(1) To account for the deductibility of tax expense from the utility's income tax liability when filing for an automatic rate adjustment for Montana state and local taxes and fees, the utility will multiply the statutory income tax rate by the incremental change in Montana state and local tax expense. The product of this multiplication is the amount of the income tax benefit, positive or negative, that results from the automatic rate adjustment for Montana state and local taxes and fees.

(2) Together with an application for a change in rate schedules filed pursuant to 69-3-302, MCA the utility shall:

(a) provide its last three annual income tax filings for both the federal and Montana jurisdictions;

(b) file a request for a protective order no later than three weeks before such a rate filing is made, if the utility desires to exercise its right under federal law to keep its income tax filing confidential; and

(c) file a statement which:

(i) discloses the amount of revenue attributable to the component of existing commission rates attributable to federal and state income taxes;

(ii) identifies the total income tax expense associated with or allocated to the customers paying those commission rates;

(iii) indicates any amount of tax benefit or liability which is normalized pursuant to federal or state laws or regulations;

(iv) indicates any amount of tax benefit or liability which is normalized voluntarily, at the utility's option, and not because it is required pursuant to federal or state laws or regulations; and

(v) provides a spreadsheet or other information documenting a cost-benefit analysis for customers regarding the utility's election for a tax treatment that prohibits flow-through and requires normalization.