After tax overhaul, utility regulators are pushing for lower customer rates
- The GOP tax overhaul will lower corporate rates from 35% to 21%, ultimately raising profits at investor-owned utilities. That has led several states to warn utilities to prepare for the change, clearing a path for those funds to be returned to customers.
- Oklahoma Attorney General Mike Hunter has filed five motions with state utility regulators requesting an immediate reduction in customer rates from the state’s leading utility companies.
- The Kentucky Public Service Commission ordered for-profit utilities to track their savings under lower corporate tax rates, ensuring those savings will be passed on to customers in the form of lower
electric, gas or water rates.
The investor-owned electric utility sector supported the Republican-led tax overhaul last month, declaring it a "win" for consumers and for investment in the sector. But with new tax rates kicking in at the beginning of the year, states are letting utilities know they must be prepared to return those savings to consumers.
“These companies will begin seeing major savings,” Oklahoma AG Hunter said in a statement. “Oklahomans who are customers of these companies should immediately retain the benefits of the savings from the tax cut in the form of lower rates."
Hunter called on the Oklahoma Corporation Commission to "act quickly and in the best interests of customers, not company shareholders.” His office says the estimated annual savings for Oklahoma Gas & Electric, Public Service Company of Oklahoma, Oklahoma Natural Gas, CenterPoint Energy, and Arkansas Oklahoma Gas, is approximately $100 million — not including additional savings from other affected utility accounts.
The Kentucky Public Service Commission has already ordered for-profit utilities to track their savings, to be passed on to customers in the form of lower electric, gas or water rates. In two orders issued last month, the PSC noted that investor-owned utilities recover their federal tax expenses from ratepayers.
“Since ratepayers are required to pay through their rates the tax expenses of a utility, any reduction in tax rates must be timely passed through to ratepayers,” Kentucky regulators said. Their order directs Duke Energy Kentucky, Kentucky Power Co., Kentucky Utilities Co., and Louisville Gas and Electric Co., to respond within ten days to a complaint to begin tracking the tax savings.
Montana and Michigan have each made similar moves as well. Montana regulators were the first to compel utilities to draft a proposal for any potential consumer savings. Michigan regulators requested utilities to file on benefits from the tax overhaul, as well as potential savings for consumers.
- S&P Global Market Intelligence States begin to examine utility rate impacts of federal tax reform law EXCLUSIVE
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