Photographer: Daniel Acker/Bloomberg

politics

Hidden Benefit to U.S. Corporate Tax Cuts: Lower Utility Bills

  • Regulated utilities may pass tax liabilities on to ratepayers
  • Consumers may get share of estimated 15% cut to utility tax

There’s one place where every American may benefit from lower corporate income-tax rates: utility bills.

Utilities’ tax burden will be cut by about 15 percent, with customers potentially getting a cut through lower bills and reduced rate increases in the future, estimates Jay Rhame, a portfolio manager at Reaves Asset Management.

Because regulated power, gas and water utilities pass tax expenses through to customers, lowering their liability becomes an almost-automatic cut to monthly bills. In some cases, utilities may ask regulators for a quick adjustment to tout the cost reduction, and others may wait for their next rate case, but most will see some benefits from the tax overhaul, said Paul Patterson, an analyst at Glenrock Associates.

“In many cases the tax savings will go right back to ratepayers,” Patterson said. “In others it may just mitigate the impact of higher rates going forward.”

An average consumer could see a reduction of about 5 percent off their monthly bill, according to Rhame. In New York, that equates to savings of about $6 a month off a $120 bill, while larger homes in hot Southern states could see savings of $15 a month or more, according to Energy Department data.

    Before it's here, it's on the Bloomberg Terminal. LEARN MORE