Photographer: Michael Nagle/Bloomberg
Trump Tax Reform Has States Hungry for Lower Utility BillsBy
States ordering utilities to track savings starting now
Exelon, Eversource already offering lower rates on tax law
It’s been less than a month since Congress approved a sweeping tax overhaul and states are already champing at the bit to get a piece of the action.
Regulators from Montana to Kentucky have ordered utilities to act now to ensure ratepayers share in the windfall from the tax bill signed into law by President Donald Trump that slashed corporate rates to 21 percent from 35 percent.
“It is consumer money,” said David Springe, executive director of the National Association of State Utility Consumer Advocates. “Everybody is focused on making sure this doesn’t just vanish.”
Utilities that are regulated -- to protect customers from being overcharged while also ensuring a fair rate of return -- have to pass along savings to ratepayers when costs fall. Exelon Corp., the biggest U.S. utility owner by sales, is already offering to reduce bills. Others may seek to spend their tax bonanza on urgent upgrades to their networks, arguing this will also benefit customers.
Some utilities might be able to boost earnings and cut bills at the same time, said Hugh Wynne, a utilities analyst for Sector & Sovereign Research in Stamford, Connecticut.
“In the case of utilities that are earning less than their regulators allow, they could cause an increase in earnings and a decrease in rates by going to the regulator and saying, ‘Let’s implement this tax cut right away’,” he said.
The following are among states that have taken action so far:
- Montana Public Service Commission gave utilities a March 31 deadline to calculate tax savings and how they should be shared with customers
- Kentucky Public Service Commission ordered utilities to begin tracking tax savings
- Indiana Utility Regulatory Commission ordered a review into the impact of the tax cut and how customers can benefit
- Louisiana Governor John Bel Edwards asked the state public service commission to review utility rates and adjust them to reflect the tax cut.
Utilities that are already offering to cut rates include:
- Exelon’s Baltimore Gas & Electric will pass around $82 million in annual tax savings to customers
- Exelon’s Commonwealth Edison in Chicago is seeking approval to pass along about $200 million in tax savings to customers this year.
- Eversource’s customers in eastern Massachusetts will see a reduction in rates of around $35.4 million instead of an approved increase of $12.2 million; its customers in western Massachusetts also stand to gain.