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Power Bills Begin to Drop Because of Tax Cuts for Utilities

by The Daily Signal | 3.27.18

Rachel del Guidice / @LRacheldG / February 06, 2018

Power companies and the states where they do business say consumers will see lower utility rates due to the tax law from congressional Republicans and President Donald Trump that went into effect Jan. 1.

The Republican tax law reduced the federal corporate tax rate from 35 percent to 21 percent. Utility companies say they want their savings to benefit consumers, although few specifics on changes to typical bills are available.

Adam Michel, policy analyst for economic studies at The Heritage Foundation, told The Daily Signal that the benefits of the tax cuts to utilities may go beyond lower rates for consumers.

“State-regulated utilities are an interesting case for tax reform,” Michel said in an email Monday. “Because their rates are not set by markets, but instead by bureaucrats, consumers should see the utilities’ tax savings show up directly in their bill through lower rates. Some of the tax savings may also be redirected into infrastructure investments for better or expanded service.”

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Here are eight examples of actions by utility companies to reduce rates:

1_ Maryland

Baltimore Gas and Electric Company, Maryland’s largest natural gas and electric utility company, announced it will reduce rates for customers by about $103 million.

The average customer of the Baltimore Gas and Electric Company will see an approximate $2.91 decrease in their monthly bill, “and the average residential combined natural gas and electric customer will receive an estimated $5.41 monthly reduction,” BGE spokesman Aaron Koos said in an email Tuesday to The Daily Signal. “ Commercial customers will also receive monthly bill reductions.”

“As a result of the Maryland Public Service Commission accepting our proposal on [Jan. 31], we began flowing back the tax reduction value to all of our customers in their February bills,” Koos said in an earlier email.

“Throughout this month, all customers’ rates will reflect the reductions, and that will continue throughout all of 2018, as the approximately $103 million is flowed to customers,” Koos said. “That is an annual tax reduction, so barring any changes, that will continue each year.”

Washington Gas, a company that services Maryland, the District of Columbia, and Virginia, is asking the state regulatory commissions of their service areas to lower rates for over 1.1 million customers.

“If the recommendations are approved, Washington Gas has committed to providing a reduction in customer rates that would lower annual customer bills by approximately $34 million, beginning in the first quarter of 2018,” the company announced.

2_ Massachusetts

The Massachusetts Department of Public Utilities has ordered utility companies in the state to decrease rates based on savings from the Republican tax law, the Boston Herald reported.

Utilities have until May 1 to submit proposals for lower rates for customers “to incorporate the reduction in the federal corporate tax rate,” the Herald reported.

3_ Ohio

The Ohio Public Utilities Commission ordered utility companies in the state to “start setting aside the estimated savings from a reduction in federal corporate taxes from 35 percent to 21 percent,” Cleveland.com reported.

The commission said it wants those savings to be reflected in rates charged to consumers, and will accept public comment until Feb. 15, spokesman Matthew Schilling said in an email Monday to The Daily Signal.

4_ Washington, D.C.

Pepco, a power company that also has customers in suburban Maryland, said it would file early this month with the D.C. Public Service Commission to lower utility rates for over 296,000 customers.

“The tax law will result in lower bills for our customers and lower taxes for Pepco,” Dave Velazquez, president and CEO of Pepco Holdings, said in a written statement.

“We are pleased to provide these savings to our customers, while at the same time ensuring we are making prudent investments in the local power grid to maintain the safe, reliable, and affordable service our customers have come to expect.”

5_ Virginia

Dominion Energy in Richmond, Virginia, says its customers also will benefit from the Republican tax plan.

“All of our customers will see the full impact of the federal tax cut reflected in their bills,” spokesman David Botkins, told The Daily Signal in an email Monday. “That, coupled with legislation now pending in the Virginia General Assembly … will see millions of dollars flow back to customers beginning almost immediately.”

Botkins says customers will save $125 million or more per year.

6_ Oregon and Washington

Pacific Power, which services parts of Oregon and Washington, announced that it intends to pass along savings from tax reform to its customers.

“We strive to provide our customers reliable service while keeping rates low,” said Stefan Bird, president and CEO. “The benefit of this tax cut should be passed on to our customers–and we will work with our regulators and stakeholders on the best way to do that.”

7_ Utah, Idaho, Colorado

Rocky Mountain Power, with companies in Utah, Idaho, and western Colorado, said in a written statement that it is “committed” to reducing rates for customers, although that will “take several months to calculate.”

8_ Illinois

Commonwealth Edison Co., which serves over ??4? million customers in northern Illinois, has petitioned the Illinois Commerce Commission to give customers $200 million in savings in 2018, translating to $2 to $3 per month for each customer.

The Daily Signal

Written by The Daily Signal

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