PA utilities ordered to lower prices

FRITZ MAYER
Posted 5/23/18

HARRISBURG, PA — The Tax Cut and Jobs Act (TCJA), which was signed by President Donald Trump in December, gave significant tax breaks to many companies including utility companies in …

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PA utilities ordered to lower prices

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HARRISBURG, PA — The Tax Cut and Jobs Act (TCJA), which was signed by President Donald Trump in December, gave significant tax breaks to many companies including utility companies in Pennsylvania. Now the Pennsylvania Public Utility Commission (PUC) is telling those companies they must pass along some of the savings to consumers.

The PUC press release said the organization on May 18 “issued an order, requiring a ‘negative surcharge’ or monthly credit on customer bills for 17 major electric, natural gas, and water and wastewater utilities, totaling more than $320-million per year. The refunds to consumers are the result of the substantial decrease in federal corporate tax rates and other tax changes under the TCJA of 2017, which impacted the tax liability of many utilities.” The companies include Pike County Electric and PPL.

In a response to a request for comments from PUC, PPL wrote that while the reduction of tax rates due to PPL should result in “benefits to customers,” a “comprehensive view of utility rates is needed to determine on a utility-by-utility basis the most advantageous way to return benefits to customers.”

The company continued, “Base rates are not permissibly changed between rate cases because one item of cost increases or decreases. They are changed only after all costs are considered, and prospective just and reasonable rates are re-determined by the commission. Changing base rates solely for reduction in federal tax rates, without consideration of all other costs, would be both unfair to utilities and violate the prohibition against ‘single issue ratemaking.’”

But the PUC moved forward with the order anyway, and expects the result to be a reduction for anywhere from between .565% to 8.55%, depending on the utility.

“As economic regulators, it is the commission’s responsibility to ensure that utility rates are just and reasonable,” said PUC Chairman Gladys M. Brown. “Further, it is necessary for utility rates to reflect relevant tax expenses.”

harrisburg, utilities

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