Consumers Begin Receiving Tax Reform Savings From Pennsylvania Public Utilities; Savings Increase to $400+ Million Per Year
Published on 7/27/2018
HARRISBURG – The Pennsylvania Public Utility Commission (PUC) today noted that consumers across the state have begun receiving savings on their utility bills – triggered by changes in federal tax rates – now valued at more than $400 million per year.
Earlier this year the PUC ordered 17 major electric, natural gas, and water and wastewater utilities to begin adding credits or “negative surcharges” to monthly customer bills, effective with their July 2018 bills, because of substantial decreases in federal corporate tax rates and other tax changes under the Tax Cuts and Jobs Act (TCJA) of 2017.
Based on original estimates, the tax savings were expected to reduce consumer bills by approximately $320 million per year, but those calculations have since been revised upward. Utilities are now expected to return $400 million in annual savings.
The Commission’s action followed an extensive investigation into the effects of federal tax reform on the rates charged by Commission-regulated utilities – which, among other things, reflect annual taxes owed both to the federal and state governments.
Under the PUC’s order, electric utilities will be returning $277 million per year to consumers, which will result in an average reduction of 4.74 percent in distribution charges on monthly bills; natural gas utilities will be returning nearly $83 million per year, reducing monthly distribution charges by an average of 4.92 percent; and water/wastewater utilities will be returning almost $40 million per year to their customers, resulting in an average 2.57 percent reduction in monthly distribution charges.
The percentage decrease in distribution charges varies from utility to utility, depending on the revenue and tax impact for each utility. The actual dollar savings for consumers will vary depending on their individual usage and rate class.
Public utilities required to return federal tax savings to consumers include Citizens’ Electric Company of Lewisburg, Metropolitan Edison Company, Pennsylvania Electric Company, Pennsylvania Power Company, Pike County Light & Power Company, PPL Electric Utilities Corporation, Wellsboro Electric Company, West Penn Power Company, PECO Energy Company (Gas Division), National Fuel Gas Distribution Corporation, Peoples Gas Company LLC, Peoples Natural Gas Company LLC - Equitable Division, UGI Central Penn Gas Inc., UGI Penn Natural Gas Inc., UGI Utilities, Inc.- Gas Division, Pennsylvania-American Water Company and Pennsylvania-American Water Company - Wastewater.
Additionally, several other utilities were not required to take immediate action because they currently have rate cases pending before the Commission, and any tax savings will be considered as part of the broader evaluation of their rates. These include UGI Utilities, Inc. (Electric), Columbia Gas of Pennsylvania, Inc., Duquesne Light Company, PECO Energy Company (Electric), York Water Company, Suez Water Pennsylvania, Inc. and Aqua Pennsylvania, Inc.
The Pennsylvania Public Utility Commission balances the needs of consumers and utilities; ensures safe and reliable utility service at reasonable rates; protects the public interest; educates consumers to make independent and informed utility choices; furthers economic development; and fosters new technologies and competitive markets in an environmentally sound manner.
For recent news releases and video of select Commission proceedings or more information about the PUC, visit our website at www.puc.pa.gov. Follow the PUC on Twitter – @PA_PUC for all things utility. “Like” Pennsylvania Public Utility Commission on Facebook for easy access to information on utility issues.
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Docket No.: M-2018-2641242
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