Utility companies are going to pay less tax through a recent tax overhaul, and several are intending to pass those savings on to customers. Rate changes may shave a few bucks off the average customer’s bill in the coming months, The Wall Street Journal reports.
Utility Bills Could Possibly Be Getting More affordable
The federal government slashed its corporate tax rate from 35% to 21%. Regulated gas and electric utilities will be required to pay less tax, and several state authorities may provide regulated utilities little choice but to return that tax savings to its customers, WSJ reports.
Some regulated utilities are going to be refunding a portion of the tax payments they collected from customers according to the 35% rate. Companies could issue refunds over a few years, so the savings could possibly be minimal for consumers.
As an example, National Grid U.S., a utility holding company with subsidiaries in New York, Massachusetts, and Rhode Island, expects a non-cash tax credit of $2 billion in 2018 from the lower tax rate. “It’s going to be returned to customers over a period of 20 to 30 years,” Peggy Smyth, the company’s finance chief, told The Wall Street Journal.
Some companies are making use of the tax savings to defray higher costs and prevent having to hike bills. As an example, Florida Power & Light stated it intends to use its savings to fund $1.3 billion in recovery costs from Hurricane Irma. Customers probably won’t see any decline in utility bills, however it will spare them from any increases, the company said.
Duke Energy Corp, with subsidiaries in North Carolina, is in the steps involved in requesting permission from local authorities to reduce retail rates or use its tax savings to defray the expense of storm-related recovery efforts, WSJ reports.
“Tax reform has presented us a unique opportunity to reduce customer bills in the near term, while also helping to offset future rate increases,” says Steven Young, Duke Energy’s finance chief.
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