Utility regulators in Washington state have directed regulated companies to track federal tax savings that results from the passage of the Tax Cuts and Jobs Act to ensure the savings will benefit utility customers, according to the Washington Utilities and Transportation Commission.
The 2017 federal tax overhaul reduced the corporate tax rate from 35 percent to 21 percent, according to the UTC. State law authorizes the UTC to determine how much profit regulated energy, telecom and water companies can earn and what rates the companies can charge its customers.
The reduction in the tax rate will reduce costs for many of the regulated companies, so the commission has directed them to report the expected revenue impacts of the revisions.
“Investor-owned utilities expect to see reduced taxes as a result of the tax legislation, and we expect them to pass those benefits on to Washington customers,” UTC Chairman Dave Danner said in the release. “UTC staff is still working through the changes brought about by the tax law, but utilities are on notice that we expect customers will reap the benefits.”
Customers will not see immediate reduced rates or bill credits. The utilities expected tax savings will be determined and reconciled with commission-set revenue requirements with regular tariff and rate case filings. According to the UTC, customers may see reduced rates as the proceedings go into effect.
Avista and Cascade Natural Gas have rate cases pending before the commission. The tax-related changes will be incorporated into the rates.
Puget Sound Energy, Pacific Power and Light, and Northwest Natural Gas have filed petitions that outline the potential changes to their 2018 taxes and the estimated potential in excess earnings.
“The UTC will evaluate the specifics and incorporate the results into future rate cases,” states the release.
“The UTC is also working with other regulated companies to determine the impacts of the federal tax law changes on their operations.”
The UTC regulates the services and rates of investor-owned electric utilities, natural gas, telecommunications, water companies, household goods movers, charter bus companies, garbage collection haulers, commercial ferries, low-level radioactive waste repository and pipeline companies. It does not regulate internet or broadband services, which are regulated by telecommunications companies.
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