Across the country, electric utilities in Massachusetts, Illinois, Oregon and Washington, D.C., and elsewhere have announced they will pass on their corporate income tax savings to customers in the form of lower rates.
Florida’s investor-owned utilities, including Juno Beach-based Florida Power & Light Co., have not made any rate-cutting announcements, and FPL officials say they are analyzing the changes to the tax code.
However, Florida Public Counsel J.R. Kelly, who represents consumers, last week called on the Florida Public Service Commission to investigate and lower rates for all investor-owned utilities for the 2018 tax savings.
The Tax Cuts and Jobs Act that took effect Jan. 1 reduces the federal corporate income tax rate from 35 to 21 percent. The utility industry will pay an estimated $4.4 billion in taxes in 2018, more than $1 billion less than it would have paid without the tax changes, according to the University of Pennsylvania’s Penn Wharton Budget Model.
It isn’t known what the savings will be after they trickle down to individual utility customers.
There’s been speculation in other states that utilities could spend the extra money on infrastructure instead of lowering rates.
“In Florida, we certainly intend to fight to get the tax benefits flowed back to customers,” Kelly said last week.
Kelly was also one of 19 state agencies and state consumer advocates from 15 states who asked the Federal Energy Regulatory Commission to prevent utilities from “reaping a windfall from the reduction in federal corporate income tax rates.”
“Otherwise, utility customers nationwide will be overpaying for their electric and gas service by hundreds of millions of dollars,” their petition states.
The rate settlements of other Florida utilities, including TECO, Duke Energy Florida, Gulf Power, and Florida Public Utilities Co. have provisions that address the changed corporate income tax rate, Kelly said. The settlements provide a period of 90 days (Gulf) and 120 days (Duke, TECO and Florida Public Utilities Co.) for the companies to make the necessary base rate changes.
FPL’s settlement, a four-year agreement reached in 2016, does not have such a provision, but Kelly said state regulators have the power to require the utilities, including FPL, to lower their rates.
FPL spokeswoman Sarah Gatewood said last week, “We believe it is in the best interests of our customers for us to take the time to analyze the changes to the federal tax code to understand the complexities and implications.
“We are conducting that analysis now,” Gatewood said. “Our goal is to develop a plan to address the impact of anticipated tax savings in a way that makes the most sense. As always, we look forward to working with the PSC and Public Counsel to ensure we can continue providing power that’s far cleaner and more reliable than the national average for a price that’s among the lowest in the nation.”
The Florida Public Counsel’s petition also says the commission needs to examine not just the base rates customers are charged, but the new tax law’s impact on the companies’ deferred tax reserves. The tax reserves, accrued at the old 35 percent rate, will be paid to the U.S. Treasury at the lower 21 percent rate.
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