Utility bill savings due to tax reform now estimated at $400 million per year

The Pennsylvania Public Utility Commission (PUC) noted recently that customer utility bill savings due to changes in federal tax rates are now estimated at $400 million per year.

Earlier this year, the commission ordered 17 major utilities to add credits or “negative surcharges” to monthly customer bills as a result of decreases in federal corporate tax rates and other tax changes under the Tax Cuts and Jobs Act (TCJA) of 2017, beginning with their July 2018 bills.

Original estimates put the tax savings impact on consumers’ bills at $320 million per year. The calculations have now been revised upward to approximately $400 million in annual savings.

The PUC has ordered electric utilities to return $277 million per year to consumers, which will lead to an average reduction of 4.74 percent in distribution charges on monthly bills. Natural gas utilities are required to return approximately $83 million per year, resulting in an average reduction of 4.92 percent to monthly distribution charges.

The percentage decrease of the distribution charges varies from utility to utility, depending on the revenue and tax impact for each utility. The savings for consumers vary depending on individual usage and rate class.

Several utilities were not required to take immediate action because they have rate cases pending before the PUC in which any tax savings will be considered.