Shortchanged by federal tax cuts? Public utilities to share their windfalls

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BUFFALO, N.Y. (WIVB) – When the president and Congress passed historic cuts in federal taxes last year, critics said the new tax rates favor corporate America more than middle class America. But there is a silver lining for utility customers.

The Federal Energy Regulatory Commission has ordered the nation’s public utilities to share their tax windfalls with their customers, and it is already having an impact in Western New York.

Consumer watchdogs point out, when utilities get hit with higher taxes, they pass those higher costs on to ratepayers, rather than their investors, so tax savings should also go to their customers.

FERC issued an order to that effect last week, and the State Public Service Commission is expected to begin proceedings shortly to decide what tax savings New York’s public utilities should pass along to their ratepayers.

Joe Stelling, a spokesman for AARP in New York, said, “We’ve got a huge reduction in the tax burden on the part of these utility companies, and that needs to be passed on to consumers.”

Stelling adds, if higher taxes fall on the customers then they should also reap the benefits of lower taxes, “Ratepayers are the ones who end up paying the taxes paid by the utility companies, and so with this reduction, we need to make sure that rates reflect that as well.”

The ruling is already having an effect, in Western New York: when the PSC granted National Grid a rate hike, last week, it lowered the company’s request substantially due to National Grid’s $75 million tax cut under the new federal tax code.

National Grid spokesman Steve Brady said taxes are part of the utility’s cost of doing business, “that is what goes into making up our delivery rates,” and Brady pointed out, “since customers, in effect, would have paid these taxes anyway, that the tax savings–all of it on a dollar-for-dollar basis–goes back to customers.”

National Grid’s $75 million in tax savings is being split two ways, Brady said $60 million goes to their electric customers and $15 million to their gas ratepayers.

The PSC granted National Fuel a rate increase last year for its New York business, and a spokesperson said the Amherst-based utility is working with regulators to determine how much they could save customers from their tax windfall in New York and Pennsylvania.

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