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State AGs to FERC: Tax Cuts Should Benefit Customers, Not Utilities

Bipartisan coalition calls for investigation into federally regulated utility rate

January 10, 2018
Contact: stateimpactcenter@nyu.edu

Washington, D.C.— Massachusetts Attorney General Maura Healey is leading a bipartisan coalition of 18 state attorneys general, as well as state agencies and consumer advocates, in calling on the Federal Energy Regulatory Commission (FERC) to ensure customers, not utility companies, benefit from recently enacted federal tax cuts.

In the letter to FERC, the coalition seeks "prompt Commission action to adjust the revenue requirements of public utilities subject to the Commission’s jurisdiction, including Electric Transmission and Interstate Natural Gas and Oil Pipeline owners...to reflect the recent reduction in the federal corporate income tax rate as well as any other rate/customer impacts associated with the recently enacted changes in the federal tax laws." 

“This new tax bill gives electric, gas and oil companies a major tax break, and unless FERC adjusts the rates, utilities customers will be overpaying for services by hundreds of millions of dollars,” said AG Healey. “FERC needs to act immediately to ensure that customers get these savings.”

"State attorneys general are taking action to ensure that utilities pass through their new tax savings directly, and immediately, to the customers who pay their bills," said David J. Hayes, executive director of the State Energy & Environmental Impact Center. “It's a simple proposition: because utilities' tax expenses have been cut, their reduced costs must be reflected in Americans' electricity bills. The Federal Energy Regulatory Commission and state Public Utility Commissions must step in quickly and make it happen." 

The coalition requests that FERC acts "as quickly as possible to make any necessary changes to utilities’ rates to ensure that customers’ bills are reduced" and sets "an immediate date to refund utility customers for any over-collection resulting from delays."

Further, the coalition cites FERC's history of adjusting rates following federal tax cuts, such as in 1987 after President Ronald Reagan cut corporate taxes by 12 percent. 

“We call on the Commission to use its experience and expertise, with stakeholder input, to determine appropriate procedural mechanisms to discover information about the scope of over-collections at issue, the types of voluntary rate reductions or refunds that can be implemented by the Public Utilities in an expedited manner under existing Commission rules and precedent, and the best way to ensure that customers are not harmed by any delay in making the appropriate changes,” the letter states.

McClatchy reported that utilities are celebrating the Trump-signed tax cuts, but questions remain about whether customers will benefit. "Utilities from California to Florida are seeing their expenses drop dramatically with the GOP tax overhaul, which could save these regulated electric, gas and water utilities billions of dollars each year. But some state regulators nationwide have been slow to recognize this potential windfall and ensure that consumers will also benefit — either with a reduction in rates or a mandate for utilities to invest more in safety measures, such as replacing aging gas pipelines."

The coalition sending the letter to FERC includes the attorneys general of California, Connecticut, Illinois, Kentucky, Maryland, Nevada, New York, North Carolina, Rhode Island, Texas, Virginia, as well as the Connecticut Office of Consumer Counsel, the Florida Office of Public Counsel, the Maine Office of the Public Advocate, the New Hampshire Office of the Consumer Advocate, the Rhode Island Division of Public Utilities and Carriers, and the Vermont Department of Public Service.

ABOUT THE STATE IMPACT CENTER: The State Energy & Environmental Impact Center is a non-partisan Center at the NYU School of Law that is dedicated to helping state attorneys general fight against regulatory rollbacks and advocate for clean energy, climate change, and environmental values and protections. It was launched in August 2017 with support from Bloomberg Philanthropies. For more information, visit http://www.law.nyu.edu/centers/state-impact.