Federal corporate tax cuts flow back to utility customers

Atlantic City Electric wants to pass along $22.7 million in federal tax savings to customers, the latest utility to flow back its tax cut through lower rates.

ACE said the cut would reduce a typical residential bill by $1.38 on April 1, increasing to $2.37 in monthly savings on July 1.

The utility, which serves 550,000 customers in South Jersey including parts of Camden and Gloucester Counties, was responding to a Jan. 31 order by the New Jersey Board of Public Utilities to file new rates reflecting the tax impact that would go into effect on April 1.

Public Service Electric & Gas Co., which has 2.2 million electric customers, in January filed a request to pass along $280 million in tax cuts, though the reduction was coupled with a rate-increase request that would result in a net 1 percent increase to customers.

Unlike other corporations, which have announced plans to reinvest the Trump administration’s tax cuts into operations or to reward employees or shareholders with bonuses, utilities with regulated rates are generally required to pass through changes in costs to customers.

The Pennsylvania Public Utility Commission in February launched a proceeding to seek comments from the public on how utilities should pass along the tax reduction — immediately or as part of an eventual formal rate filing.

The Office of Consumer Advocate, which represents residential ratepayers, argues that the tax reductions are “extraordinary and substantial” and should flow back to ratepayers immediately.

Not all utility customers will see a benefit. Philadelphia Gas Works, along with other municipal utilities, do not pay federal taxes, so the tax cut will have no impact on PGW’s 500,000 customers.