Bring Down Utility Rates Under New Federal Tax Law

Utility regulators in Texas have been sending positive signs they will make sure consumers get their fair share of savings from the recent corporate tax cuts — but let’s hold the applause until we start seeing lower monthly bills. For the sake of millions of families, this needs to happen sooner rather than later.

In many states, regulators protect the public interest by making sure utility rates are fair and reasonable. But in many parts of Texas, the Legislature deregulated retail electricity prices, so there’s no assurance that the tax savings will be passed on to consumers. Corporate taxes were slashed in December from 35 percent to 21 percent, yet millions of utility customers in Texas currently pay rates as if their utility were being taxed at 35 percent. That’s not fair or reasonable. And the clock is ticking.

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The corporate tax break has implications for electric and gas utility consumers in Texas and across the country. Earlier this year, Public Utility Commission (PUC) Chairman Dee Ann Walker instructed her staff to begin gathering information from utilities and to consider legal options to recover the savings. She cited the precedent of similar actions taken after President Reagan’s tax cuts in 1987.

Texas Railroad Commission (RRC) Chairman Christi Craddick has said the RRC will look into natural gas rates in the wake of tax cuts. In January, Texas Attorney General Ken Paxton joined a bipartisan coalition of state attorneys general in asking the Federal Energy Regulatory Commission to make sure utilities pass tax savings to their customers.

For electric consumers to get a break in their monthly bills, the PUC must do two things. First, it must use its authority over transmission and distribution companies — which operate as regulated monopolies in Texas — to compel them to pass along their tax savings. Second, the PUC must exert pressure on Retail Electric Providers — the companies that sell electricity to homes and businesses in deregulated areas of the state and which would now pay less for the electricity they buy.

One way to help consumers would be to use the PUC’s own Power to Choose website —  www.powertochoose.org — to list the companies that have and have not passed these savings to their customers. Once publicized, this would be one factor for consumers to consider when deciding which provider they want to do business with. While this is no guarantee for consumers, it may be the best way to pressure retail providers into passing along the savings.

There is plenty at stake for Texans, particularly for those living on fixed incomes or below the poverty level. The average monthly residential electricity bill in Texas is $128 — the fifth-highest in the country — compared to the national average monthly bill of $107, according to the U.S. Energy Information Administration. To make matters worse, U.S. Census figures show that about 18 percent of Texas households have incomes below the poverty level.

Utility customers aren’t nameless, faceless people. They’re folks like you and me, facing the prospect of a hot summer in 2018 and rising costs of housing and medical care. They cannot wait to get relief, especially when relief is warranted.

Grace Gonzalez, a customer of Reliant Energy in Dallas, told us that savings from rate cuts would help her buy more groceries. “Utilities get a break and so should the consumers,” she said. “It seems like rates keep rising, a return would be most welcome.”

Lydia Oliphant, a Reliant Energy customer in Houston, said, “We need utility companies to lower their rates. Our energy bills are high. People are living longer and when we retire, we don’t have the same money we did when we were working.”

“Some kind of savings would help me tremendously,” she said. “I need to buy food, medicine and have a little money left over for gas.”

By holding the utilities’ feet to the fire on tax cuts, regulators can ease the burden of monthly bills and uphold their responsibility to serve the public interest. There is no time like the present to act.