Responding to requests from regulators, Texas electric and gas utilities have begun filing paperwork showing how they’ll pass along savings from millions of dollars in new tax cuts.
The Texas Public Utility Commission and the Texas Railroad Commission both called for the filings after the U.S. Congress in December adopted the Tax Cuts and Jobs Act of 2017. Among other things, the new law drops corporate rates from 35 percent to 21 percent. The PUC regulates electric utilities and the Railroad Commission regulates gas utilities.
El Paso Electric was among the first to spell out specifics. In regulatory documents EPE proposes to issue bill credits beginning in April that will lower typical home bills by $3.83, or 4.5%. Oncor (serving the Dallas-Fort Worth area) and CenterPoint (serving the Houston area) also have filed PUC paperwork, although details remain to be worked out. You can read some initial filings here and here.
One complicating factor involves billing in areas with retail electric deregulation. Although El Paso Electric does not operate in such an area, Oncor and CenterPoint do.
In deregulated areas, end-use customers receive electric bills from retail electric providers. These providers can charge whatever they want, although a portion of each bill will include charges to pay for services from the regulated transmission and distribution utility. This means that even if Oncor or any other regulated electric utility in a deregulated area lowers its rates, the resulting savings won’t go to residential consumers unless the retail provider also lowers its bills.
State Sen. Kelly Hancock.
Electric industry trade groups say competition among retail electric providers should help ensure the savings eventually gets passed along. Many customers — even on fixed-rated contracts — also receive service through unbundled deals in which transmission and distribution charges automatically drift upward and downward to reflect regulatory changes.
But state Sen. Kelly Hancock, chair of the influential Senate’s Business and Commerce Committee, wants more assurances. In a letter he sent last month to the PUC, Hancock warned of legislative action if retail providers don’t firmly commit to passing along the tax savings.
“I don’t think the intent of the President or Congress was that the tax cuts simply get clogged up in large companies and corporations, but that they get passed down to households and consumers,” the North Richland Hills Republican said during a recent interview with the Dallas Morning News.
Dallas-based TXU and the owner of Houston-based Reliant both say that the vast majority of their customers will receive the tax savings automatically because of the structure of most residential rate plans. And in response to Sen. Hancock’s concerns, the electric retailers also committed to working with the PUC to ensure that other customers without such plans likewise benefit from the tax reductions. You can read PUC filings from both companies here and here.
The Steering Committee of Cities Served by Oncor, a coalition representing municipalities and their citizens at the PUC, has intervened at the agency to ensure tax savings are fairly reflected in Oncor’s rates. The Atmos Cities Steering Committee, a separate municipal group active at the Railroad Commission, is involved in similar proceedings with the Atmos gas utility.
Geoffrey Gay, an attorney representing both groups, says each already has secured commitments that tax savings will go to ratepayers. “It’s important that utilities don’t charge Texans for non-existent tax liabilities,” said Gay, who also serves as general counsel for the Texas Coalition for Affordable Power.