Arizonans Will Get Stuck with Higher Utility Bills Due to Biden Corporate Tax Rate Hike

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Posted by John Kartch on Friday, April 2nd, 2021, 12:05 PM PERMALINK

If Sinema and Kelly vote for Biden's corporate income tax rate increase, they will have to explain why they just increased your utility bills

If President Biden and Sens. Kyrsten Sinema and Mark Kelly raise the corporate tax rate, Arizona households and businesses will get stuck with higher utility bills. Democrats plan to impose a corporate income tax rate increase to 28%, even higher than communist China's 25%.

Customers bear the cost of corporate income taxes imposed on utility companies. Corporate income tax cuts drive utility rates down, corporate income tax hikes drive utility rates up.

Electric, gas, and water companies must get their billing rates approved by the respective state utility commissions. When the 2017 Tax Cuts and Jobs Act cut the corporate income tax rate from 35% to 21%, utility companies worked with officials to pass along the tax savings to customers, including at least 10 Arizona utilities.

As noted in a June 2018 statement from EPCOR:

More than 57,000 EPCOR wastewater customers will receive more than $1.1 million in federal corporate tax cut savings, reducing the amount of their monthly wastewater bill starting with the July 2018 billing cycle.

Today, the Arizona Corporation Commission (ACC) approved EPCOR’s request to refund $1,106,392 in tax reform savings to all of the company’s residential and commercial wastewater customers.

“We are extremely pleased to help our wastewater customers save more than $1 million each year, and it’s important to us that we put this into effect as soon as possible,” commented Joe Gysel, President of EPCOR USA, Arizona’s largest regulated water utility. “All our customers deserve to share in the savings generated by federal tax reform. It's positive for them, for their communities and for our state.” - June 12, 2018 EPCOR press release

Arizona Public Service passed along their savings to customers as well:

APS has requested the Arizona Corporation Commission approve a $119 million bill reduction for customers, based on federal corporate tax cuts, effective February 1, 2018.

If approved, the $119 million decrease will offset the $95 million revenue increase that resulted from APS’s last rate review. The savings of $0.004258/kWh will be passed directly to customers through the Tax Expense Adjustor Mechanism (TEAM), a new adjustor mechanism that was included in the company’s rate review, and customer savings will vary with actual energy usage. APS customers would receive the credit on their monthly bill.

Bermuda Water Company passed along savings to their customers:

The Arizona Corporation Commission is following through on its promise to pass savings created by the Tax Cuts and Jobs Act to Arizona utility ratepayers. As of August, the effort has totaled $189,088,437.

At the August Open Meeting, the Commission addressed tax adjustments for both the Quail Creek and Bermuda Water Companies. The largest tax adjustment occurred earlier this year when the Commission approved a $119 million dollar reduction to benefit APS customers.

Liberty Utilities also passed along savings to their customers:

The Arizona Corporation Commission is following through on its promise to pass savings created by the Tax Cuts and Jobs Act to Arizona utility ratepayers. As of August, the effort has totaled $189,088,437.

The Commission has been working on rate adjustments every month since February. At the July Open Meeting, the Commission addressed federal tax adjustments for both Southwest Gas and Liberty Utilities with adjustments made to their revenue requirements of $20 million and $1.9 million respectively.

Quail Creek passed along savings to their customers:

The Arizona Corporation Commission is following through on its promise to pass savings created by the Tax Cuts and Jobs Act to Arizona utility ratepayers. As of August, the effort has totaled $189,088,437.

At the August Open Meeting, the Commission addressed tax adjustments for both the Quail Creek and Bermuda Water Companies. The largest tax adjustment occurred earlier this year when the Commission approved a $119 million dollar reduction to benefit APS customers.

Tucson Electric Power Company passed along savings to their customers:

EP and its sister utilities “believe it is in the public interest to share a substantial portion of the expected income tax savings with their respective customers on an expedited basis,” the companies said.

TEP says its proposals may include a fast-tracked regulatory approval process to implement a billing credit as soon as possible; a higher seasonal credit that would help offset customer bills during higher usage months; or bill credits that would decline over time while still smoothing the bill impacts of future rate requests.

Alliant Gas passed along savings to their customers:

The Arizona Corporation Commission ordered Alliant Gas to file a rate case for its Page and Payson Divisions as part of the company’s action to refund customers the income tax reductions resulting from The Tax Cuts and Jobs Act of 2017.

Southwest Gas Corporation passed along savings to their customers: 

The Tax Cuts and Jobs Act of 2017 reduced the federal income tax rate for corporations like Southwest Gas, and we’re passing the savings on to you. 

Arizona Water Company passed along savings to their customers:

Arizona Water Company presented a plan to the Arizona Corporation Commission Tuesday to reduce customer rates in its western group, which includes Casa Grande, Coolidge and Stanfield.

Commissioners want to assure federal tax reform law directly benefits utility customers by passing federal tax savings on to the ratepayers, according to a press release. Commissioners have voted to award federal tax reform money directly to utility customers.

Going forward, commissioners voted to ensure a 3.6-percent rate reduction in monthly rates for the western group and a 4-percent reduction in monthly rates for the northern group.

UNS Electric, Inc. passed savings along to their customers:

The purpose of the Tax Adjustment is to address changes in the Company’s federal income tax rate until such changes are reflected in the Company’s next general rate case. The savings will be returned through a combination of (i) a per kilowatt-hour (“kWh”) bill credit for all customer classes and (ii) a regulatory liability that reflects the deferral of the return of a portion of the savings (which will be returned to customers in the Company’s next rate case). 

For 2019 (and subsequent years), the tax savings to be returned to customers will be calculated as for 2018 and will reflect the effective federal income tax rate applicable for that tax year.

Conversely, a vote for a corporate income tax rate hike is a vote for higher utility bills right as the USA is trying to recover from the pandemic.

Sens. Sinema and Kelly would be wise to stay away from tax increases.

 

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