Colorado Residents Will Get Stuck with Even Higher Utility Bills Due to Biden Corporate Tax Rate Hike

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Posted by John Kartch on Tuesday, June 8th, 2021, 1:15 PM PERMALINK

If Biden and Sens. John Hickenlooper and Michael Bennet impose a corporate income tax rate increase, they will have to explain why they just increased your utility bills

If President Biden and congressional Democrats hike the corporate income tax rate, Colorado households and businesses will get stuck with even higher utility bills.

Democrats plan to impose a corporate income tax rate increase to 28%, even higher than communist China's 25%. This does not even include state corporate income taxes, which average 4 - 5% nationwide.

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 five Colorado utilities. The savings take the form of either a rate reduction, or, a reduction to an existing/planned rate increase.

Working with the Colorado Public Utilities Commission, Public Service Company Gas Department, Public Service Company Electric Department, Black Hills Energy Electric Utility, Black Hills Energy Gas Utility and Colorado Natural Gas, Inc. passed along tax savings to their customers.

Black Hills Energy Electric Utility: As noted in this January 27, 2021 Black Hills Energy news release

Black Hills Energy’s Southern Colorado electric utility residential customers will see the benefits of a federal corporate tax rate reduction in the form of a $50.32 credit on February electric bills. The bill credit is part of a plan approved by the Colorado Public Utilities Commission to return funds to customers resulting from the 2017 Tax Cuts and Jobs Act (TCJA).

As part of the same agreement, Black Hills Energy will also provide residential customers with an additional annual bill credit of approximately $5 beginning in April 2021. The credit will appear on customer bills as a separate line item: "Tax Cuts and Jobs Act Adj."

Public Service Company Gas Department: As noted in this Public Utilities Commission of Colorado document

Effective March 1, 2018, the Company’s gas rate case provisional rates will be reduced to reflect the Company’s preliminary estimate of TCJA net impacts of $20 million, as set forth in Appendix A to this Settlement Agreement. The Settling Parties acknowledge that this preliminary estimate in Appendix A is based on high level early estimates using the limited information presently available. To this end, this preliminary estimate includes a contingency to  account for uncertainty and avoid a surcharge to customers in the event the final determination of tax law reductions to rates is lower than the preliminary estimate of the reduction to provisional rates. 

Public Service Company Electric Department: As noted in this Public Utilities Commission of Colorado document:

As set forth in more detail below, the Settling Parties agree that the following TCJA benefits be delivered to Public Service’s electric customers beginning June 1, 2018: 

Black Hills Energy Gas Utility: As noted on the Black Hills Energy website:

We filed for a reduction to the general rate schedule adjustment, or GRSA, to reflect the savings associated with the federal Tax Cuts and Jobs Act. These benefits first appeared on both gas and electric customers’ July 2018 bills. 

For Colorado gas customers, the GRSA decreased from 0.827% to -2.59%. For Colorado gas distribution customers, the GRSA decreased from 8.56% to 4.41%.

Colorado Natural Gas, Inc.: As noted in this Colorado Natural Gas statement:

At Colorado Natural Gas, our goal is to provide safe, reliable, clean burning and affordable natural gas to individuals, families and businesses in underserved areas of Colorado through exceptional customer service and a commitment to community.

To achieve that goal of providing safe and reliable natural gas to tens of thousands of Coloradans for home heating, hot water, cooking and more, we must maintain and invest in more than 1,200 miles of pipeline, while continuing to provide the quality customer service you’ve come to expect from your local natural gas utility.

All this costs money, which is why we filed a natural gas rate case in May of 2018 with the Colorado Public Utilities Commission (Commission). Until our 2018 rate case, we had not changed our rates since 2013, which meant the cost of providing safe and reliable natural gas exceeded what customers were paying.

After thorough review by the Commission and ample time for public input, the rate case settlement was approved on November 1, 2018. New rates went into effect on December 1, 2018.

New Rates:

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You may have heard about the benefits of the federal income tax reform passed in 2017. We were happy to be able to pass on those benefits to our customers through this rate case.

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

Many small businesses operate on tight margins and can't afford higher heating, cooling, gas, and refrigeration costs. President Biden should withdraw his tax increases.

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