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

If Carper and Coons enact a corporate income tax rate increase, they will have to explain why they just increased your utility bills

If President Biden and Sens. Thomas Carper and Chris Coons hike the corporate income tax rate, Delaware households and businesses will get stuck with higher utility bills as the country tries to recover from the pandemic.

Democrats plan to impose a corporate income tax rate increase to 26.5%, even higher than communist China’s 25% and higher than the developed world average of 23.5%. 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 state officials to pass along the tax savings to customers, including at least seven Delaware utilities.

The savings typically come in the form of a rate reduction, a bill credit, or a reduction to an existing or planned rate increase.

According to a report published in the trade publication Utility Dive, customers nationwide were to receive a $90 billion utility benefit from the Tax Cuts and Jobs Act:

Estimates derived from 2017 annual SEC 10-K filings indicate that the 14-percentage-point reduction in the corporate tax rate enacted under the 2017 Tax Cuts and Jobs Act (TCJA) resulted in investor-owned utilities establishing significant regulatory liability balances, totaling approximately $90 billion to be refunded back to customers.

Americans for Tax Reform has compiled a 90-second nationwide utility savings video from local news reports which may be viewed here.

If Democrats now impose a corporate income tax rate increase, they will have to reckon with local news coverage noting utility bills are going up. A vote for a corporate income tax hike is a vote for higher utility bills as households try to recover from the pandemic.

Tax Cuts and Jobs Act Impact: Working with the Delaware Public Service Commission, Delmarva, Artesian Water Company, Long Neck Water Company, Suez Water, Chesapeake Utilities, Sussex Shores and Tidewater Utilities passed along tax savings to their customers.

Delmarva (Delaware): As noted in this Delaware Public Service Commission document:

Staff of the Delaware Public Service Commission and the Division of the Public Advocate executed a settlement Wednesday that will result in a rate reduction of $6.85 million for Delmarva Power customers.

The settlement resolves a pending rate increase request from Delmarva that initially included $31 million in distribution costs to be passed on to electric consumers. Earlier this year, the Public Service Commission approved a petition from the Public Advocate requesting a reduction in Delmarva rates as a result of savings realized by the company due to the federal Tax Cuts and Jobs Act enacted last fall. The petition was bolstered by a collection of supportive public comments, including a letter signed by 38 Delaware state legislators led by representatives John Kowalko and Kimberly Williams.

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According to the settlement, instead of an initial proposed $65 per year (4.7%) increase for typical Delmarva electric customers, they will see a more than $15 annual decrease in their electric costs (-1.4%.) The settlement has been signed by Delmarva Power, Commission staff, the Public Advocate, and the Delaware Energy Users Group. Other parties included the Department of Natural Resources and Environmental Control and Rep. Kowalko. The Hearing Examiner in this proceeding and the five-member Public Service Commission are responsible for ultimate approval of the settlement.

Artesian Water Company (Delaware): As noted in this Delaware Public Service Commission document:

The Delaware Public Service Commission on Thursday approved an overall rate reduction for regulated utilities related to the overcollection of federal corporate taxes due to the Tax Cuts and Jobs Act of 2017.