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

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Posted by John Kartch, Michael Mirsky on Monday, September 6th, 2021, 2:48 PM PERMALINK

If Biden and the Democrats enact 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, Nebraska 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 two Nebraska 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 Nebraska Public Service Commission, Black Hills Gas Distribution, LLC and Black Hills/Nebraska Gas Utility Company passed along tax savings to their customers.

Black Hills Gas Distribution, LLC: As noted in this June 19, 2018 Nebraska Public Service Commission document

There is a benefit to be realized by both Black Hills entities named in this docket as a result of the reduction in the federal corporate income tax rate from 35% to 21%. This benefit should be passed on to Black Hills customers. 

Under the plan proposed by the parties in the Stipulation, BHE would credit customers through a combination of fixed bill credits and volumetric bill credits. BHGD would only provide a fixed credit to its customers, with no volumetric component, due to the operation of the Choice Gas supply program. 

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For BHGD, the total amount to be refunded would be approximately $926,691. The average residential customer of BHGD would receive $9.15 annually. The average small commercial customer would receive $15.87 annually. The average large commercial customer would receive $93.39 annually. 

Black Hills/Nebraska Gas Utility Company: As noted in this June 19, 2018 Nebraska Public Service Commission document

There is a benefit to be realized by both Black Hills entities named in this docket as a result of the reduction in the federal corporate income tax rate from 35% to 21%. This benefit should be passed on to Black Hills customers. 

Under the plan proposed by the parties in the Stipulation, BHE would credit customers through a combination of fixed bill credits and volumetric bill credits. BHGD would only provide a fixed credit to its customers, with no volumetric component, due to the operation of the Choice Gas supply program. 

For BHE, the total amount to be refined would be approximately $2,287,403. The average residential customer would receive a total of approximately $9.53 annually. The average commercial/industrial customer would receive a total of approximately $22.65 annually. The average Energy Options Firm customer would receive a total of approximately $39.80 annually.

Conversely, if Biden and Democrats raise the corporate tax rate, they will add to the burden faced by working families. And any 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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