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

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Posted by John Kartch and Michael Mirsky on Friday, June 4th, 2021, 4:53 PM PERMALINK

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

If President Biden and Sens. Catherine Cortez Masto and Jacky Rosen hike the corporate income tax rate, Nevada 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 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 state officials to pass along the tax savings to customers, including at least three Nevada 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 Nevada Public Utilities Commission, Nevada Power, Sierra Pacific Power and Southwest Gas passed along tax savings to their customers.

Nevada Power: As noted in this March 22, 2018 the Nevada Independent excerpt:

The three members of the Public Utility Commission of Nevada voted unanimously, and with little discussion, to approve a draft order on Thursday lowering NV Energy’s revenue requirements by about $83.7 million — reflecting the 14 percent cut in corporate taxes included in the federal Tax Cuts and Jobs Act.

The cuts would reduce electric bills by roughly $4.08 a month for Southern Nevadans, while those served by the utility in Northern Nevada would see a monthly rate cut of approximately $2.81 in electric bills and $1.08 in their gas bill (each part of the state is served by a different business entity controlled by NV Energy, and each is affected differently by the tax bill).

Sierra Pacific Power: As noted in this March 22, 2018 the Nevada Independent excerpt:

The three members of the Public Utility Commission of Nevada voted unanimously, and with little discussion, to approve a draft order on Thursday lowering NV Energy’s revenue requirements by about $83.7 million — reflecting the 14 percent cut in corporate taxes included in the federal Tax Cuts and Jobs Act.

The cuts would reduce electric bills by roughly $4.08 a month for Southern Nevadans, while those served by the utility in Northern Nevada would see a monthly rate cut of approximately $2.81 in electric bills and $1.08 in their gas bill (each part of the state is served by a different business entity controlled by NV Energy, and each is affected differently by the tax bill).

Southwest Gas: As noted in this May 31, 2018 Southwest Gas press release:

Southwest Gas Holdings, Inc. (NYSE: SWX) today announced that Southwest Gas Corporation ("Southwest") filed a general rate case with the Public Utilities Commission of Nevada ("Commission"), Docket No. 18-05031.  The case requests a statewide overall general rate increase of approximately $32.5 million, which reflects any reduced tax liability associated with the Tax Cuts and Jobs Act of 2017.

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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