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

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Posted by John Kartch on Thursday, April 15th, 2021, 4:32 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, Utah 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 two Utah utilities.

Working with the Utah Public Service Commission, Dominion Energy and Rocky Mountain Power passed along tax savings to customers.

Dominion Energy: As noted in this February 5, 2018 DesertNews article:

The Utah Division of Public Utilities has announced that federal tax savings filed by Dominion Energy will be passed to Utah consumers. The company filed for $17 million in adjustments as the result of the recently enacted federal tax cuts, explained Chris Parker, director of the state Division of Public Utilities.

Utah utility customers should expect to begin seeing savings over the next few months, Parker said, with the first wave of cuts expected to take effect within the next 30 days, providing $2.5 million in savings on infrastructure.

The division is working with other agencies to immediately lower base rates to customers by an additional $14.5 million, he said, with further reductions to follow Dominion Energy’s gas cost filing later this spring.

Rocky Mountain Power: As noted in this October 2020 Utah Public Service Commission Document:

Further, the Company continues to propose to offset the base rate increase, in part, for two years by refunding a portion of the deferred tax savings associated with the Tax Cuts and Jobs Act (“TCJA”). Specifically, the Company proposes to pass back approximately $62.7 million of the TCJA deferred tax balance over two years. After consideration of interest, $38.2 million will be returned in 2021 and $26.8 million in 2022. This will result in a 1.1 percent increase in 2021, another 1.1 percent increase in 2022 when the credit is reduced, and a 1.3 percent increase in 2023 when the remaining tax deferral is fully refunded and the credit is eliminated. Further, the Company would align the credit in 2021 with the two-step base rate change such that the credit would be increased in the latter half of the year to fully offset the second base rate increase. However, as I explain later in my testimony, the Company is not opposed to refunding the TCJA deferred tax balance over a longer period of time provided the balance is used to offset the overall proposed base rate increase.

Conversely, a vote for a corporate income tax rate hike is a vote for higher utility bills as households 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.