Gas and electric ratepayers in Texas could see their utility bills go down — or at least not increase as much as they might have otherwise — as a result of tax legislation recently adopted by the U.S. Congress.
Leaders at both the Texas Public Utility Commission and the Texas Railroad Commission recently pledged deep dive examinations of the potential impacts of federal tax legislation on home rates. The PUC regulates the state’s electric utilities and the Railroad Commission regulates its gas utilities.
Both agencies have the power to order rate reductions, or they could insist that utilities reduce or eliminate previously planned rate increases.
“I … believe that the Commission staff should review each electric utility on a case-by-case basis to determine the most appropriate action to take related to the reduction in the federal tax liability,” said PUC chair DeAnn T. Walker.
“These tax cuts are significant, and as a regulator, our role is to make sure Texas utilities implement them in a way that benefits consumers first,” said Railroad Commission chair Christi Craddick.
The Tax Cuts and Jobs Act of 2017 reduced the corporate tax rate from 35 percent to 21 percent as of Jan. 1. Because electric and gas utilities are regulated monopolies, the PUC and Railroad Commission can order them to adjust their rates. In theory, if a utility’s tax liability declines, then that decline should be reflected in how much it charges home consumers.
The Steering Committee of Cities Served by Oncor and the Atmos Cities Steering Committee — two city groups that represent consumers before both regulatory agencies — already have secured commitments that tax savings will be passed onto the ratepayers those groups represent, said Geoffrey Gay, an attorney representing both groups.
“It’s important that utilities don’t charge Texans for non-existent tax liabilities,” said Gay, who also serves as general counsel for the Texas Coalition for Affordable Power.
Separately the City of Dallas negotiated a rate reduction for gas rates charged by Atmos Energy within its city limits. Under the deal, home bills will drop by about $1.60 per month to comport with savings from the federal tax law. The reduction, however, still won’t make up for the $3.16 rate hike Atmos instituted in Dallas last June, according to the Dallas Morning News.
The Houston Chronicle reports that its hometown utility, CenterPoint Energy, has yet to make any firm commitments as to how the tax cuts will impact area rates. CenterPoint owns and operates both electric and gas utilities around the Gulf Coast and Houston, and as such is subject to the jurisdiction of both the PUC and the Railroad Commission.
But the PUC likely will undertake a close inspection of the utility’s rates in the near future, according to the Houston Chronicle.
A number of attorneys general in several states also have called upon the Federal Energy Regulatory Commission to ensure that utilities across the nation lower their rates to comport with the new tax law. Texas Attorney General Ken Paxton has joined in that effort. FERC has some authority over utilities in Texas, although it is limited.
— By R.A. Dyer
Is a policy analyst consultant for TCAP, a coalition of political subdivisions in Texas that purchase electricity in the deregulated market for their own governmental use. Because energy costs are typically a significant budget item to our members, TCAP is consistently looking for ways to save our members money, through cost-saving contracts, energy efficiency or demand response programs.