Corporate sharing
El Paso Electric becomes the first utility in Texas to pass on the benefits of recently enacted corporate tax cuts to their customers by lowering its rates.
El Paso Electric became the first utility in Texas to pass on the benefits of recently enacted corporate tax cuts to its customers by lowering its rates.
El Paso Electric, which serves more than 418,700 customers in Texas and New Mexico, will distribute the $27 million in savings over a year by cutting the average monthly electric bill by about 4 percent. That translates into just under $4 a month for the utility’s average residential customer using 635 kilowatthours of electricity a month.
El Paso Electric is one of several utilities across the country that have shared the windfall from the corporate tax cuts — which sliced the corporate tax rate to 21 percent from 35 percent — with their customers. In Texas, the Public Utility Commission ordered Texas utilities to calculate their savings and pass them on to ratepayers.
In some cases, rates will still go up, but not as much as they might have without the tax sav-
ings.
For Houston residents, sharing in the $1.3 billion tax benefit enjoyed by the local utility, CenterPoint Energy, is a bit more complicated. In February, the company said it would pass along $41.6 million in benefits by lowering transmission costs, which are spread to customers across the state’s power grid. This week, CenterPoint is expected to request a rate increase for its distribution costs, but will use $40 million in tax benefits to hold down the increase.
In April 2019, CenterPoint will undergo its first comprehensive electricity rate case since 2011. A rate case is an intense process in which regulators review utilities’ finances and the costs of maintaining the electric distribution system to determine whether rates sought by utilities are justified.
Houston customers saw both their gas and electricity rates rise last year. On Thursday, CenterPoint filed for another gas rate increase, expected to go into effect in May.
The PUC is joining other regulatory agencies around the country that are pushing utilities to share the benefits of corporate tax cuts with customers. In some cases, utilities have said they will reduce rates of their own volition. In others, such as in Kentucky, regulators have ordered utilities to lower rates and possibly offer rebates.
The PUC, so far, has required three utilities to plan for rate reductions, including El Paso, Dallas-based Oncor and the Southwestern Electric Power Co., which serves East Texas and the Panhandle region. All three utilities were undergoing rate cases before the corporate tax cuts were passed.
Oncor, which serves North and West Texas, has yet to finish tallying its tax benefits or decide how it will implement rate reductions. Southwestern Power is expected to present the plan for its corporate tax benefits next week.
The Railroad Commission, which regulates gas utilities in Texas, also said it would examine the fairness of gas rates in the wake of tax cuts. In January, Texas Attorney General Ken Paxton and other state attorneys general asked the Federal Energy Regulatory Commission to ensure that utilities pass along savings from the recently enacted tax overhaul to their customers. Texas utilities, however, are not regulated by FERC.