Utilities must return windfall to ratepayers
In the past few weeks, workers all over America have begun to see their paychecks swell as a result of the tax cut passed by Congress in December. That’s because of the rate reductions enacted in the bill, and because businesses are passing their corporate tax savings on to employees.
House Minority Leader Nancy Pelosi called these increases “crumbs,” but Americans for Tax Reform, a group advocating for lower taxes, has kept a running tally of more than 300 businesses boosting pay and benefits because of the bill. Taxpayers aren’t getting “crumbs,” they’re getting a whole slice of pie.
But bonuses and pay increases are only one side of the ledger. When businesses reap giant tax windfalls, they can not only pay employees more, they can charge less for their products to stimulate sales. The taxpayer slice of pie just got a side of ice cream.
This is especially true for public utilities, which are set to save enormous amounts of money as the corporate tax rate drops from 35% to 21%. In January, Baltimore Gas and Electric announced average electrical consumers would see an estimated $2.31 reduction in their monthly bills, and combined natural gas and electric customers could see monthly savings of $4.27. House Speaker Paul Ryan (R-Wis.) has boasted that utilities in Oregon, Utah, and Washington, D.C., are passing savings on to consumers.
And then there is Wisconsin. In January, the state Public Service Commission asked investor-owned utilities to submit plans explaining how they were going to implement the federal tax bill’s changes “for the benefit of ratepayers.” Unfortunately, those plans don’t give customers enough.
While WEC Energy Group, parent company of We Energies and Wisconsin Public Service Corp., reported between $100 million and $200 million in tax benefits, the company indicated a desire to use the money to buy down their “regulatory assets,” including recently purchased infrastructure equipment.
MG&E in Madison proposes providing ratepayers a credit, but then holding rates steady while spending a chunk of its tax savings on “customer-facing” green technologies. While saving $33 million a year, Xcel energy has proposed withholding any customer benefits for two years.
The PSC should require immediate rate reductions for all consumers. The corporate tax paid by utilities wasn’t really paid by the utilities; it was paid by customers in the form of higher monthly bills. It’s the customers’ money. High gas and electric bills strangle manufacturers, which rely on power to run factories. While Wisconsin once featured low-cost energy, increased infrastructure costs have pushed rates far higher.
Utilities have warned that giving money back could hurt credit ratings. But this is a familiar scare tactic. In fact, Wisconsin’s utilities enjoy a friendly regulatory system that allows for healthy profits.
Utilities should return some of the ratepayers’ money to them. The PSC should require it; consumers should demand it. It’s time to show utilities who has the power.