Pa. utility customers may see lower bills

Customers of 17 major Pennsylvania electric, gas and water utilities will see lower rates starting July 1 after the Public Utility Commission voted Thursday to require utilities to pass on savings from new federal tax cuts.

Collectively, the move is expected to reduce electric rates in the state by $210 million, natural gas rates by $66 million, and water and wastewater rates by $48 million this year, commission Chairman Gladys Brown said.

The adjustments — in the form of monthly credits or “negative surcharges” on customer bills — are expected to cut the distribution charges on monthly bills by between 0.5 percent and 8.5 percent, depending on the utility, the PUC said.

The Tax Cuts and Jobs Act of 2017 dropped the corporate income tax rate from 35 percent to 21 percent. Utility rates are designed to reflect tax expenses, Ms. Brown said, so leaving rates the same “would retain rates which are unjust and unreasonable.”

In Western Pennsylvania, the changes will apply to two Peoples natural gas utilities, Akron-based FirstEnergy Corp.’s electric companies, including Penn Power and West Penn Power, and Pennsylvania American Water’s water and wastewater utilities.

Companies with active rate adjustment cases, like Duquesne Light Co. and Columbia Gas, will have to address the tax changes as part of those reviews.

The PUC anticipates distribution charges on bills will drop by:

• 2.7 percent for Peoples Gas Co.

• 1.9 percent for the Equitable Division of Peoples Natural Gas Co.

• 8.1 percent for Penn Power

• 7.3 percent for West Penn Power

• 6.8 percent for Pennsylvania American Water

• 7.7 percent for Pennsylvania American Water’s wastewater utility.

Peoples Natural Gas Co. is expected to have a small increase in tax liability from the federal law, so its current temporary rates will continue for its 335,000 residential and 27,700 commercial customers.

The commission has been exploring how to handle the utilities’ windfall since the start of the year.

Utilities had argued to hold on to the savings, at least temporarily, so they could determine the full effect of the tax law’s changes and consider investing the money in infrastructure improvements or other programs.

Instead, the commission generally sided with the state’s Office of Consumer Advocate and found the tax savings amounted to “an extraordinary and substantial” reduction in utility expenses “that should be treated outside of a general rate proceeding and flowed back to ratepayers.”