The federal Tax Cuts and Jobs Act of 2017 is providing relief for some area utility customers in the form of a reduction in monthly bills.
Effective July 1, most of Pennsylvania American Water’s customers began seeing a reduction in their monthly water and wastewater bills as a result of the Act.
In addition, residential heating customers of UGI Utilities — Gas Division will also see their monthly bills decrease.
The reduction is the result of an order issued by the Pennsylvania Public Utility Commission in May, directing 17 electric, natural gas, and water and wastewater utilities to implement a “negative surcharge” or monthly credit on customer bills.
The commission’s order cited decreased federal corporate tax rates and other tax changes under the Tax Cuts and Jobs Act of 2017, which impacted the tax liability of many utilities. The Public Utility Commission projected the savings for the utilities’ customers at more than $320 million per year, according to a press release.
Pennsylvania American Water’s portion of the reduced tax expense amounts to approximately $47 million annually, according to Jeffrey L. McIntyre, president Pennsylvania American Water, “so we are following the PUC’s directive and passing the savings to our customers.”
The company said most water customers will see a nearly 6.8 percent decrease. For example, a water customer that typically uses 3,000 gallons per month will see $3.61 savings, or $43.32 per year. For water customers that typically use 5,000 gallons per month, the savings will be $5.27, or $63.24 per year.
For most wastewater customers, the decrease is nearly 7.7 percent. For example, a wastewater customer that typically uses 3,000 gallons per month will see $4.25 savings, or $51 per year. For wastewater customers that typically use 5,000 gallons per month, the savings will be $6.58, or $78.96 per year.
The company announced Monday that the decrease will appear on customers’ bills as the “Fed Tax Adjust Surcharge” to reflect the company’s reduced tax expense. For customers who receive both water and wastewater service from Pennsylvania American Water, their monthly bills will reflect a credit for each.
UGI Utilities Inc. — Gas Division’s residential heating customers will see their monthly bills decrease by an average of $1.81, according to a June 15 press release. The average residential heating customer bill will decrease from $69.36 to $67.55 on July 1.
UGI will provide a 5.78 percent credit on the base rate portion of the bill, which is typically comprised of the customer charge and distribution charge of a customer’s bill.
“UGI is pleased to be able to pass on these benefits associated with the Tax Cut and Jobs Act to our customers and we thank the Public Utility Commission for their support,” Paul Szykman, UGI chief regulatory officer said in the release. “The credit provides additional savings to customers on their energy bills. Combined with the competitive price of economical, locally-produced natural gas, Pennsylvania homes and businesses continue to receive a clear benefit.”
UGI’s decrease comes on top of a previously announced 2.8 percent cut based on lower purchased gas costs that was effective June 1. In addition, UGI has projected an additional 9.5 percent decrease effective Dec. 1 based on lower purchased gas costs.
Metropolitan Edison Co. and PECO Energy Company (Gas Division) must also provide a credit to customers. The Public Utility Commission’s order specified the credit be implemented by affected utilities beginning July 1.
Area utilities that are not required to institute to take immediate action because of current or pending rate cases are PECO Energy Company (Electric) and Aqua Pennsylvania Inc.
In March, PECO filed a request with the Pennsylvania Public Utility Commission for approval of an $82 million increase in rates for the delivery of electricity.
The increase would raise a residential customer’s bill by 3.2 percent.
However, as part of its March rate filing, PECO requested approval to pass the full benefit of the 2017 Tax Cuts and Jobs Act onto customers, including an estimated $68 million for 2018, that would be used to offset the proposed rate increase.
The Public Utility Commission recently completed a series of public hearings on PECO’s rate request.
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