Massachusetts AG Healey calls on FERC to give federal tax savings to customers

Leads Bipartisan Coalition of AGs and State Agencies Asking the Federal Energy Regulatory Commission to Lower Electric and Gas Rates

BOSTON January 10, 2018 – Following a call for state utilities to pass their new tax savings onto customers, Attorney General Maura Healey today led a bipartisan coalition of 18 state attorneys general, state agencies, and consumer advocates in urging the Federal Energy Regulatory Commission (FERC) to take immediate steps to ensure that public utility companies do not receive a major federal corporate tax windfall at the expense of their customers.

            In a letter sent to FERC Tuesday, the coalition requests that an investigation be opened into whether the current rates for federally regulated utilities – including electric, natural gas and oil companies – are justified following the recent passage of the new federal tax law that reduces the corporate tax rate from 35 to 21 percent.

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“This new tax bill gives electric, gas and oil companies a major tax break, and unless FERC adjusts the rates, utilities customers will be overpaying for services by hundreds of millions of dollars,” AG Healey said. “FERC needs to act immediately to ensure that customers get these savings.”

            The coalition is specifically concerned about the impact the new federal tax law has on the level of corporate income tax expenses that are incorporated into a public utilities’ rates, and the amount of money that utilities are holding in reserve to pay future tax bills. The letter requests that FERC act as quickly as possible to make any necessary changes to utilities’ rates to ensure that customers’ bills are reduced. The letter also calls on FERC to set an immediate date to refund utility customers for any over-collection resulting from delays.

As the coalition notes in the letter, FERC has experience in adjusting customers’ rates to reflect a reduction in federal income taxes. In 1987, FERC allowed electric utilities to file for rate decreases after President Ronald Reagan lowered the corporate tax rate from 46 to 34 percent. “We call on the Commission to use its experience and expertise, with stakeholder input, to determine appropriate procedural mechanisms to discover information about the scope of over-collections at issue, the types of voluntary rate reductions or refunds that can be implemented by the Public Utilities in an expedited manner under existing Commission rules and precedent, and the best way to ensure that customers are not harmed by any delay in making the appropriate changes,” the letter states.

AG Healey was the first attorney general to publicly call for across-the-board cuts in state electric, gas, and water rates, following the passage of the new law. Last month, the AG’s Office urged the state Department of Public Utilities (DPU) to recalculate the distribution rates for all Massachusetts regulated electric, gas and water companies following the passage of the new tax law.

As a result, Eversource Electric Company agreed to use the corporate savings to lower rates for its customers. In a filing last week, Eversource proposed to lower its existing rates for NStar Electric customers by approximately $35 million and reduce the rate hike for its Western Massachusetts Electric Company customers to $16 million, instead of the $25 million recently approved by the DPU.

Public utility commissions in other states have taken steps on their own, or at the urging of consumer advocates, to require utilities to lower customers’ state utility rates following the passage of the new federal tax law.

            Joining AG Healey in sending the letter are the attorneys general of California, Connecticut, Illinois, Kentucky, Maryland, Nevada, New York, North Carolina, Rhode Island, Texas, Virginia, as well as the Connecticut Office of Consumer Counsel, the Florida Office of Public Counsel, the Maine Office of the Public Advocate, the New Hampshire Office of the Consumer Advocate, the Rhode Island Division of Public Utilities and Carriers, and the Vermont Department of Public Service.