Beshear, coalition of AGs demand customers receive tax savings

Published 1:24 pm Monday, January 15, 2018

FRANKFORT — Attorney General Andy Beshear joined a bipartisan coalition of 18 state attorneys general, state agencies and consumer advocates Thursday in calling on the federal government to ensure Kentuckians, not public utilities, receive the benefits of the recently reduced federal corporate tax rate.

In the letter sent to the Federal Energy Regulatory Commission (FERC), Beshear is asking the federal commission to reduce the rates public utilities charge – including electric, natural gas and oil companies – to ensure tax savings are passed on to Kentuckians.

The utility rates Kentuckians pay include utilities’ cost for federal income taxes. Without action by the federal commission, customers would continue to pay the same utility rate even though there has been a reduction of the corporate income tax rate from 35 percent to 21 percent.

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If left unadjusted, customers in Kentucky and nationwide will overpay for their electric and gas services by hundreds of millions of dollars, Beshear said.

Kentuckians pay utilities’ taxes at the state and federal level. Ahead of today’s announcement, the Kentucky state agency that regulates public utilities, the Public Service Commission (PSC), issued orders to public utilities asking them to begin tracking their savings under the lower tax rates.

“Kentuckians were called upon to pay utility bills at the previous, higher tax rate, and now that the companies’ taxes are lower, all the savings should be returned immediately to each ratepayer,” Beshear said. “It is time for the federal government and the PSC to act quickly to protect Kentucky families.”

The coalition also requested the federal commission open an investigation into the fairness of all applicable rates recovered by public utilities with respect to federal corporate income taxes.

By taking this action, the coalition believes customers should promptly receive the full economic benefit of the tax reduction. The coalition also asked the federal commission to review the amounts the utilities are holding in reserves to pay future tax liabilities, and set an immediate refund date and order appropriate rate relief to ratepayers.

The letter requests the federal commission act as quickly as possible to make any necessary changes and use its experience and expertise to determine the best ways to expedite this matter to safeguard customers.

Beshear’s Office of Rate Intervention serves as a watchdog for consumers in matters relating to health insurance, natural gas, water, sewer, electric and telephone rates. Under Kentucky law, the office is responsible for representing the interests of Kentucky consumers before governmental ratemaking agencies, concentrating on utility cases before PSC.

This month, Beshear’s office recommended that the PSC reduce the current rates Duke Energy charges its Kentucky customers by $16 million.

In 2017, Beshear announced that his Office of Rate Intervention entered into a settlement with LG&E and KU that will save Kentucky ratepayers $90 million annually – $33.2 million of that for residential customers. He also recommended the Public Service Commission deny AEP/Kentucky Power’s more than $60 million proposed increase.

Overall in 2017, Beshear’s office saved families over $96 million in increases to their utility bills.

Joining Attorney General Andy Beshear in sending the letter are the attorneys general of California, Connecticut, Illinois, Maryland, Massachusetts, 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.