Trump tax reform has states hungry for lower utility bills

New York: It’s been less than a month since Congress approved a sweeping tax overhaul and states are already chomping at the bit to get a piece of the action.

Regulators from Montana to Kentucky have ordered utilities to act now to ensure ratepayers share in the windfall from the tax bill signed into law by President Donald Trump that slashed corporate rates to 21 per cent from 35 per cent.

“It is consumer money,” said David Springe, executive director of the National Association of State Utility Consumer Advocates. “Everybody is focused on making sure this doesn’t just vanish.”

Utilities that are regulated — to protect customers from being overcharged while also ensuring a fair rate of return — have to pass along savings to ratepayers when costs fall. Exelon Corp, the biggest US utility owner by sales, is already offering to reduce bills. Others may seek to spend their tax bonanza on urgent upgrades to their networks, arguing this will also benefit customers.

Some utilities might be able to boost earnings and cut bills at the same time, said Hugh Wynne, a utilities analyst for Sector & Sovereign Research in Stamford, Connecticut.

“In the case of utilities that are earning less than their regulators allow, they could cause an increase in earnings and a decrease in rates by going to the regulator and saying, ‘Let’s implement this tax cut right away’,” he said.