The South Carolina Office of Regulatory Staff has filed a petition asking the state’s Public Service Commission to order all investor-owned utilities under its purview to report how they will be impacted by recent changes to the tax code.
The ORS filed the petition Thursday, saying each utility should propose procedures for reducing customer rates to reflect the impacts of lower taxes the companies will pay. Under the Tax Cuts and Jobs Act passed in December, the corporate tax rate dropped from 35 percent to 21 percent.
“Utilities, as part of their rates that they charge customers, that number reflects the amount of taxes that they are charged by the federal government. They are allowed to recoup that money through the charging of rates,” ORS Spokesperson Ron Aiken said.
“South Carolina rate payers should receive any benefits associated with this tax reform,” said Nanette Edwards, Deputy Director of the ORS.
Aiken said because it requires the PSC to hold a hearing with ORS staff and the utilities, issue a ruling ordering the reports, receive the reports and then put the rates into effect, the ORS wanted to begin the process as soon as possible.
“This is about compliance and enforcement of compliance and making sure ratepayers are protected, which is why we’re trying to do this quickly, so that we are making sure that our consumers and ratepayers in South Carolina don’t get overcharged any more than they need to,” Aiken said.
The petition reads:
“Since the act will be effective January 1, 2018, and this is a known and measurable change, South Carolina rate payers should receive any benefits associated with this tax reform as of January 1, 2018. Given that it is impractical to implement a change in rates to be effective January 1, 2018, ratepayers should receive refunds on rates charged for utility service on or after January 1, 2018.”
The petition said the commission previously faced a similar situation following the Federal Tax Reform Act of 1986.
“They know they have to do it,” Aiken said of the utilities. “This is the procedure by which it has to happen.”
Aiken said ratepayers won’t see much of a reduction in their utility bills.
“It’s a relatively small amount,” he said. “It’ll mean a reduction in rates but how much is probably not as significant as a ratepayer would like it. Maybe $1 or less. It would not be a very measurable reduction in a rate because of the way that those calculations are formulated. It doesn’t reflect much of a difference in the bill, however, it is a certain percentage, so it would go down.”