The state Public Service Commission will formally explore implications of the new federal tax law to assure that windfall savings to utilities are returned to New York ratepayers.
The move comes as Assemb. Steve Englebright (D-Setauket) is drawing up legislation that would require the PSC and its Department of Public Service administrative arm to “report on ways that public utility companies can pass their tax savings on to their respective ratepayers.”
The PSC issued an order on Dec. 29 to explore the tax act’s implications on rates and put utilities “on notice of the commission’s intent to protect ratepayer interests” related to numerous tax benefits built into the federal law. The PSC order covers “any federal taxes built into rates,” as well as accumulated deferred income taxes, the treatment of bonus depreciation and net operating losses.
Englebright said he believes hundreds of millions in potential rate relief could be in play, and he viewed the “corporate-greed-induced” federal tax law as “perhaps a backhanded opportunity to pass some benefits onto ratepayers.” Investor-owned utilities, like other U.S. corporations, saw their federal tax rate drop to 21 percent from 35 percent under tax reform legislation passed by Congress and signed by President Trump in December.
Gov. Andrew M. Cuomo said in a statement, “We will do everything in our power to keep this windfall from lining the pockets of the top 1 percent, and deliver savings directly to hardworking New Yorkers.”
The PSC order calls for soliciting information from utilities, holding a technical conference and issuing a staff proposal within 90 days for treatment of the tax changes. Utilities “acting contrary” to the state’s aim to ensure that tax benefits accrue to ratepayers “do so at their own risk,” the state order says.
Englebright’s bill would require two public hearings on the matter, and for the state to submit findings and recommendations to the governor and legislature within 90 days of the law’s passage.
Recommendations from his bill would apply to all utility companies regulated by the PSC or subject to DPS recommendations, from investor-owned water companies to National Grid and PSEG Long Island, Englebright said.
While LIPA, as a public authority, doesn’t pay federal taxes, PSEG Long Island receives a management fee and incentives from LIPA ratepayers that exceed $60 million annually.
LIPA and PSEG aren’t subject to PSC jurisdiction, but the PSC’s administrative arm has a review and recommend role over the Long Island utility. A PSEG spokesman didn’t provide a comment to questions about the plan.
The bill would apply to National Grid’s Long Island and New York City gas operations, as well as its upstate electrical utility. It may also apply to taxes National Grid pays on the power plants it operates on LIPA’s behalf.
National Grid spokeswoman Wendy Ladd said the utility was already “working with our regulators to ensure that the tax benefits are fully realized and passed on to our customers.”
She noted that taxes are “generally a pass-through expense to the company and “we work hard to minimize the tax impacts on our customers. We are delighted to be in position to provide tax savings to our customers.”