SLOAN | A federal tax cut begets — at last — a local utility rate cut
Author: Kelly Sloan - May 25, 2018 - Updated: May 25, 2018
120 days may seem interminable, at times, to those caught up in the day-to-day grind of the Colorado legislative session, but a great deal happens in those mere four months and enough is packed into that short time to allow some pretty important items to slip past the tripwires of the fourth estate more or less undetected.
One of the most under-reported stories of this year concerns the efforts of a Colorado state senator to effect a direct reduction in consumers energy costs. Now normally such feats are attempted by folks like this through the conjuring up of a bill or two, but this particular effort was more direct, far simpler, and probably more effective.
As a former sheriff, Sen. John Cooke, R-Greeley, has long been proudly known as the upper chamber’s top law-and-order guy, but over the years he has also adopted a role as something of a watchdog for the state’s ratepayers. He lived up to that appellation early this year when it occurred to him that the corporate income tax rate reductions enacted late last year as part of the federal Tax Cuts and Jobs Act applied to public utilities as well; and that since public utilities, like any other corporation, “pay” corporate taxes by passing the costs along to their consumers, that maybe he would inquire with the Public Utilities Commission as to just how the state’s managed utilities were getting along with passing those savings on.
Cooke penned this succinct letter to the PUC:
“Recent news reports show that regulators and elected officials across the country have asked regulated utilities in their states how they plan to pass along the savings due to the lowering of the corporate tax rate from 35 to 21 percent. Some utilities are voluntarily passing along those savings and we commend them.
“Unfortunately, we have not seen or heard anything from Colorado regulators or our utilities. We assume plans to pass along the savings are being made but are not yet completed. In that spirit, please provide us an update on the status of rate reductions for Colorado ratepayers. Please include any information on how the lower tax rate will impact Xcel Energy’s latest rate increase request. Sincerely…”
Complete Colorado’s Sherrie Peif (who, it should be noted, latched onto this story early on and singularly followed it along its course) reported at the time that the PUC commission discussed the issue quickly thereafter, and that at least a couple of the commissioners were disappointed that the utilities had yet to offer a rate reduction plan in response to the federal tax cut.
Fast forward a few months and a couple return letters, and lo and behold the PUC reports that, sure enough, Coloradans who partake of light and heat are due to reap some savings from the federal tax overhaul.
In a letter to Sen. Cooke dated April 27, the PUC said that they and the utility companies “have identified $164 million to date in utility tax benefits due to the tax law changes.” And, “so far, about $32 million in rate reductions have been implemented for Colorado utility customers, and another $19.5 million in reductions are scheduled to take effect on May 1.”
But wait, there’s more! The PUC also reported that they had reached a settlement with Xcel Energy for a $101 million reduction in base rates, expected to take effect in June. The letter closes by saying “other proposals to address tax law impacts are expected to be filed by utilities in the next few months, and PUC staff will continue to work”
This all must be somewhat disconcerting to those who devoted an inordinate amount of time and energy since last fall expressing unremitting contumely towards the Republican tax bill, and predicting nothing less than economic cataclysm in its wake. One recalls, for instance, the apocalyptic hyperbole employed by Nancy Pelosi as she called the tax reform “the worst bill in the history of the United States Congress”, and a “monumental, brazen theft from the American middle class.” She was not alone. Rep. Cory Booker offered this dispassionate analysis: “It’s irresponsible, reckless, unjust, and just plain cruel.” Sen. Elizabeth Warren said, “(the bill) isn’t tax reform. It’s a heist.”
And so on. Cooler heads, thank goodness, recognize the purely demagogic nature of the corporate income tax, and the economic benefits, mainly to consumers, of its reduction. “Trickle-down economics,” as it was once called, works splendidly, as it always has, though public entities sometimes need a disciple of Milton Friedman – like Sen. Cooke – to loosen the valve for them.