Tax reform delivers cheaper electricity
Tax reform is already producing big benefits for Americans, despite Democratic House Minority Leader Nancy Pelosi’s (CA) comment declaring the GOP’s Tax Cuts and Jobs Act amounted to mere “crumbs” for most Americans.
Since Trump took office a little more than one year ago, the U.S. economy has grown at a healthy rate of 3 percent or higher for three consecutive quarters. Astonishingly, the economy never exceeded the 3 percent annual growth threshold during the entire Obama administration.
Americans across the economic spectrum are benefiting from Trump’s pro-growth policies. The Trump administration has cut 22 unnecessary regulations for every one new regulation added, and Trump’s deregulatory efforts have boosted corporate earnings, leading to all-time high stock market records. Hence, Americans’ retirement accounts are skyrocketing in value.
The consumer confidence index, unemployment rate, labor participation rate, and several other economic indicators all demonstrate Trump’s free-market agenda is reaping rewards for all Americans.
More recently, tax cuts have contributed to billions of dollars in bonuses and pay increases for U.S. workers. The unemployment rate is now so low American companies are actually fighting for qualified workers, resulting in steadily rising wages and benefits.
An additional, though largely overlooked, benefit of the tax cut is that electric power and utility bills are falling — or, at the very least, not rising as much as they otherwise would have without the tax cut.
Grover Norquist, president of Americans for Tax Reform, has long argued tax cuts benefit energy consumers.
“Regulated investor-owned utilities are required to pass along the savings from tax cuts to ratepayers, and they have to announce publicly why they are cutting rates or rate requests, which reminds every one of the benefits of the tax cuts,” said Norquist.
“As a result of the federal tax cuts, utilities across the country are slashing the rate increases they are requesting from their public utility commissions, when they are not withdrawing requests for higher rates entirely. Homeowners and businesses will pay less for electricity on an ongoing basis due to the tax cuts,” Norquist added.
Ratepayers across the country will see their utility bills fall due to the Trump tax cuts. For instance, Indiana Michigan Power (IMP) had filed a request for a 19.7 percent rate increase in July 2017, including a rise in the average monthly residential charge from its present $7.30 per month to $18 per month. After the tax cut, IMP cut its requested rate increase to 7.3 percent, adding $3.20 per month to residential customers’ bills.
“The reduction in the proposed rates largely reflects (IMP’s) new ability to pass savings from the federal Tax Cuts and Jobs Act to customers,” the company stated.
On Feb. 2, the Massachusetts Department of Public Utilities ordered electric, gas, and water companies in the state to lower the rates consumers pay to reflect the 14 percent reduction in corporate taxes enacted under the GOP tax cuts.
In Colorado, Xcel Energy, the state’s largest investor-owned utility, and Black Hills Energy announced rate reductions for their customers to reflect the savings they expect to receive from the Tax Cuts and Jobs Act.
Xcel will reduce residential natural gas rates by an estimated 87 cents per month and lower small business utility rates by $3.46 per month. Black Hills Energy proposed lowering monthly electric bills by $2.56 per month.
Hawaiian Electric Company announced its first rate increase in six years in early February. The 2.3 percent hike would have cost approximately $2.60 per month per 500 kilowatts of power. Reflecting the savings it anticipates from the tax cut, Hawaii Electric reversed course on March 9, announcing it will reduce rates instead of increasing them. The typical household will receive a $3.36-per-month decline in its electric bill after the cut — 76 cents below what it had been before the ill-fated February rate increase.
Baltimore Gas & Electric (based in Maryland) said it will cut its average customers’ electric and gas bills by $4.27 per month to reflect $82 million in tax savings it expects to receive.
In Oregon, Pacific Power and Rocky Mountain Power announced rate cuts for their customers. Pacific Power’s president stated, “The benefit of this tax cut should be passed on to our customers — and we will work with our regulators and stakeholders on the best way to do that.”
Illinois’ largest electric utility, Commonwealth Edison Company, which serves nearly 4 million customers, is also passing along its expected tax savings to ratepayers, having filed a request with the Illinois Commerce Commission to reduce its average residential customer’s bill by an estimated $2 to $3 per month.
While these rate cuts may appear small on a per-household basis, they amount to more disposable income and a higher standard of living for the utilities’ millions of customers across the United States.
From sea to shining sea, ratepayers across the country are benefiting from the Republicans’ Tax Cuts and Jobs Act. A few dollars saved on tens of millions of household’s utility bills adds up to billions in savings. That’s hardly “crumbs.”
H. Sterling Burnett, Ph.D. is a senior fellow on energy and the environment at The Heartland Institute.