PUC wants more time to weigh tax-cut impact on utility rates

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But they also gave themselves greater authority to adjust rates once a decision is made.

In a 5-0 vote, Pennsylvania’s Public Utility Commission adopted an order declaring existing utility rates temporary under state law for a period of six months, a status that gives the commission more power to adjust rates in response to changes in taxation – the PUC said it is “maximizing” its authority.

If necessary, the temporary rates can be renewed for an additional six months, the commission said

The order affects about three dozen gas, water and electric utilities, including those serving Central Pennsylvania. As C Corporations, they benefit from a cut in the federal corporate tax rate from 35 percent to 21 percent.

The commission has been collecting feedback on the impact of lower tax rates since early this year. Some commenters have asked for an immediate refund of all tax savings to consumers, while others have argued in favor of waiting until future rate proceedings.

Even elected officials have weighed in. In a March 9 letter to the PUC, U.S. Rep. Lloyd Smucker a Republican from Lancaster County, and U.S. Rep. Bill Shuster, a Republican whose district includes Franklin County, asked the commission to ensure the tax law’s benefit flow to utility rate payers.

“Families in our congressional districts have struggled in recent years to pay their costly utility bills,” they wrote. “We believe that we must collectively identify solutions that encourage innovation and help lower energy costs for families.”

They noted that utilities in other states already have reduced rates or otherwise shared the benefits of lower taxes.

The PUC said it needs more time to study the issue, which is complicated by the fact that state case law generally bars the commission from setting rates based on a single factor.

“While the Commission will process this matter as promptly as possible, given the complex nature of the tax law changes and the numerous public utilities involved, the Commission is not certain as to when the issues in this matter will be finally resolved for each of the affected public utilities,” the commission said in its order. “At present, however, due to the substantial decrease in the federal corporate tax rate that became effective on January 1, 2018, it appears that existing rates may be excessive and, therefore, no longer just and reasonable.”

In its order, the commission noted that it acted to declare rates temporary after the last major overhaul of federal taxes, in 1986.