HMS Legal Blog

Is the PUC Preparing to Address Utility Rates in Light of the Recent Tax Cut?

Most US taxpayers are by now conscious of the passage of President Trump’s signature tax legislation which dramatically reduces the corporate tax rate from 35% to 21%.  What many folks may not know is that the rates they pay to their local utility include recovery for the income tax expense of those utilities.  This raises the question that some states, notably Kentucky and Oklahoma, have already begun to address: “How do regulators make sure that utility rates promptly reflect the substantial reduction in tax liability?”  In Oklahoma, the Attorney General has called upon the Oklahoma Corporation Commission to address the tax savings issue which he estimates to total $100 million statewide.  The Kentucky Public Service Commission already has ordered utilities to track their savings due to the tax change and to timely pass these savings on to customers.  Montana and Michigan are taking similar actions. 

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