After tax cut, Ohio utilities fight PUCO to maintain rates

Ohio electric utilities and state regulators are still butting heads over whether the utilities should pass on savings from last year’s tax cut to their customers.

Late last year, the U.S. government lowered the federal tax rate for corporations from 35 to 21 percent.

In a filing this week with the Public Utilities Commission of Ohio (PUCO), Dayton Power & Light (DP&L) took issue with how the matter was handled at a PUCO hearing in July, saying the focus should be whether utilities should have to lower their rates after the tax cut, not how rates should be lowered.

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A group of Ohio manufacturers disagreed with DP&L, saying in its own filing this week that the PUCO “has been clear that this proceeding does not pose a question of whether regulated public utilities will pass the benefits resulting from the Tax Cuts and Jobs Act of 2017 … on to customers, but how and when those benefits will be returned to customers.”

The Ohio Manufacturers Association Energy Group thinks electric bills need to be lower, arguing that rates were set with the earlier 35 percent federal tax rate in mind.

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“Now, under the (federal tax cut), each utility is collecting the same amount from customers, but doing so while paying significantly less to the federal government for income tax,” the association said in its Aug. 13 filing.

Ohio grocer Kroger agreed.

“The utilities are currently collecting rates from customers based on an assumption that the federal corporate income tax rate is still 35 percent,” Kroger said in its filing to the PUCO.

When the PUCO first raised the idea of lowering electric rates earlier this year, Ohio utilities — including DP&L, FirstEnergy, American Electric Power and Duke Energy — objected that lowering rates now would amount to “retroactive rate-making.”

In its own recent filing, American Electric Power argues that the PUCO “is not permitted to unilaterally engage in single-issue ratemaking or change base rates without following the statutory process.”

The Ohio Consumers Counsel has argued that electric rates should be cheaper.

“Some Ohio utilities are trying to turn this into an opportunity to enrich their shareholders by keeping the tax savings for themselves,” the counsel’s office said in its Aug. 13 brief.

In June DP&L said it had filed a stipulation on its electric distribution rates case with the PUCO, which was signed by 15 parties and PUCO staff.

If the stipulation is approved by the PUCO, the average residential customer in DP&L’s service area, using 1,000 kWh on DP&L’s “standard service” offer, can expect a monthly bill increase of $2.64.

DP&L said the distribution rates reflected the new tax rates.

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