If you haven’t received your electric bill for July, get ready for a little sticker shock. July and August are usually the hottest months of the year for North Texans, and that means our air conditioning is working overtime, sending electric meters into overdrive to provide comfort in the triple digit heat.
Meanwhile, the utilities that provide our electricity are saving some hard, cold cash because of the “Tax Cuts and Jobs Act” President Trump signed into law last December.
The legislation cuts the corporate tax rate for investor-owned utilities from 35 percent to 21 percent. Some economists estimate that will reduce the industry’s tax bill by $1 billion a year. In Texas, electric providers will see their taxes cut by hundreds of millions of dollars.
Will residential and business consumers see any of that relief? Good question. If you believe in trickle down economics, you expect the utilities to pass the savings on to the rest of us. We absolutely believe they should.
But there’s little indication the Texas retail providers — the companies that send you your monthly bills — are in a sharing mood. And if they don’t want to engage in fair play on their own, we urge state lawmakers and the state’s Public Utility Commission to take action that will leave them no choice.
Only some companies required to share
Here’s what’s happened so far. It’s especially complicated in Texas because we have a deregulated electric market where some companies generate the power; others maintain the infrastructure and distribute electricity through power lines; still others sell it to customers. They may all be receiving the tax cuts, but they aren’t all regulated and required to pass them on to the rest of us.
The Texas Public Utility Commission (PUC) regulates and sets rates for the distribution and transmission companies. In North Texas and much of the state that’s Oncor, which serves about 40 percent of Texans.
In February, PUC commissioners took steps to require transmission companies like Oncor to “reflect this lower tax rate in the utility bills of Texas customers.” That seems to be happening.
Oncor told this editorial board it expects to reduce customer rates by about $181 million a year.
“We’ve been collecting the savings ever since ‘The Tax Reform and Jobs Act’ was signed by the President in December,” said company spokesman Geoffrey Bailey. “We’re in conversation with the PUC to find the best way to return the savings to customers and the best time to do that.”
How much will that reduce your bill? Not much, it turns out. Bailey says the average residential household using 1,300 kWh of electricity per month will see a savings of $1.43 a month — not even enough to buy a specialty coffee at Starbucks.
Still, Oncor seems to be playing fair, passing on savings to the rest of us.
Some don’t have to pass on savings
Most of the retail providers, however, that sell you electricity through the Power to Choose website, aren’t making any promises.
The PUC also asked them to disclose how much less they’re now paying to the federal government than they did prior to the tax cut, though the agency can’t require them to do that or transfer savings.
TXU Energy, claims to be the state’s biggest electric retail provider. In a letter to the PUC, its President Scott Hudson said the savings, “will be appropriately reflected in customers’ retail electric bills.” Which means what?
In a series of emails, TXU’s spokesperson deflected our questions about the amount the company is saving and turning over to customers.
“We believe the projected benefits resulting from the tax reform should further support the company’s capital allocation priorities including debt reduction, strategic growth, return of capital to shareholders and rewarding employees for strong performance,” the spokesperson said.
So, the savings would be used to pay off debt, increase shareholder earnings, give raises to employees. We don’t see any mention of their customers.
We don’t know how much a residential user would receive if retail providers like TXU pass on most of their tax break, but customers should get a big chunk of it.
Since the PUC doesn’t currently have the authority to require those savings trickle down to consumers we suggest this:
State lawmakers should join Sen. Kelly Hancock, R-North Richland Hills, who chairs the Senate’s Business and Commerce Committee. In a letter to the PUC he suggested regulating retail providers if they don’t “flow” their savings to consumers. Thanks, Senator!
The AARP has called for the PUC to post the names of retail providers on the Power to Choose website that willingly transfer their tax savings to consumers. That’s a good idea, too. Consumers can then buy power from retailers who value them.
Finally, taxpayers, make some noise. Tell your state lawmakers this is money you deserve. It may not be a windfall, but you pay the bills and you should get your fair share.