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States News Service

The following information was released by the Americans for Tax Reform (ATR):

Posted by John Kartch on Wednesday, March 31st, 2021, 10:04 AM PERMALINK

If Democrats increase the corporate income tax rate, they will have to explain why they just increased your utility bill

If Biden and the Democrats raise the corporate tax rate, Pennsylvanians will get stuck with higher utility bills. The higher bills will hit households and businesses just as they are trying to dig out from the pandemic.

Utility customers bear the cost of taxes imposed on utility companies. Utility companies are subject to the corporate income tax. Corporate income tax cuts drive utility rates down, corporate income tax hikes drive utility rates up.

Utility companies -- electric, gas, water -- must get their billing rates approved by the respective state utility commissions. When the Tax Cuts and Jobs Act lowered the corporate income tax rate from 35% to 21%, utility companies worked with officials to pass along the tax savings to customers.

In Pennsylvania, at least 17 utility companies passed along savings directly from the corporate income tax cut. As noted by the Pennsylvania Public Utility Commission:

The Pennsylvania Public Utility Commission (PUC) today issued an Order, requiring a "negative surcharge" or monthly credit on customer bills for 17 major electric, natural gas, and water and wastewater utilities, totaling more than $320-million per year. The refunds to consumers are the result of the substantial decrease in federal corporate tax rates and other tax changes under the Tax Cuts and Jobs Act (TCJA) of 2017, which impacted the tax liability of many utilities.

"As economic regulators, it is the Commission's responsibility to ensure that utility rates are just and reasonable. Further, it is necessary for utility rates to reflect relevant tax expenses," noted PUC Chairman Gladys M Brown in a statement at today's public meeting. "I believe this work (by PUC staff) has resulted in an innovative answer by this Commission to effectively flow-through the benefits of the TCJA back to customers.

Public utilities required to begin returning federal tax savings to consumers include Citizens' Electric Company of Lewisburg, Metropolitan Edison Company, Pennsylvania Electric Company, Pennsylvania Power Company, Pike County Light and Power Company, PPL Electric Utilities Corporation, Wellsboro Electric Company, West Penn Power Company, PECO Energy Company (Gas Division), National Fuel Gas Distribution Corporation, Peoples Gas Company LLC, Peoples Natural Gas Company LLCEquitable Division, UGI Central Penn Gas Inc., UGI Penn Natural Gas Inc., UGI Utilities, Inc.--Gas Division, Pennsylvania-American Water Company and Pennsylvania-American Water CompanyWastewater.


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