PSC KYKENTUCKY (1/2/18) — The Kentucky Public Service Commission has ordered for-profit utilities to track their savings under lower corporate tax rates that took effect yesterday, paving the way for those savings to be passed on to customers in the form of lower electric, gas or water rates.

In two orders issued Dec. 27, the PSC noted that investor-owned utilities recover their federal tax expenses from ratepayers. Under the federal tax law enacted last month, the corporate income tax rate will decline from 35 percent to 21 percent this year, substantially reducing the tax burden on for-profit, investor-owned utilities.

“Since ratepayers are required to pay through their rates the tax expenses of a utility, any reduction in tax rates must be timely passed through to ratepayers,” the PSC said in the orders.

The orders direct the affected utilities to begin tracking their savings from the immediate reduction in the corporate tax rate. The PSC also ordered the utilities to calculate the excess amount of future tax liabilities that they are carrying on their books and that will need to be refunded to ratepayers.

One of the two orders is in response to a complaint filed by the Kentucky Industrial Utility Customers, an organization that represents large electric customers in rate cases and other matters before the PSC. On Dec. 21, 2017, KIUC filed a complaint arguing that the rates of four utilities would no longer be “fair, just and reasonable,” as required by law, once the federal tax cut takes effect.

The PSC order directs the four utilities – Duke Energy Kentucky, Kentucky Power Co., Kentucky Utilities Co., and Louisville Gas and Electric Co. – to respond within ten days to the KIUC complaint and to begin tracking the tax savings. All provide electric service, while Duke Energy and LG&E also provide natural gas service.

“While the exact amount of the tax savings and resulting rate reductions cannot be determined with precision at this time, each of the (companies) should use its best estimate to determine the amount to be recorded…subject to review and adjustment as part of this case,” the PSC said.

The second order directs three other natural gas utilities – Atmos Energy Corp., Delta Natural Gas Co. and Columbia Natural Gas of Kentucky - and two water utilities – Kentucky-American Water Co. and Water Service Corp. of Kentucky – to begin recording their estimated tax savings.

The second order also directs those utilities to submit, within 30 days, testimony on the impact of the federal tax cuts on their finances and to propose new rates reflecting the tax reductions.

The four utilities cited in the KIUC complaint are not being told to file such testimony, since they must respond to KIUC’s proposed revenue and rate reductions. KIUC estimated that the tax cut would lead to rate reductions in the range of 4 percent to 7 percent, depending on the utility.

In total, more than two million customer accounts could be affected by rate changes resulting from the corporate tax reduction.

A procedural schedule in each case will be set by the PSC at a later date.

The orders and other documents in the cases are available on the PSC website, psc.ky.gov. The cases numbers are 2017-00477 (KIUC complaint) and 2017-00481.

The PSC is an independent agency attached for administrative purposes to the Energy and Environment Cabinet. It regulates more than 1,500 gas, water, sewer, electric and telecommunication utilities operating in Kentucky.

SurfKY News

sitelogosm© Copyright 2008 - 2018 SurfKY News Group, Inc. All rights reserved.
This material may not be published, broadcast, or rewritten without permission.

Click here to subscribe to receive daily updates by email.

Save

Save

Save

Most Read This Week

Jan 22, 2018 9771

KSP Charges Central City Man with Child Sex Abuse

by Rita Dukes Smith, SurfKY News Director
Jan 23, 2018 9553

UPDATE: KSP Releases Names of School Shooting Fatalities

by Rita Dukes Smith, SurfKY News Director
Jan 22, 2018 6428

4th Person Charged in Connection with Ohio County Man's Death

by Rita Dukes Smith, SurfKY News Director
Jan 22, 2018 3940

Man Known as 'Killa' Charged with Felony Assaults

by Doreen Dennis, SurfKY News

Most Read This Month

Weather brought to you by

34°
°F | °C
Partly Cloudy
Humidity: 81%
Wed
Sunny
31 | 41
0 | 5
Thu
Sunny
29 | 53
-1 | 11
Fri
Partly Cloudy
34 | 55
1 | 12
Sat
Showers
47 | 54
8 | 12

Save

Stories Trending Today

burch arrest 2
Jan 22, 2018 9771

KSP Charges Central City Man with Child Sex Abuse

by Rita Dukes Smith, SurfKY News Director
breakingnews DEV STORY 300
Jan 23, 2018 9553

UPDATE: KSP Releases Names of School Shooting Fatalities

by Rita Dukes Smith, SurfKY News Director
howard arrest
Jan 22, 2018 6428

4th Person Charged in Connection with Ohio County Man's Death

by Rita Dukes Smith, SurfKY News Director
Cruz MPD 1 22
Jan 22, 2018 3940

Man Known as 'Killa' Charged with Felony Assaults

by Doreen Dennis, SurfKY News
Arrest Log HCSheriff v2 300
Jan 22, 2018 2947

Hopkins County Sheriff’s Reports

by SurfKY News

Market Report

Market Report brought to you by

Save