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Consumer advocate says tax cuts should mean lower electricity and gas rates

  • Smoke billows out of Merrimack Station as seen from River Road in Bow on Tuesday, Jan. 2, 2018. GEOFF FORESTER—Concord Monitor

  • Smoke billows out of Merrimack Station as seen from River Road in Bow on Tuesday, Jan. 2, 2018. GEOFF FORESTER—Concord Monitor

  • Smoke billows out of Merrimack Station as seen from River Road in Bow on Tuesday, Jan. 2, 2018. GEOFF FORESTER—Concord Monitor

  • Smoke billows out of Merrimack Station as seen from River Road in Bow on Tuesday, Jan. 2, 2018. GEOFF FORESTER—Concord Monitor

  • Smoke rises out of Merrimack Station as seen from Route 3A in Bow on Tuesday, Jan. 2, 2017. GEOFF FORESTER—Concord Monitor

  • Smoke billows out of Merrimack Station as seen from River Road in Bow on Tuesday, Jan. 2, 2018. GEOFF FORESTER—Concord Monitor



Monitor staff
Tuesday, January 02, 2018

Any financial gain that New Hampshire utilities get from the federal tax overhaul should go straight to ratepayers, the state consumer advocate argues in a legal petition that echoes similar discussions around the country.

“Nobody has a really clear grasp of the precise effect it will have on utility revenues in New Hampshire and unless somebody does something, the utilities are just going to get to keep a windfall in their pockets,” said Don Kreis, who as head of the Office of Consumer Advocate represents ratepayers in utility cases.

“It’s not like it would be a huge, drastic reduction in rates, I suspect. But it’s not insignificant,” Kreis said.

Kreis filed his petition to the Public Utilities Commission on Tuesday morning, asking that the panel investigate whether changes to corporate income taxes should lead to an immediate change in utility rates. No official timeline has yet been scheduled for the request.

The petition comes in response to the overhaul of the nation’s tax laws passed in December, including a sharp cut in the corporate tax rate from 35 percent to 21 percent.

“Whether this change in federal taxes is unique enough that it requires special attention as a stand-alone matter is absolutely the type of question the PUC can consider,” Alex O’Meara, a spokesman for Unitil, said in response to the petition. “Should the PUC decide to take a look at this, we’d expect to be a full participant in that review process and would ultimately respect how the state’s regulatory body wanted to handle the matter.”

Martin Murray, spokesman for Eversource, expressed a similar opinion: “As a regulated utility, our rates are based on our costs, including federal taxes. If taxes are reduced, ultimately costs are reduced, and that benefits customers. I suspect the impact of the federal tax legislation on Eversource will be discussed more comprehensively at the Public Utilities Commission.”

Regulators such as the PUC take tax payments into account when deciding what rates utilities can charge customers for electricity, water and natural gas, as well as for other regulated services such as sewage and landline telephones. If those taxes decline, Kreis argued, then the basis for current rates is no longer valid.

The consumer advocate’s filing says the PUC should “conduct (an) investigation ... at which the respondent utilities have the burden of demonstrating ... that their rates are just and reasonable in light of the Tax Cuts and Jobs Act.”

This same argument is being made in several other states. Kreis said he will participate in a joint filing with the Federal Energy Regulatory Commission being put together by a number of states, making the same point on a national basis.

It’s not uncommon for utility rates to be adjusted suddenly due to circumstances such as sharp changes in fuel costs, changes in anticipated sales due to extreme weather or the end of a special cost such as recovery for stranded costs.

“A lot of automatic rate adjustment mechanisms are in place and they often make rates go down,” Kreis said.

However, there are no such mechanisms in place to deal with changes in tax rates.

“I can’t think of a similar situation,” Kreis said.

Kreis said he tried to guess at the possible magnitude of the change by looking at pending natural rate case filed by Unitil. It asks for a rate case to cover $1.2 million in extra costs, of which about one-third was related to corporate income tax.

(David Brooks can be reached at 369-3313 or dbrooks@cmonitor.com or on Twitter @GraniteGeek.)