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Consumer Protection

The Tax Cuts and Jobs Act, which reduced the fed­er­al cor­po­rate income tax rate from 35% to 21%, sig­nif­i­cant­ly reduced elec­tric­i­ty util­i­ties’ tax bur­dens. Because reg­u­la­tors approve elec­tric­i­ty util­i­ties’ rates based on their cost struc­tures, includ­ing tax expens­es, the sav­ings gar­nered by util­i­ties should be reflect­ed in low­er rates charged to elec­tric­i­ty customers.

Pro­tect­ing Con­sumers at FERC


State attor­neys gen­er­al alert­ed the Fed­er­al Ener­gy Reg­u­la­to­ry Com­mis­sion (FERC), which over­sees inter­state ener­gy rates, about the need to imme­di­ate­ly revise util­i­ty rates down­ward in response to pas­sage of the Tax Cuts and Jobs Act.

  • Jan­u­ary 2018

    In Jan­u­ary 2018, a bipar­ti­san group of attor­neys gen­er­al from 18 states trans­mit­ted a let­ter to FERC, request­ing rate adjust­ments that would allow con­sumers to receive the full eco­nom­ic ben­e­fit of the cor­po­rate tax reduction.

  • March 2018

    In March 2018, FERC sided with the bipar­ti­san coali­tion of attor­neys gen­er­al. FERC issued an order that requires fed­er­al­ly reg­u­lat­ed elec­tric trans­mis­sion com­pa­nies to revise rates down­ward to reflect the low­er cor­po­rate tax rate or to show cause for why they should not do so. FERC also issued a notice of pro­posed rule­mak­ing that would allow FERC to deter­mine which nat­ur­al gas pipelines sub­ject to fed­er­al reg­u­la­tion may be col­lect­ing unjust and unrea­son­able rates. Under the pro­pos­al, each inter­state pipeline could decide to reduce its rates, or com­mit to file either a prepack­aged uncon­test­ed rate set­tle­ment or a gen­er­al rate case, or sub­mit a state­ment explain­ing why it believes it should not change its rates or take no fur­ther action.

  • July 2018

    In July 2018, FERC final­ized the rule, which allows each inter­state pipeline to decide to reduce its rates, or com­mit to file either a prepack­aged uncon­test­ed rate set­tle­ment or a gen­er­al rate case, or sub­mit a state­ment explain­ing why it believes it should not change its rates or take no fur­ther action.

Pro­tect­ing Con­sumers at the State Level


State attor­neys gen­er­al have also been active at the state lev­el in tak­ing action to pass sav­ings from the Tax Cuts and Jobs Act on to con­sumers. Action is also required at the state lev­el because the rate con­sumers pay util­i­ty com­pa­nies for using elec­tric­i­ty is reg­u­lat­ed by state-lev­el pub­lic util­i­ty commissions.

  • Decem­ber 2017

    Imme­di­ate­ly fol­low­ing the pas­sage of the leg­is­la­tion, in Decem­ber 2017, Mass­a­chu­setts Attor­ney Gen­er­al Mau­ra Healey filed a motion with the Mass­a­chu­setts Depart­ment of Pub­lic Util­i­ties (MA DPU) to reduce the rates paid by Mass­a­chu­setts util­i­ty con­sumers to reflect the legislation’s low­er cor­po­rate tax rate. 

  • June 2018

    Ini­tial­ly, at the end of June 2018, the MA DPU sided with Attor­ney Gen­er­al Healey in order­ing that all util­i­ties in the state reduce their rates to reflect their fed­er­al tax sav­ings under the legislation.

  • Feb­ru­ary 2019

    Yet, in Feb­ru­ary 2019, the MA DPU ruled that its gen­er­al prin­ci­ple against retroac­tive ratemak­ing pro­hib­it­ed the agency from pro­vid­ing con­sumers a refund for the first half of 2018 before the agency ruled that util­i­ties had to pass the tax­ing sav­ings on to customers.

  • March 2019

    In March 2019, Attor­ney Gen­er­al Healey filed a motion for recon­sid­er­a­tion of the Feb­ru­ary 2019 order with the MA DPU, not­ing that the MA DPU had failed to explain why the prin­ci­ple of retroac­tive ratemak­ing should be applied in these cir­cum­stances to deny con­sumers the full ben­e­fit of the cor­po­rate tax savings.

  • May 2019

    In May 2019, Michi­gan Attor­ney Gen­er­al Dana Nes­sel announced that the Michi­gan Pub­lic Ser­vice Com­mis­sion (MPSC) approved a set­tle­ment that will return an extra $3.5 mil­lion in util­i­ty sav­ings from the Decem­ber 2017 tax leg­is­la­tion to util­i­ty cus­tomers in the state. The attor­ney gen­er­al had inter­vened in the MPSC pro­ceed­ing and through dis­cov­ery had con­clud­ed that cus­tomers were owed an addi­tion­al $3.5 mil­lion in reduced rates as a result of the Tax Cuts and Jobs Act’s low­er cor­po­rate tax rate.

  • Decem­ber 2019

    In Decem­ber 2019, Illi­nois Attor­ney Gen­er­al Kwame Raoul filed requests with the Illi­nois Com­merce Com­mis­sion (ICC) to rehear and recon­sid­er its deci­sion in the rate cas­es for two Illi­nois util­i­ties about how to han­dle sav­ings from the Tax Cuts and Jobs Acts. The ICC had approved plans for the util­i­ties to return over $500 mil­lion in sav­ings to con­sumers over a 35-year plus peri­od. Attor­ney Gen­er­al Raoul filed the rehear­ing and recon­sid­er­a­tion requests to have the refunds returned to con­sumers with­in a five year period.