Federal tax cuts may trickle down to electricity rates

January 6, 2018
Federal tax cuts may trickle down to electricity rates

By CHARLES MYRICK
EDITOR


A major victory closing out 2017 for President Donald Trump may impact Knox County wallets in a positive way.
Under a new federal tax law enacted in late December 2017, corporate income tax rates will drop from 35 percent to 21 percent, reducing the tax burden on for-profit utility companies.
While local utility companies such as Cumberland Valley Electric, Barbourville Utilities and Knox County Utility Commission are publicly-owned, non-profit municipal utility providers, some positive effects may be seen later in 2018 for electricity customers.
A statement from the Kentucky Public Service Commission has ordered four major for-profit utility companies in Kentucky to start tracking the tax savings. The PSC has ordered Kentucky Utilities Co., Louisville Gas and Electric Co., Duke Energy Kentucky, and Kentucky Power Company to also calculate the excess of future tax liabilities and adjust their rates accordingly. The second order came about as Kentucky Industrial Utility Customers (KIUC), an organization that represents large electric customers in rate cases, argued in a complaint on Dec. 21 “that the four utilities would no longer be ‘fair, just and reasonable,’ as required by law, once the federal tax cut takes effect.’” The PSC gave the utility companies 10 days to respond to the KIUC complaint and begin tracking their tax savings.
Barbourville Utilities General Manager Josh Callihan responded to the PSC release. “As far as BUC (Barbourville Utilities), we are not regulated by PSC and we don’t pay federal taxes.  So I don’t expect much of an impact.  However, we do currently buy wholesale power from KU (Kentucky Utilities Co.), so there could possibly be an impact to our rates from KU, but we would probably not see that until after July 2018 when our new formula rate from KU is calculated.  The rates from KU have been increasing about 10 to 12% annually for the last several years.  This may offset that to some degree,” said Callihan. He added that BUC is a non-profit organization, and therefore does not pay federal taxes.
Knox County Utility Commission will likewise not be affected by the PSC statement in a release to the Mountain Advocate. “Knox County Utility Commission is a local government entity. We are not investor owned and therefore, do not pay corporate taxes. The PSC order will not affect Knox County Utility or its customers.”
Cumberland Valley Electric did not have a comment on the PSC statement.