PSC to lower utility bills due to tax cost savings

By Shauna Johnson

CHARLESTON — The start of September will bring lower utility bills to West Virginians due to company tax cost savings from the 2017 Tax Cuts and Jobs Acts.

On Friday, members of the state Public Service Commission approved joint stipulation agreements with a number of utility companies operating in West Virginia that were reached to address PSC inquiries about how savings would be passed along directly to customers.

In a rare bench ruling, Michael Albert, chair of the PSC, said total utility savings under the agreements added up to $645 million in utility tax savings being passed along to customers with portions deferred.

Specifically, $84.8 million will be saved beginning Sept. 1.

“We never cease to be amazed about putting a reasonable group of people together,” Albert said.

“Very often you come up with and achieve settlements that are just remarkable and, quite frankly, we believe that’s what this is.”

The approved agreements were the results of negotiations involving a number of parties and several companies — West Virginia American Water, Mountaineer Gas, Appalachian Power and Wheeling Power and Mon Power and Potomac Edison.

All of the companies were represented during Friday’s hearing in Charleston.

“These are not ‘cookie-cutter’ proceedings. Each utility has a different set of circumstances,” Albert said. “Joint stipulations are crafted to reflect the unique circumstances of each utility.”

As filed, in general, West Virginia American Water Co. planned to reduce water rates for customers by $4.6 million, or an average of 3.5 percent, using tax savings beginning on Sept. 1 with potential future reductions applied in a base rate case.

For the average residential customer, the monthly savings will be $1.60 for water and $2.17 for wastewater, officials estimated.

The proposal from Mountaineer Gas is similar in that it includes rate reductions to start immediately along with considerations for future filings.

Initially, the reductions would be $7.20 annually or 60 cents less per month on average for residential customers, according to testimony from Scott Klemm, vice president of finance for Mountaineer Gas.

For Appalachian Power and Wheeling Power, a proposal submitted Thursday called for $25.5 million out of $235 million in total tax savings to be used for an average 3.8 percent reduction in customer rates beginning at the start of September.

With the proposal, a residential customer using 1,000 kilowatt hours (kWh) every month would save about $3.56 a month, while a customer using 2,000 kWh/month could see savings of about $7.12 a month.

The additional tax savings would be applied in many other areas for what company officials have called a “balanced approach.”

“I think this is a fair, reasonable and just stipulation,” said John Scalzo, managing director of regulatory services and finance for Appalachian Power.

“It kind of balances all the interests and passes back the dollars to customers and addresses some long-standing issues the company’s had related to legacy deferrals.”

For Mon Power and Potomac Edison, the potential rate reduction from tax savings would be about two percent overall for average residential customers or $1.97 less per month for a yearly company decrease of $25 million total.

During Friday testimony, Raymond Valdes, director of rates and regulatory affairs for Mon Power and Potomac Edison, said he believed the settlement was “fair and reasonable.”

Both Bluefield Gas and Beckley Water, which had rate cases pending at the time of passage of Tax Cuts and Jobs Act, have incorporated reductions into those cases, according to information from the PSC.

On Friday, commissioners indicated negotiations continued for Hope Gas, which had already proposed $1.3 million in initial savings along with Peoples Gas.

Waste Management and Allied Waste were excused from Friday’s proceedings due to questions about how rate returns could be applied for waste services.

Utilities across the U.S. have been adjusting rates since passage of the 2017 Tax Cuts and Jobs Act. Federal taxes account for one component of the rates customers pay for utilities.

In July, the West Virginia PSC heard three days of testimony on utility plans in the Mountain State.

“We’ve had a fair amount of work that’s gone into this,” Albert said at the start of Friday’s hearing.

Formal orders were expected to follow Friday’s bench ruling. Even without those orders, utilities were instructed to proceed with the Sept. 1 initial rate reductions.

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