By KIM CHANDLER, Associated Press
MONTGOMERY, Ala. (AP) — Alabama Power Co. customers will see slightly lower power bills because of a federal tax cut to utilities, a company spokesman said Tuesday during discussions by state regulators.
The Alabama Public Service Commission approved related measures and discussed the utility giant’s plans to pass the savings on to consumers in the form of a bill credit. Alabama Power spokesman Michael Sznajderman said the typical residential customer, who uses 1,000 kilowatt hours each month, would see their bill decrease by $9 per month starting in July.
“Certainly we are pleased to return these dollars to our customers,” Sznajderman said. “Essentially, all of it is going back to customers in one form or the other.”
Similar rate cuts are taking place across the country as companies and regulators discuss what to do with the windfall and how much to return to customers. President Donald Trump in December signed a $1.5 trillion tax cut package into law that provides generous tax cuts for corporations, including utilities.
The 2017 federal tax package cut the federal income tax rate from 35 percent to 21 percent beginning Jan. 1, 2018. Because the tax cut was implemented after the company filed rate calculations for the year, Alabama Power said it would give customers a bill credit to reflect the tax cut that began in January. The adjustment to customers is to total $257 million for the remainder of the year.
Moving forward, the tax cut will be passed along to customers in rate calculations.
Commissioners did not have to approve the credit, but approved related requests from Alabama Power on rate calculations. The company, in filings to the PSC, said the changes were needed to protect the company’s credit rating because of the cash flow impact of collecting less revenue for the payment of current taxes and other reasons.
In exchange, the company committed to no base rate increases through 2020, and to provide another $50 million in bill credits in 2019.
“They cannot increase rates and if they have any savings there, they can utilize it to put forth into their equity which, actually, in the long run will save customers money,” Commission President Twinkle Andress Cavanaugh said.
The commission denied a request for a public hearing on the proposed changes from Birmingham resident Joyce Lanning, who has often criticized what she called the commission’s lack of transparency. The commission’s administrative law judge recommended the commissioners deny the request based, among other things that the commission should act quickly.
“It amazes me that this anti-Trump mode over the whole country right now is still continuing to want to put a cog in the progress of returning funds to the people of this state, and we’re just not going to stand for it here,” Cavanaugh said after voting to deny the request.
Lanning did not attend the meeting because of a pre-arranged trip out of the country. But she said the changes should be discussed with the paying public, and the commission has a lengthy history of approving complicated changes with little discussion.
“My agenda is for transparency and accountability … That means giving people an opportunity to hear and understand,” Lanning said by phone.