An analysis by the U.S. Chamber of Commerce on the effect of the federal tax cut on investor-owned utilities estimates California ratepayers can expect to see savings of more than $3 billion over a five-year period.

But it’s still not known what the cut will mean for the monthly bills paid by San Diego Gas & Electric customers.

Signed into law last December by President Donald Trump, the federal tax bill went into effect at the start of this year. While most of the attention focused on corporate and individual rates, the tax reform measure had a big impact on electric utilities.

State regulators allow investor-owned utilities to charge rates high enough to make up for their costs, plus a return for the power companies’ shareholders. A reduction in taxes should result in a financial benefit to ratepayers.


California has three investor-owned utilities — SDG&E, Pacific Gas & Electric and Southern California Edison.

The Chamber of Commerce, a big supporter of the tax cut, and the business advisory firm FTI Consulting looked at filings submitted in June by utilities from 12 states.

The analysis said some utility customers can expect to see savings through lower monthly bills while other power companies may simply forgo surcharges or anticipated increases on customer bills that would have otherwise gone into effect if the tax cut bill had not been passed.

For example, the analysis mentioned Florida Power & Light cited the tax cut as a reason for putting aside charges related to costs stemming from Hurricane Irma.


On an individual basis, the savings are modest but when applied to millions of power customers, the numbers add up.

California ratepayers figure to save the most of the 12 states studied — $3.2 billion for the next five years. That breaks down to $129.60 in savings for a residential customer, or about $2 a month over the half-decade.

But Christopher Guith, senior vice president at the Global Energy Institute at the Chamber of Commerce said the figure has a ripple effect. In addition to residential customers saving money on their power bills, so will businesses and industries and that, the analysis concluded, can translate into a gross domestic product impact in California of $5.4 billion.

“If (businesses) know their rates are coming down by that amount over a course of a 5- or 10-year period, that helps them make that decision to invest in expanding their assembly line or buying a new piece of technology that makes them more efficient,” Guith said.


But what will the tax cut mean for a typical residential customer in the Golden State, when broken down by each distinct investor-owned utility?

SDG&E, in an email to the Union-Tribune, did not give a specific number and pointed to the utility’s upcoming general rate case before the California Public Utilities Commission, the agency that regulates privately owned electric and natural gas companies.

Last October — two months before the corporate tax cut was signed — SDG&E filed its general rate case request with the CPUC, asking for an 11 percent rate increase in 2019 and running through 2022.

“We are in the midst of a rate request proceeding with the PUC,” SDG&E spokesman Wesley Jones said in the email. “Customers will see the benefits of the tax cut upon the completion of this proceeding.”


What others are doing

A spokeswoman for Pacific Gas & Electric, the utility that covers most of Northern California, estimated its savings from the tax bill at $450 million annually.

“We’ve committed to making sure that the changes to the federal tax law benefit our customers,” said Lynsey Paulo, PG&E marketing and communications manager. The utility has proposed using the savings to offset rate increases, including impacts on the utility’s filing for an account tied to catastrophic events.

Representatives from Southern California Edison told the Union-Tribune the utility is reducing the total revenue it is requesting before the CPUC in its general rate case by about $139 million this year, about $185 million in 2019 and $235 million in 2020, largely due to the tax cut.


Without the legislation, Edison expected residential customers would see an average monthly increase of $1.51 a month this year, $5.01 in 2019 and $6.83 in 2020.

With the tax cut, the figures would drop to a 6-cents decrease per month in 2018, a $3.98 increase in 2019 and a $5.56 increase in 2020, based on average monthly usage of 550 kilowatt-hours.

Among the utilities across the country that have reported passing savings onto customers:

Dallas-based Oncor, which SDG&E parent company Sempra acquired earlier this year, expects to reduce customer rates by about $181 million a year. That works out to a savings of $1.43 a month for an average residential household.

Xcel customers in Minnesota will receive a one-time credit on their bills. A typical customer paying $85 to $90 a month will get a credit of about $45.

Baltimore Gas and Electric filed papers that would lead to a reduction of $4.27 per month for an average gas and electric customer and a $2.31 monthly savings for gas-only customers.


Business

rob.nikolewski@sduniontribune.com


(619) 293-1251 Twitter: @robnikolewski