Maybe the Trump Tax handouts to wealthy corporations will trickle down to us commoners… if government regulation makes them trickle.
The day after Congress passed the final version of the Trump Tax, South Dakota Public Utilities Commission staffers asked their bosses to look into how much the tax changes would affect South Dakota’s big power companies and make sure any tax savings are shared with customers in the form of lower electric and gas bills:
Since the Tax Cuts and Jobs Act will be effective January 1, 2018, and this is a known and measurable change, South Dakota ratepayers should receive any benefits associated with this tax reform as of January 1, 2018. Given it is impractical to implement a change in rates associated with the tax reform before the Act becomes effective, rates should be subject to refund effective January 1, 2018, pending determination of the impact of the Tax Cuts and Jobs Act. Rate making treatments other than a refund may be explored in order to ensure ratepayers receive the benefits of the tax changes as of January 1, 2018 as a result of this investigation [Amanda M. Reiss, staff attorney, “Staff’s Motion Requesting Order Requiring Comments and Securing Tax Effects for Customers as of January 1, 2018,” Docket GE17-003, SD Public Utilities Commission, 2017.12.21].
Staff sent that recommendation out to the six targeted utilities: Black Hills Energy, MidAmerican Energy, Montana-Dakota Utilities, NorthWestern Energy, Otter Tail Power, and Xcel Energy. South Dakota Intrastate Pipeline also got notice, although PUC staff want to exclude that company from this investigation since they intend to include tax impacts in a pending rate case with SDIP.
The PUC threw together an ad hoc hearing Friday and said, hey, staff, good idea!
Having heard from the impacted utilities and Staff as to how to proceed, the Commission voted unanimously to require BHP, MidAmerican, MDU, NorthWestern, OTP, and Xcel to file initial comments in this matter by February 1, 2018, regarding the general effects of the Act on the utility’s cost of service in South Dakota and possible mechanisms for adjusting rates. Staff will work with the utilities to determine a deadline for additional comments including more specific proposals and impacts and, at a minimum to address: 1) an estimate of the company’s determination of the Act’s effects on its South Dakota cost of service, inclusive of all elements; 2) include an explanation of these effects, and 3) propose a procedure for changing the company’s rates to reflect these impacts. Each utility shall file separate comments for electric and natural gas, if applicable; and, pending a determination of the impact of the Act on the utilities’ rates, the rates in effect as of January 1, 2018, shall be subject to refund or any other ratemaking treatment which ensures ratepayers receive the benefits of the tax change [SD PUC, “Order Requiring Comments; Order Requiring Rates in Effect January 1, 2018, Are Subject to Refund; Order Granting Intervention,” Docket GE17-003, 2017.12.29].
It’s hard to say how much money we’ll save, but the commissioners sound genuinely interested in translating corporate tax cuts into consumer rate cuts:
The commissioners emphasized they want customers to see savings.
“It would appear this is going to be a significant amount of money that is going to be returned to customers,” Hanson said. He added, “I want the public to know the commission is not twisting arms here” [Bob Mercer, “South Dakota Utility Companies Told to Inform Regulators About Tax Savings,” Watertown Public Opinion, 2017.12.29].
Oh, Commissioner Hanson, we don’t mind. As we look out at our subzero thermometers, you go ahead and twist all the arms you need to make sure those corporate tax cuts flow right down the power lines and pipelines to our groaning furnaces and pocketbooks.
Yeah, not a bad idea, but I’d think a little deeper on this. I’d like to see some of that tax savings go into infrastructure development of South Dakota’s wind and solar resources. I’m not sure how to structure that, but I’d say 70 percent should go to ratepayers and 30 percent to infrastructure in wind and solar. Since a lot of that development would occur in rural areas of South Dakota, it would provide a boost in areas that aren’t served by investor-owned utilities.
You are correct though as far as putting that money towards renewable energy like they were supposed to do some time ago right here in South Dakota, better late than never.
What about the dividends? Every one of these utility company’s go to the PUC for rate increases on a yearly basis. An example of this is that they ask for 15% but the PUC gives them 7%, year in and year out. The investors get their dividend, the CEO gets his bump, BTW, 7 to 8 Million bucks a year to flip a switch is a pretty good gig. Good that the PUC will allow for some creative book work to give us enough for a ham sandwich.
Is solar energy just as intense in the winter as it is in the summer?
Well, ya. Bob is bob.
The EIA reports that industry (of which agriculture is a large part) uses 4 times the natural gas that consumers do each year in South Dakota.
The state has no natural gas storage either…it all comes in by pipeline. You would think that some of the infrastructure to help wind and solar deliver energy when needed could be the storage of natural gas.
Sorry, I should have said no “underground natural gas storage”. Part of West Virginia’s strategic plan is to foster more natural gas storage for the production in the region.
Sure, Robert, there’s less sun in the winter, but that’s not stopping our Minnesota neighbors from investing in more solar panels.
Donald, I like that idea, combining ratepayer relief with reinvestment in research and development. Such a split could be part of the PUC discussion; the utilities might even make that argument themselves in order to reduce the money they give back and keep more in house to support ongoing or new research projects. If Xcel or MDU said, “Look, we’re going to invest half our Trump tax windfall in clean energy research and installation,” and if the PUC could get some clear accountability criteria to make sure that half doesn’t just go to investors’ pockets, would there be any downside?
So you are telling me they have built all that capacity, but they can’t use much of it during the winter months. So we won’t reduce any natural gas use during the winter, but keep paying for the solar farms via subsidies without getting any energy from them.
If you think we should make the most of what we have available, then integrating solar into the mix is great. In some sense it can be like energy efficiency…why not take less from the grid?
But what I disagree with is adding lots of intermittent energy sources thinking that will provide any amount of energy whenever we want it. The max capacity of that Minnesota solar farm is not achieved the majority of the time.
The investment by a state or federal entity should really go into things like energy grid infrastructure, energy storage, or recharging infrastructure. Have them fund the “energy highway”.
Let the market decide what kind of wind turbines or solar cells are going to be built.
I know we have intermittency/storage hurdles to overcome. So do the Minnesotans. So do the Germans, whose higher latitude leaves them with even less solar potential than we have but who keep installing more solar panels. Stubborn Germans.
So let’s not willy nilly say, “Every penny you save in tax cuts has to go into putting up solar panels right now!” If Trump’s going to be dumb and greedy enough to dismantle America, let’s take whatever we can save at the state level and plunge it into research to overcome solar and wind intermittency, to build better batteries, and save the planet from a man who figures he can buy everything he wants at any price and to heck with everyone else.
The Germans are also having to burn a lot of coal since they moved away from nuclear to satisfy their energy demands. The Germans building a whole lot of solar is like saying I had 5 salads this week and 10 pieces of German chocolate cake….and focusing on the salads ;^).
Solar panels are going in everywhere in the world. Coal mines are closing everywhere they exist. Storage is getting cheap enough for individuals and small companies to take advantage of it. You can holler all you want about the problems with solar and wind, but the problems are being solved. Germany, by the way, has not increased coal consumption. They have increased wind and solar generation immensely, and natural gas somewhat. https://www.cleanenergywire.org/factsheets/germanys-energy-consumption-and-power-mix-charts
I remember a year or two ago the koch bros were trying to get rules passed adding higher fees to solar power so the koch bros oil was more compatible in price. Is that the kind of market decisions we need to have?
https://www.nytimes.com/2014/04/27/opinion/sunday/the-koch-attack-on-solar-energy.html
Great discussion. Another idea for reducing the impact of utility costs for low and middle income SD families is for the legislature to eliminate the state’s regressive sales taxes on utility bills. They could do this on groceries too. This allows more money for consumers to stimulate the SD economy, and maybe promote income growth which seems to be lagging here.
Renewables are effectively replacing nuclear in the German energy mix…not coal or gas. The last year it looks like coal dipped a little and gas increased a little. Those are still in the mix because they are cheaper.
https://www.reuters.com/article/germany-electricity-retail/german-household-power-prices-at-record-high-verivox-idUSL8N1MZ30X
“The price of power in Europe’s biggest economy is politically contentious as production is cheap but state taxes and fees amount to 56 percent of the final cost. ”
“The run-away expansion of wind turbines and solar panels has made German prices the highest in Europe since 2013, not just because of surcharges but because more volatile green power capacity also necessitates new transmission grids and higher costs to manage them. “
Workplace deaths in the coal industry doubled over the last year in the United States. West Virginia had as many coal workplace deaths in 2017 as the whole nation did in 2016, eight.
http://thehill.com/policy/energy-environment/367034-coal-mining-deaths-skyrocket-in-2017
Nick K, any idea how much revenue the state gets from sales tax on utility bills?
http://wvmetronews.com/2018/01/03/gas-storage-hub-project-clears-first-hurdle-for-big-loan/
“The American Chemistry Council estimates the facility could attract up to $36 billion in new chemical and plastics industry investment and create 100,000 new area jobs.”
It helped that they reached an 83 billion dollar agreement with China Energy.
Not sure if this kind of thing would work in South Dakota.