The Public Utilities Commission is following up on its promise to see that corporate tax cuts turn into utility bill breaks for South Dakotans. Bob Mercer reports that, at its Tuesday, July 10, meeting, the PUC will consider Xcel Energy’s plan to turn tax breaks into a one-time refund for customers and hold off on rate increases until 2021.
According to a settlement stipulation filed with the PUC last week, Xcel had planned to seek PUC permission to raise rates effective January 1, 2019. Instead, Xcel proposes to refund its customers $10,868,000 no later than this August, unless the PUC deems some other schedule more suitable. That’s one-time money; Xcel will not calculate and remit tax savings in 2019 or 2020. Instead, Xcel is promising not to file for another rate increase before June 2020. Xcel agrees to adjust rates to reflect the ongoing impact of tax cuts at that time.
According to an attachment to the settlement filed Tuesday, big commercial and industrial users give Xcel a bit more than half of its revenue and thus will receive a bit more than half of the refund:
The average household refund will be $55.73, essentially a couple free weeks of air-conditioning.
The settlement stipulation and the staff memo posted yesterday thereupon explain some additional technical details:
- Xcel can still raise rates under various riders, although increases under the Infrastructure Rider are limited for the next to years to “new wind generation projects and the costs of terminating certain biomass power purchase agreements.”
- Customers may receive further refunds in 2019 and 2020 if Xcel’s earnings “result in a return on equity over 10%.”
- Xcel has filled its deferred tax reserve by charging customers a fee based on the 35% tax rate. The tax cuts dropped the rate Xcel pays to 21%. Xcel must thus return the surplus in that reserve to customers.
Xcel is the first utility to settle with the PUC. Mercer reports that Black Hills Energy is proposing $7.6 million-plus in refunds this year and $8.9 million in annual rate reductions starting in 2019. NorthWestern Energy, Montana-Dakota Utilities, MidAmerican Energy, and Otter Tail Power also need to reach agreements with the PUC to make sure their tax relief becomes ratepayer relief.