Utah regulators have approved changes to PacifiCorp's electric service rates, reducing them by $61 million through the remainder of this year due to federal tax reform.
Changes in federal tax law passed in December 2017 will reduce rates for customers of PacifiCorp's Rocky Mountain Power division in Utah by a 4.7% overall average, according to the Berkshire Hathaway Energy subsidiary. The Utah Public Service Commission on April 27 ordered the rate cuts to take effect on May 1. PacifiCorp said the average residential customer using 698 kWh a month would see a "tax cut adjustment" on their bill of about $4.17.
The PSC further noted the rate reduction it ordered reflected a substantial portion, but likely not all, of the amount of the 2018 reduction as the company must file a final calculation of the impacts of tax law changes, including the effects of excess accumulated deferred income taxes. PacifiCorp said it will continue to review more complex details of the tax law change and provide the total impact of the new law by June 15, which the company agreed is likely result in additional benefits to customers.
The commission approved PacifiCorp's rate schedule on May 9. (Utah PSC Docket No. 17-035-69)
The tax law changes included a reduction in the federal corporate income tax rate from 35% to 21%. According to PacifiCorp's initial estimate, the changes will decrease PacifiCorp's revenue requirement in Utah by about $76.2 million, but that estimate is subject to further calculations.
The Utah Department of Commerce's Division of Public Utilities, which makes recommendations on utility matters to the PSC, and the department's Office of Consumer Services, which is the state's utility consumer advocate, representing residential, small commercial and agricultural consumers, called for PacifiCorp to issue that amount as a full refund to customers. Also, PacifiCorp's initial estimate did not address excess accumulated deferred income tax, for which an associated refund will be significant, the Utah Association of Energy Users said.
However, PacifiCorp claimed refunding amounts too quickly would weaken its credit metrics, potentially resulting in a credit rating downgrade which, in turn, would result in an increase in debt costs that would be passed on to its customers.
The PSC agreed, saying it wanted to await further information and calculations of the tax reform's impact before ordering any further refunds.
PacifiCorp is pursuing similar rate adjustments in other states in which it operates.
