BOSTON – In a motion filed Thursday with the Department of Public Utilities (DPU), Attorney General Maura Healey is urging the Department to reconsider its February 15, 2019 decision to deprive Massachusetts utility customers of approximately $40 million in tax savings that should be refunded to them by utility companies.
AG Healey’s motion is the latest in her office’s efforts to ensure that Massachusetts customers receive all the savings from the Tax Cuts and Jobs Act of 2017 (TCJA) which reduced the federal corporate tax rate from 35 to 21 percent. Before the TCJA went into effect, the AG’s Office called on the DPU to recalculate the distribution rates for all Massachusetts regulated utility companies to reflect the lower federal tax rate.
In June, the DPU ordered all utilities to reduce their rates going forward to reflect the federal tax savings. However, in its recent Feb.15 decision, the DPU decided that the utilities could keep $40 million in windfall profits collected from customers in the first half of 2018.
“The DPU has handed a $40 million windfall to the utility companies that should be returned to customers,” said AG Healey. “We are optimistic that the DPU will reconsider its decision.”
Throughout the country, many other public utility commissions have returned all of the TCJA tax savings back to customers. In Thursday’s motion, the AG’s Office called on the DPU to give Massachusetts customers the same benefits as customers in other states.
The AG’s motion notes that on Feb. 5, 2019, the DPU found that the reduction in the federal tax rate was “a significant, known and measurable reduction” that was sufficient enough to “rebut the presumption that rates as of Jan. 1, 2018, were just and reasonable.” Further, the DPU determined that it had the authority to order a customer refund for the first half of 2018 without examining companies’ actual earnings or ROE. Despite these favorable conclusions, the Department found, without explanation, that its general principle against “retroactive rulemaking” was a basis to deprive customers of full recovery.
In late 2017, AG Healey publicly called for across-the-board cuts in state electric, gas, and water rates, following the passage of the new federal tax bill last year, the first state attorney general in the country to do so. Within weeks, dozens of state attorneys general and state utilities regulators proceeded to reopen rate cases with the goal of applying the tax savings back to customers.
AG Healey also led a bipartisan coalition of state attorneys general, state agencies, and consumer advocates in urging the Federal Energy Regulatory Commission (FERC) to take immediate steps to ensure that federally regulated utilities – including electric, natural gas and oil companies - do not receive a major federal corporate tax windfall at the expense of their customers. FERC later agreed and called on developers to lower their pipeline cost proposals.