With tax savings already expected to cover nearly $2 billion in hurricane-related costs, Florida regulators Tuesday began moving forward with a process to determine how utility customers should benefit from the federal tax overhaul.
Electric, gas and private water and wastewater utilities are expected to pass tax savings from the overhaul to customers, and the Florida Public Service Commission will oversee how much — and when — the money will flow through.
Duke Energy Florida, Tampa Electric Co., Gulf Power Co. and Florida Public Utilities Co. entered into rate settlements last year that address the issue of passing through tax savings to customers, though those agreements were negotiated before Congress and President Donald Trump approved the tax-cut package in December.
In recent weeks, Duke, Tampa Electric and Florida Power & Light have announced that they will use tax savings to avoid billing customers for Hurricane Irma and other storm restoration costs, a total estimated tab that tops $1.9 billion. The Public Service Commission on Tuesday signed off on Duke’s plan to shield customers from getting hit with $513 million in storm costs.
Also, Jeff Stone, general counsel of Gulf Power, said the Pensacola-based utility is working to move forward with savings for its customers by March 1. Unlike Duke, Tampa Electric and FPL, Gulf was largely spared damage from Hurricane Irma in September.
The federal tax changes include reducing the corporate income tax rate from 35 percent to 21 percent. But the law and utility finances are complex. Jon Moyle, a lawyer for the Florida Industrial Power Users Group, said Tuesday that money should come back to customers “sooner rather than later” and that it be clear how the savings flow.
Moyle, whose group includes large commercial electricity users, said he doesn’t want to see the money “mushed together with a bunch of other stuff, and then somebody wakes up a couple of years from now and says, ‘Hey, where did that tax reform savings ever show up?’”
Moyle’s comments drew a reply from John Butler, an attorney for FPL, which recently said it would use tax savings to cover about $1.3 billion in storm costs that otherwise likely would have been passed on to customers.
“FPL is not mushing,” Butler said. “We are going to use not only all of one year’s tax savings but multiple years’ tax savings to replenish the reserve for the $1.3 billion write-off that we were able to take. And by doing that, we were able to get tax savings to customers in the form of forgoing what otherwise would have been a storm-cost recovery surcharge as close to immediately as I think is possible.”
The Public Service Commission approved moving forward with a process that will start Thursday with staff members meeting with electric utilities. Meetings will follow next week with gas, water and wastewater utilities.
Commission lawyer Suzanne Brownless said each utility has a “unique financial situation.” Ultimately, parties, including representatives of consumers and businesses, will be able to take part in legal “discovery” to delve into information about the implications of the tax changes for each utility.
“These tax law changes are very complex,” Public Service Commission member Julie Brown said. “I envision that we will have a process or proceedings, plural, to ensure the full transparency and accuracy of all the savings that will accrue to the customers.”