Ameren Missouri is the first of the state’s large regulated electric power companies to drop customer rates based on savings it’s receiving from a tax reduction.
Congress cut the nation’s corporate income tax rate from 35%-to-21% last December with the reduction taking effect January 1st. Ameren’s drop of customer rates to reflect its savings from the tax reduction started Wednesday.
Spire Missouri, a natural gas company that serves portions of eastern Missouri, was actually the first regulated utility to rates based on the corporate tax cut, having done so in April. It’s total savings to customers is $15 million.
Ameren’s decrease is being implemented as part of far-reaching utility legislation passed this year in Jefferson City. Ameren says the drop of customer rates totals $167 million per year and will average out to $6.00 per month for residential customers.
By comparison, Kansas City Power & Light (KCP&L) will pass its $67.5 million in corporate tax cut savings along to customers in either November or December. It’s involved in rate cases with the Missouri Public Service Commission (MPSC) that’ll incorporate those savings when complete.
But the likely end results for KCP&L customers will be no change or a possible increase in rates because of upgrades the utility is proposing to make in the rate cases.
Spokesperson Jeremy McNieve says the savings from the corporate tax cut will be used instead to offset improvements such as a new customer information system. “It’s related to new technology and ensuring consistent and more efficient customer communications,” said McNieve.
KCP&L is also proposing to expand its electric vehicle charging program and create a renewable energy and solar subscription program through its rate cases.
Ameren has 1.2 million customers in Missouri while KCP&L serves 800,000.
KCP&L initially appeared to be ahead of the other state-regulated utilities in embracing the idea of passing along tax cut savings to customers. In January, company President and CEO Terry Bassham issued a favorable statement. “The federal tax cut has significant benefits which should be passed on to our customers in full. We look forward to working with our regulators and stakeholders on the best way to do that,” said Bassham.
Ameren and the state’s third-largest regulated power company, Liberty Utilities- Empire District, remained quiet in the early going after the corporate tax cut was implemented. Liberty, which serves portions of southwest Missouri including Joplin, did issue a statement to Missourinet Wednesday addressing its position on reducing customer rates based on the cuts.
“Liberty Utilities- Empire District is working with the Missouri Public Service Commission (MPSC) to determine the most appropriate way to effectuate the impacts of the Tax Cuts and Jobs Act of 2017 (the Congressional tax package that included the corporate rate cut). A hearing was held on July 20 and July 23 in Jefferson City, MO. The company expects the MPSC to issue its decision in the coming weeks,” said a spokesperson for Liberty Utilities – Empire District.
As part of the new utility law, Ameren will freeze current base rates for customers until April 2020.
The utility giant has a large lobbying presence in Jefferson City and is seen by watch groups as having an outsize influence on lawmakers. Both Consumers Council of Missouri and Midwest Energy Consumers Group were highly skeptical of the arrangement in the new law for Ameren to pass through the corporate tax cut to customers.
David Woodsmall with Midwest Energy Consumers Group has said that Ameren attached the rate cut to the legislation to gain leverage for a more favorable final piece of legislation.
The watchdog groups have been especially critical of a provision in the law which introduces a new accounting practice. It allows the utilities to look backward and claim depreciation costs on infrastructure upgrades made previously when they return to negotiate new customer rates. Ameren and KCP&L are participating in the practice which allows for 85% of those depreciation costs to be declared.
An analysis by the Public Service Commission concludes utility rates will increase 9.74% over 10 years, costing customers $282.5 million.
For its part, Ameren points to the numerous groups who became first-time backers of utility legislation with the new law, including Associated Industries of Missouri, the St. Louis Regional Chamber and the United Way of St. Louis.
And as it stands, the St. Louis based company has become the first of the states regulated electric power company to transfer its savings from the corporate tax on to customers.
Another thing the new law does is require that those cost savings are tracked back to January 1st when the tax cut was implemented. It calls for these savings to be passed on to customers down the line by reducing a future rate increase by an equal amount.
(Correction: An earlier version of this story did not specify that Spire Missouri, a natural gas supplier, was actually the first regulated utility to lower customer rates based on the corporate tax cut.)