You would expect federal tax cuts to have positive effects like smaller tax bills and perhaps bigger paychecks. But the tax code overhaul that became law in December has also led to some unexpected benefits.
For example, earlier in the year, some employers made headlines for handing out bonuses or boosting workers’ retirement benefits as a direct result of tax reform — which slashed the corporate tax rate.
Now, some utility companies are lowering their customers’ bills due to the companies’ newly lowered tax rate.
Americans for Tax Reform reports that more than 100 utility companies are part of this trend so far.
102 utility companies that are lowering bills
To be exact, at least 102 companies have now lowered or plan to lower their energy, water or sewer rates, according to Americans for Tax Reform (ATR).
ATR, which opposes all tax increases, attributes this directly to the federal law that recently overhauled the U.S. tax code:
“The Tax Cuts and Jobs Act cut the corporate rate from 35% to 21%. Utility companies are passing on the tax savings in the form of lower rates for customers.”
A few examples of such companies that ATR recently highlighted include:
- Consumers Energy, which has proposed to pass 100 percent of its tax savings on to customers
- Duke Energy Ohio, which has said it will pass on $20 million in annual savings
- Entergy New Orleans, which has proposed to lower bills collectively by “approximately $47 million annually in near-term tax savings and an additional $71 million in savings over the longer term.”
- Kansas City Power & Light (KCP&L), which has proposed to pass on $34.5 million in annual savings
- Quadvest, which told Congress it has lowered base sewer and water rates by 26 percent, or almost $90 per year per household
- Tampa Electric, which has said it will not raise rates to pay for Hurricane Irma restoration costs
For ATR’s complete list of 102 companies, see its June 7 report.
Don’t get too excited
Lower utility bills are undeniably good news for consumers, but it doesn’t necessarily mean you will see huge savings.
When proponents and politicians tout tax reform, they are likely embellishing to some degree. After all, it’s the nature of politics for politicians and their supporters to speak glowingly of any legislation they backed that had a positive effect on those politicians’ constituents or donors.
As Money Talks News founder Stacy Johnson wrote in “6 Important Take-Aways From the Tax Reform Effort“:
“This isn’t about Democrats or Republicans. It’s about politicians and the masters they serve.”
Take my electric bill, for example. My power company, Florida Power & Light Co., says it started lowering rates in March, with the typical bill down by about 3.3 percent or $3.35 per month. But I wouldn’t have noticed that decrease if Florida Power & Light hadn’t emailed me about it.
That said, I’ll still take that $3.35 a month — it’s about $40 a year. I don’t expect much if any savings from a veritable monopoly, and I’m not complaining about tax reform’s effects on me.
What’s your take on the effects of the overhauled tax code? Sound off below or on Facebook.