Pepco has canceled its plan to increase rates and will instead decrease energy rates after the federal tax cuts were signed into law.
When Congress passed the Tax Cuts and Jobs Act just before Christmas, pundits and experts alike were unsure of how much average Americans would feel the benefits.
Since then however, at least two million Americans have received pay increases or bonuses from companies passing along their corporate tax savings to their employees. The most recent announcement came from Walmart, which plans to give $700 million back to its employees by raising its minimum wage to $11 an hour and giving bonuses of up to $1,000.
Well, now energy company Pepco has announced that it will take its corporate tax cut and translate that into rate reductions for energy consumers in D.C. and surrounding communities in Virginia and Maryland. They estimate that at least 1.1 million households will see rate decreases.
As recently as October, Pepco had actually been approved to raise energy rates for DMV customers. While originally requesting approval for $68.6 million in rate increases, the Maryland Public Service Commission had approved roughly half that. Pepco was preparing to raise the average residential customer’s by 9.24 percent, or roughly $7.54 a month.
While the proposed rate decrease of around $4 a month does not seem significant on its own, when coupled with the proposed rate increase that will no longer happen, that means that the average household will save almost $140 a year on their energy bills.
In a press release, Pepco explained that the newly proposed rate decrease was directly connected to the federal tax cut bill.
“The tax law will result in lower bills for our customers and lower taxes for Pepco,” explained Dave Velazquez, President and CEO of Pepco Holdings. “We are pleased to provide these savings to our customers, while at the same time ensuring we are making prudent investments in the local power grid to maintain the safe, reliable, and affordable service our customers have come to expect.”
Pepco isn’t the only area power company to announce plans to pass along corporate tax savings to consumers. Baltimore General Electric (BGE) has also announced plans to slash their rates. If approved by the Maryland Public Service Commission, the average BGE residential electric customer should expect to see their monthly bill decrease by $2.31. Residential customers who use BGE for electricity and natural gas should expect to see their monthly bills reduced by an average of $4.27. Both of these changes would be effective February 1, 2018.
Since these energy companies are accountable to state regulatory commissions, they actually have to pass these corporate tax cut savings along to their consumers. Had these companies not submitted their plans to the commissions, the regulatory commissions would have likely demanded it as well. For example, the Virginia State Corporation Commission has ordered all of Virginia’s private utilities to figure out their tax savings and re-adjust their public fee and price structures accordingly.
Have you noticed any changes as a result of the Tax Cuts and Jobs Act? Let us know in the comment section below!