(WASHINGTON, DC) – One little-noticed byproduct of Congress’
recent tax reform package is about to free up tens of billions of dollars for
electric and gas utilities - and could play a vital role in the anticipated
build-out of energy infrastructure. Pro’s Darius Dixon reports that thanks to
the bill’s massive
reduction in corporate tax rates, the “deferred” money utilities have collected
from customers for years - set aside to pay future years’ taxes for projects
like transmission lines and power plants - will now be open for other
investments, such as modernizing and strengthening pipelines and the electric
grid.
“The windfall is
expected to set off a debate in dozens of states about
how to spend the money - and whether some of it should go to reducing customers’
rates. It’s also stirring interest among environmental groups, which could push
to use a chunk of the cash to build wind or solar projects or retrain displaced
coal workers,” Darius writes. David Springe, executive director of the National
Association of State Utility Consumer Advocates, tells Darius: “This is where
all the money is. That is why the utilities really care.”
The deferred money in
question is separate ”from the immediate boost to earnings that utilities will
see from the cut in their corporate income taxes,” Darius reports. For instance,
New Jersey-based PSEG estimates it will
have at least $1.8 billion in its deferred tax pool to spend on rate cuts or
infrastructure upgrades, and bigger utilities have amassed even
larger sums. American Electric Power’s regulatory filings list $4.4 billion ,
while NextEra Energy’s sits at $4.5 billion. The Edison Electric Institute
estimates that deferred tax balances across the power industry alone total
around $165 billion, although it is not yet known how much of that is “excess”
under the new tax rate. Others figures will likely start rolling out over the
next several weeks as SEC filings are reported. Read the story here.
