The Florida Public Service Commission (PSC) today turned away a requested bill increase of $5.20 per month for a typical Duke Energy Florida, LLC (DEF) residential customer, instead accepting a negotiated plan to use new federal tax benefits to prevent the increase.
A bill surcharge originally was requested to pay an estimated $513.2 million in restoration costs from Hurricanes Irma and Nate, which the company was authorized to seek approval to begin recovering March 1 under a 2017 rate case settlement negotiated by the Public Counsel and other customer representatives. That same agreement also provided that customers would benefit from any tax savings DEF might realize from proposed federal tax reform.
After federal tax cuts passed in late 2017, Duke Energy reached an agreement with the customer representatives that prevents adding the storm charge to bills by applying the new tax savings earlier than required. The PSC today chose that alternative, avoiding a bill increase.
“The federal tax cuts happened pretty abruptly,” said PSC Chairman Art Graham. “Everyone had to move fast to take advantage of the opportunity to keep customers’ bills from going up on March 1. It’s a success story.”
All parties in the 2017 DEF rate case settlement supported the new plan to prevent a bill increase, including the Office of Public Counsel, the Florida Industrial Power Users Group, PCS White Springs Agricultural Chemicals, Inc., Southern Alliance for Clean Energy, and the Florida Retail Federation.
Hurricane Irma was a historic hurricane that caused damage in September 2017 across Florida with strong winds, power outages, coastal surge flooding, and rainfall. Hurricane Nate brought a burst of flooding and power outages to the U.S. Gulf Coast in October 2017.
DEF provides service to approximately 1.8 million customers in a 13,000 square-mile service area in Florida.
In a related PSC ruling, the Florida Public Service Commission (PSC) today declared immediate jurisdiction to determine whether the federal tax savings Florida utilities are reaping as a result of the Tax Cuts and Jobs Act of 2017 (Act) must be returned to customers.
The Act took effect Jan. 1, 2018 and reduces the federal corporate income tax rate from 35 to 21 percent.
The PSC action preserves its authority to flow back any savings to customers, and applies to all investor-owned utilities (IOUs)—electric, water/wastewater, and natural gas—that do not already have rate case settlements giving tax reform benefits to ratepayers. Actual amounts will be determined after a hearing.
Today’s vote came in response to a Jan. 9 petition by Office of Public Counsel, and is effective immediately.
“Today we drove a stake in the ground,” said PSC Chairman Art Graham. “The urgent need was to assert our jurisdiction to determine who should rightly benefit from any tax savings. Now we can embark on a deliberative process to make sure customers are treated fairly.”
Previous rate case settlements for Duke Energy Florida, LLC; Tampa Electric Company; Gulf Power Company; and Florida Public Utilities Company contain provisions for flowing tax cut benefits back to customers, and that process will go forward in accordance with each settlement’s terms.
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