Utility customers could see savings on their bills in coming months after an order from the Illinois Commerce Commission (ICC) last week.
Five utility companies — Nicor Gas, Ameren Gas, Illinois American Water, Peoples Gas and North Shore Gas — will pass savings from reductions in federal corporate income taxes to consumers following the ICC’s approval of tariffs April 19, according to an ICC news release. The five companies are among the largest utilities operating in Illinois.
The Federal Tax Cuts and Jobs Act (TCJA), which went into effect Jan. 1, reduced the corporate income tax rate from 39 percent to 21 percent. Utility companies collect tax expenses through their rates. With the ICC’s order last week, the reduced corporate income tax rate should translate into lower utility rates.
“The commission’s orders Thursday will ensure that tax savings will be passed on to utility customers,” said Cholly Smith, ICC executive director, in a press statement. “In light of steep reductions in corporate taxes, it was vital to find a way to promptly pass savings to consumers. ”
The impact of the tax changes will vary based on the size of the company.
The ICC approved variable income tax adjustment riders for each of the five utilities. The riders require each utility to begin crediting consumers for the estimated tax savings beginning with the next billing cycle.
At the end of each year, the companies will file a proceeding with the ICC to reconcile the estimated tax savings with the actual savings recognized by the company. This reconciliation will ensure that all tax savings are reflected in customer rates.
Earlier this year, the ICC approved requests from Commonwealth Edison Company and Ameren electric to begin including estimated credits for the tax changes on customers’ bills.