The State Corporation Commission (SCC) is ensuring that Dominion Energy Virginia and Appalachian Power Company reduce rates in July so that their respective customers receive the benefits of the corporate tax cut contained in federal tax legislation passed by Congress in December 2017, according to a release from the SCC.
The federal corporate income tax rate was reduced from 35 percent to 21 percent beginning January 1. A week later, the SCC ordered the companies to preserve the savings from this tax cut for the benefit of their customers.
Ken Schrad, director of the SCC’s Division of Information Resources, said “The idea is for the rate reduction to be reflected on bills issued during the July billing cycle.”
The rate reductions come on the heels of legislation adopted during the 2018 session of the General Assembly that included an enactment clause specific to the federal tax impact.
Dominion Energy Virginia is to reduce rates by $125 million, according to the release.
Appalachian Power is to reduce rates by $50 million, the SCC stated in a release.
The SCC’s order ensures that the companies will comply within 30 days of July 1, the effective date of the state law.
The July rate reduction is the first step to pass the corporate tax savings to customers. Further submissions by the two utilities will be made in 2019 to make certain the tax savings are properly calculated and reflected in rates as of April 1, 2019.
In addition to the rate reduction for the lower federal tax rate, Dominion Energy Virginia will also be issuing a voluntary rate credit to customers in July. The $133 million refund is directed by the 2018 General Assembly (also within Senate Bill 966). In an informational financial filing with the Commission in May 2017, the company reported excess earnings for calendar years 2015 and 2016.
The statute also calls for an additional $67 million to be refunded in January 2019. That refund is associated with calendar year 2017 earnings. Those earnings will be analyzed in the company’s next scheduled financial review in 2021.