Due to a change in the federal tax code in late 2017, natural gas customers in Cedar Park and Leander may already be seeing lower utility bills.
U.S. Congress approved an overhaul of the tax code in December that became effective Jan. 1. Aside from changes to individual income tax thresholds, the Tax Cuts and Jobs Act also reduced the corporate tax rate from 35 to 21 percent.
The Railroad Commission of Texas, which has jurisdiction over natural gas companies in the state, in January ordered a review of how the tax cuts would impact gas utility rates. According to a state press release, Railroad Commission Chairman Christi Craddick said the move was to ensure that companies pass the savings from the tax cuts on to customers.
Lauren Hamner Spreen, a spokesperson for the railroad commission, said the utility companies have been coming before the commission for a review of their earnings.
“So when [the companies] go through these hearings with us, they are then considering these corporate tax rate reductions and the savings they are receiving, and then we are requiring them to pass those savings down to their customers,” she said.
Spreen said some utility companies have already gone through the process while the review for others is ongoing. She said some companies were also proactively calculating how to pass on the savings prior to the ruling from the railroad commission, such as Atmos Energy, which serves customers in both Cedar Park and Leander.
Atmos Energy implemented a rate reduction on April 1 for all customers within the incorporated cities served by its Mid-Tex Division. According to documents from the city of Cedar Park, Atmos Energy’s revenues are expected to decrease by about $29 million due to the reduction in utility rates.
“We immediately started calculating on how [the Tax Cuts and Jobs Act] would change a customer’s bill,” said Randy Hartford, the manager of public affairs with Atmos Energy.
Hartford said the company began calculating the difference in rate charges and presented the changes to the participating cities and the railroad commission. The average residential customer should see a monthly decrease of around $1.68, and he said customers should have started to see the reduced rate in their April bills.
Customers of Texas Gas Service, which serves Cedar Park and Austin, will also see a rate decrease, though the savings will not be as high.
Texas Gas Service’s revenues are expected to decrease by about $4.4 million due to a rate decrease, according to Christy Penders, communications manager with the company. At the same time Texas Gas Service made about $30 million worth of infrastructure investments in the Central Texas area last year.
Penders said the gas company makes these investments each year and often pays for the improvements through yearly interim rate adjustments. The company’s interim rate filing goes into effect at the same time as the rate decrease and seeks an increase in rates totaling $3.3 million altogether.
The reduction of the corporate tax rate would have lowered the average customer’s bill by $1.42 a month, though the interim rate adjustment filing reduces that amount to about $0.54 per month. The changes will be reflected on July bills, and customers will also receive a one-time credit of $9.66, Penders said.
Spreen said the amount of customer savings will depend on the utility company, the location and the current utility rate. She said natural gas customers will be receiving a reduction of some kind, whether through a reduced rate or a reduction in a higher proposed rate.
“We were happy to do it,” she said. “We’re excited that this is impacting customers in that way.”
