Michigan Utilities’ Federal Tax Cut Refunds Exceed $4 Billion

The Michigan Public Service Commission on Nov. 14 announced that the state’s utility customers will benefit from about $4.1 billion in refunds, following the final round of adjustments to tally the impacts of the federal tax law, which slashed the corporate income tax rate to 21 percent from 35 percent effective Jan. 1, 2018. The agency established a three-step process to address the short- and long-term impacts of the law to flow back corporate savings to ratepayers through monthly bill credits and longer-term adjustments.

The agency approved refunds of $382 million and  $234 million in the first and second rounds, respectively. The first step or Credit A was designed to reduce rates on a going-forward basis to reflect the lower federal corporate tax rate. The subsequent Credit B proceeding addressed the impacts of the tax law from January 1, 2018, to the date of the order in the utility’s Credit A case. The final round, called Calculation C, which quantifies the long-term benefits of the reforms, including deferred income taxes.