Mass. utilities ordered to set new rates based on federal tax cuts

“We look forward to seeing these rates adjusted promptly,” Attorney General Maura Healey said Friday.
Steven Senne/Associated Press/File 2017
“We look forward to seeing these rates adjusted promptly,” Attorney General Maura Healey said Friday.

The Massachusetts Department of Public Utilities on Friday ordered electric, gas, and water companies to determine new rates, so consumer bills are adjusted to reflect the corporate tax cuts approved by Congress in December.

“This is a huge victory for ratepayers who deserve the benefit of this major tax break for utilities,” Massachusetts Attorney General Maura Healey said in a statement Friday. “We look forward to seeing these rates adjusted promptly and are glad that the Department correctly recognized its obligation to ensure that customers receive these savings.”

The Tax Cuts and Jobs Act of 2017 reduced the federal corporate income tax rate from 35 percent to 21 percent as of Jan. 1; the DPU noted in its order that current utility rates were based on the former — higher — tax rate.


“The department finds that it is appropriate to promptly adjust rates so that ratepayers receive the benefits from the decrease,” the order states.

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Two days before the tax cuts were signed into law, on Dec. 20, Healey had filed a complaint and petitioned the DPU to open an investigation with a goal of reducing utility rates. On Friday, the department decided to open such an investigation.

“With today’s ruling, the DPU has agreed with our position that all utility companies in Massachusetts must use the corporate savings from this federal tax bill to lower rates for customers,” Healey said in her statement Friday.

The department’s order directs utilities to account for any revenues associated with the tax cuts as of Jan. 1, when they first took effect, and file proposals by May 1 to reduce rates. The proposals must address the adjustment of rates going forward, the order states, as well as incorporating “a timely refund of revenues.”

Eversource already has agreed to give its customers a break on rates, saying last month that it would pass on the $56 million in savings from the new tax bill to its 1.4 million electric customers statewide. Those changes were incorporated into new electric rates that took effect Feb. 1.


More savings could be on their way: The DPU on Friday asked Eversource to reconsider its bills to adjust them in relation to two specific aspects of the tax cut by May 1.

Other companies that could soon be adjusting their rates include electric utilities run by Unitil and National Grid as well as gas and water businesses. Because they don’t pay federal income taxes, municipal utilities would be unaffected.

Dan Dolan, president of the New England Power Generators Association, said in an e-mail that while he could not quantify what the rate relief might be, it should be “meaningful for consumers.”

“It is in line with what is happening in states across the country with regulators mandating that the tax savings be passed along,” he said.

Evan Allen can be reached at Follow her on Twitter @evanmallen. Jon Chesto can be reached at Follow him on Twitter @jonchesto.