Gulf Power Cuts Electric Rates In Wake Of Tax Cut

Mar 30, 2018

Beginning in April, Gulf Power Company’s 460,000 customers will get a break in their electric bills.

Approved this week by the Florida Public Service Commission, the $103 million reduction comes after Congress and the Trump administration passed a tax cut package in December, which includes reducing the federal corporate income-tax rate from 35 percent to 21 percent.

“It’s $103 million dollars alone that’s going back into northwest Florida,” said Gulf Power spokesman Jeff Rogers. “The average customer will see about $14 per month [less]. Total for 2018 will be about $126. So it’s great news for customers at a time they could really use it.”

The plan was finalized after negotiations between a number of utilities, such as Florida Power and Light and Duke Energy Florida, and state regulators.

“In our opinion, the best way to adjust for the Tax Act is to have that money flow back to the customers, because it is the customers’ money,” said J.R. Kelly, an attorney for the Office of Public Counsel, which has been on the front lines opposing past rate hikes by Gulf Power and other utilities around Florida.

Kelly calls the reduction a “breath of fresh air” that has a couple of aspects.

“Number one, there’s been a lot of taxes that customers have already paid in, that will now be coming back to them in the form of a refund,” Kelly said. “More importantly, rates will come down because the tax rate to the utility is going to 21 percent.”

Combined, customers of the four utilities are expected to see roughly two billion dollars in savings.

“Based on a settlement that we agreed to last year when we had an increase, that as soon as there was any kind of tax reform we would put together a plan as quickly as possible on how we would pass those savings along to our customers,” said Gulf Power’s Jeff Rogers.

Along with Gulf Power, FPL, Duke and Tampa Electric filed plans with the PSC to pass along tax savings to customers. But unlike Gulf, which was unscathed when Hurricane Irma stayed downstate in September, the other utilities used the savings primarily to shield customers from getting hit with charges related to the storm.

“You’ll see some of the other utilities in Florida offsetting that with the corporate tax relief,” said Rogers. “Us, we’re able to pass the savings along right to the customers. To use more electricity than the average customer, which is 1,112 kilowatt hours per month. If you use more you’re going to see more savings, you use less you’ll see a little bit less.”

And there does not appear to be a downside to the rate reduction, according to J.R. Kelly at the Office of Public Counsel.

“I give Gulf Power credit, because they approached us early on and said, ‘We need to work together, and let’s figure out the right amounts, and let’s get that money back to the rate payers,’” said Kelly. “To Gulf Power’s credit, I believe they’re the first [utility] in the state to reduce their rates as a result of the Tax Cut and Jobs Act.”

While the rate reduction kicks in next month, Gulf Power officials say more than $30 million in tax savings are expected to continue in 2019.