FOR IMMEDIATE RELEASE – August 16, 2018
Contact: Colin Finnegan
New U.S. Chamber Analysis Quantifies Energy Rate Savings and
Economic Growth from Tax Cuts and Jobs Act
Utility Tax Savings to Benefit Residential and Industrial Customers, Broader Economy to Include Virginia
WASHINGTON, D.C. — A new analysis released by the U.S. Chamber of Commerce Global Energy Institute (GEI) found that electricity customers across the United States will save billions as a result of the recently enacted “Tax Cuts and Jobs Act of 2017,” while the broader economy will create tens of thousands of jobs and see billions more in economic activity.
Across the states analyzed, customer savings over the next five years (2018-2022) will range from $100 million in Maine to over $3 billion in California. Each state also sees meaningful GDP and job gains as a result of these customer savings.
“Our new analysis shows that the Tax Cuts and Jobs Act of 2017 is reducing energy costs for both residential customers and industrial users,” said Karen Harbert, president and CEO of the U.S. Chamber’s Global Energy Institute. “Utilities that have seen relief from their tax bills are passing those savings onto their customers, which ultimately saves consumers money. This savings is resulting in increased economic productivity and more jobs around the country.”
“This new analysis shows how tax reform is having its intended pro-growth effects – a growing economy and families keeping more of their hard-earned dollars,” said Caroline Harris, vice president for Tax Policy and Economic Development for the U.S. Chamber. “Faced with lower tax rates, investor-owned utilities in almost every state are sharing the benefits of tax reform with their customers in the form of smaller monthly bills. Now, these customers are able to use their extra monthly savings to start a new business, hire new workers, or put money towards the future.”
Electric utilities set their rates based on their cost of service, a pricing mechanism that allows them to recoup their tax expenses from ratepayers. “The Tax Cuts and Jobs Act” reduced the tax rate that investor-owned utilities pay, which reduced their cost of service. This savings is now being passed along to consumers in the form of lower utility bills. In many cases, state public utility commissions are requiring reduced rates.
GEI engaged FTI Consulting to analyze public utility filings in 12 states to determine the investor-owned utility customer savings. FTI Consulting then applied the IMPLAN model to this data to determine the GDP and employment benefits associated with these savings. Those savings are invested into the economy, leading to additional jobs and economic growth.
The 12 states GEI analyzed were Alabama, Arizona, California, Florida, Georgia, Maine, Michigan, Minnesota, Missouri, Nevada, Texas and Virginia. The state utility commission filings are located in Appendix A of the full report.
The mission of the U.S. Chamber of Commerce's Global Energy Institute is to unify policymakers, regulators, business leaders, and the American public behind a common sense energy strategy to help keep America secure, prosperous, and clean. Through policy development, education, and advocacy, the Institute is building support for meaningful action at the local, state, national, and international levels.
The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.