New filing eliminates proposed rate increase in 2018 while maintaining key safety and compliance investments
ATLANTA – Atlanta Gas Light Company (“Atlanta Gas Light”) recently made a filing with the Georgia Public Service Commission (“PSC”) asking regulators to approve a $16 million rate reduction for customers to begin later this year. The reductions stem from the Tax Cuts and Jobs Act of 2017 (“tax reform”), which is expected to substantially lower Atlanta Gas Light’s annual tax expense and result in an overall benefit to customers of approximately $38 million.
The proposed adjustment revises a Dec. 1, 2017, annual rate filing (see release here) that will be acted upon later this spring. That original filing, which was submitted to the PSC prior to tax reform going into effect, had sought approval to raise basic service rates by approximately $22 million to support additional safety and compliance programs as well as address higher operating expenses.
“Thanks to the Tax Cuts and Jobs Act, we are able to invest in the same critical long term infrastructure programs that we proposed in December and return 100 percent of the net tax benefits back to customers,” said Bryan Batson, president of Atlanta Gas Light.
The revised filing recognizes the benefits of the federal tax reform law, including the lowering of the federal corporate income tax rate from 35 to 21 percent, and also factors in the negative impacts to utilities, such as the loss of bonus deprecation and cash flow shortfall caused by the change in tax rates. To compensate for that loss in working capital, the Company is proposing an adjustment to its capital structure, a measure recommended by various utility financial analysts as a means of protecting credit ratings and preserving lower borrowing costs, which is also expected to be a benefit to customers.
The net impact of the tax reform is that instead of an approximate $22 million annual increase in rates as initially proposed, or 98 cents monthly, customers will benefit from a proposed $16 million decrease, or a monthly cut in rates of 71 cents for the average residential customer; a $38 million overall benefit to customers.
The PSC is expected to establish a scheduling order in the coming weeks to review the request and make a decision.