Kansas utilities say they’ll pass on tax-cut savings to customers
Topeka ? Gas and electric utility customers in Kansas may soon be paying lower rates as a result of the recently enacted federal tax cuts, according to state utility regulators.
The Kansas Corporation Commission announced Thursday that it had agreed to open a general investigation into the impact those tax cuts will have on public utilities.
As part of the investigation, the commission issued an order that utilities track all savings from the tax cuts and maintain those funds in a separate interest-bearing regulatory account.
Starting Jan. 1, the controversial tax cuts that Congress passed and President Donald Trump signed into law in December lowered the federal corporate income tax rate from 35 to 21 percent, a change that is likely to produce a windfall for many corporations, including public utilities.
The move by the KCC came after three major utilities — Westar Energy, Kansas City Power and Light and Black Hills Energy — all announced that they intended to seek regulatory approval to lower their rates as a result of the tax cuts.
Topeka-based Westar Energy is an electric utility that serves much of Kansas, including customers in Lawrence. Black Hills Energy is a natural gas utility that serves 65 communities in Kansas, including Lawrence.
KCP&L provides electrical service primarily to customers in the Kansas City metropolitan area on both sides of the state line.
The issue of how utilities would handle their windfall from the tax cuts had already become a political issue in this year’s campaign for governor. Both Secretary of State Kris Kobach, a Republican, and state Rep. Jim Ward, a Wichita Democrat, had issued statements earlier calling on utilities to return the benefits of the tax cuts to ratepayers, many of whom will soon be hit with big heating bills as a result of the recent cold snap.
But it was Republican Lt. Gov. Jeff Colyer who claimed credit Thursday for the decisions, saying they came in response to letters he had sent to the companies earlier in the week.
“I am extremely encouraged by the response my letter has received from the Kansas utility community,” Colyer said in a news release. “Black Hills Energy, KCP&L and Westar understand, just as I do, how much energy costs affect every household in Kansas.
The statements from the utility companies, however, were less emphatic.
Black Hills said it first began discussions with the KCC about the impact of the tax cuts last year, as the tax bill was still being debated in Congress. Westar and KCP&L also said they had been holding discussions with KCC staff.
Ward, meanwhile, said in an interview that he didn’t know what prompted the companies to make their decisions.
“I can’t read their minds, but I was happy to put any political pressure I could because I thought it was the right thing to do,” he said.
KCP&L said the federal tax cuts would save that company an estimated $100 million a year, of which about $35 million is allocated to Kansas customers. Westar anticipates it will save about $65 million a year from the tax cuts.
Both electric companies said they intend to pass the full amount of the tax savings along to customers.
Black Hills did not say how much it anticipates saving or how much of that savings it plans to pass on to customers.
Estimates were not available Thursday about how those rate cuts would affect individual customers.
In Kansas, public utilities must get permission from the KCC to alter their rates, regardless of whether it’s an increase or a decrease.
KCC spokeswoman Linda Berry said in a phone interview that the commission was charged with ensuring that rates were reasonable and sufficient to ensure that utilities could provide reliable service to their customers.