Xcel Energy will pass on $20 million in federal tax savings to its natural gas customers in Colorado, with more savings on the way for electric customers.
Federal tax obligations go into the calculation that Xcel Energy and other utilities use to determine their cost of service. The Tax Cut and Jobs Act, which Congress passed in December, cut the federal corporate tax rate from 35 percent to 21 percent at the start of the year.
Private companies are spending their savings in a variety of ways, including buying back shares, increasing dividends and paying employees bonuses. The Colorado Public Utilities Commission stepped in to make sure the state’s regulated utilities pass those savings on to customers.
“This is a regulated monopoly. We are aligned with what the PUC commissioners have said: Bring reduction in rates to consumers as quickly as possible,” said Cindy Schonhaut, director of the Colorado Office of the Consumer Counsel.
A typical residential customer should see savings of 87 cents per month or $10.44 a year from the adjustment. Small business customers should see a monthly bill decrease of $3.46 a month or $41.52 a year, Xcel Energy estimates.
“This reduction, driven by federal tax reform, helps with our efforts to provide affordable, low-cost energy,” David Eves, an executive vice president with Xcel Energy, said in a statement.
The final amount of savings natural gas customers will capture will be determined in regulatory reviews pending before the PUC that should wrap up before the end of the year. A separate regulatory review on electric rates is also underway and will provide additional savings.
Customers will save about 2 percent on their gas bills on average, and the reduction continues a trend of lower natural gas bills from Xcel Energy going back to 2013. Since then, residential gas bills are on average 17 percent lower, a savings of $8.55 a month, while commercial bills are 12 percent lower, a savings of $27.63, the company said.