Energy & Environment
Written by Tom Steward | February 16, 2018

Minnesotans Should Save $200 Million on Gas and Electric Bills Thanks to Federal Tax Cut

Minnesotans’ power bills keep heading in the wrong direction. As American Experiment’s report, Minnesota Energy Policy: The High Cost of Failure, recently revealed, it’s no secret why.

At least $15 billion in Minnesota has been squandered on wind turbines and transmission lines with little to show for  it–except for jacked up utility bills. Green energy mandates have cost state consumers billions without achieving environmentalists’ goal of significantly reducing greenhouse gas emissions.

Last year for the first time, Minnesotans spent more than the national average on their power bills, wiping out what used to be an 18 to 20 percent price advantage before the imposition of green energy mandates.

But there’s a bit of relief in sight–thanks to the federal tax cut now in effect. The lower corporate tax rate of 21 percent will save the state’s investor-owned Minnesota utilities–and presumably their hundreds of thousands of customers–an estimated $200 million annually. But Heritage Foundation policy analyst Adam Michel warns that state regulators may be tempted to divert some of the tax savings that should go to consumers.

“State-regulated utilities are an interesting case for tax reform,” Michel said in an email Monday. “Because their rates are not set by markets, but instead by bureaucrats, consumers should see the utilities’ tax savings show up directly in their bill through lower rates. Some of the tax savings may also be redirected into infrastructure investments for better or expanded service.”

State Rep. Nolan West, R-Blaine, and Rep. Pat Garofalo, R-Farmington, have drafted legislation directing the Minnesota Public Utilities Commission to require utilities to give all of the tax savings back to lower consumers’ gas and electric bills.

“As part of the federal tax reform bill, Minnesotans will see lower energy rates and we have an opportunity to put even more money back in the pockets of millions of Minnesota families and businesses,” West said in a press release. “If we do nothing, a huge windfall will almost certainly stay in the pockets of the energy companies. But if  my legislation is approved, qualifying Minnesota ratepayers will see every penny  of the more than $200 million in expected savings.”

It may well take a law to get the utilities and state regulators on board, according to MPR.

The Minnesota Public Utilities Commission is seeking information on the impact of the new federal tax law. It’s early in the process, but so far some utilities have suggested alternatives to rate refunds, such as increasing capital investments or paying down debts sooner. Others have said they are still analyzing the tax law’s impact and how the tax savings could be spent.

Garofalo said lower gas and electricity rates can create jobs in Minnesota.

“This means more money in the pockets of small businesses, families, even large energy users. This is going to mean more money into Minnesota’s economy, and it’s going to provide more affordable rates for our customers,” he said.

After years of rate hikes in their utility bills, Minnesota ratepayers may finally catch a break, contingent on the approval of the MPUC.

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