Bill Text: NJ A3124 | 2018-2019 | Regular Session | Introduced
Bill Title: Requires public utilities to reduce rates and provide bill credit to customers based on public utility's federal income tax liability reduction.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2018-02-08 - Introduced, Referred to Assembly Telecommunications and Utilities Committee [A3124 Detail]
Download: New_Jersey-2018-A3124-Introduced.html
Sponsored by:
Assemblyman RONALD S. DANCER
District 12 (Burlington, Middlesex, Monmouth and Ocean)
SYNOPSIS
Requires public utilities to reduce rates and provide bill credit to customers based on public utility's federal income tax liability reduction.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning public utility rates and bill credits and supplementing Title 48 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. As used in this act:
"Base rate case" shall have the same meaning as provided in section 2 of P.L.1995, c.180 (C.48:2-21.25).
"Board" shall have the same meaning as provided in section 3 of P.L.1999, c.23 (C.48:3-51).
"Public utility" shall have the same meaning as provided in R.S.48:2-13.
2. Pursuant to a base rate case filed by every public utility under R.S.48:2-21 within 30 days of the effective date of this act, the board shall require a public utility to reduce its distribution and transmission rates or charges to its customers in an amount equal to the reduced federal income tax liability that was or will be realized, if any, by the public utility as a result of the federal "Tax Cuts and Jobs Act," Pub.L. 115-97. The board shall determine whether the public utility realized or will realize a federal income tax liability reduction based on a comparison of the public utility's estimated 2018 tax liability based on the "Corporation Business Tax Act (1945)," P.L.1945, c.162 (C.54:10A-1 et seq.) and the federal "Tax Cuts and Jobs Act," Pub.L. 115-97, and an estimate of what the public utility's tax liability would have been under the State and federal tax laws in place at the time of the public utility's most recent prior base rate case. As part of that rate base case, the board shall require a public utility to provide a bill credit to its customers in an amount equal to a portion of the reduced federal income tax liability realized by the public utility between January 1, 2018 and the date the reduced distribution and transmission rates or charges of the public utility become effective. The amount representing the public utility's reduced federal income tax liability shall be divided by the public utility and credited to customers in a manner determined by the board. The board shall adjust a public utility's distribution and transmission rates or charges once a public utility's actual tax liability is determined, as determined by the board.
3. This act shall take effect immediately and shall be retroactive to January 1, 2018.
STATEMENT
The bill requires the Board of Public Utilities (board) to require a public utility to reduce its distribution and transmission rates or charges to its customers in an amount equal to the reduced federal income tax liability that was or will be realized by the public utility as a result of the federal "Tax Cuts and Jobs Act," Pub.L. 115-97, that reduced the public utility's federal income tax liability beginning on January 1, 2018. Under the bill, a public utility is to file a base rate case within 30 days of the effective date of the bill. The board is to determine whether the public utility realized or will realize a federal income tax liability reduction based on a comparison of the public utility's estimated 2018 tax liability based on the State "Corporation Business Tax Act (1945)" and the federal "Tax Cuts and Jobs Act," Pub.L. 115-97, and an estimate of what the public utility's tax liability would have been under the State and federal tax laws in place at the time of the public utility's most recent prior base rate case. As part of that rate base case, the board is also to require a public utility to provide a bill credit to its customers in an amount equal to a portion of the reduced federal income tax liability realized by the public utility between January 1, 2018 and the date the reduced distribution and transmission rates or charges of the public utility become effective. The amount representing the public utility's reduced federal income tax liability is to be divided by the public utility and credited to customers in a manner determined by the board. The board is to adjust a public utility's distribution and transmission rates or charges once the public utility's actual tax liability is determined, as determined by the board.
Before a public utility can change its rates, it must first file a request with the board to undertake a proceeding known as a "base rate case." To obtain board approval, the public utility's request must include evidence that its request is merited and that its adjusted costs are prudent and reasonable. In addition to its labor, equipment and materials, taxes, and fuel costs, other costs considered in a base rate case include depreciation on public utility plant, as well as interest on debt issued by the public utility.
Given that public utilities have had their federal tax liability reduced, a rate base case is warranted and that any tax benefit realized by a public utility should be passed on to its ratepayers. On January 31, 2018, the board executed an order mandating that public utilities pass any economic benefit potentially received from the federal "Tax Cuts and Jobs Act" to ratepayers. While the board may take this action on its own intiative, this requirement should be enacted as law to strengthen this mandate and require any changes to it be subject to Legislative approval.
