James F. McDonough
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732-568-8360 jmcdonough@sh-law.comFirm Insights
Clash Over Corporate Tax in North Carolina Utilities Commission
Author: James F. McDonough
Date: October 22, 2014
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A decision by the North Carolina Utilities Commission has triggered internal protest that highlights a rift between Democrats and Republicans.
According to NewsObserver.com, the commission has ruled that the state’s utilities can continue to charge their customers for a corporate tax rate higher than the rate that they actually pay. This decision has introduced strong tensions between the commission’s Democratic minority – who controlled the commission for years – and a Republican majority recently put into place by Gov. Pat McCrory.
In a 4-3 decision, the commission ruled that North Carolina utilities can continue to charge consumers for a corporate income tax of 6.9 percent, despite the fact that the state’s corporate income tax was recently lowered to 5 percent by state legislature, the news source reported. Utility companies are allowed to pocket the difference.
“There is no set end to this over-collection, which will continue indefinitely each year until each utility’s next general rate case,” the commission’s three Democrats wrote in their dissent, according to the news source. “Even then, ratepayers will never be refunded the over-collected funds; the utilities have simply been afforded an unearned gain at the expense of North Carolina ratepayers.”
Utility Dive reported that the state’s utilities would be able to over-collect approximately $21 million per year based on the ruling. Ratepayers’ average electric bills would increase by about 1 percent and average natural gas bills would increase by between 3 and 4 percent.
The majority wrote in their decision that the amounts considered are too small to require a change, according to NewsObserver.com. Duke Energy Carolinas and Duke Energy Progress are two companies opting to pass the savings on to consumers. They noted, however, that their customers would likely only pay 9 cents more and 17 cents more per month extra, respectively.
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