Regulators approve accelerated plan for ComEd to deliver $434 million in tax refunds to customers over 3 years
ComEd will deliver $434 million in tax refunds to its customers over three years beginning in January.
The refund represents “excess deferred income taxes” collected by Illinois electric utility as a result of the Tax Cuts and Jobs Act of 2017, which reduced the corporate tax rate from 35% to 21%.
The utility, which serves more than 4 million residential and business customers across northern Illinois, wanted to distribute the refund over 39 years, but state regulators favored an accelerated schedule backed by consumer advocates and the Illinois attorney general’s office.
“There’s no reason that we should wait 39 years,” said David Kolata, executive director of the Citizens Utility Board, a nonprofit watchdog group. “It makes way more sense just to get money back to consumers faster.”
Over the course of three years, the average ComEd customer will receive about $3 per month through the tax refund, Kolata said.
The Illinois Commerce Commission approved the plan last week to credit nearly $485 million in tax refunds to the state’s electric customers beginning in 2023, including $434 million from ComEd and nearly $51 million from Ameren. The refunds will show up as a line item on customer bills through 2025.
ComEd will distribute $65 million in 2023, between $195 million and $282 million in 2024, and the remaining amount in 2025, according to ComEd spokesman David O’Dowd. The credit will vary by customer, based on distribution charges, and will increase in the second year to reflect the larger amount refunded.
“ComEd forecasts that the average monthly residential bill for distribution charges will be $35 in January of 2023, resulting in a benefit of more than 80 cents,” O’Dowd said. “Larger (commercial and industrial) customers could realize a benefit in the hundreds of dollars.”
The Republican-backed Tax Cuts and Jobs Act was signed into law by then-President Donald Trump in December 2017, lowering the corporate tax rate from 35% to 21%, and creating a windfall for companies large and small. It also reduced the tax rate for utilities, which had already collected the federal income tax from consumers at the higher rate, built into the monthly bills.
The Illinois utilities wanted to give the excess income tax collected to consumers over decades, while the attorney general’s office pushed for a quicker timetable. The Climate and Equitable Jobs Act, signed into law by Gov. J.B. Pritzker in September, added a provision requiring the electric utilities to issue the refunds by the end of 2025.
ComEd customers began receiving a carbon mitigation credit in June, which was also provided for through the state’s climate act. The average customer is getting a $20 monthly credit generated through profits at the state’s nuclear plants. The carbon mitigation credit appears as a new line item on ComEd bills through May 2023.
When the tax refund shows up on customer bills, it may be more than offset by ComEd’s proposed $199 million increase in electricity delivery charges. If approved by state regulators, the utility’s largest rate hike in nearly a decade would add $2.20 per month to the average residential customer bill beginning in January 2023.
