ComEd will provide $434 million in tax refunds to its customers over three years beginning in January.
The refund represents “excess deferred income taxes” collected by ComEd as a result of the Tax Cuts and Jobs Act of 2017, which lowered the corporate tax rate from 35% to 21%.
The utility, which serves more than 4 million residential and business customers in northern Illinois, wanted to spread the rebate over 39 years, but state regulators favored an accelerated schedule backed by consumer advocates and the bureau. of the Illinois Attorney General.
“There’s no reason we should wait 39 years,” said David Kolata, executive director of the Citizens Utility Board, a nonprofit watchdog group. “It makes a lot more sense to just pay consumers back faster.”
Over the course of three years, the average ComEd customer will receive about $3 a month through tax refunds, Kolata said.
The Illinois Commerce Commission approved the plan last week to credit nearly $485 million in tax rebates to the state’s electricity customers beginning in 2023, including $434 million from ComEd and nearly $51 million from Ameren. Rebates will appear 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 higher amount refunded.
“ComEd forecasts that the average monthly residential bill for distribution charges will be $35 in January 2023, resulting in a benefit of more than 80 cents,” O’Dowd said. “Larger customers (commercial and industrial) could make a profit of 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 businesses large and small. . It also lowered the tax rate for utilities, which had already collected federal income tax from consumers at the highest rate, built into monthly bills.
Illinois utilities wanted to give consumers excess income taxes collected over decades, while the attorney general’s office pushed for an accelerated timeline. The Fair Employment and Climate Act, signed into law by Gov. JB Pritzker in September, added a provision requiring electric utilities to issue rebates 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 law. The average customer earns 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 appears on customer bills, it can be more than offset by ComEd’s proposition. $199 million increase in electricity supply costs. If approved by state regulators, the utility’s biggest rate increase in nearly a decade would add $2.20 per month to the average residential customer bill starting in January 2023.