Florida regulators OK utility use of tax savings to pay for hurricane damages

Dive Brief:

Duke Energy Florida and Tampa Electric Co. (TECO) will use the savings from a federal tax cut to pay for hurricane damage, assuring neither utility will raise customer rates in order to pay for storm restoration efforts.
The Public Service Commission (PSC) on Tuesday approved settlements allowing Duke to use $484 million in savings from the 2017 Tax Cuts and Jobs Act (TCJA) to cover restoration costs from Hurricanes Irma and Nate and also to replenish its hurricane reserve fund.
TECO will use $91 million in savings to cover costs for Tropical Storms Erika and Colin and Hurricanes Hermine, Matthew and Irma.

Dive Insight:

The settlement, which includes customer advocates and large consumers, means lower restoration costs for consumers while also standardizing certain processes for the next time utilities are recovering from a storm.

Using TCJA savings "is an effective solution to to handle restoration costs associated with several recent named storms that caused widespread damage and power outages," PSC Chairman Art Grahams said in a statement.

Many utilities passed savings from the 2017 tax cuts back to consumers, after legislation signed by President Donald Trump lowered the corporate tax rate to 21%, down from 35%.

Grahams said the settlements are in the public interest "because they reduce storm cost recovery for customers and implement processes and procedures that will continue to benefit customers."

Utilities and customer advocates have had a "spirited debate" for the last year and a half, according to the Tampa Bay Business Journal, on a range of issues including what storm recovery costs should customers cover. The settlements approved this week look to avoid a repeat of that debate.

The PSC said newly-approved storm restoration processes and procedures include establishing billing commitments with outside companies contracted to assist with storm response, and setting limits on compensation for travel time and meal reimbursements. The settlements require utilities to track work crews using GPS and to document and justify all exceptions to the policies.