President Donald Trump presents his ideas for tax reform
About 37,000 customers in the Wichita area are getting a cut in natural gas bills starting this month to pass along federal tax reductions approved about a year ago.
Black Hills Energy customers in Wichita will see about a $7.30 reduction in their January gas bill and about a dollar a month in the future.
In total, the company is passing through about $1.7 million in annual savings to its customers, according to a statement issued Friday.
But customers of the much larger Kansas Gas Service will have to wait for any return from the tax cuts, if it happens at all.
That company, with more than 630,000 customers statewide, seeks to keep the tax cut for its bottom line.
The money comes from a reduction in corporate tax rates — from a maximum 35 percent down to 21 percent — in the Tax Cuts and Jobs Act.
That bill passed Congress in December 2017 at President Trump’s urging.
Last year, the KCC ordered the state’s utilities to pass the tax savings on to customers in most circumstances.
Westar Energy and its sister company, Kansas City Power & Light, are already passing those savings along, said David Nickel, consumer counsel for the Citizens’ Utility Ratepayer Board, the state agency that represents residential and small-business utility customers..
But Kansas Gas, a division of the Oklahoma-based One Gas, is resisting passing on its savings. The company is in the midst of a rate-setting case and contends it should get to keep the proceeds from the tax cut.
The company claims that because of other business costs, it is earning less than the KCC allows, and thus should be exempt from the commission order to pass through the tax cut.
“Kansas Gas Service demonstrated, beyond dispute, it was earning below its authorized return even after accounting for the tax savings,” the company said in a brief filed Jan. 3.
Kansas Gas originally filed for a $45.6 million a year rate hike, but recently approved settling with its opponents on a $21.5 million increase, Nickel said.
Keeping the tax cut would add an additional $14 million to the company’s bottom line, according to state records.
“In the settlement agreement, the parties agreed that Kansas Gas Service could take advantage of the provision in the Kansas Corporation Commission’s tax order allowing a utility to demonstrate through its filing that other costs of service have more than offset the decrease in the company’s income tax expenses,” company spokeswoman Dawn Tripp said in an e-mail response to Eagle questions. “Kansas Gas Service provided this supporting data in the company’s rate case.”
CURB is arguing customers should get the savings because taxes are an add-on cost that is supposed to be passed through to customers whether they go up or down.
Nickel said the agency is taking the position: “You give that dang money back. This is a windfall to (Kansas Gas) otherwise.”
The rate case has to be resolved by the commission by Feb. 25.