Avista customers could collectively see a $50 million to $60 million annual benefit from federal tax reform, utility officials said Wednesday.
The savings on individual customers’ bills, however, won’t be known until later this year.
Corporate tax rates for the Spokane-based utility dropped from 35 percent to 21 percent effective Jan. 1. Savings from the lower taxes will get passed on to Avista’s utility customers in Washington, Idaho and Oregon, said Mark Thies, senior vice president and chief financial officer.
Washington customers could start seeing the tax benefit on their bills as early as May 1, when new electric and gas rates are expected to take effect. Avista has a pending rate case before the state’s Utilities and Transportation Commission.
The utility has asked the commission to calculate the tax benefit into the new rates, Thies said. However, the decision is ultimately up to the three-member commission. “They could decide they need more time to study it,” he said.
In Idaho, the state Public Utilities Commission has asked Avista to provide a report on expected tax savings by March 30. A decision on incorporating the savings into Idaho customers’ rates is expected later this year.
The anticipated $50 million to $60 million in annual savings is the result of the lower federal tax rate and changes to Avista’s deferred tax liability related to depreciation costs. As the result of the depreciation changes, about $442 million will be returned to Avista customers over 35 years, Thies said.
Avista Corp. released information about expected tax savings as part of its 2017 earnings report. The utility reported $115.9 million in income for last year, which amounted to $1.79 per share. Earnings dropped from 2016, when Avista reported $137.2 million in income, or $2.15 per share.
Avista’s overall performance was strong in 2017, with the company benefiting from higher than normal hydroelectric generation and lower natural gas prices, Chairman and CEO Scott Morris said in a news release.
Avista reported $14.6 million in acquisition costs last year, which are related to the company’s expected sale to a Canadian utility, Hydro One of Toronto. The sale is expected to be final in mid-August.
Subscribe to the Coronavirus newsletter
Get the day’s latest Coronavirus news delivered to your inbox by subscribing to our newsletter.