Thousands of Northampton County customers served by Pennsylvania American Water Co. are beginning to benefit from the federal tax reform law.
Starting this month, most residential and business water customers will see a decrease of 6.8 percent, the utility said in a news release. For a residential consumer who typically uses 3,000 gallons per month and pays $53.15, the decrease amounts to $3.61 monthly and $43.32 for the year. Bills for customers vary depending on the amount of water used, the company said.
The monthly credits will remain in effect at least for about three years. That’s because Pennsylvania American, the state’s largest investor-owned water and wastewater utility, agreed under a $62 million annual rate hike settlement that took effect in January not to raise rates covering its operations until early 2021.
Most of Pennsylvania American’s wastewater customers will see monthly bills dip about 7.7 percent. Hershey-based Pennsylvania American provides sewage service in parts of four Monroe County townships: Coolbaugh, Middle Smithfield, Smithfield and Stroud.
The reductions stem from monthly bill credits ordered by the Pennsylvania Public Utility Commission after the federal Tax Cuts and Jobs Act signed late last year by President Trump eased the company’s tax liability. The tax law lowered the corporate tax rate for utilities and other businesses from 35 to 21 percent.
Pennsylvania American had hoped to put some of that money into system improvements, but the PUC said a separate Distribution System Improvement Charge mechanism is already in place to support infrastructure replacements.
Company President Jeffrey A. McIntyre said the bill credits under the PUC decision will consume the entire reduction in the company’s tax obligation, or $47 million annually.
More than a dozen major electric, natural gas, water and wastewater utilities have begun issuing monthly bill credits under the PUC’s May 17 order over the tax matter. The order required utilities to refund about $320 million to consumers. They include PPL Electric Utilities, UGI Utilities and Met-Ed. The bill decreases for customers range from UGI’s 5.8 percent to Met-Ed’s 8.6 percent
Pennsylvania American has 650,000 water customers in 400 communities, including 13,500 consumers throughout Northampton County.
PECO, the electric utility serving Bucks and Montgomery counties, and Aqua Pennsylvania, whose territory includes parts of Lehigh and Northampton counties, will not be immediately required to issue a credit, the PUC has said. That’s because both companies have rate cases pending before the commission.
