BOSTON — The state is ordering more than a dozen electric, gas and water companies to fork over $116 million in tax savings to their customers.
A directive issued Friday by the state Department of Public Utilities requires 14 publicly regulated companies — including National Grid, Eversource and Unitil — to reduce their distribution rates, effective July 1, to reflect savings from a cut in the federal corporate tax rate.
The agency says residential customers can expect average annual savings from $9 to $40 — or a 1 to 8.5 percent reduction on their bills.
Angela M. O’Connor, chairman of the Public Utilities Commission, said in a statement the order “guarantees that the hundreds of millions of dollars in tax savings for utility companies are passed on to hard-working Massachusetts residents, who will see real reductions in their monthly utility bills.”
The utilities are seeing a windfall because of the federal Tax Cuts and Jobs Act of 2017, which lowered the corporate tax rate from 35 to 21 percent. In Massachusetts, regulators factor in federal taxes on utility companies when calculating “reasonable and just” rates for their customers.
In February, state regulators ordered the companies to revise cost calculations to reflect the tax savings. They called for reduced rates to be set by July 1, but many companies balked at that deadline.
The attorney general’s office, which has regulatory authority over the companies, said most failed to provide information that had been requested by the state in February, or submitted inadequate plans.
It accused the companies of “playing Monopoly” with “money that didn’t belong to them.”
Under the new order, utility companies with pending rate increases can defer any tax-related adjustments until after those cases are heard by regulators, on the condition they return all the savings back to July 1, 2018, with interest at the prime rate.
For some customers, that means they could end up paying more in the end because the decrease will be wiped away by rate hikes.
National Grid, which serves about 1.2 million customers in Massachusetts, pared back a proposed natural gas rate increase by more than $22 million based on anticipated tax savings.
It also estimated $28.2 million in savings for its electric customers.
But the company told regulators it won’t be factoring those savings into bills until new — likely higher — rates go into effect this fall.
Eversource, one of the state’s largest utilities, was the first to scale back a rate increase for its 1.4 million customers in Massachusetts as a result of the tax cut.
It agreed to pass back more than $57 million in savings for electric customers beginning in February.
Unitil, which serves about 45,000 electric and gas customers in Massachusetts, said it expects to rebate customers about $1.6 million in tax savings.
The company, which owns Fitchburg Gas and Electric Light Company, is one of the few utilities that isn’t seeking a rate increase this year.
The state’s order gives utilities seven days to submit new rates for consideration. They’ll have another week after that to implement the changes.
Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites.