Federal Tax Changes And Your Bill
on Tuesday, January 30, 2018
Will federal tax changes impact your MEC bill?
Many investor-owned electric utilities (IOUs) across the country, including several right here in Michigan, are announcing utility price reductions as a result of the Federal Tax Reform package passed at the end of 2017. How will this impact your MEC bill?
We are a not-for-profit cooperative, and our electric members and internet subscribers are not subject to federal income taxes through rates. So the short answer is that the reform package will not impact your bill related to those services. While our propane service is subject to federal income taxes, we establish fair and appropriate rates well ahead of each heating season, and cap those rates at no charge to our customers. Our 2017-18 capped rate is $1.599/gallon, and this week's reported Michigan average is $2.219/gallon. We believe our customers are very well served by our strategic approach.
For-profit IOUs pay federal taxes. Therefore, the federal corporate tax reduction will result in lower expenses and higher profits for them.
That's just one difference between the two business models. Another difference is what the companies do with their profits.
Profits made by IOUs are paid out as dividends to their shareholders/investors, who may not even be their customers. Electric cooperatives are owned by those we serve, so essentially you are our shareholder. While we operate as a non-profit organization, any margins at the end of each year are assigned back to member capital credit accounts based on the energy consumed. In recent years, your Board of Directors has elected to reinvest those capital credits to best manage rates and make system improvements. We're making sure your equity is best serving you and other co-op shareholders as we live out our vision to create vibrant, relevant, and sustainable rural communities.
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