The positive effects of last year’s tax reform legislation continue to ripple through the economy, benefiting both businesses and consumers in a variety of ways. One of the positive impacts was uncovered in a new analysis released by the U.S. Chamber of Commerce Global Energy Institute (GEI) this month, which found that electricity customers across the U.S. are saving millions as a result of the law.
Across the 12 states analyzed so far – with results for additional states to come – customer savings over the next five years will range from $100 million in Maine to over $3 billion in California. This is a positive development for businesses, which will see lower operating expenses and increased efficiency, as well as for consumers, who will save on average between $200 and $500 in utility costs over the next five years.
On top of this, it’s likely that customers will experience even greater cost reductions once the regulations governing the implementation of the tax law are fully determined. This drop in electricity costs represents real money for the American people, who will then use their extra cash to shop at local businesses and save for the future. This is why each state in the study also sees meaningful GDP growth and job gains as a result of these customer savings.
How has tax reform pulled this off? Investor-funded electric utilities set their rates based on their cost of service, a pricing mechanism that allows them to recoup their tax expenses from ratepayers. Tax reform lowered the rates for investor-owned utilities in almost every state, enabling them to share the benefits with their customers in the form of smaller monthly bills.
The analysis from GEI shows just one of the ways tax reform is having its intended pro-growth effect. The benefits of the tax law touch every state and nearly every industry, in part by boosting take home pay for 90% of American workers. By empowering businesses and families to keep more of their hard-earned money, the law is growing the economy and boosting business confidence.
The U.S. Chamber was a proud proponent of the tax reform legislation as it worked its way through Congress and into law. Since then, we’ve tracked some of the many American companies that have passed on their own savings to employees and customers in the form of reduced prices, salary raises, bonuses, and new benefits. These examples can be found on an interactive map at uschamber.com/tax-reform. The new analysis of electricity costs can be found at uschamber.com/global-energy-institute.