“We were incredibly surprised,” Utilities Pay Up co-author Janet Redman told the Real News Network, “to see that between 2008 and 2013, publicly-owned utilities acutlaly paid the lowest effective tax rate of any U.S. business sector.”
The legal tax rate is 35 percent, Redman explained, and utilities pay an average of 2.9 percent. What that means, Redman said, is that utilities are pocketing cash that could be in state and federal coffers.
“That’s a huge amount of money,” Redman said. “That’s the amount of money that could pay for retrograding and doing deferred maintenance on about 25 percent of our public housing in the United States.” With that money, Redman said, we could basically renew our entire public housing stock to make them energy efficient.
Redman said utilities have been opposing the Obama administration’s Clean Power Plan based on the argument that in order to put the energy provisions in place, they would have to raise rates on their costumers.
“At the same time, they’re pocketing billions in tax breaks. So, it doesn’t add up,” Redman said.
One particular tax break that utilities take advantage of, Redman said, is the bonus depreciation tax break. This was put in place during the financial crisis to give the industry a tax incentive to invest in new infrastructure. But, Redman said, the companies aren’t spending the money in the public interest.
If instead utilities paid even at the rate that small businesses pay — 29.6 percent — the revenue could be used to meet the needs of low-income families to do weatherization on their homes.
There is an opportunity in the Clean Power Plan to implement some of the report’s solutions, Redman said, such as the clean energy investment program. “That particular incentive would give extra credit for energy efficiency and renewable energy. It would give a double credit for those activities in low-income communities,” Redman said. “What we really want to see is the broadest possible definition of a low-income community, so that it can benefit the most families.”
Right now, most of our energy efficiency programs go to single family homes, which are not affordable for low-income families. But there are some really exciting inclusive financing models being developed where an entire building can get debt-free financing on their energy bills, Redman said.
“It’s actually a boon for both the private developer’s house, because it becomes a more valuable building, and better for the individual rate payer,” Redman said.