Pennsylvania lawmakers in both parties back electric bill tax cut, with a $1.7 billion catch

A bipartisan group of Pennsylvania lawmakers is supporting a plan to quickly lower electric bills by ending the state's 5.9% tax on electricity sales.

Support for the proposal has widened as utility costs climb, but the measure would also strip $1.7 billion from the state budget, even as officials are already trying to match spending to available revenue.

What's happening?

Supporters are promoting the measure as Pennsylvania's biggest-ever tax cut, and it would end the state electricity tax for households, businesses, and nonprofits.

Once enacted, the tax change would take effect immediately, and utilities that fail to pass the savings on to customers could be fined.

That effort is unfolding amid steep increases in electricity costs statewide.

As reported by Spotlight PA, data compiled by Heatmap News and the Massachusetts Institute of Technology show the average bill has risen by more than 60% over the past five years.

After the tax cut was added, Republicans joined in a unanimous House vote for the broader bill. The Senate, meanwhile, approved the tax cut as part of a separate package.

Speed is a key selling point for backers. State Representative Carl Walker Metzgar, a Somerset Republican who introduced the amendment, said, "There is no other way for the legislature to lower people's electric bill immediately."

Meanwhile, Democratic Governor Josh Shapiro has backed a different section of the House bill, the one aimed at limiting utility profits, though his office did not say whether he supports the tax cut.

Why does it matter?

Lower electricity taxes could mean smaller monthly bills at a time when many households are already dealing with high housing, grocery, and transportation costs.

That relief may matter even more as a mix of pressures continues to drive power prices upward, including rising demand from data centers and delays in bringing new electricity generation online.

Any direct cut to utility bills would provide near-term breathing room for families trying to cover summer cooling costs and other essentials.

The proposal would lower state revenue by about $1.7 billion in the next fiscal year, and lawmakers have not laid out exactly how they would replace that money.

Even before the proposal, Pennsylvania was already under pressure to rely more heavily on reserves as spending outpaced available revenue.

That has led some lawmakers to warn that savings on electric bills now could lead to more difficult budget decisions later.

State Senator Lindsey Williams, a Democrat from Allegheny, criticized the proposal during debate, asking, "What taxes will go up to cover it? What services will be cut?"

What's being done?

Alongside the tax cut, lawmakers are also pursuing a broader attempt to reduce utility costs by targeting profits.

The original House bill was introduced by state Representative Elizabeth Fiedler, a Philadelphia Democrat who chairs the House Energy Committee, and would cap what investor-owned utilities can earn through either a formula linked to U.S. Treasury bond yields or a competitive bidding process.

Backers argue that the method could produce larger savings over time.

Patrick Cicero, an attorney with the Pennsylvania Utility Law Project and a former state consumer advocate, said the idea is meant to be "more granular and precise" in setting profits.

"Why approximate when we don't have to?" he said.

Critics, though, describe the proposal as untested and potentially risky.

Andrew Tubbs, president and CEO of the Energy Association of Pennsylvania, said that "trying to undo a century's worth of process on the fly is not sound energy policy."

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