SWEPCO rates going up this year
BENTON COUNTY — Southwestern Electric Power Co. customers will be greeted with higher electric rates to begin the new year. Residential customers will see an 8.7% increase in their electric bills.
The net overall rate increase approved by the Arkansas Public Service Commission will reach $23.9 million. SWEPCO’s initial request, submitted in February, was for a $57.6 million increase in the base rate for all customers.
An Arkansas residential customer using 1,000 kilowatt-hours per month will see an overall bill increase of $8.43 per month, or 8.7%, the utility said. The new rate will appear on January bills for the billing cycle beginning today. The U.S. Energy Information Administration said the average residential utility customer used about 914 kilowatt-hours per month in 2018.
State regulators made only a slight adjustment to the base rate increase that SWEPCO submitted to the commission in October after negotiation with large business customers, consumer groups and the attorney general. That proposal would have increased residential bills by 8.8%, or about $8.54 per month, and would have been an overall $24.1 million increase.
“Our goal is always to serve Arkansas customers and communities with a strong electric system that provides reliable and safe energy,” Malcolm Smoak, SWEPCO president and chief operating officer, said in a prepared statement.
“We work hard to balance the need to invest in the electric system with the need to manage our operating costs. We are committed to high-quality service for the families, businesses and communities we serve in Arkansas.”
The October proposal was submitted with unanimous support from Attorney General Leslie Rutledge. Other parties in the settlement included the board of trustees of the University of Arkansas, Walmart, Western Arkansas Large Energy Consumers and the Sierra Club.
The company provides electricity to nearly 120,000 residential and commercial customers in 13 Arkansas counties. SWEPCO’s most recent base rate increase occurred in 2009, according to a spokesman.
“It’s been 10 years since we last raised base rates in Arkansas,” company spokesman Peter Main said.
Base rates are influenced by the cost to build, maintain and operate the electric system statewide. Those costs account for investments in power plants, generation and transmission facilities. “It includes everything we need to serve our customers,” Main said.
The commission also approved a new process for considering and approving any rate adjustments SWEPCO will seek in the future.
Beginning in 2021, the company will convert to a formula rate plan that requires SWEPCO to file an evaluation report each April 15. The commission will then assess the filing and determine whether rates should be increased or decreased based on the company’s costs. Any commission-approved rate adjustment would take effect Oct. 15 of that same year. The formula rate plan will be in place for five years.
That process should be much quicker than the traditional rate request system. For example, the just-approved rate increase was first submitted by SWEPCO in February and only approved at the end of the year.
Customers should experience lower rate increases on an annual basis as opposed to waiting 10 years between base-rate evaluations and having cost riders, or individual charges, added in the interim.
“The formula rate plan, as provided by Arkansas law, better aligns the company’s rates with its costs on an annual basis, which promotes greater rate stability and reduces the potential for large rate swings associated with general rate cases,” Smoak said.
Under the new plan, individual riders, or charges, now move into base rates. For example, the coal-powered Flint Creek plant in Gentry was required to install environmental improvements to align with Environmental Protection Agency regulations. Arkansas law allows SWEPCO to recover those costs, which are now included in the new base-rate formula. Previously, the Flint Creek charges were recovered through a separate item added to bills.
“As part of this case those riders were moved from being individual charges on the bill into being part of the overall base rates,” Main said.
SWEPCO serves parts of Benton, Carroll, Hempstead, Howard, Little River, Logan, Miller, Pike, Polk, Scott, Sebastian, Sevier and Washington counties.