Entergy Arkansas has reached a settlement with parties in its request for a rate increase, but the agreement still must be approved by the Public Service Commission.
Entergy, the largest utility in the state, with about 700,000 customers, first sought a $167 million increase in April. Under the proposed settlement, Entergy would receive an increase of $133.6 million from its residential customers, said Laura Landreaux, Entergy's vice president of regulatory affairs.
The higher rate will show up on a customer's bill as an 8.3 percent increase. A customer who currently pays $100 a month for electricity would see his bill rise to $108.30 a month when the increase takes effect in April, if the settlement is approved.
A need to improve Entergy's electrical infrastructure and a $237 million purchase of one-fourth of the Union Power Station natural gas plant near El Dorado, among other things, are driving the request for a rate increase, said David Lewis, an Entergy spokesman. Entergy also expects to invest $1.7 billion on infrastructure improvements through 2018, Lewis said.
The Public Service Commission -- a panel made up of Chairman Ted Thomas and Commissioners Elana Wills and Lamar Davis -- are to hold a hearing on the rate request Tuesday in Little Rock.
"There are gives and takes in any settlement agreement," Landreaux said. "The [proposed rate increase] is certainly less than we asked for, but it represents a fair and just result for all parties involved, taking into account each of the litigated positions."
Agreeing to the settlement were the general staff of the Public Service Commission, the state attorney general's office and several of Entergy's major commercial customers.
Included among those customers who intervened in the case and supported the agreement are the Arkansas Advanced Energy Association, Arkansas Electric Energy Consumers, Federal Executive Agencies, the Hospitals and Higher Education Group and the Kroger Co. Five other parties to the case stated that they did not oppose the agreement.
The commission will question witnesses about the rate proposal.
"The commission has approved some settlements, has modified some settlement agreements and has rejected some settlement agreements," said John Bethel, executive director of the commission's general staff. "Oftentimes, if it's a settlement of all the parties, the commission will approve those or will approve those without substantial modification. But I certainly can't say that the commission would not make any modification to this proposal."
Movement toward a settlement began when the commission's general staff listed in a filing its recommended revenue for Entergy, about $1.3 billion, Bethel said.
Parties to the case made adjustments to that filing, which eventually led to the proposed settlement, Bethel said.
"It followed a similar pattern that other settlement agreements have followed over the last several years," Bethel said.
There was an initial settlement meeting among all the parties to the case on Dec. 14 and the discussions lasted for about a week, Landreaux said.
"Parties in good faith compromised on conditions, as they do in any settlement," Landreaux said.
It is likely that the commission will make a final decision on the case some time next month, Bethel said.
Entergy last sought a rate increase in 2013.
Initially, it sought an increase of $178 million, which Entergy projected would actually reduce customers' bills by less than $1 a month. The reason for the reduction in customers' bills was because savings Entergy expected from ending its system agreement with Entergy Corp., Entergy Arkansas' parent company, offset costs from the rate increase.
The Public Service Commission eventually approved an increase of $86 million, less than half the original request. Of that total, $49 million were costs already paid by customers that moved to base rates, Landreaux said. So the impact to customers was only $37 million.
SundayMonday Business on 01/17/2016