Entergy Arkansas has agreed to shave $32 million off a recently filed rate-increase request based on recommendations from the Public Service Commission staff. Customers across Arkansas will begin paying 6.14% more for electricity this month under the proposal.
The revised request raises the average monthly household bill by $6.80, down from $8.27 in the company's original proposal filed last month. Average usage is considered 1,000 kilowatt hours per month and that monthly bill currently is $110.76, Entergy says in its filing.
Rate increases will appear on bills this month, company officials said Monday, as a fuel and purchased power line item. Total monthly charges vary based on customer usage.
Overall, Entergy will raise rates by 6.14% for all customer classes -- more than 720,000 residential, business and commercial ratepayers. That's down from the 7.5% rate increase the state's largest electric utility first proposed last month.
However, the company confirmed Monday that it could raise rates again between now and March 2023 to make up for a shortfall in recovering costs. "The rate recovery mechanism allows for an interim adjustment, and the fuel costs would need to be re-evaluated to make a determination as to when and what amount that might be," Entergy spokesperson Brandi Hinkle said in a statement Monday.
Revisions to the rate request were outlined in a March 25 letter from David Palmer, Entergy's director of regulatory affairs, to the commission staff. Palmer wrote that "the primary reason for the Rider ECR rate increase is a large under-recovery balance as a result of higher natural gas prices in 2021, particularly in the fourth quarter."
The commission staff asked the company to delay collection of a portion of the under-recovery balance, specifically by $32 million. "We asked that they defer or delay, not to forgo, a portion of its under-recovery balance and we would consider it next year," Donna Gray, director of the commission staff, said Monday.
Hinkle said Monday that the company agreed to the staff request and "Entergy Arkansas deferred an additional $32 million from the February 2021 winter storm event in this most recent filing on March 25th." Entergy, like other utilities, incurred added costs when snow blanketed the state for much of February.
Every March, Entergy makes an annual filing that evaluates its energy costs and gives the company flexibility to adjust rates accordingly, either up or down. Those costs in 2021 were inflated by winter snowstorms in February 2021 that inflated natural gas prices and by another increase in natural gas costs in the latter portion of the year.
In the March 25 letter, while agreeing to lower the rate increase, the company pointed out that it will have an under-recovery balance of $43 million, including a shortfall of $11 million at the end of February. The company indicated it may have to seek another interim rate increase before its next annual filing in March 2023 to make up for the shortfall.
In its original filing, the company said total energy costs for 2021 spiked to $313 million, a 17.4% or $46.5 million increase from 2020. That increase was "driven by higher fuel and energy prices," the filing said.
Rates decreased over the past two years, the company said at the time of the original filing last month, noting the current rate is the lowest in more than 10 years. Company officials noted the utility's efforts to bolster its energy supply through investments in areas such as nuclear power and other diversified sources have helped customers.
"At Entergy Arkansas, we carefully plan and invest our resources to provide reliable power and keep rates as low as possible," Kurt Castleberry, director of resource planning and market operations, said in a statement when the initial rate filing was made last month.
The utility, which is owned by Entergy Corp. of New Orleans, serves residential, business and commercial customers in 63 Arkansas counties.