Cap and trade bill to increase utility bills for Arkansans

The proposed federal cap and trade legislation could raise some annual utility bills in Arkansas by as much as $870 a year by 2030.

Several Arkansas-based utilities reported Friday to the Arkansas Public Service Commission that they expect the proposed federal cap and trade legislation (HR 2454)  to increase costs for their customers.

The reports are not a surprise considering that the Congressional Budget Office previously estimated that the average American utility consumer would see a $175 annual increase in their utility bill by 2020 as a result of the proposed legislation.

Among its numerous provisions, the proposed bill establishes a national energy production standard requiring 20% of retail electric sales to come from combined renewable energy and energy efficiency by 2020. The bill also establishes greenhouse cap and trade provisions that cover 85% of the overall economy, including electricity producers, oil refineries, natural gas suppIiers, and energy-intensive industries like iron, steel, cement and paper manufacturers, according to the filing by Entergy Arkansas.

The bill was approved by the U.S House of Representatives on June 26 on a 219-212 vote. U.S. Rep. Vic Snyder, D-Little Rock, was the only member of Arkansas’ delegation in the House to vote for the bill. It is now on the Senate calendar.

Most Arkansans and one U.S. Senator from Arkansas oppose the cap and trade bill. According to polling information from Roby Brock at TalkBusiness.net, 56% of Arkansans “somewhat oppose” (17%) or “strongly oppose” (39%) the cap and trade legislation.

U.S. Sen. Blanche Lincoln, D-Ark., who could face a tough reelection bid in 2010, recently issued this statement about the bill: “The House’s Waxman-Markey bill picks winners and losers and places a disproportionate share of the economic burden on families and businesses in rural America. It is a deeply flawed bill.  I will not support similar legislation in the Senate.”

Utility companies were ordered by the PSC to submit are report on their “best estimate” of what the federal legislation might mean to their operations and customers.

• Fort Smith-based Arkansas Oklahoma Gas Corp.
The company did not offer any detailed estimates on the impact of the proposed legislation, but noted in the conclusion of its filing: “ACES is wide ranging legislation that, if made into law, will substantially impact all aspects of the way public utilities in the State of Arkansas operate. It proposes expansive new programs with stringent new requirements, that AOG is unsure how to meet at the current time. The programs will likely involve significant costs to AOG’s operations, and these costs will ultimately be borne by AOG’s customers. Because of this, the Commission and AOG should carefully balance the costs of such programs with their projected benefits.”

• Oklahoma City-based OG&E
The utility, which provides service to parts of western Arkansas, said by 2020, the proposed bill could raise average residential bill between $301 and $642 a year. The company said the average annual customer bill is now $1,200. Those costs could be higher.

“In addition, OG&E is studying other options for complying with H.R. 2454. These other options may have a greater impact on OG&E operations. Such options include repowering existing units, co-firing retrofits and new generation options. OG&E anticipates including a scenario in its upcoming Integrated Resource Plan that explores options to comply with H.R. 2454,” the company noted in the PSC filing.

• Little Rock-based Entergy Arkansas
Entergy, which provides electricity to large parts of the state and owns the nuclear power plant in Russellville, estimates increased annual customer costs of between $25 and $121 (estimated in 2012 dollars) by 2021.

• Little Rock-based Arkansas Electric Cooperative Corp.
This cooperative, which includes Arkansas Valley Electric Cooperative and its customers in the Fort Smith region, estimates that cost increases by 2030 (estimated in 2009 dollars) could range between $354 and $870 a year.