Entergy Arkansas: Fuel costs adjustment will help offset pending rate hike

Entergy Arkansas Inc. reiterated Monday (Feb. 15) that its annual “fuel and purchased power cost” adjustment for declining energy expenses will largely offset a projected increase from the utility giant’s rate case that is now before the Arkansas Public Service Commission.

“It takes careful planning and efficient operations to mitigate the bill impact to our customers,” said Hugh McDonald, president and CEO of Entergy Arkansas. “Our customers are reaping the benefit of the current energy market, combined with our timely acquisitions of modern, efficient and clean-burning combined-cycle natural-gas plants. All these factors combine to allow their rates to remain significantly lower than the national and regional averages.”

McDonald and other Entergy officials made similar assertions during testimony before the PSC on Jan. 19 for a proposed deal to lower the company’s pending rate request by some $43 million. Originally, Entergy Arkansas’s rate request filing in April 2015 would have raised a typical monthly bill for a residential customer using 1,000 kilowatts per hour (kWh) by nearly $13, or 45 cents a day.

According to testimony from the Entergy Arkansas, the PSC general staff, and a long list of intervenors in the docket, the joint settlement deal would now increase a monthly bill for a typical residential customer using 1,000 kWhs of electricity by 8.3%, or about 27 cents a day. It would also allow Entergy Arkansas to recoup $225.1 million of its $1.28 billion non-fuel revenue requirement, nearly $43.3 million or 16% less than the original rate request.

However, the fuel cost adjustment, set to be filed in March, will result in a $7.11 reduction in a 1,000 kilowatt-hour residential bill. The Energy Cost Recovery (ECR) rider is the vehicle through which Entergy Arkansas is compensated for what it spends on fuel at its power plants and for wholesale power purchased to supplement its own generation. The cost each Entergy Arkansas customer pays for fuel and purchased power appears as a separate line item on their bill called “Fuel & Purchased Power Cost.”

Entergy, the PSC staff and the intervenors first file a joint motion with the regulatory panel to approve a settlement agreement in December to increase base rates to recover costs. If approved, the requested increase, when combined with the significant decreases offered by the new fuel charge, will mean a net increase to monthly bills of about $1.30 to a residential customer using 1000 kilowatt-hours of electricity, Entergy officials said.

According to PSC Executive Director John Bethel said the Commission will render a decision on the proposed rate case agreement by late February as mandated by regulatory rules. State utility regulators conducted public comment hearings in late January on the rate case in El Dorado and Batesville.

Click here to view the Entergy Arkansas rate case docket 15-105-U.
http://www.apscservices.info/efilings/docket_search_results.asp?casenumber=15-015-U

Entergy Arkansas provides electricity to approximately 700,000 customers in 63 counties. Entergy Arkansas is a subsidiary of New Orleans-based Entergy Corp., an integrated energy company engaged primarily in electric power production and retail distribution operations. The utility holding giant delivers electricity to 2.8 million utility customers in Arkansas, Louisiana, Mississippi and Texas.f

Entergy, which will report its fourth quarter and yearly earnings on Thursday, has annual revenues of more than $12 billion and nearly 13,000 employees.