Senate committee OK’s bill to allow gas utilities to recoup investment costs earlier

Arkansas’ natural gas utilities won’t have to wait until a rate case filing before the state Public Service Commission to recoup investments on proposed infrastructure projects that benefit all classes of ratepayers, according to a bill approved by a Senate Panel on Thursday.

In a brief hearing before the Senate Committee on Agriculture, Forestry and Economic Development, lawmakers unanimously approved Senate Bill 265 as officials from the state’s three natural utilities – CenterPoint Energy, Black Hills Energy and Arkansas Oklahoma Gas – looked on.

In testifying before the Senate panel, Sen. Ronald Caldwell, R-Wynne, said Gov. Asa Hutchinson’s office, Attorney General Leslie Rutledge, the PSC and all other interested parties had signed off on the legislation that has been two years in drafting.

“Pretty much everyone is on board, but there’s one or two (businesses) who don’t want to pay the increase in a rate case,” Caldwell said, speaking for his bill.

Democratic senators Eddie Cheatham of Crossett and Bruce Maloch of Magnolia did pose several questions to Caldwell and representatives of the three utilities about how the legislation would impact ratepayers of all sizes, from residential users to larger industrial customers. Black Hills spokesman Rich Davis told Cheatham that the legislation will now allow gas utilities to recover costs during a project rather than waiting two or three years for a PSC rate review.

“What this does is give a mechanism to the (PSC) to review each project so that they can determine if in fact it is beneficial to all customers,” Davis said. “That’s why we favor it because now the Commission will have the tool to review those projects, but we have to come in and prove the value of the project. We have 167,000 customers in Arkansas. This organic growth will allow all of our customers to grow.”

PSC Executive Director John Bethel also spoke to the panel, saying that state utility regulators were supportive of the new legislation. He said SB 265 offers protections to make sure that infrastructure extension projects are beneficial to all Arkansas gas utility consumers.

“The test that the PSC has to make when it reviews a request for a project is that it has to provide benefits to all customers. If it does, it would be reasonable for all customers to pay the cost. If it doesn’t, then it wouldn’t be and the Commission would not approve the project,” said Bethel, who was accompanied by PSC Chairman Ted Thomas.

Bethel also told the Senate committee that the total recoverable costs are limited to 0.5% of the utility’s most recent application for a general change in rates. Kenny Henderson, associate general counsel for CenterPoint Energy said that cost would amount to about one dollar a year for residential consumers and about $135 annually for large industrial gas users.

In other business, the Senate committee also approved SB 255, the governor’s proposal to transfer War Memorial Stadium into the state Parks and Tourism Department.

The bill, sponsored by Sen. Missy Irvin, R-Mountain Home, was re-referred back to the Senate panel after an emergency clause was added that would allow state tourism officials to being promoting the Little Rock stadium immediately. It was unanimously approved on a voice vote. It and SB 265 now head to the full Senate.