Entergy Arkansas, Inc. filed its plan on Tuesday (Feb. 27) with the Public Service Commission (PSC) to provide customers approximately $466 million in benefits as part of the recently enacted federal tax cut law.
Entergy officials said the Tax Cuts and Jobs Act, which lowered the corporate tax rate from 35% to 21%, will result in substantial savings to the electricity giant. In January, Gov. Asa Hutchinson challenged all utility companies doing business in Arkansas to lower their rates on consumers due to benefits from the tax cut by asking the PSC to open a docket on the issue.
“The purpose of this letter is to request that the Arkansas Public Service Commission, as expeditiously as possible, take whatever steps are necessary to pass the benefit of the corporate tax cut to Arkansas families and businesses in the form of lower utility rates,” Hutchinson said.
“Investor-owned utilities have a monopoly, regulated by the Public Service Commission, on providing electricity and natural gas services to Arkansas’s families and businesses. Arkansas law allows utility providers to charge rates that recover the cost of providing utility service plus a rate of return on investment. Federal income taxes paid by the utility are one such cost,” he added.
The power provider has proposed bill reductions for its Arkansas ratepayers as early as this April.
“Because of the lower federal corporate tax rate, some of Entergy Arkansas’ future tax obligations, which are a component of customers’ rates, have been significantly reduced. To provide this benefit to customers as quickly as possible, Entergy is proposing to provide bill reductions beginning in April of this year,” a corporate press release stated.
Entergy officials said that residential customers will see a savings of an estimated $20 per month for every 1,000 kWh consumed from April 2018 to December 2019. They also said business customers would see a reduction in bills, but no specific dollar figures were applied.
“When tax reform was passed, Governor Asa Hutchinson asked that the Arkansas Public Service Commission work with utilities to pass those benefits to customers as quickly as possible,” Rick Riley, Entergy Arkansas president and CEO, said.
“Entergy Arkansas has worked with its stakeholders, including Arkansas Attorney General Leslie Rutledge, who has expressed a similar desire, to meet this objective. If approved, the plan submitted will allow Entergy to provide the tax reform benefits to customers beginning as early as April of this year. The tax reduction will allow us to provide substantial bill credits to all customers for a significant period of time,” Riley added.
Entergy said there could be additional benefits to consumers related to the tax cut measure. There is an ongoing PSC docket dedicated to exploring other rate changes for all Arkansas utilities.
Entergy Arkansas is the state’s largest electricity provider with approximately 700,000 customers in 63 counties.