Arkansas officials approve $23.9 million increase in SWEPCO rates

The Arkansas Public Service Commission (APSC) has approved new base rates for Southwestern Electric Power Co. (SWEPCO) in which an Arkansas residential customer using 1,000 kilowatt-hours per month will see an overall bill increase of approximately $8.43 per month, or 8.7%.

The commission’s decision issued Dec. 27 provides a net annual increase of $23.9 million in non-fuel base rates, down from a $24.1 million tentative agreement first reached in October. The new rates will go into effect Dec. 31, which is the first billing cycle of January 2020. SWEPCO serves more than 536,300 customers in three states, including 119,800 in Arkansas.

“Our goal is always to serve Arkansas customers and communities with a strong electric system that provides reliable and safe energy,” Malcolm Smoak, SWEPCO president and chief operating officer, said in a statement posted Monday (Dec. 30). “We work hard to balance the need to invest in the electric system with the need to manage our operating costs. We are committed to high quality service for the families, businesses and communities we serve in Arkansas.”

The commission modified and approved the terms of a unanimous settlement agreement filed Oct. 15, 2019, by SWEPCO, the APSC General Staff, the Attorney General of Arkansas, the Board of Trustees of the University of Arkansas, Walmart, the Western Arkansas Large Energy Consumers and the Sierra Club.

“The formula rate plan, as provided by Arkansas law, better aligns the company’s rates with its costs on an annual basis, which promotes greater rate stability and reduces the potential for large rate swings associated with general rate cases,” Smoak said.

The APSC decision also moved into base rates $28.9 million for costs currently recovered through separate charges, or riders, on customers’ bills. These existing costs include additional power plant environmental controls completed between 2013 and 2016 to meet federal mandates, plus construction of a high-efficiency, combined cycle natural gas plant, completed in 2010.

Base rates refer to the costs of building, maintaining and operating SWEPCO’s electric system, including power plants, transmission and distribution lines and facilities to serve customers. Base rates do not include the fuel portion of the customer’s bill, which pays for fuel and purchased power, and is a pass-through to customers with no profit to the company.

SWEPCO, a subsidiary of Columbus, Ohio-based American Electric Power (AEP: NYSE), provides utility service to more than 536,000 customers in western Arkansas, northwest and central Louisiana, northeast Texas and the Texas Panhandle. SWEPCO’s headquarters are in Shreveport, La.

AEP has said it will achieve future carbon dioxide emissions reductions through a variety of actions including investments in renewable generation, investments in transmission and distribution technologies to enhance efficiency, and expanded demand response and energy efficiency programs. AEP’s resource plans include adding more than 8,600 megawatts (MW) of new wind and solar generation by 2030.

The company is seeking regulatory approval to add 1,485 megawatts of new wind generation to serve customers in Arkansas, Louisiana, Oklahoma and Texas, and has already added 1,302 megawatts of contracted renewables to its portfolio this year. Between 2019 and 2023, the SWEPCO parent plans to invest approximately $2.2 billion in contracted renewables and renewables integrated with energy storage.

To enhance the efficiency and resiliency of the energy delivery system, AEP’s long-term strategy includes plans to invest approximately $25 billion over the next 5 years in its transmission and distribution systems. AEP said it has also factored future carbon regulations into the company’s evaluation of generation resource options for many years ahead. The company already has cut carbon dioxide emissions by 59% since 2000, officials said.