Electric utility Entergy Arkansas announced its residential customers can expect monthly bills to rise an average of $15 starting in January as a result of a federal tax credit ending. Most customers will likely receive the first bills without the credit in February.
The 21-month tax credit was established after the U.S. Congress approved the Tax Cuts and Jobs Act in December 2017. The tax reform lowered the federal tax rate of 35% to 21%, and as a result, Entergy Arkansas planned to return to all customers nearly $500 million in accumulated deferred income tax. The total amount that would be returned to residential customers was nearly $230 million.
Entergy Arkansas proposed to spread the credit for residential customers over 21 months. The credit started in April 2018 and will end in December, and it was about $15 per 1,000 kilowatt-hours. Residential customers use an average of 1,000 kilowatt-hours monthly, and customers that use more energy would receive a larger credit.
“We want all of our customers to be aware that the tax credit of nearly $230 million that has been returned to residential customers since April 2018 ends this month,” said Michael Considine, vice president of customer service. “Bills will return to levels very similar to March 2018 before the credit was applied. It’s important to note that this tax credit roll-off is not a rate increase. However, because the credit ends, this will affect bills going forward.”
Entergy Arkansas also noted that customers will see a charge of 91 cents per 1,000 kilowatt-hours starting in January. The charge will take place over 12 months and will reconcile the nearly $7 million that the utility returned to customers in excess of the $230 million that was authorized.
Entergy Arkansas, a subsidiary of New Orleans-based electricity utility Entergy Corp., provides electricity to 700,000 customers in 63 counties.
Also as a result of tax reform, the end of the tax credit and a proposed rate increase, electric utility Southwestern Electric Power Company (SWEPCO) expects its residential customer bills to rise $8.54 per month, based on a usage of 1,000 kilowatt-hours. The expected increase in bills is to start in January, and the rate increase is pending approval by the Arkansas Public Service Commission.