Southwestern Electric Power Co. (SWEPCO), a utility of Columbus, Ohio-based American Electric Power (AEP), announced Friday (July 23) it will seek an $85 million request to increase customer rates. If approved, residential customers consuming 1,000 kilowatt-hours per month would see a more than $11 monthly bill increase.
SWEPCO has submitted the request to the Arkansas Public Service Commission. According to a news release, the company looks to recover environmental and resiliency costs related to providing customers with cleaner and more reliable energy.
“We have made significant investments in wind-powered generation, specifically with the North Central Energy Facilities (NCEF) project,” said Malcolm Smoak, SWEPCO president and chief operating officer. “It’s a project that has environmental and economic benefits for SWEPCO’s customers, saving an estimated $2 billion over the next 30 years.”
The $85 million request also includes recent investments in transmission and distribution facilities and reflects costs to operate and maintain equipment that delivers power to customers. It also establishes new tariffs for electric vehicles and lighting.
If approved, the new rates would likely go into effect in the first billing cycle of June 2022. An Arkansas residential customer using 1,000 kilowatt-hours per month would have a total monthly bill of $130.20, an overall bill increase of $18.89 per month, or about 17%. This total includes SWEPCO’s 2021 winter storm costs, which are about $7.72 per month for a residential customer using 1,000 kilowatt-hours per month. SWEPCO spokeswoman Carey Sullivan said Arkansas customers are already paying for the winter storm costs through a fuel charge.
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 directly passed through to customers.
The North Central Energy Facilities will lower SWEPCO’s overall fuel cost for power generation as wind has no fuel cost. The fuel savings and federal Production Tax Credits more than offset the cost of the new facilities, resulting in net long-term savings to customers, according to the release.
Sullivan said Arkansas customers are not seeing the benefits of the new wind farm project because it’s not reflected in the rates. Sullivan said the estimated $46.3 million in savings from the project comprises savings in fuel costs, which are separate from the base rate. A base rate increase of $41.2 million can be attributed to the wind farms, she added. The proposed rate increase includes the amount attributed to the wind farms along with the previously noted facilities investments and maintenance and operational costs.
One of the three new wind farms has started operating. The other two are expected to start operating later this year and in early 2022. Arkansas customers will receive 268 megawatts of SWEPCO’s total purchase of 810 megawatts from the wind farms. SWEPCO will invest $1.01 billion in the project.
The company recently requested proposals to add up to 3,550 megawatts of electricity generating capacity to its energy portfolio by 2026. The capacity largely comprises wind and solar resources.
SWEPCO serves more than 543,000 customers in three states, including Arkansas.