Nearly 125,000 Southwestern Electric Power Co. (SWEPCO) customers in western Arkansas will soon see an increase in their energy bills. The utility company reported Wednesday (June 29) that the Arkansas Public Service Commission (APSC) approved its rate request.
SWEPCO sought a base rate increase and an interim fuel adjustment for the 2021 winter storm fuel recovery cost.
According to Shreveport, La.-based SWEPCO, the company’s western Arkansas customers using 1,000 kilowatt-hours (kWh) will see an increase of approximately $13.02 per month on their bill. The increase includes a 9.49% base rate increase, which makes up approximately $10.57 per month for an Arkansas residential customer using 1,000 kWh.
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 passed through to customers with no profit to the company.
The total bill also includes an adjustment in the Energy Cost Recovery (ECR) rate, making up approximately $2.45 per month of the increase for Arkansas residential customers using 1,000 kWh. For commercial, industrial, municipal and lighting rate classes, the impact of the new rates vary by rate class and usage characteristics. The new rates begin with bills issued for the first billing cycle of July, which is June 29.
The company said the new base rate reflects investments in reliability and improvements to the resiliency of the power grid and cleaner power generation, including the construction and purchase of three wind facilities at the North Central Energy Facilities (NCEF) in Oklahoma. All three wind facilities are in commercial operation, with the third and largest facility beginning operation in March 2022. The NCEF, which was approved by the APSC in May 2020, provides Arkansas customers 268 megawatts (MW) of SWEPCO’s 809 MW.
“We understand customers have concerns regarding increases in energy costs,” Malcolm Smoak, SWEPCO president and Chief Operating Officer, said in a statement “We believe the best way to hold down fluctuating cost drivers, such as natural gas, is to invest in a diverse energy mix. The fuel savings and tax credits SWEPCO gains with the addition of NCEF help to offset the cost of these facilities, which results in continued long-term savings to customers.”
SWEPCO filed the base rate request with the APSC in July 2021. The APSC decision authorized an annual increase of $48.7 million on May 23, 2022, and issued a final order on June 29, 2022.
The updated ECR was filed on June 13, 2022, with the APSC for an interim increase to help “true-up” the extraordinary costs incurred during the February 2021 winter storm event. SWEPCO began recovering the winter storm fuel costs beginning in April 2021. The company expects the fuel recovery costs related to the winter storm to decline in 2023 and in the following years.
SWEPCO, a subsidiary of Columbus, Ohio-based American Electric Power (AEP), has more than 543,000 customers in northwest and central Louisiana, northeast Texas and the Texas Panhandle, and western Arkansas. AEP has 16,700 employees and operates one of the nation’s largest electricity transmission systems with more than 224,000 miles of distribution lines delivering power to 5.5 million regulated customers in 11 states.
AEP reported first-quarter net income of $714.7 million, well ahead of the $575 million in the same quarter of 2021. Revenue in the first quarter was $4.6 billion, also better than the $4.3 billion in the same quarter of 2021.
AEP shares (NASDAQ: AEP) closed Wednesday at $95.37, up 29 cents. In the past 52 weeks the share price has ranged between $80.22 and $104.81.