Bill would let utilities raise rates annually to build power plants

Legislative sponsors have introduced a bill they say will allow electric utilities to increase rates sooner and annually to build power plants, ultimately creating lower rates long term.

Senate Bill 307, otherwise known as the Generating Arkansas Jobs Act of 2025, would allow utilities and electric cooperatives to file annual riders with the state Public Service Commission (PSC). Those riders would allow them to increase rates annually before a new plant is fully capitalized, rather than the current system that enacts a larger rate increase near the end of the process. The commission would have to determine if the update is in the public interest.

The 62-page bill would not allow annual updates to increase to the point that they are more than 10% below the national average for all sectors. The commission could allow utilities to increase rates above that amount if there is evidence the rates would attract or retain economic development opportunities and would be in the public interest.

“No matter what we do with or without this bill, there is an increased demand for energy, which will drive up prices,” the lead Senate sponsor, Sen. Jonathan Dismang, R-Searcy, said in a news conference Wednesday (Feb. 26). “That’s just the reality. What this bill is looking to do is mitigate that increase as much as possible.”

Dismang said the bill eliminates some of the carrying costs accrued over time, so the 30-year rate would be lower.

“You’re gradually raising the rates to pay for the plant, which means you’re not having to borrow as much money to build it,” he said in an interview. “And so you don’t have an interest debt to build the plant that you would have had otherwise.”

Dismang said in the interview that the gradual rate increases also would help prevent the sudden sticker shock that can occur now. He said the bill would allow utility companies to take advantage of the unused Construction Work In Progress program.

Gov. Sarah Sanders supports the bill, saying in a statement, “I meet with companies all the time, and one of the No. 1 topics they bring up is the need for affordable, reliable energy. This legislation helps us keep the Natural State competitive by investing in our energy infrastructure and maintaining our reputation as a national leader in energy reliability and affordability while still maintaining the PSC’s regulatory authority. I thank the legislators and stakeholders who worked on this bill and look forward to signing it when it reaches my desk.”

Jonathan Oliver, chief operations officer for Arkansas Electric Cooperative Corp. (AECC), said in the news conference that two coal-fired power plants, White Buff in Redfield and Independence in Newark, will be going offline, reducing power generation by 3,300 megawatts. At the same time, AECC members have seen requests for new loads of more than 4,000 megawatts.

Other utility companies, including Entergy Arkansas, Southwestern Electric Power Company (SWEPCO), and Black Hills Energy, support the measure.

He said similar legislation has been passed in Mississippi, Missouri, South Carolina, and Georgia. Arkansas could lose out in the competition for some employers if it can’t compete in the energy sphere.

Economic developers echoed those comments. Randy Zook, president and chief executive officer of the Arkansas State Chamber of Commerce, said electricity demand is growing fast, but Arkansas does not have slack capacity. Demand will be driven by data centers, manufacturing companies, electrification of the transportation sector, and population growth.

“Economic growth from higher value-added jobs is right at our fingertips,” he said. “Electrons equal growth equal jobs equal tax revenue.”

Jay Chesshir, president and CEO of the Little Rock Regional Chamber of Commerce, said if electric capacity doesn’t exist, employers won’t call.

“We don’t know what we’ve lost from the perspective of new projects in this state,” he said.

The sponsors represent a bipartisan legislative mix. The primary House sponsor is Rep. Les Eaves, R-Searcy, while the other Senate sponsors are Sens. Matt McKee, R-Pearcy; Justin Boyd, R-Fort Smith; Breanne Davis, R-Russellville; Bart Hester, R-Cave Springs; Blake Johnson, R-Corning; Ben Gilmore, R-Crossett; and two Democrats, Sens. Reginald Murdock, D-Marianna; and Stephanie Flowers, D-Pine Bluff.

McKee said during the press conference that legislators will introduce a bill that would establish a state energy policy development committee tasked with energy production, consumption, affordability, and adequacy.

Flowers said power generating facilities must be paid for, and she doesn’t have a problem with incremental rates.

“I’m for economic growth in the state of Arkansas,” she said. “And I think this will help to bring jobs to our communities. In particular, I am concerned about my community.”