Bill Would Let Utilities Adjust Rates Annually

A bill that will allow the Public Service Commission (PSC) to let utilities adjust rates annually, rather than doing it over the current multi-year span, with a 4% annual cap passed the House Insurance and Commerce Committee Wednesday.

House Bill 1655 by Rep. Charlie Collins, R-Fayetteville, will smooth out the process for rate increases and allow more current data to be used, Collins said.

“The expectation is if you do it annually, you’re not going to need a big huge rate increase,” he said.

Collins said the bill instructs regulators to consider factors such as market data and what other states are charging.

“The key thing I would say is it makes things more data-based, it updates the frequency, and it ensures that all of those factors are going to be looked at and considered, but ultimately the decision-making authority resides with the PSC,” he said.

Collins said he was approached by utilities about running the bill, which has been amended three times. He said the bill is meant to be flexible.

“It’s going to be in the hands of the regulator, and the regulator has ultimate authority,” he said. “One of the things that took quite a while to kind of get there, to get alignment to the bill was at the end of the day there wasn’t going to be something where a formula drives the answer.”

Randy Zook, president and CEO of Arkansas State Chamber of Commerce, said the state largest business lobby has its full weight behind House Bill 1655 because it is important for economic development and bringing new jobs and investment to the state.

For example, Zook said that electric utility companies invested more than $75 million to bring power lines to the Big River Steel plant in Osceola. The $1.4 billion steel mill and recycling facility broke ground last fall and is expected to employ more than 500 people at an average annual wage of $75,000 when operational in mid-2016.

“They (electric utilities) need to be able to get a return on that investment so they are willing to fund future projects,” Zook said. “We think it is a smart move and one that we definitely support.”

Entergy Arkansas officials would not comment specifically on the bill, but did say they fully support the State Chamber. John Bethel, PSC executive director, said state utility regulators are neutral on the legislation.

“We are not opposed to it, but we are not (actively) supporting it,” Bethel said.