Arkansans Can’t Afford Proposed Utility Rate Increases, Lawmakers Tell Regulatory Agency

From the Arkansas State Attorney:

Thousands of Arkansans would pay more for natural gas under a proposed $87.7 million increase in utility rates, and lawmakers told leaders of the state’s utility regulator Monday they were concerned voters couldn’t afford it.

Summit Utilities, one of Arkansas’ natural gas suppliers, proposed a 30% rate increase for its roughly 525,000 customers in January. The October agreement was amended to raise rates by 23.4%. For the average household using 50 cubic feet of gas, that means the estimated monthly bill will be $15.43 higher, plus a monthly credit of $4.37 that is about to be paid off.

“We taxpayers cannot afford this,” Sen. Linda Chesterfield, D-Little Rock, said during a Cooperative Insurance and Commerce Committee meeting Monday. “Our water bills have increased, our electricity bills have increased. Hospitals that say they are happy with this will raise their prices, and it will all be passed on to us.”

Summit Utilities acquired the customers of former service provider CenterPoint Energy after completing a $2.1 billion purchase in January 2022. In addition to questioning the motives behind Monday’s proposed rate increase, lawmakers also called for an investigation into the sale of utilities.

The state Public Utility Commission, which regulates utility rates, is investigating the possibility that CenterPoint Energy deferred about $300 million in maintenance costs, according to a proposal from Sen. Jimmy Hickey Jr., R-Texarkana. Hickey’s motion also would have directed the PSC to determine whether federal mandates were partly why the rate hikes were necessary and whether Summit Utilities conducted due diligence before purchasing the company.

“We expect this to be a very comprehensive report that should include any recommendations for legislative changes to prevent any negative findings that you all may have heard about,” Hickey said.

Several lawmakers on Monday expressed concern that Summit Utilities may have bought the company knowing it would need additional funding to improve infrastructure and taxpayers would pay for it through raises.

“I don’t think they (Summit Utilities) would have paid $2.15 billion for the company and its assets – and taken on the role of this regulatory monopoly, knowing they would have to spend more money – if they weren’t clear about what they were going to do.” get your money back,” said Rep. Vivian Flowers, D-Pine Bluff.

The investigation report is due at or near the time the Civil Service Commission decides to approve, reject or modify the 23.4% rate increase the parties agreed to earlier this month. The deadline is November 22 and any increase will be implemented immediately.

Rep. Howard Beaty, R-Crossett, said Arkansans are already working overtime or holding second jobs to pay for essentials like natural gas.

“I would implore the commission to consider these taxpayers and the timing of the rate increases when they make this decision, when you meet and fulfill (the) duty of care to Arkansas taxpayers who were not at the table. – Beaty said. “They are at the table through the commission.”

An example of Arkansans left out of the discussion are poultry farmers, said Rep. John Eubanks, R-Paris. Eubanks said poultry farmers have an increased need for natural gas during colder months, and he’s spoken with constituents who said their gas bills went up by $250 last winter.

The current proposed increase would generate $87.7 million for the utility, which averages out to about $15 per household per month. However, the calculation is averaged over a 12-month period and it is likely that residents will pay much more in the coming winter months.

“Usage occurs in the winter, and those monthly bills will be higher than $15 to $18 because the average will be skewed at that point,” PSC Chairman Doyle Webb said. “One of the negative factors here is that these tariff increases will come at a time when gas consumption will increase and people will not have time to prepare for it.”

Webb, a former state legislator and chairman of the state Republican Party, is a prominent political figure. Governor Sarah Huckabee Sanders appointed him to head the Civil Service Commission in January 2023. Webb’s wife is a state Supreme Court justice.

Webb and commissioners Kathy Anderson and Justin Tate will vote on the proposed rate increase. The Civil Service Commission also has employees who are admitted as parties to tariff cases, meaning that employees and commissioners do not share information about a case while it is ongoing.

Other parties in the Summit Utilities rate case include Attorney General Tim Griffin and coalitions of ratepayers that represent commercial, industrial and hospital customers, as well as the University of Arkansas system. The parties expressed support for raising the rate by 23.4%; the commission rejected Griffin’s request to renegotiate after reaching an agreement.

Under the deal to purchase CenterPoint, Summit Utilities was unable to achieve rate adjustments within the first year of operation but was required to do so within 24 months. Michael Marchant, executive director of the Public Utility Commission, said Summit Utilities has not changed its base rates since 2015.

If the Public Utility Commission does not act by Nov. 22, Summit Utilities’ initial proposal for a 30% rate increase would take effect immediately, agency chief of staff Danny Hofer said Monday.

Hofer also said she believes the Civil Service Commission will take action no later than the deadline.