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Electric rate increase OK'd Public Service Commission approves 3.59 percent jump to begin Jan. 1

Friday, November 2, 2012

Customers of Carroll Electric Cooperative Corp. will have to dig a little more deeply into their pockets this winter if they want to keep the heat on.

The Arkansas Public Service Commission last week approved a rate increase that will inflate the monthly bill for the average residential customer -- defined by the U.S. Energy Information Administration as using 1,179 kilowatt-hours per month -- by about $3, or 3.59 percent.

The increase will take effect on Jan. 1, 2013.

The decision, handed down last Wednesday, was bundled into a larger package of rate increases that will affect consumers throughout the state.

The seed for the rate hike was planted in August, when the Arkansas Electric Cooperative Corp. -- the wholesale supplier from which Carroll Electric purchases its power -- filed a request with the commission to increase their rates.

In response, Carroll Electric and 15 other member cooperatives throughout the state filed requests to pass the added costs on to consumers.

All of these were approved in last week's decision.

The rate increase will produce $34 million in additional revenue for Arkansas Electric. In testimony filed with the commission in August, the company argued the rate increase was necessary to pay for additional generating capacity.

Forest Kessinger, manager of rates and forecasting for Arkansas Electric, said the company planned to purchase a natural gas powered plant and was already committed to a 11.667 percent interest in another, coal-fired plant. The latter, known as the Turk plant, is supposed to begin operations at the end of 2012, Kessinger said.

Last month, representatives for the Public Service Commission staff and the Arkansas Attorney General's Office told commissioners they did not object to the request.

Regina Butler, senior rate case analyst for the commission, recommended that the state approve the increase. Economist William Marcus, speaking on behalf of the Attorney General, expressed some concern about the rapid increase in the company's "overhead costs" -- including customer service, marketing, and administration -- but ultimately recommended the request be approved, also.

Commissioners referenced the testimony of Butler and Marcus in their decision.

Carroll County residents are not alone in being affected by the rising cost of wholesale power: consumers throughout the state face similar pressures. However, Carroll Electric customers are quite alone in another way.

A second rate increase request, still pending before the commission, would triple the rate increase already approved -- to about $9 per month for the average residential customer. That increase would affect Carroll Electric customers alone.

Carroll Electric spokeswoman Nancy Plagge said the rate increase was necessary to cover the cost of recent improvements to the company's infrastructure.

"Despite the cooperative's best efforts to control expenses, the fact is, the cost of operating an electric system has significantly increased over the past decade," Plagge wrote in a Sept. 1 press release. "Carroll Electric added $267 million in assets during this time period, building and improving the backbone of its system to adequately provide electricity to its 88,000-plus consumers."

According to the application filed by Carroll Electric, the rate increase is designed to provide $3.4 million in additional revenue.

John Bethel, executive director of the Arkansas Public Service Commission, said the later request still had to pass muster with commissioners. If approved, the new rates would take effect on or after Feb. 1, 2013.

Consumers have until then to voice any objections to the commission, he said. If 10 percent of cooperative members were to do so, the proposal would have to pass through a more strenuous review.

Some members have already spoken up. As of Monday night, the commission had received 24 letters of opposition to the increase. The letters referene a familiar litany of grievances: Among them are concerns about undemocratic governance, a lack of transparency, unusually high corporate salaries, and the ongoing expansion of the company's headquarters in Berryville.

Despite these criticisms, the volume of protest is still far short of the 10 percent required to alter the process.

Plagge has suggested that opposing the increase might be more costly to consumers in the long run -- given added costs associated with the longer process.

"I wouldn't speculate on how that might affect our rates," she said.

Editor's Note: To view public feedback submitted to the Public Service Commission thus far, visit the commission's website at http://bit.ly/Trxl4n and scroll to the bottom of the page. Once there, you can also submit your own feedback and track the progress of the Carroll Electric rate increase request.



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