LITTLE ROCK – Entergy Arkansas, Inc. officials today said that they expect overall residential customer electricity rates to decrease over 10 percent in 2010 even with a requested increase in base rates.
The reduction in electricity rates is the result of a combination of lower fuel costs in 2009 and a sizeable reduction in the amount collected in the line item on customer bills described as “FERC-Imposed Payment.”[more]
Taking into account the total base rate increase requested by the company, Entergy Arkansas projects that residential customer bills will still be around $10 a month lower in July, when new base rates would go into effect.
The net effect of both rate decreases and Entergy Arkansas’ requested $223 million base rate increase will result in a typical residential bill for 1,000 kilowatt hours of electricity dropping from $110 a month to approximately $97 per month beginning with the July 2010 billing cycle.
Beginning in April, a downward adjustment to the fuel and purchased power part of the bill, shown on electric bills as “Fuel and Purchased Power,” will lower typical residential bills by $3.24. In addition, Entergy Arkansas expects the production cost equalization payments it is required to make to other Entergy operating companies to drop from $390 million to $70 million in July. This charge appears on bills as “FERC-Imposed Payment.” Both the fuel and FERC-imposed payment can be attributed to lower natural gas prices.
“We are very pleased by these developments,” said Hugh McDonald, president and chief executive officer, Entergy Arkansas, Inc. “Customers have been impacted by high fuel costs over the past several years, and it is good news that Entergy Arkansas will be able to keep customer bills relatively low for the foreseeable future. We expect lower fuel prices and a downward adjustment in System Agreement payments to more than offset an increase in base rates.”
In September 2009, the company requested a base rate increase of $223 million. This increase would include the costs of the company’s 2008 purchase of the Ouachita Power facility, the cost of restoration associated with the January 2009 ice storm that devastated the northern half of the state, and over $600 million of additional investment in transmission, distribution and generation utility infrastructure over the last three years. The base rate increase would also include the overall increase in the cost of providing service to customers in Arkansas.
“Energy costs have increased more than 100 percent since 1985, but the base rate level charged to our customers has not increased in 25 years,” McDonald said. “Base rates cover construction and operation of power plants and transmission and distribution grids, as well as customer service. A base rate increase is necessary to support investment in our infrastructure and to maintain reliability of the electric system.
“While we have had significant efficiency improvements and reduction of costs, the situation has reached a critical point as growth rates have declined and the cost of materials, equipment and labor have increased to the point where an increase in the base rate portion of the bill is critical for us to assure reliable service in the future.”
Entergy Arkansas, Inc. provides electricity to almost 684,000 customers in 63 counties. Entergy Corporation is an integrated energy company engaged primarily in electric power production and retail distribution operations. Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity, and it is the second-largest nuclear generator in the United States. Entergy delivers electricity to 2.7 million utility customers in Arkansas, Louisiana, Mississippi and Texas.