Entergy Arkansas Inc., looking to cover improvements to its power grid and pay for the purchase of an El Dorado power plant, is seeking to raise electrical rates next year, according to a filing Friday with the Arkansas Public Service Commission.
The increase amounts to about 13 percent for the utility’s typical residential customer. Entergy Arkansas says a residential customer using 1,000 kWh would see his bill rise by $13, or about 45 cents a day.
The increase could show up on energy bills in about 11 or 12 months.
More: Read Part 1 of Entergy Arkansas’ filing with the PSC.
In an interview, Hugh McDonald, Entergy Arkansas’ president and CEO, said the rate hike is necessary to make sure Arkansas continues to have a strong, reliable power system with the capacity to take on new industrial customers.
“Our employees have put a considerable amount of infrastructure in place over the last two years to enhance reliability and prepare Arkansas for future economic growth,” he said.
McDonald said the company is investing about $1.2 billion in its Arkansas grid. That includes hundreds of millions of dollars in upgrades to the company’s generation, distribution and transmission operations. Those projects began last year and should wrap up by March, he said.
The investment also includes Entergy Arkansas’ purchase of a $237 million, 495-megawatt power unit at the Union Power Station in El Dorado. In December, Entergy Arkansas’ parent company, publicly traded Entergy Corp. of New Orleans, agreed to purchase the station for $948 million, with each of its subsidiaries buying individual units of the gas-fired plant.
The deal is set to close in December.
More: Read McDonald’s testimony to the PSC.
Other expenses include replacing a substation destroyed during the April 2014 tornado in Mayflower and a transmission project in Hot Springs.
Should the PSC approve the full increase, McDonald said Arkansas rates would still remain below national and regional averages. Right now, McDonald said, Arkansas rates are 25 percent lower than the national average and 15 percent lower than the regional average.
Entergy Arkansas last applied for a rate increase in March 2013.
Entergy Arkansas provides electricity to about 700,000 customers in 63 counties.