Arkansas Attorney General Tim Griffin, who recently flip-flopped after signing aboard a 23% natural gas rate increase for Summit Utilities, stood firm before Thanksgiving against a 4.25% electric rate request from Entergy Arkansas.
Summit and Entergy are the state’s largest gas and electric utilities, respectively. The Arkansas Public Service Commission regulates both, and on Nov. 21 approved the new Summit rate, which will raise residential bills an average of about $15 a month. The ruling forestalled half of the increase until spring, to give ratepayers a break on costly winter heating.
In the Entergy case, which is expected to be decided by Dec. 13, Griffin accused the utility of using a 2015 state law, the Formula Rate Review Act, as a means to getting “a yearly automatic 4% rate increase.”
It’s easy to see his reasoning.
Entergy has used the formula rate process to get four straight annual rate hikes in the 4% range. Nevertheless, the law allows it. Its intent was to prevent utilities from shocking customers with painful increases in multiyear rate reviews, like Summit’s.
Utilities using the formula rate process must justify the increases with clear evidence of previous-year spending. Entergy offered up numbers from last year, and they drew no objections from the PSC staff.
But Griffin suggested 2023 was an outlier, a year of killer tornadoes that wiped out tons of utility equipment. Entergy officials testified that the increase will cover upgrades in infrastructure to ensure reliability. Delivering reliability is trickier these days as power demands soar and storms grow ever more powerful and frequent.
Griffin said the utility relied on “a once-in-a-decade tornado to inflate its forecasting” for 2025.
But once-in-a-decade storms aren’t what they used to be. Extreme weather was one chief concern in Southwest Power Pool’s recent report on the grid’s future, “Our Generational Challenge.”
And storm effects also factored into the Summit increase. The PSC allowed Summit, based in Centennial, Colorado, to recover $330.8 million in costs related to Winter Storm Uri in February 2021.
Griffin, in a statement, called the PSC’s Summit ruling a “better result” for natural gas customers, and he thanked commissioners for “listening to our concerns.”
SPP, the Little Rock nonprofit transmission organization that oversees the electric grid and wholesale power markets across a vast footprint of mid-America, reported on Nov. 19 that it expects to have enough generation to meet electricity demands this winter.
But there’s little room for error.
“We can never say for sure when extreme weather events, such as what we have experienced in recent years, may materialize,” said Lanny Nickell, SPP’s executive vice president and COO.
President and CEO Barbara Sugg, who is retiring at the end of the month, warns that electricity demand is outpacing generation. It “is expected to increase at an unprecedented pace as our nation becomes more electrified and large data centers are added,” she said in a foreword to “Our Generational Challenge.”
SPP is a leader in wind energy, but Sugg noted that dispatchable generation is crucial “for times when the wind isn’t blowing and the sun isn’t shining.”
Many dispatchable power stations, including Entergy’s coal-burning plants near Newark and Redfield, are set to retire soon. And the grid needs more transmission to connect new power plants, bolster grid security, and keep low-cost energy flowing, Sugg said.
“We are issuing grid alerts throughout the summer as well as during winter,” she said. “Our risk of having inadequate supply … has greatly increased, and grid emergencies are likely to last longer, cause more damage, and increase risks to human health and safety.”
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