A settlement setting the stage for Summit Utilities to raise Arkansans’ natural gas bills by more than 23.4% triggered political resistance almost immediately, and then a turnabout by an initial champion of the settlement, Attorney General Tim Griffin.
The gas company, which serves 410,000 homes and businesses in the state, bought the Oklahoma and Arkansas operations of CenterPoint Energy for $2.1 billion in cash nearly three years ago.
The proposed $87.7 million annual increase was presented Oct. 7 with the blessing of several ratepayer groups, state regulatory staff, the attorney general’s office and the University of Arkansas System, which had objected to Summit’s earlier, even higher 30% rate filing.
But after state legislators raised a ruckus over the plan, the attorney general reversed his position and urged renegotiations, saying regulators could get a better deal for ratepayers.
The Arkansas Public Service Commission, which regulates utilities and the rates they charge, has until Nov. 24 to approve or reject Summit’s filing. At a hearing Tuesday, commissioners questioned whether Griffin could legally back out of the deal. Senior Assistant Attorney General Clay Layson said Griffin wasn’t reneging on the settlement, but simply asking the PSC to reject it and force Summit back into bargaining.
Commissioner Justin Tate, a licensed attorney, suggested that it was too late for Griffin to have “the equivalent of buyer’s remorse” with the settlement signed and delivered. Shawn McMurray, representing Arkansas Gas Consumers, a group favoring the settlement, told the panel he considered the matter a done deal.
The day after news of the settlement broke on Oct. 8, the PSC was getting an earful from state lawmakers angered that their constituents’ monthly bills could go up an average of $15.43.
Summit argued in its filing that higher rates are needed to build up its aging infrastructure and comply with stricter pipeline safety standards.
Summit, based in Centennial, Colorado, backed off original plans to have the rate increase pay for executive and employee bonuses, as well as expenses from the COVID-19 pandemic and extreme weather. It also compromised on having the new rate pay for diversity initiatives.
Settlement opponents noted that thousands of complaints were filed last year about billing problems associated with the transition from CenterPoint’s computer system to Summit’s. They object to paying the bill for what they see as Summit’s ineptitude.
In an Oct. 10 letter to PSC Chair Doyle Webb, Griffin wrote: “Last week, I believed the savings we secured amounted to the best possible deal we could get for ratepayers at the time. Since then, public input through the legislature has created a more favorable environment for ratepayers, and I see an opportunity to secure even more savings for Arkansans.”
Arkansas law gives the PSC the duty to set utility rates that are reasonable and ensure safe and adequate services. Further, rates must allow utilities to “generate revenues which will keep them in good financial health,” PSC guidelines say.
The rate increase proposed in the settlement would set Summit’s maximum annual return on equity at 9.85%. In 2021, the average ROE for regulated natural gas utilities in the U.S. was 9.53%, according to Regulatory Research Associates and the U.S. Treasury.
Last week, the PSC gave Griffin until noon Thursday, after this publication’s print deadline, to explain any legal grounds for withdrawing from the settlement. The panel will resume hearing public testimony on the matter at 9:30 a.m. Wednesday, Oct. 23.