Southwestern Electric Power Company (SWEPCO), an American Electric Power (NYSE: AEP) company, today submitted a request to the Arkansas Public Service Commission (APSC) for a net annual increase of $45.6 million in the company’s non-fuel base rates, plus $12 million for increased vegetation management.
If approved, new rates would likely go into effect in the first billing cycle of January 2020. The combined $57.6 million request would result in an overall bill increase of approximately $22.60 per month, or 24 percent, for an Arkansas residential customer using 1,000 kilowatt-hours per month.
“We recognize that this increase will impact individuals, families and businesses. At the same time, we have made significant investments in generation, transmission and distribution facilities since our last Arkansas general rate case in 2009,” said Malcolm Smoak, SWEPCO president and chief operating officer. “We work hard to provide high quality customer service while managing our costs and continuing to invest in the electric system to provide reliable and safe power for Arkansas customers.”
Since SWEPCO’s last base rate review 10 years ago, the company’s operations and maintenance expenses and its capital investments in generation, transmission and distribution facilities have increased substantially.
Base rates refer to the costs of building, maintaining and operating SWEPCO’s electric system, including power plants, transmission and distribution lines and facilities to serve customers. Base rates do not include the fuel portion of the customer’s bill, which pays for fuel and purchased power and is a pass-through to customers with no profit to the company.
SWEPCO is also requesting that $28.9 million for costs currently recovered through separate charges on customers’ bills be moved into base rates. These existing costs include power plant environmental retrofits to meet federal mandates, construction of a high-efficiency, combined cycle natural gas plant, and recovery of costs related to energy efficiency programs.
The new environmental controls, which were completed between 2013 and 2016, have allowed four major power plants to comply with stringent U.S. Environmental Protection Agency regulations. The plants are Flint Creek at Gentry, Ark.; Welsh Units 1 and 3 at Pittsburg, Texas; Pirkey at Hallsville, Texas; and Dolet Hills at Mansfield, La. The Texas and Louisiana plants serve customers in Arkansas, just as Arkansas plants also serve Texas and Louisiana customers
The Stall Plant in Shreveport, La., began commercial operations in 2010, providing 508 megawatts of high efficiency, combined-cycle natural gas power for SWEPCO customers.
SWEPCO’s request for $12 million annually for improved vegetation management will help prevent tree-related outages on the distribution system and allow faster restoration when outages occur. “Vegetation management is critical as the company strives to maintain and improve reliability performance for customers,” Smoak said.