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What Is a Formula Rate Plan

As for the possibility of raising rates further this year, Palmer said the company`s demand will have little impact on overall rates. The formula`s pricing engine is part of a broader billing mechanism that keeps prices affordable, he said. While the new hearing is being considered, Entergy is also pursuing a legislative solution that will send opponents into turmoil, saying the move is an attempt to “make a final round around regulators,” according to Jordan Tinsley, who represented a group of corporate consumers who opposed Entergy`s rate hike. “The question is there to determine the legislative intent, which turned into a rather controversial $68 million dispute,” he said. “Excluding these gains has essentially increased the rate hike they were trying to achieve for 2021,” said Tinsley, who represents energy consumers, a set of large industrial customers. “They simply ignored the collection of this revenue.” Entergy Arkansas is again challenging the Public Service Commission over the utility`s offer to add about $68 million to fee payers` bills after state regulators halted their efforts. All the terms of each pricing plan you access apply to the calculation of a service bill. The amount of a service invoice will be changed by all optional fare drivers selected by the customer or other fare drivers who need to request it. For example, when Entergy submitted the rate plan evaluation formula in July, it included actual costs and expenses, known as the “offset adjustment” for 2019 and projections for 2021. Forecasts for this year prompted the company to request the rate hike for 2021. Cold weather and electricity consumption increased in Arkansas in late December and early January. As a result, some Entergy Arkansas customers have higher than normal utility bills. It also happens that this increase in usage coincides with the new tariffs that have come into effect for 2018.

Arkansas electric power consumers say the revenue generated in 2019 should be applied to the company`s demand for increased revenue for 2021. “That`s more than $67 million in revenue that should be used to keep bills low for fee payers,” Tinsley said. “Every payer of payment in the State is affected by this decision.” “Overall, adjusting the offset has allowed us to make significant investments while keeping the overall bill at an annual growth rate of 1 percent,” Palmer said. That`s not the case, entergy says. The company is asking lawmakers to clarify the intent of the legislation that established the rate plan process, said David Palmer, director of regulatory affairs at the Electric Utility. In this case, Arkansas electric power consumers and PSC employees say the revenue generated by Entergy from the 2019 adjustment should be applied to the 2021 rate hike. Both times, the commission ruled against the company and, in the tax return, ordered a $15 million refund for Entergy`s customers. The company filed a federal lawsuit against the decision to refund the rate. Entergy says the $916,451 rate increase approved by the commission is a drop in the ocean when considering investing in Arkansas to provide affordable electric power. The issue revolves around an annual tariff formula procedure (PIB) established by state law that allows Entergy to make an annual request for a base rate increase of no more than 4%, although increases must be weighed against costs, expenses, and revenue gains. “They recruited Senator Rice to overturn the commission`s decision in order of 40,” Tinsley said, referring to the decision that reduced Entergy`s tariff demand.

“And that would make the interest claim retroactive — which would mean that in the middle of a pandemic, we`d get a 3 or 4 percent rate hike that we wouldn`t normally get because Entergy has lawmakers carrying their water in a case they lost to the commission.” The December 15 order states: “The Commission remains concerned that the application of the PRF statutes could lead to sustained annual increases in interest rates close to or in line with the four per cent ceiling. The Commission expects all utilities to control their costs in a prudent and reasonable manner and not to use the FRP as an automatic annual rate increase of four per cent. In the formula-setting plan process, Entergy provides the commission with expenses and revenues each year that include two key aspects: a review of the previous year`s actual costs and projections for the coming year. Entergy and the Regulatory Commission have argued several times this year over tariffs, including how the company should reimburse solar customers and a request from the company to increase rates in Arkansas by $135 million to recover payments to its sister utilities. .

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