SWEPCO files settlement agreement in Arkansas rate case

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SHREVEPORT, La. (News release) – Southwestern Electric Power Company (SWEPCO), an American Electric Power (NYSE: AEP) company, today filed a settlement agreement in its request for new rates at the Arkansas Public Service Commission (APSC).

If approved, the settlement agreement provides a net annual increase of $24.1 million in non-fuel base rates. New rates would go into effect with the first billing cycle of January 2020. Under the settlement, an Arkansas residential customer using 1,000 kilowatt-hours per month would see an overall bill increase of approximately $8.54 per month, or 8.8%.

SWEPCO had originally sought a net annual increase of $45.6 million plus $12 million for additional vegetation management.
Along with SWEPCO, parties to the unanimous settlement agreement are APSC General Staff, Attorney General of Arkansas, Board of Trustees of the University of Arkansas, Walmart, Inc., Western Arkansas Large Energy Consumers and Sierra Club.

“We appreciate the careful consideration of our rate request, and we believe that all parties have worked toward an agreement that is fair for our customers and the company,” said Malcolm Smoak, SWEPCO president and chief operating officer. “We are committed to high quality customer service, managing our costs and investing in the electric system to provide reliable and safe power for the customers and communities we serve in Arkansas.”

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.

A settlement hearing is scheduled for Oct. 21 at the APSC building in Little Rock. Public comment hearings are scheduled for Oct. 24 in Ashdown, Ark., and Oct. 29 in Fayetteville, Ark.

Under the settlement, $28.9 million for costs currently recovered through separate charges, or riders, on customers’ bills will be moved into base rates. These existing costs include additional power plant environmental controls completed between 2013 and 2016 to meet federal mandates and construction of the high-efficiency, combined-cycle Stall natural gas plant, completed in 2010.

The settlement agreement includes approval of a formula rate plan for a five-year term. “The formula rate plan, as provided by Arkansas law, better aligns the company’s rates with its costs on an annual basis, which promotes greater rate stability and reduces the potential for large rate swings associated with general rate cases,” Smoak said.

SWEPCO serves 536,300 customers in three states, including 119,800 in Arkansas.

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