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Sunday, January 13, 2013

Sherwood electric customers get pitch to stay with North Little Rock

Posted By on Sun, Jan 13, 2013 at 8:24 AM

Sherwood recently signed a new 20-year agreement with the North Little Rock Electric Department to continue to buy power wholesale from NLR.

Some city residents aren't happy about it and there's talk of sending the deal to a voter referendum by petition

That, in turn, has prompted a letter from the North Little Rock Electric Department and interim leader Jason Carter. Mailed last week, it outlines the case for sticking with North Little Rock — among them that Sherwood, like North Little Rock, reaps a financial benefit for city government from profit on the sales; there'd be a huge cost to switch to another supplier; no one else emerged with a better deal.

North Little Rock also made this upfront promise, something that Entergy customers will appreciate as they continue to pay a surcharge for years-ago storm cleanup and face a new assesssment from this year's winter storm:

We are pleased to tell you that North Little Rock has no plans to pass along storm restoration costs to our customers, unlike other utilities serving this area.

While our crews were out working, some of your neighbors circulated a petition to refer our recent contract with Sherwood to a vote of the people. You may have signed it. We appreciate those who expressed concern about the process of securing electricity for our Sherwood customers and support the right of the people to have a say in government.

When you know the facts, you may wonder at the need for a special election, estimated to cost $25,000 to the taxpayers of Sherwood. If the referendum passes, the city of Sherwood will reopen the electricity contract process. And in all likelihood, North Little Rock will again be awarded the contract, because the facts will not change.

Here's a copy of the letter provided to me, in two parts.

Page one.

Page two.

UPDATE: On the jump you will find a letter being distributed by the group unhappy with the new rate deal.

Information from the citizens group:

COST — CITIZENS OF SHERWOOD TOGETHER is a grassroots citizens committee gathering Sherwood voters’ signatures on referendum petitions to require a special election so that Sherwood citizens can vote FOR or AGAINST Ordinance 1953. The committee gathered signatures equivalent to 15% of votes cast in the last Sherwood mayoral election.

The City of Sherwood passed Ordinance 1953 on November 26, 2012, and selected North Little Rock Electric Department (NLRED), the highest of the three electric service proposals submitted to the city, as the electric service provider areas within Sherwood. There was no service area map provided, nor a defined service area listed in the ordinance voted on by Sherwood Aldermen.

Sherwood had announced requests for proposals (RFPs) in May 2012 for electric service providers in certain areas of Sherwood. Some meetings were held, but minutes of the meetings were not kept, and recordings of them are missing.

Three bidders submitted proposals for Sherwood’s proposed electric service area: First Electric Co-operative, Entergy Arkansas, and North Little Rock Electric Departpment.

Both First Electric Co-op and Entergy Arkansas projected COST SAVINGS of 15 to 20 percent over the electric rates proposed by North Little Rock.

There are approximately 7,500 NLR electric meters throughout Sherwood at homes and businesses that pay a higher rate for their electric service than other areas of Sherwood. In 2008, North Little Rock Electric increased the electric rates charged to the Sherwood service area by 38%. Mike Russ assured Sherwood City Aldermen that would never happen again, and that electric service issues in Sherwood would be promptly addressed. Mike Russ left NLRED in mid-December and now works for Arkansas Electric Coop. With the ten plus inches of snow and ice, much of Sherwood lost electricity Christmas day and many remainws without power for several days. Many Sherwood residents left their dark homes to stay with friends and neighbors, or in hotels.

In the North Little Rock/Sherwood franchise agreement, the City of Sherwood also attached a tariff of $0.003206 per kilowatt-hour of usage on top of the 4.25% franchise fee that NLR pays to the City of Sherwood. Sherwood’s City Ordinance calls for a 22-year contract (to the year 2035) with only four adjustment periods during the term of the contract. Sherwood Aldermen had previously stated during public meetings that they would vote on a 20-year contract with frequent consumer price index reviews for possible rate reductions.

The 7,449 NLRED metered homes and businesses will pay millions of dollars more annually under North Little Rock electric rates than they would pay under another electric service provider.

These 7,449 home and businesses could have saved money every month on their electric bill had the city selected either of the other two electric service providers.

North Little Rock Electric is not a regulated utility. First Electric and Entergy Arkansas are regulated by the Arkansas Public Service Commission.

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