Friday, January 17, 2014

Arkansas PSC gives Entergy Arkansas $81 million rate increase; company had sought $179 million

Posted By on Fri, Jan 17, 2014 at 4:40 PM

Idle talk at the Capitol recently has included a professed desire by some legislators to rein in the state Public Service Commission in some fashion..

Huh?

I think I just found the explanation. The talk is among legislators well-oiled by the Entergy lobby, now smarting over a recent regulatory decision.

On Dec. 30 (a very slow time as I recall and that perhaps explains the lack of press notice), the PSC issued its decision in an Entergy Arkansas general rate case. The company had started out talking about a need for an additional $179 million, but moved it down to $145 million. The PSC gave the company only $81 million.

And, what's more, the PSC rejected — again — the company's effort to put a fat stock incentive plan for top executives (making more than $255,000) onto ratepayers, rather than shareholders. This took a chunk of money, about $15 million, away from the company's potential rate base. You can read it all here. Said the PSC:

The Commission denies EAI’s request to recover 100% of incentive pay and stock options for its employees from Arkansas ratepayers, and finds that EAI and Staff have failed to show that short-term, long-term, and stock-based incentive compensation provides ratepayer benefits justifying 100% inclusion in rates. 

The company wanted a 10.4 percent return on equity. The PSC gave them 9.3 percent. The PSC reaffirmed the ruling Jan. 9.

Rates won't go up, because of an unrelated development.

Entergy customers will see an average 5 percent rate decrease because of the benefit from discontinued payments once required of Entergy in the now-defunct system agreement among Entergy operating companies in four states. The Federal Energy Regulatory Commission-ordered payments will cease as Entergy Arkansas operates independently and works with a power pool to obtain electricity. John Bethel, director of the PSC staff, said the overall impact will mean a 4.9 percent rate reduction for residential customers specifically.

The rate case alone would have raised rates 8 percent if not for the offset from the defunct system payments.

Entergy now must file specific rates to implement the order. Customer rates won't change until they are filed. The company also has until Jan. 30 to ask for a rehearing of the original order.


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