Tax-cut effect on Arkansans' utility bills still hazy

Posted: January 31, 2018 at 2:05 a.m.

It will probably be at least midyear before a final decision is made on how much utilities in Arkansas will lower their bills as a result of the new corporate tax rate, an executive with the Arkansas Public Service Commission told a legislative committee Tuesday.

But whenever the decision is made, the new rates will be retroactive to Jan. 1, said John Bethel, executive director of the Public Service Commission's general staff.

Bethel on Tuesday addressed the state's Legislative Joint Committee on Energy about the effects of the federal Tax Cuts and Jobs Act, which was passed by Congress in December and signed by President Donald Trump.

The eight investor-owned utilities doing business in Arkansas will soon benefit from a corporate tax rate that is dropping from 35 percent to 21 percent.

The eight utilities are Entergy Arkansas Inc., Oklahoma Gas & Electric Co., Southwestern Electric Power Co., The Empire District Electric Co., Arkansas Oklahoma Gas Corp., Black Hills Energy Arkansas, CenterPoint Energy Arkansas and the Pine Bluff water utility Liberty Utilities.

Entergy is the largest of the eight utilities with about 715,000 customers in the state. CenterPoint has about 403,000 customers in Arkansas.

Legislators asked Bethel if the process could be sped up.

"We're certainly going to do everything we can to do it as quickly as possible," Bethel said. "When I threw out midyear ... I don't really have a very good answer to that question as far as how long it will take. I was trying to be reasonably conservative. Our intention is to make this happen as quickly as we can."

The Public Service Commission ordered the utilities to research the effects of the new law on their rates and provide their findings by Feb. 12, Bethel said.

After the utilities report to the commission, the commission will establish places and times to take comments from interested parties.

The last time there was a federal reduction in the corporate tax rate was in 1986, when the rate was lowered from 46 percent to 34 percent.

Some utilities in the country already have determined the cost savings for their customers.

For example, Baltimore Gas & Electric Co. will pass on $82 million in savings for its customers, lowering their bills by an average of $4.27 a month.

In another matter Tuesday, an undetermined number of Arkansas landowners need to have "clouds" removed from their property titles left by a "nearly dead" high-voltage transmission line project, the legislative committee was told.

Rep. Charlotte Douglas, R-Alma, asked the committee to approve a letter to be sent to Energy Secretary Rick Perry asking him to terminate the agreement between the Department of Energy and Clean Line for the Plains and Eastern transmission line.

Arkansas' congressional delegation wrote a similar letter to Perry this month urging him to either "pause or terminate" the Clean Line project.

The $2.5 billion project developed by Clean Line Energy Partners would have carried wind-generated electricity from the Oklahoma panhandle to Tennessee, cutting across Arkansas. The line would span more than 700 miles, entering Arkansas north of Van Buren and exiting the state south of Wilson in Mississippi County.

But last month, the Tennessee Valley Authority, which was projected to be Clean Line's largest customer, buying almost 90 percent of the energy the project would generate, declined to buy power from Clean Line.

Last month, Clean Line sold the Oklahoma portion of its transmission line to NextEra Energy Resources.

This month, Clean Line withdrew from a study for Midcontinent Independent System Operator, which was expected to buy the remaining energy not bought by the Tennessee Valley Authority.

"The people of Arkansas have been left in an isolated situation," the letter reads.

Some Arkansans signed easements in counties along the projected Clean Line route. But Clean Line has paid only a portion of the money for the easements, the letter said. Those people have not received full compensation for their easements and now have clouds on their titles for the property, the letter said.

And some landowners waived their homestead rights on the easements, affecting the homestead exemption taxes on their land.

"The people of our state are left with easements leading nowhere and are unable to sell their properties due to the shadow still cast by the nearly dead Clean Line project," the letter said.

The committee unanimously approved Douglas' request to send the letter to Perry on behalf of the committee.

Business on 01/31/2018