State's largest natural gas utility proposes rate reduction

CenterPoint Energy, the largest natural gas utility in the state with more than 400,000 customers, has proposed to reduce its rates by $19.2 million beginning in October.

CenterPoint filed the request with the Arkansas Public Service Commission on Friday in response to an order by the commission to reduce rates as a result of the federal tax law change passed in December. Congress passed the Tax Cuts and Jobs Act that reduced the corporate tax rate from 35 percent to 21 percent.

If the commission approves the lowered rate, Houston-based CenterPoint's rates would drop 9.5 percent on bills from October to January and 7.3 percent in January. For a customer with a bill of $100, it would fall to $90.50 under the first scenario and to $92.70 under the second scenario.

"Tax reform is a win for customers and reduced costs are being returned to them through various mechanisms or rate proceedings within each of our operating jurisdictions," said Alicia Dixon, CenterPoint's spokesman.

The lower rates will expire on Feb. 28. That is well before the commission's suggested date of Dec. 31, 2019, to refund customers.

"CenterPoint Energy believes that refunding these amounts over a shorter timeframe is in the best interest of our customers," Dixon said. "Our customers will receive this refund during the months that typically have the highest usage, providing a reduction in their bill during the winter heating season."

On Jan. 11, Gov. Asa Hutchinson asked the commission to require utilities to pass on benefits of the reduction in the federal corporate tax rate to Arkansas ratepayers "as expeditiously as possible."

Last month, the commission ordered the state's eight investor-owned utilities to make a filing with the commission by Monday that shows how deferred income taxes will be returned to their customers.

The utilities included in the case are Entergy Arkansas, CenterPoint Energy, Black Hills Energy Arkansas, Southwestern Electric Power Co., Arkansas Oklahoma Gas, Oklahoma Gas and Electric Co., Empire District Electric Co. and Liberty Utilities, Pine Bluff's water utility.

Entergy Arkansas, the state's largest electric utility with about 700,000 customers, said in March that it would reduce its customers' bills by up to $466 million. That reduction began with April's bills. The average monthly reduction in bills was 18.4 percent. That means that a customer with a monthly electric bill of $100 would see the bill drop to about $81.60.

Southwestern Electric Power Co.'s about 120,000 customers is seeking a 10.2 percent rate reduction beginning Sept. 27. That means a customer with a $100 monthly bill will see it drop to $89.80.

Black Hills Energy is seeking a 5.97 percent rate reduction beginning on Oct. 15 and running through May 15. That means a customer with a monthly bill of $100 would see a bill of $94.03 a month.

Each company has riders that will also apply varying degrees of lower rates because of the tax cut, said Donna Gray, commission spokesman.

Several utilities didn't make a filing by the end of the business day or the required documentation with a breakdown on their rate reductions, Gray said.

Those included Arkansas Oklahoma Gas, Oklahoma Gas & Electric Co., Empire District Electric Co., and Liberty Utilities.

The federal tax reduction is the largest in the United States since the mid 1980s during the Reagan administration, said David Matthews, a Rogers attorney who represents Southwestern Electric Power Co.

In that particular case, the commission followed a similar strategy, Matthews said.

"In that [case, the commission] allowed [the utilities] to flatten out the refund," said Matthews, who began representing SWEPCO three years after the 1986 tax reform.

Southwestern Electric agreed in the earlier case not to seek a revenue increase for two years while phasing in the rate reductions.

"We asked the commission to do that in this [case] and they chose not to," Matthews said. "Basically, they said 'No, let's go ahead and give it back.' And that's what we're doing now."

A Section on 08/28/2018

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