Rate Case Roundup: Arkansas

Viewed on a proportional basis, Oklahoma Gas & Electric Company (OG&E) fared much better before the Arkansas Public Service Commission last month than it had before the Oklahoma Corporation Commission two months earlier, in that the Arkansas commission accepted a settlement giving the utility $7.1 million of the $16.5 million in additional Arkansas revenues it had requested, whereas the Oklahoma commission had awarded just $8.8 million of the $92.5 million in electric rate relief sought by the company. That means Arkansas regulators granted OG&E about 43% of the increase requested, in contrast to the Oklahoma commission's decision to allow only around 9.5% of the utility's recommended rate hike. 

The two commissions were in agreement when it came to an appropriate rate of return on equity (ROE) for the company though. In both cases, the utility's proffered 10.25% ROE was nixed in favor of a 9.5% ROE. 

As it had in filing for an increase in Oklahoma, OG&E claimed in Arkansas that since its last base rate case, it had invested billions of dollars in infrastructure improvements. Among the projects OG&E identified were wire, cable, and pole replacements as well as enhanced tree-trimming and vegetation management protocols. 

The utility also had drawn attention to its participation in certain wind power developments, some of the costs of which it wanted to recover from ratepayers. The Arkansas commission concurred with the settling parties that it would be appropriate for the company to use a demand allocator (instead of an energy one) for purposes of such recoupment. It noted that would be consistent with the method approved in Oklahoma. 

Reviewing the proposed stipulation as a whole, the Arkansas commission deemed it just and reasonable by adjusting rates to bring each customer class closer to covering their true costs of service while doing so gradually so as to avoid rate shock. 

The commission commented that the rate agreement provides for an overall increase in revenues of 7.5%, but a slightly higher increase of 9.1% for residential customers. The commission stated that given the lapse of time since OG&E's last rate proceeding, the system average increase of 4.2% listed in the settlement works out to a compound annual growth rate of just 0.7%. Re Oklahoma Gas & Electric Co., Docket No. 16-052-U, Order No. 8, May 18, 2017 (Ark.P.S.C.).