SWEPCO gets rave review

Nobody really liked it, but everybody wanted it, as more than a dozen attorneys, businessmen, mayors, and area residents told the chairman, and a native son of Hope who now serves as a public utilities commissioner for the state Thursday night that AEP/Southwestern Electric Power Co. needs a proposed general rate increase.

A total of 14 witnesses offered public comment before Arkansas Public Service Commission Chair Paul Suskie and PSC Commissioner Olan “Butch” Reeves, a Hope native, at the University of Arkansas Community College at Hope Johnny Raperty Library.

The proposed rate increase, as defined in a settlement agreement between SWEPCO, the PSC general staff, the Arkansas Attorney General, and intervening parties Sierra Club and Wal-Mart increases base rates for residential customers using 1,000 kilowatt hours per month by $3.84 per month beginning Nov. 25.

A “generation rider,” which accounts for construction costs for the Lamar Stall Unit in Louisiana, but does not include construction costs for the John W. Turk, Jr., Power Plant under construction at Fulton, would add $3.17 per month beginning in the summer of 2010, for a total at that time of $7.01 per month.

Originally, the company had proposed a combined rate increase of $15.43 per month.
“SWEPCO, before the settlement was reached, withdrew the concurrent construction costs regarding the Turk plant,” SWEPCO attorney David Matthews testified Thursday.

Matthews said the action came as the result of on-going litigation regarding the $1.6 billion coal-fired power plant, but that the general rate increase was tied to more than the construction of one plant.
He said operating costs in the 24 years since SWEPCO last sought a general rate increase have risen by 79 percent.

“And, at the same time our costs were going up, the usage by our customers has gone up by 22 percent,” Matthews said. “SWEPCO did not make this decision lightly.”
The settlement agreement on the proposed general rate before the PSC was reached after “all parties included” made concessions, Assistant Attorney General Kendra Akin Jones testified.

“The evidence does not justify consumers avoiding any rate increase at all,” Jones said.
She said three principal points were considered by the AG’s office in reaching an agreement, including a reasonable return on equity for SWEPCO, adjusting construction costs to reflect needs, and the cost of jurisdiction allocations, or which state in SWEPCO’s service area pays what portion of the company’s general costs.

“The attorney general thinks the proposal is both reasonable and protects the consumer,” Jones said.
That assessment was seconded by PSC staff attorney Lori L. Burrows, who said that SWEPCO currently serves 113,000 Arkansas residents and 471,000 residents within its four-state service area.
She said the PSC general staff found the rate proposal both “in the public interest and in the interest of ratepayers.”

Neither Sierra Club nor Wal-Mart offered testimony Thursday, and neither group has opposed the rate settlement, according to SWEPCO information.
Mineral Springs Schools Superintendent Max Adcock, whose school district stands to gain thousands of dollars in payments in lieu of taxes from the Turk plant, said SWEPCO’s investment in Southwest Arkansas should not be overlooked.

“The Turk plant is a major investment, and investments cost money,” Adcock said. “SWEPCO has been and will be a good neighbor to Southwest Arkansas. Their planning assures that when you turn something on, it comes on. Nobody wants to pay more, but you have to look to the future.”
Hempstead County Economic Development Corp. President Wesley Woodard echoed Adcock’s sentiment.

“I doubt there is any business that has not raised its basic rates in 20 years,” Woodard said. “SWEPCO has met its committment for the last 20 years.”
Businessmen and mayors from Mena, Nashville, Texarkana, Hope and Prescott followed much the same theme in supporting the proposed rate increase.
“I can relate to SWEPCO’s costs increase as the owner of a chain of small businesses in Southwest Arkansas and Northeast Texas,” Hope businessman Mike Cox said. “In 1985, a Wendy’s hamburger cost $1.29, and today that same hamburger is $2.99.”

Smith Ready Mix owner Hicks Smith, of Nashville, offered the same point, noting that concrete cost $42.50 per yard in 1985, and $85.00 per yard today.
“They’ve been vital to our success and the life of our community,” Smith said.

Texarkana Mayor Horace Shipp said SWEPCO has been an integral part of Texarkana for 106 years.
“They have built a reuptation thta is very positive,” Shipp said. “They have become a very worthy business partner in our community.”

He said the PSC should allow the company to recover its historic costs, consider the need for its continued reliability, and the affordability of its rate structure in approving the proposed increase.
A final evidentiary hearing on the proposed rate increase will be conducted Nov. 2 in Little Rock at PSC offices.