The Arkansas Electric Cooperative Corporation recently asked the Arkansas Public Service Commission for permission to increase its rates by five percent beginning Jan. 1.
The PSC has 90 days from the the Aug. 1 request by Arkansas Electric to make a final determination.
Arkansas Electric is the wholesale power supplier to 17 electricity cooperatives statewide that primarily provides power to rural Arkansas residents, including C & L Electric Cooperative based in Star City, which serves residents in eight Southeast Arkansas counties — Jefferson, Grant, Bradley, Cleveland, Lincoln, Saline, Desha and Drew.
Forest Kessinger, Arkansas Electric manager of rates and forecasting, said that the increase is needed to help pay for the addition of two power plants and the consequent increase in power generation capacity.
“Our expense increases include two major plant additions,” Kessinger said. “We are very quickly signing the paperwork to acquire the 660 megawatt Hot Spring Generating Facility, a natural gas-fired plant located near Magnet Cove and the coal-fired John W. Turk Jr. Power Plant near Fulton that we will own 11.7 percent of will add 70 megawatts in power generating capacity.”
“We have to have a rate increase to fund that,” Kessinger said.
“The boards of each of the 17 cooperatives must then vote to pass along the wholesale rate increase to their retail customers,” Kessinger said. “They will then need to have the increase approved by the PSC.”
Kessinger said that the initial cost will be substantially offset by the efficiency of the new power plants.
“There will be a material fuel savings that will go along with this,” Kessinger said. “Once it is online the Turk plant will be the most efficient coal-fired power plant in the nation. The Hot Spring plant will also be extremely efficient. The total rate increase will total $33.4 million but a fuel savings of $22 million will offset roughly two thirds of the rate increase.”
Kessinger said that the fuel savings will be passed along to customers through fuel adjustment clauses.
C & L General Manager William Frizzell said that the rate increase will be passed on to the 22,000 customers the cooperative serves.
“There will just be a pass-through to them,” Frizzell said. “Arkansas Electric is the power generation and distribution end and we are the transmission end.”