Entergy Arkansas asks regulators to reconsider proposed rate hike

LITTLE ROCK Entergy Arkansas asked state regulators Friday to reconsider their decision that rejected the utility's request for a $106.5 million rate increase and ordered a $5.67 million rate cut.

The state's largest electricity provider asked the Arkansas Public Service Commission for a rehearing on its rate hike proposal, which would have increased base residential rates by $4.26 a month to $90.21 for the first 1,000 kilowatt-hours of electricity used.

In a unanimous 131-page order last month, the three-member panel denied Entergy's request to recover a number of expenses from ratepayers, and reduced the level of incentive pay and stock options requested by the utility by more than $21 million. Regulators also rejected Entergy's request that ratepayers pay for the company's entertainment expenses, which include tickets to sporting events and concerts.

In the filing Friday, Entergy defended the incentive pay requests, saying they are necessary to lure talented employees to the utility and calling the basis for the rejection of the incentives "irrelevant and irrational."

"The uncontradicted evidence is that the company must offer such incentive programs all of them to compete successfully in the market for employee talent," the 43-page filing said.

Entergy Arkansas last month said residential customers will still see an 8.1 percent increase in their bills despite the order because of costs of a multistate system agreement. The bills of an average residential customer, who uses 1,000 kilowatt-hours a month, would increase from $85.95 a month to $92.90.

The rate schedule includes a 4.8 percent reduction in base rates, but that is more than offset by a 12.9 percent increase in rates due to Entergy's system agreement.

The increase will appear on customers' July bills, labeled as "FERC-imposed payment."

Entergy Arkansas has 680,000 customers in 63 Arkansas counties.

The Public Service Commission conditionally approved a Production Cost Adjustment Rider designed to allow for the recovery of costs mandated by the Federal Energy Regulatory Commission under Entergy's system agreement. Entergy earlier this year detailed how it will use $251.7 million from Entergy Arkansas to bring generating costs among the states into "rough equalization."

Credits will be given to customers of Entergy Gulf States-Louisiana, Entergy Louisiana, Entergy Gulf States-Texas and Entergy Mississippi.

Of the $251.7 million coming from Entergy Arkansas, $230.7 million comes from retail customers. The remainder comes from wholesale power customers.

Entergy Arkansas has said it plans to leave the system agreement at the end of 2013, the earliest date possible.