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Louisiana customers to see utility rate cuts

Louisiana customers to see utility rate cuts

Arkansas, Texas have already made similar moves

July 12th, 2019 by Karl Richter in Texarkana Region

Louisiana customers soon will have lower electricity bills, thanks to a move already made by Arkansas and Texas.

SWEPCO and Cleco customers in Louisiana will get a break because of lower federal taxes, state Public Service Commissioner Foster Campbell announced in a news release Wednesday. Arkansas and Texas enacted power rate cuts for the same reason in 2017 and 2018, respectively.

For the average Louisiana SWEPCO customer, bills will decline more than $13 per month for the next three months. For Cleco customers, bills will go down more than $12 per month for the next 12 months.

An average SWEPCO residential customer using 1,282 kilowatt-hours will receive a credit of $13.62 on their August, September and October electric bills, while an average Cleco residential customer using 1217 kilowatt-hours will get a $12 credit beginning next month and running through July 2020.

Extending the benefit, average SWEPCO bills for November 2019 through July 2020 will reflect reductions of $3.03 each month.

The overall impact is a reduction of $24.4 million for SWEPCO's 231,000 Louisiana customers and a drop of $84 million for Cleco's 285,000 customers.

Campbell said he is "happy that we were able to translate these tax cuts into lower" bills during the "hot summer months, when they would have the greatest impact."

Congress enacted the Tax Cuts and Jobs Act in December 2017. The law reduced the U.S. corporate income-tax rate from 35% to 21% for many corporate taxpayers effective in January 2018. Investor-owned utilities regulated by the LPSC were required to adjust their rates to reflect the lower tax rate and refund any taxes collected before the rates were adjusted.

Wednesday, the LPSC voted with Campbell to pass the bulk of the TCJA savings on to ratepayers over a three-month period.

Malcolm Smoak, SWEPCO president and chief operating officer, said customers will see a "TCJA Refund" line item on their bills starting next month.

Campbell said savings from the federal tax cuts are being shared with customers of SWEPCO, Cleco, Entergy, CenterPoint Energy Arkla, Atmos Energy and other utilities regulated by the Louisiana PSC.

According to a SWEPCO spokesperson, similar rate cuts have already been enacted in Arkansas and Texas.

Arkansas customers began seeing a "Tax Cuts & Jobs Act" credit on their bills beginning in late September 2017. The credit reflects an ongoing annual reduction of approximately $9.7 million plus a refund from October 2018 to December 2019 of approximately $22.5 million.

The initial bill impact to an average residential customer using 905 kilowatt-hours per month will be a credit of $8.74, or a 10.2% decrease to a total monthly bill through December 2019. After the October 2018 to December 2019 refund is complete, the initial 10.2% decrease will become an ongoing 3.4% decrease, or $2.93 per month. Decreases for individual residential customers will vary depending on electricity usage.

In Texas, the reductions began with bills issued June 14, 2018, for residential customers and Sept. 19, 2018, for commercial, industrial and other classes. For a Texas residential customer using 1,000 kilowatt-hours, the estimated reduction to the overall monthly bill is about $4.55, or 3.5%.

In Arkansas, SWEPCO is in the process of raising customers' bills by about 24%. The company is seeking approval from the Arkansas Public Service Commission to enact a net annual increase of $45.6 million in the company's non-fuel base rates, plus $12 million for increased vegetation management.

Base rates refer to the costs of building, maintaining and operating SWEPCO's electric system, including power plants, transmission and distribution lines and facilities to serve customers, according to the company. Base rates do not include the fuel portion of the customer's bill, which pays for fuel and purchased power and is a pass-through to customers with no profit to SWEPCO.

If approved as proposed, the combined $57.6 million request will result in an overall bill increase of approximately $22.60 per month, or 24%, for an Arkansas residential customer using 1,000 kilowatt-hours per month. Increases for individual customers will vary by rate class and usage. New rates likely would go into effect in January 2020.

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