CONWAY -- Conway Corp., which operates the city's utilities, is seeking its first electric-rate increase since January 2006.
The proposal, which requires City Council approval, would raise rates at all levels, from residential to municipal as well as businesses and institutions, and would be spread out over three years starting Oct. 1.
Residential rates would increase by 2.06 percent in the year starting Oct. 1, by an additional 2.7 percent the next year and by 2.6 percent the third year. Small-commercial rates would increase by 3.3 percent the first year, 3.5 percent the next and 3.4 percent the third year.
Other proposed rate increase vary, depending on whether the customer is a large general user, an institutional user, a municipal user or a large power user.
"It's really a very modest increase," Richard Arnold, chief executive officer of Conway Corp., said Tuesday.
A chart provided by the corporation indicates residential customers on average currently use 1,500 kilowatt-hours monthly at a charge of $1,102.35 annually, excluding electric water heating. By the third year of the rate-increase plan, that sum would rise to $1,164 annually.
The City Council plans to hold a public hearing on the proposal May 23.
The plan, if approved, would generate roughly $1 million in new revenue annually until the total reached about $3 million the third year, Arnold said.
The utility needs the extra money because of higher transmission expenses. Those expenses refer to the sum Conway Corp. must pay to use Entergy's transmission system -- to move the power from the generating plant to Conway Corp.'s substation, Arnold said. The payment goes to the system's operator, MISO, or the Midcontinent Independent System Operator Inc.
According to a Conway Corp. "executive summary," transmission expenses were $2.4 million in 2006. Those expenses rose to $8.2 million in 2016, a $3.3 million increase from 2015. At that point, the summary says, "we had to evaluate the adequacy of our rates."
A rate study the corporation authorized forecast "net losses and a depletion of cash reserves over the next [six] years which pose a risk to the health of the Electric Department," the summary says.
"Even with [the proposed] rate increase, rates in Conway will still be among the lowest in the state," the summary says.
A chart comparing Conway with several other Arkansas cities and utilities, including Jonesboro, West Memphis, North Little Rock, Entergy Arkansas and Southwestern Electric Power Co., shows Conway at the bottom on rates even after the three years.
Jamie Gates, executive vice president of the Conway Development Corp., the local economic-development organization, said Tuesday that it is not taking an official position on the proposed increase.
"But we trust Conway Corp. to keep our service reliable and our rates competitive," Gates said. "What we understand ... is that this is a really modest increase" following "really low rates that haven't been changed in [more than] 10 years.
"We're still going to be at a big competitive advantage within Arkansas when it comes to power rates," Gates said.
State Desk on 05/10/2017