Sen. Linda Chesterfield, D-Little Rock, tells members of the Arkansas Public Service Commission that the people she represents can’t afford a rate increase for natural gas during a committee meeting on Oct. 28, 2024. (Mary Hennigan/Arkansas Advocate)
Summit Utilities customers who paid approximately $66 for natural gas in November should expect a bill twice as expensive this month, according to a recent settlement agreement that raised the utility’s rates.
For Osyrus Bolly, a community organizer and Little Rock resident, a rate increase puts more strain on an already tight budget. Bolly works with the Arkansas Public Policy Panel, a local nonprofit, and he said he works side jobs to make ends meet. He said there was little time for the working class to push back on the Summit Utilities rate increase, or prepare for the impact to their wallets.
“I’m uncertain of the increased rate – how that will affect me, because we’re at a time in our society where people are looking for other ways to diversify their income,” Bolly said. “One job is just not enough sometimes for people to pay rent, mortgage, utilities, food or take care of children.”
The three members of the Arkansas Public Service Commission on Nov. 21 approved a 23.4% rate increase for Summit Utilities, one of four natural gas providers that the independent agency regulates. The increase is expected to generate $87.7 million annually to compensate the company for the $300 million it says it has invested since January 2022, when it purchased the previous utility company, CenterPoint Energy, for $2.1 billion.
The rate approval followed a legislative meeting at which lawmakers told leaders of the regulatory agency that they didn’t think their constituents could afford the price hike.
Sen. Linda Chesterfield, D-Little Rock, who shared concerns during the legislative meeting, recently told the Advocate that she was “very disappointed” with the outcome of the rate increase.
“At the end of the day, those of us who are on fixed incomes are having more and more difficulty trying to make ends meet,” said Chesterfield, a retired educator who is about to retire as a legislator.
More than 425,000 Arkansans rely on Summit Utilities for their natural gas, and the average residential customer using 50 cubic feet of gas should expect a $15.43 increase to their monthly bill under the rate change, when averaged over a 12-month period.
But with the rate increase coming near the start of winter when more energy is often used to heat homes, Arkansans will face bills that are more than just $15 higher than they’re accustomed to.
According to the PSC settlement agreement, the average customer should expect a December bill around $134 and a January bill up to $174. Average costs will then begin declining with estimated February and March bills at $164 and $127, respectively.
By March, however, a $4.37 credit will also be added to customers’ monthly bills, per the settlement agreement.
Bolly also noted that the rate increase comes at a time when students are home for the holidays and families may have to pay more for food, child care or heating their homes for longer periods because people are home during the day. Though not everyone buys gifts during this time of year, the decision to do so adds another seasonal cost, Bolly said.
“I just think that a lot of people don’t really understand the reality of there wasn’t enough time for people to prepare for this settlement, to speak and talk about their different experiences,” Bolly said. “…Meeting in the middle of the day, of the work day, during Monday through Friday, is not a great way to engage with the community and find out how to serve the community better.”
Bolly said the rate negotiation process is not transparent and is a “betrayal of public trust.”
At October’s legislative meeting and again following PSC’s approval of the rate increase, Chesterfield questioned why Summit Utilities needed such a steep increase at this time.
“I understand that people have to make a living… and utility companies are no different than anybody else, but at the same time, it’s going to hurt the little guy one more time,” Chesterfield said. “That has always been a great concern to me, because when we have individuals who are having so much difficulty now, and they’re going to have even more difficulty, it just begs the question as to why right now and why so much?”
The concerns Chesterfield shared mirror what some Arkansans wrote in public comments to the PSC. More than 80 comments were submitted, and a majority of them were in opposition to the rate increase.
Bolly submitted a public comment as a concerned citizen and an advocate for fair utility rates.
Submitted comments varied in length, and while some Arkansans extended their dissatisfaction about the process over multiple pages, others highlighted the financial impact in a few short sentences.
“The people of Arkansas are already having problems buying food, gas and paying the bills on top of everything else now,” a public comment from Shannon Knight said. “Why let them raise the gas rate to make it harder on the people in Arkansas?”
Beyond the direct increase on customers’ gas bills, Chesterfield said the utility’s price hike would also cause an increase in other services that will affect ratepayers.
“You need to look across the total spectrum of the insurance companies, of hospitals, of whomever is affected by this in big business, is going to be passing those increases along to us as well as Summit,” she said. “That’s where I had the most heartburn.”
Other parties in the Summit Utilities rate case included Attorney General Tim Griffin and ratepayer coalitions representing commercial, industrial and hospital consumers, as well as the University of Arkansas System. The parties expressed support for the 23.4% rate increase; the commission denied a request from Griffin to renegotiate after a settlement was agreed upon.
In a statement after the rate approval, Griffin was supportive of the settlement.
“As we hoped, we were able to secure a better result, and I appreciate the Public Service Commission listening to our concerns and altering Summit’s proposed settlement, resulting in an outcome more favorable to Arkansas ratepayers,” he said.
More than a dozen public comments were also in favor of the rate increase, citing Summit Utilities’ presence in the local community and reliable service.
Summit Utilities initially requested a 30% rate increase in January, which was lowered in October to the approved rate.
Requested report
In October, lawmakers questioned whether CenterPoint Energy deferred approximately $300 million in maintenance. Per a motion from Sen. Jimmy Hickey, Jr., R-Texarkana, the Public Service Commission was to investigate that possibility, and also determine whether federal mandates partially caused the need for a rate increase and if Summit Utilities did its due diligence before it purchased the company.
The report was due before the end of November, and agency chief of staff Danni Hoefer said the Bureau of Legislative Research and the chairs of the Insurance and Commerce committee received it on Nov. 27, nearly a week after the rate increase was approved.
The PSC investigation found no evidence that showed CenterPoint was noncompliant in the maintenance of its pipeline infrastructure. The report also found no evidence that Summit Utilities has over-invested in its pipeline infrastructure, nor has it been noncompliant in its maintenance.
The PSC’s Pipeline Safety Office, which regulates the safety of gas pipelines for intrastate natural gas operators in Arkansas, has not been deficient in its oversight of CenterPoint and Summit, according to the report.
Hickey did not return a request for comment.
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