Electric deregulation faces delay

Arkansas Business, Feb 22, 1999 by Jim Lovel

Dispute Continues Between Utility Companies

The lack of agreement among utility companies and industrial customers over how to deregulate the electric industry in Arkansas may mean no deregulation for another two years.

Sen. Nick Wilson, D-Pocahontas, who is chairman of the Senate Committee on Insurance and Commerce, says he is considering introducing a bill to delay legislation until the next session in 2001.

"It's getting awfully late in the session," Wilson says. "We should have had something by now."

Legislators had asked the state's electric companies to agree on the details of the deregulation and submit a model bill for the Legislature to consider. After a year of negotiations, the companies have reached an impasse.

Entergy Arkansas Inc., the largest provider of electricity in the state, and Arkansas Electric Cooperatives Corp., the state's second-largest provider, disagree on several key issues and are poised to introduce separate bills. A coalition of the state's largest industrial customers is prepared to introduce its own bill. Spokesmen for all three groups say negotiations are continuing.

The lack of agreement by the companies and customers leaves many of the decisions about deregulation to the Legislature. Lawmakers will have to decide such complex issues as stranded costs and management of transmission lines.

There may not be enough time left in the session for the Legislature to learn the issues and decide them, Wilson says. He plans to sponsor a bill with Rep. Terry Smith, D-Hot Springs, chairman of the House Committee on Insurance and Commerce, to delay legislation. He could introduce the bill this week, he says.

"We had expected a unified bill," Wilson says. "I don't think they are going to do it."

Cecil Alexander, vice president of governmental affairs for Entergy, and Doug White, vice president of systems services for AECC, say there can be no agreement between the two companies.

"There would have to be some major movement," Alexander says.

"They are not going to back off on some key issues," White says.

The two companies reached the impasse over stranded costs and ownership of the transmission lines that carry electricity from its source of generation to customers.

Stranded costs, which Entergy estimates at about $1 billion, were incurred by the company under federal regulation requiring long-term investments to reduce the dependency on oil. Company officials want a provision in the bill to compensate the company for such expenditures as Arkansas Nuclear One in Russellville and the Grand Gulf nuclear power plant in Port Gibson, Miss. AECC doesn't have any stranded costs and disputes Entergy's calculations.

Entergy wants an independent company to own and manage the transmission lines. AECC wants an independent operator to manage the lines.

Both companies agree that the Legislature shouldn't delay deregulation for another two years. At least 18 states already have deregulated the industry and more are considering it this year. Since rates are expected to decrease in states that have deregulated the industry, Arkansas could lose business to those states, Alexander says.

"I think it is important that we do something this session," Alexander says.

Alexander says he has talked with Wilson and Smith and told them it is premature to table the issue this session.

"They were receptive to the arguments," he says.

Alexander says Entergy is prepared to submit a bill this week.

"We've made a great deal of progress and are close to having a good bill," he says.

White says AECC has a bill it plans to submit, too. White says he hopes the Legislature will at least pass something to start the process during this session.

The only negotiations that continue are between the coalition of customers and each of the two companies. Both companies hope to get the support of the coalition.

"We are working very closely with the industry group," White says. "We'd love to have them on our side."

Alexander says Entergy was meeting with the group last week and hoped to reach an agreement within days.

"We are still in the process of trying to reach a consensus with everyone involved," Alexander says.

The issue is too important to delay, he says.

"We are the last industry that is still a regulated monopoly in this country," he says.

HB 1299 - Taxpayer Bill of Rights

The Senate Revenue and Taxation Committee is considering a bill that would guarantee more rights to taxpayers and make the property assessment and taxation system more equitable. The House passed the bill unanimously last week.

The bill specifies 11 rights of taxpayers, including the right to more information about the tax system, the right to participate in determining tax rates, the right to a prompt and courteous response from government officials and the right to a prompt refund of any excess tax paid.

However, the bill states that the rights aren't guaranteed.

"The foregoing are goals and objectives only and no person or entity shall have a civil cause or action for any alleged breach or violation of any of these goals and objectives," the bill states. "Provided, however, that the preceding sentence shall not be interpreted or construed to limit the rights of any taxpayer under any other law of this state."