AR: Residential demand charge proposed


OG&E has filed a new rate case in Arkansas, seeking an overall annual rate increase of $16.5 million, or a 9.8% increase over its current rates, along with an ROE of 10.25%. Its proposal would raise a typical residential customer’s monthly bill by $15.28, or 18%. According to OG&E, the increase is needed to pay for investments in environmental controls and existing power generation equipment; to pay for higher costs related to operating expenses, dismantlement and depreciation costs, and vegetation management; and to ensure continued financial stability of the company.

Significantly, OG&E has proposed to require residential customers to choose one of three rate options:  (1) a standard or default price plan, which includes a demand charge; (2) a time-of-use plan; or (3) a variable peak pricing plan. OG&E stated that its proposal to establish a three-part rate for residential customers is “a move to increase the fairness of its pricing,” and that the establishment of a demand charge — along with a higher monthly customer charge — “more accurately reflects the cost of providing service to customers.” OG&E also asserted that customers would still benefit by embracing energy efficiency under the proposed three-part rate.

The proposed default residential rate includes a $1.00/kW demand charge and a 49% increase to the monthly fixed charge. For general service customers, OG&E would add a demand charge of $1.00/kW and raise the monthly fixed charge from $21.75 to $28.00.

In December 2015, in a rate case filed in Oklahoma, OG&E proposed to establish demand charges for all customers, including residential customers. That case is still pending before the Oklahoma Corporation Commission.