Leader Blues

Wednesday, September 14, 2005

EDITORIAL >> Co-ops vs. predators

On Oct. 1, the Arkansas State Electric Cooperatives Corp. will increase its wholesale rates by 3.8 percent, its first increase in 20 years. In the same period the coop lowered — yes, lowered — its wholesale rate for electricity seven times.

We mention that modest little rate increase and the historical trivia because it seems to be an immutable law that energy costs, driven by economic forces beyond our ken and our power in this poor little state, must always go up. The co-ops apparently don’t grasp the law.

Meantime, the energy we buy from investor-owned utilities like Centerpoint Energy (formerly Arkansas Louisiana Gas Co.), Arkansas Western Gas Co., Arkansas Oklahoma Gas Corp. and Entergy Corp. (formerly Arkansas Power and Light Co. and its sisters) keeps going up much faster than the Consumer Price Index.

Centerpoint Energy, the California and Texas giant that acquired Arkla, wants to double the base rate on its 430,000 customers in Arkansas, on top of a 50 percent increase in 2003. State auditors found the company’s figures stupefyingly clumsy and suggested that its base rates be slashed instead by $13 million a year. The Public Service Commission has not acted yet.

That big increase in the base rate does not include a large part of your monthly gas bill, which is the price of gas acquired by the company for resale to you, which it can pass along to you without having to justify it to state regulators. The gas-purchase adjustment shows up as a line on your gas bill.
The two regional utilities serving northwestern Arkansas are seeking big rate increases, too. The big guy, Centerpoint, provides them the cover.

Gil Glover, a utility counsel for the legislature, told lawmakers last week that after a 105 percent increase in residential gas prices in the past decade, Arkansas was no longer a low-cost gas state, as it once was. Spot prices for natural gas, he said, are nearly a dollar a thousand cubic feet above the national average. And Arkansas is in one of the largest gas-producing states and the state with the lowest severance tax on natural gas in the country —the virtually invisible rate of three-tenths of a penny per thousand cubic feet. So it is not confiscatory taxes, which the corporate apologists like to blame for exploding costs.
The huge run-up in wellhead and retail prices occurred after the major gas distribution company, Arkla, sold out to a big conglomerate — one with a record of energy supply and price manipulation — and after a relaxation of state regulation. This may be just a coincidence, but you will have trouble convincing us. The state makes little effort to go beyond the gas-purchase figures supplied by the companies, and state law is already generous in its treatment of the pricing of company-produced gas.

John Bethel, executive director of the state Public Service Commission, told the legislature’s Joint Committee on Energy that gas bills in Arkansas were apt to go up 50 percent or more this winter, compared with last winter. Some of it will be owing to the disruption of gas supply by Hurricane Katrina — all economic problems will be blamed on Katrina for a while, just as they were blamed on 9/11 for years — but Bethel acknowledged that companies would be jacking up residential gas rates without Katrina. Bethel stoutly defended the utilities, which he said were virtually powerless in the face of uncontrollable market forces. No one is to blame. Gas was just meant to be unaffordable for working folks.

Here is a slightly heartening note. A bunch of the lawmakers were not buying the powerlessness ideas. Rep. John Paul Verkamp, a thoughtful Republican from Greenwood, was particularly nettled at the idea that prices were skyrocketing, particularly for residential customers, and that the state regulatory agency could not do anything about it. “The residential class has been left behind,” Verkamp declared. When an Arkansas lawmaker, and a Republican, talks like that, there may be hope.