Cold weather and electricity usage were on the rise in Arkansas in late December and early January. Some Entergy Arkansas customers, as a result, are experiencing higher-than-normal electricity bills. It also happens that this increase in usage coincides with new rates that took effect for 2018.
Looking at the overall bill, which includes numerous components, the net rate increase for residential customers from December 2017 to January 2018 was 5.61 percent. On bills for 1,000 kWh of usage, that amounts to $5.80.
Consequently, if a customer’s bill doubled from December to January, it was not because of this modest increase. It was because usage increased, and that was almost certainly because of the colder-than-normal temperatures. If a customer increased usage by 25 percent, the bill would increase by approximately 25 percent.
Winter Temperatures and Electricity Consumption
At the beginning of January, Arkansas experienced four days when temperatures never made it above 32 degrees, according to the National Weather Service. Some areas of the state had overnight lows of 0 degrees. Typically, temperatures this time of year range from mid-30s for lows and mid-50s for highs.
It takes more energy to keep a home comfortable at 68 degrees when it is 15 degrees outside than when it is 34 degrees. Regarding electric energy, this is especially true in cases where the home is heated with electricity and the home is not insulated well. Mobile homes are especially at risk of high bills in winter because they often are both all-electric and inefficient. Space heaters also require significant electricity, causing big spikes in usage.
Customers may remember that on January 18 electricity usage was so high across the region that MISO asked for customers to voluntarily conserve electricity. This has been an unusually cold time, particularly compared to 2017’s mild winter.
Understanding the Electric Bill
On an Entergy Arkansas electric bill, the charge for the electricity itself is the line item “Energy Charge.” For residential customers, this is the number of kWh of electricity consumed, as measured by the electric meter, multiplied by 0.06990. So, for a customer who used 1,000 kWh, the current Energy Charge would be $69.90. Customers with a high bill should look at their previous bills for usage. In most cases, the bill is higher because usage has been higher.
Formula Rate Plan
Beginning in January, there was a nominal rate increase in a different line item on the bill called the Formula Rate Plan Rider.
This is the mechanism by which the company adjusts for fluctuations from year to year in the costs of providing service and investing in upgrades to the system. The Formula Rate Plan provides for an annual review of the company’s projected costs and revenues for the upcoming year by regulators at the Arkansas Public Service Commission. Approved changes (both up and down) become effective the first billing cycle of each January.
The Formula Rate Plan line item on a residential bill is considerably less than the Energy Charge. For instance, on a bill for 1,000 kWh usage, the current Energy Charge would be $69.90 while the Formula Rate Plan line item would be $7.27.
The Formula Rate Plan portion of the bill is relatively insignificant compared to the Energy Usage portion of the bill. Rates for Energy Usage did not change from 2017 to 2018. What did change for many customers was the amount of electricity they used during extremely cold temperatures in December and January.
What Can One Do to Avoid High Bills?
The easiest and most immediate relief for bill spikes is to convert to level billing. Level billing averages bills over 12 months so every monthly bill is close to the same amount. Learn more and sign up on our website: http://entergy.com/save_money/levelbilling/
An important longer-term solution is to reduce energy consumption by improving the energy efficiency of one’s home. See http://www.entergy-arkansas.com/your_home/save_money/EE/residential-solutions.aspx for tips on how to do this, including a free evaluation and recommendations for improvements, some of which may be done at no cost to the customer.
Entergy Arkansas offers customers in an emergency situation help with their bills. Options for bill assistance are on the website: http://www.entergy-arkansas.com/your_home/help.aspx. Customers can always call 1.800.ENTERGY for options as well.