News Center > Federal Tax Credit on Entergy Arkansas Bills to End in January; Rates to stay virtually unchanged
Federal Tax Credit on Entergy Arkansas Bills to End in January; Rates to stay virtually unchanged
Entergy Arkansas’ rates will be virtually unchanged in early 2020. However, a federal tax credit that has been on customer bills for 21 months will end, as scheduled, at the end of 2019. The result of the credit ending will be an increase of about $15 on a typical residential bill.
In December of 2017 the United States Congress passed the Tax Cuts and Jobs Act. The new law lowered the federal tax rate of 35% to 21%, which resulted in Entergy Arkansas crediting customers’ bills with the goal of returning to all customers nearly $500 million in accumulated deferred income tax. For residential customers, the total amount to be returned was nearly $230 million.
Entergy Arkansas proposed at the time, and the Arkansas Public Service Commission agreed, that it would be in customers’ best interest to spread the credit for residential customers over a 21-month period: April 2018 through December 2019. The result was a monthly credit of approximately $15 per 1,000 kilowatt hours. A typical residential customer consumes around 1,000 kilowatt hours (kWh) a month. Consuming more than 1000 KWh would result in a larger credit.
“We want all of our customers to be aware that the tax credit of nearly $230 million that has been returned to residential customers since April 2018 ends this month. Bills will return to levels very similar to March 2018 before the credit was applied," said Michael Considine, vice president of customer service. “It’s important to note that this tax credit roll-off is not a rate increase. However, because the credit ends, this will affect bills going forward.”
Additionally, pending approval by the Commission, a nominal true-up of $0.91 per 1,000 kWh will be on residential bills for 12 months beginning in January. The reason for this is: over the previous 21 months, the company returned approximately $7 million more than the $230 million authorized. The true-up will account for the $7 million excess credit.
Entergy Arkansas provides electricity to approximately 700,000 customers in 63 counties. Entergy Arkansas is a subsidiary of Entergy Corporation (NYSE: ETR), an integrated energy company engaged primarily in electric power production and retail distribution operations. Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity, including nearly 9,000 megawatts of nuclear power. Entergy delivers electricity to 2.9 million utility customers in Arkansas, Louisiana, Mississippi and Texas. Entergy has annual revenues of $11 billion and approximately 13,500 employees.