§ 23-4-1207 — Formula - Adjustment of customer rates

(a) Customer rates shall be adjusted in a formula rate review mechanism based on a comparison of the earned return rate to the target return rate. (b) Adjustments of customer rates shall be calculated using the following formula: (1) If the earned return rate is less than the target return rate minus five-tenths percent (0.5%), the formula rate review mechanism revenue level for the formula rate review test period shall be increased by an amount necessary to increase the earned return rate to the target return rate; (2) If the earned return rate is greater than the target return rate plus five-tenths percent (0.5%), the formula rate review mechanism revenue level for the formula rate review test period shall be decreased by an amount necessary to decrease the earned return rate to the target return rate; or (3) If the earned return rate is less than or equal to the target return rate plus five-tenths percent (0.5%) and greater than or equal to the target return rate minus five-tenths percent (0.5%), the formula rate review mechanism revenue level for the formula rate review test period shall not change or be adjusted. (c) If a formula rate review test period utilizes projected data under § 23-4-406 or a projected year, rates shall be adjusted by the netting of historical year differences under § 23-4-1206 . (d) (1) (A) The total change in the formula rate review mechanism revenue level shall be allocated to each applicable rate schedule based on an equal percentage of the base rate revenue used in the development of rates in the Arkansas Public Service Commission's order addressing the public utility's last application for a general change in rates and charges. (B) As part of an extension of the five-year term of a formula rate review under § 23-4-1208(a)(3) , for an electric utility if the electric utility's class of customers with the highest level of consumption per customer that has rates that include a demand component, and any successors to such a class, as they existed on January 1, 2021, has an annual usage for the class as a whole in excess of five million megawatt hours (5,000,000 MWh), the commission shall, and for all other utilities the commission may, adjust the cost allocation, with respect to the total change in the formula rate review mechanism revenue level under subdivision (d)(1)(A) of this section, to each applicable rate schedule consistent with § 23-4-422(b)(2) and § 23-4-422(d)(2) and using the public utility's most recent cost of service that was submitted under the terms of the public utility's formula rate review mechanism. (C) The public utility shall file the resulting rate schedules as part of any formula rate review compliance filing. (2) The total amount of a revenue increase or decrease for each rate class shall not exceed four percent (4%) of each rate class's total revenue for the twelve (12) calendar months preceding the formula rate review test period. (e) Only one (1) rate review adjustment shall occur during any period of three hundred sixty-five (365) days.

Legislative History

Amended by Act 2021, No. 894,§ 4, eff. 4/25/2021. Amended by Act 2021, No. 404,§ 4, eff. 3/22/2021. Superseded by Act 2021, No. 894and repealed by Act 2023, No. 180,§ 1, eff. 8/1/2023 Added by Act 2015, No. 725,§ 3, eff. 3/27/2015.