Utility regulators say AG failed to meet deadlines in case to raise gas rates

Arkansas Attorney General Tim Griffin’s failure to adhere to filing deadlines has Summit Utilities one step closer to approval of a proposed settlement that would increase residential gas rates by more than 23% for more than half a million Arkansas homes and businesses.  

That’s according to an order entered Tuesday by the Arkansas Public Service Commission, the state’s utility regulator. The commission said Griffin had missed its deadline to object to the proposed settlement, failed to identify anything objectionable in the settlement despite being given extra time to do so, and failed to establish good cause to delay proceedings any further. 

He was also premature in requesting the commission reject the proposed settlement, commissioners said, since they had not yet held a hearing on it.

At first, Griffin applauded the settlement with Summit, which the gas company filed with the commission on Oct. 7. Then, after state legislators publicly criticized the settlement, Griffin suddenly changed his tune. On Oct. 10, he flip-flopped and sent a letter to the commission asking it to reject the settlement and order more negotiation.

Based on the failures outlined in Tuesday’s order, the commission denied Griffin’s motion to set new deadlines in the case, denied his motion to reject the settlement as premature and denied his motion to withdraw from the rate case. Commissioners further ruled that Griffin would not be permitted to cross-examine witnesses or submit testimony in opposition to the proposed settlement at a Wednesday hearing due to his failure to follow the commission’s prior instructions. 

After noting the parties, including Griffin, had submitted a “unanimous joint Agreement” on Oct. 7, the commission outlined Griffin’s procedural failures as the basis for rejecting his motion for new deadlines:

The AG now wishes to oppose the Agreement despite having missed the deadline to do so, and without identifying any specific issue he now finds objectionable in the Agreement. Moreover, the AG has failed to file any testimony in opposition to the Agreement. Because of the impending statutorily mandated deadline for the Commission to issue its final rate determination and the AG’s failure to identify good cause for the Commission to extend the procedural schedule, the AG’s Motion to Set New Deadlines is denied.

The commission was similarly unmoved by Griffin’s “request for the Commission to prematurely reject the Agreement, before conducting an evidentiary hearing and fully deliberating,” which they called “procedurally inappropriate and unprecedented.” 

Finally, with respect to Griffin’s motion to withdraw from the rate case, the commission again said “the deadlines to file opposition to the settlement have passed and the AG failed to provide good cause to extend that deadline.” The order continued:

The AG has failed to identify a single issue in the Agreement to which he is opposed and failed to file any testimony in opposition to the Agreement. As the AG notes in his Motion, whether or not he is a signatory to the Agreement is irrelevant to the Commission’s power to review and approve, reject, or modify the proposed Agreement, nor does the AG’s continued participation (or not) in the Agreement alter the hearing procedures that have been agreed to and will remain in place when the hearing is continued.

The commission’s order went beyond denying all three of Griffin’s requests. After listing the witnesses required to attend today’s hearing, the commission ruled that Griffin “shall not be permitted to present an issues list, cross-examine any of these witnesses, or submit any testimony in opposition to the Agreement, given [his] failure to adhere to the procedural schedule in this Docket.”

Griffin said he respected the commission’s decision and would “continue working to ensure that Arkansas ratepayers are paying the lowest possible rates.” However, his office also said that Griffin would review the commission’s final order on the proposed settlement and, if he felt it prudent, appeal that decision to the Arkansas Court of Appeals.

The commission resumed a hearing on the proposed settlement on Wednesday morning. Following public comment, they began with testimony from Summit CEO Kurt Adams. The hearing is scheduled to conclude today, regardless of how long it runs, Public Service Commission Chairman Doyle Webb said at the outset. 

If approved by the commission, the new gas rates would go into effect for Arkansas customers on Nov. 25. If the commission does not rule on the settlement by that date, Summit can impose the 29.4% rate increase the company originally requested in January 2024.

Summit also has the option to delay the increase, which would push it out past wintertime and increased gas usage. Adams testified Wednesday morning that the company likely would not do that. He compared such a delay to his kids asking to put off doing homework.

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The background on all of this is somewhat convoluted. A more complete version of the timeline can be found in this post, but here is a condensed version:

Summit Utilities announced in April 2021 it was purchasing CenterPoint Energy’s gas supply systems in Arkansas and Oklahoma for $2.15 billion. The sale officially closed in January 2022. In documents regarding the approval of this sale, Summit asserted they would charge rates similar to what CenterPoint charged and that their revenue, fixed charges and operating expenses would be similar to CenterPoint’s. Summit also agreed not to seek an increase in rates for at least 12 months and to file a request to increase rates — called a “rate case” — between 12 and 24 months from the time the purchase was approved.

Summit filed for a rate increase in January 2024, just inside that 12-to-24 month window. They sought a 29.4% increase in residential gas rates, which they said would increase the average Arkansas homeowner’s bill by about $18 per month. (Opponents noted this average increase reflected the average gas usage for a one-bedroom home and that a two- or three-bedroom home would see a much larger monthly increase.)

Griffin immediately chimed in. After noting it would ultimately be up to the commission whether to grant the requested increase, Griffin said he was “reviewing Summit’s filing to protect Arkansas ratepayers from excessive utility rates.”

Late last month, representatives of Summit entered into negotiations with the attorney general’s office, commission staff and groups representing other interested parties, such as hospitals and colleges. They reached an agreement earlier this month, setting the rate increase at 23.4% instead of the requested 29.4%. This negotiated rate, submitted to the commission for consideration, would increase the average residential customer’s bill by $15.43/month. 

While Griffin praised what he called a solid compromise, some legislators saw it differently. 

At a Joint Budget Committee hearing two days later, during discussion of the commission’s proposed budget, Rep. Jeff Wardlaw (R-Hermitage) said some of his constituents had received letters from Summit saying the rate increase had been approved. Speaking to representatives of the Public Service Commission who were at the hearing, Wardlaw accused them of not holding Summit’s feet to the fire. “You guys are letting [Summit] run rampant,” he said. 

Other legislators echoed Wardlaw’s concerns. Rep. Fran Cavenaugh (R-Walnut Ridge) accused commission spokesperson Danni Hoefer of “talking out of both sides of [her] mouth” by saying commission staff had approved the settlement but that the commission hadn’t. Rep. Brian Evans (R-Cabot) noted the intervenors in the rate case seemed to represent everyone but the residential customers, and he asked who represented them. The attorney general, Hoefer said.

A day after legislators raked the commission and the proposed rate increase over the coals, Griffin suddenly changed his tune on the settlement. He sent a letter to the commission, bragging about the reduction in the proposed increase that his office “obtained,” but asking the commission to nevertheless reject the settlement and order more negotiation. He followed this letter with a motion to reject the settlement or, in the alternative, a motion to allow his office to withdraw from the settlement proceedings and for the commission to set a new schedule for negotiations.