Several Arkansas state lawmakers on Wednesday questioned a settlement filed Monday by Summit Utilities Inc. with the Arkansas Public Service Commission that would authorize an $87.7 million rate increase.

Average monthly residential customer bills would increase by $15.43 under the proposed settlement, beginning by Nov. 25.

“We are hearing a lot from our constituents all across the state,” state Sen. Missy Irvin, R-Mountain View, said before the Arkansas Legislative Council and Joint Budget Committee approved her motion to refer the proposed rate increase to the House and Senate Insurance and Commerce committees to seek an explanation about the settlement and ask questions about it during a meeting to be held soon.

The residential customer bills for Summit Utilities Inc. would increase by 23.4% under the settlement supported by Arkansas Attorney General Tim Griffin, the Arkansas Public Service Commission staff and ratepayer coalitions representing commercial, industrial and hospital customers and the University of Arkansas System.

Those groups opposed Summit’s initial request, filed in January, that sought a 30% annual increase, or $18.48 monthly and $221 annually.

The rates would increase for all 410,000 of the natural gas provider’s Arkansas customers under the settlement.

The agreement would be “a reasonable resolution of all the issues in this docket and as being in the public interest,” the settlement filing states, asking for approval of an agreement that balances the interest of investors and ratepayers. It would set Summit’s annual rate of return at 6.17% — establishing the profit the utility can earn in Arkansas.

The three-member Arkansas Public Service Commission has until Nov. 24 to consider the settlement. The commission is chaired by attorney Doyle Webb, who is a former state senator and chairman of the Republican Party of Arkansas. Attorneys Justin Tate and Katie Anderson also serve on the commission.

State Rep. Jeff Wardlaw, R-Hermitage, who is co-chair

man of the Legislative Council, said the settlement “seems like a very significant hit for low-income, Delta families to have to pay going into the winter, and I just want to understand it.

“You guys are over there for a reason, and that’s to hold the feet to the fire and make sure these folks do not gouge our public, and it feels like today you guys are letting them run rampant and before we let you out of budget, I would like to understand how this works,” he said referring to the Public Service Commission during the Legislative Council and Joint Budget Committee hearing on the commission’s budget for fiscal year 2026 in preparation for the regular session starting Jan. 13.

Fiscal year 2026 begins July 1, 2025.

PSC APPROVAL NEEDED

In response, Danni Hoefer, chief of staff for the Arkansas Public Service Commission, said “while there is a settlement that has agreed to by the parties, the commission has not ruled on it.

“That settlement was just filed (Monday), so the commission has not had the opportunity to review and to deliberate and to make decisions and issue a final order,” she said. “While there is a settlement that has been agreed to by the parties participating, that is not a final approval by any means.”

Hoefer said gas prices, capital investment and cost of operations are considered by the participating parties, the commission and its staff in deciding upon rates.

“The commissioners and our staff work very hard to try to balance the need for fiscally healthy utilities, so that they are able to provide safe and reliable service,” she said.

“The big balance on that of course is affordable cost for the ratepayers,” Hoefer added.

LAWMAKER OBJECTIONS

Wardlaw said a 23.4% rate increase by Summit Utilities Inc. under the settlement is not balanced in any way.

State Rep. Jim Wooten, R-Beebe, said citizens shouldn’t have to deal with a 23.4% rate increase by Summit, which he attributed in part to “a shortage of cash flow.”

State Rep. Brian Evans, R-Cabot, questioned why it doesn’t appear that there was any collaboration with residential ratepayers that would have to pay the higher rates under the settlement.

But Hoefer said the attorney general’s office represents residential ratepayers in these cases under state law, and the commission’s general staff represents “a neutral viewpoint” in these cases and reviews the information from the participating parties to try to come up with what the staff considers to be “the best most neutral numbers.”

Evans questioned whether there would be a public hearing Tuesday on the rate request.

PUBLIC HEARINGS

Hoefer said the participating parties in the case have asked to cancel the public hearing scheduled for Tuesday, but “the commissioners have not ruled on that yet.”

Evans, who is the House-speaker designate and in line to be the House speaker from 2025-27, said a public hearing should be held Tuesday to allow constituents to testify on the rate increase under the settlement.

State Rep. Fran Cavenaugh, R-Walnut Ridge, told Hoeffer that “you are talking out of both sides of your mouth.”

She said that’s disrespectful to state lawmakers and all Arkansans.

But Hoefer said she meant no disrespect to state lawmakers or the people of Arkansas.

“I am doing my best to explain,” she said.

State Rep. DeAnn Vaught, R-Horatio, said the 23.4% rate increase by Summit under the settlement “will dramatically affect my area” in southwest Arkansas.

“Are you there for the consumer or are you there for the company?”

In response, Hoefer said the commission is there for the consumer.

Webb, who is the commission’s chairman, told lawmakers on Wednesday that “I appreciate the legislative input.

“I think it’s a necessity in this situation for the people of Arkansas,” he said.

PUBLIC COMMENTS ENCOURAGED

Webb said he encourages people to file their public comments about the rate increase with the Arkansas Public Service Commission.

“We already have had 50 comments,” he said.

Webb noted that the Public Service Commission’s “staff is different than the commission.”

Afterward, Hoefer said the commission is holding public comment hearings on Oct. 22 in Texarkana and Oct. 24 in Jonesboro.

She said the public comment hearing scheduled for Oct. 22 at 6:00 p.m. will be at the Holiday Inn Texarkana, Ballroom C, 5200 Convention Plaza Drive, in Texarkana and the Oct. 24 public comment hearing will be at the Hilton Garden Inn Jonesboro, Ozark Room, 2840 S. Caraway Road, in Jonesboro.

“There is not currently a third public comment hearing for Central Arkansas, however, at the full hearing, public comments are invited and welcome, and we will take comments there,” Hoefer said in a written statement. “In the event that the full hearing was to be cancelled, then we would consider holding a public comment hearing in central Arkansas, however, at this time, the full hearing remains on the schedule.

She said the full hearing on the merits of the case Tuesday at the Public Service Commission building at 1000 Center Street, in Little Rock begins at 9:30 a.m.

“This is another opportunity for people to attend and give comments,” Hoefer said.

Asked why the rate increase is needed, Stephanie Sharp, a spokeswoman for Summit Utilities , said Wednesday in a written statement that “When Summit Utilities acquired Centerpoint Energy’s assets, a term of the agreement, as approved by the Arkansas Public Service Commission, was that Summit would file a rate case within 24 months of the transaction closing. Since the acquisition, Summit’s base rates have not changed.

BASIS FOR RATE INCREASE

“The primary drivers of the proposed rate increase are from investments in our system in Arkansas,” she said.

“When we filed our rate case, Summit had invested more than $300 million in Arkansas to enhance infrastructure, improve safety, drive job growth, and support business needs and hired more than 300 hundred Arkansans in the past three years.”

Negotiations to settle the parties’ differences began Sept. 26.

Griffin said Wednesday in a written statement, “After Summit’s initial rate-increase proposal, my office fought for ratepayers and consumers and helped reduce Summit’s rate adjustment down by $18.5 million, which represents one-fourth of their original rate-increase proposal.”

Sharp said in her statement that that “Summit is pleased it worked with all parties involved in the joint settlement agreement, the General Staff of the APSC, the Office of the Attorney General, Arkansas Gas Consumers, Inc., and the Hospitals and Higher Education Group.

She said the parties engaged in extensive discussion and negotiation regarding Summit’s rate case and worked to determine fair and equitable rates for customers that allow Summit to continue safely providing reliable gas service and customer service.

“The rate proposed in the settlement is lower than what Summit originally requested and the Agreement sets Summit return on equity at 9.85%, which is lower than originally requested at 11.00%,” Sharp said in her written statement. “The settlement provides a 54% debt and 46% equity for capital structure, on Summit’s authorized rate of return. Summit originally requested a 44.4% debt and 55.6% equity ratio.”

The agreement also significantly reduces Summit’s requested level of incentive of compensation costs to be included in rates, she said.