The Arkansas Public Service Commission is calling on utilities to begin providing details about their plans to use federal programs to increase energy-saving investments while protecting customers from any potential rate increases associated with the efforts.
State regulators issued an order Dec. 28 citing two federal funding initiatives that offer "an unprecedented opportunity for utilities in Arkansas to mitigate rate and bill impacts as they expand energy efficiency improvements and transition to renewable power generation."
The request, the commission said, is an exploratory initiative and will be a forum for utilities to share best practices to maximize the benefits provided by the Inflation Reduction Act of 2022 and the Infrastructure Investment and Jobs Act, approved in 2021.
Danni Hoefer, PSC chief of staff, said Friday the order seeks to coordinate funding and projects that enhance utility infrastructure investments and improvements across Arkansas.
"The commission is trying to ensure that Arkansas utilities are aware of the funding opportunities provided by federal programs and they're exploring how they can benefit," she said. "The commission also want to know how utilities are taking advantage of these opportunities. There is opportunity here to get federal funding to address specific grid reliability and grid infrastructure expenses and costs. We want to know how they're addressing and thinking through the process."
Some projects are eligible for up to 50% match of federal funds, a subsidy that would help utilities mitigate their own investments. When utilities invest in grid updates and improvements, that money can then be charged back to ratepayers to recover the utilities' costs.
"We've seen other states get substantial awards and grant funding to launch different energy-resiliency efforts," Hoefer said. "Part of this is to make sure that not all of the investment costs go to ratepayers."
Utility representatives on Friday said electric and national gas providers are working to upgrade the electric grid while holding down costs for ratepayers.
"We've been working to identify all areas and programs that can help save money for Arkansas ratepayers while also generating economic activity," said Lauren Waldrip, executive director of the Arkansas Advanced Energy Association, which represents traditional utilities and alternative providers such as solar companies.
"The bottom line is if we pursue these opportunities, we can save money for ratepayers," she added.
Federal subsidies offer "a significant historical opportunity to apply for these funds that can benefit Arkansans," Waldrip said. "All of the federal funds that are on the table across the board can pay for the investments that we are going to inevitably have to make in Arkansas, regardless of whether the federal resources are available or not."
Entergy Arkansas, the state's largest utility, began applying for federal support last year but did not win one of the seven applications, officials said Friday, noting that there is a pending application to help fund hydroelectric projects at Carpenter Dam on Lake Hamilton and Remmel Dam on the Ouachita River.
The PSC order will enhance coordination of funding efforts and could shape investment priorities for the state, the company said.
"This will help provide insight into initiatives the Public Service Commission or the state may prioritize," said John Bethel, director of public affairs at Entergy Arkansas. "It will be an opportunity to have discussion or review of the federal programs. This will be a continuation of our efforts to coordinate with the appropriate state agencies that are responsible for administering those funds."
Billions of dollars are available to promote energy efficiency and grid innovations and support workforce-development projects that promote a clean-energy economy. "Either ratepayers are going to have to pay for this in the future or we can take advantage of the taxes we've already paid and compete and bring some money back to Arkansas rather than letting them go to other states," Waldrip said. "The federal opportunities, and the cost-savings for Arkansans, are tremendous."
About $4.75 billion is available through the U.S. Environmental Protection Agency alone to help reduce greenhouse gases and the U.S. Department of Agriculture also has $1 billion to make low-interest loans for renewable-energy projects, according to the Sierra Club, a national environmental organization.
Funds will be disbursed in a competitive process over five years. States that act quickly will be best positioned to attract federal dollars, according to the organization.
"This sleeper of a program could end up being absorbed entirely by fast-acting states with aggressive decarbonization goals or could provide a serious booster to states and municipalities with ready-made transition opportunities," the nonprofit noted in an outline of the federal initiatives.
Through the federal programs, utility customers also can claim tax credits for making energy improvements such as installing heat pumps or deploying other innovations that lead to a cleaner environment and reduce carbon emissions.
"Utility customers are eligible for these tax rebates now," the Sierra Club said. "Public power utilities can start working with their customers to make sure customers are aware of both the tax credits and utility rebates or incentives."
The commission will decide on appropriate actions and potential funding opportunities, Hoefer said, noting there is no clear course of action at this point. "It's a little too early to speculate because we're not sure exactly what we're going to get," she said. "The funds available are all associated with infrastructure improvements and innovations."
The commission outlined 17 questions in the order and asked for responses from the utility companies, with the initial response to some questions due by Wednesday and all responses due by Feb. 15.
Questions also included requests for information about how the federal funds might affect the utilities' revenue and rates over the next decade.