Council accuses SWEPCO of price gouging

PRESCOTT – Southwest Electric Power Company (SWEPCO) was accused of price gouging by members of the Prescott City Council at its March meeting Monday night.

What the council decided, though, was to pay the normal monthly amount based on usage and the January billing rate and dispute the rest. In addition, the city will be joining Bentonville in calling for an audit of SWEPCO’s billing and get the Arkansas Attorney General’s Office involved. City Attorney Glenn Vasser said there will be a meeting with legislators and the governor Wednesday to discuss this situation and see if the winter storm could be classified as a disaster, much like floods and tornadoes.

Councilman Ivory Curry flat out said SWEPCO is price gouging after learning the utility company’s bill from January to February increased almost five times, though less electricity was used in February. According to bills presented to the council from SWEPCO, the city was billed for 7,079,848 kilowatt hours in January at a rate of 0.0398882. With transmission charges, this amounted to $452,904.62. In February, the city was billed for using 6,217,125 kwh, but the rate jumped to 0.2198109 with the bill totaling $1,963,091.22.

Larry Jones, Jr., with Prescott Water and Light, said the reason SWEPCO gave for the massive increase was the price of natural gas  increased drastically during the winter storm and the price was passed on to Prescott. However, Prescott wasn’t the only community to get hit with such bills. Hope and Bentonville also received bills nearly five times the normal rate. Jones pointed out Prescott normally pays between $400,000 and $500,000 a month for electricity, not $1.9 million.

Curry spoke up saying this is nothing more than price gouging.

Jones continued, pointing out the kwh usage wasn’t that different from January to February and was actually less in February as the month wasn’t as cold. He informed the council several options had been discussed, including paying the bill. Jones said the AG needs to look at this as price gouging and having a third party check to see if the billing is legitimate are good ideas. So far, nothing has been billed to customers of PW&L, as their bills were estimated based on the January rate.

Jones added the city can’t recuperate money from the fuel tax as it’s maxed out. He told the council if it’s not billed to customers the city could wind up having to pay for it.

Vasser said Bentonville’s bill was more than $18 million, but that community has political power that could also help Prescott. The state, he continued, will be getting stimulus money, some of which will come to cities, though not enough to cover this bill. He pointed out the Federal Electric Regulatory Commission (FERC) is still looking at the pancake billing practice and could either grandfather Prescott in or restructure the deal entirely, but, on the other hand, it could also rule against Prescott.

“This council is sick of SWEPCO killing this community,” Curry said.

The problem, as it was explained, is though there were weeks of advance notice as the winter storm approached, SWEPCO didn’t purchase natural gas to supply its furnaces and generate electricity until the last minute, after the natural gas rates had been substantially increased due to demand.