SHREVEPORT, La., – The Arkansas Public Service Commission has approved new base rates for Southwestern Electric Power Co., an American Electric Power company.

The decision provides a net annual increase of $23.9 million in non-fuel base rates.

An Arkansas residential customer using 1,000 kilowatt-hours per month will see an overall bill increase of approximately $8.43 per month, or 8.7 percent. Increases for individual customers will vary depending on rate class and electricity usage.

New rates went into effect Dec. 31, which is the first billing cycle of January 2020.

“Our goal is always to serve Arkansas customers and communities with a strong electric system that provides reliable and safe energy,” said Malcolm Smoak, SWEPCO president and chief operating officer. “We work hard to balance the need to invest in the electric system with the need to manage our operating costs. We are committed to high quality service for the families, businesses and communities we serve in Arkansas.”

The APSC approved the new rates on Dec. 27.

With its action, the APSC modified and approved the terms of a unanimous settlement agreement filed Oct. 15, by SWEPCO, the APSC General Staff, the Attorney General of Arkansas, the Board of Trustees of the University of Arkansas, Walmart, Inc., the Western Arkansas Large Energy Consumers and the Sierra Club.

The APSC decision includes approval of a formula rate plan for a five-year term, beginning in 2021.

“The formula rate plan, as provided by Arkansas law, better aligns the company’s rates with its costs on an annual basis, which promotes greater rate stability and reduces the potential for large rate swings associated with general rate cases,” Smoak said.

The APSC decision also moved into base rates $28.9 million for costs currently recovered through separate charges, or riders, on customers’ bills. These existing costs include additional power plant environmental controls completed between 2013 and 2016 to meet federal mandates, plus construction of a high-efficiency, combined cycle natural gas plant, completed in 2010.

Base rates refer to the costs of building, maintaining and operating SWEPCO’s electric system, including power plants, transmission and distribution lines and facilities to serve customers. Base rates do not include the fuel portion of the customer’s bill, which pays for fuel and purchased power, and is a pass-through to customers with no profit to the company.

SWEPCO serves more than 536,300 customers in three states, including 119,800 in Arkansas.