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West Memphis approves NextEra power‑supply amendment through 2031; staff warns electric rates likely to rise
Summary
The Utilities Commission approved an amendment to extend the power‑supply agreement with NextEra through 2031 and adjust pricing after a competitive RFP. Staff said the utility faces market exposure for purchased power and that a cost‑of‑service study will likely recommend higher electric rates to cover nearly $50 million in recent power‑plant debt.
The West Memphis Utilities Commission on Feb. 19 approved an amendment to its power‑supply agreement with NextEra that extends arrangements through 2031, a move staff said is intended to align supply terms with the planned commissioning of Independence combined‑cycle gas generation.
Staff told commissioners the amendment follows a competitive RFP and subsequent negotiations; the new term would carry pricing adjustments to reflect market conditions. A presenter said the amendment is necessary to secure the city’s power supply and that rejecting it could jeopardize the utility’s ability to serve customers.
The finance presenter also framed the action in the context of the utility’s broader fiscal position: staff are conducting a cost‑of‑service study (the first in more than five years) and are analyzing how recent capital debt — “we spent almost $50 million on a new power plant,” the presenter said — will affect electric rates. The presenter said the study will likely recommend a rate increase to achieve full cost recovery and that a recommendation may be ready in the April meeting.
On market exposure, staff explained that the utility sells owned generation into the MYSO market and purchases replacement energy as needed; NextEra functions as the utility’s market participant, managing sales, purchases and capacity obligations. Staff noted that purchased power costs can spike during cold snaps or high demand periods and cited a roughly $2 million invoice tied to a recent purchase during an extended cold period.
Commissioners approved the amendment by voice vote after motions and seconds. Staff said the amendment will permit continued supply while the municipal co‑owners transition generation as coal‑fired units retire and the new combined‑cycle plant comes online.
Next steps include the cost‑of‑service study’s recommendations to the commission and later public discussion of any proposed rate changes.
