Jonesboro, Ark. — City Water & Light (CWL) customers will see their first electric base rate increase in over four decades. The CWL Board of Directors recently approved a two-phase rate adjustment, with increases set to begin on January 1, 2027, and January 1, 2028. A potential third phase will be considered after a financial review in 2028.
The adjustment comes after a cost-of-service study by NewGen Strategies and Solutions, LLC. The study found that CWL’s current annual revenue of approximately $108.2 million falls short of its total revenue requirement of $124.95 million, creating a system-wide shortfall of about 15.5%.
“These phased adjustments will ultimately produce the additional revenue needed to fund the new plant while maintaining critical financial metrics related to our bond rating,” said CWL Manager Jake Rice. “We are hopeful that spreading the increase over three years will be more manageable for our customers. Even after these increases, we believe our electric rates will remain among the lowest in Arkansas and well below national averages.”
The driving factor behind the revenue gap is CWL’s planned $350 million investment in the new Independence Combined Cycle Natural Gas Plant (CCGP), which will support the utility’s shift away from coal. CWL plans to use $100 million from its cash reserves, accrued from decades of excess power sales, toward the plant’s cost. The remaining $250 million will be financed with tax-exempt municipal bonds. The gas plant is expected to provide comparable baseload electricity generation to the retiring coal plants.
“With the court-approved settlement leading to the retirement of our coal plants, this investment in a gas plant is a great opportunity,” Rice explained. “Generation ownership has historically benefited our customers, and we estimate that the new plant will save hundreds of millions of dollars over its lifespan compared to purchasing power from the market.”
CWL is joining forces with the Arkansas Electric Cooperative Corporation (AECC), Conway Corporation, the City of West Memphis, and East Texas Electric Cooperative in co-owning the new plant. CWL will hold a 15.4% stake in the facility, which is expected to begin operations by January 1, 2031.
This marks the first base rate increase for CWL customers since 1984. The company emphasized that bill impacts will vary based on individual kilowatt-hour usage.
The phased rate adjustments aim to spread the financial burden over time while addressing the utility’s long-term financial and operational needs.