Hino Motors seeks to force Entergy Arkansas to lower rate; says fees not applied fairly

Hino targets Entergy policy, seeks payment cuts

LITTLE ROCK, Ark. — Hino Motors asked regulators Friday to order Entergy Arkansas to develop a new agreement covering Hino’s costs for electricity and fees for the substation and power lines Entergy extended to Hino’s east Arkansas plant.

Hino Motors Manufacturing USA says its minimum monthly electric payment is just shy of $100,000, more than twice what it would pay if it had a regular user agreement with Entergy.

The company, a subsidiary of Toyota Motor Corp., said in its filing with the Arkansas Public Service Commission that Entergy set the cost of the substation and lines at $4.5 million, of which Hino paid close to $600,000.

The truck parts facility opened to great fanfare in 2006 amid an effort in the early part of the decade to have an auto assembly plant on farmland in Crittenden County. Hino launched a new frame rail line last month at the factory, which has 440 workers.

Hino argues that since the plant opened, it has paid $1.9 million in excess of its electric use, money the company says should go toward paying down the substation cost. But its contract with Entergy leaves the charge in place unless the substation cost is paid in a separate transaction.

Hino spokesman Sandy Ring said there was a misunderstanding between Entergy and Hino when the agreement was being negotiated in 2004. Citing a memo from an Entergy lawyer, Ring said it appeared that excess monthly payments were to go toward the substation costs.

Entergy spokesman Mike Maulden said Entergy wants to hold to the agreement as signed.

“We tried to work it out with them but we could not reach a resolution,” Maulden said. “We will defend our position.”

Hino has asked for a hearing before the PSC, but Ring said the company may agree to mediation, as long as the mediators aren’t all from the PSC staff.

Hino’s filing Friday asked the PSC to block a larger rate hike settlement in which Entergy Arkansas struck $150 million from a proposed base rate increase.

Under the agreement announced Monday between Entergy and Attorney General Dustin McDaniel, the power company would cut its $223 million base-rate increase request to $74 million. After factoring other costs that would decline, Entergy said a typical monthly residential bill for 1,000 kilowatt hours would drop from $110.03 to $89.21. Entergy’s original proposal would have lowered the bill to $96.79.

Other large electricity users have agreed to the proposal’s terms, according to McDaniel’s office.

Already scheduled is a May 19 hearing, at which the three-member PSC is to review the settlement proposal.

Maulden said Hino expected to put a truck assembly plant at the site and ordered electric service to support it.

“Hino’s minimum bill is higher than its usage,” Maulden said. “Hino expected to grow into the usage of this (electric) substation. But Hino built its truck assembly plant in West Virginia, therefore the growth they planned for Marion did not happen.”

To lower Hino’s bill, Entergy would have to make up the money elsewhere, he said.

“We’re just not willing to shift costs to other customers,” Maulden said.

Chief Deputy Attorney General Brad Phelps said Hino’s filing shouldn’t scuttle the rest of the agreement.

“What we anticipate will happen is the PSC will consider the settlement agreement during one part of the May 19 hearing, and Hino during another part of the hearing,” Phelps said.

The Marion Hino plant makes parts for Hino’s line of small delivery trucks and for Toyota Motor Corp.’s Tundra pickup and Sequoia SUV.