A volunteer Sherwood Ad Hoc Committee appointed by Mayor Virginia Hillman has submitted a report that contends the city does not need to find another electric provider other than North Little Rock Electric.
The report was released Monday night when the Sherwood City Council met in regular session.
The committee, chaired by Sherwood’s Jim Davis, continues in its five-page report, "In closing, after considering all the factors involved, it is the consensus opinion of the committee that changing electric suppliers in the area now franchised to [North Little Rock Electric Department], is not warranted based on the best available information."
The report adds, "This change would likely be very time consuming, costly, and potentially disruptive to the lives of those residents living in the area, and there is not sufficient credible evidence to support a claim of any better rates or service to the residents of the [North Little Rock] franchise area."
The committee was asked by Hillman to make recommendations on three companies vying for a contract to provide electric service to 7,000 Sherwood residents. The three competing companies are North Little Rock Electric, First Electric Cooperative of Jacksonville and Entergy of Arkansas.
The ad hoc committee also state that First Electric Coop should be the second company given consideration if Sherwood elected leaders steer clear of North Little Rock Electric.
"Further, the consensus opinion of the committee is that should the city council decide that it wishes to terminate the relationship with [North Little Rock] and force the sale of the distribution infrastructure to a new supplier, the best option, based on evidence reviewed and apparent willingness to respond to requests in an honest and forthcoming manner, would be [First Electric Cooperative]," reported the committee.
The Hillman-appointed committee was formed a few weeks ago and held a public hearing on Oct. 9 at the Bill Harmon Recreation Center where all three electric providers were invited to attend and answer electric-related questions.
Davis chaired the task force, with the other remaining members Carolyn Chalmers, Amy Sanders, Michael Clayton, and Dr. Gary Haas. The forum gave the three utilities vying for Sherwood’s contract a venue to make their case about why they are the best choice.
In its report, the committee urges city leaders to move soon on making a choice in going forward with one of the three providers.
"In undertaking the evaluation of the positives and negatives of each of the three electric utilities who have responded to the city’s [request for proposals], requesting certain information, the committee has attempted to be primarily mindful of two very important issues," states the report. "First, that consideration is limited to only that area of Sherwood presently serviced by North Little Rock Electric Department composed of slightly more than 7,000 customers which represents slightly more than the customer base of the other two electric providers combined."
The report also points out that Sherwood’s franchise agreement with North Little Rock Electric expires in July 2015. "That being the case, it is imperative that the city act soon, if it is determined that a change in suppliers should be made, to allow for sufficient time for appraisals, negotiations and potential, and the committee believes likely litigation to transpire without the possible interruption of service and loss of franchise revenue to the city."
The committee addressed the issue of rates that would be charged to Sherwood residents.
"The committee also is mindful, given this time frame above, that current rates charged by the respective electric companies are largely irrelevant," according to the report. "What is relevant and important is what level of cost and service can the residents of the area currently franchised by [North Little Rock] expect in mid-2015, almost three years from now."
The report continues, "To the outsider, as we are, the industry appears to be in a state of flux, with changes imminent that will have the effect of somewhat changing the manner of ‘business as usual’ for all three respondents as they anticipate their own participation in Independent Systems Organizations such as MICO or SPP. The expected effect appears to be a leveling of the playing field in terms of any and all of the respondents’ ability to procure power at established market rates on a daily basis."
Only one company, North Little Rock Electric, provided a graphic illustration of the projected effect on retail rates, based on empirical and statistical data, according to the report.
"Neither Entergy Arkansas Inc. nor First Electric Cooperative has offered any evidence or data in dispute of the assertions made and appear to be in substantial agreement," states the report. "One respondent [Entergy] has chosen to meet individually with members of the city council and make certain claims to those individuals and to the media which cannot be substantiated by any evidence presented in a comparison of the three responses."
The report continues about Entergy, "Nor, when asked in the public joint meeting with the committee and members of the council, did this respondent offer any substantiated facts that would support claims made in the media regarding the cost of transition and acquisition of the existing distribution system infrastructure."