Every other year, the state Capitol fills up with senators and representatives from across our state, working hard for months to propose and debate bills that determine the laws in Arkansas.
Some bills pass, some bills go back for more study, and some bills fail. It is truly democracy at work in Little Rock, and it is tough work for these legislators. I have seen it firsthand. I am always impressed with the sheer number of topics our legislators must get up to speed on — and with their dedication to understanding these bills and getting them right.
This session included SB307, the Generating Arkansas Jobs Act of 2025, a significant piece of legislation related to energy infrastructure. I have published numerous articles highlighting the need for a Balance of Power and the need for reliable and dispatchable power plants. Power shortages during Winter Storms Uri (2021) and Elliott (2022) that resulted in rolling blackouts provide a clear case to support this position. For years, the only power generation that has been built has been intermittent wind and solar while coal and nuclear plants have been shut down. Initially, this replacement strategy appeared to work, however, the grid reached a tipping point.
In addition to this already tenuous situation, America is experiencing historic levels of power demand due to load growth from new manufacturing plants, data centers, artificial intelligence (AI) and electric vehicles. Arkansas is in an even more stressed position because we are facing the closure of two large coal plants and the accompanying loss of their dispatchable energy. The White Bluff Steam Electric Station is scheduled to close in 2028, and the Independence Steam Electric Station is scheduled to close in 2030. Arkansas Electric Cooperative Corporation (AECC) is a co-owner of these plants, and Entergy Arkansas, LLC is the operator. These plants represent 3,200 megawatts (MW) for Arkansas and 1,168 MW for the Electric Cooperatives of Arkansas that AECC serves. For reference, 1 MW will power about 750 to 1,000 homes. It will take more than three years to build the facilities necessary to replace the 1,168 MW lost by the closure of these plants.
This was the reality that legislators faced when they came to Little Rock this year. Arkansas must not only replace a large amount of dispatchable coal generation, but even more dispatchable generation is needed to supply the power required to support economic development opportunities presented by load growth. I am proud of the work our legislators did to address this need by passing the Generating Arkansas Jobs Act of 2025.
The Electric Cooperatives of Arkansas’ mission is to provide reliable, affordable and responsible electricity and services to our members. It is always a balancing act. We must replace the generation that we are losing with the coal plants closing, and this puts a lot of pressure on affordability. My best analogy is the difference in cost between operating an old car that is paid off compared to the cost of a new car. The cost of a loan, interest on that loan, higher cost of insurance and higher taxes all make the new generation more expensive.
In terms of a power plant, it costs somewhere between $1 million to $1.5 million for every megawatt of generation that must be replaced. What does that mean for the cooperatives? Given that we must replace 1,168 MW of coal generation with new generation, and the fact that we are already facing an energy shortage, we must build nearly 2,000 MW of new generation to have adequate power supply in 2030. This is before you factor in any new manufacturing plants, data centers or other new electrical load that comes with economic development and jobs for Arkansans. In short, we need to invest nearly $3 billion in new dispatchable generation.
I am asked often why these coal plants are closing if their remaining useful life is projected to be until about 2045. The short answer is that in 2018, Sierra Club and National Parks Conservation Association sued Entergy over alleged environmental issues associated with the coal plants. Entergy determined they would need to spend about $2 billion to add new environmental controls, potentially reduce operations and possibly later require additional costly environmental controls through 2045. Given the uncertainty of these coal plants’ longevity, it was nearly impossible to justify this investment. Entergy entered into a settlement agreement with Sierra Club and National Parks Conservation Association, which included a requirement that Entergy cease burning coal at these plants in 2028 and 2030, respectively. The settlement was approved by a federal judge in 2021, resulting in what is called a Consent Decree. A copy of the Consent Decree can be found here: tinyurl.com/SierraConsentDecree.
Additional dispatchable generation is needed to maintain the status quo and to meet the demand for new opportunities. But, bankers will not loan us 100% of the money to build, just like they will not loan you 100% of the cost of your home. You must put some money down or, in the case of an electric utility, have enough equity to cover the loan. It is this fact that has caused the need for recent rate increases: The Electric Cooperatives of Arkansas need to generate revenue to build the equity needed to allow these new power plants to be financed. I highlight this fact because I have heard legislators getting negative feedback that their support for the Generating Arkansas Jobs Act of 2025 would cause rate increases. The fact of the matter is that rate increases were a certainty before this bill ever saw the floor of the house or the senate.
The goal of the Generating Arkansas Jobs Act of 2025 is to reduce the impacts of these new generation builds on members. It also accelerates the timelines for review and approval of these new projects to ensure that we can get the new assets online in time to meet demand and to take advantage of economic development opportunities available to the state. While it is true that building more power generation to support new economic development will cause more pressure on rates, the bill allows new ways for us to contain those costs and provide some relief for existing members. This legislation also allows the ability to collect revenue for these new resources as we are building them, so that less money is needed for financing, resulting in less interest, easing our balance sheet and ultimately smoothing and eventually lowering the resulting rate impact.
The Electric Cooperatives of Arkansas are not-for-profit. There is no profit motive to build new generation. Our only motive is to provide you reliable power as affordably as we can. While there is no silver bullet, I appreciate the flexibility that our legislators provided us with the Generating Arkansas Jobs Act of 2025. I want to thank the bill sponsors, Sen. Jonathan Dismang and Rep. Les Eaves, and our eight senate and 20 house co-sponsors for their work on this. I also want to thank all our senators and representatives who supported this bill and made the best decision they could to ensure that Arkansas has reliable and affordable power into the future.