The Book of Acts, authored by the Apostle Luke, tells the story of the founding of the Christian church and its spread across the Roman Empire. While an amazing story, I will leave the telling of that story to pastors and will focus on Act 676. To be best understood, some context is needed.
Arkansas Electric Cooperative Corporation (AECC) is owned by the electric distribution cooperatives. AECC exists to provide wholesale electricity to its members so they can provide retail electricity to you, their members. AECC and its electric distribution cooperative members are not-for-profit. Our mission is to provide Affordable, Reliable and Responsible energy to our members. There is no profit motive to increase rates, rather there is constant motive to keep rates as low as possible while maintaining a reliable electric system. Balancing affordability with spending needed for reliability has never been more challenging.
The Department of Energy reported in 2023 that much of the electric grid was built in the 1960s-1970s, with 70% of transmission lines being over 25 years old. The average age of U.S. power plants has steadily increased as well, with very few being built over the last 20 years. The average age of hydroelectric power plants is 64 years, coal plants 39-45 years, nuclear plants 42 years and natural gas plants 22-30 years. As older, fully depreciated power plants age, new infrastructure must come online to supply power and to keep the grid reliable. Compounding this problem was the singular national focus on reducing carbon emissions over the last 20 years, which accelerated the closure of coal power plants. Today, there are approximately 224 coal plants still in operation in the U.S. — down from over 600 in the early 2000s, mainly due to stricter environmental regulations. Replacing these power plants requires spending on new infrastructure, which adds cost, that in turn causes electricity rates to increase.
Electricity price increases across America have made national headlines and are considered a new political bellwether in the upcoming 2026 midterm elections. Understanding the reasons for these electricity price increases is nearly impossible for the average American, as the media is short-term focused with heavy bias toward intermittent, lower-carbon resources like wind and solar.
No one wants to pay more for electricity, and everyone is looking for someone to blame. The current villain is data centers. No doubt, the basics of supply and demand come into play here, especially when talking about very large electric loads like data centers. However, focusing solely on demand and not supply is not entirely honest.
Electric infrastructure is expensive to build, but is designed to last for 50 to 60 years, so when averaged over the asset lifetime, it becomes much more economical. For example, the newest American nuclear plants (Vogtle 3 and 4) cost $36 billion. However, the average cost of all operating nuclear plants is 3 cents per kilowatt-hour, which, when combined with their superior reliability, makes it some of the most cost-effective power in the country.
America has decommissioned many nuclear and coal plants over the last two decades and replaced them with less-capable but still expensive infrastructure, all in the name of climate change. This has resulted in a less-capable power grid, as evidenced by the North American Electric Reliability Corporation’s (NERC) long-term reliability assessment released last month. It showed large portions of the U.S. at high risk for electricity shortfalls under normal and severe weather conditions. As my dad would say, “These eggs were hatched years ago and now, the chickens have come home to roost.”
This leads me back to Act 676. It is the process that AECC uses to raise rates, and we filed for a 5% rate increase this year. AECC wholesale power costs account for about 60% of the retail rates that you pay your distribution cooperative, so when we raise rates, they must pass that on to you. Why? Cooperatives function with very low margins. A cost increase like this is nearly impossible to absorb, so they must pass it through to stay financially viable.
Why is AECC raising rates? In our case, it has nothing to do with data centers. It has everything to do with national energy policy previously stated. In 2018, the Sierra Club sued Entergy Arkansas, alleging Clean Air Act violations as part of a “sue and settle” policy that was popular at that time. The result was a settlement that required the White Bluff Steam Electric Station to cease operating in 2028, and the Independence Steam Electric Station to cease operating in 2030, short of their normal useful life. Those chickens have come home to roost and require AECC to build new natural gas plants to replace our 1.2 gigawatt-share of those coal plants — estimated to cost nearly $3 billion.
Spoken in English, that is 1 billion 200 million watts, or enough power to light 20 million 60-watt light bulbs. This represents over 25% of our current power supply. No new data centers or factories are driving this, just a federally approved settlement agreement to switch from coal to gas.
Building new power plants for new load allows spreading those costs over a larger base and doesn’t impact rates nearly as much. Unfortunately, adding new costs to the same base only serves to raise rates. AECC must raise rates to grow the margins needed to have the equity required by financial institutions to fund these new power plants. Cooperatives cannot issue stocks to raise capital; we can only raise rates to collect excess revenue, and then retain those earnings as collateral to finance power plants.
It is just that simple. We know it is our responsibility to keep your power affordable and look for every option to keep your rates as low as possible. However, it is also our responsibility to deliver reliable power to your home, so you can feel confident that you will have the energy you need whenever you need it.