Arkansas Low-Income Weatherization Fund Struck Down

A civil lawsuit challenging a low-income weatherization fund in Arkansas has ended with a ruling unfavorable to the low income in that state.

State legislation that had passed in February 2003 ( Act 120 and Act 121 ) gave electric and natural gas utilities the option to contribute to the fund and to assess a rate charge up to $1.00 per month to residential customers.

Entergy, one of the state's largest electric utilities, promoted the bill in the legislature and was the only utility that elected to collect the fee when the legislation was implemented in January 2004.

A Circuit Court ruled that monies collected under the legislation are a tax and not a fee. Furthermore, the court said, the legislature had delegated to Entergy the authority to decide to impose the tax, which the legislature cannot do because Entergy is not a political subdivision of the state. Collection of the tax was termed an "illegal exaction" and, therefore, unconstitutional. Defendants were enjoined from collecting further monies and must refund all monies collected on or after January 6, 2004, the filing date of the lawsuit.

Proponents had expected to raise between $6.7 and $7 million annually from the assessment, with 70 percent going toward low-income weatherization, and the remainder to an Alternative Fuels Fund for alternative energy grants and research. In May 2004, Entergy rescinded its participation in the program, thus ceasing collection of ratepayer dollars. By court order, the dollars collected have been held in escrow pending resolution of the lawsuit.

An attorney with the Rose Law Firm in Arkansas filed a complaint in February 2004 on behalf of a residential customer of Entergy Arkansas, Inc., challenging the legality of the fund. The suit named Entergy Arkansas, Inc., as well as the Auditor of the State, the State Treasurer, the Alternative Fuels Commission and the directors of the state's Departments of Finance and Administration and Department of Human Services (the LIHEAP and weatherization grantee) as defendants.

Source: Arkansas Community Action Association, National Consumer Law Center

Page Last Updated: December 7, 2005