# Class Cost of Service Study The Direct Testimony and Exhibits of [[Matthew S. Klucher]] (Doc. 51, filed 2026-02-27) in [[Entergy Arkansas]]'s base rate case before the [[Arkansas Public Service Commission]]. It presents the **Class Cost of Service Study** ("CCOS Study") — the analysis that allocates Entergy Arkansas's roughly $2 billion retail revenue requirement, and the proposed $44.6 million increase, across the utility's four standard customer classes. A [[Cost-of-service study]] is the document that determines who pays what, so it is the highest-value single filing identified in the investigation plan. ## What's inside `26-001-U_51_1.pdf` — 105 pages: Klucher's narrative testimony (pp. 4–64); a Certificate of Service (p. 65); **Exhibit MSK-1**, his prior-testimony docket list (pp. 66–69); **Exhibit MSK-2**, the CCOS Study Summary / Schedule G-1 (pp. 70–72); **Exhibit MSK-3**, the "Act 725 Rate Design" typical-bill analysis (pp. 73–84); and an Appendix testimony summary (pp. 85–105). Klucher is Director, Utility Rates & Pricing, Regulatory Compliance at Entergy Services, LLC; he served on the APSC's own General Staff from 2010 to 2018 (p. 6). ## The revenue requirement and the proposed increase Klucher's study expresses Entergy Arkansas's costs as a **Total Retail Revenue Requirement of $1,997,481,780**, against present rate-schedule revenues of $1,952,883,962 — a **Total Retail Revenue Deficiency of $44,597,818**, a 2.28% increase on rate-schedule revenue (p. 38). Measured against total retail revenue including all riders and fuel, the increase is 1.93% (p. 41). > "This summary presents the results of the functionalization, classification, and allocation of all the Company's costs of providing utility service to its customers and is expressed as the Total Retail Revenue Requirement of $1,997,481,780 and is shown by rate class on line 44. The Total Retail Revenue Deficiency of $44,597,818 is shown by class on line 43." (p. 38) The figure is large because Klucher rolled $659,582,532 of existing Rider FRP (Formula Rate Plan) revenue into base rate-schedule revenue — a 51% increase in base rate-schedule revenue — but states this "will have no impact on customer bills because these are revenues that are already approved and being collected" (pp. 32–33). ## The four customer classes and the cost-of-service result Entergy Arkansas has **four rate classes: Residential, Small General Service (SGS), Large General Service (LGS), and Lighting** (p. 9). The unadjusted CCOS Study (Table 3, p. 38) shows two classes paying less than their cost of service and two paying more: - **Residential** — revenue surplus of $1,158,784 (−0.13%) - **Small General Service** — revenue deficiency of $46,796,029 (9.92%) - **Large General Service** — revenue deficiency of $6,280,308 (1.21%) - **Lighting** — revenue surplus of $7,319,736 (−17.83%) > "As shown in Table 3, the SGS and LGS rate classes have revenue deficiencies, while the Residential and Lighting rate classes have a revenue sufficiency." (p. 40) In the proposed rate design (Table 4, p. 41) Klucher reallocates the Residential and Lighting surpluses to the SGS class, so **Residential and Lighting customers see a 0.00% rate-schedule change**, SGS absorbs $38,317,510 (8.12%), and LGS keeps $6,280,308 (1.21%). ## No data-center class — and special contracts are excluded from the study This study contains **no data-center, hyperscale, large-load, or special-contract rate class or schedule**. The terms "data center," "hyperscale," and "large load" do not appear anywhere in the 105-page filing; cost allocation is to the four conventional classes only. The study is explicit that the largest customers — those served under individually negotiated contracts — are removed from the analysis entirely: > "I also excluded the load data for customers served under special rate contracts as they are not served under standard retail rates and are not included in cost allocation as part of the CCOS Study." (p. 30) This is the key structural finding for the investigation: a hyperscale data center taking electric service under a [[Special rate contract]] is, by Entergy's own method, walled off from the public class cost-of-service study. Klucher's prior-testimony list (Exhibit MSK-1) records that he filed direct testimony in 2025 in Docket 23-025-P, "Approval of a Special Rate Contract" (p. 69) — a separate, contract-specific proceeding. ## Method, exhibits, and rate design Klucher functionalizes costs into generation, transmission, distribution, and customer service; classifies them as demand-, energy-, or customer-related; and allocates them by cost causation (pp. 8–21). Production capacity is allocated by an Average & Excess 4-CP method "consistent with Act 725 of 2015" (p. 23). The CCOS Study Summary is Exhibit MSK-2 (Schedule G-1). The filing also supports a new Rate Schedule No. 58, the Formula Rate Plan 2.0 Rider ("Rider FRP-2"), and new optional Residential Time-of-Use, Extra Small General Service, General Service, and Irrigation Pumping rates (p. 5) — see [[Proposed Rate Schedule Revisions]]. ## People and orgs mentioned - [[Matthew S. Klucher]] — Director, Utility Rates & Pricing, Regulatory Compliance, Entergy Services, LLC; the witness. - [[Entergy Arkansas]] — the applicant utility. - [[Arkansas Public Service Commission]] — the regulator. - [[J. David Palmer]] — signed the Certificate of Service (p. 65). - Sarah M. Harcus, Eric Fox, Ventrell Thompson, Kristin R. Dalrymple, Jay Lewis — other Entergy Arkansas witnesses referenced. (Plain-text mentions.) ## Concepts invoked - [[Cost-of-service study]] — this filing is the investigation's anchor document for the concept. - [[Special rate contract]] — the vehicle that removes the largest customers from this study. - [[Generating Arkansas Jobs Act (GAJA) rider]] — the separate mechanism, in [[GAJA Rider 2026 Annual Update|Docket 26-008-TF]], that recovers new-generation cost. ## Events documented - [[2026-02 Entergy Arkansas Files Its Base Rate Case]] — this testimony was filed with the application. ## Cross-references - The base rate case allocates costs among conventional classes; the cost of Entergy's new generation is recovered separately, from all retail customers, through the [[GAJA Rider 2026 Annual Update|GAJA rider]]. See the [[psc/docket-26-001-u-2026-05-22/_overview|Docket 26-001-U production overview]] for the cross-docket picture. - [[Entergy CEO Direct Testimony]] — the same docket's CEO testimony, which names the Google and AVAIO data centers and frames them as a benefit to ratepayers. ## Open questions / follow-ups - Docket **23-025-P** ("Approval of a Special Rate Contract") and Docket **22-032-TF** (the Large Power High Load Density tariff), both cited in Exhibit MSK-1, are the proceedings where large-customer/contract ratemaking would appear — candidates for retrieval. - Exhibit MSK-2 is the CCOS *summary*; the granular functional-allocation workpapers are the Schedule H series filed with the Application (Doc. 47), not retrieved this session.