August 4, 2008

PSC Sets July 7 Hearing to Scrutinize Utility’s Fuel Adjustment

By Chandler, Clay

The next electric bill Entergy Mississippi customers get is going to be higher than it has been.

The pricey power is due to a 28% rate increase that took effect July 1 and will last until September.

In an economic climate in which almost nothing is exempt from the cost of fuel, even keeping the lights on is more expensive. Entergy officials say 1,000 kilowatt hours of electricity will cost approximately $26 more per month.

That startling jump has prompted the Mississippi Public Service Commission, which regulates electric power, telephone, water and gas- line utilities in the state, to double-check the formula the utility company is using to recoup its fuel costs. By law, utility companies in Mississippi can recoup their fuel costs dollar-for-dollar.

Entergy uses a mixture of fuels to produce the electricity it provides to customers, coal and natural gas among them. Because the price of natural gas has risen 120% the past year, the price of manufacturing electricity has risen with it.

Central District Public Service Commissioner Lynn Posey said from his office July 1 that the commission's re-examining Entergy's numbers should give the impression that the watchdog agency suspects malfeasance. Posey also said that, effective immediately, utility companies would have to give the PSC a 20-day notice before raising fees.

"We just don't feel like the information has been getting to the commission in a timely manner," Posey said. "And that's nobody's fault. We're just trying to be proactive. We're just making double- sure that (Entergy) is getting exactly what they're supposed to get (for its fuel costs)."

The commission has scheduled a hearing for 10 a.m. July 7 to address the fee increases. "It's a serious issue when somebody's electric bill goes up 28%," Posey said.

"We're happy to provide the information to the commission," Entergy Mississippi director of communications Checky Herrington said shortly after the announcement. "It was sent some ago. We're happy to file whatever we need to so (commissioners) can reach the conclusion they need to."

Entergy launched a legislative campaign, which ultimately proved successful, during the 2008 regular session that would allow utility companies to charge ratepayers as new facilities are being built. Before, utility companies could only charge for construction of new facilities when they were operational. In several interviews with the Mississippi Business Journal, Herrington has said Entergy's plans to build an addition that will produce more electricity to its Grand Gulf nuclear power plant in Port Gibson would cost customers less if the company could pay construction costs up front. The plant would increase Entergy's "baseload" production, meaning less electricity would have to be transported from out-of-state utilities to meet demand. The bill, signed by Gov. Haley Barbour, had the backing of several business groups and trade associations.

Herrington said Entergy is aware that high fuel costs are squeezing markets of every kind.

"These are frustrating times for everybody, and we understand that," Herrington said, adding that Entergy has seminars and workshops available to educate customers large and small on how to conserve electricity and keep their bills as low as possible. "In the meantime, we're going to work through this crisis, because that's what it is: it's an energy crisis. We're not taking it lightly."

Copyright Mississippi Business Journal Jul 7, 2008

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