Some Louisiana customers to see Entergy rates increase
23rd December 2013 · 0 Comments
By Fritz Esker
In a meeting on Monday, December 16, the Louisiana Public Service Commission approved settlements in the electric base rate cases of Entergy Gulf States Louisiana and Entergy Louisiana. The result will be an increase in rates for some Louisiana customers starting in late 2014.
These results will not affect New Orleans customers, as Entergy New Orleans is a separate entity regulated by the New Orleans City Council. Entergy Louisiana’s service area extends from the Arkansas line down the eastern side of the state to the Gulf of Mexico. Entergy Gulf States’ area extends from Baton Rouge to Lake Charles.
The Entergy Louisiana settlement allows the company to implement a $10 million increase in base rates for cost of service, effective December 2014. According to a statement from Entergy, the settlement means a typical Entergy Louisiana customer using 1,000 kilowatt-hours of power per month will see an increase of 47 cents in their bills. Entergy Gulf States Louisiana customers will not see a base rate increase in 2014 or 2015. The votes went 4 to 1 in favor of Entergy Louisiana and 4 to 2 in favor of Entergy Gulf States.
Phillip R. May, president and chief executive officer of Entergy Gulf States Louisiana and Entergy Louisiana applauded the settlement. “Even with these decisions, customer rates are expected to remain among the lowest in the U.S.,” May said.
But there has been vehement opposition to the increase, led by Public Service Commissioner Foster Campbell (D-Bossier City). “Entergy asked for nearly $200 million in higher rates and settled for $10 million,” Campbell said.
Campbell’s argument is that if Entergy genuinely needed rate increases of close to $200 million, then they would not have been willing to settle for the $10 million amount. “If a company can start with a request to raise rates by almost $200 million and settle for $10 million, they can get to zero,” Campbell said. “If anything, rates should be decreased.”
Another of Campbell’s concerns is how even small rate increases will affect the state’s citizens who are either poor or retired and living on a fixed income. Even a small increase can add up for these customers over time.
“We don’t push them (utility companies) hard enough,” Campbell said. “We ought to be doing a better job of holding their feet to the fire to get reduced rates for our people.”
One of the components of the case is the utility profit level, also known as a return on equity or ROE. The cost of borrowing money is a major part of ROE. Campbell argued that since interest rates are so low and have been for years, then ROE should be lower since utility companies can get cheaper loans.
“If the cost of borrowing money is low, then shouldn’t the rates of return be lower?” said Bill Robertson, executive assistant to Foster Campbell. “Nobody’s answered that question. The utilities don’t want to answer that question because they know what the answer is.”
This article originally published in the December 23, 2013 print edition of The Louisiana Weekly newspaper.