Almost as soon as the new state utility regulator for the Baton Rouge-Lafayette area takes the oath of office, the winner of the upcoming election will face two complex issues that will dictate how much Louisiana customers pay for their electricity each month for years to come.
Commissioner Jimmy Field, of Baton Rouge, routinely describes the upcoming decisions as the biggest since the 1980s.
The five-member Public Service Commission is set to vote on efforts by Entergy Corp. to shift management of its transmission lines to an Indiana cooperative. Then, commissioners will be asked to consider letting the New Orleans-based utility effectively sell its 15,800 miles of interconnected transmission lines and substations across five states to a company in Michigan.
Three Republicans, one Democrat and one person running without party affiliation are vying in the Nov. 6 election to replace Field, who is retiring at the end of the year. The five are scheduled to appear at a forum Monday before the Press Club of Baton Rouge.
Not only will Entergy’s 1 million Louisiana customers be affected, but Field points out the votes will affect nearly every household and business in the state because the New Orleans-based utility company owns the transmission lines.
Generally, transmission lines move large amounts of electricity from the generating plant to substations where the volume of power is stepped down to the point that it can be distributed locally to the ultimate consumer. Utility companies that rely on Entergy’s system have long complained that the transmission system is too small and too old to handle the amounts of electricity Louisiana now needs.
Entergy Gulf States Louisiana LLC and Entergy Louisiana LLC, two of the subsidiaries that service most of this state, are spending now, and expect to spend by 2018, about $4.5 billion to upgrade and expand the transmission system, according to PSC filings. Entergy’s customers are paying for much of that work.
Entergy wants to join the 13-state Midwest Independent Transmission System Operator Inc., based in Carmel, Ind. Giving MISO management authority over Entergy’s transmission lines is projected to save the utility’s electricity customers more than $1.4 billion over the next decade.
But MISO would make the ultimate decisions about what plants would make electricity, what lines would transmit the power and what transmission infrastructure would need upgrading. That’s the big issue for regulators in other states.
Last week, the Arkansas Public Service Commission said it wants regulators in each of MISO’s member states get a majority vote on where transmission lines are built and who will pay for them.
On Sept. 17, staffers for the Mississippi Public Service Commission struck a deal that would seek to ensure that transmission costs are correctly parceled out among the states.
Candidates for the District 2 seat on the Louisiana PSC say they support the general concept of turning over transmission authority to a regional group.
“There are benefits to moving from the vertical monopoly that Entergy has had, to a market setting,” said Forest Wright, 35, D-New Orleans.
Having access to power made in plants across the Mid- west and Canada allows Entergy to buy cheaper electricity and pass those savings on to Louisiana customers, said Wright, a utility regulatory consultant who regularly attends PSC meetings. But the key to those savings is in the contract’s details. Who is going to pay for upgrades throughout the system and how will those charges be levied, he asked.
“It could save consumers a lot of money. If that is true, I’m all for it,” said Sarah Holliday, 49, R-Baton Rouge. “If you always do what you’ve always done, you get the same thing you always got. You have to have an open mind.”
Holliday, a community activist who stepped away from her duties in several Republican Party groups to make this run, said regulators should focus on the details of the agreement.
Greg Gaubert, No Party-Thibodaux, agreed, saying that as a small-business man he understands how deals are put together.
“They always frontload these deals with a lot of sweeteners,” said Gaubert, a 48-year-old innkeeper. “The key is to figure out what it’ll be like down the road, how it will operate and what the costs will be once the incentives expire.”
“Our grid system across this state is old and antiquated. It’s important that we bring it up to the 21st century,” said state Rep. Erich Ponti, 47, R-Baton Rouge. “MISO is probably the biggest issue that will be facing us in the near future, that and the potential of Entergy selling off the grid.”
These deals, if properly handled, could allow an inexpensive way to upgrade the transmission system and deliver more electricity to where it’s needed at a cheaper price, he said. Businesses and industries have been known to reject moving to and expanding in Louisiana because of the cost of power, said Ponti, who chairs the House Commerce committee, which oversees the PSC.
Joining a Regional Transmission Organization, like MISO, also would free Entergy to companies to spin off and merge their electric transmission businesses into a subsidiary of ITC Holdings Corp., of Novi, Mich.
On Sept. 24, Entergy and ITC applied with the Federal Energy Regulatory Commission, known as FERC, to finish the transaction by June 2013.
In related filings, Entergy asked the PSC to approve the deal by May 2013. The PSC began taking testimony earlier this month.
Candidate Scott A. Angelle, R-Breaux Bridge, said Entergy’s transmission system was built over the decades and largely paid for by its customers. Louisiana ratepayers need some sort of compensation if those assets are transferred, he said.
The compensation could come in the form of a lower profit margin, a rebate or a credit on monthly bills, he said. “Whatever, the ratepayers deserve a return for their contributions over the decades,” said Angelle, 50, the former secretary of state Department of Natural Resources and former interim lieutenant governor.
The newly redrawn 2nd PSC district stretches from northern parts of Livingston Parish, includes south Baton Rouge and Central, the Felicianas, much of West Baton Rouge and Iberville parishes south to the Gulf Coast to include the “Bayou Communities” in Lafourche, Terrebonne and St. Mary parishes; and west into the Acadiana parishes of Lafayette, Iberia and St. Martin parishes.
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