Responding to predictions of higher monthly bills, Entergy Louisiana offered a new plan its chief executive officer said Monday would prevent any increase in customer charges should state regulators approve a $2 billion spinoff of its transmission business.
Included in the offer — valued at about $129 million — Entergy would offset any additional charges incurred from ITC Holdings Corp. owning and operating the 15,400 miles of high-voltage transmission lines instead of Entergy, said Phillip R. May, chairman of the board and chief executive officer of Entergy Gulf States Louisiana LLC and Entergy Louisiana LLC.
The two Entergy subsidiaries have about 1 million customers in Louisiana.
Entergy Corp., based in New Orleans, owns most of the transmission lines in Louisiana that move electricity from generating plants to the substations from where the power is distributed to customers.
May’s comments came at the end of weeklong hearing, much of it conducted behind closed doors, which concluded Monday.
The Louisiana Public Service Commission was looking into the transaction, which would amount to a massive restructuring of the electricity business for this region.
The five-member LPSC will review the findings and evidence, then vote, probably in October, on whether to approve the spinoff.
“The hearings at the LPSC were, without a doubt, animated and substantive,” May said, adding that the revised “customer rate-mitigation plan” was developed to address the concerns raised by the LPSC staff and Entergy’s largest customers.
Staffers for state regulatory agencies in Arkansas, Texas — and now Louisiana — are recommending against approving the transaction, arguing that it would enrich Entergy shareholders and increase costs for customers.
LPSC staff, in a hearing memorandum, found that Entergy and ITC failed to quantify how changing owners would lead to better and cheaper service for customers.
The deal also would turn over the state’s regulatory power to federal authorities.
“Why should ratepayers pay more to ITC for a transmission system that Entergy is already required to provide as an electric public utility regulated by the LPSC,” Louisiana Energy Users Group asked in a hearing memo.
LEUG represents Entergy’s largest customers — the refineries and manufacturers that line the Mississippi River between Baton Rouge and New Orleans.
“While the benefits promised by the ITC are unquantifiable or otherwise speculative, its higher rates are guaranteed,” LEUG wrote.
Federal regulators have approved the transaction but state and local regulators for Arkansas, the city of New Orleans, Louisiana, Mississippi and Texas also must sign off for the deal to go through.
No regulators have ruled yet. Texas is expected to vote in mid-August.
Entergy made a similar “rate mitigation” offer, valued at $90 million, for Texas, and $117 million in Arkansas, according to published reports.
Because of procedural issues, Entergy’s revised plan was not presented at the weeklong hearing.
May said he hopes the five-elected members of the LPSC vote on July 31 to allow the plan to be included with the results from the hearing.
“This plan is a comprehensive approach to addressing the concerns and objections raised by LPSC staff and intervenors,” May said.
The plan calls for issuing bill credits to customers for at least the first five years following the transaction.
It would protect Entergy customers from bill increases due to the difference in costs between ITC’s ownership of the transmission assets versus ownership by Entergy’s operating companies, May said.
The credits would stay in place until ITC demonstrates economic and performance improvements as evaluated by a third party.
Copyright © 2011, Capital City Press LLC • 7290 Bluebonnet Blvd., Baton Rouge, LA 70810 • All Rights Reserved