Customers of the Entergy Corp. subsidiaries in Louisiana should expect a refund sometime within the next year because the utility improperly sold its electricity, causing some customers to pay too much, according to documents filed with Louisiana regulators.
The order by the Federal Energy Regulatory Commission, called FERC, is just the latest in a series of decisions about Entergy’s “system agreement” that has resulted in refunds for Louisiana customers. The roughly 380,000 customers of Entergy Gulf States Louisiana L.L.C. began seeing credits on their June bills because of an earlier FERC finding about the contract between Entergy’s subsidiaries in four states.
“It’s just been amazing how much success we’ve had on the system agreement,” said Commissioner Jimmy Field, of Baton Rouge, of the Louisiana Public Service Commission.
Field said the PSC legal actions in the “system agreement” cases have now caused about $1 billion in refunds for Entergy’s 1 million customers in Louisiana.
For the refund that began being paid in June, a typical residential customer buying about 2,000 kilowatt hours of electricity will see his bills drop about $20 each month of the summer, Field said.
In January the PSC voted to apply the refund as credits on bills during the summer months when air conditioning increases the usage of electricity and monthly bills are higher.
The June 21 FERC decision, which was delivered to Baton Rouge earlier this week, is for about the same total amount as the credits being applied now, according to PSC filings. But individual refunds likely will be smaller, as they will be spread to more customers in more states.
Entergy also disagrees with the calculation the PSC has made.
FERC found that Entergy’s Arkansas company sold its lower-costing excess electricity to third-party companies, leaving only the power that cost more to produce for its sister companies to buy. The other Entergy companies had to pay a higher cost for the electricity. Those costs were passed on to Entergy customers, according to the 60-page FERC ruling.
The system agreement required Entergy’s subsidiaries in Louisiana, Mississippi and Texas to receive the lower-costing power.
FERC ordered customers in those states to be refunded the difference.
The PSC estimates the total damages at about $102 million. Entergy says the amount has not been calculated yet. FERC ordered additional hearings to set the amount.
“There will be some adjustment,” said Bill Mohl, president and chief executive officer of the two Entergy companies operating in Louisiana outside of New Orleans. Officials will have to go back in time and look at specific sales to calculate the figure, he said.
“The magnitude of who gets how much hasn’t been determined,” Mohl said.
FERC ordered Friday that the parties meet to set up a time schedule to decide the issue.
Resolution of just how much money is involved, and which Entergy customers should receive how much of the refund, could take the rest of the year, said Stephen Kabel, a staff attorney with the PSC.
In the “system agreement” Entergy Corp. promised to keep the costs of generating and transmitting electricity roughly the same for its customers in the four states the utility operates.
The power made in Louisiana, more so than in other states, relies on natural gas to fuel the generators. The higher cost of natural gas, when compared to other fuels such as coal, led to cheaper rates for Entergy’s customers in other states.
FERC ruled in 2005 that under what is called Entergy’s “System Agreement,” Louisiana customers deserved a refund to make the costs roughly equal for all the utility’s customers.
Because utility companies operate as a monopoly within their service area, the PSC oversees the privately owned companies business decisions as they relate to the rates charged customers in Louisiana. FERC oversees business deals that cross state lines.