Monthly electricity rates will stay the same — at least for another year — for the 1 million Louisiana customers of Entergy Corp. because the state’s utility regulators approved Monday a settlement in 3-2 votes.
The five elected members Louisiana Public Service Commission noted that organizations representing everyday residential customers, commercial stores and big manufacturing plants all agreed with the new structure that dictates how much Entergy can charge for electricity until at least 2018.
But one of the commissioners questioned why Entergy was guaranteed so much profit under the deal. Another was uncomfortable with the possibility that customers may still be called upon to pay the company’s expenses for investigating the possibility of building another nuclear power plant near St. Francisville.
Under the settlement approved Monday, customers of Entergy Louisiana LLC will see a slight increase in their monthly bills after December 2014.
For instance, customers using 1,400 kilowatt hours of electricity, which the PSC says is typical for a residence, would see an increase of roughly 66 cents on a monthly bill that in December was about $133. Entergy Louisiana provides electricity to about 660,000 customers from the New Orleans metro area, the River parishes and northeast Louisiana.
Customers of Entergy Gulf States Louisiana L.L.C. would not see an increase in rates for at least two years. Entergy Gulf States serves about 370,000 customers from the Baton Rouge area west through Acadiana to the Texas border. Typical Entergy Gulf States residential customers paid $132 for electricity in December, according to the PSC.
Entergy New Orleans Inc., the subsidiary that serves most of the city, has about 165,000 customers and is regulated by the New Orleans City Council. ENO is not part of this agreement.
Privately owned companies are allowed to recoup their costs for making and delivering electricity plus percentage for profit.
This is called the “base rate” or “energy charge” on monthly bills.
In addition, consumers pay a handful of fees and the cost of the fuel used to turn the generators that make electricity. Profit is not allowed on the fees.
“Even with the approved settlement for Entergy Louisiana, our rates will remain among the lowest in the state, the region and the nation,” said Phillip R. May, president and chief executive officer of Entergy Gulf States Louisiana and Entergy Louisiana. He added that Entergy wants to keep rates low because that will help fuel the industrial expansion expected in Louisiana over the next few years.
“I hate to give people a rate increase at Christmas time,” said PSC Commissioner Foster Campbell, of Bossier Parish. He voted against the settlements.
Campbell tried to lower the average profit margin from the agreed upon 9.95 percent — it had been 10.65 percent — to 9 percent. Campbell pointed out that more than 30 other jurisdictions have lower profit margins, including Entergy’s subsidiary in Texas, which has 9.8 percent return. No other commissioner supported his motion.
PSC Commissioner Scott Angelle, of Breaux Bridge, said one reason he opposed the settlements was because it allowed an opportunity for Entergy to collect from customers the money spent on researching the possibility of building another nuclear power plant. He and other commissioners argued that Entergy shareholders, rather than customers, should pay the $60 million spent on a nuclear power plant that will not be built.
Entergy in 2010 suspended efforts to build a nuclear power plant, saying that the dramatic drop in the cost of natural gas made building the multibillion dollar plant economically not viable.
In a complicated calculation detailed in the rate settlement, Entergy could, under certain circumstances use 60 percent of any excess profit to pay down the costs for the nuclear power plants.
But PSC Commissioner Clyde Holloway, of Forest Hill, said that the chances of those circumstances aligning to the point where Entergy could claim the nuclear repayment are unlikely. “I’m very happy that nuclear was not included,” he said.
Holloway, PSC Chairman Eric Skrmetta, of Metairie, and PSC Commissioner Lambert Boissiere III, of New Orleans, all voted for the new rate structure.