State regulators took action Wednesday to stave off concerns that some Entergy customers would pay more for their electricity each month so that customers in other parts of Louisiana wouldn’t end up paying more.
Entergy Gulf States Louisiana LLC, which services customers from Baton Rouge west to the Texas state line, is seeking a $28 million rate increase.
Entergy Louisiana LLC, which services the New Orleans suburbs north to Monroe, wants to increase rates by $168 million.
On a vote of 3-2, the five elected members of the Public Service Commission went against the advice of their staff and refused to combine the rate hikes requests of the two companies.
Entergy officials and the staff of the Public Service Commission argued that merging the two rate cases would save “hundreds of thousands of dollars” by making more efficient use of time for the couple dozen experts called to testify on the technical issues on increasing bills for about 1 million Louisiana customers of Entergy.
“Efficiency in this case creates a great deal of fear,” PSC Commissioner Scott Angelle, of Breaux Bridge, said. “We have to make a decision today that customers are concerned about.
The Louisiana Energy Users Group, or LEUG, which represents the state’s largest manufacturers and, hence, Entergy’s largest customers, argued that the two companies have different plants and technology that are valued differently and should be evaluated differently. “To deem that these separate customers of the two utilities are merged into a single rate case is inherently prejudicial to the ratepayers,” Randy Young, LEUG’s Baton Rouge lawyer, submitted as testimony.
PSC Chairman Eric Skrmetta, of Metairie, said he was concerned that customers of different Entergy entities would end up having conflicting interests and sidetrack negotiations that help one group but not the other. “It drives the matter away from settlement,” Skrmetta said.
Jill Smith, of Entergy Corporate Communications, said the company doesn’t see the kind of customer conflicts being suggested.
“The majority of the intervenors in both cases are the same and share common interests. The proposed rate design, which is how you decide which class of customers pays what amount, was calculated in an identical manner for both companies,” Smith said.
Because utility companies operate as a monopoly in a defined service area, the state constitution gives the PSC the authority to set the rates the privately owned companies can charge their customers.
Very generally, a utility company can charge a “base rate” — the cost of making and moving electricity — plus the cost to run the electricity generators. A “base rate” can include a built-in profit while fuel costs cannot.
The rate is multiplied by the amount of electricity a customer uses during a particular month.
The pro-rata share of the fuel cost, also based on the amount of electricity is added to the monthly bill.
A typical Entergy Gulf States residential customer, who buys 1,000 kilowatt hours of electricity per month, would pay an additional to $2.41 per month, or about 2.7 percent more, if the PSC approves the Entergy rate increase.
A typical Entergy Louisiana residential customer would pay an additional to $6.80 per month, or about 6.9 percent more, according to Entergy filings.