First appeared in Times Picayune, 2/24/05

Vote on Entergy refund delayed

Regulators split on fairness of plan

Thursday, February 24, 2005

By Keith Darcé

Business writer

State utility regulators Wednesday delayed voting on a controversial plan to settle a series of rate cases that would refund $90 million to customers of two Louisiana Entergy Corp. electricity utilities and lower power rates by $30 million a year.

The delay means that any refunds resulting from the deal won't show up in the bills of Entergy Louisiana and Entergy Gulf States customers until April, at the earliest.

Commissioners had hoped to resolve the matter during their meeting Wednesday so that refunds would arrive in March. Instead, they will take up the proposal when they meet on March 23 in Ruston.

Commission Chairman Dale Sittig of Eunice said he decided to delay the vote after learning that Commissioner Jay Blossman of Covington planned to leave Wednesday's meeting early because of a recent back injury. Sittig said he also wanted to give the panel's newest member, Lambert Boissiere III of New Orleans, more time to study the proposal.

Boissiere, who was elected to the commission in November, participated in his second meeting Wednesday. He said after the meeting that he hasn't made up his mind on the proposal.

The delay also could give some commissioners more time to lobby for more concessions from the utilities.

Mike Twomey, Entergy Louisiana vice president of regulatory affairs, said the utilities had hoped for a decision on Wednesday. "We think (the proposal) is a fair settlement that represents a reasonable compromise. It's unfortunate that the matter has been delayed," he said.

The proposal has deeply divided the five-member commission, and it has driven a wedge between the agency's in-house staff, which brokered the deal, and outside consultants, who say the utilities should refund at least $148 million in excess profits.

In a highly unusual move, one commissioner, who said the deal shortchanges customers, publicly admonished the agency's staff for failing to win more concessions from Entergy.

Supporters of the settlement say it would save customers money by delivering a lump-sum refund and by lowering rates. It would avoid further litigation and wrap up unresolved rate cases that have lingered for as long as 12 years.

Opponents say the deal represents an unprecedented deviation by the commission from normal rate-setting protocol by linking cases covering a wide range of regulatory issues from two separate utilities.

The deal would deliver a $10 one-time refund to the average Entergy Louisiana residential customer and a $92 one-time refund to the average Entergy Gulf States residential customer. Entergy Gulf States customers would get more money because most of the cases involve their utility.

Entergy Louisiana supplies electricity to about 650,000 customers in southeastern Louisiana, excluding the city of New Orleans, which is served by another Entergy utility. Entergy Gulf States supplies power to about 340,000 customers in a region stretching from Baton Rouge to the Texas border.

Six of the cases covered by the proposal involve unresolved annual rate reviews for Entergy Gulf States that originated as part of the conditions imposed on the utility by the PSC when Entergy acquired the utility in 1993.

Three cases involve claims that power bills in 2001, 2002 and 2003 would have been lower if Entergy had increased production from two of its nuclear power plants instead of buying higher-priced electricity from the wholesale market.

Commission attorney Matthew Loftus said the proposal is favorable for utility customers who otherwise might have to wait years for refunds from many of the cases. "From (the in-house staff's) perspective, the settlement is fair," he said.

But Sallie Davis with the Louisiana Environmental Action Network (**note: Times Picayune clarified on 2/28 that Davis also represents the Alliance for Affordable Energy**) said the unusually large scope of the deal and the speed with which it is being handled by the commission makes it difficult for outsiders to gauge whether customers are getting a fair shake.

She pointed to one provision that would replace the current rate-setting process for Entergy Gulf States with a new one that will let the utility earn higher profits. Such an important change should be considered by the commission separate from other matters, she said, and the public should have more time to study it.

"You are going to affect ratepayers into the future. This is a serious due process issue," Davis said.

Loftus noted that the new rate-setting regime, known in regulatory parlance as a formula rate plan, is almost identical to one already in place for Entergy Louisiana.

. . . . . . .

Keith Darcé can be reached at kdarce@timespicayune.com or (504) 826-3491.

http://www.nola.com/business/t-p/index.ssf?/base/money-2/1109228702136540.xml