Entergy to cut increase amount after PSC order|[08/07/2008]

Published 12:00 am Thursday, August 7, 2008

Following a procedural order issued Wednesday by the state Public Service Commission, Entergy Mississippi has proposed a 5 percent decrease in the fuel adjustment component of its electricity bills to be sent in September for this month’s usage.

The company, which serves most of Warren County, imposed a 28 percent increase in the fuel adjustment rate on bills sent in July. With that increase and a surge in summertime power consumption, many saw their bills double.

According to Entergy, the increase added $29 per 1,000 kilowatt hours, an average month’s residential consumption.

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After the decrease, the rate should be $7 less for a consumer using 1,000 kilowatt hours of electricity, or a net increase of $21 per kilowatt hour from bills in the spring.

The adjustment tracks natural gas prices, which Entergy uses at its Baxter-Wilson Plant in Vicksburg and other locations to fire boilers to make steam that spins generators. Natural gas prices falling from a high of more than $13 per 10,000 million British thermal units, or mmBtu, formed the basis of the commission’s decision, Central District Commissioner Lynn Posey said, calling it “a significant drop.”

The adjustment tracks natural gas prices, which Entergy uses at its Baxter-Wilson Plant in Vicksburg and other locations to fire boilers to make steam that spins generators.”It closed at $8.72 Tuesday,” Posey said. “They won’t be paying nearly as much for natural gas as they thought they would.”

Entergy has five working days to file a plan with the public utilities staff, a separate, independent group that makes recommendations to the three-member elected PSC. Posey said the commission will work with both the utility and the staff to ensure cooperation. Today’s rates will remain in effect until Aug. 28, the start of the September billing cycle.

In a statement, Haley Fisackerly, Entergy Mississippi president and chief executive officer, said the utility is “cautiously optimistic” about recent drops in natural gas prices, said to make up about 60 percent of the fuel mix it uses. The company has coal-fired plants and Grand Gulf Nuclear Station near Port Gibson, the only nuclear-fired plant in the state.

“While we have no control over the price of fuel,” Fisackerly said, “we saw the decrease in price as an opportunity to offer some relief to customers who have endured a significant increase in their July and August bills.”

Under a state-approved plan, Entergy and other large utility companies set base rates to cover their operating costs and to bring a return on investment or profit. That component of bills is reviewed by state regulators and must have approval. The second component, the fuel cost adjustment, is more of a direct pass-through over which regulatory authorities have had limited to no oversight. The PSC decided to more closely monitor and review fuel cost adjustments after the 28 percent increase, mostly to assure calculations were accurate.

Natural gas traded at $8.77 at the close of trading Wednesday on the New York Mercantile Exchange.

Entergy Mississippi, provider of 433,000 customers in 45 Mississippi counties, has adjusted rates for fuel prices each quarter since 2001, Entergy spokesman Checky Herrington said, which was about when fuel costs starting escalating more broadly.

“We did it annually before,” Herrington said.

Whether recent events signal a move toward changes in electricity customers’ bills more often than quarterly is uncertain, Herrington said.

“We could,” Herrington said, adding provisions are in place in Entergy’s rate structure to allow adjustments in the middle of a quarter.

Other providers, such as Mississippi Power and CenterPoint Energy, adjust annually or bi-annually.

The parent company of Entergy Mississippi is Entergy Inc., based in New Orleans.