Entergy’s reputation is on the line via Hood’s lawsuit

Published 12:00 am Sunday, December 7, 2008

Entergy, quite frankly, is used to having its way in Mississippi.

Attorney General Jim Hood has decided to smack the investor-owned utility around a little bit, and hurt feelings are abundant.

Hood’s claim in a Hinds County Chancery Court suit filed last week is similar to litigation already resolved in Louisiana. The gist is an accusation that the company makes internal purchases from itself and hides them through accounting methods to ratchet up profits when it could save its customers money by buying what it needs for less on the open market.

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Based on the Louisiana cases, not initiated by that state, customers got $72 million back in 2000 and $34 million this year. That’s not big bucks per consumer. Entergy, based in New Orleans and operating separate electricity-selling companies in four states, has $11 billion in revenue annually. The impact has been on Entergy’s corporate image, which it has polished for decades to great advantage in all three branches of Mississippi government.

Some examples:

• Gov. Haley Barbour, like his predecessors, has gone and will go to bat for the company. More specifically, Barbour has pledged whatever state support is sought if Entergy pursues a second nuclear power plant in the state.

• The Legislature rarely even discusses any law Entergy likes before passing it. This year, lawmakers granted permission for Entergy and other large utilities to “front load” the costs of major capital expenditures. The previous law had said utilities had to pay for system improvements and put new assets in service before customers had to start paying for them.

• The state Supreme Court, which has a pretty good score on open records questions, ruled in a lawsuit initiated by The Clarion-Ledger that rates for electricity being paid by the Nissan plant near Canton in a state-negotiated deal, can remain secret — even though it is widely believed the rates amount to a public subsidy.

None of this is necessarily bad. Indeed, the new law on front-loading capital costs has the potential to save ratepayers millions of dollars.

The point is that Entergy has been above reproach.

Even the three elected members of the Mississippi Public Service Commission, which regulates rates charged by nonmunicipal utilities, was long ago rendered toothless. While once feared, the PSC adopted new procedures under which most major utilities send two-component bills. One component, the base rate, is to cover a utility’s overhead and, by statute, guarantee a profit. The other, which has caused so much misery recently, is the fuel cost adjustment, which can be changed by the utilities without in-depth hearings.

Not surprisingly, Entergy has taken the position that anything and everything having to do with customers’ bills is within the exclusive domain of the PSC, meaning the attorney general is acting outside the scope of his authority.

But in a rather bold move, the usually passive PSC said that Hood was entitled to review voluminous internal documents. Hood now says he doesn’t need all those documents, but the deck was cleared for the lawsuit.

Entergy Mississippi, which serves 45 counties from the top of the western half of the state to the bottom, has not specifically commented on the court case, but has said it can prove it is frugal and operating in compliance with not just the Mississippi PSC, but all regulatory agencies.

The company also gets a bit snippy, accusing Hood of being unfriendly and poisoning the pro-business climate in the state.

Entergy Mississippi’s president, Haley Fisackerly, is a former aide to Sen. Thad Cochran and came up through the regulatory compliance ranks of the company. He knows the players and the process. And he has sounded miffed, going so far as to label Hood’s claims as “irresponsible, without merit, a waste of taxpayer money.” And a bit absurdly, Fisackerly called Entergy an open and transparent company.

Utilities don’t have an easy go of it. Customers are happy when service is consistent, outraged and unforgiving during outages and almost always believe rates are too high. Entergy and all others have been operating in a roller-coaster economy. Company stock has been as high as $127 and as low as $62 per share in the past 52 weeks.

In return for being granted monopolies to provide services, utilities must agree to government controls. For Entergy, cozy relationships and a good public image have been key to keeping those controls as slack as possible.

The highest-ranking law enforcement officer in Mississippi has officially accused the company of fraud by cooking the books.

Facts, if they are ever known, will show whether that’s true. But more than any money involved, Entergy doesn’t appreciate the tarnish. And that’s putting it mildly.


Charlie Mitchell is executive editor of The Vicksburg Post. Write to him at Box 821668, Vicksburg, MS 39182, or e-mail cmitchell@vicksburgpost.com.