Water Industry News

New Orleans electric utility asks few who remain to pay more


Capitol news bureau

Entergy Corp. on Friday asked its Louisiana customers to help pay for an estimated $608 million that it cost to get the power up and running after the two hurricanes.

The utility that serves about 1 million Louisiana customers in 58 parishes is still accumulating invoices. But the company is expected to pay about three-fourths of that amount -- about $400 million -- before the end of the month.

So Entergy applied Friday for an interim rate increase -- typically, a couple of dollars per month -- with the Louisiana Public Service Commission.

"The company needs the revenue stream in order to satisfy its financial obligations," said Michael Twomey, the Entergy Services Inc. vice president who deals with the PSC.

"We've come up with a way to make the company whole, but in a way to minimize the impact on the customers," he said.

Under law, a utility's customers are on the hook for storm costs. In the past, these charges were assessed after all the costs had been tallied and reviewed. Only then are ratepayers charged.

Collecting in advance of that final tally is unprecedented in Louisiana but was used in Florida after four hurricanes hit that state last year.

The surcharge would be subject to refund if Entergy is able in the future to offset its hurricane expenses through insurance and federal assistance.

If approved by the five-member commission that sets utility rates, the surcharge would show up on customers' bills as early as February. The amount would vary, depending on how much electricity is used each month.

For instance, for an Entergy Gulf States Inc. residential customer using 1,500 kilowatt hours of electricity per month, which is typical for the Baton Rouge area, the surcharge would amount to about $2.45.

Public Service Commissioner Jimmy Field of Baton Rouge said he had not seen Entergy's proposal because it was not filed until minutes before the office closed Friday. But he said the plan deserves consideration if his fellow regulators determine that Entergy is entitled to the money and that getting it would help stabilize the corporation's finances.

"These hurricanes were of such magnitude and caused such damage to Entergy's system," Field said, "we do owe it to Entergy to consider this seriously."

But Field said he is concerned about adding a new charge on the heels of historically high electricity bills that consumers began receiving a couple months ago.

"I will have to be convinced to begin repaying now rather than defer until September-October," Field said.

When Hurricane Katrina came ashore Aug. 29, the winds and water damaged power plants that generate electricity as well as the facilities that distribute it to homes and businesses. More than 1.1 million customers lost power.

Then 26 days later, Hurricane Rita hit and knocked out 800,000 customers and tore up all the transmission lines from Lafayette to Conroe, Texas, north of Houston.

Entergy brought in 17,500 workers from around the country, many of whom worked all day and slept in their trucks at night, Entergy's Twomey said.

Within 46 days, Entergy had restored power to everyone, some more than once, except the 123,000 houses and businesses in and around New Orleans that need to be rebuilt.

"Our guys did an unbelievable job getting the lights back up," Twomey said. "But that cost money and it's now time to pay the bill."

Entergy Corp. estimated having to spend up to $1.4 billion for expenses, such as repairing facilities and replacing power lost over three states. Louisiana losses account for up to $608 million.

Entergy Gulf States Inc. provides power for 351,000 consumers between Baton Rouge and the Texas state line. The company owes between $141 million and $193 million to recover from the storms.

Entergy Louisiana Inc., which covers much of the state outside New Orleans and the Gulf States corridor, owes $355 million to $415 million. Its residential customers using 1,500 kilowatts per hour would pay about $3.55 additional each month.