Entergy may up rates to pay for plant
Published 12:01 am Friday, February 29, 2008
natchez — Nuclear power plants are expensive to build. Entergy would like to build one at Grand Gulf. The New Orleans-based electric company would like to raise utility rates in Mississippi in order to finance the construction of the plant.
That’s the guts of Senate Bill 2793, which was passed by the Mississippi Senate last week. The bill is now being debated in the House and if approved, would give Entergy the authority to go before the Mississippi Public Service Commission and request the rate hike. Currently, state law does not allow any utility company to increase rates in order to finance a facility that does not exist.
Entergy spokesman Stephen Caruthers said the rate hike would benefit its customers and would avoid a larger rate hike down the road.
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“In theory, if we collect monies now, they can be used to pay expenses as they come in instead of us having to finance an entire lump sum later,” he said. “It would allow us to avoid some interest by paying as we go. If this had been done in the 80s with the first Grand Gulf plant, it would have saved Entergy and its customers $1 billion.”
Sen. Bob Dearing, D-Natchez, said that when the nuclear facility is built, rates should come back down. Dearing, who voted for the bill, said there was no formula built into the bill to estimate just how much rates would be reduced.
Dearing said there was also nothing included in the bill that would refund customers the amount of the rate hike if Entergy abandoned construction of the site before completion.
“There’s no allowance in there for any sort of refund,” he said. “This bill is just an authorization to go before the Public Service Commission. If the House approves it, the rate hike would still have to be approved by the PSC.”
Caruthers said he was confident that Entergy wouldn’t abandon construction of the site once its under way.
“I don’t see that situation happening,” he said. “A company wouldn’t make that sort of investment and then walk away. Construction of nuclear facilities are very expensive.”
Caruthers said construction of the plant is still years down the road, but getting approval for the rate hike now would put Mississippi in a prime position to get the plant built here. The proposed plant would provide electricity to Mississippi, Arkansas and parts of Louisiana, including New Orleans.
“Construction isn’t starting tomorrow or next year,” he said. “But if the legislation passes, it will help put us higher up on the list of a plant being built.”
Caruthers would not estimate how much the rate hike would be or when the rate hike would go into effect. Some consumer advocacy groups are worried that approval of the pay-as-you-go financing would essentially give Entergy a blank check. Caruthers was adamant that this is not the case.
“The bill is not a blank check to raise rates,” he said. “The hike would still have to be approved by the PSC. It will be audited and looked at very hard by them.”
Caruthers said Entergy isn’t overly confident that the bill will be passed in the House, which means the PSC would not get the opportunity to approve or deny the rate hike.
“Entergy is stepping out and saying that there’s a need for more energy production,” Caruthers said. “Approval of this bill would put Mississippi out front as a leader in the nation on this. It would make us a frontrunner for the plant.”
Entergy reported earnings of $193.9 million for fourth quarter 2007. The company reported $74.4 million more during the same quarter in 2006.