If the Commission moves forward, Cleco’s customers all over the state, from St. Tammany to DeSoto Parishes, and much of CenLa in between, will start seeing major increases in October. There’s a lot to this settlement, so buckle up.
Last year, Cleco requested a rate increase that is largely driven by their loss of a big wholesale customer, the Co-Op DEMCO. Basically, when DEMCO found cheaper power (solar) through contracts with a company called NextEra, it meant that revenue from the DEMCO contract is no longer available to cover a large portion of Cleco’s costs, thus shifting responsibility for those costs to the rest of Cleco’s retail customers, including residents and businesses.
Somehow, between Cleco’s initial ask last year and this settlement, the expected bill impact in 2024 went from a projected 5.3% increase to 10.6%. The commission’s staff stated in the meeting that they didn’t think that stair-stepping the increase would be worth it for customers. Very fortunately, the Commission’s decision to require Cleco to refund millions of dollars two months ago will be spread out and soften the blow in July, August, and September. But starting with October bills, ratepayers will start to see a sharp increase in their bills.
This is a long standing issue The Alliance has been urging regulators to fix. Louisiana utilities are the worst in the nation for per capita late-fees (see graphic below). This means that customers in Louisiana who struggle to pay their bills and miss due dates are handing over extra revenue to utilities. We would have liked to see late fees go to zero, as they provide no real incentive for a resident who already does not have the money to pay on time. It is insult to injury.
In Cleco’s recently Commission-accepted Integrated Resource Plan the utility forced their models to assume that the Commission would approve a nearly billion dollar investment in Madison 3, their petroleum coke burning power plant in Boyce, to install carbon capture and storage. Both The Alliance and Sierra Club argued that the utility should have allowed their model to select from cheaper clean energy resources, and this new IRP modeling in 2025 will give the Commission and the public a better look at what the best energy resources are to serve Louisianans.
The Alliance was not willing to take a supportive or non-oppositional position on this settlement, as we know these increases will be unmanageable for many households. While the Co-Operative utilities like DEMCO and their members have the option to to buy cheaper, cleaner power elsewhere, Cleco customers cannot shop around in the same way. While ending electric monopolies in Louisiana is on the table in a separate docket, we will continue to maintain that customer protections always need to be in place, especially with Cleco recently found by the LPSC to be forcing uneconomic generation into the market and billing their customers for it. A silver lining is that Cleco has committed to stop those actions, and is required to refund customers for the unnecessary expense.
This settlement was reached without the robust stakeholder involvement we usually see in rate increase applications, and considering the high increase, we know it’s the residential customers that will bear the brunt. We hope that reduced late fees may help people stay afloat and we’ll have another opportunity for engagement in the IRP next year. We’ll keep you posted! Let us know in our survey how your bills are affecting you.
