Customers still protected from Gas Plant rate hike
Today the City Council Utility Committee approved an Agreement between their Advisors, Entergy New Orleans, and some of the city’s largest energy users, that will maintain Entergy rates at the same level for another year.
Under the Council’s final resolution (R-19-457) concluding Entergy’s contentious rate case in November of last year, Entergy was required to file a “Formula Rate Plan” report every April, including 2020. These reports are intended to allow all parties to the docket an opportunity to look at the details of Entergy’ regulatory financials and understand the impacts expected for the next year: like whether a rate increase or decrease is necessary.
After a series of extensions beginning in April, Entergy never filed its report for 2020, saying their report would have required a rate increase resulting from capital investments. This is unverified by most parties to the rate case as the reports were never provided.
“The Alliance remains concerned about Entergy’s continued lack of transparency. Parties again did not receive any of the information necessary to appropriately analyze Entergy’s claims. All parties deserve to be treated equally and the Council should take steps to ensure that parties are not required to make decisions in the dark.” Susan Stevens Miller, attorney with Earthjustice, Counsel to the Alliance for Affordable Energy.
Instead, however, Entergy sued the City Council in Civil District Court over their Rate Case decision, objecting to several of the Council’s conclusions including the utility's allowed profit margin (or Return on Equity) which Entergy insisted was too low.
Today’s agreement (attached to Resolution R-20-___) included 12 negotiated terms and conditions, including one that permits Entergy to delay its next Formula Rate Plan report until June of 2021, extending current rates until fall of next year.
Other elements will enable Entergy to make up for revenue they claim they have lost this year due to not filing for an increase this past April, including a change in their allowed capital structure, and collecting $1.4M in legal fees for their rate-case litigation. They will also get to keep $2.2M in over-charges that would have been returned to ratepayers and will recover an additional $6.2M over the next three years to cover other expenses. Entergy also will drop their frivolous lawsuit against the Council over their profit margin and maintain their allowed rate of 9.35% Return on Equity.
Importantly, the agreement preserves language from the Council’s previous decision that Entergy will not be allowed to charge customers for their new gas plant in New Orleans East unless and until outstanding lawsuits, currently before the Louisiana Supreme Court, are resolved in the utility’s favor. The conditions also included reducing the lifetime of the gas plant from 50 years to 32 years. This change will enable the Council’s commitment to 100% renewable and clean energy by 2050 to be realized. This shorter life-span will also increase the short-term revenue for the utility, but will reduce the overall life-time costs to ratepayers.
“I am encouraged to see current rates preserved for ratepayers, but no one should be under the impression that Entergy is harmed by this agreement. They are still a highly profitable company for their shareholders. In the meantime, we are pleased families are still protected from rate increases from Entergy’s new gas plant.” - Logan A. Burke, Executive Director, Alliance for Affordable Energy.
View the official Press Release below: