The Monthly Cost of Business as Usual
By Jessica Hendricks, AAE State Policy Director
If your electric bill seems higher than it was last year, it is and you are not alone. Bills are up, in some cases even $20 more per month than where they were last year and as we continue to pry ourselves out of this economic recession, many folks just can’t keep up. Just last month, at the LPSC meeting, a Ville Platte resident went before the Louisiana Public Service Commission to make a formal complaint about how high utility bills are in his community. Although unacceptable, here are a few reasons why-
Usually line itemed as FAC (Fuel Adjustment Charge) on bills, this is a 100% pass through from the utility to the customer of costs associated with the fuel needed to generate electricity. As many know, natural gas prices are significantly higher than they were last year, and Louisiana relies heavily on natural gas power plants. The high cost of natural gas is causing a spike in the FAC on customer bills. Further, if you’re a SWEPCO or Cleco customer (or a customer of a utility that buys power from Cleco, like DEMCO and the City of Alexandria), you’re soldering the costs of an expensive lignite mine and power plant. The Oxbow Mine and Dolet Hills Power Station in Northern Louisiana are nowhere near cost effective anymore and the companies are in the process of retiring both facilities. The associated retirement costs have yet to go through a full prudence review by the LPSC meaning customers are on the hook for the expensive fuel costs, albeit subject to potential refunds in the future should the LPSC determine those costs were imprudent.
This is the amount charged per kWh. Louisiana has prided itself for years in having the lowest ‘rates’ in the country, around $0.08-$0.09/kWh. However, recent rate cases and Formula Rate Plan extensions approved by the LPSC have some utilities charging over $0.13/kWh which is above the national average of $0.12/kWh.
You’ve probably heard us say, “we’ve got the lowest rates, but highest bills”. A lot of that came down to usage and the costs associated with sustaining high usage. As mentioned above, we no longer have the lowest rates yet we still have some of the highest usage. Sure, we’ve got long hot summers, but so do our neighboring states. Yet they mitigate energy usage with long-term, robust energy efficiency programs. The LPSC has been working on these programs for over seven years and have yet to finalize them, while Louisianan’s pay the price on their monthly bills.
Riders and Surcharges
This is likely where interim cost recovery from storm damage is going to start to show up. Whether it was Hurricanes Laura, Delta, Zeta, or Winter Storm Uri, some of our utilities have already started recovering them subject to a prudence review. Costs of new power plants may also be lurking here.
The problem is these costs are all adding up leading to simply unaffordable bills, especially for customers of Investor Owned Utilities (IOUs), like Entergy, Cleco and SWEPCO. Once bills get to this level, customers are at risk of incurring additional fees associated with not being able to pay bills on time. Those fees could include late fees, disconnection and/or reconnection fees, increased deposits and even negative credit reporting by the utility on behalf of the customer. Ultimately this means high rates of energy insecurity for Louisianans, utility disconnects are normalized and puts all of us on the hook for any uncollected debt the utility incurs. As Mr. Sampson, the Ville Platte resident mentioned above reminded the LPSC, our Commissioners are elected by us to work for and serve us. The time is now to engage your Commissioner and call for real energy efficiency programs, transparency in utility spending before, during and after extreme weather events and the need for a diversified fuel mix. As regulators, the LPSC needs to prioritize forward thinking energy policy to keep our bills from skyrocketing even further and put customers over shareholder profits.
If you need assistance in paying a utility bill, contact your Community Action Agency.
About the Author
Jessica Hendricks brings over seven years of policy experience to the Alliance from a community organizing perspective, serving Environmental Justice communities by addressing environmental health concerns, around the country and internationally through citizen science projects.
After developing multiple successful projects with communities in states like Idaho, Wyoming, Arkansas and Pennsylvania, Jessica landed in New Orleans focused on building statewide momentum for more equitable and affordable energy policy in Louisiana. Since joining the Alliance, Jessica has engaged with the Louisiana Public Service Commission on issues including Net Metering, Energy Efficiency and was successful in negotiating the lowest rates in the Country for Entergy Louisiana customers.
Originally from Baltimore, Maryland, Jessica has a Bachelor's Degree in Political Science, a passion for community empowerment and civic engagement, an insatiable love for international travel and spends off time geeking out to New Orleans’ rich and quirky history.
Thanks for pointing out that real energy efficiency programs should be transparent regarding utility spending. I guess that would be helpful when looking at business energy rates so owners would be prepared financially for their bills. It would save them from being short on finances if ever they would need more power usage, especially during summer.
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