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AP: Entergy Corp. to raise rates in January

December 19, 2012

JACKSON — Entergy Corp. will raise Mississippi customer bills in January to pay for higher natural gas costs as well as the company's recent purchase of a Jackson power plant, and another rate increase is likely in February to pay for more power purchases from the Grand Gulf nuclear plant.

A residential customer who uses 1,000 kilowatt hours per month will see his or her bill increase $8.29 in January from the current amount, said Wendy Collins, a member of public utilities staff, which makes recommendations to the Mississippi Public Service Commission.

Entergy's average residential customer in Mississippi used 1,326 kilowatt hours per month in 2011, according to the Energy Information Administration.

Commissioners voted 3-0 to approve the increase.

Despite the changes, Entergy says a 1000 kwh-per-month customer will pay $99.71 in February 2013, compared to $95.08 in February 2012.

"We still think gas is very reasonably priced," said Jeremy Vanderloo, Entergy's head of regulatory affairs in Mississippi. "We feel very fortunate to have the rates at the level they are right now because fuel costs are still relatively low."

In 2011, Entergy Mississippi generated about half its power by burning natural gas. With prices for that fuel low in recent years, bills for customers have declined. But Entergy says natural gas prices have risen by one-third since the last time the company filed to recoup fuel costs in August. The company and regulatory staffers projected that natural gas would cost Entergy an average of $4 per million British thermal units in 2013, compared to $3 in 2012.

"The big driver in this is the uptick in the natural gas costs," said Northern District Commissioner Brandon Presley, a Democrat.

The New Orleans-based company also recently completed the $206 million purchase of a natural gas power plant in Jackson from KGen Power Corp. That purchase will cost ratepayers money, but customers will save some on fuel from the use of the more efficient natural gas plant compared to older, less efficient plants.

Another $2.26 increase is likely on February bills, to pay the costs of Entergy Mississippi buying 90 megawatts of generating capacity at the Grand Gulf nuclear plant from sister company Entergy Arkansas. That purchase too is supposed to save fuel costs in the long run. Entergy projects a savings of $346 million from 2013 to 2042. Grand Gulf runs at half the cost of Entergy Mississippi's next cheapest asset, its share of the Independence coal plant in Arkansas.

"We went out and sought this because we thought it was a good opportunity for our customers," Vanderloo said. "It's a very low-cost fuel. It's a very stable-cost fuel."

Entergy and the Public Service Commission agreed that beginning with the current adjustments, the company would seek changes in its fuel and other costs only once a year, instead of quarterly. If the company is running a large surplus or deficit in collections for fuel and other costs, unscheduled adjustments can still take place.

"We think it will promote greater rate stability," Collins said of the yearly adjustments.

Entergy Corp. is based in New Orleans and serves 437,000 customers in 45 counties in the western half of Mississippi.

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