Over the coming months, and, in fact, years, retail competition for energy will be a critical business issue.
The Mississippi Public Service Commission has begun, and will continue to hold, public meetings as it continues to put together a plan to re-regulate the state’s investor-owned utilities with a target date of opening up the market in 2001.
At the center of these discussions will be Entergy, the New Orleans-based utility company that provides electricity to about 382,000 Mississippians.
A long-time player in providing electricity for the state, the company has in recent history branched into other areas, such as home security and even local telephone service in an effort to reinvent itself and better position itself financially as the entire utility industry heads for what is expected to be a major shake-up.
But the recent and sudden resignation of Entergy’s chairman and CEO Ed Lupberger, combined with some dismal financial numbers, has given the company its own internal struggles.
While being fairly brief about the company’s plans to improve its financial standing, Don Meiners, Entergy Mississippi president, talked this past week with the Mississippi Business Journal about a wide range of issues, including improving customer service and his views on the deregulation process in Mississippi.
Mississippi Business Journal: What are Entergy’s roots?
Don Meiners: A man named Harvey Couch actually started it all. He started out by building a telephone circuit and eventually bought out Arkansas Power and Light. Later, he started Louisiana Power and Light. His third company came into Mississippi and started Entergy Mississippi, which, back in those days, was Mississippi Power and Light. It started 75 years ago. We celebrated our 75th anniversary on April 12 this year.
The three companies united in a holding company and were called Middle South Utilities. We operated under that name until 1989, when we renamed Middle South Utilities Entergy.
MBJ: Entergy has taken a lot of heat lately over the issue of customer service. One analyst said that “right now Entergy has one of the worst records regarding customer service complaints and outage time.” How do you respond to that assessment?
DM: I really think we’re giving excellent service myself. I’m speaking mostly from Entergy Mississippi’s perspective. We monitor this carefully and we are constantly trying to improve it.
Today, we are doing a good job of answering the phones. Just recently we were answering 90% of the calls within 30 seconds.
We’re constantly training our people. We’ve improved the technical equipment that helps us answer the phones in the last two weeks.
The other thing we’ve tried to do is measure how often we meet our commitments. For example, if we tell you we’re going to be at your house by a certain time, we’re up in the 90% range of meeting those commitments.
MBJ: Do you think business and industry appreciate the importance of energy?
DM: Yes. There is an old saying I’ve quoted for many years. I picked it up when we were going through the energy crunch back in the ‘70s: “No power is more expensive than no power.”
I believe that because business and industry depend on electric energy to fuel them for their productivity.
You can track the gross national product of this country and the sale of electricity and the two track each other which tells you they are so well linked that if one get in trouble the other one would be also.
We have attracted industry through the years because we have had a reliable source of power, and they’ve been able to depend upon us and we’ve delivered on that.
One of the keys I think has been the fact that several years ago the Legislature, and the Public Service Commission working with them, made it possible for regulated utilities to have a more flexible rate structure to attract industry. And that meant you could sit down and negotiate a rate with a prospect, then you went in and sat down with the public utility staff and they went through a test to make sure it didn’t have an adverse affect on other customers and that it had a societal benefit. And if they felt it did, it was sent to the commission for approval. That has helped us attract industry in our state over the last four, five, six, seven years.
MBJ: As you go though this restructuring, what role do you see business and industry playing?
DM: One of the things that very large industry wants is to buy power on an hourly basis rather than have a negotiated rate.
Most of the very large industries have the capability, the personnel that are experts in this and the buying power that they can buy power today the way utilities buy from one another, on an hourly basis. Very large industries will have that capability and they are willing to take the risk in order to get a lower price.
Smaller business and smaller industries will elect to stay with what they’ve been doing. They’ll find a supplier they like, they’ll sign up for power on at least a monthly basis, probably an annual basis.
MBJ: Do you believe that business and industry is on the same page with the investor-owned companies as far as what needs to happen in the deregulation process?
DM: You know I don’t believe we’re that far apart.
They are saying that they’re for competition. We are for competition. I think we see it from a somewhat different perspective than they do. We’re trying to make sure that the small customers are served. I think the main difference I see in us right now after going through the generic hearings, is that they are trying to move the process along faster than we are.
We’ve said Jan. 1, 2002. The public utility staff has a date of 2001. We set out and looked at all the regulatory approvals. There’s a number of studies we have to do. I think we’re more realistic with what we’re saying than they are. I understand why they’re anxious. But we’ve been doing this 75 years as I said a moment ago, and I don’t think another 12 months is a big price to pay to make sure we do it right because we have to make sure reliability is there.
MBJ: Is 12 months that much of a difference. That’s two years away so will 12 months be a big difference?
DM: No. I think it will help us do it right. You have to understand that there’s not a day that goes by we’re not involved in preparing studies, analysis and everything else and learning from what’s taking place in the other states — the 12 states that are ahead of us so to speak.
Right now, we’re doing some studies that the public utility commission asked us to do. We’ve got a market power study to do, a reliability study to do, a holding company study, a cost of service. We’ve got about five or six major studies to do stretching out from now until January 1999. It’s not like we have extra staff on board that does nothing but competition stuff — we’re still running the old utility.
MBJ: So how is that process going?
DM: It’s very, very rushed. But I’ll tell you what, we’ve got a proactive, positive attitude toward it and we’re going to do everything we can to meet the goals and that’s all you can do.
It’s brand new territory.