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Shanks:

Change is coming

Bundled services in the electric industry — generation, transmission, distribution, customer service — will soon be altered whether the state initiates changes or waits until the federal government does, Carolyn Shanks told more than 400 participants at the Mid-Winter Conference of the Mississippi Municipal League last week.

“Mississippians need to decide what we want deregulation to do for Mississippi,” said Shanks, president and CEO of Entergy Mississippi, the state’s largest electric utility. Entergy and Mississippi Power provide electricity to 45% of the state’s population. “Electric deregulation is not a matter of ‘if’ but ‘when and how’ it will happen.”

Many analysts have said that utility companies want to delay deregulation while manufacturers want the procedure expedited.

That’s not true, said Shanks.

“In getting the state ready for restructuring, we have said that we want to make sure it’s done right and that all customers benefit,” she said. “That hasn’t changed. We were simply letting the commission do its job on generic hearings to look at the issues. Now that the commission is completing its hearings, it’s time to take the next step and look at issues beyond what the commission looked at. It’s a logical process in opening up the utility market for competition. Let the commission do their work, make a recommendation, then the Legislature take a look and make a recommendation for legislation in that session or another.”

Public service commissioners are pondering a state public utilities staff proposal, which would require legislative approval, to implement retail competition on Jan. 1, 2002, a year later than initially considered.

“They’ve been conducting hearings for the last two and a half years under a plan that the commission staff had given them,” she said. “That plan would have proposed going through the hearing process so that competition could be effective in the state of Mississippi in January 2001. What they’re now saying is that hearings will not be completed until February, that there are other issues to be looked at, and that 2001 is probably not a realistic date to open up the state for competition. Therefore, they are supporting a joint legislative study committee to take on these other issues that should be addressed beyond what the commission has in their jurisdiction.”

The result has been a gap in the level of knowledge, Shanks said.

“Because the Legislature hasn’t been focused on the issues and they’ve been letting the commission do their work, there is a gap in the level of knowledge of what’s actually going on in the information process,” she said. “This would be a great opportunity to take what the commission has done and get themselves informed about what’s going on in other states, what the issues are in Mississippi, and make informed decisions about where we want to go next.”

The most recent two states to adopt retail competition are Texas and Arkansas, two states in which Entergy serves, Shanks said.

“The main reason states in the southeastern part of the country have not adopted it yet is because we have some of the lowest rates in the country, about 20% below the national average,” she said. “Entergy Mississippi is even below the southeastern average. TVA serves Tennessee and parts of Alabama and Mississippi, which is under the federal government. As part of that, they have subsidies that allow them to take reductions in taxes they pay and offer rates lower than ours. It’s another contributing factor why we haven’t seen movement in a state like Tennessee.”

Utilities have played a big role in taxes paid to small, rural towns, Shanks said.

“These towns depend on those revenues for their own improvements,” she said. “On the other hand, new businesses are beginning to locate in the state, such as the new power plant in Batesville, that are being taxed at a rate half of what we — utility companies — pay in taxes. One of the issues that has to be looked at is how can we make sure, when there’s competition, we’re all on a level playing field. We need to assess the impact to the communities, because we don’t want to do anything on one hand that would help the state, but harm the communities.”

Should responsibility for a community impact study fall on Entergy or the Legislature?

“We’re hoping the legislative committee would look at this issue,” she said. “We’re recommending that a legislative study committee commence after the session. Tax issues related to BellSouth and telecommunications are being addressed in the current session. Getting that issue resolved would give us valuable information in looking at the impact on utility taxes. We think it’s a good first step for that issue to be resolved.”

Entergy is not asking anyone to take a stand for or against deregulation, Shanks said.

“What we are asking…is take it to the next step,” she said. “We definitely do not want to be in a position where the federal government writes rules for us. Because we’re a state that hasn’t looked at it, we may be subjected to rules that have been determined by the federal government rather than the state of Mississippi. We want this study committee to look at issues in Mississippi — what’s good, what’s bad — and determine what we need to make our own informed decisions.”

Contact MBJ contributing writer Lynne Wilbanks Jeter at lwjeter@yahoo.com or mbj@msbusiness.com.

About Lynne W. Jeter

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