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What will power industry competition mean to Mississippi consumers?

Looking for the ‘right plan’

Some deregulation proponents say that Entergy recently made a 180-degree turn on its position on retail competition. But opponents and decision-makers say Entergy’s posture on the issue doesn’t make much difference in the legislative process — at this point.

“Millions of dollars have already been spent in studying deregulation, all of which will be passed on to the state’s ratepayers,” said Senate Public Utilities chairman Tommy Robertson (R-Moss Point). “And no matter who funds additional studies, it will still be passed on to ratepayers.”

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.

“As far as I know, no bills have come through the House or the Senate to propose a joint legislative study committee to study issues beyond what the public service commission has addressed in their jurisdiction,” Robertson said. “After two and a half years and millions of dollars spent, we still do not have a recommendation from the Public Service Commission. As far as I know, the commission will continue hearings through February.”

That’s correct, said Central District Public Service Commissioner Nielsen Cochran.

“We have not submitted any legislation and do not intend to because we are not ready,” he said. “We would be foolish to say, ‘We want enabling legislation to allow us to implement a plan for competition, but trust us. We’re still going through our hearing process but we’ll make sure to come up with the right plan.’ That’s not going to work.”

Entergy and the Mississippi Manufacturers Association support the idea of a legislative study committee. Other principals, including Mississippi Power Company and electric power associations, oppose the plan, he said.

“Entergy is bringing forth the idea that there be some type of study effort on behalf of the Legislature,” said Cochran. “We aren’t pushing that. We have no problems with that. That’s a legislative decision. If members of the Legislature, to educate themselves on this complex issue and its pitfalls, feel that they need to join in or look at what we’ve done so far, we think that’s healthy. That’s why we sent the proposed plan to members of the House and Senate utilities committees a year or so ago. At some point, they need to be involved. If we come to a decision that we think is a plan where everyone will see lower rates, economic development will be enhanced and deregulation would be in the public’s interest, certainly the Legislature will need to study the plan before they vote to allow it to be implemented.”

According to the public utility staff’s proposed plan, 2000 would have been a year to solidify contracts, said Cochran.

“We have not revised our timetable at all,” he said. “That’s not to say it won’t be revised. As we now know, the plan calls for legislation to address the authorization issue to be passed this session. Well, it’s not going to pass this session. We would certainly hope there would be real intense legislative interest to look at where we are, see what we have done, look at what has been accomplished and certainly to be prepared next year — if we have a plan. I keep saying, ‘if,’ because we aren’t at that point yet. We haven’t dragged our feet. We haven’t deviated from day one, since 1996.”

Last summer, Cochran met with then Lt. Gov. Ronnie Musgrove and House Speaker Tim Ford to discuss two critical areas.

“One, there needs to be legislation to address when and if we develop an appropriate plan,” he said. “Second — and most important — is the question of taxes. I stressed to Musgrove and Ford that there is going to be a tremendous concern, not only by regulators, but to other municipalities and counties as well about the affect competition will have on the tax structure. There will be a detrimental effect, in our opinion, on the questions of taxes currently being received and that will be received after deregulation. That has not been addressed.”

The issue of price caps will be addressed in hearings scheduled later this month, Cochran said.

“If we are concerned that residential rates will go higher, should regulators be able to cap rates at the existing rate?” he said. “One of the issues involved in residential rates is that taxes flow through local utility companies to municipalities, counties and school districts. How can we cap a rate that involves taxes that may or may not go up if you have an independent, out-of-state electric supplier that comes in here and sells electricity, but does not pay ad valorem taxes? This out-of-state supplier is not contributing to the ad valorem tax base while local utility companies, like Entergy and Mississippi Power, pay 33%. In a private sector, if you build a plant in north Jackson to compete, that rate would be only 15%. That has to be totally resolved before retail competition is implemented. That’s why I met with Ford and Musgrove about this issue. Obviously, it’s something that’s going to be very painful. That’s just another problem with us trying to finalize a plan when that question is still lingering.”

In Mississippi, Entergy covers the western part of the state, from Tunica to Natchez. The Tennessee Valley Authority, which would require deregulation at a federal level, provides electricity in the northeast section of the state. Mississippi Power Company, a division of The Southern Company of Atlanta, provides service in south Mississippi. Rural areas have electric power associations, said McBride.

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

About Lynne W. Jeter

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