Editor’s note: This is part two of a series of articles examining power deregulation issues in Mississippi.
Many folks may be surprised to learn that Mississippi is one of the most powerful “power” states in the nation, with players that rank in the top echelon of energy decision-makers for the U.S. With deregulation being bandied about, on state and federal levels, much attention has been focused on energy experts’ actions from the Magnolia State.
In his new position as chairman of the Federal Energy Regulatory Commission (FERC), Mississippi native Curt Hebert Jr., former commissioner of the southern district of the Mississippi Public Service Commission, former state representative and former president of the Southeastern Association of Regulatory Utility Commissioners, holds one of the most important “power” position in the U.S. A staunch free market capitalist,Hebert has already positioned himself as pro-deregulation.
As one of three board members of TVA, a wholly owned government corporation that serves more than eight million people in the Tennessee Valley region, former Tupelo mayor Glenn L. McCullough Jr. oversees the TVA’s activities, which include flood control, navigation and development, electric power production, recreation improvement and forestry and wildlife development. McCullough has stated that deregulation might work, depending on the approach.
The state’s three public service commissioners are seasoned political veterans, even newcomer Michael Callahan. Dorlos “Bo” Robinson of Aberdeen, serving his third term as commissioner of the northern district, was a former sheriff of Monroe County and former state representative. Nielsen Cochran of Byram, former professional baseball player, former city commissioner and brother of U.S. Sen. Thad Cochran, is serving his fourth term as central district commissioner. Newcomer
Michael Callahan of Hattiesburg, 32, the youngest commissioner to be elected in Mississippi, is serving his first term representing the southern district. A lawyer by trade, Callahan quickly took an active role in regional and national regulatory organizations.
Even though Entergy Mississippi, TVA and Mississippi Power Co. are the largest power companies in the state and among the largest in the nation, the Big Three IOUs (investor-owned utilities) serve less than half the customers in the state, roughly 38%.
Entergy Mississippi, a division of Entergy Corp., a major global energy company that ranks among the nation’s largest utility companies, is the largest power provider in the state, with approximately 400,000 customers. Entergy recently announced a merger with Florida Power & Light, which would create the nation’s largest electric utility and the largest generator of electric power in the country. When the merger is complete, Entergy Corp. will own, manage or have interests in power plants around the world with more than 48,000 megawatts of plant generation capability.
Federally-owned TVA, America’s largest public power company, primarily delivers wholesale power to municipalities and co-ops in the Tennessee Valley region to eight million people and is the second largest power provider in the state, serving nearly 300,000 customers.
Mississippi Power Co., a division of The Southern Co., at this time the largest producer of power in the U.S., serves approximately 200,000 customers in the state. The Southern Co. operates nearly 50,000 megawatts of electric generating capacity worldwide.
Roughly 52% of all meters in Mississippi are serviced by electric power associations (EPAs), one of the highest ratios in the nation. EPAs are private, non-profit organizations, locally-owned, managed and incorporated under state law, providing electricity to its member/owners at the least possible cost. A democratic organization, EPA members have the final say in the operation of the association.
EPAs in the northern part of the state, located in the TVA area, with a southern boundary that borders the north shore of the Ross Barnett Reservoir, buy their power from TVA. Eleven co-ops in the remainder of the state are members of the South Mississippi EPA, a generation and transmission co-op that provides wholesale power for the southern part of the state and the Delta to the Tennessee state line. One co-op near Meridian buys half of its power from TVA and the other half from Mississippi Power.
Municipalities (MUNIs) account for approximately 10% of all meters serviced in the state. Most MUNIs in Mississippi belong to TVA or Municipal Energy Agency of Mississippi (MEAM), with a rough breakdown of 16 and eight, respectively.
President George W. Bush has already taken a stance as a strong supporter of deregulation. In his native state of Texas, deregulation will take effect Jan. 1, 2002.
“Our position is that the issue needs to be studied,” said Checky Herrington, Entergy spokesman. “Last year, we recommended a legislative study committee. The Senate utilities committee toured several states that already had deregulation and came back with ‘not at this time.’ It’s probably going to take a while before choice comes to the Mississippi customer, but we don’t think it should just be pushed under the rug and waited on, either.”
McCullough said TVA has been taking necessary steps to ensure that it will continue to provide reliable power supply at a cost that is market competitive if Congress enacts restructuring legislation that would allow other suppliers to compete with them in the TVA region.
“TVA has reduced its debt by more than $1.7 billion, including $391 million in FY2000, while increasing its power generation capacity by more than 1,300 megawatts,” McCullough said. “As the industry evolves, TVA will continue to promote economic growth, supply low-cost power and support a thriving river system in order to remain the electric supplier of choice in price, availability, reliability, quality and service. We will continue to manage the Tennessee River system without federal appropriations and do not believe that will make our power rates less competitive.”
McCullough said the impact of deregulation legislation on TVA, if enacted by Mississippi, would depend on the approach taken.
“As long as deregulation is implemented in a fair, well-considered manner, we are confident that TVA and the distributors of TVA power in Mississippi would continue to offer reliable power at competitive rates in a deregulated marketplace,” he said.
Kurt Brautigam, spokesman for Mississippi Power, said the company wants “to make sure that when Mississippi looks at the deregulation issue, any changes to the system would be beneficial for everybody.”
California knocked a lot of steam out of the idea of deregulation, said Hobson Waites, executive vice president of EPAs of Mississippi.
“A lot of folks say California didn’t do it right, and that Pennsylvania did, but I don’t know that their scheme would work too well in Mississippi,” he said.
Mississippi has a high number of EPAs because larger companies did not find it cost-effective to serve rural areas, Waites said.
“They made their money in the dense urban areas and on the large industries,” he said. “Under deregulation, the large power companies could undercut the price to our customers who are easiest to serve and leave us with only the customers that are unprofitable to serve because of their remote location. This would make it very difficult for us and for the customers. I’m biased, but I have a hard time understanding how anybody could come up with a better deal in the long term than we already give our customers. They get their power now at a not-for-profit basis and anyone else coming in would want a profit.”
Reliability under deregulation is a huge concern, Waites said.
“The transmission of power woul
d be the
key,” he said. “The transmission systems weren’t built for deliverin