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PSC, customers continue scrutiny of utility’s fuel adjustment

The Mississippi Public Service Commission’s inquiry hearings into Entergy Mississippi’s 28% rate hike for the third quarter resumed August 5 with public comment from a few of the power company’s customers.

Entergy enacted the rate increase to offset the rising cost of natural gas, which makes up almost 60% of the fuel mixture the company uses to manufacture electricity. State law allows publicly regulated utilities to recover fuel costs dollar for dollar. It forbids companies from making a profit from fuel costs.

That was not an acceptable excuse for Katrina Johnson.

Johnson, a mother of three from Vicksburg, said she and her children have had to drastically alter their lifestyle, including cutting down entertainment costs and charitable donations and adjusting their thermostats.

“It is time for Entergy to tighten up their in-house budget like everybody else has to,” Johnson said. “We can’t ask for a 28% increase in our income. This is nothing less than corporate greed.”

Not all of the public comment portion was anti-Entergy.

Nicole Claiborne, director of the Salvation Army’s Social Services Division, said Entergy has gone to great financial lengths to assist its elderly and disabled customers.

“I’ve seen the good they’ve done,” Claiborne said. Asked by Northern District PSC Commissioner Brandon Presley if she had been asked to testify, Claiborne said an Entergy representative had approached her about it.

In a press conference outside the PSC’s hearing room, representatives from the Sierra Club, the AARP and the Lake Hico Neighborhood Association echoed Johnson’s concerns.

“Our members and members of the public would be outraged to know that their money is being used to pay for a rate increase,” said the Sierra Club’s Louis Miller, in reference to Entergy officials traveling around the state to soothe customer concerns over rising electric bills. “This is an outrage any way you slice it.”

Walter Howell of the AARP said the PSC hearings were “fruitful and provides transparency.”

“ A lot of people are having to decide if they pay their light bill, buy gas or pay their house note,” said Wydette Hawkins, president of the Lake Hico neighborhood association.

Entergy spokeswoman Mara Hartmann said the company uses a large portion of natural gas to manufacture electricity “because when our facilities were built that was the fuel of choice. It was cheap and it stayed cheap until about 2000.

“We’re looking hard at nuclear power. Every utility that uses natural gas is in the same position (as Entergy).”

Entergy has signaled plans to build an addition to its nuclear power plant in Port Gibson.

Commissioners also heard testimony from Walter Drabinski, a utility expert from Florida, who has studied the methods utilities in other states collect their fuel costs.

Drabinski said utilities in 28 states use fuel adjustment clauses (FAC) to defray fuel costs, the same method used in Mississippi. FACs are reviewed anywhere from monthly to quarterly to annually. Entergy’s FAC is reviewed quarterly.

Over the past year, natural gas prices have risen 120%, although there has been a slight decline in the last month or so as demand has shrunk.

How often FACs are reviewed has historically been an issue that draws strong reaction from both sides.

“There is a lot of debate, and really there’s no right or wrong way,” Drabinski said.

Hartmann said Entergy would be willing to submit its fuel adjustments whenever the PSC orders.

“Quarterly filings allow us to equal out costs” quickly, Hartmann said. “We’re hopeful and optimistic that the price of natural gas will continue to fall.”

Contact MBJ staff writer Clay Chandler at clay.chandler@ msbusiness.com .

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