Entergy audit — routine or not?
by Amy McCullough
Published: December 3,2009
JACKSON — While Attorney General Jim Hood said a new federal audit of Entergy Mississippi means the government is taking a special interest in investigating the utility, both federal and Entergy spokespersons have said the audit is routine.
The Attorney General’s Office and Entergy published press releases Nov. 24. Hood, who sued Entergy for fraud in 2008, publicized a Federal Energy Regulatory Commission audit of Entergy’s operations. Entergy’s release touted a $500-million investment in transmissions infrastructure. Neither party claims to know which release hit first.
The FERC decision to audit is routine and “not prompted by anything else,” said FERC spokeswoman Barbara Conners in a Megawatt Daily article. “FERC staff regularly schedules operational and financial audits of regulated utilities,” Connors said.
Hood’s office sued Entergy on behalf of the state in fall 2008, for fraud and other charges. The case awaits a U.S. District Court decision about whether it will be tried in federal or state court.
Hood also said Entergy has resisted cooperation in releasing documents for a state Public Service Commission (PSC) audit that began in September and is examining the company’s fuel adjustment clause. Hood alleges the company has bilked ratepayers.
Entergy said issues with PSC auditors have been resolved, and the company has been working closely with them. The audit is wrapping up and will be presented to the PSC Dec. 15, said Mara Hartmann, communications specialist for Entergy Mississippi.
Regarding the transmissions investment announcement, Hartmann said Entergy has a regular, ongoing routine maintenance program. It’s cheaper to maintain what you have rather than replace it entirely, and it saves customers money in the long run, Hartmann said.
Entergy will spend $376 million from 2010 to 2013 on new substations, upgrades to equipment and transmission lines, new transformers, voltage regulators and other items that will contribute to customer reliability in Mississippi. The company has spent $128 million on improvements since 2006.
“We’re excited about these improvements for many reasons. It shows our commitment to the state and to bringing low-cost, reliable power to our customers,” said Entergy Mississippi president and CEO Haley Fisackerly in a statement.
The new transmissions projects and grid upgrades were publicly presented in August at annual ICT Planning Summit, said Larry Daspit, Entergy transmissions spokesman. The ICT is the Independent Coordinator of Transmission, a regulatory body that essentially answers to FERC.
The FERC audit was announced in October and will examine company operations from spring of 2006 to the present.
“I don’t believe this is just a run-of-the-mill audit,” Hood said in an interview. You can’t go on what one letter says; you have to look at the big picture, Hood said.
Hood addressed regulators at a June meeting of the FERC and public service commissioners from four states in the Entergy service area that was held in Charleston, S.C. Hood said Mississippi had experienced transparency problems regarding the company’s business practices.
“Entergy has allowed its transmission system to deteriorate in ways that both jeopardize reliability and competition,” said FERC Commissioner Suedeen Kelly at the meeting.
“The FERC is going to make Entergy spend money on its transmissions system to make a way for competition,” Hood said. “(The FERC) will make cheap power available to ratepayers.”
The three largest power providers in the state are Entergy Mississippi, Tennessee Valley Authority (TVA) and Mississippi Power Company. While all three entities own their own power plants and transmission systems, only Entergy Mississippi and Mississippi Power are regulated by the state PSC. TVA is essentially only regulated by Congress.
Other independent power providers, or IPPs, own plants throughout the state and purchase the use of transmissions lines from larger providers. IPPs are not limited to a specific service area and may sell their power across state lines. Entergy Mississippi and Mississippi Power also sell to the wholesale market and therefore compete with the IPPs. The IPPs physically located in Mississippi include KGEN, LS Power, Reliant and Magnolia Energy, LP.
In some instances IPPs, which often have newer facilities, can produce electricity more efficiently and thus likely more cheaply than large utility power plants. Typically, IPPs can only distribute their electricity if transmission lines can accommodate their energy at a given time.
With infrastructure improvements, Hood hopes to see more IPP participation and market competition.
Entergy Mississippi provides electricity to more than 433,000 customers in 45 counties and is a subsidiary of Entergy Corporation. The company as a whole delivers power to 2.7 million people in Arkansas, Louisiana, Mississippi and Texas.
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