PSC selects companies to perform electric utility audits

If the selected companies stick to their bids, Mississippi ratepayers should save money on audits of their public electric utilities this year.

The Mississippi Public Service Commission has approved bids for the fiscal year 2010 audits of Mississippi Power Company and Entergy Mississippi that cumulatively total less than $1 million. Contracts have not been finalized. Last year’s audits cost more than $1.7 million, cumulatively.

This is also the first year the PSC has advertised for bids for the audits, which are required annually by state statute. In addition to fuel purchasing practices and procedures, for the first time the audits will also examine actual energy purchases conducted by Mississippi Power Company and Entergy Mississippi.

Last year, Ohio-based Nicholson & Company audited Mississippi Power for more than $600,000. Ridgeland, Mississippi-based HORNE LLP audited Entergy with a total bill of more than $1 million, as did McFadden Consulting Group for more than $150,000. (See 2010 PSC-approved Auditors information box for new auditors.)

Fiscal year 2009 energy audits were the first to be conducted by outside parties, as was recommended by the state attorney general. Previously, the exams were handled by the state Public Utilities Staff. None of the 2009 utility auditors found any improper conduct within either of the utilities.

Last year HORNE LLP complained that it had trouble getting documents from Entergy in a timely manner. The difficulty made the audit take longer and drove up the price, the company said. HORNE had not performed a fuel adjustment audit prior to the project.

By law, utilities are required to provide the lowest cost electricity to ratepayers. Regulated public utilities own their own generation facilities and transmissions systems. In instances where an outside source, such as Independent Power Producer (IPP), can generate cheaper power, utilities are required to buy that electricity.

The attorney general sued Entergy in 2008 for allegedly bilking customers by purchasing peak-time electricity from sister Entergy divisions outside Mississippi instead of buying cheaper power from IPPs. The case awaits a decision about whether it will be tried in federal or state court.

New Orleans-based Entergy Corporation, which serves Arkansas, Louisiana, Mississippi and Texas, announced earlier this month that the U.S. Department of Justice is investigating the company’s power procurement, dispatch and transmission system practices, along with utility policies.