PSC pondering change to rate-setting policy
by MBJ Staff
Published: August 8,2012
JACKSON — Northern District Public Service Commissioner Brandon Presley reports the Mississippi Public Service Commission (PSC) has opened an inquiry into whether reduced borrowing costs for electric utility companies and other factors should translate into lower rates for customers. The PSC voted 3-0 to open the inquiry.
Presley said current rates were set when interest rates were much higher and now that those costs have come down for utilities, those savings should be passed onto customers. Electric companies were the focus of the initial inquiry, but Presley says natural gas companies should be next as part of the review by the state regulatory body. The last approved return on equity for Entergy was 11.63 percent and 10.62 percent for Mississippi Power. The average of the two companies’ return on equity that is approved is 11.12 percent.
“The cost for utilities to borrow money makes up a major portion of what they are allowed to charge customers. Now that interest rates are extremely low, it begs the question, ‘Shouldn’t rates come down, also?’ I say yes.” Presley said. “Recent low borrowing costs, reduced risk of operation, and other factors argue for a full review of Mississippi utilities’ government-backed profits being, in some cases, as high as 11.6 percent, I think we are allowing these companies to make too much money.”
Presley added the PSC has an obligation to the people of Mississippi to determine whether the profit it allows to Entergy, Mississippi Power, Atmos Energy, CenterPoint Energy and other investor-owned utilities are too excessive.
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