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Customers likely to pay $1M Entergy audit charge

Consultant: Entergy’s fuel purchasing above-board

The final bill for a state audit of Entergy Mississippi’s fuel adjustment charges, conducted by outside party HORNE LLP, is $1.019 million. The project bill was quoted to be $780,000, but according to HORNE, the price was driven up because the accounting firm had trouble obtaining needed documents from the utility. At a recent Mississippi Public Service Commission hearing, an Entergy representative said the company will likely seek to pass the cost on to ratepayers.

The audit of Entergy’s rate increases and fuel purchases occurs annually as specified by state law for regulated utilities. However, this was first time the exam was conducted by an outside group instead of the state Public Utilities Staff. 

Previously, according to the Commission’s interpretation of the statute, the state Public Utilities Staff has performed the audits. In 2009, the attorney general gave the Commission the opinion that statute called for an outside audit. The Commission agreed with the attorney general and hired HORNE.

HORNE said it had not audited a fuel adjustment clause prior to the project.

After beginning the audit in Sept. 2009, Horne sent a letter to the Commission saying that Entergy responses to data requests were “impeded” by “slow or incomplete responses” from company lawyers and staff. The utility’s “unusual” behavior required HORNE to hire addition senior auditors, the letter said.

At a March 2 hearing, Entergy attorney Jeremy Vanderloo said he took issue with some of the characterization of the company in the HORNE letter but agreed that the accounting firm had put in more than 5,600 hours for the audit.

Commissioner Brandon Presley asked Entergy if it would seek to recover the audit charges from ratepayers, even though the company was being blamed for the cost overruns.

Entergy indicated that it would make a filing before the Commission to seek fee recovery from customers.

Commission Lynn Posey spoke in favorably of HORNE and the audit process. “I think HORNE did a good job,” he said. Although our original goal was not achieved, this was the first time an audit of this kind was conducted, and I think we learned a lot, Posey said. The commissioner also said HORNE had to hire extra staff to complete the audit by the state’s deadline.

Commissioner Leonard Bentz made a motion to approve the HORNE invoice. Bentz and Posey approved it. Presley voted against the motion.

 

Entergy passes fuel purchasing exam

At a March 30 Commission meeting, an auditing consultant hired by Bentz and Posey reported that he found Entergy’s energy purchasing practices to be above-board, guaranteeing to lowest costs to rate payers.

The exam bill from Colorado-based McFadden Consulting Group, which has audited more than 40 utilities nationwide, is $154,000.

During peak demand times, such as summer months, utilities must purchase energy from sister utilities or independent power producers (IPPs) to meet the electricity demands of customers. 

Presley took issue with McFadden for not examining Entergy’s transmissions system in addition to the company’s purchasing practices and procedures. Michael McFadden said a transmissions exam was outside the scope of what his company was hired to do.

Entergy has come under fired from the attorney general for allegedly bilking rate payers by purchasing peak-time electricity from Entergy divisions outside Mississippi instead of from independent power producers who had cheaper prices. Purchasing power from IPPs costs the utility money and would require the utility to allow IPP access to its transmissions lines.

Presley said a portion of McFadden’s report saying transmissions complaints came from IPPs who “don’t want to invest in transmissions lines” sounded one-sided. 

Posey and Bentz said they appreciated McFadden’s work. Bentz said he looked forward to working with McFadden in the future.

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