PSC voted against changing process of adjusting bills based on fuel cost estimates
The Mississippi Public Service Commission has voted not to change the process of adjusting customer electric bills based on estimates of fuel costs.
Mississippi uses a method that is used in other states for setting customer rates in advance based on the estimated costs of fuel.
The state’s regulated electric utilities — Entergy Mississippi and Mississippi Power Company — are allowed to recover the costs of fuel, like natural gas, from customers. The companies do not profit from fuel costs.
Because the price of natural gas, which is traded on the open market, is hard to predict, the utilities sometimes over collect, while at other times they under collect and have to be reimbursed by their ratepayers.
After a hearing last week, the Commission passed an order with only minor alterations related to fuel transportation costs. The order did not address the process for altering customer rates based on fuel costs changes.
Commissioners Leonard Bentz and Lynn Posey voted for the order. Commissioner Brandon Presley voted no.
The purpose of examining the issue was to create more objective criteria for auditing fuel costs, which make up more than 60 percent of a customer’s bill, Presley said. “I don’t think we accomplished anything today to help the consumer. Nothing in today’s rule stops this process of over collecting,” which Presley has called a “cash advance to the company.”
Bentz said there is no ideal solution to make the process better.
In past years, natural gas prices have been extremely volatile, making fuel adjustments difficult, said Dorman Davis, Entergy Mississippi manager of regulatory affairs, in a Mississippi Business Journal interview.
Entergy Mississippi adjusts its customer rates for fuel cost changes quarterly. Mississippi Power Company undergoes fuel audits annually.
A representative from Wal-Mart said the company would prefer the adjustments to occur monthly.
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