Hood Suggests ‘Shell Game

Mississippi Attorney General Jim Hood filed a petition to enforce a subpoena last Friday, demanding Entergy Mississippi hand over information pertaining to the company’s energy procurement practices.

by Adam Lynch
September 24, 2008

Mississippi Attorney General Jim Hood filed suit in Hinds County Chancery Court last week to force Entergy Mississippi to release information on the company’s practice of buying and selling natural gas and electricity.

Hood charged the company with not following U.S. mandates to purchase the cheapest fuel possible to keep customer costs down. Hood told reporters that he believed the company was instead buying more expensive natural gas and power from its own subsidiary companies in order to enrich itself.

“We’ve quietly asked them to supply documents and without so much as a phone call they’ve filed a federal suit (to stop our investigation),” Hood said, adding, “What have they got to hide?”

Entergy Mississippi asked a U.S. District Court last month to block Hood’s request for internal company information, including price adjustments, arguing that his requests are rightfully the jurisdiction of the Mississippi Public Service Commission and the Federal Energy Regulatory Commission, not the attorney general’s office.

Entergy spokeswoman Mara Hartmann said the information Hood seeks is readily available through the Mississippi Public Service Commission.

“Hood has the regular established channels to get this information,” Hartmann said. “That’s what we were saying through federal court. We were saying a number of other agencies are already regulating us. There are proper channels where this information is available. ... If not all, then most of it. I have not seen everything he has asked for, but I know that if it’s fuel adjustment-related, it’s in the hands of the PSC people.”

The U.S. District Court partially ruled in Hood’s favor last week, deciding that it would not halt Hood from filing his petition for the information. Hood warned Entergy not to destroy any documents that have been requested until the case is resolved. The attorney general accused the company of running a “shell game” by purchasing electricity and natural gas at inflated rates from its sister companies in neighboring states and then passing those extra costs along to customers.

Entergy set off a flurry of outrage this summer after announcing that it would request permission from the Public Service Commission to increase customer rates by about 28 percent. Hartmann said the company predicted a sharp increase in the price of natural gas, which forced the company to transfer costs to consumers.

“About 55 percent of the electricity we produce comes from natural gas, and because that has risen so dramatically, it’s impacting the customers’ bill,” she said.

The PSC began investigating the company in July, however, with freshman PSC Commissioner Brandon Presley claiming the PSC, prior to his arrival, had been accepting Entergy’s arguments for rate increases “without question” for about a decade.

“We’ve got to scrutinize this process a little more,” Presley said in July. “... We’re not paid to trust. We’re paid to verify, and we’ve got to make sure we are not just taking things on face value.”

Entergy announced big price decreases as the PSC meeting got underway—coincidentally mingled with a drop in fuel prices, according to Hartmann. The company filed for a fourth-quarter fuel adjustment that could bring bills down by 9 percent in October, with PSC permission. Those cuts will join another Entergy proposal in September to reduce bills by 9.6 percent, amounting to a total 18.6 decrease by the end of the year.

The timely rate decreases have not discouraged Hood’s investigation, which he believes could prove the company bilked Mississippians out of about $100 million over the years.

“They were ordered to pay $34 million to rate payers in New Orleans. This does not include the $72 million they agreed to pay back to Louisiana rate-payers (in 2000),” Hood said. “They’ve already been called out twice in Louisiana for playing shell games and we believe we have sufficient information to demand they provide information on behalf of the rate payers.

Hood said that some of the discovery in the Louisiana case actually revealed the company’s same practice in Mississippi. “It’s just a matter of them providing documentation to update what we’ve already gotten out of the Louisiana case,” he said.

Hartmann denied Entergy was buying anything more than the cheapest fuel for its Mississippi customers.

“We stand behind time-tested fuel procurement practices. We’re under constant scrutiny and audit by a variety of utility agencies, and we’ve always been in compliance with those agencies,” Hartmann said, adding that while Entergy Louisiana did have to reimburse customers in Louisiana, she believed that the Louisiana Public Service Commission found no proof of wrongdoing by the company.

“We were not out of compliance with anything,” she said.