Hood Calls Foul on Entergy Upgrade Plan | Jackson Free Press | Jackson, MS

Hood Calls Foul on Entergy Upgrade Plan

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Attorney General Jim Hood says some holiday deals are too good to be true. Urges caution.

Entergy Mississippi Inc. announced last week that it would be investing $500 million in "upgrading and bolstering" Mississippi transmission facilities between 2006 and 2013.

The projects, the power company says, represent the continuation of Entergy Mississippi's plan to upgrade, improve and strengthen its electricity transmission system. The company says it has already built and upgraded new service substations and substation equipment and improved transmission lines to the tune of about $90 million in investments, and that it plans to invest more than $376 million in future upgrades and expansions.

"(This) shows our commitment to the state and to bringing low-cost, reliable power to our customers," said Haley Fisackerly, president and chief executive officer of Entergy Mississippi Inc., in a statement. "We spent significant time and effort analyzing and designing the most cost-efficient solutions that provide the greatest benefits to our customers, while at the same time helping improve reliability and meeting the power demands the future will surely bring."

The company points out that the upgrades will provide stronger power ties to alternative (energy) sources," and that the additional energy sources (meaning independent energy providers not affiliated with Entergy) will improve the transmission system's overall flexibility and performance.

The press release followed a Monday statement from the office of Attorney General Jim Hood about the Federal Energy Regulatory Commission's October decision to launch an audit of Entergy Services Inc. for doing exactly the opposite.

"They sent out this goofy little press release bragging about this new effort of theirs to upgrade the transmission system and stop choking competition, even though they weren't going to do anything until FERC grilled them at a meeting in Charleston, South Carolina," Hood told the Jackson Free Press. Hood is currently suing Entergy for allegedly excluding independent power producers from selling electricity to Mississippians. Hood claims the company is instead buying more expensive power from Entergy subsidiaries—and transferring those higher costs to Entergy Mississippi customers.

When reached about Hood's comments, FERC Audit Manager Stephen Flanagan clammed up on the details, refusing to offer any explanation outside FERC's October commencement letter. But the investigation runs contrary to the Entergy press release by centering on the power company's alleged persistent refusal to upgrade transmissions lines and allow smaller, independent power producers to sell electricity to Entergy customers.

The audit was actually the next logical step after the commission soundly roasted Entergy at the June FERC technical conference. FERC already determined in 2006 that the company had given its subsidiaries considerable advantage in energy bids by sharing with them pivotal information on the bids. (The commission had been affronted enough by the revelation at the time to threaten to invalidate Entergy's contracts for wholesale power purchases if it caught the company doing it again.)

FERC invited public service commissioners from Mississippi, Arkansas, Louisiana and Texas to join them in visibly bushwhacking the company for refusing to follow recommendations to build more transmission lines.

"We were allowing 10 percent of our infrastructure to bottleneck 90 percent of our resources," said Public Service Commissioner Brandon Presley, who attended the public pounding. "Entergy just decided on their own not to make those transmission investments by relying upon their personal interpretation of industry standards."

A History of Hiding

Hood called the Entergy press release misleading, and said it revealed nothing of the company's actual history.

"This announcement is completely different from their behavior in the past," Hood said. "They've denied relevant company information in federal court, telling Judge Henry Wingate that the information belongs with FERC, and then they turn around and withhold information from FERC. This is no better than their decision to withhold information from a Mississippi Public Service Commission audit of their energy purchases."

The MPSC commissioners ordered Entergy in September to step up its surrender of company information to Horne CPA for the PSC fuel purchases audit. The accounting firm informed commissioners in a Sept. 21 letter that Entergy was slowing the process by running even the most simple info requests through company lawyers, which created "a high level of confusion" and inconsistent information.

The commissioners voted to bring in Horne CPA after commissioners refused to endorse a Public Utilities Staff audit of Entergy's 2008 fuel adjustment rates on Mississippi customers. The PSC argued that PUS did not check to see if the power company had truly sold the cheapest available power to its Mississippi customers—an anxiety directly mirroring Hood's 2008 Entergy lawsuit.

Robert Cooper, manager of Entergy Services Inc., testified before the Mississippi Public Service Commission that the company's projected fuel costs for power purchased during the third quarter of 2008 were "reasonable estimates of the costs needed for (the company) to continue ... to provide reasonably adequate electricity service to its customers at the lowest reasonable rate."

The PSC was in no position to argue with this. Public Utilities Staff officials, who perform all of the PSC's audits, said they fulfilled the letter of the law regarding their audit duties, which did not include line-by-line verification of Entergy's power purchases. Their determination prompted PSC this year to go with a private accounting firm—a first in MPSC history.

Hood said the endeavor had mostly proven a failure, however: "The PSC has to provide an (audit) report to the Legislature by Jan. 15. They were under the gun, but now all they're going to produce is some kind of incomplete summary report that won't make them happy," he said.

Commissioners told the CPA to aim at specific targets; that they wanted more than a look at the bottom number to see if the power company had spent the same amount on fuel purchases that it charged its more than 400,000 Mississippi customers. What the PSC wanted to know was if Entergy had purchased more expensive power from its chosen sources despite the availability of cheaper power from smaller independent power producers.

"Fuel adjustment charges make up 60 to 70 percent of your power bill and everybody else's. This is where power companies get the big bucks from the ratepayers," Presley said. "We've got to make sure its right."

Horne CPA may have been out of its league with this assignment, however. Commissioner Lynn Posey said the CPA has not had an easy time since the PSC threatened to subpoena Entergy for the audit information back in September.

"There's a big difference in the definitions of things (between Horne and Entergy)," Posey said. "The audit is not going to be as thorough as we hope to get next year because we've run out of time trying to work out these definitions. We had hoped to reach a 99 percent confidence level, but there's no way to do that, at least not yet."

Posey's statement means the PSC will likely have an audit of the same disappointing caliber the PSC rejected in January. The commissioner added that he does not fault Horne CPA.

"It is unbelievably difficult to rebuild those transactions," Posey said. "There is no standard anywhere in the industry for fuel adjustment audits. Everybody does it a different way. Maybe next year we'll get some terms defined, and get some people in there and start earlier and get the audit we want."

Entergy did not immediately return calls regarding the audit.

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