Feds OK breakup to cut power costs in Ark., Miss.

AP News
Posted: Nov 19, 2009 3:49 PM

Federal regulators Thursday authorized Entergy Corp.'s utilities in Mississippi and Arkansas to leave a multistate agreement, a move expected to eventually save money for electric customers in Arkansas.

The Federal Energy Regulatory Commission on Thursday accepted requests by Entergy Arkansas and Entergy Mississippi to leave a pact with Entergy companies in Louisiana and Texas. Entergy Arkansas plans to exit in December 2013 while Entergy Mississippi wants to leave in 2015.

The agreement allows participating companies to share power-generating capacity, but also requires them to share the cost of power production. Arkansas regulators say Entergy Arkansas' exit from the pact will save state ratepayers money because they won't be paying for other companies' production costs.

FERC Chairman Jon Wellinghoff said the move would give both companies time to negotiate new system agreements before leaving the current arrangement.

"This order gives the parties guidance so that the operating companies can engage in long-term generation planning and procurement decisions with more certainty," Wellinghoff said.

Regulators in Arkansas worried the system agreement could cost its ratepayers millions of dollars through a rate-equalization plan _ while perhaps lowering costs in Louisiana, Mississippi and Texas.

Entergy has 685,000 customers in Arkansas and 432,000 in Mississippi.

Other companies in the pact are Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Texas and Entergy New Orleans.

Paul Suskie, chairman of the Arkansas Public Service Commission, said Arkansas ratepayers have paid more than $900 million over the past three years to the operating agreement. Suskie said exiting the agreement would lead to lower bills for Arkansas customers, who he argued had been paying for less-efficient systems in Louisiana.

"This is the best news I've heard since I became chairman of this commission," Suskie said.

This year, Entergy Arkansas' average residential customers who use 1,000 kilowatt hours a month are paying $18.20 out of a $106.60 monthly bill for the system agreement.

Entergy Arkansas Spokesman Dan Daugherty said it was too soon to tell how much of a decrease in bills Arkansas customers would see after the state exits the pact.

"Certainly, we will not be subject to production cost equalization payments anymore," Daugherty said. "That will definitely will be a factor that would give downward result to the bills."

Under the agreement, Entergy Arkansas is paying $398.8 million this year to the other operating companies, with most of that going to Entergy's Louisiana and Gulf States Louisiana companies. Entergy Mississippi will receive $24.1 million from Arkansas this year.

Entergy Corp. Spokesman Michael Burns said the utilities in Arkansas and Mississippi would begin negotiating new system agreements with the other Entergy companies in the region.

"We intend to pursue the development of a successor agreement that will allow all six utilities to continue to receive the benefits of operating as part of a larger system, including the ability to call upon a larger pool of generating resources," Burns said.