PSC approving billion dollars in grid upgrades

By CHIP ESTES,

Since the demise of the Kemper boondoggle, the MS Public Service Commission (MPSC) has consistently voted in favor of utilities at the expense of ratepayers.

On October 1, the MPSC unanimously approved Entergy MS spending over $400 million to purchase an existing used natural gas plant. This decision is detrimental to ratepayers in three ways: (1) the used plant only has 13 years left of useful life; (2) the technology is obsolete in comparison to new combined cycle natural gas plants; and (3) the MPSC and Entergy MS have just “cost” Washington and Warren counties the chance of having a nearly $1 billion dollar new power generation plant built to replace the antiquated plants still operating there.

By failing to force Entergy to seek competitive alternatives of all generation options via mandatory Requests for Proposals (RFP), the MPSC, once again, has chosen to benefit utility shareholders over ratepayers. The Entergy MS 2018 Integrated Resource Plan states the need for a new generation capacity by 2027. Had an RFP been required, one option would have been to replace one of the old and inefficient power plants that are currently operating in Washington County and Warren County with a new $800-$900 million combined cycle natural gas plant to be built by Entergy MS or some other company/entity (possibly even Cooperative Energy). The French Camp plant owner was already paying property taxes to Choctaw County, so the Entergy MS purchase simply shifted those tax payments and costs to Entergy MS ratepayers. 

FERC Docket EC19-63 explains how the French Camp power plant purchase by Entergy MS ended the opportunity for new economic development investments. A new power plant would have provided hundreds of new, high paying construction jobs and would have provided decades of tremendous financial benefits to the local schools via significant ad valorem tax payments in either Warren, Washington or possibly some other county in western Mississippi. 

“Entergy Mississippi’s Need for Additional Generating Capacity Applicants explain that Entergy Mississippi’s 2015 Integrated Resource Plan identified the need for additional generating capacity in Local Resource Zone 10. Applicants state that, although Entergy Mississippi began developing plans in 2016 to build a new combined-cycle generating facility by 2027, generating facility retirements accelerated the need for the new facility, prompting Entergy Mississippi to move the target date up to 2023. Applicants explain that Entergy Mississippi’s 2018 Integrated Resource Plan continued to identify a need to construct this new generating facility in Local Resource Zone 10 by 2023 to satisfy its customers’ capacity and energy needs, meet planning reserve and MISO resource adequacy requirements, and account for accelerated generation facility retirements.

…. Applicants state that they ultimately entered into an Asset Purchase Agreement in August 2018 and that, following the execution of the Asset Purchase Agreement, Entergy Mississippi ceased its efforts to build a new combined-cycle gas turbine facility.”

The only “winners” in this purchase vs. new build decision made by Entergy MS and the MPSC are the shareholders of Entergy and the executives that will likely earn significant bonuses in 2019 for quickly adding a $400 million power plant to the Entergy MS rate base.

Next, the MPSC, on October 28, unanimously approved for MS Power Company a $125-million-dollar expenditure on a coal plant that should have been subjected to competitive alternatives for possible shutdown and replacement.

Finally, on November 22 on a 2-1 vote, the MPSC approved its Integrated Resource Plan rule (IRP). This rule is one of the most far-reaching, utility-friendly actions ever approved by the MPSC. Unless overturned by the next commission or the courts, this partially illegal rule will negatively affect ratepayers for decades to come.

One key component of the IRP rule allows for Entergy MS, MS Power Company, Atmos Energy, Centerpoint Energy, and Spire MS to collect from ratepayers, over the next five years, a total of $625 million for “Enhanced Grid Investments” and $250 million to theoretically expand rural broadband. Simply put, the MPSC’s IRP Rule directs $875 million of subsidies to be charged to some of the poorest households in the U.S. without any guaranteed benefit to the captive ratepayers.

The MPSC IRP rule excerpt states, “Because of the inherent, yet difficult to quantify, benefits of such investments, no cost/benefit analysis shall be required.” This statement is absurd. In 2018, the MPSC, Entergy MS and C Spire created an $11 million handout that mirrors the MPSC’s IRP rule’s $250 million broadband subsidy scheme, which creates a template for a cost/benefit analysis. The proximity of C Spire’s fiber to Entergy MS’s 30,000 customers will validate whether or not any person or business can even afford to and will subscribe to broadband. The analysis results will validate if this $11 million project is a cost effective and beneficial concept or just an enabler of hidden agendas at ratepayers’ expense.

The current MPSC has approved well over $1 billion dollars in spending plans beneficial to monopoly utilities in just the past two months. Additionally, at least four former senior personnel of the MPSC and MS Public Utilities Staff have left and now work for the utilities regulated by the MPSC. These actions have solidified the legacy of a commission that initially defended ratepayers from the effects of Kemper to one that seems to be solely focused on enriching utility shareholders. And actions speak louder than words.

Chip Estes has worked as an energy executive for 38 years. He now manages an energy consulting firm and several real estate entities.

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