Energy needs require PSC to be vigilant


As this term of the Mississippi Public Service Commission (MPSC) ends in December and two of the three commissioners will not return in January, the epitaph for the four-year term could read “In Like A Lion, Out Like A Lamb.” Given that Mississippi has the unique national distinction to have its two investor owned utilities subjected to investigations by the United States Department of Justice and one of them being sued by the Mississippi Attorney General, the scrutiny of these utilities by the MPSC should be significant. Unfortunately, the opposite is the case.

After forcing the construction shutdown of the Kemper gasification plant and forcing Southern Company shareholders to absorb $6.4 billion of the largest utility boondoggle in Mississippi history, the MPSC has steadily ruled in favor of utility schemes and failed to investigate utility practices, both of which have resulted in unexamined and possibly unjustified rate increases for Mississippi consumers. Even more rate increases are looming, as the MPSC will rule in the next three months on a bonanza of earnings opportunities for utility shareholders.

Entergy Mississippi has benefitted thus far from the MPSC’s laissez-faire attitude to oversight of the Grand Gulf Nuclear Station, which has the worst operating record of all nuclear plants in the U.S. since 2016. The MPSC has yet to formally launch a prudent investigation of numerous mistakes and practices by Entergy personnel that have led to the plant operating at around 50 percent capacity factor since 2016. In comparison, the five-year average capacity factor for all U.S. nuclear plants is almost 92 percent. The failure of Grand Gulf to properly operate has resulted in Mississippi ratepayers paying significantly higher costs of actual and replacement electricity that likely totals to over $100 million.

The MPSC has also approved Entergy spending $313 million to install “smart meters,” purportedly to improve service restoration and customer usage information. However, an Entergy spokesperson, on September 16 of this year, disclosed that the apparent underlying reason for this type of meter is to provide “the foundation for any new products or services we (Entergy) can offer customers.” In fact, the want to collect and monetize customer information is evidenced in Entergy’s Privacy Policy, which states:

“We may collect all information about all interactions between your web browser and the Entergy Website and other websites unrelated to Entergy that you visit, including your IP address, the web pages you visit, how long you visit them and what you do while visiting them. For example, we may collect information that tells us how long you spent on a certain page, what information you supplied or what boxes you did or did not check.”

Therefore, not only are ratepayers now forced to pay for an Entergy sales and marketing scheme to boost Entergy earnings, the customer information being collected and used without approval is at risk of being shared with others and may even be stolen.

A Race to Approve Utility Spending

In the remaining three months of this year, there are four proceedings where a total of over $1 billion in utility spending, if approved by the MPSC, will impact MS ratepayers for decades to come:

1) A $401 million purchase by Entergy MS of a used natural gas plant.

2) A $153 million purchase by Entergy of a solar project that, according to the Mississippi Public Utility Staff expert, “will likely result in a net increase in costs to ratepayers.”

3) A $125 million approval for MS Power to spend on coal issues at Plant Daniel, even though the owner (Gulf Power) of 50 percent of the plant has stated they will retire their undivided interest in January 2024.

4) A new rule for MPSC-regulated utilities to spend $375 million (not including allowed utility earnings on the amounts) over the next five years for captive electric ratepayers to subsidize other companies in the extension of broadband in MS. This “taking” of ratepayers (including governmental entities) money is likely not legal, and the MPSC admits, “Because of the inherent, yet difficult to quantify, benefits of such investments, no cost/benefit analysis shall be required.”

The earnings model for shareholders of the investor-owned utilities in Mississippi is simple: They spend as much money as possible and then convince two of three commissioners to let them place those expenses in their rate base which then receive a guaranteed rate of return. This creates what is essentially an annuity for shareholders for decades to come.

With only three remaining months in their terms and over a billion dollars in ratepayer impacts yet to be completely and properly vetted, the current commissioners should not approve any of these filings. Instead, they should allow their successors to properly investigate these expenditures and rules to then make the final decisions regarding all remaining matters that financially impact ratepayers. Their legacy as lions or sheep depends on it. 

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

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1. He drove a blue ‘77 Chevy Nova in high school. 2. He played on Jackson Prep’s 1985 and 1986 state championship basketball teams.