Leader Blues

Tuesday, June 20, 2006

EDITORIAL >> Ratepayers still shafted

Here is some shocking news: The state Public Service Commission says it lacks confidence that Arkansas homeowners will be spared having to help pay the electricity bills of people and industries in Louisiana, Mississippi and Texas. It wants some assurances from Entergy Arkansas, the subsidiary of Entergy Corp., that costs are not going to be shifted from those states to Arkansas.

If Entergy gives the regulators that assurance, we hope they get it in writing and require a bond.

Arkansas ratepayers have subsidized Mississippi and Louisiana to the tune of $3 billion over the past 20 years, and it seems likely that even bigger bills are on the way.

Arkansas lacked the political clout to prevent it two decades ago, when energy regulators for President Reagan and the federal courts said Arkansans had to help bear the electricity costs for their southern neighbors. The state is in an even worse predicament today.

Some foggy history is needed. Back in 1978, the young governor-elect, Bill Clinton, discovered that a document called the “system agreement” obligated the subsidiaries of the big electricity holding company Middle South (now Entergy) to share new capacity costs. Arkansas had spent hundreds of millions of dollars converting from oil and gas to nuclear and coal to generate electricity.

Arkansas ratepayers bore higher bills to pay for the conversion. By 1978, Mississippi and Louisiana were starting to build the hugely expensive nuclear plants, and Arkansas was expected to pay a big share of those expenses under the system agreement, although it ordinarily would not need any of the electricity that the plants — Grand Gulf in Mississippi and Waterford in Louisiana — would produce.

Under pressure from Gov. Clinton and later Gov. Frank White, the Arkansas subsidiary wiggled out of the agreement, but the Federal Energy Regulatory Com-mission under Reagan and then the federal courts put Arkansas back in. It was obligated through homeowner rates to pay 36 percent of the costs of new nuclear plants to the south of us.

More expensive plants are on their way as the Mississippi, Louisiana and Texas subsidiaries move away from expensive oil and gas generation.

Arkansas generation and capacity costs will now become much lower, and Louisiana is petitioning to have them equalized across the states by requiring higher payments from Arkansas. Entergy Arkansas announced six months ago that it was going to leave the system agreement no later than 2013. The Public Service Commission wants assurances that Arkansas ratepayers will be protected in the interim.

We can only hope that Entergy will do that, but how can it divine what federal regulators and federal courts will do?

Back in 1982, Gov. Frank White, Republican to the core, talked menacingly about having the state condemn the Arkansas electric utility and operate it as a public power company, like North Little Rock’s municipal utility, to avoid paying Louisiana’s bills.

Gov. Huckabee is not going to do that, we predict, but it might help if he threw his now inconsiderable weight around with the Republican administration in Washington as Bill Clinton was unable to do in the ’80s. The Federal Energy Regulatory Commission could give assurances that Entergy Arkansas cannot.