Leader Blues

Wednesday, June 06, 2007

EDITORIALS>>Why we’re paying more

If you buy your electricity from Entergy you will be pleased to know that beginning this month you will help pay the light bills every month for nearly 2 million people and businesses in Texas, Louisiana and Mississippi. The charity will be figured into your monthly bill. You should gain an even deeper appreciation for the durable packhorse.

The state Public Service Commission theoretically could force Entergy Arkansas to absorb the cost of the $251 million annual subsidy to the southernmost customers of the Entergy system rather than pass it on to residential, industry and wholesale customers in Arkansas like you, but that is harsh medicine for the company and we do not expect it.

But the commission should give the customers the full measure of doubt and require the company and its holding company and shareholders to bear much of the burden.

This has been a bitter pill for Arkansas people for more than two decades. Federal regulatory appointees of President Ronald Reagan first ordered Arkansas ratepayers to help Mississippi, Louisiana and Texas customers of Entergy pay their electricity production costs in 1986 when Mississippi and Louisiana were building big nuclear plants and the building costs had gone through the roof after Three Mile Island.

Arkansas had built its two nuclear units at Russellville in the 1960s when the costs were much lower, and Arkansas customers bore the costs of nuclear construction and generation alone. The Reagan administration said Arkansas should help Mississippi and Louisiana pay the higher costs down there, although Arkansas by 1981 had negotiated an end to the 1970s agreement to share generating costs evenly.

Now the George W. Bush administration has ordered a new sharing arrangement, with Arkansas customers the packhorse again. See, Louisiana, Mississippi and Texas have benefited for decades from absurdly cheap natural gas, which allowed the Entergy companies there to generate electricity very inexpensively while Arkansas, without such plentiful supplies, had to convert to nuclear power and then expensive Wyoming coal, which comes into Arkansas by vast trains.

But natural gas prices have gone through the roof and it has become costly to run all those gas-powered generators across the coast. So the Louisiana Public Service Commission once again went to the energy regulators in Washington for relief.
Again, they ordered Arkansas to help the southern companies and their customers out by sending a little subsidy — $251 million this year — to the five southern operating companies.

If the PSC next week grants a rate increase requested by Entergy Arkansas that includes money to pay the subsidies, your bill should go up about 12 percent. Thanks to you, some 1.95 million customers in the coastal states will get credits on their monthly bills for the rest of the year. The Federal Energy Regulatory Commission will maintain that it’s all just legalities and not politics.

Just because Texas, Louisiana and Mississippi carry more clout with the Republican administration than does Arkansas, they will insist, does not mean that Bush’s men would favor the big companies on the coast over Arkansas.

But the law is always interpreted in their favor. FERC recognized the original agreement among the subsidiaries of the big holding company to share costs but then dismissed the next agreement in which Arkansas was severed from the arrangement. Doesn’t count, the regulators said.

And the federal courts agreed. Antonin Scalia, Mr. Justice Republican, wrote the opinion that saddled Arkansas ratepayers with the burden of bailing out the southern companies for their lack of foresight.

Gov. Mike Beebe’s spokesman got it right. Recalling that Beebe as attorney general had opposed the Louisiana campaign to make Arkansas pay, he said, “This is what the Bush administration decided had to be done. We don’t think it’s good for Arkansas ratepayers, but the final say lies with the federal government.”

We know your charitable impulses will prevail. We were poor, but we shared what we had with those who were better off.

Ernie Dumas writes editorials for the Leader.