Leader Blues

Tuesday, February 16, 2010

EDITORIAL >> $4.5B ripoff must stop

Don’t hold your breath, not until 2013 anyway, but a little relief on your light bill may be finally on the way. The state Public Service Commission ordered a study last week to see whether the state’s largest electric utility, Entergy Arkansas, should stop subsidizing people and industries in Mississippi, Louisiana and Texas with our paychecks.

You probably ask, why do we need a study? Isn’t the answer transparently yes? But we all thought the answer was yes 31 years ago when Arkansans first learned of the “system agreement” under which the six subsidiaries of Entergy Corp. — it was called Middle South Utilities back then — would start sharing the costs of power generation when a big new nuclear plant in Mississippi was finished.

Since 1985, when the Grand Gulf I generating plant was finished at Port Gibson, Miss., customers of the Arkansas utility have sent $4.5 billion to three states to the south so that customers there would not have to pay so much to light, heat and cool their homes and businesses. The monthly subsidy was part of your light bill. It helped Mississippi amortize the mammoth cost of building the nuclear plant and customers in all three states avoid the high cost of generating their electricity with expensive oil and gas.

As we have pointed out, Jacksonville’s own Wally Nixon, who was then working for the new young Governor Bill Clinton, uncovered the state’s obligation under the agreement, which was negotiated by the utilities. Clinton protested and there was protracted litigation, but in the end Arkansas lost. The Federal Energy Regulatory Commission and a federal appeals court said Arkansas had to oblige the agreement and pay up.

Arkansas had to pay under the agreement because in the 1960s and ’70s it had built two nuclear units at Russellville and two coal-powered plants near Pine Bluff and Batesville, all of which produced electricity at lower costs than the oil and gas plants in Louisiana. Arkansans had to pay for the plants’ construction, but along with much greater pollution from the carbon exhausts of coal, they eventually got cheaper power. Starting in 1985, they (we) would also have to subsidize the southern neighbors. The neighbors got cleaner air from generating from natural gas and nuclear and flat rates, too. Louisiana in particular has liked the arrangement a lot. Thanks Arkansas, Louisianans say, keep the money coming.

Last fall, the federal agency said Arkansas could be let out of the agreement in 2013 if it chose. The state Public Service Commission said last week that it wanted to explore that option. It will hold hearings this year.

Entergy, of course, wants the six subsidiaries to continue to share costs in some way. The company says it is working on a new agreement to start in 2013 but promises that it would be much different and presumably fairer than the old one. We recall Middle South’s insistence 30 years ago that the agreement was fair and mutually beneficial to people in the four states. How did that turn out?

It sounds like the Arkansas commissioners are going to examine the propositions with a hard eye, as they should. They only have to imagine what Arkansas and the 687,000 customers of Entergy could have done with $4.5 billion — $5 billion before this year is out.