Louisiana PSC To Consider Allowing Industrial Customers To Take Competitive Supply, As Entergy Louisiana Faces $10 Billion In Generation Investment

The Louisiana PSC has directed its Staff to look at all options available -- including allowing industrial customers to purchase electricity supplies on the 'open market' -- to address potential rate increases from new generation investment at Entergy Louisiana

The Louisiana Energy Users Group has said that, to meet its capacity needs absent any alternatives, Entergy Louisiana requires $10-12 billion in needed generation investment to replace aging power plants

The Louisiana Energy Users Group has calculated that such investments could increase base rates by 50%. Entergy Louisiana disputes the Louisiana Energy Users Group's estimate, and stressed any investments would take place over a longer period of time than used in the industrial customers' estimate, blunting any rate impact

After receiving a Staff report on electric rates, the PSC directed Staff to review all options to address rates, including use of renewables, expanded energy efficiency funding, and allowing industrials to generate their own power. Staff will also review the potential impacts from allowing industrials to purchase competitive supply from the wholesale electric market

"There was much discussion as to the uncertainty of where rates may be going and what Louisiana’s energy needs will look like in the next five, 10, 15 years," PSC Commissioner Craig Greene said. "Therefore, I directed PSC staff to research customer-centered options for all customer classes as well as other regulatory environments and recommend a plan for how to ensure customers are the focus here in Louisiana."

Industrials argue that allowing them to purchase supplies from the wholesale market will avoid certain generation investments at Entergy Louisiana to serve such customers, thereby reducing costs. Entergy Louisiana says that its current low rates are due, in part, to industrial customers paying a share of the costs, and that allowing such customers to leave would increase costs for other customers. Entergy Louisiana opposes allowing industrial customers to leave the system for supply.

In the report to the Commission, PSC Staff said, "Based upon the observations from the record of this docket, Staff is of the opinion that the competitiveness of Entergy’s industrial customer rates to other utilities or market based supplier options will vary as between individual industrial customers."

In the proceeding leading to the Staff report, Louisiana Energy Users Group had proposed the following options:

• Allowing industrials to purchase competitive supply, with power delivered to the customer under an Entergy delivery tariff

• New interruptible service tariffs

• Real-time pricing option for industrials

• Allowing industrials to take a new Stand-By Service option under which the customer pays for capacity at a daily demand charge equal to the daily MISO Auction Clearing Price and for energy at the actual, real-time Locational Marginal Price (LMP).

Docket S-34426