Entergy customers in two large sections of the state saw an increase in their electricity bills for June and will again in September for different reasons — namely a new power plant and the fading effects of federal tax reform that had benefited customers.
Together, the increases will lift residential customers' bills by between $5.68 per month and $7.10, depending on where they live. Two separate Entergy subsidiaries are involved.
The first increase is to put a dent in the payment for an $869 million St. Charles power plant that went online last month. The May rate hike, which was reflected in June's electricity bill, is expected to generate $109.5 million in one year.
In relation to the plant's construction, residential customers of Entergy Louisiana, which covers New Orleans-area parishes such as Jefferson, St. Tammany, St. Charles, St. John the Baptist, St. Bernard and Plaquemines, are paying an extra $3.48 per month per month for 1,000 kilowatt hours per month. That increases a typical bill from $99.55 to $103.03 per month.
Residential customers of Entergy Gulf States Louisiana, which covers much of Baton Rouge through Acadiana to Texas, are paying an extra $3.31, which upped bills to about $95.77 for 1,000 kilowatt hours per month.
A typical residential customer in Louisiana buys about 1,300 kWh of electricity each month.
Smaller business customers would pay between an extra $6.92 and no more than $47.69 per month, whereas larger business customers may see a monthly increase between $513.23 and $1,079.99 as of June.
About 1 million ratepayers in all are splitting the bill for the new power plant.
Entergy Louisiana asserts that actual electricity bills may go down depending on the price of fuel, which fluctuates each month. But ideally, the more efficient power plant would cost less to generate the same amount of power. Entergy projected that the more efficient plant would save customers $1.3 billion over a 30-year period.
By September, customers of the two Entergy subsidiaries will see another rate hike, which is tied to federal tax reform. Rates will go up between $2.02 and $3.79 as tax reform credits wind down, depending on where customers live, but the state can require a refund at a later date.
Federal tax reform produced credits in 2018 that were shared with customers, amounting to $140 million, but this year dropped to $115 million and will be reduced to $55 million next year. As they fade, customer bills that had been reduced will increase.
"These slight increases are primarily driven by changes to the credits provided to customers for tax reform," Entergy said in a statement. "From May through December 2018, we accelerated the benefits of tax reform to our customers resulting in the lower bills. The rate change that will take effect in September reflects about $55 million in credits that customers will receive over the 2020 calendar year."
Starting in September, Entergy Gulf States Louisiana residential customers will pay $3.79 more per month for 1,000 kilowatt hours whereas Entergy Louisiana customers will pay $2.02 more each month. That comes out to $45.48 and $24.24 per year, respectively.
Business rate increases range from at least an extra $23.48 up to $626.54 each month, for those who draw 5,000 kilowatt hours compared to those who use up to 255,500 kilowatt hours respectively.
The extra revenue collected would generate $118.6 million for Entergy Louisiana in the first year.
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Entergy has plans for more new natural gas power plants, which will mean more rate hikes in the coming years.
Entergy plans to open a Lake Charles Power Station, which is 924 megawatts, by 2020 and the Washington Parish Energy Center, which is a 363-megawatt plant expected to be turned on during peak demand periods in 2021. The plants have been approved by the state Public Service Commission.
Both an industrial consortium and consumer watchdog group opposed the approval of Entergy's plant expansions before the state agency decision.
"I think customers are going to start to get sticker shock," said Logan Atkinson-Burke, executive director of the Alliance for Affordable Energy. "Residents in particular are going to start getting pretty frustrated seeing their bills go up."
Likewise, Louisiana Energy Users Group, which is made up of industrial companies active in Louisiana from Exxon to Valero, suggested they would rather remove themselves from the grid entirely to prevent demand from increasing and avoid rate hikes for residential customers as well.
"If an industrial customer is willing to take on the risk of meeting its electricity supply on its own, the cost of replacement generation could be avoided for the benefit of all ratepayers," Randy Young, an attorney who represents Louisiana Energy Users Group, had said in a February presentation to the Gulf Coast Power Association. "The time to investigate these options is now and not wait until there is a proposal on the table to construct another new generation unit that will have to be paid for through rate increases for all ratepayers."
Still, Louisiana Public Service Commission representatives voted in favor of Entergy's power plant expansions in an effort to ensure power grid reliability as older natural gas plants are retired.
"We actively engaged with the industrial customers and consumer advocacy groups but we represent all the public and need to make sure there are adequate (electricity) resources," said Eric Skrmetta, who represents District 1 on the commission.
For Louisiana, that means having enough power to meet demand without buying more power on the open market, which can fluctuate in price, he said.
Here's how Entergy's residential rates stack up to other electricity companies in Louisiana. The most expensive electricity bills in the state are SWEPCO-Schedule RS customers who paid $115.35 last month and the least expensive bills are those in Northeast Louisiana who paid $84.34 in June.
This story has been updated to accurately reflect the month of the first rate hike and SWEPCO's average bill for June.