State regulators gave final approval Wednesday for Entergy, the state’s largest corporation, to merge two of its Louisiana utilities, thereby creating one of the nation’s largest retail electricity companies and easing its ability to raise money for building new plants.
The 1.1 million customers — a little more than half of the entire state — won’t see much of a difference after the transaction closes on Oct. 1. A typical residential customer, one who buys 1,350 kilowatt hours of electricity per month, will see his monthly electric bills drop by almost a dollar starting in December.
But the real benefit, said Phillip May, president of the two Entergy subsidiaries, is that the new, $16.5 billion company created by combining Entergy Gulf States Louisiana and Entergy Louisiana can better attract funds for building new plants that make electricity, and for strengthening the systems that move the power from the plant to the consumer.
“When you put these two companies together, it has such a large balance sheet that funding … is so much easier to do, as opposed to” seeking the dollars individually through the two smaller companies, May told The Advocate in an interview shortly after the five elected members of the Public Service Commission voted 4-1 to give final approval of the merger.
“There’s some pretty significant investments need to be made,” May said, adding that a stronger company means decreases in interest rates. Lower interest rates translate into a savings for customers, since it’s the buyers of electricity who pay the expenses for Entergy, a regulated utility operating as a monopoly in its service areas.
“As the new company makes the needed investments in the months and years ahead, the costs will be shared across a larger base of customers,” May said.
The utility companies are in the midst of a $5 billion building program through 2019, and more projects are being considered. Some of Entergy’s projects are necessary to beef up infrastructure, some are to meet environmental regulatory requirements, and others are to take advantage of the opportunities available for industrial expansion in Louisiana sparked by low energy prices.
Entergy recently completed a new $655 million power plant near Westwego and is preparing to build a similar, though larger, facility in St. Charles Parish. It should open in 2019 or 2020.
The groundwork for another generating facility in the Lake Charles area is in the works, with plans to open in 2020 to 2021.
Additionally, Entergy is strengthening and upgrading its transmission and distribution lines as well as the substations whose damage during storms causes outages, and to handle the increased power loads as new industrial plants open.
Entergy Gulf States serves 399,000 electricity customers (and 94,000 gas customers) from the eastern suburbs of Baton Rouge west along Interstate 10 to the Sabine River. Entergy Louisiana sells electricity to about 686,000 customers from the mouth the Mississippi River through the suburbs of New Orleans north to the Arkansas border.
The companies operated separately when established in 1920s. Entergy’s predecessor, which owned the old Louisiana Power & Light, bought Gulf States in 1992.
The combined company, to be called Entergy Louisiana, will cover 58 parishes.
Confusion about the different Entergy companies is substantial, said Casey DeMoss, who as chief executive officer of the Alliance for Affordable Energy, a New Orleans-based watchdog group, fields calls from consumers with complaints about their monthly electricity bills. But beyond removing the problem of trying to first figure out which Entergy subsidiary services the customer, she said, merging the two companies will result in a significant savings for ratepayers over the long run.
The price for Entergy Louisiana LLC common stock jumped 39 cents to $25.05 shortly after the PSC vote and closed the day at $25.14 per share, according to the New York Stock Exchange. The price for Entergy Corp., the parent company headquartered in New Orleans, rose 69 cents to close at $64.29 per share.
Public Service Commissioner Foster Campbell, of Bossier Parish, cast the lone no vote.
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