How much will my light bill go up? PSC approves rate hikes for Entergy, Mississippi Power
JACKSON, Miss. (WLBT) - Last February’s winter storms likely are a reason why customers will be paying more for electricity this year.
The Public Service Commission recently approved Entergy Mississippi’s request for a rate increase, largely to recoup costs associated with rising natural gas prices.
The increase means that the average customer will see his or her bill go up by about $7.81 per month, said PSC Central District Commissioner Brent Bailey.
The commission approved the increase at its January meeting.
The increase will impact approximately 456,000 customers in 45 of the state’s 82 counties.
PSC also approved a rate hike for Mississippi Power Company, also due to the natural gas price spike.
On average, customers served by that utility will see a roughly $5.27 increase on their monthly bills, Bailey said.
The rate hikes will be retroactive back to January 1 and will first be charged on customers’ February statements.
“While there were about six rate factors we considered, certainly the one that will have the biggest impact... is the fuel adjustment factor,” he said. “Due to the rate recovery needed for the volatility we saw in the natural gas prices in 2021.”
“Every year, the utilities, electric utilities, project what their fuel costs will be over the next 12 months, and we adjust rates for that. We also factor in the amount of ‘over or under’ recovery from the previous year,” he said.
Bailey said natural gas prices went up last year due to several factors, including the February winter storms, the same storms that crippled Jackson’s ability to produce water.
“It lasted about a week. It affected natural gas production in much of the Southeast. And it certainly drove up consumer demand for natural gas,” he said. “Then, we saw Hurricane Ida and what it did to natural gas production in the Gulf of Mexico.”
Entergy spokeswoman Mara Hartmann said Entergy does not profit off of natural gas costs. “That’s a pass-through cost for customers. We don’t profit from it at all,” she said. “The increase is not going to Entergy. It is going to pay for the fuel we used last year to generate electricity for customers.”
The utility has to tell the commission every November what it expects its natural gas costs to be for the coming year. “The commission approves it or doesn’t, and the following November, we give them the bill,” she said.
“If we over-estimate, say we said it would cost us $100 million and our costs were $80 million, we would funnel $20 million back to the customers in the form of bill credits until they have gotten all of it back,” she explained. “If we estimated $100 million and our costs were $120 million, we would collect that extra $20 million over the following year.”
Bailey says the commission is taking steps to ensure that another volatile year for natural gas will not give customers a sudden jolt next year.
“Something we’re going to do over the next 12 months is, continue to evaluate where prices are, and the recovery rate of which utilities are incurring or recovering those costs,” he said. “And if we need to make some adjustments, up or down, we think in the long term that will be in the best benefit of the ratepayers, so they’re not hit with a more sizable increase at some other point at this time next year.”
Hartmann says Entergy is also taking steps to rely less heavily on natural gas.
Entergy purchases natural gas because we use it to generate electricity at a lot of our plants. We have mostly natural gas plants, (and a) nuclear plant,” she said.
The utility is about to bring a solar plant online in the Delta and has plans to build two more renewable energy plants in the next five years.
In the meantime, she said customers can also take steps to lower their energy bills this winter, including replacing their air filters, weatherizing their doors and windows, closing gaps around exterior plumbing and wiring, sealing air ducts, and setting the thermostat at 68 degrees. Every degree above that can increase a bill by three percent, she said.
“We are diversifying, so we don’t keep all of our eggs in one basket,” she said. “So, when things like this happen, we minimize the impact for customers.”
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