The bills 'are going to hurt': Why Louisiana utility costs will keep climbing after deep freeze
- Feb 19, 2021 8:22 am GMTFeb 19, 2021 3:01 pm GMT
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Feb. 19—For those who thought their January and February utility bills were high, wait until March and April.
"The bills we are going to see are going to hurt, basically kick them when they are already down," said Logan Atkinson Burke, executive director for the Alliance for Affordable Energy, a consumer advocacy group based in New Orleans.
And next month's bills won't include some of the higher prices paid for fuel to run the generators that make electricity, which will come in a few months, or the cost of restoring power downed by icy lines, which likely will come next year.
Public Service Commission Chairman Craig Greene, of Baton Rouge, says he's focused on restoring power, which for some has been off for four days, and will visit other issues in the future.
But Entergy Louisiana President Phillip May said the bills will definitely be higher because of a dramatic increase in energy consumption. "Depending on when their bill cycle is, that additional usage will show up on their next bill," May said.
Unlike monthly cable invoices and newspaper subscriptions, which are a flat price, electricity and gas bills charge for how much power a customer uses during a given time period. Billing cycles differ, but most bills for February consumption will begin arriving in a little more than a week and reflect how much power a customer used during February.
And a lot of power was used.
The regional transmission operators, who move excess electricity to places that need more, report that Monday and Tuesday consumption hit record levels, said Brandon Frey, who as PSC secretary heads the staff that supports the five elected utility regulators. "Based on the information we are hearing, both (regional transmission operators) hit all-time peaks," Frey said.
In demonstrating an app Entergy has available to all customers to show how much power they are using in real time, May checked his own Baton Rouge home and found that his own usage was up 50%.
"Clearly, my increase has gone up a fair bit in just the last day," May said.
That's even after following his company's pleas to keep the temperature in homes down around 68 degrees. Every degree above 68 adds 3% more to bills, May said.
"Right now, my priority is getting people's power on," said PSC Chairman Greene when asked about the bills. "The aftermath of this unprecedented winter storm will require investigations asking different questions than past storms. If this storm has shown anything, people want accurate answers, not just words, so we will investigate and look at everything in order to get those accurate answers, rather than speak too soon and not provide clarity to customers."
PSC staff already have launched a probe into what happened during this historic polar vortex and what can be done to better keep power on during future winter events. Officials from the privately owned and cooperative utility companies, as well as from the regional transmission operators, have been called to testify before the PSC on Wednesday.
The way utility bills work, generally, is that the PSC sets a rate that covers the costs of making, transmitting, and delivering power plus a profit. That sum is divided by the number of customers to set a rate. The rate then is multiplied by the amount of power a particular customer consumed in a given month.
That rate, called an Energy Charge, is 0.04092 cents per kilowatt hour for most Entergy Louisiana residential customers. If a residential customer used 1,000 kilowatt hours of electricity the previous month, that calculates out to $40.92 on this month's bill. Added to the energy charge are surcharges, such as repaying Entergy for restoring power after a hurricane, and the cost for buying the natural gas, nuclear rods and other fuels that run the electricity-making generators. For the hypothetical customer who uses 1,000 kWh, their total amount owed would be $98.83.
In a few months, the approximately 2.1 million utility customers around the state will be seeing fuel charge increases. For Entergy, which services about a million of those customers, the purchase of natural gas is done by contract, well in advance of the date of delivery. Because demand was unexpectedly high over the past week, May said, Entergy Louisiana, and other utilities, had to buy some natural gas on the daily market at a much higher price to operate the generators in order to produce more power.
About 51% of the electricity Entergy sells is made in generators fueled by natural gas.
"We did have issues with natural gas. The freezing weather did create wellhead supply issues," May said, as did pipeline constraints.
"We've worked through most of that," May said, "in getting enough natural gas to meet our needs, but I think we look pretty good for the next couple days."
Utility companies also can collect from their customers the cost of restoring power after a storm. May said this week's event won't be as expensive as after hurricanes.
Hurricanes take out transmission lines that move large amounts of electricity to substations, which sometimes flood in storms, and also knock down the poles that distribute power to homes and businesses.
Restoration after hurricanes Katrina and Rita cost about $732 million, which translated to $2.49 to $3.92 per month for residential customers using 1,000 kilowatt hours over a period of years, according to the PSC.
This week's polar vortex caused some freezing up of equipment but mostly it was about restringing the distribution lines and replacing transformers.
Regardless, the utilities are still a few months away from tallying the costs, which they then submit to the PSC. The commissioners then decide what charges are prudent and sets the amount that the utility companies can collect.
That process will take at least a year, said PSC Secretary Frey.
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