Gustav, Ike remnants cost power companies millions
Posted on Thursday, October 2, 2008
Remnants of Hurricanes Gustav and Ike caused up to $ 41. 7 million in estimated damages for Arkansas’ main electricity providers — including $ 24 million to $ 35 million for Entergy Arkansas Inc.
For Entergy, which bore the brunt of both storms, its numbers fell far short of the $ 195 million in restoration costs the state’s largest power provider faced after two ice storms 12 days apart in December 2000.
Entergy Arkansas’ total estimates of $ 74 million to $ 85 million so far this year — including $ 50 million from earlier storms through August — have increased in importance as state utility regulators prepare to study new ways to recover such costs from customers.
But it’s too early to determine whether Entergy will pursue the matter through those proceedings, or make a separate rate filing with the Arkansas Public Service Commission, Entergy officials said Tuesday.
“It is encouraging that regulators are looking at this as something that can be applied to future rate-making decisions,” said Steve Strickland, Entergy Arkansas’ vice president of regulatory affairs. “But the [forthcoming ] proceedings may not be on a timetable that allows a prompt recovery of those costs.” For more than a year, Entergy has been vocal about the need for adequate storm-cost relief.
In June 2007, the commission rejected its request for $ 46. 6 million in storm costs since 2002. In turn, it allowed only $ 14. 5 million a year as part of a rate ruling now under appeal. For now, any additional recoveries must be sought separately before the commission.
The $ 14. 5 million represented an average of annual storm costs that Entergy faced during the past five years, commission officials said. But Entergy officials said that approach is inadequate for major storms and warned that it could limit resources that determine how fast service is restored.
Earlier this year, Entergy Arkansas — along with Southwestern Electric Power Co., Oklahoma Gas & Electric Co. and The Empire District Electric Co. — asked the commission to consider “rainy day” funds for storm damage costs.
Such funds would increase residential rates slightly over 20 to 24 months while being created, Entergy has said. Yet members of the Arkansas Electric Energy Consumers Inc., which represents large commercial and industrial users, oppose the idea, arguing it would “substantially” raise their rates.
Attorney General Dustin Mc-Daniel said in June that he would monitor the proposal to see that no utility tries to use it to gain extra profit.
Throughout its four-state service territory, parent company Entergy Corp. sustained an estimated $ 1 billion to $ 1. 3 billion in damage from Gustav and Ike, company officials revealed Tuesday.
Hardest hit was Entergy Texas, with damage estimates of $ 435 million to $ 510 million from Ike. That was followed by Entergy Gulf States Louisiana, with $ 275 million to $ 325 million in damage from Gustav and Ike. Entergy Louisiana also saw $ 240 million to $ 285 million in damage from both storms, Entergy officials said.
SWEPCO sustained far less damage — just $ 2 million from Ike in Arkansas and an estimated $ 15 million from both storms in its Arkansas-Texas-Louisiana service area, spokesman Peter Main said.
When Hurricanes Katrina and Rita caused more than $ 1 billion in damage to Entergy’s out-of-state service areas in 2005, but few of those costs will be passed to Arkansas ratepayers, Strickland said.
Repair costs that affect facilities, transmission, distribution and related functions are borne by ratepayers in those jurisdictions, while shared services such as accounting, administration, legal and human resources are shared among all subsidiaries, he said.
That put Arkansas ratepayers on the hook for about $ 10 million when Katrina forced Entergy to temporarily move its headquarters from New Orleans to Clinton, Miss.
Because neither Gustav nor Ike required such action, such costs “are probably zero,” Strickland said.
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