Entergy: Stormy ’08 proves PSC wrong
Posted on Thursday, May 8, 2008
Entergy Arkansas Inc. strongly objected last year when state utility regulators limited its storm damage recoveries to $ 14. 5 million a year.
Now the state’s largest electricity provider is saying “we told you so” after high winds, snowstorms and deadly tornadoes already have racked up that amount in restoration costs through April.
Entergy admits that it has been an unusual year so far. But it also says the recent weather illustrates the argument it made before the Arkansas Public Service Commission reduced its annual revenue by $ 5. 7 million a year.
The June 2007 ruling, which includes the storm cost decision, is under appeal before the Arkansas Court of Appeals.
“It’s an example of why you can’t assign a certain year X amount of dollars in storm costs,” spokesman Dan Daugherty said. “Restoring power as quickly as possible is something we take very seriously, and we’re going to keep doing it. But there’s only so much you can do with limited resources.” The commission stands by its decision to keep a close eye on Entergy’s storm spending, rather than allow a more open-ended process.
Although Entergy insists the limit amounts to a spending cap, commission Chief of Staff Dave Slaton says it’s a budget number based on “normalized” damage costs over the past five years.
Before its latest rate increase request, Entergy was allowed to recover from ratepayers $ 5. 5 million to $ 6 million a year for storm damage, commission Executive Director John Bethel said.
“In some years, there’s virtually no storm damage at all,” Slaton said. “But if they have extraordinary expenses as they did with the ice storms back in 2000 and 2001, they can come back before the commission and ask for a method to recover those costs.” In its latest rate case, Entergy sought to increase annual revenue by $ 106. 5 million. As part of its ruling, the commission also re- jected the recovery of $ 46. 6 million in storm damage costs since 2002 and the creation of a storm damage reserve fund. It also rejected $ 21 million in stock options and bonuses, mostly bound for top Entergy executives in other states.
To accommodate its storm damage budget, Entergy entered 2008 with a more conservative approach, including how it prepositions repair crews for largescale power restoration, Daugherty said.
Yet out of five significant weather events — a Jan. 29 wind storm, heavy snows on March 6 and tornado outbreaks on Feb. 5, April 3 and May 2 — only the April tornadoes called for that type of response, he said.
Instead, a succession of moderate, localized storms have pounded Entergy and other electric providers. For Entergy, no fewer than 30, 000 failures came with any event, with total restoration usually occurring within three days.
The peak came Jan. 29 when sustained winds of 30 to 40 miles an hour — with gusts over 60 mph — knocked out power to about 77, 500 customers throughout central Arkansas.
For three of the storms, Entergy deployed 350 to 460 additional linemen for each — some from sister utilities and contractors out of state — to restore service.
“We had to rebuild part of a large transmission line in the Mountain View area,” Daugherty said. “We had to create our own access road to it. Some of the work had to be done by helicopter.” Member utilities of the Arkansas Electric Cooperative Corp. have sustained at least $ 3 million in storm damage so far, spokesman Rob Roedel said.
Hardest hit was Clinton-based Petit Jean Electric Cooperative. It serves part of the area where an EF 4 tornado — with winds of 166 to 200 mph — carved a 123-mile path Feb. 5 from Yell County to Sharp County. It also serves Damascus, Southside and Bee Branch, where a twister hit Friday.
Although their customers bear all storm damage costs, co-ops — unlike publicly held Entergy — are not-for-profit, ratepayerowned organizations. The co-ops serve about 480, 000 customers statewide.
“They [Petit Jean ] sustained $ 2 million in damage from the first tornado alone,” Roedel said. “Some cooperatives are still assessing damage. They’re making sure everything’s the way it was before the storms hit.” Shreveport-based Southwestern Electric Power Co. has yet to estimate storm costs in western Arkansas, where it serves 112, 000 customers, spokesman Peter Main said.
Peak failures came from the January winds that left 15, 000 without power for less than a day in southwest Arkansas, he said. About 11, 300 were similarly affected Friday in Fayetteville and Rogers, with one fatality reported after straight-line winds blew a tree onto a mobile home.
With Entergy at the limit storm-damage funds that it is ensured of recovering from its ratepayers, it is now taking a second look at how power can be quickly — and more cheaply — restored without longer downtime for its 684, 000 Arkansas customers, Daugherty said.
For a company honored 10 consecutive years by the Edison Electric Institute for its emergency assistance and recovery efforts — the only U. S. utility with that distinction — the stakes involve prestige as well as money.
“We have a team working on it,” Daugherty said. “It is definitely a concern.”
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