Wednesday, March 14, 2018
The following is an op-ed written by Mississippi Attorney General Jim Hood:
In an op-ed filed by the CEO of Entergy Mississippi, he claims that the state's Public Service Commission has already approved the charges for electricity purchased by Entergy. That is very misleading.
Entergy Mississippi has a monopoly. Everybody knows monopolies must be watched closely and regulated. The fundamental compact a state makes with a utility monopoly is that they provide the ratepayers with the lowest reasonable cost of electricity available.
The Public Service Commission approves rates submitted by power companies which are to be charged prospectively on projected revenues and expenses. It does not approve the actual, after-the-fact, purchases of electricity on an individual basis. The PSC reviews information provided by utility companies, which is expected to be truthful and accurate. However, it does not look behind the information they are provided to determine whether Mississippi customers are truthfully getting the lowest reasonable cost for power.
The approval of electricity rates prospectively is completely different from the actual purchase of electricity. This is where the sleight of hand comes in. We found that Entergy, the New Orleans based for-profit parent company, was buying cheap electricity from more modern and efficient gas-powered electric generators in the market and selling it on the open market for a profit, while Entergy dumped expensive electricity on unsuspecting Entergy Mississippi ratepayers from their old, antiquated, coal-fired, electrical generating plants. In other words, Entergy Mississippi ratepayers were the buyers of last resort for its expensive generation while Entergy, the parent company, made hundreds of millions in profits from Entergy Mississippi ratepayers while at the same time selling less expensive power to third parties. This is a violation of the underlying compact that a regulated monopoly has with the state.
Since the monopoly compact is with the state, not the PSC, the Mississippi Constitution gives the attorney general the sole authority to represent the state of Mississippi. As attorney general, I also represent the Legislature and the PSC. However, when companies dupe the Legislature or a state agency and cheat the state, i.e. the citizens, I represent the interests of the citizens by asking a court to return their money and punish the conduct. The PSC regulates utility rates. The attorney general prosecutes corporate wrongdoers who take advantage of Mississippi's consumers.
Entergy tricked our PSC into approving rates for 10 years, from 1998 to 2008, based on misleading and incorrect information. Historically, the PSC has not reviewed every electrical purchase. The PSC does not "approve" fuel adjustment clause charges. They only check the invoices provided by the utilities to see whether the invoices match the charges in the fuel adjustment clause and allow the utilities to flow them through to customers dollar-for-dollar. These significant charges have rarely, if ever, been scrutinized and found "prudent and reasonable" by the PSC, therefore, they remain subject to review, reduction, and refund.
A few years before I filed the suit against Entergy in 2008, Entergy settled a suit in Louisiana for the same scheme paying millions. The evidence shows that these overcharges, plus interest and penalties, is over $1 billion owed the state of Mississippi and the customers. The evidence also showed that Entergy was using its transmission system to choke off the transmission of the cheaper power from the more efficient electricity generators to reach its Entergy Mississippi customers. After I personally delivered the evidence to the Antitrust Division of the Department of Justice, it forced Entergy to join a Regional Transmission Organization, which allowed an independent entity to control its high-voltage transmission system to end Entergy's anticompetitive practices that have kept cheaper power from the market and to control the output of Entergy's generating units. This has drastically lowered power costs. Isn't it ironic that Entergy is now taking credit for these lower rates? The Department of Justice example shows that it takes more than a mere state agency to effectively police monopolies.
After Entergy has drug out the litigation for nine years, we are set for trial in federal district court on November 5, 2018. When the Entergy Mississippi op-ed writer claims that the poor Mississippi ratepayers may have to pay Entergy's legal costs for the litigation, Entergy is once again being misleading. If I am able to move forward with this litigation and prove that they violated the law, the money will come from the pockets of the $10 billion per year, for-profit parent company based in New Orleans with CEOs making millions.
In an attempt to further delay its date of reckoning, Entergy unleashed a fleet of lobbyists into our Capitol. They got a senator to slip in an amendment into the PSC reauthorization Senate Bill 2295, which they claim is just a "clarification" of present law. That is misleading. The amendment is an unconstitutional violation of the authority of the courts and the attorney general to recover restitution and penalties and obtain injunctive relief, which is beyond the power of the PSC. Our investigators witnessed these lobbyists take legislators to multiple lunches and dinners. We will be looking for campaign contributions when the reports are filed next January. The skids were greased on this bill, just like when the Legislature passed the Kemper power plant fiasco. We the people are sick of watching huge corporations use their corporate funded elected officials to pass laws to cheat us. Although many honest legislators smelled a skunk and voted against the bill, it passed both the House and Senate and is headed to the governor's desk for his signature.
Now, those are the facts, not alternative facts. In the past 14 years, the Office of Attorney General has won over 100 cases against huge corporations, recovering over $3 billion. We have not lost a single one against these corporate wrongdoers. Are you going to believe me and the career lawyers in the Office of your Attorney General or a corporate giant with a monopoly?