Feb 6, 2014 5:36 PM by Dave Fields
Both CLECO and Entergy customers puzzled why their bills still include additional charges for hurricanes as old as 2005, will continue to pay those costs for years to come.
The Katrina and Rita restoration costs added to customers' utility bills will continue through 2019 for CLECO customers and until 2022 for Entergy customers. Entergy customers also will continue to see additions to their bills for Hurricanes Ike and Gustav until July 2018.
Liz Duhon, an Entergy spokesperson, said that the charges, called storm riders, are a direct result of Act 55 in 2007 known as the Restoration Law. These storm riders, Duhon said, allow Entergy to address $1.6 billion in statewide damages for Hurricanes Katrina, Rita, Ike, and Gustav. The legislation allowed certain utilities to recover damages over an extended period of time.
CLECO Spokesperson Robbyn Cooper held a similar perspective, suggesting that "the longer period of recovery, the less impact it will be on the customers who pay for the restoration."
"CLECO was authorized the issuance of securitized bonds to finance the restoration," Cooper explained. Cooper noted that these bonds, issued in Sept. 2007, came at a cost of lower interest to customers within its service territory.
"Between Katrina and Rita, the majority of our service territory had some impact resulting from these two storms," Cooper said. She detailed the charges assessed to its customers via email.
"The charge will remain on a customer's bill until the end of 2019," Cooper said.
"CLECO has a line item on customer bills that allows the company to recover the $159 million in storm costs associated with restoration after Hurricanes Katrina and Rita," Cooper said. "The charge is $2 plus $0.00150 per kWh. In addition, the charge helps build a $50 million storm reserve to help fund the repairs of other storms."
Questions arose from some Acadiana-area utility customers who expressed confusion about extra charges on their bills. Duhon acknowledged that sometimes customers inquire about the riders.
"It was good for the customers," Duhon said, "because it afforded them a way to pay for damages in a way that would not be a burden and would allow them to pay in increments."
Beginning July 30, 2008, Entergy attached one storm rider--2.5 percent of the customer's monthly bill--for the two 2005 storms of Katrina and Rita. Likewise, the storms of Ike and Gustav were combined into a second storm rider---1 percent of the customer's monthly bill--that began in 2012. Each of these riders is scheduled to last for a decade.
Duhon said that Entergy, as a result of these four storms, had depleted its storm reserve fund and that the two storm riders also allowed for that fund to be replenished "without having to go on the open market to borrow the money." Duhon said that this solution will save its customers a total of $10 million.
Similarly, Cooper said CLECO's rider had a dual purpose of paying for the restoration as well as the establishment of a storm reserve fund that CLECO did not have prior to the 2005 storms.
Southwest Lousiana Electric Membership Corporation (SLEMCO) Spokesperson Mary Laurent said that SLEMCO also used storm riders to pay for the restoration of three substations in Vermilion Parish, but these costs ended for its customers in March 2013.
"We had to go in and raise these substations, including the transformers," Laurent said. "All the structures inside the substations had to be raised to Hurricane Rita storm surge levels plus five feet."
Laurent added that these SLEMCO substations were raised at a pace of one per year until completion of the project in 2013.