Wednesday, March 14, 2018

Jim Hood: Entergy misleads

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?

Jim Hood is the Attorney General of Mississippi. 

19 comments:

Anonymous said...

Did Conway pay for this political ad?

Anonymous said...

So, you are saying Entergy charges Miss rate payers based on the higher cost of coal generation and selling the lower cost gas generated power to other utilities. If so, and I certainly don’t understand all that you have outlined, the PSC has not been very observant. There are no Entergy coal powered facilities in Miss. I think there are only 4 in the entire Entergy system, the remainder are gas or nuclear. Hope you are correct and my rates go down. When I worked for MP&L in the last century there was no doubt they had the PSC in their pocket.

Anonymous said...

In an attempt to further delay its date of reckoning, Entergy unleashed a fleet of lobbyists into our Capitol.

Jimbo, is that any different than the flotilla of privateers you (and Mikey) have commissioned for decades to pillage, shakedown and loot?

Our investigators witnessed these lobbyists take legislators to multiple lunches and dinners.

AND now employees under your supervision are stalking, er, following specific legislators to eating establishments? Is that correct? Are these legislators under criminal investigation? Where do you get off having your staff follow duly elected state representatives?

Anonymous said...

The entire lobbying biz is simply a form of bribery. What a bargain for the Entergys and MPs of the world - $billons for some overpriced food. Legislature members sell themselves very cheaply.

Anonymous said...

Thank you, General Hood. The Republicans certainly are not watching the hen house, ever, as usual.

Anonymous said...

138.. the cases brought by the AG's office have been won in these civil courts. Yes there has been some work farmed out. Why? Because the MS legislature holds it against the whole AG's office that the current AG is a Dem. And hasnt aligned thier pay with other state positions.

Secondly, if the legislators are accepting bribes isn't that criminal and isnt that exact what the AG's office is supposed to do?

Anonymous said...

A “coercive monopoly” is a business concern that can set its prices and production policies independent of the market, with immunity from competition, from the law of supply and demand. An economy dominated by such monopolies would be rigid and stagnant.

The necessary precondition of a coercive monopoly is closed entry—the barring of all competing producers from a given field. This can be accomplished only by an act of government intervention, in the form of special regulations, subsidies, or franchises. Without government assistance, it is impossible for a would-be monopolist to set and maintain his prices and production policies independent of the rest of the economy. For if he attempted to set his prices and production at a level that would yield profits to new entrants significantly above those available in other fields, competitors would be sure to invade his industry.

-- Ayn Rand

Anonymous said...

Hilarious Jimmy thinks he has a shot at being governor employing tactics like this.

Anonymous said...

Electric Utilities must be watched very closely just ask the ratepayers of SCE&G in South Carolina. They spent years collecting $27.00 a month from customers to pay for a new Nuclear Power Plant only to shut it down at about 1/4 complete. They still want ratepayers to continue to pay the $27. for the next 50 years to cover their loss.

Then all hell breaks loose from citizens and it fell on the state government. You know house, senate, psc etc. But, wait, the house and senate after a free meal with SCE&G power brokers wrote a law that allowed them to collect the money up front and after it failed.

Facing a new law that would require them to pay back some or all of the money they scream bankruptcy. Now when that fails to lift the pressure they offer to credit bills say for $5.00 a month. That really pissed off the citizens, hell hath no fury....

Now the Gov steps in and say make it right or else! So what did they do? They offer themselves up for sale to Dominion Energy in Virginia. Who will give all ratepayers $1,ooo.oo and only charge the $27. for just then next 20 years!

Out comes the pitch forks and torches now every one concern is hiding out, making crazy statements and looking for someone to save their sorry law writing asses.

Anonymous said...

"Thank you, General Hood. The Republicans certainly are not watching the hen house, ever, as usual. "

He says they cheated the ratepayers from 1998 - 2008. Which party had the governor's mansion and both houses of the legislature then?

Anonymous said...

Gee, am I the only person who remembers that Grand Gulf, as soon as the cost of building it had been recouped, was suppose to give Mississippi nearly free energy. We were to be " first served".

Oh yeah, I forgot, Mississippi Power and Light and the most corrupt of our PCSs decided not to make Entergy honor that commitment.

Since our population hasn't really grown since them, all of us should have free service and the excess be sold out of State. There's no way one nuclear power plant can't serve not quite 3 million people.

Anonymous said...

You lost me at "It does not approve the actual, after-the-fact, purchases of electricity on an individual basis."

Anonymous said...

No one can defend the power company monopolies any longer. I know their employees are highly thought of in their local communities but the facts are they work for corrupt enterprises and should be treated as such. it is a sorry but very real state of affairs.

Ready Killer Wonk said...

8:21 - Please let us have your thoughts on how it would work to have six electric utility providers in, say one ten county area, each stringing high-lines, hanging transformers, building generating plants and dotting rural transmission sub-stations all across the landscape. Also tell us how it might work to have that number of gas companies serving each county.

If you want to prove companies are 'corrupt', that's one thing. Go for it. It's frankly baffling how you might accept the challenge offered in the first paragraph above.

Anonymous said...

5:09am Utilities are regulated by every government for a reason. They are key to national security and defense.
Utilities were once structured so that investing share holders could be assured of a modest but reasonable profit. And, regulation was left primarily to the states.
Medical insurance was much the same, hence BC/BS started as non-profit. Healthy citizens are productive citizens.
Now, with changes in the law so that politicians so there are no rational campaign contribution regulations and Entergy is considered a citizen, no utility has to act in either the interest of the individual States or the Nation.
We took essential government systems that worked fairly well ( including Congress) and turned them into businesses.
And, if that weren't bad enough, businesses that are on the stock exchange are no longer held responsible for an inaccurate prospectus. The PSC has to pretty much accept whatever figures they are given as the PSC doesn't have enough authority to verify.
Too many of you believed the myth created by Ayn Rand that selfishness is good and not a human weakness to be managed. You missed that architects who built better and even unusual buildings like Frank Lloyd Wright, did quite well as did those who built better products. This is the century the snake oil salesman and the wagon wheel maker are protected. And, that is inconsistent with the principal of supply and demand that is key to capitalism.

Anonymous said...

Hey Ready,

Its simple. We already have all the power infrastructure we need, paid for by ratepayers. Just use the wires, poles,etc. that we have and pay the utility for their use. Then the ratepayers can pick their electric provider instead of the government dictating that they use a monopoly. That is free market capitalism instead of socialism.

Anonymous said...

Lots wrong in Hood’s column…
Entergy was on record trying to join an RTO years before.
The Louisiana case never found wrongdoing by Entergy.
The DOJ never filed charges against Entergy and there was no settlement.

Anonymous said...

8:09; your dissertation on monopolies earns you a C- since that was not the question.

9:19; surely you are not of the opinion that 'we have' infrastructure, wires, poles, etc. That infrastructure is not owned by 'we' but is property of either an electric conglomerate or a telephone enterprise or both. South Central Bell many years ago charged MP&L to string their lines on SCB's poles. You're nuts if you think everybody can come in and pump power through the 'lines and wires' and we can pick the service we prefer.

Your suggestion makes about as much sense as "Let everybody drive the cabs WE HAVE at the airport and we can just choose whichever driver charges us the least".

Anonymous said...

Bottom line is Entergy has very cheap rates compared to the rest of the country. It's the consumers of Mississippi Power Company that are getting screwed thanks to the Kemper boondoggle.

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Meet KIM Waaaaaade at the Entergy Tent. For five pesos, Kim will sell you a chance to win a deed to a crack house on Ridgeway Street stuffed in the Howard Industries pinata. Don't worry if the pinata is beaten to shreds, as Mr. Wade has Jose, Emmanuel, and Carlos, all illegal immigrants, available as replacements for the it. Upon leaving the Entergy tent, fig leaves will be available in case Entergy literally takes everything you have as part of its Trollfest ticket price adjustment charge.

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In the spirit of helping those who are less fortunate, Trollfest '09 adopts a cause for which a portion of the proceeds and donations will be donated: Keeping Frank Melton in his home. The “Keep Frank Melton From Being Homeless” booth will sell chances for five dollars to pin the tail on the jackass. John Reeves has graciously volunteered to be the jackass for this honorable excursion into saving Frank's ass. What's an ass between two friends after all? If Mr. Reeves is unable to um, perform, Speaker Billy McCoy has also volunteered as when the word “jackass” was mentioned he immediately ran as fast as he could to sign up.


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If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

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