More than 1 million Entergy Louisiana customers will see their utility bills drop this month after the debts have been paid from repairing damage done by hurricanes Katrina and Rita, the company announced Wednesday.
Residential customers will see monthly charges fall a few dollars per month, depending on where they live, according to estimates released by Entergy Louisiana.
In southeast and north Louisiana, those customers will get a reduction of about $4.35 per month, based on average usage of 1,000 kilowatt-hours. Residential users from around the Baton Rouge area west to the Texas state line will get a reduction of about $2.57 per month.
Louisiana's utility regulators praised the announcement.
"I'm glad to see this come off," said Public Service Commissioner Foster Campbell, who represents north Louisiana.
After the devastating storms ravaged south Louisiana in 2005, state officials created a quasi-state government agency called the Louisiana Utilities Restoration Corp. for Entergy to borrow $1 billion to pay for utility restoration and to create a storm reserve fund.
The approach came with lower borrowing costs than traditional financing methods. Bonds were sold to get upfront cash, and that bond debt was paid off through surcharges on customers' bills.
The surcharges began in August 2008, and the debt has been repaid over 10 years.
"The last payment has been collected, so the payment will come off customer bills," Mark Kleehammer, vice president of regulatory and public affairs for Entergy Louisiana LLC, told the Public Service Commission.
At the time the borrowing method was developed, the Public Service Commission, lawmakers and others backed the arrangement despite objections from then-Gov. Bobby Jindal's administration, which questioned the state's liabilities in the deal.
On Wednesday, commissioners said the right decision was made.
Commission Chairman Eric Skrmetta said the method used to pay off the hurricane debt saved "hundreds of millions of dollars for the ratepayers" by lessening borrowing costs.
Katrina and Rita wrecked Entergy's distribution system. Between the wind, water and flying debris, the company said the hurricanes damaged more than 21,000 utility poles, 12,000 distribution transformers and miles of wire.
Storm surcharges, however, aren't going away entirely on Entergy customers' bills.
A similar borrowing plan was used in 2010 to cover the utility's costs for repairing the damage of hurricanes Gustav and Ike, and repeated again in 2014 to finance restoration costs associated with Hurricane Isaac.
Entergy said the Gustav and Ike debt will be paid off in mid-2022, while the Isaac debt will disappear in 2026.
As they celebrated the end of one storm debt, Public Service Commission members looked to the ongoing hurricane season with worry. Skrmetta told Entergy officials he doesn't want to need the financing method: "We hope we don't have to get y'all to do this for us again."
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