Entergy Corp.’s Louisiana Utilities Combine Under One Banner

Nearly two years after Entergy Arkansas Inc. broke free from its system agreement with parent company Entergy Corp., customers of Entergy Louisiana LLC and Entergy Gulf States Louisiana LLC will soon be served by a single utility company created through a transaction approved Wednesday (Aug. 26) by the Louisiana Public Service Commission.

The single utility will operate under the name Entergy Louisiana LLC after the transaction closes, which is expected to occur Oct. 1. The new company will have over $16.5 billion in assets and 66,194 GWh in total sales.

“The change will be seamless for our customers, who will continue receiving reliable service at rates that are among the lowest in the nation,” said Phillip May, president and CEO of Entergy Louisiana and Entergy Gulf States Louisiana.

“Combining the utilities improves our ability to help Louisiana’s communities prosper. A unified, financially strong company will be better able to attract the capital required to upgrade our grid and replace aging power plants with highly efficient, clean units so we can provide the safe, reliable and affordable power needed to satisfy our current customers’ expectations and meet the demands of a growing economy,” May said.

Almost two years ago, Entergy Arkansas went through a similar transition after the Arkansas Public Service Commission ordered the state largest electric utility to maintain operational independence from its parent company, Entergy Corp., and sister operating companies in Louisiana, Mississippi and Texas.

In December 2013, Entergy Arkansas exited the so-called “Entergy System Agreement,” which allocated generation costs among the Entergy’s operating subsidiaries in Arkansas, Mississippi, Louisiana, Texas and the City of New Orleans.

The historic pact had embroiled the PSC and Entergy in protracted litigation for more than 30 years, resulting in significant “Grand Gulf payments” by Arkansas ratepayers in 1985 for a nuclear unit that PSC officials said Arkansas did not need.

As part of the PSC’s edict, Entergy Arkansas also completed the integration of its transmission system into Midcontinent Independent System Operator’s grid following more than two years of planning and preparation with the New Orleans-based parent of Entergy Arkansas and numerous other stakeholders.

According to Entergy Louisiana officials, the newly combined utility is expected to provide significant benefits, which include up to $140 million in customer benefits over the first decade, including $107 million in guaranteed customer credits. The combined utility will also improve the company’s financial and operational structure, enhance economic development efforts and reduce regulatory costs, officials said.

The transaction is designed to be revenue neutral, Entergy officials said. In order to minimize changes in customer bills, the combined utility will maintain existing base rates and riders for current and new retail customers. Fuel costs to serve the combined customer base will be blended but will be subject to a tracking mechanism to mitigate any material cost shifts.

“As the new company makes the needed investments in the months and years ahead, the costs will be shared across a larger base of customers,” May said.

The ability to reach the potential $33 million of additional customer benefits will be driven by anticipated regulatory savings and reduced administrative and operational costs, officials said. Benefits are possible even beyond the decade following the transaction, the company said.

“A combined company will result in a more efficient regulatory process for the Louisiana Public Service Commission. We will be able to combine rate cases, fuel audits and other proceedings, which should save everyone time and money, savings that will be passed along to our customers,” May added.

Like sister company Entergy Arkansas, the Entergy Louisiana utilities are subsidiaries of New Orleans-based Entergy Corp. The combined Louisiana utility provides electric service to more than one million customers through the operating companies, and also delivers natural gas service to 93,000 customers in the greater Baton Rouge area through Entergy Gulf States Louisiana.