Entergy investment advisors sought by regulator

LOUISIANA - A utility regulator said that he wants investment advisers for two Entergy Corp. power utilities to explain how part of the money to eventually dismantle two Louisiana nuclear generating plants was lost in last year's financial meltdown.

The Louisiana Public Service Commission took its initial look at a rate filing by Entergy Louisiana and Entergy Gulf State Louisiana designed to make up what federal regulators say is a $235.5 million shortfall in mandated funds for the future decommissioning of the Waterford 3 plant at Taft and the River Bend plant near St. Francisville.

The two plants were among 26 informed recently by the Nuclear Regulatory Commission that their decommissioning funds were inadequate.

The Entergy filing said that part of the shortfall stems from losses in investment markets last year — investments that had been initially made to boost the funds.

Commissioner Eric Skrmetta said he wanted the commission to grill money advisers for Entergy next month on investments in stock-based funds and the amount that was put at risk. He said it appeared that the utilities had received bad advice — leaving power customers on the hook to make up the difference.

Entergy Gulf States Louisiana wants an additional 84 cents per 1,000 kilowatt hours, while Entergy Louisiana is asking for an extra 41 cents per 1,000 kilowatt hours. Decommissioning funds are part of the expenses calculated into power rates.

In an interview after the meeting, Mark Kleehammer, vice president of regulatory affairs for the two utilities, said the investment strategy was in line with standard industry practice. He said that of the $40 million hit sustained by the Waterford 3 fund, higher markets since had restored $28 million of that. River Bend's fund, which took an initial $10 million loss, has since regained $7 million, he said.

"This is just like a person's individual retirement account," he said.

In the 1990s, the commission authorized the utilities to invest customer payments for the decommissioning funds, now a common practice across the industry. River Bend's performed so well that Entergy Gulf States Louisiana customers have not paid into the fund for several years.

Another problem, according to the filing, is a difference in how the NRC, which sets the figure for the decommissioning funds, and the PSC, which deals with rates, do their calculations. The PSC is using a projected 60-year lifespan for the plants, but the NRC takes the assumption that the plants' 40-year operating licenses will not be renewed.

Waterford 3 began generating power in 1984, while River Bend went on line in 1985. Thus, the NRC is projecting closure of the plants in 2024 and 2025, but the PSC method assumes the plants will be operating until 2044 and 2045.

Skrmetta insisted that Entergy immediately begin the process of getting the licenses renewed for another 20 years so that the ratepayer funding can be extended by two decades — thus cutting the monthly charge. He also said the PSC should offer its help in getting the NRC to move.

"We are in damage control on this now," Skrmetta said.

Entergy Louisiana, which owns Waterford 3, has 669,000 customers, while Entergy Gulf States Louisiana, which owns 70 percent of River Band, has 361,000 customers. The filing does not affect customers of the company's other Louisiana unit, Entergy New Orleans.

The commission took no formal action, other than agreeing to advertise bids for a consultant that will help the commission evaluate the request.