Conroe Courier - News
Entergy customers: another storm surcharge
By Howard Roden
The storm has passed. Now the bill comes due – again.
Three years after Hurricane Rita, Entergy Texas customers in Montgomery County are faced with paying for the repairs from another monster storm. While officials with the Beaumont-based utility have not released estimates on the restoration associated with Hurricane Ike (those numbers are expected this week), it’s a safe assumption residential customers will be paying another recovery surcharge similar to the one already on their monthly bills.
Last year, Entergy Texas got the green light to recoup $381 million spent repairing its power grid in the wake of Rita. Based on monthly usage of 1,000 kilowatt hours, the increase averages $3.96 a month per customer over a 15-year period.
“Based on the historical experience from Rita, you could say the benchmark is somewhere between $2 to $4 (a month),” said Dave Caplan, Entergy Texas’ manager of corporate communications. “But it’s very difficult to know exactly what that final number will be. Invoices won’t come in for weeks, and the (repair) process was very labor intensive. We wanted to get the power back on as quickly as possible.”
With a region-wide workforce that topped 9,000, Entergy Texas restored power to the majority of its 395,000 customers within a matter of days. Full restoration was finished 12 days after Ike made landfall – well ahead of the company’s initial timetable.
“That could even lower the (repair) costs,” Caplan said.
But now that a second catastrophic storm in the past three years has raked the upper Gulf Coast in Texas, utility customers and local lawmakers are starting to wonder what is the better approach in anticipation of another major storm:
Strengthen the transmission and distribution systems within financial reason and have utility customers continue to pay the recovery surcharges should another hurricane strike; or
Invest in a massive “hardening” of the power grid that might make it virtually impregnable to storms like Rita and Ike – but at a substantial cost to consumers.
Anna and Michael Davis are retired petroleum engineers who live in The Woodlands. Without power for four days, Anna said they were not overly inconvenienced by Ike, but she sees both sides of the issue.
“I have mixed feelings,” she said. “I don’t want to pay for this, obviously, but we’ve got to find a better way to protect ourselves. If this is going to start happening every year, we can’t be adding $4 to our electric bills every year.
“We need to develop some long-term plan. I do believe the utilities should be allowed to be profitable. All other industries pass their costs along to the consumer. But if we keep paying restoration fees, it’s going to become a burden a lot of people can’t handle,” she said.
State Rep. Brandon Creighton, R-Conroe, and state Sen. Robert Nichols, R-Jacksonville, agree that a financial balance must be struck that involves improvements to electrical service in Montgomery County.
“If you go in and put in steel and concrete poles, the cost is substantial and the public ends up paying for it,” Nichols said. “Let’s look at ways to bring the power up quicker.”
Creighton said the state Legislature will “look closely” at storm preparedness when lawmakers begin their 81st session the first week of January.
“I would look for that to be a high priority,” he said. “We would be remiss in not doing that.”
Entergy Texas President and CEO Joe Domino said the company has conducted economic evaluations on the benefits of massive improvements to its power system and has, for the most part, found it lacking.
Caplan said one example is the $1.1 billion Entergy Texas estimates it would cost to replace existing wood transmission structures all at once with steel or reinforced concrete.
“It wouldn’t double the customers’ base rate, but it would have a significant impact on what customers pay,” he said.
Placing distribution lines underground – which has been done in most of The Woodlands – is another popular method to improve a power grid’s reliability. But even the Florida Public Service Commission, which oversees the state’s five investor-owned utilities, doesn’t mandate underground utilities, although the commission implemented a number of sweeping changes to strengthen its power grid after the state was pounded by a series of storms in 2004 and 2005.
Industry experts generally consider the cost of underground utilities to be 10 times that of aboveground systems.
“We don’t believe in a one-fits-all approach,” FPSC spokeswoman Kirsten Olsen said. “One of our mandates is the need to keep things affordable. We want to storm harden as much as we can, but at reasonable cost. There is a tradeoff.”
Florida’s changes include a vegetation program, a wooden pole inspection process and the continual upgrade of existing transmission structures.
Some of Entergy Texas’ existing steel structures are decades old. When replaced, the new structures are engineered in excess of today’s national standards for wind tolerance, Caplan said.
In addition to the recovery surcharge, it is likely Entergy Texas customers will see a hike in their base rate as soon as November if the Public Utilities Commission of Texas grants Entergy Texas’ rate request.
Currently at a monthly average of $43.76, the residential rate would climb an average of $1 for a year, then increase $2 or $3 over the next two years.
If approved, the rate increase would be Entergy Texas’ first in well over a decade. Caplan said the increase would allow the company to recover some $600 million in improvements it made from 1999 to 2006.
Three years after Hurricane Rita, Entergy Texas customers in Montgomery County are faced with paying for the repairs from another monster storm. While officials with the Beaumont-based utility have not released estimates on the restoration associated with Hurricane Ike (those numbers are expected this week), it’s a safe assumption residential customers will be paying another recovery surcharge similar to the one already on their monthly bills.
Last year, Entergy Texas got the green light to recoup $381 million spent repairing its power grid in the wake of Rita. Based on monthly usage of 1,000 kilowatt hours, the increase averages $3.96 a month per customer over a 15-year period.
“Based on the historical experience from Rita, you could say the benchmark is somewhere between $2 to $4 (a month),” said Dave Caplan, Entergy Texas’ manager of corporate communications. “But it’s very difficult to know exactly what that final number will be. Invoices won’t come in for weeks, and the (repair) process was very labor intensive. We wanted to get the power back on as quickly as possible.”
With a region-wide workforce that topped 9,000, Entergy Texas restored power to the majority of its 395,000 customers within a matter of days. Full restoration was finished 12 days after Ike made landfall – well ahead of the company’s initial timetable.
“That could even lower the (repair) costs,” Caplan said.
But now that a second catastrophic storm in the past three years has raked the upper Gulf Coast in Texas, utility customers and local lawmakers are starting to wonder what is the better approach in anticipation of another major storm:
Strengthen the transmission and distribution systems within financial reason and have utility customers continue to pay the recovery surcharges should another hurricane strike; or
Invest in a massive “hardening” of the power grid that might make it virtually impregnable to storms like Rita and Ike – but at a substantial cost to consumers.
Anna and Michael Davis are retired petroleum engineers who live in The Woodlands. Without power for four days, Anna said they were not overly inconvenienced by Ike, but she sees both sides of the issue.
“I have mixed feelings,” she said. “I don’t want to pay for this, obviously, but we’ve got to find a better way to protect ourselves. If this is going to start happening every year, we can’t be adding $4 to our electric bills every year.
“We need to develop some long-term plan. I do believe the utilities should be allowed to be profitable. All other industries pass their costs along to the consumer. But if we keep paying restoration fees, it’s going to become a burden a lot of people can’t handle,” she said.
State Rep. Brandon Creighton, R-Conroe, and state Sen. Robert Nichols, R-Jacksonville, agree that a financial balance must be struck that involves improvements to electrical service in Montgomery County.
“If you go in and put in steel and concrete poles, the cost is substantial and the public ends up paying for it,” Nichols said. “Let’s look at ways to bring the power up quicker.”
Creighton said the state Legislature will “look closely” at storm preparedness when lawmakers begin their 81st session the first week of January.
“I would look for that to be a high priority,” he said. “We would be remiss in not doing that.”
Entergy Texas President and CEO Joe Domino said the company has conducted economic evaluations on the benefits of massive improvements to its power system and has, for the most part, found it lacking.
Caplan said one example is the $1.1 billion Entergy Texas estimates it would cost to replace existing wood transmission structures all at once with steel or reinforced concrete.
“It wouldn’t double the customers’ base rate, but it would have a significant impact on what customers pay,” he said.
Placing distribution lines underground – which has been done in most of The Woodlands – is another popular method to improve a power grid’s reliability. But even the Florida Public Service Commission, which oversees the state’s five investor-owned utilities, doesn’t mandate underground utilities, although the commission implemented a number of sweeping changes to strengthen its power grid after the state was pounded by a series of storms in 2004 and 2005.
Industry experts generally consider the cost of underground utilities to be 10 times that of aboveground systems.
“We don’t believe in a one-fits-all approach,” FPSC spokeswoman Kirsten Olsen said. “One of our mandates is the need to keep things affordable. We want to storm harden as much as we can, but at reasonable cost. There is a tradeoff.”
Florida’s changes include a vegetation program, a wooden pole inspection process and the continual upgrade of existing transmission structures.
Some of Entergy Texas’ existing steel structures are decades old. When replaced, the new structures are engineered in excess of today’s national standards for wind tolerance, Caplan said.
In addition to the recovery surcharge, it is likely Entergy Texas customers will see a hike in their base rate as soon as November if the Public Utilities Commission of Texas grants Entergy Texas’ rate request.
Currently at a monthly average of $43.76, the residential rate would climb an average of $1 for a year, then increase $2 or $3 over the next two years.
If approved, the rate increase would be Entergy Texas’ first in well over a decade. Caplan said the increase would allow the company to recover some $600 million in improvements it made from 1999 to 2006.
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