Sid Salter Column

Published 12:00 am Friday, December 5, 2008

Salter: Pursuit of Entergy raises questions about PSC

Perhaps my initial assessment that Attorney General Jim Hood was yet again engaging in political grandstanding in his pursuit of Entergy on charges that the utility is gouging Mississippi customers might have been premature — or at the very least, may not be the relevant issue.

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Oh, I don’t doubt that General Hood enjoys posing as a consumer protection advocate. Prior to taking on Entergy, one of Hood’s more recent crusades involved accusing several reputable small oil and gas jobbers around the state of price gouging in the sale of gasoline in the wake of Hurricane Katrina.

One of those companies — Fair Oil Company in Louisville — successfully challenged Hood over the accusation and a Winston County chancery judge agreed that the law Hood was pursuing the company on was unconstitutionally vague.

But I digress.

Regardless Hood’s motivation for pursuing Entergy on allegations that the utility buys fuel and power from other Entergy subsidiaries at a higher price than it could on the open market and then passes those costs along to customers, his investigation has raised an issue that is very relevant to Mississippi taxpayers.

For its part, Entergy has challenged the attorney general on grounds that Hood’s office doesn’t have jurisdiction over utilities, that Hood’s records subpoena is a veiled “fishing expedition” and that production of the records may end up costing Entergy customers millions of dollars to produce.

In their court pleadings, Entergy argued that their “operating companies, are the parties to a Federal Energy Regulatory Commission-regulated rate schedule that provides the basis for the integrated planning, construction and operation of the electrical generating and bulk transmission (and other) facilities” and that FERC “has exclusive administrative and regulatory jurisdiction over the transmission and sale of electrical energy in interstate commerce.”

More to the point, Entergy argued that the state Public Service Commission, not Hood, is charged with regulating public utilities in Mississippi.

The PSC has direct statutory authority to regulate Mississippi’s public utilities and to approve or deny rate hikes. In addition, the PSC’s staff is also charged with examining and auditing the financial records of public utilities and conducting “audits of electric and gas companies and purchased fuel and gas adjustments.”

But in response to Hood’s probe, PSC Central District Commissioner Lynn Posey said that it would be virtually impossible for the PSC to review the documentation Hood subpoenaed.

“We have no one on the staff capable of analyzing this information,” Posey said. He later recanted that statement, but the implications of it remain.

Why does the PSC need Hood to intercede on their behalf? Why didn’t the PSC staff review these fuel cost documents prior to approving Entergy’s current rates?

If the PSC can’t effectively regulate utility rates using their own staff without intervention from an outside agency, then why are the taxpayers footing the bill for what is essentially dual regulation?

Why not disband the PSC and simply transfer the PSC staff to the Consumer Protection Division of the attorney general’s office?

Following a legal stalemate with Entergy, Hood on Tuesday filed a fraud and antitrust lawsuit against Entergy and its subsidiaries that accuses them of manipulating electricity prices to maximize profits.

Hood has on his side two similar cases in Louisiana and Texas where Entergy subsidiaries were accused of overcharging customers and were forced to refund millions to ratepayers.

But whether it was his intention or not, Hood has also focused legitimate attention on whether the PSC remains an effective public utility watchdog or one that lacks the ability to conduct serious investigations of rate structures prior to the PSC approving them.

Which is it? Stay tuned.

(Contact Perspective Editor Sid Salter at (601) 961-7084 or e-mail Visit his blog at