NEW ORLEANS—Because of the Formula Rate Plan established by New Orleans City Council in 2009 and the city's revival, Entergy New Orleans, Inc. is lowering customer rates for the third time in three years - this time by a minimum of $14.2 million. Based on the Sept. 10 filing currently under review by the City Council and its advisors, Entergy New Orleans customers will begin to see these reductions in the first billing cycle next month.
Residential electric customers will see an approximate 4 percent decrease in bills, resulting in a monthly reduction of at least $4.66 for typical usage of 1,000 kWh per month. Gas customers will see a 3 percent (approximately $1.90) increase for typical usage of 50 Ccf per month due solely to help meet the company's costs for system maintenance. As a result, residential customers with combined electric and gas services will see a net decrease in bills, translating in a monthly reduction of at least $2.76.
"Entergy New Orleans is pleased that the City Council and its advisors had the foresight and leadership to set up an annual rate review process that allows us to pass beneficial savings on to our customers in a timely fashion," said Charles L. Rice Jr., president and chief executive officer, Entergy New Orleans, Inc. "The city's growth has contributed to our company's strong financial recovery since emerging from bankruptcy in 2007. This is great news for customers and the local economy."
Entergy New Orleans believes that the 2010 electric rate reduction, which is based on 2009 financial results, is due primarily to a continued increase in the New Orleans customer base as rebuilding of the city and the return of customers continue. Since its last rate case in July 2008, the company's electric customer count had grown from 141,000 to approximately 150,000 at the end of 2009.
And sales growth for Entergy New Orleans continues in 2010, primarily because of extreme weather conditions in the Southeast. According to the National Oceanic and Atmospheric Administration, customers have experienced the coldest Louisiana winter as well as the second hottest summer in history. These extreme temperatures result in customers using more power to heat and cool their homes. This continued sales growth will be reviewed again in 2011.
Success of Formula Rate Plan
This electric rate reduction for Entergy New Orleans customers is proof that the Formula Rate Plan process works. Entergy New Orleans and the New Orleans City Council Utility Committee worked together to create a Formula Rate Plan during the 2008/2009 rate case. Compared to a typical rate case, the Formula Rate Plan calls for a review of the company's financial results for the year by the City Council and its advisors, and then adjusts rates up or down as necessary. Any amount the company earns above its allowed return on equity during a year is returned to customers through lower rates in the following year. This efficient method for adjusting rates passes on savings to customers in a timely fashion.
This rate reduction makes for the third electric rate decrease in three years. Entergy New Orleans voluntarily reduced rates by approximately $10.6 million in 2008, and then by $35 million in June 2009 as a result of the base rate case. These reductions have been due primarily to the city's rapid re-population.
Entergy New Orleans, Inc. is an electric and gas utility serving Orleans Parish and is a subsidiary of Entergy Corporation. The company provides electricity to more than 150,000 customers and natural gas to more than 96,000 customers in Orleans Parish.