NEW ORLEANS—Entergy Corp. is proposing the use of revenue bonds backed by surcharges on Louisiana customers' bills to pay for about $420 million in costs for restoring power following hurricanes Gustav and Ike last year, according to a regulatory filing.
Entergy Louisiana is asking the Louisiana Public Service Commission to recover $267.4 million in costs, plus another $200 million to replenish its storm reserve. Entergy Gulf States Louisiana wants $152.6 million and another $90 million for its storm reserve.
In its initial PSC filing in May, the two Entergy units said the reserve funds - established after hurricanes Katrina and Rita in 2005 - had kicked in $229.5 million to help with damage from Gustav and Ike.
If the full amount is approved by the PSC, Entergy Louisiana customers would see an increase of about $2.41 per 1,000 kilowatt hours, while Entergy Gulf States Louisiana customers would pay about $1.86 per 1,000 kilowatt hours, Entergy said.
By using bonds, Entergy Louisiana customers would save $49.5 million to $139.7 million, while Entergy Gulf States Louisiana customers would save $25.7 million to $88.5 million, Entergy said. Savings would depend upon interest rates when the bonds are placed.
Customers of the two Entergy units already are paying about $1 billion over 10 years as the result of Katrina and Rita. Those restorations also are being paid through revenue bonds. Under the law, power companies are entitled to recover any storm restoration costs determined by the PSC to have been incurred properly.
At the height of Gustav, which hit Sept. 1, 2008, there were 829,000 Entergy customers in Louisiana without power. At the height of Ike, which struck 13 days later, power had been cut to 141,378 customers.
If the PSC approves, the bonds would be issued by the Louisiana Public Facilities Authority and the proceeds loaned to a state entity known as the Louisiana Utilities Restoration Corp. Customer surcharges would go to the LURC to repay the bonds.
The use of such bonds have been used in other states for utilities to recover storm costs and reduce interest costs for customers.