Entergy customers are getting a little break

Reduced bills and a lighter debt burden are coming soon to Entergy customers and Mississippi taxpayers. With the economy still sluggish, it’s not often we get to deliver such all-around good news.

It goes back to a law passed in 2006 in the wake of Hurricane Katrina’s destruction. The Hurricane Katrina Customer Relief and Electric Utility System Restoration Act helped to rebuild and shore up Mississippi’s energy infrastructure. To pay for it within the Entergy Mississippi area, about $55 million in utility restoration bonds were issued and a small System Restoration Charge, or SRC, was added to ratepayers’ bills to pay those bonds off over time.

Ten years later, the work to the power grid has been done, but the bonds are still being paid off. In fact, they won’t actually mature for another three years. Staff at the Office of the State Treasurer noticed in a recent audit of outstanding bonds, however, that enough funds would soon be available to pay the principal and interest owed on the Entergy bonds. They also realized that a provision in the bond agreement allowed the State to retire the debt early.

Working together, the Public Service Commission, the Bond Commission, and Entergy’s legal counsel developed a precise plan to reduce the SRC to zero as soon as the repayment sinking fund was sufficient to pay the remaining amounts due. We were careful to ensure that there were enough funds to repay the debt and meet the requirements set forth in the law, but we didn’t want ratepayers to pay any more than absolutely necessary. The Public Service Commission took this action at its Sept. 20, 2016 meeting.

The elimination of the SRC will reduce an Entergy customer’s bill, based on the usage of 1,000 kWh, by $0.74. Additionally, by paying off the bonds before their July 2019 maturity date, ratepayers will save an estimated $30.6 million.

The Bond Commission will now take steps to retire these bonds and take them off the list of our debts in Mississippi’s Comprehensive Annual Financial Report. Rating agencies carefully study our CAFR and closely monitor the level of debt that the state carries. Mississippi taxpayers carry above average debt levels and that’s one of the reasons our state has suffered two credit downgrades since July. A good credit rating is important for saving taxpayers money when we borrow.

Every man, woman, and child in Mississippi carries a debt burden of $1,707. That’s how much each would have to kick in to pay off our debt. Net Tax Supported Debt as a percentage of Mississippi’s Gross Domestic Product is more than double the national average and the fifth highest in the country. Our debt service ratio is nearly 50 percent higher than the national average. Paying off these utility restoration bonds helps clear a little debt off our books.

Early in 2017, we expect to take similar action with the very last of these bonds and help Mississippi Power Company ratepayers experience a similar reduction in their bills. Again, we’ll be working to time things just right so that ratepayers pay as little as possible and taxpayers save as much as possible.

Lynn Fitch is the treasurer for the state of Mississippi. Brandon Presley is the chairman of the Public Service Commission.