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Rate Case Roundup: Louisiana

The Louisiana Public Service Commission issued three separate orders pertaining to the formula rate plans (FRPs) in effect for three different electric utilities: Entergy Gulf States Louisiana, LLC; Entergy Louisiana, LLC; and Cleco Power LLC.

In each case, the commission accepted as submitted a joint report on the utility's compliance with its respective FRP. The commission observed that formula rate plans have been used in Louisiana for a number of years. According to the commission, such plans, which are implemented via an FRP surcharge or rider, are intended to more timely track and adjust for changes in a utility's costs of service. That is, the commission said, FRPs ensure that a utility's rates remain cost-based, but without the need for protracted and expensive rate case filings when costs do change.

Looking first at Entergy Gulf States Louisiana (EGSL), the commission related that the company's FRP report pertained to its 2014 test year. The data referenced in the joint report showed that the utility had an actual earned ROE of 9.09% for that year. Because the FRP approved for EGSL was grounded on a target ROE of 9.95%, plus or minus 80 basis points, and because the actual 9.09% ROE fell within that range, the joint report contended, and the commission concurred, that no changes in EGSL's rates for cost-of-service factors were necessary at the current time. Yet the commission noted that the report indicated that EGSL's revenue requirement should be increased by $4.3 million to account for additional capacity needs. However, it said, decreases in other elements would help offset that increase. The commission also drew attention to the fact that in late 2015, EGSL formally merged with Entergy Louisiana, LLC (ELL), with ELL being the surviving company. Consequently, the commission said, there will be no separate FRP filings for EGSL in the future. Re Entergy Gulf States Louisiana, LLC, Docket No. U-33782, Order No. 33782, July 25, 2017 (La.P.S.C.).

Next addressing the report detailing ELL's compliance with its FRP for the 2015 test year, the commission again adopted the report's conclusion that the utility's rates did not need to be modified as a result of any significant change in its costs of service. Nevertheless, the commission remarked that ELL's test-year earnings for 2015 indicated at least some slight change in its costs of service. The commission explained that ELL's actual earned ROE was 9.07% in 2015, placing it just below the lower end of its authorized ROE deadband. But because that ROE missed the deadband by the slimmest of margins, the commission deemed it unnecessary to make any changes in the company's rates or FRP at the present time. Re Entergy Louisiana, LLC, Docket No. U-34081, Order No. 34081, July 25, 2017 (La.P.S.C.).

Finally, with respect to Cleco Power's FRP, which encompassed a 2016 test year, the commission said that the joint report demonstrated that Cleco had enjoyed stronger earnings than the Entergy companies, at 9.98%. But, the commission noted, that was well short of the 10.9% ROE threshold that would trigger a refund to customers. The commission related that the baseline ROE set forth in Cleco's FRP is 10.0%. The utility's plan provides that Cleco can retain all earnings up to 10.9%, but it requires the company to allocate to ratepayers 60% of any earnings above 10.9% but below 11.75%. For earnings exceeding 11.75%, they are to be returned 100% to customers. The commission added that since the utility had attained a ROE just shy of its benchmark level, there clearly was no basis for its rates to be raised. Re Cleco Power LLC, Docket No. U-34289, Order No. 34289, July 25, 2017 (La.P.S.C.).