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City of Clinton files complaint against Entergy with PSC - with Mayor's Response

 

Mayor Phil Fisher’s Points of Response to Entergy’s Statement on April 22, 2020

As Mayor, I have the responsibility to assure taxpayer dollars are spent in the most efficient manner possible.  I take that responsibility seriously and will investigate any opportunity to protect your money. I became aware of perpetual charges on street lighting poles and equipment and began questioning this practice. Over the last 2 years, the City have met with Entergy multiple times to better understand their practices and reasoning. Unfortunately, these efforts failed to achieve an acceptable resolution and forced me to file a formal complaint with the Mississippi Public Service Commission.

Below is my response to an Entergy statement made after I held a press conference exposing the practice of perpetual charges related to street lighting.

 

·        From Entergy – “Entergy has been charging the correct lighting rates that are authorized by state law.” From Mayor Fisher – Entergy’s statement is an attempt to reframe the complaint. We are challenging Entergy’s practice of charging municipalities in perpetuity. We are questioning if the rate plan (created by Entergy) is fair, just, and reasonable. Put another way, how many times over must a city pay for street lighting equipment. For example, we have 331 concrete poles. Based on the $6.89 per pole per month charge, that equals $83.00 per year for this pole. Since 1979 (41 years) Clinton has paid $3,403 for a pole that would cost $1,200 to replace in 2020 dollars. In sum, over 41 years, we have paid $1,100,000 for the 331 concrete poles and continue to pay.

 

·        From Entergy – “In 2015, our municipal street lighting rates were lowered significantly due to rate design changes requested by Entergy Mississippi and approved by the Public Service Commission. From 2008 to 2018, our rates have stayed well below the state and U.S. averages. Currently, our average residential rates are about 24% below the U.S. average.” From the Mayor – Again, Entergy is trying to rewrite the narrative. This complaint is not about residential rates, but about charging for poles and equipment in perpetuity. Asserting that the rates for residential customers will increase is a scare tactic and deliberately meant to redirect the facts presented by the City. Furthermore, from 2016 to 2018, Entergy MS has raised residential rates approximately 22%. An analysis of Entergy rate schedules revealed that Entergy did not reduce the cost of lighting fixtures as they stated in their press release. The changes made by Entergy, at that time, were to remove overcharges to lighting that were unjust, unreasonable, and materially excessive. 

 

·        From Entergy – “If the City’s complaint recommendations are adopted, it will actually raise rates for all of our customers. “
From the Mayor - this is an attempt to scare residential customers. Our complaint has nothing to do with residential rates, but charging perpetually for poles and equipment. Any rate increases must be submitted to and approved by the PSC. Entergy does not have the authority to raise rates on a whim.

 

 

·        From Entergy – “The lighting service includes installation, maintenance and replacement of lighting facilities, and purchase and storing of inventory, among other services.”
From the Mayor - Our request is that once Entergy has recovered the purchase (hard) costs of durable equipment pieces (ex. Concrete poles and Brackets) via monthly billings to the City, and the equipment is fully depreciated per regulatory requirements, that portion of the charge be removed/adjusted from the monthly billing.

 

·        From Entergy – “We believe we have been a good corporate citizen and partner to the City of Clinton, through the payment of more than $2 million in franchise fees alone over the past five years… “
From the Mayor – Again, this is not about franchise fees. We acknowledge Entergy has been a valued partner with the City of Clinton, and we hope to continue and develop that relationship moving forward. However, I find it unfortunate that a multi-billion-dollar corporation would defend charging taxpayers over ten times for a piece of equipment, then threaten the PSC and citizens of the community with scare tactics (a rate increase) should our position be justified.

 

·        From Entergy – “We have been working with the City of Clinton to address its concerns, and we’re disappointed the City chose to file this complaint rather than to work with us on a potential resolution.”
From the Mayor - As mentioned in our filing, we have met with Entergy several times over the past two years, offered to assist in rate design by providing a municipal perspective, and made multiple requests in attempts to work with them. Over the last year, Entergy has failed to provide inventories, and requests for rate justification. Entergy has refused to negotiate in good faith.

 

·        From Entergy – “If the City’s complaint recommendations are adopted, it will actually raise rates for all of our customers.”
 From the Mayor – Again, Energy is trying to rewrite the narrative. This discussion is not about residential rates, but about poles and equipment relative to street lighting. It is about the charges for the poles and equipment that continue in perpetuity. Asserting that the rates for residential customers will increase is a scare tactic and deliberately meant to redirect the facts presented by the City. Rate increases and decreases are determined by the Public Service Commission.

 

Thank you,

Phil Fisher, Mayor
City of Clinton, MS

Clinton, Miss. (April 22, 2020) In an action that could impact other municipalities, the City of Clinton has filed a Formal Billing and Services Complaint against Entergy Mississippi, LLC (“Entergy”). In the filing, City officials are asking the Public Service Commission (PSC) to investigate and determine if Entergy’s charges in regards to street lighting are contrary to Mississippi Code §77-3-41.

Entergy is the provider of street lighting services to over 25,000 residents of the City of Clinton via billings to the City of Clinton. City officials are asking the Public Service Commissioners to investigate several areas of concern in billing documentation acquired by the City. 

·         Paying monthly fees for lighting poles that are decades old and far exceed any known depreciation schedule;

·         Paying monthly fees for obsolete mercury vapor lights that should have long since been replaced by more energy efficient fixtures, and;

·         Paying monthly fees for underground supply lines installed as far back as 1946.

It is the City’s position that Entergy’s charges for street lighting are contrary to Mississippi Code §77-3-41 as the rates are unjust, unreasonable, and materially excessive, particularly given that the amounts charged by Entergy are never reduced. 

The City pays for this equipment in perpetuity, long past any reasonable useful life or statutory depreciation schedule. 

One particular example involves 331 concrete poles installed in 1979 as best as the City can determine, for which the City is still paying a monthly fee. By the City's calculations the cost of these poles at the time of installation would have been approximately $104,642 yet the City has paid to date approximately $1,100,000 and is still paying every month. If installed at today's prices, the cost of the poles would be approximately $397,000.

It is the City of Clinton’s contention that street light assets fall within the residual asset class to which applies a 7-year depreciation period.

The City has found case law that indicates these assets should be on a 7-year depreciation schedule. The United States Tax Court has held that street light assets owned and depreciated by an electric utility do not constitute assets used in the distribution of electricity for sale and do not fall in asset classes subject to 15 or 20 year depreciation periods.

Additional examples of unjust, unreasonable, and excessive practices also exist. Billing documentation acquired by City leadership, indicates the City is still being charged for “Underground supply line (per foot installed after 1-1-1946)” and “30 ft. Class 7 Wood Creo Pole (installed prior to 1-1-1979)”. 

“It is incomprehensible that Clinton is being charged for these items that have benchmark dates from 74 and 41 years ago, respectively. No specific installation data is provided for the vast majority of street lighting assets for which Clinton is paying,” stated Mayor Phil Fisher.

Prior to filing the formal complaint, the City sought clarifying information from Entergy, but thus far Entergy has not provided documentation or explanations that prove unequivocally why these charges are not unjust, unreasonable, and not materially excessive.

Mayor Phil Fisher believes that “these findings are unconscionable on its face, particularly given the City's position as a guardian of taxpayer dollars. We appreciate the Public Service Commission’s willingness to take a fresh look at this matter and bring clarity for the City and other cities across the Entergy service area.”

Since the Public Service Commission approves electrical rates, we do not anticipate a rate increase to the customer.