Electric Cooperatives Allowed to Buy Power from Out-of-State Supplier

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BATON ROUGE (The Center Square) — The Louisiana Public Service Commission voted unanimously this week to allow two electrical nonprofit cooperatives to buy power from a Florida-based supplier, overriding objections from power companies Entergy and Cleco that currently control the market.

Commissioners approved two deals on Wednesday allowing the Dixie Electric Membership Cooperative and Jefferson Davis Electric Cooperative to buy power from NextEra, which is expected to save customers about $160 million over the next 10 years.

The joint application was opposed by Entergy and Cleco, which currently monopolize Louisiana’s energy market, based on allegations the deal could result in forced blackouts to stabilize the electric grid.

An administrative law judge and PSC staff recommended the deal move ahead with conditions that require the co-ops to report to the commission on price changes and capacity issues.

“You’re placing long-term resource adequacy for the state of Louisiana in the hands of the cooperatives and NextEra Energy Marketing, who are not subject to your jurisdiction,” Larry Hand, attorney for Entergy told the PSC. “The risk you are undertaking is an increased risk of more likelihood of controlled load shed events to maintain reliability when we don’t have adequate resources to support load.”

A separate docket at the PSC aims to look into the capacity issues. The deals run for a decade starting in 2024 and 2025.

Attorneys for DEMCO, JDEC and NextEra countered Entergy’s claims, pointing to rules included in the arrangements that require the co-ops to comply with regulators.

“We understand this commission could change the rules or (the Federal Energy Regulatory Commission) could change the rules. We will comply with those rules,” NextEra attorney Brian Murphy told commissioners. “The record shows we are in full compliance with every rule and current regulation, and we commit to be in compliance with every future rule and regulation.”

DEMCO CEO Randy Pierce highlighted both rates and reliability as major factors for partnering with NextEra.

“There many benefits we believe to the two contracts that we are asking for certification for today. First and foremost, they will result in lower rates for our members. We know that by the calculations within the contract,” he said. “We looked at 95 different proposals from 13 different providers across the country, including all of the incumbent folks in the state … and with that we chose one we knew would be reliable.”

“We’ve seen their performance in other states and we’ve very comfortable from the reliability standpoint and we feel very good about the pricing standpoint,” Pierce said. “We believe it is by far the best option that we looked at. It’s the most dynamic option in terms of bringing benefits to our customers and the state of Louisiana and to the seven parishes we serve.”

The deals are expected to lower rates for about 113,000 DEMCO customers and nearly 9,700 JDEC customers.

The PSC vote follows discussions by commissioners on alternatives to the current Louisiana energy monopoly controlled by Entergy and Cleco, which have earned the scorn of the PSC for significantly increasing rates in recent years.

The PSC voted earlier this year to allow five co-ops to buy power from two out-of-state firms, The Advocate reports.

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