Entergy Corporation ( ETR ) has received
approval from the Mississippi Public Service Commission ("MPSC") to
increase monthly rates of the residential electricity customers.
The revised rate is expected to be applicable from February
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Currently, the average residential electricity customer, using
1,000 kilowatt-hours ("kWh") per month, pays $96.93 per month. Per
the rate revision, the average residential customers will pay
$99.71, up 4.9% year over year.
Entergy Corporation intends to increase its residential
electricity bill in order to fund the costs incurred while
purchasing a share of Entergy Arkansas' Grand Gulf nuclear plant by
its unit Entergy Mississippi.
Grand Gulf Nuclear plant is located in Port Gibson and is the only
nuclear power plant to produce electricity in Mississippi. The deal
of this property among two sister concerns will allow Entergy
Corporation to save fuel costs in the long term. The company
anticipates saving of $346 million in the time span of 2013 to
The company files for rate hike to recoup the investment made to
develop infrastructure or to recover cost incurred to make new
purchases. In December 2012, the MPSC approved Entergy
Corporation's appeal to increase the electricity rate for
recovering investments made by the company to purchase Jackson
power plant from KGen Hinds LLC. Jackson power plant, being a new
one, will enable Entergy Corporation to generate power with using
lesser amount of natural gas than its old plants. This will
subsequently decrease the company's operating costs, resulting in
lower rates when fuel savings are passed on to the customers.
Entergy Corporation always tries to provide uninterrupted services
to its customers. Over the last couple of years, the company has
made considerable investments for the construction of
high-efficiency, natural gas-fired energy power plants, and
acquisition and development of nuclear power plants.
In November last year, Entergy Corporation had received approval
from the U.S. Department of Justice for the acquisition of Hot
Spring and Hinds power plants from the units of KGen Power
Corporation. Simultaneously, the company is also in the process of
divesting its electric transmission business to ITC
Holdings Corporation ( ITC ).
However, we are skeptical about continued weak economic
environment in the U.S., which will challenge the company's power
sales. Entergy Corporation currently has a short-term Zacks Rank #3
New Orleans, Louisiana-based Entergy Corporation and its
subsidiaries are engaged in the electric production and retail
distribution operations. It operates in two segments, Utility and
Entergy Wholesale Commodities.