Feb 7, 2014 8:36 PM by Kari Beal, Dave Fields
Some consumers are confused why they still have to pay fees for hurricane charges.
KATC investigates which energy companies are still charging customers and why. The fees, called storm riders, allow utility companies to charge customers for restoration costs associated with Hurricanes Katrina, Rite, Ike or Gustav.
Yesterday we posted on our website that Cleco and Entergy are still charging customers these line-item additions to their utility bills. SLEMCO ended their storm rider fees in March 2013 and LUS said they've never had to attach storm rider charges on utility bills.
Based on 2007 legislation, utility companies were permitted to securitize bonds over extended periods of time for the purpose of hurricane restoration. This legislation allows these utility companies to attach storm rider charges to customer bills to make up for costs in the storm damage of the four major hurricanes of 2005 and 2008.
Entergy had $1.6 billion in total damages. In comparison, SLEMCO had $159 million and down from that LUS had less than $10 million. Cleco has not responded with its figures.
Director of Utilities at LUS, Terry Huval explained energy companies can't get utility insurance, like one does on a house. Therefore, when a storm hits and their restoration funds are depleted, they have to pass the buck onto the customer. Otherwise the companies would go bankrupt. He said there are factors that can influence the damage done to energy property.
"There could be some places where utility infrastructure is more vulnerable because those wires and transformers are more subject to the elements [severe weather]," LUS Director of Utilities Terry Huval said.
SLEMCO Spokesperson Mary Laurent said some of its hurricane charges went toward building substations better suited for bad weather.
"We had to go in and raise them [substations] including the transformers," Laurent explained. "They had to be raised to Hurricane Rita storm surge levels plus five feet."
Entergy and Cleco officials also explained that their utilities have used the proceeds from their riders to restore substations, poles, lines, transformers, and other utility equipment damaged in one of the major storms. These utilities also said they used the funds to establish a storm reserve for future storms.
For a breakdown of the assessment and duration of storm rider fees attached to various Louisiana utility companies, refer to the previous article on the KATC website here.