Louisiana approve Entergy bid to merge 2 in-state utility subsidiaries

Dive Brief:

The Louisiana Public Service Commission has approved Entergy's request to combine two utilities operating in the state, a move designed to generate up to $140 million in customer benefits in the first decade.
Customers of Entergy Louisiana and Entergy Gulf States Louisiana will soon be served by a single provider called Entergy Louisiana, with annual sales of more than 66,000 GWh.
The change is meant to reduce costs, improve service and produce the necessary capital for infrastructure projects to support Louisiana's economic growth .

Dive Insight:

Amid a trend of nation-wide utility consolidation, Louisiana regulators will allow Entergy to combine two utilities in a bid to boost service, create consumer benefits and support the state's growing economy.

"Combining the utilities improves our ability to help Louisiana's communities prosper," Phillip May, president and CEO of Entergy Louisiana and Entergy Gulf States Louisiana, said in a statement.

"A unified, financially strong company will be better able to attract the capital required to upgrade our grid and replace aging power plants with highly efficient, clean units so we can provide the safe, reliable and affordable power needed to satisfy our current customers' expectations and meet the demands of a growing economy," May said. The changes are supposed to be seamless for customers, he added.

According to Entergy, combining the utilities could produce up to $140 million in customer benefits over the first decade. Customers are guaranteed to receive $107 million in credits on their bills during the first nine years from anticipated savings resulting from the transaction: Entergy said they can expect to see $22 million in credits on their bills in the first year, $18 million in the second year, $15 million per year over the next three years, and approximately $5.5 million per year over the remaining four years.

Additional benefits will be driven by anticipated regulatory savings and reduced administrative and opera, the company said, benefits possible even beyond the decade following the transaction.

Entergy proposed the combination last year, telling regulators the deal could require a $5 billion investment, the cost of which may raise rates for customers. But officials said much of that cost could be offset by post-merger savings.