The difference in what southwest Mississippi energy companies charge largely depends on where customers live.
However, recent trends show a shrinking gap between what Magnolia Electric Power Association charges compared to Entergy, as residents use more power in the summer months.
In 2012, Magnolia Electric had the fourth-highest rate in the state at $12.38 per 1,000 kilowatt hours, according to the U.S. Energy Information Administration.
Entergy, on the other hand, charged the lowest residential rate in Mississippi, at $8.17 cents per 1,000 kilowatt hours.
For 2013, however, Magnolia reported a rate of $12.20 per 1,000 kilowatt hour, which is identical to the national average.
By late summer 2012, Entergy had raised its rates three times. By June 2014, the company announced two more rate increases, one attributed to rising fuel costs and the other related to the purchase of the Grand Gulf nuclear power plant by Entergy Arkansas.
By this June, Entergy’s average was $9.16 cents per 1,000 kilowatt hours. It is expected to increase to approximately $11.44 in January, according to a recent press release.
The national average residential rate per 1,000 kilowatt hours is $12.26, according to the U.S. Energy Information Administration’s latest figures.
Despite frequent rate increases, Entergy’s rates remain well below the national average and among the lowest in Mississippi, according to the EIA.
“We work hard to keep rates low and do not take any rate increase lightly,” said Entergy President Hal Fisackerly. “With the proposed increase, Entergy Mississippi rates are expected to remain both below the national average and among the lowest residential rates in the state and the Southeast.”
One key factor in determining rates between Magnolia Electric and Entergy is the average number of meters per mile of transmission line, according to Magnolia Electric member services director Lucy Shell.
In southwest Mississippi, most of Entergy’s meters are in more populated areas. Magnolia Electric serves members in more sparsely populated areas of Pike, Amite, Walthall, Lincoln, Lawrence and Franklin counties.
MEPA services 6.6 meters per mile.
Entergy’s average is closer to 35 meters per mile of line.
Fuel costs, infrastructure, transmission and distribution lines, regulation and weather conditions all play a role in utility rates.
Shell also notes that Magnolia Electric sends a refund known as a capital credit check to its cooperative members each December. That represents the amount remaining after all the operating, maintenance and general expenses are deducted from the total amount of what the members paid for their electric bill during the fiscal year.
The credits are allocated to members each year based on power usage. The amount of each capital credit is a percentage of that allocation.
The utility rate average is not calculated with this credit in mind, which offsets some of the expense, Shell said.
In 2013, Magnolia Electric returned $1.8 million in capital credit. Since 1960, the company has refunded nearly $35 million in capital credits to its members, Shell said.
Both companies’ business models vary greatly. Magnolia is an energy cooperative, meaning its customers are in fact “members” served by an elected board of directors that determines rates.
Entergy is considered monopoly status and is regulated by the Mississippi Public Service Commission, which approves the company’s rates.
Utility rates can further be broken down by region. Mississippi is considered in the East South Central region of the country, along with Tennessee, Kentucky and Alabama. In this subgroup, the average is $11.20 per 1,000 kilowatt hours. Mississippi’s rates are the highest in the region.
One problem Mississippi has is electricity generation. The state ranks 32nd nationally in electricity generation and is well below neighboring states, according to the EIA. The cost of generating electricity is the largest component in the price of electricity.
And despite a low generation percentage among Southern states, electricity consumption is on the rise.
More than 50 percent of state electric power fuel generation comes from natural gas. Most of this fuel is imported.
Entergy’s Grand Gulf Nuclear Power Station produces nearly 20 percent of total state electricity and all of the state’s nuclear power. A recently completed power upgrade project makes Grand Gulf the largest single reactor in the U.S. in capacity at 1,443 megawatts.
Mississippi ranks third in the nation for energy expenditures as a percent of current-dollar gross domestic product, at 15.1 percent, just below neighboring Louisiana and North Dakota. The U.S. average is 8.6 percent.
MEPA provides power to 30,580 meters over 4,600 miles of line in six counties. Entergy services 437,000 customers 441,000 customers in 45 counties.
