Entergy Spends up to $35 Million for Arkansas Storm Repairs

October 3, 2008

Entergy Arkansas says the cost of repairs from hurricanes Gustav and Ike will be between $24 million and $35 million, which is almost a modest sum compared with what the utility spent on storm repairs in the first eight months of this year.

The company has a $14.4 million contingency fund that was approved last year by the Arkansas Public Service Commission.

Severe weather that included a wind storm in January, tornadoes in February, snow in March and more tornadoes in April and May resulted in 210,000 combined outages to Arkansas customers. Those storms and others cost Entergy $50 million in repairs, Entergy spokesman James Thompson said.

Winds from the remnants of Hurricane Ike knocked out electric service to 179,000 Entergy Arkansas customers. And that was less than two weeks after a weakened Hurricane Gustav stalled over Arkansas, dropping a tremendous amount of rain and knocking out power to 95,000 state Entergy customers.

Entergy has 680,000 customers in Arkansas among 63 counties.

For its entire system, repairs following Gustav and Ike will cost Entergy between $1 billion to $1.2 billion. Entergy serves customers in Arkansas, Louisiana, Mississippi and Texas. In Texas, 99 percent of Entergy users lost power during Ike, which came ashore at Galveston and then curved northeast to Arkansas.

In Arkansas, costs for Ike will be between $14 million and $20 million. For Gustav, costs will be between $10 million and $15 million.

Thompson said not all the bills are in for the post-hurricane restoration, which is why there is such a spread for the total costs.

The utility says that each of the four states it serves has to arrange to pay for its own repairs. Entergy said it has cash and the ability to borrow to cover the repairs, but ratepayers may have to bear a share of the cost.

Thompson said Entergy has not developed a plan for recovering the millions it has spent.

“We will work with the Public Service Commission to determine what we are going to do,” Thompson said. “We will be having discussions regarding that over these next few months.”

A news release sent by Entergy earlier Tuesday said the company may tap reserve funds, seek federal and local help and rely on insurance. The company also noted that revenues will be lower for its third quarter because of the volume and duration of the outages.

“Each operating company has to consider all the reasonable avenues to cover these costs,” Thompson said.

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