CLECO asks to hike rates, change residential billing formula


Cleco is seeking a rate increase, effective next July, while also proposing a significant change in how it computes residential billings.

The proposal was filed with the Public Service Commission on June 30. A year to decide such a rate case is not extraordinary for the PSC.While the 3.9 percent rate hike (first-year change, after proposed mitigation) request would not generate the  return on investment the utility feels is justified, it does allow for the unspoken reality of elected PSC members’ sensitive to public pressure.

In the first year under the request revenue from all operations would rise $115.5 million, then another $40 million the second year, reaching $155.5 million after year two.

According to the application, monthly first-year billing for a 1,000 KW residential account would rise from $131 to $138, not counting any fuel adjust charges.

Without proposed credits, the monthly bill cited would jump to $156 monthly, absent the fuel charges. That is the projected level for year three.

A substantive change – residential rate decoupling – is also proposed by the utility headquartered in Pineville.

Decoupling lowers customers’ bills when weather-related sales increase while benefiting the utility by creating more financial certainty when sales decline.

According to the application, Cleco Power currently recovers substantially all its residential base revenue requirements through volumetric charges applied to customer consumption.

Decoupling would effectively cap total base revenue for residential customers when weather has a higher-than-normal impact on their bills, while allowing Cleco to revise its residential rate design without “substantial additional risk of revenue erosion.”

As proposed, when weather and energy consumption are above normal and residential average base revenue exceeds the threshold established in this rate case, customers would realize reductions in their bills over a following 12-month period.

Conversely, when weather and energy consumption are below normal, and residential average base revenue is below the threshold, bills would increase over a following 12-month period.

Cleco notes it is at a critical juncture, as is the whole industry, as it transitions from fossil fuel to renewable resources, for example a $250 million, 240 megawatt solar farm being developed at Dolet Hills, a former fossil-fueled generating site.

Loss of wholesale power sales from the Dolet site are put at $89.4 million annually and coupled with rising expenses and flat load growth make a rate change necessary, Cleco officials say.

The utility’s senior management team has developed a strategic plan, Vision 2025, “to provide safe, reliable and clean electric service to customers at affordable rates, on a sustainable basis.”

Cleco operates in 24 of the state’s 64 parishes.