Sep 22 - McClatchy-Tribune Regional News - Lynn Cook Houston Chronicle

If Hurricane Rita is any guide, Houston-area customers could be paying higher electricity bills for years to cover the cost of repairing the battered Gulf Coast power grid in the wake of Hurricane Ike.

The reason: Ratepayers are responsible for the expense of maintaining and expanding the power grid in Texas.

In a phone interview Sunday, Entergy Texas CEO Joe Domino said Rita repairs cost his company hundreds of millions of dollars. After the 2005 storm ripped East Texas, the Public Utility Commission of Texas greenlighted a $381 million systemwide rate increase to pay for the fixes in the company's grid, which generally runs to the north and east of Houston.

The increase amounted to $3.85 for the average 1,000-kilowatt customer tacked on to each month's bill over the course of 15 years -- or roughly $700 overall. Many households use much more power, meaning their increase is higher.

"The more you use, the more you pay," Entergy spokesman Dan Daugherty said, adding that industrial users pay far more to fix the grid than residential customers.

Since CenterPoint Energy emerged from Reliant Energy upon the industry's deregulation in 2002, it has not requested a rate increase from the PUC to pay for storm damage. Ike is poised to change that.

As it stands, the PUC has frozen CenterPoint's distribution rates until 2010. Once the company has a damage estimate, it will likely ask the PUC to unfreeze those rates and pass along costs to ratepayers, CenterPoint spokeswoman Leticia Lowe confirmed.

Neither CenterPoint nor Entergy has put a dollar amount to Ike-related damage. Both companies say those figures probably will come out within the next week or so.

Terry Hadley, a spokesman for the PUC, said any rate increase would be deliberated by the commission, a process that usually takes six months. A quicker result is possible if the companies agree to a lower settlement figure, securitizing their damage costs with bonds that carry reduced interest because they are backed by cash flows from specific assets, such as transmission lines.

In the case of Entergy's rate hike petition to the PUC after Rita, the company had been asking for $561 million worth of increases but the PUC agreed to grant $381 million of them,

Hadley said.

"Damage costs from this event should be higher. The PUC will deal with whatever those numbers are when there's a formal application," he said.

Entergy and the PUC arrived at a settlement after Rita, and Domino said he expects a similar outcome with Ike damage.

Securitizing the cost of repairs is more essential now than ever given the troubles roiling Wall Street and impaired credit markets, he said.

CenterPoint probably will seek a similar agreement and try to securitize bonds to recoup its costs, according to Lowe.

Because CenterPoint has almost 2.6 million customers compared to Entergy's 392,000 in Texas, its repair costs will be spread over a greater number of ratepayers.

Entergy's overall transmission system has been socked twice this summer -- first by Hurricane Gustav, which roared ashore over Labor Day in Louisiana, and then by Hurricane Ike.

Initial estimates are that Gustav-related damage will cost between $500 million and $600 million, but the good news is that Texas customers won't have to foot that bill. The bad news is Ike's toll could be worse.

"We don't know that yet," Daugherty said.

Today, 767,000 of CenterPoint's 2.6 million customers -- or 34 percent -- were still without power. Entergy Texas said 54,199 customers, or 16 percent, had no electricity.

Texas New Mexico Power Co. still had 23,000 meters off the grid on Sunday and Sam Houston Electric Coop said 13,143 customers were without power.

lynn.cook@chron.com.com

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