Regulators to Study Formula for Utility Profits

By: The Associated Press
By: The Associated Press

The Mississippi Public Service Commission is questioning whether the state's two privately-owned electrical utilities should make lower profits because their borrowing costs have gone down.

The PSC voted 3-0 Tuesday to open an inquiry into the profit margins allowed to Entergy Mississippi and Mississippi Power Co.

Because both companies are regulated monopolies, the state allows them to collect a certain return on equity.

The formulas calculating that return are supposed to factor in the idea that people could take their money and park it in a bank for less risk. Thus they should get a higher return for investing in an electrical utility.

Commissioner Brandon Presley says because interest rates have fallen, rates of return should go down. Entergy says it believes the current formula is fair but will cooperate.

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