What do JXN Water and the Amazon Data Centers have in common? Why are decisions by JXN Water’s Interim Manager (Water Czar) and the Federal Judge who appointed him now suspect? Why do Entergy’s residential customers now fear higher rates due to the secret Amazon data center deal?
Because JXN Water and Entergy customers no longer trust those in charge. Before they said: “Trust us. This is for your own good.” Now, we say: “Show us the receipts.”
When the Environmental Protection Agency took over Jackson’s dysfunctional water system, desperate customers hoped a court appointed Water Czar spending federal money, supervised by a Federal Judge might save it. Customers tolerated their edicts— but expected results.
Now water bills are 2X higher for some customers and 10X higher for others who use the same six hundred cubic feet (ccf) of water — thanks to the Czar’s Water Availability Charge and his meter based pricing. He stops service for paying customers with disputed bills — but continues service for thousands of non-paying customers.
In a recent ruling the Judge said: “I’m JXN Water’s CEO.” He approved the Czar’s decisions and his 12% rate increase as a “survival” measure. Now he’s Monday morning quarterbacking the Czar’s decisions and his own. So much for the Judge and the Water Czar as saviors.
The Judge’s approval of the Czar’s Water Availability Charge looks like bad judgement and judicial overreach. It makes some classes of customers pay more than others for the same volume of water. It has a disparate impact on poor customers with limited means to pay.
His approval of the Water Czar’s scheme to discount bills for poor paying customers on food stamps (SNAP) was overturned by the Fifth Circuit Court. His past decisions as CEO don’t inspire confidence in his judgement that rate increases are the only solution to JXN Water’s death spiral. They could make it worse.
When the Judge and the Czar took on the challenge of restoring reliable water service and customer trust, desperate customers cut them some slack for mistakes and do-overs. Not any more. What happened? The Overton Window shifted.
Joe Overton was a think tank policy wonk. He said there’s a window of political possibility for ideas that seem sensible to most voters — but not for ideas outside the window that seem radical or unthinkable. He said ideas evolve. They go from unthinkable to radical to acceptable to sensible to popular to policy. Think tanks that inform and influence public opinion can shift the window and influence what becomes law. Example: same-sex marriage.
Failed policy initiatives can shift the window too. Examples: failure of the Water Czar and the Judge to fix JXN Water problems. Failure of electric utilities in other states with operating data centers to protect residential rates. Failure of Entergy to protect residential rates (without Public Service Commission oversight) while upgrading its system for the data centers. And fear of greater increases when upgrades are complete and the data centers are operating.
The failures have something in common: secrecy. The Czar used secret no bid contracts to repair and replace plants and pipes. But current revenues from the repaired system don’t cover current expenses even at rates three to four times those in neighboring cities. Why?
More secrecy. Who gets free water? Who decides? Does the Water Availability Charge pay for today’s operations or for past mistakes? Are legacy obligations including water bonds more than the current customer base can support? If so, is there a way to start fresh (e.g., restructuring, refinancing, even partial default)? Has the CEO considered this?
There are unanswered questions about the secret Amazon deal too. Its secrecy follows an iron law of politics: hide bad deals. Senate Bill 2001 authorized the secret deal. It slyly stripped the Public Service Commission’s authority to determine if Entergy’s spending for Amazon is prudent and should increase rates. It removed caps on rate increases. Entergy’s reporting hides how much of residential rate increases are caused by spending for the data centers.
When the Legislature passed the Governor’s bill (with help from Entergy’s lobbyists), the Overton Window was open for it. The pitch that Amazon’s investments and economic benefits were more important than affordable reliable electricity for other customers seemed politically safe then. Entergy’s claim that the data centers would put a lid on residential rate increases seemed plausible then.
But the Overton Window began to shift. Electric utilities in other states with operating data centers levied big residential rate increases. They socialized and spread part of their cost for data centers onto residential customers. Then service interruptions due to large data center demands and overloaded grids began to happen more frequently.
Now the President and congressional leaders and others are saying: “Make Big Tech pay and bring its own electricity.” The shift accelerated last week when the President extracted a Ratepayer Protection Pledge from Jeff Bezos and other data center billionaires. They promised to “build, bring, or buy” power their data centers need and to pay for grid upgrades so residential customers and small businesses don’t get stuck with higher bills.
Is that pledge retroactive? Is it enforceable? Is the secret deal grandfathered? Entergy’s answer: “Don’t worry. Our models say data centers will benefit residential customers for 20 years.” Is Amazon’s secret rate locked in for 20 years? Are residential rates protected for 20 years? Do you believe that? Me neither.
The poor in JXN Water and Entergy’s monopoly service areas will likely get poorer. They already struggle to pay for essential water and electricity. JXN Water and Entergy have failed to provide reliable affordable water and electricity. They are obliged to do so as regulated monopolies.
Has the Overton Window shifted to excuse these failures? No. It’s probably moving the other way to hold regulated utilities and their managers responsible for their failures, broken promises, secret deals, and unaffordable bills.
We’ll see.
Kelley Williams, a Northsider, is chairman of Bigger Pie, a Jackson-based think tank promoting free markets and government efficiency.
