Picture a cage match: The Publisher of the Northside Sun versus the CEO of Entergy Mississippi. No holds barred. Odds favor the CEO. My money’s on the underdog Publisher (think Charles Bronson in Hard Times). Last week’s Northside Sun reported the face-off in dueling editorials: “Tell it like it is and go for the gut” versus “spin it for the public and rope-a-dope.”
The question at the heart of the showdown: Who pays for the massive infrastructure to power Amazon’s new data centers in Mississippi—Amazon, or Entergy’s residential and small business customers? Entergy wins either way and gets a 10.5% return on its cost. Amazon wins if it pays less than its fair share. Small customers lose if they pay more than their fair share. Their rates go up dramatically.
This is not just a Mississippi story. In other states, data centers have led to skyrocketing residential rates—up 27% in Georgia. Rates expected to double in Virginia. Why? Because if data centers don’t pay their proportionate share of infrastructure costs, small customers pick up the tab. This is known as the “data center effect.”
Entergy’s infrastructure spending for Amazon is estimated at $3 billion. In comparison, the estimated cost to upgrade its existing system for small customers is $500 million—just 17% of the Amazon-related cost. On that basis, small customers should pay 17% and Amazon should pay 83%. But don’t bet on it.
We don’t know the actual split of the cost. Amazon has a “trade secret” rate. It may be fixed regardless of infrastructure cost. Residential rates will be set by a 315-page bill sponsored by our political leaders. They brokered the deal with Amazon. Did Entergy’s lawyers draft the bill? It clearly favors Entergy at the expense of small customers.
How? The bill strips the Public Service Commission (PSC) of its regulatory authority to review Entergy’s costs and approve those that are prudent to be passed on to customers. It also removes the annual 4% cap on rate increases and allows Entergy unlimited spending on infrastructure with no-bid contracts. The result: higher rates expected for small customers.
In other states, data center effects have been tempered by strong Public Service Commissions and legislative checks on infrastructure spending. Not here. So small customers may see a record-high data center effect.
The Publisher understands and articulates these points. The CEO likely understands them too, but spins a different narrative. He claims small customers’ rates were already set to rise due to needed infrastructure upgrades for grid reliability and new plant efficiencies. Entergy, he says, hesitated to upgrade its infrastructure and raise rates out of concern for small customers and a stagnant customer base.
Then along came Amazon with its $10 billion investment (now $16 B), 1,000 jobs (now 2,700 direct and indirect), corporate philanthropy, etc. The CEO says Amazon’s arrival was perfect timing—irresistible for Mississippi’s economy. He says customers need not worry about the bill’s tweaks to the PSC’s authority. Nothing has really changed. Future bills will be lower than they otherwise would have been. The Governor and the Legislature are on board. Amazon will help retain Mississippi’s next generation (less brain drain) and transform the state. What’s not to like? Just trust Entergy.
But secret deals don’t inspire trust. The bill doesn’t either. It says Entergy’s infrastructure costs will be deemed prudent if accurately recorded —no PSC review or “used and useful” test. All costs recorded by Entergy’s accountants go into the rate base. (Simpler that way. And better for Entergy.)
What if Entergy’s accounting is not accurate? In 2022, Entergy paid $300 million to settle accounting and other issues at its Grand Gulf Nuclear Plant. The PSC said unjustified higher costs were passed on to customers. It is the largest settlement in state history. (Is that why the PSC’s been sidelined?)
The CEO and the bill say the Amazon project will help stabilize the grid (energy resilience). But others say the opposite: that huge demand swings from data centers will actually destabilize the grid. Meanwhile, Entergy’s aggressive push for solar projects—and their intermittent, unreliable power—requires backup from natural gas plants. This duplication of capacity adds costs and raises rates. That’s happened in other states. More solar capacity has led to higher rates.
These competing narratives are about the future. As Yogi Berra said: “It’s hard to make predictions—especially about the future.” We’ll have to wait and see how this turns out. Residential rate increases from Entergy’s infrastructure costs are likely to hit just as the governor’s race kicks off. Large increases could influence the race.
History offers a lesson: Huey “Kingfish” Long, the former governor of Louisiana immortalized in All the King’s Men, ran a populist campaign against utilities and big business—and won. He became the scourge of Louisiana’s utility monopolies. He was assassinated.
Some recent Mississippi governors have allied with utilities. They are good bedfellows but bad news for small customers who have no political clout or voice.
Who’s speaking up for small customers? Wyatt Emmerich: the Publisher—the Cage Fighter. Thanks, Wyatt. Keep on truckin’.
Kelley Williams, a Northsider, is chairman of Bigger Pie, a Jackson-based think tank promoting free markets and government efficiency.
