Greenwell Springs, Louisiana – The DEMCO Board of Directors has announced it is initiating a dispute with its wholesale power supplier, CLECO Power, over fuel cost charges related to the Dolet Hills Power Station, a lignite plant located in Mansfield, LA. The dispute is based on an extensive audit performed by DEMCO to determine whether certain fuel charges in 2019, 2020 and 2021 were allowable under the contract. The dispute also cites findings by the Louisiana Public Service Commission (LPSC) staff consultant concerning the same matter. The Dolet Hills Power Station closed at the end of 2021.
“Our audit finds that CLECO Power ran the Dolet Hills plant during 2019, 2020 and 2021 when the costs charged to DEMCO were imprudent and significantly higher than power that was available on the market during the same period of time,” said Randy Pierce, CEO and General Manager of DEMCO. “The Public Service Commission staff has investigated these very issues on behalf of CLECO Power’s retail customers in central Louisiana and found the same result.”
Pierce said that DEMCO is still working to determine the exact amount of the overcharges and will seek a refund from CLECO Power for the full amount of the overcharges it is due under the CLECO Power contract, which DEMCO believes is likely to be over $30 million. If DEMCO and CLECO Power are unable to reach an agreement concerning the dispute, DEMCO will file a lawsuit against CLECO Power seeking to recover costs on behalf of its member/owners. “Since wholesale power costs are a direct passthrough to DEMCO members, every dollar recovered will be passed through to our members in the form of refunds or bill credits,” said Pierce.
Several LPSC consultants found the same result in a Commission docket investigating whether it was prudent for CLECO Power to run the Dolet Hills Power station during certain times over the past three years. Pierce said, “LPSC staff found that the imprudent operations of the Dolet Hills Power Station, that is, forcing the unit to run at costs that were substantially above the cost of other wholesale power options, has yielded a large suggested disallowance compared to costs CLECO Power has charged its retail customers.” LPSC staff estimates the disallowance for CLECO Power retail customers to be $217 million.
“DEMCO’s contract with CLECO Power calls upon both parties to operate in good faith according to prudent utility practices,” Pierce said. “Our audit agrees with the Public Service Commission staff investigation finding that the charges in dispute were imprudent according to prudent utility practices.”
“We will exhaust all options to recover these costs on behalf of DEMCO members. We will keep our members informed as we work through the process,” Pierce concluded.
DEMCO powers 114,420+ meters that serve over half a million people in a seven-parish service area of Southeast Louisiana:
Ascension, East Baton Rouge, East Feliciana, Livingston, St. Helena, Tangipahoa, and West Feliciana.
