Since July of 1996 the Technology Assessment Division in DNR has been contacted by at least four engineering or consulting firms requesting data and indicating that they are involved in planning NUG cogeneration facilities for plants in Louisiana. Names of the plants were not discussed. It is not known whether these facilities are existing industrial NUGs expanding, non-generators now on a utility's system, or industrial firms new to Louisiana. The effects electricity rate decreases in Louisiana have on the utility's existing industrial customer base, on th other hand, are not symmetric with the effects of rate increases. Price decreases for the industrial plants who currently buy electricity form the utilities are likely to have sales revenues effects similar to those exhibited by residential and commercial consumers.
Electricity consumption is more likely to be affected by production requirements than price.
However, if the percentage increase in consumption is more than offset by the percentage price reduction, the net effect will be a decrease in utility electricity sales revenues. Industrial electricity rate decreases can have effects which are similar to, but the reverse of, the effects of industrial rate increases. These effects hold for both the new plants of new industrial entrants into the state and plant expansions by NUGs who may not be on the utility system. If the utility can offer rates to the potential industrial which are below that customer's cost of self-generating electricity, then sales revenues may be increased incrementally and in greater proportion than the percentage rate decrease. This is particularly true if special lower rates can be applied on an industrial facility by industrial facility basis rather than through a general industrial rate decrease.