Louisiana Energy Efficiency, Entergy, and Lost Revenue Charges

FACT-CHECK & RESEARCH DOSSIER

LOUISIANA ENERGY EFFICIENCY,
ENTERGY, AND “LOST REVENUE” CHARGES

What Louisiana customers are actually paying, what LCFC means, and whether “customers reimburse Entergy for lost profits” is true.

Prepared for Stoney Hughes

October 5, 2026

Executive Summary

Claim under review: Because Louisiana is adopting energy-efficiency policies, Entergy will charge customers to make up revenue or profit it loses when customers use less electricity.

FACT-CHECK VERDICT: SUBSTANTIALLY TRUE, WITH IMPORTANT QUALIFICATIONS

• Verified: The Louisiana Public Service Commission’s current Energy Efficiency Rules expressly authorize utilities to recover a “Lost Contribution to Fixed Costs” (LCFC) amount through an energy-efficiency rate rider. [1]

• Verified: Entergy Louisiana’s current Energy Efficiency Cost Rate Rider, effective June 1, 2026, includes $3,912,695 of projected residential LCFC and $2,089,804 of projected non-residential LCFC — $6,002,499 combined. [2]

• Verified: The rider is charged to applicable retail customers based on monthly kWh usage. The total rider rate is $0.00184/kWh for residential customers and $0.00121/kWh for non-residential customers. [2]

• Important correction: It is no longer accurate to say customers “may soon” pay this charge. For Entergy Louisiana customers subject to the rider, it is already in effect as of June 1, 2026. [2]

• Important correction: LCFC is not simply a check for “lost corporate profit.” It is designed to recover the non-fuel margin that would otherwise contribute to fixed costs and authorized earnings when approved efficiency programs reduce sales. National regulatory guidance recognizes that lost margin can include earnings/profit for investor-owned utilities. [3][4]

• Important historical context: Louisiana has used LCFC-style recovery since the Quick Start efficiency program was implemented in 2014. The current 2026 LEEP framework is new, but the basic lost-margin concept is not. [1][5]

The Numbers That Matter Right Now

Direct projected LCFC is about 11.6% of the current $51.9 million rider requirement. That does not necessarily capture every LCFC-related dollar because true-up lines can include prior-period under- or over-recovery, and Entergy’s tariff notes that unrecovered prior LCFC can be carried forward. [2]

1. What Is “Lost Contribution to Fixed Costs”?

The easiest way to understand LCFC is to separate a utility bill into two broad buckets: variable costs and fixed-cost margin.

• Variable costs change when electricity use changes — fuel and some operating costs are the clearest examples.

• Fixed costs do not fall proportionally just because a customer uses fewer kWh — poles, wires, substations, billing systems, much of staffing and infrastructure, debt service, depreciation, and the utility’s authorized return are recovered through rates over time.

• Traditional utility rates recover much of that fixed-cost revenue through per-kWh charges. If an efficiency program causes customers to buy fewer kWh, the utility can collect less fixed-cost margin even though many fixed costs remain.

LCFC is the regulatory mechanism that restores that lost margin attributable to approved efficiency programs. DOE/EPA guidance describes “lost margin” as revenue that would have contributed to fixed costs, including earnings or profits for an investor-owned utility. It also warns that a utility should not automatically treat every reduction in sales as a compensable loss. [3]

Why “lost profit” is both understandable and incomplete

Reasonable shorthand: Because authorized shareholder return is part of the utility revenue requirement, LCFC can protect earnings that otherwise would be reduced when efficiency lowers sales.

Too broad if stated literally: Louisiana’s formula is not described as reimbursement of Entergy’s actual net-income shortfall. The rule generally bases the class LCFC factor on projected non-fuel revenues divided by projected sales, then applies that factor to efficiency savings. [1]

2. What Louisiana’s Current 2026 Rules Actually Say

The controlling statewide LPSC order is General Order No. 01-08-2026 in Docket R-31106. It superseded earlier orders and established LEEP beginning January 1, 2026. [1]

• Utilities may recover direct energy-efficiency program costs, including rebates, customer incentives, evaluation/measurement/verification (EM&V), and comparable implementation costs. [1]

• In addition, utilities are permitted to recover an LCFC amount. LCFC is separately identified in program budgets and is subject to true-up. [1]

• For utilities with a Formula Rate Plan or Rate Stabilization Plan, the utility must demonstrate it is not over-recovering its allowed revenues when LCFC is included. [1]

• If LCFC pushes the utility above the permitted rate-of-return band, refund provisions can apply. [1]

• The third-party evaluator verifies savings because the amount of lost-revenue recovery depends on those savings calculations. [1]

• The overall efficiency portfolio must generally meet or exceed a 1.0 Total Resource Cost test each year. [1]

The key fact: the LPSC rule does not merely let Entergy recover the cost of operating efficiency programs; it separately permits recovery of LCFC created by energy savings. [1]

3. Entergy Louisiana Is Already Collecting the Rider

Entergy Louisiana’s current Schedule EECR took effect June 1, 2026. It superseded prior efficiency riders and applies to LPSC-jurisdictional retail electric customers except qualifying opt-outs and certain special-rate contracts. [2]

• Residential EECR rate: $0.00184 per kWh (0.184 cents/kWh). [2]

• Non-residential EECR rate: $0.00121 per kWh (0.121 cents/kWh). [2]

• Projected residential LCFC: $3,912,695. [2]

• Projected non-residential LCFC: $2,089,804. [2]

• Combined direct projected LCFC: $6,002,499. [2]

Illustrative residential bill impact

**Derived from Entergy’s filed residential projected LCFC divided by the filed residential billing units. This is an analytical estimate of the direct projected LCFC component, not a separately labeled LCFC line on an individual bill. True-ups may also contain prior-period LCFC. [2]

4. Timeline: This Did Not Start in 2026

5. Why Regulators Use LCFC — and Why Critics Object

Regulatory argument for LCFC

• A utility required or encouraged to help customers use less electricity has a financial disincentive under traditional volumetric rates: successful efficiency lowers sales and can reduce fixed-cost recovery.

• LCFC is designed to make the utility financially neutral, or closer to neutral, toward Commission-approved efficiency programs.

• National utility-policy literature recognizes lost-revenue adjustment mechanisms as one accepted way to address this disincentive, although they are not the same as full revenue decoupling. [3][4]

Consumer and ratepayer objections

• Customers can reasonably ask why they should pay a surcharge precisely because they successfully used less electricity.

• LCFC depends on measuring how much electricity was saved because of the program rather than because of weather, economic conditions, customer behavior, or upgrades that would have happened anyway. That creates measurement risk. [3][4]

• A poorly designed LCFC can overcompensate a utility if lost-margin recovery overlaps with later rate adjustments or other mechanisms. Louisiana’s 2026 rule attempts to address this with FRP/RSP reviews, true-ups and refund provisions. [1]

• The Alliance for Affordable Energy has criticized Louisiana LCFC as a “ghost charge” and argued that formula-rate mechanisms already protect utilities from under-recovery. That is an advocacy position, not an uncontested fact, but it identifies the central double-recovery concern. [9]

6. Safeguards in the 2026 Rules — and the Questions That Remain

The unresolved analytical question is not whether LCFC exists — it clearly does. The deeper question is whether the amount Entergy ultimately keeps is justified after accounting for FRP revenue recovery, verified savings, avoided costs, customer growth, weather and prior-period true-ups.

7. Who Pays and Who Can Avoid the Program

The current rules do not treat every Louisiana customer identically. LEEP applies to LPSC-jurisdictional utilities. Entergy New Orleans is regulated separately by the New Orleans City Council and should not be conflated with Entergy Louisiana.

• Industrial customers are generally excluded from LEEP but may opt in. [1]

• For electric service, the rules exclude entities receiving power at 69 kV or higher and allow certain large industrial accounts to opt out under specified demand thresholds. [1]

• The current Entergy tariff excludes qualifying opt-out customers and certain special-rate-contract customers from the EECR rider. [2]

• The 2026 electric-utility program budget cap begins at 1% of each utility’s 2023 revenue base, adjusted for excluded industrial customers, and can grow up to 1.5% by year four. [1]

• At least 15% of the residential portfolio budget must go to low-income residential programs. [1]

• Customer incentives are intended to comprise at least 70% of annual program budgets at the start of the cycle, rising toward 75% and eventually a goal of 80% with program maturity. [1]

8. Fact-Check Matrix for the Screenshot Claim

9. What I Would Pull Next for a Full Audit

If the goal is to determine whether Entergy is being fairly made whole or being overcompensated, these are the documents that matter most:

• Entergy Louisiana’s 2026 EECR workpapers, especially the LCFC factor calculation (WP-2) and the full prior-period true-up schedules.

• The independent EM&V report showing verified kWh savings by program and customer class.

• Entergy Louisiana’s 2025 test-year Formula Rate Plan annual review and the exact treatment of LCFC in the FRP revenue calculation.

• Any LPSC staff memorandum determining whether Entergy’s LCFC produces over-recovery relative to its authorized return band.

• Any refund or disallowance ordered after the FRP/EECR reconciliation.

• A breakdown of the $3.906 million net prior-period true-up identifying how much is program cost, LCFC and carrying cost.

• The number and load share of industrial customers excluded or opted out, because that determines how program costs are distributed among remaining customer classes.

Questions worth putting directly to the LPSC and Entergy

• How much LCFC has Entergy Louisiana collected in each year since 2014?

• How much of those LCFC collections was later refunded because of FRP over-earning or reconciliation?

• What exact portion of the current true-up is prior-period LCFC?

• What is Entergy Louisiana’s actual earned return on equity after LCFC is included?

• What percentage of LEEP savings would have occurred without the program, and how is that adjusted in LCFC?

• Does Entergy receive any separate performance incentive in addition to program-cost recovery and LCFC under the current LPSC rules?

10. Final Conclusion

The rumor is not nonsense. Louisiana’s current regulatory structure explicitly allows Entergy Louisiana to charge customers an energy-efficiency rider that includes compensation for lost fixed-cost contribution caused by approved energy savings. That is a real, documented charge — not a social-media invention.

But accuracy matters. Calling the entire mechanism “repayment of lost profits” overstates what the tariff actually says. LCFC is lost margin/fixed-cost recovery, and that margin can include authorized profit. The strongest accurate phrasing is: “Louisiana allows Entergy to recover from customers the fixed-cost margin — including the portion supporting authorized earnings — that the utility loses when Commission-approved efficiency programs reduce electricity sales.”

And one final correction to the screenshot: for Entergy Louisiana customers covered by Schedule EECR, this is not merely a future possibility. The current rider has been effective since June 1, 2026.

Sources & Research Notes

Primary sources were prioritized. Advocacy and media sources are used only for criticism, historical context, or disputed interpretations.

[1] Louisiana Public Service Commission. General Order No. 01-08-2026 (R-31106), Louisiana Energy Efficiency Program Rules. Jan. 8, 2026. Source — Controlling current LPSC rules; especially Attachment A on cost recovery, LCFC, program design, budget caps and opt-in/opt-out provisions.

[2] Entergy Louisiana, LLC. Energy Efficiency Cost Rate Rider, Schedule EECR. Effective June 1, 2026. Source — Current tariff with rider rates, projected program costs, LCFC amounts, true-ups and billing units.

[3] U.S. Department of Energy / U.S. EPA National Action Plan for Energy Efficiency. Aligning Utility Incentives with Investment in Energy Efficiency. 2007. Source — Explains lost margin, fixed-cost recovery, earnings component and regulatory pros/cons.

[4] American Council for an Energy-Efficient Economy (ACEEE). Valuing Efficiency: A Review of Lost Revenue Adjustment Mechanisms. 2015. Source — Defines LRAM/LCFC and discusses evaluation, timing and over-recovery concerns.

[5] Louisiana Public Service Commission. RFP 24-09 / procedural history of R-31106. 2024. Source — Official history confirming development of LCFC under Quick Start and implementation by Entergy Louisiana, Cleco and SWEPCO.

[6] Louisiana Illuminator. Customers who save on electric bills could be forced to pay utility company for lost profits. July 26, 2024 (corrected). Source — Correction states LCFC was not included in the final 2024 Phase II rules.

[7] Louisiana Public Service Commission. General Order No. 05-06-2025 (R-31106). May 6, 2025. Source — Documents abandonment of the 2024 statewide structure and development of a replacement approach.

[8] Louisiana Public Service Commission. General Order 08-28-2025 (R-31106). Aug. 28, 2025. Source — LEEP rule adopted in 2025; later superseded by the Jan. 8, 2026 order.

[9] Alliance for Affordable Energy. Surprising Return of Energy Efficiency Means Great Things to Come for LA. Aug. 29, 2025. Source — Ratepayer-advocacy criticism of LCFC and argument that formula-rate mechanisms can make separate LCFC unnecessary.

Methodology note: The estimated direct residential LCFC-per-kWh component is $3,912,695 divided by 13,801,606,554 projected residential kWh, approximately $0.0002835/kWh, or about $0.28 per 1,000 kWh. This does not isolate LCFC embedded in prior-period true-up amounts.