Entergy proposes options for future operation of Entergy New Orleans

Published on September 22, 2021 by Chris Galford

Credit: Entergy

Entergy Corp. on Wednesday proposed four preliminary options for the future operation and ownership of its subsidiary, Entergy New Orleans, as the New Orleans City Council considers new oversight measures for the utility in the aftermath of Hurricane Ida.

Entergy New Orleans, formerly the New Orleans Public Service Inc., has been in operation for more than 100 years, providing electric and gas operations within city limits. As a result, it is regulated by the New Orleans City Council, although the larger Entergy Corp. is also housed within the city. Both the city and Entergy were heavily impacted by the Category 4 Hurricane Ida earlier this month. 

“Despite a comprehensive and dedicated restoration effort that saw the overwhelming majority of New Orleans customers’ power restored within a week after the strongest hurricane ever to hit our region, several members of the council have expressed their intent to introduce and support a process that could potentially have another entity own and operate electric and gas service in the city,” Rod West, utility group president of Entergy Corp., said. “We are positioned to support the City Council as they evaluate various options and prepared to move forward with whatever path the council chooses.”

Entergy proposed four preliminary options to the city council:

  1. Merging Entergy New Orleans with Entergy Louisiana to create a single, larger company;
  2. Selling Entergy New Orleans to another public utility or entity, while retaining the city council’s regulatory authority over it;
  3. Spinning off Entergy New Orleans into its own standalone company;
  4. A municipalization of Entergy New Orleans’ assets by the city, granting the council direct management of its electric and gas systems.

Entergy Corp. said a merger with Entergy New Orleans (ENO) would bring lower rates to New Orleans residents, create a larger company with stronger financial strength for investments, and spread the risk of storm costs across a larger customer base.

New Orleans City Council President and Utilities Committee Chair Helena Moreno announced on Sept. 14 several measures she sponsored that focus on oversight of Entergy. Those measures include an investigation of the power, generation, and transmission failures that led to the Hurricane Ida blackout; a new study on retail competition and utility ownership in New Orleans; a management audit of Entergy New Orleans’ operations; and filing complaints to the Louisiana Public Service Commission and Federal Energy Regulatory Commission about transmission infrastructure failures. The city council’s Utility, Cable, Telecommunications and Technology Committee met on Wednesday to discuss the issues.

Entergy New Orleans, West said, has always worked in the best interest of its customers. If the newest actions under consideration by the council were adopted, however, he said the company would be forbidden from recovering critical storm restoration costs and freeze funding mechanisms previously approved by the council. This, in turn, would lead to hastened financial and service declines for the company’s 207,000 electric customers and 108,000 gas customers.

“The New Orleans City Council and ENO have a long history of working together to find common ground on solutions for customers that solve complex problems and achieve important objectives to a sustainable energy future for New Orleans,” West said. “The council’s expected resolution will require it to make an important choice: will the city continue with Entergy as its energy partner or pursue another alternative?”

The Entergy subsidiary owns more than 1,800 miles of electric distribution lines, 144 miles of transmission lines and approximately 640 MW of power generation capabilities. For gas, it owns 36 miles of natural gas transmission lines and more than 1,700 miles of natural gas distribution lines. 

Entergy said Wednesday that its utilities had restored power to approximately 932,000 customers, which is 98 percent of customers affected by the Aug. 29 storm. Entergy had deployed a workforce of approximately 27,000 workers from 41 states to respond to the power restoration effort. The storm’s damage across Entergy’s system included more than 30,500 distribution poles, nearly 6,000 transformers, nearly 36,500 spans of distribution wire, more than 225 substations, and more than 210 transmission lines, the company said.

Over the past five years, Entergy’s operating companies have invested $9.5 billion in transmission and distribution assets that met or exceeded then-current resiliency standards, and Entergy said that Hurricane Ida demonstrated the benefits of those investments. 

According to the company, total restoration costs for the repair and/or replacement of the electrical facilities damaged by Hurricane Ida are estimated to be in the range of $2.1 billion to $2.6 billion. Most of the storm costs were incurred by Entergy Louisiana and Entergy New Orleans. The preliminary estimate for Entergy Louisiana is $2 billion to $2.4 billion, and the preliminary estimate for Entergy New Orleans is $120 million to $150 million.