Entergy New Orleans seeks $150M in bonds to replenish storm reserve depleted following Hurricane Ida
In an effort to replenish its depleted storm reserve and reduce the impact on customers in the process, Entergy New Orleans sought permission from the New Orleans City Council this week to issue $150 million in securitized bonds.
“Storm reserves allow Entergy New Orleans to access an important source of funding during a severe storm,” Deanna Rodriguez, Entergy New Orleans president and CEO, said. “Increasing, replenishing, and funding the company’s storm reserve ensures that Entergy New Orleans is prepared to meet its customers’ needs should another storm occur.”
Hurricane Ida was responsible for the depletion of the storm reserve. A massive Category 4 hurricane that struck last year, its destructive power in Louisiana was second only to Hurricane Katrina in 2005. At landfall, it sported winds of 150 mph, and the damage it caused through the state led to massive restoration efforts that drained Entergy New Orleans’ coffers, leaving its coverage area exposed as the next hurricane season approaches.
Replenishment is a costly endeavor, though, and one potentially burdensome for customers. As a result, Entergy proposed the securitization bonds – which would allow it to borrow money and fund customer investment at lower interest rates than with money borrowed through traditional financing – which, according to its estimates, could save customers approximately $50 million. Entergy New Orleans provides electricity to more than 209,000 customers in Orleans Parish and natural gas to more than 110,000.
Billing for the recovery would begin on the next billing cycle and last approximately 15 years if approved by the New Orleans City Council. It would appear as a line-item charge and, for the typical residential electric customer, would bring an increase of approximately $3.94 per month. Over time, that would decrease to about $2.75 per month for the average customer after 10 months.
