New Orleans mulls options amid anger at utility

NEW ORLEANS — There was brinksmanship with a whiff of ransom.

In the aftermath of a citywide blackout that lasted for days after Hurricane Ida hit on Aug. 29, dissatisfaction among residents and city leaders was growing with utility company Entergy New Orleans and its parent, utility giant Entergy Corp.

New Orleans City Council President Helena Moreno called for an investigation of the generation and transmission problems that led to a blackout related to Ida; a study on retail competition and utility ownership in New Orleans and a management audit of Entergy New Orleans. She also suggested there could be a suspension in any rate changes for the utility.

“It is obvious that we have reached a critical juncture in our relationship with the City Council,” Entergy Corp. executive Rod West said in a statement in response that said the corporation might give the city what it wants, whatever that might be.

There was the possible municipalization of New Orleans’ power system, putting the city among approximately 20 other cities and towns in Louisiana that operate their own systems.

There was the possibility that Entergy might merge its New Orleans subsidiary with Entergy Louisiana, which serves much of the state — and which is regulated by the Louisiana Public Service Commission.

The sale of Entergy New Orleans to another entity or the spinoff of a non-Entergy utility were also broached.

Each of the options outlined by Entergy has its pros and cons. Should a city facing numerous infrastructure problems, including an aging street drainage system, take on the responsibility of running an electric and gas utility? Would elimination of the corporate need for profit hold down rates? Would a city face higher or lower costs than a company?

Entergy said a merger of its New Orleans and Louisiana subsidiaries would result in lower rates in New Orleans. But it also means regulation would shift from the City Council to the Louisiana Public Service Commission, political power the locals might not want to cede as they seek to check the power of a monopoly that provides a vital service.

The possibility of selling the utility or spinning off a separate company would keep the council’s regulatory authority, but, as West’s statement suggested, there are no guarantees that a buyer could be found or that another company would have lower costs.

Complicating the argument were talking points Moreno said she received from the company last week. Moreno said they appeared to have been sent accidentally and Entergy spokesman Jerry Nappi said, in response to an email query, that they were. Regardless, they made clear that Entergy was ready to raise the possibility that its headquarters might move from New Orleans if it doesn’t operate a utility in the city any more.

The company says it employs 3,200 in the metropolitan New Orleans area. And the suggestion that Entergy could leave might stir uncomfortable memories of the migration of oil company headquarters out of the city beginning in the 1980s.

The latest criticism of Entergy comes after all eight transmission lines serving the city failed during Ida and the collapse of a high voltage tower by the Mississippi River; also, amid debate over whether a new gas-fired generation plant in eastern New Orleans, opposed by many who didn’t want a fossil-fuel plant in their neighborhood, performed as it was supposed to during the hurricane.

And memories remain fresh for many that the council approved construction of that plant, despite strident opposition, after Entergy was fined $5 million over the use of secretly paid actors to show up at public hearings in support of the plant.

Anger at Entergy flared anew after Ida left hundreds of thousands in the city sweltering for days. Critics say the utility hasn’t done enough to “harden” its system in preparation for major storms, or to move with sufficient speed to renewable energy sources, allegations the company denies.

After lengthy hearings Wednesday, New Orleans’ council voted Thursday for a series of proposals, broad in scope, but none promising a quick resolution. Among them is a request for proposals for consultants who will study the options before the council.

“This isn’t a push to do any one of these things,” Moreno said during Thursday’s meeting. “Not to bring in another company, not to municipalize, not to whatever. We just don’t know. This is really a push for more information.”