Last week’s New Orleans City Council’s Utility Committee meeting was a contentious match between councilmembers and Entergy New Orleans CEO Charles Rice. Entergy Corp, the parent company to Entergy New Orleans, has been working to join the Midwest Independent Transmission System Operator (MISO), slowly transitioning the transmission business away from their wholly owned subsidiary companies, including Arkansas and Mississippi, and ending their Entergy System Agreement. This System Agreement, more than 50 years old, has been advantageous to New Orleans ratepayers, offering the ability to share in low cost energy from other Entergy Operating Companies, as far away as Texas and Arkansas. The greatest point of argument included Entergy New Orleans’ support of a change to the Agreement, allowing a company to withdraw from the System Agreement with a termination notice period of 5 years, as opposed to the current notice period of 8 years. Mr. Rice responded to council’s questions about this time change saying this exit provision time is based on the length of time needed to build new generating plants.
According to Entergy’s own study, early termination of the System Agreement would result in “harm to New Orleans rate payers in the tens of millions of dollars.” Councilmembers Hedge-Morrell, Head, and Grey each argued ways in which ENO, and Mr. Rice’s actions to support early termination option was not beneficial to New Orleans rate payers. Council and advisors commented on the assistance the city has given to Entergy, since ENO went into bankruptcy after Hurricane Katrina, and council legal advisor Clint Vince requested that the utility “help us out.”
The other agenda item regarding the MISO transition involves Transmission Pricing Zones. Entergy’s recent regulatory filings suggest that ENO supports the decision to create a state-wide Transmission Pricing Zone, meaning New Orleans ratepayers would share costs of transmission in other parts of the state, with no additional benefits to the city, leading to higher rates. Council member Guidry noted that not only do all other Entergy companies get their own TPZs under the new MISO agreements, even Cleco, a utility that serves parts of Louisiana, has been granted their own TPZ. Should the state-wide TPZ be granted by the FERC, the council’s authority for transmission will be lost to the Louisiana Public Service Commission. Councilwoman Hedge-Morrell discussed the history and value of New Orleans’ independence from the LPSC, stating, “We will fight as hard as we can to never be under the LPSC for anything.”
In the end, the committee voted to initiate prudence investigations into whether ENO’s decisions were made in the best interest of the public. Each Council member who spoke indicated frustration and disappointment with Entergy New Orleans’ actions, and held Mr. Rice responsible for each decision along the way.