Entergy Corporation Proposes Potential Pathways for Entergy New Orleans
The company will discuss management options at city council meetings this week
NEW ORLEANS, September 21, 2021 / PRNewswire / – Entergy Corporation (NYSE: ETR) announced today that it is preparing to respond to New Orleans City Council with four preliminary options for the future operation and ownership of its subsidiary, Entergy New Orleans, LLC. These preliminary options respond to the September 14 announcement by Helen Moreno, President of the Council of City of New Orleans and chair of its utilities committee, that she intends to propose a resolution to consider future ownership of electricity and gas operations in the City of New Orleans, including municipalization, or a public service owned and operated by the city.
“Despite a comprehensive and dedicated restoration effort that has seen the overwhelming majority of New Orleans Customers’ electricity was restored less than a week after the most severe hurricane ever to hit our region, several board members have expressed their intention to introduce and support a process that could potentially have another entity owner and operator of electricity and gas services in the city ”, mentioned West Stem, president of the utilities group of Entergy Corporation. “We are well positioned to support City Council as it assesses various options and are ready to move forward on the path chosen by Council.”
Entergy New Orleans, including its predecessor New Orleans Public Service Inc., was part of Entergy Corporation and the fabric of the New Orleans community for over 100 years. New Orleans was one of the first American cities to have a gas and electric street lighting system for its residents. Entergy New Orleans’ geographic footprint is defined by the New Orleans city limits and its regulatory body is the New Orleans City Council. New Orleans also houses the headquarters of Entergy Corporation.
Entergy New Orleans currently serves 207,000 electricity customers and 108,000 gas customers in the City of New Orleans, representing $ 633.8 million or approximately 6% of the total operating revenues of Entergy Corporation, for the year ending December 31, 2020. The subsidiary has more than 1,800 miles of power distribution lines, 144 miles of transmission lines and approximately 640 megawatts of power generation. The company also owns 36 miles of natural gas transmission lines and over 1,700 miles of natural gas distribution lines.
The preliminary options to be considered fall into four broad categories:
Merger with Entergy Louisiana – A merger of Entergy New Orleans with Entergy Louisiana, a separate subsidiary of Entergy Corporation, to create a business for everyone Louisiana clients and regulated by the Louisiana Public Service Commission. Merger would lower rates New Orleans residents, create a larger business with greater financial soundness for investments, and spread the risk of storm costs across a broader customer base.
Entergy New Orleans Sale – A sale or merger of Entergy New Orleans with another utility or private entity. This would allow city council to retain regulatory authority over pricing and regulatory policy. If a willing buyer with sufficient financial strength is identified, such a transaction could result in advantages or disadvantages depending on the specific circumstances of the transaction.
Stand-Alone Business – A spin-off company to establish a stand-alone business without the ownership of Entergy Corporation. This would allow city council to retain regulatory authority over pricing and regulatory policy and retain the head office of a smaller company. On the other hand, this would likely create significant credit risk, which in turn would increase funding costs and could challenge the ability to fund ongoing business operations and secure funds for storm recovery. Even as a member of Entergy Corporation, Entergy New Orleans has been downgraded twice in the past twelve months by rating agencies due to its storm risk and weaker financial performance.
City of New Orleans Run Utility – A municipalization of Entergy’s assets by the City of New Orleans thus the city can assume the direct management of the electricity and gas systems for the customers. This would allow the city to have maximum control over customer rates and business operations, the elimination of a rate of return requirement and access to potential reimbursements offered under the Stafford Relief Act. disaster and emergency assistance. However, this could result in higher financing costs and additional operational expenses.
“It is evident that we have reached a critical point in our relationship with city council,” West said. “While we believe that the actions of Entergy New Orleans have always been in the best interests of our New Orleans clients, some board members have publicly expressed a different opinion. Certain proposed actions would prohibit ENO from recovering critical storm restoration costs and freezing previously approved funding mechanisms by the board, thereby inflicting a further financial decline on ENO and negatively affecting ENO’s ability to provide quality service. to its customers.
“The New Orleans City Council and ENO have a long history of working together to find common ground on solutions for customers who solve complex problems and achieve goals important to a sustainable energy future for New Orleans“West said.” The expected council resolution will force it to make an important choice: will the city continue with Entergy as its energy partner or pursue another alternative?
Among the Entergy New Orleans initiatives and programs created in partnership with the Town Hall are:
Established a mutually beneficial operating framework in 2006 that ensured continued service to customers and the company’s financial solvency in the aftermath of Hurricane Katrina, the most devastating natural disaster in the city’s 300-year history.
The planned addition of 90 MW of profitable solar projects for everyone, including the New Orleans Solar Station, a 20 MW solar power plant in New Orleans.
The ReNEWable Orleans Residential Rooftop Solar Program, which offers low-income customers the option of installing solar panels on their roof at no cost to the customer. The program has installed signs on more than 100 homes in New Orleans.
The Entergy Energy Smart program, which provides energy efficiency tools and services to everyone New Orleans residents. The program was recently named ENERGY STAR Partner of the Year by the US Department of Energy for its commitment and dedication to energy efficiency.
Total Power, which helps LIHEAP-eligible households with monthly energy grants and energy efficiency education services.
The installation of advanced meters, which help customers to better manage their energy consumption and provide faster response times during an outage.
The Commercial Rooftop Solar Program, which has already installed more than 5 MW of solar resources distributed on the roofs of New Orleans companies. The largest installation of this type in Louisiana resides in New Orleans East at 2.4 MW.
The New Orleans Power Plant, which is a 128 MW power plant located within city limits and designed to deliver reliable power to customers more efficiently with less impact on the environment. This installation was essential to provide the first lights to New Orleans customers following damage from Hurricane Ida, near Category 5 winds.
The city council’s utilities committee is expected to pass its resolution by launching a property study on Wednesday September 22, 2021.
About Entergy New Orleans
Entergy New Orleans, LLC is an electric and gas utility that serves Louisiana Parish of Orleans. The company supplies electricity to more than 200,000 customers and natural gas to more than 108,000 customers. Entergy New Orleans, LLC is a subsidiary of Entergy Corporation, an integrated energy company engaged in retail electricity generation, transmission and distribution operations. Entergy supplies electricity to 3 million utility customers by Arkansas, Louisiana, Mississippi and Texas. Entergy owns and operates one of the cleanest large-scale power generation farms in the United States with approximately 30,000 megawatts of power generation capacity, including 7,000 megawatts of nuclear power. Based at New Orleans, Louisiana, Entergy has an annual turnover of 10 billion dollars and approximately 12,500 employees. Learn more at entergy.com and follow @Entergy on social media.
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SOURCE Entergy Corporation