NEW ORLEANS, Sept. 21, 2021 /PRNewswire/ -- Entergy
Corporation (NYSE: ETR) announced today that it is preparing to
respond to the New Orleans City Council with four preliminary
options for the future operation and ownership of its subsidiary,
Entergy New Orleans, LLC. These preliminary options are in response
to the Sept. 14 announcement by
Helena Moreno, president of the
Council of the City of New Orleans
and chairperson of its Utility Committee, that she intends to
propose a resolution to study the future ownership of the electric
and gas operations in the City of New
Orleans, including municipalization, or a city-owned and
managed utility.
"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," said Rod West, utility group president of Entergy
Corporation. "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 New Orleans, including its predecessor New Orleans
Public Service Inc., has been part of Entergy Corporation and the
fabric of the New Orleans
community for more than 100 years. New
Orleans was one of the first U.S. cities to have a public
gas and electric light system for its residents. Entergy New
Orleans' geographic footprint is defined by the New Orleans city limits and its regulating
body is the New Orleans City Council. New
Orleans is also home to the corporate headquarters of
Entergy Corporation.
Entergy New Orleans currently services 207,000 electric
customers and 108,000 gas customers in the City of New Orleans, representing $633.8 million or approximately 6% of Entergy
Corporation's total operating revenues, for fiscal year ending
Dec. 31, 2020. The subsidiary owns
more than 1,800 miles of electric 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 more than 1,700 miles of natural gas
distribution lines.
Preliminary options for consideration 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 establish one company for all Louisiana customers and regulated by the
Louisiana Public Service Commission. A merger 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.
- Sale of Entergy New Orleans – A sale or merger of Entergy New
Orleans with another public utility or private entity. This would
allow the City Council to retain regulatory authority over
ratemaking and regulatory policy. If a willing buyer with
sufficient financial strength is identified, such a transaction
could lead to benefits or drawbacks depending on the specific
circumstances regarding the transaction.
- Standalone Company – A spinoff to establish a standalone
company without Entergy Corporation's ownership. This would allow
the City Council to retain regulatory authority over ratemaking and
regulatory policy and retain the headquarters of a smaller-scale
company. Contrastingly, it would likely create significant credit
risk, which in turn would raise financing costs and could challenge
the ability to fund ongoing business operations and secure funds
for storm restoration. Even as part of Entergy Corporation, Entergy
New Orleans has been downgraded twice in the last twelve months by
rating agencies due to its storm risk and weakening financial
performance.
- City of New Orleans Run Utility – A municipalization of
Entergy's assets by the City of New
Orleans so the city can assume direct management of the
electric and gas systems for 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 afforded under the Stafford
Disaster Relief and Emergency Assistance Act. However, it could
result in higher financing costs and additional operational
expenses.
"It is obvious that we have reached a critical juncture in our
relationship with the City Council," said West. "While we believe
that the actions of Entergy New Orleans have always been in the
best interest of our New Orleans
customers, some members of the council have publicly expressed a
different opinion. Certain proposed actions would prohibit ENO from
recovering critical storm restoration costs and freeze funding
mechanisms previously approved by the council, thus inflicting
further financial decline on ENO and adversely impacting 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
that solve complex problems and achieve important objectives to a
sustainable energy future for New
Orleans," said West. "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?"
Among the initiatives and programs Entergy New Orleans created
in partnership with the City Council are:
- Established a mutually beneficial operational framework in 2006
that guaranteed the continued service for customers and the
financial solvency of the business in the aftermath of Hurricane
Katrina, the most devastating natural disaster in the city's
300-year history.
- The expected addition of 90 MW of cost-effective solar projects
for everyone, including the New Orleans Solar Station, a 20 MW
solar plant in New Orleans.
- The ReNEWable Orleans Residential Rooftop Solar Program, which
gives low-income customers the opportunity to have solar panels
installed on their rooftop at no cost to the customer. The program
has installed panels on more than 100 New Orleans homes.
- The Entergy Energy Smart Program, which provides energy
efficiency tools and services to all New
Orleans residents. The program was recently awarded the
ENERGY STAR partner of the year recognition by the U.S. Department
of Energy for its commitment and dedication to energy
efficiency.
- Total Power, which helps LIHEAP eligible households with
monthly energy subsidies and energy efficiency education
services.
- The installation of Advanced Meters, which helps customers
better manage their energy usage and provides quicker response
times during an outage.
- The Commercial Rooftop Solar Program, which has already
installed more than 5 MW of distributed-scale solar resources on
rooftops of New Orleans
businesses. The largest installation of this kind in Louisiana resides in New Orleans East at 2.4
MW.
- The New Orleans Power Station, which is a 128-MW power station
located inside the city limits and designed to support the delivery
of reliable power to customers more efficiently with less
environmental impact. This facility was critical to providing the
first lights to New Orleans
customers in the wake of Hurricane Ida's damaging, near Category 5
winds.
The City Council's Utility Committee is expected to pass its
resolution initiating an ownership study on Wednesday, Sept. 22, 2021.
About Entergy New Orleans
Entergy New Orleans, LLC is
an electric and gas utility that serves Louisiana's Orleans
Parish. The company provides 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 electric power production,
transmission and retail distribution operations. Entergy delivers
electricity to 3 million utility customers in Arkansas, Louisiana, Mississippi and Texas. Entergy owns and operates one of the
cleanest large-scale U.S. power generating fleets with
approximately 30,000 megawatts of electric generating capacity,
including 7,000 megawatts of nuclear power. Headquartered in
New Orleans, Louisiana, Entergy
has annual revenues of $10 billion
and approximately 12,500 employees. Learn more at entergy.com and
follow @Entergy on social media.
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SOURCE Entergy Corporation