Court Hearing on Entergy’s Lawsuit for Higher Profits

Photo by Paul Fell

Regulated Monopoly Resists Regulation

​This week, Entergy takes the New Orleans City Council to court in pursuit of higher profits for their shareholders. A preliminary hearing will take place Wednesday morning at 9:00 AM in Judge Sidney Cates’ courtroom at Orleans Parish Civil District Court.

Last November, the Council voted to approve new retail rates which will reduce the utility’s annual revenue by $45 million. The utility already acknowledged they were bringing in $20M more each year than they needed to cover their costs, and during the 14 month proceeding an additional $25M more was trimmed from Entergy’s annual budget. 

“Entergy demonstrates that there is no bottom. After the paid actors scandal and the environmental injustice of building a polluting gas plant near homes and schools, Entergy now brings a lawsuit to squeeze more money than it deserves from the people of New Orleans,” said Dawn Hebert, a long-time community advocate in New Orleans East. “The City Council had better put up a good fight because too many families cannot afford to pay Entergy bills as it is and not enough has been done on energy efficiency and renewable energy,” she said.

The local utility has historically settled with their regulator, the Council, on matters such as rates and resource decisions, but last year the City Council pursued deeper cuts than the utility was willing to agree to. According to the City Charter and state Constitution, the Council has the authority to set rates without agreement with Entergy. Entergy’s lawsuit seeks an injunction against the Council for exercising this authority, which keeps the lower rates from going into effect.

“This lawsuit shows that Entergy New Orleans does not want their regulator to be emboldened to actually regulate them. They would rather threaten and pursue unnecessary litigation than admit they are a regulated monopoly,” said Logan Burke, Executive Director of the Alliance for Affordable Energy. The Alliance has intervened in this case on behalf of residential ratepayers, and is represented by Earthjustice. 

The new rates approved by Council have still not gone into effect, but when they do, ratepayers can expect an on-bill credit for 3 months, and lower rates. However, if the Fourth Circuit Court of Appeal reverses Judge Piper Griffin’s decision, it would open the door for the Council to allow Entergy to add an estimated $900 million on bills over 50 years to pay for the gas plant.

​No court date has been set on Entergy’s second lawsuit against the City Council, for imposing a $1M penalty for excessive power outages throughout New Orleans and Entergy’s admitted under-investment in the local distribution system. This litigation points to yet further resistance by Entergy to the realities of regulation.