**UPDATE: This meeting was postponed. At the Wednesday October 27, 2021 Special Meeting the Council approved both resolutions. YOU DID IT! Thanks to the public outcry over increases to Entergy rates the Council approved a resolution to protect people and keep bills down. ALSO, the Council opened a new docket on resilience and storm hardening for our energy system. This is where we work out how to put power where the people are and keep folks safe. We need this effort across the state too!
Back in July 2021 Entergy filed a request for an increase to New Orleans electric and gas bills. About half of Entergy’s customers take both electric and gas service. The request totaled a $64M increase ($45M electric / $19M gas). Because of the structure of Entergy’s rates, if the full Council takes no action on the resolution the Utility Committee approved in September, by November 1 of this year Entergy’s full $64M of increases will go through beginning with November bills.
Entergy’s request included a residential bill increase of $11 per month per customer (around a 10% increase) for electric and a bill increase of $14 per month per customer (around 29% increase).
On September 22 in response to outrage following Hurricane Ida and Entergy's failures the Utility Committee approved a suite of resolutions intended to respond to demands for accountability, including a management audit, review of Hurricane Ida, and a delay in the implementation of new rates. Six of the seven resolutions approved unanimously in that September meeting went on to be voted on by the full Council, with the exception of the resolution directing a delay in a rate change. Resolutions require a vote of the full Council to go into effect. The Council has not provided the public with any explanation as to why the resolution was not included in a regular meeting of the Council.
On October 1 the Council’s technical advisors, Legend Consulting, filed a set of recommended adjustments to Entergy’s request, reducing the total increase to $33M ($19.9 M electric / $13.12 gas).
Also on October 1, the Alliance for Affordable Energy submitted a filing to the Council, urging the Council to suspend the procedural schedule entirely and maintain any rate increase delay until the Council completed the various efforts to hold Entergy accountable (and find additional savings) that they had already voted on, including a management audit, and Hurricane Ida investigation, in addition to a prudence review into the costs of the New Orleans Power Station.
The resolution on the agenda set for Monday October 25 neither 1) honors the prior resolution to delay rate increases nor 2) implements all the advisor recommended adjustments.
This is hardly a “Winter Bill Freeze” as titled in the Council’s agenda.
Instead, the resolution provides $17.4M in rate credits from refunds associated with Department of Energy and Federal Energy Regulatory Commission decisions, which mitigate the impact of Entergy’s rate increase for electric customers, which will go into effect with November’s bills.
The $17.4M in credits will last only through March 2022 and would be applied to only to the electric bills.
Customer who receive gas will experience an increase immediately. This is in addition to the increases related to the cost of gas in the market, which is volatile and has doubled since last year.
All fuel costs are passed through directly to customers on separate line items on bills, whether the gas goes directly to homes or businesses or is used to generate electricity, and the bulk of electric generation in Louisiana comes from gas.
In the short term we are looking at a worrisome winter with doubled gas costs from the international gas market spike (driven partly by LNG exports) plus a 29% increase in gas system costs in New Orleans, unless the City Council chooses to take action before November 1.
Rates have already spiked 10-12% around the state from rising gas and rate increases and are expected to go up again as the costs of climate change-fueled storms roll onto bills. The City Council has a unique opportunity to maintain their promises from a month ago, hold the line, and thoughtfully find solutions that can help New Orleanians manage this uncertain time.
New Orleanians also deserve to know why the full Council has not taken up the resolution delaying any increase electric and gas rates.
The Utility Committee will meet Monday October 25 at 10:00 AM in Council Chambers. You can submit comments on this bait and switch in person or through this link.
What's up with gas costs?
Gas is used by about half of Entergy New Orleans customers, but gas use has fallen. Following Hurricane Katrina, many homes have been retrofitted to use only electricity. Gas has also been shown to be harmful to health because of fumes and emissions from burning indoors. In an effort to reduce carbon emissions across the board, many households are electrifying their homes for heating, cooking, and water heating, which can be cheaper, and some municipalities are even banning new gas infrastructure.
We looked into the major drivers of Entergy's huge increase request associated with gas system costs (29% for residents) in New Orleans (separate from the impacts of the international cost of the fuel in markets) and discovered significant falling revenue is a major driver, in addition to the increasing costs of Entergy’s Gas Infrastructure Rebuild Project (GIRP), which they expect to continue until 2027, and increasing administrative costs.
We know that Sewerage and Water Board is Entergy’s largest gas customer, and there is an expectation that in order to save money for the SWB (and all water users) and improve the waterboard’s reliability SWB will transition away from purchasing expensive gas from Entergy (at retail rates) at their facilities, and will electrify their processes. This will put further pressure on remaining gas customers bills, setting us on a track in the coming years for gas system costs to continue to increase dramatically for those using it.
This is a moment for the City Council to take a pause and assess, in a public process, how to move forward in a way that mitigates the cost impacts of falling gas use and is responsive to people’s needs in the context of climate change. We know some in New Orleans worry about moving away from gas in their homes because Entergy’s electric grid hasn’t been reliable or resilient. Meanwhile many homes and businesses are considering solar+storage as alternative resilience measures that also provide bill benefits year round. The Council should conduct a gas-specific rate review, including a depreciation study, review plans for additional capital spending on the gas system, and should develop a managed decapitalization plan, rather than continued investment of ratepayer money in systems that are increasingly stranded.
This could include a targeted plan to focus the Energy Smart program on supporting a switch from gas to electric appliances in homes, including heat pump HVAC and hot water heating (which also helps tremendously with dehumidification), and electric ranges.
The new resilience docket on the Utility's committee's agenda is a great start to plan for a safer more climate-ready New Orleans.