Last week the New Orleans City Council delivered a win to New Orleanians when they voted to approve a resolution finalizing a 15 month rate case. This was the first time in a decade that the utility's rates have been scrutinized and re-set. The Council followed the Alliance for Affordable Energy’s recommendation to deny Entergy New Orleans’ original request to nearly triple fixed charges, and instead voted to freeze residential minimum bills. The Alliance, represented by Earthjustice, with expertise from EQ Research and Graceful Systems, filed testimony warning of the negative impact to the City’s efficiency goals and the out-sized impact of this proposed hike to low-income residents, and the Council responded to our concerns.
In addition, the Council’s resolution approved the Alliance’s recommendation to deny Entergy double-recovery of costs through un-fair mechanisms tied to energy efficiency programs. The Council instead approved a decoupling mechanism that will move the utility closer to removing the incentive to sell more energy from their business model.
Until the final vote, the utility pressured the Council hard to allow a high profit margin, or Return on Equity, but instead the Council firmly stood against the utility’s pleas, reduced the ROE from 11.1% to 9.35% and approved a resolution that will deliver annual savings of approximately $33M to New Orleanians.
In the days leading up to the Council’s vote, the utility submitted a misleading proposal to settle, offering a “commitment” to spend $175M of new ratepayer dollars on projects that the Council and other stakeholders had not vetted. While continuing to lobby for a higher ROE, Entergy also pushed the Council to throw out their commitments to freeze customer charges and to lock in affordable efficiency programs. Despite these last-minute efforts, the Council did not give in to the utility’s tactics.
A final win in this rate case resolution is language from the Council confirming that Entergy does not have Council approval to recover gas plant costs from ratepayers. While the resolution does give Entergy a mechanism to recover costs if Council approval is ever finalized, this language makes it clear to the utility that despite their arguments to the contrary, Entergy New Orleans' building of a new power plant in New Orleans East, still requires another approval of the Council if they are to push the costs and risks of this plant to ratepayers.
While the majority of the decisions on this rate case are a win, the Alliance remains very concerned that the Council directed Entergy to significantly extend the lives of fossil fueled generation, as late as 2070. While other regulators in the country are discussing the dangers of stranded assets in a changing energy landscape and climate, and this Council is considering plans move New Orleans to a fully renewable and efficient energy future, these 10-20 year extensions challenge the city’s commitment to climate action. We will be working through the Renewable Portfolio Standard docket to insist that shift to an efficient, clean, distributed, and community owned energy system to both mitigate the worst impacts to our climate change and to adapt to the realities of the crisis.
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