At Tuesday’s Joint Utility, Cable, Telecommunications and Technology (UCTTC), Governmental Affairs and Budget, Audit, and Board of Review Committee meeting, Entergy’s Formula Rate Plan was extended for another four years. The Council also ordered Entergy New Orleans to begin setting aside millions of dollars that the Federal Energy Regulatory Commission found ENO owed to Entergy Louisiana and approved $13M in storm costs related to Hurricane Francine, both of which will come out of ratepayers’ pockets.
In a win for the people of New Orleans, the Climate Committee voted to approve a nation-leading $29 million battery storage program, the largest per capita investment in battery storage anywhere in the country.
On Tuesday, before the Joint Committee considered issues pertaining to Entergy New Orleans (ENO), a Special Meeting was held to discuss the city’s finances and budget. Mayor Helena Moreno and her staff presented a budget that proposes sweeping cuts across departments and programs to help close a roughly $100 million budget deficit. In comments to the Council, residents painted a clear picture of how much they are struggling to afford life in New Orleans and how much city services are already failing them. This presentation was just one step in what is sure to be a difficult budget process, and The Alliance encourages New Orleanians to make their voice heard as the process moves forward.
In a unanimous vote, the UCTTC approved a four-year extension on Entergy’s current formula rate plan (FRP). The current FRP was approved in November 2019 and would have expired in 2026 absent the extension.
A formula rate plan is a multi-year plan that allows a utility to have rate adjustments on an annual basis outside of a general rate case. Some FRPs set a plan for incremental increases over time to manage rate spikes if there are significant increases needed. This can happen if the cost of energy jumps like it’s doing now or because of other changing conditions related to the delivery of energy.
Since 2019, rates have increased incrementally nearly every year, and the FRP has been extended in two or three-year terms. This vote represents the longest extension thus far and sets ENO’s allowed rate of return on equity (profit) between 8.8% and 9.85%.
The Alliance agrees there are compelling reasons to grant an extension of the current FRP. ENO’s business is changing rapidly due to the divestiture of its gas businesses, larger purchases of energy by the Sewerage and Water Board, and the upcoming Virtual Power Plant program (more on that below). It does not make sense to conduct a general rate case, the typical process by which regulators set rates, using current numbers when there is so much uncertainty on what will happen in the coming years. However, The Alliance proposed the Council only approve an extension of two years, rather than four.
The four-year extension means that the City Council and Entergy will not have conducted a general rate case in more than ten years. This means more than a decade will pass without a complete examination of ENO’s rates, making it impossible for the Council to ensure Entergy’s rates don’t overcharge customers. The extension also puts the future full rate case in the hands of the next city council, which will have less regulatory experience than today’s.
The Alliance also suggested the Council should condition the extension onregular reporting from ENO on disconnections and utility debt. When so many New Orleanians are struggling, obtaining basic data on disconnections and arrearages is a vital first step to reigning in the energy affordability crisis.
“The Council’s failure to impose the meagerest of conditions on this increase under the FRP…The fact that you’re not interested in getting that information conveys a real lack of concern about your constituents,” Jesse George, AAE’s New Orleans Policy Director, told the Council.
“You heard from a lot of people in the budget hearing today about how they’re struggling to make ends meet, how hard it is to live in this city. A way to get a handle on this crisis we’re facing of unaffordability and Entergy bills is to get the hard data from Entergy.”
Despite our request that the Council reconsider the conditions of the extension, all Committee members voted to approve the resolution as-is. The Alliance will continue to fight for transparency and responsible rate-setting and hopes to see stronger action on these issues from the Council in the future.
The UCTTC also approved a resolution allowing Entergy to create a regulatory account related to FERC Opinion No. 595.
FERC, or the Federal Energy Regulatory Commission, is overseeing a case where it’s been alleged that poor accounting practices led Entergy New Orleans to underpay Entergy Arkansas and Entergy Louisiana millions of dollars for purchased capacity and energy. The FERC opinion signaled that ENO may owe upwards of $18 million to its sister companies, a combination of the original balance and a sort of “interest” on that balance of 7.446 percent.
While FERC considers additional arguments and calculations presented by ENO, the Committee approved a regulatory account of $10 million dollars, a conservative estimate of what Entergy may end up owing. Through this account, ENO may, over the course of years, recover and set aside $10 million from residents and businesses. By doing so, ENO will not have to impose as large of a bill increase to pay their balance when the bill finally comes due, because they will have already been collecting the necessary funds.
As one resident noted, it is unfair for residents to have to pay for Entergy’s own mismanagement, especially when that includes interest accrued over the time it took for this issue to be identified and resolved. Unfortunately, the Commission’s hands are tied, as FERC can require the Council allow Entergy to pass the surcharge onto ratepayers.
When asked how the Council is fighting such an injustice, Councilmember JP Morrell said, “We are involved at the FERC level in trying to mitigate these decisions, but when FERC issues a final decision, then we are bound by it.”
Finally, the Committee certified that approximately $13M in costs incurred by ENO in response to Hurricane Francine were proper (docket UD-25-2). Those costs, covering everything from infrastructure investments to utility workers restoring power in the field, are paid for by residents and recovered through our bills. These costs, too, will be assessed to ratepayers’ through the storm recovery rider on their bills.
With more storms and expenses expected in the future, it is more critical than ever for the Council to be investing in solutions that keep the lights on. Thankfully, the Climate Committee took a large step forward the very next day. Keep reading to learn more.
In the largest per capita investment in distributed battery storage and virtual power plants in the nation, the Climate Committee voted to approve a $29 million incentive program to put batteries in homes and businesses across the city.
The nation-leading program will provide $23 million in up-front incentives for residents and businesses to purchase roughly 800 batteries for homes and more than 200 businesses. Forty percent of upfront funds are reserved for low- and middle-income households, who will receive an $850 incentive, eliminating up-front costs. Other households and businesses are eligible for a $550 incentive. Importantly, the funds from the program come from a settlement related to the Grand Gulf (SERI) case at FERC, rather than utility bills.
Alongside the Council’s recently approved Community Solar incentives, this program creates a Virtual Power Plant (VPP) that can be leveraged to provide backup power to equipped homes during outages and reduce strain on the grid by providing additional capacity when demand for electricity is high. When paired with solar, stored energy from the day can power nighttime electricity use, reducing the amount families owe on their monthly Entergy bills.
“The investments we are making today are the difference in someone’s life, in someone’s business having to throw out hundreds of pounds of food, medication in the fridge not going bad, and keeping someone out of the hospital for a heat-related illness. And most importantly, building reliability and reduced stress on the grid every day,” said Committee Chair Aimee McCarron before opening the floor for public comments.
More than a dozen members of the public spoke, including faith leaders, residents, and The Alliance’s own Jesse George, who thanked the Council for listening to constituents and advocates.
While this program alone will not ensure the right to electricity, the key message of Energy Future New Orleans’s “Light is Your Right” campaign, the program is an enormous step forward. The Alliance will continue to advocate for an expansion of the program, including more funds for batteries and other distributed energy technologies.
In the meantime, once the full Council approves the program, Entergy must submit an implementation plan by October 31, with a proposed program launch no later than the first quarter of 2027.
The Alliance applauds the Council for this transformative investment in New Orleans’s future, as well as Together New Orleans and the many residents who spoke in support of such a program. It is because of YOU that hundreds of families won’t be left in the dark when future storms hit. You should pat yourselves on the back for this enormous win. We’re proud to have fought alongside you.
