By Brenna Landis, JD Candidate, Class of 2023, Loyola University New Orleans College of Law
We were honored to have Louisiana Public Service Commissioner Davante Lewis and State Representative Matthew Willard join as special guests. The dialogue focused on the Securitization Act, which allows utilities to purchase securities (basically loans) to repair infrastructure damaged by storms, and to pass those repair costs onto ratepayers.
Until recently, utilities have sought to securitize all the costs of their proposed projects or improvements – meaning that they have not offered to put up their own capital to make such investments, instead seeking to make ratepayers pay for 100% of financing, and therefore, assuming all risk for these investments. The LPSC has approved nearly every securitization request it has received without adjustment.
Investor-owned utilities and their lobbyists have ample resources to make their voices heard at LPSC meetings in Baton Rouge and during key votes on what costs utilities are allowed to pass onto ratepayers. However, there is no procedural process to allow for a reasonable time for public comment before the LPSC votes on matters. It is crucial that LPSC Commissioners hear not only from the utilities they regulate, but also from the people who are affected by the decisions they make. In 2005, Commissioners voted to allow Entergy Louisiana to pass the costs of 100% of the securities purchased for Hurricane Katrina repairs onto Louisiana ratepayers. Further approvals for subsequent storms have added up to $4.7 billion that ratepayers will be paying for Entergy’s own failing infrastructure for the next fifteen years.
During our Community Dialogue, Carrie and Brenna gave a presentation identifying some foundational issues that prevent the LPSC and the Legislature from serving Louisiana ratepayers to the best of their ability. We then heard from Commissioner Lewis and Representative Willard.
Commissioner Lewis Opening reMarks
CM Lewis noted that the LPSC is a constitutionally separate, executive body which stands alone outside of any other state executive body or agency. While decisions made at the Capitol and in the Legislature can indirectly apply to the LPSC’s regulatory work, the LPSC often works in a silo. Other branches of state government can dictate, compliment, and also sometimes hinder the LPSC’s work. CM Lewis emphasized that better governance at the LPSC must include the people, not just the utilities, bonding agencies, and government officials.
Representative Willard opening remarks
Rep. Willard said he had just attended a legislative panel session with senior citizens in New Orleans where the citizens complained of a spike in their bill. Willard emphasized that tax policies are people centric, and our utility policies should be too. He also emphasized that it is an election year, so in order to push for more public participation, we need to vote for candidates who support uplifting community voices.
Questions from the Community
What is the likelihood of municipalization (publicly owned utilities)?
Commissioner Lewis Comments
CM Lewis emphasized that while he is in favor of publicly owned utilities, or municipally-owned utilities, the system of regulated monopolies that we have today allows for more control over things like utility earnings and the rulemaking processes. According to CM Lewis, three things matter in utility regulation: generation, transmission, and distribution. Generation is how energy is actually created. Transmission is how energy we’ve created is transferred across long distances, so that cities and population hubs can get access to electricity made in different ways, and from different areas. Distribution is how that energy then gets to your home to power all your lights and appliances.
The main challenge with municipalization of utilities is that it requires a lot of capital to invest in all three of these areas. Lewis noted that transmission is usually the hardest part of utility regulation for public utilities to be involved in. For example, in Plaquemines Parish recently, a storm knocked out power not because of an issue with power generation, but because Plaquemines had to wait for Entergy Louisiana to fix their transmission lines so that power could get to people. Commissioner Lewis suggested that the transition to public utilities is long-term and most likely will not happen in the next few years.
Representative Willard Comments
Rep. Willard gave some cautionary feedback concerning public utilities. Willard mentioned that New Orleans Sewerage & Water Board is a locally-owned municipal utility and every time the city needs money to improve the pumps, it must go to Baton Rouge to petition for funds.This can lead to funds getting held up or denied completely due to politics. Also, municipally owned and operated utilities would be responsible for storm recovery and that money would have to come from somewhere. Willard added that he would need to see a clear transition plan before advocating for public utilities because of these concerns.
Adding renewables to the grid is going to be expensive in some cases. I’d like to hear thoughts on innovative ideas that will support transition to renewables without burdening ratepayers. In particular, I’m concerned about the cost of offshore wind energy becoming prohibitive to the point that most or all of that power goes to industry instead of communities.
Commissioner Lewis Comments
CM Lewis responded by mentioning that there is currently an open docket (R-35462) at the LPSC which includes a green renewable option that would allow some larger industrial users, such as gas stations or major retailers, to purchase renewable energy (offshore wind, solar and storage) at their own risk. These industries would be co-generating power and supplying their excess power back onto the grid. The industrial users would be responsible for the costs associated with these projects and consumers would not have to pay for building some of these new renewable resources. This docket is on the table right now at the LPSC, and CM Lewis encouraged the public to get engaged and take their seat at the table! Generally, IOUs prefer to produce their own power, as others providing power could cut into their sales; however, purchasing power from others (often through PPA’s) would be one way to bring more renewable energy onto the market.
CM Lewis also emphasized community solar and mentioned that he is looking into bringing the issue of net metering back up at the LPSC. Net metering policy determines how much utility companies have to pay residents with rooftop solar for the power they sell back to the grid. CM Lewis wants to look at not just the benefits to the individual customer, but to all of us. When residential solar customers feed excess power generated back into the grid, it helps provide a cheaper, more reliable rate for all customers. CM Lewis also stressed that we must look at energy not simply as a way of producing power, but also as a way to invest in our communities and build community power. For instance, Lewis pointed to a school district in Arkansas that had been running a $250,000 budget deficit. The school district invested in solar panels for all its facilities and turned that deficit into a $1.8 million surplus that is now funding teacher pay raises.
Representative Willard Comments
Another solar project that came up during the conversation is Together New Orleans’ (TNO) Community Lighthouse Project. Rep. Willard emphasized that TNO’s Lighthouse Project deserves more legislative attention and funding, especially because of its focus on battery storage capacity. Rep. Willard spoke about what happened during Hurricane Ida, noting that some people thought it was okay to remain in their homes for the storm because they had solar panels, but after the storm, they didn’t have power because they lacked adequate battery storage to accompany their panels. A focus on more accessible and affordable battery storage for people who purchase home solar installations could help Louisianians transition to renewable energy without burdening its residents with high upfront costs.
Rep. Willard agreed with CM Lewis that we need to bring back the old net-metering rules, which ensure that customers are fairly compensated for the energy they supply to the grid. When Rep. Willard attends neighborhood association meetings, residents tell him that the old net metering rules resulted in lower utility bills and bigger credits, whereas the current program results in very little credit for selling energy to the grid. Rep. Willard also touched on the building and construction industry, noting that Louisiana needs programs that encourage developers and realtors to construct residential and commercial properties with green infrastructure in mind, so that they incorporate things like permeable surfaces and catch basins into design and construction. While Rep. Willard mentioned that he doesn’t necessarily like using financial incentives as the first move to encourage industry; he hasn’t thought of another way to push forward such policies in Louisiana. Rep. Willard also noted that Louisiana received funds from the federal Build Back Better Act to increase electric vehicle charging stations throughout the state, and added that we need local governments to get behind electrification of their fleets. Rep. Willard is currently working on revamping an effort to electrify the City of New Orleans’ fleet.
What does “affordable energy for all” mean to you? What could change at the LPSC to ensure that the agency is held accountable?
Commissioner lewis comments
CM Lewis defined affordable energy as when “people's lights stay on…and people can afford to keep their lights on.” CM Lewis was recently appointed to the Committee on Consumers and Public Interest at the National Association of Regulatory Utility Commissioners (NARUC). As far as change within the LPSC to allow for more accountability, Lewis emphasized that we need to bring public participation back to the LPSC. The LPSC should ensure the intervention process is accessible for all. Lewis is looking at making internal changes to ensure more public accountability at the LPSC.
CM Lewis also acknowledged that more could be done at the LPSC to work closely with the Legislature. For example, during the pandemic, the LPSC issued a moratorium of utility disconnections, but no one at the Commission worked with the Legislature to appropriate some of the federal funds to the moratorium. Therefore, the utility companies are now asking to be paid back for all the money lost during the moratorium, holding ratepayers entirely responsible for those costs. Better coordination between the LPSC and the Legislature during the appropriation of Build Back Better funds could have put some of those funds toward paying off customer arrearages. The result of this missed opportunity is that ratepayers’ bills are now even higher every year because the moratorium costs are being added to their monthly bills.
representative willard comments
Rep. Willard responded that he agreed with instating a moratorium, but he thought the process wasn’t fully thought through. Rep. Willard defined affordable energy as predictability, stability, and flexibility in the way utilities charge ratepayers. Consumers should not be put into situations where they are forced to choose between paying for essential items like medicine and groceries or their energy bill. Especially in Louisiana, where an air conditioner and a heater are essential, utilities shouldn’t be viewed and treated as a commodity. Affordability, to Rep. Willard, looks like a bill you can afford on a month to month basis without big surprises. Getting a utility bill that is over $300 out of the blue is not predictable, stable, or flexible and it puts our communities at a disadvantage.
What is the best way to influence or talk to your commissioner to see how they feel about renewables and work towards changing his opinion on the feasibility of renewables?
CM Lewis noted that part of the systemic and procedural issues at the LPSC is that people are encouraged to call only when there is a complaint. He wants to encourage the public to contact commissioners about issues, comments or requests. The best way to contact CM Lewis is via his email, office phone, or constituent phone, which are listed on the LPSC website.
Is there any way to contract a neutral party to do a report on net metering instead of relying on the report by David Dismukes, a known opponent of renewable energy?
CM Lewis emphasized that the LPSC is not funded by any tax dollars. The LPSC’s budget comes from fines, fees, and inspection rates that the regulated entities must pay. This relatively small budget forces LPSC to outsource to consultants. Usually, there is an RFP (request for proposals) and then a vote on which contractor to use based on the submitted proposals. CM Lewis mentioned that he is looking into this process because, during a recent meeting where a majority of the meeting consisted of hiring consultants, some information was left out about a particular consultant. The consultant had been disbarred and had personal ties and business dealings with a fellow commissioner. CM Lewis argues that there should be a more transparent process at the LPSC, not only regarding how consultants must respond to an RFP, but also including background on the work the applying contractor has previously done.
What are some other changes that could be made at the LPSC to make sure the LPSC is held accountable?
CM Lewis suggested two ways to make the LPSC more accountable: 1) improving campaign finance rules, and 2) opening the process up to the public.
In regards to campaign finance rules, CM Lewis emphasized that LPSC Ethics rule bans commissioners from accepting “anything of value” (such as in-kind or non monetary donations such as gifts, tickets, food, drinks) from any person or entity regulated by the commission, yet it doesn’t ban commissioners from accepting campaign contributions in the form of checks written by regulated industry players for thousands of dollars or more. So, while a Commissioner may not accept a bottle of water from a regulated industry representative, he can accept a check from the same regulated industry representative.
CM Lewis shared an anecdote from his second meeting at the LPSC. He asked the people attending the meeting to raise their hand if they were not a regulated entity, a lobbyist for a regulated entity, or a lawyer representing a regulated entity. Out of an estimated almost two hundred people in attendance, only about three people raised their hands in response. CM Lewis stressed that when we talk about making the LPSC accountable, we have to talk about making the process more open to the public. CM Lewis also noted that before the pandemic, LPSC meetings were not available to livestream online. Now, meetings are streamed live on YouTube. CM Lewis also stressed educating the public on the very existence of the LPSC as a first step to improving public engagement, accessibility, and accountability.
How can we make utilities more responsible for damages instead of [allowing utilities] to pass the costs to ratepayers via their utility bills? Ratepayers have to pay for insurance for various items. Why don’t utilities have insurance for their infrastructure so that ratepayers don’t have to pay for the damages to the utility’s own equipment?
To tackle this issue CM Lewis pointed out that the LPSC must get better at requiring regular maintenance and upkeep of infrastructure by the utilities that own that infrastructure. Regulated utilities are entitled by law to make a “just and reasonable” profit, and, historically, the LPSC has allowed utilities to be reimbursed for damaged infrastructure using this metric. In other words, the LPSC hasn’t done a great job of assessing infrastructure damage outside of singular items.
For example, when a regulated utility comes to the LPSC and asks for the full recovery cost of transmission poles grounded after a storm, the LPSC approves a reimbursement for the value of the poles as if they had been maintained thoroughly. However, CM Lewis advocated for a stronger reimbursement test – if a utility pole should have been replaced thirty years ago and it’s broken during a storm, then the approved reimbursement should be for the value of a thirty year old utility pole and not for the value of a brand new utility pole. Weak regulation, in CM Lewis’ opinion, has actually created an incentive for utilities to not repair damaged infrastructure because they know that a storm will eventually damage their old infrastructure and the LPSC will handle the recovery costs rather than forcing the utility to take the repair costs out of their operational budget. CM Lewis said that the LPSC must look into an auditing process, an independent monitoring process, and maintenance and upkeep or else we will be back in a situation where the utility says, “By law, I recover my costs, so you have to give it to me,” and our hands are tied.
To close out what was a beautifully open and productive dialogue, The Alliance and Louisiana Utility Watchdog want to express our sincere appreciation for Commissioner Lewis and Representative Willard’s participation and detailed answers to questions from our attendees. We would also like to thank everyone who took time out of their day to attend our Community Dialogue and engage with our elected representatives in a dialogue about serious issues within our state government. We are deeply grateful to have such passionate fellow citizens and elected representatives who care enough to ask the hard questions and to engage in hard conversations about the issues. We anticipate holding similar community dialogues in the future, and we look forward to discussing issues as well as the solutions!
About Louisiana Utility Watchdog
Loyola University New Orleans College of Law students, Brenna Landis and Carrie Ann Ducote, created Louisiana Utility Watchdog to further support AAE’s consumer advocacy work. The Watchdog is advocating for systemic change at the LPSC to create an equitable and accessible public participation component to the process.