Critics say utility wants to maximize profits and works to undermine regional power sharing model.
The idea behind the regional sharing model is to protect customers from major outages during ever-intensifying storms by delivering cheaper, more reliable electricity from other parts of the country. But former regulators and energy consultants say Entergy has never embraced the idea and, in some cases, works to undermine it so it can avoid competition.
“It's indicative of Entergy's business model, which is to build generation and protect it from competition to maximize the return that you get on that generation investment,” said John Norris, a former member of the Iowa Public Service Commission who was appointed by President Barack Obama to the Federal Energy Regulatory Commission and served on FERC from 2012 to 2014.
“Entergy simply does not seem to get it,” said Karl Rábago, former deputy assistant U.S. secretary of energy under President Bill Clinton and a former utilities regulator in Texas. Rábago sent a recorded video message to the New Orleans City Council last week urging the council’s utility committee to dig deep into Entergy’s operations.
“We can't keep investing in our grid like we invest in a used car. We can’t invest in one used car after another used car. We've got to invest in long-term solutions,” said Andy Kowalczyk, a clean energy consultant, who also addressed the utility committee.
“And so, regulators have got to recognize to not just take Entergy's word for anything, but actually verify,” Norris added in an interview with WWL-TV.
Each time a hurricane knocks out power to New Orleans for several days, as it did after Hurricane Isaac in 2012, Hurricane Zeta in 2020 and Hurricane Ida in 2021, the regulators at the City Council ask questions about how much Entergy has spent hardening the grid.
But the city council only regulates Entergy New Orleans, a subsidiary that serves about 6 percent of the parent company’s 3 million customers and controls very little of its transmission system. Most of the high-voltage lines connecting New Orleans with the surrounding grid are owned by Entergy Louisiana, a separate subsidiary regulated by the Louisiana Public Service Commission.
Last week, City Council President Helena Moreno asked Entergy New Orleans’ new CEO, Deanna Rodriguez, how much money Entergy Louisiana spent on upgrades and hardening of the transmission system as opposed to repairs. Rodriguez answered that she didn’t have that information but assumed it would come out in an investigation ordered by the council.
WWL-TV reviewed the last five years of public financial reports to FERC by both Entergy Louisiana and Entergy New Orleans. Those records show the two Entergy subsidiaries spent a combined $11.5 billion operating and maintaining power plants and adding new ones to their portfolio between 2016 and 2020. That’s about four times more than the $3 billion the two companies spent during the same five years on operating, maintaining and expanding the transmission lines they use to deliver the power.
The two Entergy subsidiaries reported spending $2.7 billion adding four gas-fired power plants in Lake Charles, St. Charles Parish, Washington Parish and New Orleans East. They all started producing power Entergy could sell to customers and other utilities in 2019 and 2020.
In 2020, the companies sold $4 billion in electricity to their customers and made another $366 million selling power to other utilities so they could resell it, according to their annual reports to FERC.
They nearly doubled their combined investment in the transmission system from 2019 to 2020, from $577 million to more than $1 billion. But they still spent 2.5 times more producing their own power last year.
It’s a far different story at other utilities. Ameren Illinois, for example, serves 1.2 million customers – about 100,000 fewer than Entergy Louisiana and Entergy New Orleans combined – and belongs to MISO, the same regional power grid Entergy joined in 2013. Ameren reported spending more than half a billion dollars on transmission – a similar amount as the two Entergy entities did in 2019 – but a paltry $76 million on producing its own power.
Critics say Entergy has been disinterested in improving the regional grid since joining MISO. It joined the regional grid after the U.S. Justice Department opened an investigation into allegations Entergy was stifling competition and limiting its customers’ access to cheaper electricity. As a FERC commissioner, Norris voted to approve Entergy’s membership in MISO, with the idea it would help expand the regional grid and improve the sharing of electricity between the Upper Midwest and the South.
But after Ida, Norris went before the MISO board and blasted Entergy for failing to expand the single transmission line connecting the northern and southern MISO regions at New Madrid, Ark. He also accused Entergy of actively blocking MISO’s regional transmission planning process, which is critical to improving the grid.
“Since Entergy joined MISO, they have continued to obstruct, try and delay and stop regional planning so that regional lines don't get built,” he said.
Hurricane Ida raised more urgent questions about the resiliency of the transmission system within Entergy’s territory. All eight transmission lanes sending high-voltage power into New Orleans-area substations for distribution to homes and businesses failed during the Aug. 29 storm. Entergy said it had hardened key equipment to withstand 150 mile-an-hour winds, but some of the lines appeared to fail in winds only two-thirds as strong.
It took two days to restore the first of those lines from Slidell, the farthest from the direct path of the storm. Six of the eight lines were restored by the fifth day after the storm, but a 400-foot tower supporting one of the main lines across the Mississippi River collapsed in a rusty heap. The National Weather Service recorded maximum wind gusts within a mile of the tower at 92 miles per hour.
In an interview with WWL-TV the day after the storm, Entergy Louisiana CEO Phillip May said the tower was “robustly engineered,” had passed inspection at the end of 2020 and did not need to be replaced prior to the storm. But Entergy has declined to produce a copy of the inspection report.
Entergy has not responded to WWL-TV’s questions since Friday about its spending on transmission and critics’ concerns about it.
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