Entergy Louisiana owes up to $4.4 billion for getting the lights back on after a string of storms and needs a $1 billion loan to meet those costs in the short-term, says the head of the utility that provides electricity to about half the state’s customers.
The utility’s customers may well see their bills increase about $15 per month just to pay for restoring power, but that amount could drop to $11 month if financing costs can be lowered.
Entergy serviced most, but not all, of the 1 million homes and businesses that lost power Aug. 29 because of Hurricane Ida, a Category 4 hurricane. Ida took out more poles, down more lines and destroyed more equipment than hurricanes Katrina and Rita combined. Traveling northeast as a tropical storm, another 200,000 customers in seven more states lost power.
But Entergy’s storm restoration fund is tapped out and the bills are arriving for the nearly 30,000 linemen and workers from all over the country who were brought in to restore power – in nine days for most, weeks for others and months for the hardest hit.
This month’s bills for Louisiana’s two million or so electricity customers are $11.67 higher, on average, than they were in October 2020, acco…
“Those invoices continue to come in. This will help to pay for that and that will put us in a better financial position,” Phillip R. May, president and chief executive officer of Entergy Louisiana LLP told the Public Service Commission on Wednesday.
“Following the 2020 storm season we had approximately $2-$2.1 billion of damage from multiple storms. And this last hurricane season we had this devastating effect from Hurricane Ida that incurred an additional $2-to-$2.4,” May said. “So, the company is essentially responsible for $4-$4.4 billion of costs without any recovery at this time.”
Entergy Louisiana doesn’t take in $4.4 billion in revenues for an entire year.
The PSC agreed to the loan, as long as the costs aren’t folded into what customers will ultimately have to pay for storm recovery. The five elected members of the PSC utilities throughout most of the state but for a handful of municipalities, such as Lafayette and New Orleans.
There was brinksmanship with a whiff of ransom.
Legally, the cost of getting the lights back on after a storm are paid by a utility’s customers. But the PSC analysis of what charges are prudent take time, so the official order that will add the amount onto monthly bills is still a year or two away.
Interest on the utility’s unpaid balances as well as the restoration costs could become part of the formula that calculates the rates paid for electricity. Once the total cost of the storm is approved by the PSC, Entergy hopes to sell bonds for the entire amount, rather than incorporating the repayment in the electricity rates. The bonds would be secured by a monthly surcharge added to customer bills. The method, called “securitization,” lowers how many customers will have to repay.
Mark D. Kleehammer, Entergy’s vice president regulatory affairs, said the high-level estimates indicate customers would see monthly bills about $15 higher for about 15 years, if the restoration costs are included in the rates. “We think that going through the securitization route, takes that to about $11, plus or minus, so it is absolutely a significant issue,” Kleehammer said.
PSC Commissioner Foster Campbell, D-Bossier Parish, praised Entergy in getting power back on fast relative to previous storms.
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“But everybody is not in love with y’all,” he added. “You’re fixin’ to tattoo them $15 a month for 15 years. That’s a lot of money.”
Campbell said the well-paid utility executives, lobbyists and lawyers who attend PSC meetings may grumble but they won’t have much of a problem paying the increase. Most of the customers in Louisiana will.
Gov. John Bel Edwards has requested the federal government give Louisiana ratepayers $1.3 billion to help cover storm costs.
May noted that Congress does not often give money to privately owned companies. He and Kleehammer two weeks ago visited the state’s Congressional delegation and addressed appropriations committees in both chambers asking them to overcome their reluctance.
“Given the number of low- and moderate-income customers we have, this relief is extremely important,” May said. The aid would help the customers, not the company.
PSC Commissioner Lambert C. Boissiere III, D-New Orleans, said he wanted to hear May say that he understood that agreeing to allowing the loan would not be seen by Entergy as an agreement to how much the storm restoration charges will be. May agreed.