‘There’s no end in sight’: Entergy bills rising at historic pace
6th November 2023 · 0 Comments
By Michael Isaac Stein
Contributing Writer
(Veritenews.org) — You don’t need to be an expert to know energy costs in New Orleans are rising. Spend enough time at your closest grocery or dive bar and you’ll soon hear neighbors expressing shock at their latest Entergy bills.
“Everyone’s feeling it,” said Logan Burke, executive director of the New Orleans-based Alliance for Affordable Energy.
Entergy officials have continued to claim the company offers “some of the lowest electricity rates in the nation,” and blamed the recent sticker shock on gas prices and higher customer energy use during heat waves and winter storms.
But the data tells another story.
Verite compiled 20 years of Entergy New Orleans’ electric and gas rates, finding that energy bills are rising at the fastest pace in nearly two decades, even for customers who kept their energy usage exactly the same.
The average New Orleans resident in 2019 paid $1,345 for a year of electricity, or about $112 per month. In 2022, that same customer using the same exact amount of electricity would pay $2,148, or $179 per month – a 60 percent increase, Verite’s analysis found. If you add gas charges, average monthly bills rose from $135 to $215.
Bills will would rise even higher if the New Orleans City Council approves Entergy’s controversial $1.3 billion proposal for storm resilience upgrades, which calls for another 20 percent bill hike over the next decade.
“It looks like a runaway charge, and there’s no end in sight,” Monique Harden, an advocate with the Deep South Center for Environmental Justice, told Verite.
Costs are growing for a number of reasons, according to council officials, including new storm fees, fuel costs, new power plants, electric reliability upgrades, inflation and an overhaul of the city’s gas infrastructure.
But those costs don’t account for the entire bill increase, Verite’s analysis found. And some local affordable-energy advocates are calling for the New Orleans City Council, which regulates Entergy New Orleans, to audit how the company is spending customer money.
The rise in New Orleans’ bills also appears to be outpacing the rest of the country. Data from the U.S. Energy Information Administration shows that Entergy New Orleans’ price per kilowatt hour – the standard unit of measure for electricity – has risen by 40 percent since 2020. That’s twice the national average for the same period.
The federal data also shows that the average energy costs paid by New Orleans residents was seven percent below the national average in April 2020, but rose to seven percent above the average in April 2023.
The rising bills have an outsized impact in a city like New Orleans, where typical household incomes lag behind much of the rest of the country.
“We’re a poor city and Louisiana is a very poor state,” Harden said. “So we have a lot of folks living paycheck to paycheck, or even in more dire situations. For lots of people, an average Entergy bill is already going to be a challenge.”
The energy burden — the percentage of income used to pay energy bills — is now 70 percent higher for a median income New Orleans household than the US average, according to the federal data.
Entergy New Orleans officials have repeatedly declined to say how many customers have fallen behind on bills in recent years, but told the City Council late last year that 38,000 customers — roughly one in five New Orleans accounts — had entered payment plans to pay off bill debt. Officials last month said that customers owed nearly $7 million in past-due gas and electric bills.
The company did not respond to any of Verite’s findings or answer questions. In a brief statement, Entergy New Orleans spokesman Beau Tidwell acknowledged that there had been “increased costs for many customers,” but maintained it was largely out of the company’s control.
“The last two summers have seen record levels of heat, and last summer natural gas prices were very high,” Tidwell said. “Both elements contributed to increased costs for customers, and while they were outside of our control, we are sensitive to the impact they created.”
Not everyone agrees with that assessment. Councilwoman Helena Moreno told Verite that she also blamed costs from the construction of the New Orleans Power Station, Entergy’s controversial gas plant in New Orleans East, which went online in 2020.
Moreno came into office shortly after the council voted to approve the plant in 2018 and unsuccessfully attempted to stop its construction after she took office.
Moreno told Verite this week that she is considering whether to force Entergy to sell the plant, which would let customers off the hook for paying off its $210 million construction cost, as well as roughly $450 million the company is allowed to collect for interest payments, operations and profit.
“I believe an option to eliminate the cost of NOPS from ratepayers bills should be examined,” Moreno said.
But the gas plant only accounts for a small part of local bill increases (roughly $6.96 per month, according to information provided by the council’s utility consultants). Some Entergy critics argue that there is also a broader and more simple reason bills are rising so fast — Entergy is favoring its shareholders over its customers.
“Entergy’s mission is to enrich shareholders, so it’s a contributing factor for certain,” Harden said. “It’s about trapping New Orleans residents to ensure we’re always paying high bills, a cycle of billing we have no control over.”
At the same time as bills have reached historic highs, so have dividend payments to Entergy shareholders. Entergy New Orleans’ parent company, Entergy Corp., has paid out $3.2 billion in shareholder dividends since 2020.
Burke and other advocates have long warned that the company has effectively shifted most of the risk of the business onto the shoulders of customers, who have to deal with erratic bills while shareholders enjoy steady, rising profits.
“Why should only residents be the ones who suffer as a result of climate change and international markets?” Burke said. “Why should people, especially in cities like New Orleans where a vast percentage of our population is in poverty, be holding up these Fortune 500 companies and their shareholders who are insulated from every risk at every turn? I don’t think there’s any world in which that is just or equitable.”
A historic rise
The only time New Orleans has seen a similar spike in energy bills over the last 20 years was in 2006, the year after hurricane Katrina, when Entergy New Orleans was facing serious trouble.
Entergy New Orleans was in the hole for over half a billion dollars in damage caused during and after the storm. And because of the massive displacement of New Orleans residents, the company’s customer base was cut in half, leading to a sharp revenue decline. The company even filed for bankruptcy.
The bill increase over the last few years hasn’t been quite as steep as in the years following Katrina. But as Burke pointed out, the company isn’t facing nearly the same challenges now. In fact, just this week the company announced it was raising shareholder dividends by another six percent.
“I mean, we were dealing with bankruptcy following Katrina,” Burke said. “And that’s not where we are now. It’s a different situation entirely. Is the company in dire straits? It doesn’t look like it. It seems as though the company is continuing to deliver dividends and continuing to benefit shareholders.”
Entergy’s rising bills come at a tough time for residents, who have faced a barrage of financial burdens in recent years — including rising housing costs and insurance rates, hurricane damage, inflation and the COVID pandemic — that have made it increasingly difficult to afford life in New Orleans.
Andreanecia Morris, executive director of affordable housing group HousingNOLA, said local government officials have “failed” to properly respond to rising utility bills, which she said are a major contributor to the city’s affordable housing crisis.
“The calculations around affordability don’t just include basic housing costs like mortgages and rents — utilities are also a key part,” Morris said in an email. “This data shows that the failure to act has direct, and dire, consequences and reinforces the need for policy makers to introduce meaningful reforms that allow folks to keep a roof over their heads and keep the lights on.”
Why are bills climbing this time?
When previously questioned about rising prices in recent years by local media or the City Council, Entergy New Orleans has cited two central reasons: higher gas prices and extreme weather.
Heat waves and winter storms have indeed driven up usage as people try to heat and cool New Orleans’ notoriously energy inefficient homes. And a series of hurricanes have caused hundreds of millions of dollars in damage, mainly from Hurricane Ida in 2021.
“This is climate change on our bills right now,” Burke said.
But those two factors alone don’t explain the recent bill hikes. Verite’s analysis shows that bills rose significantly even for customers who kept their energy consumption constant. And average monthly storm fees make up less than a dollar of the total monthly increase.
Councilmember JP Morrell and the council’s utility advisors provided four additional explanations and the monthly bill impact compared to 2019: electric reliability upgrades ($3.96 per month), gas infrastructure investments ($5.52 per month), and the construction of two power plants: the New Orleans Power Station ($6.96 per month) and the New Orleans Solar Station ($1.10 per month).
The NOPS plant is a particularly controversial charge. The council approved the gas plant in 2018 after Entergy hired actors to pose as supporters of the proposal at council meetings. Questions have swirled ever since about whether it was financially prudent or provides the hurricane protection that officials originally promised.
“We are now captive to a gas plant we didn’t need,” Harden said. “None of the shifting justifications were ever fulfilled by this gas plant. But now we’re paying it for the next 30 plus years. People who are yet to be born will be paying for this gas plant.”
Altogether, while the explanations from Entergy and the City Council account for the majority of bill increases since 2019, it doesn’t explain the whole spike. And it isn’t entirely clear what makes up the remaining portion — about $25 per month for an average customer.
When you break down a bill, the majority of the recent increases don’t come from storm fees or fuel costs, but from the base electric and gas charges, which, like all Entergy charges, are approved by the City Council.
Unlike other elements of an Entergy bill, it is difficult to decipher exactly why base energy charges have increased. While fuel charges and storm fees are used for one specific purpose, the base energy charge pays for virtually everything Entergy does, from hiring linemen to buying wire to paying executive bonuses.
Local advocates including Burke and Harden say the company’s regulators — the City Council — need to dive into Entergy’s books to figure out exactly how customer money is being used, especially before they consider Entergy’s $1.3 billion storm hardening plan.
“For every dollar that residents pay to Entergy, what is it being used for exactly?” Harden said. “And what are the benefits returning to the residents? It’s really basic.”
The City Council questioned Entergy New Orleans’ spending decisions in the wake of Hurricane Ida. The storm caused a city-wide blackout, during which time 21 people died, mostly from extreme heat exposure. The tragedy raised questions about why Entergy’s grid wasn’t more prepared, especially as climate change increases the frequency and intensity of storms.
“Since Hurricane Katrina, the council has approved requests for funding around storm hardening,” Harden said. “Where is that? What has that gotten us? Because there hasn’t been any audit or review of that. But each and every time there’s a hurricane, there’s Entergy with its hand out again.”
The council voted in late 2021 to launch an internal management audit of Entergy New Orleans to answer the very questions Harden is asking. But the audit never happened. The council put out public bids to hire an independent auditor twice, but no firms applied for the job and the effort lost momentum.
Morrell, who is chair of the council utility committee, did not respond to questions about whether the council would make another effort to follow through with an audit.
The $1.3 billion question
As customers struggle with bills, Entergy has launched a public relations campaign to convince residents and the council to get on board with its $1.3 billion plan to harden the grid against future hurricanes.
The plan was written at the direction of the council in the aftermath of Hurricane Ida and is linked to an $8 billion storm hardening plan from another Entergy subsidiary — Entergy Louisiana. The company argues that the investment wouldn’t only keep us safer during storms, but save money in the long run by reducing the damage caused by storms, which customers have to pay to fix.
“From my perspective, there are things within Entergy’s plan that I would argue are no regrets investments,” Burke said.
At the same time, many customers are simply at their limit for what they can afford. And Burke and Harden agree that some of the items Entergy is asking customers to pay for, like routine operations and maintenance, are things the company should already be doing with the money they’re collecting from customers.
“We’re not getting things we’re already paying for,” Harden said.
Burke added that it’s hard to believe Entergy’s argument that it can’t afford to provide basic, reliable services without bill hikes, while its parent company continues to hand out record-setting dividends to shareholders.
However, Burke said there was reason for optimism, and that after years of advocates sounding the alarm, regulators with the City Council and the Louisiana Public Service Commission are finally starting to seriously question Entergy’s budgeting decisions.
“Regulators are starting to ask these questions,” Burke said. “We can only hope these decision makers will address the existing system and make it work for people and not just corporations.”
This article originally published in the November 6, 2023 print edition of The Louisiana Weekly newspaper.
