New Orleans regulators last week requested a FERC investigation into Entergy transmission-planning practices as criticism continues to mount that the utility is hindering transmission development to shield its footprint from competing energy suppliers.
The New Orleans City Council’s utilities committee voted during a Sept. 22 meeting to ask state and federal regulators to examine Entergy’s practices following the post-Hurricane Ida transmission failures.
The council’s resolution, approved unanimously, asks FERC to examine Entergy’s planning for any reliability violations.
“[T]he council … believes that FERC should exercise its regulatory jurisdiction to determine whether [Entergy Louisiana’s] transmission line failures resulted from any violations of applicable FERC or NERC reliability standards … including whether the lines were prudently operated and maintained,” the council wrote.
It asked FERC to determine “whether Entergy’s investment in transmission has allowed adequate access to competition and new technologies to enhance reliability and cost savings for ratepayers.”
The council also asked the Louisiana Public Service Commission to investigate Entergy Louisiana’s reliability planning. It said that, as a city government, it lacks the standing to order an investigation into the eight transmission lines that feed the city. All eight of the lines were knocked out of service by Ida.
“[T]he council pledges its support, encouragement and cooperation in any FERC/NERC effort to protect all of southeast Louisiana from ever facing such catastrophic transmission line failures,” the council said.
City Council President Helena Morena accused Entergy of using “threats and PR spins” when responding to the city’s inquiries about Entergy’s planning decisions.
The council is currently contemplating forcing a change in the city’s electric utility structure. Entergy has said it could either sell its New Orleans unit; merge it with Entergy Louisiana; create a standalone company without the Entergy brand; or allow New Orleans to set up a municipal utility. (See Facing City Council Inquiry, Entergy Says it Could Sell New Orleans Utility Arm.)
“Please stop acting like you are the victim. You are the Goliath. You are a powerful Fortune 500 company with all the resources in the world and record profits last year of $1.4 billion,” Moreno said during the meeting. “We are not the bullies, and we are not trying to run anyone out of town. We just want you to do your job for the ratepayers.”
The city council has charged its utility advisers with conducting its own investigation of Entergy New Orleans’ actions during and after the storm. That inquiry will pay special attention as to why Entergy didn’t immediately activate the blackstart-capable New Orleans Power Station. When Entergy was seeking council approval for the plant in 2018, officials promised the city council that the unit could provide blackstart services following major storms. (See Entergy Touts Restoration; NOLA Leaders Question Lack of Blackstart Service.)
The city council said its utility advisors also will file comments regarding Entergy’s grid performance after Hurricane Ida in FERC’s examination of climate change and extreme weather events’ impact on grid reliability (AD21-13).
Entergy did not respond to RTO Insider’s request for comment.
The company did, however, tout the role of its rebuilt natural gas system in storm restoration, saying it played a “quiet, yet significant role” by supplying the New Orleans Power Station and city generators used for pumping floodwaters. Entergy almost completely rebuilt its gas system after 2005’s Hurricane Katrina.
NOLA Raises Bar for Cost Recovery
Meanwhile, New Orleans Councilmember Kristin Palmer brokered yet another unanimous resolution last week that says the council will only consider rate increases tied to recovery costs after a “careful evaluation” of the proposed increases.
“We need to be very clear here: Entergy failed the people of New Orleans,” Palmer said in a press release. “It’s inexcusable that our entire city was left in the dark for weeks following Hurricane Ida. People died. Most of them were part of our city’s most vulnerable populations who suffered in the sweltering heat. Asking for the people of New Orleans to pay more for bad service caused by obvious negligence is not going to cut it.”
The resolution dictates that any cost “caused by the failure of power utilities during Hurricane Ida cannot simply be passed onto Entergy’s customers.” It would require Entergy New Orleans to submit to an “open and transparent” review of its actions and plans to prove that the city’s power outage wasn’t a result of utility failures before the council could consider storm recovery rate increases.
“It’s not enough to just wag our finger at Entergy,” Palmer said. “We need to let them know that we aren’t going to stand for avoidable negligence that kills our people. Anyone else in New Orleans who doesn’t do their job doesn’t get paid. The same should go for Entergy.”
The council said that before Hurricane Ida’s landfall, Entergy began seeking $38.5 million from customers to address 2020 power restoration costs related to hurricanes Laura, Delta and Zeta.
“[I]n spite of these substantial investments borne by ratepayers, residents and businesses faced prolonged power outages following Hurricane Ida,” the council said.
Quashing Line Development?
The recent scrutiny of the Louisiana Entergy system following Hurricane Ida has spurred a reexamination of some of the company’s past planning decisions and whether they were motivated by preservation of the utility’s monopoly.
In 2016, MISO and Entergy agreed to build a $74 million 230-kV transmission line to ease the Amite South load pocket that includes New Orleans in southern Louisiana. The line would have connected two substations and boosted reliability. Four years later, Entergy canceled the project after it built the nearby $900-million, 950-MW St. Charles combined cycle gas turbine west of New Orleans.
Southern Renewable Energy Association (SREA) Executive Director Simon Mahan said the gas plant’s construction and subsequent cancellation of the line ensured that local cooperatives had no choice but to purchase energy from Entergy.
A similar scenario could be playing out with MISO’s second-ever competitively bid transmission project, the Hartburg-Sabine line in East Texas. Despite MISO awarding construction responsibilities to NextEra Energy in 2018, development of the line has ground to a standstill. (See Uncertainty Deepens for Hartburg-Sabine Project.)
In 2019, Texas passed a right-of-first-refusal law that handed the project to Entergy Texas, the incumbent transmission company. The U.S. Department of Justice opposed Texas’ ROFR law as anti-competitive, and NextEra filed a federal lawsuit. (See NextEra Appeals Court Decision on Texas ROFR Law.)
The Hartburg-Sabine line now languishes in “legal limbo,” according to the SREA, despite MISO’s projections of a 2023 completion estimate. NextEra still lists the project on its website.
Last year, Entergy Texas issued a request for proposals for a 1.2 GW natural gas plant along the line’s route. The $1 billion power plant, expected to be operational by 2025, could supplant the $115 million line.
Entergy has denied that it tries to stall transmission line approvals and said while it works in collaboration with MISO, the RTO ultimately decides on grid expansion. The grid operator has also characterized its transmission planning as a collaborative process between it and its stakeholders.
Other stakeholders have said Entergy and state regulatory consultants deliberately try to slow the RTO’s planning process by raising frequent objections and demanding more studies to back up MISO’s renewable projections. Environmental advocates recently accused Entergy and regulatory consultants of dominating conversations in long-range planning workshops. (See Tensions Boil over MISO South Attitudes on Long-range Transmission Planning.)
