Demonstrators say Entergy’s promises of lower bills are deceptive

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Michael Isaac Stein / The Lens

Pastor Gregory Manning speaks on the steps of City Hall, accusing Entergy New Orleans of being deceitful when communicating with its customers.

A group of about a dozen demonstrators outside New Orleans City Hall on Wednesday accused Entergy New Orleans of trying to deceive the public with a new public relations campaign promoting the company’s proposed gas and electric rate change plans. The protesters said the utility is promoting its “Path to Progress” plan as a decrease to New Orleans residents’ utility bills, though those bills are likely to increase by several dollars per month in the next few years due to the added costs of two power plants in eastern New Orleans. 

In an Aug. 1 letter to the City Council, Entergy New Orleans announced a plan to promote its proposal in its current “rate case,” the process through which the City Council, as Entergy New Orleans’ regulator, determines how much the company can charge customers for electricity. 

The letter said that Entergy’s proposed rates would reduce a typical east bank resident’s electricity bill by $1.03 a month. Electric bills would stay the same on the west bank. When gas rates are factored in, the rate decreases would be $3.14 on the east bank and $2.11 on the west bank. 

Entergy is holding public meetings in every council district to promote the plan. One of those meetings was held Tuesday night at the Ashe Power House Theater in District B. 

One demonstrator, Happy Johnson, attended the meeting and said that Entergy was failing to tell the whole story. 

“Residents have been left in the dark for far too long,” he said. 

One of his main critiques was that Entergy’s promise of rate decreases for residents doesn’t consider the costs of its new gas plant or a recently announced solar plant in eastern New Orleans. According to council utility advisor Clint Vince, those will increase monthly customer bills by $6.63 — for the gas plant — and $1.50 per month — for the solar plant. 

When those are factored in, the typical resident would see a $5 to $6 increase on their monthly utility bills, rather than a decrease.

Central to Wednesday’s demonstration was a recent analysis by the Alliance for Affordable Energy that estimates that under Entergy’s plan, the gas plant in eastern New Orleans would cost customers more than $650 million over 30 years, a sum that includes at least $140 million in profit for Entergy shareholders. That total cost is more than three times the $210 million construction cost that had previously been publicized and reported in local media, including by The Lens. 

“Two hundred and ten million dollars is the public pricetag for the cost of construction,” Johnson said. But taking other costs, including shareholder profits, interest on debt and operations cost over 30 years, into account, “We know they’re being deceitful.”

Entergy told The Lens last week that the Alliance for Affordable Energy’s calculation had errors that caused the overall costs to be overstated. The company did not provide further explanation of what those errors were. It did not respond to requests for comment on this story.

Logan Burke, the Executive Director for the Alliance and the main author of the analysis, told The Lens last week that while it may not be 100 percent accurate, it is the best possible guess that can be derived from public information from Entergy. 

“What they’re telling you is that they’re asking for a rate decrease,” Burke said at Wednesday’s demonstration. “What they’re not telling you is about the bill increases that they want to lock in six months from now.”

Entergy scheduled the plant to go into service in January 2020, and in one public filing, said that it would start charging customers the month after the plant was up and running.

Entergy and Vince both defended the plant, saying that the analysis didn’t take into account several other factors, such as the cost of alternative solutions or the possibility that the company will be able to sell excess energy from the plant on the open market. 

In its letter to the council, Entergy also defended its proposed 10.5 percent return on equity — a rate that is applied annually to certain portions of Entergy’s capital investments to yield profits for the company’s shareholders — saying that it is important to strengthen the company’s financial health and credit rating. It said that the rate of return was necessary to achieve goals such as additional renewable energy resources, improved reliability and demand side management programs. 

“These shared objectives must also be coupled with a plan that preserves ENO’s financial health as it commits substantial capital investment necessary to make these goals a reality,” the letter said. “ENO is one of only three utilities in the U.S. with a below-investment-grade credit rating, which signals that ENO is a riskier company when compared to other utilities with which it competes for capital and, therefore, requires a higher equity return.”

But at the demonstration, Burke said the focus should be not on what the company needs, but what residents can afford. 

“Entergy has been profiting too much from the citizens of New Orleans,” Burke said. “And we can’t afford it anymore.”

According to the Alliance for Affordable Energy, Entergy New Orleans would profit from its customers to the tune of roughly $49 million a year if the rate plan in its “Path to Progress” is ultimately approved by the City Council. The utility’s letter said that over the last ten years, Entergy New Orleans customers have seen lower electricity rates than the national average. That is the cost to customers per unit of electricity, and doesn’t include additional costs related to operations and damage from natural disasters. 

Demonstrators pointed to the annual energy affordability studies done by Fisher, Sheehan & Colton, a Massachusetts based economic research and consulting firm. Its 2019 study found that the nearly 20,000 households in Orleans Parish living under 50 percent of the federal poverty level were paying an average of 28 percent of their incomes on their energy bills.

A 2016 study from the American Council for an Energy Efficient Economy found that New Orleans residents had the second-highest energy burden in the country after Memphis. Energy burden refers to the portion of household income dedicated to energy costs.

“It’s too much,” demonstrator Sylvia Mckenzie said. “We’re taking on two to three jobs and still not able to make it because we can’t get a decent wage to pay the utilities.”

In its letter, Entergy New Orleans said one of its goals to work more collaboratively with the council and public, saying that it created a “new organization aimed exclusively at improving customer service and community relations.” At previous council meetings, Entergy New Orleans officials, including CEO David Ellis, have said they want to mend the mistrust borne from an astroturfing scheme in which one of Entergy’s subcontractors paid actors to support the new gas plant at City Council meetings. 

“Entergy has lost its credibility and continues to shovel more coal on that fire with their newest misleading campaign,” Burke said. “New Orleans cannot afford it.”

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