At a special meeting on Tuesday, a New Orleans City Council committee advanced a measure to restart a moratorium on electric and gas service shut offs by Entergy New Orleans. A prior moratorium had expired at the end of July. The company began shutting off service to commercial customers late last year, and was planning to start disconnections for residential customers this month.
The resolution would also, for the first time since the pandemic began, forbid Entergy New Orleans from assessing any new late fees on delinquent bills. Both moratoriums would last until May 15 if approved by the full City Council. The full council is expected to take a vote on the resolution at its Thursday meeting next week.
Entergy did not respond to a question about whether it plans to proceed with any disconnections before the council can vote on a moratorium.
Tuesday’s special meeting was called by Councilwoman Helena Moreno in response to skyrocketing energy bills in New Orleans last month. Residents across the city reportedly saw their bills double or even triple from December to January.
“A lot of Entergy customers were caught by surprise with the power bills they received,” said Moreno, who chairs the council’s utility committee. “These surprise increases really couldn’t come at a worse time. There are a lot of people in the city struggling to make ends meet.”
In a presentation, Entergy New Orleans executives pointed to two main culprits for the higher January bills. The first cause was higher energy usage due to recent cold weather. In addition, January bills accounted for 35 calendar days, meaning people were paying for more than a month’s worth of electricity.
“The primary reason for the January bill increase is customer consumption,” Brian Guillot, Entergy’s vice president of regulatory affairs, said. “Consumption increased 40 percent for electric and 120 percent for gas for a typical customer. This was driven by weather that was colder than the weather that was included on the December bills, and also colder weather than this time last year.”
But even without any change in energy usage and the longer-than-usual billing cycle, many residential customers still would have seen a roughly $15 bump to their bills from December to January, according to Guillot. One reason is outages at two major power generators in Entergy New Orleans’ portfolio: Grand Gulf Nuclear Station and Union Power Station.
Grand Gulf has been a source of headaches for New Orleans for years due to its chronic unreliability. According to the council’s utility advisors, Grand Gulf had only operated at 50 percent capacity in 2020 through November. The average capacity factor among the entire US nuclear fleet over the same period was 93 percent.
Grand Gulf outages can be expensive. The company sells much of the power it produces on the market. Those lost sales caused by outages alone — not including the price to make repairs — can cost over $200,000 per day.
According to Entergy’s presentation, another small factor in the bill increases was the addition of the New Orleans Solar Station, a 20 megawatt power plant that came online late last year. But according to council utility consultant Joe Rogers, that only added roughly $1.25 to residential bills. And those costs were added to bills in December, meaning that wouldn’t have an impact on bill fluctuations between December and January.
The presentation did not, on the other hand, mention the additional $6 to $7 that typical residential customers started paying in November for a different power generator that recently came online — the 128 megawatt, gas powered New Orleans Power Station. The plant cost about $210 million, but New Orleans customers will likely be on the hook for more than $600 million over the next few decades in large part to cover interest payments and Entergy’s profit.
Guillot indicated on Tuesday that further bill hikes could be on the horizon. He said that Hurricane Zeta caused between $50 million and $60 million in damage the utility would have to pay for. It’s unclear whether the company has enough in storm reserves to cover it all, or whether the company will need to “recover” those funds from ratepayers.
“We’ll be making a filing with the council within the next few months to get those costs in front of the council and we can talk about how to recover those costs,” Guillot said.
He also told the council that over the course of the pandemic, customers had accumulated “tens of millions of dollars” in unpaid bill debt. He said that those arrears could cause bill increases, even for customers who don’t owe any debt.
“When you look at the arrears balance, it keeps growing and it keeps growing,” he said. “And so all of that money is eventually going to be spread out through the broader customer base and so it could eventually result in a rate increase to the broader customer base.”
First-time late fee protections
Early on in the pandemic, Entergy New Orleans voluntarily stopped shutting off people’s power for nonpayment of bills. But it took a while for the city to put formal restrictions in place.
The Louisiana Public Service Commission, which regulates utilities in most of the state, placed a moratorium on service disconnections in March. It later passed another moratorium on assessing late payment fees and permanently prohibited utilities from assessing late fees on any debt accumulated during the moratorium period.
But Entergy New Orleans is regulated by the New Orleans City Council, not the Public Service Commission, meaning New Orleans customers were left out of those protections. At that point, the council was relying on informal assurances from Entergy New Orleans that it wouldn’t disconnect customers.
The City Council eventually passed a moratorium on disconnections later in May, but never passed any restrictions on the accumulation of late fees. The Lens asked Moreno’s Chief of Staff Andrew Tuozzolo why the council was just now putting late fee protections in place.
Tuozzolo pointed to the City Council Cares program. In July, the council set up the program to provide up to $400 in bill credits to residents who had received unemployment benefits since the pandemic’s inception. That program ended in December after serving roughly 11,000 customers. The program, Tuozzolo said, provided some late fee protection by waiving late fees for the program participants .
“At the beginning of the pandemic, the Council worked quickly to build a one-of-a-kind program, Council Cares, to give ratepayers $400 of bill credits. We directed ENO to waive all penalties in relation to that program. Almost 11k ratepayers were served by the program. While it ended in December, we’ve now extended the ban on penalties and late fees on all ratepayers now through May as we await positive changes in Federal policy and new relief for the people of New Orleans.”