Entergy has not kept its commitments to regionalize and New Orleanians are paying the price, the author writes. Since 2020, Entergy bills have increased at twice the national average, while residents have endured some of the nation's longest and most frequent outages. Credit: Jed Horne

For most Americans, keeping the lights on isn’t an issue. But Louisianans have some unique challenges. 

For households in Louisiana, bills are rising while the reliability of their electricity service isn’t improving. And although there aren’t foolproof solutions for addressing extreme weather events, better-planned and executed transmission-line development could help the state address both cost and reliability.

However, the state’s largest utility, Entergy, continues to block progress on both fronts. 

This is a long-standing challenge, as the utility has sought for years to protect an expensive portfolio of generation plants from competition by not planning and building infrastructure that would yield benefits for Louisiana’s homeowners and businesses. At a time when utilities are diversifying with low-cost wind and solar, Entergy lags far behind, producing less than 1% of its energy from renewable resources across Arkansas, Louisiana, Mississippi and Texas, its four-state footprint. For all it has invested in this strategy, Entergy’s system still struggles with reliability. 

At a time when utilities are diversifying with low-cost wind and solar, Entergy lags far behind, producing less than 1% of its energy from renewable resources across its four-state footprint. In the chart above, the MISO South region, which is dominated by Entergy, is primarily fueled by gas (in blue), with almost no solar (yellow) or wind (green). Data/image from MISO.

More than a decade ago, while serving on the Federal Energy Regulatory Commission (FERC), I voted to approve integration of Entergy services from the four states, including Louisiana, into the Midcontinent Independent System Operator (MISO), a regional grid operator. 

I did so because it was clear then, as it is now, that regionally planned transmission (as opposed to the transmission Entergy builds) would yield more efficient lines that benefit homes and businesses.

Entergy itself had also proposed joining the regional MISO grid, as it was under investigation by the U.S. Department of Justice (DOJ) for possible anticompetitive behavior.  

As a result of that investigation, the DOJ had argued that Entergy should sell off its transmission assets — a key action to alleviate anticompetitive behavior. By joining MISO and selling its transmission assets, the DOJ reasoned that Entergy would be incentivized to build the infrastructure necessary to deliver lowest-cost power to consumers.

But more than a decade later, the utility has failed to fulfill those commitments. And New Orleanians continue to pay the price. Energy bills in the city have risen at their fastest pace in nearly two decades. Since 2020, the pace of increase has been twice the national average. 

As consumer bills have reached historic highs, Entergy’s shareholders are reaping the benefits. The company has paid out $3.2 billion in shareholder dividends since 2020.  

And to add insult to injury, Louisianans have seen some of the longest and most frequent outages in recent years, as the state is increasingly vulnerable to extreme weather events. 

A nationwide analysis looked at counties/parishes that were burdened by two factors: high levels of power outages lasting for more than eight hours and high rates of social vulnerability. Of those counties, 83% were in three Entergy states – Louisiana, Mississippi, and Arkansas – with nearly half of them in Louisiana.

Meanwhile, Entergy — which owns generation, transmission, and distribution assets across Louisiana, Arkansas, Mississippi, and Southeast Texas — is not investing in the regional transmission lines that can deliver the lowest-cost power for consumers and can meet power demand during and after extreme weather events.

Despite joining MISO in 2013, no regional lines have been planned or constructed in the Southern subregion. In fact, Entergy has actively worked against such planning efforts.

The time needed to complete annual transmission planning increased by more than fivefold immediately after Entergy joined MISO, according to the Energy and Policy Institute. The utility even used paid actors at New Orleans City Council meetings in 2018 to fake community support for a natural gas plant. That gas plant, which was approved, ultimately failed during a storm, with widespread outages revealing Entergy’s focus on fossil plants rather than investing in a stronger grid and allowing competition to improve reliability.

Entergy, like all businesses, makes decisions based on economic incentives. And there are clear disincentives for the utility to support the type of regional transmission projects that would yield the most benefits for Louisiana businesses and homeowners.  Entergy Arkansas and Entergy Louisiana would have lost a combined $930 million in net revenue in 2022 if the subsidiaries had built more efficient transmission across the system, according to a recent study from the National Bureau of Economic Research. 

Meanwhile, MISO’s northern subregion is poised to reap the benefits of proactive regional transmission planning. The grid operator has approved 18 major transmission projects across the Midwest that are expected to deliver 2.6 times more benefits compared to their costs. In the coming years, MISO will consider projects to improve the system in its Southern region, which includes Louisiana, before addressing the lack of transfer capacity between the North and South. Regulators in the region must consider the long-term benefits these projects can deliver to their constituents and call for collaborative planning.

The good news is that a recent federal rulemaking could help ensure MISO South better plans and builds these crucial lines. FERC’s regional transmission planning and cost allocation rule, finalized last month, aims to address barriers hindering the development of critical grid projects. That rulemaking requires that transmission providers (1) conduct long-term regional transmission planning and (2) use defined benefits when evaluating system needs and project benefits. The rule could help MISO South states build projects that will deliver long-term affordability and reliability benefits. 

However, that rulemaking did not address interregional line development, which the Delta region desperately needs to help ensure low-cost, reliable power. Compared to 2020, the region will need a 414% increase in interregional capacity to support future generation and meet demand by 2035, according to the U.S. Department of Energy. Part of this demand growth stems from new industries across the Southeast, such as data centers and manufacturing facilities. Yet the Delta, Southeast, and Florida have installed the fewest circuit-miles relative to regional load in the last decade. And once again, Entergy is blocking progress on a potential interregional line that is under development.

MISO South cannot continue operating as an island. Louisianans deserve affordable, reliable power — under normal operating conditions as well as during extreme weather events. 

It’s time for local and state regulators to take steps to ensure long-term regional grid planning is a priority rather than allowing Entergy to kick the can down the road with costly short-term solutions that may prove inadequate during the next storm. 

More local generation is only part of the answer. It’s time for greater transmission buildout.

Louisiana must modernize. MISO South must regionalize. Failure to do so is a disservice to the residents and businesses that have had to foot the bill for inaction for far too long. It’s time for consumer-focused transmission investment.

John Norris served as a Commissioner on the Federal Energy Regulatory Commission from 2010 to 2014 and as chair of the Iowa Utilities Board from 2005 to 2009. He has also served in several capacities at the U.S. Department of Agriculture.