In a joint request filed Thursday, Entergy New Orleans Inc. and Entergy Louisiana LLC asked the New Orleans City Council to approve the transfer of Entergy Louisiana’s Algiers customers to the utility’s New Orleans subsidiary.
The companies have asked the council to allow Entergy Louisiana to sell its operations and certain assets serving Algiers for a net value of about $60 million, according to the filing. The actual value will be determined when the deal closes. The assets, mostly transmission and distribution products, as well as certain liabilities, would be transferred to a new Entergy Louisiana subsidiary that would be purchased by, and merged into, Entergy New Orleans.
The deal would be financed through temporary short- and long-term debt and cash.
The companies have asked the council to approve the transfer by June so the deal can close by Sept. 1 .
Entergy Louisiana serves about 22,000 residential, commercial and industrial customers in Algiers. The rest of the city receives electric service from Entergy New Orleans. Both are subsidiaries of Entergy Corp.
Entergy New Orleans and the Algiers portion of Entergy Louisiana are regulated by the council. The rest of Entergy Louisiana’s operations are regulated by the Louisiana Public Service Commission.
The transfer request does not need the approval of the PSC because it amounts to less than 1 percent of Entergy Louisiana’s total assets, said Gary Huntley, vice president of regulatory affairs for Entergy New Orleans.
Entergy said the transfer is designed to “streamline utility regulation” in New Orleans. Under the terms of the transfer, the City Council would regulate the rates of all Entergy customers in New Orleans and Algiers.
“Consolidating utility service in New Orleans under a single utility and a single retail regulator will streamline the regulatory process, saving time and resources for both the companies and the council,” Entergy New Orleans President and CEO Charles Rice said in a statement. “We believe the transfer will be essentially seamless for Algiers residents and current Entergy New Orleans customers.”
Entergy Louisiana received approval from the council in July to work toward transferring its Algiers electric service to Entergy New Orleans as part of a settlement agreement between the utility company and the council.
That agreement also allowed Entergy Louisiana to raise rates for Algiers customers by 31 percent over the next four years. Entergy had not sought a rate increase for Algiers customers in 28 years, the council was told, and as a result, those customers paid a lower base rate for service than other Entergy Louisiana customers and those of Entergy New Orleans.
The plan to increase rates over the next four years in Algiers will proceed as planned, Huntley said.
The transfer will cause no change in base rates for customers of either Entergy arm until Entergy New Orleans files a consolidated rate case, the company said in its filing with the council.