Over the objections of residents who said the increase would be a budget buster, the New Orleans City Council voted Thursday to allow Entergy Louisiana to raise rates for Algiers customers by 31 percent over the next four years, part of an agreement reached between the council’s utility advisers and Entergy.
Entergy Louisiana has not sought a rate increase for Algiers customers in 28 years, the company said. As a result, those customers pay a lower base rate for service than other Entergy Louisiana customers and those of Entergy New Orleans, said lawyer Clint Vince, the council’s chief adviser on utility rates.
Entergy officials said the increase is needed in part to cover costs associated with restoring and upgrading the company’s system after damage caused by recent hurricanes. Those improvements have benefited Algiers residents but have not been reflected in ratepayers’ bills, the company said.
“Current rates in Algiers do not currently cover the company’s costs,” Alyssa Maurice-Anderson, Entergy Louisiana’s senior counsel, told the City Council.
The company can meet its obligation to provide safe and reliable services only if it has a “reasonable opportunity” to recover its costs, she said.
Some residents said the increase would be burdensome, especially to elderly residents and those on fixed incomes. They also pointed out that the hike would make the overall rate paid by Algiers residents higher than that paid by customers in neighboring areas because they already pay a higher fuel adjustment charge.
“I think the way it’s presented to the general public, as a way to align our bills with other customers, is inaccurate and misleading,” Algiers Point resident Julie Ford said.
The council voted 6-0 in favor of raising the rates, with Councilman Jason Williams absent.
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 companies are subsidiaries of Entergy Corp.
Entergy Louisiana submitted a new rate plan for Algiers residents more than a year ago. It initially sought to raise rates by a total of $12.9 million, a 42 percent increase. The parties settled on a $9.3 million increase, phased in over four years.
Under the settlement, the monthly bill of a typical customer using 1,000 kilowatt hours of electricity will rise by $7.77 in the first year, $5.69 in year two, $5.67 in year three and $5.26 in year four, according to figures released by the utility.
The average Algiers customer using 1,000 kilowatt hours of electricity now has a monthly Entergy bill of $79.23, an Entergy Louisiana spokeswoman said. That monthly bill will rise to $103.62 at the end of the four years.
Had the council not approved the settlement, Entergy could have raised rates in Algiers, as the company first proposed, by 42 percent over three years, effective July 1. The City Council could then have sued the company. But Vince called the agreement a “fair settlement” and said it would have been imprudent to challenge the request in court.
“On this one, I just feel that we’ve got enough balance in here ... that I don’t think you’re going to do better in court,” Vince said. “There’s a risk you might do worse. And I’m also worried about fixed-income ratepayers and other ratepayers having to wait a certain amount of time and having the uncertainty of whether we will win.”
The AARP and the Alliance for Affordable Energy, a consumer watchdog group, also endorsed the rate increase.
“It was time for this to happen,” Alliance CEO Casey DeMoss Roberts said. “It’s painful, and I wish it didn’t have to happen. And I know that the 30 percent increase sounds like a scary number, but thankfully with the expertise brought forth by AARP, we were able to push Entergy to agree to a four-year settlement.”
As part of the same settlement agreement, Entergy Louisiana also received approval from the council to work toward transferring its Algiers electric service to Entergy New Orleans. No timeline has been established for making that transfer.