Entergy Louisiana LLC expects to hand off its Algiers customers to the utility’s New Orleans subsidiary in September, the company said Thursday before the City Council approved an agreement in principle authorizing the transfer.
When made official by two ordinances that will be considered by the council in June, the agreement means all of New Orleans will be served by the same utility: Entergy New Orleans.
Meanwhile, the change will allow Entergy Louisiana to sell its operations and certain assets — mostly transmission and distribution products serving Algiers — to its sister firm for a net value to be determined when the deal closes, but estimated at about $60 million.
Entergy Louisiana now serves about 22,000 residential, commercial and industrial customers in Algiers. The rest of the city receives gas and electric service from Entergy New Orleans. Both are subsidiaries of Entergy Corp.
Entergy officials say they hope the transfer will simplify utility regulation in New Orleans, saving time and resources for both the company and the City Council.
The council regulates utility matters for the entire city, but that has meant dealing with both Entergy New Orleans and Entergy Louisiana.
Entergy Louisiana received approval from the council last year to work toward transferring its Algiers electric service to its sister firm as part of a settlement agreement between the utility company and the council. The companies came to terms on the deal and signed an agreement in principle last week.
The deal does not need approval from the Louisiana Public Service Commission — which regulates Entergy Louisiana’s operations outside Algiers — because the value of the assets being transferred is less than 1 percent of Entergy Louisiana’s total assets, the company said.
Under the terms of the transfer, the City Council will continue to regulate the rates of all Entergy customers in New Orleans, including Algiers.
“The transfer would allow Algiers customers to be served by a utility that is focused exclusively on the needs of New Orleans,” said Councilman Jason Williams, who chairs the council’s Utility Committee. “This will allow Algiers customers to benefit from unified programs such as integrated resource planning, energy efficiency and alternative financing for storm costs that are developed solely for New Orleans customers.”
The transfer will result in a freeze on base rates for existing Entergy New Orleans customers until at least the first quarter of 2018, said lawyer Clint Vince, the council’s chief adviser on utility rates. That means the earliest there could be a rate increase for those customers is 2019, Vince said.
Although there will be no additional rate increases for Algiers customers, an agreement that already was in place to raise rates in Algiers by 31 percent over four years will proceed as planned through July 2017.
That deal was part of the same settlement agreement that set the groundwork for the transfer.