Entergy Louisiana is seeking permission from state regulators to charge its customers nearly $2.1 billion to cover the cost of repairing its power grid following last year's Hurricanes Laura, Delta, Zeta and the subsequent winter storm in February.
More than 1 million customers statewide, excluding those who live in New Orleans, would face the surcharge, with the average residential customer paying an extra $5 a month for the next 15 years, Entergy Louisiana officials told state lawmakers Monday.
Even if it sails through the complicated regulatory process with ease, the fee increase likely won't be added onto customers' bills for at least another year.
"This is not a quick process," said Brandon Frey, executive secretary of Louisiana's Public Service Commission, which regulates Entergy Louisiana and other utilities.
It's not the first time Entergy Louisiana customers had to pick up the tab on repairs sustained from natural disasters. Customers already pay a monthly "Storm Restoration Charge" to cover damage from Hurricanes Gustav, Ike and Isaac. Following Hurricane Ida's catastrophic jaunt through southeast Louisiana, which leveled 30,000 utility poles, another surcharge is expected.
Entergy Louisiana submitted its latest request for a fee increase with the Public Service Commission earlier this summer, though the five-member panel of elected officials won't issue a final vote on the request for another eight to 10 months, Frey said.
The state's Bond Commission will then vote on whether to issue bonds, a process that could draw out the implementation even longer. Bonds to cover damage from Hurricane Gustav and Ike weren't sold until 2012 — four years after those storms made landfall. Those surcharges are expected to roll-off Entergy Louisiana bills in 2022.
At a Joint Legislative Commerce Committee hearing Monday, the prospect of a fee increase drew jeers from some state lawmakers.
Rep. Bryan Fontenot, R-Thibodeaux, suggested Entergy Louisiana direct a portion of its $700 million in annual profits to cover the damage. “Even though you carry this astronomical profit every year, you’re going to go back to ask the customers to pay you for all the damage?" Fontenot said.
Jody Montelaro, an Entergy Louisiana vice president, responded, "Despite these charges, Louisiana has had some of the lowest rates in the country."
A portion of the fee increase could be offset by the federal government. Following Hurricanes Katrina and Rita, Congress approved a one-time waiver to grant Entergy Louisiana $200 million in assistance to avoid a rate shock for its customers. The firm has a similar request pending with Louisiana's Congressional delegation.
Montelaro said that when Entergy Louisiana rebuilds after storms, it does so in a way that's more "robust." He noted that in portions of lower Lafourche, Plaquemines and Jefferson parishes, only 3 out of its 387 new "more resilient" transmission structures were destroyed. Meanwhile, nearly half of structures in the same area built before 1997 succumbed to the storm.
"This type of investment is working," Montelaro said.
That primarily includes stronger above-ground infrastructure. Montelaro said putting the infrastructure underground is expensive, citing a 2009 report that determined it would cost $59 billion to bury its transmission and distribution lines below ground.
Customers in New Orleans, who receive their power through Entergy New Orleans, wouldn't be subjected to the rate increase.
Earlier this summer, Entergy New Orleans proposed a $24 per month fee increase it says is needed to pay for upgrades to electricity and gas systems and to meet renewable energy goals.
But Councilmember Helena Moreno, who chairs the committee that regulates the power company, said she's putting a pause on considerations of any potential rate increase. She first wants an audit into its performance during Hurricane Ida.
Editor's Note: This story has been updated to clarify Entergy's profit margin