Entergy New Orleans says it wants to be a good neighbor and a good corporate citizen, but Mayor LaToya Cantrell, the New Orleans City Council and energy activists don’t agree about the best ways it can do that.
Just recently, Cantrell, frustrated by a 61-year-old Sewerage & Water Board turbine explosion that injured some city employees and rocked homes in New Orleans and Metairie, suggested that the council restart negotiations with the utility company. It could take a year to fix the busted turbine, leaving the city vulnerable during the 2020 hurricane season.
Entergy may have a solution. In November, the firm offered to build a modern power substation with a $75 million price tag and to upgrade the power grid with another $100 million. In return, the utility wants a higher profit margin approved by the council, and the council balked. City Councilwoman Helena Moreno said the Entergy proposal didn’t have enough specifics.
But the explosion should prompt the council to take a second look.
Entergy New Orleans wants a 10.75% return on equity, but the firm has indicated it might settle for less. It contends that its request is in line with utilities in other markets. The council supports a 9.35% return, believing the company can provide expected service with a rate comparable to other communities with return on equity rates below 10%. Entergy argues that still other companies have returns higher than 10%, and those operations can invest more.
That’s a significant difference, and the matter has ended up in court — an outcome that will benefit lawyers but not the company or its customers.
The turbine explosion was frightening, and the mayor was right to embrace the wounded employees and promise them a safer work environment.
But some good might come of the mishap if it pushes the council and the utility toward a negotiated settlement.
Entergy, the council and energy advocates should work to come to agreement in the coming days and weeks so we can get to a deal that best positions the city for fewer explosions and harmful incidents and a more viable system built for longevity.