The City Council signed off Thursday on a routine $640 million financing plan for Entergy New Orleans, after members had for weeks refused to give the utility the OK to incur debt as it has for years.
The plan, which was submitted to the council four months ago, allows Entergy to issue new bonds and preferred securities.
A longstanding agreement allows Entergy to incur up to $600 million in long-term debt and to issue up to $40 million in preferred stock to fund its daily operations and other projects. The utility doesn’t actually use that much; the amount is only a cap.
But the council twice held that agreement hostage in recent weeks, once because members found Entergy’s plans for utilizing solar power and fixing power outages lacking, and once because Entergy purportedly didn’t give a full explanation of the plan to council staffers ahead of time.
By contrast, Thursday's 5-0 approval came with little discussion. Both at-large council members, Helena Moreno and Jason Williams, were absent for the vote.
The council’s get-tough attitude with Entergy came as the utility’s public image took a nosedive after it became known that two companies hired to recruit supporters for a proposed gas-fired power plant in New Orleans East had been involved in paying actors to support the plant at council meetings.
Council members also have been upset that Entergy reduced funding five years ago for repairs to power lines and poles, a move that led to more power outages for city residents. And an Entergy plan to install solar panels on city rooftops — a response to the council’s demand that the utility add more renewable power sources to its portfolio — stalled recently after a developer backed out of that project.
The council, which regulates Entergy on behalf of residents, routinely approves financing options for the utility, allowing the company to incur long-term debt like mortgage bonds, long-term revolving credit accounts and securities, if necessary.
That money helps fund everything from buying fuel and paying contractors to capital projects like the proposed solar panel installations, said Gary Huntley, Entergy’s vice president of regulatory affairs.
“The ability to finance is really our ability to have cash for the entire business,” he said.
The financing plan approved Thursday would allow Entergy to issue mortgage bonds and other debt at an amount not to exceed $600 million, and preferred stocks at an amount not to exceed $40 million.
The utility already has about $350 million in outstanding mortgage bonds. It does not intend to hit its $600 million cap during the length of the agreement, Huntley said.
The utility asked the council nearly two years ago to approve an identical finance plan, which expired on July 1. The new plan runs until Oct. 31, 2019.