La. Senator David Vitter wants to sell Entergy assets
1st October 2012 · 0 Comments
By Zoe Sullivan
Entergy has been the target of much wrath in the aftermath of Hurricane Isaac. With hundreds of thousands of people left without power for days, public officials and residents denounced the firm’s performance. Almost a month after the storm, The Times-Picayune reported that 250 streetlights are still out in Kenner. Giving voice to the frustration of many Louisiana residents, Senator David Vitter held a press conference on September 25 calling for legislation that would make it possible to sell the assets of utilities companies that do not perform adequately.
Setting forth this proposal in a letter, Vitter challenged Governor Jindal and other state officials to consider “[injecting] real competitive pressure into the equation.” He asked: “Why should a utility be guaranteed its costs plus a profit but in most cases never EVER be able to be replaced, no matter how poorly it performs?” Vitter also argued that “The forced sale option should be created for use in those hopefully rare cases when needed.”
Vitter’s proposal makes sense to Casey DeMoss Roberts, Executive Director of the Alliance for Affordable Energy. Roberts told The Louisiana Weekly that her organization is a watchdog organization that “promotes fair and affordable, environmentally responsible energy policy in Louisiana.”
Roberts said that she would love to see power become publicly-owned. “In New Orleans, we’re having to fight for energy efficiency because the utility is worried about losing sales.” She compared the successes that San Antonio and Austin, TX have enjoyed promoting energy efficiency and pointed out that because of those cities’ efforts to use power wisely, they have managed to avoid having to build new power plants.
But, Roberts cautions, New Orleans currently enjoys some of the lowest power rates in the country thanks to long-term purchase agreements with Arkansas and Mississippi. “If we municipalized, we would likely lose those contracts,” she cautioned. She added, however, that a city-owned power company could make a point of negotiating agreements with providers so that the switch would “make sense for rate bearers.”
Vitter’s letter stated that a mechanism that would allow municipalities to sell off power company assets “would give ALL dissatisfied jurisdictions a meaningful avenue to replace a poorly performing utility, something most don’t have now.” But Roberts cautions that the ability to sell power assets on a whim could have negative consequences. “What is a little scary is that the parishes would go to the public service commission just because they’re angry and don’t really understand utility regulation and could sell off their assets to some other big company.” She suggested that if Vitter’s proposal were to move forward, strict oversight of such sales would be essential.
Asked whether she had criticisms of Entergy’s performance post-Isaac, Roberts explained that the firm doesn’t appear to be undertaking the kind of basic maintenance needed to prepare for storms and compared its behavior to that of a “slumlord.”
“They didn’t send trucks around the city to look at poles to make sure poles weren’t rotten at the base,” she pointed out. “When 40 percent of all outages are due to trees…they’re not doing that basic requirement, which they’re supposed to be doing,” Roberts asserted. “We all know what hurricane season is,” she went on in a matter-of-fact tone. “It’s common sense to protect your assets.” In spite of this, Roberts also acknowledged that, given the hierarchy of priorities for repair after the storm – sub-stations, generators, transmission lines, hospitals, etc. – Entergy did what it could as quickly as it could. The issue, Roberts says, is that these efforts may cost utility customers quite a bit.
Raising a point of concern looking forward, Roberts described her thoughts during a Louisiana Public Service Commission meeting in mid-September that focused on Entergy’s performance and the power outages post-Isaac. She said that Entergy officials presented information about hurricane damage to the state over the past several decades. “The five worst storms, as far as damage, have been since Hurricane Katrina,” Roberts said. “When I looked at that slide, I saw what I thought was a very obvious trend, which is that storms are becoming a lot more damaging…and no one is really talking about how we need to adapt.”
Entergy responded to an inquiry from The Louisiana Weekly regarding Vitter’s proposal stating “We stand by the results of our restoration efforts which saw us restore power to customers faster than we have been able to do in any previous hurricane – Katrina, Rita, Gustav or Ike. At the same time, we learn lessons from every storm, and Isaac was no different.”
Public Service Commissioner Eric Skrmetta told The Louisiana Weekly that he was philosophically uncomfortable “with the idea that we just take your company away.” Skrmetta explained that the Commission has the power to discipline companies already through fines and by withholding funds requested for expense reimbursements.
He also expressed concern about the kind of deregulated market that might result from enacting Vitter’s proposal. “I don’t think so far that deregulation has been of any success,” Skrmetta told The Louisiana Weekly. He gave the example of Texas, which he described as “bifurcated.”
“Regulated rates [in Texas] are about the same as Louisiana, 8.4 cents per kilowatt hour.” But, he pointed out, “the deregulated rate is about 11.75 cents per kilowatt hour,” which represents a substantially larger cost burden for utility customers.
This article was originally published in the October 1, 2012 print edition of The Louisiana Weekly newspaper