It's on the Up-and-Up
Clancy DuBos' column ('Morally Indefensible," Politics, Oct. 7) criticizing Entergy New Orleans' (ENO) position on System Agreement issues is a one-sided account of the company's stance regarding Entergy Arkansas' (EAI) and Entergy Mississippi's (EMI) notification of their decisions to exit the System Agreement in 2013 and 2015, respectively.
The System Agreement, a contract among Entergy's six utility companies to jointly plan and operate generation and bulk transmission resources, has provided benefits for all of Entergy's 2.5 million customers. Nonetheless, the agreement provides the legal authority for any of the six operating companies to exit the agreement, provided it gives 96 months notice. Because DuBos wrote his column without seeking comments from ENO, he failed to note several important points. With a simple phone call, he would have learned that the notice to withdraw from the System Agreement was given by EAI over two years ago and that in the intervening time, the Federal Energy Regulatory Commission (FERC), in a proceeding in which the City Council participated, ruled on June 1, 2007, that EAI could withdraw.
Next, ENO customers did not help pay for EAI's generation plants and, further, even when EAI withdraws from the System Agreement, it will not be able to take with it all of its low-cost electricity generated at its coal and nuclear power plants. In 2003, ENO entered a life-of-the-unit contract for coal and nuclear capacity from EAI, and that contract will continue even if EAI exits the System Agreement.
Because FERC has already ruled that EAI and EMI can withdraw from the System Agreement, ENO believes that the best course of action to preserve the benefits of economy of scale and fuel diversity for its customers is to seek a successor agreement with its sister companies. Both ENO and the council agree that the FERC has the sole authority to decide this issue. Likewise, both ENO and the City Council agree that the FERC is the only regulator that has the authority to decide whether a company that withdraws from the current System Agreement has any obligation to the remaining companies. The City Council, rather than attacking ENO, should urge the FERC to decide this issue once and for all.
We have invited the City Council to constructively discuss with us a plan for our customers' future. A constructive dialogue would certainly be more productive and less expensive for our customers than headline-grabbing, factually incorrect statements or needless and pointless litigation.
Vice President of Regulatory and Governmental Affairs
Entergy New Orleans Inc.
DuBos responds: I admit that I failed to call anyone at Entergy. I should have. However, I did quote from ENO president Rod West's letter to the Council, which sets forth the company's position. And while I failed to note that Entergy Arkansas had given eight years' notice under the system agreement's withdrawal provision, Arkansas' decision to exit the agreement is not the issue. Entergy Arkansas wants to withdraw from the system and take with it (without paying any long-term exit fees, as demanded by the New Orleans Council) several sources of low-cost power that were expressly built for the benefit of all of Entergy's customers. Arkansas also wants to avoid the annual FERC-imposed payments of more than $200 million to Entergy Louisiana and ENO. The defining issue for the Council and ENO is this: Will ENO insist that Entergy Arkansas continue making the annual payments until the eight-year withdrawal notice runs its course in December 2013 or will ENO help confect a "successor agreement" that skirts the FERC order by taking effect prior to December 2013? On that issue, ENO has a duty to look out for the interests of its customers, not just its sole stockholder.
It's Worth the Energy
The Alliance for Affordable Energy wants to thank Political Editor Clancy DuBos for his insightful article ('Morally Indefensible," Politics, Oct. 7) about Entergy's treatment of New Orleans ratepayers. His article fills an important role in educating the public about these vital issues. Additionally, we applaud the New Orleans City Council, the regulators of Entergy-New Orleans (ENO), for its proactive stance on utility matters.
ENO is a regulated monopoly, not a private company. For the privilege of not having to compete for customers, it is regulated by an agreement that guarantees a profit for ENO. As a result, ENO has responsibilities to ratepayers in our city.
The job of a regulator is to approve agreements with utilities like Entergy, then make sure these utilities stick to the deals they make. We fully support the New Orleans City Council in this work. For the past 18 months, the City Council has repeatedly requested ENO's plan for protecting New Orleans ratepayers from the current financial debacle that was explained in DuBos' article. After two years of waiting, we are thrilled to see the City Council begin to demand action to protect our citizens.
As cumbersome as this process is, it is still the best way to protect our city from corporate decisions made in the interest of shareholders instead of the public good. When regulation is "loosened up" (as we have seen in the sub-prime mortgage debacle and the banking and financial industries), it is the average person who pays the price.
The Alliance for Affordable Energy has been fighting for 23 years to protect the citizens of New Orleans from unreasonably high utility bills. We believe that solutions exist to our energy crisis, and those solutions will involve effective regulation, maximizing energy efficiency and developing renewable energy.
For readers who want to get involved, the best way to let your regulators know what you think about these issues is by calling them, writing them and attending their meetings. Our Web site (www.all4energy.org) has contact information for the City Council members and for the Louisiana Public Service Commission, which regulates utilities in much of the rest of the state.
Solutions exist, but they will take all of us working together. Karen Wimpleberg Board President, Alliance for Affordable Energy More to the Story Thank you for your column ('Morally Indefensible," Politics, Oct. 7) concerning Entergy's efforts to cut off annual payments of more than $200 million to its customers in Louisiana by permitting the withdrawal of Entergy Arkansas (EAI) and Entergy Mississippi (EMI) from the Entergy System Agreement for free. If citizens were aware of what Entergy is doing, they would be protesting in front of Entergy's headquarters.
Here are the key facts:
EAI has been ordered by Federal Energy Regulatory Commission (FERC) to make more than $250 million in annual payments to Entergy customers outside of Arkansas (including those in Louisiana), because the cost structure of the Entergy system is not fair and favors EAI. The majority of those payments go to the benefit of customers in Louisiana more than $200 million in 2006 and 2007.
The President and CEO of EAI publicly admitted that EAI is attempting to withdraw from the Entergy System Agreement to duck these payments.
If it is able to withdraw from the system, EAI plans to remove several sources of low-cost power that are located in Arkansas but which Louisiana customers can access now through the system. Those sources of power were built for the express benefit of all Entergy customers, including those in Louisiana, and we helped pay for their operating costs over the years.
Entergy New Orleans (ENO) has voted in favor of allowing EAI to leave the system, to stop making the $250 million in annual payments when it leaves, and to take with it for free the sources of low-cost energy located in Arkansas.
ENO signed an agreement with the City Council in 2003 promising to comply with the terms of the 2003 federal order. Yet it did not oppose the EAI withdrawal and instead provided assistance to EAI by voting to allow it to escape the federally ordered payments and to leave the system for free.
ENO argues that EAI can legally exit the Entergy System Agreement on eight years notice. What it doesn't say is that nowhere is it written in the agreement that upon withdrawal, a party can take systemwide assets with them for free and/or stop making the $250 million in payments ordered by FERC to balance an unequal and unfair system.
The City Council is committed to protecting the ratepayers of New Orleans and Louisiana from this power play by EAI.
Chair, Council Utility Committee