City residents energy bills could be going up
By Pam Radtke Russell Business writer
New Orleans residents could see their electric and gas bills rise about $45 a month under a plan Entergy New Orleans has filed with the New Orleans City Council.
The filing is the first time since Hurricane Katrina that Entergy New Orleans has requested a rate increase to help pay for damage it sustained in the hurricane and to adjust rates based on its much smaller customer base.
The City Council has until Nov. 1 to act upon the filing.
City Council President Oliver Thomas said Wednesday that he has not had time to review the rate increase and couldn’t yet comment on the filing. Clint Vince, an advisor to the city council on Entergy-related issues, is also still reviewing the filing, but said he wouldn’t expect the council to rubber stamp the request.
“The council’s job is going to be to really dig deep and make sure that any amount that is given to the company is backed up,” Vince said.
Entergy New Orleans is proposing a 25 percent increase in monthly bills for a typical electric and gas customer, including a 17 percent increase in electric and gas bills, as well as two additional monthly line item charges to recover storm costs and to build up a storm reserve in the event of future storms.
“This is a major step for our path out of bankruptcy,” said Dan Packer, chief executive officer for Entergy New Orleans.
Weeks after Hurricane Katrina, Entergy New Orleans filed bankruptcy. Though it still is operating, and its assets exceed its liabilities, it does not have enough cash to keep the system operating. It’s operating with about 40 percent of its 190,000 pre-Katrina electric customers.
The company has requested $718 million in federal aid to help pay for some storm losses and losses in revenue. Without that money or another source of revenue, the company can legally ask its customers to pay for its losses in their monthly bills.
Under the plan, Entergy New Orleans is asking to recoup only the $118 million of storm costs it has paid for so far, or about $9.20 a month from each customer over 10 years. When more costs come due monthly bills could increase as the company seeks to have more of the storm recovery costs paid by ratepayers. It also could be reduced if Entergy New Orleans gets the requested federal money.
The rate increases would apply only to residents of the east bank of New Orleans. The west bank of New Orleans is covered by Entergy Louisiana, a sister company.
Based on a typical home that uses 1,000 kilowatt hours of electricity, and 5,000 cubic feet of natural gas, customers would see their electric and bills rise from $177.58 a month to $207.12 a month. Entergy New Orleans is also requesting that the typical customer pay about $9.20 a month to help recover the $118 million in storm costs, and another $5.85 a month to build up a $150 million storm reserve account, for a total monthly bill of $222.
About $128 of the bill would be for the electric portion, still much lower than Boston, where the typical electric bill is $207.34, the highest in the nation. Electric costs, however, would still be higher than the rest of the state.
Those costs include fuel adjustment charges, a line item on customers bills which varies month by month depending on the cost of fuel.
But gas customers would have rates skyrocket 160 percent, from $15.72 a month to $41.02 a month. That dramatic rise is because of the extensive damage to the gas system and the smaller customer base, Entergy said. There is no available data to compare how that rate compares with the rest of state or the nation.
The total increase of 25 percent, though, is far short of the 140 percent increase that Entergy has been warning of if the company doesn’t get a portion of the federal money.
If the city council doesn’t agree with Entergy’s recommended rate increase, it could affect the company’s ability to emerge from bankruptcy, according to Phillip May,vice president of regulatory services for Entergy Corp.
“It would delay our ability to emerge from bankruptcy,” May said. “Or worse.”
(Pam Radtke Russell can be reached at (504) 826-3351 or email@example.com.)