Hurricane Ida power grid failure forces a reckoning over Entergy’s monopoly in the South

Like many ravaging storms that got here earlier than it, Hurricane Ida uncovered the fragility of Louisiana’s energy grid, knocking out electrical energy to lots of of 1000’s of individuals and companies, together with practically all of New Orleans. It additionally laid naked rising doubts in regards to the potential of the state’s largest vitality supplier to guard in opposition to the consequences of local weather change, together with the more and more damaging climate it causes.

The corporate, Entergy Corp., has advised regulators and shareholders that it’s dedicated to defending the grid in opposition to excessive climate, having spent billions of {dollars} to improve towers, poles and features.

However Entergy additionally has a historical past of resisting adjustments that will have made the electrical grid extra resilient, from creating new transmission strains to increasing solar energy, in keeping with an examination of regulatory filings and different public paperwork and interviews with trade researchers and clean-power proponents.

These actions present that whereas Entergy isn’t against renewable energy, it fights initiatives it doesn’t management and doesn’t need competitors from different firms or householders attempting to generate their very own energy from the solar. That has angered native elected officers and environmental advocates, who say Entergy is obstructing wanted change to take care of its dominance of the native vitality market.

The New Orleans Metropolis Council, which regulates an area Entergy subsidiary, is utilizing the Ida outages to pressure a counting on Entergy. The council introduced an investigation of the failures that led to the citywide blackout and requested state and federal regulators to evaluate the corporate’s planning for long-range energy strains. Fourteen deaths have been attributed to Hurricane Ida in New Orleans, 10 of which had been attributable to extreme warmth through the outage, in keeping with the Louisiana Well being Division.

The council fined Entergy $5 million in 2018 for hiring actors to pose as proponents of a brand new energy plant and $1 million extra in 2019 for failing to take care of poles and features (Entergy is suing to enchantment the latter nice). In March, the council launched a administration audit of the corporate following outages throughout an excessive chilly snap.

“It comes right down to credibility,” stated council member Joe Giarrusso, a member of the Utility, Cable, Telecommunications and Expertise Committee. His message to Entergy: “You’re offering one of many metropolis’s most vital assets, and the individuals who reside right here have a proper to know what has occurred.”

Entergy, which reported $1.4 billion in earnings final 12 months, stated in a press release that claims that it delays increasing of transmission strains “are with out advantage and haven’t any foundation actually.” The corporate stated that it’s “actively working towards a carbon-free future,” and that its system has turn into extra dependable in recent times.

Broken energy strains and houses days after Hurricane Ida ripped by Grand Isle, La., on Sept. 2, 2021.Leah Millis / Reuters file

The frustration in New Orleans displays wider issues with America’s fractured vitality system and President Joe Biden’s hopes to remodel it right into a seamless community capable of harness new sources of photo voltaic, wind and different clear energy. Biden’s $1.2 trillion infrastructure plan requires billions of {dollars} for brand new transmission strains and the creation of a federal company that will take away bureaucratic obstacles to creating them.

That form of overhaul could be a problem for regional monopolies like Entergy, an investor-owned utility whose enterprise mannequin depends on management of its community of fossil fuel-burning energy vegetation and transmission strains.

Entergy says it helps a transition to renewable vitality and a stronger grid. Nevertheless it has acted in opposition to that purpose whereas preserving its dominance over an influence market that stretches throughout Texas, Louisiana, Mississippi and Arkansas, in keeping with researchers and clean-power advocates.

The outcomes, critics say, are missed alternatives to raised face up to excessive climate, draw electrical energy from extra sources and restore energy after storms extra rapidly.

Throughout Ida, all eight of Entergy’s high-voltage transmission strains into New Orleans failed. Seven months earlier, when a February storm disabled many energy vegetation in Entergy’s area, there weren’t sufficient transmission strains to ship needed energy from different components of the nation, resulting in widespread outages, in keeping with a report on the storm from the Midcontinent Unbiased System Operator, or MISO, which oversees the grid.

John Norris, a former member of the Federal Vitality Regulatory Fee who advocates for renewable vitality, stated the 2 occasions illustrate the results of Entergy’s hindering the event of a bigger and extra resilient grid.

“Our frustration with what’s happening precedes Ida, precedes the freeze final February,” Norris stated. “Nevertheless it’s simply an opportunity for us to attract individuals’s consideration to the truth that that is nonetheless not transferring ahead.”

Defending a monopoly

Entergy, previously often known as Center South Utilities, has existed in varied types for greater than a century, wielding appreciable political energy within the states the place it operates. Its headquarters are in New Orleans, the place it’s the metropolis’s solely Fortune 500 firm.

Like virtually all investor-owned utilities, Entergy operates as a state-sanctioned monopoly, allowed to behave as the only electrical energy supplier in its area whereas topic to strict oversight by authorities regulators, together with of the charges it fees clients. In current many years, the federal authorities has tried to deliver competitors to energy markets by forcing utilities to surrender management of their transmission methods so different energy firms can use them to maneuver electrical energy, as properly.

Entergy bumped into that greater than a decade in the past, when it got here below investigation by the Justice Division’s Antitrust Division. The division stated it was inspecting allegations that Entergy was utilizing its management of its regional transmission community to maintain rivals from promoting energy produced at vegetation that had been extra environment friendly and cheaper than its personal.

In 2012, the Antitrust Division introduced that Entergy had glad its considerations by taking steps that will enable rivals into its market. A type of steps concerned transferring its transmission strains to an unbiased firm.

However that by no means occurred. Entergy and a proposed purchaser known as off the deal in 2013 after state regulators rejected it, saying it will value customers an excessive amount of.

When Hurricane Ida knocked out energy to New Orleans, 1000’s sweltered within the warmth. Matt Slocum / AP file

Entergy held on to its transmission strains. The corporate stated in a press release that the Justice Division had taken no motion on the matter because the investigation “turned inactive” in 2012 and that it wasn’t conscious of any considerations that the federal company had in regards to the possession of its transmission strains. The Justice Division did not reply to requests for remark.

The second piece of Entergy’s cope with the Justice Division did happen. Entergy joined MISO, which oversees an influence grid throughout 15 states within the Midwest and the South. The transfer was purported to loosen Entergy’s grip on the native energy market.

However Entergy stays the dominant participant within the group’s Southern area, the place it has obstructed plans to construct high-voltage transmission strains that would deliver in additional energy from different components of the nation — and different firms — in keeping with trade researchers and former state regulators. Entergy and its consultants sluggish approvals by elevating frequent objections, asking for brand new research and accusing MISO of doing one thing unsuitable, in keeping with Norris and others. That, they are saying, has allowed Entergy to guard and increase its fleet of energy vegetation, giving it extra management and earnings.

“MISO says it wants to maneuver extra energy from north to south or inside a area, like in Louisiana. These are the sorts of initiatives that Entergy desires to dam,” stated Daniel Tait, a researcher for the Vitality and Coverage Institute, an trade watchdog that advocates for the event of renewable vitality in response to local weather change.

Ari Peskoe, the director of the Electrical energy Regulation Initiative at Harvard Regulation Faculty, stated Entergy is “an excessive instance” amongst old-school utilities that stand to lose from the constructing of regional transmission strains.

“There may be an incentive mismatch between what’s good for the general public versus what a utility would possibly wish to do, which is to guard its legacy energy vegetation that it may nonetheless earn cash off of,” Peskoe stated.

An indication of that, Entergy critics say, is a current effort to construct transmission strains in East Texas.

In 2018, a Florida firm received a aggressive bid from MISO to construct the strains, which might enable cheaper vitality to circulate to clients in a three-county space.

However Entergy and different utilities urged Texas lawmakers to guard them from competitors by passing a “proper of first refusal” regulation that stops outdoors energy firms from constructing transmission strains within the utilities’ territories. The Justice Division warned that the regulation would stifle competitors and result in larger charges. However the regulation handed.

The venture, which has turn into mired in litigation, hasn’t begun.

Entergy stated in a press release that the regulation “didn’t relate” as to whether the East Texas venture could be constructed. “So for critics to counsel it illustrates Entergy’s purported work to stall transmission improvement is solely unsuitable as a matter of reality,” the corporate stated.

At a current assembly of MISO’s board of administrators, Norris and different Entergy critics stated the group was permitting Entergy to exert an excessive amount of affect.

The consequence, critics say, is that in disasters like Hurricane Ida, Entergy’s grid is extra susceptible to wind-driven outages and fewer capable of transfer energy round to locations that want it.

Brandon Morris, a MISO spokesman, responded with a press release saying the group’s transmission planning was “a collaborative planning course of with our utility regulators, member firms and different stakeholders to find out the place transmission is required to make sure the supply of dependable, cost-effective electrical energy to customers.”

Entergy stated in a press release that it advocated for its pursuits with MISO similar to every other stakeholder and that it didn’t “have the facility or authority” to stall MISO’s plans. The corporate stated it has invested over $6 billion in new transmission initiatives because it joined MISO in December 2013.

“The stakeholders who’ve been accusing Entergy of delay and obstruction, essentially, seem to dispute Entergy’s proper to have a voice within the course of or are merely angered by the truth that Entergy’s view on sure points differs from theirs,” the corporate stated.

Battle over photo voltaic

Entergy says it helps creating solar energy and different clear vitality sources. However a few of its insurance policies have completed the alternative, critics say.

An instance, they are saying, was Entergy’s work to steer Louisiana regulators to cut back how a lot it paid individuals who put in photo voltaic panels on their roofs and contributed extra energy to the corporate’s grid.

Entergy argued that it was paying too excessive a charge and that it was unfair for its different clients to basically subsidize the price of solar energy. The corporate supported a rule, adopted by the state Public Service Fee in 2019, that reduce the financial savings for householders who put in photo voltaic panels by lots of of {dollars} per 12 months, in keeping with the Gulf States Renewable Vitality Trade Affiliation.

Opponents argued that the change would curb curiosity in rooftop photo voltaic installations. Two years later, they are saying their predictions have come true.

For the reason that vote in September 2019, gross sales have dropped by about 90 % for the largest photo voltaic firms in Louisiana, stated Stephen Wright, government director of the Gulf States Renewable Vitality Trade Affiliation.

“That’s a market killer,” Wright stated.

Downed energy strains in Waggaman, Louisiana.Steve Helber / AP file

Entergy has additionally blocked the extra widespread adoption of solar energy by combating new transmission strains that will carry renewable vitality into the corporate’s territory, stated Simon Mahan, government director of the Southern Renewable Vitality Affiliation.

“If we had a extra sturdy large-scale transmission of photo voltaic throughout Louisiana and into Texas, you’d simply have one other device to forestall main energy outages,” Mahan stated. “You may have had extra strains serving New Orleans.”

Entergy stated that it has opposed a small fraction of proposed transmission initiatives within the area and that it’s including photo voltaic initiatives to the community it controls, together with three vegetation in Louisiana.

‘You’re the goliath’

New Orleans has turn into the starkest instance of rising public frustration with Entergy.

A lot of that has to do with a shift within the political panorama. The Metropolis Council has virtually utterly turned over since 2018, when members voted over neighborhood objections to permit Entergy to construct a gas-fired energy plant in New Orleans.

Entergy stated the plant was wanted to offer energy throughout storms and high-demand intervals. Opponents stated the plant would contribute to carbon emissions and advocated investing in photo voltaic choices, as an alternative.

Since then, all however one of many members who supported the facility plant have left workplace. The brand new council has taken a extra aggressive strategy to the corporate, observers say.

Along with the current fines and the administration audit, the council has required Entergy to conform to remove carbon emissions by 2050. And in Ida’s wake, it’s contemplating methods to deliver extra competitors to the native vitality market.

After Metropolis Council President Helena Moreno introduced plans to judge Entergy’s future in New Orleans, Entergy responded with a information launch saying it was prepared to discover a number of choices, together with promoting or spinning off its New Orleans subsidiary or turning its native belongings over to town.

“It’s apparent that we have now reached a crucial juncture in our relationship with the Metropolis Council,” Rod West, Entergy’s utility group president, stated within the assertion.

On Wednesday, the council’s utilities committee voted to analyze Entergy’s transmission failures throughout Ida and to ask state and federal regulators to evaluate its native transmission planning.

On the assembly, which Entergy executives attended, Moreno accused the corporate of utilizing “threats and PR spins” in response to questions on its service.

“Please cease appearing like you’re the sufferer. You’re the goliath. You’re a highly effective Fortune 500 firm with all of the assets on the planet and document earnings final 12 months of $1.4 billion,” Moreno stated. “We aren’t the bullies, and we’re not attempting to run anybody out of city. We simply need you to do your job for the ratepayers.”

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