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Entergy can recover $170 million in Ida costs from customers, consultant says

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lailluminator.com – Michael Isaac Stein, Verite – 2023-08-28 09:00:12

Entergy can recover $170 million in Ida costs from customers, consultant says

by Michael Isaac Stein, Verite, Louisiana Illuminator
August 28, 2023

NEW ORLEANS — Consultants for the New Orleans City Council have issued a new report saying that Entergy New Orleans should be able to collect $170 million from local customers to pay for damages caused by Hurricane Ida, just shy of the $179 million the company has asked for.

The consultants found the company responsibly and correctly spent $170 million to recover from Hurricane Ida, which ripped through New Orleans in August 2021 and left the city completely without power. The Aug. 15 report also states that current legal precedent allows Entergy to recoup those costs from customers through extra fees.

Councilmembers Helena Moreno and JP Morrell have both previously argued that customers shouldn't be on the hook for damages from Ida. Neither confirmed to Verite whether they will vote to approve the consultant recommendation. But both indicated publicly and to Verite that they will likely have no choice but to greenlight Entergy's request.

“The system of paying for storm restoration is broken,” Moreno told Verite in a statement. “We'll continue to look for all options to reform this broken system and build a more resilient grid.”

“The Council will review the record in its entirety to ensure that ratepayers are only footing the bill for the costs necessary to restore power after Hurricane Ida,” Morrell said.

“Under federal law and court precedent, the Council … is limited in its review of an application for cost recovery to the questions: Are the cost calculations correct? And were these costs prudently incurred?”

The consultant report was fairly clear: “Nothing suggested that [Entergy New Orleans'] actions were not in accordance with prudent utility practices.”

Entergy New Orleans did not respond to a request for comment for this story.

Residents and government officials alike have harshly criticized the company for its preparations and response to the storm. It took over a week to return power to most of the city as 21 people died, mostly from heat exposure.

Councilwoman Moreno and then-council candidate Morrell responded in the aftermath of the storm by saying that they would do whatever they could to make sure costs weren't shouldered by customers who were already dealing with skyrocketing bills.

“I do not support Entergy passing through the cost of power restoration,” Morrell said on his campaign website after the storm.

Nearly two years later, it appears the council may be out of options and will likely have to approve Entergy's request. Local consumer advocates with the Alliance for Affordable Energy told Verite they were worried about the impact to customers.

“We are concerned about the effect of these storm costs on ratepayers, especially when compounded with Entergy's pending applications before the Council for increases in both electric and gas rates and for $1 billion for storm hardening,” Jesse George, policy director for the alliance, told Verite in an email. “Ratepayers in New Orleans suffer one of the highest energy burdens in the nation while Entergy routinely boasts to its shareholders about increasing profits and shareholder dividends by slashing maintenance spending.”

Although the cost recovery hasn't gotten final approval yet, customers began paying a fee for costs related to Ida in January. In December, the council voted to allow the company to preemptively start charging customers so that it could finance the recovery costs through bonds, and so that Entergy could lock in lower interest rates. If cost recovery ultimately isn't approved by the council, that money would likely be refunded or turned into discretionary council funds.

According to a sample bill on Entergy's website, a typical residential customer in New Orleans is paying $5.25 for the new storm recovery fee in August. Morrell's chief of staff Monet Brignac said that 62.5 percent of that fee was going to directly pay for Ida costs. The rest is dedicated to refilling the company's storm reserve fund, which was drained by Ida and previous hurricanes in 2020.

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‘We fought for months'

Councilmembers had first attempted to avoid charging customers by lobbying the federal government, making trips to Washington, D.C. and meeting with representatives of the Biden administration.

“We fought for months to get federal assistance to help take these costs from overburdened ratepayers,” Moreno said.

But Moreno's chief of staff, Andrew Tuozzolo, told Verite that to his knowledge, no federal funds were ever dedicated to Entergy New Orleans' cost recovery. Mayor LaToya Cantrell's office did not respond to questions about federal assistance for Entergy reimbursements.

The council also tried to find a way to force Entergy to pay for some of the recovery itself, instead of charging all of it to customers. According to Brignac, the council is obligated to follow a “prudent investment rule,” which basically states that if a utility company like Entergy is “prudent” in its storm recovery, regulators have to allow the company to recover those costs from customers.

The council opened a process to investigate Entergy's post-Ida spending, to ensure that all of it was indeed spent prudently. That process resulted in the new consultant report.

The advisors' suggested recovery amount — $170 million — was only slightly lower than the $179 million Entergy originally asked for. According to the report, 98 percent of the damage was to the local distribution system, the smaller poles and lines that bring electricity from building to building.

That might come as a surprise to some residents. The post-Ida blackout was primarily caused by problems in the transmission system: the bigger poles and wires that transport electricity regionally to the city. Hurricane Ida brought down all eight transmission lines that come into New Orleans, leaving the city an “island” without power.

Most of the damaged transmission equipment was outside of the Entergy New Orleans territory, and mostly owned by its sister company, Entergy Louisiana. The Louisiana Public Service Commission, which regulates Entergy Louisiana, approved its separate request to recover $1.5 billion for Ida damages in January.

When New Orleans was cut off from outside electrical transmission in the storm's aftermath, Entergy opted against activating a controversial new power plant — the New Orleans Power Station — inside city limits, which company executives previously said would be useful for just such a situation.

In response to questions from the council and the press, the company said that although the black-start capability could have been used, it was faster to repair the transmission lines first, leading critics to question the usefulness of the plant's black-start capability.

The company was also criticized for not adequately preparing for an era in which climate change is predicted to bring more intense storms. Following Hurricane Ida, the council asked Entergy New Orleans to develop a plan to harden the grid that would incur less damage from storms and therefore result in long-term savings.

Entergy New Orleans came up with a $1.3 billion storm hardening proposal, which would add over $11 to customers' monthly bills by 2028. The plan has not been approved by the City Council yet.

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This article first appeared on Verite and is republished here under a Creative Commons license.

Louisiana Illuminator is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. maintains editorial independence. Contact Editor Greg LaRose for questions: info@lailluminator.com. Follow Louisiana Illuminator on Facebook and Twitter.

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Landry removes job requirements, trumps local authority for industrial tax breaks

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lailluminator.com – Greg LaRose – 2024-02-22 05:00:54

Landry removes job requirements, trumps local authority for industrial tax breaks

by Greg LaRose, Louisiana Illuminator
February 22, 2024

Companies that receive major breaks on their local property taxes to invest in large industrial projects in Louisiana will no longer have to set hiring goals to get the incentive, plus they won't need approval from local taxing authorities if the governor is in favor of their proposal.   

Gov. Jeff Landry signed an executive order Wednesday that upends the standards and approval process that's been place for the Industrial Tax Exemption Program (ITEP) since 2016. The signing took place during the governor's appearance at a Louisiana Association of Business and Industry luncheon, according to the Baton Rouge Business Report

“This program is about capital investment. It is not about job creation,” Landry said.

Since 1998, Louisiana has awarded more than $20 billion in local tax breaks to industry through its Industrial Tax Exemption Program, according to an Ohio River Valley Institute analysis. 

Flow from the ITEP spigot slowed significantly in 2016 then-Gov. John Bel Edwards issued an executive order that required local approval of industrial tax exemptions. He also reduced the tax break available from 100% of property taxes to 80% and inserted a job-creation requirement for companies. Landry's order keeps the tax reduction at the same level.

The executive order he signed Wednesday also condenses the process for companies to receive local approval on their tax exemptions. Previously, each local body that collects property taxes had to approve tax breaks independently with a separate public hearing. For example, a parish school board could approve the tax exemption, but a parish council or sheriff could reject it. The business would then receive a partial tax break.  

Landry's new arrangement calls for a single parish industrial board, which would include representatives from the taxing agencies, to consider ITEP applications. Its vote would apply to all local agencies that receive property taxes, meaning companies would get approval a total tax break or none.

The executive order also upends the sequence of approval to award industrial tax exemptions, placing ultimate power in the governor's hands. Local approval has been necessary for an ITEP request to advance for consideration to the state Board of Commerce and Industry, a 24-member panel of appointees from business groups and the governor. 

Now, under Landry's order, companies will first submit their applications to the Board of Commerce and Industry. If their request is approved, the state panel will then notify a parish industrial board that it must hold a public hearing on the application within 45 days.

However, the order says little about what weight the local recommendation has in the ITEP approval process or how it factors into the governor's decision.

“Input from the Local ITEP Committee is important for consideration of an industrial tax exemption; however, it should not unduly delay the ITEP application process,” the order reads.

In an email, the Illuminator asked Landry spokesperson Kate Kelly about the governor's ability to override a local ITEP vote.

“The governor is the final say,” Kelly said.

Together Louisiana, a coalition of church and civic groups, has been highly critical of the state's generous ITEP giveaways. In a statement Wednesday, the group questioned whether Landry's order turned the incentive program into “a gift.”

“If a corporation gets a tax exemption, not to bring in a new plant or create jobs, but just as a public subsidy for its routine capital investments — investments, that is, that would have happened anyway — the result is not economic development. It's the opposite,” the Together Louisiana statement said. 

“In that scenario, local communities don't get new economic activity, but they still lose the millions in tax revenue from their schools, roads and police,” the statement continued. “They lose jobs — the teachers, construction workers, sheriff's deputies and others who would have provided the services that went unfunded. And their property taxes start going up, to fill the holes in the tax base left by each new round of gratuitous giveaway.”

Without any job requirements, companies can now apply for tax exemptions for most any large-scale investment in Louisiana. Landry's order does specify that maintenance expenses, environmental compliance upgrades and replacement parts that are not part of an extensive restoration do not qualify for ITEP awards.

The order goes into effect for all ITEP applications moving forward, effective Feb. 21, but does not apply retroactively to applications or exemptions.

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Louisiana Illuminator is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. maintains editorial independence. Contact Editor Greg LaRose for questions: info@lailluminator.com. Follow Louisiana Illuminator on Facebook and Twitter.

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Criminal justice reform advocates ask court to force Legislature to hear from public

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lailluminator.com – Piper Hutchinson – 2024-02-21 16:51:56

Criminal justice reform advocates ask court to force Legislature to hear from public

by Piper Hutchinson, Louisiana Illuminator
February 21, 2024

Three Louisiana criminal justice reform advocates have asked a state court to prevent the Legislature from discussing several proposals until more public testimony is heard on the bills. 

Their petition was filed Wednesday in 19th Judicial District Court in Baton Rouge by Norris Henderson, executive director of Voice of the Experienced, Ronald Marshall, chief policy analyst with Voice of the Experienced, and Erica Navalance, a staff attorney with the Promise of Justice Initiative. Read the full petition below. 

They contend House Administration of Criminal Justice Chair Rep. Debbie Villio, R-Kenner, has irregularly limited public input over two days of hearings during a special session on crime policy. The agenda for the session features a string of bills, with Gov. Jeff Landry's support, that call for harsher consequences for criminals.   

The committee enacted a rule to limit each public commenter to three minutes and cut off public debate after proponents and opponents of a bill each testified for one hour. The three-minute rule is a common practice at the Capitol, but overall time limits are seldom used. 

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Committee members said they supported these rules to get through testimony more quickly. On Tuesday and Wednesday, the committee had a full schedule of bills that attracted a large number of public comments. The special session doesn't have to end until March 5, but leaders have suspended the rules several times in order to expedite hearings on bills rather than letting them lay over for a day between hearings. 

House Democratic Caucus Chair Rep. Matthew Willard of New Orleans and other Democrats have criticized Republicans for fast-tracking legislation that would almost totally reshape Louisiana's criminal justice system, giving the public limited opportunity for input. 

The court petition seeks to prevent the full House of Representatives from discussing the bill until the House Criminal Justice Committee holds another hearing to allow more public comment. The complainants say they traveled to Baton Rouge to testify, but the committee's time limits prevented them from speaking. 

House Speaker Phillip Devillier, R-Eunice, defended the committee, arguing two hours of discussion per bill is reasonable, and that the Legislature is allowed to suspend the rules to advance bills. 

The complainants want to pause debate on four bills: 

House Bill 4, by Rep. Julie Emerson, R-Carenco, which limits post-conviction relief opportunities. House Bill 6, by Rep. Nicholas Muscarello, R-Hammond, which expands the methods by which Louisiana executes people and shields records related to executions from public viewHouse Bill 9, by Villio, which eliminates parole in almost all circumstances House Bill 10, by Villio, which limits good time credits and credit for time served

 

Louisiana Illuminator is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. maintains editorial independence. Contact Editor Greg LaRose for questions: info@lailluminator.com. Follow Louisiana Illuminator on Facebook and Twitter.

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Biden unveils latest round of student loan cancellation to aid 153,000 borrowers

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lailluminator.com – Jennifer Shutt – 2024-02-21 16:26:30

Biden unveils latest round of student loan cancellation to aid 153,000 borrowers

by Jennifer Shutt, Louisiana Illuminator
February 21, 2024

President Joe Biden expanded his push to eliminate student loan debt Wednesday, saying during a speech the initiative is part of a campaign promise to address the “broken” system.

“While a college degree is still a ticket to a better life, that ticket is too expensive,” Biden said. “And too many Americans are still saddled with unsustainable debt in exchange for a college degree.”

Biden, who made his remarks while on a trip to California that also included fundraising for his 2024 campaign, argued that canceling student loan debt not only helps those who receive the benefit directly, but those in their communities.

“When people's student debt is relieved, they buy homes, they start businesses, they contribute, they engage in the community in ways they weren't able to before and it actually grows the economy,” Biden said.

The latest round of student debt forgiveness includes nearly 153,000 borrowers and a total of $1.2 billion in debt, according to a fact sheet from the White House.

Those receiving loan forgiveness are enrolled in the Saving on a Valuable Education or SAVE repayment plan, have been paying back their loans for at least 10 years and originally took out less than $12,000 in loans.

This week's actions bring total student loan cancellation by the Biden administration to $138 billion for nearly 3.9 million people, according to the fact sheet.

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Repayments tied to income, family size

The so-called SAVE Plan allows borrowers to set their student loan repayments based on their income and family size, not the amount of student loan debt they hold.

“The SAVE plan ensures that if borrowers are making their monthly payments, their balances cannot grow because of unpaid interest,” according to the White House's fact sheet. “And, starting in July, undergraduate loan payments will be cut in half, capping a borrower's loan payment at 5% of their discretionary income.”

Education Secretary Miguel Cardona said on a call with reporters Tuesday there are about 7.5 million people enrolled in the SAVE Plan and that 4.3 million don't have a monthly payment.

“Many SAVE forgiveness recipients come from lower- and middle-income backgrounds,” Cardona said. “Many took out loans to attend community colleges. Some were at high risk for delinquency and default. That's why the actions we're announcing today do matter.”

Cardona said those eligible for this round of student debt cancellation would receive an email from Biden telling them about the move.

New FAFSA rollout criticized

Louisiana Republican Sen. Bill Cassidy said in a written statement the latest round of student loan forgiveness is misguided.

“The Biden Department of Education has been unable to fulfill their basic responsibilities mandated by Congress and essential to families, like implementing FAFSA,” Cassidy said, referring to the application college students fill out to access student aid, including grants, scholarships and loans.

The Biden administration's efforts to revamp the form have been marred by delays and errors. 

“Instead, they have spent a considerable amount of time prioritizing their student loan schemes to shift someone else's debt onto taxpayers that chose not to go to college or already paid off their loans,” Cassidy added. “This is unfair, manipulative and a cynical attempt to buy votes.”

Cassidy is the ranking member on the U.S. Senate's Health Education Labor and Pensions Committee, often referred to as the HELP Committee.

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Supreme Court decision

Biden, speaking at the Julian Dixon Library in Culver City, California, criticized the U.S. Supreme Court for blocking his original student loan forgiveness plan. 

“Early in my term, I announced a major plan to provide millions of working families with debt relief for their college student debt,” Biden said. “But my MAGA Republican friends in the Congress, elected officials and special interests stepped in and sued us. And the Supreme Court blocked it. But that didn't stop me.”

Biden said the justices' opinion in that case led him to “pursue alternative paths” for student debt relief, which includes the announcement he made Wednesday.

Canceling some student loan debt, Biden said, is about giving people a chance.

“That's all we're doing … giving people a chance, a fighting chance to make it, because no one who is willing to work hard in America should be denied the opportunity to have that chance.”

Louisiana Illuminator is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. maintains editorial independence. Contact Editor Greg LaRose for questions: info@lailluminator.com. Follow Louisiana Illuminator on Facebook and Twitter.

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