N.O. City Councilwoman Shelley Midura accuses Entergy of 'corporate

New Orleans CityBusiness, Oct 1, 2008 by Jaime Guillet

City Councilwoman Shelley Midura called out Entergy New Orleans again in a Monday letter for the company's participation in what she's called "an elaborate corporate shell game" that she says will cost Louisiana ratepayers upwards of $1.5 billion.

Midura, chairwoman of the council's Utility Committee, responded to a Thursday letter from ENO President and CEO Rod West, in which he said ENO has worked on behalf of New Orleans ratepayers regarding Entergy Arkansas and Entergy Mississippi's plan to pull out of a federally established system agreement which equalizes Louisiana's rates. But Midura said West never enumerated "a single action" ENO has taken on behalf of the ratepayers anywhere in his Thursday letter to the committee.

"'To focus on developing workable solutions' requires the participation of the company," Midura wrote. "ENO has not participated in such a dialogue."

Midura also supplied a six-point list of what council utility advisers say ENO should be doing to protect its ratepayers.

"Entergy is working a backroom deal that could cost Louisiana ratepayers hundreds of millions of dollars," Midura said Tuesday after receiving West's letter. "They're mad at the ruling from the federal refs and now want to quit in the middle of the game and take the ball home with them when we're the ones who paid for that ball. The New Orleans City Council is saying that we are not going to let them do that to our people."

Although unavailable for interview, ENO issued a response to Midura's letter, which preserves ENO's position that it is working only in the best interest of ratepayers.

"At Entergy New Orleans, we continue to work for the benefit of our ratepayers every day and clearly our proposals submitted to the City Council to lower electric rates and the fuel adjustment charge are two recent examples of our focus on the well-being of our ratepayers," ENO said. "Entergy New Orleans believes legitimate concerns regarding the future of the contractual arrangement among Entergy's utilities in effect until 2013 can be addressed in a more constructive and appropriate manner.

"Entergy New Orleans will continue to work towards a solution to our system agreement issues before the Federal Energy Regulatory Commission. The facts and the law on this issue will be properly brought before the Federal Energy Regulatory Commission which is the only regulatory body with jurisdiction over this matter, a fact acknowledged by Ms. Midura and her legal advisers. We welcome the participation of Ms. Midura and her legal advisers."

ENO said it "will not engage in a politically motivated letter writing campaign that is designed to generate media attention." But during the council's Utility Committee meeting Thursday, Midura asked West to provide specifics of ENO's efforts to prevent Entergy Arkansas from pulling out of the agreement. West said he would supply those efforts in an official response letter.

At the heart of the matter is a proposal by Entergy's wholly- owned subsidiaries -- Entergy Arkansas and Entergy Mississippi -- to withdraw from a federally imposed system agreement with other Entergy subsidiaries, Entergy New Orleans and Entergy Louisiana, to operate as one overall system which includes the cost of generating and transmitting power to customers. The Federal Energy Regulatory Commission found that for many years there was a system-wide inequity in Entergy's system that led to unjust and unreasonable costs to New Orleans ratepayers. Specifically, FERC found that Entergy Arkansas was enjoying massive production cost savings -- approximately $250 million annually -- at the expense of other Entergy operating companies, including ENO and Entergy Louisiana, and ordered modification to the system agreement, which included "equalization" compensation in 2007 of $250 million to Entergy Louisiana and $6.5 million to Entergy New Orleans. Not only that but Entergy Arkansas provides some of the lowest-costing power generation in the system through its coal-powered plant compared with natural gas plants in Louisiana.

The council has official testimony from Entergy Arkansas CEO Hugh McDonald before the Arkansas Public Service Commission that "that all of the operating companies, including ENO, have agreed not to seek dissolution/transition costs, continued Bandwidth remedy payments or other payments," Midura says in the letter Monday.

The council is expected to vote Thursday on a resolution that would require ENO to provide monthly reports to the council on the status of negotiations, all discussions and proposed cost payments of a new or revised Entergy agreement.