This time of year, when the mercury starts erupting comically out of the top of every thermometer, every New Orleanians eyes turn worriedly to their electricity bill. This is because whenever temperatures spike, so does the monthly amount we owe Entergy New Orleans, our much-maligned local electric utility.
Many people have long believed that Entergy is gouging them. This is to be expected when bills skyrocket and people begin seeking out scapegoats.
The reviews of Entergy on Yelp are particularly hilarious. Here’s a representative sampling:
“Being an Entergy customer is like being in an abusive relationship.”
“Dear Entergy: You suck.”
“The reviewer below me is right. You do suck.”
…And so on.
However, it turns out that critics were right. It wasn’t just a case of sour grapes; New Orleanians were, in fact, being gouged.
In 2005, the Federal Energy Regulatory Commission (FERC) held that Entergy had illegally charged Eastbank customers more than 11% variance above or below its company-wide median. Although it was actually the City of New Orleans itself that authorized the higher rates for eastbank ratepayers, FERC held that Entergy couldn’t charge a dramatically higher rate for Entergy New Orleans customers than those of its other units.
A lawsuit filed the previous year by the Public Service Commissions of Louisiana, Texas, Mississippi, and Arkansas, as well as the New Orleans City Council (New Orleans’ utility regulator), had sought to recover any ill-gotten sums on behalf of beleaguered ratepayers.
For New Orleans, the lawsuit netted $14.6 million dollars in 2013 alone, a tidy sum that Entergy collected in a reserved, interest-bearing account. Per the court’s order, Entergy then transferred the award to the relevant regulatory authority, the New Orleans City Council, so that it could be distributed back to ratepayers.
Except that didn’t happen. Instead, the city simply stole it.
The veneer of legality for this theft was an ordinance authorizing the use of the award, acknowledged to be “ratepayer funds,” to fund the city’s streetlighting LED conversion program. It may be a noble cause, but the city wasn’t bilked – ratepayers were. It’s difficult to understand exactly how, legally, the city can keep the funds.
Councilwoman Cynthia Hedge-Morrell defended the move at a meeting in April by explaining that New Orleanians taxpayers pay for streetlighting anyway, so, you know, same difference.
“One of the things that ratepayers do not understand is that you, the ratepayer, through city funds, are paying to maintain all of those streetlights,” Hedge-Morrell explained. “Those streetlights are not maintained by Entergy Corp. or ENO, and those streetlights are totally at a cost to the city of New Orleans.”
Hedge-Morrell is correct that we pay for streetlighting either way, and it’s also true that upgrades to street lighting are overdue. However, that doesn’t make the theft of the ratepayer funds more noble or less improper.
What really happened is that the city essentially passed a one-time tax or fee on ratepayers equal to the amount they were owed back. It’s unclear whether the city actually has legal authority to enact such a tax or fee, and in times when New Orleanians are being squeezed financially from all sides, it’s unclear that it’s good policy.
As erstwhile city council candidate Drew Ward opined, “[t]here is certainly nothing wrong with the city working toward replacing and repairing existing streetlights … but to have such efforts funded with money wrongly appropriated from cash-strapped residents is not something most New Orleanians would tolerate.”
Ward is correct. We shouldn’t tolerate this, but it’s happening regardless with very little debate and little public outcry. The council vote (cast a few weeks prior to the newly-elected members taking their seats) was 6-0, with Stacy Head absent.
In the past Head has criticized Landrieu’s piecemeal approach that lacked long-term sources of funding. Given that the city is swiping a one-time award owed to ratepayers to pay for a portion of LED streetlight upgrades, it’s difficult to gainsay her criticism.
Entergy may “suck,” but the city council is supposed to be the bulwark between their avarice and our pocketbooks. In that regard, the city council is failing. In my opinion, we should all be demanding our money back.
Owen Courrèges, a New Orleans attorney and resident of the Garden District, offers his opinions for UptownMessenger.com on Mondays. He has previously written for the Reason Public Policy Foundation.