The New Orleans City Council is poised to make a decision on whether Entergy will be allowed to sell off its natural gas business to a newly formed private-equity-backed firm — a deal that the utility and the prospective buyer have said will improve service, but that has been criticized by consumer advocates as bad for ratepayers.
On Monday (Dec. 16), the council’s utilities committee will consider a resolution allowing Entergy to sell its New Orleans-based gas assets to Delta Utilities, a subsidiary of Baton Rouge-based private equity firm Bernhard Capital. The full council could take a final vote on the proposed sale as early as its regular meeting on Thursday.
The resolution under consideration comes with conditions meant to ensure that the sale will not result in large spikes in ratepayers’ bills.
“We’ve worked hard to ensure that this transition will not lead to dramatic increases and utility costs,” Council President Helena Moreno said in a statement. “Our focus remains on maintaining affordability while securing a reliable and forward-thinking energy future for our community.”
The approval in New Orleans is a key part of a larger $484 million sale of Entergy’s gas utilities across the state, first announced last year. Both Entergy and Delta Utilities have argued that the sale will allow each entity to focus on and invest in their respective utility.
“Entergy New Orleans looks forward to the Council’s approval of the sale of our gas distribution assets to Delta Utilities,” a spokesperson for the company told Verite News. “The transaction will enable us to prioritize electric customer-centric capital needs while maintaining our commitment to safe and reliable service throughout the transition.”
But the deal needed to pass regulatory muster with both the Louisiana Public Service Commission, which regulates utilities across the state, and the New Orleans City Council, which regulates utilities in the city.
Delta Utilities secured unanimous approval from the Louisiana Public Service Commission in August. However, the regulatory docket — where the sale is officially researched and debated — did not include any intervenors or challengers to the sale.
Approval from the New Orleans City Council is the most significant regulatory hurdle that Delta Utilities needs to clear to take over Entergy’s gas utilities in Louisiana.
“The City Council’s regulatory process for this transaction has been exceptionally thorough, ensuring that all aspects of the sale are properly evaluated,” Tim Poché, CEO of Delta Utilities, told Verite News. “We are committed to demonstrating how this transaction will provide long-term benefits, including enhanced service reliability, modernized infrastructure, and continued affordability.”
Unlike the Public Service Commission, the City Council has had to address pushback on the proposal. The Alliance for Affordable Energy, a local consumer advocacy nonprofit, intervened in the process, arguing that the sale was not in the public interest, arguing that it would incentivize the expansion of the gas utility in the city against the city’s own climate goals and put the poorest customers at risk of increased rates.
Faced with the looming possibility that the council will ultimately approve the sale, the Alliance for Affordable Energy is once again raising alarm bells.
“What’s actually happening is that ratepayers are going to be forced to prop up this aging fossil gas distribution system and pay for inevitable rate increases for the benefit of private equity,” said Jesse George, the group’s policy director.
But George and the Alliance weren’t the only ones raising concerns about the sale.
Utility advisers for the council also warned that the transaction could “impose quantifiable harm” on ratepayers, with the average customer incurring over $12 in additional costs per month.
According to a statement released by the City Council on Friday, the proposed conditions on the sale, which include caps on the amount of transition costs that can be passed on to ratepayers, will minimize the estimated impact on an average ratepayer to less than $3 per month.
“The proposed resolution is the result of a year of hard work and demonstrates this Council’s relentless commitment to progress for our City while protecting our constituents,” Utilities Committee Chair JP Morrell said in a statement.
George says that he had long anticipated that the council would move to approve the sale before the end of the year — specifically during the holidays when attendance at council meetings might be low.
“We have thought all along that exactly this would happen, that they would try to sneak this in the week before the holidays and vote on it and then disappear for the holidays,” George said. “And that’s exactly what they’re doing.”
Monday’s committee meeting will be the first time that councilmembers will publicly discuss the sale since the regulatory docket was first introduced in January.