Last week, the New Orleans City Council approved the sale of Entergy New Orleans’ gas distribution system to Delta Utilities, a newly created company backed by the Baton Rouge-based private equity firm Bernhard Capital Partners. The approval in New Orleans is part of a larger, $484 million deal that will see Entergy turn over all of its natural gas distribution assets to the firm.
This means that, in the coming months, Delta Utilities will own and operate the local gas system, which serves approximately 108,000 customers. The deal will not affect the city’s utility regulatory structure. The council will oversee Delta Utilities’ gas operations and set its billing rates just as it has for Entergy New Orleans.
As New Orleanians face this major transition, Verite News is here to answer your questions about the sale, its impact, and what will happen next.
What happened?
The City Council approved Entergy’s request to sell its gas utility to Delta Utilities. This came after a year-long discussion of the sale in a regulatory docket. The docket – which included Entergy, Delta Utilities, the council’s utility advisors and the Alliance for Affordable Energy – largely debated whether the sale would be good for the city. To learn more about the background of this deal, you can read Verite News’ deep-dive on it from June.
OK, now that the sale has been approved, what happens next?
In the near term, nothing will happen. If you are a gas customer, you will continue to receive bills from Entergy New Orleans. The sale is not projected to close until the second half of 2025. Over the next six to nine months, Delta Utilities and Entergy New Orleans say they will be working hard behind the scenes to ensure this transition is seamless for gas customers.
When will I see my first bill from Delta Utilities?
Once the sale closes, customers will receive their first bill from Delta Utilities. This will be the biggest immediate change for customers: Instead of receiving one bill from Entergy for their electric and gas charges, they will now receive two bills – one from Entergy for electric service, and one from Delta Utilities for natural gas.
Will I still be able to pay my bill by mail? What about at the grocery store?
At a utility committee meeting discussing the sale, Delta Utilities representatives said they are working to ensure that customers can still pay their bills in any way they choose, whether by mail-in check or at an authorized payment center.
Will I still be able to levelize my bill?
Entergy offers a billing feature that will “levelize” customers’ bills across a year so that the cost of any particularly high gas usage months can be distributed across 12 months of bills. Delta Utilities says it will continue to offer the same service.
What happens if I accidentally send my check to Entergy New Orleans instead of Delta Utilities?
At a utility committee meeting discussing the sale, representatives of Delta Utilities said that they were working with Entergy New Orleans to make sure those issues will be addressed. They also said they will reach out on an individual basis to customers who don’t pay their bills and offer them a grace period before shutting off service.
The company echoed this sentiment in a press release, saying that a “robust outreach effort will be deployed before closing on these sales to inform customers and community members of any changes they may experience as a result of Delta Utilities’ ownership.”
Why did Entergy want to sell its gas utilities, and why did Bernhard Capital want to buy them?
According to Entergy, the deal will give them $484 million in capital, which they can use to pay down debt and support capital-intensive projects like hardening the electrical grid and investing in renewable energy sources. For Delta Utilities, the deal – along with its pending acquisition of CenterPoint Energy’s gas distribution systems in Louisiana and Mississippi, which serve nearly 400,000 customers – will establish the company as the largest gas utility in the state. They say their size and scale will help them best serve gas customers.
Some critics of the deal claim that Entergy was trying to get out of the natural gas business as more and more homes and businesses fully electrify their operations, including the Sewerage & Water Board. Jesse George, policy director for the Alliance for Affordable Energy, has previously arguedthat Delta Utilities, which is owned by the private equity firm Bernhard Capital, may be interested in taking advantage of a captive customer base, who they could wring more profit out of by raising rates while cutting internal spending on maintenance and improvement.
Both Entergy and Delta Utilities have denied this, saying that they believe this transaction will allow both companies to focus on their core businesses, which will ultimately provide more efficiency and better service for both gas and electric customers.
Could the City Council have rejected this deal?
Technically, yes. Because Entergy New Orleans is a publicly-regulated utility, it needed approval from the City Council to transfer ownership of its gas utility to another company. However, Entergy has the right to sell its assets, and the City Council cannot reject that sale arbitrarily. The council could only reject the transaction insofar as it would measurably and negatively impact ratepayers.
To get more specific, the council was tasked with evaluating the sale based on 18 factors. These factors included whether the transfer is in the public interest, whether Delta Utilities could successfully operate the utility and whether ratepayers would benefit, among other considerations.
That analysis was conducted by the council’s longtime utility advisers. For the past year, the advisers have weighed in on a utility “docket” debating the sale.
What is the utility docket? And who participated in it?
The utility docket was where the sale was legally debated in briefs, testimonies and rebuttals. The primary parties involved in the docket were Entergy New Orleans, Delta Utilities, the council’s utility advisers and the Alliance for Affordable Energy. The Alliance intervened in its capacity as a local consumer advocacy nonprofit, representing residential and small commercial customers. Occasionally other entities, like the city’s Office for Resilience and Sustainability or the Sewerage & Water Board, filed briefs – usually to speak to specific questions or concerns – but the docket was mostly a conversation between those four entities.
What were the main questions debated in the docket?
Verite News summarized the docket in a story published in November. The docket was thousands of pages long. But three big questions debated in the docket were: could Delta Utilities successfully operate the gas utility? Would the sale alone increase rates for local customers? And how would the deal square with the city’s climate goals to reduce greenhouse gas emissions?
So can Delta Utilities successfully operate a gas utility?
The Alliance for Affordable Energy didn’t think so. In the docket, they pointed out that Delta Utilities had yet to serve a single customer. But Delta Utilities argued that this would not be an issue since they planned to keep on Entergy’s existing gas utility employees, ensuring both consistency and institutional expertise. Because of this, they argued that, for most customers, the only real change would be the name of the company on their bills.
What commitments did Delta Utilities make when it came to gas rates?
Delta Utilities pledged to “step into” Entergy’s existing gas rates. Based on the terms of the council resolution, Delta Utilities will not be able to bring a rate case until 15 months after closing. This means the first “rate case” — where the council approves gas rates — will likely come around the beginning of 2027.
And what did the advisers determine about whether the sale would increase rates for local customers?
This is a little more complicated to answer. Though rates would not change immediately, the advisers looked at potential future rate changes. And they not only looked at how the sale might impact gas bills but also how it might affect electric bills. In both cases, they warned that approving the sale without any mitigating measures could increase residents’ bills.
This was because the sale would result in a little less efficiency, the advisers argued. Even though the electric and gas utilities are physically separate and have their own dedicated workforces, the fact that Entergy operates both means that the two utilities share some costs, like the cost of maintaining a billing system, renting office space and employing customer service representatives. Splitting that operation into two separate utility companies could increase those costs – and advisers warned that increase could potentially trickle down to both electric and gas bills.
There were also a few other reasons that advisers worried that bills might increase as a result of the sale. These mainly had to do with some tax implications of the deal, as well as the fact that Delta Utilities has a higher cost of debt than Entergy. The advisers noted that Delta Utilities planned to spend more money to “stand up” its utility and update the infrastructure, and those costs could eventually be passed down to customers.
The advisers estimated that the transaction would increase residents’ bills by $12 per month on average. Because of this, they advised the City Council to impose conditions on the deal to mitigate these harms—and the council did. According to the council, these conditions have lessened the impact to approximately $3 per month.
What are the conditions the City Council put on the deal?
The City Council imposed 30 conditions on the deal. Most of these conditions require Delta Utilities to stand by what it claimed in the utility docket – that it would locate its headquarters in New Orleans, substantially invest in and improve the gas utility and “step into” the existing gas rates. But the council also added some conditions designed to mitigate the impact of the sale on customers’ bills. These conditions limit the transaction and transition costs that can be passed onto both gas and electric customers.
Does it matter that our gas utility will now be owned by private equity?
It depends on who you ask! Some argue that private equity firms are well-positioned to provide much-needed capital to modernize and improve aging infrastructure. Others are wary of private equity’s reputation for saddling companies with substantial debt before cutting and running. In the utility space, the worry is that the private equity business model, predicated on achieving high returns for its investors, may eventually result in higher rates for local customers.
It remains to be seen whether Delta Utilities will be a responsible, long-term steward of the gas utility, but company representatives repeatedly insist that that is the plan. They point out that the company will continue to be regulated by the City Council, which will need to approve any increase in customers’ rates.
It’s also important to note that this sale will shift ownership of the gas system from a publicly traded company to a private equity company. Unlike Entergy, Delta is not required to disclose its financial information regularly through quarterly reports, making it less transparent to the public.
Why did the City Council announce their intent to approve the sale on such short notice?
Though the deal has been in the works for many months, the council announced its intention to take its first vote on a Friday (Dec. 13) before a Monday (Dec. 16) committee meeting, less than two weeks before the Christmas holiday. However, the docket closed at the beginning of November 2024, so the possibility of a council decision had been looming for weeks. Representatives from Entergy had told shareholders that they expected a decision before the end of the year.
Still, at both the committee and regular meetings, people lambasted the council’s timing on approving this resolution, alleging that councilmembers were sneaking it through ahead of the holidays. Councilmember JP Morrell, who chairs the utility committee, did not respond to Verite News’ request for comment on this.
Why did the City Council approve this deal?
In their press release announcing their resolution to approve the sale, the council said the sale would result in significant economic investment in the city and improvements to the gas utility. Entergy New Orleans and Delta Utilities have long argued that this sale is a win-win transaction, giving New Orleans two utilities focused on a singular core business, both headquartered in the city.
Council President Helena Moreno also said that the sale “would allow us to invest in cleaner, more sustainable energy options without burdening our residents with skyrocketing rates.” Entergy New Orleans had previously asked the council to approve more than $1 billion in grid-hardening efforts, but the council rejected that proposal due to the sizable impact on customers’ bills and instead asked Entergy to source capital elsewhere.
How does climate change factor into all of this?
Good question – there are a lot of conflicting perspectives on this.
The Alliance for Affordable Energy has maintained that the sale itself incentivizes expansion of the gas system as Delta Utilities will want to deliver more gas to more customers in order to earn back its sizable investment in the utility. For the Alliance, this runs counter to the city’s goal of achieving net zero greenhouse emissions by 2050. They found support from the Office of Resilience and Sustainability, which issued a letter advising against the sale on this basis.
But Morrell and the utility advisers have maintained that Delta Utilities, as a regulated entity, will still be subjected to the same climate policies as Entergy. And Moreno has said that the capital from the sale will help Entergy invest in more renewable energy sources for the electric grid without raising rates on customers.
Delta Utilities, for its part, has repeatedly shared gas industry-funded research that says that home appliances that rely on natural gas use have a lower carbon footprint. While burning natural gas is cleaner than burning coal or petroleum products, the production and use of natural gas still have a sizable impact on the environment.