[StBernard] Entergy Action Plan Published for Review

[Westley Annis]

Entergy Action Plan Published for Review

Public Invited to Comment on Plan to Provide $200 Million in Rate Relief 


BATON ROUGE, La. (October 30, 2006) - The Louisiana Recovery Authority (LRA) and Office of Community Development (OCD) published an action plan amendment for public comment last week surrounding a plan to allocate $200 million in Community Development Block Grant (CDBG) funds to Entergy New Orleans (ENO) to defray gas and electric utility system repair costs in an effort to provide rate relief for ENO customers. The public comment period will conclude at 5:00 p.m. CT on Friday, November 3, 2006. 

"Keeping energy bills at an affordable level is a top priority for us," said LRA Infrastructure Task Force Chair John T. Landry. "Our plan guarantees that people can come home and rebuild without facing skyrocketing energy and gas bills."

On October 12, 2006 the LRA Board of Directors approved a preliminary resolution allocating $200 million of CDBG funds to offset extraordinary rate increases that would otherwise be passed on to New Orleans gas and electric utility ratepayers. 

In addition, the State pledged to work with the Congressional delegation, City Council of New Orleans and local governments, business interests, and others to seek additional federal funds to cover future gas system repair costs which are largely due to salt water intrusion that resulted from the failure of the federal government's levee system. 

It is estimated that the LRA's suggested allocation of $200 million will avoid an annually recurring increase of nearly $24 million in revenue requirements otherwise recoverable through rate increases. 

Hurricane Katrina caused unprecedented damage to the electric and gas system infrastructure in the city of New Orleans. As a result, ENO lost electric service to 100% of its customers immediately following the storm. 

Damage to the electricity infrastructure included:

*	All electricity transmission lines were knocked out of service; 78 transmission towers were significantly damaged;
*	All 22 electrical substations were knocked out of service. Twelve of the 22 substations were flooded and sustained moderate to heavy flood damage; and
*	The electricity distribution facilities received extensive damage from the storm and flooding: approximately 2,300 spans of conductor, covering 95 miles (or 76% of the total of 125 line-miles), over 1,700 poles and over 3,100 cross-arms required replacement.

Damage to the natural gas infrastructure included:


*	12 of 13 operational city gates (i.e. connections from high pressure natural gas transmission pipelines to lower pressure city distribution lines) experienced damage; 
*	Approximately four million gallons of salt water entered the natural gas distribution system, flooding approximately 60 percent of the system and causing catastrophic damage to: approximately 257 miles of cast iron pipe; 277 miles of low-pressure steel and 310 miles of high-pressure steel were subject to saltwater infiltration; and over 1,400 miles (out of approximately 2,500 miles) of gas service lines were subject to saltwater infiltration; and
*	More than 80% of natural gas meters and regulators were destroyed.

The LRA's October resolution established several conditions for the award of CDBG funds, as request by the City Council of New Orleans including: 

*	CDBG funds may only be used to offset the cost of restoration, reconstruction and rebuilding of ENO's damaged electric and gas utility systems, and to offset such other unrecovered fixed costs as may be the responsibility of ratepayers. 
*	CDBG funds should be used to mitigate and/or eliminate possible rate increases to New Orleans ratepayers. 
*	No CDBG funds may be used to profit ENO's parent, Entergy Corporation.
*	ENO must agree that all restoration, reconstruction, and rebuilding costs claimed for CDBG funding must be certified as reasonable and necessary through an independent process approved by the LRA.
*	ENO must not claim in any forum capital assets paid for with CDBG funds as additions to the rate base for ratemaking purposes or for the valuation of ENO's assets in connection with the city's perpetual option to purchase set forth in the applicable 1922 Ordinances, as amended.
*	Any CDBG funds awarded to ENO should be exempt from existing or future liens held by any of the applicant's bondholders and, except to the extent necessary to reimburse audited expenditures for restoration, reconstruction, and rebuilding, the Entergy Corporation debtor-in-possession loan to ENO.

Citizens, community leaders and elected officials can access the plan online by clicking http://www.doa.louisiana.gov/cdbg/dractionplans.htm <http://keelson.eatel.net/websites/la.gov/action.cfm?md=communication&task=addClick&msg_ID=2743&ID=d%28jjk%23mal%3BmD&redirect=http://www.doa.louisiana.gov/cdbg/dractionplans.htm>  and opening Action Plan Amendment 6 or request a copy by phone by calling (225) 342-7412.

Once public input is reviewed and considered, the final plan will come before the LRA board, Governor Blanco and the Louisiana Legislature for approval before moving to HUD. 

Hurricanes Katrina and Rita devastated South Louisiana, killing 1,464 people, destroying more than 200,000 homes and 18,000 businesses and inflicting about $25 billion in insured losses. The Louisiana Recovery Authority (LRA) is the planning and coordinating body that was created in the aftermath of these storms by Governor Kathleen Babineaux Blanco to lead one of the most extensive rebuilding efforts in the world. The LRA is a 33-member body which is coordinating across jurisdictions, supporting community recovery and resurgence, ensuring integrity and effectiveness, and planning for the recovery and rebuilding of Louisiana.


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