[StBernard] LRA Board of Directors Endorses Plan to Provide Relief for Entergy-N.O. Ratepayers

[Westley Annis]

LRA Board of Directors Endorses Plan to Provide Relief for Entergy-N.O. Ratepayers

Board also approves resolution asking SBA to reconsider duplication of benefits policy

WESTWEGO, La.- In an effort to defray repair costs and provide relief for gas and electric utility system ratepayers in New Orleans, the Louisiana Recovery Authority (LRA) Board of Directors today approved an action plan to allocate $200 million in Community Development Block Grant (CDBG) funds to Entergy New Orleans (ENO). 

"Without this funding, it is estimated that Entergy would have to pass on about $24 million a year in lost revenues to ratepayers," said John T. Landry, Chair of the LRA Infrastructure Task Force. "By passing this action plan today, we've acted to ensure that people can come home and rebuild without facing skyrocketing energy and gas bills."

The plan now moves to Governor Blanco and the Louisiana Legislature for approval before moving to the U.S. Department of Housing and Urban Development (HUD).

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 percent of its customers immediately following the storm. 

The Ratepayer Mitigation Plan Action Plan included several conditions for the award of CDBG funds, as requested by the City Council of New Orleans and adopted by the LRA at its October Board of Directors meeting, 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 utility 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 Louisiana Recovery Authority.
*	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 ENO'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.

In early 2006, ENO requested CDBG funds from the LRA to cover electric and gas utility costs, gas system infrastructure rebuilding costs and un-recovered fixed costs through the end of 2007 that are expected due to the loss of customers in New Orleans. By the end of 2006, ENO will have incurred nearly $200 million of the estimated $640 million in total restoration and rebuilding costs related to repairs necessitated by Hurricane Katrina damage. 

In other action, the LRA board endorsed a resolution to request that the Small Business Administration (SBA) or Congress change the calculation method regarding the duplication of benefits for SBA loans as it relates to the Road Home program.

"According to the current interpretation, an SBA loan carries the same value to the homeowner as a grant, and receiving both is considered to be a duplication of benefits," said LRA Housing Task Force Chair and Board Member Walter Leger. "We believe recovering homeowners should be afforded the greatest possible flexibility under the policies set forth by the SBA and the federal government and are strongly urging that the current interpretation be reconsidered." 

The Stafford Act requires that funds provided for disaster recovery may not be duplicated by other funds. Currently, the SBA implements the Stafford Act requirement by demanding that grant funds, such as those provided by the Road Home, be used to repay SBA loans to the extent that the Road Home funds and other compensation plus SBA loan funds exceed the estimated damages to a property. 

The board also accepted a report from members of the New Orleans City Council which included neighborhood rebuilding plans for some of the most severely impacted communities in Orleans Parish. These neighborhood plans will be incorporated into a comprehensive recovery and rebuilding plan, known as the Unified New Orleans Plan that is scheduled for completion in January 2007. 

Federal, state and local agencies, including the LRA, will use this comprehensive plan as a strategic guide for the future investment of funds to support the continued rebuilding of communities in Orleans Parish. 

In the meantime, funding for repairs to permanent infrastructure is already available and flowing to the impacted areas through the FEMA Public Assistance program, made possible by the LRA's commitment to provide matching funds. 

The board also received updates from several committees and task forces.

*	Human Services Task Force Chairman Calvin Mackie hosted guest presentations from the Louisiana Family Recovery Corps and Operation Hope regarding the needs of recovering families. 
*	The Education Committee also provided an update on the status of the Recovery School District and the committees' work with the non-profit organizations New Schools for New Orleans and New Leaders for New Schools. 
*	New Leaders for New Schools is currently considering expanding into New Orleans, a move which would bring 40 new, qualified principals to New Orleans schools over the next 3 years. "As you consider this move, please know that you have the full support, encouragement and commitment of the LRA," said Dr. Norman C. Francis, Chairman of the LRA Board of Directors.
*	The Coastal Protection Committee provided an update on the status of Governor Blanco's lawsuit against the Minerals Management Service regarding the environmental impacts of offshore drilling in Louisiana.

Hurricanes Katrina and Rita devastated South Louisiana, claiming 1,464 lives and destroying more than 200,000 homes and 18,000 businesses. 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 against jurisdictions, supporting community recovery and resurgence, ensuring integrity and effectiveness, and planning for the recovery and rebuilding of Louisiana. 

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