NEW ORLEANS — Entergy appears to be pulling out of a major agreement struck just last year to provide $30 million to fortify its tenuous power supply to the city’s drainage and water systems.
Mayor LaToya Cantrell announced the agreement in June for Entergy to provide the up-front financing for a dedicated substation at the planned $74 million West Power Complex at the Sewerage & Water Board’s Carrollton Plant.
But Cantrell’s head of infrastructure, Ramsey Green, told the Sewerage & Water Board directors last week that the “landscape has dramatically changed” since Entergy had pledged the $30 million last summer.
“If Entergy pulls its money out, do we really want to put $30 million of city money into Entergy’s plan? I just want to review that before the city commits any additional funds into that,” Green said.
The substation is critical to providing fortified electricity directly to the Sewerage & Water Board’s drainage and water pumps, rather than relying on overhead Entergy power lines that often fail in bad weather or the Sewerage & Water Board’s own, often-broken generators and turbines, some of which are more than 100 years old.
City Councilman Joe Giarrusso said the substation is by far the most important infrastructure project in the city.
The project has been on the drawing board since at least 2013, but a WWL-TV investigation found emails from 2016 showing that former Sewerage & Water Board director Cedric Grant and Entergy New Orleans officials got bogged down arguing about who should pay for the substation.
Current Sewerage & Water Board Executive Director Ghassan Korban said the agency was “very close to an agreement” with Entergy when the power company indicated it could no longer commit to fronting the money.
Entergy said the cost of repairing its own system from Hurricane Ida damage made fronting the money too difficult right now.
“Entergy New Orleans was discussing the unusual step of financing a substation for the S&WB given its financial condition,” Entergy spokeswoman Lee Sabatini said. “Subsequent to those initial negotiations, Hurricane Ida hit Entergy New Orleans’ service area, which further strained the company’s own financial condition by having to fund large amounts of storm costs with uncertainty around the timing and mechanism to recover those costs.”
Sabatini said Entergy remains committed to the project, and the Sewerage & Water Board issued a statement indicating the same thing from its end.
"Sewerage and Water Board and Entergy New Orleans both remain committed to the substation project. While its funding structure is not yet finalized, we are working with our partners to pursue other options for this critical project," the statement said. We appreciate Entergy’s ongoing commitment to build, maintain and supply power to SWBNO through the substation no matter the funding source.”
Korban said the loss of Entergy’s up-front funding means the substation will not be ready for the 2023 hurricane season, as originally expected.
The city has already borrowed $22 million to pay for new equipment to produce its own power at the West Power Complex, and Korban said the purchase of a new turbine and a frequency changer to convert electricity to a lower frequency used by the city’s older drainage and water pumps is still on track.
Giarrusso says there could be a silver-lining in the loss of Entergy’s funding, which would have been a loan and required the Sewerage & Water Board to pay the money back over 10 years, with interest. If the city uses some of the American Rescue Plan funding coming from Washington to fund the project, ratepayers could save $7 million to $10 million, Giarrusso said.