Entergy Louisiana’s plans to spend an extraordinary $30 billion to expand and improve its infrastructure are drawing new scrutiny from elected officials, regulators and advocacy groups concerned about the potential impact on ratepayers.
If all of what Entergy wants to do is approved, the average residential customer’s monthly bill could rise by around $40, according to documents Entergy filed with the state Public Service Commission. But Entergy CEO Phillip May said in an interview that the eventual amount customers actually pay to help fund the buildout is likely to be much less because he expects a growing base of industrial users will offset 50% or more of the costs.
“What will happen is we will see additional revenues that will pay for much of that cost,” May said. “Including revenues we anticipate from the substantial economic growth in the state.”
Entergy’s plans reflect a never-before-seen level of growth in Louisiana’s electricity sector, drawing the interest of the governor, state lawmakers and others who historically have stayed out of the complex business of utility regulation.
Just how much more residents pay will be decided by the PSC, a five-member elected body that regulates utilities with monopolies on their service territories, including Entergy.
“There are too many variables to look at ($40 a month) as a final number,” said Commissioner JP Coussan, a Lafayette Republican. “It’s our job to make sure that Louisiana families are getting the best deal possible. That includes not rubber-stamping every proposal that comes before us.”
Regulators have already raised concerns about Entergy’s planned $1.8 billion acquisition of a Texas power plant called Cottonwood, with a staff consultant saying it’s largely needed because of Meta’s emerging data center in northeast Louisiana. Entergy and Meta insist that claim is false.
Entergy contends that it needs new infrastructure to address longstanding constraints in moving power long distances, to strengthen the grid and to ensure Louisiana signals to private companies — including data center developers like Meta — that it is ready for them to relocate here.
The company has repeatedly cited an “economic resurgence” in applications to build more infrastructure, saying it must build new power plants and transmission lines to support new industrial companies building local plants.
The $40 a month projection is based on a customer using 1,000 kilowatt-hours a month, slightly less than the average customer usage. Entergy said that number will likely decrease as companies like Hyundai, CF Industries and Woodside Energy begin buying huge amounts of power. Entergy has cut at least one of those companies, Hyundai, an economic development discount worth about $300 million, according to internal Hyundai documents. State officials say incentives are needed to attract companies to the state.
In an interview with the Times-Picayune, May said that the company still expects Louisiana’s electric rates to be 20% lower than the national average after the spending is finalized, compared to about 30% lower now.
May said some of the offsets are already guaranteed by contracts that require industrial customers to pay a minimum bill even if their demand never ramps up. He declined to offer specifics on how much of the load growth is guaranteed.
He also said Entergy is collaborating with the PSC on a working group to help ease the burden on low-income customers. He noted the company has lowered late fees and eliminated charges for disconnections and reconnections for certain customers.
The utility’s plans to ramp up spending are drawing the attention of consultants who analyze deals on behalf of the PSC, as well as consumer advocates and a group that represents large industrial users in the state, which has long sought the ability to go around Entergy to get power.
The concerns are creating an unlikely coalition of allies: The Louisiana Energy Users Group, a trade association representing dozens of industrial companies, and the Alliance for Affordable Energy, a consumer advocacy group, have both raised concerns about Entergy’s plans.
“While projected load growth will hopefully offset some of rate increase impacts, the spending is happening now before the load growth has been realized and so there is risk to existing ratepayers in the meantime, and the projected load growth will not offset all of the cost risk and rate increases even if it does fully materialize,” LEUG attorney Randy Young wrote in PSC proceedings last month.
In a recent dispute over whether Entergy should be able to recover more of its costs associated with the troubled River Bend nuclear facility from customers, PSC consultant Lane Sisung cited customer affordability in recommending the PSC reject Entergy’s request. The case is still pending.
Sisung, who has analyzed utility proposals for the PSC for years, noted that Entergy has delivered “substantial” profits to shareholders in recent years. And he said the company’s “future projected earnings trajectory is already positioned to grow through new capital deployment while customer affordability is being imperiled.”
Big plans
The spending plans that add up to $30 billion aren’t happening all at once.
Instead, Entergy has filed more than a dozen separate plans that are being litigated in “dockets” before the PSC, where regulators, opponents and other affected parties file evidence, testify and hold hearings before administrative law judges.
In 2022, the company won approval to spend $2 billion hardening the electric grid amid questions over failures during Hurricane Ida, adding more than $8 a month to the average electric bill.
Then, starting two years later, Entergy filed an array of proposals. It plans to spend nearly half a billion dollars on a transmission line between Iberville and St. Charles parishes, $1 billion on another line between Iberville and Jefferson parishes, $1.8 billion to buy a Texas power plant called Cottonwood and $4.1 billion to build new gas-fired power plants at sites in St. Charles and Calcasieu parishes, among others.
On top of those plans, which would be funded by all ratepayers, Entergy has struck deals with Meta to build at least $18.7 billion worth of infrastructure to serve its northeast Louisiana data center campus, including infrastructure that will power a massive $50 billion expansion Meta just announced.
At President Donald Trump’s urging, Meta pledged at a White House event earlier this year to pay for all its power needs for data centers.
Meta’s deal with Entergy requires it to fund the costs associated with those plans for the first 15 to 20 years, at which point it can renew or walk away. The plans have drawn outcry from groups like the Alliance for Affordable Energy, which is calling for more regulations.
Entergy’s buildout has boosted its standing on Wall Street, where the company has seen significant growth in shareholder returns.
At its recent investor day in June, Entergy Corp. executives told investors that the company’s returns have outpaced the broader stock market. And leaders from the utility welcomed Meta and Amazon executives onstage for a discussion about the two companies’ data centers in Mississippi in Louisiana.
“Our sales growth from two years ago has doubled to 9%,” CEO Drew Marsh told investors at the event at the New York Stock Exchange. “Our five-year capital plan has doubled to $67 billion. Our total shareholder return has more than doubled the S&P 500 over that time frame.”
May, CEO of Entergy Corp’s Louisiana subsidiary, said that while Wall Street is excited about Entergy’s growth opportunities, the company still has a target 9.7% profit that is regulated by the PSC. If it under-earns, customers will pay more, and if it earns too much, rates will come down to bring the profit back down.
“That does not mean we’re making an unusually high return on our investment,” May said. “The 9.7% return set by the commission is generally consistent with rates of return for the industry in general and actually a bit lower than what you see in the southeast region.”
Political concerns
While the state constitution gives the PSC the ultimate power to decide what to do, Gov. Jeff Landry and some legislative leaders are also now stepping into the arena.
Landry issued an executive order on ratepayer protections last month after The Times-Picayune’s reporting on one of Entergy’s most controversial components of its spending plan, to buy a power plant called Cottonwood. The order requires data center developers to pay for their own power if they want to take advantage of lucrative tax breaks by the state.
“These resources are vital to the welfare of our citizens and to the future of our economy, and that is why our approach demands thoughtful and responsible stewardship,” Landry said.
Sisung, the PSC consultant, concluded that Cottonwood is largely only needed because of Meta’s data center, prompting Landry to issue the order. Meta and Entergy have rejected the idea that the data center is responsible for the energy needs, and Entergy will soon file a rebuttal.
“This consultant's report is inaccurate speculation given the facility will provide power to multiple Entergy customers and Entergy planned to acquire it before Meta decided to build in Louisiana,” Meta spokesperson Francis Brennan said in a statement.
Meanwhile, state Senate leaders have formed a task force on energy issues, including whether to allow industrial customers to buy or build their own power and go around Entergy.
Sen. Bob Hensgens, R-Abbeville, a member of the task force, said in an interview that there’s a “new normal” in the electricity sector because of huge power needs of data centers and industrial plants, and the public has a hard time understanding how the PSC works.
“I just don’t find the process open enough,” Hensgens said. “I’m not sure we’re taking every step to make sure we’re not socializing these costs.”
The Alliance for Affordable Energy, a nonprofit that advocates for ratepayers, is asking for more oversight of Entergy’s plans for Meta and other projects. Executive director Logan Burke said Entergy’s spending plans come at a time when many households in the state are “already paying more than they can handle.”
The Alliance has also criticized Entergy’s huge expansion of its fleet of natural gas-fired power plants, noting the state already heavily relies on gas and that rising natural gas prices have hit residents hard. Customers pay for the cost of fuel like natural gas.
“If all of these plans come home to roost, not only are the bills going to spike, these costs are going to be locked in for decades with no way out,” she said. “The commission must take action to limit the harms at the front end, even if they won’t be in office when the bills come due.”
And the Louisiana Energy Users Group, which represents a group of industrial companies with 92 facilities in the state, is also raising questions about Entergy’s plans. LEUG has argued for years that its industry members should be able to get their own power, a proposal that has failed to win approval so far.
Last month, LEUG filed comments at the commission expressing concerns about the rate hikes on the way for customers because of the $30 billion in spending Entergy is planning. While growth in the number of customers may offset some of the impacts, “there is risk to existing ratepayers in the meantime.”
“Louisiana’s current rules for private generation investment were developed more than 40 years ago,” Young, LEUG’s attorney, wrote. “We don’t buy cellphones or computers from 40 years ago, so why should Louisiana limit itself to more than 40 year old rules for electric generation?”
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