$4M raise for CEO, $1.2B in shareholder dividends, but Entergy forcing consumers to pay for storm restoration

$4M raise for CEO, $1.2B in shareholder dividends, but Entergy forcing consumers to pay for storm restoration

July 7, 2022 by tomaswell

Like the other 1.1 million Louisiana captive subjects of the marriage between electric utilities and the Louisiana Public Service Commission, I received my monthly Entergy bill the other day that included a fee of $18.76 cryptically notated as “Storm Restoration Charge.”

So, why am I upset over a charge of $18.76? For several reasons:

• My $18.76 was probably on the low side because my home is well insulated and we don’t set the thermostat very low. One reader said her charge this month was $51.13 (despite Entergy’s initial promise that the fees would run between $5 and $15 per month). Because the fee is presumably determined by usage, and considering there are 12,000 industrial and 142,000 commercial customers, I would guess that $50 would probably be a low average, meaning Entergy would be raking in at least $50 million per month for storm restoration.
• Why are the customers of Entergy being asked forced to pay for Entergy’s failure to plan for natural disasters when the company should have been placing its lines underground decades ago instead of leaving them suspended on poles and vulnerable to hurricane-force winds?
• Locked in for 15 years, Entergy projects it will collect $3.2 billion for storm restoration over that time. Who’s to say there won’t be more storms in those 15 years that will necessitate additional “storm restoration” fees? What are the odds of that and where does it end?
• What is the fate of that $450 million federal grant for which Entergy recently applied to make its power grid more reliable? Looks like double-dipping to me.
• Does Entergy not have sufficient business acumen as to have excess-coverage insurance policies in place to cover natural disasters? There’s a conglomerate of companies calling themselves Lloyd’s of London that is in business to write just such coverage. Hell, they even insured actress Betty Grable’s legs for a cool million bucks way back in the 1940s. But no, Entergy instead has gone the self-insured route and now is getting bailed out on the backs of its customers.
• Why did the Louisiana Public Service Commission (along with its counterparts in Texas, Mississippi, and Arkansas) roll over for Entergy when the company requested approval of the special fee? Why didn’t members see fit to protect the interests of Louisiana citizens? The only one of the five PSC members to vote against approval was Foster Campbell of Shreveport, who tossed out some pretty pointed barbs Entergy’s way.

Which brings me to Campbell’s major STICKING POINTS raised when the PSC initially approved the surcharge back in February:

First of all, he felt it unfair to penalize customers in north Louisiana who didn’t feel the brunt of hurricanes, Ida, Laura, Delta, Zeta and winter storm Uri (I didn’t even know about that one) in 2020 and 2021.

Second, it kinda stuck in Campbell’s craw (and mine as well) to learn that Entergy, while suffering the economic impact of the storms, managed to find an additional $4 million in compensation for its CEO, Leo Denault, who pulls down a cool $16 million per annum.

And he was justifiably pissed when Entergy, in its news release, inplied that the PSC vote was unanimous. It wasn’t. The vote was 4-1, with Campbell casting the lone negative vote. He asked Entergy to clarify its news release but the company politely ignored his request.

Nor was Campbell overjoyed to know that Entergy, while in the throes of economic ruin, doled out $1.2 billion in dividends to shareholders. Would it not have been prudent to not declare dividends during this time of hardship and dedicate that $1.2 billion to storm recovery? “I’m just troubled by your company’s arrogance,” Campbell said, directing his criticism to Denault. “Absolute arrogance.”

Oh, and my rhetorical question about investing that $1.2 billion in storm recovery was actually addressed by an Entergy spokesperson way back in 2006 who said, “It would not be prudent to invest shareholder money into the utility if there’s no chance of recouping the money.” Well, I thought investment brochures all carried the disclaimer that investing is a risk with no guarantees.

A lot of folks, mainly Repugnantcans, are preaching the gospel of self-sufficiency for the unfortunate among us while turning a blind eye to corporate welfare – like Commissioner ERIC SKRMETTA of Metairie describing Entergy’s handling of the storm as “impressive” and saying if the rate surcharge was not approved, it would make the state less attractive to corporate investment.

Less attractive than pulling Louisiana out of the Midcontinent Independent System Operator (MISO), a nonprofit association that manages the POWER GRID for 42 million people in 15 states and Manitoba Province in Canada? That was Skrmetta’s brainchild last November as he apparently forgot what happened in Texas – that precipitated Ted Cruz’s abrupt departure for Cancun.

Entergy, headquartered in New Orleans, boasts revenues of $12 billion and is the only Fortune 500 company left in Louisiana.