Power lines crashed to the ground after being damaged during Hurricane Ida in New Orleans. Ida made landfall Aug. 29 southwest of New Orleans. |
As Hurricane Ida, downgraded to a tropical depression, headed for the Tennessee Valley on Aug. 30, the storm left widespread destruction in its wake, knocking out transmission lines and leaving more than a million Gulf Coast residents, primarily Entergy Corp. customers in Louisiana and Mississippi, without power with no timeline for restoration as crews assess damage.
"I can't tell you when the power is going to be restored," Gov. John Bel Edwards said during an evening press conference Aug. 30, but the governor promised that more than 25,000 utility workers from at least 32 states and Washington, D.C., were mobilized to support power restoration efforts after the storm, with thousands more on the way.
Ida "tied for as best we can tell, the strongest hurricanes that have ever impacted the state of Louisiana," Edwards said, adding that the storm wreaked "havoc on infrastructure that includes on the electric grid" but utility companies were working to restore power to critical locations.
"Almost the entire southeast important part of our state is without power presently," the governor said. "Obviously we need to have the power restored just as quickly as possible, and for that restoration process, there's going to be some priority so that the most critical infrastructure comes up first ... our hospitals, dialysis centers and so forth."
"It would be premature for me to speculate at this time when power will be restored," Entergy New Orleans President and CEO Deanna Rodriguez said during a midday news conference with New Orleans city officials Aug. 30. "Until we can collect the damage assessment, we can't give you that answer."
Ida made landfall at about 11:55 a.m. CT on Aug. 29 in southeastern Louisiana as a Category 4 hurricane with winds up to 150 mph, according to the National Hurricane Center. The first landfall of the powerful storm was reported near Port Fourchon, La., about 100 miles southwest of New Orleans.
By late afternoon
More than 1 million customers were without power in Louisiana at about 5:30 p.m. ET on Aug. 30, including 823,198 Entergy customers, according to PowerOutage.US, a project that tracks power outages in the country. About 91,906 outages were reported in Mississippi at the time.
On Aug. 29, Entergy reported that "all eight transmission lines that deliver power into the New Orleans area" were out of service. City officials during the Aug. 30 news conference warned evacuated residents not to return, especially because of the blackout.
"Of the eight transmission lines, we don't know if one is severely damaged," Rodriguez said during the news conference. "It could be minor damage that could allow us to get that fixed more quickly. I just don't have a good answer for you yet."
Entergy reported early Aug. 30 that 216 substations, 207 transmission lines and more than 2,000 miles of transmission lines were out of service, as well as a transmission line spanning the Mississippi River that withstood Hurricane Katrina in 2005.
Power lines have fallen after being damaged during Hurricane Ida in New Orleans. Ida has since been downgraded to a tropical depression and was moving east over Mississippi the evening of Aug. 30. |
Past storms
In October 2020, Hurricane Zeta struck the Southeast U.S. and Entergy estimated the cost to repair or replace equipment damaged in the storm at about $220 million to $250 million, including $165 million to $185 million in damage at Entergy Louisiana LLC and $50 million to $60 million at Entergy New Orleans.
Entergy previously disclosed that Hurricane Laura in August 2020 inflicted $1.5 billion to $1.7 billion in damage to the transmission and distribution systems of Entergy Louisiana and Entergy Texas Inc. The company's preliminary cost estimate for damage from Hurricane Delta, which struck earlier in October 2020, was $250 million to $350 million.
Cost recovery
Despite the heavy costs of hurricane damage for a utility company serving the Gulf Coast region, such storms rarely rattle investors because the damage is recoverable from ratepayers, "and the only question for investors is the timing and form of recovery," CreditSights analyst Andrew DeVries wrote in an Aug. 30 report.
These costs are typically recovered through a special rider on bills or issuing securitization debt that amortizes via a nonbypassable charge on bills and on which utilities do not earn a return.
"The issue for investors generally is hurricane fatigue over constantly seeking storm damage relief and then specifically our own concern on if their customers can afford all these securitizations," DeVries wrote.
Shares of Entergy finished the day 2.09% lower to close at $109.36 in nearly three times average trading volume compared with the S&P 500 Utilities index, which gained 0.18%.