New Orleans City Council President Helena Moreno asked Midcontinent Independent System Operator Inc. to adopt a plan that would improve grid reliability and questioned Entergy Corp.'s grid-planning motives, following the devastation wrought by Hurricane Ida that knocked out all eight transmission lines serving the city and left millions without power.

"For too long, the region surrounding New Orleans has been served by a grid that was built in a piecemeal manner and without sufficient connections to other geographic areas," Moreno wrote in a Sept. 20 letter to MISO executives. "I question whether our grid was designed and built by a utility that is more interested in protecting its own interests than those of its customers."

Moreno's Sept. 20 letter was sent amid growing friction between the city that regulates Entergy subsidiary and the utility following Ida. During recent meetings, council members including Moreno have questioned the utility's work to harden its systems against storms and its investment in transmission. Entergy said Ida caused up to $2.6 billion in damage to its systems, including to more than 210 transmission lines.

"I believe that there has been a lack of investment from the company overall into the transmission system," Councilmember Jared Brossett said during a Sept. 22 meeting.

In her letter, Moreno noted statements by former Federal Energy Regulatory Commissioner John Norris and other critics at a Sept. 16 MISO board meeting who asserted that "Entergy is obstructing progress in MISO at the expense of those who rely on the grid for affordable power."

"Historically, Entergy isolated itself to ensure only Entergy's generators could supply electricity to its customers," Moreno, who also chairs the council's utility committee, wrote in her letter. "This parochialism resulted in inflated rates to customers and diminished Entergy's ability to deliver electricity when Entergy's generators or transmission grid went down."

Moreno called upon MISO to lead in the effort to adopt a plan in 2022 to improve regional grid interconnection around New Orleans.

In an Oct. 1 statement, Entergy responded that transmission projects ultimately approved as part of MISO's long-range transmission plan are determined by MISO, not the utility.

"The initial set of long-range transmission projects proposed by MISO is estimated to cost approximately $30 billion and Entergy New Orleans would be required to pay its allocated share of these costs," Entergy spokesman Neal Kirby said in an email. "Given these substantial costs, it is important that we work carefully through the MISO stakeholder process to advocate on behalf of our customers' interests and provide thoughtful input to MISO and our regulators on this important matter in the coming months."

Investigations, share price decline

The city council on Sept. 23 voted unanimously to launch investigations of Entergy New Orleans LLC's Hurricane Ida response and future ownership of the utility, and to direct Entergy New Orleans to delay implementing new rates. Prior to the meeting, Entergy proposed four scenarios for the future of its New Orleans subsidiary, including divesting the utility altogether, but Wall Street observers do not see that as a likely outcome. were skeptical such a move might materialize.

Shares of Entergy have fallen more than 12% during the second half of September, from a high of $115.02 on Sept. 14 to close out the month at $99.37, compared with the S&P 500 Utilities Sector Index, which dropped 5.8% over the same period. On Sept. 23, Moody's lowered its outlook for Entergy, Entergy New Orleans and Entergy Louisiana LLC's rating to "negative" from "stable" citing storm costs and investigations initiated in New Orleans. S&P Global Ratings on Sept. 24 downgraded Entergy New Orleans to BB from BB+, following a downgrade from BBB on Sept. 2. S&P Global Ratings also downgraded Entergy Louisiana to BBB+ from A- on Sept. 2.

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