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    Entergy pulling $30M funding commitment for S&WB substation, leaving pumping power in doubt


    January 25, 2022 - Ben Myers

     

      A critical deal to ensure New Orleans' drainage system remains online during flooding emergencies is in jeopardy, with Entergy New Orleans backing out of its $30 million commitment to finance a new substation for the Sewerage & Water Board that would supply power to its pumps.

      The $74 million project, announced just seven months ago in a celebratory City Hall press conference, would have made Entergy New Orleans the primary electricity supplier for the S&WB's massive system of drainage pumps that keeps the city from filling with storm water during heavy rains and hurricanes.

      At the time, Entergy executives said they had agreed to put up part of the money needed to get construction moving and reduce the city's reliance on its antiquated power turbines in time for the 2023 hurricane season.

      But in a prepared statement Monday, the utility said that it could not afford its portion of the deal. Entergy, which was hit with more than $2 billion in damage and other costs as a result of Hurricane Ida, said it could revisit its stance if "financial stability is restored" in the future.

      City Council members said they want to move quickly to find a different funding source.

      "My view is, there is no future. There is right now," said Councilmember Joseph Giarrusso.

      During a meeting of the S&WB board last week, Executive Director Ghassan Korban said that even if another funding source is found, the city had "maybe lost the opportunity to have the substation being delivered for the 2023 hurricane season."

      "I think that's becoming more evident," Korban said. "It makes me very nervous on behalf of the city."

      The Cantrell administration did not return a request for comment.

      Under the terms of a deal announced in June, the city was set to kick in $22 million from a bond issue to pay for frequency changers that convert Entergy power to an older standard compatible with the city's pumps.

      State construction financing would kick in more than $20 million to the project, with Entergy fronting the rest in a loan that the S&WB would repay over a decade. Entergy would retain ownership of the facility.

      Mayor LaToya Cantrell praised the "unprecedented partnership" and cheered it as a way to reduce the upfront cost to ratepayers. Last week, Korban said during the board meeting that there had been an agreement in principle, but the final deal was never executed.

      After Ida, the relationship between Entergy and its regulators on the City Council frayed. The council pledged investigations into Entergy's preparedness and toyed with the idea of booting its New Orleans subsidiary as the city's sole electrical provider.

      During the back and forth, Entergy officials said such a move would force them to rethink the deal. The company said on Monday that hurricane damages were compounded by "uncertainty around the timing and mechanism to recover those costs."

      Still, the utility said Monday that it would build, maintain and operate the substation if funding is secured, and that it was working with the city to find another source.

      Power has long been one of the most vulnerable parts of the S&WB's ancient drainage system. Roughly half the 99 pumps that push water out of the city during storms draw their electricity from a brace of turbines at the public utility's Carrollton Plant, with the rest already powered by Entergy's lines.

      But recent years have shown the limitations of the turbines, some of which are century-old, steam-powered antiques. They have been prone to breakdowns, including during the 2017 summer flooding that officials said was exacerbated by power-related pump malfunctions.

      While that flooding prompted the purchase of new generators and repairs to the old ones, more failures have left the S&WB vulnerable heading into major storms. Without enough power, some pumps could be rendered useless, allowing streets and homes to flood until power was restored.

      The uncertainties around the S&WB's power situation continue to this day. Two of four turbines are out of service as of Jan. 14, according to S&WB. Combined with the new generators, the turbines that are now online provide just enough electricity to power the entire system with little to spare.

      Officials have long eyed Entergy as a potential solution to those problems. The current plan would see the S&WB switch over to the power company as its primary electricity source. The new substation would bring power directly to the station, where it would be converted to the older standard of energy that is compatible with the S&WB's pumps.

      That would relieve the S&WB from having to rely on its own turbines, though officials have said they would be kept in service to provide backup power.

      With Entergy withholding funding for now, what happens next is an open question. The administration could identify federal funding sources, such as stimulus money from the American Rescue Plan Act or the $1 trillion infrastructure bill.

      Council President Helena Moreno said the stimulus money would be a logical way to fill in the gap left by Entergy and to lessen the burden on ratepayers.

      "I think we have this very unique opportunity to save the ratepayers a bunch of money, and to keep this project on a timeline. I think it could be a win for everyone," Moreno said.

      Council member JP Morrell, who recently succeeded Moreno as head of the council's utilities committee, said in a prepared statement that the prospect of bringing the substation online in time for the 2023 hurricane season is "unlikely," but that council members would "take necessary steps" to move the project forward with alternative funding.

      The administration does not appear ready to pursue any particular course of action, though its $22 million commitment of bond funds remains intact. The city's infrastructure director, Ramsey Green, said at the S&WB board meeting last week that the administration will review its options.

      "We want to be careful given how much federal money is forthcoming," Green said. "We want Entergy to do this, do what they committed to do."

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