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Rising Electricity Costs in Louisiana: A Deep Dive
Following the devastation of Hurricane Francine, crews are actively engaged in restoring power lines across south Louisiana. In light of the ongoing recovery, Entergy Louisiana has proposed a modest fee increase of approximately $1 per month for customers to cover repair costs from the storm. This comes on top of an existing charge of about $20 per month that residents are already paying to address damages from previous hurricanes.
Consumer advocates have raised concerns about the projected electricity price surge for Entergy Louisiana customers, forecasting a staggering 90% increase in rates between 2018 and 2030. This significant hike reflects broader trends seen across the United States, driven by various factors such as the escalating demand for energy from data centers and energy-intensive industries, the need for infrastructure upgrades, and the growing impact of climate change-induced natural disasters.
Logan Atkinson Burke, executive director of the nonprofit Alliance for Affordable Energy, highlighted the situation in Louisiana as a reflection of national challenges, noting the rapid pace at which these issues are unfolding and the lack of adequate protections for residents. “This is not acceptable,” Burke asserted.
Regional Rate Increases and Industry Pressure
Electricity rates have surged elsewhere as well; Oregon experienced a 50% rise in residential rates over the past five years, while 13 states in the mid-Atlantic are expecting a 10% increase this year. Florida Power & Light recently proposed an eye-watering $9 billion rate hike, potentially the largest in U.S. history, which could lead to a 22% increase in power bills across the state.
Joshua A. Basseches, an assistant professor of environmental studies and public policy at Tulane University, emphasized the importance of exploring new electricity generation models to avert further rate hikes. He warned that without innovative solutions, increases in electricity costs would be a persistent issue.
Industries in Louisiana, which consume upwards of 40% of the state’s electricity, have suggested a potential remedy: giving them the autonomy to generate or purchase their own power rather than relying solely on Entergy. Additionally, these industries are pushing for greater access to renewable energy sources, as Louisiana ranks poorly—44th in the nation—with only 3.2% of its electricity generated from renewable resources like wind and solar.
Randy Young, a lawyer representing the Large Energy Users Group (LEUG), which encompasses 28 companies in Louisiana, stated, “We believe we can do some things to help avoid Entergy having to build some of that generation … for the most economic development.”
Escalating Costs for Consumers
Recently, Entergy Louisiana has been authorized to impose an additional $7 monthly charge on residents to enhance the electric grid and is seeking a further $1 charge to cover Hurricane Francine repairs. On top of that, costs associated with new power lines for a planned steel plant will add another $1.50 to the monthly bills of residential customers.
Entergy has numerous capital projects pending approval that are likely to drive customer rates higher. According to analyses by BAI Group, projected costs from these initiatives suggest that base rates for customers could inflate by 90% by 2030. However, Entergy representatives have dismissed these forecasts, arguing they misrepresent the situation and origin of costs.
The utility’s spokesperson emphasized that maintaining fixed costs—covering generation, transmission, and distribution—is fundamental, and despite rate increases, Entergy continues to offer competitive pricing, with the second-lowest industrial rates in the country. The utility has also focused on reducing reliance on traditional fossil fuels, such as coal.
Push for Renewable Solutions
In 2019, LEUG advocated for the ability of industrial facilities to directly acquire renewable energy, co-generate power, or even withdraw from Entergy’s system entirely. They argue that access to renewable energy is essential for meeting environmental regulations imposed by both their companies and their clients.
Currently, Entergy has obtained permission to significantly increase its renewable energy portfolio, targeting 3,000 megawatts of renewables to better serve industrial customers. Plans include sourcing 1,500 megawatts of solar power to offset emissions from new gas plants associated with a large data center project.
However, Burke criticized Entergy for its slow transition to renewables, noting the company’s current lack of significant renewable resources and its focus on expanding natural gas infrastructure. A recent report from the Public Service Commission regarding the potential for industrial users to sell or trade excess generated power was released, yet it deferred any recommendations for future assessment.
In a move to bypass potential delays, LEUG proposed to independently acquire renewable energy and relocate more than 2,000 megawatts of industrial co-generated power for sale or trade.
Unless the state’s regulatory commission approves alternative options, Louisiana will continue down a path characterized by rising costs and sustained expenditure on an aging electricity infrastructure. This situation is expected to be addressed in the upcoming commission meeting, where the future of Entergy’s proposed rate adjustments and capital projects will be discussed.
Burke concluded that urgent action is crucial, asserting, “We are at a very clear inflection point that the commission has a responsibility to consider all the possible options.”
Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School, characterized the current rate hikes as “astonishing,” particularly in the Southeast’s monopolistic utility landscape, calling for a reevaluation of competition within the power sector.
Floodlight is a nonprofit newsroom that investigates the powerful interests stalling climate action.
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