No Entergy Bailout
More proof that Entergy isn’t Halliburton, but wants to be.
President Bush’s hurricane recovery accountant wants Entergy New Orleans, which supplies electricity and natural gas in the city, to pursue one of two options: Tap the financial pockets of its parent, which earned $909 million in profits on $10 billion in revenue in 2004, or ask the utility’s bondholders to write down the value of the subsidiary’s debt.
Personally, I was offended by Entergy’s decision to declare bankruptcy and shuffle its responsibility to restore electical service in New Orleans onto the federal government. The idea that Entergy “New Orleans” exists apart from Entergy “Other Regions” and Entergy “Corporate” is ridiculous. Entergy made $909 million dollars in profit in 2004. Even if it cost Entergy $350 million of that to restore the grid in New Orleans, they’d still be in the black. Given the differences between the 2004 and the 2005 marketplace, I have to wonder if the numbers weren’t looking better for them in pre-K 2005. To then turn around and hold New Orleans hostage when, as a company, they have the necessary resources to repair the grid regardless of what they may or may not receive from the federal government, has got to be ethically wrong.
And they will be holding New Orleans hostage: “Entergy executives and city officials [have warned] that electricity rates in New Orleans could jump more than 140 percent if utility customers are forced to foot the hurricane recovery bill. They said such a rate increase would significantly raise the cost of living in the city and stifle its recovery.” Note the “rates in New Orleans” line. Sure, we should pay our own way. But “we’re” part of a larger Entergy entity that should help insulate us from localized gouging after natural disasters. Just as it should protect Entergy customers in other parts of their network.
Jay Batt can disagree all he wants, but the responsibility of the federal government to restore a division of an otherwise profitable private entity is negligible next to its responsibility to restore a failed levee system for which the federal government was responsible and to further compensate property owners for losses which they would not have incurred had the levee system been properly designed and constructed in the first place. The two situations are fundamentally different. Entergy’s losses were caused by the storm, not the flooding. During the hurricane, even Entergy’s own emergency command post lost power. The timeline is somewhat murky, but it wouldn’t surprise me if 100% of the Entergy grid was offline before the levees broke.
Sure, Mama D is a terrorist, but even she’s on higher moral ground than companies who hide behind phony bankruptcies to protect corporate profits and threaten areas with 140% rate increases (that’s more than double, folks) rather than assume any risk for themselves or their investors.