Why New Orleans is the only U.S. city to regulate its investor-owned power company
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After more than 100,000 Entergy customers lost power across southeast Louisiana over Memorial Day weekend in a regional regulator's bid to ease grid strain, officials are asking why no one had advance notice of the potential for outages.
Why it matters: New Orleans will have a unique seat at the table alongside state regulators as they press for answers, creating an opportunity to elevate its residents' interests.
Fun fact: New Orleans is the only city in the country that regulates its own investor-owned power utility in this way. For the most part, other cities in Louisiana leave it up to the state to regulate the utility.
- (Washington, D.C., also regulates its own power, but it exists outside state regulation and has a separate commission for the purpose.)
Flashback: By the time Louisiana created its own statewide utility regulatory body (the Public Service Commission) with the 1921 state constitution, New Orleans was already serving as its own regulator, according to Public Service Commissioner Davante Lewis, based on power granted to it by the city charter.
- That constitution, Lewis tells Axios New Orleans, "included a carve-out that municipal systems would not be subject to regulatory authority without a vote of the people."
- That's why, for example, the LPSC doesn't regulate power in Lafayette, which has its own citizen-owned public power utility.
Over the years, Lewis says, New Orleans has fought to keep its own regulating authority, even though it doesn't have a publicly owned utility.
- "It's been the nature of New Orleans to separate itself from portions of state law and state statute," he says.
State of play: It's not clear exactly why the city wanted to keep its own regulatory authority when the LPSC was first created, but the Alliance for Affordable Energy's Yvonne Cappel-Vickery says New Orleans' needs are different from the rest of the state.
- "New Orleans is a transmission island," she says, which many didn't realize until Hurricane Ida, when downed transmission lines took out power for the whole city.
- "All power that comes in has to travel over water via transmission wires to get to us," Cappel-Vickery says, "so those needs are pretty unique compared to the whole state's needs, and New Orleans has always had a different political makeup than the larger state."
Yes, but: For a short time in the 1980s, New Orleans did give regulatory control to the LPSC, but took it back over the cost of building the Grand Gulf nuclear power facility, according to the Alliance for Affordable Energy.
Between the lines: New Orleans has also considered taking over its power production at various points in the past century or so.
- The city technically has the right to buy out its production from Entergy, Gambit reported in 2022, but few cities in modern history have successfully made the expensive and complicated transition from private to public power ownership.
What we're watching: Frustrated by the weekend's outages, New Orleans City Council members have called for a hearing at 10am Tuesday to investigate how and why customers were selected for Sunday's blackout.