Recently, last year’s deposed University of New Orleans chancellor Tim Ryan, back to wearing his faculty researcher hat, produced a report commissioned by Entergy to determine the utility’s impact to the New Orleans metropolitan area. In an opinion piece focusing on how company metrics reflected the recovery of the city, the shorter-term successes were blunted by a revealing, and disturbing, tidbit about the considerable economic impact Entergy has on New Orleans.
New Orleans as a whole and its Mayor Mitch Landrieu in particular have been trying to convince the world that the city has become a more business-friendly place. Approving this plan change for Entergy would provide some confirmation of that assertion, and help to continue evolving perceptions in the direction that considers Louisiana genuinely more business-friendly than in the past.
And that was, ranked as the 213th largest public company in America, Entergy is the only Fortune 500 company still headquartered in New Orleans. As a whole, Louisiana has only three, with Entergy the smaller CenturyLink in Monroe and Shaw Group in Baton Rouge, and those two are newcomers moving on up onto the list in the past couple of years, while New Orleans has been slipping back. In 2006, the only two in the state were in New Orleans – and then Freeport McMoran bolted. But the decline had been long in coming.
Just before Hurricane Katrina, in 2004, in per capita terms by metropolitan area, the New Orleans area ranked second-lowest with these large firms in the country.
And a decade earlier, the figure was lower still as the only reason Entergy became large enough to make the list and join Freeport McMoran (before it left for Phoenix) was its purchase of the city-owned New Orleans Public Service, Inc., in the early 1990s. Through the previous four decades, several other area firms made the list, such as Avondale Industries, Godchaux Sugar, and Louisiana Land and Exploration – all now merged into other, larger national corporations headquartered elsewhere.
It’s no accident that decades of lackadaisical attention to the quality of education and less emphasis on building a culture of innovation and initiative that general economic development in Louisiana would suffer. But additionally with Louisiana being a center of government meddling in commercial affairs, and New Orleans being its epicenter, perhaps it’s no surprise that the single survivor is in a heavily-regulated industry. Which now finds itself at the mercy of the Public Service Commission and New Orleans City Council to allow a cost-saving action that could pass on lower rates.
Entergy seeks to join a consortium of power suppliers and users across the U.S. and Canada that, through connections by transmission lines, can more effectively respond to supply and demand considerations. As a utility serving the state this needs approval by the PSC, but also because of the NOPSI acquisition, meaning Entergy operates distinct subsidiaries, it needs likewise from the City Council.
New Orleans city government always has been picky about utilities and used its power to create artificially low rates, even taking back control from state regulators when, in the mid-1980s, Entergy’s predecessor began to increase rates as a result of paying for expansion of its nuclear facilities, prompting the city to make a populist call to arms in a referendum to reassert control. As this latest request likely promises, because of greater efficiency in utilizing slack resources, but does not guarantee lower rates, while most of the PSC members have taken reasonable approaches to regulation, resisting heavy-handedness, the City Council’s view is harder to predict.
Posted by Jeff Sadow at 00:00