Utility Entergy stymied transmission projects that might have prevented some New Orleans blackouts

After Hurricane Ida hit the Gulf Coast on August 29 and knocked out critical transmission lines, hundreds of thousands of Louisiana residents were left without power, some for weeks. Many stakeholders and experts contend that shortsighted and opportunistic transmission investments made by Entergy, the investor-owned utility that serves the region, were to blame.

Over the past decade, Entergy has sunk a great deal of money and effort into relatively small transmission grid projects that it owns itself, a fact that allows it to charge its customers to foot the bill for them. At the same time, it has fought back against proposals for larger-scale transmission projects that would have been required to be open to competitive bidding by independent developers, even though those projects likely would have done more to improve the reliability of the grid.

Entergy’s service area includes much of Louisiana and parts of three other neighboring states. Ida knocked out nearly one-eighth of the utility’s transmission network in a single blow — including every transmission line serving New Orleans, which plunged that city into a near-total blackout.

Now the company’s strategy is coming under fire from political leaders, energy insiders and plenty of others. Investigative journalists are detailing the utility’s failings too: ProPublica and NPR recently produced a lengthy article entitled ​“Entergy Resisted Upgrading New Orleans’ Power Grid. When Ida Hit, Residents Paid the Price,” and NBC News dug in on the issue as well.

In mid-September, former federal regulator John Norris accused Entergy of stalling efforts to build a more reliable regional grid. That’s not what he expected to happen back in 2012 when he sat on the Federal Energy Regulatory Commission. As a FERC commissioner, Norris voted to approve Entergy’s admission into the Midcontinent Independent System Operator (MISO), which manages the grid in a swathe that cuts through the middle of North America, from Manitoba, Canada to the Gulf Coast.

That step placed Entergy’s grid under MISO’s operational control — and seems simultaneously to have put a halt to a federal antitrust investigation into the utility’s allegedly anticompetitive practices. (The investigation remains open, but no recent developments have been publicly reported since Entergy joined MISO.)

But as Norris, who has also served a stint as president of an organization that represents the states within MISO, told stakeholders at a recent meeting of the grid operator’s board, ​“I did not [think], nor did I suspect any of my colleagues at FERC would have thought, that by late 2021 no advancement in regional transmission planning and building would have taken place.”

Clean-energy advocates in the region have long been frustrated by Entergy’s transmission strategy. In June, the Southern Renewable Energy Association and Clean Grid Alliance filed comments with the Mississippi Public Service Commission that charged Entergy with stalling long-term transmission planning in its geographically isolated ​“MISO south” region.

Utilities’ long-term plans generally focus on larger-scale projects that are open to competitive bidding. Entergy has instead opted to focus on smaller transmission projects that aren’t open to competition. Like most vertically integrated utilities, Entergy is legally permitted to collect rates from its customers based on the scope of its capital investments, including transmission projects. This gives the utility an incentive to direct its spending toward those types of projects. While each of Entergy’s transmission projects may carry a relatively small price tag, together, they add up.

What’s more, by selecting only these smaller-scale projects to submit to MISO’s planning processes, ​“Entergy has effectively eliminated MISO’s transmission expansion planning function in MISO south,” the Southern Renewable Energy Association states in its June filing. ​“Entergy has a very strong incentive to maximize smaller, local projects, which are shielded from MISO review and approval while simultaneously restricting the ability to expand transmission which may lead to more electric power competition.”

A larger problem is that these small investments led to a patchwork of new and old infrastructure, including some transmission lines built before 1990s-era standards were imposed to ensure they could withstand hurricane-force winds. Reuters reported earlier this month that roughly one-sixth of Entergy’s network consisted of these older power lines, which were built to withstand winds no greater than 95 mph. Hurricane Ida’s wind speeds at landfall were up to 150 mph.

New Orleans City Council President Helena Moreno, an Entergy critic, cited these concerns in a letter to MISO leadership this week. ​“For too long, the region surrounding New Orleans has been served by a grid that was built in a piecemeal manner and without sufficient connections to other geographic areas,” Moreno says in the letter. ​“Given recent stakeholders comments[,] I question whether our grid was designed and built by a utility that is more interested in protecting its own interests than those of its customers.”

How Entergy has (mis)managed transmission development

Across Louisiana and Mississippi, nearly 1.2 million customers lost power after Hurricane Ida due to damaged transmission and distribution infrastructure, according to the U.S. Energy Information Administration. At the peak of these outages, nearly 210 transmission lines, about one-eighth of Entergy’s 16,100 miles of high-voltage lines, were out of commission.

Damage this expansive clearly raises questions around the age and durability of the impacted transmission infrastructure. But the type of infrastructure that is affected is also a key factor.

Simon Mahan, executive director of the Southern Renewable Energy Association, recently fired off a Twitter thread that laid out Entergy’s misdeeds related to transmission (and much else).

Mahan argued that investor-owned utilities (IOUs) like Entergy benefit from restricting transmission projects that could be built by competitors, citing and quoting a May paper by Ari Peskoe, director of the Electricity Law Initiative at Harvard University.

Entergy’s hostility to transmission that it doesn’t own was also on display in 2019 in Texas (the utility’s territory extends into the eastern part of the state). Entergy joined a number of other utilities in successfully lobbying the Texas legislature to pass SB 1938, a right-of-first-refusal bill signed into law that year that prevents competitive bids on transmission projects in the Lone Star State.

That law put on hold the only MISO regional project planned in the state: the 500-kilovolt Hartburg-Sabine line in Entergy Texas territory. NextEra Transmission, the company developing the project, challenged the law in the 5^th U.S. Circuit Court of Appeals shortly thereafter. The case is still pending, so the future of the power line, which had been expected to begin service in 2023, remains uncertain.

The need for a transmission system that can handle both hurricanes and clean energy

It’s hard to gauge how large regional transmission projects that haven’t yet been built might have reduced the scope of outages like those triggered by Hurricane Ida. However, regional transmission projects in MISO that are 345 kilovolts and up — the size category of projects that are required to be open to competitive bidding — would have a greater ability to transfer power and would be engineered to withstand winds up to 150 mph.

The lines feeding New Orleans, by contrast, were a jumble of new and old 230-kilovolt lines, some of which were approaching the end of their expected lifespans. A large part of Entergy’s system was built to comply with an earlier generation of engineering standards that were not as stringent as current standards.

Entergy’s website states that all new projects are built to withstand 140 to 150 mph winds, but it doesn’t disclose the age of the infrastructure in its system. Given that transmission assets have a 50-year average lifespan, the utility’s focus on smaller projects designed to prop up these aging assets threatens overall reliability.

A new power line endorsed by MISO in 2016 to relieve transmission congestion might have provided relief to New Orleans; it was also backed by the staff of the Louisiana Public Service Commission. But Entergy declined to build the 230-kilovolt line between the power grid substations of Waterford and Churchill in the New Orleans area. It did, however, build the 980-megawatt St. Charles Power Station gas plant, which generated enough power within the region the transmission line would have served to undermine the economic case for building that line.

In its June filing submitted to Mississippi regulators, the Clean Grid Alliance described the state of affairs this way: ​“It appears that a $108 million economic transmission project was canceled in favor of an $870 million power plant.”

“Because utilities earn a larger amount on a larger cost project, Entergy has an incentive [to spend] more on a large generation project instead of a smaller amount on a transmission project…that may be awarded to a competitive transmission developer,” the group continues in the filing.

Ironically, this gas plant sat idle in the aftermath of Hurricane Ida, unable to generate power to feed a blacked-out grid.

Entergy’s approach to transmission has also come under increasing scrutiny in recent years as a potential barrier to expanding renewable energy and supporting increased electrification. Now, its fundamental reliability is at stake, Moreno states in her letter to MISO.

“MISO was supposed to ensure that Entergy could no longer prevent the development of a reliable and interconnected transmission grid in MISO South,” she wrote. ​“The citizens of New Orleans need MISO to fulfill its promise.”