Move to Shift New Orleans Utility Regulation to Public Service Commission a Risky Deal for Residents and Climate 

The Louisiana Legislature is considering a constitutional amendment that seeks to take away New Orleans’ authority over its local utilities and give it to the Louisiana Public Service Commission in Baton Rouge. While this might be good news for Entergy shareholders, it could translate to higher utility bills for city residents and threaten to undermine the city’s efforts to combat climate change.

House Bill 744 by Rep. Mark Wright would move Entergy New Orleans’s 209,000 customers from City Council oversight to the LPSC, where they would undoubtedly be merged with Entergy Louisiana’s 1.1 million customer base. The move would also remove local oversight of Delta Utilities’ 100,000 natural gas customers in New Orleans.

The five-member LPSC is the only elected public service commission in the country whose independence is enshrined in a state constitution. It was once a launching pad for gubernatorial hopefuls, starting with Huey Long. But today it is commonly seen as beholden to the utility companies it regulates. 

The City Council, by contrast, has put policies in place to protect utility customers by holding down utility profit margins. The council also has passed climate-friendly policies that include a Renewable Power Portfolio standard that prioritizes renewable energy and requires utilities to source 100% of their power from non-emitting, clean sources by 2040. 

New Orleans also has approved higher net metering, which lets solar panel owners save more on their bills. For example, Entergy Louisiana only repays customers 30 cents for every $1 saved on their solar panels, whereas Entergy New Orleans gives all the savings back to customers. That progress was hard-won by grassroots advocates.

With no renewable portfolio standard on the state level, Louisiana ranks 48^th in the nation for renewable power consumption with less than 1 percent of its electricity generated from renewables, according to the Energy Information Administration.

This is the wrong time to hinder renewable power as electricity loads are forecast to exponentially increase over the next decade. 

Statewide, utility rates are already on the rise. Louisiana is among the most energy cost-burdened states based on the percentage of household earnings spent on utility bills. 

A 2025 Legislative auditor report found that while its official base-kilowatt hour rate is below the national average, monthly electricity bills are well above the national average: ranking 16th in 2023 due to high air conditioning usage. Customers also pay additional riders for storm recovery costs and grid hardening. Nearly 30% of Louisiana households are unable to pay their full energy bill at least once every year. 

The state also hosts one of the least reliable grids, according to the audit.  

Rising Utility Profits

Policymakers and utilities often blame rising electricity bills on factors like volatile energy prices, grid modernization for increasing electrification, including “large load” customers, and extreme weather events. But along with rising bills, utility profits are also increasing, according to a new report by the Energy Policy Institute.

Entergy Louisiana, for example, funneled a whopping 19.5 percent of bill payments to its shareholders in 2024. That’s nearly $20 for a $100 utility bill, which was 15th worst offender of 110 investor-utility companies in the nation. By contrast, Entergy New Orleans returned only 6.5 percent of its bill collections to shareholders, based on this Energy Policy Institute calculator.

Louisiana customers of SWEPCO spent 16% on shareholder profits while CLECO sent 12% of bills to profits. We don’t necessarily know the average cost of New Orleans bills. Utilities do not disclose such numbers. 

We do know that the City Council is thriftier than the LPSC about the “return on equity” that it guarantees to the utilities it regulates. This is the amount a utility can charge customers for its equity and assets, which is how utilities earn much of their profits. 

Most investor-owned utilities operate as regulated monopolies. Under a century-old model, utilities are granted monopoly power over designated territories by public service commissions that then have the right to regulate the rates that utilities charge.

The regulator allows for “a return on equity” of its cash and assets, which is supposed to be a fair rate of return that would match what a private investor would earn elsewhere. The return on equity is negotiated between the utility and regulator through the “formula rate plan.”

Corporate profits – and utility bills – tend to be high in states like Louisiana where investor-owned utilities are vertically integrated, meaning they produce the power they sell directly to customers. This is especially true if they are not required to participate in multi-state markets, which is also the case in Louisiana. 

Entergy does not profit by buying someone else’s electricity for its customers. It profits from building power stations. Right now, it is building three new gas generators with plans before the LPSC to add seven more gas-powered plants, and massive transmission upgrades — all to power Meta’s $27 billion “Hyperion” data center in Richland Parish. Together, these plants will generate 7,50O megawatts of new electricity, enough to power seven million homes.  

The seven new gas-fire generators would be covered under the newly created LPSC Lightning Initiative, which allows Entergy to bypass longstanding competitive bidding requirements and market assessments for lower cost alternatives.  Even with agreements by Meta to fund some of the construction costs and guarantee 15-20 years of electricity payments, the sharp increase in new construction brings higher risk exposure for customers and higher utility bills should Meta somehow falter on the deal. Add that to the rising costs of natural gas – which Entergy passes directly onto ratepayers – customers should expect higher electricity bills. 

Loss of Autonomy

While Entergy New Orleans is the only investor-owned utility regulated by a municipality, many cities around the country – including Lafayette and Alexandria– own and manage their utilities. 

In fact, about 30% of the country’s electricity is sold by non-profit utilities, most of which are either cooperatives or municipally owned. Since those utilities do not collect profit, they typically charge lower rates, according to the Energy Policy Institute.

There are other reasons to be wary of taking away regulatory authority from New Orleans. Wright’s proposed amendment is part of a slew of measures this legislative session to erode local control of government, particularly from New Orleans.

What safeguards would ensure the LPCS prioritizes residential priorities over Entergy shareholders?

The New Orleans City Council has improved its regulatory oversight in recent years following a scathing Inspector General report in 2015 that criticized it for outsourcing its authority to consultants.  Since 2018, the council has redirected funds from outside advisors back to the Council Utility Regulatory Office, which went from a single staff member to an office of seven, saving millions of dollars.

One argument in favor of the LPSC takeover is that New Orleans is a risky place to do business, given its high vulnerability to catastrophic storms. The city also is experiencing out-migration. Entergy New Orleans is less financially secure with fewer assets, shrinking customer base, and higher borrowing costs than Entergy Louisiana, which could eventually lead the parent company to sell off its riskier subsidiary to a less transparent private equity firm.

Entergy Corp. last year sold its gas operations to the private equity firm Bernhard Capital Partners, whose Delta Utilities has been excoriated by customers and regulators for spiking gas bills and poor transparency. 

The City could conceivably buy Entergy New Orleans and turn it into a municipal utility, but with its estimated $160 million deficit identified by the state auditor and ongoing fiscal crisis, such a prospect is unlikely anytime soon. 

Yet, it is a question that needs to be explored. While there is always room for improvement with the council, moving oversight to the LPSC would lead to less autonomy, dirtier energy policies, and more exposure to potential costs of new datacenters. Despite its imperfections, New Orleans’ local regulatory authority has been good for the city and its residents and deserves to stay in place.