In an exchange of letters at the end of November, 2005, Entergy New Orleans learned that the Federal Executive branch does not support a grant to the utility to repair the storm damaged distribution network. Entergy had initially requested $350 million (this amount later grew to $1.5 billion including Entergy and CLECO interests in Louisiana).

"The risk of a financial loss from a natural disaster is one that any investor in a private firm must face, and it would be wrong for the taxpayer to bail out those investors after the fact," wrote Allan Hubbard, chairman of the White House's Gulf Coast Recovery and Rebuilding Council. Hubbard went on to say that Entergy should use some of its $909 million in earnings on over $10 billion in revenue to cover these costs. He suggested investors and bond holders should bear the cost.

Entergy replied with a recap of utility regulation and settled law regarding who bears the responsibility for risks to the monopolized distribution network. Entergy pointed out that the responsibility for this risk has never been assigned to the investors but has always been borne by the ratepayers. Finally Entergy cited several precedents including 911, a northeast Ice Storm, and the post-911 airline bailout in which the Federal government had interceded.

Entergy and the Louisiana Congressional delegation plan to pursue this matter in Congress, perhaps under the Community Block Grant Programs.

In July 2006, without further action on their request for relief. The bankrupt Entergy New Orleans subsidiary filed for a 25% rate increase in the the New Orleans city council. According to my calculations I purchase about 2,500 kilowatt hours per month in the summer, mainly to feed my central air conditioner. At $.10 per kwh my bill runs $250 per month. Half of the ten cents is fuel adjustment, half is the base rate. A 25% rate increase would increase my rate to $0.1125 and my bill to $281.25. Strangely enough, since I live on the westbank of the river, even though I am in Orleans, I am served by Entergy Louisiana. I understand this rate increase does not apply to me or my neighbors.

In August 2006 this issue is still unsettled in Louisiana. Mississippi has committed $360 million of CDBG funding to its utilities and is expecting HUD approval. Louisiana earmarked $1 billion of the CDBG money approved by Congress for infrastructure. Entergy NO, Entergy LA and CLECO are all vying for those funds along with other interests. To avoid rate increases the state PSC estimates the utilities will need $1.085 billion to repair the distribution network. Entergy New Orleans included another $320 million in their request to replace lost revenue.

Electric rates can help or hinder growth in an area. Rates higher than surrounding areas are a chilling effect on a local economy. The negative impact will reduce the chance for new investment in the area. Commercial and residential customers are especially hard hit. The utilities negotiate directly with large industrial customers who typically don't depend on the utility's distribution system.