CRISIS In New Orleans - Power Will Not Be Restored Until Summer 2006

No plan yet for return of power to New Orleans

By Kevin Krolicki Sat Nov 5, 4:12 PM ET

NEW ORLEANS (Reuters) - The bankrupt utility that supplies power and gas to New Orleans has not set a timetable for restoring service to the city's storm-ravaged eastern neighborhoods and the Lower Ninth Ward, the company's chief executive told an angry crowd of residents on Saturday.
[click here]

Entergy New Orleans, a subsidiary of Entergy Corp., needs a $450 million federal bailout to replace equipment destroyed by Hurricane Katrina and finance operations over the next year, Chief Executive Dan Packer said.

Packer, speaking to more than 400 evacuees spilling out of a jammed City Hall meeting room, said Entergy did not expect to be able to restart its two gas-fired power plants in New Orleans until summer 2006.

Entergy has restored electric service to only about 24 percent of its pre-storm levels in New Orleans and is having to repair and replace more than half of its substations after they were swamped with flood water, he said.

"At this moment, we have a very, very fragile electric system," Packer said, adding: "This storm is unlike anything we have ever seen, so the pace (of recovery) is not going to be normal. It is going to be slow."

The utility still has to figure out how to route power being supplied from the Louisiana grid through its crippled system and into the worst-hit regions of the city, he said.

As a result, Entergy will not have a schedule for restoring power to the still-dark neighborhoods of New Orleans until mid-November, almost 10 weeks after Hurricane Katrina unleashed floods that swamped about 80 percent of the city.


Displaced New Orleans residents, most of whom had traveled to the city for an update on the recovery process, reacted angrily to Packer's presentation.

One man called on the city to end Entergy's monopoly position in the market. Another accused the utility of diverting resources to the higher-rent Uptown district and away from the overwhelmingly black Lower Ninth Ward.

"That is not true," Packer shot back. "I'm not going to sit here and take that."

Cynthia Willard-Lewis, the New Orleans city councilwoman who represents the worst-hit district, told her frustrated constituents she shared their anger, but repeatedly pleaded for order in the packed meeting room.

"We are not going to accelerate progress with the outbursts and believe me, I understand the outbursts," she said.

Entergy New Orleans has received $200 million in financing from its parent company, Entergy Corp., which has relocated to Jackson, Mississippi, from its office in downtown New Orleans.

But Packer said that projected restoration costs of $325 million made it impossible for his subsidiary, which has assets of $480 million, to emerge from bankruptcy on its own, and needs a federal bailout.

Without that bailout, city officials have said they would have to approve a more than doubling in electricity rates and consider a city-takeover of the bankrupt utility.

A $17 billion hurricane rebuilding package submitted to Congress this week has no funding for Entergy, but Packer told Reuters that
President George W. Bush had provided a personal assurance that federal help would be coming.

New York utility Con Edison received similar assistance after the September 11, 2001, attacks on Manhattan.

"He said, 'We're going to take care of you guys,"' Packer said of a meeting with Bush. "I think for sure we have a shot in the spring."