City Council Bows to Entergy with Renewable and Clean Portfolio Standard, Meanwhile Energy Bills Skyrocket

In March 2020, the New Orleans City Council voted unanimously to pass a “Renewable and Clean Portfolio Standard” (RCPS), which would mandate carbon emissions reductions from the city’s energy provider, Entergy New Orleans. The RCPS comes nearly three years after the Council published their Climate Action Plan, which envisions a 50% reduction in New Orleans’ greenhouse gas emissions by 2030. The Climate Action Plan highlighted a Renewable Portfolio Standard (RPS), legislation that requires increases in renewable energy production, as a crucial step toward meeting that goal. Despite these initial intentions, the Renewable and Clean Portfolio Standard (RCPS), which was eventually chosen, lacks renewable energy requirements, stripping it of a Renewable Portfolio Standard (RPS) title. The naming however, remained strikingly similar, with only the addition of “clean” to distinguish between the two. Clean refers to non-renewable energy resources that do not emit greenhouse gases–like nuclear, or fossil fuel sources where 100% of the greenhouse gases are captured, a process which has yet to succeed on a commercial scale. 

In 2019, the Council established a docket to begin proceedings for a Renewable Portfolio Standard (RPS), which “would require Entergy New Orleans (“ENO”) to use a certain amount of energy from renewable sources (e.g. solar, wind, biomass) in its resource portfolio.” 

After the RPS docket was opened, Energy Future New Orleans (EFNO)– a coalition of environmental and renewable energy organizations, and Entergy submitted plans to the Council, the R-RPS (Resilient and Renewable Portfolio Standard) and CES (Clean Energy Standard) respectively. While EFNO’s R-RPS centered equity for low-income communities and a staunch commitment to 100% renewable energy by 2040, Entergy’s CES recommended a

“voluntary, goals-based” plan emphasizing clean, but not necessarily renewable energy sources and electrification of entities like the Sewage and Water Board, which would likely increase Entergy’s profits. Electrification is when energy needs that were met by fossil fuel sources are transitioned to electric– think electric cars– though the source of that electricity can be from fossil fuels. 

Logan Burke from Alliance for Affordable Energy, one of the coalition members of Energy Future New Orleans (EFNO) said of her coalition’s Resilient and Renewable Portfolio Standard (R-RPS), “We recommended a structure that doesn’t profit them (Entergy), and instead puts power into the hands of the people.” Putting “power into the hands of the people” can be taken quite literally considering the potential for energy sovereignty in the form of rooftop solar microgrids that was involved in EFNO’s R-RPS. However, with the possibility of public reclamation of the grid, it’s understandable that a utility like Entergy, who profits off of community dependence on their energy systems, would have reservations. 

To inform their decision, the Council spared no expense hiring advisors, who they pay on average $7 million annually to regulate Entergy. These were the same advisors who in 2019 recommended that the Council approve the $210 million, utility ratepayer funded New Orleans Power Station, a gas plant in New Orleans East, even after Entergy used paid actors to give public comment. The Council will decide to either renew or pursue other advisory contracts this year. 

The advisors made three recommendation models for the Council, who chose the least ambitious plan, the Renewable and Clean Portfolio Standard (RCPS)–coined by the Advisors as “a more aggressive alternative to Entergy’s proposed CES.” 

The RCPS requires Entergy to reach net-zero emissions by 2040. However, net-zero is much further from zero than its name seems to imply. The “net” refers to Entergy offsetting any carbon emissions from their fossil fuel infrastructure through renewable or clean energy credits and multipliers. The RCPS allows credits and multipliers until 2050 when 100% clean energy is required. This means that Entergy can continue burning fossil fuels well past 2040 as long as they have enough credits and multipliers to cancel out those emissions. 

Credits represent symbolic ownership of energy, meaning that the credit won’t actually be used to power the New Orleans grid. This investment will instead go toward supporting renewable or clean energy projects nationwide. So, by purchasing, for example, a 1 MWh renewable or clean credit, Entergy can offset the emissions of 1MWh of their own fossil fuel generated energy. Of course, this purchase is then passed on to the ratepayer, who now pays for both the credit and the fossil fuel energy. This does not get rid of the fossil fuel emissions, nor does it build renewable or clean energy resources in New Orleans. 

Similarly, Entergy can offset emissions through multipliers. A wide range of projects can qualify for multipliers– from energy efficiency fixes and renewable resources to electric car charging stations and largely unproven technologies like Carbon Capture and Sequestration (CCUS), which would be used to capture emissions from existing fossil fuel infrastructure. Any project that qualifies for Tier 1 gets a multiplier of 1.5, meaning that if the project has the “clean energy” equivalent of 5 MWh (megawatt hours), it’s counted for 7.5 MWh. This multiplier is used to incentivize Entergy to invest in emissions reducing projects. However, Tier 1, which is the highest multiplier, only recognizes projects that reduce carbon emissions from “existing resources”. Renewable energy does not qualify for Tier 1 incentives, but Carbon Capture and Sequestration (CCUS) does, thus incentivizing unproven technology for fossil fuel infrastructure over renewable energy. At the end of 2020, renewables made up only 3.9% of Entergy’s portfolio. 

The Council cited concerns over utility ratepayer price increases as a key reason for choosing the Renewable and Clean Portfolio Standard (RCPS) over more ambitious plans like the Resilient and Renewable Portfolio Standard (R-RPS). In response, Energy Future New Orleans (EFNO) released a report authored by the Applied Economics Clinic, which argued that load flexibility would be more affordable than peaker plants, like the new gas plant, that are currently used to meet peak demand. Peaker plants might operate for only a few hours out of the year, even though they account for a high rate of consumer cost. In contrast, load flexibility balances out peak energy demand through a range of tactics from offering discounts to consumers who don’t use energy during peak demand, to batteries, to energy efficiency fixes. 

Coincidentally, energy bills skyrocketed last month, in part due to outages at out-of-state power plants like Grand Gulf nuclear and Union Power gas, a 12% increase in natural gas prices, and charges for the new gas plant. Working or not, customers pay for these plants as well as the replacement energy needed when there are outages. The recurrence of outages– some of which have been ongoing since 2016, the volatility of market price shifts for fossil fuels, and the inconsistent usage of expensive peaker plants, highlight the inadequacies of our current energy systems, and the need for a reimagining of how we power New Orleans. Until then, ratepayers will continue to pay the price for Entergy’s shortfalls. 

The Council will likely finalize the RCPS resolution this month.

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