The increase, which officials warn may not hold up to a legal challenge, would still be subject to approval by Entergy officials.
Entergy New Orleans customers could see their electricity costs rise by $3 a month under Mayor Mitch Landrieu's 2013 budget plan for fixing and updating the city's more than 50,000 streetlights, mayoral aides told a council committee Tuesday. Landrieu wants to increase the franchise fee that Entergy pays the city, a cost Entergy passes on to its customers, at an estimated cost of between $10 million and $11 million in 2013. That means the fee would go up 5 percent to 7 percent on east bank power bills, and 2 percent to 4 percent in Algiers, which is served by Entergy Louisiana.
Entergy officials did not address the council's Public Works Committee on Tuesday, but Gary Huntley, the utility's vice president for regulatory and government affairs, told council members in a Dec. 12 letter that the proposed increase would likely make it the highest franchise fee paid by any utility in Louisiana. Huntley wrote that the utility "does not believe that its use of its franchise rates has suddenly changed in a way to justify higher compensation to the city, especially when such higher compensation would only result in increased electric and gas bills to New Orleans customers."
The increase, which Huntley warned may not hold up to a legal challenge, would still be subject to approval by Entergy officials. It would be the first fee increase since 1997.
Cedric Grant, deputy mayor of facilities, infrastructure and community development, told committee members that the Landrieu administration inherited 16,000 streetlight outages in May 2010.
Major repairs are needed across the system, and city officials want to convert traditional streetlights to LED lights, which officials say could last twice as long and use up to 50 percent less energy. But doing so would be expensive, said Mark Jernigan, director of the city's Public Works Department: Swapping a conventional streetlight in a residential neighborhood costs about $450, while doing so on a major road is about $750.
Several council members, including Cynthia Hedge-Morrell, who also chairs the council's Utility Committee, expressed skepticism about the mayor's proposal. "My concern is that we have a broke system," Hedge-Morrell said, "and that it does not make sense to me to pour this kind of money down a broke system if you don't have a plan for replacing that system."
As far as raising the franchise fee to pay for streetlight repairs, she said: "I'm not really sure that that's the best thing to do," and suggested that Landrieu officials consider other options.
After a pair of presentations that stretched nearly two hours, committee members adjourned without taking action on the proposal, requesting that Landrieu officials return to them later with more information, including studies from other cities that have overhauled their streetlight systems, and whether the added fee would stand up to potential legal challenges.