Shocked, Shocked!! Sale Of Entergy Gas Assets To Private Equity Will Mean Higher Prices, More GHG Output
December 19 2024
Earlier today, New Orleans City Council unanimously approved the sale of the city’s natural gas distribution system to a private equity firm. Delta State Utilities (DSU), a new subsidiary of Bernhard Capital Partners, will pay $484 million to take over gas distribution systems of Entergy New Orleans and Entergy Louisiana. Bernhard also plans to purchase systems in other states: CenterPoint Energy in Mississippi, and Emera in New Mexico.
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The sale is a blow to New Orleans ratepayers, as bills are expected to rise on average $31 next year as a result. But it also points to a broader concern: As private equity firms snap up utilities and oil and gas assets, they are largely shielded from local regulation and public pressure to decarbonize. In 2021, New Orleans passed the Gulf South’s first clean energy standard, legally mandating the complete elimination of fossil fuel use for electricity by 2050. But the mandate applies only to the city-regulated electric utility, Entergy New Orleans, and will not apply to the gas utility being purchased by DSU. Sweeney said the sale creates a massive loophole circumventing the city’s renewable portfolio standard, to Bernhard’s benefit.
The City’s own Office of Resilience and Sustainability (ORS) also opposed the sale. “This deal will place an undue burden on low- to middle-income households, particularly those who are unable to afford the costs of electrifying their homes,” said Greg Nichols, deputy chief resilience officer, in a prepared statement. Nichols added in an email to DeSmog that the City Council could still take actions to address emissions from the gas utility, and that his office is “concerned about DSU’s role in the potential expansion of fossil gas use and infrastructure, which run counter to the City’s long-term climate action goals.”
Private equity firms bought at least $25b in fossil fuel assets from the public markets through 2021 and 2022. An October report that examined the energy portfolios of 21 leading private equity firms found that 67 percent of their energy portfolios are invested in fossil fuels, and the carbon footprint of the firms’ investments exceeds the emissions of all global flights taken in 2019. Private equity firms don’t have the same federal financial reporting requirements that publicly traded companies have, and don’t have state regulators motivated to keep rates low. This “lack of public accountability creates the very real possibility that efforts to curb regional carbon dioxide emissions will become more difficult in the years ahead,” warned Dennis Wamsted, an analyst with IEEFA, in a report last year.
Nichole Heil, senior research and campaign coordinator at the Private Equity Stakeholder Project, says private equity will typically do whatever they can to increase short-term revenue while minimizing costs, and “for things like utilities and where we get our energy from, this has led to spills and accidents.” Shortcuts are especially concerning when it comes to methane gas, which is 28 times more heat-trapping than CO2. Recent studies suggest methane leaks are far more common than previously estimated.
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https://www.desmog.com/2024/12/19/entergy-city-council-new-orleans-residents-face-surge-in-energy-costs-from-sale-of-gas-utility/
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