Fresh Start. With Gulf Coast devastated, critics are calling for Entergy to consider redesigning its system.

The severity of the hurricane damage to Entergy Corp.’s Gulf Coast transmission system has left industry observers wondering how the New Orleans-based utility will rebuild the system. Company officials say the first order of business is to get the existing infrastructure back up and providing electricity to the 180,000 customers now without power. But industry sources say that the system Entergy had is not the one it should rebuild.

Hurricane Rita knocked out all Entergy transmission lines between Lafayette, La., and the Trinity River in East Texas–371 substations and 334 transmission lines, all told. At ENR press time on Oct. 4, the company still had 25 spans and 20 substations out of service from damage caused earlier by Katrina.

Industry observers say Entergy’s transmission system is archaic, poorly designed and far too constrained. It was designed and built to handle native load and critics say Entergy has not upgraded it to accommodate new, more efficient powerplants built by independent power producers. "We find Entergy’s transmission system to have artificial barriers to a vibrant wholesale market," says Marvin Carraway, secretary of the Mississippi Delta Energy Agency, a joint-action agency composed of two municipal utilities. The only upgrades since the 1940s were limited improvements following the ice storm of 1994, he says. "Trying to move economical power resources to customers in Mississippi is a tough proposition. You run into transmission constraints at every turn," Carraway says.

Upgrades Needed

A study commissioned by the Louisiana Public Service Commission outlined upgrades that the Entergy system needed in that state. "It completed the reliability upgrades, but it has been slow to move on the following economic upgrades," says an industry source. The upgrades included new lines and other infrastructure to add 700 MW of transmission capacity near New Orleans. Half the upgrades were completed when Hurricane Katrina hit, an Entergy spokesman says. In Texas, the company has added two 138-kV lines since 2004.

Hurricane Rita knocked out the only interconnection between Entergy’s eastern and western service territories, leaving Texas without enough power. It took a week to connect and energize an alternate 500-kV line that runs 250 miles from Arkansas to Texas.

Independent power producers have been fighting Entergy over transmission upgrades for years. Some have given up and sold their plants for a fraction of their construction costs. One source calls it "predatory behavior." Citing its "singular goal [of restoring power] as safely and as quickly as possible," Entergy declined to respond to the criticism.

"A redesign of the system takes years to implement. We can’t simply string up new line with additional capacity without considering how it would affect the system," says Mike Twomey, Entergy vice president of regulatory affairs in Louisiana.

Beyond that, the company must look at who will pay for the upgrades, says an analyst. Utilities are unlikely to make an investment unless they know how they will recover their costs, and state regulators must approve cost recovery from customers, he says.

In Louisiana, that pos-sibility already has raised eyebrows. Public Service Commissioner Foster Campbell says he will not vote for a rate increase to cover the storm recovery costs of a company that has $28 billion in assets and $10 billion in annual revenue. "I’m not about to be stampeded into feeling sorry for Entergy," he says.