New Orleans Battle Fought Anew: Fossil Fuel vs. Clean Power

Source: By Ivan Penn, New York Times • Posted: Monday, November 11, 2019

Entergy New Orleans has started building a new power plant next to a decommissioned plant in New Orleans East. Opponents are hoping to halt the project and pursue an alternative based on renewable energy.
William Widmer for The New York Times

NEW ORLEANS — Susan Guidry stepped up as a volunteer in New Orleans after Hurricane Katrina, helping clear debris from the streets as part of a group calling itself the Katrina Krewe. She saw firsthand the disaster’s toll, including the crippling of the power supply. When voters elected her to the City Council, she said, she hardly knew what a kilowatt was. But she came to the conclusion that the city had to change its approach to energy.

“As fragile as New Orleans is with climate change, hurricanes, sea-level rise, I just started researching,” Ms. Guidry said. “That was a lot of hard learning.”

What she found out led her into battle over a question central to the climate debate. Is it wise to keep building fossil-fuel plants — even those powered by natural gas rather than coal — that will be in operation for decades? Or are wind turbines and solar farms now reliable and economical enough to take their place?

Ms. Guidry began her homework after a subsidiary of Entergy — a major utility in a state heavily reliant on the oil and gas industry — said it needed to build a new natural-gas plant to replace an outdated unit in the New Orleans East neighborhood. When the issue arose in 2015, “that probably sounded fine to me,” said Ms. Guidry, whose district hugged the city’s western boundary. “There was solar power, there was wind, whatever. It all seemed a bit ahead in time for that to be sufficient for us.”

But in the course of briefings by city advisers, she began to raise questions. “About a year into it,” she said, “I was like, wait a minute, this is not a good idea.”

A retired trial lawyer who worked on civil litigation, Ms. Guidry began reading books, searching the internet, seeking out experts, finding out how other states and cities were addressing their needs. “Having a legal background,” she said, “you’re prone to search for the facts.”

The advisers had told her that the regional grid operator was requiring the gas plant. The grid operator told her otherwise. Entergy said that solar and wind power were inadequate because the sun does not always shine and the wind does not always blow, and that the associated cost of battery storage was too high. But she saw the economics changing.

Even with environmental concerns and mounting community opposition, Ms. Guidry was the sole dissenter when the council approved the plant last year. “It was very clear we were fighting a utility that wanted to live in the Dark Ages,” she said.

Now, with the project well underway, the opponents have a chance for a do-over. In July, a judge voided the council’s decision, ruling that proponents had used illegal means to win approval — specifically, that actors had been hired to pack a crucial City Council meeting and voice support.

The judge has ordered a new vote. The council is fighting the ruling. Ms. Guidry will not be part of any reconsideration, having left the council last year. But however the struggle plays out, it is being mirrored across the country.

Utility companies are investing tens of billions of dollars in natural-gas plants, insisting that renewables aren’t ready to serve as the primary source of electricity, while environmentalists and many states are pushing back against that argument.

In Virginia, Dominion Energy has proposed as many as 13 new natural-gas plants. In Florida, TECO Energy won approval to replace a coal-fired power plant with natural gas, even as a bigger utility in the state is building the world’s largest energy storage facility as part of a big investment in renewable sources. In California, the power-plant developer AES received approval in 2017 to build new gas-power plants in Long Beach and Huntington Beach, despite protests from residents and consumer advocates calling for carbon-free energy sources.

But as cities and states increasingly issue mandates for 100 percent carbon-free electricity by the middle of the century, California and Arizona are planning or have built renewable-energy projects for less than the cost of natural-gas plants like the one approved in New Orleans.

“Many utilities continue to sell the story that gas is the bridge that we need right now to the clean energy future,” said Bill Corcoran, a director of state strategies for the Sierra Club, which has surveyed gas-plant projects across the country. “I think this is about locking in as much as you can now.”

A Potemkin Protest

Entergy New Orleans, a subsidiary of a power company with 2.9 million customers across Louisiana, Mississippi, Arkansas and Texas, had built a reputation in town for its reluctance to embrace clean energy.

The utility said it needed the gas plant to replace an old, inefficient unit at its Michoud plant, just south of Interstate 10 and Lake Pontchartrain in largely African-American and Vietnamese-American neighborhoods. The utility argued that the replacement plant — known as a peaker, referring to times of high demand — would help ensure that the city had electricity during the Gulf Coast’s muggy summer days, or if access to power elsewhere in Louisiana or from neighboring states were lost during a disaster or some other event.

“They never really looked at any alternatives,” said Monique Harden, an assistant director of the Deep South Center for Environmental Justice, which has brought lawsuits to stop the project.

The natural-gas plant depended on City Council approval, and at a crucial public hearing in October 2017, dozens of supporters crowded the room bearing signs and dressed in T-shirts saying “Clean Energy. Good Jobs. Reliable Power.” Several testified in support of the plant, and the group filled so many hearing seats that opponents could not get in to speak against it.

The project was approved a few months later. But a complaint filed by Ms. Harden’s organization with federal tax authorities asserted that the nonprofit Entergy Charitable Foundation had “recruited recipients of its charitable donations to take public positions in support of the proposed gas plant as a quid pro quo exchange for the donations, as well as lobby the New Orleans City Council.”

Keith Keough, who had moved to New Orleans from Durham, N.C., was among those responding to an ad on Facebook that sought actors to participate in a commercial. The ad promised $40 for showing up, sitting in a room and wearing a T-shirt. Those willing to read a script during the meeting received as much as $200.

“I was pretty much homeless and needed the money,” said Mr. Keough, 41. “They gave us these orange shirts. When we went in the City Council building, they told us not to talk to any of the reporters.”

Afterward, he said, he received $40 plus some money for food when he and about 40 others gathered at the local Dave & Buster’s to receive their payments.

The exercise in astroturfing — a seemingly grass-roots effort with manufactured support — led a local judge to void the approval of the plant, calling use of the paid actors a violation of public-meetings laws.

“I still think that people’s rights were violated by not being able to participate in the proceeding,” said Logan Atkinson Burke, executive director of the Alliance for Affordable Energy, a nonprofit consumer-advocacy organization based in New Orleans. “I think the law is squarely on the people’s side.”

An Entergy official said in an interview that a subcontractor, without the company’s knowledge, had paid actors to appear in support of the power plant. The utility said it had fired the public-relations firm involved.

The council is seeking to have the judge’s decision overturned. An appellate decision in the council’s favor would move the $210 million construction project closer to completion by the January target date for operation. If the project is blocked, someone would have to cover the $96 million already spent on it.

Based on calculations in a resolution approved by the council on Thursday, if the project proceeds, the utility’s customers would pay $960 million over the expected 50-year life of the plant, yielding tens of millions of dollars of profits for the company. Entergy said in a statement that “when the estimated economic benefits of the plant are included within the correct calculations, the total net costs over the life of the unit are expected to be even less than the $210 million cost to construct the plant.”

On a reporter’s recent visit to City Hall, one councilwoman declined to discuss the gas plant, citing pending litigation, while aides to the six other council members were unresponsive to requests for comment.

Shifting Economics

Until the recession a decade ago, coal-fired power plants generated almost half of all electricity in the country. But power from natural-gas plants surged as fracking produced an abundant supply of the fuel.

At the end of 2018, about a third of the nation’s electricity was coming from natural gas and a little more than a quarter from coal. Renewable sources like wind, solar and hydroelectric plants produced 18 percent of the electricity and nuclear 19 percent, according to data from the federal Energy Information Administration.

Along the way, Entergy put forward its New Orleans proposal. But critics argue that the economics have changed since then, and that solar power, combined with energy storage, offers competitive prices. They say that is especially true of a plant like the New Orleans project, aimed at periods of peak demand, which might require it to operate only 20 percent of the year or less.

In a September report, the Rocky Mountain Institute, a nonprofit environmental research organization, said the utility industry was set to spend $70 billion on development of natural-gas power plants through the mid-2020s, while pouring money into electricity production from clean energy would save $29 billion and reduce carbon emissions by 100 million tons a year.

Neal Kirby, an Entergy spokesman, said as the need for the power plant became apparent, a gas facility was the best option. He said renewable-energy plants had become less expensive than some projects but added, “That wasn’t the case a few years ago.”

Since Entergy sought approval of the gas plant, at least two projects have gained acclaim for beating the cost of natural-gas plants.

The first came in 2017, when Tucson Electric Power announced an agreement to build a solar-and-storage facility capable of producing power for 4.5 cents a kilowatt-hour — more than a third less than a cost estimate offered by an Entergy representative during hearings on the New Orleans project. (Entergy said the testimony was not specifically for the New Orleans site but declined to give any other calculation, citing “business-sensitive” information.) The average electricity customer in the United States pays 13.34 cents a kilowatt-hour, according the federal Energy Information Administration.

In June, Nevada’s main utility, NV Energy, announced projects that will include solar and storage at less than 4 cents a kilowatt-hour, including what is projected to be the largest solar farm in the United States.

And in September, the Los Angeles Department of Water and Power approved a proposal by the developer 8minute Solar Energy to build a large-scale solar farm with energy storage on 2,650 acres in the Mojave Desert for less than 4 cents a kilowatt-hour and possibly less than 2 cents, according to Mayor Eric Garcetti.

The low-cost solar-and-storage projects sometimes rely on creative accounting, taking advantage of federal tax subsidies by applying a tax credit for solar to the entire project. That is allowed as long as the solar farm is the sole source for charging the battery.

But even without tax subsidies, the cost of solar farms and battery storage has fallen significantly, and opponents of the Entergy project argue that it is not cost-efficient. They say ever-cheaper supplies of renewable energy from the grid will address the intermittent needs that the peaker plant is meant to address.

The Energy Information Administration’s outlook for 2050, when many cities and states aim to get all of their electricity from carbon-free sources, shows renewables replacing coal’s potential to supply power but remaining second to natural-gas plants, which are expected to continue growing in number.

“What could change that? The continued decline in the cost of renewables,” said Mr. Corcoran of the Sierra Club. “The E.I.A. numbers have historically underestimated the growth of renewables.” And he said the price of gas was not likely to remain at the current low.

Michael Skelly, a senior adviser at Lazard, the financial advisory and asset management firm, also feels the outlook is in flux.

“All of a sudden there’s a debate,” said Mr. Skelly, whose firm conducts cost comparisons of power-plant sources. “You wouldn’t have had this debate five years ago. Do we do storage? Do we build natural-gas plants at all?”

‘There Wasn’t Any Input’

In New Orleans, many feel that debate has not been given a fair hearing.

The fight over the Entergy plant has stirred longstanding racial tensions, highlighted in the devastation of African-American communities from Hurricane Katrina in 2005. In gatherings at homes and local churches, residents describe feelings of victimization again, this time over a power plant they do not want in their neighborhood.

“There wasn’t any input from the community at all,” said Ed Blouin, head of a local neighborhood association.

African-Americans and Vietnamese-Americans who make their homes near the site of Entergy’s project have been urging city officials to stop the project and consider alternatives.

Many point to a pattern of imposing such projects on minority areas. While the nonwhite population of the state is about 41 percent, the census tracts around the Michoud plant are 83 percent nonwhite. And more than half of the power plants in Louisiana are in census tracts where a majority of residents are nonwhite.

Asked about public consultation on the project, Entergy cited a municipal approval process that entailed “approximately two years of numerous public hearings and community meetings, extensive discovery on every aspect of the proposal, thousands of pages of expert testimony and exhibits, and a weeklong evidentiary trial.”

“Since that time,” the company added, “the New Orleans City Council has held subsequent public meetings on the power station that provided the public with additional opportunities for their voices to be heard.”

But Sylvia Scineaux-Richard, president of the East New Orleans Neighborhood Advisory Commission, shook her head in disbelief that the utility continues to move forward with the power plant.

“It’s insulting,” said Ms. Scineaux-Richard, sitting in her home with neighbors. “You’ve not established that it’s even necessary. What is the benefit of that plant to the community?”

Ms. Guidry, the former City Council member, could say only that she tried. She thought the evidence of her own research would have been enough. Then, with the knowledge that the public-hearing process was corrupted with paid actors, she thought that surely that would have ended the project.

“It was really sad,” she said. “Why the City Council didn’t ultimately say, ‘This totally stinks,’ I don’t know.”