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Louisiana May Finally Get Aid to Rebuild Electric Grid

Last year’s federal infrastructure bill allotted $62 billion to bolster and update the nation’s electric grid, which could result in $9.2 million annually to Louisiana for the next five years if the state’s application is approved.

(TNS) — After a series of devastating hurricanes wreaked havoc on Louisiana's electric grid in 2020 and 2021, utilities and regulators tried in vain to get federal help to offset the costs of rebuilding and hardening the system.

State regulators unsuccessfully sought federal aid for publicly traded utilities like Entergy, which seldom get reimbursement for storm damage. Then, Entergy applied for FEMA funds for several infrastructure projects early this year, but was denied.

But in the coming months and years, the state and its for-profit utilities could finally tap into significant federal largesse. The state is hoping to reel in an unprecedented federal investment in the electric grid, through the bipartisan infrastructure bill passed by Congress and President Joe Biden last year.

The $1.2 trillion bill included $62 billion to bolster and update the nation's electric grid, in large part to facilitate a shift away from fossil fuels and toward renewables.

The bill will also send money to states and utilities vulnerable to climate change — including hurricane-prone Louisiana — to build stronger transmission poles, establish solar microgrids, bury power lines and more.

Experts say the amount of money likely to flow to Louisiana won't be enough to fund a much-needed overhaul of the state's aging electric grid, which was ravaged by hurricanes in recent years, leading to lengthy power outages. Even when removing hurricanes from the equation, Louisiana has among America's least reliable grids, according to federal data.

Still, regulators hope a chunk of federal funds will help kickstart an ongoing effort to reform how Louisiana hardens its grid to prepare for storms.

The state is expected to send in its application for the first batch of funds, which could result in $9.2 million annually to Louisiana for the next five years, in the coming week. The grant program gives each state a set amount of money; Louisiana would then dole out the money through its own grant program.

That represents a relatively small portion of the overall aid package. Utilities and other institutions will have to compete for bigger chunks of the available help against other states ravaged by wildfires and other natural disasters.

"This is going to be very competitive. Much of the West and all the challenges they've faced with wildfires — they have a strong case to make for funding," said Lindsay Cooper, a policy advisor for the Governor's Office of Coastal Activities. "The Gulf South has gotten a lot of attention for our grid ... I see we have a very strong case to make. What it will really depend on the applications we're able to put forward."

A coalition of state officials has spent months meeting with utility leaders, state and local regulators, Native American tribes, consumer advocates and others to develop the first application. Gov. John Bel Edwards has prodded his department heads to make sure they're getting in line for the massive influx of federal dollars from the infrastructure bill, as well as the Inflation Reduction Act passed this year.

Cooper said the state is prioritizing five uses for the money. Three center around microgrids, which use solar arrays and batteries to create power islands that operate even when the grid is offline. The state is focusing on microgrids for critical facilities like hospitals; community microgrids that connect neighborhoods to power; and "relief islands" like Walmarts or churches that can serve as community resource centers.

Another focus is on building infrastructure to allow electric vehicles to send power back to a building in a post-disaster situation, Cooper said. The state will also prioritize vegetation management, where utilities trim trees to make it harder for branches to knock down lines in a storm.

Public Service Commissioner Craig Greene, one of five members of the board regulating electric companies in Louisiana, sent a letter to Biden after 2021's Hurricane Ida asking for federal aid to offset storm costs. Typically, co-ops and city-owned electric systems can get federal money for hurricane recovery, but not for-profit companies like Entergy. Greene wrote in the letter that the request wasn't aimed at helping shareholders, but rather the customers who shoulder the burden of storm repairs.

But the request is still in limbo. Greene is spearheading several efforts at the PSC to harden the electric grid, but the dockets haven't yet produced a reform plan.

In addition to allowing investor-owned utilities to compete for money from the infrastructure bill, Congress also included language in a recent stopgap funding bill that allows for a similar competition for federal grant dollars typically reserved for nonprofits and government agencies. But that appropriation, of $600 million, is relatively small.

Entergy, which reported Friday it was raising its quarterly dividends for shareholders by 6 percent, separately sought federal help for a series of infrastructure projects earlier this year in conjunction with the Governor's Office of Homeland Security and Emergency Preparedness. The company said it applied for funding for $450 million in resilience projects, including flood protection in Calcasieu and St. Charles parishes, strengthening power lines serving New Orleans and bolstering substations and lines in lower Plaquemines Parish to withstand high winds. The feds denied the applications.

"Although we're disappointed that FEMA didn't pursue our grant applications, we're continuing to move forward with reliability and resilience projects across the state and will continue to do everything within our power to garner federal funding," Entergy spokesperson David Freese said in an email. "When and if federal funding is received, every dollar will go toward offsetting costs to customers dollar for dollar." He added that insurance for electric equipment has been effectively unavailable since 1992's Hurricane Andrew.

Freese said the company plans to submit proposals seeking money from the infrastructure bill when applications open in the coming months. The Department of Energy is currently asking for feedback on a $10.5 billion grid resilience program, and is expected to open it to applicants late this year or early next year.

Advocates are pushing for Louisiana to finally make big, proactive grid investments, after largely failing to do so in the years since Katrina. By comparison, Florida embarked on an ambitious grid-hardening effort after the 2004-2005 hurricane seasons, and that state's recovery from big storms now moves much quicker than in Louisiana. Florida also has lower electric bills on average than in Louisiana, which uses more power per household than anywhere in the nation.

(c)2022 The Advocate, Baton Rouge, La. Distributed by Tribune Content Agency, LLC.
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