by Thomas Mattera
The offspring of “a pile of sawdust and a handshake”, Entergy Inc. has come a long way from its humble origins in 1913, when the Arkansas Power Company was founded by Harvey Couch. For several decades the company grew steadily, largely by acquiring utilities in neighboring states. In 1949, the system adopted the name Middle South Utilities, keeping this moniker until 1989 when it finally took on its current name—a dictionary defying composite of the words enterprise, energy, and synergy.
Today, the Fortune 500 energy titan acts as a holding company for utilities that supply power to over 3 million Americans, primarily in Arkansas, Louisiana, Mississippi, and Texas. The company is also the nation’s second largest owner of nuclear power plants.
Based In New Orleans, Entergy Inc. generated just under $12.5 billion in revenue in 2014, with $960 million in profits.
Nuclear Safety Violations
At a time when other companies sought to get out of nuclear power because of safety concerns and rising operating costs, Entergy doubled down in an effort to extract more production out of the aging systems. Despite having been penalized over $525,000 for 14 violations in the previous three years, the Nuclear Regulatory Commission saw the company fit to add three reactors to its portfolio from 2000 to 2002: Vermont Yankee, Indian Point, and the James A. Fitzpatrick Center.
The Vermont Yankee power plant has had a host of scandals, including company officials providing incorrect information under oath, a 2010 radioactive tritium leak, and three unplanned safety stoppages inside a year.
Similarly, Entergy has seen its Indian Point reactors in Buchanan, NY, 38 miles north of New York City surrounded by controversy. In 2010, a transformer exploded and leaked oil into the Hudson River, an accident that drew a $1.2 million fine and forced Entergy to infamously shut down both Indian Point 2 and Vermont Yankee within the same hour. A supervisor at the plant also plead guilty to falsifying company records in an effort to cover up fuel violations
On March 31, 2013, Wade Walters, a 24-year-old employee at an Entergy nuclear power plant in Arkansas, was crushed to death by a 500 ton stator device on the job. The accident also injured several other workers, shut down the plant, and caused Walters’ family to file a wrongful death suit against Entergy.
Less than a week after the accident, an Entergy executive publicly championed the company’s industrial safety record at a community forum in South Haven, Michigan.
A twenty month period from 2012 to 2013 saw the company’s plants suffer a radioactive discharge in St. Francisville, Louisiana, a reactor fire at Walters’ Arkansas plant seven months after his death, and the spilling of radioactive water by another plant into Lake Michigan, the sixth time in a year that facility had to be shut down because of a dangerous leak.
Labor Relations and Executive Pay
A passionate supporter of right to work legislation in its Southern plants, Entergy has had a strained relationship with its unionized workforce in the North, primarily represented by the Utility Workers of America (UWUA).
In June 2012, Entergy locked out 250 employees at its Plymouth, Massachusetts nuclear power plant. Entergy had been unable to come to an agreement with the UWUA after the company demanded the abolition of plant seniority and cuts to the workers’ insurance, retirement, and medical plans. One of the replacement workers brought in to run the plant described Entergy’s competency in the situation as “pretty low.”
One year later, Entergy announced 30 layoffs at the Vermont Yankee plant. The job cuts were a part of a “human capital management reorganization” that involved over 800 total layoffs nationwide with the goal of saving Entergy nearly $250 million by 2016. Critics questioned the logic of decreasing oversight at aging reactors to cut costs while then-CEO Wayne Leonard enjoyed yearly earnings of $12.3 million, 356 times that of the average worker.
By the end of 2009, Leonard’s pension and company equity was already worth more than $92 million. The company’s directors have also given Leonard additional money to help with his income taxes, free use of the company private jet, and complimentary life insurance.
Climate Change and Renewable Energy
Despite the company’s admission that “climate change is happening, it is caused in large part by human activity”, Entergy continues to be one of the United States’ largest polluters while operating several coal-fired plants, arguably the largest contributor to global climate change.
In 2007, Entergy joined forces with Southern Company, the nation’s third largest emitter, to fight a federal Renewable Portfolio Standard, which would have mandated that all utilities get at least 15% of their power from renewable sources by 2020.
Seven years later, Entergy sought to enforce a de facto solar tax on Louisianans in 2014 by preventing those with solar power from receiving full value for the excess power they return to the grid.
In 2015, Entergy publicly condemned the EPA’s Clean Power Plan, which would require Mississippi to cut carbon dioxide emissions 38% by 2030.
Unlike the New Orleans City Council, which banned Entergy’s PAC from donating politically in 2007, the Louisiana Public Service Commission accepts the company’s money. This means Entergy is at once the entity that appears before the regulatory commission the most and its biggest political contributor. In a 2014 election, Eric Skrmetta, an incumbent commissioner and longtime recipient of Entergy money, narrowly prevailed over renewable energy proponent Forest Wright in a runoff.
Other Political Activities
Since 1989, Entergy has spent over $56 million on lobbying in addition to $10 million in direct financial campaign contributions at the federal level alone. Recipients of Entergy’s generosity include a long list of mostly Southern climate change skeptics.
Recently, the company has come under fire for spending big on lobbying efforts to keep Indian Point and Vermont Yankee open even as states and citizens fight to close them down.
In 2011, Entergy aggressively lobbied the NRC to help the company deny Vermont’s efforts to close the Vermont Yankee nuclear plant. Though the agency whited-out most of the documents that were disclosed regarding these ultimately unsuccessful efforts, it was proven that NRC chairman Gregory Jaczko was coached by Entergy lawyers on the matter. These revelations, made months after the NRC granted Vermont Yankee a 20-year license renewal despite its safety record, only served to confirm long held suspicions that the agency was “too cozy” with Entergy.
Two years later, Entergy’s political spending saw a noticeable uptick in the lead-up to the possible renewal of its pair of Indian Point reactors.
Entergy has also sought to gain influence through another creative spending campaign: bankrolling supposedly impartial entities. In 2008, the company announced the formation of a 12-person Independent Safety Panel at Indian Point, all of whom were being paid by Entergy for their participation. The media contact for the panel, the Potomac Communications Group, had been exposed three years earlier as the source of dozens of ghostwritten pro-nuclear op-eds that the Austin Chronicle called “a decades-long, centrally orchestrated plan to defraud the nation's newspaper readers.”
In 2007, fresh off a second missed deadline to fix its broken Indian Point nuclear emergency warning system, Entergy launched the radio program “Green on Energy.” Though the show had no announced affiliation, it was funded by the company and hosted by supposed “industry expert” Lawrence Gottlieb, Entergy’s longtime Director of Communications.
Five years later, the company looked to rebound from criticism it had drawn for operating Indian Point without state approval by launching SHARE NY, a non-profit coalition that put Entergy in the crosshairs after accusations of astroturfing.
As a monopoly regulated by the City Council, Entergy subsidiary Entergy New Orleans is allowed to charge a rate that guarantees it a profit in exchange for agreeing to provide reliable service and ethical operations.
In 1994, Entergy was required to pay New Orleans $6 million after an investigation by billing auditor Joe Seeber of TriStem, Inc. found the company had been engaging in overcharging for everything from the city’s Superdome to the company’s streetlights. Two years later, one of those street lights snapped at its rusty base, sending over six hundred pounds of steel crashing into fruit vendor Nathaniel Joseph. Permanently disabled, Joseph and his wife sued Entergy, ultimately winning $3.1 million in damages.
Entergy then sued Seeber, arguing that as the city energy auditor he should have been aware of the rust on the company’s pole. The lawsuit was eventually dismissed.
In 2000 another audit found more phantom charges. After a failed personal attempt by Mayor Marc Morial to seek restitution from the company, the city took Entergy to court, seeking $41 million in compensation (Times-Picayune, August 21, 2002).
While the litigation progressed, New Orleans elected Ray Nagin to succeed Morial. The former head of New Orleans’ cable monopoly Cox, the new mayor hired a senior Entergy lawyer to be city attorney (though he recused himself from the lawsuit), fired the city official responsible for hiring Seeber, and settled with Entergy for $6.7 million, a fraction of the money the company owed the cash-strapped city.
Like much of the Gulf Coast, Entergy New Orleans Inc. suffered heavy damage from Hurricane Katrina. Rather than pay for repairs out of the $923 million in profits its parent company made in 2005, the subsidiary instead raised rates on those trying to move home in the most ravaged areas and requested $592 million in federally allocated money for the bulk of the expenses.
In 2006, Entergy New Orleans was granted $200 million in taxpayer assistance. Over the following twelve months, Entergy, Inc.’s stock went up 68% while the company paid a real federal tax rate of -2.4%.
Katrina was neither the first nor the last time Entergy sought to have impoverished ratepayers foot the company’s bills. Ten years before the storm the company tried unsuccessfully to get Louisianans to help pay its nuclear debt. In fall 2006, it increased rates on its customers to help pay for the transfer of a share of the Grand Gulf nuclear plant from one of its subsidiaries to another.
More Ethics Issues
In 2001, fellow utility FPL Group, Inc. backed out of an agreed-upon merger with Entergy that would have created the largest power producer in the United States. In explaining his company’s last minute decision to nix the deal, FPL Chairman James Broadhead shared that his confidence in Entergy’s integrity was “destroyed” after the company provided what he said were misleading financial statements to FPL officials.
Three years later, a partnership of Entergy and Koch Industries, Inc. paid a $3 million fine to avoid prosecution after the CFTC accused the firm of exploiting the 2001 Enron-engineered California energy crisis by intentionally reporting fake natural gas trades.
Entergy has been cited by the Federal Energy Regulatory Commission on multiple occasions. These include a 2007 fine for breaking agency rules, a $400,000 capacity penalty in 2008, a 2012 citation for grid issues, and a $975,000 fine in 2013 for 27 separate violations of 15 different reliability standards.
In 2010, a federal judge found Entergy guilty of overcharging customers in Arkansas, Mississippi, Texas, and Louisiana (for a third time).
Other Information Sources
Violation Tracker summary page
Watchdog Groups and Campaigns
Alliance for a Green Economy
Citizens Awareness Network
New England Coalition for Sustainable Population
Nuclear Energy Information Service
Nuclear Information & Resource Center
Public Citizen Energy & Climate Program
The Utility Reform Network
Utility Workers of America
Key Books and Reports
Benchmarking Utility Clean Energy Deployment (Ceres, 2014)
The Fine Print by David Cay Johnston (Penguin Group, 2012)
Palisades’ and Entergy’s Chronic Security Failures by Kevin Kamps (Beyond Nuclear, 2014)
Wired for Greed by Joe Seeber (iUniverse, 2005)
Last updated February 23, 2015