A private equity firm that has given more than $200,000 in campaign contributions to Louisiana Public Service Commission members won unanimous approval from the commission Wednesday to purchase Entergy Louisiana’s gas distribution system.
There was little discussion and no opposition to the system’s sale to Bernhard Capital Partners. Bernhard has agreed to pay $484 million for Entergy Louisiana and Entergy New Orleans’ gas systems. The latter is subject to approval by the New Orleans City Council.
Floodlight’s analysis of campaign contributions found that Bernhard Capital Partners and its executives donated to all the five Louisiana Public Service commissioners, and one former commissioner, over the past seven years. Most of that money, $149,000 or 71%, went to Commissioner Craig Greene, whose district includes Baton Rouge, where Entergy Louisiana’s gas customers live.
Greene, who made the motion to approve the deal at the meeting, told Floodlight before the vote that he thinks Bernhard donated to his campaign because they believed in him.
“I have a vision for the state, I’m considered a swing member, and I think they like that I’m agnostic,” on technologies, he told Floodlight before the vote. “Their money doesn’t mean anything more than if you gave me $25 right now.”
Other commissioners also said campaign contributions don’t affect their votes.
“Hell no, I do what I want,” said Commissioner Foster Campbell, who received $7,500 from Bernhard founders Jeff Jenkins and Jim Bernhard and Bernhard’s wife in 2019. Bernhard did not return requests for comment on this story.
Bernhard filed its request with the commission to purchase Entergy’s gas utility late last year, but as early as 2018, the company telescoped its interest in purchasing utilities.
Private equity firms often buy companies with the goal of changing them to become more profitable. Such a move can make the company more successful — or weigh it down with massive debt.
“We have general concerns when a private equity firm acquires a franchised utility with captive customers, in part because the financial structure of a private equity firm is far more opaque when compared to a publicly-traded companies,” said Tyson Slocum, director of the energy program at Public Citizen, a nonprofit consumer advocacy organization.
In addition to Entergy’s gas systems in Louisiana, Bernhard has announced deals to purchase CenterPoint’s gas systems in Louisiana and Mississippi and another system owned by Emera in New Mexico. With those acquisitions, Bernhard’s newly formed gas utility, Delta State Utilities, would have about 1.1 million customers.
Currently it has zero.
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Greene plans to return donations
Jean-Paul Coussan announced he was running to take Greene’s place in June. Since then he has reported receiving $36,000 from Bernhard and executives, including Bernhard and Jenkins, their wives and at least two subsidiaries, Allied Power Holdings and National Water Infrastructure.
Before he announced he would not continue his re-election bid in June, Greene reported $36,500 in contributions from Bernhard this year. He said Wednesday he intends to return those donations.
The other two candidates running for the seat did not report any contributions from Bernhard. Greene’s successor might be on the commission when CenterPoint’s acquisition comes before the PSC. In Louisiana, CenterPoint has 247,000 customers.
Contributing to commission members’ campaigns is legal. Donors, including the utilities that the PSC regulates, can give up to $5,000 a year. Bernhard, as a company, often donated up to that limit, Floodlight found, as did several of its executives. Entergy, CenterPoint, Cleco and other utilities in the state routinely contribute to PSC commissioners and candidates.
Energy experts believe that campaign donations create a conflict for regulators charged with holding the companies accountable.
“(When) the people regulating the utility are essentially propped up by the utility itself, it’s problematic. I think everybody can recognize that as a conflict of interest,” Ari Peskoe, director of the Electricity Law Initiative at the Harvard Law School, told Floodlight.
The Alliance for Affordable Energy is concerned about what the sale of the gas systems means for the future of a state already burdened by climate change. It intervened in the New Orleans case but lacked the resources to do so in the Entergy Louisiana case, executive director Logan Burke said.
Bernhard requested and was granted an expedited timeline. That gave interested parties just 15 days after Dec. 22, 2023, to request to join the case.
“Our concern … is that DSU (Delta States Utilities) has made it clear they intend to continue to invest in fossil infrastructure,” Burke said, noting that the consensus among climate experts is “we have to stop producing and using fossil fuels as soon as possible.”
Added Burke: “We recognize that fossil gas cannot be turned off tomorrow. But if we don’t start planning to wind down investment today, ratepayers will be stuck with a big bill.”
Will cost of gas rise?
The Alliance has filed testimony opposing the sale with the New Orleans City Council, which regulates Entergy New Orleans, on behalf of the utility’s 109,000 customers.
On Wednesday, the PSC did not debate many of the issues raised by the Alliance in New Orleans, such as the “potential of significantly and unreasonably inflating costs” for customers, less efficiency because two utilities will now operate where there was just one, and additional costs to regulate those two utilities.
In its report recommending approval, the PSC staff cited Bernhard’s promise to not raise rates for 15 months after the acquisition is completed, which is expected to occur by mid-2025.
Commissioner Davante Lewis, whose district covers pockets of Entergy Louisiana’s gas system, has received $10,500 from Bernhard. Lewis said when he got the contributions last year, he assumed it was because Bernhard, a former chairman of the Louisiana Democratic Party, was supporting a fellow Democrat. The company had not yet announced the deal to purchase Entergy Louisiana’s gas system.
Lewis voted in favor of the acquisition, but did ask Bernhard representatives to reiterate the company’s commitment to retain Entergy’s gas employees — and not to raise rates.
Lewis said he voted for the deal because no one raised the issues like those being raised in New Orleans, such as continued investment in a fossil fuel system, on the record. Voting against it based on concerns that hadn’t been raised at the PSC could be considered “arbitrary and capricious” and subject to litigation, Lewis said.
“I may have a goal of a clean future, but at this point, I cannot tell someone they cannot have a gas stove,” he added.
The Entergy Louisiana sale approved Wednesday must still be approved by the Baton Rouge Metropolitan Council, which will occur after New Orleans votes on the sale of the Entergy New Orleans system.
Bernhard representative Ryan King told the commission the New Orleans City Council also would likely take up the sale before the end of this year.
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Floodlight is a nonprofit newsroom that investigates the powerful interests stalling climate action.