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Repowering New Orleans

Dan Grech Aug 28, 2006

SCOTT JAGOW: One of the companies hit hardest by Katrina was the electricity giant Entergy. The storm wiped out a huge section of Entergy’s power grid. When I say huge, I mean about the size of Great Britain. Marketplace has been following Entergy the past year as it’s tried to recover. Here’s the latest from reporter Dan Grech.

DAN GRECH: The eye of Hurricane Katrina was still miles away when the first alarm went off in Entergy’s Louisiana control room. At the farthest corner of a wall-sized map of transmission lines, a single light started blinking.

Technician Mike Labiche:

MIKE LABICHE:“As the winds are approaching, we start losing things down toward the mouth of the river. As the storm got closer and closer, more and more lines went green.”

Green, in electrical terms, is really bad news during a storm. It means electricity has stopped flowing.Labiche and his crew tried rerouting power. But then another alarm would sound and another substation would turn from red to green.

LABICHE:“You get to one point where you accept that the power is going out and your wait for storm to pass. By the time the storm had completely past, the closest hot line we had was over here at Waterford in Little Gypsy.”

When the alarms finally stopped, Entergy raced to get the power back on in Texas, Mississippi and Louisiana. Within days, lines in lesser hit areas began humming again. Now only a tiny section of the lower Ninth Ward is without service. And Entergy’s stock price has recovered to pre-Katrina levels.

But the company has a sick child — its New Orleans operation. It accounts for only 2 percent of Entergy’s revenue, but it’s lost half its customer base and sustained a billion dollars in damage. The company even won an industry award for its restoration effort.

The unit declared declared bankruptcy a month after Katrina. The company could have tried to walk away. That put Entergy CEO Wayne Leonard in a quandry.

WAYNE LEONARD:“Is this a Chapter 11 company or Chapter 7 company? Is this just something that we liquidate and move on? Or what’s our fiduciary obligations here? What are we supposed to do?”

The smart business move might have been to sell the New Orleans unit to the city. But Leonard says the moral questions weighed more heavily on his mind.

LEONARD:“How do you maintain a corporation that trusts management, that believes in what they do, that has an essential service like ours, if you would make a decision to cut and run at the lowest point the city’s ever been in? How do you do that? How would I serve as the leader of the company if people knew I made that decision?”

And so Entergy took on one of the most extensive restoration projects of its kind ever undertaken in the US.

RANDY HELMICK:“I’m Randy Helmick, Entergy’s storm boss.”

Helmick’s job is to rebuild the New Orleans unit from the ground up.

HELMICK:“We have continued to work at incrementally improving the reliability. Once the lights are back on, we want them to stay on.”

On a recent afternoon, Helmick puts on a hard hat and safety goggles to visit the Avenue C substation in Lakeview. When the levee broke at the 17th Street canal, the substation was just three blocks away. The fenced enclosure filled with brackish water. There were loud bangs as the substation’s breakers tripped. And some sizzling as the DC control circuits shorted. Then the substation went silent and there is only the sound of rushing water.

Substation manager Ray Yates says it would have taken a year and several million dollars to replace the substation’s two huge transformers. They didn’t have that kind of time. So like weekend mechanics, Yates and his crew began tinkering with the tap changer, a finely calibrated machine that regulates the transformer.

RAY YATES:“The purpose of this device is to simply turn that shaft. And to turn it the exact number of turns, and stop it exactly when it has to be stopped. We took all the pieces out and we laid them on the floor of the warehouse, and we found parts to replace each and every piece, and then we built a new wiring diagram and rewired it all back together.”

The repair cost just $40,000 bucks. This, of course, is only a small piece of a billion-dollar reconstruction effort. Even at the Avenue C substation, only one transformer is back in operation.

Yates says it’s not a problem with money or time or expertise. It’s a problem with demand.

The power’s back in Lakeview, he says, but not the people.

From New Orleans, I’m Dan Grech for Marketplace.

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