Tuesday, May 16, 2006

Why does Corporate America hate New Orleans?

CorpWatch : Entergy Holds New Orleans for Ransom:
"Entergy Corp. was the last Fortune 500 Company still based in New Orleans before Hurricane Katrina struck. Now its headquarters has not only abandoned Louisiana for the debatably fairer climes of neighboring Mississippi, it is also threatening to leave the Big Easy quite literally in the dark; that is, unless the federal government grants it the $718 million it demands to maintain and rebuild its gas and electricity infrastructure damaged in the storm. Entergy’s wholly owned subsidiary, Entergy New Orleans LLC (E-NO) supplies all of the gas and electricity to the Crescent City. It isn’t that Entergy can’t afford to rebuild; it’s that it would rather keep its profits and let the federal government absorb the losses. E-NO took its first step weeks after the storm, filing for bankruptcy to protect its assets.

Entergy Corp. racked up $10 billion in revenues last year and has $29 billion in collective assets. On paper, there is no question Entergy could comfortably cover its losses and rebuild the infrastructure of its utility business in New Orleans. On May 2, Entergy announced that its first-quarter profit rose nearly 13 percent, as higher energy prices offset disrupted sales following last year's hurricanes. Entergy CEO J. Wayne Leonard received a $1.1 million bonus at the end of 2005, according to SEC records, which coincidentally works out to one dollar per Entergy customer in the Gulf Coast left without power in the weeks following the hurricane.

But the company’s executives feel that if anyone should pay the cost of its getting back into business, it should be ratepayers and taxpayers, and not its own shareholders. And indeed, the government may have little choice but to give in to what critics characterize as blackmail or extortion – or leave a major American metropolis powerless."


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