Entergy New Orleans to Get Funds, Insurance Payment

    Entergy New Orleans, the bankrupt electricity and natural gas supplier for Hurricane Katrina-ravaged New Orleans, signed two agreements Thursday that will fulfill major conditions of its reorganization plan, the company said. Under a contract with the Louisiana Office of Community Development, ENO will quickly receive $171.7 million of the $200 million in federal community development block grant funds approved for the company by the Louisiana Recovery District. Also, ENO will receive an insurance settlement of $53.7 million from AIG Inc., the company said. Entergy New Orleans, a unit of Entergy Corp., has proposed a reorganization plan calling for all creditors to be paid in full and maintaining its current work force of 400 employees. But the plan would not go into effect without the $200 million grant and at least $50 million in insurance payments. ENO filed for bankruptcy protection in October 2005 after suffering extensive damage and losing most of its customer base in New Orleans. On Thursday, ENO said storm recovery costs currently total $213 million. ``We are hopeful that the next steps in the process, including an approval by the bankruptcy judge, will go smoothly so that our company can exit bankruptcy a financially viable company,'' said Rod West, ENO's president and chief executive officer. ENO creditors are voting on the reorganization plan, with a deadline of April 19 looming. At the same time, the company's unsecured creditors have put forth their own plan, largely identical to ENO's, but requiring that the company borrow the $250 million if the CDBG money and insurance payment are not obtained. ENO has said borrowing the money would result in about $30 million in interest. The New Orleans City Council, which regulates ENO, reviewed and certified the costs covered by the $171.1 million. ENO will continue to submit costs until the full $200 million is met. The company is far from finished spending on Katrina damage. ENO said it expects to spend $465 million to rebuild its natural gas system to pre-storm standards. The federal funds were sought by ENO to cushion rate increases to repair storm damage. Under a plan approved by the City Council, ENO will be allowed to raise electric and gas rates by about 7.5 percent through April 2009. The plan includes a special assessment to build up a $75 million reserve fund against future storms. Prior to Katrina, ENO had 190,000 power customers and 147,000 natural gas customers in Orleans Parish. Currently, the company says it has about 95,000 electricity customers and 65,000 gas customers. The bankruptcy filing did not cover Entergy Corp. In trading on the New York Stock Exchange, shares of the parent fell 44 cents to close at $108.65. The shares have traded in a 52-week range of $66.78 to $110.81.