Back to the future

By Marie Shields, Editor

Entergy’s Gary Taylor talks to Marie Shields about environmental concerns, rebuilding the country’s utility infrastructure, and the return of nuclear power.

Almost everywhere you look these days, utilities are trumpeting their green credentials – bragging about how much they care for the environment or how much they do for the people who live in their areas. But Entergy was way ahead of the game, as Gary Taylor, the company’s Group President of Utility Operations, explains, “One of the things I’m most proud of in this company, especially under Wayne Leonard, the chairman and CEO, is the passion with which he has driven these issues before they became popular. Now everybody has taken a position of how green can you be, but if you go back to 2001, Entergy made a commitment to reduce our greenhouse gases to 2000 levels, and hold them there until 2005.

“In 2000, we were generating about 53.2 million tons and in 2005 that had fallen to 35 million. We renewed that commitment for 2006 to 2010 to keep that 20 percent below the 2000 level, even though the system is growing. We’ve been working through a portfolio transformation with our nuclear plants and adding more efficient natural gas-fired plants, along with partnerships and funding projects like reforestation and carbon sequestration . This has allowed us to take a leadership role.”

Taylor has firsthand experience of the aftermath of the worst that nature can dish out. He now lives in New Orleans, having moved there post-Katrina. He says the city has still not recovered from the impact of the hurricane three years ago. “Clearly, we’re still recovering from Katrina and Rita. We were devastated by both. We’ve spent the past three years focusing on recovery.”

The city narrowly dodged a similar fate when Hurricane Gustav made landfall 70 miles away on Sept. 1 of this year. While it didn’t directly hit New Orleans, the storm caused significant damage to Entergy’s system, primarily in Louisiana. Only 12 days later, Hurricane Ike struck Entergy’s service territory, leaving more than 99 percent of Entergy Texas, Inc.’s 395,000 customers without power. Ike also caused significant flooding along the areas of the Texas and Louisiana coastal parishes served by Entergy’s Louisiana utilities. Overall, the two storms knocked out power to a total of 1.7 million customers.

Entergy’s utilities set a record for the fastest and safest storm restoration effort in the company’s 95-year history after Gustav made landfall. Crews restored power to 85 percent of customers within eight days. By comparison, it took 13 days to reach that level for Hurricane Rita and 16 days following Hurricane Katrina in 2005, excluding extended restoration customers. Restoration after Ike also surpassed the levels achieved following Rita. Crews had restored power to 86 percent of customers within nine days after Ike. Nine days after Rita, the restoration level was 61 percent.

“I’ve seen a city and state that have clearly learned the lessons from the past. And I continue to see the challenges global warming and coastal erosion create that I believe have changed the rules of the game,” Taylor says. “I’ve had the opportunity to witness firsthand the devastation in Louisiana and along the Texas coast. What comes to mind isn’t a word but a feeling of sadness, and in the same instant I am so proud of the people who work for Entergy and those who came to our aid. They put helping others above their own concerns.”

Coping with change
As Taylor points out, the most significant challenge that faces us today, for this country and for the world, is how to deal with climate change. Entergy has taken a very strong position, a position that, according to Taylor, is not always popular.

“We have taken a very aggressive approach – we believe the time to act is now. And we recognize that it’s not going to be cheap. This starts with a price on CO 2 emissions here in the US of around $15, and will escalate to over $50 if we really want to encourage the generation of new technologies. Then there’s coal, which is going to be around for a while, so how do we deal with it in a responsible manner?

“We believe if a cap-and-trade system is put in place it should prohibit credits being given away to the companies that create the pollution. You just don’t encourage change that way. From a corporate standpoint, we believe legislation should provide the appropriate price signals to encourage new technologies we need to reduce CO 2 emissions, and to ensure that financial protection is provided to the public to help pay the increased costs they will face under this new structure.

“Looking at it solely from the standpoint of a regulated utility with a significant amount of clean generation in its portfolio, any benefits under greenhouse gas regulation will go to our customers. It’s simply not right for companies who failed to invest in clean generation to try to shift the costs they avoided all of these years onto others.”

Since May of 2001, Entergy has completed 61 internal CO 2 reduction projects, investing about $14.8 million. It has reduced 6.3 million tons of CO 2 emissions and about 15 external offset projects, in which it has invested about $5.5 million and has reduced about 3.6 million tons of CO 2 emissions.

Nuclear rising
One interesting offshoot of this renewed interest in the environment is the return of nuclear power. There was a time, in the 1980s and 1990s, when many people thought that nuclear power was dead. But now, with energy consumption predicted to rise by 32 percent over the next two decades, and the search for sources of renewable energy reaching fever pitch, nuclear power is on the rise once again.

Since Taylor has spent most of his career working in nuclear, he is well prepared to meet this new challenge. “From 1976 until April of last year, when I took up my current position, I worked in a business that we all thought was going away. Our company is the second largest owner and operator of nuclear power plants in the United States. We have made a large investment, through acquiring nuclear power plants when other people thought they were going away and through working to extend the licenses of all those plants.

“We’ve invested in additional cooling towers and uprates, increasing the production of those plants, and we’re going to continue to do that with some new projects. For example, we have filed Combined Construction and Operating License applications – although we have not made a decision to build the units – at Grand Gulf, which is outside of Vicksburg, Mississippi, and at our River Bend nuclear plant site in St. Francisville, Louisiana. In addition to that, we’ve taken a leadership position as to how does nuclear emerge in a way that turns out different today than it did when I started in this business in the 1970s.

“To that end, we’ve been involved with a group called NuStart, of which we were one of the founders. It represents 80 percent of the nuclear owners in the country. The express purpose of this group was to come up with a standardized design and standardized licensing so that new technologies could be rolled out efficiently and economically in the United States. With NuStart, we have taken the lead with our economic simplified boiling water reactor – ESBWR – at our Grand Gulf site. We’re also doing that same licensing and submittal at our River Bend site.”

Taylor acknowledges the irony that nuclear power, once the scourge of environmental action groups worldwide, is now being touted as a ‘green’ source of energy. He is quick to point out though, that these advantages are real: “My brother always used to say, ‘You do realize the crusade has ended.’ I’ve been an advocate for nuclear for so many years. Even through its complete life cycle, nuclear is the only true CO 2-free emitting technology; but probably more important, it’s the only one that can be deployed in any significant scale, in any kind of reasonable time.

“The second part of it is a hedge against other fossil fuels. It’s not the sole solution by any stretch of the imagination, but it can free up valuable natural resources, specifically natural gas, to be used for other things. A good use of natural gas would be in the automotive industry, as a cleaner fuel to displace oil. And it would obviously meet a huge need in the petrochemical industry. People worry about oil, but if you look at the estimates, we only have an 80-year supply of natural gas at the world’s current usage rate. Natural gas is not a solution for our grandchildren. Maybe for our children, but not our grandchildren. Nuclear can help solve some of those issues in a way that’s responsible.”

Making it safe
With nuclear power’s original incarnation, the main issue – the one the media seized on, the one that was highlighted in films, and then came to terrifying reality with Three Mile Island and Chernobyl – was safety. According to Taylor, safety has vastly improved since those days, and the American people are ready to give nuclear a second chance: “The nuclear power industry is a business that for years has suffered from poor public perception, and it’s some of our own doing, frankly. But we’ve worked hard to earn back that trust. We need to deal with closing the fuel cycle – that’s always been one of the challenges. It’s not a technological challenge, but it is a true challenge.

“We have to look at reprocessing fuel. Reprocessing was something that was viable even when I was going to graduate school in 1975-76. I’ve been to the plants that operate that way in France. They do it in an environmentally responsible manner and they show that it can be done well.”

Taylor believes that the initial poor public perception of nuclear power came about for a number of reasons, the first being that it was over-promised, and it under-performed. Many construction projects experienced huge overruns, companies went bankrupt, projects were cancelled. “It got to be seen as an uneconomical supply of energy. Then Three Mile Island and Chernobyl happened, and people began to worry – is this a technology that companies can responsibly operate? Do they have the skills? Do they have the ability? Is it safe?

“I’ve been fortunate to meet a couple of people who were very anti-nuclear. Patrick Moore, who was one of the co-founders of Greenpeace, and Stewart Brand, who wrote The Whole Earth Catalog. Stewart Brand said an interesting thing a few years back: ‘We, the environmental group, owe you an apology.’ This was to a nuclear group. ‘We lumped you in with nuclear weapons.’ That was part of the problem, and he was pleased that we hung in there.

“This world has so many issues. We can’t throw potential solutions away because there are some concerns. We need to figure out how to address those concerns and do it well. Entergy has truly been a leader in how to do that.”

Social responsibility
Part of the company’s vision centers on how to conduct business in a manner that is socially as well as environmentally responsible. “It’s about how do we care about the environment, how do we care about our customers with these challenges, and how do we do that in a responsible but actionable manner?” Taylor says. “It’s more than just handing out posters and charts – it’s about true actions. We’re focused on economic sustainability and making sure that we’re pushing cleaner generation through advocacy of nuclear and natural gas and through improving transmission, and encouraging our employees to live safer, healthier, more well-balanced environmentally responsible lives.

“You have to take a step back and ask where you see yourself at the end of the day. How do we at Entergy want to be viewed? What’s the legacy we want to leave for those who run this company after us, for those who live in the communities we serve, and for our children and grandchildren. Since I have a couple of grandchildren, I worry about that too.”

More than 25 percent of Entergy’s customers need government assistance to help make ends meet, and the company feels it has a responsibility to improve the quality of life of those customers who are struggling to make it through the day. It has been involved in social welfare programs for the past 25 years. Its efforts stretch from providing customers help with paying utility bills to funding various community-based initiatives it determines are effective sustainable efforts that strengthen the social fabric of its communities. One of its recent steps was the rebranding of Entergy’s customer assistance programs as The Power to Care, which is focused on helping low-income, elderly and disabled customers pay energy bills. The intent of the rebranding was to raise awareness about the programs and increase donations.

Entergy matches dollar-for-dollar its employees’ contributions to The Power to Care, which last year added up to $2.4 million, up 13 percent on the previous year. Taylor puts this down partly to the enthusiasm of the company’s CEO. “I can’t say enough about Wayne Leonard’s efforts to get this company to recognize the challenges around low-income customers. Not only that, but many of our employees, retirees and customers now realize that there is a responsibility to help others. That’s probably been reinforced because of what we’ve gone through here in New Orleans in the past three years.”

Getting smart
Another big topic that concerns the future of the utility sector is the implementation of the so-called smart grid. Deploying the smart grid power grid became US policy with the passage of the Energy Independence and Security Act of 2007. What are the potential benefits for customers and providers, and what are the challenges?

“The biggest challenge is not necessarily in the technology of deployment,” says Taylor. “The biggest challenge is that our systems are not designed to handle information that comes in every 15 minutes or every five minutes. With that amount of information, how do you manage the system in a way that’s going to have to be fundamentally different? You’re talking about a depth of knowledge that doesn’t exist today. It’s absolutely fascinating what the smart grid can offer, but the challenge is in taking all that data and turning it into knowledge that you can do something with.

“The other portion of it – the one that is beyond technology – is human behavior. You can’t say, ‘If we had the technology, we’d fix all this.’ We have to keep in mind how our customers will react. What will it take for them to change their behaviors, and are they willing to do that, no matter how much technology you put out there? We need to work through that. We’re doing a pilot in Baton Rouge with AMI devices that control thermostats and pool pumps. What I’m most interested in is how well is that received? Are people willing to live with it? Are they going to override it? It gets pretty warm down here in the Deep South; about one-third of a person’s power bill is air conditioning.”

Taylor points out that implementing the smart grid isn’t necessarily going to be easy for the company, given the scope of the task involved. “We’re talking about 2.7 million customers over roughly 115,000 square miles in four states. It’s an immense task involving a lot of equipment. We’ve been adding on to this system for 70 years. Every day, we go out and add new things to it, and now we’ll need to structure that in a different way. It is something that has to come, because it will allow us to better manage and plan the system, we just have to have the courage to stay the course.”

One of the biggest challenges of the smart grid is in changing the way people view energy, how they use it and how they take responsibility for it. This will mean changing the relationship between utilities and their customers, which is where a strong customer service focus comes in. Utilities have not always been strong in this area, but Taylor says that Entergy is an exception to this rule.

“We’ve spent a great deal of effort focusing on what our customers want from us, on asking them how we can give them information the way they want it. We’ve rolled out web self-service, which is another channel of communication. We have 1400 customers a day registering. In a period of less than a month, that’s about 65,000 accounts that have signed up.

“You can tell there’s a thirst for that kind of information, and we need to put more focus on educating our customers. Because even though they understand what their bill is and what the product is, I don’t think they really understand what the value proposition is. Our aspiration is not to have the best customer service for a utility company, but to go beyond that and compare our customer service to companies that do that really well outside the industry.”

Looking ahead
Taylor underlines some of the major challenges for the industry’s future: replacing an aging infrastructure and meeting changing customer expectations. “The whole idea of modernizing our infrastructure is incredibly daunting. For the past 30 years, this country has not built anything of any significance, certainly not nuclear power plants. Everything has been about natural gas. Now, we’re at the point of facing the need for more infrastructure, and the replacement of the existing infrastructure and expansion of that, but doing it in a way that provides some intelligence to the systems so that we can actually move power and meet needs in different ways.

“Another challenge, which is probably the most important one for me, is ensuring that our employees recognize that the expectations of our customers are changing, and what’s that going to mean for them going forward. Our workforce is changing, we’re seeing a whole new group of people coming in, and we want them to be able to pick up the mantle and run with it.

“We’ve focused on a strategy we call Back to the Future, because if you think about it, we’re going back to a time where we have to invest in the infrastructure in this country, back to a time where we’ve got to rebuild the workforce of this country, and really back to a time where we need to focus more on the people.”

And then we come back to climate change, and the need for greater environmental responsibility. “Climate change is not something we can get wrong. If we get it wrong, we don’t get to reset the button and try over again. Whether you believe in it or not, there’s enough information out there that says we better be doing the right things. Not only here in the US, but internationally. I believe we have a responsibility, as technology is developed, to ensure it gets shared with developing countries, because in a way it doesn’t matter what we do if we don’t address what’s happening in India, China, South America and Africa.

“It may be stating the obvious, but we have to continue focusing on the basics while preparing for the future. We really have our work cut out for us, but this company is well suited to the task and has the experience to carry it out.”

Gary Taylor is Group President of Utility Operations. He is responsible for the regulated utility financial results, along with operational results of electric and natural gas distribution and customer service. He also oversees utility regulatory support and regulated retail activities. Taylor was previously President and CEO of Entergy Nuclear.

Entergy quick facts

• 2.7 million customers
• Operates in Mississippi , Louisiana, Arkansas, part of Texas, and the city of New Orleans
• 114,669 square miles of service territory
• 99,467 miles of distribution system
• 14,500 pole miles of high voltage transmission lines
• 38 regulated plants, with total capacity of 22,000 MW
• Regulated generation portfolio:
  • nuclear 23%
  • coal 10%
  • gas/oil/hydro 67%

Support for environmental projects 2007

• $250,000 to Ducks Unlimited for restore bottomland hardwoods in the Mississippi Delta
• $130,000 to help restore coastal and estuarine habitat
• $100,000 to help support Lake Pontchartrain Basin Foundation’s work to build oyster shell reefs to stabilize shorelines, improve water quality and create structural habitats
• $250,000 to support environmental projects through 31 Environmental Stewardship grant programs in 2007  

Awards and recognition

• Only utility to earn 2007 Climate Protection Award from Environmental Protection Agency.
• Named to exclusive Dow Jones Sustainability North American Index for an unprecedented seventh straight year in 2007.
• For the third straight year, the only U.S. utility named to the Dow Jones Sustainability World Index.
• Ranked as second cleanest generator among top 10 power producers in the U.S.