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City Council votes to launch investigations, audits into Entergy

Entergy New Orleans' CEO defended the utility’s performance during Ida, their speed to restore power to the City of New Orleans and their use of the new power plant.

NEW ORLEANS — In the wake of a total blackout in the days after Hurricane Ida, the New Orleans City Council's Utility Committee voted unanimously Wednesday to launch investigations and audits of Entergy New Orleans, the monopoly power company regulated by the council.

Entergy announced Tuesday that it’s considering selling its New Orleans subsidiary or merging it with Entergy Louisiana. The utility company said it would work with the City Council on a new path forward, but also suggested that the council’s proposed actions could make its service worse.

During Wednesday’s meeting, City Council President Helena Moreno said the committee wasn't there to municipalize Entergy New Orleans or get the company to sell.

“We haven’t even done the study,” Moreno said.

She did accuse Entergy of not making the proper investments in their transmission infrastructure and asked for information on how much the utility spends on repairs versus improvements. Entergy New Orleans CEO Deanna Rodriguez said she did not have that information and assumed it would be part of what the company turns over as a part of the council's investigation.

“All I’ve ever asked for is for you to do your job,” Moreno said. “Please stop acting like you’re the victim.”

Rodriguez defended the utility’s performance during Ida, its speed to restore power to the City of New Orleans and its use of a new power plant in New Orleans East.

Entergy has come under a torrent of criticism for its performance in Hurricane Ida, particularly losing all eight of its primary transmission lines into the New Orleans metro area.

   

Moreno has been particularly vocal about Entergy's performance and has sent out notices to Entergy requesting that the company do everything in its power to limit the cost burden of the storm's recovery on ratepayers.

“Ida will cost 300 percent more than Hurricane Zeta,” Rodriguez said.

The council pushed to avoid passing those costs on to customers, but Entergy has the right to recover costs. The Utilities Committee also passed a non-binding resolution "directing" Entergy New Orleans not to impose higher rates on customers in November, even though the council already approved the rate hike at a 9.3 percent rate of return on equity and even though Entergy agreed to delay the new rates last year because of the pandemic.

If the full council approves the resolution Thursday, it's not clear that it will be able to force Entergy to delay an already-approved rate hike.

Rodriguez repeatedly pointed out that the Entergy New Orleans subsidiary only represents 6 percent of Entergy Corp.'s portfolio and Entergy Louisiana owns the transmission lines that failed during the storm.

The council committee voted 5-0 to request the Louisiana Public Service Commission and the Federal Energy Regulatory Commission (FERC) review Entergy Louisiana’s transmission planning that affected New Orleans.

A major focus of the committee was the rusty transmission tower that collapsed in Avondale, sending the transmission lines into the Mississippi River. Entergy Louisiana CEO Phillip May told WWL-TV the day after the storm that the Avondale tower was "robustly engineered," passed an inspection in December 2020 and did not need to be replaced. 

"So many times when we see rusty old things, it looks like it's been abandoned," District E City Councilwoman Cindy Nguyen said.

"That's right. That's right. And it could well work, right?" Rodriguez said. "But I think it's important for us to go through the investigative process and provide that information to you."

Council members did not seem inclined to accept Entergy's own assessment of its system, however. 

When Entergy New Orleans Vice President Courtney Nicholson cited an Entergy study of the costs and benefits of burying power lines and found they did not improve reliability.

"Undergrounding isn't necessarily the silver bullet that intuitively it would seem to be," she said.

But District C Councilwoman Kristin Gisleson Palmer dismissed Entergy's self-assessment.

"I think we need a third party to do this and not Entergy, because I do think that this is one of the solutions we have to be looking for. If Entergy had buried (lines in) one neighborhood a year since we've been requesting this, we would have had 10 additional neighborhoods that would have had underground lines. So, I don't buy y'all's answer on that."

The committee also voted 5-0 to hire an independent consultant to perform a full management audit of Entergy.

Moreno also signaled that big changes could be afoot for the advisers the City Council uses to understand the intricacies of utility regulations. Clint Vince of the Washington, D.C. law firm Dentons has been the council's legal adviser since 1983. Moreno said the council would consider a request for bids from a new "pool of advisers" to offer different options in addition to Dentons and the council's technical advisers since the 1980s, Denver-based Legend Consulting Group.

A story by The Lens in 2019 questioned Dentons' and Legend's decades-long grip on the lucrative contract. The Lens noted that State Sen. Karen Carter Peterson, D-New Orleans, works for Dentons and City Councilman Jay Banks worked for Legend Consulting immediately before being elected to the council in 2017.

Dentons did not immediately respond to WWL-TV's request for comment.

Entergy executives left the council chambers immediately after making their presentation, just as the council committee began hearing public comment, most of it extremely critical of Entergy.

Rodriguez returned about 45 minutes later, after council members called her and her team. She stepped to the microphone and said she’s new to her role as Entergy New Orleans CEO and didn’t know she was supposed to stay and listen to the public comments.