Government & Politics
 

Council votes for potential $5 million fine on Entergy, some councilmembers open to revoting on power plant

Michael Isaac Stein / The Lens

Reverend Gregory T. Manning delivers a fiery sermon about how Entergy deceived residents.

At a special meeting on Wednesday, the City Council passed two resolutions that aim to, in the words of one of the resolutions, engender a “sea-change in the corporate culture” at Entergy New Orleans.

The special meeting was convened two days after the Council released the damning results of its investigation into Entergy’s “astroturfing” campaign, which concluded that Entergy “knew or should have known” that actors were paid to attend City Council meetings and support Entergy’s proposed power plant in eastern New Orleans.

The Council voted unanimously to initiate a sanctions process that could impose a $5 million fine on Entergy. Councilwoman Helena Moreno said that this would be “the largest single penalty ever imposed by the New Orleans City Council.” The resolution prohibits Entergy from passing that fine onto ratepayers.

Two councilmembers — Jared Brossett and Jason Williams — also signaled for the first time that they would consider a revote on Entergy’s application for the plant. Brossett and Williams are the only current councilmembers who were on the council when it voted to approve the plant in March. Both voted in favor.

But the meeting wasn’t just about the “astroturfing” campaign. In her opening statement, Moreno noted that this was just one of a myriad of issues plaguing Entergy’s relationship with the city of New Orleans

“I have cringed as Entergy has been the focus of scathing local and national reports,” she said. “Entergy lost sight of the company they’ve always claimed to be.”

The second ordinance passed on Wednesday opens an investigation into Entergy’s culpability for the frequent power outages in New Orleans. The investigation will determine whether Entergy should face additional penalties for its “inaction and omissions” in addressing the outages and maintaining the distribution system.

Over the past year, councilmembers have sparred with Entergy officials for passing the blame for the recurring outages onto Mylar balloons and stray cats rather than taking responsibility for the city’s aging distribution system (the power lines and poles that run down the city’s streets connecting buildings to the grid).

In June, Entergy told the council that between 73 and 81 percent of power outages in New Orleans over the last five years were caused by broken distribution equipment. At the same meeting, the council reprimanded Entergy when it discovered that the company had pulled $1 million out of a repair fund meant to improve the distribution system in 2013.

“The gap between expectations and performance today is too great,” Moreno said at Wednesday’s meeting.

Entergy Deleted Evidence

The council launched an independent investigation into the “astroturfing” campaign in May after The Lens reported that people, including some professional actors, were paid between $60 and $200 to go to city council meetings and play the role of power plant supporters.

The results of the investigation were released on Monday. Two of the investigators, former federal prosecutor Matthew Coman and former Judge Calvin Johnson, summarized their conclusions for the council on Wednesday.

Entergy maintains that their subcontractor, The Hawthorn Group, was responsible for the scheme and that no Entergy employee approved or was aware that people were being paid to support the plant.

But the investigation found that Entergy officials repeatedly turned a blind eye to the truth when faced with credible allegations and suspicious behavior. It also showed that top executives were involved in planning the scheme.

In October 2017, two weeks before a key utility committee meeting, former CEO Charles Rice texted another Entergy employee, telling her that he wanted more supporters at the public meetings, regardless of how much they had to pay.

“This is a war and we need all the foot shoulders [soldiers] we can muster,” he wrote.

“The best way I can describe this situation is sad,” Moreno said on Wednesday. “Sad and disappointing.”

Coman and Johnson also emphasized that Entergy originally withheld a large bulk of the documents they were supposed to hand over to the City Council.

In May, the council passed a resolution demanding “all documents that relate in any way” to its campaign for the plant. Entergy originally turned over hundreds of documents. But over the past few months, investigators have unearthed 1,200 additional documents that they say should have been included in the first cache.

And, investigators added, there are still relevant documents that Entergy refuses to turn over.

The investigators also said that Entergy deleted some of the relevant documents they were supposed to give to the council. They pointed out that some of the emails between Entergy and Hawthorn employees were provided by Hawthorn, but were missing from Entergy’s files.

Coman said that he couldn’t say whether these deletions were “intentional or automatic.” He did note, however, that Entergy has a “rather aggressive” records retention policy.

“Aren’t you, as a quasi-public entity, supposed to retain documents?” Johnson asked in reference to Entergy.

Outrage was on display during public comment.

“They have an undeserved monopoly and they operate with greed and disdain for their customers,” said New Orleans resident Janice Long. “They respect nothing but profit.”

The Largest Single Penalty in the Council’s History

The resolution opens a 30 day docket to determine what penalties Entergy New Orleans will face for its role in the paid actor scandal. While the penalties could change over that period, the resolution sets the baseline at a $5 million fine, new ethics training for Entergy management, and a new internal code of conduct for dealing with the City Council.

Entergy now has 30 days to prove why they shouldn’t face these repercussions. Residents can submit their opinions to City Council as well.

During public comment, the majority of speakers described the $5 million fine as slap on the wrist. Through a rate deal with the city, Energy New Orleans will receive a automatic $23 million profit for constructing the plant. That money will come from customers’ monthly bills.

“Five million dollars just puts a price on undermining the democratic process,” said Logan Burke, the executive director for the Alliance for Affordable Energy.

Many of the speakers said that Entergy’s scheme irredeemably corrupted the public hearing process that led to the council’s approval for the new plant. The only way to remediate that, they said, was to rescind the initial vote and hold a new hearing.

Council President Jason Williams, who has stayed quiet about the idea of a revote, gave his strongest signal to date that he was open to the idea.

“The war is not over,” he said. “We still need to have a conversation about whether or not we need another vote,” he said.

The audience burst into applause

Brossett then tacked on to William’s announcement by saying that “after the hearing today and the many months of discussion and debate with the public, I am open to revoting on this matter.”

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About Michael Isaac Stein

Michael Isaac Stein covers New Orleans' cultural economy and local government for The Lens. Before joining the staff, he freelanced for The Lens as well as The Intercept, CityLab, The New Republic, and Pacific Standard. He was recently awarded a fellowship from the Heinrich Boll Foundation, which he used to report on water scarcity, division, and colonialism in Cyprus.