In 1985, New Orleans residents decided that New Orleans Public Service Inc. — now called Entergy New Orleans — should be regulated by the City Council rather than the state’s Public Service Commission, which had overseen the utility for the three previous years. Ever since, the council has relied almost entirely on a group of outside consultants to fulfill that authority.
Council members have come and gone over the past 30 years, but that group of consultants has remained remarkably consistent. The council’s primary legal adviser — Washington D.C. attorney Clinton Vince of the law firm Dentons — has advised council members on utility matters since 1983. So had the lead technical adviser, Joseph Vumbaco, until he passed away in 2018. His Denver-based firm, Legend Consulting Group, still holds the contract. Walter Wilkerson served as the Council’s local legal consultant from 1987 until he also passed away in 2018. Wilkerson’s firm still has the contract.
Those contracts are far and away the most lucrative awarded by the council, adding up to nearly $7 million a year. Most of those costs are paid by Entergy, but they’re ultimately passed on to ratepayers through their utility bills. Some observers question how such a prized gig could remain locked down by the same people and firms for so long.
“No one has a government contract for life,” said Monique Harden of the Deep South Center for Environmental Justice. “These advisers have somehow managed a way to do that. And I believe it’s fueled by the way in which they give to political organizations and people running for office.”
Harden is representing a coalition of environmental and consumer advocacy groups in a lawsuit against the City Council over its decision last year to approve Entergy’s $210 million power plant in eastern New Orleans. The suit focuses on the prominent role the advisers played in the application process, with the plaintiffs arguing that the firms played conflicting roles as both advocates for the plant and fact-finders for the City Council. On Tuesday, Harden laid out those arguments for Civil District Court Judge Piper D. Griffin, who did not immediately issue a ruling.
Harden is an outspoken critic of Entergy and the way the council regulates it. But she isn’t alone in her suspicions. Similar claims have been hurled at the advisers dating back to the 1980s. And three former council members — Shelley Midura, Oliver Thomas and Stacy Head — told The Lens that the complaints are far from baseless.
“Certainly, politics come into play,” Head said. “And these advisers have been skilled at making sure they have alliances that will benefit them in keeping relationships with council members and getting their contracts renewed.”
Midura agreed that “historically, that’s what would happen.” But while she criticized the system, she was hesitant to condemn any individual council member or consultant.
“I don’t want to insinuate that anyone did anything wrong, because that’s the way things were done,” she said. “But to me, it could have been better.”
Representatives from the two out-of-state consulting firms, Dentons and Legend, denied the allegations and said the council continues to hire them because of the quality of their work. Vince called them “serious but demonstrably false accusations from our detractors.”
Midura, Thomas and Head were at various times members of the council’s utility committee, which oversees the advisers’ contracts. And they said that historically, political connections and contributions factored in to who got hired.
“When you talk about a crown jewel committee, that’s probably the most influential council committee,” said Thomas, who was chair of the utility committee from 2006 to 2007. “That’s where you can raise money. And more importantly than being able to raise money, that’s where you place your relationships and where you can help people who are trying to get involved in that particular industry. So that’s a plum jewel.”
Unlike the city’s executive branch — which is responsible for hundreds of millions of dollars in contracts — the City Council only awards a few contracts each year. In terms of total dollar values, the majority goes to the utility consultants.
Midura, Thomas’ successor as utility chair, said that she couldn’t directly speak to what happened before she joined the committee, but added that traditionally, political favoritism played a role in who got the consulting contracts.
“What I know is that it used to be if you were the chair and you wanted to award someone a contract, you could do it through that committee,” she said. “I tried to make [the selection process] stronger so that it would be a lot less ‘who do you know’ and more on the merits.”
During her tenure, Midura attempted to make a number of changes to how the committee chooses its consultants. While many of those ideas never reached fruition, she was able to convince the council in April 2007 to pass a non-binding resolution in which the members promised not to accept donations from Entergy or the utility advisers. Two similar motions were passed by later councils in 2010 and 2016.
It’s neither illegal nor uncommon in Louisiana for government contractors to make campaign contributions to the politicians that hire them. And prior to the April 2007 resolution, members of the utility committee received a steady stream of campaign contributions from utility advisors, adding up to tens of thousands of dollars. Even after 2007, several council members received campaign contributions from utility consultants.
Thomas’ campaign finance records from his time on the council show thousands of dollars in contributions from several utility advisers, dating from at least 2002 to early 2007. The Lens identified one small contribution of $250 to Head from Bruno and Tervalon — the utility committee’s accounting contractor — in 2015. We could not identify any such contributions to Midura, who said in 2007 that she did not accept campaign money from contractors involved in regulating Entergy, according to an article in The Times-Picayune.
Clint Vince’s law firm, Dentons, also gave $25,000 to the Louisiana Democratic Party’s political action committee between 2013 and 2018, according to state campaign finance records. State Sen. Karen Carter Peterson, the chair of the Louisiana Democratic Party since 2012, was hired by Dentons in 2014.
“Dentons does not have a relationship with the Louisiana Democratic Party,” Peterson said in an email to The Lens. “Separate and apart from my role with Dentons, I serve as chair of the Louisiana Democratic Party.”
There also appears to be a longtime relationship between the utility consultants and the Black Organization for Leadership Development (BOLD), a local political organization based in Central City. That relationship can be traced back at least to 1987, when the council hired a firm run by Sidney Cates IV and then-Tax Assessor Kenneth Carter. Carter, a co-founder of BOLD and the father of Karen Carter Peterson, was a close friend of then-Councilman Jim Singleton, another BOLD co-founder.
Ken Carter died last year. Cates, who is now an Orleans Parish Civil District Court judge, has been endorsed by BOLD in past elections. His son, Sidney Cates V, is currently the Political Director of the organization. He did not respond to repeated requests for comment on this story.
During a February 2019 Council meeting, Councilman Jay Banks came under fire over his work for Legend Consulting Group prior to being elected. Banks is currently BOLD’s Operations Chief and has worked within the organization for years. During Singleton’s time on the council, Banks served as his chief of staff and has described him as a mentor.
Banks later revealed that he worked for Legend as a government liaison from 2013 until August 2017, right before qualifying for the 2017 council election. He did not disclose his employment with Legend on personal financial disclosures submitted to the state. Banks also said that he worked for Entergy between 2005 and 2008.
Banks’ chief of staff, Jarvis Lewis, told The Lens in an email that Banks “believes the advisors have been prudent in their work on behalf of the ratepayers” and that he “is not aware of any connection between the advisors and BOLD.”
In an email, current BOLD President Darren Mire said, “If you want information about professional relationships and contracts, you should speak with the individuals involved in the same.”
“I’m sure there was a friendship or a relationship that existed,” Singleton told The Lens in an interview. “Obviously Ken Carter and Judge Cates were the two that were part of the team, and I guess I probably had something to do with them getting involved.”
He added that while he took contributions from the consultants, it wasn’t his primary motivation in assigning the contracts. As for the political influence of the utility committee, he said that was merely politics as usual in New Orleans.
“That was no different to me from the contractors who were doing the streets, engineering firms and all across the board,” he said. “I think we got contributions from anyone you could get them from.”
He also said that regardless of the contributions, they still demanded quality work from the consultants. Thomas had a similar recollection.
“Singleton might have played his politics, I might have played my politics, but we demanded a certain amount of accountability and delivery of service,” Thomas said.
On the current council, Banks appears to be the only member with a professional link to council utility consultants.
Councilman Jared Brossett, who serves on the utility committee, received $8,500 in campaign contributions from utility consultants — including Vumbaco, Vince and Wilkerson — while he was serving in the state House of Representatives. Vumbaco’s wife, Linda Vumbaco, also contributed $750 to Brossett’s campaign fund in 2011, according to campaign finance records. Brossett’s office did not respond to requests for comment.
And Councilman Jason Williams, who served as utility chair until May 2018, is a “Pillar Chair” of the Dentons Smart Cities & Communities Think Tank. The organization was started by Vince and was first announced in February 2018. Current utility committee chair Heleno Moreno is a member as well, as is Erin Spears, the chief of staff of the Council Utilities Regulatory Office (CURO) — the council’s in-house utility regulatory division — and several of the council’s technical consultants from Legend. Peterson is also a “Pillar Chair.” The think tank has 180 total members, according to Vince.
In May 2018, the City Council launched a new Smart and Sustainable Cities Committee, for which Dentons is performing billable work, according to Vince.
Williams’ Communication Director, Katie Hunter-Lowrey, told The Lens that Williams is not compensated for his role on the think tank, and that none of the advisers, their firms or their co-workers have either made contributions or helped Williams with fundraising. Moreno’s office declined to comment for this story.
As for the new committee, Vince said “the Council, not the advisers, set up the Smart and Sustainable Cities Committee.”
‘Blurring of the line’
In emails to The Lens, Vince said there were “serious problems” with the assertion that political contributions and connections helped the advisers keep their contracts.
“The allegation that we have been selected for 3 decades through multiple competitive selection processes with multiple Councils, generally by votes of 6-1 or 7-0, because of political contributions is false,” Vince wrote. “We have been selected because of our highly effective performance, win rate and credentials.”
He also sent a 31-page document enumerating the various reasons why he and the Dentons team were repeatedly selected by the council. They include the firm’s role in ending the Entergy System Agreement, absorbing Algiers into Entergy New Orleans service area and Entergy New Orleans’ partial purchase of a the Union Generating Power Station in Arkansas.
The fact that the council’s utility advisers have successfully litigated and negotiated on behalf of the council is acknowledged even by some of their critics. But the issue, they said, is that they don’t know whether a truly competitive bidding process would have yielded better results.
“Some of the consultants might be the best for us,” Midura said. “Now I can definitely say that isn’t true of everybody. But I do think if the process was more transparent and good-government oriented then this wouldn’t be a question. But right now it’s murky.”
Another concern is the quantity of the work done by consultants, rather than the quality. In 2015, the New Orleans Office of Inspector General released a report on how the city regulates Entergy and found that 96 percent of the council’s 2013 regulatory budget was spent on consultants. The report also found that Council Utilities Regulatory Office was woefully understaffed, with just two employees in 2013. Today, the office has risen to five employees, but that is still an aberration when compared to other utility regulators.
“What’s unprecedented about New Orleans, putting aside only having five people on staff, is that they outsource everything,” attorney Scott Hempling told The Lens. “That’s what’s unusual.”
Hempling has represented 19 U.S. utility regulatory bodies, according to his resume, and wrote a textbook on utility regulatory law.
While it is routine for regulators to employ consultants for their specialized expertise in areas such as litigation at the Federal Electricity Regulatory Commission or corporate mergers, critics question whether it is necessary to pay rates as high as $600 an hour for tasks that could be handled by full-time city employees. Overall, the Inspector General report found that Entergy New Orleans customers were paying roughly six times more in regulatory costs than costumers of Entergy subsidiaries regulated by the Louisiana Public Service Commission.
The IG report went on to say that because the city lacked in-house staff, and because utility regulation is only one of many responsibilities of the council, the unelected consultants were the ones truly in the driver’s seat, creating “an echo chamber in which their findings and recommendations go unchecked.”
“I’m not aware of any place that has any resemblance to that paucity of internal expertise and the near total dependence on outside expertise,” Hempling said. “No place.”
“It’s just that there seems to be some blurring of the line here,” former Councilwoman Susan Guidry said. “When I couldn’t get them to do what I wanted them to do, it became a matter of me relying on myself and doing my own research. I was fighting a losing battle.”
Midura said that the complicated nature of utility regulation encourages a passive approach from the Council.
“Nobody gets elected to the council to be an expert on utility issues, so trying to get anyone to pay attention to the issues versus rewarding their friends with a contract is tough,” she said. “The learning curve is huge. And you’re learning from the very people that you’re going to be deciding on whether or not to give a contract to. You’re totally dependent on them for everything.”
Vince questioned the conclusions in the Inspector General report.
He noted that the report was funded through a third-party grant. And its author — an outside consultant hired by the Office of Inspector General — later used his own findings to try and solicit a city job. According to a 2015 story by Fox 8 News, shortly after the report was released, the consultant wrote a letter to the city that said, in part, “I suggest you retain me immediately to address those issues.”
Head, Thomas and Midura all said that the solution to the over-reliance on consultants is to build more in-house expertise. But according to Head and Thomas, the advisers actively undermined the Council’s attempts to do that.
“On the surface they were supportive of the idea,” Head said. “But I believe they sabotaged that in-house growth actively.”
“The last thing they want is a strong in house staff,” Thomas said. “They don’t want lawyers and advisers to hold them accountable.”
In an email, Vince told The Lens that the advisers had “always supported efforts to expand CURO to handle many matters that can be done in-house.”
Head said she believes that the importance of political connections has waned in recent years when it comes to the consultant contracts. But she said that those past political connections helped shape the current regulatory structure. And she thinks that the lack of in-house staff has made that structure self-perpetuating and allowed the consultants to increase the size of their contracts.
“Our structure is essentially set up to have an ignorant council,” she said. “Not stupid, but ignorant, because we don’t have the in-house staff to give us advice. So we must rely, in these incredibly complicated matters, on our outside consultants. … And I think the politics allow the bad structure to be maintained.”
Harden is even more critical of the consultants than the former council members. She remains unimpressed with the work of the consultants, especially in the areas of energy efficiency and cost relief for low income customers.
“The people who keep winning are the ones who look past frequent power outages, look past the city paying one of the largest bills for electricity,” she said. “So I don’t think any of them have been effective. And I think their ability to keep the contracts is rooted in that first effort to get competitive selection, which dates back to the 1996 Home Rule Charter change.”
The 1996 Home Rule Charter Change
In 1995, New Orleans residents voted to change the city charter in an attempt to remove political patronage from who got government contracts. The amendment forced the city to employ a competitive bidding process when choosing which firms and individuals to hire. The new requirements took effect on Jan. 1, 1996.
But those hoping for sweeping change were in for a disappointment. Although the charter now compelled the council to use competitive bidding, it let the council design the process. And their framework had major loopholes.
The new rules had several exemptions for competitive bidding, including one for existing contracts “when continuity of service is essential.”
“It completely eviscerated the whole purpose of competitive selection,” said Harden, who worked for The Alliance for Affordable Energy at the time.
Less than a month after the city charter change, the Council announced its intention to renew the utility consultant contracts — then worth $3.8 million, according to an article in The Times-Picayune — without a competitive selection process.
“The mayor and council are showing that they intend to keep their patronage options open when it comes to choosing architects, engineers, attorneys and consultants.” said a January 1996 Times-Picayune editorial. Another article from that month claimed that contracts awarded by the council “have long been a major source of political patronage, with supporters of officeholders getting most of the contracts.”
Then, in February, Singleton introduced a motion to specifically exempt the contracts for the utility consultants. The motion passed in March.
The Alliance for Affordable Energy sued the council for violating the new charter amendment. The group argued that because utility consultant contracts comprised 90 percent of those signed by the council, the exemptions rendered the competitive selection process pointless. The Louisiana Supreme Court ultimately ruled in the Council’s favor and allowed it to hire the utility consultants without going through competitive selection.
The ruling permitted the Council to extend exempted contracts without considering alternative firms. But those contracts can only be extended for a maximum of five years, at which point the council must put out a Request for Qualifications (RFQ) and sign new contracts through a selective bidding process.
The Times-Picayune condemned the decision in another editorial headlined “Anti-patronage fiasco.” It said that residents who recently voted “to prevent just this kind of political slipperiness” had been “cruelly and cynically deceived.”
‘Marred by cronyism’
By 1996, the utility consultant contracts had already been the target of patronage allegations for years. In 1987, for example, the Council replaced its chief local utility lawyer with attorneys Kenneth Carter, Sidney Cates IV and Walter Wilkerson. The Times Picayune noted that “all three have political ties to Council members” as well as then-Mayor Sidney Barthelemy and former Mayor Ernest Morial.
Another accusation of political favoritism came in 1992, when the Council awarded a new utility planning contract to Legend through a process that critics said was “marred by cronyism,” according to The Times-Picayune. Legend said they could fulfill the contract for $480,000. The competing firm said it could do it for only $350,000.
Gary Groesch, then the director of the Alliance for Affordable Entergy, told the paper that one reason for the choice was Legend Consulting head Joseph Vumbaco’s close relationships and steady political contributions to the three members of the utility committee: Jim Singleton, Joseph Giarrusso (current District A Councilman Joseph Giarrusso’s grandfather) and Lambert Boissiere Jr. The elder Giarrusso died in 2005. Boissiere did not respond to a request for comment.
The next year, the Alliance released a report claiming that those three councilmen were too cozy with Vumbaco and Vince. The report claimed that the Dentons and Legend firms, along with the councilmen, had wasted $500,000 in ratepayer money on first class air travel, limousines, expensive hotels and lavish meals in New Orleans, Washington D.C, and Denver over five years. The report also claimed that the committee and the advisers had broken Louisiana’s open meetings law on more than a dozen occasions by privately discussing government business.
“If what he says is true, it’s a small price to pay for a service rendered to the ratepayers of the city,” Giarrusso told The Times-Picayune at the time.
A gap in BOLD leadership
The turn of the century saw a power shift on the City Council. Singleton lost two key allies in the 2000 council elections and was booted from his long-held post as utility chair. He was replaced by Councilman Eddie Sapir and removed from the committee entirely.
Two months after Singleton’s exit from the committee, Carter and Cates lost their $600,000 utility consulting contract. Karen Carter Peterson was an associate at Carter and Cates and unsuccessfully urged the committee to reconsider, according to The Times-Picayune.
“It wasn’t about the work they were doing,” Singleton told The Lens. “It was a political decision that [Sapir] made.”
After Singleton lost control of the utility committee, Sapir used the position to hire one of his allies, Basile Uddo. Uddo was one of Sapir’s business partners in a real estate development firm. In 2001, he was hired for a $160,000 utility consulting contract. The contract was for telecommunications issues, but he was later hired by Dentons to work on Entergy regulation. He is still a utility consultant with Dentons today and is currently defending the council against Harden in the ongoing power plant lawsuit.
During this period, there was one major change to utility regulation that occurred outside the auspices of the City Council. Until 2002, utility regulatory responsibility was split between the Council and the Mayor’s Department of Utilities. That changed under Mayor Ray Nagin.
When Nagin became Mayor in 2002, an attorney named Charles Rice Jr. left his job at Entergy to become the City Attorney and later the city’s Chief Administrative Officer. Months into his term, Nagin shut down the Utilities Department as part of a broader anti-corruption campaign. The department’s director and deputy director were both arrested. The director, Lilliam Regan, was charged with seven counts of malfeasance in office for waiving $50 inspection fees and $2 a day late charges for seven cab drivers. The charges were ultimately dropped.
To permanently close the department, the Nagin administration sought Council approval. Rice appeared in front of the Council to argue that Nagin’s move was legal. The council ultimately gave its blessing. Rice would go on to serve as Entergy New Orleans’ CEO from 2009 to 2018.
After that episode, regulating Entergy became the sole responsibility of the Council. Utility consultants, including Uddo and Legend, contributed at least $19,000 to Nagin’s campaign funds from 2002 to 2006.
Then, in 2006, the political dynamics of the council utility committee shifted again.
“BOLD is back in business, and it appears that state Rep. Karen Carter Peterson could be among the immediate beneficiaries,” said a Times-Picayune article. “BOLD’s new standard bearer, Oliver Thomas, grabbed the chairmanship of the powerful Utility Committee.”
Only months after Thomas took the reins, Peterson announced that she had forged a business relationship with Walter Wilkerson and would start advising the council on regulating Entergy. Peterson was later hired by Vince’s firm, Dentons, in 2014.
‘That’s how you undermine a competitive process’
Thomas’ chairmanship was short-lived. On Aug. 14, 2007, Thomas stepped down from his council seat after pleading guilty to federal bribery charges. Councilwoman Shelley Midura was thrust into the utility chair position.
In her tenure, Midura aggressively sought to overturn the structure of utility regulation by trying to change the advisor RFQ, cut consultant contracts and hire outside experts to analyze the efficiency of New Orleans’ current model. But she hit some brick walls. Namely, Cynthia Willard-Lewis and Cynthia Hedge-Morrell, according to Midura and Times-Picayune coverage from those years.
Willard-Lewis received at least $11,600 in contributions from the consultants while on the Council. Hedge-Morrell received at least $12,500. Neither responded to repeated requests for comment.
In December 2008, Midura convinced the committee to hire a firm to do a comprehensive review of how New Orleans regulates Entergy. In May 2009, the committee interviewed the only candidate: a joint application by the Rand Corp. and the National Regulatory Research Institute.
“It was really embarrassing and it was ugly.” Midura said about the meeting. “Basically we had an interview with them and it was totally embarrassing because I was the only one on the committee that was really interested in even talking to them.”
The council didn’t hire anyone to complete the review.
When that faltered, Midura tried another route. In 2009, the consultant contracts reached their fifth year, forcing the council to rebid their contracts. Midura tried to amend the RFQ to make it less favorable to incumbent firms.
“The old RFQ gave a lot of weight to working for the city before and having knowledge of the city,” she told The Lens. “No one wanted to bid because they thought it was a done deal. So what I was trying to do was encourage a competition so we would have some new blood vying for it.”
But when she presented the new version to the rest of the utility committee, they rejected it.
“Unlike some council committees, where members almost invariably take their cues from the chairman, Midura has become a minority on her own committee, frequently clashing with Hedge-Morrell and Willard-Lewis,” said a 2009 article in The Times-Picayune.
According to that article, Hedge-Morrell and Willard-Lewis demanded a revision to the RFQ. Applicants would now be asked to describe their “knowledge and experience with Entergy New Orleans system agreement and disaster recovery matters.” The provision, the article noted, “clearly favored the firms already working for the council.”
“And that’s how you undermine a competitive process,” Midura told The Lens. “No one wanted to bid because they thought it was a done deal.”
Head told The Lens that she witnessed similar biases in the competitive selection process.*
“I think that message has gotten out in the regulatory community,” she said. “It will chill many firms from responding, because it’s very expensive to respond to these complicated RFQs.”
The council ultimately chose the same advisers yet again. Midura, at the very least, wanted to get those contracts reduced. But she was again voted down.
“This makes me sick,” Midura said at the meeting, according to The Times-Picayune. “I hope the citizens of New Orleans see through what has happened here.”
‘Barefoot and stupid’
Midura didn’t run for reelection and in May 2010, Hedge-Morrell replaced her as chair of the utility committee. In 2011, Hedge-Morrell helped ward off a challenge to the utility consultants from Council members Stacy Head, Susan Guidry, and Kristin Palmer.
The other notable challenge to the consultants in the past decade occurred during a 2016 re-bidding process. In a departure from the council’s routine, the RFQ attracted a wide field of applications and the council had legitimate alternatives to its usual set of consultants. This time, the incumbent consultants found their champion in Councilman Jason Williams, then the chair of the utility committee.
“We had learned through the grapevine — and apparently it was inaccurate — that the city was indeed serious about trying to save money,” William Demarest told NOLA.com/The Times-Picayune. Demarest applied with his Washington, D.C. law firm, Husch Blackwell LLP.
But he was disappointed when the utility committee decided to hire the same group of consultants without even publicly discussing the other options. Although out of state firms had traveled to New Orleans to attend the meeting, only the current advisers were called up for questions.
“It was, in my opinion, devastating to the ratepayers of New Orleans that we did not make a change,” Head said. “And we didn’t even do a good job of window dressing. It appeared in hindsight largely like a charade. And I think that message has gotten out in the regulatory community.”
When Guidry and Head suggested deferring the vote so that the Council could have more time analyze the other firms, Williams shot them down. It turned into one of the most acrimonious Council meetings in recent memory. After, Demarest sent an irate email to the Council Utilities Regulatory Office.
“The failure to even discuss or consider the other responses and proposals before voting on the Dentons proposal was the height of disrespect,” he wrote. “Please do not send me any future RFQs from the City Council. Once was enough.”
While the 2016 RFQ followed a similar pattern, it differed from the past in a key way. There didn’t appear to be a political motive behind it, Head said.
“I don’t know that the political connections in the last few years have been the driving force,” she told The Lens. “To be honest I don’t know why we decided to stay barefoot and stupid. I really don’t.”
Head said that New Orleans’ regulatory structure has become “preordained,” and suggested that this arrangement, given the consultants’ influence over the process, is self-reinforcing.
“They decide what direction we go in,” she said. “They are the ones driving the ship. And they council merely pays their invoices.”
*Correction: As originally published, this article incorrectly said that Stacy Head was not yet on the council during a discussion on rebidding consultant contracts.