The New Orleans City Council’s utility committee on Wednesday announced plans to shift more of the work involved in regulating Entergy New Orleans to its in-house staff and away from a group of highly paid outside consultants, some of whom have worked for the city for decades.
The consultants — lawyers and technical experts — earn between $6 million and $7 million per year, by far the most lucrative contracts awarded by the council. Entergy pays those costs, but the company passes on the expenses to ratepayers.
“It has long been advised that instead the council should build up its own staff of experts, bring in local talent as full-time employees to take over the bulk of the work,” said Councilwoman and utility committee chair Helena Moreno, who is spearheading the effort. “Under this council, that process has begun.”
Erin Spears, the executive director of the Council Utilities Regulatory Office (CURO), laid out the office’s plan. It includes doubling the size of the office’s staff — from five to 10 employees — and changing the billing guidelines for contracted consultants.
Currently, the utility consultants work on year-long contracts that allow them to do a broad range of work. The contracts are limited by a cost cap, but those caps are sometimes increased in mid-year amendments. Moreno has criticized this system in the past, saying there should be more oversight and explicit direction from the council as to what the consultants should be working on and billing for.
In March, The Lens reported on how several of the city’s utility consultants maintained their contracts for over 30 years. In interviews, former council members said they would sometimes use political connections and campaign contributions to sustain their positions.
Former Councilman Oliver Thomas, who served as utility committee chairman in 2006 and 2007, told The Lens in March that the contracts were useful for council members looking to receive favors or contributions.
“When you talk about a crown jewel committee, that’s probably the most influential council committee,” he said. “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.”
Aside from political favoritism, New Orleans’ regulatory system stands out due to its reliance on consultants rather than full time staff.
“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,” Attorney Scott Hempling told The Lens in March. “No place.”
Hempling has represented 19 U.S. utility regulatory bodies, according to his resume, and wrote a textbook on utility regulatory law. Spears said they consulted Hempling when drafting these new plans.
In an emailed statement on Wednesday, longtime utilities legal consultant Clint Vince said he and the other contracted advisers support the plan.
“Over the years the City Council has followed various paradigms for the role of the Council
Utility Regulatory Office (CURO) in support of its utility regulatory function,” Vince said. “The utility Advisors support a strong and independent CURO and have enjoyed an outstanding relationship with CURO staff.”
At the meeting, Spears illustrated how New Orleans was an outlier by comparing CURO to other utility regulatory bodies. The Public Service Commission of the District of Columbia, for example, has 85 employees with a personnel budget of $14.6 million. Currently, CURO has five people on staff with a personnel budget of $560,000, less than 10 percent of what the city spends on the contractors, according to Spears.
The new staff will include an attorney, electric and gas engineer, financial analyst, legislative aid, and policy analyst. Spears said they hope to have this done by the late 2021, just before the the current council term ends.
The reason the process may take so long, Spears explained, is that they must work with the Civil Service Commission to create the new staff positions, a process that she said can take up to a year. The Civil Service Commission oversees personnel matters for the city government.
“It’s not going to be easy to make this transition to reduce our outside adviser needs,” Moreno said. “And it won’t be immediate. But it is necessary and the public is demanding it.”
The other major part of the plan will be to shift to a “project-based budgeting system” in which consultants are assigned to work on specific projects, such as working on a case at the Federal Energy Regulatory Commission or crafting the framework for community solar projects.
“This is probably the most important piece of your presentation as far as immediate impact,” Moreno said. “I’m really surprised that we hadn’t done this in the past.”
“It’s a standard best practice to adopt a project-based budgeting system,” Spears said..
At the end of her presentation, Spears talked about the long term vision for CURO and laid out several different designs the city could strive for. In the most ambitious iteration, CURO staffers could handle all utility regulatory matters except for those at the Federal Energy Regulatory Commission. At the other end of the spectrum, CURO would handle all “routine matters” while the consultants would deal with everything else.
By July 1, the office will submit required job questionnaires to the Civil Service Commission Staff — the first step in creating the new positions at CURO. By September 26, it will give a presentation on the new billing guidelines meant to add accountability to consultant invoices. By October 1, the office will update the council on the CURO staffing plan and proposed personnel budget. And in December, Spears said the office will provide another staffing update and present on an ordinance to amend the section of city law that deals with utility regulation.