After more than two years of investigations, the New Orleans City Council plans to vote on a resolution to fine Entergy New Orleans $1 million for its “inaction and omissions in mitigating” the thousands of power outages the city experiences every year.
The council, which is responsible for regulating Entergy New Orleans, will vote on the proposed fine at its Wednesday utility committee meeting.
The resolution represents the conclusion of a so-called prudence investigation that began last year in response to frequent outages the city experienced between 2013 through 2017. In 2013 and 2014, Entergy cut funding for maintenance and system improvements by millions of dollars.
The number and duration of power outages has increased every year after 2013, when the disinvestment began, according to reliability measures provided by Entergy included in the resolution.
There were 2,599 outages between June 1, 2016 and May 31, 2017 alone, according to the resolution. Most of those occurred on fair-weather days, the council’s utility advisers found. And according to a report from an Entergy consultant, Quanta, roughly 41 percent were caused by equipment failures.
“The Council further concludes that [Entergy New Orleans] did not act prudently in its reaction to the reliability crisis, which caused [Entergy New Orleans] customers pay a substantial price, measured not just by direct economic costs such as closures of businesses leading to lost profits, lost wages, and reduced tax revenue, but also by less tangible costs, including the physical discomfort caused by multiple outages and the uncertainty of knowing when persistent outages will end,” the resolution says.
It says that the money will be used “to benefit ratepayers,” but does not specify what exactly it will be spent on. Entergy told The Lens it couldn’t comment on the resolution because it hadn’t seen it yet.
“Since I’ve been Utilities Chair, my focus has been accountability and affordability,” Moreno said in an emailed statement. “Through accountability efforts like this one, we hope to guarantee better reliability for New Orleanians, saving money and improving our quality of life.”
If the fine is approved at Wednesday’s meeting, it will still need to go through the full City Council.
The number in the resolution is lower than what the utility advisers previously recommended. In a report from last spring, they called for a $1.5 million to $2 million fine for years of reliability issues and Entergy’s disinvestment in maintaining the distribution system. In that report, the advisers criticized the utility for passing the blame for outages.
“Councilmembers expressed frustration in finding that ENO’s routine explanations for outages— Mylar balloons or squirrels —were not supported by the facts, facts which laid blame on ENO equipment failures,” the advisor report said.
Questions about whether Entergy was doing enough to maintain reliability started mounting in 2017, when Councilman Jared Brossett wrote a letter to the company about the high volume of constituent complaints he was receiving. The pressure on Entergy increased in 2018 when it was discovered that the company had removed $1 million from a repair fund for power lines in 2013.
The advisers’ May report shows that Entergy also reduced the amount it spent on capital additions to the distribution system by about $21 million from 2014 to 2015.
In 2017, the council passed a resolution requiring Entergy to submit a plan for remediating the frequent outages and improving the distribution system. The first plan it submitted in late 2017 was “functionally useless,” according to the resolution.
Eventually, in August 2018, Entergy hired Quanta Technology LLC, a utility consultant, to assess its reliability measures. Although that was a step in the right direction, the resolution calls it a “failure” that it took so long to seek outside help.
The resolution quotes one of the council’s technical advisors, Joseph Rogers — “ENO knew it had a problem, yet avoided thoroughly addressing it until forced to do so by the Council, which, in my opinion, is not demonstrative of prudent or reasonable conduct.”
Entergy also submitted a revised reliability plan to the council, which, according to the council, was a vast improvement on their first attempt in 2017. Still, the advisors point out that regardless of whether Entergy has gotten its act together, it should have been doing more to sustain reliability without all the pressure and inquiries from the City Council.
“No regulator, including the Council, is responsible for directing a utility to operate in a specific manner with respect to distribution reliability,” the advisors say in the resolution. “Every utility including [Entergy New Orleans], is required to operate prudently in all aspects of its operations. [Entergy New Orleans] has an independent and indisputable responsibility to maintain and operate a reliable distribution system.”