One of the New Orleans City Council’s most important functions is one of the last things many voters think about when casting a ballot for council members: regulating public utilities, including Entergy New Orleans.
A City Council with regulatory authority over an electric and gas utility isn’t a common sight in the U.S. A 2015 report by the New Orleans Office of Inspector General described New Orleans as “the only city in the United States to regulate an investor-owned energy utility when there is a state level agency in place.” For the most part, energy companies are regulated at the state level through publicly elected public service commissions.
This unusual position provides some unusual opportunities. The council, for example, is currently working on a clean energy standard that could mandate 100 percent renewables by 2050, a goal unlikely to fly at the much more conservative Louisiana Public Service Commission.
But unlike a public service commission, the City Council has to split its attention between utility regulation and an interminable list of other responsibilities, including setting the annual city budget. The City Council has regulated the local power company since the mid-1980s. Since then, it has relied almost entirely on expensive outside consultants to provide the specialized expertise necessary to deal with the constant duties of a utility regulator.
Those consultant contracts are the most valuable doled out by the City Council every year, totaling over $7 million. Some of those consultants charge as much as $600 an hour to do tasks as basic as drafting resolutions or attending meetings with the council. The city’s in-house staff, meanwhile, has hovered around two employees for the better part of three decades, and at some points has had no employees at all.
“What’s unprecedented about New Orleans … is that they outsource everything,” utility industry attorney Scott Hempling told The Lens in March. “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. No place.”
In Washington, D.C., the only other city that regulates an investor-owned power company — it does not have a state government to provide that service — the public service commission has 85 employees.
The Inspector General report found that the council spent 96 percent of its 2013 regulatory budget on consultants, rather than employees. And it found that New Orleans Entergy customers were paying six times more in regulatory costs than customers of utilities regulated by the Louisiana Public Service Commission.
But in 2019, this dynamic began to change. The Council Utilities Regulatory Office, or CURO, grew from two to five employees this year. And in June, Councilwoman and utility committee chair Helena Moreno announced that the council would be doubling the size of the office. Already, the civil service commission has recommended approval of three more CURO positions — an energy policy analyst, a regulatory auditor and a staff attorney.
In a phone interview last week, Andew Tuozzolo, Moreno’s chief of staff, said that next year, they would be attempting to add three more positions — two accountants and an engineer. He said the biggest impediment to growth is the physical size of CURO, and that they are working with the city to find more office space in City Hall.
“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,” Moreno said at a June meeting. “Under this council, that process has begun.”
And on Thursday, at its last meeting of the year, the council passed a resolution changing the way that its consultants bill the city. Now, they will have to submit extensive work plans for every project or assignment they take on, bringing a level of accountability to the invoice process that critics have long called for. The consultants will have to detail who will work on a project, how many hours they expect to work and what the expenses will be.
The council also designated the CURO Chief of Staff, Erin Spears, as general counsel for the City Council on utility matters. Tuozzolo said that before, only the consultants could act as official legal representatives for the council.
Moreno is not the first council member to push for change. Notable predecessors include Shelley Midura, Stacy Head and Susan Guidry. Those former council members told The Lens earlier this year that the consultants were able to keep their positions in part due to political connections and contributions.
“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.”
Another former council member, Oliver Thomas, told The Lens that because the utility committee was responsible for assigning the bulk of the council contracts’ value, it was traditionally seen as politically powerful.
“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.”
Dentons and Legend
As The Lens reported in March, the same three men held onto the lucrative utility contracts without interruption for 35 years. Clint Vince has been the council’s central legal advisor since 1983. Local attorney Walter Wilkerson also had a contract as a utility legal consultant from 1987 until he passed away in 2018. His contract was absorbed by Vince’s law firm, Dentons, this year.
The council’s main technical advisor, Joseph Vumbaco, had also been on the payroll since 1983 until he passed away in 2018. His Denver-based firm, Legend Consulting Group, still holds the contract.
At Thursday’s council meeting, the council renewed the utility consultant contracts. Dentons will be authorized to bill the city up to $3.5 million in 2020 while Legend will be able to bill $2.2 million — the same as last year.
Historically, Dentons and Legend have often exceeded their contract amounts, forcing the council to amend and raise their contracts mid-year. Tuozzolo says that with the new accountability measures, the council might be able to rein in some of that spending.
But cost savings aside, Tuozzolo said he’s most excited about the city taking agency over what energy policies it wants to pursue.
“An energy policy person could be sitting in our office dreaming up or proposing policy that would advance the energy goals that the people of New Orleans want to see,” he said. “We can create policy. It sounds like we can do that now, but we really can’t, unfortunately.”
He said that currently, if the council wants to explore an idea, they need to go to Dentons or Legend. Even a phone call to Vince, for example, will cost the city $600 an hour.
The Legend and Dentons contracts were renewed this year. And they will be eligible for another renewal next year. But those contracts will have to go out for public bid in 2021, meaning the council will have to define the services it’s seeking and give a chance to other firms to snatch the long-held contracts from Dentons and Legends.
The bid process for these contracts has been called into doubt in the past. The last time the contracts went out for bid was in 2016. The city stuck with Dentons and Legend. After the vote, attorney William Demarest, who had applied for the contract with his Washington D.C. firm Husch Blackwell LLP, sent an irate email to the CURO chief of staff.
“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.”
Tuozzolo said the next bid will go out in the middle of 2021, giving them ample time to consider all the applicants by the end of the year.