The New Orleans City Council’s efforts to reduce the use of outside consultants to regulate Entergy New Orleans have already saved the city $1.2 million this year, according to a Thursday presentation from Erin Spears, chief of staff of the Council Utilities Regulatory Office. Spears said that the savings should only grow from here as her office continues to add policy experts, engineers, attorneys and other administrative staff to handle issues in-house instead of exporting them to consultants that charge as much as $600 an hour.
As The Lens reported last year, the council has long used expensive and politically connected private firms to do most of its regulatory work. In April 2019, the City Council, led by Councilwoman Helena Moreno, began a long-term process of expanding in-house expertise at CURO and reducing consultant costs with stricter billing protocols.
“It’s been talked about for years and years and years, about the fact that savings could be accomplished, but nothing was done until now,” Moreno said at a Thursday City Council utilities committee meeting. “We’re starting to finally see the results.”
Also on Thursday, Spears provided some details about how the city plans to expand internet access throughout New Orleans to help close the “digital divide” for households with no regular internet access. Spears said that her office is working with the Mayor’s Office of Utilities and the Office of Information, Technology and Innovation to implement a plan to “significantly close the digital divide by the end of next year if not sooner.”
The precise details, scope and cost of that plan weren’t immediately clear on Thursday, but a presentation from Spears included several broad ideas including internet access on public right-of-ways and public-private partnerships to help get WiFi into homes. She also mentioned the possibility of blanket WiFi access in certain high-need neighborhoods.
Spears said that a plan had already been put together by the city’s Office of Information, Technology and Innovation, and that the city had already launched several pilot programs to provide WiFi in public spaces. Mayor LaToya Cantrell’s office did not immediately respond to questions for this story.
New Orleans, unlike most cities in the US, regulates its local power provider — Entergy New Orleans — rather than relying on state-level regulators. That comes with benefits, such as being able to control the city’s decarbonization goals without having to convince the rest of a largely conservative state. But it comes with burdens as well.
Utility regulation is notoriously complex, and requires the resources to be able to match a Fortune 500 company and its teams of attorneys and policy experts. Utility regulation also requires a very specific area of expertise that can be hard to come by.
Since New Orleans first took regulatory control 30 years ago, the city has met this challenge almost exclusively by relying on outside consultants. For decades, CURO’s in-house staff hovered around two employees. When Moreno became chair of the utility committee in 2018, the office only had a single employee. Meanwhile, the city was spending about $7 million a year on utility consultants in recent years.
“What’s unprecedented about New Orleans … is that they outsource everything,” utility industry attorney Scott Hempling told The Lens in 2019. “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.”
But that dynamic began to change last year. The CURO office is still relatively small, but it’s budgeted for five positions next year. Spears said on Thursday that the economic fallout related to the coronavirus crisis had slowed the office’s growth somewhat, but that she hopes to add two more positions — an engineer and a policy director — in 2021, funded through Entergy New Orleans. That would bring the office to seven total employees.
The city also created new protocols for how the consultants bill the city in 2019. Now, the consultants have to submit extensive work plans for every new project or assignment they’re working on, detailing who’s assigned to the project, how many hours they expect to work and any other expenses they expect to have.
That accountability, combined with the greater CURO capacity, is what allowed the city to cut back on $1.2 million of consultant bills this year, Spears said.
The two major utility consultants, Dentons and Legend Consulting Group, have contracts that allow them to bill up to a combined $5.6 million. But prior to the new accountability measures, the City Council was routinely forced to pass contract amendments that allowed the consultants to exceed the contract cap. The City Council didn’t have to do that this year.
“I just think that’s really amazing,” Moreno said. “We together worked long and hard trying to figure out what were the best protocols to put in place so that we really had increased oversight on the spending on our outside consultants. And because of this increased oversight and monitoring, we’ve been able to save ratepayers over a million dollars.”
Along with the cost savings, another argument for a larger CURO office is that it allows the city to pursue new policies and ideas on its own without having to rely on the consultants. Just casually calling the consultants to float an idea could cost the city up to $600 an hour. A larger in-house staff, Moreno has argued, gives the city the flexibility to explore new ideas for how to reduce the city’s carbon footprint, increase reliability, lower bills, expand internet access and much more.
Spears said the goal is to continue to grow the office in order “to continue those cost savings, to continue to bring as much as possible in-house, and to make sure we’re using the advisors for the technical stuff that we absolutely need outside help with.”