The New Orleans City Council voted on Thursday to rehire the same two utility consultants it has relied on for decades to regulate Entergy New Orleans — legal advisor Dentons law firm and technical advisor Legend Consulting Group.
However, the council also passed a resolution aimed at changing the status quo and finding new firms as soon as possible. And its possible the council could cancel the contracts before they reach their full one-year terms.
Prior to Thursday’s meeting, some observers were concerned that rehiring those consultants signaled that the council was moving away from recent reform efforts to end the council’s near total reliance on these two expensive, out-of-town consultants to regulate Entergy.
But Councilman JP Morrell, who recently replaced Councilwoman Helena Moreno as chair of the council’s utility committee, said that simply isn’t the case. He said that as he takes the baton from Moreno, the ultimate goal remains the same — replace the existing consultants with in-house staff and a roster of qualified consultants that can be tapped for limited, specialized work.
“The goal is to use our consultants less and less,” Morrell said on Thursday.
Morrell said rehiring the two firms was “a stopgap” measure as the city relaunches its effort to find a broader pool of candidates. The council voted on Thursday to hire a “headhunter” to recruit potential alternatives to the current consultants.
The council’s utility consultants have been a source of controversy over the years. The city has been criticized for almost exclusively relying on consultants to fulfill its regulatory responsibilities while maintaining a tiny, and at times nonexistent, in-house staff.
The contracts are the most lucrative handed out by the council, and they’ve gone to practically the same group of consultants for decades. In 2019, The Lens reported on how those consultants had used political connections and contributions to help hang on to the multi-million dollar contracts year after year.
Soon after that report, Councilwoman Helena Moreno announced she would begin overhauling the way the council regulated Entergy, specifically by reducing reliance on consultants and building up staffing at the Council Utilities Regulatory Office, or CURO. In 2020, the council estimated those efforts saved the city $1.2 million in reduced consultant bills.
In September, the council rebid its two utility consultant contracts — one for legal advice and one for technical advice — for the first time since 2016. The city only received four total applicants — two for each category — including the two current consultants.
“I really wanted another opportunity to try and get more responses,” Morrell told The Lens in an interview. “Because I think that the city and the ratepayers can do better than two responses each on multi-million dollar contracts, the largest contracts that the council [awards].”
That’s why the council voted on Thursday to hire a “headhunter” to go out and recruit potential firms. Morrell said that it was necessary to actively go and search for potential firms, rather than just release general advertisements, in part because the council has been so loyal to its existing consultants.
“I think it was probably discouraging for groups that might have been interested to actually apply because they might have thought it was a pro-forma, the fix was kind of in, and it wasn’t worth it,” Morrell said.
Morrell said that would help explain why there was such little interest in such lucrative city contracts. He said the headhunters will not only find more candidates, but will also help with the council’s goal of hiring more local and disadvantaged businesses.
“It will show we’re much more serious about trying to encourage not just more submissions, but we’re also deadly serious on local and [Disadvantaged Business Enterprise] representation, which were both not stellar in the existing responses.”
The contracts are valid for “up to a year” and are worth a combined $5.8 million. But Morrell said that doesn’t mean the firms will actually get that much money or keep the contract for a full year.
Morrell said that the contracts allow the city to cancel with a 30-day notice. He said they’re better viewed as month-to-month contracts that will end as soon as the city can complete its new headhunting search.
“It’s essentially month to month,” Morrell said. “It’s up to a year, but the goal is not for this to take a year.”
More than just finding new consultants, Morrell said, the goal was to continue changing the nature of the council’s relationship with its consultants, regardless of which firm they work with. He said there were a couple things the council could do to get in line with what most utility regulators across the country do.
The first is to continue building in-house staff. CURO still only has four employees, Morrell said. He said the office was currently trying to fill an additional three to four positions.
“We’re being very bullish on bringing staff in-house.”
The second is changing how the contracts are structured. Morrell said that instead of relying on one firm to do all the legal work and one firm to do all the technical work, other regulators maintain a roster of qualified firms that can be tapped for specific projects.
“Ideally I’d have a slate of law firms that are all qualified to do the legal piece, and a slate of groups that are qualified to do the technical piece, and you make sure none of this work is centralized in a single organization ever again,” Morrell said.
But whether that actually happens will depend on how many firms the new headhunter can attract.
“If these headhunters and advisors do their job and we’re able to get robust responses, that would certainly be the best case scenario.”
Electric fleet and renewable energy
Also on Thursday, the council voted in favor of an ordinance that will begin shifting the city’s vehicle fleet to electric and other no-emissions vehicles starting in 2025.
“We understand transitioning and moving toward our clean energy goals are difficult, no doubt about it,” Moreno, who sponsored the ordinance, said on Thursday. “But we have to really keep pushing ourselves to find our way to ‘yes,’ to get these things done. The climate impacts on the city of New Orleans are certainly significant. We’ve seen the impacts with storms getting stronger and coming faster toward us. So this is at least beginning with us, with city government.”
The ordinance doesn’t force the city to replace its entire fleet by 2025. It only dictates that any new vehicles bought after that must be electric, plug-in hybrids or any other vehicle with zero tailpipe emissions. The ordinance also requires the city’s Chief Administrative Officer to submit annual reports on the status of the city’s fleet.
On Thursday, Moreno said this would only apply to “non-emergency vehicles.” The ordinance doesn’t automatically exempt emergency vehicles. It allows the CAO to grant exemptions, but says that “exemptions are disfavored and may be granted only on a case-by-case basis,” and that the exemption needs to be justified by a “substantial public-safety justification.”
The council also passed another climate-related resolution on Thursday to encourage the city government and the Sewerage and Water Board to start using 100 percent renewable energy. Unlike the electric fleet ordinance, this was a non-binding resolution, meaning the city isn’t legally obligated to make any changes. During a committee hearing on Wednesday, Moreno called it a “first step.”
In theory, Moreno said this goal could be reached through so-called “purchase power agreements” with Entergy or other energy producers to buy electricity directly from renewable power producers.
Moreno admitted that this was a tougher goal for the Sewerage and Water Board, because it produces much of its own power with diesel and gas generators.
The council did not present a cost estimate on implementing either the electric fleet ordinance or the resolution encouraging 100 percent renewables.