Judge Spares Entergy New Orleans $1M for Power Outages

(TNS) — Entergy New Orleans will be spared a $1 million fine levied by the City Council three years ago for repeated power outages between 2014 and 2017 thanks to a state judge's decision that the council has vowed to appeal.

Orleans Parish Civil District Court Judge Rachael Johnson vacated the fine against the utility in a ruling from the bench Monday. The ruling was quickly denounced by some council members who said they would be forced to appeal to try and maintain their ability to issue fines for future outages.

"This decision flies in the face of our regulatory authority and weakens the Council's best tool to hold Entergy New Orleans accountable when their actions harm the people of this City," Council Vice President JP Morrell said in a prepared statement. "We have no choice but to challenge this ruling."

Maintenance, Spending Cuts

At issue was a three-year-old lawsuit from Entergy New Orleans, which was filed to stop the council from enforcing a fine it levied in 2019.

At the time, the council alleged that the utility in 2013 spent $1 million initially slated for system maintenance on other priorities, and then scaled back on upgrades to the distribution system by about $21 million in the two following years. The council argued that those decisions led to a string of unnecessary power outages that disrupted the lives of residents and business owners.

However, the utility argued in the lawsuit that the council had never created a reliability standard by which it could be judged. One Entergy attorney likened the council's fine to making an arrest for a criminal statute that's still sitting in a legislative committee.

In court, the council said that as Entergy New Orleans' regulator — with powers akin to the state Public Service Commission's authority over other utilities in Louisiana — it has nearly unlimited authority to issue penalties as it sees fit.

In a statement released late Monday, Entergy New Orleans said it has increased its reliability by 30 percent since 2017 and characterized the fine as an outdated enforcement action.

"The Court's decision today involved a fine for reliability performance that occurred over five years ago in years with hotter and wetter weather than the years that preceded them," said Lee Sabitini, a spokesperson. "Going forward, the company supports the Council issuing objective regulations regarding its reliability performance and potential penalties so that expectations are clear and known."

The judge's decision is a blow to non-profit groups like the Alliance for Affordable Energy, which has argued that the council should aggressively wield its regulatory authority to punish Entergy for failing to harden its grid.

That group has expressed concerns that the lawsuit has created a chilling effect for the council. Leaders have pointed to the Mardi Gras Day 2021 power outage, which the council's advisors said knocked out power to four times as many customers as necessary due to avoidable computer errors, and for which council hasn't yet moved to issue a fine.

No Issues With Ida

And while many residents and advocates are still smarting from the weeklong outage in the wake of Hurricane Ida last year, a recent report from the council's utility advisors appeared to back Entergy New Orleans' statements that it handled the storm as best it could.

In a report submitted on May 6, council advisors stated that "ENO was well prepared for the storm, and nothing has come to the advisors' attention during this after-incident review to suggest that ENO's actions were not in accordance with prudent utility practices."

The citywide power outage was due to the loss of transmission paths owned by utilities, including Entergy Louisiana, that are outside of the council's purview, the advisors said.

If the judge's decision Monday is upheld, it could imperil the council's ability to levy fines for future outages. Entergy New Orleans said in a June 1 brief that the City Council still has yet to create reliability standards that could set up future fines.

"The council still has not adopted reliability standards or a penalty mechanism, leaving ENO vulnerable to the arbitrary whims of a political body whose members change every four years," the utility said.

Entergy's lawsuit had lain largely dormant between 2020 and this year, when both sides re-engaged in litigation.

A written copy of Johnson's judgment was not immediately available. Morrell and Council President Helena Moreno said the council's appeal will follow upon the release of a formal decision.


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