Could New Public Board Do a Better Job?
In New Orleans, the city council regulates the power company. This is a unique occurrence. Everywhere else across the state, the state-run Public Service Commission regulates the power companies for local municipalities. The commission regulates insures that every district has safe and reliable power at reasonable rates. Utility regulation is complex and important. Utility commissions make life changing decisions. Should the city council regulate Entergy?
The state’s Public Service Commission has five commissioners that represent different parts of the state. In New Orleans, while the entire council must approve any regulation, the utility committee interacts directly with the power company. This unique authority provides citizens direct access to all of the regulators. That council members are the regulatory body, a heightened sense of politicization affects the policy decisions.
Is this the best solution?
The notion of local control seems great. Now, council members have direct management of the power company with access to the company executives circumvents excessive bureaucracy. And for the company, New Orleans officials directly hear their concerns. Win-win right?
The complexity of utility regulation is significantly high. Even the state’s commission hires advisors and experts to help it understand their choices. And the New Orleans City Council annually spends over a million dollars on utility consultants and attorneys. Finding the sweet spot – a financially strong and profitable power company that provides safe, reliable and affordable electricity – is an extreme challenge. Add in climate change and the stakes get higher. Our Hurricane Ida experience exposes our vulnerability. 100% of the metro was out of power.
Role of the City Council
The council is the legislative and partly administrative branch of city government. New laws, potholes, marijuana laws, city budget, crime, internet and cable TV, housing, water and land use are some of the important work done by the council. Our members serve four-year terms. The approve the city budget. The council has several subcommittees that meet regularly in addition to the normal every other Thursday regular meeting.
Entergy New Orleans(ENO) is a subsidiary of Entergy Corporation, the city’s only Fortune 500 company. ENO has been the power company in New Orleans for 99 years. And ENO is guaranteed a reasonable profit. They must provide always on electricity and gas to homes and businesses. Additionally, the company must maintain the power grid for the city. ENO attempts to maximize its’ profit through efficiency and minimizing expenses while continuing to provide high quality service.
The very nature of this business partnership requires informed and committed regulation. Business intends to make the most profit possible providing desired service or products. In the case of Entergy, cutting costs to increase profits might result in potential calamity. Some have claimed the tower that collapsed during the storm is a prime example. They say the rusted and twisted metal indicates lack of proper maintenance. Though not a part of ENO, this example provides insight into the difficulty regulators face. How to oversee the wide and complex power grid.
But the New Orleans City Council is much more than just a regulatory body. The city council must provide public policy, laws, budgets, and a host of other responsibilities. And the complexity of utility regulation is immense. Even our state commission hires consultants and law firms. Furthermore, none of the current council members is a utility expert. The field is a specialty that requires specific skills and knowledge. We ask too much of council members. They are already burdened with everyday city stuff to oversee a powerful company. Combine term limits to this equation and it’s no wonder that the same questions come up year after year.
Entergy is able to monetize our city government structure. Council members cycle off every eight years. New council members usually have no knowledge of the utility committee’s actions. Sometimes the new members’ campaigns were supported by ENO. Their ability to regulate may not be compromised. However, they may have more information about Entergy’s desires than the city’s position.
Therefore a diverse new board comprised not only of City Council members, but also citizens, independent industry experts, Entergy representatives, the New Orleans representative on the Public Service Commission, and university representatives should serve staggered 8-year terms. This board should only regulate ENO. This relieves burdened and inexperienced council members. This new board will ensure that the threats of climate change are mitigated. In other words, if we can not keep the lights on, then we no longer exist.
The new power and gas board of New Orleans means we have a strong city for another 100 years.