For the second time in less than four years, Entergy New Orleans is suing the City Council to stop it from collecting a $1 million fine over increasingly frequent power outages in the city. The new lawsuit was filed in Orleans Parish Civil District Court on Friday (May 19).
The company has been fighting the fine, imposed due to frequent power failures in prior years, since it was first imposed in 2019. Entergy New Orleans sued to block its imposition and obtained a judgment in its favor last year.
However, the council almost immediately started working to reimpose it. In response, Entergy warned the council in an April letter that any further attempts to collect the penalty would lead to “expensive litigation” that would ultimately be paid for by New Orleans residents — through their tax dollars and electric bills.
Councilwoman Helena Moreno told Verite last week that the council — which regulates Entergy New Orleans — would move forward with attempts to collect the fine despite the foreboding letter.
And now, Entergy is following through on the threat.
The lawsuit asks the court to throw out an April 20 council vote — which reopened the regulatory process that could lead to the reimposition of the fine — and prohibit the council from making another attempt to open it again.
The fine was first levied in 2019 following a council investigation that found that the number of “fair-weather” outages had grown rapidly throughout the past decade, particularly in 2016 and 2017. The investigation also found that the falling reliability correlated with decisions by Entergy New Orleans’ to pull millions of dollars out of its budgets for grid maintenance and improvement.
Entergy sued, and last year, Civil District Court Judge Rachael Johnson ruled in the company’s favor, vacating the fine because the council didn’t have any clear reliability standards in place at the time.
The council argued that it had the right as Entergy New Orleans’ regulator to penalize the company for inadequate reliability even without a specific threshold. But instead of appealing the decision, the council accepted the ruling and passed a new set of regulations earlier this year setting clear minimum reliability standards.
Council members said that the new rules would not only allow them to fine the company for future reliability problems, but could be used to retroactively levy the 2019 fine. Under the fine schedule in the new regulations, Entergy’s poor reliability in 2016 and 2017 — for which the council originally levied a $1 million fine — would have resulted in a fine of almost the exact same amount: $1,005,000.
Entergy, however, argued in its letter to the council and in its new lawsuit that the court’s ruling still applies to the 2019 fine despite the new rules. It is again arguing that the fine is improper because of the lack of standards when the council approved it.
“The legal defects underlying the Penalty Resolution cannot be cured retroactively,” the lawsuit said.
“The Council is attempting to reimpose a fine for reliability performance that occurred more than six years ago and before the Council developed reliability standards,” Entergy spokesperson Lee Sabatini told Verite in an email. “The Court previously struck down the $1 million fine because there were no reliability standards in place at the time of the reliability performance at issue.”
In a Monday (May 22) afternoon statement, Councilman JP Morrell, who chairs the council committee responsible for regulating the company, called the lawsuit “disappointing,” but not surprising.
“At some point, Entergy New Orleans’ continued avoidance to do right by its ratepayers must end so that accountability may begin,” Morrell said.
“The company continues to act to avoid paying the consequences for its own actions,” Moreno added in the statement. “The people of New Orleans deserve better.”
Note: This story has been updated to include a statement from New Orleans City Councilmembers JP Morrell and Helena Moreno.
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