Entergy New Orleans has warned the New Orleans City Council that its renewed efforts to impose a $1 million fine on the company in response to multiple power outages in recent years would result in “expensive litigation.”
Courtney Nicholson, Entergy’s vice president for regulatory and public affairs, advised council members in a letter last month that a recommendation from a city committee urging the submission of more evidence about a potential Entergy fine was improper. Last year, a Parish of Orleans Civil District judge concluded that the $1 million fine was unlawful because the city, which regulates the utility, had not adopted any minimum reliability standards and did not have a penalty mechanism in place.
“Because the City Council had no pre-existing financial penalty mechanism in place at the time of the imposition of … the $1 million penalty, this court finds the actions of the City Council were arbitrary and capricious,” Judge Rachael Johnson said in the June 24, 2022, ruling.
An Entergy spokesperson expressed hope that the dispute could be resolved outside of the courtroom.
“We are not going to comment on a matter that is before the City Council,” Lee Sabatini said in an email to the Louisiana Record. “Our hope would be to find a constructive resolution, working with the council.”
Entergy has also said that the imposition of such a fine would eventually lead to higher electricity rates for customers.
“The proposed procedural schedule will impose significant litigation costs from the council (particularly if its advisors continue to bill hundreds of thousands of dollars to this docket), ENO and, ultimately, those costs will be borne by our customers,” Nicholson’s letter states. “... ENO respectfully requests that the council avoid further expensive litigation in this matter and forgo adoption of the proposed resolution.”
In the wake of Judge Johnson’s ruling, the council has adopted resolutions establishing a reliability standard and related potential penalties for excessive outages. But those resolutions, which were adopted earlier this year, are not enforceable until the start of 2024, Entergy said.