Whatever Happened to N.O. City Council Docket Number UD-16-01?
If you’ve been following all of the excitement at the New Orleans City Council Utility Committee over the last few months, you’re probably aware that the City’s electricity provider Entergy New Orleans (ENO) has been very busy! It is in the process of wrapping up the 2015 Integrated Resource Plan (IRP), has applied to restructure into a Texas company, and has also applied to construct a 250 Megawatt Combustion Turbine (CT) natural gas power plant. However, these action packed dockets are not the only ones worthy of the public eye. In fact, the docket that could inform the outcome of the IRP and CT, docket number UD-16-01, the Show Cause Order, seems to have fallen to the wayside. So, the question is – what happened and what will happen next?
As a quick refresher, docket number UD-16-01 was opened on July 14, 2016 by an order initiating a “show cause proceeding.” Show cause orders are generally used by Courts to compel parties to present evidence as to why a court should or should not take a specific action. In the case of this Show Cause Order, the City Council is seeking information in order to determine whether ENO was prudent in its decision making, and the information provided on a range of operations concerns. However, the Council did not specify what actions it would take as a consequence of whether ENO provided sufficient evidence to convince the Council its actions were prudent. Instead, the Council resolved that pending the close of a discovery period in January of 2017, it would make a further determination on the “most appropriate future course of action”.
What Is It All About?
In initiating this show cause docket, the Council displayed concern regarding the course of action ENO has taken in four particular areas of operation: the integrated resource planning, its proposed CT plant, a gas infrastructure rebuild, and storm hardening measures. The first two, though separate issues, are related. However, the gas re-build and storm hardening plans are separate issues from the IRP and the CT plant. Which of these areas of operation was the City Council concerned enough to open an inquiry into the utility’s chosen courses of action?
Over the course of the 2015 IRP process, stakeholders, including the Alliance, have been active participants in technical conferences and in filings within the docket. Stakeholders from across the board have raised concerns numerous times about the inputs used by ENO in its modeling software for the IRP. In particular, the Alliance and others took issue with the use of outdated cost assumptions for renewable resources, and the inadequate economic benefits given to demand side management (DSM) programs, as well as the disregard of the historic performance of existing DSM programs in the New Orleans area.
The Council recognized stakeholder frustration at the continued disregard of their positions and the unwavering decision of ENO not to incorporate these concerns into their IRP modeling. As a result, one of the things required of ENO to satisfy the show cause order was to address all of the concerns that had previously been disregarded.
In addition to stakeholder concerns, the Advisors took issue with ENO’s refusal to provide requested information. In particular, in a set of discovery questions the Advisors sought information regarding the ICF International and the Demand Side Management study conducted for the IRP. ENO at first refused to turn over the requested information claiming it was not in their control or custody. The Council believes that as ENO relies on third-party consultants in its planning process, that the information requested should be discoverable to ensure transparency of the proceedings and was ordered to turn over the requested information.
Finally, the Council raised its own concerns about the change in size of ENO’s preferred CT portfolio. In the early drafts of its final IRP, ENO called for CT technology that had only 194 MW of capacity. However, by the time the final IRP was submitted the capacity had increased to a 250 MW CT. No explanation was included with this increased size, which the Council sought to obtain through the show cause order.
In addition to the increased size of the CT plant, there was a substantial amount of concern raised by stakeholders and members of the New Orleans East community who had not been notified or engaged during ENO’s planning of the facility. Moreover, in its application to build the CT plant, ENO alluded to the fact that it already found and contracted with a company to build the CT plant. This action contributed to a perceived finality that caused alarm with both members of the New Orleans community and with Councilpersons. Through the show cause order, the Council sought to ensure that ENO was proactively engaging the community about the costs and benefits of the proposed plant.
As many New Orleanians are well aware, it is fairly common to experience loss of power. This is even more frequent during storms and hurricanes. In 2015, the Council instructed ENO to develop plans to ensure that its electrical distribution system be “hardened” in order to prevent major outages. This is called “storm hardening”. The plan that was ultimately submitted by ENO was deemed “woefully inadequate” by the Council, in particular because it found that ENO’s distribution system was compliant with national standards and only proposed enhanced operation and maintenance practices. In the order, the Council looked to Florida Power and Light and the efforts that the utility company had made to harden their system against strong Florida storms. Ultimately, the Council found that seventeen months after beginning the process to get a comprehensive storm hardening plan, they had received very little information of substantive value.
Gas Infrastructure Rebuild
Finally, the Council has been seeking information from ENO about its Gas Infrastructure Rebuild program that has been operational since the early years following Hurricane Katrina. While ENO has replaced 328 miles of salt-water inundated gas pipes throughout the City since 2007, the company has also indicated that all of the inundated pipe will need to be replaced. In the show cause order the Council requested that ENO’s plans to replace these pipes beyond the first quarter of 2017 be produced, at the time the proceedings were initiated these plans had not been made available to the Council nor had the Council been provided with a date as to when they would be. As a result of the proceeding these plans were submitted promptly.
So What Next?
Early in the docket, August 15, 2016, to be exact, the Alliance submitted comments regarding the show cause order. In particular, the Alliance recounted the challenges it and other stakeholders experienced during the 2015 IRP process, requested that a thorough investigation into alternative resources both in regards to the CT application and a new round of the Integrated Resource Process intended to end in 2018, and ultimately addressed the ongoing debate in the utility world of whether the traditional utility model provides the best results for ratepayers and utilities alike. Also early in the docket was an in-depth back and forth of discovery questions. Most of the discovery questions were to ENO, but some were from ENO to intervenors, including the Alliance.
ENO submitted the evidence it thought sufficient to address the concerns of the Council in a filing on September 29, 2016. ENO’s filing failed once again to address stakeholder concerns and instead fixated on procedural technicalities that the Company itself has not observed. This lack of information resulted in a letter written by the Advisors to ENO. The letter detailed the Advisors continued dismay at ENO’s lack of self-awareness in the IRP process. In particular, the Advisors were upset that instead of addressing the many concerns of stakeholders as it was instructed to do, ENO sought to explain why it had not considered stakeholder positions previously. Additionally, the Advisors concluded that the information explaining the size increase of 56 mw of its CT plant still had not been provided.
That being said, the Advisors have since issued comments in the IRP docket stating that what ENO has produced up to this point is the best plan we have, and it should therefore be approved.
At a utility meeting on November 2016, the show cause order was not discussed at all. There is another utility meeting approaching on December 14, and the Alliance hopes the show cause order will be addressed. However, it may not be until the new year when the discovery period comes to an end that any resolution regarding UD-16-01 is reached. Unfortunately, by that time all intervenor testimony will have been submitted in the CT docket, and all that will be left is the Advisor testimony and ENO’s rebuttal testimony. Will it be too late for intervenors to have sufficient information on the CT and why ENO chose to increase its size? If the Council approves the IRP as the Advisors have recommended, even though the company still refuses to address stakeholder concerns in a constructive manner, will this set a precedent that rewards ENO for digging its heels in? The Alliance cannot say what the outcome of the show cause proceeding will be. However, it hopes that whatever the outcome that ENO is reminded that its obligation is to serve the City of New Orleans, as guided by the regulatory body of the Utility Committee, and that operating behind a corporate veil is intolerable.