Political connections, contributions helped utility consultants keep lucrative contracts for decades, former council members say By Michael Isaac Stein

Michael Isaac Stein / The Lens Council utility consultants responding to questions from the City Council at a Feb. 21, 2019 meeting.

Originally published in The Lens, by Michael Isaac Stein
​March 28, 2019

Click here to view original article

In 1985, New Orleans residents decided that New Orleans Public Service Inc. — now called Entergy New Orleans — should be regulated by the City Council rather than the state’s Public Service Commission, which had overseen the utility for the three previous years. Ever since, the council has relied almost entirely on a group of outside consultants to fulfill that authority.

Council members have come and gone over the past 30 years, but that group of consultants has remained remarkably consistent. The council’s primary legal adviser — Washington D.C. attorney Clinton Vince of the law firm Dentons — has advised council members on utility matters since 1983. So had the lead technical adviser, Joseph Vumbaco, until he passed away in 2018. His Denver-based firm, Legend Consulting Group, still holds the contract. Walter Wilkerson served as the Council’s local legal consultant from 1987 until he also passed away in 2018. Wilkerson’s firm still has the contract.
Those contracts are far and away the most lucrative awarded by the council, adding up to nearly $7 million a year. Most of those costs are paid by Entergy, but they’re ultimately passed on to ratepayers through their utility bills. Some observers question how such a prized gig could remain locked down by the same people and firms for so long.

“No one has a government contract for life,” said Monique Harden of the Deep South Center for Environmental Justice. “These advisers have somehow managed a way to do that. And I believe it’s fueled by the way in which they give to political organizations and people running for office.”
​
Harden is representing a coalition of environmental and consumer advocacy groups in a lawsuit against the City Council over its decision last year to approve Entergy’s $210 million power plant in eastern New Orleans. The suit focuses on the prominent role the advisers played in the application process, with the plaintiffs arguing that the firms played conflicting roles as both advocates for the plant and fact-finders for the City Council. On Tuesday, Harden laid out those arguments for Civil District Court Judge Piper D. Griffin, who did not immediately issue a ruling.

“I don’t want to insinuate that anyone did anything wrong, because that’s the way things were done. But to me, it could have been better.”
—Former City Councilwoman Shelley Midura

Harden is an outspoken critic of Entergy and the way the council regulates it. But she isn’t alone in her suspicions. Similar claims have been hurled at the advisers dating back to the 1980s. And three former council members — Shelley Midura, Oliver Thomas and Stacy Head — told The Lens that the complaints are far from baseless.
​
“Certainly, politics come into play,” Head said. “And these advisers have been skilled at making sure they have alliances that will benefit them in keeping relationships with council members and getting their contracts renewed.”

Midura agreed that “historically, that’s what would happen.” But while she criticized the system, she was hesitant to condemn any individual council member or consultant.

“I don’t want to insinuate that anyone did anything wrong, because that’s the way things were done,” she said. “But to me, it could have been better.”

Representatives from the two out-of-state consulting firms, Dentons and Legend, denied the allegations and said the council continues to hire them because of the quality of their work. Vince called them “serious but demonstrably false accusations from our detractors.”

​Midura, Thomas and Head were at various times members of the council’s utility committee, which oversees the advisers’ contracts. And they said that historically, political connections and contributions factored in to who got hired.

​“When you talk about a crown jewel committee, that’s probably the most influential council committee,” said Thomas, who was chair of the utility committee from 2006 to 2007. “That’s where you can raise money. And more importantly than being able to raise money, that’s where you place your relationships and where you can help people who are trying to get involved in that particular industry. So that’s a plum jewel.”

Unlike the city’s executive branch — which is responsible for hundreds of millions of dollars in contracts — the City Council only awards a few contracts each year. In terms of total dollar values, the majority goes to the utility consultants.

Midura, Thomas’ successor as utility chair, said that she couldn’t directly speak to what happened before she joined the committee, but added that traditionally, political favoritism played a role in who got the consulting contracts.

“What I know is that it used to be if you were the chair and you wanted to award someone a contract, you could do it through that committee,” she said. “I tried to make [the selection process] stronger so that it would be a lot less ‘who do you know’ and more on the merits.”

During her tenure, Midura attempted to make a number of changes to how the committee chooses its consultants. While many of those ideas never reached fruition, she was able to convince the council in April 2007 to pass a non-binding resolution in which the members promised not to accept donations from Entergy or the utility advisers. Two similar motions were passed by later councils in 2010 and 2016.

It’s neither illegal nor uncommon in Louisiana for government contractors to make campaign contributions to the politicians that hire them. And prior to the April 2007 resolution, members of the utility committee received a steady stream of campaign contributions from utility advisors, adding up to tens of thousands of dollars. Even after 2007, several council members received campaign contributions from utility consultants.

“That’s where you can raise money. And more importantly than being able to raise money, that’s where you place your relationships and where you can help people who are trying to get involved in that particular industry. So that’s a plum jewel.”
—Former City Councilman Oliver Thomas

Thomas’ campaign finance records from his time on the council show thousands of dollars in contributions from several utility advisers, dating from at least 2002 to early 2007. The Lens identified one small contribution of $250 to Head from Bruno and Tervalon — the utility committee’s accounting contractor — in 2015. We could not identify any such contributions to Midura, who said in 2007 that she did not accept campaign money from contractors involved in regulating Entergy, according to an article in The Times-Picayune.

​Clint Vince’s law firm, Dentons, also gave $25,000 to the Louisiana Democratic Party’s political action committee between 2013 and 2018, according to state campaign finance records. State Sen. Karen Carter Peterson, the chair of the Louisiana Democratic Party since 2012, was hired by Dentons in 2014.

“Dentons does not have a relationship with the Louisiana Democratic Party,” Peterson said in an email to The Lens. “Separate and apart from my role with Dentons, I serve as chair of the Louisiana Democratic Party.”

There also appears to be a longtime relationship between the utility consultants and the Black Organization for Leadership Development (BOLD), a local political organization based in Central City. That relationship can be traced back at least to 1987, when the council hired a firm run by Sidney Cates IV and then-Tax Assessor Kenneth Carter. Carter, a co-founder of BOLD and the father of Karen Carter Peterson, was a close friend of then-Councilman Jim Singleton, another BOLD co-founder.

Ken Carter died last year. Cates, who is now an Orleans Parish Civil District Court judge, has been endorsed by BOLD in past elections. His son, Sidney Cates V, is currently the Political Director of the organization. He did not respond to repeated requests for comment on this story.

During a February 2019 Council meeting, Councilman Jay Banks came under fire over his work for Legend Consulting Group prior to being elected. Banks is currently BOLD’s Operations Chief and has worked within the organization for years. During Singleton’s time on the council, Banks served as his chief of staff and has described him as a mentor.

Banks later revealed that he worked for Legend as a government liaison from 2013 until August 2017, right before qualifying for the 2017 council election. He did not disclose his employment with Legend on personal financial disclosures submitted to the state. Banks also said that he worked for Entergy between 2005 and 2008.

Banks’ chief of staff, Jarvis Lewis, told The Lens in an email that Banks “believes the advisors have been prudent in their work on behalf of the ratepayers” and that he “is not aware of any connection between the advisors and BOLD.”

In an email, current BOLD President Darren Mire said, “If you want information about professional relationships and contracts, you should speak with the individuals involved in the same.”

​“I’m sure there was a friendship or a relationship that existed,” Singleton told The Lens in an interview. “Obviously Ken Carter and Judge Cates were the two that were part of the team, and I guess I probably had something to do with them getting involved.”

“That was no different to me from the contractors who were doing the streets, engineering firms and all across the board. I think we got contributions from anyone you could get them from.”
—Former City Councilman Jim Singleton

He added that while he took contributions from the consultants, it wasn’t his primary motivation in assigning the contracts. As for the political influence of the utility committee, he said that was merely politics as usual in New Orleans.

​“That was no different to me from the contractors who were doing the streets, engineering firms and all across the board,” he said. “I think we got contributions from anyone you could get them from.”

He also said that regardless of the contributions, they still demanded quality work from the consultants. Thomas had a similar recollection.

“Singleton might have played his politics, I might have played my politics, but we demanded a certain amount of accountability and delivery of service,” Thomas said.

On the current council, Banks appears to be the only member with a professional link to council utility consultants.

Councilman Jared Brossett, who serves on the utility committee, received $8,500 in campaign contributions from utility consultants — including Vumbaco, Vince and Wilkerson — while he was serving in the state House of Representatives. Vumbaco’s wife, Linda Vumbaco, also contributed $750 to Brossett’s campaign fund in 2011, according to campaign finance records. Brossett’s office did not respond to requests for comment.

And Councilman Jason Williams, who served as utility chair until May 2018, is a “Pillar Chair” of the Dentons Smart Cities & Communities Think Tank. The organization was started by Vince and was first announced in February 2018. Current utility committee chair Heleno Moreno is a member as well, as is Erin Spears, the chief of staff of the Council Utilities Regulatory Office (CURO) — the council’s in-house utility regulatory division — and several of the council’s technical consultants from Legend. Peterson is also a “Pillar Chair.” The think tank has 180 total members, according to Vince.

​In May 2018, the City Council launched a new Smart and Sustainable Cities Committee, for which Dentons is performing billable work, according to Vince.

Williams’ Communication Director, Katie Hunter-Lowrey, told The Lens that Williams is not compensated for his role on the think tank, and that none of the advisers, their firms or their co-workers have either made contributions or helped Williams with fundraising. Moreno’s office declined to comment for this story.

​As for the new committee, Vince said “the Council, not the advisers, set up the Smart and Sustainable Cities Committee.”

​‘Blurring of the line’

In emails to The Lens, Vince said there were “serious problems” with the assertion that political contributions and connections helped the advisers keep their contracts.

“The allegation that we have been selected for 3 decades through multiple competitive selection processes with multiple Councils, generally by votes of 6-1 or 7-0, because of political contributions is false,” Vince wrote. “We have been selected because of our highly effective performance, win rate and credentials.”

​He also sent a 31-page document enumerating the various reasons why he and the Dentons team were repeatedly selected by the council. They include the firm’s role in ending the Entergy System Agreement, absorbing Algiers into Entergy New Orleans service area and Entergy New Orleans’ partial purchase of a the Union Generating Power Station in Arkansas.

The fact that the council’s utility advisers have successfully litigated and negotiated on behalf of the council is acknowledged even by some of their critics. But the issue, they said, is that they don’t know whether a truly competitive bidding process would have yielded better results.

​“Some of the consultants might be the best for us,” Midura said. “Now I can definitely say that isn’t true of everybody. But I do think if the process was more transparent and good-government oriented then this wouldn’t be a question. But right now it’s murky.”

“The allegation that we have been selected for 3 decades through multiple competitive selection processes with multiple Councils, generally by votes of 6-1 or 7-0, because of political contributions is false.”
—Clint Vince, Dentons

Another concern is the quantity of the work done by consultants, rather than the quality. In 2015, the New Orleans Office of Inspector General released a report on how the city regulates Entergy and found that 96 percent of the council’s 2013 regulatory budget was spent on consultants. The report also found that Council Utilities Regulatory Office was woefully understaffed, with just two employees in 2013. Today, the office has risen to five employees, but that is still an aberration when compared to other utility regulators.

“What’s unprecedented about New Orleans, putting aside only having five people on staff, is that they outsource everything,” attorney Scott Hempling told The Lens. “That’s what’s unusual.”

Hempling has represented 19 U.S. utility regulatory bodies, according to his resume, and wrote a textbook on utility regulatory law.

​While it is routine for regulators to employ consultants for their specialized expertise in areas such as litigation at the Federal Electricity Regulatory Commission or corporate mergers, critics question whether it is necessary to pay rates as high as $600 an hour for tasks that could be handled by full-time city employees. Overall, the Inspector General report found that Entergy New Orleans customers were paying roughly six times more in regulatory costs than costumers of Entergy subsidiaries regulated by the Louisiana Public Service Commission.

Click the image to view entire document

The IG report went on to say that because the city lacked in-house staff, and because utility regulation is only one of many responsibilities of the council, the unelected consultants were the ones truly in the driver’s seat, creating “an echo chamber in which their findings and recommendations go unchecked.”

“I’m not aware of any place that has any resemblance to that paucity of internal expertise and the near total dependence on outside expertise,” Hempling said. “No place.”

“It’s just that there seems to be some blurring of the line here,” former Councilwoman Susan Guidry said. “When I couldn’t get them to do what I wanted them to do, it became a matter of me relying on myself and doing my own research. I was fighting a losing battle.”

Midura said that the complicated nature of utility regulation encourages a passive approach from the Council.

“Nobody gets elected to the council to be an expert on utility issues, so trying to get anyone to pay attention to the issues versus rewarding their friends with a contract is tough,” she said. “The learning curve is huge. And you’re learning from the very people that you’re going to be deciding on whether or not to give a contract to. You’re totally dependent on them for everything.”

Vince questioned the conclusions in the Inspector General report.

He noted that the report was funded through a third-party grant. And its author — an outside consultant hired by the Office of Inspector General — later used his own findings to try and solicit a city job. According to a 2015 story by Fox 8 News, shortly after the report was released, the consultant wrote a letter to the city that said, in part, “I suggest you retain me immediately to address those issues.”

​Head, Thomas and Midura all said that the solution to the over-reliance on consultants is to build more in-house expertise. But according to Head and Thomas, the advisers actively undermined the Council’s attempts to do that.

Read the rest of the article here