RESOLUTION
NO. R-19-____
CITY HALL:
BY:

COUNCILMEMBERS BROSSETT, MORENO, WILLIAMS, GIARRUSSO AND
BANKS

IN RE: DIRECTING ENTERGY NEW ORLEANS, INC. TO INVESTIGATE AND
REMEDIATE ELECTRIC SERVICE DISRUPTIONS AND COMPLAINTS AND TO
ESTABLISH MINIMUM ELECTRIC RELIABILITY PERFORMANCE STANDARDS
AND FINANCIAL PENALTY MECHANISMS
DOCKET NO. UD-17-04
RESOLUTION AND ORDER REGARDING PRUDENCE INVESTIGATION
REGARDING ENTERGY NEW ORLEANS, LLC ELECTRIC
SERVICE DISRUPTIONS AND COMPLAINTS

WHEREAS, pursuant to the constitution of the State of Louisiana and the Home Rule
Charter of the City of New Orleans (“Charter”), the Council of the City of New Orleans
(“Council”) as the governmental body with power of supervision, regulation, and control over
public utilities providing service within the City of New Orleans; and
WHEREAS, Entergy New Orleans, LLC (“ENO” or “Company”) provides electric service
within the City of New Orleans; and
WHEREAS, on June 8, 2017, Councilmember Jared Brossett sent a letter to ENO noting
the Councilmember’s concerns regarding ongoing and increasing customer complaints related to
electric outages and reliability issues “during what appears to be normal electric system operations
and during what I would describe as lesser storm events.”1 The letter directed ENO to provide

1

See Council Resolution No. R-18-475 at 1.

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 detailed information explaining the specific problems and causes of the outages for the previous
12 month period, in addition to other specific information; and
WHEREAS, at the June 28, 2017 Council Utility, Cable, Telecommunications, and
Technology Committee (“UCTTC”) meeting, ENO made a presentation, that provided information
regarding ENO’s reliability performance, outage causes, and ENO’s current reliability programs.
At that meeting, the UCTTC strongly voiced its concerns regarding ENO’s reliability issues, and
posed numerous questions to ENO concerning such issues; and
WHEREAS, on July 10, 2017, ENO responded to Councilmember Brossett’s letter,
providing detailed information on its outages occurring for the 12 month period of June 1, 2016
through May 31, 2017. ENO also provided statistical information regarding its 2017 System
Average Interruption Frequency Index (“SAIFI”) and System Average Interruption Duration Index
(“SAIDI”) and the prevailing weather conditions for ENO’s entire distribution system for the same
time period;2 and
WHEREAS, on August 10, 2017, the Council unanimously adopted Resolution R-17-427
establishing Docket No. UD-17-04, for the Council’s investigation into electric outages, and
reliability issues in Orleans Parish in general, ENO’s level of distribution Operations and
Management (“O&M”) staffing and scheduling, and to consider the establishment of minimum
reliability performance standards for all of the utilities under the Council’s jurisdiction including
the establishment of financial penalty mechanisms for failure to meet such minimum reliability
standards as established by the Council in this docket; and

2

Id. at 2.

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 WHEREAS, among other things, Resolution No. R-17-427 directed ENO to “provide the
Council with its formal plans, budgets, and schedules for improving the reliability performance of
its distribution system and recommended minimum SAIFI and SAIDI standards to measure the
reliability performance of its distribution system for monitoring and evaluation by the Council and
its Technical Advisors;”3 and
WHEREAS, on November 10, 2017, ENO filed its initial reliability plan (“Initial Plan”)
with the Council, which consisted of six major reliability-focused programs described as: the
FOCUS Program, the Backbone Program, the Internal Program, the Pole Program, the Equipment
Inspection Program, and the URD/Cable Renewal Program. Each of these programs was generally
described; and
WHEREAS, the Technical Advisors performed a review of ENO’s Initial Plan, and
concluded that it lacked adequate detail concerning ENO’s proposed projects, schedules, a
comparison of capital and O&M costs by years, and the location of each proposed project included
in its Initial Plan’s FOCUS, Backbone, Internal, Equipment Inspection, and URD/Cable Renewal
Programs, despite the Council’s clear direction that the plan should have included more detailed
information; and
WHEREAS, the Technical Advisors found that the lack of significant details thwarted the
Council’s ability to perform a “thorough and comprehensive review of ENO’s Reliability Plan and
to constantly measure ENO’s performance in accomplishing its Reliability Plan as proposed; 4 and

3
4

Id. at 3.
Id.

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 WHEREAS, the Technical Advisors concluded that the Initial Plan “contained no
information upon which the Council can measure any improvement in ENO’s reliability
performance;”5 and
WHEREAS, after the Council’s adoption of Resolution R-17-427, numerous distribution
outages throughout ENO’s system continued to occur with great frequency, and Councilmembers
continued to receive numerous customer complaints regarding the occurrence of such outages,
especially related to equipment failures during normal clear weather conditions; and
WHEREAS, the Council became increasingly concerned about the continuation of ENO’s
pattern of frequent large-scale distribution outages and customer service interruptions, often for
extended periods of time; and
WHEREAS, on April 5, 2018, the Council unanimously adopted Resolution No. R-18-98,
which directed ENO “to show cause…why ENO’s inaction and omissions in mitigating and
remediating electric service disruptions and complaints and unacceptable reliability performance
should not be presumed imprudent.”6 In addition, the resolution directed ENO to file a revised
reliability plan that would be required to include certain specified and detailed information;7 and
WHEREAS, the resolution also directed the Advisors to file a report with the Council
regarding: “(i) their review and recommendations regarding ENO’s revised reliability plan; (ii)
recommending proposed minimum reliability standards upon which ENO’s future reliability
performance can be evaluated; and (iii) proposing financial penalty mechanisms for ENO’s non-

5

Id. at 6.
Council Resolution No. R-18-98 at 8.
7
Id. at 9.
6

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 compliance with such minimum reliability performance standards for the Council’s consideration
and future action;”8 and
WHEREAS, on October 31, 2018, the Council unanimously adopted Resolution R-18-475
expressing the Council’s view that “for nearly two years, the Council has been expressing its
discontent with the unacceptable level of outages on ENO’s distribution system and the
Company’s overall poor, reliability performance;”9 and
WHEREAS, the Council established a prudence investigation “to determine whether
ENO’s inaction and omissions in mitigating and remediating electric service disruptions and
complaints and addressing the performance of the distribution system as discussed herein were
imprudent and whether financial and/or other penalties should be imposed by the Council;”10 and
WHEREAS, the resolution established a procedural schedule that directed ENO to file
“such testimony, evaluations, analyses, workpapers, and other information, as the Company
believes will be of assistance to the Council in this prudence investigation;”11 and
WHEREAS, the resolution provided for comments responsive to ENO’s filing to be filed
by any participating intervenors and the Council’s Advisors, as well as providing for rebuttal
testimony by ENO; and
WHEREAS, although there were intervenors in the Docket, none submitted comments in
response to ENO’s filing; and

8

Id.
Council Resolution No. R-18-475 at 9.
10
Id. at 13.
11
Id. at 14.
9

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 WHEREAS, the procedural schedule has been completed and the record has been certified
by the Hearing Officer; and
BACKGROUND
WHEREAS, this Council proceeding is in response to the significant customer complaints
regarding declining day-to-day distribution reliability on the ENO system; and
WHEREAS, the Initial Plan filed by ENO was found by the Technical Advisors to be
functionally useless and structured in a manner that would thwart the Council’s efforts to
effectively “perform a thorough and comprehensive review of ENO’s Reliability Plan and to
constantly measure ENO’s performance in accomplishing” the plan;12 and
WHEREAS, ENO’s repeated failure to reflect the sense of urgency expressed by
Councilmember Brossett, the UCTTC and the Council, up to and including the filing of a
functionally useless reliability plan, resulted in the Council unanimously adopting Resolution No.
R-18-98, which directed ENO to submit a revised remediation plan following specific details, and
to show cause why it should not be found to have acted imprudently for its “inaction and omission
in [not] mitigating and remediating electric service disruptions and complaints and unacceptable
reliability performance;”13 and
WHEREAS, the rising concerns and frustrations of the UCTTC regarding reliability issues
were strongly stated at subsequent meetings when members posed numerous questions to ENO
concerning those issues; and

12
13

See Council Resolution No. R-18-475 at 3.
See Council Resolution No. R-18-98 at 8.

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 WHEREAS, at the June 28, 2018 UCTTC meeting, Councilmembers learned that ENO
had cut distribution system funding just prior to the decline in reliability. Ms. Melonie Stewart,
ENO Vice President of Customer Service, appeared at the meeting. Ms. Stewart admitted that
“[a]s we [ENO] backed off on that funding slightly, we did see the reliability go in the wrong
direction.”14 The Council also learned at that meeting that the “slight” reduction in funding was
$1,000,000 in 2014 according to Ms. Stewart.15
MS. STEWART:
So, Councilmember Brossett, Madam Chair, members of the Utility
Committee, we do have a plan, and we do recognize that our performance has not
been up to par over the past several years. In 2013, we had outstanding distribution
reliability, and we did back off slightly on our funding because we didn’t want to
spend money on a system that was performing extremely well. We wanted to
ensure that we were spending our money in the right places, that we were balancing
costs and reliability, and the reliability on the distribution system was outstanding
in 2013. As we backed off on that funding slightly, we did see the reliability go in
the wrong direction….16
COUNCILMEMBER WILLIAMS:
What was the date that you said that you all - - I think I am using
your word correctly - - slacked off on the investment? What was the date of that?
what year was that?

Transcript, UCTTC Meeting June 28, 2018 (“June 28, 2018 Transcript”) at 75.
Id. at 76-77.
16
Id. at 74-75. (Emphasis added.)
14
15

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 MS. STEWART:
In 2014. In 2014 we reduced our investment in the distribution
system by about a million dollars;17 and
WHEREAS, Councilmember Jason Williams reflected the reaction of the Committee:
… I struggle with the fact that today you say you realize that you are not investing
enough and you are falling short. You said that, but the reaction to that again seems
delayed, and I am certain that shareholders of Entergy did not suffer during those
times…. Businesses, people, citizens, ratepayers suffered during those times. Why
wasn’t there a quicker reaction to reinvesting in that grid?18
In response Ms. Stewart replied:
… When we look at the performance of our distribution and transmission system,
our entire system, it’s like a link in a chain. If there’s one weak link in that chain,
then power is lost, whether the weak link is on the distribution system, within the
substation, within the transmission system. We are always monitoring performance
of our entire system to ensure that we are spending the dollars in the right places.
We are always trying to balance cost and reliability.
When we saw that our reliability on the distribution system was
performing very well, we looked at the other links in the chain and said, ‘Are there
other areas that are vulnerable and should we shift some of that funding from the
distribution system upstream to ensure that other potential challenges don’t cause
outages?’ So that’s what it was. It was really a shift in funding. We looked at all
the links in the chain to make sure that they were all strong.19
COUNCILMEMBER WILLIAMS:
I think it’s also a matter of perspective. I would say that the system
was performing better. I don’t know that I would say the system was performing
well. I mean, you don’t have to ride very far in the City of New Orleans to realize
that, you know, we don’t have the most modern grid in the world and it is not at the
top of its game; right? So right now I am just talking about equipment failures;20
and
WHEREAS, the Council also learned from Ms. Stewart that the key reliability benchmarks
followed by ENO at the time were clearly declining:

17

Id. at 76-77. (Emphasis added.)
Id. at 77.
19
Id. at 77-78.
20
Id. at 78-79.
18

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 MS. STEWART:
So most of your reliability - - in this industry, reliability benchmark
data is available on SAIFI, the frequency of outages, and SAIDI, the duration of
outages. We will monitor our progress based on SAIFI and SAIDI and compare
ourselves to peers in our industry and share that information with you to ensure that
we are making improvements that are appropriate.
COUNCILMEMBER MORENO:
… Let me have the advisors come in. Can you let us know what the
SAIFI and SAIDI numbers have been doing over the past couple of years?
MR. MOVISH:
Yeah. ENO’s reported information to the EIA shows that the
SAIFI’s are - - the frequency of outages is getting longer, and it shows that the
duration of outages is getting longer.
COUNCILMEMBER MORENO:
So, Phil, what you are saying is that it’s actually getting worse?
MR. MOVISH:
Yes;21 and
WHEREAS, ENO provided information on its outages occurring for the 12 month period
of June 9, 2016 through May 31, 2017. ENO also provided statistical information regarding its
2017 System Average Interruption Frequency (SAIFI) and System Average Interruption Duration
Index (SAIDI) and the prevailing weather conditions for ENO’s entire distribution system for the
same time period;22 and
WHEREAS, according to ENO’s data the Advisors were able to determine that ENO’s
SAIDI results had declined significantly between 2013 and 2017 as did their SAIFI results. In
addition, the information determined that 56% of the outages during the time period occurred
during fair weather conditions. Further, the Advisors’ preliminary analysis revealed that of the
21

Id. at 84-85.
The Technical Advisors’ analysis of ENO’s data was reported in the filing of the “Technical Advisors’ Review of
Entergy New Orleans, Inc.’s Outages and Reliability Performance Council Docket No. UD-17-04, Initial Report to
the Council of the City of New Orleans.”
22

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 total 2,599 outages from all causes that occurred in ENO’s distribution system during the June 1,
2016 through May 31, 2017 period, more than one-third were the result of equipment failures;23
and
WHEREAS, the Technical Advisors’ analysis indicated that a total of 2,599 outages from
all causes occurred in ENO’s distribution system during the June 1, 2016 through May 31, 2017
period taking into account all weather conditions, of which a total of 1,462 outages from all causes
occurred during fair weather conditions, and the Technical Advisors noted that many of the outages
reported by ENO were of significantly longer duration; and
WHEREAS, the Technical Advisors’ analysis indicated that of the 2,599 total outages that
occurred during June 1, 2016 through May 31, 2017, approximately 56% occurred during normal
business hours between 8:00 a.m. and 5:00 p.m., and approximately 44% occurred outside of
normal business hours starting at 5:00 p.m. and ending 8:00 a.m.; and
WHEREAS, approximately 48% of all outages that occurred between 8:00 a.m. and 5:00
p.m. were greater than 2 hours in duration, and approximately 31% of outages during this time
period were greater than three hours in duration; and
WHEREAS, 54% of all outages that occurred during 5:00 p.m. and 8:00 a.m. were greater
than 2 hours in duration and 38% of outages during this time period were greater than 3 hours in
duration; and
WHEREAS, the ENO data and the Technical Advisors’ analysis were sufficient to confirm
the Council’s concern and to support additional investigation; and

Technical Advisors’ Review Initial Report to the Council of the City of New Orleans, dated October 31, 2017
(“Technical Advisors’ Review of Initial Report”), Table 1 at 3.
23

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 WHEREAS, after the Technical Advisors rejected ENO’s Initial Plan, and the Council
directed ENO to file a Revised Reliability Plan, which further delayed progress on analyzing,
approving and implementing such a plan; and
WHEREAS, the Council continued to express serious concerns about ongoing reliability
problems and ENO’s lethargic response. As Councilmember Brossett expressed it:
You know, I don’t - - I am still dismayed at the level of urgency and action today.
I mean, the level of lack of preparation for the Council, the Council’s Utility
Committee, is plainly awful. You all have to present us with an action plan, as Mr.
Vince stated, and treat it like a crisis because our ratepayers deserve better;24 and
WHEREAS, at the July 19, 2018 UCTTC meeting, the Council expressed serious concerns
about ENO’s inability to answer basic questions regarding the status of its distribution equipment
and the overall condition of its assets, which raised the concern that ENO was not giving the
necessary attention to the reliability problems; and
WHEREAS, ENO’s presentation at that meeting raised doubts as to whether ENO even
properly understood its own system. Chair Helena Moreno pointed out:
…this is a serious matter, that we need to understand just the overall condition of
your assets, and I am not quite understanding your asset management process or if
you really have one that's fully vetted out or that -- you know, you can't even
come to the table and explain to us just the very basics of what your assets look
like;25 and
WHEREAS, Councilmember Giarrusso, addressing ENO executives said:
.… So I added up based on your top ten outage causes equipment failures … and I
got 5,065 from 2013-2018…. If you divide that by six years, you get 845 per year,
which means 2.3 times a day we are having an equipment failure right now; 26 and

Transcript, July 19, 2018 UCTTC Meeting (“July 19, 2018 Transcript”) at 54. (Emphasis added.)
Id. at 17.
26
Id. at 39.
24
25

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 WHEREAS, Chair Moreno summarized: “Well, at the end of the day, you still have the
majority of the outages for Entergy being caused by equipment failures…;”27 and
WHEREAS, as a result of the information provided by ENO and the concerns expressed
by the Council, the Council unanimously adopted Resolution R-18-475 initiating a prudence
investigation regarding ENO’s decisions and actions relating to service disruptions and
complaints. The resolution directed ENO specifically to “file…such testimony, evaluations,
analyses, workpapers, and other information, as the Company believes will be of assistance to the
Council in this prudence investigation.”28
ENO’S RESPONSE
WHEREAS, on January 10, 2019, ENO filed its “Response to Prudence Investigation
pursuant to Resolution No. R-18-475” (“Initial Response”), which included the Supplemental
Direct Testimony of Tad S. Patella and Direct Testimony of William L. Sones; and
WHEREAS, ENO argued in its Initial Response that Resolution No. R-17-427
presupposed that there would be a consideration of establishing minimal reliability standards and
financial penalty mechanisms as prerequisites to the imposition of any reliability related
deficiencies by ENO; and
WHEREAS, ENO stated that “if the purpose of this docket was to establish minimum
reliability standards and associated financial penalties for failure to meet such standards, no such
standards were in place at the inception of this docket. Moreover, to date, no such minimum
reliability performance standards or financial penalty mechanisms have been proposed by the

27
28

Id. at 31
Council Resolution No. R-18-475 at 14.

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 Advisors or any other party to this docket and, accordingly, the Council has neither established
nor considered the establishment of any minimum reliability standards or associated financial
penalties. Because the Council has not established minimum reliability standards or any penalties
associated with failure to meet any such standards if adopted, no financial penalty should be
imposed on ENO retroactively for failing to meet some standard established after the fact;”29 and
WHEREAS, ENO asserted that without minimum reliability standards the cost associated
with attaining and maintaining those standards cannot be determined:
However, in order to gauge the level of investments ENO must make and the level
of costs it must expend to meet or exceed a Council-imposed minimum reliability
standard, it must know what that standard is. If the Council expects 1st quartile
performance, there will be a certain cost associated with achieving and maintaining
that level of reliability. If the Council expects 2nd quartile performance, presumably
there will be a somewhat lower level of cost associated with attaining and
maintaining that level of reliability…. But if the Council is going to seek to penalize
ENO for not attaining a certain level of reliability, it should first enact the standards
it plans to impose, so ENO can assess the level of financial commitment needed;30
and
WHEREAS, ENO also argued that the Council improperly “presumed” that ENO acted
imprudently with respect to its distribution reliability and that the burden should be on the Council
to establish imprudent conduct; and
WHEREAS, ENO asserted that it “has shown that it has reacted reasonably and prudently
in the face of increased distribution-related outages in 2016 by significantly increasing its
reliability-related investments and expenditures and by setting forth a detailed and reasonable plan
for combating those increases;”31 and

29

ENO Response to Prudence Investigation dated January 10, 2019 at 7-8.
Id. at 8.
31
Id. at 9.
30

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 WHEREAS, ENO argued that in 2016 ENO “ramped up its reliability spending by $10
million over its baseline reliability budget and committed to spending an additional $30 million
on storm hardening projects;”32 and
WHEREAS, ENO claimed that these efforts “appear to be having a positive effect, with
preliminary distribution line customer interruptions in 2018 declining by approximately 20% when
compared to 2017 distribution line customer interruptions. Although these distribution line
advances were offset in 2018 by a challenging year for transmission-related customer
interruptions, it is clear that the hard work that is being done by our motivated reliability team is
showing progress;”33 and
WHEREAS, ENO relied upon the Supplemental Direct Testimony of Tad S. Patella, P.E.
who addressed actions taken by ENO in 2018 to address distribution reliability including (1) the
establishment in 2018 of the dedicated “Fix-It-Now (“FIN”) reliability crew and the success that
the crew has had in identifying potential outages before they occur and fixing the issue(s) that
might have resulted in an outage; (2) our engagement of Quanta Technology, LLC to perform an
independent review of our reliability programs and to provide recommendations for improving our
reliability programs and procedures; and (3) the reliability work that was accomplished in 2018
and the distribution line reliability improvements that we are seeing;”34 and
WHEREAS, the balance of Mr. Patella’s testimony was an elaboration on actions taken
with respect to the FIN program in 2018, the Quanta Report in 2018 and other general descriptions

32

Id. at 10.
Id.
34
Supplemental Direct Testimony of Tad S. Patella, P.E. at 2.
33

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 of routine reliability projects, and the approximately $16.5 million in storm hardening work “that
is also expected to provide long-term reliability benefits;”35 and
WHEREAS, ENO also relied upon the Direct Testimony of William L. Sones who
described his testimony as helping to demonstrate that “ENO’s capital and O&M investments in
transmission reliability programs have been reasonable and prudent, and that the measures ENO
has taken to address recent reliability challenges are also reasonable and prudent, and strike a
reasonable balance between (i) the need to make certain capital and O&M transmission line and
substation investments and (ii) the cost to customers of making those investments;”36 and
WHEREAS, after describing a number of transmission and substation related projects, Mr.
Sones concluded that “[w]hile these projects do not specifically address the causes of outages
recently experienced by ENO, they address reliability issues from a broader system perspective by
increasing transmission capacity and ENO’s ability to reliably serve customers. Without the
construction of these projects, the system could have experienced additional reliability issues.
Furthermore, while it is difficult to quantify, having newer assets can result in higher reliability,
as these newer assets would be less prone to failure in comparison with older assets;”37 and
WHEREAS, ENO also referred to the Direct Testimony of Tad S. Patella, P.E. in its
response to Resolution No. R-18-98 in which Mr. Patella referenced the testimony of Melonie
Stewart and the “description of the various reliability programs that are regularly used to maintain

35

Id. at 9.
Direct Testimony of William L. Sones at 3-4.
37
Id. at 14-15
36

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 and improve reliability in the Metro Region and that are part of the Reliability Plan that ENO filed
with the Council in November 2017;”38 and
WHEREAS, Mr. Patella attempted to explain why outages on the distribution system can
occur on fair weather days by noting that:
For example, on a fair weather day, it is still possible for animals to come into
contact with electrical equipment and cause outages or for a vehicle to strike an
ENO pole resulting in power outages to an entire neighborhood. Or on a day that
is fair, but windy, a cross arm that has been weakened by age or long-term exposure
to weather may finally give way, resulting in outages. Or a child’s metallic balloon
can come in contact with an overhead distribution wire causing a short and resulting
in an outage. Even on days when it is neither windy nor raining, the extreme heat
and humidity that often descends on New Orleans can place an increased level of
stress on equipment, leading to more equipment failures than would otherwise be
the case in more moderate climates. In that example, even though the sun may be
shining without a cloud in the sky, the temperature may be a significant factor in
an outage…. It could be due to age, or to a defective part, or to an outside force
such as wind, a tree, a car, an animal, or any number of other intrusions;39 and
WHEREAS, Mr. Patella concluded that “ENO has stacked-up reasonably well against
other U.S. utilities with respect to its SAIDI and SAIFI scores from 2013 through 2015.” 40
However, in his explanation of SAIDI and SAIFI benchmarks, Mr. Patella acknowledged that
those benchmarks declined between 2013 and 2017 placing “ENO in the fourth quartile among
U.S. utilities for those years;”41 and
WHEREAS, Mr. Patella speculated on the potential causes of the declining reliability
performance of the distribution system: “However, as noted, ENO’s SAIFI and SAIDI results
increased sharply in the past two years. Again, it is difficult to pinpoint the primary cause of such

38

Direct Testimony of Tad S. Patella at 9. The Reliability Plan referenced by Mr. Patella is the plan that was
rejected by the Technical Consultants and the Council, which led to a Revised Reliability Plan not referenced in Mr.
Patella’s testimony.
39
Id. at 10-11.
40
Id. at 20.
41
Id. at 14.

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 fluctuations with certainty, but a look at the comparative weather data for those years seems to
provide at least a partial explanation.”42 Mr. Patella goes on to testify that in 2016 the number of
days in which the temperature reached 90 degrees or above was “approximately 46% higher than
the average for 2013 through 2015. Similarly, the average rainfall for 2015 through 2017 was
approximately 20% higher than the average of the five previous years.”43 Mr. Patella also notes
an increase in lightning strikes in 2016 and 2017 without concluding that they are related to
outages, but that “[g]enerally speaking, the more extreme the weather, the more stress is placed on
the distribution system and the more likely SAIFI and SAIDI results will be adversely affected;”44
and
WHEREAS, ENO’s Initial Response also referred to the Direct Testimony of Melonie P.
Stewart provided in connection with ENO’s Response to Resolution No. R-18-98. Ms. Stewart’s
testimony is offered to “help demonstrate that ENO’s efforts to operate and maintain the
distribution system in New Orleans have been reasonable;”45 and
WHEREAS, Ms. Stewart’s testimony was a broad and general description of ENO’s
annual reliability plans, which consists of eight major reliability programs. In addition to the
primary reliability programs, Ms. Stewart also testified with respect to ENO’s filed Storm
Hardening Plan; however, none of Ms. Stewart’s testimony directly addressed the issues raised by
Resolution No. R-18-475, or the concerns expressed by the Council in connection with the
distribution reliability prudence investigation for the stated time period; and

42

Id. at 15.
Id.
44
Id.
45
Direct Testimony of Melonie B. Stewart on behalf of Entergy New Orleans, LLC. in Response to Resolution R18-98 at 3.
43

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 WHEREAS, Ms. Stewart’s references to the Storm Hardening Plan were characterized as
“certain programs and expenditures that would begin to assist in hardening the distribution system
to allow it to better withstand the impact of major storms affecting New Orleans.”46 She described
the program as “hardening service up to ‘critical customers.’”47 Critical customers are defined as
those whose services are most important in responding to major storm events and maintaining or
restoring order after such an event and include facilities related to first responders, local and
emergency preparedness centers, military facilities, airports, major land line and cell phone
communications systems, and medical related facilities.48
ADVISORS’ POSITION
WHEREAS, the Advisors are of the opinion that ENO’s Initial Response did not meet the
burden of demonstrating that decisions related to maintaining and improving its distribution
system were prudent. No regulator, including the Council, is responsible for directing a utility to
operate in a specific manner with respect to distribution reliability. Every utility including ENO,
is required to operate prudently in all aspects of its operations. ENO has an independent and
indisputable responsibility to maintain and operate a reliable distribution system; and
WHEREAS, the responsibility of a utility has been well described in judicial opinions to
the effect that “one of the most important duties of a public utility, inherent in its franchise to serve
the public, is the duty to take the initiative in proposing reasonable rates and rendering adequate
services, taking into account changing conditions; and the utility is not relieved from this duty

46

Id. at 10.
Id.
48
Id. at 11.
47

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 because its activities are subject to government regulation, for a regulatory commission is not
clothed with the responsibility or qualified to manage the utility’s business;”49 and
WHEREAS, Resolution No. R-18-475 instituted a prudence investigation independent of
the development of reliability performance standards and/or financial penalty mechanisms. As
stated in the resolution, “in addition to the establishment of financial penalty mechanisms for
failure to meet minimum reliability performance standards, the Council intends to conduct a
prudence investigation to determine whether ENO's previous inactions and omissions in
mitigating and remediating electric service disruptions and complaints and unacceptable reliability
performance should not be presumed imprudent.”50 Similarly, the resolution states that ”the
Council reiterates its intention to establish minimum reliability performance standards and
financial penalty mechanisms after receiving all relevant information in connection with this
docket;”51 and
WHEREAS, the Council clearly stated in the first ordering paragraph of the resolution that
“[t]he Council hereby establishes a prudence investigation to determine whether ENO's inaction
and omissions in mitigating and remediating electric service disruptions and complaints and
addressing the performance of the distribution system as discussed herein were imprudent and
whether financial and/or other penalties should be imposed by the Council;”52 and
WHEREAS, in ordering paragraph four the Council clearly directed ENO to file “such
testimony, evaluations, analyses, workpapers, and other information, as the Company believes will

49

Pennsylvania. Water and Power Co. v. Consolidated Ga, Elec. Light & Power Co., 184 F.2d 552, 567 (4th Cir.
1950).
50
Council Resolution No. R-18-475, dated October 31, 2018, at 9. (Emphasis added.)
51
Id.
52
Id. at 13.

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 be of assistance to the Council in this prudence investigation,”53 which is a directive independent
of the discrete process of gathering information to establish reliability standards and penalty
mechanisms in the future; and
WHEREAS, this is consistent with the direction of the Council in Resolution No. R-1898 in which the Council stated that “in determining a method of ensuring that ENO provides
acceptable levels of reliability to its customers prospectively, it is prudent for the Council to
consider the establishment of minimum reliability performance standards for ENO,”54 clearly
indicating reliability standards and penalty mechanisms were intended to be prospective and
independent of the instant prudence investigation; and
WHEREAS, it is instructive that ENO’s argument was also rejected in a relevant ruling
of the Maryland Public Service Commission (“MPSC”), which considered the utility’s argument
that “the Commission may only penalize a utility pursuant to a regulatory standard with an
objective metric...”55 even though the MPSC was engaged in contemporaneous rulemaking related
to establishing standards, as is the case with the Council; and
WHEREAS, additionally, ENO has been on notice since at least 1999 that inadequate
distribution system reliability could result in penalties under Section 3-130(7) of the Charter of the
City of New Orleans. In 1999, the Council reacted comprehensively to a previous decline in
reliability with Resolution No. R-99-433. The resolution placed ENO “on notice” that failure to
complete the remediation plans could result in the imposition of “financial penalties, which

53

Id. at 14. (Emphasis added.)
Council Resolution No. R-18-98 at 7. (Emphasis added.)
55
In re: Potomac Electric Power Company, 102 Md.P.S.C. 408, 2011 WL 7164366 (Md.P.S.C.), 295 P.U.R.4th 373
at 34.
54

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 penalties shall be in an amount the Council deems sufficient to constitute reasonable penalties and
which assures the ultimate achievement by ENO of a reliable electric distribution system.”56 Also,
Section 3-130(7) of the Charter provides: “The orders of the Council shall be enforced by the
imposition of such reasonable penalties as the Council may provide…;” and
WHEREAS, despite the Council’s repeated concerns over the unacceptable number of fair
weather outages of long duration, and the Council’s repeated directions to ENO with respect to its
insistence on urgent action by ENO, as expressed in (1) Councilmember Brossett’s June 8, 2017
letter to ENO voicing his concerns over ongoing customer complaints related to the mounting
outages and reliability issues; (2) Resolution R-17-427 expressing the Council’s concern “with the
overall level of ENO’s distribution system reliability throughout ENO’s service territory;” 57 and
(3) the unanimous comments of concern and urgency by all Councilmembers at several meetings,
ENO submitted an Initial Plan that was judged so deficient by the Technical Advisors as to be
essentially useless, requiring a specific directive by the Council to file a revised reliability plan
with mandated specific information; and
WHEREAS, it is widely recognized that two of the most important indices utilized by
electric utilities to measure their reliability performance are the System Average Interruption
Frequency Index (SAIFI) and System Average Interruption Duration Index (SAIDI). SAIFI
measures the average number of interruptions of all customers over a defined period of time,
usually a year. SAIFI is calculated by dividing the number of customer interruptions by the

56
57

Council Resolution No. R-99-433 at 6.
Council Resolution No. R-17-427 at 4.

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 number of customers served. An upward trend in SAIFI generally indicates a reduction in
reliability;58 and
WHEREAS, SAIDI is calculated by dividing the total hours of interruption by total
customers served. Like SAIFI, an upward trend in SAIDI generally indicates a reduction in
reliability. The following table provided by ENO witness Tad S. Patella confirms ENO’s decline
in reliability starting after 2013;

Table 1:59
ENO’s SAIDI and SAIFI (2013-2017)
2013

2014

2015

2016

2017

SAIDI

92

121.3

128

167.9

179.8

SAIFI

1.04

1.209

1.234

1.61

1.584

and
WHEREAS, subsequent to Councilmember Brossett’s June 8, 2017 letter requesting
detailed information on the specific problems and causes of outages, data was provided to the
Council and Advisors detailing outages during the period June 1, 2016 through May 31, 2017; and
WHEREAS, the Advisors review of that data provided by ENO determined that 56% of
total outages occurred during fair weather conditions and that more than one-third of the outages
were a result of equipment failures;60 and

Direct Testimony of Joseph W. Rogers, P.E. dated April 25, 2019 (“Rogers Testimony”) at 6.
Direct Testimony of Tad S. Patella, Docket UD-17-04, June 6, 2018, at 14.
60
Technical Advisors’ Review of Initial Report at 3.
58
59

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 WHEREAS, at the July 19, 2018 UCTTC meeting, ENO pointed to its aging legacy
distribution system as an explanation for some reliability issues; however, the Committee members
were frustrated by ENO’s inability to discuss its asset management plan, even in light of its legacy
system:
COUNCILMEMBER GIARRUSSO:
… Do we know the condition of the transformers, how they are
doing, which ones need to be replaced immediately, which ones are medium term?
Do we have that data or are we going to get it at the next meeting?61
Councilmember Giarrusso asked for input from Mr. Movish, a Council Utility Technical Advisor:
MR. MOVISH:
… I think the genesis of the question that you got is: How are you
tracking the overall condition and making your decisions on replacement, repair,
etcetera, to the life of your assets, your distribution infrastructure? You know, a
modern asset management program allows one -- allows a utility to track the history
of each class of equipment, each type of equipment, from nut, bolt, washer up
through transformers, insulators, lightning arresters, sectionalized switches, fuses,
what have you.
And when you start seeing that, hey, we are determining that the
fuse from this manufacturer is failing prematurely, a very high failure rate, this
transformer is failing at an inordinately high rate, perhaps we should pull those
things out, replace them with equipment from another manufacturer or design in
support of maintaining system reliability.
What you are promoting today or what you are discussing today is
a very reactive approach and what your projects in field are. There also should be,
in my opinion, a program in place that would allow you to follow your assets
through their life and make very judicious decisions, which if you followed those
or made those judicious decisions on a timely basis, you could potentially avoid
some of the outages that are occurring.62
The 2018 Quanta Technology, LLC assessment of Entergy New Orleans Distribution
Reliability Improvement Initiatives (“Quanta Report”) described why the asset management of

61
62

July 19, 2018 Transcript at 18.
Id. at 19-21. (Emphasis added.)

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 ENO’s infrastructure that was being questioned by the Council and the Council’s Technical
Advisors could not be performed by ENO:
Similar to many urban utility companies in the United States, ENO has a high
population of aged equipment. In the utility industry, aged does not mean that
equipment is no longer functioning as designed. In fact, some older equipment
designs and manufacture are much more robust than new equipment. Older
facilities do, however, represent increased risk of failure simply due to approaching
end of normal service life.
Entergy’s current asset information does not allow for an in-depth analysis of
age of a class of equipment or other analysis often done in review of equipment
failure situations….63
… Overall, ENO’s distribution reliability practices are similar to the other utilities
included in the survey. The primary difference is related to the failure rate
analysis which is not possible at this time, but is expected to be available in the
future as new systems are implemented;64 and
WHEREAS, the Quanta Report identified asset management as an area in need of
improvement:
Improvement in overall asset management capability is an identified need within
Entergy at the corporate level. Currently at Entergy, asset management is located
organizationally as a corporate services function supporting all Entergy operating
companies. In order to implement a comprehensive asset management capability,
Entergy is in process of implementing an enterprise asset management
solution….65
Accordingly, ENO as an individual operating company, did not have adequate asset management
procedures in place prior to the decline of the distribution system, which could have reduced the
number of customer outages. Moreover, according to the Quanta Report ENO is only now, six

63

Quanta Technology, LLC's Assessment of Entergy New Orleans, LLC's ("ENO") Distribution Reliability
Improvement Initiatives, dated October 31, 2018, (“Quanta Report”) at 16. (Emphasis added.)
64
Id. at 51. (Emphasis added.)
65
Id. at 73. (Emphasis added.)

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 years after the beginning of the decline of ENO’s reliability, starting to implement appropriate
asset management systems; and
WHEREAS, the Quanta Report noted that Customer Interrupted (“CI”) and Customer
Minutes of Interruption (“CMI”) are used as proxies for SAIFI and SAIDI and that ENO focuses
on CI and CMI as the primary operating metrics to track reliability internally. In reviewing ENO
outage data from 2013 to 2017, with respect to the CI and CMI indices, Quanta observed:
Analysis of ENO outage records indicates that 64% of the CI increase between
2013 and 2017 is due to three cause codes: equipment (41%), conductor (12%),
and vegetation (11%). The same cause codes contributed 61% of the CMI increase
between 2013 and 2017: equipment (42%), conductor (12%), and vegetation
(7%);66 and
WHEREAS, in its Initial Response, ENO suggested that its “now-aging infrastructure”
“present increasing reliability challenges”67 and asserted that “Quanta also confirmed our belief –
and strongly emphasized – that, given our legacy distribution construction and infrastructure, we
will need grid modernization and distribution automation to see significant improvements in
distribution reliability.”68 As expert witness Rogers testified “[t]hese comments appear to be
excuses rather than substantive responses or evidence of prudent conduct;”69 and
WHEREAS, witness Rogers further testified “[l]egacy construction, no matter how aged,
in and of itself is not unreliable if adequately maintained on an ongoing and prudent basis.
Numerous electric utilities throughout the country operate systems that have aging legacy

Id. at 20. While Quanta noted some improper coding by ENO that could result in a “higher number of outage
events than what actually occurred,” Quanta concluded that “[t]he extent of the impact of this practice is not known
and is not anticipated to be highly significant, however, it does artificially inflate the number of outage events that
have occurred.” Id. at 22. (Emphasis added.)
67
ENO Response to Prudence Investigation dated January 10, 2019 at 11.
68
Supplemental Direct Testimony of Tad S. Patella, P.E. at 7.
69
Direct Testimony of Joseph W. Rogers, P.E. dated April 25, 2019 (“Rogers Testimony”) at 16.
66

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 construction, but still achieve acceptable levels of reliability. ENO’s assertion that its reliability
problems stem from its legacy construction simply highlights ENO’s failure to maintain and
improve its system over time;”70 and
WHEREAS, Quanta confirmed that ENO never had in place an asset management system
that could have more quickly recognized and stemmed the tide of dramatically increasing outages;
and
WHEREAS, witness Rogers testified that a table provided by ENO witness Tad S. Patella
in June 2018 clearly shows ENO’s decline in reliability since 2013.

Table 171
ENO’s SAIDI and SAIFI (2013-2017)

SAIDI
SAIFI

2013
92
1.04

2014
121.3
1.209

2015
128
1.234

2016
167.9
1.61

2017
179.8
1.584

Witness Rogers testified that these SAIDI and SAIFI numbers, as presented to the U. S. Energy
Information Administration (“EIA”), can also be used to determine ENO’s reliability performance
compared with other utilities. Rogers testified that: “A review of EIA data by separating the
reporting utilities into quartiles shows that ENO’s reliability, as measured by SAIFI and SAIDI in
comparison with other utilities, has dropped from second quartile performance in 2013 to third and
then fourth quartile performance in the following years.”72

70

Id.
Id. at 6, citing Direct Testimony of Tad S. Patella, Docket UD-17-04, June 6, 2018, page 14.
72
Id. at 7.
71

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 Table 273
System Average Interruption Frequency Index (“SAIFI”) without Major Event Days
2013-2017 (1)
2013 (2)

2014

2015

2016

2017

1st Quartile Highest SAIFI

.739

.690

.700

.677

.680

2nd Quartile Highest SAIFI
3rd Quartile Highest SAIFI

1.045
1.653

1.076
1.503

1.077
1.580

1.073
1.560

1.069
1.519

Average # of Utilities in Each
Quartile

121

132

142

154

164

Entergy New Orleans LLC
Indices

1.032
2nd Quartile

1.222
3rd Quartile

1.413
3rd Quartile

1.816
4th Quartile

1.796
4th Quartile

(1)
(2)

73

Data sourced from US Energy Information Administration Form EIA-861
EIA began collecting and including SAIDI and SAIFI data in Form EIA-861in 2013

Id. at 8.

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 Table 374
System Average Interruption Duration Index (“SAIDI”) without Major Event Days
2013-2017 (1)

1st Quartile Highest SAIDI
2nd Quartile Highest SAIDI
3rd Quartile Highest SAIDI
Average # of Utilities in
Each Quartile

2013 (2)

2014

2015

2016

2017

46.000
88.000
145.100

46.280
92.409
141.350

53.419
100.610
164.210

54.830
102.000
166.800

54.130
94.450
160.900

135

144

155

169

177

90.300
117.400
135.800
190.200
Entergy New Orleans LLC
Indices
3rd Quartile 3rd Quartile 3rd Quartile 4th Quartile
(1) Data sourced from US Energy Information Administration Form EIA-861
(2) EIA began collecting and including SAIDI and SAIFI data in Form EIA-861in 2013
and
WHEREAS, witness Rogers also testified that:
ENO was definitely aware of its decline in reliability performance by May of 2015,
when its report to EIA was due. However, while not aware of the exact calculable
annual SAIDI and SAIFI numbers for 2014, ENO either was or should have been
aware of its decline in late 2014 based upon the increased need to respond to
customer outages as compared to 2013. ENO witness, Melonie Stewart at the June
28, 2018, UCTTC meeting indicated that ‘[w]e are always monitoring the
performance of our entire system to ensure that we are spending the dollars in the
right places.’4 At that same UCTTC meeting, Ms. Stewart indicated that ‘In 2013
we had outstanding distribution reliability, and we did back off slightly on our
funding because we didn't want to spend money on a system that was performing
extremely well.’5 Ms. Stewart went on to indicate that ‘As we backed off on that
funding slightly, we did see the reliability go in the wrong direction.’6 When
questioned further about the reduction in funding, Ms. Stewart clarified that ENO
reduced its investment in the distribution system by about one million dollars. In
2014, ENO was both aware of the decline in system reliability and the relationship

74

Id.

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192.900
4th Quartile

 between investment in the distribution system and the resulting system reliability;75
and
WHEREAS, witness Rogers testified that in response to declining reliability, ENO did not
adequately increase its distribution operations and maintenance expense in 2015 nor did ENO
increase its distribution capital addition sufficiently in 2015;76 and
WHEREAS, witness Rogers testified that ENO’s Initial Response failed entirely to
address the critical timeframe leading up to the increase in outages and complaints that led to the
Council’s urgent involvement in mid-2017. Rogers testified that the majority of the testimony
submitted with ENO’s Initial Response focuses on actions being taken currently, after the Council
initiated its investigation into outages and reliability issues. For example, Mr. Patella discusses
remedial actions started by ENO in April 2018, long after the problems were recognized and
allowed to persist. The actions touted by Mr. Patella resulted from the filing of a Revised
Reliability Plan in response to the Advisor criticism of the Initial Plan filed by ENO, which was
deemed essentially useless. In addition, the engagement of Quanta Technology, LLC, which was
incorporated into ENO’s Initial Response by reference, did not occur until August 2018, again
long after the Council intervened and well after the notable decline in reliability performance; and
WHEREAS, witness Rogers testified that the delay in engaging Quanta may be explained
by the Supplemental Direct Testimony of Mr. Patella where Mr. Patella testified “‘In many ways,
Quanta’s review and conclusions confirmed what we already knew or suspected about ENO’s
distribution system. For instance, we knew that our reliability metrics had slipped in recent years
and suspected that they would not match up favorably with the reliability metrics of high

75
76

Id. at 9-10.
Id. at 10-11.

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 performing utilities selected by Quanta for benchmarking.’”77 As Mr. Rogers testified “ENO knew
it had a problem, yet avoided thoroughly addressing it until forced to do so by the Council, which,
in my opinion, is not demonstrative of prudent or reasonable conduct;”78 and
WHEREAS, witness Rogers also testified that no other witnesses in the ENO Initial
Response provided testimony demonstrating that ENO acted prudently in addressing the declining
performance of the distribution system. Rogers noted that “ENO’s only other witness who
provided testimony in response to the prudence investigation, was Mr. William L. Sones. Mr.
Sones’ testimony addresses only transmission reliability and the transmission related contribution
to SAIDI and SAIFI.”79 Rogers also noted that “[w]ith respect to transmission reliability efforts
and results, Mr. Sones lists transmission projects completed from 2013 to 2018 to ‘...address
compliance with NERC reliability standards, to adhere to MISO’s planning process, and to reliably
serve customers.’”80 Clearly, none of the efforts described by Mr. Sones were undertaken or
intended to address the distribution reliability problems that began to cascade in 2014. In fact,
witness Rogers notes that “Mr. Sones admits that the projects he identified ‘…do not specifically
address the causes of the outages recently experienced by ENO....;’”81 and
WHEREAS, witness Rogers testified that ENO’s attempt to use storm hardening
expenditures as evidence of prudent investment in the reliability of the overall distribution system
was meritless.

As Mr. Rogers testified, “Ms. Stewart makes that argument in testimony

incorporated by reference. Storm hardening is a separate issue, which relates to the resiliency of

77

Id. at 13, citing Supplemental Direct Testimony of Tad S. Patella at 6.
Id. at 13.
79
Id.
80
Id., citing Direct Testimony of William L. Sones at 12.
81
Id., citing Direct Testimony of William S. Sones at 14.
78

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 the system in storms and hurricanes. It seeks to mitigate damage to the system and facilitate
recovery. It does not address the day-to-day operation of the distribution system, even though
there can be some carryover benefit.”82 Mr. Rogers goes on to explain that the storm hardening
reference by Ms. Stewart was the result of other dockets in which the Council initiated action and
caused ENO to make such upgrades and improvements. “Moreover, the storm hardening work
was not in response to declining reliability and did not start until well into 2017;”83 and
WHEREAS, the Quanta Report explained that “[t]he primary goal of the Storm Hardening
program is to improve the resiliency of the circuits serving Critical Customers. Critical Customer
examples include public safety and health facilities, civil defense facilities, and facilities important
to ENO’s restoration process.”84

As testified to by witness Rogers, storm hardening is a

completely different category from whether or not ENO prudently invested in and maintained its
day-to-day distribution system; and
WHEREAS, Mr. Rogers testified that: “There is simply no discussion [in ENO’s Initial
Response] of what, if any, reasonable decision-making process informed the decision to reduce
investment in the distribution system [as reported by Melonie Stewart, Vice President of Customer
Service]. Nor is there any testimony that explains why ENO was not immediately proactive in
mitigating the decline in reliability performance. ENO’s Response relies heavily on what they are
doing currently to improve reliability, not on any prudent internal process or decision-making
process;”85 and

82

Id. at 14.
Id.
84
Quanta Report at 29.
85
Rogers Testimony at 14.
83

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 WHEREAS, witness Rogers also questions why “ENO’s response fails to address why it
did not investigate or adopt the use of best distribution maintenance practices to improve reliability
performance of its distribution system when problems started and before the Council initiated an
investigation.”86 In fact, when ENO did finally engage Quanta to conduct an assessment in 2018,
well after the decline in reliability had begun, the best Quanta could say about ENO’s distribution
program was that it “includes adequate components to continue addressing existing and shortterm needs in this area.”87 Adequate components are hardly best practices. The prudence standard
“essentially applies an analog of the common law negligence standard for determining whether to
exclude value from rate base….That is, the utility must demonstrate that it ‘went through a
reasonable decision making process to arrive at a course of action and, given the facts as they were
should have been known at the time, responded in a reasonable manner;’”88 and
WHEREAS, “the focus in a prudence inquiry is not whether a decision produced a
favorable or unfavorable result, but rather, whether the process leading to the decision was a logical
one, and whether the utility company reasonably relied on information and planning techniques
known or knowable at the time.”89 In addition, prudence is an ongoing obligation of the utility
“the inquiry encompasses a public utility’s continuation of an investment as well as its decision to
enter into that investment, and requires the utility to respond prudently to changing circumstances
or new challenges that arise as a project progresses;”90 and

86

Id. at 18.
Quanta Report at ii. (Emphasis added.)
88
Gulf States Utilities Co. v LPSC, 578 So. 2d 71 at 85 (La. 1991), citing Appeal of Conservation Law Foundation,
127 N.H. 606, 507A 2d 652, 673 (1986) and citing Re Cambridge Electric Light Co., 86 P.U.R.4th 574
(Mass.D.P.U.1987).
89
Id. citing Metzenbaum v. Columbia Gas Transmission Corp., Opinion No. 25, 4 FERC 161,277.
90
Id. citing Re Central Vermont Public Service Corp., 83 P.U.R.4th 532 (Vt.Pub.Serv.Bd.1987) and citing In Re
Long Island Lighting Co., 71 P.U.R.4th 262, 1985 WL 258217 (N.Y.Pub.Serv.Comm’n, 1985).
87

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 WHEREAS, when serious doubt about prudence is raised, as it is here, “the burden shifts
to the utility….”91 “A ‘doubt’ is created if the challenge raises a question the answer to which is
not arguably in favor of prudence. A doubt is ‘serious’ if there appears at least a possibility that,
upon due investigation, the answer to the question will lead to a finding against prudence;”92 and
WHEREAS, the very essence of “serious doubt” is manifested in the following ENO
actions:
1. ENO’s precipitous decline in reliability beginning in 2014, which by its own
admission dropped its performance reliability from 1st and 2nd quartile to 4th quartile
performance between 2013 and 2017;
2. ENO’s 2,599 outages for the period June 1, 2016 through May 31, 2017 occurring
56% of the time in fair weather conditions;
3. Equipment failures were implicated in 41% of the outages (as reported by Quanta);
4. Quanta’s identification of ENO’s deficient asset management system;
5. ENO representatives’ persistent inability to answer basic questions about its
distribution system and reliability issues at two UCTTC meetings;
6. Ms. Stewart’s statement that funding was reduced by a million dollars after 2013;

91

Id. citing Union Electric Co., 40 F.E.R.C. 61,046 (FERC 1987); Long Island Lighting Co. v. Public Serv. Comm'n
of New York, 134 A.D.2d 135, 523 N.Y.S.2d 615 (3d Dept.1987); Re Central Vermont Pub. Serv. Comm'n Corp., 83
P.U.R.4th 532 (Vt.P.S.B.1987).
92
Alliance. for Affordable Energy, Inc. v. Council of City of New Orleans, 578 So. 2d 949, 958 (La. Ct. App.), writ
granted sub nom. Alliance. for Affordable Energy, Inc. v. The Council of the City of New Orleans, 585 So. 2d 554
(La. 1991), and writ granted, 585 So. 2d 555 (La. 1991), and vacated sub nom. Alliance. for Affordable Energy v.
Council of City of New Orleans, 588 So. 2d 89 (La. 1991) citing New England Power Co., 27 FERC # 63,037, at
65,157 (1984), rev'd on other grounds, 31 FERC # 61,047 (1985).

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 7. Mr. Patella’s statement about engaging Quanta admitting that ENO “knew that our
reliability metrics had slipped in recent years and suspected that they would not
match up favorably with the reliability metrics of high performing utilities selected
by Quanta for benchmarking;”
8. ENO’s failure to engage Quanta until 2018;
9. ENO’s submission of an Initial Plan that was rejected as essentially useless; and
10. The Quanta Report characterizing ENO’s distribution reliability program as
merely “adequate;”
all leading to the conclusion that serious doubt is raised about the prudence of ENO, which shifts
the burden of demonstrating prudence to the utility; and
WHEREAS, in its Initial Response ENO has failed to provide any evidence of prudence
sufficient to meet the standard as provided by applicable case law and regulatory standards; and
WHEREAS, the Code of the City of New Orleans Section 158-1045 addresses the
enumerated rights of ENO customers:
Among the rights that are more fully set forth in the council-adopted customer
service regulations governing the provision of utility services in New Orleans,
customers shall have the following rights:
(a) The right to safe and reliable service in accordance with industry
standards; and
WHEREAS, Section 10 of the Service Regulations Applicable to Electric and Gas Service
by ENO (“Service Regulations”) provides:
The Company shall use Prudent Utility Practice to provide safe, adequate and
continuous Service but shall not be responsible for loss or damage caused by the
failure or other defects of Service when such failure is not reasonably avoidable or
due to unforeseen difficulties or causes beyond its control; and
34

US_Active\113471302\V-1

 WHEREAS, Section 2(W) of the Service Regulations defines “Prudent Utility Practice”
as: “The practices, methods and acts, which, in the exercise of reasonable judgment in light of the
facts (including but not limited to practices, methods and acts engaged in or approved by a
significant portion of the utility industry) known at the time the decision was made, would have
been expected to accomplish the desired result at the lowest reasonable cost consistent with
reliability, safety and expedition;” and
WHEREAS, ENO clearly had a pre-existing obligation to engage in practices, methods
and acts typically engaged in or approved by a significant portion of the utility industry for the
purpose of meeting its obligation and to provide safe and reliable service in accordance with
industry standards. Reliability performance declines from the 1st to 4th quartiles while employing
merely “adequate” reliability measures falls short of the Service Regulations requirements; and
WHEREAS, witness Rogers testified that “ENO’s Response fails to address the critical
timeframe leading up to the increase in outages and complaints that led to the Council’s direct
involvement in mid-2017. The majority of the testimony focuses on actions being taken currently,
after the Council initiated its investigation into outages and reliability issues…. The actions touted
by Mr. Patella resulted from the filing of a revised reliability plan in response to Advisor criticism.
In addition, the engagement of Quanta Technology, LLC, which is incorporated in ENO’s
Response by reference, did not occur until August 2018, again long after the Council intervened
and compelled ENO to act;”93 and
WHEREAS, witness Rogers also testified that: “There is simply no discussion of what, if
any, reasonable decision-making process informed the decision to reduce investment in the

93

Rogers Testimony at 12.

35

US_Active\113471302\V-1

 distribution system. Nor is there any testimony that explains why ENO was not immediately
proactive in mitigating the decline in reliability performance. ENO’s Initial Response relies
heavily on what they are doing currently to improve reliability, not on any prudent internal process
or decision-making process;”94 and
WHEREAS, the Quanta Report only analyzed ENO’s current reliability practices and their
impact on future reliability performance, without any helpful examination of the time period after
2013 and before the submission of the Revised Reliability Plan:
Quanta conducted a review of ENO’s distribution reliability program and a
comparison of its distribution reliability practices versus industry leading practices
and those of a selected group of high performing utility peers. ENO’s distribution
reliability performance had declined in the last five years, and its 2017 key
distribution reliability indices (SAIFI and SAIDI) were close to the borderline
between 3rd and 4th quartile of the 2017 IEEE Annual Distribution Reliability
Benchmark. ENO has increased its reliability spending in the last three years and
has planned further investments in key infrastructure, technologies, and systems to
stop and reverse this trend and improve reliability performance….
The results of Quanta’s assessment indicate that ENO’s distribution reliability
program includes adequate components to continue addressing existing and shortterm needs in this area. If investments in distribution reliability and grid
modernization continue as planned, it would be expected that ENO’s distribution
reliability indices improve to 2nd quartile performance….
The improvements in ENO reliability will not be immediate, since some
investments (e.g., BACKBONE program) are essentially needed to stabilize
performance and prevent further decline of reliability indices, while others
(e.g., deployment of smart reclosers) are largely intended to improve performance,
and most importantly, because of the legacy construction and design of ENO’s
distribution grid coupled with aging infrastructure. The overall effort to achieve
reliability improvement on the ENO system should be viewed as a long-term
initiative, as opposed to quick fixes;95 and

94
95

Id. at 14
Quanta Report at ii-iii. (Emphasis Added.)

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 WHEREAS, witness Rogers testified, “In my opinion, as an expert in the utility industry,
a prudent utility would be able to demonstrate that it had an active capital project and O&M
program in place to maintain system reliability. Further, a prudent utility would have been able to
demonstrate that once it realized that its capital project and O&M program was failing to maintain
reliability that it took immediate steps to correct the reliability issues. ENO has failed to
demonstrate that it used prudent utility practice;”96 and
WHEREAS, Section 10 of the Service Regulations is particularly relevant for purposes of
imposing a fine and/or penalty, because Section 10 provides specific circumstances under which
ENO “shall not be responsible for loss or damages caused by the failure or other defects of
Service.” The logical corollary of this clause is necessarily a counterfactual circumstance under
which ENO shall be responsible for loss or damage caused by the failure or other defects of
Service; and
WHEREAS, pursuant to Section 10, ENO shall be responsible for loss or damage caused
by the failure or other defects of Service when such failure is reasonably avoidable, and due to
foreseeable difficulties or causes within ENO’s ability to control. These standards -- reasonably
avoidable, foreseeable, and ability to control -- are objective measures of Prudent Utility Practice.
Accordingly, ENO has pre-existing reliability standards that it must either meet, or face the
consequences for failing to do so; and
WHEREAS, Section 3-130(7) of the Charter provides: “The orders of the Council shall
be enforced by the imposition of such reasonable penalties as the Council may provide….” The
Council adopted the Service Regulations in Resolution No. R-17-228, and, in so doing, the Council

96

Rogers Testimony at 15.

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 ordered ENO’s compliance with Section 10’s continuity of service obligations. To enforce ENO’s
compliance with those reliability obligations, Section 3-130(7) instructs that the Council may
impose reasonable penalties; and
WHEREAS, ENO has been on notice since at least 1999 that inadequate distribution
system reliability could result in penalties under Section 3-130(7) when the Council reacted
comprehensively to a previous decline in reliability with Resolution No. R-99-433. That resolution
placed ENO “on notice” that failure to complete the remediation plans could result in the
imposition of “financial penalties, which penalties shall be in an amount the Council deems
sufficient to constitute reasonable penalties and which assure the ultimate achievement by ENO of
a reliable electric distribution system;” and
WHEREAS, a 2011 Order of the MPSC is highly instructive for determining an
appropriate penalty in similar circumstances.97 In that Order, the MPSC imposed a $1 million civil
penalty on Potomac Electric Power Company (“Pepco”) for failing “to satisfy its legal obligation
to provide its customers with reliable service.”98 The investigation was in response to “an
unusually large number of customer complaints about chronic electric outages,”99 which the
commission found was a result of poor vegetation management. The commission further found
that “the utility’s failure to maintain its system properly subjected ratepayers to an excessively
large number of power outages of long duration, both during storms and on fair weather days….

97

In re: Potomac Electric Power Company, 102 Md.P.S.C. 408, 2011 WL 7164366 (Md.P.S.C.), 295 P.U.R.4 th 373.
WL 7164366 at 1.
99
Id.
98

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 Pepco’s imprudent mistake was in not committing adequate resources to vegetation management
in order to attain an acceptable level of reliability;”100 and
WHEREAS, the MPSC rejected Pepco’s argument that SAIDI and SAIFI standards are
not reliable because of “unique” tree canopy issues, not unlike ENO’s legacy infrastructure
argument. The commission responded that “as a matter of policy, each utility has an obligation to
provide reliable service based on the particular circumstances and characteristics of its service
territory.”101 The commission noted that if a utility is presented with a unique challenge like an
extensive tree canopy, “it should be more active than other utilities in executing tree trimming…it
is not perpetually relieved from the obligation of maintaining a reliable system;”102 and
WHEREAS, the MPSC Order tracks directly witness Rogers’ testimony that “ENO’s
assertion that its reliability problems stem from its legacy construction simply highlights ENO’s
failure to maintain and improve its system over time;”103 and
WHEREAS, the MPSC also rejected Pepco’s argument that “the Commission may only
penalize a utility pursuant to a regulatory standard with an objective metric…,” even though the
commission was concurrently engaged in rulemaking related to establishing standards;104 and
WHEREAS, MPSC found that Pepco acted imprudently and imposed a civil penalty of $1
million. “After consideration of the substantial decline in reliability resulting from Pepco's
inadequate vegetation management practices, and the significant costs, both economic and noneconomic, imposed on the Company's Maryland ratepayers, we have determined that a penalty is

100

Id.
Id at 21.
102
Id.
103
Direct Testimony of Joe Rogers at 16.
104
WL 7164366 at 34.
101

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 appropriate in this case. In establishing the appropriate amount of any civil penalty, PUA §13201(d) requires us to consider (i) the number of any other previous violations, (ii) the gravity of
the current violation, (iii) the violator's good-faith efforts in attempting to achieve compliance after
notification of the violation, and (iv) any other appropriate and relevant matters;”105 and
WHEREAS, what constitutes a “reasonable penalty” is intentionally left to the Council,
consistent with general regulatory principles:
We do not agree that the term “reasonable level” is susceptible of only one
interpretation. “Reasonable level” is a vague term, and its presence in an
administrative statute such as the Public Service Commission Law suggests that the
General Assembly intended to entrust the formulation of specific standards to the
technical expertise of those charged with enforcing the statute;106 and
WHEREAS, the significant impact of the ever-increasing outages is documented by a
representative sample of outages in 2017 and 2018 provided by witness Rogers in his testimony,
which list includes:
March 15, 2017 - Mid City-Carrolton 14,000 customers affected
June 12, 2017 - Algiers 3,000 customers affected
June 15, 2017 - Algiers 3,000 customers affected
June 21, 2017 - Orleans Parish-wide 4,700 customers affected
August 25, 2017 - Gentilly 7,500 customers affected
January 1, 2018 - Algiers 2,400 customers affected
February 21, 2018 - Mid-City, Navarre, Hollygrove 5,000 customers affected

105

Id. at 32.
Baltimore Gas and Elec. Co. v. PSC of Maryland, 501 A. 2d 1307, 1314 (Md. 1986) citing See Springfield Ed.
Ass'n v. Springfield, Etc., 290 Or. 217, 621 P.2d 547, 555–57 (1980); Brix v. City of San Rafael, 92 Cal.App.3d 47,
50–51, 154 Cal.Rptr. 647 (Cal.Ct.App.1979); Roberts v. Police & Firemen's Retirement, Etc., 412 A.2d 47, 50
(D.C.1980); Kopp v. State, 100 Idaho 160, 595 P.2d 309, 312 (1979); WIPE v. Illinois Pollution Control Bd., 55
Ill.App.3d 475, 13 Ill.Dec. 149, 152, 370 N.E.2d 1176, 1179 (Ill.App.Ct.1977)
106

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 February 27, 2018 - Mid-City, Treme 4,000 customers affected
March 2, 2018 - Mid-City 1,900 customers affected and LSU Medical Education Building
March 3, 2018 - Gentilly 432 customers affected
March 4, 2018 - New Orleans Metro Area 2,427 customers affected
May 15, 2018 - Uptown 23,700 customers affected
June 5, 2018 - Uptown 1,000 customers affected
July 2, 2018 - Uptown 2,300 customers affected
September 17, 2018 - Uptown 7,500 customers affected
September 25, 2018 - Bywater 2,000 customers affected
September 30, 2018 - Bywater, Lower Ninth Ward 2,000 customers affected;107 and
WHEREAS, even this small sampling of the total outages indicates the enormous and
pervasive impact of ENO’s precipitous decline in reliability during a portion of the relevant period,
March 2017 - September 2018; and
WHEREAS, a similar point was made by Councilmember Banks during the July 19, 2018
UCTTC meeting
COUNCILMEMBER BANKS:
Gary, all of the technical stuff, that's real nice. I want you to walk
real slow with me, though. April 30th, June 22nd, August 30th, October 2nd,
January 17th, May 15th, May 16th, May 28th, June 11th, all of those dates I got a
text on my phone telling me the lights are out at my house. Now, my issue with
that is that at some point somebody has got to figure out something near [sic] there
got a problem.
So at what point -- I hear you are saying you are trending up, but at
what point do you get to the point where you figure that we either got to go change
something, fix something, or do something. I hear all you are saying, but I ain't
107

Rogers Testimony at 16-17.

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 making this up, man. Y'all sent me the texts. So, clearly, there is a problem. If it's
a transformer, if it's a line, if it's mutant ninja squirrels, whatever it is in that area,
there is clearly a problem there. I don't know how many outages are affecting the
same person throughout the city, but I can tell you right there in mine, so I have got
to believe that I am not that special and I am not that unique;108 and
WHEREAS, the information provided by ENO to the Advisors showed that 56% of
outages occurred during business hours, which multiplies the impact of the disruptions caused by
the outages, as noted by Councilmember Williams:
COUNCILMEMBER WILLIAMS:
And I struggle with the fact that today you say you all realize that
you are not investing enough and you are falling short. You said that, but the
reaction to that again seems delayed, and I am certain that shareholders of Entergy
did not suffer during those times. I am also certain that restaurants like Atchafalaya
that go dark on Sunday when it's sunshining outside or when there's a little bit of
rain -and, Mr. Huntley, you know I would call you when half of that portion of
Magazine was dark and they lost their biggest day of revenue, that Sunday brunch
crowd. Businesses, people, citizens, ratepayers suffered during those times. Why
wasn't there a quicker reaction to reinvesting in that grid?109; and
WHEREAS, New Orleans is largely dependent upon the tourist economy; power
disruptions to hotels, restaurants and visitor venues are particularly disruptive to business
operations and impact the City’s reputation as a tourism venue; and
WHEREAS, the Maryland commission’s penalty was similarly bolstered by the
commission’s recognition of the economic and non-economic impacts of outages:
Pepco's customers have paid a substantial price for Pepco's neglect, measured not
just by direct economic costs such as closures of businesses leading to lost wages
and reduced tax revenue, but also by less tangible costs, including the physical
discomfort caused by multiple outages and the uncertainty of knowing when
persistent outages will end;110 and

108

July 19, 2018 Transcript at 36-37.
June 28, 2018 Transcript at 77.
110
In re: Potomac Electric Power Company, 102 Md.P.S.C. 408, 2011 WL 7164366 (Md.P.S.C.), 295 P.U.R.4th
373, at 9.
109

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 WHEREAS, following the guidance of the MPSC Order with respect to the appropriate
considerations for establishing a penalty the Advisors argue that with respect to the following:
1.

The Number of Any Other Previous Violations. As noted above in 1998, as a result
of numerous customer complaints to the Council regarding ENO’s service
reliability and continuity of service in New Orleans East, as well as complaints by
residents in other areas of the City, on July 16, 1998 the Council adopted Resolution
No. R-98-460, which addressed in aggressive fashion ENO’s reliability deficiency,
ultimately extending it City-wide in Resolution No. R-99-433. The resolution also
placed ENO on notice that non-compliance could result in financial penalties “in
an amount the Council deemed sufficient to constitute a reasonable penalty and
which assure the ultimate achievement by ENO of a reliable electric distribution
system;”

2.

The Gravity of The Current Violation. Again, as noted above, in just the period
June 1, 2016 through May 30, 2017 2,600 outages occurred affecting every area of
the City impacting tens of thousands of residents, businesses and visitors, over 40%
of which were caused by ENO equipment failures. Approximately, 56% occurred
during normal business hours. Approximately 48% of all outages that occurred
between 8:00 a.m. and 5:00 p.m. were greater than two hours in duration, and
approximately 31% of outages during this period were greater than three hours in
duration. 54% of all outages that occurred between 5:00 p.m. and 8:00 a.m. were

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 greater than two hours in duration and 38% of outages during this time period were
greater than three hours in duration.111
3.

The Violator’s Good Faith Efforts.

In attempting to ameliorate the outages,

Resolution No. R-17-427 directed ENO to provide the Council with its formal
plans, budgets, and schedules for improving the reliability performance of its
distribution system. The Initial Plan filed by ENO on November 10, 2017 was
reviewed by the Technical Advisors and found to be functionally useless. The
Technical Advisors concluded that the Initial Plan’s lack of significant details and
“thwarts the Council’s ability to perform a thorough and comprehensive review of
ENO’s reliability plan and to constantly measure ENO’s performance in
accomplishing its reliability plan as proposed.”112
4.

Any Other Appropriate and Relevant Matters. The Advisors argue that throughout
this process ENO has shown a lack of urgency that would remotely match the
concerns consistently expressed by the Council. The best example of this lack of
urgency and inability to address the concerns of the Council in even a fundamental
fashion are the transcripts of the June 28, 2018 and July 19, 2018 UCTTC meetings.

ENO REBUTTAL AND ADVISORS’ RESPONSES
WHEREAS, on June 28, 2019, ENO submitted its “Rebuttal Comments in Response to
the Advisors’ Comments on ENO’s Response to ENO Filing and Prudence Investigation”
(“Rebuttal Response”), which included rebuttal testimony by Melonie P. Stewart and Tad S.

111
112

Resolution R-17-427 at 2-3.
Resolution No. R-18-98 at 2. (Emphasis added.)

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 Patella, P.E. The ENO Rebuttal Response reiterates ENO’s general reliability programs, which
Ms. Stewart described as “extensive information about several major reliability-focused efforts
that were in place from 2013 to 2018 and will continue to be in effect (or will be improved upon)
in 2019 and beyond;”113 and
WHEREAS, Ms. Stewart went on to explain once again the general reliability programs.
However, the Advisors argue that Ms. Stewart’s general descriptions of general reliability
programs is not responsive to the prudence investigation mandate of Resolution R-18-475, nor
responsive to their burden to provide evidence of prudence with respect to the specific occurrences
that motivated the Council’s investigation in the first place. In addition, the Advisors’ argue that
ENO’s parroting of their general programs is misguided in that the 2018 Quanta Report, relied on
heavily by ENO, concluded only that “ENO’s distribution reliability program includes adequate
components to continue addressing existing and short term needs in this area;”114 and
WHEREAS, the Advisors argue that while ENO was facing a reliability crisis it employed
ordinary procedures rather than crisis management. Obviously, the ordinary procedures were
inadequate, but ENO never rose to the occasion as the Council continually urged them to; and
WHEREAS, Ms. Stewart objected to Mr. Rogers’ testimony that ENO provided no
evidence of any decision-making process in response to the decline in reliability. In response, Ms.
Stewart says “ENO has provided detailed information about the reliability programs that it
employs on a routine basis and other projects, efforts, and initiatives that are expected to improve
distribution reliability (including efforts taken in response to the increase in outages in 2016).” 115

113

Rebuttal Testimony of Melonie P. Stewart at 4.
Quanta Report at ii (Emphasis added.)
115
Rebuttal Testimony of Melonie P. Stewart at 20-21.
114

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 The Advisors again argue that routine projects are not responsive to a crisis. The Advisors argue
that ENO never seemed to grasp that 2,600 outages during just one year of the period in question,
which affected tens of thousands of residents, businesses and visitors, is not a routine situation;
and
WHEREAS, the Advisors argue that ENO’s lack of appreciation of the situation and tepid
response were also evident in its Initial Plan, which was so deficient that it was rejected by the
Council upon the recommendation of the Utility Technical Advisors; and
WHEREAS, Ms. Stewart and Mr. Patella referred to the so-called “reliability blitz” in late
2016 and early 2017 as evidence of appropriate efforts to respond to the decline in reliability; and
WHEREAS, the Advisors argue the reliability blitz does not demonstrate best practices
with respect to utility operations. The need for a reliability blitz, absent a storm or other abnormal
event, represents ENO operating in an atypical mode that could have likely been avoided through
improved asset management and increased investment and maintenance of the distribution system
prior to the reliability decline. Such management and investment could have avoided both the
significant decline in reliability and the need for ENO to bring in a number of outside contractor
crews to assist in executing targeted reliability projects. Further, the Advisors argue that the MPSC
Order confers that this is not evidence of prudence, but of prior deficiencies. The MPSC addressed
a similar argument concluding that although the utility increased its reliability spending in one
year, “it did so only because of imprudently inadequate expenditures in prior years.” 116

The

commission ruled that “the fact that we need this enhanced retroactive more aggressive vegetation

116

In re: Potomac Electric Power Company, 102 Md.P.S.C. 408, 2011 WL 7164366 (Md.P.S.C.), 295 P.U.R.4 th
373, at 1.

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 management is a function of not having done appropriate vegetation management for some period
of time before;”117 and
WHEREAS, Ms. Stewart also argued that Mr. Rogers did not take into consideration the
cost minimization objective of prudent utility practice indicating that “ENO is expected to provide
safe, reliable service at the ‘lowest reasonable cost’ to customers.”118 The Advisors argue that Ms.
Stewart establishes a false dichotomy. The obligations of ENO are clear with respect to the
obligation to provide reliable service. There is no exception to that obligation. There is no option
for providing semi-reliable service. The obligation to provide it at the lowest reasonable cost does
not abrogate the obligation to provide reliable service. New Orleans City Code Section 158-1045
makes clear that ENO customers have a right to safe and reliable service. The ENO Service
Regulations provide that “the Company shall use Prudent Utility Practice to provide safe, adequate
and continuous service...” (emphasis added); and
WHEREAS, Ms. Stewart admitted, though she tries to minimize it, that ENO “did reduce
investment in the distribution system by about $1 million in 2014….,”119 and
WHEREAS, the Advisors argue that it is truly ironic that ENO argues that the cost
minimization objective is a defense against 2,600 outages affecting tens of thousands of residents,
businesses and visitors between June 1, 2016 and May 31, 2017 when during that same period
ENO was in a cycle of earning excess revenues estimated to be more than $40 million.
Specifically: 2014- $10.6 million; 2015 - $19.5 million; and 2016 - $11.2 million;120 and

117

WL 7164366 at 33, FN 182, citing June 16, 2011 Transcript at 182.
Rebuttal Testimony of Melonie P. Stewart at 20.
119
Id. at 22.
120
Direct Testimony of Byron S. Watson (Docket No. UD-16-04, Advanced Metering) at 12, Table 1.
118

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 WHEREAS, both Ms. Stewart and Mr. Patella refer to a 2013 Quanta Study, which they
cite as support for ENO’s compliance with industry practices in 2013.121 However, the Advisors
argue that ENO’s reliance on the 2013 Quanta Study is misplaced. Unlike the 2018 Quanta Report
which detailed an assessment of distribution reliability improvement initiatives, the 2013 Quanta
Study focused predominantly on storm preparedness, storm restoration planning and emergency
operations, and storm hardening as opposed to an evaluation of ENO’s compliance with industry
practices in maintaining distribution reliability. In addition, 2013 was a well performing year for
ENO’s distribution system as a result of improvements required by the Council in several
resolutions in 1998 reacting to a previous substantial decline in reliability performance by ENO’s
distribution system;122 and
WHEREAS, in addition, the Advisors argue that the 2013 Quanta Study was prepared as
a post-event analysis of damage that resulted from the August 28, 2012 Hurricane Isaac.123
Quanta’s opinion was that “condition of facilities is not a factor leading to more damage than what
could be expected by a storm such as Hurricane Isaac and with a distribution system serving a
major metropolitan area.”124 The study addressed numerous storm related issues such as “Storm
Restoration Planning and Emergency Operations,” “Infrastructure Hardening Business Analysis,”
and “Technology as a Storm Hardening Strategy.” Accordingly, the 2013 Quanta Study is not
evidence of prudent conduct with respect to the day-to-day performance of the ENO distribution
system during the time period covered by Resolution No. R-18-475. In addition, there is nothing

121

Reliability Study of the Electric System in Orleans Parish, Quanta Technology, LLC, July 17, 2013.
See Resolution No. R-98-460 and Resolution No. R-98-433.
123
See 2013 Quanta Study.
124
Id. at 9.
122

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 in the Quanta Study that would support ENO’s decision to reduce distribution system funding in
2014; and
WHEREAS, Ms. Stewart objected to the premise underlying the questions in Mr. Rogers’
testimony regarding whether ENO increased its distribution O&M expenses and capital
expenditures in 2015 in response to declining reliability; and
WHEREAS, in his testimony, Mr. Rogers relied on data as reported by ENO in its FERC
Form-1 for the years 2009 through 2018 and testified on changes in distribution capital additions
and distribution O&M expenses from 2015 to 2018 when ENO was aware of its declining
reliability. Mr. Rogers was not solely focused on calendar year 2015; and
WHEREAS, Ms. Stewart focused her rebuttal to Mr. Rogers in this area on calendar year
2015. Ms. Stewart failed to recognize the significance of trends in the data that showed that ENO
did not report remarkable increases in distribution O&M expenses (49.8% to 105.9% higher than
the 2009-2013 five-year average) until 2017 and 2018; and
WHEREAS, Ms. Stewart, in her rebuttal testimony, criticized Mr. Rogers for not
following up on a FERC Form-1 footnote regarding electric plant in service that states: “negative
project additions include reversal credits from prior year additions for unclassified project costs
closed to plant in service,” which reversal credits materially reduce the amount reported in 2015
FERC Form-1 regarding distribution capital additions in 2015;125 and
WHEREAS, Ms. Stewarts testified, “Without that adjustment, the form would have
reflected distribution capital additions of over $32.6 million in 2015.”126 The Advisors note,

125
126

Rebuttal Testimony of Melanie P. Stewart at 27-28.
Rebuttal Testimony of Melonie P. Stewart at 28.

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 however, that adjusted amount represents only a 4.1 percent increase over the $31.3 million
amount reported for 2014 and that the following year, 2016, the reported amount was $30.7;127 and
WHEREAS, ENO is responsible for the level of detail provided in its 2015 FERC Form1. ENO did not provide, as directed by the Council in Resolution No. R-18-475, more detailed
information in defense of its conduct, even after admitting a decline in reliability and a “backing
off” in funding. It is disingenuous to suggest that an accounting note solely regarding 2015 in the
FERC Form-1 data used by Mr. Rogers in any way affects Mr. Rogers’ fundamental conclusions;
and
WHEREAS, Ms. Stewart testified that Mr. Rogers did not correctly apply the prudent
utility standard in his testimony because “[h]e does not examine the causes of any of those outages
or identify any ENO maintenance program, process, or decision that falls below what would be
expected from a reasonable utility or, more importantly, what alternative decisions he believes
ENO should have made based on what was known or reasonably knowable at the time.” 128 The
Advisors’ argue that Ms. Stewart, not being a lawyer, would not be the best reference for the
appropriate prudence standard, especially for the applicable burden of proof and ENO’s
responsibility in this proceeding; and
WHEREAS, Resolution No. R-18-475 clearly directed ENO to “file…such testimony,
evaluations, analyses, workpapers, and other information, as the Company believes will be of
assistance to the Council in this prudence investigation,”129 which ENO clearly did not do in
its Initial Response; and

127

Rogers Testimony, Table 5 at 11.
Rebuttal Testimony of Melonie P. Stewart at 34.
129
Council Resolution No. R-18-475 at 14. (Emphasis added.)
128

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 WHEREAS, serious doubt about ENO’s prudence was raised; therefore, “the burden shifts
to the utility….”130 The Advisors argue that: “A ‘doubt’ is created if the challenge raises a question
the answer to which is not arguably in favor of prudence. A doubt is ‘serious’ if there appears at
least a possibility that, upon due investigation, the answer to the question will lead to a finding
against prudence;”131 and
WHEREAS, Resolution No. R-18-475 clearly “raises a question the answer to which is
not arguably in favor of prudence,” leading to “at least a possibility that, upon due investigation,
the answer to the question will lead to a finding against prudence,” a serious doubt about prudence
was raised and the burden of demonstrating prudence was shifted to ENO, which burden it did not
carry; and
WHEREAS, because the burden shifted to ENO, Mr. Rogers did not need to “examine the
causes of any of those outages or identify any ENO maintenance program, process, or decision
that falls below what would be expected from a reasonable utility or, more importantly, what
alternative decisions he believes ENO should have made based on what was known or reasonably
knowable at the time” as suggested by Ms. Stewart; and
WHEREAS, Mr. Patella questioned Mr. Rogers’ comparison of ENO’s reliability with
that of other utilities while acknowledging that “[h]is conclusion is similar to what I advised the

130

Gulf States Utilities Co. v LPSC, 578 So. 2d 71 at 85 (La. 1991) citing Appeal of Conservation Law Foundation,
127 N.H. 606, 507A 2d 652, 673 (1986), citing Union Electric Co., 40 F.E.R.C. 61,046 (FERC 1987); Long Island
Lighting Co. v. Public Serv. Comm'n of New York, 134 A.D.2d 135, 523 N.Y.S.2d 615 (3d Dept.1987); Re Central
Vermont Pub. Serv. Comm'n Corp., 83 P.U.R.4th 532 (Vt.P.S.B.1987).
131
Alliance. for Affordable Energy, Inc. v. Council of City of New Orleans, 578 So. 2d 949, 958 (La. Ct. App.), writ
granted sub nom. Alliance. for Affordable Energy, Inc. v. The Council of the City of New Orleans, 585 So. 2d 554
(La. 1991), and writ granted, 585 So. 2d 555 (La. 1991), and vacated sub nom. Alliance. for Affordable Energy v.
Council of City of New Orleans, 588 So. 2d 89 (La. 1991) citing New England Power Co., 27 FERC # 63,037, at
65,157 (1984), rev'd on other grounds, 31 FERC # 61,047 (1985).

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 Council in my June 2018 testimony — for 2013–2015, ENO was generally in the second or third
quartile among U.S. utilities, and scores for 2016–2017 placed ENO in the fourth quartile among
U.S. utilities for those years.”132 Mr. Patella averred that “[l]ooking at nation-wide quartile
comparisons, however, does not necessarily allow for meaningful conclusions about ENO’s
distribution maintenance practices.”133 Mr. Patella testifies that “Quanta’s own benchmarking
study, by contrast, used EIA data and other publicly available data to identify potential peer utilities
for comparison to ENO, but that was only the beginning of Quanta’s study.” and that “Quanta’s
benchmarking study is far more helpful in comparing ENO with other utilities than the cursory
quartile comparisons set forth in Mr. Rogers’s testimony.”134; and
WHEREAS, the Advisors note that Quanta, utilizing Institute of Electrical and Electronics
Engineers (“IEEE”) benchmark data in comparison with ENO’s historical reliability performance,
determined that “…ENO’s reliability performance for 2017 is close to the borderline between 3rd
and 4th quartile in the IEEE benchmark”135. Quanta’s conclusion was not dissimilar from witness
Rogers’ analysis that showed 2017 performance in the 4th quartile and the Council believes the
Advisors’ comparison and the 2018 Quanta Report are each informative; and
WHEREAS, Mr. Patella questioned Mr. Rogers’ assertion that ENO did not provide
information to address the critical timeframe leading up to the increase in outages and complaints
that led to the Council’s direct involvement in mid-2017. Mr. Patella suggested that he provided
information about the weather during that “critical timeframe.”136 The Advisors argue that Mr.

132

Rebuttal Testimony of Tad S. Patella at 8.
Id.
134
Id. at 10.
135
Quanta Report page 35
136
Rebuttal Testimony of Tad S. Patella at 18.
133

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 Patella’s testimony with respect to weather was pure speculation and did not provide any causal
connection to any outages or the trend of outages after 2013; and
WHEREAS, specifically, Mr. Patella suggested that “both 2016 and 2017 were
significantly hotter and wetter than the average of the preceding years.”137 Mr. Patella also testified
that there was a substantial increase in lightning strikes during 2016 and 2017. However, the
Advisors argue that Mr. Patella’s testimony was abstract and theoretical. Mr. Patella did not tie
his weather related testimony to any outages that actually occurred. However, in the information
originally provided to the Council in response to Councilmember Brossett’s letter, the specific
weather conditions referred to by Mr. Patella hypothetically were not in existence during any
significant portion of the outages reported on by ENO. Specifically, the weather condition
described as “heat” accounted for just 3% of the total outages, while the weather condition
described as “rain” accounted for only 5% of the total reported outages, and “wind” accounted for
only 2% of the outages. Accordingly, Mr. Patella’s weather-related speculation had no factual
connections to the prevailing weather conditions during the overwhelming majority of the outages
that occurred during what ENO’s own data reported as “fair weather;”138 and
WHEREAS, Mr. Patella also referenced the 2018 Quanta Report, which makes the
statement “that ENO’s service territory ‘is very vulnerable to weather events,’”139 and Quanta’s
additional statement that “’weather parameters such as temperature, lightning flash density,
precipitation and relative humidity have a direct effect on various aspects of distribution reliability

137

Id.
Technical Advisors’ Review of Initial Report at 3.
139
Rebuttal Testimony of Tad S. Patella at 18; citing Quanta Report at 74.
138

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 performance.’”140 The Advisors argue that these generic statements in the Quanta Report are not
related to any conclusions by Quanta that any of these conditions or factors accounted for any
particular outages among the thousands suffered by the local community during the time period
covered by Resolution No. R-18-475; and
WHEREAS, Mr. Patella disagreed with Mr. Rogers’ testimony that ENO has used aging
infrastructure as an excuse for its declining performance, citing selected sections of the Quanta
Report to conclude that “[f]ailure rates do not seem excessive at this time but the legacy design
features of the system along with high customer density and a congested urban environment do, in
many cases, contribute to higher CI and CMI.”141 However, the Advisors argue that Mr. Patella
has cherry-picked only two components of the overall picture of the state of the ENO distribution
system and the problem inherent therein. Specifically, Quanta pointed out in its infrastructure
discussion that “Entergy’s current asset information does not allow for an in-depth analysis of
age of a class of equipment or other analysis often done in review of equipment failure situations.
Some data on the distribution line transformer and wood pole population at ENO was obtained and
is basis for discussion of those asset classes.”142 Accordingly, the Advisors argue that ENO’s rosy
conclusion that failure rates did not seem excessive only applies to the limited data Quanta was
able to obtain on certain distribution line transformers and wood poles. ENO’s lack of current
information on the age of other classes of equipment prevents an “in-depth analysis…often done
in review of equipment failure situations.”143 Accordingly, Mr. Patella only reported on a small

140

Rebuttal Testimony of Tad S. Patella at 18-19; citing Quanta Report at 39.
Rebuttal Testimony of Tad S. Patella at 24-25; citing Quanta Report at 19.
142
Quanta Report at 16. (Emphasis added.)
143
Id.
141

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 part of the data of two components of all equipment classes subject to failure analysis. This flea
on the elephant analysis provides no useful insight into ENO’s aging legacy system and the agerelated equipment failures for classes where ENO is not maintaining sufficient information; and
WHEREAS, in making peer comparisons Quanta concluded that “[o]verall, ENO’s
distribution reliability practices are similar to the other utilities included in the survey. The
primary difference is related to the failure rate analysis which is not possible at this time, but
is expected to be available in the future as new systems are implemented.”144 The Advisors argue
that the Quanta benchmark survey is essentially useless because comparisons are not able to be
made because of ENO’s lack of information necessary to make valid failure rate analysis
comparisons; and
WHEREAS, Mr. Patella disagreed with Mr. Rogers’ assertion that ENO did not
investigate or adopt the use of “best distribution maintenance practices” or “proactive measures”
to improve reliability performance, primarily objecting that “Mr. Rogers does not explain what he
considers to be “best distribution maintenance practices” or “proactive measures.’” 145

The

Advisors argue that the “Executive Summary” of the Quanta Report completely refutes any
objection stated by Mr. Patella in that Quanta concluded that “[t]he results of Quanta’s assessment
indicate that ENO’s distribution reliability program includes adequate components to continue
addressing existing and short-term needs in this area.”146 The sum total of the Quanta analysis is
“adequacy.” By definition, that does not equal best practices or proactive measures; and
CONCLUSIONS

144

Id. at 51. (Emphasis added.)
Rebuttal Testimony of Tad S. Patella at 25; citing Rogers Testimony at 18.
146
Quanta Report at ii.
145

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 WHEREAS, the Council, having reviewed the full record presented in this proceeding as
well as the independent analysis performed by the Advisors, conclude that the burden of
demonstrating prudent conduct legally shifted to ENO, and ENO did not prove that it acted
prudently in the maintenance and repair of its distribution reliability system during 2014-2017,
and that it did not act prudently in its investment in the system having reduced funding by $1
million in 2014 after which its reliability performance declined annually resulting in ENO’s
SAIDI/SAIFI results falling from first or second quartile to fourth quartile; and
WHEREAS, the Council further concludes that ENO did not act prudently in its reaction
to the reliability crisis, which caused ENO customers pay a substantial price, measured not just by
direct economic costs such as closures of businesses leading to lost profits, lost wages, and reduced
tax revenue, but also by less tangible costs, including the physical discomfort caused by multiple
outages and the uncertainty of knowing when persistent outages will end; and
WHEREAS, the Council, having been advised on the applicable law, finds that a one-time
penalty of $1 million imposed against ENO is reasonable, appropriate and consistent with Code of
the City of New Orleans, the Service Regulations Applicable to Electric and Gas Service by
Entergy New Orleans, the precedent of the Maryland Public Service Commission in Re: Potomac
Electric Power Co. (Case No. 9240, December 21, 2011) and other regulatory law; and
WHEREAS, the Council also finds that the one-time $1 million penalty should be used to
benefit ratepayers; and
WHEREAS, the omission from this decision of any argument or portion of the record that
may exist or may have been raised by the participants does not mean it has not been considered.

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 All such arguments and portions of the record have been evaluated and found to add nothing further
to the substance or effect of this decision;
NOW THEREFORE:
BE IT RESOLVED BY THE COUNCIL OF THE CITY OF NEW ORLEANS
THAT:
ENO is assessed a one-time $1 million penalty to be applied/paid in accordance with
further directions from the Council.
THE FOREGOING RESOLUTION WAS READ IN FULL, THE ROLL WAS
CALLED ON THE ADOPTION THEREOF AND RESULTED AS FOLLOWS:
YEAS:
NAYS:
ABSENT:
AND THE RESOLUTION WAS ADOPTED.

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