I know that those of you still without power and those of you who endured the sweltering heat for many days are rightfully upset with how long it has taken Entergy Louisiana to restore power to our residents and businesses. I want you to know that while progress is being made, I will not rest until every citizen and business in Jefferson Parish has their power back. I have called for an investigation by the Louisiana Public Service Commission into the unacceptable length of time it is taking to get our parish back up and running again. I have met daily with Entergy’s management and will continue to do so. This is about more than mere comfort. Entergy’s inability to rapidly restore power has affected the health of our elderly, businesses economic viability, our infrastructure and the ability of our parish to get back on our feet. If not for Entergy Louisiana’s lack of preparedness and lack of a sense of urgency, Jefferson Parish could already be back to 100%. I promise to stay on top of Entergy until we have full power restoration and a viable solution is produced for future storm responses, whatever that may be. ~ Jefferson Parish Prez John Young Email Blast 9/5/2012
So folks, what are we to believe, the TeeVee pictures of powerline contractors sitting in staging areas or career political hack turned Entergy NOLA CEO Charles Rice? Since the storm Rice has gone on every NOLA TeeVee station saying Entergy did great after Hurricane Isaac without mentioning the 90 year old man in Marrero that died from heat stroke. Frankly watching this whole PR point-counterpoint between the area’s elected leaders and Entergy via it’s NOLA CEO Charles Rice and assorted spokespersons play out after the storm left me with way more questions than answers. This post has taken me three days of exhaustive research and interviews with 3 different area political observers along with extensive internet research to formulate the complicated, though somewhat predictable answer in this is how crony capitalism works.
First we need to review and do a compare and contrast. For that I’d like to direct everyone to the first Hurricane to hit this area back in 2005, Hurricane Cindy, which made landfall close to Grand Isle, cut across the mouth of the Mississippi River making landfall again near Waveland. It was the 2005 Hurricane that I slept through and we never lost power on the West Gulfport Beachfront as the old pre Katrina grid did well. That said the USA Today has an old AP story that tells the tale of damage:
BAY ST. LOUIS, Miss. (AP) — Heavy rain and storm surge flooded low-lying streets along the Gulf Coast on Wednesday as a rapidly weakening Tropical Storm Cindy pushed inland after leaving more than 300,000 homes and businesses without electricity.
By and large the area did well with only 300,000 people without power in a 2 state area populated by millions. Remember this was the pre-Katrina grid that had some age on it when Cindy hit, not the almost brand spanking new infrastructure that is the post Katrina landscape. Before Isaac hit, Entergy NOLA CEO Charles Rice commented to Bloomberg on Entergy’s readiness for Isaac:
Entergy requested 3,750 emergency utility workers from neighboring states to help respond to inevitable blackouts, said Mike Burns, a spokesman. The New Orleans-based company yesterday began shutting down its 1,250-megawatt Waterford 3 nuclear reactor located 25 miles west of New Orleans.
“We have spent a significant amount of money improving the system since Katrina,” Charles Rice, chief executive officer of Entergy New Orleans, said at a press conference yesterday. “The system is in about as good of shape as it could be. However, when you have winds of 50, 60, 70 miles an hour, I don’t care how storm-hardened the system is, there will be outages.”
True dat and by 5:oo AM on August 28th, Isaac day 1, Entergy reported over 400,000 of its Louisiana customers were without power. By Isaac day 3 that number had grown to well over 675,000. Day 3 should have been the day work really got started on the restoration as the storm had cleared out by then. Instead tempers began to flare as stories of staging areas full of line crews not working passed through the various rumors mills. My email inbox began receiving tips on Entergy NOLA CEO Charles Rice and I had heartburn on two issues:
- Why did what should be brand new infrastructure fail so miserably in Isaac?
- Why does Entergy New Orleans have a political operative as its CEO?
The answer to question #1 is that one way too complex and premature an issue to flesh out here. Item number 2 however can be tackled today though as Charles Rice has taken what I would call a strange route to the top of Entergy’s New Orleans unit. If we can agree the early assessment is that Entergy’s performance in Louisiana after Isaac is best described as poor with lots of room for improvement then we must assess Entergy’s local leadership as the buck stops with them. A bit more history is in order to draw a sharper bead on the political operative now leading Entergy New Orleans as I offer the following links to Rice and his shithouse past working point for disgraced former Mayor Ray Nagin:
- Mayor Treading Water on Board Seat ~ Times Picayune via The Nagin Files Blog (I wonder if Charles was vacationing with Chereen and Jon)
- Trash bin contract smells, some say; No-bid deal in N.O. raises questions ~ Times Picayune via The Nagin Files Blog
- 3rd place fits bill for N.O. contract; Winning firm rated last, lacks experience ~ Times Picayune via The Nagin Files Blog
- Mayor’s top aide quitting to join law firm; Rice cites pressures of politics on family ~ Times Picayune via The Nagin Files Blog
- Was Rice shown the door at City Hall? ~ Times Picayune via The Nagin Files Blog
And if doing Ray Nagin’s shithouse deals wasn’t enough there was this Rice post departure gem that sums up the incompetence now in Entergy’s employ:
- Storm work deals go to inside players; Contracts could hurt state’s image ~ Times Picayune via The Nagin Files Blog
We need to flesh out that last link just a bit:
Weeks after Charles Rice left his post as chief administrative officer of the city of New Orleans in June, the city sanitation department sought to hire a contractor for storm debris removal.
The day before Hurricane Katrina made landfall, Mayor Ray Nagin signed a contract potentially worth tens of millions of dollars with Omni Pinnacle of Slidell.
Omni’s offer wasn’t the cheapest of the six offers the city received. But the city didn’t have to pick the low bidder, an experienced firm, because the job was considered a professional service rather than a finite task.
City sanitation director Veronica White, who oversaw the selection process, was hired into her city post by Rice. Rice, meanwhile, has turned up on Omni’s payroll in his new position as a lawyer. Omni has also been represented in contract talks with the city and the Army Corps of Engineers by Rice’s brother, Terrence Rice, according to a corps official.
The Rices’ work for Omni is just one of many instances in which the politically connected have landed work as subcontractors in the few hot economic markets of post-Katrina New Orleans. Whether the job involves debris removal and staging, roof tarping, trailer sales or building inspection and cleanup, people with familiar names and faces are making money — often in areas where they seemed to have no particular expertise before the storm. It’s a sign, observers say, that perhaps the Louisiana way wasn’t washed away with the storm’s floodwaters.
With this Rice guy the public was no where in public service as he is most remembered for the $750 trash can boondoggle:
The city just bought new trash cans three years ago, and there is plenty to criticize about that deal. The 600 receptacles, which cost $450,000, were bought through a no-bid contract, even though trash cans that provide advertising are typically free to cities, which usually get a share of the ad revenue. What’s more, the company that supplied them, Niche Marketing USA, acknowledged a business connection with Terrence Rice, brother of then-Chief Administrative Office Charles Rice — a relationship that the Rices deny.
But even though the purchase was plainly a bad business move, the trash cans — touted as bomb-proof — certainly hadn’t worn out this quickly.
That’s why it’s hard to understand the Nagin administration’s decision to get rid of them and spend $335,000 for 500 new wrought-iron trash cans. Sanitation Director Veronica White says she wants to get another 500 if the City Council gives her a large enough budget to do so, which would mean a whopping $670,000 for new trash cans.
The replacements might be more attractive than the receptacles that Mayor Nagin now mocks as “little munchkin trash cans.” But if a concern for aesthetics is the driving force here, the administration should be able to find much better uses for the money.
Jeffrey over at Yellow blog was also all over that topic back in 2007 in a post that has additional links that is well worth the read.
So folks are we getting a flavor for the talents Rice brings to the table? After leaving C. Ray I noted he hooked up with Slabbed fav Judy Barrasso as the firm’s CAO but as a lawyer familiar with Rice opined to me he did not last long there because those type firms favor workhorses, not Pampy Barre trained political hacks and that is how the 3 political observers I spoke with remember Rice, as Barre’s briefcase porter. Of course doing the right kind of google search with Rice, Barre and Nagin lands one on 3 area blogs, The Nagin files which I linked copiously above, Your Right Hand Thief where Rice shows up in comments to Oyster’s post on Oliver Thomas being run out of office in disgrace and finally Slabbed, where Telemachus gave mucho context to the now infamous Dutchie Connick Waste Management memo. Bottom line here is Rice, a guy that by all appearances knows nothing about running a utility has plenty of knowledge of the local shithouse for he came from there. But then I contacted the Wino of Lafayette Square.
The Wino knew Rice as Pampy Barre’s briefcase boy but he remembered something else about Marc Morial, Pampy Barre and Rice as he indicated they were involved with a guy by the name of Glenn Haydel and his company Metro New Orleans Transit Inc and its subsidiary Transit Management of Southeast Louisiana, Inc (TMSEL). Worth noting is TMSEL had a kissing cousin in TMSEL of Jefferson Inc. What is important about TMSEL, Haydel and the RTA? For that we need to check in with the FBI via the Columbia University website:
Jim Letten, United States Attorney for the Eastern District of Louisiana and James Bernazzani, Jr., Special Agent in Charge, Federal Bureau of Investigation and Michael Nelson, Special Agent in Charge, Internal Revenue Service, Criminal Investigations, announced today that a Federal Grand Jury indicted GLENN A. HAYDEL in connection with a federal investigation into corruption at the Regional Transit Authority (RTA). In particular, the indictment returned by the Grand Jury charges one count of wire fraud, one count of theft concerning programs receiving federal funds and one count of money laundering.
The indictment alleges that GLENN A. HAYDEL became the majority stockholder and president of Metro New Orleans Transit Incorporated (Metro) and was the president of Transit Management of Southeast Louisiana, Inc. (TMSEL) which together essentially operated the mass transit system for the Regional Transit Authority (RTA).
The Indictment alleges that in August of 1999, GLENN A. HAYDEL, acting as the president of TMSEL, developed a scheme to substitute cash which was in the Debt Service Reserve Fund (DSRF) of the 1991 Sales Tax Bonds Issue with a surety bond. The indictment alleges that GLENN A. HAYDEL approached the Board of Commissioners for the RTA on three occasions and sought their authority to substitute the cash in the DSRF with a surety bond thereby liberating the cash in the fund to be used for capital expenses of the RTA. At this time, the RTA was in dire need of cash.
After receiving permission from the Board of Commissioners of the RTA to substitute the cash in the DSRF with a surety bond, HAYDEL, according to the Indictment, developed a scheme to divert $550,000.00 of the funds to a bank account owned by Metro. As the Indictment alleges, in August, 2000, HAYDEL instructed a bank officer to divert $550,000.00 from the proceeds from DSRF to the bank account of Metro and thereafter, HAYDEL diverted $350,000.00 to his personal account. In particular, the indictment charges one count of wire fraud involving the actual diversion of the $550,000.00 from the proceeds of the DSRF to the Metro bank account.
In fairness to Rice I’ll reiterate his involvement was that of Barre’s briefcase boy but we see where he learned the art of no bid contracts to the benefit of his family later on as Ray Nagin’s top aide. And the taxpayers in that RTA deal? Well they got raped as the New Orleans bulletin reported:
Frank Donze of T-P reports that the Regional Transit Authority has offered a $650,000 cash settlement to Glenn Haydel, the politically connected, former management consultant whose contract was terminated in 2003 amid allegations that he had bilked the agency out of hundreds of thousands of dollars.
You may remember that we focused on the “politically connected” label as meaning hold on to your wallet and that is certainly the case here.
Interesting that Rice’s name also appeared in comments to part two of the series The Cost of Corruption in New Orleans Bulletin:
Perhaps the Richie Angelico, the TP or the FBI should look into the relationship between Charles Rice, CAO, and the spouse of one the parking company’s principals. . .Mr. Rice’s career was virtually saved by the actions of the spouse (and community property equity holder in the parking company) of one the owners of the parking company. She abused her authority as a member of the bar to help Rice dodge a legal thicket that could have cost Rice his career. . . a few short months later, Rice steers this multi million contract to a startup company offering an inferior deal to the city.
So at the end of the day Entergy thought it better to hire someone with no practical experience running a utility as CEO in favor of a highly connected political operative. There is more to this IMHO as Entergy NOLA exists only because it was a regulatory gift to the NOLA City Council as everyone else is regulated at the state level by the PSC. Entergy NOLA CEO Charles Rice is a product of this cesspool.
Feel free to register your thoughts in comments because I sense this topic is a fertile one indeed.