REFUND: HOW LOBBYIST GOT $1 MILLION DEAL
It was a deeply troubled Floyd W. Lewis, chairman of Middle South Utilities Inc., who attended a Council for a Better Louisiana banquet in February 1983.
Lewis' company already had spent $587 million of a $1.7 billion settlement in a natural-gas contract dispute with Texaco Inc. when it was ordered by the Louisiana Public Service commission [PSC] to refund the money to customers.
Lewis was searching for a way to reverse the decision, which threatened to bankrupt Middle South subsidiary Louisiana Power & Light Co. [LP&L]. He found it at the dinner in the person of lawyer Edmund M. Reggie, a colleague from law school days who had become one of the most influential political operatives in the state.
In talks that began at the dinner, Reggie agreed to represent the companies for $250,000 up front and an additional $100,000 a year for 10 years.
He would get the money only if he succeeded in getting the order reversed, and Lewis said he didn't want to know what Reggie did to accomplish that.
Within weeks, the PSC had changed its mind in a decision some critics called a setback for LP&L's 570,000 customers. Reggie's payments began. Reggie, in turn, split his fees with former Gov. Edwin W. Edwards.
It remains unknown what Reggie and Edwards did. But court documents in a non-payment suit filed by Reggie against the utilities this year offer a glimpse into the lobbying efforts surrounding the largest utility refund case in the state's history.
According to court documents and interviews with commissioners, Reggie never appeared before the commission as a Middle South representative in the case. And surviving commissioners from that time all have denied talking to Reggie or Edwards about the case.
Still, Reggie was paid more than $400,000 before LP&L stopped making payments in 1986, shortly after Edwards revealed during his racketeering trial that he received some of the money.
Utility officials, Reggie, and Edwards refuse to say whether the settlement of the non-payment lawsuit resulted in the payment of the almost $1 million Reggie contended he still was owed.
But officials of Middle South, which this year was renamed Entergy, said that whatever the payments were, LP&L and NOPSI [New Orleans Public Service, Inc.] ratepayers picked up a substantial portion of the cost.
How it started
The story of Reggie's involvement in the case began in 1982, when LP&L settled its dispute with Texaco over its failure to honor a long-term contract for cheap natural gas.
Texaco agreed to pay LP&L $1.7 billion, of which $587 million was paid in late 1982. About $500 million was paid in 1984, and the rest was given to the company in the form of cheaper natural gas over several years.
LP&L decided to use the first installment to reduce its debts and pay outstanding bills for construction of its
But on December 21, 1982, the PSC voted 4-1 to require LP&L to refund the money to customers immediately. Voting for the refund were Commissioners Ed Kennon of Bossier City, George Ackel Sr. of Harahan, Louis Lambert of Gonzales, and Tommy Powell of Eunice.
Voting against the refund was John F. Schwegmann of New Orleans, who earlier had proposed allowing LP&L to keep the settlement money to help defray future rate increases.
The commission's decision threw LP&L and Middle South into a tailspin.
So when Lewis ran into Reggie at the banquet, it was natural to discuss LP&L's troubles.
"You asked how I was getting along and I told you that we were confronting the toughest problems, basically of a political nature, that we'd ever had to face," Lewis said in a 1988 letter to Reggie recounting the Texaco refund case. "It occurred to me that you might very well be able to assist us." The letter was appended to Reggie's suit.
Reggie declined Lewis' first request for help, but asked Lewis and his wife to dinner at his Crowley home three nights later.
"When we arrived in Crowley on Sunday afternoon, you and I went into one room to talk while the ladies were in another part of the house," Lewis wrote.
Reggie balked again at getting involved in the utility case.
But a week after the dinner in Crowley, Lewis said, he called Reggie again to report that he and then-LP&L President Jack Wyatt had met with then-Gov. Dave Treen to ask for his help.
"Gov. Treen indicated he was well enough acquainted with one or two members of the LPSC to talk with them about the matter," Lewis said.
Treen recently said he doesn't remember any meeting, and never contacted any commissioners on LP&L's behalf.
In any case, none of the company's lobbying efforts proved fruitful, Lewis told Reggie. Reggie finally agreed to help.
In his letter, Lewis said the contract for $1,250,000 was based on approval of Schwegmann's plan or a modified version.
Lewis also told Reggie that he didn't expect to be kept informed of his progress.
"You were free to handle your representation as you saw fit... You were clearly on your own," Lewis wrote.
Three weeks later, a modified version of Schwegmann's plan, calling for some money to be refunded, was approved. Powell and Ackel changed their votes.
Lobbying effort denied
Ackel died in 1988. Powell, Kennon, Lambert and Schwegmann all deny being approached by Reggie, Edwards or Treen about the Texaco case, although Powell and Lambert both have had longtime personal or business relationships with Edwards.
Powell and Edwards bought a ranch in Texas together in 1986, and Lambert was paid $6,000 a month for real estate advice and services during an unspecified period when Edwards was out of office between his second and third terms as governor.
Edwards and Reggie both have declined to comment about their actions on behalf of LP&L and Middle South, citing the lawyer-client privilege. Lewis did not return phone calls.
Asked why he changed his vote, Powell said, "I just don't remember. The best I can remember, I talked to Schwegmann. I believe there was some move to reduce the rates.
"I believe that's what made me change my mind. That's a good idea, cheaper rates. That's about what I remember."
Kennon, who left the commission in 1984, said he would have publicly condemmed LP&L's use of Reggie as a silent lobbyist if he had known about it at the time.
"I think it's improper for people to sell political influence at that price, or any price, as far as that goes," Kenon said.
Schwegmann said he knew nothing about Reggie's involvement or his financial arrangement based on Schwegmann's proposal until he found out about Reggie's suit.
He said his plan to delay the refunds was designed to help customers, not save LP&L.
"It was very popular for certain people to play Santa Claus and give presents out," Schwegmann said. But he said the commissioners didn't understand that 70 percent of the refund money would be given to industry, where it would be taxed as earning.
At the same time, Schwegmann said, customers who joined the LP&L system after the initial refund decision still would have paid higher natural gas prices without receiving any benefit from the Texaco settlement.
But Brod Bagert, a New Orleans lawyer and former PSC member who sued the commission over its initial approval of the Texaco settlement, said the commission's refund decision discriminated against people who already had paid higher prices for electricity and would not get all the money due them.
More work for Reggie
After the case, relationship between Middle South and Reggie continued.
Lewis said he and Jim Cain, who by then had become chief executive officer of both LP&L and NOPSI, decided to pay Reggie an additional $50,000-a-year retainer for at least two years for other work for the company. And the company paid him another $200,000 for a single case he was involved in in 1984, according to the lawsuit.
During 1984 and 1985, the company was in the midst of several fights with the PSC over rate increases involving
In one instance, Attorney General William Guste asked the federal Nuclear Regulatory Commission [NRC] to delay a license for
Edwards, who by then was serving his third term as governor, sent a telegram to the NRC telling them to ignore Guste. The telegram didn't mention that Edwards still was receiving money from Reggie for work he had done for LP&L.
Edwards' and Reggie's roles in the case first came to light on Dec. 3, 1985.
Edwards was on the stand during his federal trial on unrelated racketeering charges when the revelation occured.
"Do you get money from (LP&L) through Reggie?" U.S. Attorney John Volz asked.
"Yes, sir," Edwards replied.
"Do you still get money from them?" Volz asked.
"Yes, sir," Edwards said.
"What for?" Volz asked.
"For legal services we performed for LP&L before I was governor in 1983 and 1984," Edwards said.
At the time, however, LP&L Senior Vice President John Cordaro denied that there was any business relationship between the company and Edwards, although Cordaro confirmed that Reggie had represented the utility.
By that time, Lewis had been forced to retire, the victim of heart problems and the company's flagging stock price.
In a statement released by Entergy in response to this story, company Chairman Ed Lupberger said Reggie's relationship with the company was terminated on Feb. 7, 1986, soon after Edwards' connection became known.
Entergy said it settled Reggie's later lawsuit because Lewis "supported Mr. Reggie's position and apparently would have been a witness for him in any court proceeding."
Indeed, Lewis said in his letter to Reggie that he had been so upset over the termination of Reggie's contract that "I offered to work out an arrangement to pay you from my own income over time, even though this would have been a great burden. You declined this offer, stating that it was not my personal debt, but the debt of the companies."
Copyright 1989, The Times-Picayune Publishing Corp.
From: The Times-Picayune, New Orleans, July 23, 1989,