Entergy Denies Refunds Due Customers in Defiance of Federal Regulators

Credit: “Look Up Fondren Entergy substation lit up” by Tate Nations is licensed under CC BY 2.0

On Dec. 23, the Federal Energy Regulatory Commission (FERC) ruled that Entergy Corp. owes around $500 million in refunds to ratepayers in Louisiana and Arkansas related to the management and operation of the Grand Gulf nuclear plant. The FERC’s ruling comes as the result of a joint lawsuit filed by Arkansas, Louisiana, and Mississippi claiming the company overcharged customers to operate the facility. Both Arkansas and Louisiana Public Service Commissions rejected settlement offers in the case earlier this year in part because they did not include refunds to ratepayers. However, on Monday Entergy issued a press release saying that no refunds are due to its customers, in direct defiance of the FERC ruling.

“While we disagree with some elements of FERC’s findings, in particular its ruling on the sale leaseback claim, we are pleased that FERC’s remedy results in no additional refunds due to customers beyond those already provided in 2021 on the uncertain tax positions taken by SERI,” said Drew Marsh, Entergy’s chief executive officer in a press release.

According to Entergy, a $25 million one-time credit issued in 2021 by System Energy Resources Inc. related to the disputed accounting issue that resulted in the FERC ruling already satisfied the federal requirement for a refund, and that no further funds are due to ratepayers. That’s incorrect, the Louisiana Public Service Commission states.

“The initial decision was by a FERC administrative law judge and occurred in 2020. The initial decision ordered SERI to pay $334 million in refunds plus interest, on the uncertain tax deduction. FERC affirmed that decision on Friday, December 23, 2022, but altered the order to
include additional refunds for items omitted from the initial decision’s refund calculation,” the commission said in a press release Wednesday.

-ADVERTISEMENT-

“About $160 million would be due to Entergy Louisiana customers, $190 million to customers served by Entergy New Orleans and $124 million to Entergy Arkansas customers,” the commission continues.

“For reasons unknown, Entergy is attempting to mislead its customers, investors, and the public regarding the consequences of FERC’s findings of unjust and unreasonable conduct by SERI,” said commission Chairman Lambert Boissiere. The federal ruling stated “we will require a refund amount,” noting that the “refund amount is intended to compensate customers for the excessive revenue requirement incurred as a result of SERI’s noncompliance.”

According to the FERC decision, SERI failed to reduce the rate base for taxes it collected from ratepayers, but didn’t pay those taxes to the government due to an “uncertain” tax deduction for the future cost of decommissioning the Grand Gulf facility. As a result, FERC ruled that Entergy overbilled customers in Louisiana, Arkansas and Mississippi millions of dollars.