By Amanda Durish Cook
FERC last week ordered Entergy and the Louisiana Public Service Commission to provide it with more information to determine whether its past decision not to order refunds in the ongoing dispute over the company’s equalization of production costs remains appropriate.
FERC’s voluntary remand of its decision revives the possibility that Entergy may be required to issue refunds over its multistate system agreement (EL01-88-019).
“Having re-examined the matter, the commission seeks further submissions by the parties on whether refunds are appropriate given the circumstances presented in this case,” FERC said in a May 22 order.
The commission set the matter to a paper hearing and ordered Entergy and the Louisiana PSC to submit initial briefs and evidence on refunds within 30 days.
The issue dates to 2001, when the PSC and the New Orleans City Council filed a complaint with FERC, arguing that Entergy’s allocation of production costs among its operating companies in its 1982 multistate system agreement had become unfair.
In the past, the operations of Entergy’s subsidiaries were more integrated, with different transmission and generation facilities functioning as a single electric system. Entergy’s system agreement consisted of several service schedules that allocated costs among the operating companies according to a responsibility ratio.
In a 2005 order, FERC found that Entergy’s allocation of production costs across its subsidiaries was no longer in rough equalization. And while the commission required Entergy to employ a “bandwidth” remedy that ensured no operating company had production costs more than 11% above or below the system average, it declined to order refunds for the years prior to the bandwidth calculations.
The commission originally found that the Federal Power Act prohibits refunds among electric companies of a registered holding company “to the extent that one or more of the electric companies making refunds cannot surcharge its customers or otherwise obtain retroactive cost recovery.” FERC also said that there was no evidence in the record that the operating companies making refunds could receive a retroactive recovery of their costs and rejected the PSC’s request for a rehearing over refunds.
The D.C. Circuit Court of Appeals in 2008 remanded the case back to FERC, questioning whether the commission had adequately supported its decision not to order refunds. However, by 2014, FERC had again declined to order refunds in another rehearing requested by the PSC.
FERC now says the PSC’s past arguments are influencing its decision to revisit the possibility of refunds.
In March, the D.C. Circuit decided that no refunds were necessary in a closely related case involving Entergy’s multistate system agreement. In that case, FERC also determined Entergy’s practices were unfair because the company’s formula for determining peak load responsibility included interruptible load in addition to firm load. (See No Refunds in 20-Year-Old Entergy Rate Complaint.)
