By Amanda Durish Cook

FERC OKs 6 Amended Entergy PPAs

FERC last week accepted six revised power purchase agreements among Entergy subsidiaries following Entergy Arkansas’ withdrawal from the company’s multistate system agreement.

The company sought in May to amend the PPAs, each of which had been previously filed with FERC because they are being transferred under provisions of the company’s tariff and involve the Grand Gulf Nuclear Station in Mississippi. Under the tariff that replaces the longstanding Entergy system agreement, the resale of power purchased from Grand Gulf must earn FERC approval.

Entergy Arkansas withdrew from the agreement in late 2013 when it joined MISO; the rest of the company’s Gulf Coast operating companies followed suit and set staggered dates to abandon the agreement, prompting Entergy to create a company-wide tariff that governs PPAs among its affiliates. (See FERC OKs 2018 Entergy System Agreement Exit.) The  system agreement had been the basis for planning and operating the Entergy utilities’ generation and transmission facilities as a single system since 1982.

In accepting the amended PPAs, the commission determined that the language is similar to Entergy’s previously approved agreements and in compliance with Nuclear Regulatory Commission requirements (ER17-1160, et al.). In addition to Entergy Arkansas, the PPAs include Entergy Louisiana, Entergy New Orleans and Entergy Mississippi.

The commission also directed the company to submit a compliance filing specifying the date on which the amended PPAs began to fall under the new tariff rather than the system agreement. FERC noted that Entergy may have meant to fill in Dec. 19, 2013, the date of Entergy Arkansas’ withdrawal from the agreement.

The commission’s order makes the PPAs’ acceptance official. FERC staff had provisionally accepted the company’s filing in June when the commission still lacked quorum.

FERC Orders Compound Interest Refund in Entergy Bandwidth Issue

Entergy’s fading system agreement was at the center of another FERC ruling last week when the commission rejected a compliance filing the company made to provide refunds on the bandwidth payments it received from its operating companies (ER10-1350-006). Entergy submitted the filing a year ago to comply with a commission order to calculate interest on refunds related to the payments. (See FERC: Further Compliance Filings for Entergy, MISO.)

FERC determined the company miscalculated the interest on the refund due back to its Louisiana affiliate. In February 2016, Entergy refunded Entergy Louisiana $27 million in payments, paying the principal but not the interest, and recording the amount in its refund compliance filing. The parent company last November additionally refunded compounded interest, but only up until the Feb. 16 principal payment date. The Louisiana Public Service Commission noticed that the company did not pay interest on the initial missing interest payment and protested the filing, asking that interest-on-interest payments of $25,761 be made for most of 2016.

Entergy argued that interest should have only been calculated from the date of collection until the date refunds are made.

FERC last week ordered another compliance filing, ruling that the company must “calculate interest compounding on the interest component of the payments at issue until the date the interest payment is actually made.”

Entergy’s allocation of production costs among its half-dozen operating companies under its system agreement has been a source of disagreement for a decade. Payments are made annually by the company’s low-cost operating companies to the highest-cost company in the system, using a “bandwidth” solution that ensures no operating company has production costs more than 11% above or below the system average.