FERC told the Louisiana Public Service Commission Thursday that it would not appoint a discovery master or settlement judge in an ongoing dispute over Entergy’s decommissioning deduction for its Grand Gulf Nuclear Station.
The PSC is attempting to compel Entergy subsidiary System Energy Resources, Inc. (SERI) to hand over accounting information and discussion notes with the IRS and understand the sudden decision to forgo a deduction it has enjoyed and renewed for 17 years (ER21-142).
However, the tax clash will continue to play out in another FERC docket.
The federal commission said in its order that state regulators were raising their arguments under an informal challenge as an interested party and that they needed a more formal channel for those measures.
The PSC filed the information request through a 2020 amendment to SERI’s formula rate protocols that allows interested parties to request information and submit informal challenges to unit power sales agreements. The commission claimed it needed to better understand Grand Gulf’s 2020 formula rate inputs.
SERI owns 90% of the 1,400-MW Grand Gulf plant in Port Gibson, Miss., and sells the plant’s output under a FERC-regulated wholesale rate to Entergy’s Arkansas, Mississippi, Louisiana and New Orleans subsidiaries. It’s taken a tax deduction since 2003 for future costs of shuttering the plant.
The Louisiana commission alleges SERI’s Grand Gulf power sales agreements contain “millions of dollars of unjust and unreasonable charges” because it didn’t reflect the decommissioning tax benefit in its rates. The PSC has accused Entergy of collecting money from ratepayers for taxes that were never paid.
The Louisiana commission and Entergy are involved in a separate docket before FERC over whether the utility violated filed rate doctrine by neglecting to include the decommissioning deduction as a rate base offset. The federal commission this year set that case for settlement hearings to determine customer refunds (ER21-748).
SERI relinquished its decommissioning deduction in 2020 following an IRS Notice of Proposed Adjustment that disallowed more than $1 billion of the deduction. The subsidiary quickly accepted the settlement, and Entergy said its net operating loss carryforwards would absorb the adjustment’s costs.
The Grand Gulf plant has been criticized in recent years for its persistent unplanned outages. Earlier this year, the PSC was joined by the Arkansas Public Service Commission and the New Orleans City Council in a FERC complaint over the plant’s malfunctions and performance issues. The trio argued that Entergy should refund customers the $800 million spent on upgrades to the plant in 2012. They also said Entergy should refund its customers the $361 million in power purchases it has had to make when the station was unavailable since the upgrade.
The Louisiana PSC has registered other grievances about Grand Gulf rates, arguing that SERI’s return on equity was overstated. (See FERC Rebuffs Challenges to Grand Gulf Ruling.)
