FERC on Tuesday rejected a new argument by the Louisiana Public Service Commission in a 17-year-old case tied to a now terminated agreement among Entergy’s operating companies (EL01-88-023).
Having previously faced rejection from FERC, the PSC framed its argument for refunds to Entergy Louisiana customers in a new light, this time claiming that Entergy’s System Agreement itself — not the Federal Power Act, as the PSC originally thought — was the basis for the “rough equalization” of costs requirement.
Prior to 2015, the Entergy operating companies functioned as one system across four states, although each had different operating costs. FERC in 2005 determined that production costs across the multistate Entergy system were not as equal as Entergy promised and imposed a bandwidth payment remedy among the companies, spurring litigation that’s lasted several years. (See FERC Affirms Ruling Favoring Entergy Bandwidth Calculation.)
The Louisiana PSC has mounted multiple attempts to compel refunds for the period before the 2005 solution, arguing that “large disparities in production costs” began showing up in 2000 without Entergy attempting to distribute production costs more evenly in accordance with its 1982 System Agreement.
This time, the PSC requested rehearing of FERC’s decision not to order refunds for 2001-2003 and asked it to consider a new refund period from 2003 through mid-2005 on the basis that Entergy violated its own tariff, not the FPA. (See La. PSC Complaints Denied in Entergy System Disputes.)
FERC refused both requests on Tuesday.
“We are not persuaded by the Louisiana commission’s arguments on rehearing concerning its new refund claim, and we continue to find that it was too late in this 17-year-old proceeding for the Louisiana commission to change its theory of the case and raise a new claim,” FERC said.
Beyond that, the commission said the now defunct System Agreement and the FPA are not the same.
“The System Agreement and the FPA therefore do not constitute potential alternative bases for the rough equalization requirement. Rather, the System Agreement has been structured in a way that was intended to achieve rough equalization and thereby satisfy FPA standards,” FERC said.
It also said the PSC failed to point out a provision of the System Agreement that Entergy violated.
“Instead, it treats rough equalization as a general, albeit unarticulated, duty applicable to the parties, rather than as a result that the specific duties set forth in the System Agreement are expected to achieve,” FERC said.
The PSC has long argued that Entergy Arkansas “reaped” over-collections of system payments. In its order, FERC again reminded the PSC that Entergy as a whole didn’t over-collect on rates.
“The Entergy Operating Companies operate[d] on a single-system basis, and this case involves a zero-sum allocation of costs among the operating companies under the System Agreement,” FERC said.
Entergy Arkansas gave notice in 2005 to leave the System Agreement in 2013, asserting it was effectively subsidizing the other Entergy companies. Entergy Mississippi followed in 2007, seeking a 2015 exit. FERC approved the departures in 2009 and ruled that neither utility was bound to compensate the remaining unified Entergy companies upon their departures.
The PSC also argued that the presiding judge over the bandwidth remedy issue in 2005 implied that refunds were appropriate for the 2003-2005 period and that FERC could use its discretion bestowed under Section 309 of the FPA to go beyond the law itself and order refunds beyond a 15-month span.
FERC said the reference to Section 309 was an invention of the PSC and that it couldn’t “identify any pleading or order in the long history of this proceeding that invokes, or even mentions, FPA Section 309.”
