By Amanda Durish Cook

Entergy will not have to issue refunds in a decades-long rate dispute with the Louisiana Public Service Commission, the D.C. Circuit Court of Appeals ruled Tuesday.

In denying the PSC’s petition for review, the court upheld FERC’s decision not to order the refunds, acknowledging that the federal commission does not have a “generally applicable policy of granting refunds,” something the court did not understand when it originally remanded the rate case (16-1382).

The issue dates back to 1995, when the PSC and the New Orleans City Council filed a successful complaint with FERC, arguing that Entergy’s formula for determining peak load responsibility in its multistate system agreement was unfair because it included interruptible load in addition to firm load.

In a 2004 order, FERC found that certain aspects of Entergy’s rates were unreasonable. And while the commission required Entergy to remove all interruptible load from its cost allocation, it declined to order refunds, concluding that the utility did not over-collect despite relying on an inequitable cost allocation.

FERC does not historically order refunds when “the company collected the proper level of revenues, but it is later determined that those revenues should have been allocated differently,” the court noted.

The court said that in 2016 it was initially convinced by the PSC’s argument that FERC had failed to “‘reasonably explain the departure’ from its ‘general policy’ of ordering refunds when consumers have paid unjust and unreasonable rates” and remanded the case to FERC. Last year, the PSC was still arguing at FERC that refunds to Entergy Louisiana could be possible. (See FERC Accepts Entergy Revision on ‘Moot’ Settlement.)

But, on remand, FERC told the court that it “actually has no general policy of ordering refunds in cases of rate design.”

FERC acknowledged that throughout the case it had referred to “a ‘general policy’ in favor of refunds” but said that the phrase was a mischaracterization and that it has no such policy.

The court accepted the explanation, saying FERC had clarified its “previously muddled position.”

“Now that the commission has corrected its characterization of its own precedent, we find that the commission’s denial of refunds accords with its usual practice in cost allocation cases such as this one. We also find that the commission adequately explained its conclusion that it would be inequitable to award refunds in this case. The commission did not abuse its discretion. … We find that the commission has made its historic practice clear and justified its application of that practice here,” the court said.