Entergy loses battle with US Regulators

Entergy loses battle with U.S. regulators
Company wanted control over rates
Tuesday, July 10, 2007
By Pam Radtke Russell
A move by Entergy Corp. to give itself a larger say in dividing up the costs of new power plants was rebuffed last week by the Federal Energy Regulatory Commission.
"It was a really inappropriate attempt to do an end run around local regulatory authority," said Clint Vince, an attorney for the New Orleans City Council on utility issues.
In March, Entergy asked FERC to cede much of its responsibility in determining electric rates between states. In its request, Entergy said if its own Operating Committee decides that a new power plant will serve all of Entergy's five-state system, and the state regulator where the plant is acquired says Entergy's decision to expand is prudent, that FERC should limit its ability to second-guess that state's decision.
FERC ruled against Entergy's request Friday, saying delegating such authority to a state commission would violate its obligations under the Federal Power Act.
State regulators in Louisiana, Mississippi and Arkansas, as well as the city of New Orleans, which regulates Entergy New Orleans, opposed the request.
Currently, states can appeal to FERC if they disagree with a decision made in another state that affects them. Had the FERC ruled in Entergy's favor, it would have been much more difficult for regulators in one state to appeal a decision made in another state.
New Orleans found such an appeal necessary after Entergy built the $3.8 billion Grand Gulf nuclear plant in Port Gibson, Miss., Vince said.
Originally, Entergy said New Orleans residents should pay 30 percent of the Mississippi plant's cost. After appealing that decision to FERC, the city managed to get the amount reduced to 17 percent.
"When you have a multistate system like Entergy, you need to have a federal referee," Vince said. "Local regulators try to get lower rates for their customers and push them off," on customers in other jurisdictions.
In requesting the change, Entergy claimed a 2005 decision by FERC, which requires electric rates to be roughly equal between all of its operating companies, adds too much uncertainty in knowing which customers will pay for a new power plant.
Under the 2005 system agreement, customers of Entergy Arkansas have to pay more for power, while Entergy's customers in Louisiana and Mississippi will receive about $284 million over the next year to "equalize" rates. Entergy argued that the system agreement will trigger a recalculation of those amounts every time a new power plant is brought online.
But Mike Fontham, an attorney for the Louisiana Public Service Commission, says that nothing has changed.
"It's no more or less uncertain than it ever was," Fontham said. Entergy also requested that if FERC ruled against the company on the larger issue, that FERC decide that the utility's decision to buy a power plant in Calcasieu Parish is prudent now, months before the sale is complete. Such a decision would limit the future ability of state regulators to question Entergy's purchase.
FERC also ruled against that request.
Entergy did not comment on the rulings.