Entergy to issue $100 million in rebates to Arkansas customers as part of settlement
Utility seeks end to regulators' litigation
December 1, 2023 at 5:00 a.m.
by Andrew Moreau
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The nuclear power plant in Grand Gulf, Miss., is shown in this Oct. 9, 2002, file photo. (Arkansas Democrat-Gazette file photo)
About $100 million in billing rebates will be issued to 730,000 Entergy Arkansas customers, as soon as Feb. 1, the utility said Thursday. Arkansas ratepayers had already received about $42 million in credits when Entergy reduced its fuel charges in March.
The rebates would be in response to a proposed settlement the Arkansas Public Service Commission has approved related to overcharges involving the utility's Grand Gulf nuclear plant in southern Mississippi. The proposal is awaiting approval by the Federal Energy Regulatory Commission (FERC).
This time around, the credit will actually reduce the amount a customer owes the month the rebate is issued and will appear as a specific line item on bills, according to Danni Hoefer, chief of staff at the Public Service Commission, which filed the settlement proposal Nov. 17.
"We anticipate there would be an insert in the bill," Hoefer said Thursday. "They will likely do something like that."
Both Entergy and commission officials issued statements Thursday noting the settlement avoids ongoing "costly litigation" on an issue that has been contested for six years and involved 19 cases. Federal utility regulators, along with public service agencies in Arkansas, Louisiana and Mississippi, contended Entergy's mismanagement of Grand Gulf led to excess charges for ratepayers in the states.
Louisiana is still contesting Energy's settlement offer while Mississippi ratepayers have received $300 million in credits related to the issue.
"Grand Gulf Nuclear Station has remedied the billing issues that led to Entergy Arkansas ratepayers being over-billed," the commission said in a statement. "Once the settlement agreement is approved by FERC, Entergy Arkansas, LLC will issue refunds to customers, possibly as early as the first quarter of 2024."
Entergy's statement also noted the settlement resolves a long-running dispute.
"This settlement resolves costly litigation and will result in meaningful benefits for customers," the company said, noting that details of specific ratepayer refunds will be available after further approvals. "Once the settlement is approved by FERC, Entergy Arkansas will make a filing at the [public service commission] to calculate the amount customers will receive on their bill and subsequently issue refunds."
Last August the commission, led by then-Chairman Ted Thomas, rejected the settlement offer, calling it a "low-ball amount" that didn't cover ratepayer losses. Thomas resigned in September and another commissioner who rejected the proposal also left the commission. The revamped agency accepted the offer that was previously rejected.
The Federal Energy Regulatory Commission is handling the case because Grand Gulf operates as a wholesale power supplier, selling electricity to Entergy Arkansas Inc. and other Entergy subsidiaries in Louisiana and Mississippi. System Energy Resources Inc. (SERI), the Entergy unit that generates and distributes power from the Grand Gulf nuclear station, is the primary entity involved in the lawsuits.
Based on the recovery-cost structure for Grand Gulf established by the Federal Energy Regulatory Commission, Arkansas would be in line to receive the largest settlement. The regulatory commission's formula says Entergy Arkansas is responsible for 36% of Grand Gulf's operating costs for the life of the plant, which has been approved to continue to provide power until 2044. The federal formula has Mississippi picking up 33% of the costs while Louisiana pays the remaining 31%.
The lawsuit that spurred the settlement proposals began in 2017 when Mississippi regulators filed a claim with the Federal Energy Regulatory Commission that Entergy's return on investment for the power plant was inflated and led to unnecessary bill increases for ratepayers.
Regulators in Arkansas and Louisiana joined the complaint, which also claimed that ratepayers were charged for other unnecessary costs, including executive compensation, private airplane travel, lobbying expenses, advertisements promoting Entergy and industry association dues.
Estimates from the Encyclopedia of Arkansas project ratepayers in the state have been charged $4.5 billion for costs related to Grand Gulf from 1985 to 2012.