FERC: Entergy overcharged customers
Published: December 13,2010
BATON ROUGE, La. — A federal regulatory judge has ruled that electric utility Entergy Corp. overcharged customers in four states by selling higher priced power to its own subsidiaries.
Mississippi Attorney General Jim Hood on Monday announced last week’s ruling by an administrative law judge for the Federal Energy Regulatory Commission. The ruling can be appealed and no dollar amount for a potential rebate was specified by the judge.
The investigation covered subsidiaries with about 2.7 million customers: Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans and Entergy Texas. Also involved is Entergy Services Inc., which provides shared services to all the utilities, such as engineering.
The judge found that Entergy violated its own “System Agreement,” which requires it to sell its cheapest electricity to its affiliated utility companies. Instead, the judge said, Entergy Corp. sold its lowest cost power to outside parties from 2000 to 2009 for a profit, forcing higher electricity costs onto customers of the Entergy subsidiaries.
“A judge has now found by compelling evidence that Entergy has overcharged ratepayers by selling them its most expensive electricity. This is one of the company’s methods of cheating ratepayers,” Hood said in a statement.
The case was brought by the Louisiana Public Service Commission.
Hood said the judge’s order requires Entergy’s shareholders to repay the overcharges to the subsidiary companies, but he said the money then should be refunded to ratepayers because the overcharges were passed along through monthly electricity bills.
Entergy will file a request in early January to ask the entire Federal Energy Regulatory Commission to review last week’s initial decision, said Entergy Mississippi spokeswoman Mara Hartmann. She said it’s premature to discuss how much money would be refunded.
“We believe what we did is appropriate and consistent with the system agreement,” Hartmann said. She said the dispute is a “complex issue of tariff interpretation.”
One of Mississippi’s three elected public service commissioners, Brandon Presley, said Monday that the administrative judge’s order “is as strong as 10 acres of garlic.”
Presley said Entergy should immediately refund money to customers.
“I’m not interested in there being a credit on somebody’s bill,” Presley said. “There should be a check in the mail for the amount they were overcharged.”
Hood sued Entergy in December 2008, claiming the company overcharged customers by buying electricity from its sister companies at a higher rate than on the open market, then passing the inflated costs along to consumers. That suit, currently pending in federal court, is separate from the Louisiana Public Service Commission’s complaint to FERC.
Hartmann said Entergy officials believe regulatory agencies, such as FERC, are the proper groups to decide the issue.
“It’s time for him to drop his lawsuit,” Hartmann said of Hood.
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