Court rules for Entergy Mississippi in agreement-ending case

WASHINGTON D.C. — A federal appeals court yesterday rejected an effort by Louisiana utility regulators to make Entergy Corp. subsidiaries in Arkansas and Mississippi pay for ending an agreement with their Entergy counterparts in Louisiana and Texas.

The ruling by an appeals court in Washington deals with an agreement that has proven beneficial to customers of Entergy Gulf States Louisiana and Entergy New Orleans, at the expense of customers of Entergy Arkansas.

A 2005 Federal Energy Regulatory Commission ruling dealing with the agreement among the Entergy systems said customers of Entergy Arkansas — which has relied heavily on nuclear, coal and hydroelectric plants — did not pay a fair share of the costs of generating power. The ruling resulted in rate cuts for other Entergy utilities, which were being affected by the then-high cost of using natural gas to generate electricity.

The utilities were obligated to give eight years’ notice before leaving the agreement. Entergy Arkansas gave notice in 2005. Entergy Mississippi decided to give notice in 2007.

Louisiana’s Public Service Commission and the New Orleans City Council had argued federal regulators should force them to pay exit fees. FERC said there is nothing in the agreement requiring exit fees. The Court of Appeals for the District of Columbia Circuit agreed.

Yesterday’s ruling may not be the final word on the matter. The ruling said that while there is no explicit requirement for exit fees, FERC could decide to impose other conditions for with withdrawal.

“As FERC noted, it must still review the post-withdrawal arrangements to ensure that they are just, reasonable, and not unduly discriminatory,” the appeals court ruling said.

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