Hood levels charges at Entergy affiliate

Drew Smith Dec. 23, 2008, 1:48pm

Jim Hood (D)

JACKSON, Miss. (Legal Newsline) -- Mississippi Attorney General Jim Hood announced Tuesday that he has found more evidence of wrongdoing on the part of state power provider Entergy Corporation.

Hood claims he has evidence that Entergy Louisiana, LLC, an affiliate of Entergy Corp., is guilty of improperly recovering non-fuel costs that are prohibited by law.

By an order dated December 4, 2008, the Louisiana Public Service Commission claims the affiliate used non-fuel operation and maintenance expenses and "hypothetical S02 allowance costs" to pad its bills.

"This is just another example of how Entergy pads its bills," the Democratic attorney general said. "Our complaint alleges that they have padded their bills with these 'hypothetical SO2 allowance costs.' We intend to make them stop this improper conduct and give this money back to ratepayers, just like they were required to do in Louisiana."

Entergy Louisiana, LLC allegedly used its fuel adjustment clause (FAC) to justify the allowance costs, despite those costs being disallowed in January 2002.

The clause allows utility companies to recover fuel related expenses as soon as they are incurred instead of waiting until after regulatory
approval is complete. It also provides for a dollar-for-dollar recovery by utilities and prohibits the companies from earning a profit from the FAC.

Hood's law suit is the latest development in an ongoing dispute between the attorney general's office and Entergy, the state's largest energy provider.

In October, Entergy filed for an injunction in federal court seeking to protect itself from Hood's demands to comply with his investigation into the company's business practices.

Hood has asked the company for information regarding its pricing and fuel buying and selling in the past 10 years in order to investigate
recent rate increases.

Entergy has fought Hood on the issue, claiming he has no authority to issue Civil Investigative Demands to the company. In its complaint, the company called Hood's investigation "a fishing expedition, commanding the production and delivery of great volumes of documents and information, relevant or irrelevant, in the hope that something will turn up."

Hood, however claims the state's Consumer Protection Act allows him to investigate. In addition, he claims the company buys electricity and fuel for Mississippi at inflated rates from its sister companies and overcharges state customers.

Earlier this month, Hood filed suit against Entergy, charging the company with fraud, unjust enrichment and anti-trust violations.

To date, the two sides remain deadlocked on the legality of the investigation.

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Mississippi Attorney General
550 High St Suite 1200
Jackson, MS 39201

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