Hood happy with Entergy ruling

Jessica M. Karmasek Dec. 14, 2010, 2:18pm


JACKSON, Miss. (Legal Newsline) - An administrative law judge for the Federal Energy Regulatory Commission has found that electricity provider Entergy Corporation did not sell its lowest cost power to benefit its affiliated companies.

Instead, the parent company profited by selling its lowest cost power to an array of third parties that had nothing to do with the company's systems agreement, said Judge John P. Dring, presiding administrative law judge for the commission.

The result, Dring wrote, was harming its own customers "who had to pay for the higher costs of replacement energy."

Entergy Corporation, according to its website, is an integrated energy company engaged primarily in electric power production and retail distribution operations.

Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity, and it is the second-largest nuclear generator in the United States. The company delivers electricity to 2.7 million utility customers in Arkansas, Louisiana, Mississippi and Texas. Entergy has annual revenues of more than $10 billion and more than 15,000 employees.

Dring ruled the violations harmed the other operating companies and were not accidental. Entergy, he wrote, "should have known that the sales in question violated the systems agreement."

Mississippi Attorney General Jim Hood, who filed a lawsuit against Entergy two years ago, said the judge's ruling confirms the state's position that the corporate giant is operating under a system that has not provided ratepayers with a fair cost for electricity that is supplied under open and transparent business practices.

"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 as stated in our lawsuit," Hood said in a statement Monday.

"The law is crystal clear that they must provide ratepayers with the cheapest electricity."

The violations occurred from 2000 through 2009, a period during which Entergy claimed no wrongdoing.

But the judge found that the violations were illustrated by "clear and convincing evidence" and were proved under a much more stringent burden of proof than found in most civil cases.

The judge's order only requires Entergy's shareholders to refund the overcharges to the operating companies, including Entergy Mississippi.

Mississippi's lawsuit against the company, which is currently pending in federal court, includes the same allegations of "accounting manipulations" used to produce illegal profits as spelled out in the judge's ruling.

However, the lawsuit is more expansive than the accounting manipulation issue and seeks both civil penalties under the Mississippi Deceptive Trade Practices Act and ratepayer refunds from Entergy and Entergy Mississippi. It includes charges of antitrust violations that are presently under investigation by the Department of Justice.

Entergy has prevented companies that generate electricity to use Entergy's lines to sell cheaper power, according to the lawsuit.

"Entergy is now sitting under a mountain of evidence that its business practices have been just plain bad for Mississippi ratepayers," Hood said. "We will not rest until every business and residential customer in our state is made whole."

This isn't the first time Hood's office has issued a press release during his dispute with the company announcing an issue that didn't directly affect his lawsuit.

In March, Entergy expressed their anger over Hood putting out a release that questioned a transfer of $1.3 billion to the company's nuclear power wing.

A November 2009 release brought an audit by the regulatory commission into the spotlight, and an April 2009 release made news of the millions of dollars Entergy spent on executive bonuses.

From Legal Newsline: Reach Jessica Karmasek by e-mail at jessica@legalnewsline.com.

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