The Federal Energy Regulatory Commission approved a settlement March 21 between Entergy Corp. and Arkansas regulators over customer rate impacts from the utility's 1,428-MW Grand Gulf nuclear plant in Mississippi.
Under the settlement, Entergy subsidiary System Energy Resources Inc. (SERI) will provide a refund to Entergy Arkansas LLC of $142.27 million, inclusive of FERC interest, to resolve all claims in the dispute among settling parties. SERI is the majority owner of Grand Gulf in Port Gibson, Miss. (FERC Docket ER18-1182)
SERI said in the order that the settlement terms are consistent with the Mississippi settlement filed in June 2022, which resulted in bill credits and reductions for Entergy Mississippi LLC customers, and will not adversely affect any non-settling buyers. FERC approved the uncontested Arkansas settlement because it "appears to be fair and reasonable and in the public interest," according to the order.
"We are pleased that FERC has approved the SERI settlement with the Arkansas Public Service Commission," Entergy spokesperson Cristina del Canto said in an email. "The approval of this settlement, together with the settlement with the Mississippi Public Service Commission, reduces significantly the level of claims against SERI, and at the same time, benefits customers through both the refund that SERI will be paying as well as the future rate reduction provided for by the settlement."
Regulators in Arkansas, Louisiana and, in part, Mississippi in March 2021 filed a complaint with FERC seeking more than $360 million in damages for "sub-par performance" and "imprudent" operation of the Grand Gulf nuclear plant related to underperformance from 2016 through 2020. The complaint also called for an investigation of plant management going back to 2012 and an inquiry into the prudence of an $800 million capacity uprate of the facility in 2012, which the complaint alleged led to decreased output. (Docket EL21-56)
Grand Gulf first entered service in 1985, according to S&P Global Market Intelligence data, and supplies electricity to Entergy utility subsidiaries Entergy Mississippi, Entergy Arkansas, Entergy Louisiana LLC and Entergy New Orleans LLC. A Mississippi cooperative, Cooperative Energy, owns a 10% share of the single-unit plant.
The Arkansas settlement amount could increase if SERI settles with other affected parties and is required to pay a refund greater than $588.25 million, according to the order. Regulators in Mississippi, Arkansas, Louisiana and the city of New Orleans oversee Entergy operations in their jurisdictions. SERI has not reached settlements with the Louisiana Public Service Commission or the New Orleans City Council.
Entergy disclosed in October 2023 that a settlement in principle had been reached between SERI and the Arkansas PSC but was still subject to FERC approval. "With this latest settlement, SERI has now resolved nearly two-thirds of its litigation risk," Entergy CEO and Chairman Drew Marsh said at the time, adding that the Arkansas settlement provides important clarity that could guide resolution of remaining litigation.
Louisiana
According to the order, the Louisiana Public Service Commission said it does not oppose the Arkansas settlement so long as non-settling parties are protected from "discriminatory spillover effects."
The Arkansas settlement is a "black-box settlement," or an agreement in which a total dollar figure is typically agreed upon but the specific adjustments used by each party to arrive at the figure are not known. Louisiana regulators said the uncertainty of such a settlement leaves it unclear how SERI is allocating refunds among parties it is settling with and those with whom it has not yet reached agreements.
SERI said in the order that the $142.27 million for Entergy Arkansas customers is based on a $588.25 million total settlement amount not binding for any parties other than those in the settlement, and SERI has used allocations reflecting that "Entergy New Orleans and Entergy Louisiana [customers] would be paid 19.75% and 16.13% of any [FERC]-directed refunds." SERI said it intends to continue using this refund calculation methodology in any future cases to the extent further refunds are ordered.
The New Orleans City Council said in the order that it did not oppose the Arkansas settlement as long as it did not affect the city's rights and available remedies, as its case, like the Louisiana PSC's, is ongoing.
Entergy said in August 2023 that it owed no further customer refunds or credits in connection with Grand Gulf, but Louisiana regulators disagreed at the time. The Louisiana PSC said it expected litigation on the issue to continue as it pursued potential refunds estimated at the time at $145 million for Entergy Louisiana customers and more than $180 million for Entergy New Orleans customers.
Regulators in Arkansas, Louisiana and New Orleans previously declined to join the 2022 Mississippi settlement, citing concerns about potential continued mismanagement, broad future protections for Entergy built into the settlement and their exclusion from settlement negotiations.
