Normally, for trial lawyers, state court is where you want to be. However, in the case of Attorney General Jim Hood vs. Entergy, Carlton Reeves dealt the contingency case a pretty serious blow on Thursday night when he remanded the case back to state Chancery Court in Hinds County. Hood was so bold in October of 2018 to say that the he “finally had Entergy cornered.”
The long running suit deals with allegations by Hood and deputized trial lawyers that Entergy “duped” the Legislature and Mississippi Public Service Commission (MPSC), which has the job of making sure that utilities appropriately price services. Entergy reports annually to both the MPSC and the Legislature.
The case, which has been in process for over 10 years, started in state court and was later removed to federal court. Entergy has consistently said that Hood’s allegations are issues for regulators (either the PSC or the federal regulator FERC) to decide.
Entergy Mississippi commented on the Reeves decision.
While we respect Judge Reeves’ decision, we believe that the Attorney General’s long-running, decade-old case against Entergy, if heard by any court, should be heard in federal court – and the Attorney General agreed with that on Thursday. We continue to believe that this subject matter is best handled by a regulatory body like the Federal Energy Regulatory Commission or the Mississippi Public Service Commission. As the past few days in Judge Reeves’ court have shown, issues concerning utility rates and multi-state power purchases are very complicated and require specialized expertise. Although the Federal Court ultimately determined it did not have authority to decide where this case should be heard, we are confident the Chancery Court will carefully consider where this case should be heard.
It is important to remember that our rates are among the lowest in the country and numerous audits of our fuel costs have affirmed that we treat our customers fairly. Entergy looks forward to the opportunity to defend its record and the record of our nearly 4,000 employees and retirees across Mississippi.
Complicating the legal landscape substantially is the 2018 law passed by the Mississippi legislature that essentially provides safe harbor for regulated entities sued by the Attorney General for regulated behavior without going through the regulator first, which in this case would be the PSC. That’s complicated, because the Public Service Commission has an audit trail of 10 years where they’ve been regulating Entergy. Plus, independent audits are conducted annually outside the PSC. Finding, as Hood would say, “fraudulent behavior” by Entergy, would essentially be an admission that the PSC has no idea what it’s doing. Entergy regularly touts reports that put it among the lowest cost providers nationally for publicly traded utilities.
Even further complicating the issue is the clock.
Time is running out for Jim Hood. Carlton Reeves is as likely a friendly a judge to Hood as Hood could have possibly hoped for. Now, essentially the case will start over again in state court to determine whether or not the new SB 2295 applies. And whatever happens in Chancery Court, either side would vigorously appeal whatever decision the Chancery Court finds. The appellate courts are increasingly conservative and pro-business in Mississippi.
Jim Hood’s term ends at the end of 2019, and it is hard to imagine that this case would find resolution before Hood is out of office. Given the political winds, it’s highly unlikely that the new AG will be cut from the same political cloth as Hood and will have any interest in pushing the case.
One of his prospective successors, State Rep. Mark Baker, championed the new law in a fiery floor speech last year.
Also, if and when the case does wind up in front of the PSC, depending on its political makeup at the time, it’s going to be difficult for them to have to admit publicly that they somehow didn’t do their primary job of regulating Entergy correctly. For over a decade.
Without a doubt, bringing the case back to state court will dial up the politics substantially. Some observers thought that a victory in federal court might substantially prop up Hood’s chances in his 2019 gubernatorial campaign. That prospect has now taken a pretty dire turn.