FERC AND STATE REGULATORS SHOCK ENTERGY
Entergy was unanimously condemned by state Public Service Commissioners from all four states in the Entergy service area for refusing to build more transmission lines and preventing cheaper electricity from reaching its customers. Entergy was grilled for five hours at a historic joint meeting of the Federal Energy Regulatory Commission (FERC) and the state public service commissions on June 24, 2009, in Charleston, S.C.
The Chairman of the FERC, Jon Wellinghoff was quoted in the Platts’ trade publication, as stating:
“What Entergy needs to understand here is that they have a huge potential liability if they’re wrong. And certainly if their actions cause specific damage to consumers, I think their liability is the sky…That’s like a lawyer’s dream” (Electric Power Daily, June 25). Mr. Wellinghoff was appointed by President George W. Bush and was recently elevated to FERC Chairman by President Barack Obama.
At the conference, FERC Commissioner Suedeen Kelly told the state regulators that “It’s very significant to me that you are all united in your concerns. Entergy has allowed its transmission system to deteriorate in ways that both jeopardize reliability and competition . . . both of which are bad.” Chairman Wellinghoff said he was “extremely concerned” about reliability for customers.
Entergy has refused to follow the recommendations of the Southwest Power Pool (SPP) to build more transmission lines to allow for cheaper electricity to reach consumers. The SPP was established by FERC in an attempt to reform and improve transparency, transmission planning, and power procurement through independent review of Entergy’s transmission system. Nevertheless, an Entergy spokesman at one point told the Chairman of FERC that its electricity purchases were confidential and could not be shared with the FERC.
Entergy already has a bad track record with the FERC. On September 27, 2006, the FERC found Entergy guilty of bid rigging, as follows:
“However, the Commission puts Entergy on notice that if such violations occur in the future, the Commission will consider civil penalties as a potential remedy. Moreover, at the Commission stated in the Enforcement Policy Statement, a factor to be considered in determining the appropriate penalty is whether a company has a history of violations. Finally, as discussed herein, going forward, we expect Entergy to adhere to guidelines issued in Allegheny and will consider invalidating, as not just and reasonable, wholesale sales contracts that are the result of affiliate abuse [bid rigging].”
(Opinion No. 485 , page 29, paragraph 82)
Mississippi Public Service Commissioners Lynn Posey and Brandon Presley attended the event along with State public service commissioners from Arkansas, Louisiana, Texas, and Mississippi. The state commissioners unanimously criticized Entergy for using its own interpretation of mandatory transmission planning requirements as a reason to exclude some transmission projects recommended by the independent transmission coordinator. Commissioner Presley questioned Entergy as to why Entergy had ignored a SPP recommendation to build a major transmission line North Mississippi.
Mississippi Attorney General Jim Hood addressed the regulators advising them of the transparency problems the state of Mississippi was having with Entergy’s efforts to keep its ratepayers in the dark about its business practices. “Our goal is to find the truth,” General Hood told the panel. “What we find is that Entergy has, at every turn, tried to thwart our statutory authority to enforce Public Service Commission law.” When Entergy of Mississippi’s attorney and vice president for regulatory affairs arose and demanded time to respond, Wellinghoff responded, “No, you can sit down.”
Attorney General Hood’s Office was forced to file a lawsuit against Entergy in December on behalf of the State, charging the company with fraud, unjust enrichment, anti-trust violations and other illegal conduct. The case is currently pending. Entergy has already admitted to overcharging Mississippi ratepayers for power. Since last year, General Hood has tried to convince Entergy to turn over documents about its business practices to shed some light on the way in which it operates. Entergy has refused every request.
AG Jim Hood Press Release