Osceola Loses Bid to Recoup $4.9M From Entergy

A U.S. District Court judge on Wednesday tossed out a lawsuit the city of Osceola filed against Entergy Arkansas Inc. in an attempt to recover $4.9 million the city said it was owed.

The city alleged in its lawsuit that it was due $4.09 million for overpayments tied to the purchase of wholesale electric power between 2007 and 2009 from Entergy Arkansas Inc., a subsidiary of Entergy Corp. In addition to the alleged overpayment, Osceola said it was owed another $844,000 in interest as of the end of 2013.

In his ruling, U.S. District Judge Brian Miller in the Eastern District of Arkansas' Jonesboro Division said Osceola missed its chance to challenge the payment.

Miller said Osceola should have made the challenge when another one of Entergy's customers, Union Electric, a Missouri public utility, filed a complaint with the Federal Energy Regulatory Commission in Washington, D.C.

Union Electric argued that Entergy couldn't pass on bandwidth costs to it as purchased energy, Miller said in the order.

Osceola did intervene in the FERC proceeding, but it didn't offer any testimony or make any argument why it should also be entitled to a refund if FERC ruled in favor of Union Electric, which is did in 2012.

"Afterwards, Osceola contacted Entergy and requested a refund of its bandwidth payments, but Entergy refused, arguing that the FERC order was specific to the Union Electric contract only," Miller's ruling said.

Entergy said in its motion to dismiss the case that FERC has jurisdiction over the issue and Osceola should have objected in the Union Electric case.

Miller agreed.

"The record indicates that Osceola intervened in the FERC proceeding to protect its interests, but sat by while Union Electric argued its case," Miller wrote. "Osceola had several chances to raise these arguments to the FERC but elected not to do so, and it is inappropriate for it to now raise these arguments in this forum."

Zachary David Wilson of North Little Rock, Osceola's lead attorney, told Arkansas Business Friday that the city had testimony that would have addressed that issue but "didn't get a chance to put that forward."

Wilson also said it would have been too expensive to make a claim in the FERC proceeding.

"And we really didn't know at the time that the Union Electric complaint was going to be successful," he said. "We didn't know until 2012 that we had a case."

He said one of the options the city is considering is appealing to 8th U.S. Circuit Court of Appeals. But no decision has been made yet.

Scott Trotter of Little Rock was the lead attorney for Entergy. Kimberly Bennett, an attorney for Entergy, said Friday that she was happy with the ruling.

"We were very pleased that the court recognized that Osceola, first had the opportunity to litigate these claims back when it should have and doesn't get a second bite at the apple," Bennett said. "And the FERC has exclusive jurisdiction over this matter, which we thought was also a pretty strong point."