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Arkansas Regulators Reverse Decision, Accept $142M Settlement for Grand Gulf Costs

3 min read

In a turnabout from last year, Arkansas utility regulators have approved a $142 million offer from Entergy to repay Arkansas electric ratepayers for the utility’s alleged mismanagement of the Grand Gulf nuclear power plant in Mississippi.

The Arkansas Public Service Commission, which rejected the offer in August 2022 as insufficient, dropped its objections with little fanfare last month. Mississippi regulators accepted a $300 million settlement last year, but Louisiana’s PSC has vowed to fight on, seeking hundreds of millions more from the utility, which has subsidiaries in the three states, including Entergy Arkansas of Little Rock.

Entergy Arkansas issued a statement to Arkansas Business on the settlement, saying that the $142 million will eventually go back to its customers.

“A global settlement including Entergy Arkansas LLC, System Energy Resources Inc. and the Arkansas Public Service Commission has been filed with the Federal Energy Regulatory Commission for approval, resolving all current claims at this time.” System Energy Resources of Jackson, Mississippi, is an Entergy Corp. subsidiary and 90% owner of the Grand Gulf plant.

“This settlement resolves costly litigation and will result in meaningful benefits for customers,” the statement continued. “Once the settlement is approved by FERC, Entergy Arkansas will make a filing at the [Arkansas Public Service Commission] to calculate the amount customers will receive on their bill and subsequently issue refunds.”

The financing of the nuclear power station near Port Gibson, Mississippi, stirred political controversy in the 1980s, when Gov. Bill Clinton warned that Arkansans would be paying for a costly nuclear plant to provide power that they didn’t need. Entergy Arkansas’ predecessor, Arkansas Power & Light, already had a nuclear plant, Arkansas Nuclear One, near Russellville.

The management of the plant came under scrutiny later.

The state of Mississippi brought the controversy before the FERC in 2017, alleging that Entergy had “greatly overcharged Mississippians and others, perhaps by billions of dollars,” and Louisiana and Arkansas eventually joined the litigation, according to the Encyclopedia of Arkansas.

The litigation accused Entergy of failing to operate the plant properly, starting work on a wrongheaded expansion, and using inappropriate tax and accounting methods. The FERC ruled against Entergy in some aspects of the case. Louisiana regulators say Entergy is willfully misinterpreting FERC rulings when it insists it owes no additional refunds.

The Arkansas PSC turnabout was first reported this week by Nola.com.

Danni Hoefer, chief of staff at Arkansas Public Service Commission, said in a telephone interview that commissioners were concerned about the cost of the ongoing litigation.

“The ratepayers bear both [Entergy Arkansas’] and PSC’s costs in the litigation,” Hoefer said. “The commissioners were concerned that these costs were being passed on to ratepayers. This settlement is going to result in refunds to ratepayers as a result of that overbilling, and the overbilling problem has been remedied.”

Two of the three Arkansas PSC commissioners are new to the commission since August 2022. Former Commission Chairman Ted Thomas resigned at the end of September, attorney Katie Anderson of Scott briefly became commission chair. Anderson remained a commissioner when  Gov. Sarah Huckabee Sanders appointed former Republican Party of Arkansas Chairman Doyle Webb as PSC chairman in January. Kimberly O’Guinn left the commission at the end of the year to become director of state regulatory policy for Southwest Power Pool of Little Rock.

The only remaining commissioner from August 2022 is Justin Tate, who was appointed by Gov. Asa Hutchinson in 2019. His term is set to end in 2025.

When construction on Grand Gulf began in the 1970s, its projected cost was $1.2 billion. But by the time the plant on the east bank of the Mississippi River was commissioned in 1985, costs had zoomed to more than $5 billion.

Arkansas customers paid an estimated $4.5 billion for costs related to Grand Gulf from 1985 to 2012, about $6,500 per customer, according to the Encyclopedia of Arkansas.

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