AP NEWS

Trial finally set in Mississippi’s $1B suit over power costs

March 30, 2019

JACKSON, Miss. (AP) — Way back in December 2008, Mississippi’s attorney general sued the state’s largest private electrical utility claiming the company had overcharged customers by more than $1 billion.

Now, with Democrat Jim Hood running for governor, he’ll finally get his day in court on Monday against Entergy Mississippi, a subsidiary of New Orleans-based Entergy Corp.

The federal trial is expected to run for more than two weeks. U.S. District Judge Carlton Reeves, not a jury, will decide if Entergy is guilty of the offenses Hood alleges. The nub of the state’s argument is simple. Hood claims Entergy should have bought cheaper power from generating plants owned by others, but instead chose to run older, less efficient plants that it owned because selling that electricity was more profitable. Hood’s says Entergy should have to pay back up to $1.1 billion, plus penalties, from 1998 to 2009.

If Hood wins, he could force Entergy to issue refunds to 447,000 customers in western Mississippi during election season, although any verdict would likely be tied up appeals. A victory would amplify Hood’s position that he defends Mississippians against rapacious corporations. Those same lawsuits have long stuck in the craw of Republicans, who says Hood lets private lawyers handle lucrative suits and they then donate to Hood’s campaigns. This lawsuit is being handled for Hood by private lawyers who sued two Entergy subsidiaries in Louisiana, winning about $100 million in class-action damages. A state appeals court threw out a Texas suit, agreeing with Entergy that the dispute was for a regulator to decide.

Hood issued a statement Friday saying he was confident the state would prevail in court.

“I have been fighting this case for a decade,” he said. “It’s time for Entergy to stop being a poor corporate citizen and pay what they owe Mississippians.”

Entergy’s defenses start with arguments that Hood shouldn’t be bringing the suit at all. The company claims that either the Federal Energy Regulatory Commission or Mississippi’s Public Service Commission should decide such a complaint.

The latter argument is bolstered by a 2018 state law saying the Mississippi Public Service Commission has “exclusive jurisdiction” over utility matters. The law, pushed strongly by Entergy, says Hood can only appeal decisions to court or sue with permission from the three-member regulatory body. Hood decried the law, but says it doesn’t apply to this case, filed long before.

Entergy also says that it needed its own expensive-to-run power plants that could start and stop quickly in order to ensure the lights stayed on. Entergy notes that it’s required to buy electricity generated as a byproduct at industrial plants. Louisiana and Texas have many such plants and Entergy says the power supply can shift from moment to moment in a way that third-parties can’t handle.

Entergy argues that buying more power for Mississippi from independent producers would have harmed other subsidiaries under a now-defunct system agreement that unified operation of subsidiaries across Mississippi, Arkansas, Louisiana and Texas.

“We have always believed that this case should be heard by our regulators and are hopeful the court will find in our favor and grant our motion to dismiss,” Entergy spokeswoman Mara Hartmann said in a statement. “Regardless, our fuel costs have been audited annually since 1979, and since the suit was first filed in 2008, 20 independent audits have all concluded that there were no inappropriate charges by Entergy Mississippi to its customers. This affirms that we treat our customers fairly.”

Reeves hasn’t agreed with Entergy’s claim that Hood shouldn’t be bringing the suit so far, though. On Friday, he issued a short ruling denying Entergy’s previous arguments to dismiss the case.

“Persistent factual and legal issues require a complete airing of their dispute at trial,” Reeves wrote.

Entergy faced claims from the U.S. Department of Justice that it used control of its transmission grid to favor its own power plants over independent generators. Independents were unable to sign profitable long-term contracts. Many generators ended up in financial distress and Entergy bought seven of their power plants.

The Justice Department didn’t pursue those claims further after Entergy turned over management of its power grid to the Midcontinent Independent System Operator, a third party that now decided which power plants run. Entergy has long denied wrongdoing.

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