On February 26, 2021, FERC accepted a proposal from Entergy Services, LLC (“Entergy”) to amend a wholesale rate schedule, the Unit Power Sales Agreement (“UPSA”), subject to refund and set the matter for hearing. FERC also instituted an investigation under section 206 of the FPA to allow customers to recover refunds associated with any further rate reduction, consolidated various related Entergy proceedings on accumulated deferred income taxes (“ADIT”), set a hearing procedure and held those procedures in abeyance pending the issuance of further FERC orders.
In October 2020, Entergy submitted proposed changes on behalf of System Energy Resources, Inc. (“SERI”), a wholly-owned subsidiary of Entergy, after the IRS resolved an uncertain tax position by issuing a resolution that allows SERI to include future nuclear decommissioning expenses in its Cost of Goods Sold for the 2015 tax year. The IRS resolution prompted two Entergy filings to: 1) revise the formula rate in the UPSA to establish an ongoing credit for ADIT; and 2) revise the UPSA to provide a one-time credit to customers. FERC accepted both amendments in a February 5, 2021 order, subject to refund, established hearing procedures, initiated a 206 investigation to allow customer refunds associated with any further reduction, consolidated the proceedings for purposes of hearing and decision, and held the procedures in abeyance pending the issuance of further FERC orders on two related proceedings currently pending before the Commission in Docket Nos. Docket Nos. EL18-152 and ER18-1182.
In the proceeding, Entergy argued, among other things, that it would be inappropriate for FERC to set the UPSA Amendment for hearing or make it subject to refund because section 205 applies exclusively to a proposed increase rate or change whereas the UPSA Amendment is a proposed rate decrease. Entergy also argued that any hearing would relitigate the same issues from previous Entergy-ADIT proceedings and possibly delay customer benefits.
FERC accepted the UPSA Amendment for filing, to be effective February 26, 2021, subject to refund, and established hearing procedures. FERC explained that while Entergy is proposing a rate decrease, its preliminary review indicates that a further decrease may be warranted. Because FERC found common issues of law and fact between the UPSA Amendment and other Entergy-ADIT proceedings, FERC consolidated all of the related proceedings and held the UPSA Amendment hearing in abeyance pending the issuance of further Commission orders. FERC explained this would prevent re-litigation of any common issues.
A copy of the order is available here.