Mississippi Utility Customers May Get Refunds

In Mississippi, who pays what for energy has become a contentious issue, with state officials claiming consumers are bearing the brunt of a flawed pricing policy.

The issue has ended up in court and the regulatory system, where an administrative law judge for the Federal Energy Regulatory Commission has found that, for the last decade, Entergy Corp. has knowingly violated its own operating procedures by selling its lowest cost power to a host of outside parties, harming its own customers "who had to pay for the higher costs of replacement energy.

Judge John P.Dring found that Entergy defied its own Systems Agreement, which required the company to sell its lowest cost power to benefit its affiliated companies such as Entergy Mississippi. Instead, the parent company profited by selling its lowest cost power to an array of third parties that had nothing to do with the Systems Agreement.

The result, say state officials, was higher utility bills for Mississippi consumers. The judge in the case says that result was not accidental.

Mississippi Attorney General Jim Hood, who filed a lawsuit against Entergy two years ago, said the judge's ruling confirms the state's position that the corporate giant is operating under a system that has not provided ratepayers with a fair cost for electricity that is supplied under open and transparent business practices.

Compelling evidence

"A judge has now found by compelling evidence that Entergy has overcharged ratepayers by selling them its most expensive electricity," Hood said. "This is one of the company's methods of cheating ratepayers as stated in our lawsuit. The law is crystal clear that they must provide ratepayers with the cheapest electricity."

The violations occurred from 2000 through 2009, a period during which Entergy claimed no wrongdoing. But the judge found that the violations were illustrated by "clear and convincing evidence" and were proved under a much more stringent burden of proof than found in most civil cases.

While the judge's order only requires Entergy's shareholders to refund the overcharges to the operating companies, including Entergy Mississippi, Hood says it is clear from his opinion that refunds should go to the ratepayers who were harmed by paying the cost of Entergy's generation plants, which was included in their monthly power bills.

Mississippi's lawsuit against the company, which is currently pending in Federal Court, includes the same "accounting manipulations" used to produce Illegal profits as spelled out in the judge's ruling. The lawsuit is more expansive than the accounting manipulation issue and seeks both civil penalties under the Mississippi Deceptive Trade Practices Act and ratepayer refunds from Entergy Corp. and Entergy Mississippi.

It includes charges of anti-trust violations that are presently under investigation by the Department of Justice.  Entergy has prevented companies that generate electricity to use Entergy's lines to sell cheaper power, according to the lawsuit.

"Entergy is now sitting under a mountain of evidence that its business practices have been just plain bad for Mississippi ratepayers," Hood said. "We will not rest until every business and residential customer in our state is made whole."