LITTLE ROCK — A federal appeals court decision Tuesday upholding Entergy Arkansas right to withdraw from a power agreement with its parent company without continuing financial obligations to other affiliates was favorable to Arkansas ratepayers, the state Public Service Commission said.
The U.S. Court of Appeals for the District of Columbia affirmed a Federal Energy Regulatory Commission ruling. Entergy Arkansas is a subsidiary of Entergy Corp., which also owns five other operating companies in Louisiana, Mississippi and Texas. An Entergy System Agreement includes cost-sharing among the six operating companies.
The agreement has been in litigation since 1982, leading to decisions by the Federal Energy Regulatory Commission that have obligated Arkansas ratepayers to subsidize the other operating companies by about $4.5 billion, the PSC said.
In 2005, Entergy Arkansas notified its parent company that it would withdraw from the system agreement in December 2013. The Louisiana Public Service Commission and the city of New Orleans petitioned the FERC to require Entergy Arkansas to pay an exit fee or maintain other ongoing financial obligations to the other operating companies as a condition for leaving the system.
The FERC rejected those claims. The Washington, D.C., appeals court affirmed the agency’s ruling Tuesday.
"This ruling represents a tremendous victory for Arkansas ratepayers and is another major step toward protecting Arkansas ratepayers from future subsidy payments to the other operating companies," state PSC Chairman Colette Honorable said Tuesday in a news release.
The Arkansas utility regulatory agency took an active role in the FERC case and in the appeal, defending the FERC’s decision and arguing that any continuing obligations by Entergy Arkansas would violate the system agreement.