Louisiana: Group alleges $570 million overcharge by Entergy

By CARL REDMAN

Capitol news bureau

Officials with Entergy Corp. overcharged Louisiana citizens $570 million for utilities over the last 20 years, attorneys for a group of Louisiana consumers and businesses charged Monday.

Consumer attorney Kent Parsons said Entergy Louisiana and its predecessor, Louisiana Power & Light Co., systematically included illegal charges in its fuel costs and passed along to customers high-priced power purchased from Entergy subsidiaries.

Public Service Commission consulting attorney Lannie Edwards said the allegations are some of the most serious ever leveled at a Louisiana utility.

"Boiled down to it, their allegations are that the utility, with knowledge and purpose, took actions intentionally to harm rate payers by manipulating the fuel adjustment clause and inflating the costs that were included in the fuel adjustment clause," Edwards said.

Edwards said a PSC staff investigation of the case did not turn up any fraud, although it did find lesser instances of imprudence and accounting errors by Entergy.

Entergy spokesman Bill Benedetto said Entergy will make its responses as the case unfolds over the next three weeks before an administrative law judge.

"We feel we have followed all proper policies and procedures in charging fuel costs back to our customers," Benedetto said.

The complaint before the PSC by Linda Delaney, Factory Service Agency and others contends that Entergy Louisiana illegally overcharged its more than 600,000 rate payers in north Louisiana and parts of the Florida and River parishes.

Delaney was a St. Bernard Parish customer of Entergy at the time of the complaint. Factory Service Agency is a business in Metairie.

Entergy officials violated Public Service Commission rules, punishing poor Louisiana families and hampering economic growth in the process, said Parsons, who represents the businesses and consumers fighting Entergy.

"A half a billion dollars is very important," Parsons told an administrative law judge on the first day of what is expected to be three weeks of hearings.

"Here we have a large corporation, the very last of the Fortune 500 remaining in Louisiana, that has declared its intention to merge (with a Florida utility company) and move the headquarters to Florida.

"They are ready to move on, and they're moving out. But before they go, they have a significant debt to pay. Louisiana rate payers have been victims. ... There have been purposeful decisions that have been made," Parsons said.

The Delaney complaint contends Entergy Louisiana overcharged its customers in two ways:  By including $237.9 million in expenses in fuel adjustment costs that were not reviewed or approved by the PSC and that were not allowed by PSC rules.  By purchasing power from other Entergy affiliated companies at costs that were higher than market rates or by selling cheap Entergy power to other utilities while keeping more expensive power for Entergy customers. The effect, Parsons said, was to add $332 million in extra costs to Entergy Louisiana customers.

"We have discovered that in virtually every hour of every day, Entergy buys expensive power from itself and passes those costs on to its rate payers," Parsons said.

In the complaint, Parsons is asking the PSC to disallow the fuel cost and purchased power charges and order Entergy Louisiana to refund that money to rate payers.

In a companion lawsuit, which is on hold in state court while the PSC hears this case, Parsons is seeking triple damages, which would push Entergy's exposure to $1.7 billion.

Parsons has filed a similar complaint and lawsuit in New Orleans over fuel adjustment practices and power purchases by Entergy New Orleans, formerly New Orleans Power and Light.

Parsons said the Entergy Louisiana case does not directly affect Entergy Gulf States, which serves south Louisiana from the Baton Rouge area to the Texas line. Parsons said fuel costs problems with Gulf States were settled in 1995 when Entergy and GSU merged.

Edwards said the PSC staff spent the last 18 months looking into the allegations raised in the Delaney case and did not find the purposeful actions that Parson alleges.

"We looked at everything that has been alleged and ... we could find no credible evidence to support the allegations of the plaintiffs," Edwards said.

However, Edwards said, the staff investigation turned up several other areas that could result in more than $100 million in refunds to Entergy Louisiana rate payers, including a natural gas contract dating from the early 1990s that allegedly cost rate payers between $40 million and $90 million too much.

Benedetto said Entergy doesn't agree with the staff findings and will dispute them as the Delaney case unfolds.

The administrative law judge hearing the case has to rule within 60 days of the end of the trial. That decision then goes to the five-member Public Service Commission for review.

http://www.theadvocate.com/news/story.asp?StoryID=16238

-- Carl Jenkins (Somewherepress@aol.com), September 19, 2000