In explaining why the distinction exists, FERC stated that its refund authority is discretionary, and guided by equitable principles. FERC noted that while it had traditionally elected to order refunds with respect to the latter, it had traditionally declined to order refunds in cases involving rate design and cost allocation issues. Circuit’s reference to FERC’s “general policy” of ordering refunds when consumers have paid unjust and unreasonable rates was “based on statements made by the Commission in this proceeding that do not accurately represent that policy as both the Commission and the courts have described it in the past.” FERC clarified that while it had previously described its approach of ordering refunds in cases of utility over-recovery as a “general policy,” FERC “has never treated it as a policy that encompasses all cases involving unjust and unreasonable rates.”įERC distinguished cases involving unjust and unreasonable cost allocation or rate design, from cases where a utility was over-recovering. In its April 29 Order, FERC stated that the D.C. Circuit also stated that invoking FERC policy on refunds did not eliminate the need to consider the fact that an unjust and unreasonable cost allocation had caused consumers in Louisiana to pay their utility companies too much and consumers in other states to pay too little, and that refunds, if ordered, would transfer a subset of the total overpayment to Entergy’s Louisiana operating companies from its other operating companies. Circuit remanded the case back to FERC, finding, among other things, that FERC had failed to explain its departure from its “general policy” of ordering refunds when consumers have paid unjust and unreasonable rates, and that FERC had failed to explain why the absence of over-recovery “should automatically negate refunds.” The D.C. FERC concluded that it would invoke its “equitable discretion” and follow its “general practice” of not ordering refunds in rate design and cost allocation cases.Īfter the LPSC petitioned the United States Court of Appeals for the District of Columbia Circuit (“D.C. FERC determined that Entergy Services, Inc., therefore, did not engage in an over-collection of revenue, but rather in a misallocation of revenue. (the subject of the original complaint) incorrectly allocated peak load responsibility among the various Entergy operating companies. On March 21, 2013, FERC upheld a prior determination it had made that the Entergy system as a whole collected the proper level of revenue, but that Entergy Services, Inc. under the Entergy System Agreement-an agreement between and among the Entergy operating companies-were unjust and unreasonable because they did not exclude interruptible load from the calculation of peak load responsibility. The proceedings at issue originated in 1995, when the Louisiana Public Service Commission (“LPSC”) filed a complaint at FERC alleging that certain cost allocation calculations used by Entergy Services, Inc. Specifically, FERC clarified that it will generally decline to order refunds under disputes over cost allocation, whereas refunds will generally be awarded in cases involving allegations of a utility earning more than a just and reasonable rate during the refund period. FILED MAY 16, 2017DOCUMENT NO.In an Aporder regarding cost allocation among the Entergy operating companies, FERC clarified and distinguished its approach to refunds in cost allocation and rate design cases, from its approach to refunds in cases of utility over-recovery (“April 29 Order”).
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