Former AG Steve Clark welcomes Entergy case settlement in Arkansas

Steve Clark, the state’s longest-serving attorney general, said he’s unsure whether anyone has enough wisdom to determine the fairness of an Entergy settlement that the Arkansas Public Service Commission recently accepted, but he’s glad it’s settled. Officials on both sides said the deal avoids additional costly litigation.

The $142.27 million deal would settle Arkansas’ part in litigation started in 2017 by utility regulators, claiming an Entergy subsidiary’s mismanagement of the 1,433-megawatt Grand Gulf nuclear power plant in Mississippi and Entergy customers being overbilled for its electricity. The Federal Energy Regulatory Commission (FERC) must approve the agreement before Entergy Arkansas can issue bill credits to its customers.

Grand Gulf legal wrangling has been ongoing for decades. Clark, who is currently the president and CEO of Fayetteville Chamber of Commerce, was the Arkansas Attorney General when utility and regulatory officials were negotiating an agreement that allowed the Grand Gulf project to proceed in the early 1980s. It opened in July 1985 in Port Gibson, Miss, and is the largest single-unit nuclear plant in the United States.

“I was there in that fight in that beginning,” he said. “We negotiated all night one night, both sides did in my office there at the AG’s office. We had dinner brought in, breakfast brought in and midnight snacks brought in because we were about to get to a stalemate that would’ve been not good for anyone. A great deal of give and take was a result of that.”

He reflected on “the landmark project” to provide power in a region that without it would have curtailed jobs, highlighted the positives happening in Arkansas, Mississippi and Louisiana at the time and the need to produce a great amount of electricity supporting the new jobs.

“It was a time when nuclear energy was relatively new to us, but it was part of the pattern and the plan for success to achieve all the best that Arkansas could achieve,” he said. “And that was true in the other southern states, too.”

Clark said he’s uncertain if anyone could provide an honest answer on the fairness of the recent settlement agreement.

“We’re probably just not smart enough to know whether it’s fair or not,” he said. “It’s close to fair, and that’s probably as good as you’re going to get.

“It’s settled. That’s good. Let’s never repeat that again for any reason —that would be even better and just leave it at that and move on.”

Asked whether the customers who may have been overbilled would ever be made whole, he said, “No, it’s almost mathematically impossible to do…There’s some people who died in that time. Some businesses went out of business.”

Asked how much the litigation might cost if it were to proceed, he estimated in the millions to tens of millions of dollars.

Following is a statement from Entergy Arkansas on the deal: “A global settlement including Entergy Arkansas LLC, System Energy Resources, Inc., and the Arkansas Public Service Commission has been filed with the Federal Energy Regulatory Commission for approval, resolving all current claims at this time. This settlement resolves costly litigation and will result in meaningful benefits for customers. Once the settlement is approved by FERC, Entergy Arkansas will make a filing at the APSC to calculate the amount customers will receive on their bill and subsequently issue refunds.”

Entergy spokeswoman Kacee Kirschvink said the utility does not have a specific litigation cost estimate if the case were to continue but would have included “outside attorney and consultant fees for several additional years and would have included the cost of a lengthy in-person hearing at the Federal Energy Regulatory Commission in Washington, D.C., as well as possible appeals in federal court.”

The utility is seeking FERC approval of the deal in the first quarter of 2024. According to Kirschvink, about $100 million of the settlement will be provided to customers as bill credits. As noted in the statement, the timing of the credits hinges on the federal approval. The other $42 million of the settlement is being refunded to customers through a fuel charge reduction that went into effect in April.

Kirschvink said Entergy Arkansas pays for about 25% of Grand Gulf’s operating expenses because the utility sells a portion of its Grand Gulf entitlement to Entergy Mississippi, Entergy Louisiana and Entergy New Orleans. If it did not do this, Entergy Arkansas would be responsible for 36% of the plant’s operating expenses.

“The APSC is pleased to have reached a settlement in principle with Entergy Arkansas LLC, which the APSC felt was in the best interest of ratepayers,” according to a statement provided by Danni Hoefer, chief of staff for the Arkansas Public Service Commission.

Last year, the Arkansas Public Service Commission rejected the settlement offer. Asked how much the litigation expenses have been between then and now, Hoefer said the commission does not have “FERC litigation costs for Grand Gulf separately carved out from the rest of FERC litigation. That said, the commissioners were particularly concerned with how the costs would greatly increase, for both sides, as litigation progressed toward a trial. It is important to note that the cost of litigation for both sides is passed onto ratepayers.”

In 2008, the commission approved a fee rider allowing Entergy Arkansas to charge its customers for the commission’s litigation costs in federal cases between the commission and Entergy Arkansas. A 2007 state law allows the commission to do this and sets a $3 million limit on how much it can recover annually. Hoefer noted that a 2023 state law increased the cap to $5 million “in anticipation of the growing costs of this litigation.”

On Dec. 7, FERC trial staff and the Louisiana Public Service Commission filed documents showing they do not oppose the proposed settlement agreement between the Arkansas Public Service Commission and Entergy. The federal trial staff believe “the settlement is fair, reasonable and consistent with the interests of” the plant’s customers in Arkansas. The Louisiana Public Service Commission and the New Orleans Council are also complainants in the case. Another complainant, the Mississippi Public Service Commission, reached a $300 million settlement in the case last year.