The Mississippi Public Service Commission announced a $300 million settlement on Thursday with Entergy Mississippi over profits the company received in running the Grand Gulf Nuclear Power Station in Port Gibson.
The settlement, the largest in the PSC’s history, ends Mississippi’s involvement in a multi-state dispute with Entergy. As part of the agreement, $200 million of the settlement will go towards offsetting rising natural gas costs for customers, $35 million will go towards direct payments or bill credits to Mississippi ratepayers, and the remaining $65 million will go towards savings for future mitigation costs.
The $35 million in direct rebates from the settlement will be divvied up and amount to about $80 per Entergy Mississippi customer. Customers can choose to use that money as a credit towards their electric bill or get the amount in a check.
The PSC said in its press release that without the $200 million for offsetting rising natural gas costs, Mississippians would have seen an extra $15 on their electric bills starting in 2023.
The PSC first brought the dispute to the Federal Energy Regulatory Commission (FERC) in 2017 over “certain accounting and financing aspects” of the nuclear plant, the PSC said in a release.
When a utility company, in this case Entergy, builds or operates a power plant, the company gets a return on investment for those costs, agreed to by the regulatory body. Because the power from Grand Gulf is sold wholesale, FERC regulates the prices that the energy is sold for.
The PSC alleged to FERC, which ruled on the settlement, that Entergy’s return on investment was higher than what FERC originally allowed. As a result, Entergy made more than it should have from charges that were passed onto customers, Northern District Commissioner Brandon Presley explained.
“Their return on equity was more than what it should have been,” he said. “That’s agreed to by the FERC. We were arguing that profitability was inflated and actually should have been less of a cost and translating to lower rates for Mississippians.”
Separately, Entergy’s other subsidiaries in Arkansas, Louisiana and the city of New Orleans are also facing litigation over Grand Gulf’s services. The regulators for those service areas are alleging that the station doesn’t run as effectively as other nuclear plants and charges customers for the plant to run even when it isn’t producing power, among other complaints.
Those three other regulators are also challenging the Mississippi PSC’s decision to increase output from the Grand Gulf station years ago, Presley said.
“That plant provides some of the lowest cost electricity that Mississippi is getting, with zero carbon emissions,” Presley said.
In addition to the $300 million, the settlement also puts a moratorium on Entergy’s future return on investment for the power station, Presley added.
In a statement Thursday, Entergy said that the “taxing, financing, accounting and operating of Grand Gulf before FERC are proper, well-reasoned and in the best interest of its customers and the company.
“However, Entergy officials explained that the ongoing cost of the dispute at FERC and the uncertainty it created for customers, employees and stockholders led the company to seek a resolution,” the utility provider said.