For years, regulators in Louisiana, Mississippi and Arkansas have fought to force Entergy Corp. to pay refunds for alleged mismanagement and problematic bookkeeping at its massive Grand Gulf nuclear power station, in Port Gibson, Mississippi.
Grand Gulf has now been offline for more than three weeks. It's the latest in a series of outages at the plant, where unreliability has been a central gripe of regulators. The shutdown is forcing the utility to buy expensive natural gas to make up for the lost power generation, squeezing customers who are already facing skyrocketing bills - and adding another layer to the long-running dispute over Entergy's alleged mismanagement of the power plant.
Entergy recently struck a deal with Mississippi to pay $235 million to settle its portion of those allegations. But the other regulators involved in the dispute, including the New Orleans City Council and Louisiana Public Service Commission, have rejected the offer.
The outage at Grand Gulf, which began July 12, comes at a time when buying replacement power is particularly expensive. Data from Midcontinent Independent System Operator, the regional grid operator, show prices are more than double what they were a year earlier.
In addition to complaints about the failures at Grand Gulf, which is home to the largest nuclear reactor in the United States, Entergy has been facing withering criticism from customers and some regulators over its heavy reliance on natural gas, which is driving already high prices further skyward.
Less than three weeks before the plant went down - for the replacement of turbine valve control stems, according to a federal regulator - Entergy landed the settlement with Mississippi, which spelled the end of its fight with one of the company's four regulators.
The other three - the New Orleans City Council, Louisiana Public Service Commission and Arkansas Public Service Commission - have rejected Entergy's proposed settlement. New Orleans officials called it insultingly low. The latest litigation, which began last year, centers around outages at the plant; the Grand Gulf was the least reliable nuclear plant in the U.S. from 2018 to 2020, according to figures compiled by the Nuclear Energy Institute.
The government agencies are instead plodding ahead with their case at the Federal Energy Regulatory Commission, or FERC, where they have already won early rounds. If that commission, which referees such multi-state disputes, sides with the state and local regulators, Entergy could be on the hook for much more than the $588 million it offered in its settlement.
New Orleans council member JP Morrell, who chairs the council's Utilities Committee, called the settlement a "terrible" offer at "pawn shop rates" that would have prevented regulators from holding the company accountable for future outages, like the one currently happening.
"I'm very concerned with the kind of haphazard usefulness of Grand Gulf, and its on-and-off, kind of at-a-whim status," Morrell said.
Entergy spokesperson David Freese said operators shut Grand Gulf down to complete "required work on turbine control valve stems," adding that "other work is being completed while the unit is shut down." Freese said that in the "near future," Entergy will be able to estimate the effect of the outage.
Responding to questions from the Louisiana Public Service Commission, Phillip May, Entergy Louisiana's president and CEO, said recently that customers won't see the effects until September. He also downplayed the outage's effect, saying it's only 150 megawatts out of a 10,000-megawatt portfolio.
"It's enough to make a difference, but it's not going to have huge swings in prices," May said.
Freese said Entergy's settlement offer was a "fair one" that would provide "significant benefits to customers" if accepted by regulators.
"In the litigation, refunds won't be paid until after FERC rules, and there's no deadline for FERC to act," he said. "That's why we believe the parties involved should continue to engage in dialogue and work towards just and reasonable settlements."
While it's unclear exactly how much the latest outage will cost customers, available data suggests it will be much pricier than previous outages. And it is likely to hit ratepayers in New Orleans harder than those who get power from Entergy Louisiana. That's because Entergy New Orleans gets a greater share of its power from Grand Gulf than does Entergy Louisiana.
Previous outages at Grand Gulf cost New Orleans ratepayers more than $3.3 million a month, according to estimates from Morrell's office. With natural gas prices higher, that figure might may climb to $7 million to $12 million a month, he said. For an average customer's electric bill, that would translate to $15 to $25 a month, but the total is likely to be higher because the outage comes during summer, when use is high, Morrell said. The costs likely won't hit bills for a couple months, when customers will be expecting lower bills because of the cooler weather.
"It's going to be a tremendous impact," Morrell said. He added that he thinks Entergy tried to entice regulators to take the settlement now because the prospect of immediate refunds is enticing when electric bills are soaring.
Louisiana regulators estimate Grand Gulf outages have cost customers $360 million from 2016 to 2020. But that was based on "replacement costs," where Entergy buys power from the open market, of $25 to $30 per megawatt hour. Prices now are at least $70.
Filings from the Louisiana Public Service Commission also suggest that Grand Gulf affects prices in other ways. When the plant goes down, the huge supply loss roils the entire regional electricity market, driving up prices for the remaining available power, consultants for the regulators say.
Ratepayers were already facing high bills when Grand Gulf went down. And in the spring, Entergy told regulators its shutdown of the Waterford nuclear plant, to refuel, drove electric costs up because the utility bought expensive gas-fired replacement power, a similar dynamic to Grand Gulf. Nuclear stations often go offline for planned refueling outages in the spring when weather is mild; part of the reason that the latest outage has drawn the ire of regulators is that it comes in the summer when electricity use is high.
Usually, Entergy plants are under the purview of state and city regulators, like the New Orleans City Council and state Public Service Commission. But Grand Gulf is a wholesale power supplier, owned mostly by an Entergy subsidiary, which sells its power to the Entergy companies in Arkansas, Mississippi, Louisiana and New Orleans. That's why the battle is playing out at FERC.
Aside from regular outages, regulators are also hammering Entergy for alleged bookkeeping practices that have fleeced ratepayers for years. For instance, regulators say Entergy charged customers for private airplane travel for executives, lobbying costs and advertising, among other things.
Logan Burke, executive director of the Alliance for Affordable Energy, a frequent Entergy critic, said the structure of Grand Gulf - where FERC, instead of state regulators, have oversight - has let the company "get away with everything."
"What we're experiencing right now, yet another extended and surprise outage, is just illustrative of the last [six years] that has been an enormous drag on the pocketbooks of people in Entergy footprints," Burke said.