State regulators refused Wednesday to allow Entergy Corp. to immediately charge its customers for about $63 million spent preparing to build another nuclear power plant at River Bend, near St. Francisville.
Entergy, which had gone as far as to negotiate with a building contractor, suspended in January 2010 efforts to build a generator fueled by nuclear rods to make electricity. A dramatic drop in the cost of natural gas made the cost of building a multi-billion dollar plant economically unviable at this time, according to Entergy’s filings with regulators.
The New Orleans-based company then sought to recover from customers, rather than shareholders, the money spent on the reports, studies, examinations and other activities necessary for obtaining licenses and financing. The state’s Incentive Cost Recovery Rule for Nuclear Power Generation allows Entergy to pass those costs to its customers.
The five elected members of the Louisiana Public Service Commission voted 3-2 not to hear any public testimony but to approve an administrative law judge’s decision over that of their own staff.
In wording unusually harsh for regulatory decisions, Chief Administrative Law Judge Valerie Seal Meiners wrote in her opinion that Entergy’s actions “fly in the face of the rules’ intent and gorals of transparency and partnership …”
Entergy did not properly seek the PSC’s approval for about $63 million spent on preparation to build what would have been called River Bend 3, Meiners wrote. Therefore, Entergy should not be able to take advantage of the incentive rule, which would have allowed the companies to seek recompense from its customers, according to Meiners opinion.
Bill Mohl, president and chief executive officer of Entergy Louisiana, said he disagrees with Meiners’ opinion and was disappointed the PSC chose not to debate the issue in a public hearing. He said Entergy pursued a new nuclear plant because south Louisiana needs more electricity and the prices for the fuel necessary to run the generators that make electricity are so volatile that company officials acted prudently when looking at nuclear power.
“It really shifts the burden for the ratepayer to shareholder,” said Commissioner Jimmy Field, of Baton Rouge, about the PSC’s decision. Entergy could still be able to collect the money in the future as part of its rates, provided the utility can prove the costs were necessary and reasonable, Field said.