FERC issues orders on customer rate impacts at the Grand Gulf Nuclear Station

Published on December 29, 2022 by Dave Kovaleski

© Entergy

The Federal Energy Regulatory Commission (FERC) issued two orders last week involving the customer rate impacts of the Grand Gulf Nuclear Station, which is operated and mostly owned by System Energy Resources Inc. (SERI).

Grand Gulf, located near Port Gibson in Mississippi, is the largest single-unit nuclear reactor in the United States. It employs 675 site workers and provides power to Entergy operating company customers in Arkansas, Louisiana, and Mississippi.

“We believe Friday’s FERC orders are a positive step toward resolving a number of long-standing issues raised by our retail regulators. While we disagree with some elements of FERC’s findings, in particular, its ruling on the sale leaseback claim, we are pleased that FERC’s remedy results in no additional refunds due to customers beyond those already provided in 2021 on the uncertain tax positions taken by SERI,” Drew Marsh, Entergy’s CEO, said. “SERI has consistently maintained that its tax strategy was in the best interest of customers and ultimately provided them with millions of dollars in savings. We are committed to working with our regulators to resolve outstanding FERC issues for the benefit of our customers.”

FERC’s orders address a series of decommissioning uncertain tax positions that SERI took to benefit customers.

“SERI assumed the risk of Internal Revenue Service penalties and interest that could have resulted from unsuccessful portions of these positions. The IRS ultimately allowed over $100 million of an uncertain tax position SERI took in 2015. The remedy in FERC’s order directed SERI to compute a refund based on the accumulated deferred income tax, or ADIT, amounts resulting from the IRS’s partial allowance of SERI’s 2015 decommissioning uncertain tax position,” Entergy officials wrote.

Upon resolution with the IRS of the 2015 uncertain tax position, SERI provided an ongoing rate base credit for the ADIT associated with the successful portion of the uncertain tax position, which is estimated to result in a benefit of $69 million to customers over the expected life of Grand Gulf, Entergy officials said. Also, SERI provided a one-time credit of $25 million inclusive of interest for the ADIT created by the 2015 decommissioning uncertain tax position in 2021. This is consistent with the directives of FERC’s order. Therefore, according to Entergy, SERI’s position is that it has already satisfied the remedy required in FERC’s order.

“The dedicated men and women who work at Grand Gulf have not been distracted by these ongoing proceedings. Their primary focus has been and continues to be, the safe and reliable operations of the facility. Grand Gulf is a critical component of Entergy’s overall generation fleet and provides clean, affordable, carbon-free energy for our customers,” Marsh said. “I appreciate the team’s continued focus on ensuring that Grand Gulf continues to deliver clean, affordable, and reliable power to our customers.”