RESPONDENT: Louisiana Public Service Commission
LOCATION: El Segundo Golf Course
DOCKET NO.: 02-299
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: Louisiana Supreme Court
CITATION: 539 US 39 (2003)
ARGUED: Apr 28, 2003
DECIDED: Jun 02, 2003
Austin C. Schlick - for the United States as amicus curiae, supporting the petitioner
David W. Carpenter - for the petitioner
Michael R. Fontham - for the respondents
Facts of the case
Several Louisiana cotton gins sued Entergy, an electric utility company, because it had over-billed them for electricity between 1988 and 1994. The gins claimed that Entergy had failed to notify them of a lower rate that would have saved them more than $2 million over the six-year period. Louisiana law requires that utility companies notify customers when they are eligible for a lower rate. Furthermore, the gins claimed that Entergy had discriminated against them by notifying several other gins in the state of the lower rate. Deferring to the decision of the Louisiana Public Service Commission, the state's utility regulatory agency, a state district court ruled against Entergy. The Supreme Court of Louisiana affirmed the decision on appeal.
Does a Federal Energy Regulatory Commission approved tariff that delegates discretion to the regulated entity to determine the precise cost allocation similarly preempt a state order that adjudges those costs imprudent?
Media for Entergy Louisiana, Inc. v. Louisiana Public Service CommissionAudio Transcription for Oral Argument - April 28, 2003 in Entergy Louisiana, Inc. v. Louisiana Public Service Commission
Audio Transcription for Opinion Announcement - June 02, 2003 in Entergy Louisiana, Inc. v. Louisiana Public Service Commission
William H. Rehnquist:
The opinion of the Court in No. 02-299, Entergy Louisiana, Inc. versus Louisiana Public Service Commission will be announced by Justice Thomas.
This case comes to us on the writ of certiorari to the Supreme Court of Louisiania.
The Federal Energy Regulatory Commission (FERC) regulates the sale of electricity at wholesale and interstate commerce.
Under the filed rate doctrine, FERC approved cost allocations between affiliated energy companies may not be reevaluated by state regulators in setting retail rates.
Petitioner, Entergy Louisiana, Inc. or ELI is one of the five public utilities owned by Entergy Corporation.
ELI shares capacity with its corporate siblings in other states and this allows each company to access additional capacity when necessary.
Entergy allocates cost for the sharing through a tariff approved by FERC called the system agreement.
Under the agreement, some companies like ELI, make payments to others to cover capacity cost.
In the 1980's the operating committe which administers the system agreement initiated the Extended Reserve Shutdown or ERS program.
The ERS program responded to systemwide overcapacity by allowing some generating units not immediately necessary for capacity needs to be effectively mothballed.
Because ERS units could be reactivated if needed, they were considered available for purposes of calculating capacity cost payment.
In August of 1997, FERC found that Entergy had violated the system agreement in classifying ERS units as available but determined that a refund was not due ELI customers.
FERC approved an amendment to the system agreement allowing ERS unit to be treated as available if the operating committee determines that it intends to return the unit to service at a future day.
In 1997, ELI made its annual retail rate filing with respondent, Louisiana Public Service Commission.
One of the contested issues in this proceeding was whether the cost of ERS units should be considered in setting ELI's retail rates.
In finding its review to the period after the FERC order had issued, the Commission concluded that it was not preempted from disallowing ELI's payments or capacity, and ELI was not permitted to charge retail rates that reflected the cost of these payments.
The State District Court denied ELI's petition for review and the State Supreme Court upheld the Commission's decision.
In an opinion filed with the Clerk today, we reverse the Louisiana Supreme Court.
Under our decisions and Nantahala Power & Light company versus Thornburg and Mississippi Power & Light Company versus Mississippi ex rel. Moore, the Commission's order is preempted through the filed rate doctrine.
In both of these cases, we held that FERC approved cost allocations could not be second guess by state regulators.
The only differnce between the tariffs in Nantahala and MP&L and the tariff in this case is that this one grants the regulated holding company discretion to set the precise allocation.
We do not find the distinction significant enough to save the Commission's order from preemption.
The opinion of the Court is unanimous.