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The Grand Gulf Nuclear Station in Port Gibson, Mississippi is back in the news, along with lawyers, regulators and dollar signs. But first, a snippet of history.
When the Grand Gulf Nuclear Power Plant was commissioned at Big Muddy in Claiborne County in 1985, the cost of $5 billion was so much beyond its budget that the project earned a nickname: Grand Goof.
The original cost estimate was $1.2 billion, but the late ’70s were terrible years for long-term construction. During the Gerald Ford and Jimmy Carter administrations, inflation and interest rates increased costs when the average annual home mortgage rate reached 17%. By 1985, nuclear power was losing support, and Grand Gulf’s builder, Middle South Utilities, now Entergy Corp., owed billions to the banks that financed the plant. Customers then paid larger bills at Middle South subsidiaries: Mississippi Power & Light Co., Arkansas Power & Light Co., Louisiana Power & Light Co., and New Orleans Public Service Inc.
AP&L is now Entergy Arkansas.
According to the Encyclopedia of Arkansas, between 1985 and 2012, AP&L and Entergy Arkansas customers had to pay $4.5 billion to operate the Mississippi plant and subsidize taxpayers in Louisiana under the terms of old agreements. That was about $6,500 per Arkansas customer. Senator Dale Bumpers called the nuclear plant a “bondoggle” and a “scam,” and as utility bills rose, the then-governor said. Bill Clinton threatened a state takeover of AP&L.
Over time, like most permanent nuclear power projects, Grand Gulf began to recover. After years of low-cost, zero-emission generation, Entergy customers have enjoyed some of the cheapest electricity in the United States. In 2016, Grand Gulf received clearance for another 20 years of service.
Now it’s back in the headlines, with a potential impact on 715,000 Entergy Arkansas customers.
Entergy Mississippi on June 23 reached a $300 million settlement with the Mississippi Public Service Commission, an agreement that prevents rising bills, protects against future fluctuations in fuel prices and provides $80 in cash to the utility’s 461,000 customers or credit granted. The Associated Press described the deal as the largest ever achieved by Mississippi regulators, and Public Service Commissioner Brandon Presley called it “literally unheard of in today’s global energy crisis.”
The commission said in a press release that the settlement’s $200 million offset for rising natural gas costs will prevent an average $15 per month increase in utility bills starting next year.
Mississippi regulators initiated the Grand Gulf litigation in 2017, arguing that Entergy’s return on investment for the plant was inflated and that the poor numbers contributed to several unjustified increases in consumer tariffs. The settlement also provides that Entergy will spend $600,000 over four years on annual audits of Grand Gulf’s financial statements.
The Nuclear Station is also the focus of similar complaints from the Louisiana Public Service Commission, the New Orleans City Council, and the Arkansas Public Service Commission. These regulators believe that $800 million in Entergy spending on upgrades in Grand Gulf never improved safety or performance, and that customers in those three states were overcharged $361 million.
The Mississippi deal is related to 13 cases being heard before the Federal Energy Regulatory Commission, and Arkansas PSC Chairman Ted Thomas told Arkansas Business last week that regulators in Little Rock are involved.
“The Arkansas PSC is a party in a number of FERC proceedings relating to the Grand Gulf Generation Facility,” said Thomas, a trained attorney who has served as commission chair since January 2015. “We are aware of the settlement with the Mississippi PSC regarding some of these FERC procedures.”
Thomas said Arkansas regulators “will carefully review the settlement offer filed with the FERC and will continue to do our best to represent the interests of Arkansas ratepayers in this litigation.”
Entergy Arkansas officials referred those seeking comment to statements by Entergy after the settlement.
In a June 23 statement, Entergy said that the accounting, financing and operating records reported by Grand Gulf to FERC were “appropriate, well founded and in the best interests” of its customers and the company. However, the company said the ongoing costs of the FERC case and the uncertainty it caused for customers, employees and shareholders “led the company to seek a resolution.”