Entergy Louisiana, Inc. v. Louisiana Public Service Commission

Entergy Louisiana, Inc. v. Louisiana Public Service Commission
Supreme Court of the United States
Argued April 28, 2003 Decided June 2, 2003
Full case name	Entergy Louisiana, Inc. v. Louisiana Public Service Commission et al.
Citations	539 U.S. 39 (more) 123 S. Ct. 2050; 156 L. Ed. 2d 34
Prior history	815 So.2d 27 (La. 2002)
Holding
Federal agency approved tariff that delegated to regulated entity the discretion to determine cost allocations between affiliated public utilities preempted under the filed rate doctrine a state public utilities commission rate order denying recovery of the costs as imprudent.
Court membership
Case opinions
Majority	Thomas, joined by unanimous
Laws applied
Federal Power Act, 16 U.S.C. § 824d(f)

Entergy Louisiana, Inc. v. Louisiana Public Service Commission, 539 U.S. 39 (2003), is a Supreme Court of the United States case holding that a federal administrative agency approved public utility preempted a state public utilities commission rate order under the filed rate doctrine.

Entergy, a multistate holding company, allocated the costs of its electric generating capacity, including capacity held in extended reserve shutdown, among its five public utilities that it owned pursuant to a tariff schedule MSS-1 approved by the Federal Energy Regulatory Commission (FERC). The tariff delegated discretion to Entergy to determine the specific cost allocations. The resulting costs, which changed monthly, were then assigned under the Entergy System Operating Agreement to each of the five public utilities under an automatic adjustment clause in the tariff, so FERC review and approval of a specific cost allocation was not required.

In May 1997 Entergy Louisiana, Inc., one of the five public utilities, filed its annual retail electric rate case with the Louisiana Public Service Commission (PSC). The PSC issued an order disallowing the costs associated with the electric generating units in extended shutdown reserve from being recovered in rates. The PSC concluded that since FERC had never determined that the allocation of costs as determined by Entergy was consistent with the Entergy System Operating Agreement, it could make this prudency decision without violating the Supremacy Clause of the United States Constitution. As a result of this decision, Entergy Louisiana was required to pay the allocated costs of the extended shutdown reserve generation but could not recover these costs in its retail electric rates.

Entergy Louisiana appealed the PSC order to the Supreme Court of Louisiana. The state court upheld the PSC order as not being barred by federal preemption because the PSC was not attempting to regulate interstate wholesale electric rates. The court also noted that FERC never ruled on the issue of whether Entergy Louisiana's decision to include the extended shutdown reserve generating units was a prudent one or whether to include these costs in rates was mandatory.