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City of Osceola v. Entergy Arkansas, Inc.

United States Court of Appeals, Eighth Circuit

July 2, 2015

City of Osceola, Arkansas, Plaintiff - Appellant
v.
Entergy Arkansas, Inc.; Entergy Services, Inc., Defendants - Appellees

Submitted: March 12, 2015.

Appeal from United States District Court for the Eastern District of Arkansas - Jonesboro.

For City of Osceola, Arkansas, Plaintiff - Appellant: Charles A. Banks, Banks Law Firm, Little Rock, AR; Zachary David Wilson, Zachary David Wilson, P.A., North Little Rock, AR.

For Entergy Arkansas, Inc., Entergy Services, Inc., Defendants - Appellees: Matthew Estes, John Stewart Moot, Skadden & Arps, Washington, DC; Nathan M. Norton, Wright & Lindsey, Little Rock, AR; Tucker Raney, Entergy Services, Inc., Little Rock, AR; Scott C. Trotter, Trotter Law Firm, Little Rock, AR.

Before MURPHY and SHEPHERD, Circuit Judges, and HARPOOL,[1] District Judge.

OPINION

Page 905

MURPHY, Circuit Judge.

The City of Osceola purchases wholesale energy from Entergy Arkansas, Inc. (Entergy)

Page 906

under an agreement filed with and approved by the Federal Energy Regulatory Commission (FERC). Osceola sued Entergy in Arkansas state court, seeking reimbursement for charges allegedly in violation of their agreement. Entergy removed the case to the federal district court[2] which denied Osceola's motion to remand, granted summary judgment to the defendant energy providers, and dismissed the case. Osceola appeals, and we affirm.

I.

Entergy's parent company operates a system of multiple energy providers. In 2005 FERC decided that the allocation of production costs among the companies in this system was no longer just and reasonable. La. Pub. Serv. Comm'n.v. Entergy Servs., Inc., Opinion No. 480, 111 F.E.R.C. ¶ 61,311 (2005). In order to equalize production costs, FERC implemented a bandwidth based remedy under which it set a bandwidth of 11% above and below the system average production cost. Companies with costs below the band were required to make bandwidth payments to companies above the average. From 2007 to 2009, Entergy was the only company which was required to make payments to the other energy providers.

The City of Osceola, Arkansas purchased wholesale energy from Entergy under a Power Coordination, Interchange, and Transmission Agreement (the agreement). After making the payments required by FERC's bandwidth remedy, Entergy passed the cost on to Osceola, submitting bills which totaled $4,087,668.10. The monthly bills categorized these payments as " purchased energy." In the same time period Entergy passed its cost for the payments on to other customers, including Union Electric. As required by FERC, Entergy made a compliance filing before an administrative law judge to ensure it was properly implementing the bandwidth remedy. Both Osceola and Union Electric intervened in the compliance action. Osceola stated in its intervention motion that these new rates could substantially affect what it must pay to Entergy under their own agreement.

In the FERC compliance action, Union Electric had successfully sought permission to argue that their contract did not permit Entergy to pass on charges for the bandwidth payments. Union Electric also filed a separate FERC complaint based on the same argument, but this was held in abeyance and eventually dismissed. After an administrative law judge ruled that Entergy's charges to Union Electric for the bandwidth payments were proper, Union Electric appealed to FERC. On January 11, 2010, FERC reversed the administrative law judge. It decided that while bandwidth payments could be charged to wholesale customers, Union Electric's contract with Entergy did not permit it to charge these payments as " purchased energy." Entergy Servs., Inc., Opinion No. 505, 130 F.E.R.C. ΒΆ 61,023 PP 100-01 (2010). FERC ordered Entergy to ...


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