Entergy 2009 Annual Report Download - page 94

Entergy Corporation and Subsidiaries
Notes to Financial Statements
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Entergy Services, and Entergy Power in state court in Orleans Parish purportedly on behalf of all Entergy New
Orleans ratepayers. The plaintiffs seek treble damages for alleged injuries arising from the defendants' alleged
violations of Louisiana's antitrust laws in connection with certain costs passed on to ratepayers in Entergy New
Orleans' fuel adjustment filings with the City Council. In particular, plaintiffs allege that Entergy New Orleans
improperly included certain costs in the calculation of fuel charges and that Entergy New Orleans imprudently
purchased high-cost fuel or energy from other Entergy affiliates. Plaintiffs allege that Entergy New Orleans and the
other defendant Entergy companies conspired to make these purchases to the detriment of Entergy New Orleans'
ratepayers and to the benefit of Entergy's shareholders, in violation of Louisiana's antitrust laws. Plaintiffs also seek
to recover interest and attorneys' fees. Entergy filed exceptions to the plaintiffs' allegations, asserting, among other
things, that jurisdiction over these issues rests with the City Council and the FERC. In March 2004, the plaintiffs
supplemented and amended their petition. If necessary, at the appropriate time, Entergy will also raise its defenses to
the antitrust claims. The suit in state court was stayed by stipulation of the parties and order of the court pending
review of the decision by the City Council in the proceeding discussed in the next paragraph.
Plaintiffs also filed a corresponding complaint with the City Council in order to initiate a review by the City
Council of the plaintiffs' allegations and to force restitution to ratepayers of all costs they allege were improperly and
imprudently included in the fuel adjustment filings. Testimony was filed on behalf of the plaintiffs in this proceeding
asserting, among other things, that Entergy New Orleans and other defendants have engaged in fuel procurement and
power purchasing practices and included costs in Entergy New Orleans' fuel adjustment that could have resulted in
Entergy New Orleans customers being overcharged by more than $100 million over a period of years. Hearings were
held in February and March 2002. In February 2004, the City Council approved a resolution that resulted in a
refund to customers of $11.3 million, including interest, during the months of June through September 2004. In
May 2005 the Civil District Court for the Parish of Orleans affirmed the City Council resolution, finding no support
for the plaintiffs' claim that the refund amount should be higher. In June 2005, the plaintiffs appealed the Civil
District Court decision to the Louisiana Fourth Circuit Court of Appeal. On February 25, 2008, the Fourth Circuit
Court of Appeal issued a decision affirming in part, and reversing in part, the Civil District Court's decision.
Although the Fourth Circuit Court of Appeal did not reverse any of the substantive findings and conclusions of the
City Council or the Civil District Court, the Fourth Circuit found that the amount of the refund was arbitrary and
capricious and increased the amount of the refund to $34.3 million. Entergy New Orleans and the City Council filed
with the Louisiana Supreme Court seeking, among other things, review and reversal of the Fourth Circuit decision.
In April 2009 the Louisiana Supreme Court reversed the decision of the Louisiana Fourth Circuit Court of Appeal
and reinstated the decision of the Civil District Court. In May 2009 the Louisiana Supreme Court denied the
plaintiffs' request for rehearing. In January 2010 the plaintiffs filed a motion to lift the stay and to supplement and
amend their state court petition.
In the Entergy New Orleans bankruptcy proceeding, the named plaintiffs in the Entergy New Orleans fuel
clause lawsuit, together with the named plaintiffs in the Entergy New Orleans rate of return lawsuit, filed a
Complaint for Declaratory Judgment asking the court to declare that Entergy New Orleans, Entergy Corporation, and
Entergy Services are a single business enterprise, and, as such, are liable in solido with Entergy New Orleans for any
claims asserted in the Entergy New Orleans fuel adjustment clause lawsuit and the Entergy New Orleans rate of
return lawsuit, and, alternatively, that the automatic stay be lifted to permit the movants to pursue the same relief in
state court. The bankruptcy court dismissed the action on April 26, 2006. The matter was appealed to the U.S.
District Court for the Eastern District of Louisiana, and the district court affirmed the dismissal in October 2006, but
on different grounds, concluding that the lawsuit was premature. In Entergy New Orleans' plan of reorganization
that was confirmed by the bankruptcy court in May 2007, the plaintiffs' claims are treated as unimpaired "Litigation
Claims," which will "ride through" the bankruptcy proceeding, with any legal, equitable and contractual rights to
which the plaintiffs' Litigation Claim entitles the plaintiffs unaltered by the plan of reorganization.
Electric Industry Restructuring (Entergy Texas)
In June 2009, a law was enacted in Texas that requires Entergy Texas to cease all activities relating to
Entergy Texas' transition to competition. The law allows Entergy Texas to remain a part of the SERC Region,
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