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Entergy Arkansas is asking for a federal court order allowing the utility to charge Arkansas ratepayers $135 million and rescind a $15 million rate refund the state Public Service Commission approved in July.

On Friday, Entergy filed suit in U.S. Court for the Eastern District against the three members of the commission: Chairman Ted Thomas, Kimberly O'Guinn and Justin Tate.

The lawsuit contends the commission's "discriminatory action" has harmed the utility by making an "arbitrary and capricious" order that preempted federal regulatory rulings.

Through the chairman, the panel declined comment Tuesday because of the pending litigation.

Entergy has a right under rulings from the Federal Energy Regulatory Commission to recoup money it paid to its sister utilities, company spokesperson Kacee Kirshvink said Tuesday in defending the lawsuit.

"We believe that ... the law requires that Entergy Arkansas be permitted to recover an appropriate portion of the FERC-ordered payment from Entergy Arkansas' retail customers," she said.

"We have been and remain willing to work with the Arkansas Public Service Commission to try to reach an amicable resolution that allows reasonable recovery of these costs in a manner that minimizes the impact on customer bills."

Entergy also has the right to pursue an appeal of the order at the Arkansas Supreme Court but is not going to do so, Kirshvink said.

The issue dates back to 1982 and involves payments under systemwide agreements that included Entergy Arkansas and sister utilities also owned by Entergy Corp. of New Orleans.

From 2000-2009, Entergy Arkansas made sales of short-term energy to companies outside the Entergy system. The Louisiana Public Service Commission challenged the sales, and the Federal Energy Regulatory Commission ruled for the state and against Entergy.

To comply with the federal ruling, Entergy Arkansas in December 2018 made payments of $135 million to its affiliates in Louisiana, Mississippi and Texas. That money was then refunded to customers in those states.

In May 2019, Entergy Arkansas asked the state commission to allow the utility to recover from Arkansas customers the $135 million that was reimbursed to ratepayers in Louisiana, Mississippi and Texas. The proposal would have increased rates by $62 million for residential customers and by $70.4 million for businesses and industrial customers and the recovery charge would have been in place for two years.

Commissioners rejected the request and instead ordered Entergy to issue a $15 million refund to its Arkansas ratepayers. Those refunds were issued as billing credits in August.

The commission found that Entergy's shareholders, not its ratepayers, were responsible for the federally ordered payments and the Arkansas commission also found that the state's ratepayers were overcharged in the process and were due the $15 million refund.

Now, Entergy is asking that Arkansas ratepayers be charged for the $135 million under the federal order and that state residents be ordered to return the $15 million in rebates.

The lawsuit is scheduled to be heard by U.S. District Judge Kristine Baker.

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