Entergy Louisiana, Inc. v. Louisiana Public Service Commission, 539 U.S. 39, 11 (2003)

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Cite as: 539 U. S. 39 (2003)

Opinion of the Court

termination that MP&L's assumption of a 33% share of the costs associated with Grand Gulf would be fair to its sister operating companies did not obligate the State to approve a pass-through of those costs to state consumers without a prudence review." MP&L, 487 U. S., at 367. The Mississippi Supreme Court distinguished Nantahala by limiting the scope of its holding to "matters actually determined, whether expressly or impliedly, by the FERC." Mississippi ex rel. Pittman v. Mississippi Public Service Comm'n, 506 So. 2d 978, 986 (Miss. 1987) (citation omitted).

This Court disagreed, holding that the state court "erred in adopting the view that the pre-emptive effect of FERC jurisdiction turned on whether a particular matter was actually determined in the FERC proceedings." MP&L, 487 U. S., at 374. Although FERC had not explicitly held that the construction of Grand Gulf was prudent, the cost allocation filed with FERC pre-empted any state prudence review, because "if the integrity of FERC regulation is to be preserved, it obviously cannot be unreasonable for MP&L to procure the particular quantity of high-priced Grand Gulf power that FERC has ordered it to pay for." Ibid.


Applying Nantahala and MP&L to the facts of this case, we conclude that the LPSC's order impermissibly "traps" costs that have been allocated in a FERC tariff. The amended system agreement differs from the tariffs in MP&L and Nantahala because it leaves the classification of ERS units to the discretion of the operating committee, whereas in Nantahala and MP&L the cost allocations were specific mandates. The Louisiana Supreme Court concluded that this delegated discretion provided room for the LPSC's finding of imprudence where a mandated cost allocation would not. However, Congress has specifically allowed for the use of automatic adjustment clauses in the FPA, and it is uncontested that the MSS-1 schedule constitutes such an


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