Entergy 2002 Annual Report Download - page 26

an increase in depreciation and amortization expenses of
$105.7 million primarily due to the effects in 2001 of the
final Federal Energy Regulatory Commission (FERC)
order addressing the System Energy Resources, Inc.
(System Energy) 1995 rate filing.
Partially offsetting these decreases in operating income were
the following:
increased revenues of $155.7 million due to increased
electricity usage in the service territories;
an increase in revenue of $94.3 million due to an increase
in the price applied to unbilled sales; and
an increase in other regulatory credits of $121.3 million
primarily due to a March 2002 settlement agreement
allowing Entergy Arkansas to recover a large majority of
2000 and 2001 ice storm repair expenses through the
previously-collected TCA amounts. This increase is offset
in other operation and maintenance expenses.
In addition to the effect of the March 2002 settlement agree-
ment, the increase in other operation and maintenance
expenses was primarily due to:
an increase of $51.2 million in benefit costs;
increased expenses of $24.5 million at Entergy Arkansas
due to the reversal in 2001 of ice storm costs previously
charged to expense in December 2000;
an increase of $14.6 million in fossil plant expenses due to
maintenance outages and turbine inspection costs at vari-
ous plants;
an increase of $10.9 million to reflect the current estimate
of the liability for the future disposal of low-level radioac-
tive waste materials; and
lower nuclear insurance refunds of $6.7 million.
Fuel recovery mechanisms at the domestic utility companies
(Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, and Entergy New Orleans, collectively)
generally provide for the deferral of fuel and purchased power
costs above the amounts included in existing rates. Operating
revenues include a decrease in fuel cost recovery revenue of
$897.4 million and $60.5 million related to electric sales and
gas sales, respectively, primarily due to lower fuel recovery
factors resulting from decreases in the market prices of natural
gas and purchased power in 2002. As such, this revenue
decrease is offset by decreased fuel and purchased power
expenses. Also contributing to the decrease in fuel cost
recovery revenue was a lower fuel recovery surcharge in 2002
in the Texas jurisdiction of Entergy Gulf States.
2001 Compared to 2000
Operating income decreased $125.6 million in 2001 primarily
due to:
decreased revenues of $161.9 million due to decreased
electricity usage in the service territories;
a decrease in revenue of $161.7 million due to a decrease
in the price applied to unbilled sales; and
the accrual of $26.8 million in the TCA at Entergy Arkansas.
Partially offsetting these decreases in operating income were
the following:
a decrease in other operation and maintenance expenses
of $95.6 million, which is explained below;
a decrease in depreciation and amortization expense at
System Energy of $74.5 million primarily resulting from
the final resolution of its 1995 rate filing; and
a decrease in decommissioning expense at System Energy
of $32.4 million resulting from the final resolution of the
FERC order addressing the 1995 rate increase filing.
The decrease in other operation and maintenance expenses in
2001 was primarily due to:
a decrease in property damage expenses of $49.7 million
primarily due to a reversal of $24.5 million in June 2001,
upon recommendation from the Arkansas Public Service
Commission (APSC), of ice storm costs previously charged
to expense in December 2000 (the effect of the reversal of
the ice storm costs on net income was largely offset by the
adjustment to the TCA as a result of the 2000 earnings
review in 2001);
decreases in expenses of $9.3 million at Entergy Arkansas
due to decreased transition to competition support costs
and $11.0 million at Entergy Louisiana due to decreased
legal fees; and
decreases of $10.7 million and $14.6 million at Entergy
Louisiana and Entergy Mississippi, respectively, because of
maintenance and planned maintenance outages at certain
fossil plants in 2000.
Operating revenues include an increase in fuel cost recovery
revenue of $462.7 million related to electric sales, primarily
due to increased fuel recovery factors at Entergy Arkansas,
Entergy Gulf States in the Texas jurisdiction, and Entergy
Mississippi, combined with higher fuel and purchased power
MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS continued
24
The increase in earnings in 2002 for Non-Utility Nuclear
from $128 million to $201 million was primarily due
to the operation of Indian Point 2 and Vermont Yankee,
which were purchased in September 2001 and
July 2002, respectively.