Entergy 2002 Annual Report Download - page 59

settlement agreement delaying retail open access in Texas
requires a rate freeze during the delay period. If Entergy Gulf
States goes to retail open access without a Texas base rate
proceeding, it is possible that Entergy Gulf States will not be
allowed to recover these imputed capacity charges.
In January 2001, Entergy Gulf States filed a fuel reconciliation
case covering the period from March 1999 through August
2000. Entergy Gulf States was reconciling approximately
$583.0 million of fuel and purchased power costs. As part of this
filing, Entergy Gulf States requested authority to collect
$28.0 million, plus interest, of under-recovered fuel and
purchased power costs. The PUCT decided in August 2002
to reduce Entergy Gulf States’ request to approximately
$6.3 million, including interest through July 31, 2002.
Approximately $4.7 million of the total reduction to the
requested surcharge relates to nuclear fuel costs that the PUCT
deferred ruling on at this time. In October 2002, Entergy Gulf
States appealed the PUCT’s final order in Texas District Court.
In its appeal, Entergy Gulf States is challenging the PUCT’s
disallowance of approximately $4.2 million related to imputed
capacity costs and its disallowance related to costs for energy
delivered from the 30% non-regulated share of River Bend. No
assurance can be given as to the final outcome of this proceeding.
In September 2002, Entergy Gulf States filed an application
with the PUCT for an interim surcharge to collect $53.9 million,
including interest and $6.3 million from the January 2001 fuel
reconciliation proceeding discussed above, of under-recovered
fuel and purchased power expenses incurred from March 2002
through August 2002. The PUCT authorized collection of the
amounts requested over an 11-month period beginning in
February 2003. Expenses collected through this interim
surcharge, with the exception of expenses already reconciled
in prior proceedings, are subject to review in a future fuel
reconciliation proceeding.
ENTERGY GULF STATES, ENTERGY LOUISIANA, AND ENTERGY
NEW ORLEANS – The Louisiana jurisdiction of Entergy Gulf
States, Entergy Louisiana, and Entergy New Orleans recover
electric fuel costs on a two-month lag. The Louisiana jurisdic-
tion of Entergy Gulf States’ and Entergy New Orleans’ gas rate
schedules include estimates for the billing month adjusted by
a surcharge or credit for deferred fuel expense arising from
monthly reconciliations.
In August 2000 the LPSC authorized its staff to initiate a pro-
ceeding to audit the fuel adjustment clause filings of Entergy
Louisiana pursuant to a November 1997 LPSC general order.
The time period that is the subject of the audit is January 1, 2000
through December 31, 2001. The LPSC staff has submitted sev-
eral requests for information from Entergy Louisiana, and it is
expected that the LPSC staff will issue its audit report in the
spring of 2003, following which a procedural schedule will be
established.
In January 2003 the LPSC opened a docket to investigate the
fuel adjustment clause practices of Entergy Gulf States and its
affiliates. The investigation will include a review of the reason-
ableness of charges flowed by Entergy Gulf States through its
fuel adjustment clause in Louisiana for the period subsequent
to 1994. No assurance can be given at this time as to the timing
or outcome of this proceeding.
ENTERGY MISSISSIPPI – Entergy Mississippi’s rate schedules
include an energy cost recovery rider which is adjusted
quarterly to reflect accumulated over- or under-recoveries
from the second prior quarter. The deferred fuel balances
as of December 31, 2002 and 2001 reflect the 24-month
recovery of $136.7 million of under-recoveries that began in
January 2001 as approved by the MPSC.
RETAIL RATE PROCEEDINGS
Filings with the APSC
MARCH 2002 SETTLEMENT AGREEMENT –In May 2002, the APSC
approved a settlement agreement submitted by Entergy
Arkansas, the APSC staff, and the Arkansas Attorney General.
Provisions of the agreement are discussed below under “Retail
Rates,” “Transition Cost Account,” and “December 2000 Ice
Storm Cost Recovery.”
RETAIL RATES –As discussed in “December 2000 Ice Storm Cost
Recovery” below, Entergy Arkansas was scheduled to file a
general rate proceeding in February 2002, in which Entergy
Arkansas would have sought an increase in rates. The March
2002 settlement agreement states, however, that Entergy
Arkansas will not file an application seeking to increase base
rates prior to January 2003.
TRANSITION COST ACCOUNT – A 1997 settlement provided for
the collection of earnings in excess of an 11% return on equity
in a transition cost account (TCA) to offset stranded costs if
retail open access were implemented. In May 2002, Entergy
Arkansas filed its 2001 earnings evaluation report with the
APSC. In June 2002, the APSC approved a contribution of
$5.9 million to the TCA. A principal provision in the March
2002 settlement agreement was to offset $137.4 million of ice
storm recovery costs with the TCA on a rate class basis. In accor-
dance with the settlement agreement and following the APSC’s
approval of the 2001 earnings review, Entergy Arkansas filed to
return $18.1 million of the TCA to certain large general service
class customers that paid more into the TCA than their alloca-
tion of storm costs. The APSC approved the return of funds to
the large general service customer class in the form of refund
checks in August 2002. As part of the implementation of the
March 2002 settlement agreement provisions, the TCA proce-
dure ceased with the 2001 earnings evaluation.
DECEMBER 2000 ICE STORM COST RECOVERY –In mid- and late
December 2000, two separate ice storms left 226,000 and 212,500
Entergy Arkansas customers, respectively, without electric power
in its service area. Entergy Arkansas filed a proposal to recover
costs plus carrying charges associated with power restoration
caused by the ice storms. In an order issued in June 2001, the
APSC decided not to give final approval to Entergy’s proposed
storm cost recovery rider outside of a fully developed cost-of-
service study in a general rate proceeding. The APSC action
resulted in the deferral in 2001 of storm damage costs expensed
in 2000 as reflected in Entergy Arkansas’ financial statements.
ENTERGY CORPORATION AND SUBSIDIARIES 2002 57