Entergy 2002 Annual Report Download - page 61

with the U.S. Supreme Court an application for writ of certiorari,
which application was supported by an amicus curiae brief filed
on behalf of the United States of America by the Solicitor
General and the General Counsel and Solicitor for FERC.
The U.S. Supreme Court granted certiorari in January 2003,
and the case will be argued during the last week of April 2003.
Filings with the MPSC
FORMULA RATE PLAN FILINGS – Pursuant to Entergy Mississippi’s
annual performance-based formula rate plan filing for the
2001 test year, the MPSC approved a stipulation between
the Mississippi Public Utilities Staff and Entergy Mississippi. The
stipulation provided for a $1.95 million rate increase effective
in May 2002.
In August 2002, Entergy Mississippi filed a rate case with the
MPSC requesting a $68.8 million rate increase effective January
2003. Entergy Mississippi requested this increase as a result
of capital investments and operation and maintenance
expenditures necessary to replace and maintain aging electric
facilities and to improve reliability and customer service. In
December 2002, the MPSC issued a final order approving a joint
stipulation entered into by Entergy Mississippi and the
Mississippi Public Utilities Staff in October 2002. The final order
results in a $48.2 million rate increase, or about a 5.3% increase
in overall retail revenues, which is based on an ROE of 11.75%.
The order endorsed a new power management rider schedule
designed to more efficiently collect capacity portions of pur-
chased power costs. Also, the order provides for improvements
in the return on equity formula and more robust performance
measures for Entergy Mississippi’s formula rate plan. Under the
provisions of the order, Entergy Mississippi will make its next
formula rate plan filing during March 2004.
Filings with the Council
RATE PROCEEDINGS – In May 2002, Entergy New Orleans filed a
cost of service study and revenue requirement filing with the
City Council for the 2001 test year. The filing indicated that a
revenue deficiency exists and that a $28.9 million electric rate
increase and a $15.3 million gas rate increase are appropriate.
Additionally, Entergy New Orleans has proposed a $6.0 million
public benefit fund. The City Council has established a proce-
dural schedule for consideration of the filing and hearings are
scheduled to begin in May 2003. The procedural schedule
provides for the City Council’s decision with respect to Entergy
New Orleans’ filing by June 15, 2003. On March 13, 2003,
Entergy New Orleans and the Advisors to the City Council
presented to the City Council an agreement in principle that, if
approved by the City Council, would resolve the proceeding.
The agreement in principle, if approved by the City Council,
would result in a $30.2 million base rate increase for Entergy
New Orleans. A procedural schedule for the City Council’s
consideration of the agreement in principle has not been
established. Entergy New Orleans’ rates will remain at their cur-
rent level until the earlier of a decision in the proceeding or
June 15, 2003.
NATURAL GAS –In a resolution adopted in August 2001, the City
Council ordered Entergy New Orleans to account for $36 million
of certain natural gas costs charged to its gas distribution
customers from July 1997 through May 2001. The resolution
suggests that refunds may be due to the gas distribution
customers if Entergy New Orleans cannot account satisfactorily
for these costs. Entergy New Orleans filed a response to the City
Council in September 2001, which is still being evaluated by the
City Council. Entergy New Orleans has documented a full
reconciliation for the natural gas costs during that period. Entergy
New Orleans has filed for a hearing on this matter. The presenta-
tion made to the City Council on March 13, 2003 regarding the
agreement in principle that would resolve Entergy New Orleans’
rate proceeding also included proposed terms for resolution of
this proceeding, if approved by the City Council. A procedural
schedule for consideration of the agreement has not been
established. The ultimate outcome of the proceeding cannot be
predicted at this time.
FUEL ADJUSTMENT CLAUSE LITIGATION –In April 1999, a group
of ratepayers filed a complaint against Entergy New Orleans,
Entergy Corporation, 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
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
FERC. If necessary, at the appropriate time, Entergy will also
raise its defenses to the antitrust claims. At present, the suit in
state court is stayed by stipulation of the parties.
Plaintiffs also filed this 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 in April 2000 and has been supplemented.
The testimony, as supplemented, asserts, 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 New Orleans customers being over-
charged by more than $100 million over a period of years. In
June 2001, the City Council’s advisors filed testimony on these
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