Entergy 2002 Annual Report Download - page 73

decommissioning expense was $18.9 million. Pilgrim’s decom-
missioning expense was $20.1 million in 2001 and $19.2 million
in 2000. In 2001, Indian Point 1 & 2’s decommissioning expense
was $5.3 million.
The Energy Policy Act of 1992 contains a provision that
assesses domestic nuclear utilities with fees for the decontami-
nation and decommissioning (D&D) of the DOE’s past
uranium enrichment operations. Annual assessments (in 2002
dollars), which will be adjusted annually for inflation, are
for 15 years and were $4.2 million for Entergy Arkansas,
$1.0 million for Entergy Gulf States, $1.6 million for Entergy
Louisiana, and $1.6 million for System Energy in 2002. At
December 31, 2002, four years of assessments were remaining.
D&D fees are included in other current liabilities and other
non-current liabilities and, as of December 31, 2002, recorded
liabilities were $16.7 million for Entergy Arkansas, $4.0 million
for Entergy Gulf States, $6.4 million for Entergy Louisiana,
and $6.3 million for System Energy. Regulatory assets in the
financial statements offset these liabilities, with the exception
of Entergy Gulf States’ 30% non-regulated portion. FERC
requires that utilities treat these assessments as costs of fuel as
they are amortized and recover these costs through rates in
the same manner as other fuel costs.
EMPLOYMENT LITIGATION
Entergy Corporation and certain subsidiaries are defendants
in numerous lawsuits filed by former employees asserting that
they were wrongfully terminated and/or discriminated against
on the basis of age, race, and/or sex. Entergy Corporation and
these subsidiaries are vigorously defending these suits and
deny any liability to the plaintiffs. Nevertheless, no assurance
can be given as to the outcome of these cases.
NOTE 10. LEASES
GENERAL
As of December 31, 2002, Entergy had non-cancelable operating
leases for equipment, buildings, vehicles, and fuel storage
facilities (excluding nuclear fuel leases and the Grand Gulf 1
and Waterford 3 sale and leaseback transactions) with minimum
lease payments as follows (in thousands):
Year Operating Leases Capital Leases
2003 $ 98,124 $18,695
2004 91,185 18,695
2005 73,437 9,660
2006 56,469 5,724
2007 41,416 3,439
Years thereafter 140,089 4,597
Minimum lease payments $500,720 $60,810
Less: Amount representing interest – 13,942
Present value of net minimum
lease payments $500,720 $46,868
Total rental expenses for all leases (excluding nuclear fuel
leases and the Grand Gulf 1 and Waterford 3 sale and leaseback
transactions) amounted to $60.1 million in 2002, $65.1 million
in 2001, and $53.3 million in 2000.
NUCLEAR FUEL LEASES
As of December 31, 2002, arrangements to lease nuclear fuel
existed in an aggregate amount up to $140 million for Entergy
Arkansas, $80 million for each of Entergy Gulf States and
Entergy Louisiana, and $95 million for System Energy. As of
December 31, 2002, the unrecovered cost base of nuclear fuel
leases amounted to approximately $88.1 million for Entergy
Arkansas, $41.4 million for Entergy Gulf States, $50.9 million
for Entergy Louisiana, and $79.0 million for System Energy.
The lessors finance the acquisition and ownership of nuclear
fuel through loans made under revolving credit agreements,
the issuance of commercial paper, and the issuance of
intermediate-term notes. The credit agreements for Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, and System
Energy have termination dates of November 2003, November
2003, December 2004, and November 2003, respectively. Such
termination dates may be extended from time to time with the
consent of the lenders. The intermediate-term notes issued
pursuant to these fuel lease arrangements have varying
maturities through March 15, 2006. It is expected that
additional financing under the leases will be arranged as
needed to acquire additional fuel, to pay interest, and to pay
maturing debt. However, if such additional financing cannot
be arranged, the lessee in each case must repurchase sufficient
nuclear fuel to allow the lessor to meet its obligations.
Lease payments are based on nuclear fuel use. The total
nuclear fuel lease payments (principal and interest) as well
as the separate interest component charged to operations by
the domestic utility companies and System Energy were
$137.8 million (including interest of $11.3 million) in 2002,
$149.3 million (including interest of $17.2 million) in 2001,
and $158.7 million (including interest of $19.9 million)
in 2000.
SALE AND LEASEBACK TRANSACTIONS
In 1988 and 1989, System Energy and Entergy Louisiana,
respectively, sold and leased back portions of their ownership
interests in Grand Gulf 1 and Waterford 3 for 261⁄2-year and
28-year lease terms, respectively. Both companies have options
to terminate the leases, to repurchase the sold interests, or to
renew the leases at the end of their terms.
Under System Energy’s sale and leaseback arrangements,
letters of credit are required to be maintained to secure
certain amounts payable for the benefit of the equity investors
by System Energy under the leases. The current letters of
credit are effective until March 20, 2003.
Entergy Louisiana did not exercise its option to repurchase
the undivided interests in Waterford 3 in September 1994. As a
result, Entergy Louisiana was required to provide collateral for
the equity portion of certain amounts payable by Entergy
Louisiana under the leases. Such collateral was in the form of a
new series of non-interest bearing first mortgage bonds in the
aggregate principal amount of $208.2 million issued by Entergy
Louisiana in September 1994.
ENTERGY CORPORATION AND SUBSIDIARIES 2002 71