Entergy 2003 Annual Report Download - page 64

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ENTERGY CORPORATION AND SUBSIDIARIES 2003
Trading and Risk Management Activities; SFAS 149,
“Amendment of Statement 133 on Derivative Instruments
and Hedging Activities” and related interpretations by
the Derivatives Implementation Group, and FIN 45,
“Guarantor’s Accounting and Disclosure Requirements for
Guarantees Including Indirect Guarantees of Indebtedness
of Others.” The adoption of these standards did not have a
material effect on Entergy’s financial statements.
NOTE 2. RATE AND REGULATORY MATTERS
ELECTRIC INDUSTRY RESTRUCTURING AND THE
CONTINUED APPLICATION OF SFAS 71
Although Arkansas and Texas enacted retail open access
laws, the retail open access law in Arkansas has now been
repealed. Retail open access in Entergy Gulf States’ service
territory in Texas has been delayed. Entergy believes that
significant issues remain to be addressed by regulators, and
the enacted law in Texas does not provide sufficient detail to
allow Entergy Gulf States to reasonably determine the
impact on Entergy Gulf States’ regulated operations.
Entergy therefore continues to apply regulatory accounting
principles to the retail operations of all of the domestic
utility companies. Following is a summary of the status of
retail open access in the domestic utility companies’ retail
service territories.
% of Entergy’s
2003 Revenues Derived
Status of Retail from Retail Electric Utility
Jurisdiction Open Access Operations in the Jurisdiction
Arkansas Retail open access was
repealed in February 2003. 15.4%
Texas Implementation delayed in Entergy
Gulf States’ service area in a settlement
approved by Public Utility Commission
of Texas (PUCT). In light of regulatory
proceedings and approvals required,
retail open access is not likely before the
first quarter of 2005. 14.4%
Louisiana The LPSC has deferred pursuing retail
open access, pending developments at
the federal level and in other states. 43.9%
Mississippi The Mississippi Public Service Commission
(MPSC) has recommended not pursuing
open access at this time. 13.0%
New Orleans The Council of the City of New Orleans,
Louisiana (Council or City Council) has
taken no action on Entergy New Orleans’
proposal filed in 1997. 5.9%
Retail open access commenced in portions of Texas on
January 1, 2002. The staff of the PUCT filed a petition to
delay retail open access in Entergy Gulf States’ service area,
and Entergy Gulf States reached a settlement agreement
approved by the PUCT to delay retail open access until at
least September 15, 2002. In September 2002, the PUCT
ordered Entergy Gulf States to file on January 24, 2003 a
proposal for an interim solution – retail open access without
a FERC-approved regional transmission organization (RTO)
– if it appeared by January 15, 2003 that a FERC-approved
RTO would not be functional by January 1, 2004. On
January 24, 2003, Entergy Gulf States filed its proposal,
which among other elements, included:
the recommendation that retail open access in Entergy
Gulf States’ Texas service territory, including corporate
unbundling, occur by January 1, 2004, or else be
delayed until at least January 1, 2007. If retail open
access is delayed past January 1, 2004, Entergy Gulf
States seeks authorization to separate into two bundled
utilities, one subject to the retail jurisdiction of the PUCT
and one subject to the retail jurisdiction of the LPSC.
the recommendation that Entergy’s transmission
organization, possibly with the oversight of another
entity, will continue to serve as the transmission
authority for purposes of retail open access in Entergy
Gulf States’ service territory.
the recommendation that the decision points be identified
that would require prior to January 1, 2004, the PUCT’s
determination, based upon objective criteria, whether to
proceed with further efforts toward retail open access in
Entergy Gulf States’ Texas service territory.
The PUCT considered the proposal at a March 2003
hearing, and issued an order in April 2003. The order set
forth a sequence of proceedings and activities designed to
initiate an interim solution. These proceedings and activities
include ruling on market protocols; initiating a proceeding
to certify an independent organization to administer the
market protocols and ensure nondiscriminatory access to
transmission and distribution systems; resuming business
separation proceedings; re-invigorating the pilot project;
and initiating a market-readiness proceeding. The PUCT
issued an order on rehearing in late-July 2003 in which it
identified December 2004 as the target date for the begin-
ning of the interim solution. Consistent with the order, and
after negotiations with other parties and following a series
of contested hearings and the PUCT approval of a settlement
agreement on the market protocols, Entergy Services made
a filing at FERC and has received approval on an expedited
basis of the market protocols subject to FERC jurisdiction.
This ruling, when final and appealable, will allow for the
reinvigorated pilot to begin upon the PUCT approval of
Entergy Gulf States’ independent organization request. The
PUCT is currently scheduled to conduct a hearing on this
request in June 2004.
In September 2003, the PUCT issued a written order that
approved the Price to Beat (PTB) fuel factor for Entergy
Gulf States, which is to be implemented upon the
commencement of retail open access in its Texas service
territory. This PTB fuel factor is subject to revision based on
PUCT rules. The PUCT declined consideration of a request
for rehearing sought by certain cities in Texas served by
Entergy Gulf States and the Office of Public Utility Counsel.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued