Entergy 2003 Annual Report Download - page 68

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ENTERGY CORPORATION AND SUBSIDIARIES 2003
implementation of which would, based on current natural
gas prices, produce fuel savings for customers that
substantially mitigate the impact of the requested base
rate increase. The filing also requested an allowed ROE of
11.4%. Entergy Louisiana’s previously authorized ROE
midpoint currently in effect is 10.5%. Hearings are currently
set for September 2004.
Filings with the MPSC (Entergy Mississippi)
FORMULA RATE PLAN FILINGS
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 rate increase began in January
2003. The order endorsed a new power management rider
schedule designed to more efficiently collect capacity
portions of purchased 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
Entergy Mississippi’s formula rate plan, a bandwidth is
placed around the benchmark ROE, and if Entergy
Mississippi earns outside of the bandwidth (as well as
outside of a range-of-no-change at each edge of the band-
width), then Entergy Mississippi’s rates will be adjusted,
though on a prospective basis only. Under the provisions of
the order, Entergy Mississippi will make its next formula
rate plan filing during March 2004. The “benchmark ROE”
set out in Entergy Mississippi’s March 2004 annual formula
rate plan filing likely will differ from the last approved
ROE. Under Mississippi law and Entergy Mississippi’s formula
rate plan, however, if Entergy Mississippi’s earned ROE is
above the top of the range-of-no-change at the top of the
formula rate plan bandwidth, then Entergy Mississippi’s
“Allowed ROE” for the next twelve-month period is the
point halfway between such earned ROE and the top of the
bandwidth; and Entergy Mississippi’s retail rates are set at
that halfway-point ROE level. In the situation where
Entergy Mississippi’s earned ROE is not above the top of the
range-of-no-change at the top of the bandwidth, then
Entergy Mississippi’s “Allowed ROE” for the next twelve-
month period is the top of the range-of-no-change at the top
of the bandwidth.
GRAND GULF ACCELERATED RECOVERY TARIFF
(GGART)
In September 1998, FERC approved the GGART for Entergy
Mississippi’s allocable portion of Grand Gulf, which was
filed with FERC in August 1998. The GGART provided for
the acceleration of Entergy Mississippi’s Grand Gulf
purchased power over the period October 1, 1998 through
June 30, 2004. In May 2003, the MPSC authorized the
cessation of the GGART effective July 1, 2003. Entergy
Mississippi filed notice of the change with FERC and FERC
approved the filing on July 30, 2003. Entergy Mississippi
accelerated a total of $168.4 million of Grand Gulf
purchased power obligation under the GGART over the
period October 1, 1998 through June 30, 2003.
Filings with the Council (Entergy New Orleans)
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 defi-
ciency existed and that a $28.9 million electric rate increase
and a $15.3 million gas rate increase were appropriate.
Additionally, Entergy New Orleans proposed a $6 million
public benefit fund. In March 2003, Entergy New Orleans
and the Advisors to the City Council presented to the City
Council an agreement in principle and the City Council
approved that agreement in May 2003 allowing for a total
increase of $30.2 million in electric and gas base rates effec-
tive June 1, 2003. Certain intervenors have appealed the City
Council’s approval to Civil District Court for the Parish of
Orleans. Entergy New Orleans and the City Council will
oppose the appeal, but the outcome cannot be predicted.
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 excep-
tions 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. The suit in state court has been stayed by stipulation
of the parties pending a decision by the City Council in the
proceeding discussed in the next paragraph.
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
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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