Entergy 2003 Annual Report Download - page 79

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ENTERGY CORPORATION AND SUBSIDIARIES 2003
Entergy to assume the decommissioning liability provided
that it assigns the corresponding decommissioning trust,
up to a specified level, to Entergy. If the decommissioning
liability is retained by NYPA, Entergy will perform the
decommissioning of the plants at a price equal to the lesser
of a pre-specified level or the amount in the decommissioning
trusts. Entergy believes that the amounts available to it
under either scenario are sufficient to cover the future
decommissioning costs without any additional contribu-
tions to the trusts.
Entergy maintains decommissioning trust funds that
are committed to meeting the costs of decommissioning the
nuclear power plants. The fair values of the decommissioning
trust funds and asset retirement obligation-related regula-
tory assets of Entergy as of December 31, 2003 are as
follows (in millions):
Decommissioning Trust Regulatory
Fair Values Assets
ANO 1 & ANO 2 $ 360.5 $203.7
River Bend 267.9 36.2
Waterford 3 152.0 132.3
Grand Gulf 1 172.9 92.7
Pilgrim 491.9 –
Indian Point 1 & 2 485.9 –
Vermont Yankee 347.4 –
$2,278.5 $464.9
The Energy Policy Act of 1992 contains a provision that
assesses domestic nuclear utilities with fees for the decont-
amination and decommissioning (D&D) of the DOE’s past
uranium enrichment operations. Annual assessments (in
2003 dollars), which will be adjusted annually for inflation,
are for 15 years and were $4.3 million for Entergy
Arkansas, $1.1 million for Entergy Gulf States, $1.6 million
for Entergy Louisiana, and $1.8 million for System Energy
in 2003. The Energy Policy Act calls for cessation of annual
D&D assessments not later than October 24, 2007. At
December 31, 2003, three years of assessments were
remaining. D&D fees are included in other current liabili-
ties and other non-current liabilities and, as of December
31, 2003, recorded liabilities were $12.8 million for Entergy
Arkansas, $3.0 million for Entergy Gulf States, $4.9 million
for Entergy Louisiana, and $4.8 million for System Energy.
Regulatory assets in the financial statements offset these
liabilities, with the exception of Entergy Gulf States’ 30%
non-regulated portion. These assessments are recovered
through rates in the same manner as 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, 2003, 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):
Operating Capital
Leases Leases
2004 $ 98,664 $18,695
2005 89,497 9,660
2006 69,957 5,724
2007 52,528 3,439
2008 40,445 1,753
Years thereafter 245,159 2,844
Minimum lease payments $596,250 $42,115
Less: Amount representing interest – 9,149
Present value of net
minimum lease payments $596,250 $32,966
Total rental expenses for all leases (excluding nuclear fuel
leases and the Grand Gulf 1 and Waterford 3 sale and lease-
back transactions) amounted to $58.9 million in 2003,
$60.1 million in 2002, and $65.1 million in 2001.
NUCLEAR FUEL LEASES
As of December 31, 2003, arrangements to lease nuclear
fuel existed in an aggregate amount up to $150 million
for Entergy Arkansas, $80 million for each of System
Energy and Entergy Louisiana, and $105 million for
Entergy Gulf States. As of December 31, 2003, the unrecovered
cost base of nuclear fuel leases amounted to approximately
$102.7 million for Entergy Arkansas, $63.7 million for
Entergy Gulf States, $65.0 million for Entergy Louisiana,
and $47.2 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 each have a termination date of October 30, 2006.
The 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 December 15, 2008. 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 in accordance with the
Fuel Lease.