Entergy 2004 Annual Report Download - page 63

Entergy Corporation and Subsidiaries 2004
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fuel mechanisms of the domestic utility companies, subject to
subsequent regulatory review (in millions):
2004 2003
Entergy Arkansas $ 7.4 $ 10.6
Entergy Gulf States $ 90.1 $118.4
Entergy Louisiana $ 8.7 $ 30.6
Entergy Mississippi $(22.8) $ 89.1
Entergy New Orleans $ 2.6 $ (2.7)
Entergy Arkansas
Entergy Arkansas’ rate schedules include an energy cost recovery
rider to recover fuel and purchased energy costs in monthly bills.
The rider utilizes prior calendar year energy costs and projected
energy sales for the twelve-month period commencing on April 1
of each year to develop an annual energy cost rate. The energy cost
rate includes a true-up adjustment reflecting the over-recovery or
under-recovery, including carrying charges, of the energy cost for
the prior calendar year.
In March 2004, Entergy Arkansas filed with the Arkansas Public
Service Commission (APSC) its energy cost recovery rider for the
period April 2004 through March 2005. The filed energy cost rate,
whichaccounts for 12 percent of a typical residential customer’s bill
using 1,000 kWh per month, increased 16 percent due primarily
to the elimination of a credit contained in the prior year’s rate to
refund previously over-recovered fuel costs. Also included in the
current year’senergycost calculationis a decrease in rates of
$3.9 million as a result of the operation of a revised energy
allocationmethod between the retail and wholesale sectors resulting
fromthe APSC's approval of a life-of-resources power purchase
agreement with Entergy New Orleans.
Entergy Gulf States (Texas)
In the Texas jurisdiction, Entergy Gulf States’ rate schedules include
afixed fuel factor to recover fuel and purchased power costs,
including carrying charges, not recovered in base rates. Under the
current methodology, semi-annual revisions of the fixed fuel factor
maybe made in March and September based on the market price of
natural gas. Entergy Gulf States will likely continue to use this
methodology until the start of retail open access, which has been
delayed. The amounts collected under Entergy Gulf States’ fixed
fuel factor and any interim surcharge implemented until the date
retail open access commences are subject to fuel reconciliation
proceedings before the PUCT. In the Texas jurisdiction, Entergy
Gulf States’ deferred electric fuel costs are $78.6 million as of
December 31, 2004, whichinclude the following (in millions):
Under-recovered fuel costs for the period 9/03 - 7/04
to be recovered through an interim fuel surcharge over a
six-month period beginning in January 2005 $27.8
Items to be addressed as partof unbundling $29.0
Imputed capacity charges $ 9.3
Other $12.5
The PUCT has ordered that the imputed capacity charges be
excluded from fuel rates and therefore recovered through base rates.
Entergy Gulf States filed a retail electric rate case and fuel
proceeding with the PUCT in August 2004. As discussed below,
the PUCT dismissed the rate case and fuel reconciliation
proceeding in October 2004 indicating that Entergy Gulf States is
still subject to a rate freeze based on the current PUCT-approved
settlement agreement stipulating that a rate freeze would remain in
effect until retail open access commenced in Entergy Gulf States’
service territory, unless the rate freeze is lifted by the PUCT prior
thereto. Without a Texas base rate proceeding, it is possible that
Entergy Gulf States will not be allowed to recover imputed
capacity charges in Texas retail rates in the future. Entergy Gulf
States believes the PUCT has misinterpreted the settlement and has
appealed the PUCT order to the Travis County District Court and
also intends to pursue other available remedies as discussed above in
“Electric Industry Restructuring and the Continued Application of
SFAS 71.” The dismissal of the rate case does not preclude Entergy
Gulf States from seeking the reconciliation of fuel and purchased
power costs of $288 million incurred from September 2003 through
March 2004 when, at the appropriate time, similar costs are
reconciled in the future.
In January 2001, Entergy Gulf States filed with the PUCT a fuel
reconciliation case covering the period from March 1999 through
August 2000. Entergy Gulf States was reconciling approximately
$583 millionof fuel and purchased power costs. As partof this
filing, Entergy Gulf States requested authority to collect
$28 million, plus interest, of under-recovered fuel and purchased
power costs. In August 2002, the PUCT reduced Entergy Gulf
States’ request to approximately $6.3 million, including interest
through July 31, 2002. Approximately $4.7 million of the total
reduction to the requested surcharge relates to nuclear fuel costs
that the PUCT deferred ruling on at this time. In October 2002,
Entergy Gulf States appealed the PUCT’s final order in Texas
District Court. In its appeal, Entergy Gulf States is challenging the
PUCT’s disallowance of approximately $4.2 million related to
imputed capacitycosts and its disallowance related to costs for ener-
gydelivered from the 30% non-regulated share of River Bend. The
case was argued before the Travis County Texas District Court in
August 2003 and the Travis CountyDistrict Court judge affirmed
the PUCT’s order. In October 2003, Entergy Gulf States appealed
this decisionto the Court of Appeals. Oral argument before the
appellate court occurred in September 2004 and the matter
is stillpending.
In September 2003, Entergy Gulf States filed an application with
the PUCT to implement an $87.3 million interim fuel surcharge,
including interest, to collect under-recovered fuel and purchased
power expenses incurred from September 2002 through August
2003. Hearings were held in October 2003 and the PUCT issued
an order in December 2003 allowing for the recovery of
$87 million. The surcharge was collected over a twelve-month
period that began in January 2004.
In March 2004, Entergy Gulf States filed with the PUCT a fuel
reconciliationcase covering the period September 2000 through
August 2003. Entergy Gulf States is reconciling $1.43 billion of
fuel and purchased power costs on a Texas retail basis. This amount
includes $8.6 million of under-recovered costs that Entergy Gulf
States is asking to reconcile and roll into its fuel over/under-
recoverybalance to be addressed in the next appropriate fuel
proceeding. This case involves imputed capacity and River Bend
payment issues similar to those decided adversely in the January
NOTES to CONSOLIDATED FINANCIAL STATEMENTS continued