Entergy 2004 Annual Report Download - page 64

-62 -
Entergy Corporation and Subsidiaries 2004
2001 proceeding, discussed above, which is now on appeal. On
January 31, 2005, the Administrative Law Judges (ALJ) issued a
Proposal for Decision that recommends disallowing $10.7 million
(excluding interest) related to these two issues. A final PUCT
decision is expected in the first quarter of 2005.
In September 2004, Entergy Gulf States filed an application with
the PUCT to implement a $27.8 million interim fuel surcharge,
including interest, to collect under-recovered fuel and purchased
power expenses incurred from September 2003 through July 2004.
Entergy Gulf States proposed to collect the surcharge over a
six-month period beginning January 2005. In December 2004, the
PUCT approved the surcharge consistent with Entergy Gulf States’
request. Amounts collected though the interim fuel surcharge,
which will be implemented over the six-month period commencing
January2005, are subject to final reconciliation in a future fuel
reconciliation proceeding.
Entergy Gulf States (Louisiana) and Entergy Louisiana
In Louisiana, Entergy Gulf States and EntergyLouisiana recover
electric fuel and purchased power costs for the upcoming month
based uponthe level of such costs from the prior month. In
Louisiana, Entergy Gulf States’ purchased gas adjustments include
estimates for the billing month adjusted by a surcharge or credit for
deferred fuel expense arising from monthly reconciliations of actual
fuel costs incurred with fuel cost revenues billed to customers.
In August 2000, the LPSC authorized its staff to initiate a
proceeding to audit the fuel adjustment clause filings of Entergy
Louisiana pursuant to a November 1997 LPSC general order. The
time period that is the subject of the audit is January 1, 2000
through December 31, 2001. In September 2003, the LPSC staff
issued its audit report and recommended a disallowance with regard
to one item. The issue relates to the alleged failureto uprate
Waterford 3 in a timely manner, a claim that also has been raised in
the summer 2001, 2002, and 2003 purchased power proceedings.
The LPSC staff has quantified the possible disallowance as between
$7.6 and $14 million. Entergy Louisiana notified the LPSC that it
will contest the recommendation. The procedural schedule in the
case has been suspended. Astatus conference for the purpose of
establishing a new procedural schedule will be set when the current
hearings in the Power Purchase Agreement proceedings at FERC
are concluded. FERC hearings in that matter concluded in
November 2004. If the LPSC approves the proposed settlement
discussed belowunder “Retail Rate Proceedings,” the issue of a
proposed imprudence disallowance relating to the uprate will be
resolved and will no longer be at issue in this proceeding.
In January2003, the LPSC authorized its staff to initiate a
proceeding to audit the fuel adjustment clause filings of Entergy
Gulf States and its affiliates pursuant to a November 1997 LPSC
general order. The audit will include a review of the reasonableness
of charges flowed by Entergy Gulf States through its fuel
adjustment clause in Louisiana for the period January 1, 1995
through December 31, 2002. Discovery is underway, but a detailed
procedural schedule extending beyond the discovery stage has not
yet been established and the LPSC staff has not yet issued its
audit report.
Entergy Mississippi
Entergy Mississippi’s rate schedules include an energy cost recovery
rider which is adjusted quarterly to reflect accumulated over- or
under-recoveries from the second prior quarter. In May 2003,
Entergy Mississippi filed and the MPSC approved a change in
Entergy Mississippi’s energy cost recovery rider. Under the MPSC’s
order, Entergy Mississippi deferred until 2004 the collection of fuel
under-recoveries for the first and second quarters of 2003 that
would have been collected in the third and fourth quarters of 2003,
respectively. The deferred amount of $77.6 million plus carrying
charges was collected through the energy cost recovery rider over a
twelve-month period that began in January 2004.
In January 2005, the MPSC approved a change in Entergy
Mississippi’s energy cost recovery rider. Entergy Mississippi’s fuel
over-recoveries for the third quarter of 2004 of $21.3 million will be
deferred from the first quarter 2005 energy cost recovery rider
adjustment calculation. The deferred amount of $21.3 million plus
carrying charges will be refunded through the energy cost recovery
rider in the second and third quarters of 2005.
Entergy New Orleans
Entergy New Orleans’ electric rate schedules include a fuel
adjustment tariff designed to reflect no more than targeted fuel and
purchased power costs adjusted by a surcharge or credit for deferred
fuel expense arising from monthly reconciliations, including
carrying charges. Entergy New Orleans’ gas rate schedules include
estimates for the billing month adjusted by a surcharge or credit for
deferred fuel expense arising from monthly reconciliations,
including carrying charges. In June and November 2004, the City
Council passed resolutions implementing a package of measures
developed by Entergy New Orleans and the Council Advisors to
protect customers from potential gas price spikes during the 2004 -
2005 winter heating season. These measures include: maintaining
EntergyNew Orleans’ financial hedging plan for its purchase of
wholesale gas, and deferral of collection of up to $6.2 million of gas
costs associated with a cap on the purchased gas adjustment in
November and December 2004 and in the event that the average
residential customer’s gas bill were to exceed a threshold level. The
deferrals resulting from these caps will receive accelerated recovery
over a seven-month period beginning in April 2005.
In November 2004, the City Council directed Entergy New
Orleans to confer with the Council Advisors regarding possible
modification of the current gas cost collection mechanism in order
to address concerns regarding its fluctuations particularly during the
winter heating season.
Retail Rate Proceedings
Filings with the APSC (Entergy Arkansas)
Nosignificant retail rate proceedings arepending in Arkansas at
this time.
NOTES to CONSOLIDATED FINANCIAL STATEMENTS continued