Entergy 2005 Annual Report Download - page 73

ENTERGY CORPORATION AND SUBSIDIARIES 2005
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States filed motions for rehearing on these issues which were denied
by the PUCT. Entergy Gulf States and certain Cities filed appeals
to the Travis County District Court. The appeals are pending.
Any disallowance will be netted against Entergy Gulf States’
under-recovered costs and will be included in its deferred fuel
costs balance.
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 million of fuel and purchased power costs. As part of 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 that 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 disal-
lowance of approximately $4.2 million related to imputed capacity
costs and its disallowance related to costs for energy delivered from
the 30% non-regulated share of River Bend. The case was argued
before the Travis County District Court in August 2003 and the
Travis County District Court judge affirmed the PUCT’s order. In
October 2003, Entergy Gulf States appealed this decision to the
Court of Appeals. Oral argument before the appellate court
occurred in September 2004, and the Court denied Entergy Gulf
States’ appeal. In October 2005, Entergy Gulf States filed a petition
for review by the Texas Supreme Court, and in December 2005, the
Texas Supreme Court requested that responses be filed to Entergy
Gulf States’ petition as part of its ongoing consideration of whether
to exercise its discretion to grant review of this matter. Those
responses and Entergy Gulf States’ reply to those responses were
filed in January 2006.
Entergy Gulf States (Louisiana) and Entergy Louisiana
In Louisiana, Entergy Gulf States and Entergy Louisiana recover
electric fuel and purchased power costs for the upcoming month
based upon the 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 pro-
ceeding 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 failure to 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 global settlement approved by the LPSC in March 2005, dis-
cussed below in “Retail Rate Proceedings,” resolves the uprate
imprudence disallowance and is no longer at issue in this proceed-
ing. Subsequent to the issuance of the audit report, the scope of this
docket was expanded to include a review of annual reports on fuel
and purchased power transactions with affiliates and a prudence
review of transmission planning issues. Also, in July 2005, the
LPSC expanded the audit to include the years 2002 through 2004.
A procedural schedule has been established and LPSC staff and
intervenor testimony is due in April 2006.
In January 2003, 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 gen-
eral 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 proce-
dural schedule extending beyond the discovery stage has not yet
been established, and the LPSC staff has not yet issued its audit
report. In June 2005, the LPSC expanded the audit to include the
years through 2004.
In November 2005, the LPSC authorized its staff to initiate an
expedited proceeding to audit the fuel and power procurement
activities of Entergy Louisiana and Entergy Gulf States for the period
January 1, 2005 through October 31, 2005.
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 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 were deferred from the first
quarter 2005 energy cost recovery rider adjustment calculation. The
deferred amount of $21.3 million plus carrying charges was refund-
ed through the energy cost recovery rider in the second and third
quarters of 2005.
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.
RETAIL RATE PROCEEDINGS
Filings with the APSC
Retail Rates
No significant retail rate proceedings are pending in Arkansas at
this time.
Filings with the PUCT and Texas Cities
Retail Rates
Entergy Gulf States is operating in Texas under a base rate freeze
that has remained in effect during the delay in the implementation
of retail open access in Entergy Gulf States’ Texas service territory.
As discussed in “Electric Industry Restructuring and the Continued
Application of SFAS 71” below, a Texas law was enacted in June
2005 which includes provisions in the Texas legislation regarding
Entergy Gulf States’ ability to file a general rate case and to file for
recovery of transition to competition costs. As authorized by the
legislation, in August 2005, Entergy Gulf States filed with the
PUCT an application for recovery of its transition to competition
costs. Entergy Gulf States requested recovery of $189 million in
transition to competition costs through implementation of a 15-year
rider to be effective no later than March 1, 2006. The $189 million
NOTES to CONSOLIDATED FINANCIAL STATEMENTS continued