Entergy 2006 Annual Report Download - page 79

ENTERGY CORPORATION AND SUBSIDIARIES 2
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the case to $8.3 million. Both Entergy Gulf States and certain cities
served by Entergy Gulf States filed motions for rehearing on these
issues which were denied by the PUCT. Entergy Gulf States and cer-
tain cities filed appeals to the Travis County District Court. Based on
the Texas Supreme Court decision described below covering these
issues for previous periods, Entergy Gulf States is withdrawing its
appeal of this decision.
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 challenged the PUCT’s disallowance 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 consid-
eration 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. In September 2006, the Texas
Supreme Court denied the appeal. Entergy Gulf States has decided
not to continue to pursue this appeal. Entergy Gulf States recorded
reserves for the amounts at issue in this appeal and the appeal of the
subsequent case with identical issues and they have been written off.
Entergy Gulf States (Louisiana) and Entergy Louisiana
In Louisiana, Entergy Gulf States and Entergy Louisiana recover elec-
tric 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 proceed-
ing 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 an alleged failure to
uprate Waterford 3 in a timely manner. This issue was resolved with
the March 2005 global settlement. 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
and to include the years 2002 through 2004. Hearings were held in
November 2006 and post-hearing briefs were filed in January and
February 2007.
In January 2003, the LPSC authorized its staff to initiate a proceed-
ing 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. 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 activ-
ities of Entergy Louisiana and Entergy Gulf States for the period
January 1, 2005 through October 31, 2005. In April 2006, the LPSC
accepted the LPSC Staff’s audit report finding that the prices paid for
natural gas and purchased power were reasonable and that given the
market conditions surrounding Hurricanes Katrina and Rita, Entergy
Louisiana and Entergy Gulf States acted reasonably and prudently in
response to an extremely difficult environment.
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 refunded through the energy
cost recovery rider in the second and third quarters of 2005.
Entergy New Orleans
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 Entergy New 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 deferral of $1.7 million resulting from
these caps was recovered over a seven-month period that began in
April 2005.
In November 2004, the City Council directed Entergy New
Orleans to confer with the Council Advisors regarding possible mod-
ification of the gas cost collection mechanism in order to address
concerns regarding its fluctuations, particularly during the winter
heating season. In June 2005, Entergy New Orleans filed a new pur-
chased gas adjustment tariff (PGA tariff) with the City Council. The
City Council approved the PGA tariff which became effective with
billings in October 2005. In October 2005, the City Council
approved modifications to the PGA tariff that became effective in
November 2005. The modifications are intended to minimize fluctu-
ations in PGA rates during the winter months.
STORM COST RECOVERY FILINGS WITH RETAIL REGULATORS
Entergy Gulf States – Texas
In July 2006, Entergy Gulf States filed an application with the PUCT
with respect to the $393.2 million of Hurricane Rita reconstruction
costs incurred in its Texas retail jurisdiction through March 31, 2006.
The filing asked the PUCT to determine that $393.2 million is the
NOTESto CONSOLIDATED FINANCIAL STATEMENTS continued
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