Entergy 2007 Annual Report Download - page 48

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Entergy Corporation and Subsidiaries 2007
with the FERC in April 2007 a request to make certain corrections and
limited modications to the current WPP tari provisions. e Utility
operating companies have led status reports with the FERC notifying
the FERC that, due to unexpected issues with the development of the
WPP soware and testing, the WPP is still not operational. e Utility
operating companies led a revised tari with the FERC on January
31, 2008 to address issues identied during the testing of the WPP. e
Utility operating companies have requested the FERC to rule on the
proposed amendments by April 30, 2008 and allow them to go into
eect May 11, 2008, following which the WPP would be expected to
become operational.
In March 2004, the APSC initiated a proceeding to review Entergy’s
proposal and compare the benets of such a proposal to the alternative
of Entergy joining the SPP RTO. e APSC sought comments from all
interested parties on this issue. Various parties, including the APSC
General Sta, led comments opposing the ICT proposal. A public
hearing has not been scheduled by the APSC at this time, although
Entergy Arkansas has responded to various APSC data requests. In
May 2004, Entergy Mississippi led a petition for review with the
MPSC requesting MPSC support for the ICT proposal. A hearing in
that proceeding was held in August 2004, and the MPSC has taken
no further action. Entergy New Orleans appeared before the Utility
Committee of the City Council in June 2005 to provide information on
the ICT proposal, and the Council has taken no further action. Entergy
Louisiana and Entergy Gulf States Louisiana led an application with
the LPSC requesting that the LPSC nd that the ICT proposal is
a prudent and appropriate course of action. A hearing in the LPSC
proceeding on the ICT proposal was held in October 2005, and the
LPSC voted to approve the ICT proposal in July 2006.
Available Flowgate Capacity (AFC) Proceeding
In April 2007 the FERC issued an order terminating the AFC hearing
involving Entergy because Entergy’s ICT has been installed. In
accordance with the provisions of the FERC order approving the ICT,
during the rst three quarters of 2007 the Utility operating companies
notied the FERC, the ICT, and the stakeholders that certain instances
had been identied in which soware errors related to the AFC
process had resulted in the reporting of inaccurate data. Following
the reporting of these errors, certain market participants continue to
urge the FERC to move forward with an AFC hearing in light of the
identied errors.
FERC Investigations
In 2005, the Utility operating companies notied the FERC’s Oce of
Market Oversight and Investigations (FERC enforcement) that certain
historic data related to the hourly AFC models was inadvertently
lost due to errors in the implementation of a data archiving process.
e data at issue is hourly AFC data for the nine-month period
April 27, 2004 through January 31, 2005. Subsequently, the Utility
operating companies notied FERC enforcement that: (1) Entergy
had identied certain instances in which transmission service either
was granted when there was insucient transmission capacity or
was not granted when there was sucient transmission capacity; and
(2) Entergy had failed to timely post to Entergy’s OASIS site certain
curtailment and schedule information. Entergy cooperated fully and
timely in the investigation of these instances. In January 2007, the
FERC approved a settlement agreement between the Utility operating
companies and the FERC enforcement sta resolving all issues arising
out of or related to these issues. e Order accepting the Stipulation
and Consent Agreement indicates that the matters “were generally the
result of low-level employees’ inadvertent actions, done without the
knowledge or acquiescence of senior management. e matters did
not reect undue preference or undue discrimination and resulted in
little or no quantiable harm.” Pursuant to the Stipulation and Consent
Agreement, Entergy agreed to pay a $2 million civil penalty and to
make a $1 million payment to the Nike/Entergy Green Schools for
New Orleans Partnership. Additionally, the Stipulation and Consent
Agreement required the establishment of a compliance plan that
includes independent auditing provisions.
Interconnection Orders
e Utility operating companies (except Entergy New Orleans)
have been parties to several proceedings before the FERC in which
independent generation entities (GenCos) seek refunds of monies that
the GenCos had previously paid to the Entergy companies for facilities
necessary to connect the GenCos’ generation facilities to Entergy’s
transmission system. As of December 31, 2007, the Utility operating
companies’ obligation resulting from the FERC’s decisions to grant
the GenCos refunds is approximately $105.4 million, including $26.7
million at Entergy Arkansas, $20.2 million at Entergy Louisiana, $39.9
million at Entergy Mississippi and $18.6 million at Entergy Texas.
To the extent the Utility operating companies have been ordered to
provide refunds, or may in the future be ordered to provide additional
refunds, the majority of these costs will qualify for inclusion in the
Utility operating companies’ rates. e recovery of these costs is not
automatic, however, especially at the retail level, where the majority
of the cost recovery would occur. With respect to the facilities for
which the FERC has ordered refunds, the ICT recently completed a
report evaluating the classication of facilities that have produced the
refunds. e Utility operating companies are reviewing the report and
will make appropriate lings with the FERC to implement the ICT’s
reclassications, which could reduce the amount of refunds not yet
credited against transmission charges.
EN E R G Y PO L I C Y AC T O F 2005
e Energy Policy Act of 2005 became law in August 2005. e
legislation contains electricity provisions that, among other things:
n฀ Repealed Public Utility Holding Company Act (PUHCA) 1935,
through enactment of PUHCA 2005, eective February 8, 2006;
PUHCA 2005 and/or related amendments to Section 203(a) of
the Federal Power Act (a) remove various limitations on Entergy
Corporation as a registered holding company under PUHCA 1935;
(b) require the maintenance and retention of books and records by
certain holding company system companies for inspection by the
FERC and state commissions, as appropriate; and (c) eectively leave
to the jurisdiction of the FERC (or state or local regulatory bodies,
as appropriate) (i) the issuance by an electric utility of securities; (ii)
(A) the disposition of jurisdictional FERC electric facilities by an
electric utility; (B) the acquisition by an electric utility of securities
of an electric utility; (C) the acquisition by an electric utility of
electric generating facilities (in each of the cases in (A), (B) and (C)
only in transactions in excess of $10 million); (iv) electric public
utility mergers; and (v) the acquisition by an electric public utility
holding company of securities of an electric public utility company
or its holding company in excess of $10 million or the merger of
electric public utility holding company systems. PUHCA 2005 and
the related FERC rule-making also provide a savings provision
which permits continued reliance on certain PUHCA 1935 rules and
orders aer the repeal of PUHCA 1935.
Management’s Financial Discussion and Analysis conti nued