Entergy 2007 Annual Report Download - page 73

71
Entergy Corporation and Subsidiaries 2007
Notes to Consolidated Financial Statements continued
(Entergy Gulf States Louisiana)
In May 2007, Entergy Gulf States Louisiana made its formula rate
plan ling with the LPSC for the 2006 test year. e ling reected
a 10.0% return on common equity, which is within the allowed
earnings bandwidth, and an anticipated formula rate plan decrease
of $23 million annually attributable to adjustments outside of the
formula rate plan sharing mechanism related to capacity costs and the
anticipated securitization of storm costs related to Hurricane Katrina
and Hurricane Rita and the securitization of a storm reserve. In
September 2007, Entergy Gulf States Louisiana modied the formula
rate plan ling to reect a 10.07% return on common equity, which is
still within the allowed bandwidth. e modied ling also reected
implementation of a $4.1 million rate increase, subject to refund,
attributable to recovery of additional LPSC-approved incremental
deferred and ongoing capacity costs. e rate decrease anticipated
in the original ling did not occur because of the additional capacity
costs approved by the LPSC, and because securitization of storm
costs associated with Hurricane Katrina and Hurricane Rita and the
establishment of a storm reserve have not yet occurred. Entergy Gulf
States Louisiana is currently exploring its securitization options. In
October 2007, Entergy Gulf States Louisiana implemented a $16.4
million formula rate plan decrease that is due to the reclassication
of certain franchise fees from base rates to collection via a line item
on customer bills pursuant to an LPSC order. e LPSC sta issued
its nal report in December 2007, indicating a $1.6 million decrease
in formula rate plan revenues for which interim rates were already in
eect. In addition, the LPSC sta recommended that the LPSC give
a one-year extension of Entergy Gulf States Louisiana’s formula rate
plan to synchronize with the nal year of Entergy Louisiana’s formula
rate plan, or alternatively, to extend the formula rate plan for a longer
period. Entergy Gulf States Louisiana indicated it is amenable to a
one-year extension. An uncontested stipulated settlement was led in
February 2008 that will leave the current base rates in place.
In May 2006, Entergy Gulf States Louisiana made its formula rate
plan ling with the LPSC for the 2005 test year. Entergy Gulf States
Louisiana modied the ling in August 2006 to reect an 11.1%
return on common equity which is within the allowed bandwidth. e
modied ling includes a formula rate plan increase of $17.2 million
annually that provides for 1) interim recovery of $10.5 million of storm
costs from Hurricane Katrina and Hurricane Rita and 2) recovery of
$6.7 million of LPSC-approved incremental deferred and ongoing
capacity costs. e increase was implemented with the rst billing
cycle of September 2006. In May 2007 the LPSC approved a settlement
between Entergy Gulf States Louisiana and the LPSC sta, arming
the rates that were implemented in September 2006.
In June 2005, Entergy Gulf States Louisiana made its formula
rate plan ling with the LPSC for the test year ending December 31,
2004. In March 2006, the LPSC approved an uncontested stipulated
settlement that included a revenue requirement increase of $36.8
million, including increases related to the formula rate plan 2004 test
year revenue requirement and the capacity costs associated with the
purchase of power from the Perryville power plant.
Retail Rates – Gas
In January 2008, Entergy Gulf States Louisiana led with the LPSC its
gas rate stabilization plan for the test year ending September 30, 2007.
e ling showed a revenue deciency of $3.7 million based on a return
on common equity mid-point of 10.5%.
In January 2007, Entergy Gulf States Louisiana led with the LPSC its
gas rate stabilization plan for the test year ending September 30, 2006.
e ling showed a revenue deciency of $3.5 million based on a return
on common equity mid-point of 10.5%. In March 2007, Entergy Gulf
States Louisiana led a set of rate and rider schedules that reected all
proposed LPSC sta adjustments and implemented a $2.4 million base
rate increase eective with the rst billing cycle of April 2007 pursuant
to the rate stabilization plan.
In January 2006, Entergy Gulf States Louisiana led with the LPSC
its gas rate stabilization plan. e ling showed a revenue deciency
of $4.1 million based on an ROE mid-point of 10.5%. In May 2006,
Entergy Gulf States Louisiana implemented a $3.5 million rate increase
pursuant to an uncontested agreement with the LPSC Sta.
In June 2005, the LPSC unanimously approved Entergy Gulf States
Louisiana’s proposed settlement that included a $5.8 million gas base
rate increase eective the rst billing cycle of July 2005 and a rate
stabilization plan with an ROE mid-point of 10.5%.
Filings with the MPSC
Formula Rate Plan Filings
In March 2007, Entergy Mississippi made its annual scheduled
formula rate plan ling for the 2006 test year with the MPSC. e ling
showed that an increase of $12.9 million in annual electric revenues
is warranted. In June 2007 the MPSC approved a joint stipulation
between Entergy Mississippi and the Mississippi Public Utilities sta
that provides for a $10.5 million rate increase, which was eective
beginning with July 2007 billings.
In March 2006, Entergy Mississippi made its annual scheduled
formula rate plan ling with the MPSC. e ling was amended by
an April 2006 ling. e amended ling showed that an increase of
$3.1 million in electric revenues is warranted. e MPSC approved
a settlement providing for a $1.8 million rate increase, which was
implemented in August 2006.
Power Management Rider
In November 2005, the MPSC approved the purchase of the
480MW Attala power plant. In December 2005, the MPSC issued
an order approving the investment cost recovery through its power
management rider and limited the recovery to a period that begins
with the closing date of the purchase and ends the earlier of the date
costs are incorporated into base rates or December 31, 2006. As a
consequence of the events surrounding Entergy Mississippi’s ongoing
eorts to recover storm restoration costs associated with Hurricane
Katrina, in October 2006, the MPSC approved a revision to Entergy
Mississippi’s power management rider. e revision has the eect of
allowing Entergy Mississippi to recover the annual ownership costs
of the Attala plant until such time as there has been a resolution of
Entergy Mississippi’s recovery of its storm restoration costs and a
general rate case can be led.
Filings with the City Council
Formula Rate Plans and Storm-Related Riders
In June 2006, Entergy New Orleans made its annual formula rate plan
lings with the City Council. e lings presented various alternatives
to reect the eect of Entergy New Orleans’ lost customers and
decreased revenue following Hurricane Katrina. e alternative that
Entergy New Orleans recommended adjusts for lost customers and
assumes that the City Council’s June 2006 decision to allow recovery of
all Grand Gulf costs through the fuel adjustment clause stays in place
during the rate-eective period (a signicant portion of Grand Gulf
costs was previously recovered through base rates).
At the same time as it made its formula rate plan lings, Entergy New
Orleans also led with the City Council a request to implement two
storm-related riders. With the rst rider, Entergy New Orleans sought