Entergy 2007 Annual Report Download - page 88

86
Entergy Corporation and Subsidiaries 2007
Notes to Consolidated Financial Statements continued
e cumulative decommissioning and retirement cost liabilities and
expenses recorded in 2007 by Entergy were as follows (in millions):
(a) Represents the $3.1 million allocated to Entergy Texas as part of the
jurisdictional separation.
(b) The Non-Utility Nuclear liability as of December 31, 2006 includes
$219.7 million for the Palisades nuclear plant which was acquired in
April 2007.
Entergy periodically reviews and updates estimated decommissioning
costs. e actual decommissioning costs may vary from the estimates
because of regulatory requirements, changes in technology, and
increased costs of labor, materials, and equipment. As described below,
during 2005, 2006, and 2007 Entergy updated decommissioning cost
estimates for certain Non-Utility Nuclear plants.
In the fourth quarter 2007, Entergy’s Non-Utility Nuclear business
recorded an increase of $100 million in decommissioning liabilities
for certain of its plants as a result of revised decommissioning cost
studies. e revised estimates resulted in the recognition of a $100
million asset retirement obligation asset that will be depreciated over
the remaining life of the units.
In the third quarter 2006, Entergy’s Non-Utility Nuclear business
recorded a reduction of $27.0 million in decommissioning liability for
a plant as a result of a revised decommissioning cost study and changes
in assumptions regarding the timing of when decommissioning of the
plant will begin. e revised estimate resulted in miscellaneous income
of $27.0 million ($16.6 million net-of-tax), reecting the excess of
the reduction in the liability over the amount of undepreciated asset
retirement cost recorded at the time of adoption of SFAS 143.
In the rst quarter 2005, Entergy’s Non-Utility Nuclear business
recorded a reduction of $26.0 million in its decommissioning cost
liability in conjunction with a new decommissioning cost study as a
result of revised decommissioning costs and changes in assumptions
regarding the timing of the decommissioning of a plant. e revised
estimate resulted in miscellaneous income of $26.0 million ($15.8
million net-of-tax), reecting the excess of the reduction in the liability
over the amount of undepreciated retirement cost recorded at the time
of adoption of SFAS 143.
For the Indian Point 3 and FitzPatrick plants purchased in 2000,
NYPA retained the decommissioning trusts and the decommissioning
liability. NYPA and Entergy executed decommissioning agreements,
which specify their decommissioning obligations. NYPA has the right
to require Entergy to assume the decommissioning liability provided
that it assigns the corresponding decommissioning trust, up to a
specied level, to Entergy. If the decommissioning liability is retained
by NYPA, Entergy will perform the decommissioning of the plants
at a price equal to the lesser of a pre-specied level or the amount in the
decommissioning trusts. Entergy believes that the amounts available to it
under either scenario are sucient to cover the future decommissioning
costs without any additional contributions to the trusts.
Entergy maintains decommissioning trust funds that are committed
to meeting the costs of decommissioning the nuclear power plants. e
fair values of the decommissioning trust funds and the related asset
retirement obligation regulatory assets of Entergy as of December 31,
2007 are as follows (in millions):
Decommissioning Trust Fair Values Regulatory Asset
Utility:
ANO 1 and ANO 2 $ 466.3 $139.4
River Bend $ 366.1 $ 5.9
Waterford 3 $ 222.0 $ 66.2
Grand Gulf $ 315.7 $ 95.5
Non-Utility Nuclear $1,937.5 $ –
NOTE 10. LEASES
GE N E R A L
As of December 31, 2007, Entergy Corporation and subsidiaries had
capital leases and non-cancelable operating leases for equipment,
buildings, vehicles, and fuel storage facilities (excluding nuclear
fuel leases and the Grand Gulf and Waterford 3 sale and leaseback
transactions) with minimum lease payments as follows (in
thousands):
Operating Capital
Year Leases Leases
2008 $ 98,717 $ 3,553
2009 139,188 2,037
2010 60,982 2,037
2011 44,923 2,037
2012 31,567 2,037
Years thereaer 132,884 3,657
Minimum lease payments 508,261 15,358
Less: Amount representing interest – 3,361
Present value of net minimum lease payments $508,261 $11,997
Total rental expenses for all leases (excluding nuclear fuel leases
and the Grand Gulf and Waterford 3 sale and leaseback transactions)
amounted to $78.8 million in 2007, $78.0 million in 2006, and $71.2
million in 2005.
NU C L E A R FU E L LE A S E S
As of December 31, 2007, arrangements to lease nuclear fuel existed
in an aggregate amount up to $155 million for Entergy Arkansas, $100
million for Entergy Gulf States Louisiana, $110 million for Entergy
Louisiana, and $135 million for System Energy. As of December 31,
2007, the unrecovered cost base of nuclear fuel leases amounted to
approximately $124.6 million for Entergy Arkansas, $90.3 million for
Entergy Gulf States Louisiana, $44.5 million for Entergy Louisiana, and
$81.6 million for System Energy. e lessors nance the acquisition
and ownership of nuclear fuel through loans made under revolving
credit agreements, the issuance of commercial paper, and the issuance
of intermediate-term notes. e credit agreements for Entergy
Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, and
System Energy each have a termination date of August 12, 2010. e
termination dates may be extended from time to time with the consent
of the lenders. e intermediate-term notes issued pursuant to these
Liabilities
as of
Dec. 31, 2006 Accretion
Change
in Cash
Flow
Estimate Spending
Liabilities
as of
Dec. 31, 2007
Utility:
Entergy Arkansas $472.8 $32.8 $ – $ – $ 505.6
Entergy Gulf States
Louisiana $191.0 $16.9 $ –$ – $ 204.8
Entergy Louisiana $238.5 $18.6 $ – $ – $ 257.1
Entergy Mississippi $ 4.3 $ 0.2 $ – $ – $ 4.5
Entergy New Orleans $ 2.6 $ 0.2 $ – $ – $ 2.8
Entergy Texas $ 2.9 $ 0.2 $ – $ – $ 3.1
System Energy $342.8 $25.8 $ – $ – $ 368.6
Non-Utility Nuclear(b) $993.0 $78.6 $ 100.4 $ – $1,141.6
Other $ 1.1 $ – $ – $ – $ 1.1
(30.4)
(3.1)(a)