Entergy 2008 Annual Report Download - page 65

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ENTERGY CORPORATION AND SUBSIDIARIES 2008
63
Notes to Consolidated Financial Statements continued
Non-Utility
2007 Entergy Utility Nuclear All Other
Production:
Nuclear $ 8,031 $ 5,654 $2,377 $ –
Other 1,571 1,364 – 207
Transmission 2,569 2,539 30 –
Distribution 5,206 5,206 – –
Other 1,626 1,341 254 31
Construction work in progress 1,060 859 192 9
Nuclear fuel (leased and owned) 911 400 511 –
Property, plant, and
equipment - net $20,974 $17,363 $3,364 $247
Depreciation rates on average depreciable property for Entergy
approximated 2.7% in 2008, 2007, and 2006. Included in these rates
are the depreciation rates on average depreciable utility property of
2.7% in 2008, 2.6% in 2007, and 2.6% in 2006 and the depreciation
rates on average depreciable non-utility property of 3.7% in 2008,
3.6% in 2007, and 3.6% in 2006.
“Non-utility property - at cost (less accumulated depreciation)”
for Entergy is reported net of accumulated depreciation of $185.8
million and $177.1 million as of December 31, 2008 and 2007,
respectively.
JO I N T L Y -OW N E D GE N E R A T I N G ST A T I O N S
Certain Entergy subsidiaries jointly own electric generating facilities
with affiliates or third parties. The investments and expenses
associated with these generating stations are recorded by the Entergy
subsidiaries to the extent of their respective undivided ownership
interests. As of December 31, 2008, the subsidiaries’ investment and
accumulated depreciation in each of these generating stations were
as follows (dollars in millions):
Total
Fuel Megawatt Accumulated
Generating Stations Type Capability(1) Ownership Investment Depreciation
Utility Business:
Entergy Arkansas
Independence
Unit 1 Coal 836 31.50% $ 121 $ 88
Common Facilities Coal 15.75% $ 31 $ 22
White Bluff
Units 1 and 2 Coal 1,655 57.00% $ 483 $ 313
Entergy Gulf States Louisiana
Roy S. Nelson
Unit 6 Coal 550 40.25% $ 234 $ 157
Big Cajun 2
Unit 3 Coal 588 24.15% $ 139 $ 86
Entergy Mississippi
Independence
Units 1 and 2 and
Common Facilities Coal 1,678 25.00% $ 243 $ 128
Entergy Texas
Roy S. Nelson
Unit 6 Coal 550 29.75% $ 173 $ 114
Big Cajun 2
Unit 3 Coal 588 17.85% $ 102 $ 62
System Energy
Grand Gulf
Unit 1 Nuclear 1,265 90.00%(2) $3,794 $2,207
Non-Nuclear Wholesale Assets:
Independence
Unit 2 Coal 842 14.37% $ 73 $ 37
Common Facilities Coal 7.18% $ 15 $ 14
Harrison County Gas 550 60.90% $ 212 $ 24
(1) “Total Megawatt Capability” is the dependable load carrying capability as
demonstrated under actual operating conditions based on the primary fuel
(assuming no curtailments) that each station was designed to utilize.
(2) Includes an 11.5% leasehold interest held by System Energy. System
Energy’s Grand Gulf lease obligations are discussed in Note 10 to the
financial statements.
NU C L E A R RE F U E L I N G OU T A G E CO S T S
Nuclear refueling outage costs are deferred during the outage and
amortized over the estimated period to the next outage because
these refueling outage expenses are incurred to prepare the
units to operate for the next operating cycle without having to
be taken off line. Prior to 2006, River Bend’s costs were accrued
in advance of the outage and included in the cost of service used
to establish retail rates. Entergy Gulf States Louisiana relieved the
accrued liability when it incurred costs during the next River Bend
outage. In 2006, Entergy Gulf States Louisiana adopted FASB Staff
Position (FSP) No. AUG AIR-1, “Accounting for Planned Major
Maintenance Activities,” for its River Bend nuclear refueling
outage costs and now accounts for these costs in the same manner
as Entergy’s other subsidiaries. Adoption of FSP No. AUG AIR-1
resulted in an immaterial retrospective adjustment to Entergy’s
and Entergy Gulf States Louisiana’s retained earnings balance.
AL L O W A N C E F O R FU N D S US E D DU R I N G CO N S T R U C T I O N
(AFUDC)
AFUDC represents the approximate net composite interest cost
of borrowed funds and a reasonable return on the equity funds
used for construction by the Registrant Subsidiaries. AFUDC
increases both the plant balance and earnings and is realized in
cash through depreciation provisions included in rates.
IN C O M E TA X E S
Entergy Corporation and the majority of its subsidiaries file a
United States consolidated federal income tax return. Income
taxes are allocated to the subsidiaries in proportion to their
contribution to consolidated taxable income. In accordance with
SFAS 109, “Accounting for Income Taxes,” deferred income taxes
are recorded for all temporary differences between the book and
tax basis of assets and liabilities, and for certain credits available
for carryforward. Entergy Louisiana, formed December 31, 2005,
was not a member of the consolidated group in 2006 and 2007 and
filed a separate federal income tax return. Beginning January 1,
2008, Entergy Louisiana joined the Entergy consolidated federal
income tax return.
Deferred tax assets are reduced by a valuation allowance when,
in the opinion of management, it is more likely than not that some
portion of the deferred tax assets will not be realized. Deferred tax
assets and liabilities are adjusted for the effects of changes in tax
laws and rates in the period in which the tax or rate was enacted.
Investment tax credits are deferred and amortized based upon
the average useful life of the related property, in accordance with
ratemaking treatment.