Entergy 2008 Annual Report Download - page 76

7474
ENTERGY CORPORATION AND SUBSIDIARIES 2008
Notes to Consolidated Financial Statements continued
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included in Entergy Louisiana’s filing. Entergy Louisiana disagrees
with the majority of the proposed disallowances and a hearing on
the disputed issues was held in late-September/early-October
2008. Post-hearing briefing concluded in mid-December 2008.
In May 2006, Entergy Louisiana made its formula rate plan filing
with the LPSC for the 2005 test year. Entergy Louisiana modified
the filing in August 2006 to reflect a 9.45% return on equity which
is within the allowed bandwidth. The modified filing includes an
increase of $24.2 million for interim recovery of storm costs from
Hurricanes Katrina and Rita and a $119.2 million rate increase to
recover LPSC-approved incremental deferred and ongoing capacity
costs. The filing requested recovery of approximately $50 million
for the amortization of capacity deferrals over a three-year period,
including carrying charges, and approximately $70 million for
ongoing capacity costs. The increase was implemented, subject
to refund, with the first billing cycle of September 2006. Entergy
Louisiana subsequently updated its formula rate plan rider to reflect
adjustments proposed by the LPSC Staff with which it agrees. The
adjusted return on equity of 9.56% remains within the allowed
bandwidth. Ongoing and deferred incremental capacity costs were
reduced to $118.7 million. The updated formula rate plan rider
was implemented, subject to refund, with the first billing cycle of
October 2006. An uncontested stipulated settlement was filed in
February 2008 that will leave the current base rates in place, and
the LPSC approved the settlement in March 2008. In the settlement
Entergy Louisiana agreed to credit customers $7.2 million, plus
$0.7 million of interest, for customer contributions to the Central
States Compact in Nebraska that was never completed and agreed
to a one-time $2.6 million deduction from the deferred capacity cost
balance. The credit, for which Entergy Louisiana had previously
recorded a provision, was made in May 2008.
(Entergy Gulf States Louisiana)
In May 2008, Entergy Gulf States Louisiana made its formula
rate plan filing with the LPSC for the 2007 test year. The filing
reflected a 9.26% return on common equity, which is below the
allowed earnings bandwidth, and indicated a $5.4 million revenue
deficiency, offset by a $4.1 million decrease in required additional
capacity costs. Entergy Gulf States Louisiana implemented a
$20.7 million formula rate plan decrease, subject to refund, effective
the first billing cycle in September 2008. The decrease includes
removal of interim storm cost recovery and a reduction in the storm
damage accrual. Entergy Gulf States Louisiana then implemented a
$16.0 million formula rate plan increase, subject to refund, effective
the first billing cycle in October 2008 to collect previously deferred
and ongoing costs associated with LPSC approved additional capacity,
including the Ouachita power plant. In November 2008 Entergy
Gulf States Louisiana filed to implement an additional increase of
$9.3 million to recover the costs of a new purchased power agreement.
Consideration of the formula rate plan filing is pending.
In May 2007, Entergy Gulf States Louisiana made its formula
rate plan filing with the LPSC for the 2006 test year. The filing
reflected 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
modified the formula rate plan filing to reflect a 10.07% return on
common equity, which is still within the allowed bandwidth. The
modified filing also reflected implementation of a $4.1 million rate
increase, subject to refund, attributable to recovery of additional
LPSC-approved incremental deferred and ongoing capacity costs.
The rate decrease anticipated in the original filing 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 had not yet occurred. In October 2007, Entergy Gulf States
Louisiana implemented a $16.4 million formula rate plan decrease
that is due to the reclassification of certain franchise fees from base
rates to collection via a line item on customer bills pursuant to an
LPSC order. The LPSC staff issued its final report in December 2007,
indicating a $1.6 million decrease in formula rate plan revenues for
which interim rates were already in effect. In addition, the LPSC staff
recommended that the LPSC give a one-year extension of Entergy
Gulf States Louisiana’s formula rate plan to synchronize with the
final 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 filed in February 2008 that
will leave the current base rates in place and extend the formula
rate plan for one year, and the LPSC approved the settlement in
March 2008.
In May 2006, Entergy Gulf States Louisiana made its formula rate
plan filing with the LPSC for the 2005 test year. Entergy Gulf States
Louisiana modified the filing in August 2006 to reflect an 11.1%
return on common equity which is within the allowed bandwidth.
The modified filing 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. The increase was implemented
with the first billing cycle of September 2006. In May 2007 the LPSC
approved a settlement between Entergy Gulf States Louisiana
and the LPSC staff, affirming the rates that were implemented in
September 2006.
In June 2005, Entergy Gulf States Louisiana made its formula
rate plan filing 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 (Entergy Gulf States Louisiana)
In January 2009, Entergy Gulf States Louisiana filed with the LPSC
its gas rate stabilization plan for the test year ending September 30,
2008. The filing showed a revenue deficiency of $530 thousand
based on a return on common equity mid-point of 10.5%.
In January 2008, Entergy Gulf States Louisiana filed with the LPSC
its gas rate stabilization plan for the test year ending September 30,
2007. The filing showed a revenue deficiency of $3.7 million based
on a return on common equity mid-point of 10.5%. Entergy Gulf
States Louisiana implemented a $3.4 million rate increase in April
2008 pursuant to an uncontested agreement with the LPSC staff.
In January 2007, Entergy Gulf States Louisiana filed with the LPSC
its gas rate stabilization plan for the test year ending September 30,
2006. The filing showed a revenue deficiency of $3.5 million based
on a return on common equity mid-point of 10.5%. In March 2007,
Entergy Gulf States Louisiana filed a set of rate and rider schedules
that reflected all proposed LPSC staff adjustments and implemented
a $2.4 million base rate increase effective with the first billing cycle of
April 2007 pursuant to the rate stabilization plan.
In January 2006, Entergy Gulf States Louisiana filed with the
LPSC its gas rate stabilization plan. The filing showed a revenue