Entergy 2009 Annual Report Download - page 41

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
37
changes in the treatment of interruptible load in the allocation of capacity costs by the Utility operating companies.
The FERC also deferred further action on the question of whether it provided sufficient rationale for not ordering
refunds, and whether it impermissibly delayed implementation of the bandwidth remedy, until resolution of this paper
hearing.
Entergy's Utility Operating Companies' Compliance Filing
In April 2006, the Utility operating companies filed with the FERC their compliance filing to implement the
provisions of the FERC's decision. The filing amended the System Agreement to provide for the calculation of
production costs, average production costs, and payments/receipts among the Utility operating companies to the
extent required to maintain rough production cost equalization pursuant to the FERC's decision. The FERC accepted
the compliance filing in November 2006, with limited modifications. Provisions of the compliance filing as approved
by the FERC include: the first payments commenced in June 2007, rather than earlier; interest is not required on the
unpaid balance; and any payments will be made over seven months, rather than 12. In April 2007, the FERC denied
various requests for rehearing, with one exception regarding the issue of retrospective refunds. That issue will be
addressed subsequent to the remanded proceeding involving the interruptible load decision discussed further below in
this section under "Interruptible Load Proceeding."
Rough Production Cost Equalization Rates
Each year Entergy has filed with the FERC the rates to implement the FERC's orders in the System
Agreement proceeding. These filings show the following payments/receipts among the Utility operating companies
are necessary to achieve rough production cost equalization as defined by the FERC's orders:
2007 Payments or
(Receipts) Based on
2006 Costs
2008 Payments or
(Receipts) Based on
2007 Costs
2009 Payments or
(Receipts) Based on
2008 Costs
(In Millions)
Entergy Arkansas $252 $252 $390
Entergy Gulf States Louisiana ($120) ($124) ($107)
Entergy Louisiana ($91) ($36) ($140)
Entergy Mississippi ($41) ($20) ($24)
Entergy New Orleans $- ($7) $-
Entergy Texas ($30) ($65) ($119)
Management believes that any changes in the allocation of production costs resulting from the FERC's
decision and related retail proceedings should result in similar rate changes for retail customers. The APSC has
approved a production cost allocation rider for recovery from customers of the retail portion of the costs allocated to
Entergy Arkansas. See "Fuel and purchased power cost recovery, Entergy Texas," in Note 2 to the financial
statements for discussion of a PUCT decision that Entergy Texas is currently challenging regarding the rough
production cost equalization payments that could result in $18.6 million of trapped costs between Entergy's Texas
and Louisiana jurisdictions.
Based on the FERC's April 27, 2007 order on rehearing that is discussed above, in the second quarter 2007
Entergy Arkansas recorded accounts payable and Entergy Gulf States Louisiana, Entergy Louisiana, Entergy
Mississippi, and Entergy Texas recorded accounts receivable to reflect the rough production cost equalization
payments and receipts required to implement the FERC's remedy based on calendar year 2006 production costs.
Entergy Arkansas recorded a corresponding regulatory asset for its right to collect the payments from its customers,
and Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, and Entergy Texas recorded
corresponding regulatory liabilities for their obligations to pass the receipts on to their customers. The companies
39