Entergy 2009 Annual Report Download - page 52

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Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
48
costs will affect net income, only to the extent that the estimate of any reduction in the liability exceeds the
amount of the undepreciated asset retirement cost at the date of the revision, for unregulated portions of
Entergy's business. Any increases in the liability recorded due to such changes are capitalized and
depreciated over the asset's remaining economic life.
Spent Fuel Disposal - Federal law requires the DOE to provide for the permanent storage of spent nuclear
fuel, and legislation has been passed by Congress to develop this repository at Yucca Mountain, Nevada.
However the DOE has not yet begun accepting spent nuclear fuel and is in non-compliance with federal law.
The DOE continues to delay meeting its obligation and Entergy is continuing to pursue damages claims
against the DOE for its failure to provide timely spent fuel storage. Until a federal site is available, however,
nuclear plant operators must provide for interim spent fuel storage on the nuclear plant site, which can
require the construction and maintenance of dry cask storage sites or other facilities. The costs of developing
and maintaining these facilities can have a significant effect (as much as an average of 20% to 30% of
estimated decommissioning costs). Entergy's decommissioning studies may include cost estimates for spent
fuel storage. However, these estimates could change in the future based on the timing of the opening of an
appropriate facility designated by the federal government to receive spent nuclear fuel.
Technology and Regulation – Over the past several years, more practical experience with the actual
decommissioning of facilities has been gained and that experience has been incorporated in to Entergy's
current decommissioning cost estimates. However, given the long duration of decommissioning projects,
additional experience, including technological advancements in decommissioning, could occur and affect
current cost estimates. If regulations regarding nuclear decommissioning were to change, this could have a
potentially significant effect on cost estimates. The effect of these potential changes is not presently
determinable.
Interest Rates - The estimated decommissioning costs that form the basis for the decommissioning liability
recorded on the balance sheet are discounted to present values using a credit-adjusted risk-free rate. When
the decommissioning cost estimate is significantly changed requiring a revision to the decommissioning
liability and the change results in an increase in cash flows, that increase is discounted using a current credit-
adjusted risk-free rate. Under accounting rules, if the revision in estimate results in a decrease in estimated
cash flows, that decrease is discounted using the previous credit-adjusted risk-free rate. Therefore, to the
extent that one of the factors noted above changes resulting in a significant increase in estimated cash flows,
current interest rates will affect the calculation of the present value of the additional decommissioning
liability.
In the first quarter 2009, Entergy Arkansas recorded a revision to its estimated decommissioning cost
liabilities for ANO 1 and 2 as a result of a revised decommissioning cost study. The revised estimates resulted in an
$8.9 million reduction in its decommissioning liability, along with a corresponding reduction in the related regulatory
asset.
In the second quarter 2009, System Energy recorded a revision to its estimated decommissioning cost
liability for Grand Gulf as a result of a revised decommissioning cost study. The revised estimate resulted in a $4.2
million reduction in its decommissioning liability, along with a corresponding reduction in the related regulatory
asset.
In the fourth quarter 2009, Entergy Gulf States Louisiana recorded a revision to its estimated
decommissioning cost liability for River Bend as a result of a revised decommissioning cost study. The revised
estimate resulted in a $78.7 million increase in its decommissioning liability, along with a corresponding increase in
the related asset retirement obligation asset that will be depreciated over the remaining life of the unit.
In the third quarter 2008, Entergy's Non-Utility Nuclear business recorded an increase of $13.7 million in
decommissioning liabilities for certain of its plants as a result of revised decommissioning cost studies. The revised
estimates resulted in the recognition of a $13.7 million asset retirement obligation asset that will be depreciated over
the remaining life of the units.
50