Entergy 2009 Annual Report Download - page 79

Entergy Corporation and Subsidiaries
Notes to Financial Statements
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ANO 1 and 2 and Grand Gulf, had refueling outages in 2008, and the previous energy cost rate had been adjusted to
account for the replacement power costs that would be incurred while these units were down; 2) Entergy Arkansas
had a deferred fuel cost liability from over-recovered fuel costs at December 31, 2008, as compared to a deferred fuel
cost asset from under-recovered fuel costs at December 31, 2007; offset by 3) an increase in the fuel and purchased
power prices included in the calculation.
In August 2009, as provided for by its energy cost recovery rider, Entergy Arkansas filed with the APSC an
interim revision to its energy cost rate. The revised energy cost rate is a decrease from $0.01552/kWh to
$0.01206/kWh. The decrease was caused by a decrease in natural gas and purchased power prices from the levels
used in setting the rate in March 2009. The interim revised energy cost rate went into effect for the first billing cycle
of September 2009. In its order approving the new rate, the APSC ordered Entergy Arkansas to show cause why the
rate should not be further reduced. In its September 14, 2009 response, Entergy Arkansas explained that it used the
same methodology it had used in previous interim revisions, which is based on estimating what the rate would be in
the next annual update based on the information known at the time. There has been no further activity in this
proceeding.
APSC Investigations
In September 2005, Entergy Arkansas filed with the APSC an interim energy cost rate per the energy cost
recovery rider, which provides for an interim adjustment should the cumulative over- or under-recovery for the
energy period exceed 10 percent of the energy costs for that period. In early October 2005, the APSC initiated an
investigation into Entergy Arkansas' interim energy cost rate. The investigation is focused on Entergy Arkansas' 1)
gas contracting, portfolio, and hedging practices; 2) wholesale purchases during the period; 3) management of the
coal inventory at its coal generation plants; and 4) response to the contractual failure of the railroads to provide coal
deliveries. In March 2006, the APSC extended its investigation to cover the costs included in Entergy Arkansas'
March 2006 annual energy cost rate filing, and a hearing was held in the APSC energy cost recovery investigation in
October 2006.
In January 2007, the APSC issued an order in its review of the energy cost rate. The APSC found that
Entergy Arkansas failed to maintain an adequate coal inventory level going into the summer of 2005 and that Entergy
Arkansas should be responsible for any incremental energy costs resulting from two outages caused by employee and
contractor error. The coal plant generation curtailments were caused by railroad delivery problems and Entergy
Arkansas has since resolved litigation with the railroad regarding the delivery problems. The APSC staff was
directed to perform an analysis with Entergy Arkansas' assistance to determine the additional fuel and purchased
energy costs associated with these findings and file the analysis within 60 days of the order. After a final
determination of the costs is made by the APSC, Entergy Arkansas would be directed to refund that amount with
interest to its customers as a credit on the energy cost recovery rider. Entergy Arkansas requested rehearing of the
order. In March 2007, in order to allow further consideration by the APSC, the APSC granted Entergy Arkansas'
petition for rehearing and for stay of the APSC order.
In October 2008, Entergy Arkansas filed a motion to lift the stay and to rescind the APSC's January 2007
order in light of the arguments advanced in Entergy Arkansas' rehearing petition and because the value for Entergy
Arkansas' customers obtained through the resolved railroad litigation is significantly greater than the incremental cost
of actions identified by the APSC as imprudent. The APSC staff, the AEEC, and the Arkansas attorney general
support the lifting of the stay but request additional proceedings. In December 2008, the APSC denied the motion to
lift the stay pending resolution of Entergy Arkansas' rehearing request and of the unresolved issues in the proceeding.
The APSC ordered the parties to submit their unresolved issues list in the pending proceeding, which the parties have
done. In February 2010 the APSC denied Entergy Arkansas' request for rehearing, and scheduled a hearing for
September 2010 to determine the amount of damages, if any, that should be assessed against Entergy Arkansas.
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