Entergy 2009 Annual Report Download - page 81

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Entergy Corporation and Subsidiaries
Notes to Financial Statements
77
litigation in Louisiana. Entergy Mississippi and Entergy Services filed a response to the MPSC order stating that gas
from the Evangeline gas contract had been sold into the Entergy System exchange and had an effect on the costs paid
by Entergy Mississippi's customers. The MPSC's investigation is ongoing.
In August 2009 the MPSC retained an independent audit firm to audit Entergy Mississippi's fuel adjustment
clause submittals for the period October 2007 through September 2009. The independent audit firm submitted its
report to the MPSC in December 2009. The report does not recommend that any costs be disallowed for recovery.
The report did suggest that some costs, less than one percent of the fuel and purchased power costs recovered during
the period, may have been more reasonably charged to customers through base rates rather than through fuel charges,
but the report did not suggest that customers should not have paid for those costs. In November 2009 the MPSC also
retained another firm to review processes and practices related to fuel and purchased energy. The results of that
review are due to the MPSC in March 2010.
In January 2010 the MPSC issued an order certifying to the Mississippi Legislature the independent audit
report and the Public Utilities Staff's annual fuel audit report for the years ended September 30, 2008 and 2009,
which did not find any imprudent costs. The order stated that the MPSC will open a rulemaking docket to address
certain policy issues regarding allowable fuel adjustment costs, fuel adjustment mechanisms, and related matters.
Mississippi Attorney General Complaint
The Mississippi attorney general filed a complaint in state court in December 2008 against Entergy
Corporation, Entergy Mississippi, Entergy Services, and Entergy Power alleging, among other things, violations of
Mississippi statutes, fraud, and breach of good faith and fair dealing, and requesting an accounting and restitution.
The litigation is wide ranging and relates to tariffs and procedures under which Entergy Mississippi purchases power
not generated in Mississippi to meet electricity demand. Entergy believes the complaint is unfounded. On December
29, 2008, the defendant Entergy companies filed to remove the attorney general's suit to U.S. District Court (the
forum that Entergy believes is appropriate to resolve the types of federal issues raised in the suit), where it is
currently pending, and additionally answered the complaint and filed a counter-claim for relief based upon the
Mississippi Public Utilities Act and the Federal Power Act. The Mississippi attorney general has filed a pleading
seeking to remand the matter to state court. In May 2009, the defendant Entergy companies filed a motion for
judgment on the pleadings asserting grounds of federal preemption, the exclusive jurisdiction of the MPSC, and
factual errors in the attorney general's complaint.
Entergy New Orleans
Entergy New Orleans' electric rate schedules include a fuel adjustment tariff designed to reflect no more than
targeted fuel and purchased power costs, adjusted by a surcharge or credit for deferred fuel expense arising from the
monthly reconciliation of actual fuel and purchased power costs incurred with fuel cost revenues billed to customers,
including carrying charges. In June 2006 the City Council authorized the recovery of all Grand Gulf costs through
Entergy New Orleans' fuel adjustment clause (a significant portion of Grand Gulf costs was previously recovered
through base rates), and continued that authorization in approving the October 2006 formula rate plan filing
settlement. Effective June 2009, the majority of Grand Gulf costs were realigned to base rates and are no longer
flowed through the fuel adjustment clause.
Entergy New Orleans' gas rate schedules include a purchased gas adjustment to reflect estimated gas costs
for the billing month, adjusted by a surcharge or credit similar to that included in the electric fuel adjustment clause,
including carrying charges. In October 2005, the City Council approved modification of the gas cost collection
mechanism effective November 2005 in order to address concerns regarding its fluctuations, particularly during the
winter heating season. The modifications are intended to minimize fluctuations in gas rates during the winter months.
79