Entergy 2009 Annual Report Download - page 82

Entergy Corporation and Subsidiaries
Notes to Financial Statements
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Entergy Texas
Entergy Texas' rate schedules include a fixed fuel factor to recover fuel and purchased power costs,
including carrying charges, not recovered in base rates. The fixed fuel factor formula was revised and approved by a
PUCT order in August 2006. The new formula was implemented in September 2006. Under the new methodology,
semi-annual revisions of the fixed fuel factor will continue to be made in March and September based on the market
price of natural gas and changes in fuel mix. The amounts collected under Entergy Texas' fixed fuel factor and any
interim surcharge or refund are subject to fuel reconciliation proceedings before the PUCT.
In July 2005, Entergy Texas filed with the PUCT a request for implementation of an incremental purchased
capacity recovery rider. Through this rider Entergy Texas sought to recover incremental revenues that represent the
incremental purchased capacity costs, including Entergy Texas' obligation to purchase power from Entergy
Louisiana's Perryville plant, over what is already in Entergy Texas' base rates. The PUCT approved an initial rider
to collect $18 million annually, which was increased to $21 million in subsequent years. Under the settlement of the
2007 rate case discussed below, this rider ceased on January 28, 2009, with the implementation of stipulated base
rates. The amounts collected through the rider are subject to reconciliation.
In May 2006, Entergy Texas filed with the PUCT a fuel and purchased power reconciliation case covering
the period September 2003 through December 2005 for costs recoverable through the fixed fuel factor rate and the
incremental purchased capacity recovery rider. Entergy Texas sought reconciliation of $1.6 billion of fuel and
purchased power costs on a Texas retail basis. A hearing was conducted before the ALJs in April 2007. In July
2007, the ALJs issued a proposal for decision recommending that Entergy Texas be authorized to reconcile all of its
requested fixed fuel factor expenses and recommending a minor exception to the incremental purchased capacity
recovery calculation. The ALJs also recommended granting an exception to the PUCT rules to allow for recovery of
an additional $11.4 million in purchased power capacity costs. In September 2007, the PUCT issued an order, which
affirmed the ultimate result of the ALJs' proposal for decision. Upon motions for rehearing, the PUCT added
additional language in its order on rehearing to further clarify its position that 30% of River Bend should not be
regulated by the PUCT. Two parties filed a second motion for rehearing, but the PUCT declined to address them.
The PUCT's decision has been appealed to the Travis County District Court.
In March 2007, Entergy Texas filed a request with the PUCT to refund $78.5 million, including interest, of
fuel cost recovery over-collections through January 2007. In June 2007 the PUCT approved a unanimous stipulation
and settlement agreement that updated the over-collection balance through April 2007 and established a refund
amount, including interest, of $109.4 million. The refund was made over a two-month period beginning with the first
billing cycle in July 2007.
In October 2007, Entergy Texas filed a request with the PUCT to refund $45.6 million, including interest, of
fuel cost recovery over-collections through September 2007. In January 2008, Entergy Texas filed with the PUCT a
stipulation and settlement agreement among the parties that updated the over-collection balance through November
2007 and established a refund amount, including interest, of $71 million. The PUCT approved the agreement in
February 2008. The refund was made over a two-month period beginning February 2008, but was reduced by
$10.3 million of under-recovered incremental purchased capacity costs.
In January 2008, Entergy Texas made a compliance filing with the PUCT describing how its 2007 Rough
Production Cost Equalization receipts under the System Agreement were allocated between Entergy Gulf States,
Inc.'s Texas and Louisiana jurisdictions. A hearing was held at the end of July 2008, and in October 2008 the ALJ
issued a proposal for decision recommending an additional $18.6 million allocation to Texas retail customers. The
PUCT adopted the ALJ's proposal for decision in December 2008. Because the PUCT allocation to Texas retail
customers is inconsistent with the LPSC allocation to Louisiana retail customers, the PUCT's decision would result
in trapped costs between the Texas and Louisiana jurisdictions with no mechanism for recovery. The PUCT denied
Entergy Texas' motion for rehearing and Entergy Texas commenced proceedings in both state and federal district
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