Entergy 2009 Annual Report Download - page 84

Entergy Corporation and Subsidiaries
Notes to Financial Statements
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investigation for whether they are incremental, prudent, and reasonable. A law was enacted in April 2009 in
Arkansas that authorizes securitization of storm damage restoration costs. On February 1, 2010, Entergy Arkansas
requested a financing order to issue approximately $127.5 million in storm recovery bonds, which included carrying
costs of $11.7 million and $4.6 million of up-front financing costs to pay for ice storm restoration because Entergy
Arkansas' analysis demonstrates retail customers will benefit from lower costs using securitization. The APSC has
established a procedural schedule that includes a hearing in April 2010 and states that the APSC will issue its final
order by June 15, 2010. Entergy Arkansas' September 2009 general rate filing also requested recovery of the
January 2009 ice storm costs over 10 years if it was expected that securitization would not produce lower costs for
customers, and Entergy Arkansas will remove this request if the APSC approves securitization.
Entergy Texas
Hurricane Rita
In July 2006, Entergy Texas filed an application with the PUCT with respect to its Hurricane Rita
reconstruction costs incurred through March 2006. The filing asked the PUCT to determine the amount of
reasonable and necessary hurricane reconstruction costs eligible for securitization and recovery, approve the recovery
of carrying costs, and approve the manner in which Entergy Texas allocates those costs among its retail customer
classes. In December 2006, the PUCT approved $381 million of reasonable and necessary hurricane reconstruction
costs incurred through March 31, 2006, plus carrying costs, as eligible for recovery. After netting expected
insurance proceeds, the amount is $353 million.
In April 2007, the PUCT issued its financing order authorizing the issuance of securitization bonds to
recover the $353 million of hurricane reconstruction costs and up to $6 million of transaction costs, offset by $32
million of related deferred income tax benefits. See Note 5 to the financial statements for a discussion of the June
2007 issuance of the securitization bonds.
Hurricane Ike and Hurricane Gustav
Entergy Texas filed an application in April 2009 seeking a determination that $577.5 million of Hurricane
Ike and Hurricane Gustav restoration costs are recoverable, including estimated costs for work to be completed. On
August 5, 2009, Entergy Texas submitted to the ALJ an unopposed settlement agreement intended to resolve all
issues in the storm cost recovery case. Under the terms of the agreement $566.4 million, plus carrying costs, are
eligible for recovery. Insurance proceeds will be credited as an offset to the securitized amount. Of the $11.1 million
difference between Entergy Texas' request and the amount agreed to, which is part of the black box agreement and
not directly attributable to any specific individual issues raised, $6.8 million is operation and maintenance expense
for which Entergy Texas recorded a charge in the second quarter 2009. The remaining $4.3 million was recorded as
utility plant. The PUCT approved the settlement in August 2009, and in September 2009 the PUCT approved
recovery of the costs, plus carrying costs, by securitization. See Note 5 to the financial statements for a discussion of
the November 2009 issuance of the securitization bonds.
Entergy Gulf States Louisiana and Entergy Louisiana
Hurricane Gustav and Hurricane Ike
Entergy Gulf States Louisiana and Entergy Louisiana filed their Hurricane Gustav and Hurricane Ike storm
cost recovery case with the LPSC in May 2009. In September 2009, Entergy Gulf States Louisiana and Entergy
Louisiana made a supplemental filing to, among other things, recommend recovery of the costs and replenishment of
the storm reserves by Louisiana Act 55 (passed in 2007) financing. Entergy Gulf States Louisiana and Entergy
Louisiana recovered their costs from Hurricane Katrina and Hurricane Rita primarily by Act 55 financing, as
discussed below. On December 30, 2009, Entergy Gulf States Louisiana and Entergy Louisiana entered into a
stipulation agreement with the LPSC Staff that, if approved, provides for total recoverable costs of approximately
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