Entergy 2009 Annual Report Download - page 89

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Entergy Corporation and Subsidiaries
Notes to Financial Statements
85
Filings with the LPSC
Formula Rate Plans (Entergy Gulf States Louisiana and Entergy Louisiana)
In March 2005, the LPSC approved a settlement proposal to resolve various dockets covering a range of
issues for Entergy Gulf States Louisiana and Entergy Louisiana. The settlement included the establishment of a
three-year formula rate plan for Entergy Gulf States Louisiana that, among other provisions, establishes a return on
common equity mid-point of 10.65% for the initial three-year term of the plan and permits Entergy Gulf States
Louisiana to recover incremental capacity costs outside of a traditional base rate proceeding. Under the formula rate
plan, over- and under-earnings outside an allowed range of 9.9% to 11.4% are allocated 60% to customers and 40%
to Entergy Gulf States Louisiana. Entergy Gulf States Louisiana made its initial formula rate plan filing in June
2005. The formula rate plan was subsequently extended one year.
Entergy Louisiana made a rate filing with the LPSC requesting a base rate increase in January 2004. In May
2005 the LPSC approved a settlement that included the adoption of a three-year formula rate plan, the terms of which
included an ROE mid-point of 10.25% for the initial three-year term of the plan and permit Entergy Louisiana to
recover incremental capacity costs outside of a traditional base rate proceeding. Under the formula rate plan, over-
and under-earnings outside an allowed regulatory range of 9.45% to 11.05% will be allocated 60% to customers and
40% to Entergy Louisiana. The initial formula rate plan filing was made in May 2006.
As discussed below the formula rate plans for Entergy Gulf States Louisiana and Entergy Louisiana have
been extended, with return on common equity provisions consistent with previously approved provisions, to cover the
2008, 2009, and 2010 test years.
Retail Rates - Electric
(Entergy Louisiana)
In October 2009 the LPSC approved a settlement that resolves Entergy Louisiana's 2006 and 2007 test year
filings. The settlement provides for a new formula rate plan for the 2008, 2009, and 2010 test years. Entergy
Louisiana is permitted, effective with the November 2009 billing cycle, to reset its rates to achieve a 10.25% return
on equity for the 2008 test year. 10.25% is the target midpoint return on equity for the new formula rate plan, with
an earnings bandwidth of +/- 80 basis points (9.45% - 11.05%). The rate reset, a $2.5 million increase that includes
a $16.3 million cost of service adjustment less a $13.8 million net reduction for decreased capacity costs and a base
rate reclassification, was implemented for the November 2009 billing cycle, and the rate reset will be subject to
refund pending review of the 2008 test year filing that was made on October 21, 2009. The settlement does not allow
recovery through the formula rate plan of most of Entergy Louisiana's costs associated with Entergy's stock option
plan. Pursuant to the settlement Entergy Louisiana refunded to its customers $12.9 million, which includes interest,
in the November 2009 billing cycle. The LPSC Staff and one intervenor filed comments on the 2008 test year filing
in January 2010. Entergy Louisiana has until March 2010 to provide an initial response to the proposed adjustments
and discovery is ongoing. Entergy Louisiana will implement any agreed changes by March 15, 2010. A procedural
schedule to address any contested issues would be set after March 15, 2010.
In December 2009, Entergy Louisiana filed an application seeking LPSC approval for a $10.3 million
revenue requirement to provide supplemental funding for the decommissioning trust maintained for Waterford 3, in
response to an NRC notification of a projected shortfall of decommissioning funding assurance. Currently, Entergy
Louisiana has $2.2 million in annual retail rates for decommissioning funding.
In May 2008, Entergy Louisiana made its formula rate plan filing with the LPSC for the 2007 test year,
seeking an $18.4 million rate increase, comprised of $12.6 million of recovery of incremental and deferred capacity
costs and $5.8 million based on a cost of service revenue deficiency related to continued lost contribution to fixed
87