Entergy 2010 Annual Report Download - page 104

Notes to Consolidated Financial Statements continued
Geographic Areas
For the years ended December 31, 2010 and 2009, the amount of
revenue Entergy derived from outside of the United States was
insignificant. As of December 31, 2010 and 2009, Entergy had no
long-lived assets located outside of the United States.
Note 14. Equity Method Investments
As of December 31, 2010, Entergy owns investments in the
following companies that it accounts for under the equity method
of accounting:
Investment Ownership Description
Entergy-Koch 50% partnership interest Entergy-Koch was in
the energy commodity
marketing and trading
business and gas
transportation and storage
business until the fourth
quarter of 2004 when these
businesses were sold. In
December 2009, Entergy
reorganized its investment
in Entergy-Koch, received
a $25.6 million cash
distribution, and received
a distribution of certain
software owned by the
joint venture.
RS Cogen LLC 50% member interest Co-generation project
that produces power and
steam on an industrial and
merchant basis in the Lake
Charles, Louisiana area.
Top Deer 50% member interest Wind-powered electric
generation joint venture.
Following is a reconciliation of Entergy’s investments in equity
affiliates (in thousands):
2010 2009 2008
Beginning of year $39,580 $66,247 $78,992
Loss from the investments (2,469) (7,793) (11,684)
Dispositions and other adjustments 3,586 (18,874) (1,061)
End of year $40,697 $39,580 $66,247
Related-Party Transactions and Guarantees
Entergy Gulf States Louisiana purchased approximately
$50.8 million, $49.3 million, and $82.5 million of electricity
generated from Entergy’s share of RS Cogen in 2010, 2009, and
2008, respectively. Entergy’s operating transactions with its
other equity method investees were not significant in 2010, 2009,
or 2008.
Note 15. Acquisitions and Dispositions
Calcasieu
In March 2008, Entergy Gulf States Louisiana purchased the
Calcasieu Generating Facility, a 322 MW simple-cycle gas-fired
power plant located near the city of Sulphur in southwestern
Louisiana, for approximately $56 million from a subsidiary of
Dynegy, Inc. Entergy Gulf States Louisiana received the plant,
materials and supplies, SO2 emission allowances, and related
real estate in the transaction. The FERC and the LPSC approved
the acquisition.
Ouachita
In September 2008, Entergy Arkansas purchased the Ouachita
Plant, a 789 MW three-train gas-fired combined cycle generating
turbine (CCGT) electric power plant located 20 miles south of the
Arkansas state line near Sterlington, Louisiana, for approximately
$210 million from a subsidiary of Cogentrix Energy, Inc. Entergy
Arkansas received the plant, materials and supplies, and related
real estate in the transaction. The FERC and the APSC approved
the acquisition. The APSC also approved the recovery of the
acquisition and ownership costs through a rate rider and the
planned sale of one-third of the capacity and energy to Entergy
Gulf States Louisiana.
The LPSC also approved the purchase of one-third of the
capacity and energy by Entergy Gulf States Louisiana, subject to
certain conditions, including a study to determine the costs and
benefits of Entergy Gulf States Louisiana exercising an option to
purchase one-third of the plant (Unit 3) from Entergy Arkansas.
In April 2009, Entergy Gulf States Louisiana made a filing with
the LPSC seeking approval of Entergy Gulf States Louisiana
exercising its option to convert its purchased power agreement
into the ownership interest in Unit 3 and a one-third interest in
the Ouachita common facilities. In September 2009 the LPSC,
pursuant to an uncontested settlement, approved the acquisition
and a cost recovery mechanism. Entergy Gulf States Louisiana
purchased Unit 3 and a one-third interest in the Ouachita common
facilities for $75 million in November 2009.
Palisades Purchased Power Agreement
Entergy’s purchase of the Palisades plant in 2007 included a
unit-contingent, 15-year purchased power agreement (PPA) with
Consumers Energy for 100% of the plant’s output, excluding any
future uprates. Prices under the PPA range from $43.50/MWh in
2007 to $61.50/MWh in 2022, and the average price under the
PPA is $51/MWh. For the PPA, which was at below-market prices
at the time of the acquisition, Entergy will amortize a liability
to revenue over the life of the agreement. The amount that will
be amortized each period is based upon the difference between
the present value calculated at the date of acquisition of each
year’s difference between revenue under the agreement and
revenue based on estimated market prices. Amounts amortized
to revenue were $46 million in 2010, $53 million in 2009, and
$76 million in 2008. The amounts to be amortized to revenue for
the next five years will be $43 million for 2011, $17 million in 2012,
$18 million for 2013, $16 million for 2014, and $15 million for 2015.
NYPA Value Sharing Agreements
Entergy’s purchase of the FitzPatrick and Indian Point 3 plants
from NYPA included value sharing agreements with NYPA. In
October 2007, Entergy subsidiaries and NYPA amended and
restated the value sharing agreements to clarify and amend
certain provisions of the original terms. Under the amended
value sharing agreements, Entergy subsidiaries will make annual
payments to NYPA based on the generation output of the Indian
Point 3 and FitzPatrick plants from January 2007 through December
2014. Entergy subsidiaries will pay NYPA $6.59 per MWh for power
sold from Indian Point 3, up to an annual cap of $48 million, and
$3.91 per MWh for power sold from FitzPatrick, up to an annual
cap of $24 million. The annual payment for each year’s output is
due by January 15 of the following year. Entergy will record the
liability for payments to NYPA as power is generated and sold by
Indian Point 3 and FitzPatrick. An amount equal to the liability will
be recorded to the plant asset account as contingent purchase
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