Entergy 2010 Annual Report Download - page 36

Management’s Financial Discussion and Analysis continued
OTHER INCOME STATEMENT ITEMS
Utility
Other operation and maintenance expenses increased from $1,837
million for 2009 to $1,949 million for the 2010 primarily due to:
n an increase of $70 million in compensation and benefits costs,
resulting from decreasing discount rates, the amortization
of benefit trust asset losses, and an increase in the accrual
for incentive-based compensation. See “Critical Accounting
Estimates - Qualified Pension and Other Postretirement
Benefits” below and also Note 11 to the financial statements
for further discussion of benefits costs;
n an increase of $25 million in fossil expenses resulting from
higher outage costs in 2010 primarily because the scope of
the outages was greater than in 2009;
n an increase of $17 million in transmission and distribution
expenses resulting from increased vegetation contract work;
n an increase of $13 million in nuclear expenses primarily due
to higher nuclear labor and contract costs;
n an increase of $12.5 million due to the capitalization in 2009 of
Ouachita Plant service charges previously expensed; and
n an increase of $11 million due to the amortization of Entergy
Texas rate case expenses. See Note 2 to the financial
statements herein for further discussion of the Entergy Texas
rate case settlement.
The increase was partially offset by:
n a decrease of $19.4 million due to 2008 storm costs at Entergy
Arkansas which were deferred per an APSC order and were
recovered through revenues in 2009;
n a decrease of $16 million due to higher write-offs of
uncollectible customer accounts in 2009; and
n charges of $14 million in 2009 due to the Hurricane Ike and
Hurricane Gustav storm cost recovery settlement agreement,
as discussed further in Note 2 to the financial statements.
Other income decreased primarily due to:
n a decrease of $50 million in carrying charges on storm
restoration costs because of the completion of financing or
securitization of the costs, as discussed further in Note 2 to
the financial statements; and
n a gain of $16 million recorded in 2009 on the sale of
undeveloped real estate by Entergy Louisiana Properties, LLC.
The decrease was partially offset by:
n an increase of $24 million due to investment gains from the
ANO 1 and 2 decommissioning trust, as discussed above;
n an increase of $14 million resulting from higher earnings on
decommissioning trust funds; and
n an increase of distributions of $13 million earned by Entergy
Louisiana and $7 million earned by Entergy Gulf States
Louisiana on investments in preferred membership interests
of Entergy Holdings Company. The distributions on preferred
membership interests are eliminated in consolidation and
have no effect on net income because the investment is
in another Entergy subsidiary. See Note 2 to the financial
statements for discussion of these investments in preferred
membership interests.
Interest charges increased primarily due to an increase in
long-term debt outstanding resulting from net debt issuances
by certain of the Utility operating companies in the second half
of 2009 and in 2010. See Notes 4 and 5 to the financial statements
for details of long-term debt outstanding.
Depreciation and amortization expenses decreased primarily
due to a decrease in depreciation rates at Entergy Arkansas as
a result of the rate case settlement agreement approved by the
APSC in June 2010.
Entergy Wholesale Commodities
Other operation and maintenance expenses increased from
$922 million for 2009 to $1,047 million for 2010 primarily due to:
n the write-off of $64 million of capital costs, primarily for
software that will not be utilized, and $16 million of additional
costs incurred in connection with Entergy’s decision to
unwind the infrastructure created for the planned spin-off of
its non-utility nuclear business;
n an increase of $36 million in compensation and benefits costs,
resulting from decreasing discount rates, the amortization
of benefit trust asset losses, and an increase in the accrual
for incentive-based compensation. See “Critical Accounting
Estimates - Qualified Pension and Other Postretirement
Benefits” below and also Note 11 to the financial statements
for further discussion of benefits costs;
n spending of $15 million related to tritium remediation work at
the Vermont Yankee site; and
n the write-off of $10 million of capitalized engineering costs
associated with a potential uprate project that will not
be pursued.
The gain on sale resulted from the sale of Entergy’s ownership
interest in the Harrison County Power Project 550 MW combined-
cycle plant to two Texas electric cooperatives that owned a
minority share of the plant. Entergy sold its 61 percent share
of the plant for $219 million and realized a pre-tax gain of $44.2
million on the sale.
Other income increased primarily due to $86 million in charges
in 2009 resulting from the recognition of impairments that are not
considered temporary of certain equity securities held in Entergy
Wholesale Commodities’ decommissioning trust funds, partially
offset by a decrease of $28 million in realized earnings on the
decommissioning trust funds.
Interest charges decreased primarily due to a decrease in
fees paid to Entergy Corporation for providing collateral in
the form of guarantees in connection with some of the Entergy
Wholesale Commodities agreements to sell power. The guarantee
fees paid are intercompany transactions and are eliminated in
consolidation. The decrease was substantially offset by the write-
off of $39 million of debt financing costs, primarily incurred for a
$1.2 billion credit facility that will not be used, in connection with
Entergy’s decision to unwind the infrastructure created for the
planned spin-off of its non-utility nuclear business.
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