Entergy 2010 Annual Report Download - page 65

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ENTERGY CORPORATION AND SUBSIDIARIES 2010
Notes to Consolidated Financial Statements continued
Depreciation rates on average depreciable property for Entergy
approximated 2.6% in 2010 and 2.7% in 2009, and 2.7% in 2008.
Included in these rates are the depreciation rates on average
depreciable utility property of 2.5% in 2010, 2.7% in 2009, and
2.7% 2008, and the depreciation rates on average depreciable non-
utility property of 3.7% in 2010, 3.8% in 2009, and 3.7% in 2008.
Entergy amortizes nuclear fuel using a units-of-production
method. Nuclear fuel amortization is included in fuel expense in
the income statements.
“Non-utility property - at cost (less accumulated depreciation)”
for Entergy is reported net of accumulated depreciation of $207.6
million and $197.8 million as of December 31, 2010 and 2009,
respectively.
Construction expenditures included in accounts payable at
December 31, 2010 is $171 million.
Jointly-Owned Generating Stations
Certain Entergy subsidiaries jointly own electric generating
facilities with affiliates or third parties. The investments and
expenses associated with these generating stations are recorded
by the Entergy subsidiaries to the extent of their respective
undivided ownership interests. As of December 31, 2010, the
subsidiaries’ investment and accumulated depreciation in each of
these generating stations were as follows (dollars in millions):
Total
Fuel Megawatt Accumulated
Generating Stations Type Capability(1) Ownership Investment Depreciation
Utility Business:
Entergy Arkansas
Independence
Unit 1 Coal 836 31.50% $ 127 $ 94
Common Facilities Coal 15.75% $ 33 $ 24
White Bluff
Units 1 and 2 Coal 1,659 57.00% $ 489 $ 332
Ouachita(2)
Common Facilities Gas 66.67% $ 171 $ 140
Entergy Gulf States Louisiana
Roy S. Nelson
Unit 6 Coal 550 40.25% $ 243 $ 167
Big Cajun 2
Unit 3 Coal 588 24.15% $ 142 $ 94
Ouachita(2)
Common Facilities Gas 33.33% $ 87 $ 72
Entergy Mississippi
Independence
Units 1 and 2 and
Common Facilities Coal 1,678 25.00% $ 247 $ 132
Entergy Texas
Roy S. Nelson
Unit 6 Coal 550 29.75% $ 178 $ 116
Big Cajun 2
Unit 3 Coal 588 17.85% $ 106 $ 67
System Energy
Grand Gulf
Unit 1 Nuclear 1,251 90.00%(3) $3,852 $2,418
Entergy Wholesale Commodities:
Independence
Unit 2 Coal 842 14.37% $ 68 $ 40
Common Facilities Coal 7.18% $ 16 $ 10
(1) “Total Megawatt Capability” is the dependable load carrying capability as
demonstrated under actual operating conditions based on the primary fuel
(assuming no curtailments) that each station was designed to utilize.
(2) Ouachita Units 1 and 2 are owned 100% by Entergy Arkansas and
Ouachita Unit 3 is owned 100% by Entergy Gulf States Louisiana. The
investment and accumulated depreciation numbers above are only for the
common facilities.
(3) Includes an 11.5% leasehold interest held by System Energy. System
Energy’s Grand Gulf lease obligations are discussed in Note 10 to the
financial statements.
Nuclear Refueling Outage Costs
Nuclear refueling outage costs are deferred during the outage and
amortized over the estimated period to the next outage because
these refueling outage expenses are incurred to prepare the units
to operate for the next operating cycle without having to be taken
off line.
Allowance for Funds Used During Construction
(AFUDC)
AFUDC represents the approximate net composite interest cost
of borrowed funds and a reasonable return on the equity funds
used for construction by the Registrant Subsidiaries. AFUDC
increases both the plant balance and earnings and is realized
in cash through depreciation provisions included in the rates
charged to customers.
Income Taxes
Entergy Corporation and the majority of its subsidiaries file
a United States consolidated federal income tax return. Each
tax paying entity records income taxes as if it were a separate
taxpayer and consolidating adjustments are allocated to the tax
filing entities in accordance with Entergy’s intercompany income
tax allocation agreement. Deferred income taxes are recorded for
all temporary differences between the book and tax basis of assets
and liabilities, and for certain credits available for carryforward.
Deferred tax assets are reduced by a valuation allowance when,
in the opinion of management, it is more likely than not that some
portion of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes
in tax laws and rates in the period in which the tax or rate
was enacted.
Investment tax credits are deferred and amortized based upon
the average useful life of the related property, in accordance with
ratemaking treatment.
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