Entergy 2010 Annual Report Download - page 69

ENTERGY CORPORATION AND SUBSIDIARIES 2010
Notes to Consolidated Financial Statements continued
Note 2. Rate and Regulatory Matters
Regulatory Assets
OTHER REGULATORY ASSETS
Regulatory assets represent probable future revenues associated
with costs that are expected to be recovered from customers
through the regulatory ratemaking process affecting the Utility
business. In addition to the regulatory assets that are specifically
disclosed on the face of the balance sheets, the table below
provides detail of “Other regulatory assets” that are included
on Entergy’s balance sheets as of December 31, 2010 and 2009
(in millions):
2010 2009
Asset retirement obligation - recovery dependent
upon timing of decommissioning (Note 9)(b) $ 406.4 $ 403.9
Deferred capacity - recovery timing will be
determined by the LPSC in the formula
rate plan filings (Note 2 - Retail Rate Proceedings -
Filings with the LPSC) 15.8 23.2
Grand Gulf fuel - non-current and power
management rider - recovered through rate
riders when rates are redetermined periodically
(Note 2 - Fuel and purchased power cost recovery) 17.4 58.2
Gas hedging costs - recovered through fuel rates 1.9 0.4
Pension & postretirement costs
(Note 11 - Qualified Pension Plans, Other Postretirement
Benefits, and Non-Qualified Pension Plans)(b) 1,734.7 1,481.7
Postretirement benefits - recovered through 2012
(Note 11 - Other Postretirement Benefits)(b) 4.8 7.2
Provision for storm damages, including hurricane
costs - recovered through securitization,
insurance proceeds, and retail rates (Note 2 -
Storm Cost Recovery Filings with
Retail Regulators) 1,026.0 1,183.2
Removal costs - recovered through depreciation rates
(Note 9)(b) 81.5 44.4
River Bend AFUDC - recovered through August 2025
(Note 1 - River Bend AFUDC) 26.2 28.1
Sale-leaseback deferral - Grand Gulf Lease Obligation
recovered through June 2014 and Waterford 3
Lease Obligation (in 2009) (Note 10 - Sale and
Leaseback Transactions - Grand Gulf Lease
Obligations and Waterford 3 Lease Obligations) 22.3 115.3
Spindletop gas storage facility - recovered through
December 2032(a) 32.6 34.2
Transition to competition costs - recovered over a
15-year period through February 2021 95.8 101.9
Little Gypsy cost proceedings - recovery
timing will be determined by the LPSC in the project
costs proceeding (Note 2 - Little Gypsy Repowering
Project) 200.9 –
Unamortized loss on reacquired debt -
recovered over term of debt 122.5 115.0
Other 49.4 50.5
Total $3,838.2 $3,647.2
(a) The jurisdictional split order assigned the regulatory asset to Entergy Texas.
The regulatory asset, however, is being recovered and amortized at Entergy
Gulf States Louisiana. As a result, a billing will occur monthly over the
same term as the recovery and receipts will be submitted to Entergy Texas.
Entergy Texas has recorded a receivable from Entergy Gulf States Louisiana
and Entergy Gulf States Louisiana has recorded a corresponding payable
(b) Does not earn a return on investment, but is offset by related liabilities.
FUEL AND PURCHASED POWER COST RECOVERY
Entergy Arkansas, Entergy Gulf States Louisiana, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, and
Entergy Texas are allowed to recover fuel and purchased power
costs through fuel mechanisms included in electric and gas
rates that are recorded as fuel cost recovery revenues. The
difference between revenues collected and the current fuel and
purchased power costs is recorded as “Deferred fuel costs” on
the Utility operating companies’ financial statements. The table
below shows the amount of deferred fuel costs as of December
31, 2010 and 2009, that Entergy expects to recover (or return
to customers) through fuel mechanisms, subject to subsequent
regulatory review (in millions):
2010 2009
Entergy Arkansas $ 61.5 $ 122.8
Entergy Gulf States Louisiana(a) $ 77.8 $ 57.8
Entergy Louisiana(a) $ 8.8 $ 66.4
Entergy Mississippi $ 3.2 $ (72.9)
Entergy New Orleans(a) $ (2.8) $ 8.1
Entergy Texas $(77.4) $(102.7)
(a) 2010 and 2009 include $100.1 million for Entergy Gulf States Louisiana,
$68 million for Entergy Louisiana , and $4.1 million for Entergy New
Orleans of fuel, purchased power, and capacity costs, which do not
currently earn a return on investment and whose recovery periods are
indeterminate but are expected to be over a period greater than
twelve months.
Entergy Gulf States Louisiana made a $36.8 million adjustment
to its deferred fuel costs in the fourth quarter 2009 relating to
unrecovered nuclear fuel costs incurred since January 2008 that
will now be recovered after a revision to the fuel adjustment
clause methodology.
Entergy Arkansas
Production Cost Allocation Rider
The APSC approved a production cost allocation rider for
recovery from customers of the retail portion of the costs
allocated to Entergy Arkansas as a result of the System Agreement
proceedings, which are discussed in the “System Agreement Cost
Equalization Proceedings” section below. These costs cause
an increase in Entergy Arkansas’s deferred fuel cost balance,
because Entergy Arkansas pays the costs over seven months but
collects them from customers over twelve months.
Energy Cost Recovery Rider
Entergy Arkansas’s retail rates include an energy cost recovery
rider to recover fuel and purchased energy costs in monthly bills.
The rider utilizes prior calendar year energy costs and projected
energy sales for the twelve-month period commencing on April 1
of each year to develop an energy cost rate, which is redetermined
annually and includes a true-up adjustment reflecting the over-
recovery or under-recovery, including carrying charges, of
the energy cost for the prior calendar year. The energy cost
recovery rider tariff also allows an interim rate request depending
upon the level of over- or under-recovery of fuel and purchased
energy costs.
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