Entergy 2010 Annual Report Download - page 71

ENTERGY CORPORATION AND SUBSIDIARIES 2010
Notes to Consolidated Financial Statements continued
Entergy Mississippi
Entergy Mississippi’s rate schedules include an energy cost
recovery rider that is adjusted quarterly to reflect accumulated
over- or under-recoveries from the second prior quarter. Entergy
Mississippi’s fuel cost recoveries are subject to annual audits
conducted pursuant to the authority of the MPSC.
In October 2008 the MPSC issued an order directing Entergy
Mississippi and Entergy Services, Inc. to provide documents
associated with fuel adjustment clause litigation in Louisiana
involving Entergy Louisiana and Entergy New Orleans, and in
January 2009 issued an order requiring Entergy Mississippi
to provide additional information related to the long-term
Evangeline gas contract that had been an issue in the fuel
adjustment clause litigation in Louisiana. Entergy Mississippi
and Entergy Services filed a response to the MPSC order stating
that gas from the Evangeline gas contract had been sold into the
Entergy System exchange and had an effect on the costs paid by
Entergy Mississippi’s customers. Further proceedings have not
been scheduled.
Mississippi Attorney General Complaint
The Mississippi attorney general filed a complaint in state court in
December 2008 against Entergy Corporation, Entergy Mississippi,
Entergy Services, Inc., and Entergy Power, Inc. alleging, among
other things, violations of Mississippi statutes, fraud, and breach
of good faith and fair dealing, and requesting an accounting and
restitution. The litigation is wide ranging and relates to tariffs and
procedures under which Entergy Mississippi purchases power
not generated in Mississippi to meet electricity demand. Entergy
believes the complaint is unfounded. On December 29, 2008,
the defendant Entergy companies filed to remove the attorney
general’s suit to U.S. District Court (the forum that Entergy
believes is appropriate to resolve the types of federal issues
raised in the suit), where it is currently pending, and additionally
answered the complaint and filed a counter-claim for relief
based upon the Mississippi Public Utilities Act and the Federal
Power Act. The Mississippi attorney general has filed a pleading
seeking to remand the matter to state court. In May 2009, the
defendant Entergy companies filed a motion for judgment on the
pleadings asserting grounds of federal preemption, the exclusive
jurisdiction of the MPSC, and factual errors in the attorney
general’s complaint.
Entergy New Orleans
Entergy New Orleans’s electric rate schedules include a fuel
adjustment tariff designed to reflect no more than targeted fuel
and purchased power costs, adjusted by a surcharge or credit
for deferred fuel expense arising from the monthly reconciliation
of actual fuel and purchased power costs incurred with fuel
cost revenues billed to customers, including carrying charges.
In June 2006 the City Council authorized the recovery of all
Grand Gulf costs through Entergy New Orleans’s fuel adjustment
clause (a significant portion of Grand Gulf costs was previously
recovered through base rates), and continued that authorization
in approving the October 2006 formula rate plan filing settlement.
Effective June 2009, the majority of Grand Gulf costs were
realigned to base rates and are no longer flowed through the fuel
adjustment clause.
Entergy New Orleans’s gas rate schedules include a purchased
gas adjustment to reflect estimated gas costs for the billing month,
adjusted by a surcharge or credit similar to that included in the
electric fuel adjustment clause, including carrying charges.
Entergy Texas
Entergy Texas’s rate schedules include a fixed fuel factor to
recover fuel and purchased power costs, including carrying
charges, not recovered in base rates. Semi-annual revisions of the
fixed fuel factor are made in March and September based on the
market price of natural gas and changes in fuel mix. The amounts
collected under Entergy Texas’s fixed fuel factor and any interim
surcharge or refund are subject to fuel reconciliation proceedings
before the PUCT.
In October 2007, Entergy Texas filed a request with the PUCT
to refund $45.6 million, including interest, of fuel cost recovery
over-collections through September 2007. In January 2008,
Entergy Texas filed with the PUCT a stipulation and settlement
agreement among the parties that updated the over-collection
balance through November 2007 and established a refund
amount, including interest, of $71 million. The PUCT approved
the agreement in February 2008. The refund was made over a
two-month period beginning February 2008, but was reduced
by $10.3 million of under-recovered incremental purchased
capacity costs.
In January 2008, Entergy Texas made a compliance filing
with the PUCT describing how its 2007 rough production
cost equalization receipts under the System Agreement were
allocated between Entergy Gulf States, Inc.’s Texas and Louisiana
jurisdictions. In December 2008 the PUCT adopted an ALJ
proposal for decision recommending an additional $18.6 million
allocation to Texas retail customers. Because the PUCT allocation
to Texas retail customers is inconsistent with the LPSC allocation
to Louisiana retail customers, the PUCT’s decision results in
trapped costs between the Texas and Louisiana jurisdictions with
no mechanism for recovery. Entergy Texas filed with the FERC
a proposed amendment to the System Agreement bandwidth
formula to specifically calculate the payments to Entergy Gulf
States Louisiana and Entergy Texas of Entergy Gulf States, Inc.’s
rough production cost equalization receipts for 2007. In May 2009
the FERC issued an order rejecting the proposed amendment.
Because of the FERC’s order, Entergy Texas recorded the effects
of the PUCT’s allocation of the additional $18.6 million to Texas
retail customers in the second quarter 2009. On an after-tax basis,
the charge to earnings was approximately $13.0 million (including
interest). The PUCT and FERC decisions are now final.
In May 2009, Entergy Texas filed with the PUCT a request to
refund $46.1 million, including interest, of fuel cost recovery over-
collections through February 2009. Entergy Texas requested that
the proposed refund be made over a four-month period beginning
June 2009. Pursuant to a stipulation among the various parties, in
June 2009 the PUCT issued an order approving a refund of $59.2
million, including interest, of fuel cost recovery overcollections
through March 2009. The refund was made for most customers
over a three-month period beginning July 2009.
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