Entergy 2010 Annual Report Download - page 75

ENTERGY CORPORATION AND SUBSIDIARIES 2010
FILINGS WITH THE APSC (ENTERGY ARKANSAS)
Retail Rates
2009 Base Rate Filing
In September 2009, Entergy Arkansas filed with the APSC for a
general change in rates, charges, and tariffs. In June 2010 the
APSC approved a settlement and subsequent compliance tariffs
that provide for a $63.7 million rate increase, effective for bills
rendered for the first billing cycle of July 2010. The settlement
provides for a 10.2% return on common equity.
2006 Base Rate Filing
In August 2006, Entergy Arkansas filed with the APSC a request
for a change in base rates. In June 2007, after hearings on the
filing, the APSC ordered Entergy Arkansas to reduce its annual
rates by $5 million, and set a return on common equity of 9.9%
with a hypothetical common equity level lower than Entergy
Arkansas’s actual capital structure. For the purpose of setting
rates, the APSC disallowed a portion of costs associated with
incentive compensation based on financial measures and all costs
associated with Entergy’s stock-based compensation plans, and
left Entergy Arkansas with no mechanism to recover $52 million
of costs previously accumulated in Entergy Arkansas’s storm
reserve and $18 million of removal costs associated with the
termination of a lease. The base rate change was implemented
effective for bills rendered after June 15, 2007.
Entergy Arkansas sought to overturn the APSC’s decision,
but in December 2008 the Arkansas Court of Appeals upheld
almost all aspects of the APSC decision. After considering the
progress of the proceeding in light of the decision of the Court of
Appeals, Entergy Arkansas recorded in the fourth quarter 2008 an
approximately $70 million charge to earnings, on both a pre- and
after-tax basis because these are primarily flow-through items, to
recognize that the regulatory assets associated with the storm
reserve costs, lease termination removal costs, and stock-based
compensation were no longer probable of recovery. In April 2009
the Arkansas Supreme Court denied Entergy Arkansas’s petition
for review of the Court of Appeals decision.
FILINGS WITH THE LPSC
Formula Rate Plans (Entergy Gulf States Louisiana and
Entergy Louisiana)
In March 2005 the LPSC approved a settlement proposal to
resolve various dockets covering a range of issues for Entergy
Gulf States Louisiana and Entergy Louisiana. The settlement
included the establishment of a three-year formula rate plan
for Entergy Gulf States Louisiana that, among other provisions,
establishes a return on common equity mid-point of 10.65% for
the initial three-year term of the plan and permits Entergy Gulf
States Louisiana to recover incremental capacity costs outside of
a traditional base rate proceeding. Under the formula rate plan,
over- and under-earnings outside an allowed range of 9.9% to
11.4% are allocated 60% to customers and 40% to Entergy Gulf
States Louisiana. Entergy Gulf States Louisiana made its initial
formula rate plan filing in June 2005. The formula rate plan was
subsequently extended one year.
Entergy Louisiana made a rate filing with the LPSC requesting
a base rate increase in January 2004. In May 2005 the LPSC
approved a settlement that included the adoption of a three-year
formula rate plan, the terms of which included an ROE mid-point
of 10.25% for the initial three-year term of the plan and permit
Entergy Louisiana to recover incremental capacity costs outside
of a traditional base rate proceeding. Under the formula rate plan,
over- and under-earnings outside an allowed regulatory range of
9.45% to 11.05% will be allocated 60% to customers and 40% to
Entergy Louisiana. The initial formula rate plan filing was made
in May 2006.
As discussed below the formula rate plans for Entergy Gulf
States Louisiana and Entergy Louisiana have been extended,
with return on common equity provisions consistent with
previously approved provisions, to cover the 2008, 2009, and 2010
test years.
Notes to Consolidated Financial Statements continued
Retail Rate Proceedings
Company Authorized Return on Common Equity Pending Proceedings/Events
Entergy Arkansas 10.2% n Current retail base rates implemented in the July 2010 billing
cycle pursuant to a settlement approved by the APSC.
Entergy Gulf States Louisiana 9.9% - 11.4% Electric; 10.0% - 11.0% Gas n Current retail electric base rates implemented in the September
2010 billing cycle based on Entergy Gulf States Louisiana’s
revised 2009 test year formula rate plan filing approved by the
LPSC. Current retail gas base rates reflect the rate stabilization
plan filing for the 2009 test year ended September 2009.
Entergy Louisiana 9.45% - 11.05% n Current retail base rates implemented in the September 2010
billing cycle based on Entergy Louisiana’s revised 2009 test year
formula rate plan filing approved by the LPSC.
Entergy Mississippi 10.79% - 13.05% n Current retail base rates reflect Entergy Mississippi’s latest
formula rate plan filing, based on the 2009 test year, and a
settlement approved by the MPSC.
Entergy New Orleans 10.7% - 11.5% Electric; 10.25% - 11.25% Gas n Current retail base rates implemented in the October 2010 billing
cycle pursuant to Entergy New Orleans’s 2009 test year formula
rate plan filing and a settlement approved by the City Council
Entergy Texas 10.125% n Current retail base rates implemented for usage beginning
August 15, 2010, pursuant to a settlement of Entergy Texas’s
base rate case approved by the PUCT.
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