Entergy 2010 Annual Report Download - page 76

Notes to Consolidated Financial Statements continued
Retail Rates - Electric
(Entergy Gulf States Louisiana)
In October 2009 the LPSC approved a settlement that resolved
Entergy Gulf States Louisiana’s 2007 test year filing and provided
for a new formula rate plan for the 2008, 2009, and 2010 test
years. 10.65% is the target midpoint return on equity for the new
formula rate plan, with an earnings bandwidth of +/- 75 basis
points (9.90% - 11.40%). Entergy Gulf States Louisiana, effective
with the November 2009 billing cycle, reset its rates to achieve
a 10.65% return on equity for the 2008 test year. The rate reset,
a $44.3 million increase that includes a $36.9 million cost of
service adjustment, plus $7.4 million net for increased capacity
costs and a base rate reclassification, was implemented for the
November 2009 billing cycle, and the rate reset was subject to
refund pending review of the 2008 test year filing that was made
in October 2009. In January 2010, Entergy Gulf States Louisiana
implemented an additional $23.9 million rate increase pursuant
to a special rate implementation filing made in December 2009,
primarily for incremental capacity costs approved by the LPSC.
In May 2010, Entergy Gulf States Louisiana and the LPSC staff
submitted a joint report on the 2008 test year filing and requested
that the LPSC accept the report, which resulted in a $0.8 million
reduction in rates effective in the June 2010 billing cycle and a $0.5
million refund. At its May 19, 2010 meeting, the LPSC accepted the
joint report.
In May 2010, Entergy Gulf States Louisiana made its formula
rate plan filing with the LPSC for the 2009 test year. The filing
reflected a 10.25% return on common equity, which is within the
allowed earnings bandwidth, indicating no cost of service rate
change is necessary under the formula rate plan. The filing does
reflect, however, a revenue requirement increase to provide
supplemental funding for the decommissioning trust maintained
for the LPSC-regulated 70% share of River Bend, in response to
a NRC notification of a projected shortfall of decommissioning
funding assurance. The filing also reflected a rate increase for
incremental capacity costs. In July 2010 the LPSC approved a $7.8
million increase in the revenue requirement for decommissioning,
effective September 2010. In August 2010, Entergy Gulf States
Louisiana made a revised 2009 test year filing. The revised filing
reflected a 10.12% earned return on common equity, which is
within the allowed earnings bandwidth resulting in no cost of
service adjustment. The revised filing also reflected two increases
outside of the formula rate plan sharing mechanism: (1) the
previously approved decommissioning revenue requirement,
and (2) $25.2 million for capacity costs. The rates reflected in
the revised filing became effective, beginning with the first billing
cycle of September 2010. Entergy Gulf States Louisiana and the
LPSC staff subsequently submitted a joint report on the 2009 test
year filing consistent with these terms and the LPSC approved
the joint report in January 2011.
(Entergy Louisiana)
In October 2009 the LPSC approved a settlement that resolved
Entergy Louisiana’s 2006 and 2007 test year filings provided for
a new formula rate plan for the 2008, 2009, and 2010 test years.
10.25% is the target midpoint return on equity for the new formula
rate plan, with an earnings bandwidth of +/- 80 basis points
(9.45% - 11.05%).
Entergy Louisiana was permitted, effective with the November
2009 billing cycle, to reset its rates to achieve a 10.25% return
on equity for the 2008 test year. The rate reset, a $2.5 million
increase that included a $16.3 million cost of service adjustment
less a $13.8 million net reduction for decreased capacity costs
and a base rate reclassification, was implemented for the
November 2009 billing cycle, and the rate reset was subject to
refund pending review of the 2008 test year filing that was made in
October 2009. In April 2010, Entergy Louisiana and the LPSC staff
submitted a joint report on the 2008 test year filing and requested
that the LPSC accept the report, which resulted in a $0.1 million
reduction in rates effective in the May 2010 billing cycle and a
$0.1 million refund. In addition, Entergy Louisiana moved the
recovery of approximately $12.5 million of capacity costs from
fuel adjustment clause recovery to base rate recovery. At its April
21, 2010 meeting, the LPSC accepted the joint report.
In May 2010, Entergy Louisiana made its formula rate plan filing
with the LPSC for the 2009 test year. The filing reflected a 10.82%
return on common equity, which is within the allowed earnings
bandwidth, indicating no cost of service rate change is necessary
under the formula rate plan. The filing does reflect, however, a
revenue requirement increase to provide supplemental funding
for the decommissioning trust maintained for Waterford 3,
in response to a NRC notification of a projected shortfall of
decommissioning funding assurance. The filing also reflected a
rate change for incremental capacity costs. In July 2010 the LPSC
approved a $3.5 million increase in the retail revenue requirement
for decommissioning, effective September 2010. In August 2010,
Entergy Louisiana made a revised 2009 test year formula rate
plan filing. The revised filing reflected a 10.82% earned return on
common equity, which is within the allowed earnings bandwidth
resulting in no cost of service adjustment. The filing also
reflected two increases outside of the formula rate plan sharing
mechanism: (1) the previously approved decommissioning
revenue requirement, and (2) $2.2 million for capacity costs. The
rates reflected in the revised filing became effective beginning
with the first billing cycle of September 2010. Entergy Louisiana
and the LPSC staff subsequently submitted a joint report on the
2009 test year filing consistent with these terms and the LPSC
approved the joint report in December 2010.
Retail Rates - Gas (Entergy Gulf States Louisiana)
In January 2011, Entergy Gulf States Louisiana filed with the LPSC
its gas rate stabilization plan for the test year ended September
30, 2010. The filing showed an earned return on common equity
of 8.84% and a revenue deficiency of $0.3 million. The sixty-day
review and comment period for this filing remains open.
In January 2010, Entergy Gulf States Louisiana filed with the LPSC
its gas rate stabilization plan for the test year ended September
30, 2009. The filing showed an earned return on common equity
of 10.87%, which is within the earnings bandwidth of 10.5% plus
or minus fifty basis points, resulting in no rate change. In April
2010, Entergy Gulf States Louisiana filed a revised evaluation
report reflecting changes agreed upon with the LPSC Staff. The
revised evaluation report also resulted in no rate change.
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