Entergy 2010 Annual Report Download - page 80

Notes to Consolidated Financial Statements continued
on nuclear depreciation and decommissioning expense. The
FERC’s conclusion related to the AmerenUE contract does not
permit Entergy Arkansas to recover a portion of its bandwidth
payment from AmerenUE. The Utility operating companies
requested rehearing of that portion of the decision and requested
clarification on certain other portions of the decision.
AmerenUE argued that its current wholesale power contract
with Entergy Arkansas, pursuant to which Entergy Arkansas
sells power to AmerenUE, does not permit Entergy Arkansas to
flow through to AmerenUE any portion of Entergy Arkansas’s
bandwidth payment. According to AmerenUE, Entergy Arkansas
has sought to collect from AmerenUE approximately $14.5
million of the 2007 Entergy Arkansas bandwidth payment. The
AmerenUE contract expired in August 2009. In April 2008,
AmerenUE filed a complaint with the FERC seeking refunds
of this amount, plus interest, in the event the FERC ultimately
determines that bandwidth payments are not properly recovered
under the AmerenUE contract. In response to the FERC’s decision
discussed in the previous paragraph, Entergy Arkansas recorded
a regulatory provision in the fourth quarter 2009 for a potential
refund to AmerenUE.
2008 Rate Filing Based on Calendar Year 2007
Production Costs
Several parties intervened in the 2008 rate proceeding at the
FERC, including the APSC, the LPSC, and AmerenUE, which have
also filed protests. Several other parties, including the MPSC and
the City Council, have intervened in the proceeding without filing
a protest. In direct testimony filed on January 9, 2009, certain
intervenors and also the FERC staff advocated a number of
positions on issues that affect the level of production costs the
individual Utility operating companies are permitted to reflect
in the bandwidth calculation, including the level of depreciation
and decommissioning expense for the nuclear and fossil-fueled
generating facilities. The effect of these various positions would
be to reallocate costs among the Utility operating companies.
In addition, three issues were raised alleging imprudence by
the Utility operating companies, including whether the Utility
operating companies had properly reflected generating units’
minimum operating levels for purposes of making unit commitment
and dispatch decisions, whether Entergy Arkansas’s sales to third
parties from its retained share of the Grand Gulf nuclear facility
were reasonable, prudent, and non-discriminatory, and whether
Entergy Louisiana’s long-term Evangeline gas purchase contract
was prudent and reasonable.
The parties reached a partial settlement agreement of certain of
the issues initially raised in this proceeding. The partial settlement
agreement was conditioned on the FERC accepting the agreement
without modification or condition, which the FERC did on August
24, 2009. A hearing on the remaining issues in the proceeding was
completed in June 2009, and in September 2009 the ALJ issued an
initial decision. The initial decision affirms Entergy’s position in
the filing, except for two issues that may result in a reallocation of
costs among the Utility operating companies. Entergy, the APSC,
the LPSC, and the MPSC have submitted briefs on exceptions in
the proceeding, and the matter has been submitted to the FERC
for decision.
2009 Rate Filing Based on Calendar Year 2008
Production Costs
Several parties intervened in the 2009 rate proceeding at the
FERC, including the LPSC and Ameren, which have also filed
protests. In July 2009 the FERC accepted Entergy’s proposed rates
for filing, effective June 1, 2009, subject to refund, and set the
proceeding for hearing and settlement procedures. Settlement
procedures were terminated and a hearing before the ALJ was
held in April 2010. In August 2010 the ALJ issued an initial decision.
The initial decision substantially affirms Entergy’s position in the
filing, except for one issue that may result in some reallocation
of costs among the Utility operating companies. The LPSC, the
FERC trial staff, and Entergy have submitted briefs on exceptions
in the proceeding.
2010 Rate Filing Based on Calendar Year 2009
Production Costs
In May 2010, Entergy filed with the FERC the 2010 rates in accordance
with the FERC’s orders in the System Agreement proceeding,
and supplemented the filing in September 2010. Several parties
intervened in the proceeding at the FERC, including the LPSC
and the City Council, which have also filed protests. In July 2010
the FERC accepted Entergy’s proposed rates for filing, effective
June 1, 2010, subject to refund, and set the proceeding for
hearing and settlement procedures. Settlement procedures
have been terminated, and the ALJ scheduled hearings to begin
in March 2011, with an initial decision scheduled for July 2011.
Subsequently, in January 2011 the ALJ issued an order directing
the parties and FERC staff to show cause why this proceeding
should not be stayed pending the issuance of FERC decisions in
the prior production cost proceedings currently before the FERC
on review. Briefing on the issue concluded on February 14, 2011. A
hearing on the show cause order is scheduled for March 3, 2011.
INTERRUPTIBLE LOAD PROCEEDING
In April 2007 the U.S. Court of Appeals for the D.C. Circuit issued
its opinion in the LPSC’s appeal of the FERC’s March 2004 and
April 2005 orders related to the treatment under the System
Agreement of the Utility operating companies’ interruptible
loads. In its opinion, the D.C. Circuit concluded that the FERC
(1) acted arbitrarily and capriciously by allowing the Utility
operating companies to phase-in the effects of the elimination
of the interruptible load over a 12-month period of time; (2)
failed to adequately explain why refunds could not be ordered
under Section 206(c) of the Federal Power Act; and (3) exercised
appropriately its discretion to defer addressing the cost of sulfur
dioxide allowances until a later time. The D.C. Circuit remanded
the matter to the FERC for a more considered determination on
the issue of refunds. The FERC issued its order on remand in
September 2007, in which it directed Entergy to make a compliance
filing removing all interruptible load from the computation of
peak load responsibility commencing April 1, 2004 and to issue
any necessary refunds to reflect this change. In addition, the
order directed the Utility operating companies to make refunds
for the period May 1995 through July 1996. In November 2007 the
Utility operating companies filed a refund report describing the
refunds to be issued pursuant to the FERC’s orders. The LPSC
filed a protest to the refund report in December 2007, and the
Utility operating companies filed an answer to the protest in
January 2008. The refunds were made in October 2008 by the
Utility operating companies that owed refunds to the Utility
operating companies that were due a refund under the decision.
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