Entergy 2011 Annual Report Download - page 104

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
Geographic Areas
For the years ended December 31, 2011 and 2010, the amount of
revenue Entergy derived from outside of the United States was
insignificant. As of December 31, 2011 and 2010, Entergy had no
long-lived assets located outside of the United States.
NOTE 14. EQUITY METHOD INVESTMENTS
As of December 31, 2011, Entergy owns investments in the
following companies that it accounts for under the equity method
of accounting:
Investment Ownership Description
Entergy-Koch 50% partnership interest Entergy-Koch was in the
energy commodity marketing
and trading business and gas
transportation and storage
business until the fourth
quarter of 2004 when these
businesses were sold.
RS Cogen LLC 50% member interest Co-generation project that
produces power and steam
on an industrial and merchant
basis in the Lake Charles,
Louisiana area.
Top Deer 50% member interest Wind-powered electric
generation joint venture.
Following is a reconciliation of Entergy’s investments in equity
affiliates (in thousands):
2011 2010 2009
Beginning of year $ 40,697 $ 39,580 $ 66,247
Loss from the investments (88) (2,469) (7,793)
Dispositions and other adjustments 4,267 3,586 (18,874)
End of year $44,876 $40,697 $39,580
Transactions with Equity Method Investees
Entergy Gulf States Louisiana purchased approximately $41.1
million, $50.8 million, and $49.3 million of electricity generated from
Entergy’s share of RS Cogen in 2011, 2010, and 2009, respectively.
Entergy’s operating transactions with its other equity method
investees were not significant in 2011, 2010, or 2009.
NOTE 15. ACQUISITIONS AND DISPOSITIONS
Acquisitions
ACAD I A
In April 2011, Entergy Louisiana purchased Unit 2 of the Acadia
Energy Center, a 580 MW generating unit located near Eunice,
Louisiana, from an independent power producer. The Acadia Energy
Center, which entered commercial service in 2002, consists of two
combined-cycle gas-fired generating units, each nominally rated at
580 MW. Entergy Louisiana purchased 100 percent of Acadia Unit 2
and a 50 percent ownership interest in the facility’s common assets
for approximately $300 million. In a separate transaction, Cleco
Power acquired Acadia Unit 1 and the other 50 percent interest in
the facility’s common assets. Cleco Power will serve as operator for
the entire facility. The FERC and the LPSC approved the transaction.
RHOD E IS L AN D STATE ENERGY CE NTE R
In December 2011 a subsidiary in the Entergy Wholesale Commodities
business segment purchased the Rhode Island State Energy Center,
a 583 MW natural gas-fired combined-cycle generating plant located
in Johnston, Rhode Island, from a subsidiary of NextEra Energy
Resources, for approximately $346 million. The Rhode Island State
Energy Center began commercial operation in 2002.
PALI S ADES PURC H A S E D POWER AGR E E M E N T
Entergy’s purchase of the Palisades plant in 2007 included a unit-
contingent, 15-year purchased power agreement (PPA) with
Consumers Energy for 100% of the plant’s output, excluding any
future uprates. Prices under the PPA range from $43.50/MWh in 2007
to $61.50/MWh in 2022, and the average price under the PPA is $51/
MWh. For the PPA, which was at below-market prices at the time of
the acquisition, Entergy will amortize a liability to revenue over the
life of the agreement. The amount that will be amortized each period
is based upon the difference between the present value calculated
at the date of acquisition of each year’s difference between revenue
under the agreement and revenue based on estimated market prices.
Amounts amortized to revenue were $43 million in 2011, $46 million
in 2010, and $53 million in 2009. The amounts to be amortized to
revenue for the next five years will be $17 million in 2012, $18 million
for 2013, $16 million for 2014, $15 million for 2015, and $13 million
for 2016.
NYPA VALUE SH ARING AGR E E M E N TS
Entergy’s purchase of the FitzPatrick and Indian Point 3 plants from
NYPA included value sharing agreements with NYPA. In October
2007, Entergy subsidiaries and NYPA amended and restated the
value sharing agreements to clarify and amend certain provisions
of the original terms. Under the amended value sharing agreements,
Entergy subsidiaries will make annual payments to NYPA based on
the generation output of the Indian Point 3 and FitzPatrick plants
from January 2007 through December 2014. Entergy subsidiaries will
pay NYPA $6.59 per MWh for power sold from Indian Point 3, up to
an annual cap of $48 million, and $3.91 per MWh for power sold from
FitzPatrick, up to an annual cap of $24 million. The annual payment
for each year’s output is due by January 15 of the following year.
Entergy will record the liability for payments to NYPA as power is
generated and sold by Indian Point 3 and FitzPatrick. An amount
equal to the liability will be recorded to the plant asset account as
contingent purchase price consideration for the plants. In 2011, 2010,
and 2009, Entergy Wholesale Commodities recorded $72 million as
plant for generation during each of those years. This amount will be
depreciated over the expected remaining useful life of the plants.
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