Entergy 2011 Annual Report Download - page 65

Entergy Corporation and Subsidiaries 2011
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
Depreciation rates on average depreciable property for Entergy
approximated 2.6% in 2011, 2.6% in 2010, and 2.7% in 2009. Included
in these rates are the depreciation rates on average depreciable
utility property of 2.5% in 2011, 2.5% in 2010, and 2.7% 2009, and the
depreciation rates on average depreciable non-utility property of 3.9%
in 2011, 3.7% in 2010, and 3.8% in 2009.
Entergy amortizes nuclear fuel using a units-of-production
method. Nuclear fuel amortization is included in fuel expense in the
income statements.
“Non-utility property - at cost (less accumulated depreciation)” for
Entergy is reported net of accumulated depreciation of $214.3 million
and $207.6 million as of December 31, 2011 and 2010, respectively.
Construction expenditures included in accounts payable at
December 31, 2011 is $171 million.
Jointly-Owned Generating Stations
Certain Entergy subsidiaries jointly own electric generating facilities
with affiliates or third parties. The investments and expenses
associated with these generating stations are recorded by the Entergy
subsidiaries to the extent of their respective undivided ownership
interests. As of December 31, 2011, the subsidiaries’ investment and
accumulated depreciation in each of these generating stations were as
follows (dollars in millions):
Total
Fuel Megawatt Accumulated
Generating Stations Type Capability(1) Ownership Investment Depreciation
Utility Business:
Entergy Arkansas -
Independence
Unit 1 Coal 836 31.50% $ 128 $ 96
Common Facilities Coal 15.75% $ 33 $ 24
White Bluff
Units 1 and 2 Coal 1,659 57.00% $ 494 $ 337
Ouachita(2)
Common Facilities Gas 66.67% $ 171 $ 142
Entergy Gulf States Louisiana -
Roy S. Nelson
Unit 6 Coal 550 40.25% $ 244 $ 172
Roy S. Nelson
Unit 6
Common Facilities Coal 15.92% $ 9 $ 3
Big Cajun 2
Unit 3 Coal 588 24.15% $ 142 $ 97
Ouachita(2)
Common Facilities Gas 33.33% $ 87 $ 72
Entergy Louisiana
Acadia
Common Facilitites Gas 50.00% $ 12 $ –
Entergy Mississippi -
Independence
Units 1 and 2 and
Common Facilities Coal 1,678 25.00% $ 249 $ 137
Entergy Texas -
Roy S. Nelson
Unit 6 Coal 550 29.75% $ 178 $ 117
Roy S. Nelson
Unit 6
Common Facilities Coal 11.77% $ 6 $ 2
Big Cajun 2
Unit 3 Coal 588 17.85% $ 107 $ 68
System Energy -
Grand Gulf
Unit 1 Nuclear 1,190 90.00%(3) $3,929 $2,518
Total
Fuel Megawatt Accumulated
Generating Stations Type Capability(1) Ownership Investment Depreciation
Entergy Wholesale Commodities:
Independence
Unit 2 Coal 842 14.37% $ 68 $ 41
Common Facilities Coal 7.18% $ 16 $ 10
Roy S. Nelson Unit 6 Coal 550 10.9% $ 102 $ 53
Roy S. Nelson Unit 6
Common Facilities Coal 4.31% $ 2 $ 1
(1) “Total Megawatt Capability” is the dependable load carrying capability as
demonstrated under actual operating conditions based on the primary fuel
(assuming no curtailments) that each station was designed to utilize.
(2) Ouachita Units 1 and 2 are owned 100% by Entergy Arkansas and
Ouachita Unit 3 is owned 100% by Entergy Gulf States Louisiana.
The investment and accumulated depreciation numbers above are only
for the common facilities and not for the generating units.
(3) Includes an 11.5% leasehold interest held by System Energy. System
Energy’s Grand Gulf lease obligations are discussed in Note 10 to
the financial statements.
Nuclear Refueling Outage Costs
Nuclear refueling outage costs are deferred during the outage and
amortized over the estimated period to the next outage because these
refueling outage expenses are incurred to prepare the units to operate
for the next operating cycle without having to be taken off line.
Allowance for Funds Used During Construction
(AFUDC)
AFUDC represents the approximate net composite interest cost of
borrowed funds and a reasonable return on the equity funds used for
construction by the Registrant Subsidiaries. AFUDC increases both the
plant balance and earnings and is realized in cash through depreciation
provisions included in the rates charged to customers.
Income Taxes
Entergy Corporation and the majority of its subsidiaries file a United
States consolidated federal income tax return. Each tax paying entity
records income taxes as if it were a separate taxpayer and consolidating
adjustments are allocated to the tax filing entities in accordance with
Entergy’s intercompany income tax allocation agreement. Deferred
income taxes are recorded for all temporary differences between the
book and tax basis of assets and liabilities, and for certain credits
available for carryforward.
Deferred tax assets are reduced by a valuation allowance when, in
the opinion of management, it is more likely than not that some portion
of the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates
in the period in which the tax or rate was enacted.
Investment tax credits are deferred and amortized based upon
the average useful life of the related property, in accordance with
ratemaking treatment.
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