Entergy 2011 Annual Report Download - page 69

Entergy Corporation and Subsidiaries 2011
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
total equity in Entergy’s consolidated balance sheets. The preferred
dividends or distributions paid by all subsidiaries are reflected for all
periods presented outside of consolidated net income.
New Accounting Pronouncements
The accounting standard-setting process, including projects between
the FASB and the International Accounting Standards Board (IASB) to
converge U.S. GAAP and International Financial Reporting Standards,
is ongoing and the FASB and the IASB are each currently working on
several projects that have not yet resulted in final pronouncements.
Final pronouncements that result from these projects could have a
material effect on Entergy’s future net income, financial position, or
cash flows.
In May 2011 the FASB issued ASU No. 2011-4, “Fair Value
Measurement (Topic 820): Amendments to Achieve Common Fair
Value Measurement and Disclosure Requirements in U.S. GAAP
and IFRSs,” which states that the ASU explains how to measure fair
value. The ASU states that: 1) the amendments in the ASU result
in common fair value measurement and disclosure requirements
in U.S. GAAP and International Financial Reporting Standards; 2)
consequently, the amendments change the wording used to describe
many of the requirements in U.S. GAAP for measuring fair value and
for disclosing information about fair value measurements; 3) for
many of the requirements, the FASB does not intend for the ASU to
result in a change in the application of the requirements of current
U.S. GAAP; 4) some of the amendments clarify the FASB’s intent about
the application of existing fair value measurement requirements; and
5) other amendments change a particular principle or requirement
for measuring fair value or for disclosing information about fair
value measurements. ASU No. 2011-4 is effective for Entergy for the
first quarter 2012. Entergy does not expect ASU No. 2011-4 to affect
materially its results of operations, financial position, or cash flows.
In September 2011 the FASB issued ASU No. 2011-8, “Intangibles –
Goodwill and Other (Topic 350): Testing Goodwill for Impairment.”
The amendments permit an entity to first assess qualitative factors
to determine whether it is more likely than not that the fair value
of a reporting unit is less than its carrying amount as a basis for
determining whether it is necessary to perform a quantitative
goodwill impairment assessment. ASU No. 2011-8 is effective for
Entergy for the first quarter 2012. The adoption of ASU No. 2011-
8 will have no effect on Entergy’s results of operations, financial
position, or cash flows.
NOTE 2. RATE AND REGULATORY MATTERS
Regulatory Assets
OTH E R RE GU L ATO RY AS S ETS
Regulatory assets represent probable future revenues associated with
costs that are expected to be recovered from customers through the
regulatory ratemaking process affecting the Utility business. In addition
to the regulatory assets that are specifically disclosed on the face of
the balance sheets, the tables below provide detail of “Other regulatory
assets” that are included on Entergy’s and the Registrant Subsidiaries’
balance sheets as of December 31, 2011 and 2010 (in millions):
2011 2010
Asset retirement obligation - recovery dependent
upon timing of decommissioning (Note 9)(b) $ 395.9 $ 406.4
Deferred capacity - (Note 2 - Retail Rate
Proceedings - Filings with the LPSC) – 15.8
Grand Gulf fuel - non-current and power
management rider - recovered through rate
riders when rates are redetermined periodically
(Note 2 - Fuel and purchased power cost recovery) 12.4 17.4
New nuclear generation development costs
(Note 2) 56.8 –
Gas hedging costs - recovered through fuel rates 30.3 1.9
Pension & postretirement costs
(Note 11 - Qualified Pension Plans, Other Postretirement
Benefits, and Non-Qualified Pension Plans)(b) 2,542.0 1,734.7
Postretirement benefits - recovered through 2012
(Note 11 - Other Postretirement Benefits)(b) 2.4 4.8
Provision for storm damages, including hurricane
costs - recovered through securitization,
insurance proceeds, and retail rates (Note 2 -
Storm Cost Recovery Filings with
Retail Regulators) 996.4 1,026.0
Removal costs - recovered through depreciation rates
(Note 9)(b) 81.2 81.5
River Bend AFUDC - recovered through August 2025
(Note 1 - River Bend AFUDC) 24.3 26.2
Sale-leaseback deferral - (Note 10 - Sale and
Leaseback Transactions - Grand Gulf Lease
Obligations) – 22.3
Spindletop gas storage facility - recovered through
December 2032(a) 31.0 32.6
Transition to competition costs - recovered over a
15-year period through February 2021 89.2 95.8
Little Gypsy cost proceedings - recovery
through securitiazation (Note 5 - Entergy Louisiana
Securitization Bonds - Little Gypsy) 198.4 200.9
Incremental ice storm costs - recovered through 2032 10.5 11.1
Michoud plant maintenance - recovered over a
7-year period through September 2018 12.9 –
Unamortized loss on reacquired debt -
recovered over term of debt 108.8 122.5
Other 44.4 38.3
Total $4,636.9 $3,838.2
(a) The jurisdictional split order assigned the regulatory asset to Entergy
Texas. The regulatory asset, however, is being recovered and amortized at
Entergy Gulf States Louisiana. As a result, a billing occurs monthly over
the same term as the recovery and receipts will be submitted to Entergy
Texas. Entergy Texas has recorded a receivable from Entergy Gulf States
Louisiana and Entergy Gulf States Louisiana has recorded
a corresponding payable.
(b) Does not earn a return on investment, but is offset by related liabilities.
FUEL AND PURC H A S E D POWER COST RECOV E RY
Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, and Entergy Texas are
allowed to recover fuel and purchased power costs through fuel
mechanisms included in electric and gas rates that are recorded
as fuel cost recovery revenues. The difference between revenues
collected and the current fuel and purchased power costs is generally
recorded as “Deferred fuel costs” on the Utility operating companies’
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