Entergy 2011 Annual Report Download - page 71

Entergy Corporation and Subsidiaries 2011
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
In July 2008 the MPSC began a proceeding to investigate
the fuel procurement practices and fuel adjustment schedules of
the Mississippi utility companies, including Entergy Mississippi. The
MPSC stated that the goal of the proceeding is fact-finding so that the
MPSC may decide whether to amend the current fuel cost recovery
process. Hearings were held in July and August 2008. Further
proceedings have not been scheduled.
Mississippi Attorney General Complaint
The Mississippi attorney general filed a complaint in state court in
December 2008 against Entergy Corporation, Entergy Mississippi,
Entergy Services, Inc., and Entergy Power, Inc. alleging, among other
things, violations of Mississippi statutes, fraud, and breach of good
faith and fair dealing, and requesting an accounting and restitution.
The litigation is wide ranging and relates to tariffs and procedures
under which Entergy Mississippi purchases power not generated
in Mississippi to meet electricity demand. Entergy believes the
complaint is unfounded. On December 29, 2008, the defendant
Entergy companies filed to remove the attorney general’s suit to
U.S. District Court (the forum that Entergy believes is appropriate
to resolve the types of federal issues raised in the suit), where it is
currently pending, and additionally answered the complaint and filed
a counter-claim for relief based upon the Mississippi Public Utilities
Act and the Federal Power Act. The Mississippi attorney general has
filed a pleading seeking to remand the matter to state court. In May
2009, the defendant Entergy companies filed a motion for judgment
on the pleadings asserting grounds of federal preemption, the
exclusive jurisdiction of the MPSC, and factual errors in the attorney
general’s complaint.
In July 2011, the attorney general requested a status conference
regarding its motion to remand. The court granted the attorney
general’s request for a status conference, which was held in
September 2011. Consistent with the court’s instructions, both
parties submitted letters to the court in September 2011 providing
updates on the facts of the case and the law, and the court has now
taken the parties’ arguments under advisement.
Entergy New Orleans
Entergy New Orleans’s electric rate schedules include a fuel
adjustment tariff designed to reflect no more than targeted fuel and
purchased power costs, adjusted by a surcharge or credit for deferred
fuel expense arising from the monthly reconciliation of actual fuel
and purchased power costs incurred with fuel cost revenues billed
to customers, including carrying charges.
Entergy New Orleans’s gas rate schedules include a purchased
gas adjustment to reflect estimated gas costs for the billing month,
adjusted by a surcharge or credit similar to that included in the
electric fuel adjustment clause, including carrying charges.
Entergy Texas
Entergy Texas’s rate schedules include a fixed fuel factor to recover fuel
and purchased power costs, including carrying charges, not recovered
in base rates. Semi-annual revisions of the fixed fuel factor are made
in March and September based on the market price of natural gas and
changes in fuel mix. The amounts collected under Entergy Texas’s
fixed fuel factor and any interim surcharge or refund are subject to
fuel reconciliation proceedings before the PUCT.
In January 2008, Entergy Texas made a compliance filing with the
PUCT describing how its 2007 rough production cost equalization
receipts under the System Agreement were allocated between Entergy
Gulf States, Inc.’s Texas and Louisiana jurisdictions. In December
2008 the PUCT adopted an ALJ proposal for decision recommending
an additional $18.6 million allocation to Texas retail customers.
Because the PUCT allocation to Texas retail customers is inconsistent
with the LPSC allocation to Louisiana retail customers, the PUCT’s
decision resulted in trapped costs between the Texas and Louisiana
jurisdictions with no mechanism for recovery. Entergy Texas filed
with the FERC a proposed amendment to the System Agreement
bandwidth formula to specifically calculate the payments to Entergy
Gulf States Louisiana and Entergy Texas of Entergy Gulf States, Inc.’s
rough production cost equalization receipts for 2007. In May 2009 the
FERC issued an order rejecting the proposed amendment. Because of
the FERC’s order, Entergy Texas recorded the effects of the PUCT’s
allocation of the additional $18.6 million to Texas retail customers in
the second quarter 2009. On an after-tax basis, the charge to earnings
was approximately $13.0 million (including interest). The PUCT and
FERC decisions are now final.
In May 2009, Entergy Texas filed with the PUCT a request to refund
$46.1 million, including interest, of fuel cost recovery over-collections
through February 2009. Pursuant to a stipulation among the various
parties, in June 2009 the PUCT issued an order approving a refund of
$59.2 million, including interest, of fuel cost recovery overcollections
through March 2009. The refund was made for most customers over a
three-month period beginning July 2009.
In October 2009, Entergy Texas filed with the PUCT a request
to refund approximately $71 million, including interest, of fuel cost
recovery over-collections through September 2009. Pursuant to a
stipulation among the various parties, the PUCT issued an order
approving a refund of $87.8 million, including interest, of fuel cost
recovery overcollections through October 2009. The refund was made
for most customers over a three-month period beginning January 2010.
In June 2010, Entergy Texas filed with the PUCT a request to refund
approximately $66 million, including interest, of fuel cost recovery
over-collections through May 2010. In September 2010 the PUCT
issued an order providing for a $77 million refund, including interest,
for fuel cost recovery over-collections through June 2010. The refund
was made for most customers over a three-month period beginning
with the September 2010 billing cycle.
In December 2010, Entergy Texas filed with the PUCT a request to
refund fuel cost recovery over-collections through October 2010. Pursuant
to a stipulation among the parties that was approved by the PUCT in March
2011, Entergy Texas refunded over-collections through November 2010 of
approximately $73 million, including interest through the refund period.
The refund was made for most customers over a three-month period that
began with the February 2011 billing cycle.
In December 2011, Entergy Texas filed with the PUCT a request
to refund approximately $43 million, including interest, of fuel cost
recovery over-collections through October 2011. Entergy Texas and
the parties to the proceeding reached an agreement that Entergy Texas
will refund $67 million, including interest, over a three-month period,
which refund includes additional over-recoveries through December
2011. Entergy Texas and the parties requested that interim rates
consistent with the settlement be approved effective with the March
2012 billing month, and this request was granted by the presiding ALJ
on February 16, 2012.
Entergy Texas’s December 2009 rate case filing, which is discussed
below, also included a request to reconcile $1.8 billion of fuel and
purchased power costs covering the period April 2007 through
June 2009.
Entergy Texas’s November 2011 rate case filing, which is
discussed below, also includes a request to reconcile $1.3 billion
of fuel and purchased power costs covering the period July 2009
through June 2011.
69