Entergy 2011 Annual Report Download - page 72

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
FILI N G S W ITH T H E APSC ( ENTE RGY AR K AN SA S)
Retail Rates
2009 Base Rate Filing
In September 2009, Entergy Arkansas filed with the APSC for a
general change in rates, charges, and tariffs. In June 2010 the APSC
approved a settlement and subsequent compliance tariffs that
provide for a $63.7 million rate increase, effective for bills rendered
for the first billing cycle of July 2010. The settlement provides for a
10.2% return on common equity.
FILI N G S W ITH T H E LPSC
Formula Rate Plans (Entergy Gulf States Louisiana
and Entergy Louisiana)
In March 2005 the LPSC approved a settlement proposal to resolve
various dockets covering a range of issues for Entergy Gulf States
Louisiana and Entergy Louisiana. The settlement included the
establishment of a three-year formula rate plan for Entergy Gulf
States Louisiana that, among other provisions, established a return on
common equity mid-point of 10.65% for the initial three-year term of the
plan and permits Entergy Gulf States Louisiana to recover incremental
capacity costs outside of a traditional base rate proceeding. Under the
formula rate plan, over- and under-earnings outside an allowed range
of 9.9% to 11.4% are allocated 60% to customers and 40% to Entergy
Gulf States Louisiana. Entergy Gulf States Louisiana made its initial
formula rate plan filing in June 2005. The formula rate plan was
subsequently extended one year.
Entergy Louisiana made a rate filing with the LPSC requesting a
base rate increase in January 2004. In May 2005 the LPSC approved
a settlement that included the adoption of a three-year formula rate
plan, the terms of which included an ROE mid-point of 10.25% for the
initial three-year term of the plan and permit Entergy Louisiana to
recover incremental capacity costs outside of a traditional base rate
proceeding. Under the formula rate plan, over- and under-earnings
outside an allowed regulatory range of 9.45% to 11.05% will be allocated
60% to customers and 40% to Entergy Louisiana. The initial formula
rate plan filing was made in May 2006.
The formula rate plans for Entergy Gulf States Louisiana and Entergy
Louisiana have subsequently been extended, with return on common
equity provisions consistent with the previously approved provisions,
to cover the 2008, 2009, 2010, and 2011 test years.
Retail Rates – Electric
(Entergy Gulf States Louisiana)
In October 2009 the LPSC approved a settlement that resolved Entergy
Gulf States Louisiana’s 2007 test year filing and provided for a formula
rate plan for the 2008, 2009, and 2010 test years. 10.65% is the target
midpoint return on equity for the formula rate plan, with an earnings
bandwidth of +/- 75 basis points (9.90% - 11.40%). Entergy Gulf States
Louisiana, effective with the November 2009 billing cycle, reset its
rates to achieve a 10.65% return on equity for the 2008 test year. The
rate reset, a $44.3 million increase that includes a $36.9 million cost of
service adjustment, plus $7.4 million net for increased capacity costs
and a base rate reclassification, was implemented for the November
2009 billing cycle, and the rate reset was subject to refund pending
review of the 2008 test year filing that was made in October 2009. In
January 2010, Entergy Gulf States Louisiana implemented an additional
$23.9 million rate increase pursuant to a special rate implementation
filing made in December 2009, primarily for incremental capacity costs
approved by the LPSC. In May 2010, Entergy Gulf States Louisiana and
the LPSC staff submitted a joint report on the 2008 test year filing and
requested that the LPSC accept the report, which resulted in a $0.8
million reduction in rates effective in the June 2010 billing cycle and
a $0.5 million refund. At its May 19, 2010 meeting, the LPSC accepted
the joint report.
In May 2010, Entergy Gulf States Louisiana made its formula rate
plan filing with the LPSC for the 2009 test year. The filing reflected a
10.25% return on common equity, which is within the allowed earnings
bandwidth, indicating no cost of service rate change is necessary
under the formula rate plan. The filing does reflect, however, a
revenue requirement increase to provide supplemental funding for
the decommissioning trust maintained for the LPSC-regulated 70%
share of River Bend, in response to a NRC notification of a projected
shortfall of decommissioning funding assurance. The filing also
reflected a rate increase for incremental capacity costs. In July 2010
the LPSC approved a $7.8 million increase in the revenue requirement
for decommissioning, effective September 2010. In August 2010,
Entergy Gulf States Louisiana made a revised 2009 test year filing.
The revised filing reflected a 10.12% earned return on common equity,
which is within the allowed earnings bandwidth resulting in no cost
of service adjustment. The revised filing also reflected two increases
outside of the formula rate plan sharing mechanism: (1) the previously
approved decommissioning revenue requirement, and (2) $25.2
million for capacity costs. The rates reflected in the revised filing
Retail Rate Proceedings
The following chart summarizes the Utility operating companies’ current retail base rates:
Company Authorized Return on Common Equity
Entergy Arkansas 10.2% n Current retail base rates implemented in the July 2010 billing cycle
pursuant to a settlement approved by the APSC.
Entergy Gulf States Louisiana 9.9% - 11.4% Electric; 10.0% - 11.0% Gas n Current retail electric base rates implemented based on Entergy Gulf
States Louisiana’s 2010 test year formula rate plan filing approved by the
LPSC.
n Current retail gas base rates reflect the rate stabilization plan filing for
the 2010 test year ended September 2010.
Entergy Louisiana 9.45% - 11.05% n Current retail base rates on Entergy Louisiana’s 2010 test year formula
rate plan filing approved by the LPSC.
Entergy Mississippi 10.54% - 12.72% n Current retail base rates reflect Entergy Mississippi’s latest formula rate
plan filing, based on the 2010 test year, and a stipulation approved by the
MPSC.
Entergy New Orleans 10.7% - 11.5% Electric; 10.25% - 11.25% Gas n Current retail base rates reflect Entergy New Orleans’s 2010 test year
formula rate plan filing and a settlement approved by the
City Council
Entergy Texas 10.125% n Current retail base rates reflect Entergy Texas’s 2009 base rate case filing
and a settlement approved by the PUCT.
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