Entergy 2011 Annual Report Download - page 74

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
In January 2011, Entergy Gulf States Louisiana filed with the LPSC
its gas rate stabilization plan for the test year ended September 30,
2010. The filing showed an earned return on common equity of 8.84%
and a revenue deficiency of $0.3 million. In March 2011 the LPSC
Staff filed its findings, suggesting an adjustment that produced an
11.76% earned return on common equity for the test year and a $0.2
million rate reduction. Entergy Gulf States Louisiana implemented
the $0.2 million rate reduction effective with the May 2011 billing
cycle. The LPSC docket is now closed.
In January 2010, Entergy Gulf States Louisiana filed with the LPSC its
gas rate stabilization plan for the test year ended September 30, 2009.
The filing showed an earned return on common equity of 10.87%, which
is within the earnings bandwidth of 10.5% plus or minus fifty basis points,
resulting in no rate change. In April 2010, Entergy Gulf States Louisiana
filed a revised evaluation report reflecting changes agreed upon with the
LPSC Staff. The revised evaluation report also resulted in no rate change.
FILI N G S W ITH T H E MPSC (ENTE R GY MI S S I S S I PPI )
Formula Rate Plan Filings
In September 2009, Entergy Mississippi filed with the MPSC proposed
modifications to its formula rate plan rider. In March 2010 the MPSC
issued an order: (1) providing the opportunity for a reset of Entergy
Mississippi’s return on common equity to a point within the formula
rate plan bandwidth and eliminating the 50/50 sharing that had been
in the plan, (2) modifying the performance measurement process, and
(3) replacing the revenue change limit of two percent of revenues,
which was subject to a $14.5 million revenue adjustment cap, with
a limit of four percent of revenues, although any adjustment above
two percent requires a hearing before the MPSC. The MPSC did not
approve Entergy Mississippi’s request to use a projected test year for
its annual scheduled formula rate plan filing and, therefore, Entergy
Mississippi will continue to use a historical test year for its annual
evaluation reports under the plan.
In March 2010, Entergy Mississippi submitted its 2009 test year
filing, its first annual filing under the new formula rate plan rider. In
June 2010 the MPSC approved a joint stipulation between Entergy
Mississippi and the Mississippi Public Utilities Staff that provides for
no change in rates, but does provide for the deferral as a regulatory
asset of $3.9 million of legal expenses associated with certain litigation
involving the Mississippi Attorney General, as well as ongoing legal
expenses in that litigation until the litigation is resolved.
In March 2011, Entergy Mississippi submitted its formula rate plan
2010 test year filing. The filing shows an earned return on common equity
of 10.65% for the test year, which is within the earnings bandwidth and
results in no change in rates. In November 2011 the MPSC approved a
joint stipulation between Entergy Mississippi and the Mississippi Public
Utilities Staff that provides for no change in rates.
FILINGS WITH THE CITY COUNCIL (ENTERGY NEW ORLEANS)
Formula Rate Plan
On July 31, 2008, Entergy New Orleans filed an electric and gas base
rate case with the City Council. On April 2, 2009, the City Council
approved a comprehensive settlement. The settlement provided for
a net $35.3 million reduction in combined fuel and non-fuel electric
revenue requirement, including conversion of a $10.6 million voluntary
recovery credit, implemented in January 2008, to a permanent reduction
and substantial realignment of Grand Gulf cost recovery from fuel to
electric base rates, and a $4.95 million gas base rate increase, both
effective June 1, 2009, with adjustment of the customer charges for all
rate classes. A new three-year formula rate plan was also adopted, with
terms including an 11.1% benchmark electric return on common equity
(ROE) with a +/- 40 basis point bandwidth and a 10.75% benchmark
gas ROE with a +/- 50 basis point bandwidth. Earnings outside the
bandwidth reset to the midpoint benchmark ROE, with rates changing
on a prospective basis depending on whether Entergy New Orleans is
over- or under-earning. The formula rate plan also includes a recovery
mechanism for City Council-approved capacity additions, plus
provisions for extraordinary cost changes and force majeure events.
In May 2010, Entergy New Orleans filed its electric and gas formula rate
plan evaluation reports. The filings requested a $12.8 million electric base
revenue decrease and a $2.4 million gas base revenue increase. Entergy
New Orleans and the City Council’s Advisors reached a settlement that
resulted in an $18.0 million electric base revenue decrease and zero gas
base revenue change effective with the October 2010 billing cycle. The
City Council approved the settlement in November 2010.
In May 2011, Entergy New Orleans filed its electric and gas
formula rate plan evaluation reports for the 2010 test year. The filings
requested a $6.5 million electric rate decrease and a $1.1 million gas
rate decrease. Entergy New Orleans and the City Council’s Advisors
reached a settlement that results in an $8.5 million incremental electric
rate decrease and a $1.6 million gas rate decrease. The settlement
also provides for the deferral of $13.4 million of Michoud plant
maintenance expenses incurred in 2010 and the establishment of a
regulatory asset that will be amortized over the period October 2011
through September 2018. The City Council approved the settlement
in September 2011. The new rates were effective with the first billing
cycle of October 2011.
The 2008 rate case settlement also included $3.1 million per year in
electric rates to fund the Energy Smart energy efficiency programs.
In September 2009 the City Council approved the energy efficiency
programs filed by Entergy New Orleans. The rate settlement provides
an incentive for Entergy New Orleans to meet or exceed energy savings
targets set by the City Council and provides a mechanism for Entergy
New Orleans to recover lost contribution to fixed costs associated with
the energy savings generated from the energy efficiency programs.
FILINGS WITH THE PUCT AND TEXAS CITIES
(ENTERGY TEXAS)
Retail Rates
2009 Rate Case
In December 2009, Entergy Texas filed a rate case requesting a $198.7
million increase reflecting an 11.5% return on common equity based
on an adjusted June 2009 test year. The rate case also includes a $2.8
million revenue requirement to provide supplemental funding for the
decommissioning trust maintained for the 70% share of River Bend
for which Entergy Texas retail customers are partially responsible,
in response to an NRC notification of a projected shortfall of
decommissioning funding assurance. Beginning in May 2010, Entergy
Texas implemented a $17.5 million interim rate increase, subject to
refund. Intervenors and PUCT Staff filed testimony recommending
adjustments that would result in a maximum rate increase, based on
the PUCT Staff’s testimony, of $58 million.
The parties filed a settlement in August 2010 intended to resolve
the rate case proceeding. The settlement provides for a $59 million
base rate increase for electricity usage beginning August 15, 2010,
with an additional increase of $9 million for bills rendered beginning
May 2, 2011. The settlement stipulates an authorized return on equity
of 10.125%. The settlement states that Entergy Texas’s fuel costs for
the period April 2007 through June 2009 are reconciled, with $3.25
million of disallowed costs, which were included in an interim fuel
refund. The settlement also sets River Bend decommissioning costs
at $2.0 million annually. Consistent with the settlement, in the third
quarter 2010, Entergy Texas amortized $11 million of rate case costs.
The PUCT approved the settlement in December 2010.
2011 Rate Case
In November 2011, Entergy Texas filed a rate case requesting a $112
million base rate increase reflecting an 10.6% return on common
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