Entergy 2011 Annual Report Download - page 93

Entergy Corporation and Subsidiaries 2011
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
The cumulative decommissioning and retirement cost liabilities
and expenses recorded in 2011 by Entergy were as follows
(in millions):
Change
Liabilities in Cash Liabilities
as of Dec. Flow as of Dec.
31, 2010 Accretion Estimate Spending 31, 2011
Utility:
Entergy Arkansas $ 602.2 $ 38.0 $ – $ – $ 640.2
Entergy Gulf States
Louisiana $ 339.9 $ 19.9 $ – $ – $ 359.8
Entergy Louisiana $ 321.2 $ 24.6 $ – $ – $ 345.8
Entergy Mississippi $ 5.4 $ 0.3 $ – $ – $ 5.7
Entergy
New Orleans $ 3.4 $ 0.2 $ – $ (0.7) $ 2.9
Entergy Texas $ 3.6 $ 0.3 $ – $ – $ 3.9
System Energy $ 452.8 $ 31.5 $(38.9) $ – $ 445.4
Entergy Wholesale
Commodities $1,420.0 $115.6 $(34.1) $ (8.6) $1,492.9
The cumulative decommissioning and retirement cost liabilities
and expenses recorded in 2010 by Entergy were as follows
(in millions):
Change
Liabilities in Cash Liabilities
as of Dec. Flow as of Dec.
31, 2009 Accretion Estimate Spending 31, 2010
Utility:
Entergy Arkansas $ 566.4 $ 35.8 $– $ – $ 602.2
Entergy Gulf States
Louisiana $ 321.2 $ 18.7 $– $ – $ 339.9
Entergy Louisiana $ 298.2 $ 23.0 $– $ – $ 321.2
Entergy Mississippi $ 5.1 $ 0.3 $– $ – $ 5.4
Entergy
New Orleans $ 3.2 $ 0.2 $– $ – $ 3.4
Entergy Texas $ 3.4 $ 0.2 $– $ – $ 3.6
System Energy $ 421.4 $ 31.4 $– $ – $ 452.8
Entergy Wholesale
Commodities $1,320.6 $107.6 $– $(8.2) $1,420.0
Entergy periodically reviews and updates estimated decommission-
ing costs. The actual decommissioning costs may vary from
the estimates because of regulatory requirements, changes in
technology, and increased costs of labor, materials, and equipment.
As described below, during 2011 Entergy updated decommissioning
cost estimates for certain nuclear power plants. There were no
updates to decommissioning cost estimates for 2010.
In the first quarter 2011, System Energy recorded a revision to its
estimated decommissioning cost liability for Grand Gulf as a result
of a revised decommissioning cost study. The revised estimate
resulted in a $38.9 million reduction in its decommissioning liability,
along with a corresponding reduction in the related regulatory asset.
In the fourth quarter of 2011, Entergy Wholesale Commodities
recorded a reduction of $34.1 million in the decommissioning
cost liability for a plant as a result of a revised decommissioning
cost study obtained to comply with a state regulatory requirement.
The revised cost study resulted in a change in the undiscounted
cash flows and a credit to decommissioning expense of $34.1 million
($21 million net-of-tax) was recorded, reflecting the excess of the
reduction in the liability over the amount of undepreciated assets.
For the Indian Point 3 and FitzPatrick plants purchased in 2000,
NYPA retained the decommissioning trusts and the decommissioning
liability. NYPA and Entergy subsidiaries executed decommissioning
agreements, which specify their decommissioning obligations.
NYPA has the right to require the Entergy subsidiaries to assume the
decommissioning liability provided that it assigns the corresponding
decommissioning trust, up to a specified level, to the Entergy
subsidiaries. If the decommissioning liability is retained by NYPA, the
Entergy subsidiaries will perform the decommissioning of the plants
at a price equal to the lesser of a pre-specified level or the amount in
the decommissioning trusts. Entergy recorded an asset, which is now
$521.6 million as of December 31, 2011, representing its estimate of
the present value of the difference between the stipulated contract
amount for decommissioning the plants less the decommissioning
cost estimated in an independent decommissioning cost study. The
asset is increased by monthly accretion based on the applicable
discount rate necessary to ultimately provide for the estimated future
value of the decommissioning contract. The monthly accretion is
recorded as interest income.
Entergy maintains decommissioning trust funds that are
committed to meeting the costs of decommissioning the nuclear
power plants. The fair values of the decommissioning trust funds
and the related asset retirement obligation regulatory assets of
Entergy as of December 31, 2011 are as follows (in millions):
Decommissioning Trust Fair Values Regulatory Asset
Utility:
ANO 1 and ANO 2 $ 541.7 $181.5
River Bend $ 420.9 $ 5.5
Waterford 3 $ 254.0 $116.1
Grand Gulf $ 423.4 $ 59.6
Entergy Wholesale Commodities $2,148.0 $ –
The fair values of the decommissioning trust funds and the
related asset retirement obligation regulatory assets of Entergy as of
December 31, 2010 are as follows (in millions):
Decommissioning Trust Fair Values Regulatory Asset
Utility:
ANO 1 and ANO 2 $ 520.8 $161.4
River Bend $ 393.6 $ 10.9
Waterford 3 $ 240.5 $104.2
Grand Gulf $ 387.9 $ 98.3
Entergy Wholesale Commodities $2,052.9 $ –
NOTE 10. LEASES
General
As of December 31, 2011, Entergy had capital leases and non-
cancelable operating leases for equipment, buildings, vehicles, and
fuel storage facilities (excluding nuclear fuel leases and the Grand
Gulf and Waterford 3 sale and leaseback transactions) with minimum
lease payments as follows (in thousands):
Operating Capital
Year Leases Leases
2012 $ 84,860 $ 6,494
2013 78,552 6,494
2014 78,559 4,694
2015 62,043 4,615
2016 37,963 4,457
Years thereafter 166,445 38,025
Minimum lease payments 508,422 64,779
Less: Amount representing interest – 23,621
Present value of net minimum
lease payments $508,422 $41,158
Total rental expenses for all leases (excluding nuclear fuel leases
and the Grand Gulf and Waterford 3 sale and leaseback transactions)
amounted to $75.3 million in 2011, $80.8 million in 2010, and $71.6
million in 2009. In addition to the above rental expense, railcar
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