Entergy 2011 Annual Report Download - page 96

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
Entergy Arkansas, Entergy Mississippi, Entergy New Orleans,
and Entergy Texas have received regulatory approval to recover
accrued other postretirement benefit costs through rates. Entergy
Arkansas began recovery in 1998, pursuant to an APSC order. This
order also allowed Entergy Arkansas to amortize a regulatory asset
(representing the difference between other postretirement benefit
costs and cash expenditures for other postretirement benefits
incurred from 1993 through 1997) over a 15-year period that began
in January 1998.
The LPSC ordered Entergy Gulf States Louisiana and Entergy
Louisiana to continue the use of the pay-as-you-go method for
ratemaking purposes for postretirement benefits other than
pensions. However, the LPSC retains the flexibility to examine
individual companies’ accounting for other postretirement benefits
to determine if special exceptions to this order are warranted.
Pursuant to regulatory directives, Entergy Arkansas, Entergy
Mississippi, Entergy New Orleans, Entergy Texas, and System
Energy contribute the other postretirement benefit costs collected
in rates into external trusts. System Energy is funding, on behalf of
Entergy Operations, other postretirement benefits associated with
Grand Gulf.
Trust assets contributed by participating Registrant Subsidiaries
are in three bank-administered trusts, established by Entergy
Corporation and maintained by a trustee. Each participating
Registrant Subsidiary holds a beneficial interest in the trusts’ assets.
The assets in the master trusts are commingled for investment
and administrative purposes. Although assets are commingled, the
trustee maintains supporting records for the purpose of allocating
the beneficial interest in net earnings/(losses) and the administrative
expenses of the investment accounts to the various participating
plans and participating Registrant Subsidiaries. Beneficial interest
in an investment account’s net income/(loss) is comprised of
interest and dividends, realized and unrealized gains and losses, and
expenses. Beneficial interest from these investments is allocated
monthly to the plans and participating Registrant Subsidiary based
on their portion of net assets in the pooled accounts.
Components of Net Other Postretirement Benefit
Cost and Other Amounts Recognized as a
Regulatory Asset and/or AOCI
Entergy Corporation’s and its subsidiaries’ total 2011, 2010, and 2009
other postretirement benefit costs, including amounts capitalized and
amounts recognized as a regulatory asset and/or other comprehensive
income, included the following components (in thousands):
2011 2010 2009
Other postretirement costs:
Service cost - benefits earned
during the period $ 59,340 $ 52,313 $ 46,765
Interest cost on APBO 74,522 76,078 75,265
Expected return on assets (29,477) (26,213) (23,484)
Amortization of transition obligation 3,183 3,728 3,732
Amortization of prior service credit (14,070) (12,060) (16,096)
Recognized net loss 21,192 17,270 18,970
Net other postretirement benefit cost $114,690 $111,116 $105,152
Other changes in plan assets and benefit
obligations recognized as a regulatory asset and/or
AOCI (before tax)
Arising this period:
Prior service credit for period $(29,507) $(50,548) $ –
Net loss 236,594 82,189 24,983
Amounts reclassified from regulatory
asset and/or AOCI to net periodic
benefit cost in the current year:
Amortization of transition obligation (3,183) (3,728) (3,732)
Amortization of prior service credit 14,070 12,060 16,096
Amortization of net loss (21,192) (17,270) (18,970)
Total $196,782 $ 22,703 $ 18,377
Total recognized as net periodic
benefit cost, regulatory asset,
and/or AOCI (before tax) $311,472 $133,819 $123,529
Estimated amortization amounts from
regulatory asset and/or AOCI to net
periodic benefit cost in the following year
Transition obligation $ 3,177 $ 3,183 $ 3,728
Prior service credit $(18,163) $(14,070) $ (12,060)
Net loss $ 43,127 $ 21,192 $ 17,270
Other Postretirement Benefit Obligations,
Plan Assets, Funded Status, and Amounts Not Yet
Recognized and Recognized in the Balance Sheet
of Entergy Corporation and its Subsidiaries as of
December 31, 2011 and 2010 (in thousands):
2011 2010
Change in APBO
Balance at beginning of year $ 1,386,370 $1,280,076
Service cost 59,340 52,313
Interest cost 74,522 76,078
Plan amendments (29,507) (50,548)
Plan participant contributions 14,650 14,275
Actuarial (gain)/loss 216,549 92,340
Benefits paid (77,454) (83,613)
Medicare Part D subsidy received 4,551 5,449
Early Retiree Reinsurance Program proceeds 3,348 –
Balance at end of year $ 1,652,369 $1,386,370
Change in Plan Assets
Fair value of assets at beginning of year $ 404,430 $ 362,399
Actual return on plan assets 9,432 36,364
Employer contributions 76,114 75,005
Plan participant contributions 14,650 14,275
Benefits paid (77,454) (83,613)
Fair value of assets at end of year $ 427,172 $ 404,430
Funded status $(1,225,197) $ (981,940)
Amounts recognized in the balance sheet
Current liabilities $ (32,832) $ (30,225)
Non-current liabilities (1,192,365) (951,715)
Total funded status $(1,225,197) $ (981,940)
Amounts recognized as a regulatory asset
(before tax)
Transition obligation $ 2,557 $ 5,118
Prior service cost/(credit) (6,628) (8,442)
Net loss 353,905 253,415
$ 349,834 $ 250,091
Amounts recognized as AOCI (before tax)
Transition obligation $ 620 $ 1,242
Prior service credit (66,176) (48,925)
Net loss 313,379 198,466
$ 247,823 $ 150,783
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