Entergy 2012 Annual Report Download - page 59

Entergy Corporation and Subsidiaries 2012
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
Depreciation rates on average depreciable property for Entergy
approximated 2.5% in 2012, 2.6% in 2011, and 2.6% in 2010.
Included in these rates are the depreciation rates on average deprecia-
ble Utility property of 2.4% in 2012, 2.5% in 2011, and 2.5% 2010,
and the depreciation rates on average depreciable Entergy Wholesale
Commodities property of 3.5% in 2012, 3.9% in 2011, and 3.7%
in 2010.
Entergy amortizes nuclear fuel using a units-of-production method.
Nuclear fuel amortization is included in fuel expense in the income
statements.
“Non-utility property - at cost (less accumulated depreciation)” for
Entergy is reported net of accumulated depreciation of $230.4 million
and $214.3 million as of December 31, 2012 and 2011, respectively.
Construction expenditures included in accounts payable is
$267 million and $171 million at December 31, 2012 and 2011,
respectively.
Jointly-Owned Generating Stations
Certain Entergy subsidiaries jointly own electric generating facilities
with affiliates or third parties. The investments and expenses asso-
ciated with these generating stations are recorded by the Entergy
subsidiaries to the extent of their respective undivided ownership
interests. As of December 31, 2012, the subsidiaries’ investment and
accumulated depreciation in each of these generating stations were as
follows (dollars in millions):
Total
Fuel Megawatt Accumulated
Generating Stations Type Capability(1) Ownership Investment Depreciation
Utility Business:
Entergy Arkansas -
Independence
Unit 1 Coal 836 31.50% $ 128 $ 86
Common Facilities Coal 15.75% $ 33 $ 22
White Bluff
Units 1 and 2 Coal 1,659 57.00% $ 498 $ 319
Ouachita(2)
Common Facilities Gas 66.67% $ 169 $ 142
Entergy Gulf States Louisiana -
Roy S. Nelson
Unit 6 Coal 540 40.25% $ 250 $ 170
Roy S. Nelson
Unit 6
Common Facilities Coal 15.92% $ 9 $ 3
Big Cajun 2
Unit 3 Coal 588 24.15% $ 142 $ 99
Ouachita(2)
Common Facilities Gas 33.33% $ 87 $ 73
Entergy Louisiana -
Acadia
Common Facilities Gas 50.00% $ 8 $ –
Entergy Mississippi -
Independence
Units 1 and 2 and
Common Facilities Coal 1,678 25.00% $ 250 $ 140
Entergy Texas -
Roy S. Nelson
Unit 6 Coal 540 29.75% $ 180 $ 113
Roy S. Nelson
Unit 6
Common Facilities Coal 11.77% $ 6 $ 2
Big Cajun 2
Unit 3 Coal 588 17.85% $ 107 $ 68
System Energy -
Grand Gulf
Unit 1 Nuclear 1,430(4) 90.00%(3) $4,557 $2,569
Total
Fuel Megawatt Accumulated
Generating Stations Type Capability(1) Ownership Investment Depreciation
Entergy Wholesale Commodities:
Independence
Unit 2 Coal 842 14.37% $ 69 $ 43
Independence
Common Facilities Coal 7.18% $ 16 $ 9
Roy S. Nelson
Unit 6 Coal 540 10.9% $ 104 $ 54
Roy S. Nelson
Unit 6
Common Facilities Coal 4.31% $ 2 $ 1
(1) “Total Megawatt Capability” is the dependable load carrying capability as
demonstrated under actual operating conditions based on the primary fuel
(assuming no curtailments) that each station was designed to utilize.
(2) Ouachita Units 1 and 2 are owned 100% by Entergy Arkansas and Ouachita
Unit 3 is owned 100% by Entergy Gulf States Louisiana. The investment and
accumulated depreciation numbers above are only for the common facilities
and not for the generating units.
(3) Includes a leasehold interest held by System Energy. System Energy’s Grand
Gulf lease obligations are discussed in Note 10 to the financial statements.
(4) Includes estimate, pending further testing, of the rerate for recovered
performance (approximately 55 MW) and uprate (approximately 178 MW)
completed in 2012.
Nuclear Refueling Outage Costs
Nuclear refueling outage costs are deferred during the outage and
amortized over the estimated period to the next outage because these
refueling outage expenses are incurred to prepare the units to operate
for the next operating cycle without having to be taken off line.
Allowance for Funds Used During Construction
(AFUDC)
AFUDC represents the approximate net composite interest cost of
borrowed funds and a reasonable return on the equity funds used for
construction by the Registrant Subsidiaries. AFUDC increases both
the plant balance and earnings and is realized in cash through depre-
ciation provisions included in the rates charged to customers.
Income Taxes
Entergy Corporation and the majority of its subsidiaries file a United
States consolidated federal income tax return. Each tax-paying entity
records income taxes as if it were a separate taxpayer and consoli-
dating adjustments are allocated to the tax filing entities in accor-
dance with Entergy’s intercompany income tax allocation agreement.
Deferred income taxes are recorded for all temporary differences
between the book and tax basis of assets and liabilities, and for cer-
tain credits available for carryforward.
Deferred tax assets are reduced by a valuation allowance when, in
the opinion of management, it is more likely than not that some por-
tion of the deferred tax assets will not be realized. Deferred tax assets
and liabilities are adjusted for the effects of changes in tax laws and
rates in the period in which the tax or rate was enacted.
Investment tax credits are deferred and amortized based upon the
average useful life of the related property, in accordance with rate-
making treatment.
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