Entergy 2012 Annual Report Download - page 65

Entergy Corporation and Subsidiaries 2012
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
Arkansas’s assistance to determine the additional fuel and purchased
energy costs associated with these findings and file the analysis within
60 days of the order. After a final determination of the costs is made
by the APSC, Entergy Arkansas would be directed to refund that
amount with interest to its customers as a credit on the energy cost
recovery rider. Entergy Arkansas requested rehearing of the order. In
March 2007, in order to allow further consideration by the APSC, the
APSC granted Entergy Arkansas’s petition for rehearing and for stay
of the APSC order.
In October 2008, Entergy Arkansas filed a motion to lift the stay
and to rescind the APSC’s January 2007 order in light of the argu-
ments advanced in Entergy Arkansas’s rehearing petition and because
the value for Entergy Arkansas’s customers obtained through the
resolved railroad litigation is significantly greater than the incremen-
tal cost of actions identified by the APSC as imprudent. In December
2008 the APSC denied the motion to lift the stay pending resolution
of Entergy Arkansas’s rehearing request and the unresolved issues in
the proceeding. The APSC ordered the parties to submit their unre-
solved issues list in the pending proceeding, which the parties did.
In February 2010 the APSC denied Entergy Arkansas’s request for
rehearing, and held a hearing in September 2010 to determine the
amount of damages, if any, that should be assessed against Entergy
Arkansas. A decision is pending. Entergy Arkansas expects the
amount of damages, if any, to have an immaterial effect on its results
of operations, financial position, or cash flows.
The APSC also established a separate docket to consider the resolved
railroad litigation, and in February 2010 it established a procedural
schedule that concluded with testimony through September 2010.
Testimony has been filed, and the APSC will decide the case based on
the record in the proceeding, including the prefiled testimony.
Entergy Gulf States Louisiana and Entergy Louisiana
Entergy Gulf States Louisiana and Entergy Louisiana recover electric
fuel and purchased power costs for the billing month based upon the
level of such costs incurred two months prior to the billing month.
Entergy Gulf States Louisiana’s purchased gas adjustments include
estimates for the billing month adjusted by a surcharge or credit that
arises from an annual reconciliation of fuel costs incurred with fuel
cost revenues billed to customers, including carrying charges.
In January 2003 the LPSC authorized its staff to initiate a pro-
ceeding to audit the fuel adjustment clause filings of Entergy Gulf
States Louisiana and its affiliates. The audit included a review of the
reasonableness of charges flowed by Entergy Gulf States Louisiana
through its fuel adjustment clause for the period 1995 through 2004.
Entergy Gulf States Louisiana and the LPSC Staff reached a settle-
ment to resolve the audit that requires Entergy Gulf States Louisiana
to refund $18 million to customers, including the realignment to base
rates of $2 million of SO2 costs. The ALJ held a stipulation hear-
ing and in November 2011 the LPSC issued an order approving the
settlement. The refund was made in the November 2011 billing cycle.
Entergy Gulf States Louisiana had previously recorded provisions for
the estimated outcome of this proceeding.
In December 2011 the LPSC authorized its staff to initiate another
proceeding to audit the fuel adjustment clause filings of Entergy Gulf
States Louisiana and its affiliates. The audit includes a review of the
reasonableness of charges flowed by Entergy Gulf States Louisiana
through its fuel adjustment clause for the period 2005 through 2009.
Discovery is in progress, but a procedural schedule has not been
established.
In April 2010 the LPSC authorized its staff to initiate an audit of
Entergy Louisiana’s fuel adjustment clause filings. The audit includes
a review of the reasonableness of charges flowed through the fuel
adjustment clause by Entergy Louisiana for the period from 2005
through 2009. The LPSC Staff issued its audit report in January
2013. The LPSC staff recommended that Entergy Louisiana refund
approximately $1.9 million, plus interest, to customers and realign
the recovery of approximately $1.0 million from Entergy Louisiana’s
fuel adjustment clause to base rates. Two parties have intervened in
the proceeding. A procedural schedule has not yet been established.
Entergy Louisiana has recorded provisions for the estimated outcome
of this proceeding.
Entergy Mississippi
Entergy Mississippi’s rate schedules include an energy cost recovery
rider that, effective January 1, 2013, is adjusted annually to reflect
accumulated over- or under-recoveries. Entergy Mississippi’s fuel cost
recoveries are subject to annual audits conducted pursuant to the
authority of the MPSC.
Mississippi Attorney General Complaint
The Mississippi attorney general filed a complaint in state court in
December 2008 against Entergy Corporation, Entergy Mississippi,
Entergy Services, and Entergy Power alleging, among other things,
violations of Mississippi statutes, fraud, and breach of good faith
and fair dealing, and requesting an accounting and restitution. The
complaint is wide ranging and relates to tariffs and procedures
under which Entergy Mississippi purchases power not generated in
Mississippi to meet electricity demand. Entergy believes the complaint
is unfounded. In December 2008, the defendant Entergy companies
removed the attorney general’s suit to U.S. District Court in Jackson,
Mississippi. The Mississippi attorney general moved to remand the
matter to state court. In August 2012, the District Court issued an
opinion denying the Attorney General’s motion for remand, finding
that the District Court has subject matter jurisdiction under the Class
Action Fairness Act.
The defendant Entergy companies answered the complaint and
filed a counterclaim for relief based upon the Mississippi Public
Utilities Act and the Federal Power Act. In May 2009, the defen-
dant Entergy companies filed a motion for judgment on the pleadings
asserting grounds of federal preemption, the exclusive jurisdiction of
the MPSC, and factual errors in the attorney general’s complaint. In
September 2012 the District Court heard oral argument on Entergy’s
motion for judgment on the pleadings. The District Court’s ruling on
the motion for judgment on the pleadings is pending.
Entergy New Orleans
Entergy New Orleans’s electric rate schedules include a fuel adjust-
ment tariff designed to reflect no more than targeted fuel and pur-
chased power costs, adjusted by a surcharge or credit for deferred
fuel expense arising from the monthly reconciliation of actual fuel
and purchased power costs incurred with fuel cost revenues billed to
customers, including carrying charges.
Entergy New Orleans’s gas rate schedules include a purchased
gas adjustment to reflect estimated gas costs for the billing month,
adjusted by a surcharge or credit similar to that included in the elec-
tric fuel adjustment clause, including carrying charges.
Entergy Texas
Entergy Texas’s rate schedules include a fixed fuel factor to recover
fuel and purchased power costs, including interest, not recovered in
base rates. Semi-annual revisions of the fixed fuel factor are made in
March and September based on the market price of natural gas and
changes in fuel mix. The amounts collected under Entergy Texas’s
fixed fuel factor and any interim surcharge or refund are subject to
fuel reconciliation proceedings before the PUCT.
In October 2009, Entergy Texas filed with the PUCT a request
to refund approximately $71 million, including interest, of fuel cost
recovery over-collections through September 2009. Pursuant to a
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