Entergy 2012 Annual Report Download - page 73

Entergy Corporation and Subsidiaries 2012
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
the level of depreciation and decommissioning expense for the nuclear
and fossil-fueled generating facilities. The effect of these various posi-
tions would be to reallocate costs among the Utility operating compa-
nies. In addition, three issues were raised alleging imprudence by the
Utility operating companies, including whether the Utility operating
companies had properly reflected generating units’ minimum oper-
ating levels for purposes of making unit commitment and dispatch
decisions, whether Entergy Arkansas’s sales to third parties from its
retained share of the Grand Gulf nuclear facility were reasonable, pru-
dent, and non-discriminatory, and whether Entergy Louisiana’s long-
term Evangeline gas purchase contract was prudent and reasonable.
The parties reached a partial settlement agreement of certain of the
issues initially raised in this proceeding. The partial settlement agree-
ment was conditioned on the FERC accepting the agreement without
modification or condition, which the FERC did on August 24, 2009.
A hearing on the remaining issues in the proceeding was completed in
June 2009, and in September 2009 the ALJ issued an initial decision.
The initial decision affirms Entergy’s position in the filing, except for
two issues that may result in a reallocation of costs among the Utility
operating companies. In October 2011 the FERC issued an order on
the ALJ’s initial decision. The FERC’s order resulted in a minor real-
location of payments/receipts among the Utility operating companies
on one issue in the 2008 rate filing. Entergy made a compliance filing
in December 2011 showing the updated payment/receipt amounts.
The LPSC filed a protest in response to the compliance filing. On
January 3, 2013, the FERC issued an order accepting Entergy’s com-
pliance filing. In the January 2013 order the FERC required Entergy
to include interest on the recalculated bandwidth payment and
receipt amounts for the period from June 1, 2008 until the date of the
Entergy intra-system bill that will reflect the bandwidth recalculation
amounts for calendar year 2007. On February 4, 2013, Entergy filed
a request for rehearing of the FERC’s ruling requiring interest.
2009 Rate Filing Based on Calendar Year 2008 Production Costs
Several parties intervened in the 2009 rate proceeding at the FERC,
including the LPSC and Ameren, which have also filed protests. In
July 2009 the FERC accepted Entergy’s proposed rates for filing,
effective June 1, 2009, subject to refund, and set the proceeding for
hearing and settlement procedures. Settlement procedures were ter-
minated and a hearing before the ALJ was held in April 2010. In
August 2010 the ALJ issued an initial decision. The initial decision
substantially affirms Entergy’s position in the filing, except for one
issue that may result in some reallocation of costs among the Utility
operating companies. The LPSC, the FERC trial staff, and Entergy
submitted briefs on exceptions in the proceeding. In May 2012 the
FERC issued an order affirming the ALJ’s initial decision, or finding
certain issues in that decision moot. Rehearing and clarification of
FERC’s order have been requested.
2010 Rate Filing Based on Calendar Year 2009 Production Costs
In May 2010, Entergy filed with the FERC the 2010 rates in accor-
dance with the FERC’s orders in the System Agreement proceeding,
and supplemented the filing in September 2010. Several parties inter-
vened in the proceeding at the FERC, including the LPSC and the
City Council, which have also filed protests. In July 2010, the FERC
accepted Entergy’s proposed rates for filing, effective June 1, 2010, sub-
ject to refund, and set the proceeding for hearing and settlement pro-
cedures. Settlement procedures have been terminated, and the ALJ
scheduled hearings to begin in March 2011. Subsequently, in January
2011, the ALJ issued an order directing the parties and FERC Staff
to show cause why this proceeding should not be stayed pending the
issuance of FERC decisions in the prior production cost proceedings
currently before the FERC on review. In March 2011 the ALJ issued
an order placing this proceeding in abeyance.
2011 Rate Filing Based on Calendar Year 2010 Production Costs
In May 2011, Entergy filed with the FERC the 2011 rates in accor-
dance with the FERC’s orders in the System Agreement proceeding.
Several parties intervened in the proceeding at the FERC, including the
LPSC, which filed a protest as well. In July 2011, the FERC accepted
Entergy’s proposed rates for filing, effective June 1, 2011, subject
to refund, set the proceeding for hearing procedures, and then held
those procedures in abeyance pending FERC decisions in the prior
production cost proceedings currently before the FERC on review.
2012 Rate Filing Based on Calendar Year 2011 Production Costs
In May 2012, Entergy filed with the FERC the 2012 rates in
accordance with the FERC’s orders in the System Agreement pro-
ceeding. Several parties intervened in the proceeding at the FERC,
including the LPSC, which filed a protest as well. In August 2012,
the FERC accepted Entergy’s proposed rates for filing, effective
June 2012, subject to refund, set the proceeding for hearing proce-
dures, and then held those procedures in abeyance pending FERC
decisions in prior production cost proceedings currently before the
FERC on review.
INTERRUPTIBLE LOAD PROCEEDING
In April 2007, the U.S. Court of Appeals for the D.C. Circuit issued
its opinion in the LPSC’s appeal of the FERC’s March 2004 and April
2005 orders related to the treatment under the System Agreement
of the Utility operating companies’ interruptible loads. In its opin-
ion, the D.C. Circuit concluded that the FERC (1) acted arbitrarily
and capriciously by allowing the Utility operating companies to
phase-in the effects of the elimination of the interruptible load over a
12-month period of time; (2) failed to adequately explain why refunds
could not be ordered under Section 206(c) of the Federal Power Act;
and (3) exercised appropriately its discretion to defer addressing the
cost of sulfur dioxide allowances until a later time. The D.C. Circuit
remanded the matter to the FERC for a more considered determina-
tion on the issue of refunds. The FERC issued its order on remand in
September 2007, in which it directed Entergy to make a compliance
filing removing all interruptible load from the computation of peak
load responsibility commencing April 1, 2004 and to issue any nec-
essary refunds to reflect this change. In addition, the order directed
the Utility operating companies to make refunds for the period May
1995 through July 1996. In November 2007 the Utility operating
companies filed a refund report describing the refunds to be issued
pursuant to the FERC’s orders. The LPSC filed a protest to the refund
report in December 2007, and the Utility operating companies filed
an answer to the protest in January 2008. The refunds were made in
October 2008 by the Utility operating companies that owed refunds
to the Utility operating companies that were due a refund under the
decision. The APSC and the Utility operating companies appealed the
FERC decisions to the D.C. Circuit. Because of its refund obligation
to its customers as a result of this proceeding and a related LPSC
proceeding, Entergy Louisiana recorded provisions during 2008 of
approximately $16 million, including interest, for rate refunds. The
refunds were made in the fourth quarter 2009.
Following the filing of petitioners’ initial briefs, the FERC filed a
motion requesting the D.C. Circuit hold the appeal of the FERC’s
decisions ordering refunds in the interruptible load proceeding in
abeyance and remand the record to the FERC. The D.C. Circuit
granted the FERC’s unopposed motion in June 2009. In December
2009 the FERC established a paper hearing to determine whether the
FERC had the authority and, if so, whether it would be appropriate
to order refunds resulting from changes in the treatment of interrupt-
ible load in the allocation of capacity costs by the Utility operating
companies. In August 2010 the FERC issued an order stating that it
has the authority and refunds are appropriate. The APSC, MPSC, and
Entergy requested rehearing of the FERC’s decision. In June 2011 the
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