Entergy 2012 Annual Report Download - page 89

Entergy Corporation and Subsidiaries 2012
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
Entergy periodically reviews and updates estimated decommission-
ing costs. The actual decommissioning costs may vary from the esti-
mates because of regulatory requirements, changes in technology,
and increased costs of labor, materials, and equipment. As described
below, during 2012 and 2011 Entergy updated decommissioning cost
estimates for certain nuclear power plants.
In the second quarter 2012, Entergy Louisiana recorded a revision
to its estimated decommissioning cost liability for Waterford 3 as a
result of a revised decommissioning cost study. The revised estimate
resulted in a $48.9 million increase in its decommissioning cost liabil-
ity, along with a corresponding increase in the related asset retirement
costs asset that will be depreciated over the remaining life of the unit.
In the second quarter 2012, Entergy Wholesale Commodities recorded
a reduction of $60.6 million in the estimated decommissioning cost lia-
bility for a plant as a result of a revised decommissioning cost study.
The revised estimate resulted in a credit to decommissioning expense of
$49 million, reflecting the excess of the reduction in the liability over the
amount of the undepreciated asset retirement costs asset.
In the first quarter of 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, reflecting the
excess of the reduction in the liability over the amount of undepreci-
ated assets.
For the Indian Point 3 and FitzPatrick plants purchased in 2000,
NYPA retained the decommissioning trusts and the decommissioning
liabilities. NYPA and Entergy subsidiaries executed decommission-
ing agreements, which specify their decommissioning obligations.
NYPA has the rights to require the Entergy subsidiaries to assume
each of the decommissioning liabilities provided that it assigns the
corresponding decommissioning trust, up to a specified level, to the
Entergy subsidiaries. If the decommissioning liabilities are retained
by NYPA, the Entergy subsidiaries will perform the decommission-
ing 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 $546.5 million as of December 31, 2012, rep-
resenting its estimate of the present value of the difference between
the stipulated contract amount for decommissioning the plants less
the decommissioning costs estimated in independent decommission-
ing cost studies. 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 (liabilities) of Entergy as
of December 31, 2012 are as follows (in millions):
Regulatory
Decommissioning Trust Fair Values Asset (Liability)
Utility:
ANO 1 and ANO 2 $ 600.6 $204.0
River Bend $ 477.4 $ (1.7)
Waterford 3 $ 287.4 $126.7
Grand Gulf $ 490.6 $ 58.9
Entergy Wholesale Commodities $2,334.1 $ –
Entergy maintains decommissioning trust funds that are com-
mitted 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 $ –
NOTE 10. LEASES
General
As of December 31, 2012, Entergy had capital leases and non-can-
celable 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):
Year Operating Leases Capital Leases
2013 $ 94,422 $ 6,494
2014 97,001 4,694
2015 80,172 4,615
2016 55,083 4,457
2017 38,771 4,457
Years thereafter 139,560 34,223
Minimum lease payments 505,009 58,940
Less: Amount representing interest – 13,357
Present value of net minimum
lease payments $505,009 $45,583
Total rental expenses for all leases (excluding nuclear fuel leases
and the Grand Gulf and Waterford 3 sale and leaseback transac-
tions) amounted to $69.9 million in 2012, $75.3 million in 2011,
and $80.8 million in 2010. In addition to the above rental expense,
railcar operating lease payments and oil tank facilities lease payments
are recorded in fuel expense in accordance with regulatory treat-
ment. Railcar operating lease payments were $8.5 million in 2012,
$8.3 million in 2011, and $8.4 million in 2010 for Entergy Arkansas
87