Company: EAI
Filing Date: 2025-02-18
Form Type: 10-K
Source: 0000065984-25-000012
Chunk: 344

Company: ENTERGY ARKANSAS, LLC
Filing Date: 2025-02-18
Form: 10-K
Item: Item 1A
Chunk 344
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System Energy Formula Rate Annual Protocols Formal Challenge Concerning 2022 Calendar Year Bills

In February 2024, pursuant to the protocols procedures, the LPSC and the City Council filed with the FERC a formal challenge to System Energy’s implementation of the formula rate during calendar year 2022.  This formal challenge was ultimately settled as a result of System Energy’s global settlements with the MPSC, the APSC, the City Council, and the LPSC.  See “Complaints Against System Energy” in Note 2 to the financial statements for further discussion of the System Energy settlements with the MPSC, the APSC, the City Council, and the LPSC.

Depreciation Amendment Proceeding

In December 2021, System Energy submitted to the FERC proposed amendments to the Unit Power Sales Agreement to adopt updated rates for use in calculating Grand Gulf plant depreciation and amortization expenses.  The proposed amendments would result in higher charges to the Utility operating companies that buy capacity and energy from System Energy under the Unit Power Sales Agreement.  In February 2022 the FERC accepted System Energy’s proposed increased depreciation rates with an effective date of March 1, 2022, subject to refund pending the outcome of the settlement and/or hearing procedures.  In June 2023 System Energy filed with the FERC an unopposed offer of settlement that it had negotiated with intervenors to the proceeding.  In August 2023 the FERC approved the settlement, which resolves the proceeding.  In third quarter 2023, System Energy recorded a reduction in depreciation expense of $41 million representing the cumulative difference in depreciation expense resulting from the depreciation rates used from March 2022 through June 2023 and the depreciation rates included in the settlement filing approved by the FERC.  In October 2023, System Energy filed a refund report with the FERC.  The refund provided for in the refund report was included in the September 2023 service month bills under the Unit Power Sales Agreement.  No comments or protests to the refund report were filed.

Pension Costs Amendment Proceeding

In October 2021, System Energy submitted to the FERC proposed amendments to the Unit Power Sales Agreement to include in rate base the prepaid and accrued pension costs associated with System Energy’s qualified pension plans.  Based on data ending in 2020, the increased annual revenue requirement associated with the filing is approximately $8.9 million.  In March 2022 the FERC accepted System Energy’s