Company: EAI
Filing Date: 2025-10-31
Form Type: 10-Q
Source: 0000065984-25-000132
Chunk: 43

Company: ENTERGY ARKANSAS, LLC
Filing Date: 2025-10-31
Form: 10-Q
Item: Item 3
Chunk 43
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2024 calendar year operations.  Consistent with the global stipulated settlement agreement approved by the LPSC in August 2024, the filing reflected a 9.7% allowed return on common equity with a bandwidth of 40 basis points above and below the midpoint.  For the test year 2024, however, any earnings above the allowed return on common equity were to be returned to customers through a credit, pursuant to the terms of the global stipulated settlement agreement.  The 2024 test year evaluation produced an earned return on common equity of 9.98%, which was within the approved formula rate plan bandwidth, but above the allowed return on common equity, resulting in customer credits of $31.9 million to be returned to customers during September and October 2025.

Other changes in formula rate plan revenue were driven by higher nuclear depreciation rates, additions to transmission and distribution plant in service reflected through the transmission recovery mechanism and distribution recovery mechanism, and the expiration of customer credits related to the LPSC’s order, offset by increased customer credits resulting from an increase in net MISO revenues reflected through the MISO cost recovery mechanism and the reduction in the Louisiana corporate income tax rate effective January 1, 2025, reflected through the tax adjustment mechanism, as discussed below.  Excluding the customer credit for earnings above the authorized return on common equity discussed above, the net result of these changes on an annualized basis was a $2 million increase in formula rate plan revenue.

As noted above, the 2024 evaluation report included the effects of the change in Louisiana state tax law that reduced the corporate income tax rate to a flat 5.5% (from the then-current highest marginal rate of 7.5%) effective January 1, 2025.  As such, the 2024 evaluation report reflected the calculation of current and deferred income tax expenses as well as the revaluation of accumulated deferred income taxes based on the income tax laws currently in effect.  The 2024 evaluation report proposed that the rate effects associated with the revaluation of accumulated deferred income taxes, including the collection of any net accumulated deferred income tax deficiency and any related effects on rate base, should be reflected in the tax adjustment mechanism consistent with the treatment of similar Tax Cuts and Jobs Act and prior state tax change-related impacts.  The effects of the change in tax law on Entergy Louisiana’s authorized return on rate base were also reflected in the 2024 evaluation report consistent with the treatment cited above, including a credit