Company: EAI
Filing Date: 2025-02-18
Form Type: 10-K
Source: 0000065984-25-000012
Chunk: 184

Company: ENTERGY ARKANSAS, LLC
Filing Date: 2025-02-18
Form: 10-K
Item: Item 1A
Chunk 184
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  See Note 4 to the financial statements for further discussion of Entergy Arkansas’s short-term borrowing limits.  The long-term securities issuances of Entergy Arkansas are limited to amounts authorized by the FERC.  The APSC has concurrent jurisdiction over Entergy Arkansas’s first mortgage bond/secured issuances.  Entergy Arkansas has obtained long-term financing authorization from the FERC that extends through January 2027.  Entergy Arkansas has obtained first mortgage bond/secured financing authorization from the APSC that extends through December 2025.

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Table of ContentsEntergy Arkansas, LLC and SubsidiariesManagement’s Financial Discussion and Analysis

State and Local Rate Regulation and Fuel-Cost Recovery

The rates that Entergy Arkansas charges for its services significantly influence its financial position, results of operations, and liquidity.  Entergy Arkansas is regulated, and the rates charged to its customers are determined in regulatory proceedings.  A governmental agency, the APSC, is primarily responsible for approval of the rates charged to customers.

Retail Rates

2022 Formula Rate Plan Filing

In July 2022, Entergy Arkansas filed with the APSC its 2022 formula rate plan filing to set its formula rate for the 2023 calendar year.  The filing contained an evaluation of Entergy Arkansas’s earnings for the projected year 2023 and a netting adjustment for the historical year 2021.  The filing showed that Entergy Arkansas’s earned rate of return on common equity for the 2023 projected year was 7.40% resulting in a revenue deficiency of $104.8 million.  The earned rate of return on common equity for the 2021 historical year was 8.38% resulting in a $15.2 million netting adjustment.  The total proposed revenue change for the 2023 projected year and 2021 historical year netting adjustment was $119.9 million.  By operation of the formula rate plan, Entergy Arkansas’s recovery of the revenue requirement is subject to a four percent annual revenue constraint.  Because Entergy Arkansas’s revenue requirement in this filing exceeded the constraint, the resulting increase was limited to $79.3 million.  In October 2022 other parties filed their testimony recommending various adjustments to Entergy Arkansas’s overall proposed revenue deficiency, and Entergy Arkansas filed a response including an update to actual revenues through August 2022, which raised the constraint to $79.8 million.  In November 2022, Entergy