Company: EAI
Filing Date: 2025-02-18
Form Type: 10-K
Source: 0000065984-25-000012
Chunk: 497

Company: ENTERGY ARKANSAS, LLC
Filing Date: 2025-02-18
Form: 10-K
Item: Item 7
Chunk 497
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 Unit Power Sales Agreement formula rate would also involve changes to accumulated depreciation, accumulated deferred income taxes, and other formula elements as needed.After holding a hearing in November 2019, in April 2020 the FERC ALJ issued the initial decision.  Among other things, the ALJ determined that refunds were due on three main issues.  First, with regard to the lease renewal payments, the ALJ determined that System Energy was recovering an unjust acquisition premium through the lease renewal payments, and that System Energy’s recovery from customers through rates should be limited to the cost of service based on the remaining net book value of the leased assets, which was approximately $70 million.  The ALJ found that the remedy for this issue should be the refund of lease payments (approximately $17.2 million per year since July 2015) with interest determined at the FERC quarterly interest rate, which would be offset by the addition 

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Table of ContentsEntergy Corporation and SubsidiariesNotes to Financial Statements

of the net book value of the leased assets in the cost of service.  The ALJ did not calculate a value for the refund expected as a result of this remedy.  In addition, System Energy would no longer recover the lease payments in rates prospectively.  Second, with regard to the liabilities associated with uncertain tax positions, the ALJ determined that the liabilities are accumulated deferred income taxes and that System Energy’s rate base should have been reduced for those liabilities.  The ALJ also found that System Energy should include liabilities associated with uncertain tax positions as a rate base reduction going forward.  Third, with regard to the depreciation expense adjustments, the ALJ found that System Energy should correct for the error in re-billings retroactively and prospectively, but that System Energy should not be permitted to recover interest on any retroactive return on enhanced rate base resulting from such corrections.In June 2020, System Energy, the LPSC, and the FERC trial staff filed briefs on exceptions, challenging several of the initial decision’s findings.  System Energy’s brief on exceptions challenged the initial decision’s limitations on recovery of the lease renewal payments, its proposed rate base refund for the liabilities associated with uncertain tax positions, and its proposal to asymmetrically treat interest on bill corrections for depreciation expense adjustments.  The LPSC’s and the FERC trial staff’s briefs on exceptions each challenged the initial decision’s allowance for recovery of the cost of service associated with the lease renewal based on the remaining net book value of