Company: EAI
Filing Date: 2025-02-18
Form Type: 10-K
Source: 0000065984-25-000012
Chunk: 490

Company: ENTERGY ARKANSAS, LLC
Filing Date: 2025-02-18
Form: 10-K
Item: Item 7
Chunk 490
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, including challenges with respect to System Energy’s authorized return on equity and capital structure, renewal of its sale-leaseback arrangement, treatment of uncertain tax positions, a broader investigation of rates under the Unit Power Sales Agreement, and two prudence complaints, one challenging the extended power uprate completed at Grand Gulf in 2012 and the operation and management of Grand Gulf, particularly in the 2016-2020 time period, and the second challenging the operation and management of Grand Gulf in the 2021-2022 time period.  Settlements that resolve all significant aspects of these complaints have been reached with the MPSC, the APSC, the City Council, and the LPSC, and these settlements have been approved by the FERC.  Following are discussions of the proceedings.Return on Equity and Capital Structure ComplaintsIn January 2017 the APSC and the MPSC filed a complaint with the FERC against System Energy.  The complaint sought a reduction in the return on equity component of the Unit Power Sales Agreement pursuant to which System Energy sells its Grand Gulf capacity and energy to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans.  Entergy Arkansas also sells some of its Grand Gulf capacity and energy to Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans under separate agreements.  The return on equity under the Unit Power Sales Agreement at the time of the complaint was 10.94%, which was established in a rate proceeding that became final in July 2001.The APSC and the MPSC complaint alleged that the return on equity was unjust and unreasonable because capital market and other considerations indicated that it was excessive.  The complaint requested proceedings to investigate the return on equity and establish a lower return on equity, and also requested that the FERC establish January 23, 2017 as a refund effective date.  The complaint included a return on equity analysis that purported to establish that the range of reasonable return on equity for System Energy was between 8.37% and 8.67%.  System Energy answered the complaint in February 2017 and disputed that a return on equity of 8.37% to 8.67% was just and reasonable.  The LPSC and the City Council intervened in the proceeding expressing support for the complaint.  In September 2017 the FERC established a refund effective date of January 23, 2017 and directed the parties to engage in settlement proceedings before an ALJ.  The parties were unable to settle the