Company: EAI
Filing Date: 2025-02-18
Form Type: 10-K
Source: 0000065984-25-000012
Chunk: 559

Company: ENTERGY ARKANSAS, LLC
Filing Date: 2025-02-18
Form: 10-K
Item: Item 7
Chunk 559
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 the applicable tax rate to account for the effect of excess ADIT on the ratemaking formula.  The regulatory liability for income taxes reflects (1) the reduction of the net deferred tax liability resulting in excess ADIT, and (2) the tax gross-up of excess ADIT.  The Registrant Subsidiaries’ December 31, 2024 and December 31, 2023 balance sheets reflect net regulatory liabilities for income taxes as follows:20242023(In Millions)Entergy Arkansas$418 $392 Entergy Louisiana$355 $194 Entergy Mississippi$181 $189 Entergy New Orleans$15 $36 Entergy Texas$94 $115 System Energy$105 $107 Excess ADIT is generally classified into two categories: (1) the portion that is subject to the normalization requirements of the TCJA, referred to as “protected”, and (2) the portion that is not subject to such normalization provisions, referred to as “unprotected”.  See Note 2 to the financial statements for discussion of Entergy Louisiana’s $106 million reversal of a regulatory liability, primarily associated with the Hurricane Isaac securitization, recognized in 2017 as a result of the TCJA, recorded in fourth quarter 2023.The majority of the remaining unamortized Excess ADIT as of December 31, 2024 is classified as protected.  The TCJA mandates the normalization method of accounting for income taxes for excess ADIT associated with public utility property.  The TCJA specifies the use of the average rate assumption method (ARAM) to determine of the timing of the return of excess ADIT associated with such property.  Under ARAM, the excess ADIT is reduced over the remaining life of the asset.  Remaining asset lives vary for each Registrant Subsidiary, but the average life of public utility property is typically 30 years or longer.  Entergy will amortize the protected portion of the excess ADIT in compliance with the normalization requirements.During the second quarter 2018, the Registrant Subsidiaries began returning unprotected excess accumulated deferred income taxes, associated with the effects of the TCJA, to their customers through rate riders 

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Table of ContentsEntergy Corporation and SubsidiariesNotes to Financial Statements

and other mechanisms approved by their respective regulatory authorities.  Return of the unprotected excess accumulated deferred income taxes results in a reduction in the regulatory liability for income taxes and a corresponding