Company: EAI
Filing Date: 2025-02-18
Form Type: 10-K
Source: 0000065984-25-000012
Chunk: 507

Company: ENTERGY ARKANSAS, LLC
Filing Date: 2025-02-18
Form: 10-K
Item: Item 7
Chunk 507
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 the implementation of its proposed refunds.  In addition, the LPSC sought amendments to the Unit Power Sales Agreement going forward to address below-the-line costs, incentive compensation, the working capital allowance, litigation expenses, and the 2019 termination of the capital funds agreement.  The APSC argued that: (1) System Energy should have included borrowings from the Entergy system money pool in its determination of short-term debt in its cost of capital; and (2) System Energy should credit customers with System Energy’s allocation of earnings on money pool investments.  The City Council alleged that System Energy has maintained excess cash on hand in the money pool and that retention of excess cash was imprudent.  Based on this allegation, the City Council’s witness recommended a refund of approximately $98.8 million for the period 2004-September 2021 or other alternative relief.  The City Council 

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Table of ContentsEntergy Corporation and SubsidiariesNotes to Financial Statements

further recommended that the FERC impose a hypothetical equity ratio such as 48.15% equity to capital on a prospective basis.In January 2022, System Energy filed answering testimony arguing that the FERC should not order refunds for prior periods or any prospective amendments to the Unit Power Sales Agreement.  In response to the LPSC’s refund claims, System Energy argued, among other things, that: (1) the inclusion of sale-leaseback transaction costs in prepayments was correct; (2) that the filed rate doctrine bars the request for a retroactive credit to rate base for the time value of money associated with the advance collection of lease payments; (3) that an accounting misclassification for deferred refueling outage costs had been corrected, caused no harm to customers, and requires no refunds; and (4) that its accounting and ratemaking treatment of specified accumulated deferred income tax balances in account 190 had been correct.  System Energy further responded that no retroactive adjustment to retained earnings or capital structure should be ordered because there was no general policy requiring such a remedy, and there was no showing that the retained earnings element of the capital structure was incorrectly implemented.  Further, System Energy presented evidence that all of the costs that were being challenged were long known to the retail regulators and were approved by them for inclusion in retail rates, and the attempt to retroactively challenge these costs, some of which had been included in rates for decades, was unjust and unreasonable.  In response to the LPSC’s proposed going-forward adjustments, System