Opinion ID: 187138
Heading Depth: 3
Heading Rank: 2

Heading: The Rising Cost of Natural Gas and its Effect on the Entergy System

Text: After implementation of the nuclear investment remedy, rough production cost equalization was maintained from 1986-1999, with variations from year-to-year, but without any long-term large bias for any one company or another. 111 F.E.R.C. at 62,352. During the three years prior to the nuclear investment remedy, the production costs of the Entergy operating companies had deviated from System average by 35.15, 25.32, and 32.9 percent. Id. at 62,355. During the fourteen years after the nuclear investment remedy, the deviations on the System moderated, ranging from a low of 7.71 percent in 1995 to a high of 22.2 percent in 1987. Id. The picture changed in 2000 when there was a spike in the price of natural gas. 111 F.E.R.C. at 62,352. The increase had a dramatically disproportionate effect on [Entergy Louisiana]'s relatively large amount of gas-fired generation, as compared to [Entergy Arkansas]'s relatively large amount of cheaper coal base load capacity. Id. In 2000, Entergy Louisiana had production costs that were 12 percent above System average, while Entergy Arkansas's costs were 17 percent below average. La. Pub. Serv. Comm'n v. Entergy Servs., Inc., et al., 106 F.E.R.C. ¶ 63,012, 65,110 (2004) (Initial Decision). Similarly, in 2001, when Entergy Louisiana had costs that were 10 percent above average, Entergy Arkansas's costs were 14 percent below, and in 2002, when Entergy Louisiana's were 11 percent above average, Entergy Arkansas's costs were 15 percent below. Id. The total deviations of all of the operating companies around System average accordingly rose, with deviations of 33.26 percent in 2000, 39.79 percent in 2001, and 27.6 percent in 2002. 111 F.E.R.C. at 62,355.