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Decommissioning Trust Funds

12 Months Ended

Dec. 31, 2011

Decommissioning Trust Fund [Abstract]

NOTE 17. DECOMMISSIONING TRUST FUNDS (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, and System Energy)

Entergy holds debt and equity securities, classified as available-for-sale, in nuclear decommissioning trust accounts. The NRC requires Entergy subsidiaries to maintain trusts to fund the costs of decommissioning ANO 1, ANO 2, River Bend, Waterford 3, Grand Gulf, Pilgrim, Indian Point 1 and 2, Vermont Yankee, and Palisades (NYPA currently retains the decommissioning trusts and liabilities for Indian Point 3 and FitzPatrick). The funds are invested primarily in equity securities; fixed-rate, fixed-income securities; and cash and cash equivalents.

Entergy records decommissioning trust funds on the balance sheet at their fair value. Because of the ability of the Registrant Subsidiaries to recover decommissioning costs in rates and in accordance with the regulatory treatment for decommissioning trust funds, the Registrant Subsidiaries have recorded an offsetting amount of unrealized gains/(losses) on investment securities in other regulatory liabilities/assets. For the nonregulated portion of River Bend, Entergy Gulf States Louisiana has recorded an offsetting amount of unrealized gains/(losses) in other deferred credits. Decommissioning trust funds for Pilgrim, Indian Point 2, Vermont Yankee, and Palisades do not meet the criteria for regulatory accounting treatment. Accordingly, unrealized gains recorded on the assets in these trust funds are recognized in the accumulated other comprehensive income component of shareholders’ equity because these assets are classified as available for sale. Unrealized losses (where cost exceeds fair market value) on the assets in these trust funds are also recorded in the accumulated other comprehensive income component of shareholders’ equity unless the unrealized loss is other than temporary and therefore recorded in earnings. Generally, Entergy records realized gains and losses on its debt and equity securities using the specific identification method to determine the cost basis of its securities.

The securities held as of December 31, 2011 and 2010 are summarized as follows:


	Fair Value		Total Unrealized Gains		Total Unrealized Losses
	(In Millions)
2011
Equity Securities	$	2,129	$	423	$	14
Debt Securities		1,659		115		5

Total	$	3,788	$	538	$	19


2010
Equity Securities	$	2,076	$	436	$	9
Debt Securities		1,520		67		12

Total	$	3,596	$	503	$	21

Deferred taxes on unrealized gains/(losses) are recorded in other comprehensive income for the decommissioning trusts which do not meet the criteria for regulatory accounting treatment as described above. Unrealized gains/(losses) above are reported before deferred taxes of $149 million and $130 million as of December 31, 2011 and 2010, respectively. The amortized cost of debt securities was $1,530 million as of December 31, 2011 and $1,475 million as of December 31, 2010. As of December 31, 2011, the debt securities have an average coupon rate of approximately 4.15%, an average duration of approximately 5.40 years, and an average maturity of approximately 8.53 years. The equity securities are generally held in funds that are designed to approximate or somewhat exceed the return of the Standard & Poor’s 500 Index. A relatively small percentage of the securities are held in funds intended to replicate the return of the Wilshire 4500 Index or the Russell 3000 Index.

The fair value and gross unrealized losses of available-for-sale equity and debt securities, summarized by investment type and length of time that the securities have been in a continuous loss position, are as follows as of December 31, 2011:


	Equity Securities				Debt Securities
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In Millions)
Less than 12 months	$	130	$	9	$	123	$	3
More than 12 months		43		5		60		2

Total	$	173	$	14	$	183	$	5


	Equity Securities				Debt Securities
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In Millions)
Less than 12 months	$	15	$	1	$	474	$	11
More than 12 months		105		8		4		1

Total	$	120	$	9	$	478	$	12

The unrealized losses in excess of twelve months on equity securities above relate to Entergy’s Utility operating companies and System Energy.

The fair value of debt securities, summarized by contractual maturities, as of December 31, 2011 and 2010 are as follows:


	2011		2010
	(In Millions)
less than 1 year	$	69	$	37
1 year - 5 years		566		557
5 years - 10 years		583		512
10 years - 15 years		187		163
15 years - 20 years		42		47
20 years+		212		204

Total	$	1,659	$	1,520

During the years ended December 31, 2011, 2010, and 2009, proceeds from the dispositions of securities amounted to $1,360 million, $2,606 million, and $2,571 million, respectively. During the years ended December 31, 2011, 2010, and 2009, gross gains of $29 million, $69 million, and $80 million, respectively, and gross losses of $11 million, $9 million, and $30 million, respectively, were reclassified out of other comprehensive income into earnings.

Entergy Arkansas

Entergy Arkansas holds debt and equity securities, classified as available-for-sale, in nuclear decommissioning trust accounts. The securities held as of December 31, 2011 and 2010 are summarized as follows:


	Fair Value		Total Unrealized Gains		Total Unrealized Losses
	(In Millions)
2011
Equity Securities	$	329.4	$	70.9	$	0.4
Debt Securities		212.3		15.2		0.4

Total	$	541.7	$	86.1	$	0.8

2010
Equity Securities	$	319.7	$	74.2	$	0.3
Debt Securities		201.1		11.0		1.0

Total	$	520.8	$	85.2	$	1.3

The amortized cost of debt securities was $197.5 million as of December 31, 2011 and $191.2 million as of December 31, 2010. As of December 31, 2011, the debt securities have an average coupon rate of approximately 3.61%, an average duration of approximately 4.86 years, and an average maturity of approximately 5.58 years. The equity securities are generally held in funds that are designed to approximate the return of the Standard & Poor’s 500 Index. A relatively small percentage of the securities are held in funds intended to replicate the return of the Wilshire 4500 Index.


	Equity Securities				Debt Securities
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In Millions)
Less than 12 months	$	13.7	$	0.4	$	14.3	$	0.4
More than 12 months		—		—		1.0		—

Total	$	13.7	$	0.4	$	15.3	$	0.4


	Equity Securities				Debt Securities
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In Millions)
Less than 12 months	$	—	$	—	$	44.3	$	1.0
More than 12 months		6.6		0.3		—		—

Total	$	6.6	$	0.3	$	44.3	$	1.0

The fair value of debt securities, summarized by contractual maturities, as of December 31, 2011 and 2010 are as follows:


	2011		2010
	(In Millions)
less than 1 year	$	7.8	$	5.3
1 year - 5 years		86.5		100.1
5 years - 10 years		109.1		85.2
10 years - 15 years		2.7		4.5
15 years - 20 years		—		—
20 years+		6.2		6.0

Total	$	212.3	$	201.1

During the years ended December 31, 2011, 2010, and 2009, proceeds from the dispositions of securities amounted to $125.4 million, $367.3 million, and $154.6 million, respectively. During the years ended December 31, 2011, 2010, and 2009, gross gains of $3.9 million, $29.2 million, and $2.6 million, respectively, and gross losses of $0.2 million, $0.8 million, and $1.4 million, respectively, were recorded in earnings.

Entergy Gulf States Louisiana

Entergy Gulf States Louisiana holds debt and equity securities, classified as available-for-sale, in nuclear decommissioning trust accounts. The securities held as of December 31, 2011 and 2010 are summarized as follows:


	Fair Value		Total Unrealized Gains		Total Unrealized Losses
	(In Millions)
2011
Equity Securities	$	238.7	$	40.9	$	0.8
Debt Securities		182.2		15.2		0.3

Total	$	420.9	$	56.1	$	1.1

2010
Equity Securities	$	234.9	$	41.7	$	1.4
Debt Securities		158.7		8.8		0.8

Total	$	393.6	$	50.5	$	2.2

The amortized cost of debt securities was $166.9 million as of December 31, 2011 and $150.0 million as of December 31, 2010. As of December 31, 2011, the debt securities have an average coupon rate of approximately 4.74%, an average duration of approximately 5.94 years, and an average maturity of approximately 9.20 years. The equity securities are generally held in funds that are designed to approximate the return of the Standard & Poor’s 500 Index. A relatively small percentage of the securities are held in funds intended to replicate the return of the Wilshire 4500 Index.


	Equity Securities				Debt Securities
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In Millions)
Less than 12 months	$	14.0	$	0.5	$	9.3	$	0.2
More than 12 months		2.7		0.3		1.1		0.1

Total	$	16.7	$	0.8	$	10.4	$	0.3


	Equity Securities				Debt Securities
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In Millions)
Less than 12 months	$	—	$	—	$	22.6	$	0.6
More than 12 months		18.6		1.4		0.9		0.2

Total	$	18.6	$	1.4	$	23.5	$	0.8

The fair value of debt securities, summarized by contractual maturities, as of December 31, 2011 and 2010 are as follows:


	2011		2010
	(In Millions)
less than 1 year	$	7.1	$	4.7
1 year - 5 years		40.8		35.0
5 years - 10 years		53.5		54.2
10 years - 15 years		62.9		48.1
15 years - 20 years		3.2		3.7
20 years+		14.7		13.0

Total	$	182.2	$	158.7

During the years ended December 31, 2011, 2010, and 2009, proceeds from the dispositions of securities amounted to $76.8 million, $100.8 million, and $95.2 million, respectively. During the years ended December 31, 2011, 2010, and 2009, gross gains of $2.8 million, $2.0 million, and $2.4 million, respectively, and gross losses of $0.5 million, $0.4 million, and $0.6 million, respectively, were recorded in earnings.

Entergy Louisiana

Entergy Louisiana holds debt and equity securities, classified as available-for-sale, in nuclear decommissioning trust accounts. The securities held as of December 31, 2011 and 2010 are summarized as follows:


	Fair Value		Total Unrealized Gains		Total Unrealized Losses
	(In Millions)
2011
Equity Securities	$	149.2	$	29.7	$	1.6
Debt Securities		104.8		8.8		0.2

Total	$	254.0	$	38.5	$	1.8

2010
Equity Securities	$	143.9	$	31.0	$	1.7
Debt Securities		96.6		5.3		0.1

Total	$	240.5	$	36.3	$	1.8

The amortized cost of debt securities was $91.9 million as of December 31, 2011 and $91.0 million as of December 31, 2010. As of December 31, 2011, the debt securities have an average coupon rate of approximately 3.81%, an average duration of approximately 4.94 years, and an average maturity of approximately 8.96 years. The equity securities are generally held in funds that are designed to approximate the return of the Standard & Poor’s 500 Index. A relatively small percentage of the securities are held in funds intended to replicate the return of the Wilshire 4500 Index.


	Equity Securities				Debt Securities
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In Millions)
Less than 12 months	$	11.6	$	0.3	$	5.5	$	0.2
More than 12 months		10.0		1.3		0.2		—

Total	$	21.6	$	1.6	$	5.7	$	0.2


	Equity Securities				Debt Securities
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In Millions)
Less than 12 months	$	—	$	—	$	4.8	$	0.1
More than 12 months		18.9		1.7		0.2		—

Total	$	18.9	$	1.7	$	5.0	$	0.1

The fair value of debt securities, summarized by contractual maturities, as of December 31, 2011 and 2010 are as follows:


	2011		2010
	(In Millions)
less than 1 year	$	3.9	$	5.3
1 year - 5 years		39.8		28.1
5 years - 10 years		22.2		31.5
10 years - 15 years		18.9		14.1
15 years - 20 years		2.2		2.9
20 years+		17.8		14.7

Total	$	104.8	$	96.6

During the years ended December 31, 2011, 2010, and 2009, proceeds from the dispositions of securities amounted to $19.9 million, $44.5 million, and $47.5 million, respectively. During the years ended December 31, 2011, 2010, and 2009, gross gains of $0.3 million, $0.7 million, and $1.7 million, respectively, and gross losses of $0.2 million, $0.3 million, and $1.1 million, respectively, were recorded in earnings.

System Energy

System Energy holds debt and equity securities, classified as available-for-sale, in nuclear decommissioning trust accounts. The securities held as of December 31, 2011 and 2010 are summarized as follows:


	Fair Value		Total Unrealized Gains		Total Unrealized Losses
	(In Millions)
2011
Equity Securities	$	237.2	$	35.4	$	5.4
Debt Securities		186.2		9.5		0.1

Total	$	423.4	$	44.9	$	5.5

2010
Equity Securities	$	224.0	$	37.3	$	5.2
Debt Securities		163.9		4.4		1.5

Total	$	387.9	$	41.7	$	6.7

The amortized cost of debt securities was $175.1 million as of December 31, 2011 and $159.3 million as of December 31, 2010. As of December 31, 2011, the debt securities have an average coupon rate of approximately 3.46%, an average duration of approximately 4.89 years, and an average maturity of approximately 6.91 years. The equity securities are generally held in funds that are designed to approximate the return of the Standard & Poor’s 500 Index. A relatively small percentage of the securities are held in funds intended to replicate the return of the Wilshire 4500 Index.


	Equity Securities				Debt Securities
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In Millions)
Less than 12 months	$	41.3	$	1.8	$	10.5	$	0.1
More than 12 months		30.0		3.6		—		—

Total	$	71.3	$	5.4	$	10.5	$	0.1


	Equity Securities				Debt Securities
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In Millions)
Less than 12 months	$	—	$	—	$	63.0	$	1.5
More than 12 months		61.1		5.2		—		—

Total	$	61.1	$	5.2	$	63.0	$	1.5

The fair value of debt securities, summarized by contractual maturities, as of December 31, 2011 and 2010 are as follows:


	2011		2010
	(In Millions)
less than 1 year	$	10.2	$	1.8
1 year - 5 years		94.6		79.8
5 years - 10 years		57.9		52.3
10 years - 15 years		2.6		2.5
15 years - 20 years		2.9		3.8
20 years+		18.0		23.7

Total	$	186.2	$	163.9

During the years ended December 31, 2011, 2010, and 2009, proceeds from the dispositions of securities amounted to $203.4 million, $322.8 million, and $393.0 million, respectively. During the years ended December 31, 2011, 2010, and 2009, gross gains of $2.7 million, $4.4 million, and $4.4 million, respectively, and gross losses of $1.2 million, $0.6 million, and $6.5 million, respectively, were recorded in earnings.

Other-than-temporary impairments and unrealized gains and losses

Entergy, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, and System Energy evaluate unrealized losses at the end of each period to determine whether an other-than-temporary impairment has occurred. The assessment of whether an investment in a debt security has suffered an other-than-temporary impairment is based on whether Entergy has the intent to sell or more likely than not will be required to sell the debt security before recovery of its amortized costs. Further, if Entergy does not expect to recover the entire amortized cost basis of the debt security, an other-than-temporary impairment is considered to have occurred and it is measured by the present value of cash flows expected to be collected less the amortized cost basis (credit loss). For debt securities held as of January 1, 2009 for which an other-than-temporary impairment had previously been recognized but for which assessment under the new guidance indicates this impairment is temporary, Entergy recorded an adjustment to its opening balance of retained earnings of $11.3 million ($6.4 million net-of-tax). Entergy did not have any material other-than-temporary impairments relating to credit losses on debt securities for the years ended December 31, 2011 and 2010. The assessment of whether an investment in an equity security has suffered an other-than-temporary impairment continues to be based on a number of factors including, first, whether Entergy has the ability and intent to hold the investment to recover its value, the duration and severity of any losses, and, then, whether it is expected that the investment will recover its value within a reasonable period of time. Entergy’s trusts are managed by third parties who operate in accordance with agreements that define investment guidelines and place restrictions on the purchases and sales of investments. Entergy recorded charges to other income of $0.1 million in 2011, $1 million in 2010, and $86 million in 2009, resulting from the recognition of the other-than-temporary impairment of certain equity securities held in its decommissioning trust funds.