XML 152 R18.htm IDEA: XBRL DOCUMENT v2.4.0.6
Asset Retirement Obligations
 12 Months Ended
Dec. 31, 2012
Asset Retirement Obligations

NOTE  9.  ASSET RETIREMENT OBLIGATIONS  (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

 

            Accounting standards require the recording of liabilities for all legal obligations associated with the retirement of long-lived assets that result from the normal operation of those assets. For Entergy, substantially all of its asset retirement obligations consist of its liability for decommissioning its nuclear power plants. In addition, an insignificant amount of removal costs associated with non-nuclear power plants is also included in the decommissioning line item on the balance sheets.

 

These liabilities are recorded at their fair values (which are the present values of the estimated future cash outflows) in the period in which they are incurred, with an accompanying addition to the recorded cost of the long-lived asset. The asset retirement obligation is accreted each year through a charge to expense, to reflect the time value of money for this present value obligation. The accretion will continue through the completion of the asset retirement activity. The amounts added to the carrying amounts of the long-lived assets will be depreciated over the useful lives of the assets. The application of accounting standards related to asset retirement obligations is earnings neutral to the rate-regulated business of the Registrant Subsidiaries.

 

In accordance with ratemaking treatment and as required by regulatory accounting standards, the depreciation provisions for the Registrant Subsidiaries include a component for removal costs that are not asset retirement obligations under accounting standards. In accordance with regulatory accounting principles, the Registrant Subsidiaries have recorded regulatory assets (liabilities) in the following amounts to reflect their estimates of the difference between estimated incurred removal costs and estimated removal costs recovered in rates:

 

 

 

December 31,

 

 

2012

 

2011

 

 

(In Millions)

 

 

 

 

 

Entergy Arkansas

 

($12.2)

 

($16.4)

Entergy Gulf States Louisiana

 

($22.0)

 

($30.3)

Entergy Louisiana

 

($9.2)

 

($62.6)

Entergy Mississippi

 

$57.4

 

$48.5 

Entergy New Orleans

 

$29.9

 

$16.3 

Entergy Texas

 

$11.5

 

$4.5 

System Energy

 

$56.8

 

$11.8 

         

  

            The cumulative decommissioning and retirement cost liabilities and expenses recorded in 2012 by Entergy were as follows:

 

 

 

Liabilities as
of December 31,
2011

 



Accretion

 

Change in
Cash Flow
Estimate

 



Spending

 

Liabilities as
 of December 31,
2012

 

 

 

 

 

(In Millions)

 

 

 

 

Utility:

 

 

 

 

 

 

 

 

 

  Entergy Arkansas

$640.2

 

$40.5

 

$-

 

$- 

 

$680.7

  Entergy Gulf States Louisiana

$359.8

 

$21.0

 

$-

 

$- 

 

$380.8

  Entergy Louisiana

$345.8

 

$23.4

 

$48.9

 

$- 

 

$418.1

  Entergy Mississippi

$5.7

 

$0.3

 

$-

 

$-

 

$6.0

  Entergy New Orleans

$2.9

 

$0.2

 

$-

 

($0.9)

 

$2.2

  Entergy Texas

$3.9

 

$0.2

 

$-

 

$-

 

$4.1

  System Energy

$445.4

 

$33.0

 

$-

 

$-

 

$478.4

 

 

 

 

 

 

 

 

 

 

Entergy Wholesale Commodities

$1,492.9

 

$119.4

 

($58.5)

 

($10.5)

 

$1,543.3

                                                                                                                                   

            The cumulative decommissioning and retirement cost liabilities and expenses recorded in 2011 by Entergy were as follows:

 

 

 

Liabilities as
of December 31,
2010

 



Accretion

 

Change in
Cash Flow
Estimate

 



Spending

 

Liabilities as
 of December 31,
2011

 

 

 

 

 

(In Millions)

 

 

 

 

Utility:

 

 

 

 

 

 

 

 

 

  Entergy Arkansas

$602.2

 

$38.0

 

$- 

 

$- 

 

$640.2

  Entergy Gulf States Louisiana

$339.9

 

$19.9

 

$- 

 

$- 

 

$359.8

  Entergy Louisiana

$321.2

 

$24.6

 

$- 

 

$- 

 

$345.8

  Entergy Mississippi

$5.4

 

$0.3

 

$- 

 

$- 

 

$5.7

  Entergy New Orleans

$3.4

 

$0.2

 

$- 

 

($0.7)

 

$2.9

  Entergy Texas

$3.6

 

$0.3

 

$- 

 

$- 

 

$3.9

  System Energy

$452.8

 

$31.5

 

($38.9) 

 

$- 

 

$445.4

 

 

 

 

 

 

 

 

 

 

Entergy Wholesale Commodities

$1,420.0

 

$115.6

 

($34.1) 

 

($8.6)

 

$1,492.9

 

 

Entergy periodically reviews and updates estimated decommissioning costs. The actual decommissioning costs may vary from the estimates because of regulatory requirements, changes in technology, and increased costs of labor, materials, and equipment. As described below, during 2012 and 2011 Entergy updated decommissioning cost estimates for certain nuclear power plants.

 

In the second quarter 2012, Entergy Louisiana recorded a revision to its estimated decommissioning cost liability for Waterford 3 as a result of a revised decommissioning cost study. The revised estimate resulted in a $48.9 million increase in its decommissioning cost liability, along with a corresponding increase in the related asset retirement costs asset that will be depreciated over the remaining life of the unit.

 

In the second quarter 2012, Entergy Wholesale Commodities recorded a reduction of $60.6 million in the estimated decommissioning cost liability for a plant as a result of a revised decommissioning cost study. The revised estimate resulted in a credit to decommissioning expense of $49 million, reflecting the excess of the reduction in the liability over the amount of the undepreciated asset retirement costs asset.

 

In the first quarter of 2011, System Energy recorded a revision to its estimated decommissioning cost liability for Grand Gulf as a result of a revised decommissioning cost study.  The revised estimate resulted in a $38.9 million reduction in its decommissioning liability, along with a corresponding reduction in the related regulatory asset. 

 

In the fourth quarter of 2011, Entergy Wholesale Commodities recorded a reduction of $34.1 million in the decommissioning cost liability for a plant as a result of a revised decommissioning cost study obtained to comply with a state regulatory requirement. The revised cost study resulted in a change in the undiscounted cash flows and a credit to decommissioning expense of $34.1 million, reflecting the excess of the reduction in the liability over the amount of undepreciated assets.

 

            For the Indian Point 3 and FitzPatrick plants purchased in 2000, NYPA retained the decommissioning trusts and the decommissioning liabilities. NYPA and Entergy subsidiaries executed decommissioning agreements, which specify their decommissioning obligations. NYPA has the rights to require the Entergy subsidiaries to assume each of the decommissioning liabilities provided that it assigns the corresponding decommissioning trust, up to a specified level, to the Entergy subsidiaries. If the decommissioning liabilities are retained by NYPA, the Entergy subsidiaries will perform the decommissioning of the plants at a price equal to the lesser of a pre-specified level or the amount in the decommissioning trusts. Entergy recorded an asset, which is now $546.5 million as of December 31, 2012, representing its estimate of the present value of the difference between the stipulated contract amount for decommissioning the plants less the decommissioning costs estimated in independent decommissioning cost studies. The asset is increased by monthly accretion based on the applicable discount rate necessary to ultimately provide for the estimated future value of the decommissioning contract. The monthly accretion is recorded as interest income.

        

Entergy maintains decommissioning trust funds that are committed to meeting the costs of decommissioning the nuclear power plants. The fair values of the decommissioning trust funds and the related asset retirement obligation regulatory assets (liabilities) of Entergy as of December 31, 2012 are as follows:

 

 

 

Decommissioning
Trust Fair Values

 

Regulatory
Asset (Liability)

 

 

(In Millions)

 

 

 

 

 

Utility:

 

 

 

 

  ANO 1 and ANO 2

 

$600.6

 

$204.0

  River Bend

 

$477.4

 

($1.7)

  Waterford 3

 

$287.4

 

$126.7

  Grand Gulf

 

$490.6

 

$58.9

Entergy Wholesale Commodities

 

$2,334.1

 

$-

 

Entergy maintains decommissioning trust funds that are committed to meeting the costs of decommissioning the nuclear power plants. The fair values of the decommissioning trust funds and the related asset retirement obligation regulatory assets of Entergy as of December 31, 2011 are as follows:

 

 

 

Decommissioning
Trust Fair Values

 

Regulatory
Asset

 

 

(In Millions)

 

 

 

 

 

Utility:

 

 

 

 

  ANO 1 and ANO 2

 

$541.7

 

$181.5

  River Bend

 

$420.9

 

$5.5

  Waterford 3

 

$254.0

 

$116.1

  Grand Gulf

 

$423.4

 

$59.6

Entergy Wholesale Commodities

 

$2,148.0

 

$-

 

 

 
Entergy Arkansas [Member]
  
Asset Retirement Obligations

NOTE  9.  ASSET RETIREMENT OBLIGATIONS  (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

 

            Accounting standards require the recording of liabilities for all legal obligations associated with the retirement of long-lived assets that result from the normal operation of those assets. For Entergy, substantially all of its asset retirement obligations consist of its liability for decommissioning its nuclear power plants. In addition, an insignificant amount of removal costs associated with non-nuclear power plants is also included in the decommissioning line item on the balance sheets.

 

These liabilities are recorded at their fair values (which are the present values of the estimated future cash outflows) in the period in which they are incurred, with an accompanying addition to the recorded cost of the long-lived asset. The asset retirement obligation is accreted each year through a charge to expense, to reflect the time value of money for this present value obligation. The accretion will continue through the completion of the asset retirement activity. The amounts added to the carrying amounts of the long-lived assets will be depreciated over the useful lives of the assets. The application of accounting standards related to asset retirement obligations is earnings neutral to the rate-regulated business of the Registrant Subsidiaries.

 

In accordance with ratemaking treatment and as required by regulatory accounting standards, the depreciation provisions for the Registrant Subsidiaries include a component for removal costs that are not asset retirement obligations under accounting standards. In accordance with regulatory accounting principles, the Registrant Subsidiaries have recorded regulatory assets (liabilities) in the following amounts to reflect their estimates of the difference between estimated incurred removal costs and estimated removal costs recovered in rates:

 

 

 

December 31,

 

 

2012

 

2011

 

 

(In Millions)

 

 

 

 

 

Entergy Arkansas

 

($12.2)

 

($16.4)

Entergy Gulf States Louisiana

 

($22.0)

 

($30.3)

Entergy Louisiana

 

($9.2)

 

($62.6)

Entergy Mississippi

 

$57.4

 

$48.5 

Entergy New Orleans

 

$29.9

 

$16.3 

Entergy Texas

 

$11.5

 

$4.5 

System Energy

 

$56.8

 

$11.8 

         

  

            The cumulative decommissioning and retirement cost liabilities and expenses recorded in 2012 by Entergy were as follows:

 

 

 

Liabilities as
of December 31,
2011

 



Accretion

 

Change in
Cash Flow
Estimate

 



Spending

 

Liabilities as
 of December 31,
2012

 

 

 

 

 

(In Millions)

 

 

 

 

Utility:

 

 

 

 

 

 

 

 

 

  Entergy Arkansas

$640.2

 

$40.5

 

$-

 

$- 

 

$680.7

  Entergy Gulf States Louisiana

$359.8

 

$21.0

 

$-

 

$- 

 

$380.8

  Entergy Louisiana

$345.8

 

$23.4

 

$48.9

 

$- 

 

$418.1

  Entergy Mississippi

$5.7

 

$0.3

 

$-

 

$-

 

$6.0

  Entergy New Orleans

$2.9

 

$0.2

 

$-

 

($0.9)

 

$2.2

  Entergy Texas

$3.9

 

$0.2

 

$-

 

$-

 

$4.1

  System Energy

$445.4

 

$33.0

 

$-

 

$-

 

$478.4

 

 

 

 

 

 

 

 

 

 

Entergy Wholesale Commodities

$1,492.9

 

$119.4

 

($58.5)

 

($10.5)

 

$1,543.3

                                                                                                                                   

            The cumulative decommissioning and retirement cost liabilities and expenses recorded in 2011 by Entergy were as follows:

 

 

 

Liabilities as
of December 31,
2010

 



Accretion

 

Change in
Cash Flow
Estimate

 



Spending

 

Liabilities as
 of December 31,
2011

 

 

 

 

 

(In Millions)

 

 

 

 

Utility:

 

 

 

 

 

 

 

 

 

  Entergy Arkansas

$602.2

 

$38.0

 

$- 

 

$- 

 

$640.2

  Entergy Gulf States Louisiana

$339.9

 

$19.9

 

$- 

 

$- 

 

$359.8

  Entergy Louisiana

$321.2

 

$24.6

 

$- 

 

$- 

 

$345.8

  Entergy Mississippi

$5.4

 

$0.3

 

$- 

 

$- 

 

$5.7

  Entergy New Orleans

$3.4

 

$0.2

 

$- 

 

($0.7)

 

$2.9

  Entergy Texas

$3.6

 

$0.3

 

$- 

 

$- 

 

$3.9

  System Energy

$452.8

 

$31.5

 

($38.9) 

 

$- 

 

$445.4

 

 

 

 

 

 

 

 

 

 

Entergy Wholesale Commodities

$1,420.0

 

$115.6

 

($34.1) 

 

($8.6)

 

$1,492.9

 

 

Entergy periodically reviews and updates estimated decommissioning costs. The actual decommissioning costs may vary from the estimates because of regulatory requirements, changes in technology, and increased costs of labor, materials, and equipment. As described below, during 2012 and 2011 Entergy updated decommissioning cost estimates for certain nuclear power plants.

 

In the second quarter 2012, Entergy Louisiana recorded a revision to its estimated decommissioning cost liability for Waterford 3 as a result of a revised decommissioning cost study. The revised estimate resulted in a $48.9 million increase in its decommissioning cost liability, along with a corresponding increase in the related asset retirement costs asset that will be depreciated over the remaining life of the unit.

 

In the second quarter 2012, Entergy Wholesale Commodities recorded a reduction of $60.6 million in the estimated decommissioning cost liability for a plant as a result of a revised decommissioning cost study. The revised estimate resulted in a credit to decommissioning expense of $49 million, reflecting the excess of the reduction in the liability over the amount of the undepreciated asset retirement costs asset.

 

In the first quarter of 2011, System Energy recorded a revision to its estimated decommissioning cost liability for Grand Gulf as a result of a revised decommissioning cost study.  The revised estimate resulted in a $38.9 million reduction in its decommissioning liability, along with a corresponding reduction in the related regulatory asset. 

 

In the fourth quarter of 2011, Entergy Wholesale Commodities recorded a reduction of $34.1 million in the decommissioning cost liability for a plant as a result of a revised decommissioning cost study obtained to comply with a state regulatory requirement. The revised cost study resulted in a change in the undiscounted cash flows and a credit to decommissioning expense of $34.1 million, reflecting the excess of the reduction in the liability over the amount of undepreciated assets.

 

            For the Indian Point 3 and FitzPatrick plants purchased in 2000, NYPA retained the decommissioning trusts and the decommissioning liabilities. NYPA and Entergy subsidiaries executed decommissioning agreements, which specify their decommissioning obligations. NYPA has the rights to require the Entergy subsidiaries to assume each of the decommissioning liabilities provided that it assigns the corresponding decommissioning trust, up to a specified level, to the Entergy subsidiaries. If the decommissioning liabilities are retained by NYPA, the Entergy subsidiaries will perform the decommissioning of the plants at a price equal to the lesser of a pre-specified level or the amount in the decommissioning trusts. Entergy recorded an asset, which is now $546.5 million as of December 31, 2012, representing its estimate of the present value of the difference between the stipulated contract amount for decommissioning the plants less the decommissioning costs estimated in independent decommissioning cost studies. The asset is increased by monthly accretion based on the applicable discount rate necessary to ultimately provide for the estimated future value of the decommissioning contract. The monthly accretion is recorded as interest income.

        

Entergy maintains decommissioning trust funds that are committed to meeting the costs of decommissioning the nuclear power plants. The fair values of the decommissioning trust funds and the related asset retirement obligation regulatory assets (liabilities) of Entergy as of December 31, 2012 are as follows:

 

 

 

Decommissioning
Trust Fair Values

 

Regulatory
Asset (Liability)

 

 

(In Millions)

 

 

 

 

 

Utility:

 

 

 

 

  ANO 1 and ANO 2

 

$600.6

 

$204.0

  River Bend

 

$477.4

 

($1.7)

  Waterford 3

 

$287.4

 

$126.7

  Grand Gulf

 

$490.6

 

$58.9

Entergy Wholesale Commodities

 

$2,334.1

 

$-

 

Entergy maintains decommissioning trust funds that are committed to meeting the costs of decommissioning the nuclear power plants. The fair values of the decommissioning trust funds and the related asset retirement obligation regulatory assets of Entergy as of December 31, 2011 are as follows:

 

 

 

Decommissioning
Trust Fair Values

 

Regulatory
Asset

 

 

(In Millions)

 

 

 

 

 

Utility:

 

 

 

 

  ANO 1 and ANO 2

 

$541.7

 

$181.5

  River Bend

 

$420.9

 

$5.5

  Waterford 3

 

$254.0

 

$116.1

  Grand Gulf

 

$423.4

 

$59.6

Entergy Wholesale Commodities

 

$2,148.0

 

$-

 

 

 
Entergy Gulf States Louisiana [Member]
  
Asset Retirement Obligations

NOTE  9.  ASSET RETIREMENT OBLIGATIONS  (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

 

            Accounting standards require the recording of liabilities for all legal obligations associated with the retirement of long-lived assets that result from the normal operation of those assets. For Entergy, substantially all of its asset retirement obligations consist of its liability for decommissioning its nuclear power plants. In addition, an insignificant amount of removal costs associated with non-nuclear power plants is also included in the decommissioning line item on the balance sheets.

 

These liabilities are recorded at their fair values (which are the present values of the estimated future cash outflows) in the period in which they are incurred, with an accompanying addition to the recorded cost of the long-lived asset. The asset retirement obligation is accreted each year through a charge to expense, to reflect the time value of money for this present value obligation. The accretion will continue through the completion of the asset retirement activity. The amounts added to the carrying amounts of the long-lived assets will be depreciated over the useful lives of the assets. The application of accounting standards related to asset retirement obligations is earnings neutral to the rate-regulated business of the Registrant Subsidiaries.

 

In accordance with ratemaking treatment and as required by regulatory accounting standards, the depreciation provisions for the Registrant Subsidiaries include a component for removal costs that are not asset retirement obligations under accounting standards. In accordance with regulatory accounting principles, the Registrant Subsidiaries have recorded regulatory assets (liabilities) in the following amounts to reflect their estimates of the difference between estimated incurred removal costs and estimated removal costs recovered in rates:

 

 

 

December 31,

 

 

2012

 

2011

 

 

(In Millions)

 

 

 

 

 

Entergy Arkansas

 

($12.2)

 

($16.4)

Entergy Gulf States Louisiana

 

($22.0)

 

($30.3)

Entergy Louisiana

 

($9.2)

 

($62.6)

Entergy Mississippi

 

$57.4

 

$48.5 

Entergy New Orleans

 

$29.9

 

$16.3 

Entergy Texas

 

$11.5

 

$4.5 

System Energy

 

$56.8

 

$11.8 

         

  

            The cumulative decommissioning and retirement cost liabilities and expenses recorded in 2012 by Entergy were as follows:

 

 

 

Liabilities as
of December 31,
2011

 



Accretion

 

Change in
Cash Flow
Estimate

 



Spending

 

Liabilities as
 of December 31,
2012

 

 

 

 

 

(In Millions)

 

 

 

 

Utility:

 

 

 

 

 

 

 

 

 

  Entergy Arkansas

$640.2

 

$40.5

 

$-

 

$- 

 

$680.7

  Entergy Gulf States Louisiana

$359.8

 

$21.0

 

$-

 

$- 

 

$380.8

  Entergy Louisiana

$345.8

 

$23.4

 

$48.9

 

$- 

 

$418.1

  Entergy Mississippi

$5.7

 

$0.3

 

$-

 

$-

 

$6.0

  Entergy New Orleans

$2.9

 

$0.2

 

$-

 

($0.9)

 

$2.2

  Entergy Texas

$3.9

 

$0.2

 

$-

 

$-

 

$4.1

  System Energy

$445.4

 

$33.0

 

$-

 

$-

 

$478.4

 

 

 

 

 

 

 

 

 

 

Entergy Wholesale Commodities

$1,492.9

 

$119.4

 

($58.5)

 

($10.5)

 

$1,543.3

                                                                                                                                   

            The cumulative decommissioning and retirement cost liabilities and expenses recorded in 2011 by Entergy were as follows:

 

 

 

Liabilities as
of December 31,
2010

 



Accretion

 

Change in
Cash Flow
Estimate

 



Spending

 

Liabilities as
 of December 31,
2011

 

 

 

 

 

(In Millions)

 

 

 

 

Utility:

 

 

 

 

 

 

 

 

 

  Entergy Arkansas

$602.2

 

$38.0

 

$- 

 

$- 

 

$640.2

  Entergy Gulf States Louisiana

$339.9

 

$19.9

 

$- 

 

$- 

 

$359.8

  Entergy Louisiana

$321.2

 

$24.6

 

$- 

 

$- 

 

$345.8

  Entergy Mississippi

$5.4

 

$0.3

 

$- 

 

$- 

 

$5.7

  Entergy New Orleans

$3.4

 

$0.2

 

$- 

 

($0.7)

 

$2.9

  Entergy Texas

$3.6

 

$0.3

 

$- 

 

$- 

 

$3.9

  System Energy

$452.8

 

$31.5

 

($38.9) 

 

$- 

 

$445.4

 

 

 

 

 

 

 

 

 

 

Entergy Wholesale Commodities

$1,420.0

 

$115.6

 

($34.1) 

 

($8.6)

 

$1,492.9

 

 

Entergy periodically reviews and updates estimated decommissioning costs. The actual decommissioning costs may vary from the estimates because of regulatory requirements, changes in technology, and increased costs of labor, materials, and equipment. As described below, during 2012 and 2011 Entergy updated decommissioning cost estimates for certain nuclear power plants.

 

In the second quarter 2012, Entergy Louisiana recorded a revision to its estimated decommissioning cost liability for Waterford 3 as a result of a revised decommissioning cost study. The revised estimate resulted in a $48.9 million increase in its decommissioning cost liability, along with a corresponding increase in the related asset retirement costs asset that will be depreciated over the remaining life of the unit.

 

In the second quarter 2012, Entergy Wholesale Commodities recorded a reduction of $60.6 million in the estimated decommissioning cost liability for a plant as a result of a revised decommissioning cost study. The revised estimate resulted in a credit to decommissioning expense of $49 million, reflecting the excess of the reduction in the liability over the amount of the undepreciated asset retirement costs asset.

 

In the first quarter of 2011, System Energy recorded a revision to its estimated decommissioning cost liability for Grand Gulf as a result of a revised decommissioning cost study.  The revised estimate resulted in a $38.9 million reduction in its decommissioning liability, along with a corresponding reduction in the related regulatory asset. 

 

In the fourth quarter of 2011, Entergy Wholesale Commodities recorded a reduction of $34.1 million in the decommissioning cost liability for a plant as a result of a revised decommissioning cost study obtained to comply with a state regulatory requirement. The revised cost study resulted in a change in the undiscounted cash flows and a credit to decommissioning expense of $34.1 million, reflecting the excess of the reduction in the liability over the amount of undepreciated assets.

 

            For the Indian Point 3 and FitzPatrick plants purchased in 2000, NYPA retained the decommissioning trusts and the decommissioning liabilities. NYPA and Entergy subsidiaries executed decommissioning agreements, which specify their decommissioning obligations. NYPA has the rights to require the Entergy subsidiaries to assume each of the decommissioning liabilities provided that it assigns the corresponding decommissioning trust, up to a specified level, to the Entergy subsidiaries. If the decommissioning liabilities are retained by NYPA, the Entergy subsidiaries will perform the decommissioning of the plants at a price equal to the lesser of a pre-specified level or the amount in the decommissioning trusts. Entergy recorded an asset, which is now $546.5 million as of December 31, 2012, representing its estimate of the present value of the difference between the stipulated contract amount for decommissioning the plants less the decommissioning costs estimated in independent decommissioning cost studies. The asset is increased by monthly accretion based on the applicable discount rate necessary to ultimately provide for the estimated future value of the decommissioning contract. The monthly accretion is recorded as interest income.

        

Entergy maintains decommissioning trust funds that are committed to meeting the costs of decommissioning the nuclear power plants. The fair values of the decommissioning trust funds and the related asset retirement obligation regulatory assets (liabilities) of Entergy as of December 31, 2012 are as follows:

 

 

 

Decommissioning
Trust Fair Values

 

Regulatory
Asset (Liability)

 

 

(In Millions)

 

 

 

 

 

Utility:

 

 

 

 

  ANO 1 and ANO 2

 

$600.6

 

$204.0

  River Bend

 

$477.4

 

($1.7)

  Waterford 3

 

$287.4

 

$126.7

  Grand Gulf

 

$490.6

 

$58.9

Entergy Wholesale Commodities

 

$2,334.1

 

$-

 

Entergy maintains decommissioning trust funds that are committed to meeting the costs of decommissioning the nuclear power plants. The fair values of the decommissioning trust funds and the related asset retirement obligation regulatory assets of Entergy as of December 31, 2011 are as follows:

 

 

 

Decommissioning
Trust Fair Values

 

Regulatory
Asset

 

 

(In Millions)

 

 

 

 

 

Utility:

 

 

 

 

  ANO 1 and ANO 2

 

$541.7

 

$181.5

  River Bend

 

$420.9

 

$5.5

  Waterford 3

 

$254.0

 

$116.1

  Grand Gulf

 

$423.4

 

$59.6

Entergy Wholesale Commodities

 

$2,148.0

 

$-

 

 

 
Entergy Louisiana [Member]
  
Asset Retirement Obligations

NOTE  9.  ASSET RETIREMENT OBLIGATIONS  (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

 

            Accounting standards require the recording of liabilities for all legal obligations associated with the retirement of long-lived assets that result from the normal operation of those assets. For Entergy, substantially all of its asset retirement obligations consist of its liability for decommissioning its nuclear power plants. In addition, an insignificant amount of removal costs associated with non-nuclear power plants is also included in the decommissioning line item on the balance sheets.

 

These liabilities are recorded at their fair values (which are the present values of the estimated future cash outflows) in the period in which they are incurred, with an accompanying addition to the recorded cost of the long-lived asset. The asset retirement obligation is accreted each year through a charge to expense, to reflect the time value of money for this present value obligation. The accretion will continue through the completion of the asset retirement activity. The amounts added to the carrying amounts of the long-lived assets will be depreciated over the useful lives of the assets. The application of accounting standards related to asset retirement obligations is earnings neutral to the rate-regulated business of the Registrant Subsidiaries.

 

In accordance with ratemaking treatment and as required by regulatory accounting standards, the depreciation provisions for the Registrant Subsidiaries include a component for removal costs that are not asset retirement obligations under accounting standards. In accordance with regulatory accounting principles, the Registrant Subsidiaries have recorded regulatory assets (liabilities) in the following amounts to reflect their estimates of the difference between estimated incurred removal costs and estimated removal costs recovered in rates:

 

 

 

December 31,

 

 

2012

 

2011

 

 

(In Millions)

 

 

 

 

 

Entergy Arkansas

 

($12.2)

 

($16.4)

Entergy Gulf States Louisiana

 

($22.0)

 

($30.3)

Entergy Louisiana

 

($9.2)

 

($62.6)

Entergy Mississippi

 

$57.4

 

$48.5 

Entergy New Orleans

 

$29.9

 

$16.3 

Entergy Texas

 

$11.5

 

$4.5 

System Energy

 

$56.8

 

$11.8 

         

  

            The cumulative decommissioning and retirement cost liabilities and expenses recorded in 2012 by Entergy were as follows:

 

 

 

Liabilities as
of December 31,
2011

 



Accretion

 

Change in
Cash Flow
Estimate

 



Spending

 

Liabilities as
 of December 31,
2012

 

 

 

 

 

(In Millions)

 

 

 

 

Utility:

 

 

 

 

 

 

 

 

 

  Entergy Arkansas

$640.2

 

$40.5

 

$-

 

$- 

 

$680.7

  Entergy Gulf States Louisiana

$359.8

 

$21.0

 

$-

 

$- 

 

$380.8

  Entergy Louisiana

$345.8

 

$23.4

 

$48.9

 

$- 

 

$418.1

  Entergy Mississippi

$5.7

 

$0.3

 

$-

 

$-

 

$6.0

  Entergy New Orleans

$2.9

 

$0.2

 

$-

 

($0.9)

 

$2.2

  Entergy Texas

$3.9

 

$0.2

 

$-

 

$-

 

$4.1

  System Energy

$445.4

 

$33.0

 

$-

 

$-

 

$478.4

 

 

 

 

 

 

 

 

 

 

Entergy Wholesale Commodities

$1,492.9

 

$119.4

 

($58.5)

 

($10.5)

 

$1,543.3

                                                                                                                                   

            The cumulative decommissioning and retirement cost liabilities and expenses recorded in 2011 by Entergy were as follows:

 

 

 

Liabilities as
of December 31,
2010

 



Accretion

 

Change in
Cash Flow
Estimate

 



Spending

 

Liabilities as
 of December 31,
2011

 

 

 

 

 

(In Millions)

 

 

 

 

Utility:

 

 

 

 

 

 

 

 

 

  Entergy Arkansas

$602.2

 

$38.0

 

$- 

 

$- 

 

$640.2

  Entergy Gulf States Louisiana

$339.9

 

$19.9

 

$- 

 

$- 

 

$359.8

  Entergy Louisiana

$321.2

 

$24.6

 

$- 

 

$- 

 

$345.8

  Entergy Mississippi

$5.4

 

$0.3

 

$- 

 

$- 

 

$5.7

  Entergy New Orleans

$3.4

 

$0.2

 

$- 

 

($0.7)

 

$2.9

  Entergy Texas

$3.6

 

$0.3

 

$- 

 

$- 

 

$3.9

  System Energy

$452.8

 

$31.5

 

($38.9) 

 

$- 

 

$445.4

 

 

 

 

 

 

 

 

 

 

Entergy Wholesale Commodities

$1,420.0

 

$115.6

 

($34.1) 

 

($8.6)

 

$1,492.9

 

 

Entergy periodically reviews and updates estimated decommissioning costs. The actual decommissioning costs may vary from the estimates because of regulatory requirements, changes in technology, and increased costs of labor, materials, and equipment. As described below, during 2012 and 2011 Entergy updated decommissioning cost estimates for certain nuclear power plants.

 

In the second quarter 2012, Entergy Louisiana recorded a revision to its estimated decommissioning cost liability for Waterford 3 as a result of a revised decommissioning cost study. The revised estimate resulted in a $48.9 million increase in its decommissioning cost liability, along with a corresponding increase in the related asset retirement costs asset that will be depreciated over the remaining life of the unit.

 

In the second quarter 2012, Entergy Wholesale Commodities recorded a reduction of $60.6 million in the estimated decommissioning cost liability for a plant as a result of a revised decommissioning cost study. The revised estimate resulted in a credit to decommissioning expense of $49 million, reflecting the excess of the reduction in the liability over the amount of the undepreciated asset retirement costs asset.

 

In the first quarter of 2011, System Energy recorded a revision to its estimated decommissioning cost liability for Grand Gulf as a result of a revised decommissioning cost study.  The revised estimate resulted in a $38.9 million reduction in its decommissioning liability, along with a corresponding reduction in the related regulatory asset. 

 

In the fourth quarter of 2011, Entergy Wholesale Commodities recorded a reduction of $34.1 million in the decommissioning cost liability for a plant as a result of a revised decommissioning cost study obtained to comply with a state regulatory requirement. The revised cost study resulted in a change in the undiscounted cash flows and a credit to decommissioning expense of $34.1 million, reflecting the excess of the reduction in the liability over the amount of undepreciated assets.

 

            For the Indian Point 3 and FitzPatrick plants purchased in 2000, NYPA retained the decommissioning trusts and the decommissioning liabilities. NYPA and Entergy subsidiaries executed decommissioning agreements, which specify their decommissioning obligations. NYPA has the rights to require the Entergy subsidiaries to assume each of the decommissioning liabilities provided that it assigns the corresponding decommissioning trust, up to a specified level, to the Entergy subsidiaries. If the decommissioning liabilities are retained by NYPA, the Entergy subsidiaries will perform the decommissioning of the plants at a price equal to the lesser of a pre-specified level or the amount in the decommissioning trusts. Entergy recorded an asset, which is now $546.5 million as of December 31, 2012, representing its estimate of the present value of the difference between the stipulated contract amount for decommissioning the plants less the decommissioning costs estimated in independent decommissioning cost studies. The asset is increased by monthly accretion based on the applicable discount rate necessary to ultimately provide for the estimated future value of the decommissioning contract. The monthly accretion is recorded as interest income.

        

Entergy maintains decommissioning trust funds that are committed to meeting the costs of decommissioning the nuclear power plants. The fair values of the decommissioning trust funds and the related asset retirement obligation regulatory assets (liabilities) of Entergy as of December 31, 2012 are as follows:

 

 

 

Decommissioning
Trust Fair Values

 

Regulatory
Asset (Liability)

 

 

(In Millions)

 

 

 

 

 

Utility:

 

 

 

 

  ANO 1 and ANO 2

 

$600.6

 

$204.0

  River Bend

 

$477.4

 

($1.7)

  Waterford 3

 

$287.4

 

$126.7

  Grand Gulf

 

$490.6

 

$58.9

Entergy Wholesale Commodities

 

$2,334.1

 

$-

 

Entergy maintains decommissioning trust funds that are committed to meeting the costs of decommissioning the nuclear power plants. The fair values of the decommissioning trust funds and the related asset retirement obligation regulatory assets of Entergy as of December 31, 2011 are as follows:

 

 

 

Decommissioning
Trust Fair Values

 

Regulatory
Asset

 

 

(In Millions)

 

 

 

 

 

Utility:

 

 

 

 

  ANO 1 and ANO 2

 

$541.7

 

$181.5

  River Bend

 

$420.9

 

$5.5

  Waterford 3

 

$254.0

 

$116.1

  Grand Gulf

 

$423.4

 

$59.6

Entergy Wholesale Commodities

 

$2,148.0

 

$-

 

 

 
Entergy Mississippi [Member]
  
Asset Retirement Obligations

NOTE  9.  ASSET RETIREMENT OBLIGATIONS  (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

 

            Accounting standards require the recording of liabilities for all legal obligations associated with the retirement of long-lived assets that result from the normal operation of those assets. For Entergy, substantially all of its asset retirement obligations consist of its liability for decommissioning its nuclear power plants. In addition, an insignificant amount of removal costs associated with non-nuclear power plants is also included in the decommissioning line item on the balance sheets.

 

These liabilities are recorded at their fair values (which are the present values of the estimated future cash outflows) in the period in which they are incurred, with an accompanying addition to the recorded cost of the long-lived asset. The asset retirement obligation is accreted each year through a charge to expense, to reflect the time value of money for this present value obligation. The accretion will continue through the completion of the asset retirement activity. The amounts added to the carrying amounts of the long-lived assets will be depreciated over the useful lives of the assets. The application of accounting standards related to asset retirement obligations is earnings neutral to the rate-regulated business of the Registrant Subsidiaries.

 

In accordance with ratemaking treatment and as required by regulatory accounting standards, the depreciation provisions for the Registrant Subsidiaries include a component for removal costs that are not asset retirement obligations under accounting standards. In accordance with regulatory accounting principles, the Registrant Subsidiaries have recorded regulatory assets (liabilities) in the following amounts to reflect their estimates of the difference between estimated incurred removal costs and estimated removal costs recovered in rates:

 

 

 

December 31,

 

 

2012

 

2011

 

 

(In Millions)

 

 

 

 

 

Entergy Arkansas

 

($12.2)

 

($16.4)

Entergy Gulf States Louisiana

 

($22.0)

 

($30.3)

Entergy Louisiana

 

($9.2)

 

($62.6)

Entergy Mississippi

 

$57.4

 

$48.5 

Entergy New Orleans

 

$29.9

 

$16.3 

Entergy Texas

 

$11.5

 

$4.5 

System Energy

 

$56.8

 

$11.8 

         

  

            The cumulative decommissioning and retirement cost liabilities and expenses recorded in 2012 by Entergy were as follows:

 

 

 

Liabilities as
of December 31,
2011

 



Accretion

 

Change in
Cash Flow
Estimate

 



Spending

 

Liabilities as
 of December 31,
2012

 

 

 

 

 

(In Millions)

 

 

 

 

Utility:

 

 

 

 

 

 

 

 

 

  Entergy Arkansas

$640.2

 

$40.5

 

$-

 

$- 

 

$680.7

  Entergy Gulf States Louisiana

$359.8

 

$21.0

 

$-

 

$- 

 

$380.8

  Entergy Louisiana

$345.8

 

$23.4

 

$48.9

 

$- 

 

$418.1

  Entergy Mississippi

$5.7

 

$0.3

 

$-

 

$-

 

$6.0

  Entergy New Orleans

$2.9

 

$0.2

 

$-

 

($0.9)

 

$2.2

  Entergy Texas

$3.9

 

$0.2

 

$-

 

$-

 

$4.1

  System Energy

$445.4

 

$33.0

 

$-

 

$-

 

$478.4

 

 

 

 

 

 

 

 

 

 

Entergy Wholesale Commodities

$1,492.9

 

$119.4

 

($58.5)

 

($10.5)

 

$1,543.3

                                                                                                                                   

            The cumulative decommissioning and retirement cost liabilities and expenses recorded in 2011 by Entergy were as follows:

 

 

 

Liabilities as
of December 31,
2010

 



Accretion

 

Change in
Cash Flow
Estimate

 



Spending

 

Liabilities as
 of December 31,
2011

 

 

 

 

 

(In Millions)

 

 

 

 

Utility:

 

 

 

 

 

 

 

 

 

  Entergy Arkansas

$602.2

 

$38.0

 

$- 

 

$- 

 

$640.2

  Entergy Gulf States Louisiana

$339.9

 

$19.9

 

$- 

 

$- 

 

$359.8

  Entergy Louisiana

$321.2

 

$24.6

 

$- 

 

$- 

 

$345.8

  Entergy Mississippi

$5.4

 

$0.3

 

$- 

 

$- 

 

$5.7

  Entergy New Orleans

$3.4

 

$0.2

 

$- 

 

($0.7)

 

$2.9

  Entergy Texas

$3.6

 

$0.3

 

$- 

 

$- 

 

$3.9

  System Energy

$452.8

 

$31.5

 

($38.9) 

 

$- 

 

$445.4

 

 

 

 

 

 

 

 

 

 

Entergy Wholesale Commodities

$1,420.0

 

$115.6

 

($34.1) 

 

($8.6)

 

$1,492.9

 

 

Entergy periodically reviews and updates estimated decommissioning costs. The actual decommissioning costs may vary from the estimates because of regulatory requirements, changes in technology, and increased costs of labor, materials, and equipment. As described below, during 2012 and 2011 Entergy updated decommissioning cost estimates for certain nuclear power plants.

 

In the second quarter 2012, Entergy Louisiana recorded a revision to its estimated decommissioning cost liability for Waterford 3 as a result of a revised decommissioning cost study. The revised estimate resulted in a $48.9 million increase in its decommissioning cost liability, along with a corresponding increase in the related asset retirement costs asset that will be depreciated over the remaining life of the unit.

 

In the second quarter 2012, Entergy Wholesale Commodities recorded a reduction of $60.6 million in the estimated decommissioning cost liability for a plant as a result of a revised decommissioning cost study. The revised estimate resulted in a credit to decommissioning expense of $49 million, reflecting the excess of the reduction in the liability over the amount of the undepreciated asset retirement costs asset.

 

In the first quarter of 2011, System Energy recorded a revision to its estimated decommissioning cost liability for Grand Gulf as a result of a revised decommissioning cost study.  The revised estimate resulted in a $38.9 million reduction in its decommissioning liability, along with a corresponding reduction in the related regulatory asset. 

 

In the fourth quarter of 2011, Entergy Wholesale Commodities recorded a reduction of $34.1 million in the decommissioning cost liability for a plant as a result of a revised decommissioning cost study obtained to comply with a state regulatory requirement. The revised cost study resulted in a change in the undiscounted cash flows and a credit to decommissioning expense of $34.1 million, reflecting the excess of the reduction in the liability over the amount of undepreciated assets.

 

            For the Indian Point 3 and FitzPatrick plants purchased in 2000, NYPA retained the decommissioning trusts and the decommissioning liabilities. NYPA and Entergy subsidiaries executed decommissioning agreements, which specify their decommissioning obligations. NYPA has the rights to require the Entergy subsidiaries to assume each of the decommissioning liabilities provided that it assigns the corresponding decommissioning trust, up to a specified level, to the Entergy subsidiaries. If the decommissioning liabilities are retained by NYPA, the Entergy subsidiaries will perform the decommissioning of the plants at a price equal to the lesser of a pre-specified level or the amount in the decommissioning trusts. Entergy recorded an asset, which is now $546.5 million as of December 31, 2012, representing its estimate of the present value of the difference between the stipulated contract amount for decommissioning the plants less the decommissioning costs estimated in independent decommissioning cost studies. The asset is increased by monthly accretion based on the applicable discount rate necessary to ultimately provide for the estimated future value of the decommissioning contract. The monthly accretion is recorded as interest income.

        

Entergy maintains decommissioning trust funds that are committed to meeting the costs of decommissioning the nuclear power plants. The fair values of the decommissioning trust funds and the related asset retirement obligation regulatory assets (liabilities) of Entergy as of December 31, 2012 are as follows:

 

 

 

Decommissioning
Trust Fair Values

 

Regulatory
Asset (Liability)

 

 

(In Millions)

 

 

 

 

 

Utility:

 

 

 

 

  ANO 1 and ANO 2

 

$600.6

 

$204.0

  River Bend

 

$477.4

 

($1.7)

  Waterford 3

 

$287.4

 

$126.7

  Grand Gulf

 

$490.6

 

$58.9

Entergy Wholesale Commodities

 

$2,334.1

 

$-

 

Entergy maintains decommissioning trust funds that are committed to meeting the costs of decommissioning the nuclear power plants. The fair values of the decommissioning trust funds and the related asset retirement obligation regulatory assets of Entergy as of December 31, 2011 are as follows:

 

 

 

Decommissioning
Trust Fair Values

 

Regulatory
Asset

 

 

(In Millions)

 

 

 

 

 

Utility:

 

 

 

 

  ANO 1 and ANO 2

 

$541.7

 

$181.5

  River Bend

 

$420.9

 

$5.5

  Waterford 3

 

$254.0

 

$116.1

  Grand Gulf

 

$423.4

 

$59.6

Entergy Wholesale Commodities

 

$2,148.0

 

$-

 

 

 
Entergy New Orleans [Member]
  
Asset Retirement Obligations

NOTE  9.  ASSET RETIREMENT OBLIGATIONS  (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

 

            Accounting standards require the recording of liabilities for all legal obligations associated with the retirement of long-lived assets that result from the normal operation of those assets. For Entergy, substantially all of its asset retirement obligations consist of its liability for decommissioning its nuclear power plants. In addition, an insignificant amount of removal costs associated with non-nuclear power plants is also included in the decommissioning line item on the balance sheets.

 

These liabilities are recorded at their fair values (which are the present values of the estimated future cash outflows) in the period in which they are incurred, with an accompanying addition to the recorded cost of the long-lived asset. The asset retirement obligation is accreted each year through a charge to expense, to reflect the time value of money for this present value obligation. The accretion will continue through the completion of the asset retirement activity. The amounts added to the carrying amounts of the long-lived assets will be depreciated over the useful lives of the assets. The application of accounting standards related to asset retirement obligations is earnings neutral to the rate-regulated business of the Registrant Subsidiaries.

 

In accordance with ratemaking treatment and as required by regulatory accounting standards, the depreciation provisions for the Registrant Subsidiaries include a component for removal costs that are not asset retirement obligations under accounting standards. In accordance with regulatory accounting principles, the Registrant Subsidiaries have recorded regulatory assets (liabilities) in the following amounts to reflect their estimates of the difference between estimated incurred removal costs and estimated removal costs recovered in rates:

 

 

 

December 31,

 

 

2012

 

2011

 

 

(In Millions)

 

 

 

 

 

Entergy Arkansas

 

($12.2)

 

($16.4)

Entergy Gulf States Louisiana

 

($22.0)

 

($30.3)

Entergy Louisiana

 

($9.2)

 

($62.6)

Entergy Mississippi

 

$57.4

 

$48.5 

Entergy New Orleans

 

$29.9

 

$16.3 

Entergy Texas

 

$11.5

 

$4.5 

System Energy

 

$56.8

 

$11.8 

         

  

            The cumulative decommissioning and retirement cost liabilities and expenses recorded in 2012 by Entergy were as follows:

 

 

 

Liabilities as
of December 31,
2011

 



Accretion

 

Change in
Cash Flow
Estimate

 



Spending

 

Liabilities as
 of December 31,
2012

 

 

 

 

 

(In Millions)

 

 

 

 

Utility:

 

 

 

 

 

 

 

 

 

  Entergy Arkansas

$640.2

 

$40.5

 

$-

 

$- 

 

$680.7

  Entergy Gulf States Louisiana

$359.8

 

$21.0

 

$-

 

$- 

 

$380.8

  Entergy Louisiana

$345.8

 

$23.4

 

$48.9

 

$- 

 

$418.1

  Entergy Mississippi

$5.7

 

$0.3

 

$-

 

$-

 

$6.0

  Entergy New Orleans

$2.9

 

$0.2

 

$-

 

($0.9)

 

$2.2

  Entergy Texas

$3.9

 

$0.2

 

$-

 

$-

 

$4.1

  System Energy

$445.4

 

$33.0

 

$-

 

$-

 

$478.4

 

 

 

 

 

 

 

 

 

 

Entergy Wholesale Commodities

$1,492.9

 

$119.4

 

($58.5)

 

($10.5)

 

$1,543.3

                                                                                                                                   

            The cumulative decommissioning and retirement cost liabilities and expenses recorded in 2011 by Entergy were as follows:

 

 

 

Liabilities as
of December 31,
2010

 



Accretion

 

Change in
Cash Flow
Estimate

 



Spending

 

Liabilities as
 of December 31,
2011

 

 

 

 

 

(In Millions)

 

 

 

 

Utility:

 

 

 

 

 

 

 

 

 

  Entergy Arkansas

$602.2

 

$38.0

 

$- 

 

$- 

 

$640.2

  Entergy Gulf States Louisiana

$339.9

 

$19.9

 

$- 

 

$- 

 

$359.8

  Entergy Louisiana

$321.2

 

$24.6

 

$- 

 

$- 

 

$345.8

  Entergy Mississippi

$5.4

 

$0.3

 

$- 

 

$- 

 

$5.7

  Entergy New Orleans

$3.4

 

$0.2

 

$- 

 

($0.7)

 

$2.9

  Entergy Texas

$3.6

 

$0.3

 

$- 

 

$- 

 

$3.9

  System Energy

$452.8

 

$31.5

 

($38.9) 

 

$- 

 

$445.4

 

 

 

 

 

 

 

 

 

 

Entergy Wholesale Commodities

$1,420.0

 

$115.6

 

($34.1) 

 

($8.6)

 

$1,492.9

 

 

Entergy periodically reviews and updates estimated decommissioning costs. The actual decommissioning costs may vary from the estimates because of regulatory requirements, changes in technology, and increased costs of labor, materials, and equipment. As described below, during 2012 and 2011 Entergy updated decommissioning cost estimates for certain nuclear power plants.

 

In the second quarter 2012, Entergy Louisiana recorded a revision to its estimated decommissioning cost liability for Waterford 3 as a result of a revised decommissioning cost study. The revised estimate resulted in a $48.9 million increase in its decommissioning cost liability, along with a corresponding increase in the related asset retirement costs asset that will be depreciated over the remaining life of the unit.

 

In the second quarter 2012, Entergy Wholesale Commodities recorded a reduction of $60.6 million in the estimated decommissioning cost liability for a plant as a result of a revised decommissioning cost study. The revised estimate resulted in a credit to decommissioning expense of $49 million, reflecting the excess of the reduction in the liability over the amount of the undepreciated asset retirement costs asset.

 

In the first quarter of 2011, System Energy recorded a revision to its estimated decommissioning cost liability for Grand Gulf as a result of a revised decommissioning cost study.  The revised estimate resulted in a $38.9 million reduction in its decommissioning liability, along with a corresponding reduction in the related regulatory asset. 

 

In the fourth quarter of 2011, Entergy Wholesale Commodities recorded a reduction of $34.1 million in the decommissioning cost liability for a plant as a result of a revised decommissioning cost study obtained to comply with a state regulatory requirement. The revised cost study resulted in a change in the undiscounted cash flows and a credit to decommissioning expense of $34.1 million, reflecting the excess of the reduction in the liability over the amount of undepreciated assets.

 

            For the Indian Point 3 and FitzPatrick plants purchased in 2000, NYPA retained the decommissioning trusts and the decommissioning liabilities. NYPA and Entergy subsidiaries executed decommissioning agreements, which specify their decommissioning obligations. NYPA has the rights to require the Entergy subsidiaries to assume each of the decommissioning liabilities provided that it assigns the corresponding decommissioning trust, up to a specified level, to the Entergy subsidiaries. If the decommissioning liabilities are retained by NYPA, the Entergy subsidiaries will perform the decommissioning of the plants at a price equal to the lesser of a pre-specified level or the amount in the decommissioning trusts. Entergy recorded an asset, which is now $546.5 million as of December 31, 2012, representing its estimate of the present value of the difference between the stipulated contract amount for decommissioning the plants less the decommissioning costs estimated in independent decommissioning cost studies. The asset is increased by monthly accretion based on the applicable discount rate necessary to ultimately provide for the estimated future value of the decommissioning contract. The monthly accretion is recorded as interest income.

        

Entergy maintains decommissioning trust funds that are committed to meeting the costs of decommissioning the nuclear power plants. The fair values of the decommissioning trust funds and the related asset retirement obligation regulatory assets (liabilities) of Entergy as of December 31, 2012 are as follows:

 

 

 

Decommissioning
Trust Fair Values

 

Regulatory
Asset (Liability)

 

 

(In Millions)

 

 

 

 

 

Utility:

 

 

 

 

  ANO 1 and ANO 2

 

$600.6

 

$204.0

  River Bend

 

$477.4

 

($1.7)

  Waterford 3

 

$287.4

 

$126.7

  Grand Gulf

 

$490.6

 

$58.9

Entergy Wholesale Commodities

 

$2,334.1

 

$-

 

Entergy maintains decommissioning trust funds that are committed to meeting the costs of decommissioning the nuclear power plants. The fair values of the decommissioning trust funds and the related asset retirement obligation regulatory assets of Entergy as of December 31, 2011 are as follows:

 

 

 

Decommissioning
Trust Fair Values

 

Regulatory
Asset

 

 

(In Millions)

 

 

 

 

 

Utility:

 

 

 

 

  ANO 1 and ANO 2

 

$541.7

 

$181.5

  River Bend

 

$420.9

 

$5.5

  Waterford 3

 

$254.0

 

$116.1

  Grand Gulf

 

$423.4

 

$59.6

Entergy Wholesale Commodities

 

$2,148.0

 

$-

 

 

 
Entergy Texas [Member]
  
Asset Retirement Obligations

NOTE  9.  ASSET RETIREMENT OBLIGATIONS  (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

 

            Accounting standards require the recording of liabilities for all legal obligations associated with the retirement of long-lived assets that result from the normal operation of those assets. For Entergy, substantially all of its asset retirement obligations consist of its liability for decommissioning its nuclear power plants. In addition, an insignificant amount of removal costs associated with non-nuclear power plants is also included in the decommissioning line item on the balance sheets.

 

These liabilities are recorded at their fair values (which are the present values of the estimated future cash outflows) in the period in which they are incurred, with an accompanying addition to the recorded cost of the long-lived asset. The asset retirement obligation is accreted each year through a charge to expense, to reflect the time value of money for this present value obligation. The accretion will continue through the completion of the asset retirement activity. The amounts added to the carrying amounts of the long-lived assets will be depreciated over the useful lives of the assets. The application of accounting standards related to asset retirement obligations is earnings neutral to the rate-regulated business of the Registrant Subsidiaries.

 

In accordance with ratemaking treatment and as required by regulatory accounting standards, the depreciation provisions for the Registrant Subsidiaries include a component for removal costs that are not asset retirement obligations under accounting standards. In accordance with regulatory accounting principles, the Registrant Subsidiaries have recorded regulatory assets (liabilities) in the following amounts to reflect their estimates of the difference between estimated incurred removal costs and estimated removal costs recovered in rates:

 

 

 

December 31,

 

 

2012

 

2011

 

 

(In Millions)

 

 

 

 

 

Entergy Arkansas

 

($12.2)

 

($16.4)

Entergy Gulf States Louisiana

 

($22.0)

 

($30.3)

Entergy Louisiana

 

($9.2)

 

($62.6)

Entergy Mississippi

 

$57.4

 

$48.5 

Entergy New Orleans

 

$29.9

 

$16.3 

Entergy Texas

 

$11.5

 

$4.5 

System Energy

 

$56.8

 

$11.8 

         

  

            The cumulative decommissioning and retirement cost liabilities and expenses recorded in 2012 by Entergy were as follows:

 

 

 

Liabilities as
of December 31,
2011

 



Accretion

 

Change in
Cash Flow
Estimate

 



Spending

 

Liabilities as
 of December 31,
2012

 

 

 

 

 

(In Millions)

 

 

 

 

Utility:

 

 

 

 

 

 

 

 

 

  Entergy Arkansas

$640.2

 

$40.5

 

$-

 

$- 

 

$680.7

  Entergy Gulf States Louisiana

$359.8

 

$21.0

 

$-

 

$- 

 

$380.8

  Entergy Louisiana

$345.8

 

$23.4

 

$48.9

 

$- 

 

$418.1

  Entergy Mississippi

$5.7

 

$0.3

 

$-

 

$-

 

$6.0

  Entergy New Orleans

$2.9

 

$0.2

 

$-

 

($0.9)

 

$2.2

  Entergy Texas

$3.9

 

$0.2

 

$-

 

$-

 

$4.1

  System Energy

$445.4

 

$33.0

 

$-

 

$-

 

$478.4

 

 

 

 

 

 

 

 

 

 

Entergy Wholesale Commodities

$1,492.9

 

$119.4

 

($58.5)

 

($10.5)

 

$1,543.3

                                                                                                                                   

            The cumulative decommissioning and retirement cost liabilities and expenses recorded in 2011 by Entergy were as follows:

 

 

 

Liabilities as
of December 31,
2010

 



Accretion

 

Change in
Cash Flow
Estimate

 



Spending

 

Liabilities as
 of December 31,
2011

 

 

 

 

 

(In Millions)

 

 

 

 

Utility:

 

 

 

 

 

 

 

 

 

  Entergy Arkansas

$602.2

 

$38.0

 

$- 

 

$- 

 

$640.2

  Entergy Gulf States Louisiana

$339.9

 

$19.9

 

$- 

 

$- 

 

$359.8

  Entergy Louisiana

$321.2

 

$24.6

 

$- 

 

$- 

 

$345.8

  Entergy Mississippi

$5.4

 

$0.3

 

$- 

 

$- 

 

$5.7

  Entergy New Orleans

$3.4

 

$0.2

 

$- 

 

($0.7)

 

$2.9

  Entergy Texas

$3.6

 

$0.3

 

$- 

 

$- 

 

$3.9

  System Energy

$452.8

 

$31.5

 

($38.9) 

 

$- 

 

$445.4

 

 

 

 

 

 

 

 

 

 

Entergy Wholesale Commodities

$1,420.0

 

$115.6

 

($34.1) 

 

($8.6)

 

$1,492.9

 

 

Entergy periodically reviews and updates estimated decommissioning costs. The actual decommissioning costs may vary from the estimates because of regulatory requirements, changes in technology, and increased costs of labor, materials, and equipment. As described below, during 2012 and 2011 Entergy updated decommissioning cost estimates for certain nuclear power plants.

 

In the second quarter 2012, Entergy Louisiana recorded a revision to its estimated decommissioning cost liability for Waterford 3 as a result of a revised decommissioning cost study. The revised estimate resulted in a $48.9 million increase in its decommissioning cost liability, along with a corresponding increase in the related asset retirement costs asset that will be depreciated over the remaining life of the unit.

 

In the second quarter 2012, Entergy Wholesale Commodities recorded a reduction of $60.6 million in the estimated decommissioning cost liability for a plant as a result of a revised decommissioning cost study. The revised estimate resulted in a credit to decommissioning expense of $49 million, reflecting the excess of the reduction in the liability over the amount of the undepreciated asset retirement costs asset.

 

In the first quarter of 2011, System Energy recorded a revision to its estimated decommissioning cost liability for Grand Gulf as a result of a revised decommissioning cost study.  The revised estimate resulted in a $38.9 million reduction in its decommissioning liability, along with a corresponding reduction in the related regulatory asset. 

 

In the fourth quarter of 2011, Entergy Wholesale Commodities recorded a reduction of $34.1 million in the decommissioning cost liability for a plant as a result of a revised decommissioning cost study obtained to comply with a state regulatory requirement. The revised cost study resulted in a change in the undiscounted cash flows and a credit to decommissioning expense of $34.1 million, reflecting the excess of the reduction in the liability over the amount of undepreciated assets.

 

            For the Indian Point 3 and FitzPatrick plants purchased in 2000, NYPA retained the decommissioning trusts and the decommissioning liabilities. NYPA and Entergy subsidiaries executed decommissioning agreements, which specify their decommissioning obligations. NYPA has the rights to require the Entergy subsidiaries to assume each of the decommissioning liabilities provided that it assigns the corresponding decommissioning trust, up to a specified level, to the Entergy subsidiaries. If the decommissioning liabilities are retained by NYPA, the Entergy subsidiaries will perform the decommissioning of the plants at a price equal to the lesser of a pre-specified level or the amount in the decommissioning trusts. Entergy recorded an asset, which is now $546.5 million as of December 31, 2012, representing its estimate of the present value of the difference between the stipulated contract amount for decommissioning the plants less the decommissioning costs estimated in independent decommissioning cost studies. The asset is increased by monthly accretion based on the applicable discount rate necessary to ultimately provide for the estimated future value of the decommissioning contract. The monthly accretion is recorded as interest income.

        

Entergy maintains decommissioning trust funds that are committed to meeting the costs of decommissioning the nuclear power plants. The fair values of the decommissioning trust funds and the related asset retirement obligation regulatory assets (liabilities) of Entergy as of December 31, 2012 are as follows:

 

 

 

Decommissioning
Trust Fair Values

 

Regulatory
Asset (Liability)

 

 

(In Millions)

 

 

 

 

 

Utility:

 

 

 

 

  ANO 1 and ANO 2

 

$600.6

 

$204.0

  River Bend

 

$477.4

 

($1.7)

  Waterford 3

 

$287.4

 

$126.7

  Grand Gulf

 

$490.6

 

$58.9

Entergy Wholesale Commodities

 

$2,334.1

 

$-

 

Entergy maintains decommissioning trust funds that are committed to meeting the costs of decommissioning the nuclear power plants. The fair values of the decommissioning trust funds and the related asset retirement obligation regulatory assets of Entergy as of December 31, 2011 are as follows:

 

 

 

Decommissioning
Trust Fair Values

 

Regulatory
Asset

 

 

(In Millions)

 

 

 

 

 

Utility:

 

 

 

 

  ANO 1 and ANO 2

 

$541.7

 

$181.5

  River Bend

 

$420.9

 

$5.5

  Waterford 3

 

$254.0

 

$116.1

  Grand Gulf

 

$423.4

 

$59.6

Entergy Wholesale Commodities

 

$2,148.0

 

$-

 

 

 
System Energy [Member]
  
Asset Retirement Obligations

NOTE  9.  ASSET RETIREMENT OBLIGATIONS  (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

 

            Accounting standards require the recording of liabilities for all legal obligations associated with the retirement of long-lived assets that result from the normal operation of those assets. For Entergy, substantially all of its asset retirement obligations consist of its liability for decommissioning its nuclear power plants. In addition, an insignificant amount of removal costs associated with non-nuclear power plants is also included in the decommissioning line item on the balance sheets.

 

These liabilities are recorded at their fair values (which are the present values of the estimated future cash outflows) in the period in which they are incurred, with an accompanying addition to the recorded cost of the long-lived asset. The asset retirement obligation is accreted each year through a charge to expense, to reflect the time value of money for this present value obligation. The accretion will continue through the completion of the asset retirement activity. The amounts added to the carrying amounts of the long-lived assets will be depreciated over the useful lives of the assets. The application of accounting standards related to asset retirement obligations is earnings neutral to the rate-regulated business of the Registrant Subsidiaries.

 

In accordance with ratemaking treatment and as required by regulatory accounting standards, the depreciation provisions for the Registrant Subsidiaries include a component for removal costs that are not asset retirement obligations under accounting standards. In accordance with regulatory accounting principles, the Registrant Subsidiaries have recorded regulatory assets (liabilities) in the following amounts to reflect their estimates of the difference between estimated incurred removal costs and estimated removal costs recovered in rates:

 

 

 

December 31,

 

 

2012

 

2011

 

 

(In Millions)

 

 

 

 

 

Entergy Arkansas

 

($12.2)

 

($16.4)

Entergy Gulf States Louisiana

 

($22.0)

 

($30.3)

Entergy Louisiana

 

($9.2)

 

($62.6)

Entergy Mississippi

 

$57.4

 

$48.5 

Entergy New Orleans

 

$29.9

 

$16.3 

Entergy Texas

 

$11.5

 

$4.5 

System Energy

 

$56.8

 

$11.8 

         

  

            The cumulative decommissioning and retirement cost liabilities and expenses recorded in 2012 by Entergy were as follows:

 

 

 

Liabilities as
of December 31,
2011

 



Accretion

 

Change in
Cash Flow
Estimate

 



Spending

 

Liabilities as
 of December 31,
2012

 

 

 

 

 

(In Millions)

 

 

 

 

Utility:

 

 

 

 

 

 

 

 

 

  Entergy Arkansas

$640.2

 

$40.5

 

$-

 

$- 

 

$680.7

  Entergy Gulf States Louisiana

$359.8

 

$21.0

 

$-

 

$- 

 

$380.8

  Entergy Louisiana

$345.8

 

$23.4

 

$48.9

 

$- 

 

$418.1

  Entergy Mississippi

$5.7

 

$0.3

 

$-

 

$-

 

$6.0

  Entergy New Orleans

$2.9

 

$0.2

 

$-

 

($0.9)

 

$2.2

  Entergy Texas

$3.9

 

$0.2

 

$-

 

$-

 

$4.1

  System Energy

$445.4

 

$33.0

 

$-

 

$-

 

$478.4

 

 

 

 

 

 

 

 

 

 

Entergy Wholesale Commodities

$1,492.9

 

$119.4

 

($58.5)

 

($10.5)

 

$1,543.3

                                                                                                                                   

            The cumulative decommissioning and retirement cost liabilities and expenses recorded in 2011 by Entergy were as follows:

 

 

 

Liabilities as
of December 31,
2010

 



Accretion

 

Change in
Cash Flow
Estimate

 



Spending

 

Liabilities as
 of December 31,
2011

 

 

 

 

 

(In Millions)

 

 

 

 

Utility:

 

 

 

 

 

 

 

 

 

  Entergy Arkansas

$602.2

 

$38.0

 

$- 

 

$- 

 

$640.2

  Entergy Gulf States Louisiana

$339.9

 

$19.9

 

$- 

 

$- 

 

$359.8

  Entergy Louisiana

$321.2

 

$24.6

 

$- 

 

$- 

 

$345.8

  Entergy Mississippi

$5.4

 

$0.3

 

$- 

 

$- 

 

$5.7

  Entergy New Orleans

$3.4

 

$0.2

 

$- 

 

($0.7)

 

$2.9

  Entergy Texas

$3.6

 

$0.3

 

$- 

 

$- 

 

$3.9

  System Energy

$452.8

 

$31.5

 

($38.9) 

 

$- 

 

$445.4

 

 

 

 

 

 

 

 

 

 

Entergy Wholesale Commodities

$1,420.0

 

$115.6

 

($34.1) 

 

($8.6)

 

$1,492.9

 

 

Entergy periodically reviews and updates estimated decommissioning costs. The actual decommissioning costs may vary from the estimates because of regulatory requirements, changes in technology, and increased costs of labor, materials, and equipment. As described below, during 2012 and 2011 Entergy updated decommissioning cost estimates for certain nuclear power plants.

 

In the second quarter 2012, Entergy Louisiana recorded a revision to its estimated decommissioning cost liability for Waterford 3 as a result of a revised decommissioning cost study. The revised estimate resulted in a $48.9 million increase in its decommissioning cost liability, along with a corresponding increase in the related asset retirement costs asset that will be depreciated over the remaining life of the unit.

 

In the second quarter 2012, Entergy Wholesale Commodities recorded a reduction of $60.6 million in the estimated decommissioning cost liability for a plant as a result of a revised decommissioning cost study. The revised estimate resulted in a credit to decommissioning expense of $49 million, reflecting the excess of the reduction in the liability over the amount of the undepreciated asset retirement costs asset.

 

In the first quarter of 2011, System Energy recorded a revision to its estimated decommissioning cost liability for Grand Gulf as a result of a revised decommissioning cost study.  The revised estimate resulted in a $38.9 million reduction in its decommissioning liability, along with a corresponding reduction in the related regulatory asset. 

 

In the fourth quarter of 2011, Entergy Wholesale Commodities recorded a reduction of $34.1 million in the decommissioning cost liability for a plant as a result of a revised decommissioning cost study obtained to comply with a state regulatory requirement. The revised cost study resulted in a change in the undiscounted cash flows and a credit to decommissioning expense of $34.1 million, reflecting the excess of the reduction in the liability over the amount of undepreciated assets.

 

            For the Indian Point 3 and FitzPatrick plants purchased in 2000, NYPA retained the decommissioning trusts and the decommissioning liabilities. NYPA and Entergy subsidiaries executed decommissioning agreements, which specify their decommissioning obligations. NYPA has the rights to require the Entergy subsidiaries to assume each of the decommissioning liabilities provided that it assigns the corresponding decommissioning trust, up to a specified level, to the Entergy subsidiaries. If the decommissioning liabilities are retained by NYPA, the Entergy subsidiaries will perform the decommissioning of the plants at a price equal to the lesser of a pre-specified level or the amount in the decommissioning trusts. Entergy recorded an asset, which is now $546.5 million as of December 31, 2012, representing its estimate of the present value of the difference between the stipulated contract amount for decommissioning the plants less the decommissioning costs estimated in independent decommissioning cost studies. The asset is increased by monthly accretion based on the applicable discount rate necessary to ultimately provide for the estimated future value of the decommissioning contract. The monthly accretion is recorded as interest income.

        

Entergy maintains decommissioning trust funds that are committed to meeting the costs of decommissioning the nuclear power plants. The fair values of the decommissioning trust funds and the related asset retirement obligation regulatory assets (liabilities) of Entergy as of December 31, 2012 are as follows:

 

 

 

Decommissioning
Trust Fair Values

 

Regulatory
Asset (Liability)

 

 

(In Millions)

 

 

 

 

 

Utility:

 

 

 

 

  ANO 1 and ANO 2

 

$600.6

 

$204.0

  River Bend

 

$477.4

 

($1.7)

  Waterford 3

 

$287.4

 

$126.7

  Grand Gulf

 

$490.6

 

$58.9

Entergy Wholesale Commodities

 

$2,334.1

 

$-

 

Entergy maintains decommissioning trust funds that are committed to meeting the costs of decommissioning the nuclear power plants. The fair values of the decommissioning trust funds and the related asset retirement obligation regulatory assets of Entergy as of December 31, 2011 are as follows:

 

 

 

Decommissioning
Trust Fair Values

 

Regulatory
Asset

 

 

(In Millions)

 

 

 

 

 

Utility:

 

 

 

 

  ANO 1 and ANO 2

 

$541.7

 

$181.5

  River Bend

 

$420.9

 

$5.5

  Waterford 3

 

$254.0

 

$116.1

  Grand Gulf

 

$423.4

 

$59.6

Entergy Wholesale Commodities

 

$2,148.0

 

$-