The General Staff of the Arkansas Public Service Commission, in a final statement of position, said Nov. 9 that the commission should only approve the proposed transfer of capacity of the Arkansas Nuclear One plant to the retail service of Entergy Arkansas.
On June 13, Entergy Arkansas Inc. (EAI) filed an application to designate 286 MW of wholesale base load capacity (the “Available WBL Capacity”) as available to serve Arkansas retail load and requested concurrent recovery through a capacity rider. That includes capacity at the White Bluff and Independence coal plants, plus the Grand Gulf nuclear plant. Staff’s recent recommendation was that the commission approve the acquisition of the ANO capacity only and that EAI be allowed to recover the costs of the ANO capacity through normal ratemaking processes, i.e., through an increase in base rates after EAI’s next rate case.
EAI then provided an alternative offer of 154 MW of wholesale baseload capacity consistent with staff’s recommendation, which represented 70 MW from ANO Unit 1, and 84 MW from ANO Unit 2, and continued to request concurrent recovery for the ANO 1 portion for 2013.
A hearing was conducted on Nov. 5. Both in testimony and at the hearing, EAI revised its request relating to capacity designation and cost recovery, since it had gotten offers in the meantime for sale to unnamed parties of some of the capacity covered by the original application. The commission then requested this post-hearing final statement of position, detailing and clarifying each party’s final position and recommendations in light of EAI’s revised application.
Staff said in its Nov. 9 final statement that ANO Unit 1 should be assigned to serve retail customers beginning Jan. 1, 2013, and ANO Unit 2 should be assigned to retail customers beginning Dec. 19, 2013. It said both units should be assigned and approved by the commission on a life-of-unit basis.
EAI should recover the non-fuel costs for ANO Unit 1 through the Arkansas Nuclear One Unit 1 Interim Capacity Cost Recovery Rider (Rider ANOR), as revised by staff. The initial estimated ANO Unit 1 nonfuel costs will be based on a prior docket revenue requirement, as set out in Attachment B of Rider ANOR, and will become effective, upon commission approval, with the first billing cycle of January 2013. EAI will true-up the 2013 revenues to actual 2013 booked costs in accordance with the provisions of Rider ANOR.
EAI should recover the non-fuel costs for ANO Units 1 and 2 in base rates following the completion of its 2013 general rate case, consistent with traditional ratemaking principles, staff said. The commission should approve EAI’s sale on a life-of-unit basis of the portions of the Available WBL Capacity for the non-retained share of Grand Gulf, White Bluff Units 1 and 2, and Independence Unit 1 to third parties, staff added.
Issue of two power purchase deals to be addressed later
Whether two proposed purchase power agreements (PPAs) are a reasonable part of EAI’s resource plan for post-Entergy System Agreement operation should be addressed in a second phase of this proceeding and timed to result in a commission order by May 31, 2013, if possible, to support development of EAI’s resource plan. To enable a commission order by May 31, 2013, the commission should direct EAI to file testimony as soon as possible fully addressing the issues as detailed in Staff’s testimony, staff recommended.
EAI is opting out of the System Agreement of parent Entergy (NYSE: ETR) and related companies because it plans in late 2013 to join the Midwest ISO. The System Agreement basically covers interchanges of power between Entergy subsidiaries, with the MISO entry to override that old agreement when EAI joins MISO.
“EAI’s alternative offer of the ANO Units is consistent with the recommendation of Staff witness John Athas, as reflected in his pre-filed testimony,” staff noted. “Mr. Athas concluded that unbundling the WBL resources and acquiring only the ANO units would bring greater benefits to Arkansas ratepayers over time than the entire wholesale base load bundle, and that those benefits would accrue in a much shorter time frame. Accordingly, Staff requests approval of its recommendation as reflected in Mr. Athas’ testimony, which has now also become EAI’s alternative offer, and that the Commission designate the ANO capacity as available to serve Arkansas retail load on a life of unit basis.”
The Consumer Utilities Rate Advocacy Division of the Arkansas Attorney General’s Office (CURAD), Arkansas Electric Energy Consumers (AEEC) and EAI filed their own joint Nov. 9 final brief that basically agreed with the points made by commission staff.
They noted that the Available WBL Capacity represents a percentage portion of generating units already owned by EAI (White Bluff Unit 1 (8.45% of EAI’s ownership share, approximately 39 MW) and White Bluff Unit 2 (8.45%, about 41 MW), Independence Unit 1 (8.43%, approximately 22 MW), ANO Unit 1 (8.43%, about 70 MW) and ANO Unit 2 (8.45%, about 84 MW)), and from EAI’s purchase power obligation from the Grand Gulf Nuclear Station (Grand Gulf) (8.31%, approximately 30 MW). The ANO Unit 1 portion and non-retained share of Grand Gulf become available to EAI on Jan. 1, 2013, with the remaining portions becoming available on Dec. 19, 2013.
CURAD, AEEC and EAI agreed on the following matters related to the proposed PPAs and their cost recovery:
- The issue of whether the two PPAs are a reasonable part of EAI’s resource plan for post-System Agreement operation should be addressed in a second phase of this proceeding and timed to result in a commission order by May 31, 2013 to support development of EAI’s resource plan.
- The issue of whether it is reasonable for EAI to use a separate tariff to recover the capacity cost of short- and limited-term capacity purchases will be addressed in a general rate proceeding EAI plans to file in 2013.