Entergy : 16 036 FR

APSC FILED Time: 7/7/2023 9:08:31 AM: Recvd 7/7/2023 8:59:27 AM: Docket 16-036-FR-Doc. 902

BEFORE THE

ARKANSAS PUBLIC SERVICE COMMISSION

IN THE MATTER OF THE FORMULA RATE	)
PLAN FILINGS OF ENTERGY ARKANSAS,,	)	DOCKET NO. 16-036-FR
IINC. PURSUANT ToO APSC DOCKET NoO. )
15-015-U	)

APPLICATION

COMES ENTERGY ARKANSAS, LLC ("EAL" or the "Company"), and for its Application in this matter, respectfully states as follows:

IINTRODUCTION

1. This Application is filed pursuant to and in compliance with the provisions of EAL'S's Rate Schedule No. 44, Formula Rate Plan Rider ("Rider FRP"), including Attachment F, the Formula Rate Protocols ("Protocols"), Ark. Code Ann. § 23-4-1201 et seq., as amended by Acts 404 and 894 of 2021, and the applicable

Arkansas Public Service Commission ("APSC" or the "Commission") Rules of

1	Attached as EAL Application Exhibit AisiS the EAL Rider
Practice and Procedure..1

FRP 2023 Evaluation Report ("2023 Evaluation Report"), which contains an

evaluation of the Company's earnings pursuant to Rider FRP for the Formula Rate Review Test Period. The 2023 Evaluation Report is the eighth Evaluation Report filed by EAL during the existence of Rider FRP, and the Evaluation Report is

11 Rider FRP was first approved by the APSC in Docket No. 15-015-U, Order No. 18 at 22-23 (February 23, 2016) and approved most recently by Order No. 9 in Docket No. 18-004-TF (May 31,

2022).

1

APSC FILED Time: 7/7/2023 9:08:31 AM: Recvd 7/7/2023 8:59:27 AM: Docket 16-036-FR-Doc. 902

consistent with revisions to Ark. Code Ann. § 23-4-1201 et seq. as made by Acts 404

and 894 of2021..2

2. The Company is a limited liability company organized and operating under the laws of the State of Texas, and is a public utility as defined by Ark. Code Ann. § 23-1-101 et seq. The Company's principal office is located at the Simmons Bank Building, 425 West Capitol Avenue, Little Rock, Arkansas 72201. A copy of

EAL's Company Agreement is on file with the APSC and is incorporated by reference

herein.

3. Act 725 of 2015, as amended by Acts 404 and 894 of 2021,

authorizes utilities to elect to implement a formula rate review mechanism using a projected year test period..3 In its order issued in February 2016 in Docket No. 15- 015-U, the Commission initially approved EAL's Rider FRP and election of a projected year test period, and in its orders issued in April 2021, July 2021,

March 2022, April 2022, and May 2022 in Docket No. 18--004--TF, the Commission

approved the current Rider FRP..4 Moreover, EAL witness J. David Palmer, Vice

President Regulatory Affairs provides an overview of EAL's 2023 Rider FRP filing,

describes the significant drivers of the proposed Rider FRP Revenue Change used

2 Act 725 of 2015 established an initial five-year term for use of a formula rate review, and Act 404 of 2021 and Order No. 4 in Docket No. 18--004--TF extended that term for an additional five years. 3 See Ark. Code Ann. § 23-4-1201 et. seq., which is known and may be cited as the "Formula Rate

Review Act."

4 Docket No. 15-015-U, Order No. 18 at 22-23 (February 23, 2016). The current Rider FRP was approved by the Commission by Order Nos. 4, 5, 6, 7, 8 and 9 in Docket No. 18--004--TF (April 27, 2021, July 6, 2021, March 17, 2022, April 14, 2022, May 5, 2022, and May 31, 2022, respectively).

2

APSC FILED Time: 7/7/2023 9:08:31 AM: Recvd 7/7/2023 8:59:27 AM: Docket 16-036-FR-Doc. 902

to calculate the Rider FRP Rate Adjustment, and introduces the Company

witnesses, who explain that the Rate Adjustment complies with the requirements

of Rider FRP and that it should be implemented effective January 2, 2024, for the

first billing cycle of January 2024. Ilmportantly, Mr. Palmer explains the significant effects of forcing generation additions through the FRP and the negative consequences this will have on the Company's economic development efforts and customer rates. Mr. Palmer also notes that this Rider FRP filing applies the

"Netting Adjustment,"5," whereby the net differences between the prior Formula Rate Review Test Period change in revenue and the actual Historical Year change in

revenue for that same year, i.e., the Historical Year (2022), are reconciled and

accounted for as part of the calculation of Required Rider FRP Revenue, which,

after application of the four percent (4%) cap, becomes the proposed Rider FRP

Revenue Change..6

5 The Netting Adjustment in the 2023 Evaluation Report reflects the directives found in Acts 404 and 894 of 2021. See the 2023 Evaluation Report -- Direct Testimony of Company witness Matthew S. Klucher, and that of Mr. Palmer, filed concurrently herewith.

6 Rider FRP Section 44.5.3. and Attachment D.6. See, Ark. Code Ann. § 23-4-1206€(1)-(4). See, the 2023 Evaluation Report -- Direct Testimony of Klucher filed concurrently herewith.

3

APSC FILED Time: 7/7/2023 9:08:31 AM: Recvd 7/7/2023 8:59:27 AM: Docket 16-036-FR-Doc. 902

2023 EVALUATION REPORT

4. For this filing, the Projected Year is the twelve-month period ending

December 31, 2024, the Filing Year is the twelve-month period ending

December 31, 2023, and the Historical Year is the twelve-month period ending

December 31, 2022. The 2023 Evaluation Report and revised tariff attachments

are included as EAL Application Exhibit Ato the Application.

5. The Company's Earned Rate of Return on Common Equity ("ERR")7

reflected in the 2023 Evaluation Report on Attachment B6. is 8.11 percent for the

Projected Year and, as shown on Attachment D6. ,, is 7.29 percent for the Historical

Year. As a result, the projected revenue change necessary to achieve EAL's

Targeted Rate of Return ("TRR") of 9.65 percent for the Projected Year and for the Historical Year is $130.3 million. The total revenue change is based upon a

Projected Year deficiency of approximately $80.5 million for 2024 and a deficiency of approximately $49.8 million in the Historical Year Netting Adjustment for 2022..8

6. As discussed by EAL witness Lydia W. Joseph, the revenue change

necessary to achieve the 9.65 percent return is above the four percent (4%) cap, referred to as the Calculation Constraint. As discussed by Mr. Klucher, per the operation of the Calculation Constraint in Attachment A.2 -- Extension of Rider FRP, the Company's proposed Rider FRP Revenue Change is limited to $88.6

7 Rider FRP Attachment B.6 Note 1 defines "ERR" as the "Earned Rate of Return on Common Equity." Rider FRP Section 44.5..1 also defines "ERR" as ""Earned Return Rate."

8 Amounts may not tie due to rounding.

4

APSC FILED Time: 7/7/2023 9:08:31 AM: Recvd 7/7/2023 8:59:27 AM: Docket 16-036-FR-Doc. 902

million, which is the level of additional revenue included in EAL's proposed rate adjustment. EAL Direct Exhibit LWJ--1shows the significant drivers of the Projected Year Revenue Change.

7. The Company's Application and 2023 Evaluation Report comply with Rider FRP, including its Protocols in Attachment F. The 2023 Evaluation Report

includes (1) a Rider FRP Attachment A..1 -- Extension, which contains EAL's proposed Rate Adjustment; (2) Attachment A.2 -- Extension, which includes the

calculation of the total Rider FRP Revenue to be collected in the Projected Year;

and (3) Attachment B, which was prepared consistent with the description of Rider FRP Adjustments in Attachment C and with each oftthe applicable Rider FRP Filing

Requirements included in Rider FRP Attachment E.9 The 2023 Evaluation Report, attached as EAL Application Exhibit A, describes the compliance requirements for

Rider FRP annual filings that were established by the 2016, 2017, 2018, 2019,

2020, 2021 and 2022 Rider FRP Settlement and Stipulation Agreements and

Order No. 14 in this docket, in addition to clarifications of the 2016 Rider FRP

Settlement Agreement made by Order No. 7, and the Joint Response to Order No. 7 and Motion to Approve Settlement Items approved by Order No. 10, as well as Order No. 18. To enhance transparency in its Rider FRP filings, beginning in 2022,

9 As in the 2020, 2021 and 2022 Rider FRP filings, the Company is filing Rider FRP Attachment D, which calculates the Netting of Historical Year Diifferences Adjustment, and certain Attachment E Filing Requirements specifically related to the Historical Year (twelve months ending December 2022), namely Attachment E Filing Requirement Item Nos. 2, 3, 4, 5, 6, 7, 8, 12, 13, 14, 15, 16, 18, 20, 23, 24, 25, and 28 wherein these items require reconciliation to Rider FRP Attachment D or request Minimum Filing Requirement Schedules related to Rider FRP Attachment D and the Historical Year.

5