BEFORE THE ARKANSAS PUBLIC SERVICE COMMISSION ) ) ) ) NON-PROTECTED SURREBUTTAL EXHIBITS JEFF HILTON DIRECTOR OF REVENUE REQUIREMENTS

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1 APSC FILED Time: 11/24/ :57:47 AM: Recvd 11/24/ :46:36 AM: Docket U-Doc. 312 BEFORE THE ARKANSAS PUBLIC SERVICE COMMISSION IN THE MATTER OF THE APPLICATION OF ENTERGY ARKANSAS, INC. FOR APPROVAL OF CHANGES IN RATES FOR RETAIL ELECTRIC SERVICE ) ) ) ) NON-PROTECTED SURREBUTTAL EXHIBITS OF JEFF HILTON DIRECTOR OF REVENUE REQUIREMENTS ON BEHALF OF THE GENERAL STAFF OF THE ARKANSAS PUBLIC SERVICE COMMISSION NOVEMBER 24,

2 SURREBUTTAL EXHIBIT JH-1 APSC FILED Time: 11/24/ :57:47 AM: Recvd 11/24/ :46:36 AM: Docket U-Doc. PAGE 1312 OF 1 SUMMARY OF OPERATIONS (1) (2) (3) Arkansas Retail Jurisdiction Line As Adjusted No. Description By Staff 1 Adjusted Rate Base $ 5,858,174,236 2 Adjusted Operating Revenue $ 1,084,904,648 3 Adjusted Operating Expense $ 964,919,706 4 Adjusted Operating Income $ 119,984,941 5 Current Rate of Return 2.05% 6 Required Rate of Return 4.48% 7 Required Operating Income $ 262,446,206 8 Operating Income Deficiency $ 142,461,265 9 Revenue Conversion Factor Revenue Deficiency (Excess) $ 233,721, Total Revenue Requirement $ 1,318,626, Less: Other Revenues $ 26,481, Total Rate Schedule Revenue Requirement $ 1,292,144, Percentage Increase Recommended 21.54% -2-

3 SUMMARY OF RATE BASE SURREBUTTAL EXHIBIT JH-2 PAGE 1 OF 1 (1) (2) (3) (4) (5) (6) Arkansas Line Total Company Staff As Adjusted Retail No. Description March 31, 2015 Adjustments By Staff Jurisdiction 1 Gross Utility Plant-In-Service $ 9,556,269,881 $ 15,182,006 $ 9,571,451,887 $ 9,571,363,393 2 Less: Accumulated Depreciation $ (4,800,757,780) $ 518,371,210 $ (4,282,386,571) $ (4,282,351,966) 3 Net Utility Plant-In-Service $ 4,755,512,101 $ 533,553,216 $ 5,289,065,317 $ 5,289,011,427 4 Plant Held for Future Use $ 787,014 $ (787,014) $ - $ - 5 Construction Work in Progress $ 286,061,243 $ (286,061,243) $ - $ - 6 Working Capital Assets $ 4,469,823,502 $ (3,943,861,397) $ 525,962,105 $ 525,956,901 7 Other $ 19,192,394 $ 24,013,772 $ 43,206,166 $ 43,205,908 8 Total Rate Base $ 9,531,376,253 $ (3,673,142,665) $ 5,858,233,588 $ 5,858,174,236-3-

4 ADJUSTMENTS TO RATE BASE SURREBUTTAL EXHIBIT JH-3 PAGE 1 OF 1 APSC FILED Time: 11/24/ :57:47 AM: Recvd 11/24/ :46:36 AM: Docket U-Doc. 312 (1) (2) (3) (4) Staff's Line Adj. Staff No. No. Description Witness (5) Total Adjustments 1 Adjustments to Utility Gross Plant-In-Service 2 RB-5 Decommissioning and ARO Robertson $ (111,717,077) 3 RB-6H Energy Efficiency Program Costs Brooks (498,296) 4 RB-10 Working Cash Assets Dunn (211,504,412) 5 RB-14 Plant Transfers Robertson 282,797,585 6 RB-18 Power Block 2 of Union Power Station Robertson 321,981,622 7 RB-26 Wholesale Baseload Butler (265,877,417) 8 Total Adjustments to Utility Gross Plant-In-Service $ 15,182,006 9 Adjustments to Accumulated Depreciation 10 RB-5 Decommissioning and ARO Robertson $ 64,535, RB-10 Working Cash Assets Dunn 534,084, RB-14 Plant Transfers Robertson (131,500,265) 13 RB-18 Power Block 2 of Union Power Station Robertson (110,863,249) 14 RB-26 Wholesale Baseload Butler 162,115, Total Adjustments to Accumulated Depreciation $ 518,371, RB-3A Removal Of Plant Held For Future Use Robertson $ (787,014) 17 RB-6C Removal of CWIP Robertson $ (286,061,243) 18 Adjustments to Working Capital Assets 19 RB-2 13 Month Average Balance Dunn $ (336,082,485) 20 RB-4 Fuel Inventory Dunn (52,732,428) 21 RB-10 Working Cash Assets Dunn (3,548,006,321) 22 RB-18 Power Block 2 of Union Power Station Robertson 1,433, RB-20 Disallowable Expenses Dunn (91,285) 22 RB-21 Rate Case Expenses Dunn - 25 RB-26 Wholesale Baseload Butler (8,382,266) 26 Total Adjustments to Working Capital Assets $ (3,943,861,397) 27 Adjustments to Acquisition Adjustment 28 RB-14 Acquisition Adjustment Amortization Robertson $ (1,226,534) 29 RB-18 Acquisition Adjustment - Union Power Robertson 25,240, Total Adjustments to Acquisition Adjustment $ 24,013, Total Rate Base Adjustments $ (3,673,142,665) -4-

5 STATEMENT OF INCOME AND EXPENSE SURREBUTTAL EXHIBIT JH-4 PAGE 1 OF 1 (1) (2) (3) (4) (5) (6) Line Total Company Staff As Adjusted Arkansas No. Description March 31, 2015 Adjustments By Staff Jurisdiction 1 Operating Revenue: 2 Sales Revenues $ 1,682,141,017 $ (623,718,321) $ 1,058,422,696 $ 1,058,422,696 3 Other Sales for Resale $ 378,291,794 $ (378,277,691) $ 14,103 $ - 4 Other Operating Revenues $ 93,329,368 $ (66,847,313) $ 26,482,054 $ 26,481,952 5 Total Operating Revenue $ 2,153,762,178 $ (1,068,843,325) $ 1,084,918,853 $ 1,084,904,648 6 Operating Expenses: 7 Fuel $ 432,477,122 $ (432,477,122) $ - $ - 8 Purchased Power $ 509,705,964 $ (509,705,964) $ - $ - 9 Production Expense $ 201,323,924 $ 81,414,078 $ 282,738,001 $ 282,736, Transmission Expense $ 42,907,667 $ (12,911,378) $ 29,996,289 $ 29,995, Electric Regional Market Expense $ 3,916,466 $ (3,916,466) $ - $ - 12 Distribution Expense $ 70,830,861 $ 4,454,929 $ 75,285,790 $ 75,284, Customer Accounts Expense $ 37,101,319 $ (757,930) $ 36,343,389 $ 36,343, Customer Service & Information Expense $ 79,284,213 $ (74,533,354) $ 4,750,859 $ 4,750, Sales Expense $ 716,621 $ 564,543 $ 1,281,164 $ 1,281, Administrative & General Expense $ 184,212,568 $ (3,065,879) $ 181,146,689 $ 181,145, Depreciation & Amortization Expense $ 287,737,183 $ (33,666,126) $ 254,071,057 $ 254,069, Regulatory Debits $ (33,430,647) $ 33,957,303 $ 526,656 $ 526, Taxes Other Than Income Taxes $ 95,109,116 $ (39,514,602) $ 55,594,514 $ 55,594, Loss (Gain) from Disposition of Allowances $ (9,201) $ 390,744 $ 381,542 $ 381, Total Operating Expense $ 1,911,883,176 $ (989,767,225) $ 922,115,951 $ 922,109, Federal & State Income Tax $ 61,164,105 $ (18,350,985) $ 42,813,120 $ 42,810, Total Expenses $ 1,973,047,280 $ (1,008,118,210) $ 964,929,071 $ 964,919, Net Utility Operating Income (Loss) $ 180,714,898 $ (60,725,115) $ 119,989,783 $ 119,984,941-5-

6 INCOME AND EXPENSE ADJUSTMENTS NON-PROTECTED SURREBUTTAL EXHIBIT JH-5 PAGE 1 OF 1 (1) (2) (3) (4) (5) (6) (7) (8) (9) Staff's Total Expense Income Line Adj. Staff Operating Adjustments Tax Total Expense Impact on No. No. Description Witness Revenue Before Taxes Expense Adjustments Net Income 1 IS-1A Revenue And Expense Brooks (984,244,783) $ (651,046,495) $ (651,046,495) $ (333,198,288) 2 IS-1B Load Data Product Fees Brooks (4,294) $ - $ - $ (4,294) 3 IS-1C Miscellaneous Service Fees Brooks (240,677) $ - $ - $ (240,677) 4 IS-05 Decommissioning And Aro Robertson $ (26,146,548) $ (26,146,548) $ 26,146,548 5 IS-6A Provision For Rate Refund Brooks (1,618,556) $ - $ - $ (1,618,556) 6 IS-6B Regulatory Debits And Credits Brooks $ 4,717,458 $ 4,717,458 $ (4,717,458) 7 IS-6D Interest Expense Reclassification Dunn $ 383,652 $ 383,652 $ (383,652) 8 IS-6E Federal Litigation Fees Brooks $ (1,043,848) $ (1,043,848) $ 1,043,848 9 IS-6F Economic Development Rider Brooks $ 556,800 $ 556,800 $ (556,800) 10 IS-6G Non-Utility Property Expenses Robertson $ (33,828) $ (33,828) $ 33, IS-6H Energy Efficiency Program Costs Brooks $ (75,984,529) $ (75,984,529) $ 75,984, IS-6I Miscellaneous Robertson $ 8,984 $ 8,984 $ (8,984) 13 IS-6J Postage Increase Brooks $ 84,068 $ 84,068 $ (84,068) 14 IS-07 Income Tax Hilton $ - (20,229,472) $ (20,229,472) $ 20,229, IS-08 Grand Gulf Expenses Brooks $ (218,878,237) $ (218,878,237) $ 218,878, IS-11 Storm Damage Roberts $ 6,256,272 $ 6,256,272 $ (6,256,272) 17 IS-12 Interest Synchronization Dunn $ - $ - $ - 18 IS-13 Depreciation Annualization Robertson $ 9,422, ,029 $ 9,764,653 $ (9,764,653) 19 IS-15 Fukushima Hilton $ (2,331,295) $ (2,331,295) $ 2,331, IS-16 O&M Payroll Taylor $ 10,428,783 $ 10,428,783 $ (10,428,783) 21 IS-17 Fas 106 & Pension Expense O&M Taylor $ 12,184,612 $ 12,184,612 $ (12,184,612) 22 IS-18 Power Block 2 of Union Power Station Robertson $ 23 IS-19 ANO Stator Incident Hilton $ (3,739,134) $ (3,739,134) $ 3,739, IS-20 Disallowable Expenses Brooks $ (1,217,502) $ (1,217,502) $ 1,217, IS-21 Rate Case Expenses Roberts $ (199,367) $ (199,367) $ 199, IS-22 Lake Catherine 4 Reliability Expenditures Hilton $ (1,913,680) $ (1,913,680) $ 1,913, IS-23 Capacity Costs Brooks (970,516) $ (20,790,297) $ (20,790,297) $ 19,819, IS-24 MISO Roberts (82,621,494) $ (14,795,279) $ (14,795,279) $ (67,826,214) 29 IS-25 Long - Term Incentive Compensation Taylor $ (5,389,487) $ (5,389,487) $ 5,389, IS-26 Wholesale Baseload Butler $ (28,907,568) $ (28,907,568) $ 28,907, IS-27 Transmission Reorganization Taylor $ (3,768,242) $ (3,768,242) $ 3,768, IS-28 ANO Flood Barrier Hilton $ (3,930,389) $ (3,930,389) $ 3,930, IS-29 Vegetation Management Roberts $ 2,758,831 $ 2,758,831 $ (2,758,831) 34 IS-30 External ITC Transaction Costs Brooks $ (50,754) $ (50,754) $ 50, IS-31 Moark Agreement Dunn $ (5,822) $ (5,822) $ 5, IS-32 Stock Options Taylor $ (3,431,126) $ (3,431,126) $ 3,431, IS-33 Nrc Oversight Hilton $ (1,849,107) $ (1,849,107) $ 1,849, IS-35 Short-Term Incentive Comp Taylor $ (380,682) $ (380,682) $ 380, IS-37 Non-Recurring Expenses Hilton $ (2,207,031) $ (2,207,031) $ 2,207, IS-38 Environmental Chemical Costs Butler $ 41 IS-39 Mutual Assistance Taylor 856,994 $ - $ - $ 856, IS-40 Loaned Labor Taylor $ (2,489,853) $ (2,489,853) $ 2,489, TOTAL ADJUSTMENTS ($1,068,843,325) ($989,767,225) ($18,350,985) ($1,008,118,210) ($60,725,115) -6-

7 CURRENT INCOME TAX ADJUSTMENTS - TOTAL COMPANY SURREBUTTAL EXHIBIT JH-6 PAGE 1 OF 1 APSC FILED Time: 11/24/ :57:47 AM: Recvd 11/24/ :46:36 AM: Docket U-Doc. 312 (1) (2) (3) (4) Line State Income Federal Income No. Description Taxes Taxes 1 Operating Revenues $ 1,084,918,853 $ 1,084,918,853 2 Less: 3 Operating Expenses $ (922,115,951) $ (922,115,951) 4 Fixed Charges $ (93,731,737) $ (93,731,737) 5 Other Adjustments $ (117,738,708) $ (222,447,744) 6 Operating Income Before Taxes $ (48,667,542) $ (153,376,578) 7 State Income 6.5% $ (3,163,390) $ 3,163,390 8 Adj. to State Tax - EOI/ESI $ 868,083 9 State Income Tax $ (2,295,307) 10 Federal Taxable Income $ (150,213,188) 11 Federal Income 35% $ (52,574,615) 11 Adj. to Federal Tax - EOI/ESI $ 4,871, Federal Income Tax $ (47,703,233) 14 Test Year Tax $ 413,605 $ (19,825,959) 14 Adjustment $ (2,708,912) $ (27,877,275) 16 Calculation of Fixed Charges Amount 17 Total Rate Base $ 5,858,233, Weighted Cost of Debt 1.60% 19 Fixed Charges $ 93,731,737-7-

8 REVENUE CONVERSION FACTOR SURREBUTTAL EXHIBIT JH-7 PAGE 1 OF 1 (1) (2) (3) (4) (5) (6) (7) LN Description Total Retail RES SMALL GEN SERVICE LARGE GEN SERVICE LIGHTING 1 Arkansas Corporate Tax Rate 6.50% 6.50% 6.50% 6.50% 6.50% 2 Federal Corporate Tax Rate 35.00% 35.00% 35.00% 35.00% 35.00% 3 Composite Tax Rate (1) 39.23% 39.23% 39.23% 39.23% 39.23% 4 Uncollectible Accounts Ratio % % % % % 5 Forfeited Discounts Ratio % % % % % 6 Revenue Conversion Factor (2) Notes: (1) Composite Tax Rate = Arkansas Tax Rate + (1 - Arkansas Tax Rate) x (Federal Tax Rate) Composite Tax Rate = L 1 + (1 - L1-L3)' (L2) (2) Revenue Conversion Factor = 1 / ((1 - Composite Tax Rate) x (1 - Uncollectible Accounts Ratio + Forfeited Discounts ratio)) Revenue Conversion Factor = 1 / ((1 - L4) x (1 - L5 + L6)) Total Retail Revenue Conversion Factor is weighted per COS -8-

9 APSC FILED Time: 11/24/ :57:47 AM: Recvd 11/24/ :46:36 AM: Docket U-Doc. 312 ENTIRE SURREBUTTAL EXHIBIT JH-8 PROTECTED HSPI PURSUANT TO ORDER NO. 1 IN PAGE 9 OF THE FILED EXHIBITS -9-

10 SURREBUTTAL EXHIBIT JH-9 EAI RESPONSE TO APSC-5.9 APSC FILED Time: 11/24/ :57:47 AM: Recvd 11/24/ :46:36 AM: Docket U-Doc. 312 ENTERGY ARKANSAS, INC. ARKANSAS PUBLIC SERVICE COMMISSION Docket No U Response of: Entergy Arkansas, Inc. to the Fifth Set of Data Requests of Requesting Party: Arkansas Public Service Commission Staff Filed: 5/11/15 Question No.: STAFF 5-9 Part No.: Addendum: Question: Please provide a schedule of all non-recurring, abnormal, prior period adjustments or other out-of-period events and transactions recorded/included during the test year and the pro forma year. The schedule should include, but should not be limited to, the following: FERC account and sub account number (if applicable), description of item/event to include a narrative, transaction date, transaction amount, and a notation of whether the amount represents a direct assignment of costs or an allocation of costs. Response: The following pro forma adjustments were included in Entergy Arkansas, Inc. s ( EAI ) filing. See also the direct testimony of Gregory R. Zakrzewski and Ina P. Laney. Adjustment 06A - Eliminate Provision for Rate Refund. This adjustment eliminates amounts related to a prior year refund. Adjustment 06I - Eliminate Miscellaneous Items Recorded in the Test Year. This adjustment eliminates non-recurring amounts related to Loss on Disposition of Property. Adjustment 15 Fukushima. This adjustment removes test year amounts and normalizes incremental Fukushima expenses incurred at Arkansas Nuclear One ( ANO ). This adjustment requests regulatory asset treatment of the incremental Fukushima expenses incurred at ANO not recovered in base rates as of February 1, 2016 and amortizes these amounts over 5 years. EAI did not request a return on the proposed regulatory asset. Adjustment 22 Lake Catherine Unit 4 Sustainability / Reliability Expenses. This adjustment reflects the amortization of the reliability expenditures the Company will be making at this power plant. It also requests regulatory asset treatment of the reliability expenditures incurred at Lake Catherine Unit 4. EAI did not request a return on the proposed regulatory asset U STAFF 5-9 LR17-10-

11 SURREBUTTAL EXHIBIT JH-9 EAI RESPONSE TO APSC-5.9 APSC FILED Time: 11/24/ :57:47 AM: Recvd 11/24/ :46:36 AM: Docket U-Doc. 312 Question No.: STAFF 5-9 Adjustment 27 Transmission Reorganization. This adjustment removes the Transmission Reorganization Costs that occurred during the test year and amortizes these costs over 3.5 years. This adjustment also removes costs associated with the Docket U Human Capital Management Reorganization and amortizes the remaining unamortized balance as of January 31, 2016 over a 3.5 year period. Adjustment 28 ANO Flood Barrier. This adjustment removes test year amounts and normalizes total ANO flood barrier expenses over 5 years. It also requests regulatory asset treatment of the ANO flood barrier expenses. The Company does not request a return on the proposed regulatory asset. Adjustment 30 External ITC Transaction Costs. This adjustment eliminates nonrecurring external costs related to the ITC Transaction. The following non-recurring, abnormal costs were recorded in the test year: 1. Cost associated with ANO Transformer Fire Recovery of $1,156,602 ($1,049,018 are EAI Direct costs, and $107,583 are allocated costs). See Attachment 1 for details associated with these costs. 2. Costs associated with turbine/generator outage on the Remmel Unit 2 of $555,479. All costs are EAI Direct costs. See Attachment 2 for details associated with these costs U STAFF 5-9 LR18-11-

12 APSC FILED Time: 11/24/ :57:47 AM: Recvd 11/24/ :46:36 AM: Docket U-Doc. 312 CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing has been served on all parties of record by electronic means via the Electronic Filing System this 24th day of November, /s/ Dawn Kelliher Guthrie Dawn Kelliher Guthrie -12-