Entergy 2003 Annual Report Download - page 15

Once again in 2003 Entergy employees met
the challenge of a major storm in our service
area. In June, Tropical Storm Bill left nearly
150,000 Entergy customers without power,
mostly in the New Orleans area. Entergy
employees were also honored with EEI’s
Emergency Assistance Award for their efforts
to restore power after Hurricane Isabel in
Maryland and Virginia.
In September 2003, Entergy’s Teamwork
Arkansas was recognized by Site Selection
magazine for the best record of all the North
American utility companies in the number of
jobs the company helped create per capita.
Positive Regulatory Environment
Entergy’s focus on efficiency, reliability, and
service has led to improved regulatory
relationships, and the opportunity to earn
improved returns on the investments we have made to serve customers.
NEW ORLEANS –Entergy New Orleans obtained a $30.2 million retail rate increase and
the opportunity to earn a higher return on equity under a two-year formula rate plan.
Entergy New Orleans reported a loss in 2002 and faced a possible credit downgrade prior to
the rate settlement.
The settlement included the ability for Entergy New Orleans to earn above its allowed ROE
through incentives to acquire generation resources at prices that produce savings for
customers. These generation resource
agreements became effective on June 1, 2003,
subject to refund pending approval from the
Federal Energy Regulatory Commission,
which we anticipate in fourth quarter 2004.
ARKANSAS –In May 2003, the Arkansas
Public Service Commission concluded that
planned replacements of the steam generator
and reactor vessel head for Arkansas Nuclear
One Unit 1 were in the best interest of Entergy
Arkansas customers. The $235 million
replacement project is expected to
be complete in fall 2005. This advance vote
authorizing an investment of this magnitude
offers support for future regulatory
cost recovery.
ENTERGY CORPORATION AND SUBSIDIARIES 2003
13
2003 Goals
(in 2002 Annual Report)
Make significant progress towards
achieving top-quartile cost
performance by identifying and
implementing process efficiencies.
Gain approval for a rate increase at
Entergy New Orleans that allows
the company to earn a fair return
on its investment.
Move our generation supply plan
in Louisiana forward and introduce
performance incentives into the
rate of return formulas by year-end.
Performance Review
Club Utility
A solid performance that combined perennial crowd-pleasers (cutting
costs) with some new numbers (at Entergy New Orleans) and creative
renditions (generation supply plans).
2003 Performance
Realized significant process
efficiencies such that our voluntary
severance program resulted in over
250 utility employee reductions.
Obtained a $30.2 million retail rate
increase and an ROE midpoint of
11.25 percent under a two-year
formula rate plan.
Generation supply plan
incorporated in New Orleans
settlement and in rate case filed by
Entergy Louisiana in January 2004.
Outperforming the Market in Shareholder Returns.
Over the last five years Entergy has delivered a total return to shareholders –
dividends plus stock price appreciation – of 119 percent. During that same
period, the S&P 500 returned a negative 3 percent and the S&P Electric Utilities
Index returned 13 percent. To support higher returns for shareholders, Entergy
has focused on improving the company’s return on invested capital. Between
mid-1998, when we adopted a refocused strategy, and 2003, Entergy increased
ROIC by 64 percent.
Rating:
ETR S&P S&P
Electric 500
Utilities
Total Shareholder Return
(99-03;%)
1Q 2Q 3Q 4Q 4Q 4Q 4Q 4Q 4Q
98 98 98 98 99 00 01 02 03
Return on Invested Capital
(12 mos. ended 1Q98-4Q03;%)
119
13 (3)
4.21 4.50
5.40
7.71
6.07 6.56 7.16
5.79
7.38