Entergy 2003 Annual Report Download - page 21

costs and risk. In 2003, EKT expanded this
physical optimization business by adding
3,640 MW to its management portfolio in the
United States. This increases revenues from a
repeatable, lower-risk customer management
business. As EKT expands its presence in the
marketplace, it can demonstrate its
capabilities to asset owners with similar
physical optimization needs.
With the latest additions to its physical
optimization business, EKT now manages
commodity positions for a total of 9.8
gigawatts of generation and 149 BCF of gas
storage in the United States. EKT also
manages 1.2 gigawatts of generation in
Europe, and the company is working to
expand its trading capabilities and physical
optimization there, with a goal of building
operations to the level of the U.S. business.
Gulf South Focus on Productivity
Results at Gulf South Pipeline suffered from a 17 percent decline in throughput in 2003, as higher
gas prices led industrial and power plant customers to switch to fuel oil or competitive carriers.
Average production costs increased 55 percent from the prior year, mainly as a result of incremental
legal and consulting expenses incurred primarily in connection with Gulf South’s defense of a
lawsuit which it believes has no merit.
Gulf South’s diversified customer base – with
no customer class accounting for more than
35 percent of revenues – helped to moderate the
throughput decline. Gulf South’s storage
capabilities also reduced the impact of higher
gas prices. The higher volatility associated with
high gas prices increases storage utilization, as
customers seek greater flexibility to respond to
the market. Gulf South’s storage revenues
increased 23 percent over the previous year.
To improve its performance in 2004 and
beyond, Gulf South will continue to focus on
reductions in production costs. In addition, a
recent increase in firm pipeline transportation
rates should improve 2004 results.
In 2003, the Mastio rankings placed Gulf
South among the top five of the nation’s largest
pipelines for meeting commitments to
customers. The ranking enhances Gulf South’s
credibility among the country’s leading gas
pipeline supply companies.
ENTERGY CORPORATION AND SUBSIDIARIES 2003
2003 Goals
(in 2002 Annual Report)
Obtain new customers, primarily by
advancing the physical optimization
business with a goal of doubling
over the next two years.
Achieve global growth in the
weather business by developing
distribution channels.
Continue to improve productivity
at Gulf South Pipeline.
Complete the Magnolia Gas Storage
facility on time and on budget.
Performance Review
Club E-K
The trading business delivered a stellar performance while Gulf South
was out of the groove – a mixed review for a combo whose past
performances have raised audience expectations.
2003 Performance
Increased physical optimization
earnings by 27 percent; added
3,640 MW under management; on
track to double business by year-
end 2005.
Continued efforts on distribution
channels; growth-to-date has been
slower than expected.
Recorded higher production costs
due in part to higher fuel costs and
legal expenses.
Completed on time and on budget
in October 2003, but subsequent
problems have delayed operations.
Rating:
Growing Our Customer Business.
Entergy-Koch Trading expanded its physical optimization business
with the addition of 3,640 MW to its U.S. management portfolio in
2003. Growing EKT’s management of customer-owned power plants
and gas distribution systems in both the United States and Europe
is a key initiative for Entergy-Koch.
Entergy-Koch Trading
U.S. Assets Under Management
(MW)
4Q 4Q 1Q 2Q 3Q 4Q
01 02 03 03 03 03
5,975 6,065
6,605 6,125
9,395 9,765
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