Entergy 2003 Annual Report Download - page 31

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ENTERGY CORPORATION AND SUBSIDIARIES 2003
Operating Lease Obligations and Guarantees of
Unconsolidated Obligations
In addition to the obligations listed above that are reflected
on the balance sheet, Entergy has a minimal amount of
operating leases and guarantees in support of unconsolidated
obligations that are not reflected as liabilities on the balance
sheet. These items are not on the balance sheet in accor-
dance with generally accepted accounting principles.
Following are Entergy’s payment obligations as of
December 31, 2003 on non-cancelable operating leases with
a term over one year (in millions):
2007- after
2004 2005 2006 2008 2008
Operating lease payments $99 $89 $70 $93 $245
The operating leases are discussed more thoroughly in Note 10
to the consolidated financial statements.
Entergy’s guarantees of unconsolidated obligations out-
standing as of December 31, 2003 total a maximum amount
of $249 million, detailed as follows:
In August 2001, EntergyShaw entered into a turnkey
construction agreement with an Entergy subsidiary,
Entergy Power Ventures, L.P. (EPV), and with Northeast
Texas Electric Cooperative, Inc. (NTEC), providing for
the construction by EntergyShaw of a 550 MW electric
generating station to be located in Harrison County,
Texas. Entergy has guaranteed the obligations of
EntergyShaw to construct the plant, which is 70%
owned by EPV. Entergy’s maximum liability on the
guarantee is $232.5 million, and the guarantee is
expected to remain outstanding through June 2004.
RS Cogen has an interest rate swap agreement that
hedges the interest rate on a portion of its debt. Entergy
guaranteed RS Cogen’s obligations under the interest
rate swap agreement. The guarantee is for $16.5 million
and terminates in October 2017.
Summary of Contractual Obligations
of Consolidated Entities (in millions)
2005- 2007- after
Contractual Obligations 2004 2006 2008 2008 Total
Long-term debt (1) $524 $ 591 $1,626 $5,106 $7,847
Capital lease obligations (2) $165 $ 148 $ 5 $ 3 $ 321
Operating leases (2) $ 99 $ 159 $ 93 $ 245 $ 596
Purchase obligations (3) $925 $1,007 $ 907 $ 1,446 $ 4,285
(1) Long-term debt is discussed in Note 5 to the consolidated financial statements.
(2) Capital lease obligations include nuclear fuel leases. Lease obligations are discussed
in Note 10 to the consolidated financial statements.
(3) As defined by SEC rule. For Entergy, it includes unconditional fuel and purchased
power obligations and other purchase obligations. Approximately 97% of the total
pertains to fuel and purchased power obligations that are recovered in the
normal course of business through various fuel cost recovery mechanisms in
the U.S. Utility business.
Capital Funds Agreement
Pursuant to an agreement with certain creditors, Entergy
Corporation has agreed to supply System Energy with
sufficient capital to:
maintain System Energy’s equity capital at a minimum
of 35% of its total capitalization (excluding short-term debt);
permit the continued commercial operation of Grand
Gulf 1;
pay in full all System Energy indebtedness for borrowed
money when due; and
enable System Energy to make payments on specific
System Energy debt, under supplements to the
agreement assigning System Energy’s rights in
the agreement as security for the specific debt.
CAPITAL EXPENDITURE PLANS AND
OTHER USES OF CAPITAL
Following are the amounts of Entergy’s planned construction
and other capital investments by operating segment for
2004 through 2006 (in millions):
Planned construction
and capital investment 2004 2005 2006
Maintenance Capital:
U.S. Utility $ 767 $ 767 $759
Non-Utility Nuclear 73 68 76
Energy Commodity Services 7 2 2
Parent and Other 7 10 14
854 847 851
Capital Commitments:
U.S. Utility 569 295 112
Non-Utility Nuclear 123 – –
Energy Commodity Services 73 – –
Parent and Other 32 – –
797 295 112
Total $1,651 $1,142 $963
Maintenance Capital refers to amounts Entergy plans to
spend on routine capital projects that are necessary to
support reliability of its service, equipment, or systems and
to support normal customer growth.
Capital Commitments refers to non-routine capital
investments that Entergy is either contractually obligated
or otherwise required to make pursuant to a regulatory
agreement or existing rule or law with which Entergy is
required to comply. Amounts reflected in this category
include the following:
Replacement of the Arkansas Nuclear One Unit 1
(ANO 1) steam generators and reactor vessel closure
head. Entergy estimates the cost of the ANO 1 project to
be approximately $235 million, of which approximately
$135 million will be incurred through 2004. Entergy
expects the replacement to occur during a planned
refueling outage in 2005. Entergy Arkansas filed in
January 2003 a request for a declaratory order by the