Entergy 2004 Annual Report Download - page 31

Entergy Corporation and Subsidiaries 2004
of operations. Following are Entergy’s payment obligations as of
December 31, 2004 on non-cancelable operating leases with a term
over one year (in millions):
2008- After
2005 2006 2007 2009 2009
Operating lease payments $99 $86 $69 $100 $210
The operating leases are discussed more thoroughly in Note 9 to the
consolidated financial statements.
Summary of Contractual Obligations
of Consolidated Entities (in millions)
2006- 2008- After
Contractual Obligations 2005 2007 2009 2009 Total
Long-term debt(1) $496 $ 331 $1,328 $5,354 $7,509
Capital lease payments(2) $136 $ 146 $ 2 $ 3 $ 287
Operating leases(2) $ 99 $ 155 $ 100 $ 210 $ 564
Purchase obligations(3) $1,160 $1,402 $ 962 $1,156 $4,680
(1) Long-term debt is discussed in Note 5 to the consolidated financial
statements.
(2) Capital lease payments include nuclear fuel leases. Lease obligations are
discussed in Note 9 to the consolidated financial statements.
(3) Purchase obligations represent the minimum purchase obligation or cancellation
charge for contractual obligations to purchase goods or services. Approximately
99% of the total pertains to fueland purchased power obligations that are
recovered in the normal course of business through various fuel cost recovery
mechanisms in the U.S. Utilitybusiness.
In additionto these contractual obligations, Entergyexpects to con-
tribute $185.9 millionto its pension plans and $63.3 million
to other postretirement plans in 2005.
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;
•pay in full all System Energy indebtedness for borrowed money
when due; and
•enable System Energy to make payments on specific System
Energydebt, 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 2005
through 2007 (in millions):
Planned construction
and capital investments 2005 2006 2007
Maintenance Capital:
U.S. Utility $ 734 $ 699 $ 763
Non-Utility Nuclear 72 72 60
Energy Commodity Services 3 4 6
Parent and Other 11 19 11
820 794 840
Capital Commitments:
U.S. Utility 571 349 201
Non-Utility Nuclear 90 67 43
Energy Commodity Services – – –
Parent and Other – – –
661 416 244
Total $1,481 $1,210 $1,084
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
for which Entergy is either contractually obligated, has
Board-approval, or is otherwise required to make pursuant to a
regulatoryagreement or existing rule or law. 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. Management
estimates the cost of the ANO 1 project to be approximately
$235 million, of whichapproximately $96 million has been
incurred through 2004. $115 million is expected to be incurred
in 2005, with the remainder expected to be spent in 2006.
Entergy expects the replacement to occur during a planned
refueling outage in 2005. Entergy Arkansas filed with the
APSC in January2003 a request for a declaratory order that the
investment in the replacement is in the public interest. The
APSC issued the requested order in May 2003. This order is
analogous to the order received in 1998 prior to the
replacement of the Arkansas Nuclear One Unit 2 (ANO 2)
steam generators.
•Purchase of the Perryville power plant in Louisiana. In January
2004, Entergy Louisiana signed a definitive agreement to
acquire the 718 MW Perryville power plant for $170
million.The agreement has subsequently been amended to allow
the current plant owner to retain the interconnection facilities
associated with the plant, resulting in a decrease in the
acquisition price to $162 million. As a result of the amended
terms, the Federal Energy Regulatory Commission (FERC)
issued an order in October 2004 disclaiming jurisdiction over
the acquisition. This order currently is subject to rehearing by
FERC. The plant is owned by a subsidiary of Cleco
Corporation, which subsidiary submitted a bid in response to
Entergy’s Fall 2002 request for proposals for supply-side
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“Assuming regulatoryapproval by the
LPSC, Entergy Louisiana expects to
close its acquisition of the 718 MW
Perryville power plant in mid-2005.”
MANAGEMENT’S FINANCIAL DISCUSSION and ANALYSIS continued