Entergy 2005 Annual Report Download - page 28

costs, we believe that unwinding our financing plan
could be effected easily and at a reasonable cost.
In the near term, combining our cost recovery efforts
with a comprehensive financing plan is highly
consistent with aspirations we have previously laid
out to deliver top-quartile total shareholder
return while keeping the overall risk profile of
the company on sound footing.
TURNING ONE STEP BACK
INTO TWO STEPS FORWARD
The hit we took from Hurricanes Katrina and
Rita set us back, there’s no question about it. Prior
to August 29, we had generated a great deal of
positive momentum in 2005.
UTILITIES: MOMENTUM ON HOLD
From a regulatory perspective, the first half of the
year brought unprecedented success to our utility
business with the resolution of regulatory issues in
almost every jurisdiction.
■The Louisiana Public Service Commission
approved the global settlement resolving 12 open
dockets covering a range of issues for Entergy
Louisiana and Entergy Gulf States. Formula rate
plans were approved for both companies that
allow them to earn an ROE of just over 11 percent
before sharing with customers. The Perryville
plant acquisition was rolled into Entergy Louisiana
and Entergy Gulf States rates following the
transaction close on June 30.
■Entergy Mississippi filed for rate recovery of the
Attala Plant acquisition that we announced
pursuant to our Generation Supply Plan. Like
Perryville, the Attala Plant is a highly efficient,
load-following addition to our generation
portfolio. In fourth quarter 2005, the Mississippi
Public Service Commission approved interim
recovery of the Attala acquisition, paving the way
for the January 2006 sale closing.
■In Texas, the Governor signed legislation that
extends our base rate freeze until 2008 but at
the same time, allows for the recovery of certain
costs in the near-term. Subsequently, two new
riders were approved that, first, allow us to collect
$18 million of annual capacity costs beginning
December 2005 and, second, allow for interim
recovery of $18 million per year of transition to
competition costs beginning March 2006 while
our case is pending. In addition, the legislation
provides considerable direction to the Public
Utility Commission of Texas for moving Entergy
Gulf States Texas to retail open access if and
when it becomes part of a certified power region.
■The Federal Energy Regulatory Commission
decided a long-awaited System Agreement case
in June 2005 and essentially reaffirmed that decision
in December 2005, with a ruling that we believe
supports our Generation Supply Plan as a means
toward achieving rough production cost equalization.
■The federal Administrative Law Judge acted
on our affiliate Power Purchase Agreement case
and found all eight contracts to be just and
reasonable. The ALJ also noted our RFP process
and Generation Supply Plan work well in
driving benefits for customers.
■We withdrew from FERC our request for renewal
of market base rate authority. As a capacity-
short company operating in an overbuilt market,
we believe that possessing market base rate
authority in our service area has an insignificant
effect on our operations.
The constructive resolution of a majority of the
regulatory issues we faced created substantial
positive momentum in 2005. Katrina and Rita
essentially put our momentum on hold for the
ENTERGY CORPORATION AND SUBSIDIARIES 2005
Continued from page 21
Estimated restoration costs*
in percent by type Distribution – 68%
Transmission – 15%
Generation – 3%
Gas – 8%
Other – 6%
Total: $1.5 billion
Restoring power after the two storms cost
approximately $1.5 billion. More than 80 percent of
those costs are for repairs to above-ground
transmission and distribution lines, poles, towers,
and the devices attached to them – assets
that are generally uninsurable.
*Does not include other storm effects such as estimated lost net revenue,
uncollectible utility customer receivables, and the longer-term accelerated
replacement of the gas distribution system in New Orleans