Entergy 2005 Annual Report Download - page 8

Through extraordinary efforts and genuine creativity and
innovation, 13 days after Rita’s landfall, 85 percent of
customers who could take power had power.
The heroic efforts of our employees – and the huge
number of outside workers who came to our assistance –
are impossible to truly put into words. Even as they
struggled to put their personal lives back together, they
gave everything they had in the service of our customers.
Randy Helmick, vice president of transmission and our
official “storm boss”, led the restoration efforts with
outstanding results.
Our employees repaired more than 75,000 miles of
transmission lines and distribution circuits; handled more
than 3 million calls; coordinated, clothed, housed, and fed
more than 23,000 workers; restored critical IT systems so
all employees were paid on time; and coordinated the
redeployment of our headquarters offices and 1,500
headquarters employees. Our employees performed
thousands of individual acts of courage and ingenuity that
made our darkest moment truly our finest hour.
We are gratified by the appreciation and recognition
our response received from the media, local regulators and
officials, and most importantly, our customers. Without
question, Entergy emerged from the trials of Katrina and
Rita an even more responsive, prepared, and vigilant company.
FINANCIAL RECOVERY
Even as the physical restoration began to wind down,
we faced an enormous financial recovery. We incurred
restoration costs for Hurricanes Katrina and Rita of
approximately $1.5 billion, just over half of which was paid
in 2005. This cost estimate 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. Based on standard, long-accepted, and
applied regulatory principles, these costs should be
recoverable in the retail ratemaking process. That is a well-
settled principle of law, reinforced by historical practices.
The company’s preparation for and response to the
hurricanes and their aftermath has been in our view,
prudent under the circumstances. Although storm costs
should be recoverable in rates, we do have as a primary
objective that rates are both “just and reasonable.” Given
the fact we serve some of the poorest communities in the
country, maintaining “reasonable” rates in the aftermath of
this catastrophe will test not only our effectiveness and
efficiency as operators, but also our creativity and resolve as
managers. We have pursued several initiatives to recover
these costs through various sources and to maintain
affordable rates while restoring our liquidity to its pre-
hurricane position. While we are encouraged by the response
we have received, our efforts continue along multiple fronts.
■Insurance is one avenue for cost recovery, and we
expect it to cover a portion of our losses related to our
generation assets and gas distribution properties.
Losses related to transmission and distribution assets,
representing roughly 80 percent of our restoration
costs, are generally uninsurable.
■We continue to seek federal relief from Congress – a
combination of Community Development Block Grants
and tax benefits, as well as other federal relief. In late
2005, the Gulf Opportunity or GO Zone legislation and
the Katrina Relief Bill were passed by Congress and
signed into law. The GO Zone legislation permits public
utilities to accelerate the realization of tax benefits for
Hurricane Katrina casualty losses and repair costs. The
Katrina Relief Bill provides $11.5 billion of Community
Development Block Grants and includes language that
permits funding for infrastructure restoration. The
Department of Housing and Urban Development has
already allocated specific amounts to each of the states
affected by Hurricanes Katrina, Rita, and Wilma and
those states are responsible for administering the actual
grants. We intend to pursue CDBG funding in
Louisiana, Mississippi, and Texas, and we are working
with state leaders on behalf of our customers to make the
case for federal assistance through support of the
operating companies in the affected areas. To be clear,
these monies, if made available to utilities, are not a
“shareholder” or “lender” bail-out but go directly to
reducing rates that customers would otherwise struggle
“Despite the obstacles, Entergy…
Customer outages by day
in thousands
1,200
1,000
800
600
400
200
0
landfall 246810 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46
Return to
Service Customers
Extended
Outage Customers
Katrina Landfall
85%
Restored*
Rita Landfall
Day 16 Day 39
Day 47
Oct. 15
* Percent of customers who can take power (“Return to Service Customers”)
In Hurricanes Katrina and Rita,
we faced the highest number of
customer outages in our
company’s history. Thanks to the
tireless efforts of thousands of
workers, power was fully restored
to all customers who could
accept power in just 47 days.