Entergy 2005 Annual Report Download - page 83

ENTERGY CORPORATION AND SUBSIDIARIES 2005
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The annual long-term debt maturities (excluding lease
obligations) for debt outstanding as of December 31, 2005, for the
next five years are as follows (in thousands):
2006 $ 80,528
2007 $ 149,539
2008 $1,066,625
2009 $ 512,584
2010 $ 923,667
In November 2000, Entergy’s Non-Utility Nuclear business
purchased the FitzPatrick and Indian Point 3 power plants in a
seller-financed transaction. Entergy issued notes to New York Power
Authority (NYPA) with seven annual installments of approximately
$108 million commencing one year from the date of the closing, and
eight annual installments of $20 million commencing eight years
from the date of the closing. These notes do not have a stated inter-
est rate, but have an implicit interest rate of 4.8%. In accordance
with the purchase agreement with NYPA, the purchase of Indian
Point 2 in 2001 resulted in Entergy’s Non-Utility Nuclear business
becoming liable to NYPA for an additional $10 million per year for
10 years, beginning in September 2003. This liability was recorded
upon the purchase of Indian Point 2 in September 2001, and is
included in the note payable to NYPA balance above. In July 2003,
a payment of $102 million was made prior to maturity on the note
payable to NYPA. Under a provision in a letter of credit supporting
these notes, if certain of the domestic utility companies or System
Energy were to default on other indebtedness, Entergy could be
required to post collateral to support the letter of credit.
Non-Utility Nuclear’s purchase of the Fitzpatrick and Indian
Point 3 plants from NYPA included value sharing agreements with
NYPA. Under the value sharing agreements, to the extent that the
average annual price of the energy sales from each of the two plants
exceeds specified strike prices, the Non-Utility Nuclear business
will pay 50% of the amount exceeding the strike prices to NYPA.
These payments, if required, will be recorded as adjustments to the
purchase price of the plants. The annual energy sales subject to
the value sharing agreements are limited to the lesser of actual
generation or generation assuming an 85% capacity factor based
on the plants’ capacities at the time of the purchase. The value shar-
ing agreements are effective through 2014. The strike prices for
Fitzpatrick range from $37.51/MWh in 2005 increasing by approx-
imately 3.5% each year to $51.30/MWh in 2014, and the strike
prices for Indian Point 3 range from $42.26/MWh in 2005 increas-
ing by approximately 3.5% each year to $57.77/MWh in 2014.
Covenants in the Entergy Corporation notes require it to maintain
a consolidated debt ratio of 65% or less of its total capitalization.
If Entergy’s debt ratio exceeds this limit, or if Entergy or certain of
the domestic utility companies default on other indebtedness or are
in bankruptcy or insolvency proceedings, an acceleration of the
notes’ maturity dates may occur.
The long-term securities issuances of Entergy Mississippi and
System Energy also are limited to amounts authorized by the SEC
under PUHCA 1935. After the repeal of PUHCA 1935 on February
8, 2006, the FERC, under the Federal Power Act, has jurisdiction
over the securities issuances of these companies. Under a savings
provision in the PUHCA 1935 repeal legislation, these companies
can rely on the authority of their existing SEC orders until each
obtains new orders from the FERC. The SEC PUHCA 1935
financing order of Entergy Mississippi limits securities issuances
unless certain capitalization and investment grade ratings conditions
are met. Entergy Gulf States and Entergy Louisiana, LLC have
received FERC long-term financing orders that do not have such
conditions. The long-term securities issuances of Entergy Arkansas
are limited to amounts authorized by the APSC.
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
Energy debt, under supplements to the agreement assigning
System Energy’s rights in the agreement as security for the
specific debt.
NOTES to CONSOLIDATED FINANCIAL STATEMENTS continued