Entergy 2007 Annual Report Download - page 17

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Entergy Corporation and Subsidiaries 2007
15
System Agreement was adopted more than 20 years ago. Entergy Arkansas
and Entergy Mississippi both issued withdrawal notices. In light of that, the
LPSC recently unanimously voted to direct its sta to evaluate the potential
for a new agreement. Likewise, the New Orleans City Council opened a
docket to gather information on progress towards a successor agreement.
Ongoing Implementation of Our Portfolio Transformation Strategy
We took several steps in 2007 to execute our portfolio transformation
strategy. e LPSC demonstrated progressive leadership and constructive
regulatory policy on several initiatives. At its November meeting, the LPSC
unanimously approved Entergy Louisiana’s request to repower the 538-megawatt
Little Gypsy Unit 3 gas-red facility, well in advance of the June 2008 approval
initially requested. is project is a much needed solid-fuel baseload resource
that can reduce customers’ dependence on natural gas, a signicant issue for
Louisiana customers’ bills.
e LPSC also unanimously approved the uncontested settlement for the
acquisition by Entergy Gulf States Louisiana of the 322-megawatt Calcasieu
Generating Facility in southwestern Louisiana. In a third action, the LPSC
granted approval to recover costs associated with the Ouachita interim tolling
agreement, preserving Entergy Gulf States Louisiana’s opportunity to purchase
a portion of the plant output on a long-term basis. In July, Entergy Arkansas
reached agreement to acquire the 789-megawatt combined-cycle Ouachita
Power Facility in northern Louisiana. Pursuant to a separate agreement, Entergy
Arkansas will sell one-third of the plant output to Entergy Gulf States Louisiana.
Finally, to preserve the nuclear option for its customers, the utilities
continued to pursue the potential of new nuclear development at the Grand
Gulf Nuclear Station and River Bend Station. In 2007, the utilities continued
with licensing and design activities at both sites and plans include ling for
Construction and Operating Licenses in 2008.
Value Revealed: The Future of Entergy Utilities
Going forward, Entergy Utilities oer a unique investment opportunity with
a unique base rate path and earnings per share growth prospect. Our utilities’
generating capacity remains short, with customer demand exceeding capacity by
two to four gigawatts. We are condent there is substantial value to be realized
in the transformation of our generation portfolio with new and/or repowered
sources. In addition, we believe that ownership and operation of a premier
nuclear eet is a key component of our utilities’ clean generation portfolio.
In support of its nancial aspirations through 2012, Entergy’s utilities aspire to
deliver a “real” decrease in customer rates, with a base rate path less than projected
ination. is aspiration will be pursued through its portfolio transformation
strategy and investment in a premier nuclear eet, while simultaneously growing
earnings per share at 3 to 4 percent. Earnings growth at this level will equal roughly
half of Entergy Classic’s annualized 6 to 8 percent earnings aspiration through
2012, the remainder of which is expected to come from the accretive eect of share
repurchases. Going forward, we believe Entergy Utilities will continue to be well
positioned to provide customers with clean, reliable and aordable power.
“Our utilities unlock value by finding better ways to provide clean, reliable and affordable power to our customers.”
System Average Production Cost Trend
of Transformed Portfolio (Illustrative)
$ per MWh*
With our planned portfolio transformation, we
believe we can significantly lower our production
costs from what they otherwise would have been,
unlocking significant value for our utility stakeholders.
2003
2005
2007
2009
2011
2013
2015
2017
With Planned
Portfolio Transformation
* Including fuel and non-fuel costs and return of and on investment
With Portfolio
Transformation to Date
No Portfolio
Transformation
Regulatory Outage Complaints
We strive to continually improve customer satisfaction.
Regulatory outage complaints are down 87 percent
from 1998. Our performance on outage frequency
and duration also improved significantly over that
time period.
20071998
535
70