Entergy 2008 Annual Report Download - page 21

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19
move the Indian Point site to an even higher performance level, consistent
with the commitment to operational excellence that is a hallmark of Entergy-
operated assets. Entergy Nuclear continues to work through the license renewal
process with the NRC and most recently received draft environmental impact
and safety evaluation reports.
Point-of-View-Driven Hedging Strategy
We continue to pursue opportunities with natural buyers and other market
participants in the region served by our non-utility nuclear fleet who can commit
for large blocks of power on a longer term basis and with other counterparties.
We layer in hedges on an annual basis that are consistent with our dynamic points
of view on factors affecting commodity prices, including carbon legislation and
regional generation and infrastructure constraints. Our objective is to avoid risks
associated with attempting to time the market.
As of year-end 2008, 86 percent of our planned generation for 2009 was under
contract, 66 percent for 2010 and 46 percent for 2011 at average energy prices per
MWh of $61, $60 and $56, respectively.
Opportunities for a Premier Generation Company
When the spin transaction is executed, Enexus will be a premier generation
company. A number of short- and long-term growth opportunities exist for an
entity with the assets and capabilities of Enexus.
In the short term, Enexus will be able to execute a flexible generation hedging
strategy that is consistent with its risk profile as a merchant business. Despite the
recent downturn, our point of view on power pricing over the long term in the
Northeast remains bullish given capacity constraints in that market region and the
likelihood of carbon legislation. In addition, Enexus will evaluate the opportunity
to further increase its generation capacity through uprates at its existing fleet of
plants. Past uprates have added 245 megawatts of generating capacity to the
non-utility nuclear plants.
In the long term, Enexus growth opportunities also include potential
acquisitions of existing U.S. nuclear assets, complementary generation assets or
businesses with complementary assets. As a 50 percent owner of EquaGen, Enexus
can also realize growth from the provision of EquaGen’s nuclear services to
other operators. EquaGen has the ability to offer a complete life cycle of services
including construction management, operations, license renewal processes
and decommissioning.
Ultimately, we believe Enexus has the potential to deliver $2 billion in earnings
before interest, taxes, depreciation and amortization through higher power prices
and/or incremental investment. A combination of heat rate expansion, carbon
legislation, capacity markets and/or changes in gas prices are expected to affect
power prices.
ENTERGY CORPORATION AND SUBSIDIARIES 2008
Non-Utility Nuclear Fleet
Capability Factor
%
Non-Utility Nuclear Fleet
Production Costs
$ per MWh
Even as we pursued plans
to spin our non-utility nuclear
fleet, our teams of nuclear
engineers, operators and
managers delivered another
outstanding year of operating
performance.
Before ETR
ownership
2008
73
95
Before ETR
ownership
2008
30
22
operational excellence