Entergy 2009 Annual Report Download

Download and view the complete annual report

Please find the complete 2009 Entergy annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 154

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154

ENTERGY CORPORATION
AND SUBSIDIARIES
2009 ANNUAL REPORT

Table of contents

  • Page 1
    E N T E R G Y A N D C O R P O R A T I O N S U B S I D I A R I E S 2 0 0 9 A N N U A L R E P O R T

  • Page 2
    ... and sells electric power in a four-state service territory that includes portions of Arkansas, Mississippi, Texas and Louisiana, including the City of New Orleans; and operates a small natural gas distribution business. n Non-Utility Nuclear owns and operates six nuclear power plants located in the...

  • Page 3
    ...Entergy employees. Thanks to their hard work, we achieved several important milestones in 2009. We recorded the safest year in Entergy's history with no fatalities and the fewest number of accidents. We improved from 2008 to 2009 on key customer service metrics such as regulatory outage complaints...

  • Page 4
    ... corporate governance declines in the market prices of marketable securities and resulting funding requirements for Entergy's defined benefit pension and other postretirement benefit plans changes in decommissioning trust fund earnings or in the timing of or cost to decommission nuclear plant sites...

  • Page 5
    ...,612 1,422 33,641 Operating revenues (in millions) Billed electric energy sales (GWh) (a) Includes long-term debt (excluding currently maturing debt), preferred stock with sinking fund, and noncurrent capital lease obligations. (b) Includes sales to Entergy New Orleans, which was deconsolidated in...

  • Page 6
    ... kilowatt-hours Independence Steam Electric Station (coal), owned 16% by Entergy Arkansas, 25% by Entergy Mississippi, and 7% by Entergy Power Internal Revenue Service Independent System Operator Entergy Gulf States Louisiana Entergy-Koch Entergy Texas EPA ERCOT FASB FERC Firm LD Grand Gulf...

  • Page 7
    ... electric power, with a small amount of natural gas distribution Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas Unit No. 3 (nuclear) of the Waterford Steam Electric Generating Station, 100% owned or leased by Entergy...

  • Page 8
    ... nuclear plant and store spent nuclear fuel expire in March 2012. Non-Utility Nuclear has an application pending with the Vermont Public Service Board (VPSB) for approval of continued operations and storage of spent nuclear fuel generated after March 2012. On February 25, 2010, the VPSB opened...

  • Page 9
    ... sells electric power in service territories in four states that include portions of Arkansas, Mississippi, Texas, and Louisiana, including the City of New Orleans; and operates a small natural gas distribution business. Non-Utility Nuclear owns and operates six nuclear power plants located in the...

  • Page 10
    ... of the Utility nuclear plants. In the December 2007 supplement to the NRC application, Entergy Nuclear Operations, Inc. provided additional information regarding the spin-off transaction, organizational structure, technical and financial qualifications, and general corporate information. On July...

  • Page 11
    ... of Enexus' common stock shares. In September 2009 the FERC approved the amended application. Vermont On January 28, 2008, Entergy Nuclear Vermont Yankee, LLC and Entergy Nuclear Operations, Inc. requested approval from the Vermont Public Service Board (VPSB) for the indirect transfer of control...

  • Page 12
    ... that due to the nuclear power plants' unique role in supporting the reliability of electric service in New York, and their large size and unique operational concerns, a more searching inquiry of the transaction will be conducted than if other types of lightly-regulated generation were at issue...

  • Page 13
    ... meeting all financial and other obligations related to the ownership and operation of the New York nuclear facilities. In early November 2009 the New York State Attorney General's Office, the New York Department of Public Service's Staff, and Westchester County filed initial comments on the amended...

  • Page 14
    ... Entergy Corporation's financial statements in this report for further information with respect to operating statistics. Net Revenue Utility Following is an analysis of the change in net revenue comparing 2009 to 2008. Amount (In Millions) 2008 net revenue Volume/weather Retail electric price Fuel...

  • Page 15
    ... rate plan rider at Entergy Mississippi in July 2009; an Energy Efficiency rider at Entergy Texas, which was effective December 31, 2008, that is substantially offset in other operation and maintenance expenses; and an increase in the Attala power plant costs recovered through the power management...

  • Page 16
    ... and 2008: 2009 Net MW in operation at December 31 Average realized price per MWh GWh billed Capacity factor Refueling Outage Days: FitzPatrick Indian Point 2 Indian Point 3 Palisades Pilgrim Vermont Yankee Realized Price per MWh When Non-Utility Nuclear acquired its six nuclear power plants it also...

  • Page 17
    ... cost financing at Entergy Gulf States Louisiana and Entergy Louisiana; a decrease of $16 million in payroll-related and benefits costs; prior year storm damage charges as a result of several storms hitting Entergy Arkansas' service territory in 2008, including Hurricane Gustav and Hurricane Ike...

  • Page 18
    ... by Entergy Louisiana and $9 million by Entergy Gulf States Louisiana on investments in preferred membership interests of Entergy Holdings Company, as discussed above. Interest charges decreased primarily due to lower interest rates on borrowings under Entergy Corporation's revolving credit facility...

  • Page 19
    ...income tax benefit of approximately $79.5 million. Entergy Power Generation, LLC was a holding company in Entergy's non-nuclear wholesale assets business; recognition of tax benefits of $44.3 million associated with the loss on sale of stock of Entergy Asset Management, Inc., a non-nuclear wholesale...

  • Page 20
    ... the prior period: Non-Utility Parent & Other Nuclear (In Thousands) $539,200 ($83,639) Utility Entergy 2007 Consolidated Net Income (Loss) Net revenue (operating revenue less fuel expense, purchased power, and other regulatory charges/credits) Other operation and maintenance expenses Taxes other...

  • Page 21
    ... rate plans at Entergy Louisiana and Entergy Gulf States Louisiana which ceased upon the Act 55 financing of storm costs in the third quarter 2008; and a credit passed on to customers as a result of the Act 55 storm cost financings. Refer to "Liquidity and Capital Resources - Hurricane Katrina...

  • Page 22
    ... Arkansas' service territory in 2008, including Hurricane Gustav and Hurricane Ike in the third quarter 2008. Entergy Arkansas discontinued regulatory storm reserve accounting beginning July 2007 as a result of the APSC order issued in Entergy Arkansas' base rate case. As a result, non-capital storm...

  • Page 23
    ... by Entergy Gulf States Louisiana on investments in preferred membership interests of Entergy Holdings Company. The dividends on preferred stock are eliminated in consolidation and have no effect on net income since the investment is in another Entergy subsidiary. Non-Utility Nuclear Other operation...

  • Page 24
    ... Power Marketing, LLC during the third quarter 2008, which resulted in an income tax expense of approximately $16.1 million; and book and tax differences for utility plant items and state income taxes at the Utility operating companies, including the flow-through treatment of the Entergy Arkansas...

  • Page 25
    ... the rate as of December 31, 2009. The figures below include payments on the Entergy Louisiana and System Energy saleleaseback transactions, which are included in long-term debt on the balance sheet. Long-term debt maturities and estimated interest payments Utility Non-Utility Nuclear Parent Company...

  • Page 26
    ...2010 Capital lease payments, including nuclear fuel leases 2011 2012 (In Millions) $3 2013-2014 after 2014 $212 $319 $4 $28 Notes payable includes borrowings outstanding on credit facilities with original maturities of less than one year. Entergy Arkansas, Entergy Gulf States Louisiana, Entergy...

  • Page 27
    ... for the years 2010-2012 primarily related to Hurricane Katrina restoration work, including approximately $55 million of continued gas rebuild work at Entergy New Orleans. Also, Entergy currently expects to contribute approximately $270 million to its pension plans and approximately $76.4 million to...

  • Page 28
    ... Acadia Unit 2, which is discussed below. Entergy Louisiana's Waterford 3 steam generators replacement project, which is discussed below. System Energy's planned approximate 178 MW uprate of the Grand Gulf nuclear plant. The project is currently expected to cost $575 million, including transmission...

  • Page 29
    ... unit located near Eunice, La., from Acadia Power Partners, LLC, an independent power producer. The Acadia Energy Center, which entered commercial service in 2002, consists of two combined-cycle gas-fired generating units, each nominally rated at 580 MW. Entergy Louisiana proposes to acquire...

  • Page 30
    ...1) project management; 2) cost controls; 3) success in achieving stated objectives; 4) the costs of the replacement project; and 5) the outage length and replacement power costs. In July 2009, the LPSC granted Entergy Louisiana's motion to dismiss, without prejudice, its application seeking recovery...

  • Page 31
    ... for Entergy Corporation to issue securities. The current FERC-authorized short-term borrowing limits are effective through October 2011, as established by a FERC order issued October 14, 2009. Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy Texas, and System Energy...

  • Page 32
    ... the power outages. In October 2008, Entergy Gulf States Louisiana, Entergy Louisiana, and Entergy New Orleans drew a total of $229 million from their funded storm reserves. Entergy Gulf States Louisiana and Entergy Louisiana filed their Hurricane Gustav and Hurricane Ike storm cost recovery case...

  • Page 33
    ... states that the APSC will issue its final order by June 15, 2010. Entergy Arkansas' September 2009 general rate filing also requested recovery of the January 2009 ice storm costs over 10 years if it was expected that securitization would not produce lower costs for customers, and Entergy Arkansas...

  • Page 34
    ... Gulf States Louisiana invested $189.4 million, including $1.7 million that was withdrawn from the restricted escrow account as approved by the April 16, 2008 LPSC orders, in exchange for 1,893,918.39 Class A preferred, non-voting, membership interest units of Entergy Holdings Company LLC, a company...

  • Page 35
    ... for storm-related rate increases. In October 2006, the Louisiana Recovery Authority Board endorsed a resolution proposing to allocate $200 million in CDBG funds to Entergy New Orleans to defray gas and electric utility system repair costs in an effort to provide rate relief for Entergy New Orleans...

  • Page 36
    ...effect of Hurricane Gustav and Hurricane Ike which reduced operating cash flow by $444 million in 2008 as a result of costs associated with system repairs and lower revenues due to customer outages, the receipt of $181 million of Community Development Block Grant funds by Entergy New Orleans in 2007...

  • Page 37
    ...Capital Expenditure Plans and Other Uses of Capital" above. In April 2007, Non-Utility Nuclear purchased the 798 MW Palisades nuclear power plant located near South Haven, Michigan for a net cash payment of $336 million. In March 2008, Entergy Gulf States Louisiana purchased the Calcasieu Generating...

  • Page 38
    ...Entergy Louisiana repurchased, prior to maturity, $60 million of Auction Rate governmental bonds in April 2008. Entergy New Orleans paid, at maturity, its $30 million 3.875% Series first mortgage bonds in August 2008. The Utility operating companies decreased the borrowings outstanding on their long...

  • Page 39
    ...equity. The Utility operating companies' base rate, fuel and purchased power cost recovery, and storm cost recovery proceedings are discussed in Note 2 to the financial statements. Company Entergy Arkansas...Entergy Gulf States Louisiana...Entergy Louisiana ...Entergy Mississippi Entergy New Orleans...

  • Page 40
    ... solid fuel and gas-fired generation available to each company and the costs of natural gas and purchased power. Entergy Louisiana, Entergy Gulf States Louisiana, Entergy Texas, and Entergy Mississippi are more dependent upon gas-fired generation sources than Entergy Arkansas or Entergy New Orleans...

  • Page 41
    ...124) ($36) ($20) ($7) ($65) 2009 Payments or (Receipts) Based on 2008 Costs Entergy Arkansas Entergy Gulf States Louisiana Entergy Louisiana Entergy Mississippi Entergy New Orleans Entergy Texas $252 ($120) ($91) ($41) $($30) $390 ($107) ($140) ($24) $($119) Management believes that any changes...

  • Page 42
    ... also the FERC staff advocated a number of positions on issues that affect the level of production costs the individual Utility operating companies are permitted to reflect in the bandwidth calculation, including the level of depreciation and decommissioning expense for the nuclear and fossil-fueled...

  • Page 43
    ...Corporation and Subsidiaries Management's Financial Discussion and Analysis properly reflected generating units' minimum operating levels for purposes of making unit commitment and dispatch decisions, whether Entergy Arkansas' sales to third parties from its retained share of the Grand Gulf nuclear...

  • Page 44
    ...capacity costs by the Utility operating companies. Pursuant to the paper hearing schedule, initial briefs were filed on January 19, 2010 and reply briefs were filed on February 9, 2010. Entergy Arkansas and Entergy Mississippi Notices of Termination of System Agreement Participation and Related APSC...

  • Page 45
    ... that Entergy Arkansas and Entergy Mississippi are permitted to withdraw from the System Agreement following the 96 month notice period without payment of a fee or the requirement to otherwise compensate the remaining Utility operating companies as a result of withdrawal. The FERC stated that...

  • Page 46
    ... pricing structure that ensures that the Utility operating companies' retail native load customers are required to pay for only those upgrades necessary to reliably serve their needs. serving as the reliability coordinator for the Entergy transmission system. overseeing the operation of the weekly...

  • Page 47
    ... North American Electric Reliability Corporation (NERC) reliability planning standards, the availability of transmission service across the system, and whether the Utility operating companies could have purchased lower cost power from merchant generators located on the transmission system rather...

  • Page 48
    ...Reliability of the FERC jointly commenced an audit of Entergy Services, Inc. on October 1, 2009. The audit will evaluate Entergy Services': (1) practices related to Bulk Electric System planning and operations; (2) compliance with the requirements contained within its Open Access Transmission Tariff...

  • Page 49
    ... contracts with its customers and sells energy in the day ahead or spot markets. In addition to selling the energy produced by its plants, Non-Utility Nuclear sells unforced capacity to load-serving entities, which allows those companies to meet specified reserve and related requirements placed on...

  • Page 50
    ... current market and contracted power prices in the regions where Non-Utility Nuclear sells power. The primary form of collateral to satisfy these requirements is an Entergy Corporation guaranty. Cash and letters of credit are also acceptable forms of collateral. At December 31, 2009, based on power...

  • Page 51
    ... units. Regulations require Entergy to decommission its nuclear power plants after each facility is taken out of service, and money is collected and deposited in trust funds during the facilities' operating lives in order to provide for this obligation. Entergy conducts periodic decommissioning cost...

  • Page 52
    ... and Entergy is continuing to pursue damages claims against the DOE for its failure to provide timely spent fuel storage. Until a federal site is available, however, nuclear plant operators must provide for interim spent fuel storage on the nuclear plant site, which can require the construction...

  • Page 53
    ..., Pilgrim, Indian Point 2, and Indian Point 3 power plants. In addition, for Vermont Yankee the state certificates of public good to operate the plant and store spent nuclear fuel also expire in 2012. Non-Utility Nuclear filed an application with the Vermont Public Service Board on March 3, 2008...

  • Page 54
    ... qualified, defined benefit pension plans which cover substantially all employees. Additionally, Entergy currently provides postretirement health care and life insurance benefits for substantially all employees who reach retirement age while still working for Entergy. Entergy's reported costs of...

  • Page 55
    Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis Entergy's funding and reported costs for these benefits. In addition, these trends have caused Entergy to make a number of adjustments to its assumptions. In selecting an assumed discount rate to calculate benefit ...

  • Page 56
    ...over the average remaining service period of active employees. Entergy calculates the expected return on pension and other postretirement benefit plan assets by multiplying the long-term expected rate of return on assets by the market-related value (MRV) of plan assets. Entergy determines the MRV of...

  • Page 57
    Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis Other Contingencies As a company with multi-state domestic utility operations and a history of international investments, Entergy is subject to a number of federal, state, and international laws and regulations and ...

  • Page 58
    Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis New Accounting Pronouncements In June 2009 the FASB issued SFAS 167, "Amendments to FASB Interpretation No. 46R". SFAS 167 replaces the current quantitative-based risks and rewards calculation for determining which ...

  • Page 59
    ... is also tested by a comprehensive internal audit program. Entergy management assesses the effectiveness of Entergy's internal control over financial reporting on an annual basis. In making this assessment, management uses the criteria set forth by the Committee of Sponsoring Organizations of the...

  • Page 60
    ... REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of Entergy Corporation and Subsidiaries New Orleans, Louisiana We have audited the accompanying consolidated balance sheets of Entergy Corporation and Subsidiaries (the "Corporation") as of December 31, 2009 and 2008...

  • Page 61
    ... REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of Entergy Corporation and Subsidiaries New Orleans, Louisiana We have audited the internal control over financial reporting of Entergy Corporation and Subsidiaries (the "Corporation") as of December 31, 2009, based on...

  • Page 62
    ..., 2009. Entergy's registered public accounting firm has issued an attestation report on Entergy's internal control over financial reporting. Changes in Internal Control over Financial Reporting Under the supervision and with the participation of management, including the Chief Executive Officer and...

  • Page 63
    ...2007 (In Thousands, Except Share Data) 2009 OPERATING REVENUES Electric Natural gas Competitive businesses TOTAL OPERATING EXPENSES Operating and Maintenance: Fuel, fuel-related expenses, and gas purchased for resale Purchased power Nuclear refueling outage expenses Other operation and maintenance...

  • Page 64
    ... funds used during construction Nuclear fuel purchases Proceeds from sale/leaseback of nuclear fuel Proceeds from sale of assets and businesses Payment for purchase of plant Insurance proceeds received for property damages Changes in transition charge account NYPA value sharing payment Increase...

  • Page 65
    ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2009 2008 2007 (In Thousands) FINANCING ACTIVITIES Proceeds from the issuance of: Long-term debt Preferred equity Common stock and treasury stock Retirement of long-term debt Repurchase of ...

  • Page 66
    ... in affiliates - at equity Decommissioning trust funds Non-utility property - at cost (less accumulated depreciation) Other TOTAL PROPERTY, PLANT AND EQUIPMENT Electric Property under capital lease Natural gas Construction work in progress Nuclear fuel under capital lease Nuclear fuel TOTAL...

  • Page 67
    ... BALANCE SHEETS LIABILITIES AND EQUITY December 31, 2009 (In Thousands) CURRENT LIABILITIES Currently maturing long-term debt Notes payable Accounts payable Customer deposits Taxes accrued Accumulated deferred income taxes Interest accrued Deferred fuel costs Obligations under capital leases Pension...

  • Page 68
    ... 2007 RETAINED EARNINGS Retained Earnings - Beginning of period Add: Net income attributable to Entergy Corporation Adjustments related to implementation of new accounting pronouncements Total Deduct: Dividends declared on common stock Capital stock and other expenses Total Retained Earnings - End...

  • Page 69
    ... and Entergy Texas generate, transmit, and distribute electric power primarily to retail customers in Arkansas, Louisiana, Louisiana, Mississippi, and Texas, respectively. Entergy Gulf States Louisiana also distributes natural gas to retail customers in and around Baton Rouge, Louisiana. Entergy New...

  • Page 70
    ... from Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans operating expenses and capital costs attributable to Grand Gulf. The capital costs are computed by allowing a return on System Energy's common equity funds allocable to its net investment in Grand Gulf, plus...

  • Page 71
    ... Utility business: Entergy Arkansas Independence Fuel-Type Ownership Accumulated Investment Depreciation (In Millions) White Bluff Ouachita (3) Entergy Gulf States Louisiana Roy S. Nelson Big Cajun 2 Ouachita (3) Unit 1 Common Facilities Units 1 and 2 Common Facilities Coal Coal Coal Gas...

  • Page 72
    ... equity funds used for construction by the Registrant Subsidiaries. AFUDC increases both the plant balance and earnings and is realized in cash through depreciation provisions included in rates. Income Taxes Entergy Corporation and the majority of its subsidiaries file a United States consolidated...

  • Page 73
    ... portion (approximately 15%) of River Bend plant costs, generation, revenues, and expenses established under a 1992 LPSC order. The plan allows Entergy Gulf States Louisiana to sell the electricity from the deregulated assets to Louisiana retail customers at 4.6 cents per kWh or off-system at higher...

  • Page 74
    ... period of time. Entergy's trusts are managed by third parties who operate in accordance with agreements that define investment guidelines and place restrictions on the purchases and sales of investments. See Note 17 to the financial statements for details on the decommissioning trust funds and the...

  • Page 75
    ... and costs associated with reacquired debt of Entergy's Utility operating companies and System Energy (except that portion allocable to the deregulated operations of Entergy Gulf States Louisiana) are included in regulatory assets and are being amortized over the life of the related new issuances...

  • Page 76
    ...generally, that the holders of each company's preferred securities may elect a majority of the respective company's board of directors if dividends are not paid for a year, until such time as the dividends in arrears are paid. Therefore, Entergy Arkansas, Entergy Mississippi, and Entergy New Orleans...

  • Page 77
    ...timing will be determined by the LPSC in the formula rate plan filings (Note 2 - Retail Rate Proceedings - Filings with the LPSC) Grand Gulf fuel - non-current - recovered through rate riders when rates are redetermined periodically (Note 2 - Fuel and purchased power cost recovery) Gas hedging costs...

  • Page 78
    ... power cost recovery Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas are allowed to recover certain fuel and purchased power costs through fuel mechanisms included in electric and gas rates that are recorded as fuel cost...

  • Page 79
    Entergy Corporation and Subsidiaries Notes to Financial Statements ANO 1 and 2 and Grand Gulf, had refueling outages in 2008, and the previous energy cost rate had been adjusted to account for the replacement power costs that would be incurred while these units were down; 2) Entergy Arkansas had a ...

  • Page 80
    ... Louisiana recover electric fuel and purchased power costs for the upcoming month based upon the level of such costs from the prior month. Entergy Gulf States Louisiana's purchased gas adjustments include estimates for the billing month adjusted by a surcharge or credit that arises from an annual...

  • Page 81
    ... rate plan filing settlement. Effective June 2009, the majority of Grand Gulf costs were realigned to base rates and are no longer flowed through the fuel adjustment clause. Entergy New Orleans' gas rate schedules include a purchased gas adjustment to reflect estimated gas costs for the billing...

  • Page 82
    Entergy Corporation and Subsidiaries Notes to Financial Statements Entergy Texas Entergy Texas' rate schedules include a fixed fuel factor to recover fuel and purchased power costs, including carrying charges, not recovered in base rates. The fixed fuel factor formula was revised and approved by a ...

  • Page 83
    ...file specific proposals for the recovery of extraordinary storm restoration expenses associated with the ice storm. On February 16, 2009, Entergy Arkansas filed a request with the APSC for an accounting order authorizing deferral of the operating and maintenance cost portion of Entergy Arkansas' ice...

  • Page 84
    ... states that the APSC will issue its final order by June 15, 2010. Entergy Arkansas' September 2009 general rate filing also requested recovery of the January 2009 ice storm costs over 10 years if it was expected that securitization would not produce lower costs for customers, and Entergy Arkansas...

  • Page 85
    ..., Entergy Louisiana, and the Louisiana Utilities Restoration Corporation (LURC), an instrumentality of the State of Louisiana, filed at the LPSC an application requesting that the LPSC grant financing orders authorizing the financing of Entergy Gulf States Louisiana and Entergy Louisiana storm costs...

  • Page 86
    ... Community Development Block Grant (CDBG) funding for reimbursement of its Hurricane Katrina infrastructure restoration costs. Entergy Mississippi also filed a Petition for Financing Order with the MPSC for authorization of state bond financing of $169 million for Hurricane Katrina restoration costs...

  • Page 87
    ... 4, 2009, Entergy Arkansas filed with the APSC for a general change in rates, charges, and tariffs. Entergy Arkansas requested a $223.2 million base rate increase that would become effective in July 2010. The filing reflects an 11.5% return on common equity using a projected capital structure, and...

  • Page 88
    ... power recovery rider and a competitive generation service tariff and will establish test year baseline values to be used in the transmission cost recovery factor rider authorized for use by Entergy Texas in the 2009 legislative session. The rate case also includes a $2.8 million revenue requirement...

  • Page 89
    ... of the 2008 test year filing that was made on October 21, 2009. The settlement does not allow recovery through the formula rate plan of most of Entergy Louisiana's costs associated with Entergy's stock option plan. Pursuant to the settlement Entergy Louisiana refunded to its customers $12.9 million...

  • Page 90
    ... test year filing that was made on October 21, 2009. The settlement does not allow recovery through the formula rate plan of most of Entergy Gulf States Louisiana's costs associated with Entergy's stock option plan. Pursuant to the settlement Entergy Gulf States Louisiana refunded to its customers...

  • Page 91
    ... capacity, including the Ouachita power plant. In November 2008 Entergy Gulf States Louisiana filed to implement an additional increase of $9.3 million to recover the costs of a new purchased power agreement. In May 2007, Entergy Gulf States Louisiana made its formula rate plan filing with the LPSC...

  • Page 92
    ... Rate Plans and Storm-related Riders On July 31, 2008, Entergy New Orleans filed an electric and gas base rate case with the City Council. On April 2, 2009, the City Council approved a comprehensive settlement. The settlement provided for a net $35.3 million reduction in combined fuel and non-fuel...

  • Page 93
    ... recovered through base rates). At the same time as it made its formula rate plan filings, Entergy New Orleans also filed with the City Council a request to implement two storm-related riders. With the first rider, Entergy New Orleans sought to recover the electric and gas restoration costs that it...

  • Page 94
    ... plaintiffs in the Entergy New Orleans fuel clause lawsuit, together with the named plaintiffs in the Entergy New Orleans rate of return lawsuit, filed a Complaint for Declaratory Judgment asking the court to declare that Entergy New Orleans, Entergy Corporation, and Entergy Services are a single...

  • Page 95
    ... Electric Cooperative Corporation (AECC) filed a complaint at the FERC against Entergy Arkansas relating to a contract dispute over the pricing of substitute energy at the co-owned Independence and White Bluff coal plants. The main issue in the case related to the consequences under the governing...

  • Page 96
    .... Entergy Arkansas had previously recorded a provision for the estimated effect of this refund. NOTE 3. INCOME TAXES Income tax expenses from continuing operations for 2009, 2008, and 2007 for Entergy Corporation and subsidiaries consist of the following: 2009 Current: Federal Foreign State Total...

  • Page 97
    ...514,417 30.7% In December 2009 an Entergy subsidiary sold Class B preferred shares to a third party for $2.1 million. The sale resulted in a capital loss for tax purposes of $73.1 million, providing a federal and state net tax benefit of approximately $28 million that Entergy recorded in the fourth...

  • Page 98
    ... deferred investment tax credit Pension-related items Nuclear decommissioning liabilities Sale and leaseback Reserve for regulatory adjustments General contingencies reserve Unbilled/deferred revenues Customer deposits Net operating loss carryforwards Capital losses Other Valuation allowance...

  • Page 99
    ... the annual effective income tax rate but would accelerate the payment of cash to the taxing authority to an earlier period. Entergy accrues interest and penalties expenses related to unrecognized tax benefits in income tax expense. Entergy's December 31, 2009, 2008, and 2007 balance of unrecognized...

  • Page 100
    ... the IRS Appeals Office indicating disagreement with certain issues contained in the Revenue Agent' s Report. The major issues in dispute are: Depreciation of street lighting assets (issue before the Tax Court) Depreciable basis of assets acquired in Non-Utility Nuclear plant purchases (issue before...

  • Page 101
    ...quarter 2009, Entergy filed Applications for Change in Method of Accounting for certain costs under Section 263A of the Internal Revenue Code. In the Application, Entergy is requesting permission to treat the nuclear decommissioning liability associated with the operation of its nuclear power plants...

  • Page 102
    Entergy Corporation and Subsidiaries Notes to Financial Statements Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, and Entergy Texas each had credit facilities available as of December 31, 2009 as follows: Amount of Facility $88 million (b) $100 million (c) ...

  • Page 103
    ... 31, 2009 (aggregating both money pool and external short-term borrowings) for the Registrant Subsidiaries: Authorized Borrowings (In Millions) $250 $200 $250 $175 $100 $200 $200 - Entergy Arkansas Entergy Gulf States Louisiana Entergy Louisiana Entergy Mississippi Entergy New Orleans Entergy Texas...

  • Page 104
    ... - Entergy Gulf States Louisiana (f) 6.2% Series due October 2012 - System Energy 6.0% Series due December 2012 - Entergy Gulf States Louisiana (f) 5.15% Series due February 2013 - Entergy Mississippi 5.40% Series due August 2013 - Entergy Arkansas 5.25% Series due August 2013 - Entergy New Orleans...

  • Page 105
    ... 2011, Entergy Corporation (c) 7.06% Notes due March 2011, Entergy Corporation Long-term DOE Obligation (d) Waterford 3 Lease Obligation 7.45% (Note 10) Grand Gulf Lease Obligation 5.13% (Note 10) 5.51% Series Senior Secured, Series A due October 2013, Entergy Gulf States Reconstruction Funding 5.79...

  • Page 106
    ...for spent nuclear fuel disposal service. The contracts include a one-time fee for generation prior to April 7, 1983. Entergy Arkansas is the only Entergy company that generated electric power with nuclear fuel prior to that date and includes the one-time fee, plus accrued interest, in long-term debt...

  • Page 107
    ... occur. Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy Texas, and System Energy have received FERC long-term financing orders authorizing long-term securities issuances. Entergy Arkansas has received an APSC long-term financing order authorizing long-term securities...

  • Page 108
    ...to the assets or revenues of Entergy Texas. Entergy Texas has no payment obligations to Entergy Gulf States Reconstruction Funding except to remit transition charge collections. Entergy Texas Securitization Bonds - Hurricane Ike and Hurricane Gustav In September 2009 the PUCT authorized the issuance...

  • Page 109
    ... of the related company. Shares/Units Authorized 2009 2008 Entergy Corporation Utility: Preferred Stock or Preferred Membership Interests without sinking fund: Entergy Arkansas, 4.32%-6.45% Series Entergy Gulf States Louisiana, Series A 8.25 % Entergy Louisiana, 6.95% Series (a) Entergy Mississippi...

  • Page 110
    ... other agreements relating to the long-term debt and preferred stock of certain of Entergy Corporation's subsidiaries restrict the payment of cash dividends or other distributions on their common and preferred stock. As of December 31, 2009, Entergy Arkansas and Entergy Mississippi had restricted...

  • Page 111
    ... the years 2011 through 2031. Entergy Louisiana currently recovers the costs of the purchased energy through its fuel adjustment clause. In an LPSC-approved settlement related to tax benefits from the tax treatment of the Vidalia contract, Entergy Louisiana agreed to credit rates by $11 million each...

  • Page 112
    ... the policies are issued on a per site basis. Big Rock Point has its own primary policy with no excess coverage. In addition, Waterford 3, Grand Gulf, and the Non-Utility Nuclear plants are also covered under NEIL's Accidental Outage Coverage program. This coverage provides certain fixed indemnities...

  • Page 113
    ...) Utility: Entergy Arkansas Entergy Gulf States Louisiana Entergy Louisiana Entergy Mississippi Entergy New Orleans Entergy Texas System Energy Non-Utility Nuclear $21.3 $17.1 $19.0 $0.07 $0.07 N/A $15.1 $- Effective April 1, 2009, potential assessments for the Non-Utility Nuclear plants are...

  • Page 114
    ... Proceedings The Registrant Subsidiaries and other Entergy subsidiaries are responding to various lawsuits in both state and federal courts and to other labor-related proceedings filed by current and former employees and third parties not selected for open positions. These actions include, but are...

  • Page 115
    ... the difference between estimated incurred removal costs and estimated removal costs recovered in rates: December 31, 2009 2008 (In Millions) Entergy Arkansas Entergy Gulf States Louisiana Entergy Louisiana Entergy Mississippi Entergy New Orleans Entergy Texas System Energy ($7.3) ($7.5) ($21.7) $44...

  • Page 116
    ... and retirement cost liabilities and expenses recorded in 2008 by Entergy were as follows: Liabilities as of December 31, 2007 Utility: Entergy Arkansas Entergy Gulf States Louisiana Entergy Louisiana Entergy Mississippi Entergy New Orleans Entergy Texas System Energy Non-Utility Nuclear Other...

  • Page 117
    ... decommissioning trust funds and the related asset retirement obligation regulatory assets of Entergy as of December 31, 2009 are as follows: Decommissioning Regulatory Trust Fair Values Asset (In Millions) Utility: ANO 1 and ANO 2 River Bend Waterford 3 Grand Gulf Non-Utility Nuclear $440.2 $349...

  • Page 118
    ... 31, 2009, Entergy Corporation and subsidiaries had capital leases and non-cancelable operating leases for equipment, buildings, vehicles, and fuel storage facilities (excluding nuclear fuel leases and the Grand Gulf and Waterford 3 sale and leaseback transactions) with minimum lease payments as...

  • Page 119
    ... power plants: 2009 Lease Payments Interest 2008 Lease Payments Interest (In Millions) $63.5 29.3 44.6 33.0 $170.4 $4.7 2.5 3.0 2.9 $13.1 2007 Lease Payments Interest Entergy Arkansas Entergy Gulf States Louisiana Entergy Louisiana System Energy Total Sale and Leaseback Transactions Waterford...

  • Page 120
    Entergy Corporation and Subsidiaries Notes to Financial Statements As of December 31, 2009, Entergy Louisiana had future minimum lease payments (reflecting an overall implicit rate of 7.45%) in connection with the Waterford 3 sale and leaseback transactions, which are recorded as long-term debt, as...

  • Page 121
    ...the quarter adjusted for contributions and benefit payments made during the quarter. Entergy Corporation and its subsidiaries fund pension costs in accordance with contribution guidelines established by the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code of...

  • Page 122
    ...) Entergy Corporation's and its subsidiaries' total 2009, 2008, and 2007 qualified pension costs and amounts recognized as a regulatory asset and/or other comprehensive income, including amounts capitalized, included the following components: 2009 Net periodic pension cost: Service cost - benefits...

  • Page 123
    ... Pension Obligations, Plan Assets, Funded Status, Amounts Recognized in the Balance Sheet for Entergy Corporation and its Subsidiaries as of December 31, 2009 and 2008 December 31, 2009 2008 (In Thousands) Change in Projected Benefit Obligation (PBO) Balance at beginning of year Service cost...

  • Page 124
    ..., Entergy Arkansas, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy contribute the other postretirement benefit costs collected in rates into trusts. System Energy is funding, on behalf of Entergy Operations, other postretirement benefits associated with Grand Gulf...

  • Page 125
    ...or AOCI Entergy Corporation's and its subsidiaries' total 2009, 2008, and 2007 other postretirement benefit costs, including amounts capitalized and amounts...capitalized, included the following components: 2009 Other post retirement costs: Service cost - benefits earned during the period Interest cost...

  • Page 126
    ... Notes to Financial Statements Other Postretirement Benefit Obligations, Plan Assets, Funded Status, and Amounts Not Yet Recognized and Recognized in the Balance Sheet of Entergy Corporation and its Subsidiaries as of December 31, 2009 and 2008 December 31, 2009 2008 (In Thousands) Change in APBO...

  • Page 127
    ... for 2010 and 2009 for the qualified retirement plans assets is based on the expected long term return of each asset class, weighted by the target allocation for each class as defined in the table above. The source for each asset class' expected long term rate of return is the geometric mean of the...

  • Page 128
    ... common stocks are stated at fair value determined by quoted market prices. Fixed income securities (corporate, government, and securitized), are stated at fair value as determined by broker quotes. Common collective investment trust funds and registered investment company trust funds are stated at...

  • Page 129
    ... (In Thousands) Level 1 Equity securities: Corporate stocks: Preferred Common Common collective trusts Fixed securities: U.S. Government securities Corporate debt instruments: Preferred All others Registered investment companies Other Other: Insurance company general account (unallocated contracts...

  • Page 130
    ...Future Benefit Payments Based upon the assumptions used to measure Entergy's qualified pension and other postretirement benefit obligation at December 31, 2009, and including pension and other postretirement benefits attributable to estimated future employee service, Entergy expects that benefits to...

  • Page 131
    ... assumed health care cost trend rate used in measuring the Net Other Postretirement Benefit Cost of Entergy was 8.5% for 2009, gradually decreasing each successive year until it reaches 4.75% in 2016 and beyond. A one percentage point change in the assumed health care cost trend rate for 2009 would...

  • Page 132
    ...for prescription drug claims. Non-Qualified Pension Plans Entergy also sponsors non-qualified, non-contributory defined benefit pension plans that provide benefits to certain key employees. Entergy recognized net periodic pension cost related to these plans of $23.6 million in 2009, $17.2 million in...

  • Page 133
    ... Subsidiaries Notes to Financial Statements Defined Contribution Plans Entergy sponsors the Savings Plan of Entergy Corporation and Subsidiaries (System Savings Plan). The System Savings Plan is a defined contribution plan covering eligible employees of Entergy and its subsidiaries. The employing...

  • Page 134
    ... 2009, there were 2,569,926 authorized shares remaining for stock-based awards, including 2,000,000 for non-option grants. Stock Options Stock options are granted at exercise prices that equal the closing market price of Entergy Corporation common stock on the date of grant. Generally, stock options...

  • Page 135
    ... has no effect on net income, of the stock options exercised is calculated by the difference in Entergy Corporation's common stock price on the date of exercise and the exercise price of the stock options granted. Entergy recognizes compensation cost over the vesting period of the options based on...

  • Page 136
    ... grants restricted awards earned under its stock benefit plans in the form of stock units that are subject to time-based restrictions. The restricted units are equal to the cash value of shares of Entergy Corporation common stock at the time of vesting. The costs of restricted awards are charged...

  • Page 137
    ... Texas, and provides natural gas utility service in portions of Louisiana. Non-Utility Nuclear owns and operates six nuclear power plants and is primarily focused on selling electric power produced by those plants to wholesale customers. "All Other" includes the parent company, Entergy Corporation...

  • Page 138
    ... 200 employees from the Non-Utility Nuclear business and 150 employees in the Utility business accepted the voluntary severance program offers. Geographic Areas For the years ended December 31, 2009 and 2008, the amount of revenue Entergy derived from outside of the United States was insignificant...

  • Page 139
    ... merchant basis in the Lake Charles, Louisiana area. Wind-powered electric generation joint venture. RS Cogen LLC 50% member interest Top Deer 50% member interest Following is a reconciliation of Entergy's investments in equity affiliates: 2009 Beginning of year Entergy New Orleans (a) Income...

  • Page 140
    ... and a cost recovery mechanism. Entergy Gulf States Louisiana purchased Unit 3 and a onethird interest in the Ouachita common facilities for $75 million in November 2009. Palisades In April 2007, Entergy's Non-Utility Nuclear business purchased the 798 MW Palisades nuclear energy plant located near...

  • Page 141
    ... its liability for payments to NYPA as power is generated and sold by Indian Point 3 and FitzPatrick. An amount equal to the liability will be recorded to the plant asset account as contingent purchase price consideration for the plants. In 2009, 2008, and 2007, Non-Utility Nuclear recorded $72...

  • Page 142
    ... assets or liabilities. Entergy manages fuel price risk for its Louisiana jurisdictions (Entergy Gulf States Louisiana, Entergy Louisiana, and Entergy New Orleans) and Entergy Mississippi primarily through the purchase of short-term natural gas swaps. These swaps are marked-to-market with offsetting...

  • Page 143
    ... price also affects the level of market risk. A significant factor influencing the overall level of market risk to which Entergy is exposed is its use of hedging techniques to mitigate such risk. Entergy manages market risk by actively monitoring compliance with stated risk management policies...

  • Page 144
    ... manage fuel price risk for the Utility's Louisiana and Mississippi customers. All benefits or costs of the program are recorded in fuel costs. The total volume of natural gas swaps outstanding as of December 31, 2009 is 36,710,000 MMBtu for Entergy, 9,530,000 MMBtu for Entergy Gulf States Louisiana...

  • Page 145
    ... use in pricing assets or liabilities at fair value. The inputs can be readily observable, corroborated by market data, or generally unobservable. Entergy and the Registrant Subsidiaries endeavor to use the best available information to determine fair value. Accounting standards establish a fair...

  • Page 146
    ...'s point of delivery, generally a power market hub, for the period thereafter. The difference between the fixed price in the swap contract and these market-related prices multiplied by the volume specified in the contract and discounted at the counterparties' credit adjusted risk free rate are...

  • Page 147
    ... levels. NOTE 17. DECOMMISSIONING TRUST FUNDS Entergy holds debt and equity securities, classified as available-for-sale, in nuclear decommissioning trust accounts. The NRC requires Entergy to maintain trusts to fund the costs of decommissioning ANO 1, ANO 2, River Bend, Waterford 3, Grand Gulf...

  • Page 148
    ... than 12 months More than 12 months Total $57 205 $262 $1 29 $30 $311 18 $329 $6 2 $8 The unrealized losses in excess of twelve months above relate to Entergy's Utility operating companies and System Energy. 144 146

  • Page 149
    ... value within a reasonable period of time. Entergy's trusts are managed by third parties who operate in accordance with agreements that define investment guidelines and place restrictions on the purchases and sales of investments. Non-Utility Nuclear recorded charges to other income of $86 million...

  • Page 150
    ...Entergy New Orleans' preferred stock will remain outstanding on its stated dividend terms, and Entergy New Orleans paid its unpaid preferred dividends in arrears (approximately $1 million). Litigation claims were generally unaltered, and will generally proceed as if Entergy New Orleans had not filed...

  • Page 151
    ... Share 2009 Basic First Quarter Second Quarter Third Quarter Fourth Quarter $1.22 $1.16 $2.35 $1.66 Diluted $1.20 $1.14 $2.32 $1.64 Basic $1.60 $1.42 $2.47 $0.90 2008 Diluted $1.56 $1.37 $2.41 $0.89 The business of the Utility operating companies is subject to seasonal fluctuations with the peak...

  • Page 152
    ... Carolina Electric & Gas Company. Age, 56 John T. Herron Former President, Entergy Corporation, Punta Gorda, Florida. An Entergy director since 2004. Age, 66 J. Wayne Leonard President and Chief Executive Officer Nuclear Operations/ Chief Nuclear Officer. Joined Entergy in 2001. Former Site Vice...

  • Page 153
    ... Web site at entergy.com/investor_ relations for earnings reports, financial releases, SEC filings and other investor information, including Entergy's Corporate Governance Guidelines, Board Committee Charters for the Corporate Governance, Audit and Personnel Committees and Entergy's Code of Conduct...

  • Page 154
    E n t E r g y C o r p o r at i o n post offiCE Box 61000 nEw orlEans, la 70161 e n t e r g y. c o m