Entergy 2009 Annual Report Download - page 114

Entergy Corporation and Subsidiaries
Notes to Financial Statements
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Conventional Property Insurance
Entergy's conventional property insurance program provides coverage of up to $400 million on an Entergy
system-wide basis for all operational perils (direct physical loss or damage due to machinery breakdown, electrical
failure, fire, lightning, hail, or explosion) on an "each and every loss" basis; up to $400 million in coverage for
certain natural perils (direct physical loss or damage due to earthquake, tsunami, flood, ice storm, and tornado) on an
annual aggregate basis; and up to $125 million for certain other natural perils (direct physical loss or damage due to
a named windstorm or storm surge) on an annual aggregate basis. The conventional property insurance program
only provides up to $50 million in coverage for the Entergy New Orleans gas distribution system on an annual
aggregate basis. The coverage is subject to a $20 million self-insured retention per occurrence for operational perils
and a $35 million self-insured retention per occurrence for natural perils and for the Entergy New Orleans gas
distribution system.
Covered property generally includes power plants, substations, facilities, inventories, and gas distribution-
related properties. Excluded property generally includes above-ground transmission and distribution lines, poles, and
towers. The primary layer consists of a $125 million layer in excess of the self-insured retention and the excess layer
consists of a $275 million layer in excess of the $125 million primary layer. Both layers are placed on a quota share
basis through several insurers. This coverage is in place for Entergy Corporation, the Registrant Subsidiaries, and
certain other Entergy subsidiaries, including the owners of the Non-Utility Nuclear power plants.
In addition to the conventional property insurance program, Entergy has purchased additional coverage ($20
million per occurrence) for some of its non-regulated, non-generation assets. This policy serves to buy-down the
$20 million deductible and is placed on a scheduled location basis. The applicable deductibles are $100,000 to
$250,000, except for properties that are damaged by flooding and properties whose values are greater than $20
million; these properties have a $500,000 deductible.
Waterford 3 Lease Obligations (Entergy Louisiana)
In 1989, in three separate but substantially identical transactions, Entergy Louisiana sold and leased back
undivided interests in Waterford 3 for the aggregate sum of $353.6 million. The interests represent approximately
9.3% of Waterford 3. Upon the occurrence of certain events, Entergy Louisiana may be obligated to pay amounts
sufficient to permit the termination of the lease transactions and may be required to assume the outstanding bonds
issued to finance, in part, the lessors' acquisition of the undivided interests in Waterford 3.
Employment and Labor-related 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 not limited to, allegations of wrongful employment
actions; wage disputes and other claims under the Fair Labor Standards Act or its state counterparts; claims of race,
gender and disability discrimination; disputes arising under collective bargaining agreements; unfair labor practice
proceedings and other administrative proceedings before the National Labor Relations Board; claims of retaliation;
and claims for or regarding benefits under various Entergy Corporation sponsored plans. Entergy and the Registrant
Subsidiaries are responding to these suits and proceedings and deny liability to the claimants.
NOTE 9. ASSET RETIREMENT OBLIGATIONS
Accounting standards require the recording of liabilities for all legal obligations associated with the
retirement of long-lived assets that result from the normal operation of those assets. For Entergy, substantially all of
its asset retirement obligations consist of its liability for decommissioning its nuclear power plants. In addition, an
insignificant amount of removal costs associated with non-nuclear power plants is also included in the
decommissioning line item on the balance sheets.
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