Entergy 2009 Annual Report Download - page 17

Download and view the complete annual report

Please find page 17 of the 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
Management's Financial Discussion and Analysis
13
outpacing new unit additions. The majority of the existing long-term contracts for power from these four plants
expire by the end of 2012. The recent economic downturn and negative trends in the energy commodity markets have
resulted in lower natural gas prices and therefore current prevailing market prices for electricity in the New York and
New England power regions are generally below the prices in Non-Utility Nuclear's existing contracts in those
regions. Therefore, it is uncertain whether Non-Utility Nuclear will continue to experience increases in its annual
realized price per MWh or what contract prices for power Non-Utility Nuclear will be able to obtain as its existing
long-term contracts expire. As shown in the contracted sale of energy table in "Market and Credit Risk Sensitive
Instruments," Non-Utility Nuclear has sold forward 88% of its planned energy output in 2010 for an average
contracted energy price of $57 per MWh.
Other Income Statement Items
Utility
Other operation and maintenance expenses decreased from $1,867 million for 2008 to $1,837 million for
2009. The variance includes the following:
a decrease due to the write-off in the fourth quarter 2008 of $52 million of costs previously accumulated in
Entergy Arkansas's storm reserve and $16 million of removal costs associated with the termination of a lease,
both in connection with the December 2008 Arkansas Court of Appeals decision in Entergy Arkansas's base
rate case. The base rate case is discussed in more detail in Note 2 to the financial statements;
a decrease due to the capitalization of Ouachita plant service charges of $12.5 million previously expensed;
a decrease of $22 million in loss reserves in 2009, including a decrease in storm damage reserves as a result
of the completion of the Act 55 storm 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 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' rate case. As a result, non-capital storm expenses of $41 million were charged to other
operation and maintenance expenses. In December 2008, $19.4 million of these storm expenses were
deferred per an APSC order and were recovered through revenues in 2009;
an increase of $35 million in fossil expenses primarily due to higher plant maintenance costs and plant
outages;
an increase of $22 million in nuclear expenses primarily due to increased nuclear labor and contract costs;
an increase of $14 million due to the reinstatement of storm reserve accounting at Entergy Arkansas effective
January 2009;
an increase of $14 million due to the Hurricane Ike and Hurricane Gustav storm cost recovery settlement
agreement, as discussed below under "Liquidity and Capital Resources - Sources of Capital - Hurricane
Gustav and Hurricane Ike";
an increase of $8 million in customer service costs primarily as a result of write-offs of uncollectible
customer accounts; and
a reimbursement of $7 million of costs in 2008 in connection with a litigation settlement.
Depreciation and amortization expenses increased primarily due to an increase in plant in service.
Other income increased primarily due to:
an increase in distributions of $25 million earned by Entergy Louisiana and $9 million earned by Entergy
Gulf States Louisiana on investments in preferred membership interests of Entergy Holdings Company. The
distributions on preferred membership interests are eliminated in consolidation and have no effect on
Entergy's net income because the investment is in another Entergy subsidiary. See Note 2 to the financial
statements for a discussion of these investments in preferred membership interests;
15