Entergy 2009 Annual Report Download - page 32

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
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authorization from the FERC, and Entergy Arkansas has obtained long-term financing authorization from the APSC.
The long-term securities issuances of Entergy New Orleans are limited to amounts authorized by the City Council,
and the current authorization extends through August 2010. In addition to borrowings from commercial banks, the
FERC short-term borrowing orders authorized the Registrant Subsidiaries to continue as participants in the Entergy
System money pool. The money pool is an intercompany borrowing arrangement designed to reduce Entergy's
subsidiaries' dependence on external short-term borrowings. Borrowings from the money pool and external short-
term borrowings combined may not exceed authorized limits. As of December 31, 2009, Entergy's subsidiaries had
no outstanding short-term borrowings from external sources. See Notes 4 and 5 to the financial statements for
further discussion of Entergy's borrowing limits and authorizations.
Hurricane Gustav and Hurricane Ike
In September 2008, Hurricane Gustav and Hurricane Ike caused catastrophic damage to portions of
Entergy's service territories in Louisiana and Texas, and to a lesser extent in Arkansas and Mississippi. The storms
resulted in widespread power outages, significant damage to distribution, transmission, and generation infrastructure,
and the loss of sales during 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 with the LPSC in May 2009. In September 2009, Entergy Gulf States Louisiana and Entergy
Louisiana made a supplemental filing to, among other things, recommend recovery of the costs and replenishment of
the storm reserves by Louisiana Act 55 (passed in 2007) financing. Entergy Gulf States Louisiana and Entergy
Louisiana recovered their costs from Hurricane Katrina and Hurricane Rita primarily by Act 55 financing, as
discussed below. On December 30, 2009, Entergy Gulf States Louisiana and Entergy Louisiana entered into a
stipulation agreement with the LPSC Staff that, if approved, provides for total recoverable costs of approximately
$234 million for Entergy Gulf States Louisiana and $394 million for Entergy Louisiana. Under this stipulation,
Entergy Gulf States Louisiana agrees not to recover $4.4 million and Entergy Louisiana agrees not to recover $7.2
million of their storm restoration spending. The stipulation also permits replenishing Entergy Gulf States Louisiana's
storm reserve in the amount of $90 million and Entergy Louisiana's storm reserve in the amount of $200 million
when Act 55 financing is accomplished. The parties to the proceeding have agreed to a procedural schedule that
includes March/April 2010 hearing dates for both the recoverability and the method of recovery proceedings.
Entergy Texas filed an application in April 2009 seeking a determination that $577.5 million of Hurricane
Ike and Hurricane Gustav restoration costs are recoverable, including estimated costs for work to be completed. On
August 5, 2009, Entergy Texas submitted to the ALJ an unopposed settlement agreement intended to resolve all
issues in the storm cost recovery case. Under the terms of the agreement $566.4 million, plus carrying costs, are
eligible for recovery. Insurance proceeds will be credited as an offset to the securitized amount. Of the $11.1 million
difference between Entergy Texas' request and the amount agreed to, which is part of the black box agreement and
not directly attributable to any specific individual issues raised, $6.8 million is operation and maintenance expense
for which Entergy Texas recorded a charge in the second quarter 2009. The remaining $4.3 million was recorded as
utility plant. The PUCT approved the settlement in August 2009, and in September 2009 the PUCT approved
recovery of the costs, plus carrying costs, by securitization. In November 2009, Entergy Texas Restoration Funding,
LLC (Entergy Texas Restoration Funding), a company wholly-owned and consolidated by Entergy Texas, issued
$545.9 million of senior secured transition bonds (securitization bonds). See Note 5 to the financial statements for a
discussion of the November 2009 issuance of the securitization bonds.
In the third quarter 2009, Entergy settled with its insurer on its Hurricane Ike claim and Entergy Texas
received $75.5 million in proceeds (Entergy received a total of $76.5 million).
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