Entergy 2009 Annual Report Download - page 34

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
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that includes Entergy Gulf States Louisiana and Entergy Louisiana's proposals under the Act 55 financings, which
includes a commitment to pass on to customers a minimum of $10 million and $30 million of customer benefits,
respectively, through prospective annual rate reductions of $2 million and $6 million for five years. On April 16,
2008, the LPSC approved the settlement and issued two financing orders and one ratemaking order intended to
facilitate implementation of the Act 55 financings. In May 2008, the Louisiana State Bond Commission granted final
approval of the Act 55 financings.
On July 29, 2008, the LPFA issued $687.7 million in bonds under the aforementioned Act 55. From the
$679 million of bond proceeds loaned by the LPFA to the LURC, the LURC deposited $152 million in a restricted
escrow account as a storm damage reserve for Entergy Louisiana and transferred $527 million directly to Entergy
Louisiana. From the bond proceeds received by Entergy Louisiana from the LURC, Entergy Louisiana invested
$545 million, including $17.8 million that was withdrawn from the restricted escrow account as approved by the
April 16, 2008 LPSC orders, in exchange for 5,449,861.85 Class A preferred, non-voting, membership interest units
of Entergy Holdings Company LLC, a company wholly-owned and consolidated by Entergy, that carry a 10% annual
distribution rate. Distributions are payable quarterly commencing on September 15, 2008 and have a liquidation
price of $100 per unit. The preferred membership interests are callable at the option of Entergy Holdings Company
LLC after ten years under the terms of the LLC agreement. The terms of the membership interests include certain
financial covenants to which Entergy Holdings Company LLC is subject, including the requirement to maintain a net
worth of at least $1 billion.
On August 26, 2008, the LPFA issued $278.4 million in bonds under the aforementioned Act 55. From the
$274.7 million of bond proceeds loaned by the LPFA to the LURC, the LURC deposited $87 million in a restricted
escrow account as a storm damage reserve for Entergy Gulf States Louisiana and transferred $187.7 million directly
to Entergy Gulf States Louisiana. From the bond proceeds received by Entergy Gulf States Louisiana from the
LURC, Entergy 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 wholly-owned and
consolidated by Entergy, that carry a 10% annual distribution rate. Distributions are payable quarterly commencing
on September 15, 2008 and have a liquidation price of $100 per unit. The preferred membership interests are
callable at the option of Entergy Holdings Company LLC after ten years under the terms of the LLC agreement. The
terms of the membership interests include certain financial covenants to which Entergy Holdings Company LLC is
subject, including the requirement to maintain a net worth of at least $1 billion.
Texas
In July 2006, Entergy Texas filed an application with the PUCT with respect to its Hurricane Rita
reconstruction costs incurred through March 2006. The filing asked the PUCT to determine the amount of
reasonable and necessary hurricane reconstruction costs eligible for securitization and recovery, approve the recovery
of carrying costs, and approve the manner in which Entergy Texas allocates those costs among its retail customer
classes. In December 2006, the PUCT approved $381 million of reasonable and necessary hurricane reconstruction
costs incurred through March 31, 2006, plus carrying costs, as eligible for recovery. After netting expected
insurance proceeds, the amount is $353 million.
In April 2007, the PUCT issued its financing order authorizing the issuance of securitization bonds to
recover the $353 million of hurricane reconstruction costs and up to $6 million of transaction costs, offset by $32
million of related deferred income tax benefits. See Note 5 to the financial statements for a discussion of the June
2007 issuance of the securitization bonds.
Community Development Block Grants
In December 2005, the U.S. Congress passed the Katrina Relief Bill, a hurricane aid package that includes
$11.5 billion in Community Development Block Grants (CDBG) (for the states affected by Hurricanes Katrina, Rita,
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