Entergy 2009 Annual Report Download - page 35

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
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and Wilma) that allows state and local leaders to fund individual recovery priorities. The bill includes language that
permits funding to be provided for infrastructure restoration.
New Orleans
In March 2006, Entergy New Orleans provided a justification statement to state and local officials in
connection with its pursuit of CDBG funds to mitigate Hurricane Katrina restoration costs that otherwise would be
borne by customers. The statement included all the estimated costs of Hurricane Katrina damage, as well as a lost
customer base component intended to help offset the need 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 customers. The proposal was developed as an action plan amendment and published for public
comment. State lawmakers approved the action plan in December 2006, and the U. S. Department of Housing and
Urban Development approved it in February 2007. Entergy New Orleans filed applications seeking City Council
certification of its storm-related costs incurred through December 2006. Entergy New Orleans supplemented this
request to include the estimated future cost of the gas system rebuild.
In March 2007, the City Council certified that Entergy New Orleans incurred $205 million in storm-related
costs through December 2006 that are eligible for CDBG funding under the state action plan, and certified Entergy
New Orleans' estimated costs of $465 million for its gas system rebuild. In April 2007, Entergy New Orleans
executed an agreement with the Louisiana Office of Community Development (OCD) under which $200 million of
CDBG funds will be made available to Entergy New Orleans. Entergy New Orleans submitted the agreement to the
bankruptcy court, which approved it on April 25, 2007. Entergy New Orleans received $180.8 million of CDBG
funds in 2007.
Mississippi
In March 2006, the Governor of Mississippi signed a law that established a mechanism by which the MPSC
could authorize and certify an electric utility financing order and the state could issue bonds to finance the costs of
repairing damage caused by Hurricane Katrina to the systems of investor-owned electric utilities. Because of the
passage of this law and the possibility of Entergy Mississippi obtaining CDBG funds for Hurricane Katrina storm
restoration costs, in March 2006, the MPSC issued an order approving a Joint Stipulation between Entergy
Mississippi and the Mississippi Public Utilities Staff that provided for a review of Entergy Mississippi's total storm
restoration costs in an Application for an Accounting Order proceeding. In June 2006, the MPSC issued an order
certifying Entergy Mississippi's Hurricane Katrina restoration costs incurred through March 31, 2006 of $89 million,
net of estimated insurance proceeds. Two days later, Entergy Mississippi filed a request with the Mississippi
Development Authority for $89 million of 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 and future storm costs. The $169
million amount included the $89 million of Hurricane Katrina restoration costs plus $80 million to build Entergy
Mississippi's storm damage reserve for the future. Entergy Mississippi's filing stated that the amount actually
financed through the state bonds would be net of any CDBG funds that Entergy Mississippi received.
In October 2006, the Mississippi Development Authority approved for payment and Entergy Mississippi
received $81 million in CDBG funding for Hurricane Katrina costs. The MPSC then issued a financing order
authorizing the issuance of state bonds to finance $8 million of Entergy Mississippi's certified Hurricane Katrina
restoration costs and $40 million for an increase in Entergy Mississippi's storm damage reserve. $30 million of the
storm damage reserve was set aside in a restricted account. A Mississippi state entity issued the bonds in May 2007,
and Entergy Mississippi received proceeds of $48 million. Entergy Mississippi does not report the bonds on its
balance sheet because the bonds are the obligation of the state entity, and there is no recourse against Entergy
Mississippi in the event of a bond default.
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