Entergy 2009 Annual Report Download - page 57

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Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
53
Other Contingencies
As a company with multi-state domestic utility operations and a history of international investments, Entergy
is subject to a number of federal, state, and international laws and regulations and other factors and conditions in the
areas in which it operates, which potentially subject it to environmental, litigation, and other risks. Entergy
periodically evaluates its exposure for such risks and records a reserve for those matters which are considered
probable and estimable in accordance with generally accepted accounting principles.
Environmental
Entergy must comply with environmental laws and regulations applicable to the handling and disposal of
hazardous waste. Under these various laws and regulations, Entergy could incur substantial costs to restore
properties consistent with the various standards. Entergy conducts studies to determine the extent of any required
remediation and has recorded reserves based upon its evaluation of the likelihood of loss and expected dollar amount
for each issue. Additional sites could be identified which require environmental remediation for which Entergy could
be liable. The amounts of environmental reserves recorded can be significantly affected by the following external
events or conditions:
Changes to existing state or federal regulation by governmental authorities having jurisdiction over air
quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental
matters.
The identification of additional sites or the filing of other complaints in which Entergy may be asserted to be
a potentially responsible party.
The resolution or progression of existing matters through the court system or resolution by the EPA.
Litigation
Entergy has been named as defendant in a number of lawsuits involving employment, ratepayer, and injuries
and damages issues, among other matters. Entergy periodically reviews the cases in which it has been named as
defendant and assesses the likelihood of loss in each case as probable, reasonably estimable, or remote and records
reserves for cases which have a probable likelihood of loss and can be estimated. Notes 2 and 8 to the financial
statements include more detail on ratepayer and other lawsuits and management's assessment of the adequacy of
reserves recorded for these matters. Given the environment in which Entergy operates, and the unpredictable nature
of many of the cases in which Entergy is named as a defendant, however, the ultimate outcome of the litigation
Entergy is exposed to has the potential to materially affect the results of operations of Entergy, or its operating
company subsidiaries.
Uncertain Tax Positions
Entergy's operations, including acquisitions and divestitures, require Entergy to evaluate risks such as the
potential tax effects of a transaction, or warranties made in connection with such a transaction. Entergy believes that
it has adequately assessed and provided for these types of risks, where applicable. Any reserves recorded for these
types of issues, however, could be significantly affected by events such as claims made by third parties under
warranties, additional transactions contemplated by Entergy, or completion of reviews of the tax treatment of certain
transactions or issues by taxing authorities. Entergy does not expect a material adverse effect on earnings from these
matters.
55