Entergy 2009 Annual Report Download - page 8

Entergy Corporation and Subsidiaries
ENTERGY CORPORATION AND SUBSIDIARIES
RECENT DEVELOPMENTS
The following summary provides important additional information as of March 17, 2010, concerning certain
mattersreferencedintheManagement’sFinancialDiscussionandAnalysis(MD&A)thatfollows,andshouldberead
in conjunction with such MD&A.
New York Regulatory Proceedings Regarding the Spin-Off
As discussed in the MD&A, at a meeting on February 11, 2010, the advisory staff of the New York State Public
ServiceCommission(NYPSC)articulatedcertainprinciplesandpotentialconditionsapplicabletoanyapprovalof
Entergy’s proposed spin-off of its Non-Utility Nuclear business. The principles behind the conditions proposed by
the advisory staff were to mitigate near-term liquidity risk related to debt covenants of Enexus Energy Corporation
(Enexus),enhanceEnexus’long-termnancialcapabilities,andprovidecertainratepayerbenets.Aftergiving
carefulconsiderationtohowtheprinciplesoutlinedbytheadvisorystaffcouldbesatisedinamannerconsistentwith
objectivesinpursuingthespin-offtransaction,onMarch2,2010,EnexusledwiththeNYPSCaproposalthattakes
theformofproposedconditionsthattheNYPSCcouldincludeinitsapprovalorder.Therstconditionproposesa
further reduction of Enexus long-term debt in the amount of $500 million. The second condition restricts dividend
payments and return of capital to shareholders in accordance with the restrictions in Enexus’ existing secured bank
facility,evenifthatbankfacilityisterminatedoramended,untilEnexusachievesatleast(1)aBB+orBa1creditrating
or(2)a50%orlowernetdebt-to-capitalizationratiowithenhancements.Forpurposesofthisproposedrestriction,
the amount available for distribution as dividends or return of capital to shareholders in the permitted “basket” under
Enexus’ existing secured bank facility is reduced from $500 million to $250 million, and net debt is increased by $200
million to represent the approximate amount used for Enexus’ operational purposes. The third condition calls for
Enexustodistributeupto$300milliontoNewYork’senergyefciencyfundsiffuturepowerpricesexceedcertain
levels. A maximum of $5 million for each of the three price tranches per unit would be payable annually under the
tenyearagreements.TheIndianPoint2termwouldcommencetherstdayofthecalendarquarterbeginningafter
thedateofclosingofallspin-offtransactions.TheIndianPoint3andFitzPatricktermswouldcommenceJanuary1,
2015. The strike prices for the Indian Point units are $76/MWh, $94/MWh and $112/MWh and for FitzPatrick are
$49/MWh, $61/MWh and $73/MWh for the measurement period ending December 31, 2010, subject to an annual
escalator. In addition, Enexus recently amended its secured bank facility to raise the permitted debt ratio during plant
outages, thereby eliminating covenant challenges in the scenario forecasts.
At a NYPSC meeting on March 4, 2010, the NYPSC Commissioners and advisory staff discussed the
principles the advisory staff had previously articulated and the proposal made by Enexus on March 2, 2010. The
NYPSC subsequently issued a press release stating that an initial analysis of the proposal by its advisory staff indicated
thattheproposaldoesnotreasonablyaddressthelong-termnancialviabilityofEnexusandwilllikelyprovideasmall
levelofratepayerbenets.TheNYPSCstatedthattheresultsofitsanalysiswillbeaugmentedasamorecomplete
review is conducted and the comments of the parties are considered. On March 4, 2010, the NYPSC also issued a
noticestatingthattheAdministrativeLawJudgeswouldconveneaconferencetoclarifyanddiscussboththeNYPSC
advisory staff’s principles and Enexus’ March 2, 2010 response thereto, which conference was held on March 10,
2010.ThenoticefurtherindicatedthatcommentsonthesemattersweretobelednolaterthanMarch18,2010,
unlessmodiedforgoodcause.TheNYPSCpressreleasefurtherindicatedthatthematterwouldbebroughtbackfor
deliberations at the earliest possible NYPSC session. The next scheduled meeting of the NYPSC is March 25, 2010.
Vermont Yankee Nuclear Plant
AsdiscussedintheMD&A,underVermontstatutesthestatecerticatesofpublicgoodtooperatetheVermont
Yankee nuclear plant and store spent nuclear fuel expire in March 2012. Non-Utility Nuclear has an application pending
withtheVermontPublicServiceBoard(VPSB)forapprovalofcontinuedoperationsandstorageofspentnuclearfuel
generated after March 2012. On February 25, 2010, the VPSB opened a separate proceeding to consider its jurisdiction
and whether Entergy Nuclear Vermont Yankee should be required to cease operations at Vermont Yankee or take
other ameliorative actions, pending completion of repairs to stop releases of radionuclides, radioactive materials, and,
potentially, other radioactive materials into the environment. This investigation will also consider whether good cause
existstomodifyorrevokethecerticateofpublicgoodthattheVPSBissuedtoEntergyNuclearVermontYankee,
andwhetheranypenaltiesshouldbeimposedonEntergyNuclearVermontYankeeforanyidentiedviolationsof
Vermont statutes or VPSB orders related to those releases. A prehearing conference on this matter was conducted on
March 10, 2010.
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