Entergy 2009 Annual Report Download - page 85

Entergy Corporation and Subsidiaries
Notes to Financial Statements
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$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.
Hurricane Katrina and Hurricane Rita
In February 2007, Entergy Louisiana and Entergy Gulf States Louisiana filed a supplemental and amending
application by which they sought authority from the LPSC to securitize their Hurricane Katrina and Hurricane Rita
storm cost recovery and storm reserve amounts, together with certain debt retirement costs and upfront and ongoing
costs of the securitized debt issued. Securitization is authorized by a law signed by the Governor of Louisiana in
May 2006. Hearings on the quantification of the amounts eligible for securitization began in late-April 2007. At the
start of the hearing, a stipulation among Entergy Gulf States Louisiana, Entergy Louisiana, the LPSC staff, and most
other parties in the proceeding was read into the record. The stipulation quantified the balance of storm restoration
costs for recovery as $545 million for Entergy Louisiana and $187 million for Entergy Gulf States Louisiana, and set
the storm reserve amounts at $152 million for Entergy Louisiana and $87 million for Entergy Gulf States Louisiana.
The stipulation also called for securitization of the storm restoration costs and storm reserves in those same amounts.
In August 2007, the LPSC issued orders approving recovery of the stipulated storm cost recovery and storm reserve
amounts plus certain debt retirement and upfront and ongoing costs through securitization financing.
In March 2008, Entergy Gulf States Louisiana, Entergy Louisiana, and the Louisiana Utilities Restoration
Corporation (LURC), an instrumentality of the State of Louisiana, filed at the LPSC an application requesting that
the LPSC grant financing orders authorizing the financing of Entergy Gulf States Louisiana and Entergy Louisiana
storm costs, storm reserves, and issuance costs pursuant to Act 55 of the Louisiana Legislature (Act 55 financings).
The Act 55 financings are expected to produce additional customer benefits as compared to Act 64 traditional
securitization. Entergy Gulf States Louisiana and Entergy Louisiana also filed an application requesting LPSC
approval for ancillary issues including the mechanism to flow charges and savings to customers via a Storm Cost
Offset rider. On April 3, 2008, the Louisiana State Bond Commission granted preliminary approval for the Act 55
financings. On April 8, 2008, the Louisiana Public Facilities Authority (LPFA), which is the issuer of the bonds
pursuant to the Act 55 financings, approved requests for the Act 55 financings. On April 10, 2008, Entergy Gulf
States Louisiana and Entergy Louisiana and the LPSC Staff filed with the LPSC an uncontested stipulated settlement
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.
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