Entergy 2009 Annual Report Download - page 86

Entergy Corporation and Subsidiaries
Notes to Financial Statements
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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LURC, Entergy Gulf States Louisiana invested $189.4 million, including $1.7 million that was withdrawn from the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 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.
Entergy Gulf States Louisiana and Entergy Louisiana do not report the bonds on their balance sheets because
the bonds are the obligation of the LPFA, and there is no recourse against Entergy, Entergy Gulf States Louisiana or
Entergy Louisiana in the event of a bond default. To service the bonds, Entergy Gulf States Louisiana and Entergy
Louisiana collect a system restoration charge on behalf of the LPFA, and remit the collections to the LPFA. By
analogy to and in accordance with Entergy's accounting policy for collection of sales taxes, Entergy Gulf States
Louisiana and Entergy Louisiana do not report the collections as revenue because they are merely acting as the
billing and collection agent for the state.
Entergy 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. 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 Community Development Block Grant (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. To service the bonds, Entergy Mississippi collects a system restoration
charge on behalf of the issuer, and remits the collections to the issuer. By analogy to and in accordance with
Entergy's accounting policy for collection of sales taxes, Entergy Mississippi does not report the collections as
revenue because it is merely acting as the billing and collection agent for the state.
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