Entergy 2010 Annual Report Download - page 45

ENTERGY CORPORATION AND SUBSIDIARIES 2010
Management’s Financial Discussion and Analysis continued
2009 Compared to 2008
Entergy’s cash flow provided by operating activities decreased
by $391 million in 2009 compared to 2008 primarily due to the
receipt in 2008 of $954 million from the Louisiana Utilities
Restoration Corporation as a result of the Louisiana Act 55 storm
cost financings, Arkansas ice storm restoration spending, and
increases in nuclear refueling outage spending and spin-off costs
for the non-utility nuclear business. These factors were partially
offset by a decrease of $94 million in income tax payments, a
decrease of $155 million in pension contributions at Utility and
Entergy Wholesale Commodities, increased collection of fuel
costs, and higher spending in 2008 on Hurricane Gustav and
Hurricane Ike storm restoration.
INVESTING ACTIVITIES
2010 Compared to 2009
Net cash used in investing activities increased $480 million in
2010 compared to 2009 primarily due to the following activity:
n an increase in net uses of cash for nuclear fuel purchases,
which was caused by the consolidation of the nuclear fuel
company variable interest entities that is discussed in Note
18 to the financial statements. With the consolidation of
the nuclear fuel company variable interest entities, their
purchases of nuclear fuel from Entergy are now eliminated
in consolidation, whereas before 2010 they were a source of
investing cash flows;
n the investment of a total of $290 million in Entergy Gulf States
Louisiana’s and Entergy Louisiana’s storm reserve escrow
accounts as a result of their Act 55 storm cost financings,
which are discussed in Note 2 to the financial statements;
n an increase in construction expenditures, primarily in the
Entergy Wholesale Commodities business, as decreases for
the Utility resulting from Hurricane Gustav, Hurricane Ike, and
Arkansas ice storm restoration spending in 2009 were offset
by spending on various projects; and
n proceeds of $219 million in 2010 from the sale of Entergy’s
ownership interest in the Harrison County Power Project
550 MW combined-cycle power plant to two Texas electric
cooperatives that owned a minority share of the plant.
2009 Compared to 2008
Net cash used in investing activities decreased by $496 million in
2009 compared to 2008. The following significant investing cash
flow activity occurred in 2009 and 2008:
n Construction expenditures were $281 million lower in 2009
than in 2008 primarily due to Hurricane Gustav and Hurricane
Ike restoration spending in 2008.
n In March 2008, Entergy Gulf States Louisiana purchased the
Calcasieu Generating Facility, a 322 MW simple-cycle, gas-fired
power plant located near the city of Sulphur in southwestern
Louisiana, for approximately $56 million.
n In September 2008, Entergy Arkansas purchased the Ouachita
Plant, a 789 MW gas-fired plant located 20 miles south of
the Arkansas state line near Sterlington, Louisiana, for
approximately $210 million (In November 2009, Entergy
Arkansas sold one-third of the plant to Entergy Gulf States
Louisiana).
n Receipt in 2009 of insurance proceeds from Entergy Texas’s
Hurricane Ike claim and in 2008 of insurance proceeds from
Entergy New Orleans’s Hurricane Katrina claim.
n The investment of $45 million in escrow accounts for
construction projects in 2008 and the withdrawal of
$36 million of those funds from escrow accounts in 2009.
FINANCING ACTIVITIES
2010 Compared to 2009
Net cash used in financing activities increased $719 million in
2010 compared to 2009 primarily because long-term debt activity
used approximately $307 million of cash in 2010 and provided
approximately $160 million of cash in 2009. The most significant
net use for long-term debt activity was by Entergy Corporation,
which reduced its 5-year credit facility balance by $934 million
and repaid a total of $275 million of notes and bank term loans,
while issuing $1 billion of notes in 2010. For the details of
Entergy’s long-term debt outstanding see Note 5 to the financial
statements herein. In addition, Entergy Corporation repurchased
$879 million of its common stock in 2010 and repurchased
$613 million of its common stock in 2009. Entergy’s stock
repurchases are discussed further in the “Capital Expenditure
Plans and Other Uses of Capital - Dividends and Stock
Repurchases” section above.
2009 Compared to 2008
Net cash used in financing activities increased $978 million
in 2009 compared to 2008 primarily because long-term debt
activity provided approximately $160 million of cash in 2009
and provided approximately $970 million of cash in 2008. Also,
Entergy Corporation repurchased $613 million of its common
stock in 2009 and repurchased $512 million of its common stock
in 2008.
Rate, Cost-Recovery, and Other Regulation
State and Local Rate Regulation and Fuel-Cost Recovery
The rates that the Utility operating companies and System Energy
charge for their services significantly influence Entergy’s financial
position, results of operations, and liquidity. These companies are
regulated and the rates charged to their customers are determined
in regulatory proceedings. Governmental agencies, including the
APSC, the City Council, the LPSC, the MPSC, the PUCT, and the
FERC, are primarily responsible for approval of the rates charged
to customers. Following is a summary of the Utility operating
companies’ authorized returns on common equity and current
retail base rates. The Utility operating companies’ base rate, fuel
and purchased power cost recovery, and storm cost recovery
proceedings are discussed in Note 2 to the financial statements.
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