Entergy 2010 Annual Report Download - page 55

ENTERGY CORPORATION AND SUBSIDIARIES 2010
Management’s Financial Discussion and Analysis concluded
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:
n 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.
n The identification of additional sites or the filing of other
complaints in which Entergy may be asserted to be a
potentially responsible party.
n 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.
New Accounting Pronouncements
The accounting standard-setting process, including projects
between the FASB and the International Accounting Standards
Board (IASB) to converge U.S. GAAP and International Financial
Reporting Standards, is ongoing and the FASB and the IASB
are each currently working on several projects that have not
yet resulted in final pronouncements. Final pronouncements
that result from these projects could have a material effect on
Entergy’s future net income or financial position.
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