Entergy 2010 Annual Report Download - page 87

ENTERGY CORPORATION AND SUBSIDIARIES 2010
The annual long-term debt maturities (excluding lease
obligations and long-term DOE obligations) for debt outstanding
as of December 31, 2010, for the next five years are as follows
(in thousands):
2011 $ 230,257
2012 $1,815,972
2013 $ 734,309
2014 $ 150,681
2015 $ 863,539
In November 2000, Entergy’s non-utility nuclear business
purchased the FitzPatrick and Indian Point 3 power plants in
a seller-financed transaction. Entergy issued notes to NYPA
with seven annual installments of approximately $108 million
commencing one year from the date of the closing, and eight
annual installments of $20 million commencing eight years from
the date of the closing. These notes do not have a stated interest
rate, but have an implicit interest rate of 4.8%. In accordance
with the purchase agreement with NYPA, the purchase of Indian
Point 2 in 2001 resulted in Entergy becoming liable to NYPA for
an additional $10 million per year for 10 years, beginning in
September 2003. This liability was recorded upon the purchase
of Indian Point 2 in September 2001, and is included in the note
payable to NYPA balance above. In July 2003, a payment of $102
million was made prior to maturity on the note payable to NYPA.
Under a provision in a letter of credit supporting these notes, if
certain of the Utility operating companies or System Energy were
to default on other indebtedness, Entergy could be required to
post collateral to support the letter of credit.
One of the covenants in certain of the Entergy Corporation
notes require it to maintain a consolidated debt ratio of 65% or
less of its total capitalization. If Entergy’s debt ratio exceeds this
limit, or if Entergy Corporation or certain of the Utility operating
companies default on other indebtedness or are in bankruptcy
or insolvency proceedings, an acceleration of the notes’ maturity
dates may occur.
Entergy Gulf States Louisiana, Entergy Louisiana, Entergy
Mississippi, Entergy Texas, and System Energy have obtained
long-term financing authorizations from the FERC that extend
through July 2011. Entergy Arkansas has obtained long-term
financing authorization from the APSC that extends through
December 2012. Entergy New Orleans has obtained long-term
financing authorization from the City Council that extends
through July 2012.
Capital Funds Agreement
Pursuant to an agreement with certain creditors, Entergy
Corporation has agreed to supply System Energy with sufficient
capital to:
n maintain System Energy’s equity capital at a minimum of 35%
of its total capitalization (excluding short-term debt);
n permit the continued commercial operation of Grand Gulf;
n pay in full all System Energy indebtedness for borrowed money
when due; and
n enable System Energy to make payments on specific System
Energy debt, under supplements to the agreement assigning
System Energy’s rights in the agreement as security for the
specific debt.
Entergy Arkansas Securitization Bonds
In June 2010, the APSC issued a financing order authorizing the
issuance of bonds to recover Entergy Arkansas’s January 2009
ice storm damage restoration costs, including carrying costs
of $11.5 million and $4.6 million of up-front financing costs. In
August 2010, Entergy Arkansas Restoration Funding, LLC, a
company wholly-owned and consolidated by Entergy Arkansas,
issued $124.1 million of storm cost recovery bonds. The bonds
have a coupon of 2.30% and an expected maturity date of August
2021. Although the principal amount is not due until the date
given above, Entergy Arkansas Restoration Funding expects to
make principal payments on the bonds over the next five years
in the amount of $10.3 million for 2011, $12.2 million for 2012,
$12.6 million for 2013, $12.8 million for 2014, and $13.2 million for
2015. With the proceeds, Entergy Arkansas Restoration Funding
purchased from Entergy Arkansas the storm recovery property,
which is the right to recover from customers through a storm
recovery charge amounts sufficient to service the securitization
bonds. The storm recovery property is reflected as a regulatory
asset on the consolidated Entergy Arkansas balance sheet.
The creditors of Entergy Arkansas do not have recourse to the
assets or revenues of Entergy Arkansas Restoration Funding,
including the storm recovery property, and the creditors of
Entergy Arkansas Restoration Funding do not have recourse to
the assets or revenues of Entergy Arkansas. Entergy Arkansas has
no payment obligations to Entergy Arkansas Restoration Funding
except to remit storm recovery charge collections.
Entergy Texas Securitization Bonds - Hurricane Rita
In April 2007 the PUCT issued a financing order authorizing
the issuance of securitization bonds to recover $353 million of
Entergy Texas’s Hurricane Rita reconstruction costs and up to
$6 million of transaction costs, offset by $32 million of related
deferred income tax benefits. In June 2007, Entergy Gulf States
Reconstruction Funding I, LLC, a company that is now wholly-
owned and consolidated by Entergy Texas, issued $329.5 million of
senior secured transition bonds (securitization bonds) as follows
(in thousands):
Senior Secured Transition Bonds, Series A:
Tranche A-1 (5.51%) due October 2013 $ 93,500
Tranche A-2 (5.79%) due October 2018 121,600
Tranche A-3 (5.93%) due June 2022 114,400
Total senior secured transition bonds $329,500
Although the principal amount of each tranche is not due until the
dates given above, Entergy Gulf States Reconstruction Funding
expects to make principal payments on the bonds over the next
five years in the amounts of $19.7 million for 2011, $20.8 million
for 2012, $21.9 million for 2013, $23.2 million for 2014, and $24.6
million for 2015. All of the scheduled principal payments for 2011-
2012 are for Tranche A-1, except for $2.3 million for Tranche A-2
in 2012, and all of the scheduled principal payments for 2013-2015
are for Tranche A-2.
With the proceeds, Entergy Gulf States Reconstruction Funding
purchased from Entergy Texas the transition property, which
is the right to recover from customers through a transition
charge amounts sufficient to service the securitization bonds.
The transition property is reflected as a regulatory asset on
the consolidated Entergy Texas balance sheet. The creditors of
Entergy Texas do not have recourse to the assets or revenues
of Entergy Gulf States Reconstruction Funding, including the
Notes to Consolidated Financial Statements continued
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