Entergy 2011 Annual Report Download - page 37

Entergy Corporation and Subsidiaries 2011
MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS continued
2010 Compared to 2009
Following are income statement variances for Utility, Entergy
Wholesale Commodities, Parent & Other, and Entergy comparing
2010 to 2009 showing how much the line item increased or
(decreased) in comparison to the prior period (in thousands):
Entergy
Wholesale Parent
Utility Commodities & Other Entergy
2009 Consolidated
Net Income (Loss) $708,905 $641,094 $(98,949) $1,251,050
Net revenue (operating
revenue less fuel expense,
purchased power, and
other regulatory
charges/credits) 357,211 (163,518) 8,622 202,315
Other operation and
maintenance expenses 112,384 124,758 (18,550) 218,592
Taxes other than
income taxes 28,872 2,717 (1,149) 30,440
Depreciation and
amortization (24,112) 11,413 (182) (12,881)
Gain on sale of business – 44,173 – 44,173
Other income (14,915) 66,222 (25,681) 25,626
Interest expense 31,035 (6,461) (19,851) 4,723
Other 7,758 19,728 – 27,486
Income taxes 65,545 (53,606) (27,440) (15,501)
2010 Consolidated
Net Income (Loss) $829,719 $489,422 $(48,836) $1,270,305
Refer to “Selected Financial Data - Five-Year Comparison Of Entergy
Corporation And Subsidiaries” which accompanies Entergy
Corporation’s financial statements in this report for further information
with respect to operating statistics.
In November 2007 the Board approved a plan to pursue a
separation of Entergy’s non-utility nuclear business from Entergy
through a spin-off of the business to Entergy shareholders. In April
2010, Entergy announced that it planned to unwind the business
infrastructure associated with the proposed spin-off transaction.
As a result of the plan to unwind the business infrastructure,
Entergy recorded expenses in 2010 for the write-off of certain
capitalized costs incurred in connection with the planned
spin-off transaction. These costs are discussed in more detail
below and throughout this section.
NET RE V E N U E
Utility
Following is an analysis of the change in net revenue comparing
2010 to 2009 (in millions):
2009 Net Revenue $4,694
Volume/weather 231
Retail electric price 137
Provision for regulatory proceedings 26
Rough production cost equalization 19
ANO decommissioning trust (24)
Fuel recovery (44)
Other 12
2010 Net Revenue $5,051
The volume/weather variance is primarily due to an increase of
8,362 GWh, or 8%, in billed electricity usage in all retail sectors,
including the effect on the residential sector of colder weather in
the first quarter 2010 compared to 2009 and warmer weather in the
second and third quarters 2010 compared to 2009. The industrial
sector reflected strong sales growth on continuing signs of economic
recovery. The improvement in this sector was primarily driven by
inventory restocking and strong exports with the chemicals, refining,
and miscellaneous manufacturing sectors leading the improvement.
The retail electric price variance is primarily due to:
n increases in the formula rate plan riders at Entergy Gulf States
Louisiana effective November 2009, January 2010, and September
2010, at Entergy Louisiana effective November 2009, and at
Entergy Mississippi effective July 2009;
n a base rate increase at Entergy Arkansas effective July 2010;
n rate actions at Entergy Texas, including base rate increases
effective in May and August 2010;
n a formula rate plan provision of $16.6 million recorded in the
third quarter 2009 for refunds that were made to customers in
accordance with settlements approved by the LPSC; and
n the recovery in 2009 by Entergy Arkansas of 2008 extraordinary
storm costs, as approved by the APSC, which ceased in January
2010. The recovery of storm costs is offset in other operation and
maintenance expenses.
See Note 2 to the financial statements for further discussion of the
proceedings referred to above.
The provision for regulatory proceedings variance is primarily due
to provisions recorded in 2009 at Entergy Arkansas. See Note 2 to
the financial statements for a discussion of regulatory proceedings
affecting Entergy Arkansas.
The rough production cost equalization variance is due to an
additional $18.6 million allocation recorded in the second quarter of
2009 for 2007 rough production cost equalization receipts ordered
by the PUCT to Texas retail customers over what was originally
allocated to Entergy Texas prior to the jurisdictional separation of
Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and
Entergy Texas, effective December 2007, as discussed in Note 2 to
the financial statements.
The ANO decommissioning trust variance is primarily related to the
deferral of investment gains from the ANO 1 and 2 decommissioning
trust in 2010 in accordance with regulatory treatment. The gains
resulted in an increase in interest and investment income in 2010
and a corresponding increase in regulatory charges with no effect
on net income.
The fuel recovery variance resulted primarily from an adjustment
to deferred fuel costs in the fourth quarter 2009 relating to
unrecovered nuclear fuel costs incurred since January 2008
that will now be recovered after a revision to the fuel adjustment
clause methodology.
Entergy Wholesale Commodities
Following is an analysis of the change in net revenue comparing
2010 to 2009 (in millions):
2009 Net Revenue $2,364
Nuclear realized price changes (96)
Nuclear volume (60)
Other (8)
2010 Net Revenue $2,200
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