Entergy 2011 Annual Report Download - page 6

In this case, each Entergy shareholder receives ownership in
two companies and presumably higher combined earnings and
dividends. The employees of our electric transmission business
receive better career opportunities as part of a transmission-
only business. Our customers and suppliers will be part of the
best structure to drive economic efficiency, achieve an open
and robust market, and provide access for low-cost generation
and efficient transmission use and expansion.
The business and financial landscape facing the utility industry
is undergoing its own transformation. From volatile commodity
price markets and evolving and uncertain environmental
regulations, to the longer-term need for multi-trillion dollar
industry-wide capital investments and potentially catastrophic
risk from climate change, the future will offer unprecedented
challenges. The issues we face at Entergy are no different. There
is no place to hide. There is no “safe” path. The path we have
chosen will not be easy. It will require outstanding execution; it
contemplates an end-state that will create sustainable value for
all stakeholders. At the same time, we believe we must be flexible
and adaptable to bring our vision to reality.
Our Track Record of Adaptation
While our track record of adaptation at Entergy doesn’t come
close to the frog’s 200 million years, we have been at it for
many years. Our point-of-view-driven business model gives
us the foresight to identify and effectively adapt to changing
market conditions. This approach has created value for our
stakeholders through major transactions such as the purchase
of generation assets, including our Northern U.S. nuclear fleet,
and, as I previously referenced, the formation and subsequent
sales of the Entergy-Koch joint venture’s trading and natural
gas pipeline businesses. Our industry-leading storm response
capability has been honed from years of experience, and the
operational capability is now matched by efficient financial
recovery and regulatory mechanisms put in place after
hurricanes Katrina and Rita in 2005. We have also adapted in
many other ways over the years, developing new technologies,
improving processes and adding capabilities to better serve
our customers, shareholders and communities.
Our DNA:
Safety, Sustainability and Operational Excellence
Even as we have evolved as an organization, there are key
elements of our company that do not change. These elements
define Entergy in the same way that being amphibian with a short
body, webbed digits, protruding eyes and no tail defines a frog.
We are defined by our unrelenting focus on safety and our
goal of achieving an accident-free work environment. We are
defined by our pursuit of sustainability, which drives us to
work hand-in-hand with numerous stakeholders to achieve
economic, societal and environmental priorities. We are defined
by our employees’ drive for operational excellence throughout
our organization. From our storm restoration records to our
continuous nuclear operating-run records, our employees take
pride in setting the standard for the industry.
With this as our DNA, we can act confidently on our points
of view. We have the proven ability to adapt to even the most
difficult of conditions without losing sight of the overall goal to
create sustainable value for all stakeholders.
2011 Results:
Strong Operational Performance
In 2011, we took actions in our utility business and within
Entergy Wholesale Commodities to adapt to and take advantage
of opportunities during these changing times. We delivered
strong operational performance, excellent customer service
and generated record operational earnings per share for the
11th time in the past 12 years. Strategically, we made moves
to bolster our generation portfolio in both businesses. We
announced proposals to move the utility operating companies to
MISO and then a separate transaction to spin off and merge our
transmission business with ITC. We also continued our ongoing
efforts towards securing renewed licenses for our Northeast
nuclear fleet. Returns to shareholders reached nearly $800 million
through a combination of dividends and share repurchases. And
we were named again to the Dow Jones Sustainability North
America Index. It marks the 10th consecutive year that Entergy
has been included on either the DJSI World Index or DJSI North
America Index, or both, in recognition of our sustainability
leadership, a distinction held by no other U.S. utility.
At the same time our 2011 total shareholder performance
was dismal in comparison to our peers. Our total shareholder
return ranked in the bottom quartile of our peer group. Concerns
surrounding our Northeast nuclear plants, including the Indian
Point Energy Center near New York City, have contributed to
limiting investors’ willingness to take what they often think of as
“political risk” that is outside our control and often unpredictable.
Also devastating in 2011 was our employee safety performance.
We lost a long-time, dedicated and respected co-worker in a traffic-
related pedestrian accident and another employee was severely
injured on the job. As a result, it is tough to look back on the
positives last year that many in our organization achieved without
recognizing the shortcomings in the basic areas of safety and total
shareholder return.
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