Entergy 2012 Annual Report Download - page 16

completed its purchase of the Hot
Spring Energy Facility, a 620-megawatt,
combined-cycle natural gas-fired
power plant, and Entergy Mississippi
completed its purchase of the Hinds
Energy Facility, a 450-megawatt,
combined-cycle natural gas-fired power
plant. Both purchases support the
utilities’ strategy of providing reliable
service at the lowest reasonable costs. In
2012, we permanently retired the Delta
Power Plant located in Cleveland, Miss.
and Sterlington Unit 6 in Sterlington,
La. Over the past two years, 18 fossil
generating units have been retired as
Entergy utilities work to transform and
modernize their generating portfolio
to match ongoing and projected
supply needs.
Also in 2012, Entergy Louisiana began
construction on Ninemile Unit 6, a
550-megawatt combined-cycle gas
turbine unit at the existing Ninemile
Point Plant. The unit is expected to enter
commercial operation by early 2015.
In June, work was completed on the
178-megawatt uprate project at Grand
Gulf. With this uprate, the reactor
at Grand Gulf is now the largest
single-unit nuclear plant of its type
in the nation. In December, the steam
generator replacement project at the
Waterford 3 Steam Electric Station
was put in service. Major multi-year
capital investments such as the Grand Gulf uprate and
Waterford 3 steam generator replacement present a multitude
of execution challenges. Despite these challenges, we are
pleased with the successful outcome of both projects, which
have secured the availability of clean and efficient nuclear
energy for the benefit of our customers.
Clean generation is of increasing importance to our
customers, communities and regulators, which is leading to
higher levels of environmental regulation. Entergy utilities
have steadily increased the portion of power supplied by
clean and efficient natural gas-fired, combined-cycle and
single-cycle units and operate five nuclear units. As a result,
our utility generating fleet’s emission rates for carbon
dioxide, nitrogen oxide and sulfur dioxide are significantly
lower than the average U.S. utility fleet.
PURSUING PRODUCTIVE
REGULATORY CONSTRUCTS
Constructive relationships with our
federal, state and local regulators are
a vital component of our efforts to
deliver value to our stakeholders. Our
goal is to support the development of
regulatory constructs that match our
cost structure, investment profile and
customer needs. We work tirelessly
to meet the challenges posed by
regulatory environments and to satisfy
the expectations of our regulators.
We work with regulators to reduce
regulatory lag through timely cost
recovery mechanisms that help
maintain our utilities’ financial metrics
at reasonable levels and support access
to capital on reasonable terms. Our
regulators’ foresight related to our
investments in Hinds, Hot Spring and
the Waterford 3 project helped position
our utilities for the future. These
projects, plus the Grand Gulf uprate,
total approximately $2 billion in
investments placed in service in 2012.
Cost recovery mechanisms allowed
for rate adjustments within a matter
of days and weeks. Timely recovery
mechanisms will be particularly
important going forward as we project
increased capital investments will be
required to deliver reliable, reasonably
priced power to our customers.
In 2013, we have a full regulatory agenda once again, in
addition to the ongoing MISO and ITC regulatory processes.
Five of our six utilities will seek recovery of extraordinary
storm restoration costs in 2012 due to Hurricane Isaac and
a December ice storm in Arkansas. Storm restoration costs
related to Hurricane Isaac alone are estimated at $370 million.
In February 2013, Entergy Louisiana and Entergy Gulf States
Louisiana filed rate cases requesting base-rate increases of
approximately $168 million and $28 million, respectively,
reflecting a 10.4 percent ROE and proposing new three-year
Formula Rate Plans for the 2013 to 2015 test years. These
amounts reflect the scenario that assumes completion of
the proposed spin-merge transaction with ITC. In addition,
Entergy Arkansas recently filed a base-rate case. We made the
annual FRP filing in Mississippi and will seek to resolve the
2011 test-year FRP filing in New Orleans.
Serving Our Utility
Customers
Over the past five years, our utility
operating companies have improved
residential customer satisfaction as
measured by J.D. Power and Associates
while holding average residential rates
below the U.S. average.
Average Residential Rates
cents per kWh
14
12
10
8
6
4
2
0
08 09 10 11 12
U.S.
Entergy
Residential
Customer Satisfaction
700
600
500
08 09 10 11 12
U.S.
Entergy
Transitions | Entergy Corporation and Subsidiaries 2012
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