Entergy 2012 Annual Report Download - page 36

Entergy Corporation and Subsidiaries 2012
MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS continued
OPERATING LEASE OBLIGATIONS AND GUARANTEES
OF UNCONSOLIDATED OBLIGATIONS
Entergy has a minimal amount of operating lease obligations and
guarantees in support of unconsolidated obligations. Entergy’s guar-
antees in support of unconsolidated obligations are not likely to have
a material effect on Entergy’s financial condition, results of opera-
tions, or cash flows. Following are Entergy’s payment obligations as
of December 31, 2012 on non-cancelable operating leases with a term
over one year (in millions):
2016- After
2013 2014 2015 2017 2017
Operating lease payments $94 $97 $80 $94 $140
The operating leases are discussed in Note 10 to the financial statements.
SUMMARY OF CONTRACTUAL OBLIGATIONS OF
CONSOLIDATED ENTITIES (IN MILLIONS):
2014- 2016- After
Contractual Obligations 2013 2015 2017 2017 Total
Long-term debt(1) $1,292 $2,463 $2,929 $12,755 $19,439
Capital lease payments(2) $ 6 $ 10 $ 9 $ 34 $ 59
Operating leases(2) $ 94 $ 177 $ 94 $ 140 $ 505
Purchase obligations(3) $1,939 $3,512 $2,609 $11,195 $19,255
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(1) Includes estimated interest payments. Long-term debt is discussed in Note 5 to
the financial statements.
(2) Lease obligations are discussed in Note 10 to the financial statements.
(3) Purchase obligations represent the minimum purchase obligation or
cancellation charge for contractual obligations to purchase goods or services.
Almost all of the total are fuel and purchased power obligations.
In addition to the contractual obligations, Entergy currently expects
to contribute approximately $163.3 million to its pension plans and
approximately $82.5 million to other postretirement plans in 2013,
although the required pension contributions will not be known with
more certainty until the January 1, 2013 valuations are completed by
April 1, 2013. See “Critical Accounting Estimates – Qualified Pension
and Other Postretirement Benefits” below for a discussion of quali-
fied pension and other postretirement benefits funding.
Also in addition to the contractual obligations, Entergy has $148
million of unrecognized tax benefits and interest net of unused tax
attributes for which the timing of payments beyond 12 months cannot
be reasonably estimated due to uncertainties in the timing of effective
settlement of tax positions. See Note 3 to the financial statements for
additional information regarding unrecognized tax benefits.
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.
Capital Expenditure Plans and Other Uses of Capital
Following are the amounts of Entergy’s planned construction and
other capital investments by operating segment for 2013 through
2015 (in millions):
Planned Construction and
Capital Investments 2013 2014 2015
Maintenance Capital:
Utility:
Generation $ 133 $ 127 $ 135
Transmission 253 229 202
Distribution 504 494 489
Other 97 107 105
Total 987 957 931
Entergy Wholesale Commodities 108 131 176
$1,095 $1,088 $1,107
Capital Commitments:
Utility:
Generation $ 716 $ 415 $ 392
Transmission 162 240 303
Distribution 45 21 16
Other 92 88 92
Total 1,015 764 803
Entergy Wholesale Commodities 257 242 281
1,272 1,006 1,084
Total $2,367 $2,094 $2,191
The planned amounts do not reflect the expected reduction in capital
expenditures that would occur if the planned spin-off and merger
of the transmission business with ITC Holdings occurs, and do not
include material costs for capital projects that might result from the
NRC post-Fukushima requirements that remain under development.
Maintenance Capital refers to amounts Entergy plans to spend on
routine capital projects that are necessary to support reliability of
its service, equipment, or systems and to support normal customer
growth, and includes spending for the nuclear and non-nuclear plants
at Entergy Wholesale Commodities.
Capital Commitments refers to non-routine capital investments for
which Entergy is either contractually obligated, has Board approval,
or otherwise expects to make to satisfy regulatory or legal require-
ments. Amounts reflected in this category include the following.
n The currently planned construction or purchase of additional
generation supply sources within the Utility’s service territory
through the Utility’s portfolio transformation strategy, including a
self-build option at Entergy Louisiana’s Ninemile site identified in
the Summer 2009 Request for Proposal and final spending from
the Waterford 3 steam generator replacement project, both of
which are discussed below.
n Spending to support the Utility’s plan to join the MISO RTO by
December 2013 along with other transmission projects.
n Entergy Wholesale Commodities investments associated with
specific investments such as dry cask storage, nuclear license
renewal, component replacement and identified repairs, and
potential wedgewire screens at Indian Point.
n Environmental compliance spending. Entergy continues to
review potential environmental spending needs and financing
alternatives for any such spending, and future spending estimates
could change based on the results of this continuing analysis and
the implementation of new environmental laws and regulations.
The Utility’s owned generating capacity remains short of customer
demand, and its supply plan initiative will continue to seek to trans-
form its generation portfolio with new or repowered generation
resources. Opportunities resulting from the supply plan initiative,
including new projects or the exploration of alternative financing
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