Entergy 2012 Annual Report Download - page 6

However in 2012, employee lost-time injuries increased over 2011 and we suffered an employee fatality,
our third fatality in a two-year period. This safety performance is devastating. We are working to build
greater safety awareness and a stronger safety culture. Achieving an accident-free work environment for
our employees and contractors remains a top priority.
Over the years, Entergy’s utility retail regulators have shown foresight in approving constructive
policies that reflect benefits for customers and reduce regulatory lag for our owners. Illustrating this
point are long-standing use of Formula Rate Plans in several jurisdictions and approximately $2 billion
of investments in 2012 reflected in rates around their in-service dates. In 2013, we have another full
regulatory calendar before us. Entergy Louisiana and Entergy Gulf States Louisiana filed rate cases in
February 2013, and Entergy Arkansas filed its rate case in March 2013. In addition, we will continue
to pursue strategies to resolve our Texas rate structures in ways that deliver meaningful improvement in
value to our owners and customers. We recently made the annual FRP filing in Mississippi and will seek
to resolve the 2011 test-year FRP filing in New Orleans. We will also pursue recovery of extraordinary
2012 storm costs. Through all of this, we will work with our local and state regulators to ensure we
have the opportunity to earn a competitive return on equity. Competitive returns enable us to attract the
investment capital we need to deliver reliable power at reasonable rates to customers for the foreseeable
future. Longer term, we will proactively work with regulators to help build regulatory constructs that
align lower prices and customer satisfaction with return on new investment.
Operation of our EWC plants is vital to our owners, customers, employees and communities. In 2012,
we completed two breaker-to-breaker runs, including one at a plant we manage under contract. However
at 89 percent, our 2012 EWC nuclear capacity factor fell short of our expectations. As part of our
ongoing operational excellence efforts, we are working to raise the bar in areas where we met our goals
and improve our performance in areas where we fell short. In addition, we will continue to advance the
multi-year license renewal process for Indian Point Energy Center Units 2 and 3, having secured license
renewal for Pilgrim Nuclear Power Station in 2012. We also are working through the courts to ensure
Vermont Yankee Nuclear Power Station can continue to operate under the 20-year operating license
issued by the Nuclear Regulatory Commission in 2011.
We view hedging as an important risk management tool for the EWC business. Northeast power prices
for delivery in future years continued to decline through early 2012. Given a cautiously optimistic view
of prices relative to those levels, we utilized asymmetrical hedging products for future nuclear output
that limit our downside exposure while allowing for benefit if Northeast power prices rise. We monitor
numerous factors that impact power prices, including ongoing natural gas fundamentals, environmental
and other regulations, individual unit shutdowns and market response, and continuously adjust hedging
products and tactics accordingly as market conditions change.
MANAGING OUR PORTFOLIO
Beyond our operational performance, we look for other ways to deliver value to our stakeholders. We
do this on a proactive basis, regularly assessing opportunities to optimize our business. Most recently,
our portfolio management efforts have focused on transforming our utility transmission business.
Each of Entergy’s utility operating companies has agreed to become a member of the Midwest Independent
Transmission System Operator, one of the largest regional transmission organizations in the country.
Entergy utilities successfully obtained orders from their retail regulators granting their requests, subject
to terms and conditions, to join MISO. Estimated customer savings of approximately $1.4 billion are
expected in the first decade of MISO membership due to more efficient dispatch of generating plants and
economies of scale. Teams are now fully engaged in implementation efforts to transfer functional control
of Entergy utilities’ transmission operations to MISO in December 2013. We also are working with the
Public Utility Commission of Texas staff to resolve issues in joining MISO that are related to certain
power purchase agreements put in place at the time of the jurisdictional separation of Entergy Gulf States
approximately five years ago. We believe the PUCT’s concerns can be addressed to everyone’s satisfaction
in a way that preserves the principles of jurisdictional separation.
Transitions | Entergy Corporation and Subsidiaries 2012
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