a10q.htm
__________________________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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For the Quarterly Period Ended March 31, 2010
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OR
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TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ____________ to ____________
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Commission
File Number
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Registrant, State of Incorporation or Organization,
Address of Principal Executive Offices, Telephone
Number, and IRS Employer Identification No.
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Commission
File Number
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Registrant, State of Incorporation or Organization,
Address of Principal Executive Offices, Telephone
Number, and IRS Employer Identification No.
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1-11299
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ENTERGY CORPORATION
(a Delaware corporation)
639 Loyola Avenue
New Orleans, Louisiana 70113
Telephone (504) 576-4000
72-1229752
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1-31508
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ENTERGY MISSISSIPPI, INC.
(a Mississippi corporation)
308 East Pearl Street
Jackson, Mississippi 39201
Telephone (601) 368-5000
64-0205830
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1-10764
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ENTERGY ARKANSAS, INC.
(an Arkansas corporation)
425 West Capitol Avenue
Little Rock, Arkansas 72201
Telephone (501) 377-4000
71-0005900
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0-05807
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ENTERGY NEW ORLEANS, INC.
(a Louisiana corporation)
1600 Perdido Street
New Orleans, Louisiana 70112
Telephone (504) 670-3700
72-0273040
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0-20371
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ENTERGY GULF STATES LOUISIANA, L.L.C.
(a Louisiana limited liability company)
446 North Boulevard
Baton Rouge, Louisiana 70802
Telephone (800) 368-3749
74-0662730
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1-34360
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ENTERGY TEXAS, INC.
(a Texas corporation)
350 Pine Street
Beaumont, Texas 77701
Telephone (409) 981-2000
61-1435798
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1-32718
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ENTERGY LOUISIANA, LLC
(a Texas limited liability company)
446 North Boulevard
Baton Rouge, Louisiana 70802
Telephone (800) 368-3749
75-3206126
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1-09067
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SYSTEM ENERGY RESOURCES, INC.
(an Arkansas corporation)
Echelon One
1340 Echelon Parkway
Jackson, Mississippi 39213
Telephone (601) 368-5000
72-0752777
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__________________________________________________________________________________________
Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether Entergy Corporation has submitted electronically and posted on Entergy's corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o
Indicate by check mark whether Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy Resources have submitted electronically and posted on Entergy's corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files). Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Securities Exchange Act of 1934.
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Large
accelerated
filer
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Accelerated
filer
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Non-
accelerated
filer
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Smaller
reporting
company
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Entergy Corporation
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Ö
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Entergy Arkansas, Inc.
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Entergy Gulf States Louisiana, L.L.C.
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Entergy Louisiana, LLC
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Ö
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Entergy Mississippi, Inc.
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Ö
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Entergy New Orleans, Inc.
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Ö
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Entergy Texas, Inc.
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Ö
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System Energy Resources, Inc.
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Ö
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Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
Common Stock Outstanding
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Outstanding at April 30, 2010
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Entergy Corporation
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($0.01 par value)
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189,303,044
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Entergy Corporation, Entergy Arkansas, Inc., Entergy Gulf States Louisiana, L.L.C., Entergy Louisiana, LLC, Entergy Mississippi, Inc., Entergy New Orleans, Inc., Entergy Texas, Inc., and System Energy Resources, Inc. separately file this combined Quarterly Report on Form 10-Q. Information contained herein relating to any individual company is filed by such company on its own behalf. Each company reports herein only as to itself and makes no other representations whatsoever as to any other company. This combined Quarterly Report on Form 10-Q supplements and updates the Annual Report on Form 10-K for the calendar year ended December 31, 2009, filed by the individual registrants with the SEC, and should be read in conjunction therewith.
ENTERGY CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
March 31, 2010
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Page Number
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Definitions
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1
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Entergy Corporation and Subsidiaries
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Management's Financial Discussion and Analysis
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Plan to Pursue Separation of Non-Utility Nuclear
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3
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Results of Operations
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4
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Liquidity and Capital Resources
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7
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Rate, Cost-recovery, and Other Regulation
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10
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Market and Credit Risk Sensitive Instruments
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12
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Critical Accounting Estimates
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13
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Consolidated Statements of Income
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15
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Consolidated Statements of Cash Flows
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16
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Consolidated Balance Sheets
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18
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Consolidated Statements of Retained Earnings, Comprehensive Income, and
Paid-In Capital
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20
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Selected Operating Results
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21
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Notes to Financial Statements
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22
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Part 1. Item 4. Controls and Procedures
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55
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Entergy Arkansas, Inc.
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Management's Financial Discussion and Analysis
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Results of Operations
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56
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Liquidity and Capital Resources
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57
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State and Local Rate Regulation
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59
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Federal Regulation
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59
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Nuclear Matters
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59
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Environmental Risks
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60
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Critical Accounting Estimates
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60
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Income Statements
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61
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Statements of Cash Flows
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63
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Balance Sheets
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64
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Selected Operating Results
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66
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Entergy Gulf States Louisiana, L.L.C.
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Management's Financial Discussion and Analysis
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Results of Operations
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67
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Liquidity and Capital Resources
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68
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State and Local Rate Regulation
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70
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Federal Regulation
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71
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Nuclear Matters
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71
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Environmental Risks
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71
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Critical Accounting Estimates
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71
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ENTERGY CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
March 31, 2010
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Page Number
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Income Statements
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72
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Statements of Cash Flows
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73
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Balance Sheets
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74
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Statements of Members' Equity and Comprehensive Income
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76
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Selected Operating Results
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77
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Entergy Louisiana, LLC
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Management's Financial Discussion and Analysis
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Results of Operations
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78
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Liquidity and Capital Resources
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79
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State and Local Rate Regulation
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82
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Federal Regulation
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82
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Nuclear Matters
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83
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Environmental Risks
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83
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Critical Accounting Estimates
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83
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Income Statements
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84
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Statements of Cash Flows
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85
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Balance Sheets
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86
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Statements of Members' Equity and Comprehensive Income
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88
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Selected Operating Results
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89
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Entergy Mississippi, Inc.
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Management's Financial Discussion and Analysis
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Results of Operations
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90
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Liquidity and Capital Resources
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91
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State and Local Rate Regulation
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93
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Federal Regulation
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93
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Critical Accounting Estimates
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94
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Income Statements
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95
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Statements of Cash Flows
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97
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Balance Sheets
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98
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Selected Operating Results
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100
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Entergy New Orleans, Inc.
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Management's Financial Discussion and Analysis
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Results of Operations
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101
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Liquidity and Capital Resources
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102
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State and Local Rate Regulation
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103
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Federal Regulation
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103
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Environmental Risks
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103
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Critical Accounting Estimates
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104
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Income Statements
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105
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Statements of Cash Flows
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107
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Balance Sheets
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108
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Selected Operating Results
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110
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ENTERGY CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
March 31, 2010
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Page Number
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Entergy Texas, Inc.
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Management's Financial Discussion and Analysis
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Results of Operations
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111
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Liquidity and Capital Resources
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112
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State and Local Rate Regulation
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114
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Federal Regulation
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114
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Environmental Risks
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114
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Critical Accounting Estimates
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114
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Consolidated Income Statements
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115
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Consolidated Statements of Cash Flows
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117
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Consolidated Balance Sheets
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118
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Selected Operating Results
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120
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System Energy Resources, Inc.
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Management's Financial Discussion and Analysis
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Results of Operations
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121
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Liquidity and Capital Resources
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121
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Nuclear Matters
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122
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Environmental Risks
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122
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Critical Accounting Estimates
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123
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Income Statements
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124
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Statements of Cash Flows
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125
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Balance Sheets
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126
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Part II. Other Information
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Item 1. Legal Proceedings
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128
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Item 1A. Risk Factors
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128
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
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128
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Item 5. Other Information
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128
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Item 6. Exhibits
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132
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Signature
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135
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FORWARD-LOOKING INFORMATION
In this combined report and from time to time, Entergy Corporation and the Registrant Subsidiaries each makes statements as a registrant concerning its expectations, beliefs, plans, objectives, goals, strategies, and future events or performance. Such statements are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "may," "will," "could," "project," "believe," "anticipate," "intend," "expect," "estimate," "continue," "potential," "plan," "predict," "forecast," and other similar words or expressions are intended to identify forward-looking statements but are not the only means to identify these statements. Although each of these registrants believes that these forward-looking statements and the underlying assumptions are reasonable, it cannot provide assurance that they will prove correct. Any forward-looking statement is based on information current as of the date of this combined report and speaks only as of the date on which such statement is made. Except to the extent required by the federal securities laws, these registrants undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
Forward-looking statements involve a number of risks and uncertainties. There are factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including those factors discussed or incorporated by reference in (a) Item 1A. Risk Factors in the Form 10-K, (b) Management's Financial Discussion and Analysis in the Form 10-K and in this report, and (c) the following factors (in addition to others described elsewhere in this combined report and in subsequent securities filings):
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resolution of pending and future rate cases and negotiations, including various performance-based rate discussions, and other regulatory proceedings, including those related to Entergy's System Agreement, Entergy's utility supply plan, recovery of storm costs, and recovery of fuel and purchased power costs
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changes in utility regulation, including the beginning or end of retail and wholesale competition, the ability to recover net utility assets and other potential stranded costs, the operations of the independent coordinator of transmission for Entergy's utility service territory, and the application of more stringent transmission reliability requirements or market power criteria by the FERC
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changes in regulation of nuclear generating facilities and nuclear materials and fuel, including possible shutdown of nuclear generating facilities, particularly those owned or operated by the Non-Utility Nuclear business
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resolution of pending or future applications for license renewals or modifications of nuclear generating facilities
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the performance of and deliverability of power from Entergy's generation resources, including the capacity factors at its nuclear generating facilities
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Entergy's ability to develop and execute on a point of view regarding future prices of electricity, natural gas, and other energy-related commodities
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prices for power generated by Entergy's merchant generating facilities, the ability to hedge, sell power forward or otherwise reduce the market price risk associated with those facilities, including the Non-Utility Nuclear plants, and the prices and availability of fuel and power Entergy must purchase for its Utility customers, and Entergy's ability to meet credit support requirements for fuel and power supply contracts
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volatility and changes in markets for electricity, natural gas, uranium, and other energy-related commodities
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changes in law resulting from federal or state energy legislation or legislation subjecting energy derivatives used in hedging and risk management transactions to governmental regulation
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changes in environmental, tax, and other laws, including requirements for reduced emissions of sulfur, nitrogen, carbon, mercury, and other substances, and changes in costs of compliance with environmental and other laws and regulations
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uncertainty regarding the establishment of interim or permanent sites for spent nuclear fuel and nuclear waste storage and disposal
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variations in weather and the occurrence of hurricanes and other storms and disasters, including uncertainties associated with efforts to remediate the effects of hurricanes and ice storms (including most recently, Hurricane Gustav and Hurricane Ike in 2008 and the January 2009 ice storm in Arkansas) and recovery of costs associated with restoration, including accessing funded storm reserves, federal and local cost recovery mechanisms, securitization, and insurance
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FORWARD-LOOKING INFORMATION (Concluded)
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effects of climate change
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Entergy's ability to manage its capital projects and operation and maintenance costs
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Entergy's ability to purchase and sell assets at attractive prices and on other attractive terms
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the economic climate, and particularly economic conditions in Entergy's Utility service territory and the Northeast United States
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the effects of Entergy's strategies to reduce tax payments
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changes in the financial markets, particularly those affecting the availability of capital and Entergy's ability to refinance existing debt, execute share repurchase programs, and fund investments and acquisitions
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actions of rating agencies, including changes in the ratings of debt and preferred stock, changes in general corporate ratings, and changes in the rating agencies' ratings criteria
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changes in inflation and interest rates
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the effect of litigation and government investigations or proceedings
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the potential effects of threatened or actual terrorism and war
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Entergy's ability to attract and retain talented management and directors
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changes in accounting standards and corporate governance
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declines in the market prices of marketable securities and resulting funding requirements for Entergy's defined benefit pension and other postretirement benefit plans
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changes in decommissioning trust fund values or earnings or in the timing of or cost to decommission nuclear plant sites
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the ability to successfully complete merger, acquisition, or divestiture plans, regulatory or other limitations imposed as a result of merger, acquisition, or divestiture, and the success of the business following a merger, acquisition, or divestiture
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risks and uncertainties associated with unwinding the business infrastructure associated with the contemplated Non-Utility Nuclear spin-off, joint venture, and related transactions.
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DEFINITIONS
Certain abbreviations or acronyms used in the text and notes are defined below:
Abbreviation or Acronym
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Term
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AEEC
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Arkansas Electric Energy Consumers
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AFUDC
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Allowance for Funds Used During Construction
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ALJ
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Administrative Law Judge
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ANO 1 and 2
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Units 1 and 2 of Arkansas Nuclear One Steam Electric Generating Station (nuclear), owned by Entergy Arkansas
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APSC
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Arkansas Public Service Commission
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ASC
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FASB Accounting Standards Codification
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ASU
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FASB Accounting Standards Update
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Board
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Board of Directors of Entergy Corporation
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capacity factor
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Actual plant output divided by maximum potential plant output for the period
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City Council or Council
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Council of the City of New Orleans, Louisiana
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Entergy
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Entergy Corporation and its direct and indirect subsidiaries
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Entergy Corporation
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Entergy Corporation, a Delaware corporation
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Entergy Gulf States, Inc.
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Predecessor company for financial reporting purposes to Entergy Gulf States Louisiana that included the assets and business operations of both Entergy Gulf States Louisiana and Entergy Texas
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Entergy Gulf States Louisiana
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Entergy Gulf States Louisiana, L.L.C., a company created in connection with the jurisdictional separation of Entergy Gulf States, Inc. and the successor company to Entergy Gulf States, Inc. for financial reporting purposes. The term is also used to refer to the Louisiana jurisdictional business of Entergy Gulf States, Inc., as the context requires.
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Entergy Texas
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Entergy Texas, Inc., a company created in connection with the jurisdictional separation of Entergy Gulf States, Inc. The term is also used to refer to the Texas jurisdictional business of Entergy Gulf States, Inc., as the context requires.
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EPA
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United States Environmental Protection Agency
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ERCOT
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Electric Reliability Council of Texas
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FASB
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Financial Accounting Standards Board
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FERC
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Federal Energy Regulatory Commission
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Form 10-K
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Annual Report on Form 10-K for the calendar year ended December 31, 2009 filed with the SEC by Entergy Corporation and its Registrant Subsidiaries
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Grand Gulf
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Unit No. 1 of Grand Gulf Steam Electric Generating Station (nuclear), 90% owned or leased by System Energy
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GWh
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Gigawatt-hour(s), which equals one million kilowatt-hours
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Independence
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Independence Steam Electric Station (coal), owned 16% by Entergy Arkansas, 25% by Entergy Mississippi, and 7% by Entergy Power
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IRS
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Internal Revenue Service
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ISO
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Independent System Operator
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kW
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Kilowatt, which equals one thousand watts
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kWh
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Kilowatt-hour(s)
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LPSC
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Louisiana Public Service Commission
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MMBtu
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One million British Thermal Units
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DEFINITIONS (Continued)
Abbreviation or Acronym
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Term
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MPSC
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Mississippi Public Service Commission
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MW
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Megawatt(s), which equals one thousand kilowatts
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MWh
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Megawatt-hour(s)
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Net MW in operation
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Installed capacity owned or operated
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Non-Utility Nuclear
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Entergy's business segment that owns and operates six nuclear power plants and sells electric power produced by those plants to wholesale customers
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NRC
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Nuclear Regulatory Commission
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NYPA
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New York Power Authority
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PPA
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Purchased power agreement
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PUCT
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Public Utility Commission of Texas
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PUHCA 1935
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Public Utility Holding Company Act of 1935, as amended
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PUHCA 2005
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Public Utility Holding Company Act of 2005, which repealed PUHCA 1935, among other things
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Registrant Subsidiaries
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Entergy Arkansas, Inc., Entergy Gulf States Louisiana, L.L.C., Entergy Louisiana, LLC, Entergy Mississippi, Inc., Entergy New Orleans, Inc., Entergy Texas, Inc., and System Energy Resources, Inc.
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River Bend
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River Bend Steam Electric Generating Station (nuclear), owned by Entergy Gulf States Louisiana
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RTO
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Regional transmission organization
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SEC
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Securities and Exchange Commission
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System Agreement
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Agreement, effective January 1, 1983, as modified, among the Utility operating companies relating to the sharing of generating capacity and other power resources
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System Energy
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System Energy Resources, Inc.
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TWh
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Terawatt-hour(s), which equals one billion kilowatt-hours
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Unit Power Sales Agreement
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Agreement, dated as of June 10, 1982, as amended and approved by FERC, among Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, relating to the sale of capacity and energy from System Energy's share of Grand Gulf
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Utility
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Entergy's business segment that generates, transmits, distributes, and sells electric power, with a small amount of natural gas distribution
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Utility operating companies
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Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas
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Waterford 3
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Unit No. 3 (nuclear) of the Waterford Steam Electric Generating Station, 100% owned or leased by Entergy Louisiana
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weather-adjusted usage
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Electric usage excluding the effects of deviations from normal weather
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ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
Entergy operates primarily through two business segments: Utility and Non-Utility Nuclear.
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Utility generates, transmits, distributes, and sells electric power in service territories in four states that include portions of Arkansas, Mississippi, Texas, and Louisiana, including the City of New Orleans; and operates a small natural gas distribution business.
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Non-Utility Nuclear owns and operates six nuclear power plants located in the northern United States and sells the electric power produced by those plants primarily to wholesale customers. This business also provides services to other nuclear power plant owners.
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In addition to its two primary, reportable, operating segments, Entergy also operates the non-nuclear wholesale assets business. The non-nuclear wholesale assets business sells to wholesale customers the electric power produced by power plants that it owns while it focuses on improving performance and exploring sales or restructuring opportunities for its power plants. Such opportunities are evaluated consistent with Entergy's market-based point-of-view.
Plan to Pursue Separation of Non-Utility Nuclear
See the Form 10-K for a discussion of the Board-approved plan to pursue a tax-free spin-off of the Non-Utility Nuclear business to Entergy shareholders. On March 2, 2010, Entergy proposed conditions for review by the New York Public Service Commission (NYPSC), including an incremental $500 million reduction in Enexus's long-term debt, restrictions on Enexus's ability to make dividend payments and returns of capital to shareholders until certain conditions are met, and the potential for disbursements to New York's energy efficiency funds if power prices exceed certain levels. At its hearing held on March 4, 2010, the NYPSC discussed Entergy's petition and proposed conditions and, after that meeting, issued a notice soliciting comments "on a set of conditions that could potentially be developed" regarding Entergy's planned spin-off transaction. At its hearing held on March 25, 2010, the NYPSC voted 5-0 to reject Entergy's planned spin-off transaction.
On April 5, 2010, Entergy announced that, effective immediately, it plans to unwind the business infrastructure associated with the proposed separate Non-Utility Nuclear generation (Enexus) and nuclear services (EquaGen) companies while it evaluates and works to preserve its legal rights. Entergy also announced that its next quarterly dividend on its common shares would be $0.83 per share, an increase from the previous $0.75 per share, and that it expected to execute on the $750 million share repurchase program authorized by the Board in the fourth quarter 2009. The amount of repurchases may vary as a result of material changes in business results or capital spending or new investment opportunities. As a result of the plan to unwind the business infrastructure, Entergy recorded expenses in the first quarter 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 throughout the "Results of Operations" section below. Entergy expects that it will incur approximately $50 million in additional expenses in unwinding this business through the remainder of 2010, including additional write-offs, dis-synergies, and certain other costs.
Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
Results of Operations
Income Statement Variances
Following are income statement variances for Utility, Non-Utility Nuclear, Parent & Other, and Entergy comparing the first quarter 2010 to the first quarter 2009 showing how much the line item increased or (decreased) in comparison to the prior period:
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Utility
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Non-Utility
Nuclear
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Parent &
Other (1)
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Entergy
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(In Thousands)
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1st Qtr 2009 Consolidated Net Income
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$115,968
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$180,882
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($56,517)
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$240,333
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Net revenue (operating revenue less fuel
expense, purchased power, and other
regulatory charges/credits)
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93,040
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(48,127)
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3,772
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48,685
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Other operation and maintenance expenses
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12,852
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46,704
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(1,769)
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57,787
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Taxes other than income taxes
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3,427
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(2,137)
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(275)
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1,015
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Depreciation and amortization
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7,188
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4,051
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113
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11,352
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Other income
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(7,202)
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32,764
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1,123
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26,685
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Interest charges
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15,970
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33,098
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(15,316)
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33,752
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Other expenses
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2,892
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5,449
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3
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8,344
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Income taxes
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16,506
|
|
(15,872)
|
|
(15,995)
|
|
(15,361)
|
|
|
|
|
|
|
|
|
|
1st Qtr 2010 Consolidated Net Income
|
|
$142,971
|
|
$94,226
|
|
($18,383)
|
|
$218,814
|
(1)
|
Parent & Other includes eliminations, which are primarily intersegment activity.
|
Refer to "ENTERGY CORPORATION AND SUBSIDIARIES - SELECTED OPERATING RESULTS" for further information with respect to operating statistics.
Net Revenue
Utility
Following is an analysis of the change in net revenue comparing the first quarter 2010 to the first quarter 2009.
|
|
Amount
|
|
|
(In Millions)
|
|
|
|
2009 net revenue
|
|
$1,037
|
Volume/weather
|
|
65
|
Retail electric price
|
|
23
|
Net gas revenue
|
|
11
|
Other
|
|
(6)
|
2010 net revenue
|
|
$1,130
|
Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
The volume/weather variance is primarily due to an increase of 2,654 GWh, or 12%, in billed electricity usage in all sectors, including the effect of significantly colder-than-normal weather on the residential sector.
The retail electric price variance is primarily due to increases in the formula rate plan riders at Entergy Gulf States Louisiana and Entergy Louisiana effective November 2009 and at Entergy Mississippi effective July 2009. The retail electric price increase was partially offset by the recovery in 2009 by Entergy Arkansas of 2008 extraordinary storm costs as approved by the APSC and a base rate decrease at Entergy New Orleans effective June 2009.
The net gas revenue variance is primarily due to the effect of significantly colder-than-normal weather on residential sales.
Non-Utility Nuclear
Following is an analysis of the change in net revenue comparing the first quarter 2010 to the first quarter 2009.
|
|
Amount
|
|
|
(In Millions)
|
|
|
|
2009 net revenue
|
|
$603
|
Realized price changes
|
|
(53)
|
Volume
|
|
10
|
Other
|
|
(5)
|
2010 net revenue
|
|
$555
|
As shown in the table above, net revenue for Non-Utility Nuclear decreased by $48 million, or 8%, in the first quarter 2010 compared to the first quarter 2009 primarily due to lower pricing in its contracts to sell power, partially offset by slightly higher volume resulting from fewer refueling outage days. Included in net revenue is $12 million and $13 million of amortization of the Palisades purchased power agreement in the first quarters 2010 and 2009, respectively, which is non-cash revenue and is discussed in Note 15 to the financial statements in the Form 10-K. Following are key performance measures for Non-Utility Nuclear for the first quarter 2010 and 2009:
|
|
2010
|
|
2009
|
|
|
|
|
|
Net MW in operation at March 31
|
|
4,998
|
|
4,998
|
Average realized price per MWh
|
|
$58.72
|
|
$63.84
|
GWh billed
|
|
10,255
|
|
10,074
|
Capacity factor
|
|
94%
|
|
92%
|
Refueling Outage Days:
|
|
|
|
|
Indian Point 2
|
|
22
|
|
-
|
Indian Point 3
|
|
-
|
|
21
|
Palisades
|
|
-
|
|
9
|
Realized Price per MWh
See the Form 10-K for a discussion of Non-Utility Nuclear's realized price per MWh, including the factors that influence it and the increase in the annual average realized price per MWh from $39.40 for 2003 to $61.07 for 2009. Non-Utility Nuclear is likely to experience a decrease in realized price per MWh in 2010, however, because as shown in the contracted sale of energy table in "Market and Credit Risk Sensitive Instruments," Non-Utility Nuclear has sold forward 91% of its planned energy output for the remainder of 2010 for an average contracted energy price of $57 per MWh.
Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
Other Income Statement Items
Utility
Other operation and maintenance expenses increased from $422 million for the three months ended March 31, 2009 to $435 million for the three months ended March 31, 2010 primarily due to an increase of $16 million in payroll-related and benefits costs and nuclear insurance premium refunds of $8 million received in 2009, partially offset by a decrease of $6 million due to 2008 storm costs at Entergy Arkansas which were deferred per an APSC order and were recovered through revenues in 2009 and a decrease of $5 million in customer write-offs.
Depreciation and amortization expenses increased primarily due to an increase in plant in service.
Other income decreased primarily due to carrying charges on storm restoration costs recorded in the first quarter 2009 and a decrease in allowance for equity funds used during construction due to higher construction work in progress in 2009 primarily as a result of Hurricane Gustav and Hurricane Ike. The decrease was partially offset by higher earnings on decommissioning trust funds.
Interest charges increased primarily due to an increase in long-term debt outstanding resulting from debt issuances by certain of the Utility operating companies in 2009.
Non-Utility Nuclear
Other operation and maintenance expenses increased from $200 million for the three months ended March 31, 2009 to $247 million for the three months ended March 31, 2010 primarily due to the write-off of $32 million of capital costs, primarily for software that will not be utilized, in connection with Entergy's decision to unwind the infrastructure created for the planned Non-Utility Nuclear spin-off transaction. Also contributing to the increase were tritium remediation work at the Vermont Yankee site, higher pension and benefits expense, and higher insurance expense.
Other income increased primarily due to $16 million in charges in 2009 resulting from the recognition of impairments that are not considered temporary of certain equity securities held in Non-Utility Nuclear's decommissioning trust funds, increases in realized earnings on the decommissioning trust funds, and interest income from loans to Entergy subsidiaries.
Interest charges increased primarily due to the write-off of $37 million of debt financing costs, primarily incurred for Enexus's $1.2 billion credit facility, in connection with Entergy's decision to unwind the infrastructure created for the planned Non-Utility Nuclear spin-off transaction.
Parent & Other
Interest charges decreased primarily due to lower borrowings, including the redemption of $267 million of notes payable in December 2009, as well as lower interest rates on borrowings under Entergy Corporation's revolving credit facility.
Income Taxes
The effective income tax rate for the first quarter 2010 was 40.3%. The difference in the effective income tax rate versus the statutory rate of 35% for the first quarter 2010 is primarily due to a charge of $16 million resulting from a change in tax law associated with the recently enacted federal healthcare legislation, as discussed below in "Critical Accounting Estimates". Also contributing to the increased effective rate were state income taxes and certain book and tax differences for utility plant items. These factors were partially offset by a $19 million tax benefit recorded in connection with Entergy's decision to unwind the infrastructure created for the planned Non-Utility Nuclear spin-off transaction resulting from implementation expenses that previously were not deductible for tax purposes. Also offsetting the increased effective rate are book and tax differences related to storm cost financing and allowance for equity funds used during construction.
Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
The effective income tax rate for the first quarter 2009 was 40.4%. The difference in the effective income tax rate versus the statutory rate of 35% for the first quarter 2009 is primarily due to state income taxes and certain book and tax differences for utility plant items, partially offset by book and tax differences related to storm cost financing and allowance for equity funds used during construction.
Liquidity and Capital Resources
See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources" in the Form 10-K for a discussion of Entergy's capital structure, capital expenditure plans and other uses of capital, and sources of capital. Following are updates to that discussion.
Capital Structure
Entergy's capitalization is balanced between equity and debt, as shown in the following table.
|
|
March 31,
2010
|
|
December 31,
2009
|
|
|
|
|
|
Net debt to net capital, excluding the Texas securitization
bonds, which are non-recourse to Entergy Texas
|
|
51.3%
|
|
51.5%
|
Effect of excluding the securitization bonds
|
|
2.1%
|
|
2.1%
|
Net debt to net capital
|
|
53.4%
|
|
53.6%
|
Effect of subtracting cash from debt
|
|
3.6%
|
|
3.8%
|
Debt to capital
|
|
57.0%
|
|
57.4%
|
Net debt consists of debt less cash and cash equivalents. Debt consists of notes payable, capital lease obligations, and long-term debt, including the currently maturing portion. Capital consists of debt, common shareholders' equity, and subsidiaries' preferred stock without sinking fund. Net capital consists of capital less cash and cash equivalents. Entergy uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy's financial condition.
As discussed in the Form 10-K, Entergy Corporation has in place a $3.5 billion credit facility that expires in August 2012. Entergy Corporation has the ability to issue letters of credit against the total borrowing capacity of the facility. As of March 31, 2010, amounts outstanding under the credit facility are:
Capacity
|
|
Borrowings
|
|
Letters
of Credit
|
|
Capacity
Available
|
(In Millions)
|
|
|
|
|
|
|
|
$3,500
|
|
$2,615
|
|
$25
|
|
$860
|
Entergy Corporation's credit facility requires it to maintain a consolidated debt ratio of 65% or less of its total capitalization. The calculation of this debt ratio under Entergy Corporation's credit facility and in the indenture governing the Entergy Corporation senior notes is different than the calculation of the debt to capital ratio above. Entergy is currently in compliance with this covenant. If Entergy fails to meet this ratio, or if Entergy Corporation or one of the Utility operating companies (except Entergy New Orleans) defaults on other indebtedness or is in bankruptcy or insolvency proceedings, an acceleration of the facility's maturity date may occur, and there may be an acceleration of amounts due under Entergy Corporation's senior notes.
See Note 4 to the financial statements herein for additional discussion of the Entergy Corporation credit facility and discussion of the Registrant Subsidiaries' credit facilities.
Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
Capital Expenditure Plans and Other Uses of Capital
See the table and discussion in the Form 10-K under "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Capital Expenditure Plans and Other Uses of Capital," that sets forth the amounts of planned construction and other capital investments by operating segment for 2010 through 2012. See Part II, Item 5 in this report for an update regarding Entergy Arkansas’s White Bluff project. Following are additional updates to the discussion in the Form 10-K.
Acadia Unit 2 Purchase Agreement
As discussed more fully in the Form 10-K, in October 2009, Entergy Louisiana announced that it has signed an agreement to acquire Unit 2 of the Acadia Energy Center, a 580 MW generating unit located near Eunice, La., from Acadia Power Partners, LLC, an independent power producer. Entergy Louisiana's purchase is contingent upon, among other things, obtaining necessary approvals, including full cost recovery, from various federal and state regulatory and permitting agencies. Currently the closing is expected to occur in the first quarter 2011. Entergy Louisiana and Acadia Power Partners also have entered into a purchase power agreement for 100 percent of the output of Acadia Unit 2 that is expected to commence after receipt of all required regulatory approvals and is set to expire at the closing of the acquisition transaction. Entergy Louisiana has filed with the LPSC for approval of the transaction, and the LPSC has approved the purchase power agreement. The parties have agreed to a procedural schedule for the acquisition that would lead to LPSC consideration of the matter at its January 2011 meeting and includes a hearing before the ALJ in September 2010.
Dividends and Stock Repurchases
In the fourth quarter 2009 the Board granted authority for a $750 million share repurchase program. As discussed above, at the same time that it announced its plans to unwind the business infrastructure associated with the proposed spin-off of the Non-Utility Nuclear business, Entergy also announced in April 2010 that it expected to execute on the $750 million share repurchase program and also that its next quarterly dividend on its common shares would be $0.83 per share, an increase from the previous $0.75 per share. The amount of repurchases may vary as a result of material changes in business results or capital spending or new investment opportunities.
Sources of Capital
See Note 4 to the financial statements for discussion of long-term debt issuances by Entergy Louisiana and Entergy Mississippi in 2010.
Hurricane Gustav and Hurricane Ike
As discussed in the Form 10-K, in September 2008, Hurricane Gustav and Hurricane Ike caused catastrophic damage to Entergy's service territory. Entergy Gulf States Louisiana and Entergy Louisiana filed their Hurricane Gustav and Hurricane Ike storm cost recovery case with the LPSC in May 2009. In September 2009, Entergy Gulf States Louisiana and Entergy Louisiana and the Louisiana Utilities Restoration Corporation (LURC), an instrumentality of the State of Louisiana, filed with the LPSC an application requesting that the LPSC grant financing orders authorizing the financing of Entergy Gulf States Louisiana’s and Entergy Louisiana’s storm costs, storm reserves, and issuance costs pursuant to Act 55 of the Louisiana Regular Session of 2007 (Act 55 financings). Entergy Gulf States Louisiana’s and Entergy Louisiana’s Hurricane Katrina and Hurricane Rita storm costs were financed primarily by Act 55 financings, as discussed in the Form 10-K. Entergy Gulf States Louisiana and Entergy Louisiana also filed an application requesting LPSC approval for ancillary issues including the mechanism to flow charges and Act 55 financing savings to customers via a Storm Cost Offset rider. On December 30, 2009, Entergy Gulf States Louisiana and Entergy Louisiana entered into a stipulation agreement with the LPSC Staff that provides for total recoverable costs of approximately $234 million for Entergy Gulf States Louisiana and $394 million for Entergy Louisiana. Under this stipulation, Entergy Gulf States Louisiana agrees not to recover $4.4 million and Entergy Louisiana agrees not to
Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
recover $7.2 million of their storm restoration spending. The stipulation also permits replenishing Entergy Gulf States Louisiana's storm reserve in the amount of $90 million and Entergy Louisiana's storm reserve in the amount of $200 million when the Act 55 financings are accomplished. In March and April 2010, Entergy Gulf States Louisiana, Entergy Louisiana, and other parties to the proceeding filed with the LPSC an uncontested stipulated settlement that includes these terms and also includes Entergy Gulf States Louisiana’s and Entergy Louisiana's proposals under the Act 55 financings, which includes a commitment to pass on to customers a minimum of $15.5 million and $27.75 million of customer benefits, respectively, through prospective annual rate reductions of $3.1 million and $5.55 million for five years. A stipulation hearing was held before the ALJ on April 13, 2010. On April 21, 2010, the LPSC approved the settlement and subsequently issued two financing orders and one ratemaking order intended to facilitate the implementation of the Act 55 financings. Louisiana State Bond Commission approval is now required before Entergy Gulf States Louisiana and Entergy Louisiana proceed with the Act 55 financings.
Cash Flow Activity
As shown in Entergy's Consolidated Statements of Cash Flows, cash flows for the three months ended March 31, 2010 and 2009 were as follows:
|
|
2010
|
|
2009
|
|
|
(In Millions)
|
|
|
|
|
|
Cash and cash equivalents at beginning of period
|
|
$1,710
|
|
$1,920
|
|
|
|
|
|
Cash flow provided by (used in):
|
|
|
|
|
Operating activities
|
|
674
|
|
375
|
Investing activities
|
|
(515)
|
|
(646)
|
Financing activities
|
|
(212)
|
|
154
|
Net decrease in cash and cash equivalents
|
|
(53)
|
|
(117)
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$1,657
|
|
$1,803
|
Operating Activities
Entergy's cash flow provided by operating activities increased by $299 million for the three months ended March 31, 2010 compared to the three months ended March 31, 2009, primarily due to the absence of the Hurricane Gustav, Hurricane Ike, and Arkansas ice storm restoration spending that occurred in 2009. In addition, an increase in Utility net revenue also contributed to the increase. These increases were partially offset by decreased collection of fuel costs and an $87.8 million fuel cost refund made by Entergy Texas in the first quarter 2010 that is discussed further in Note 2 to the financial statements in the Form 10-K. Operating cash flow provided by the Non-Utility Nuclear business was relatively unchanged, with its decline in net revenue offset by various, individually insignificant, factors.
Investing Activities
Net cash used in investing activities decreased by $131 million for the three months ended March 31, 2010 compared to the three months ended March 31, 2009, primarily due to a decrease in nuclear fuel purchases and an increase in collateral deposits received from Non-Utility Nuclear counterparties.
Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
Financing Activities
Financing activities used cash flow of $212 million for the three months ended March 31, 2010 compared to providing cash flow of $154 million for the three months ended March 31, 2009. The following significant financing cash flow activity occurred in the three months ended March 31, 2010 and 2009:
·
|
Entergy Corporation increased the net borrowings under its credit facilities by $49 million in the first quarter 2010 compared to decreasing the net borrowings under its credit facilities by $5 million in the first quarter 2009. See Note 4 to the financial statements for a description of the Entergy Corporation credit facilities.
|
·
|
Entergy Texas issued $500 million of 7.125% Series Mortgage Bonds in January 2009 and used a portion of the proceeds to repay $100 million in borrowings outstanding on its long-term credit facility and $70.8 million in long-term debt prior to maturity in 2009.
|
·
|
The Utility operating companies increased the borrowings outstanding on their short-term credit facilities by $25 million in 2009.
|
In addition, in March 2010, Entergy Louisiana issued $150 million of 6.0% Series first mortgage bonds due March 2040. Because the proceeds were deposited directly with a trustee and not held by Entergy Louisiana, the bond issuance is reported as a non-cash financing activity on the cash flow statement. Entergy Louisiana used the proceeds in April 2010, together with other available funds, to redeem, prior to maturity, all of its $150 million 7.60% Series first mortgage bonds, due April 2032.
Rate, Cost-recovery, and Other Regulation
See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Rate, Cost-recovery, and Other Regulation" in the Form 10-K for discussions of rate regulation, federal regulation, and related regulatory proceedings.
State and Local Rate Regulation and Fuel-Cost Recovery
See Note 2 to the financial statements herein for updates to the discussion in the Form 10-K regarding these proceedings.
Federal Regulation
See the Form 10-K for a discussion of federal regulatory proceedings. Following are updates to that discussion.
System Agreement Proceedings
Rough Production Cost Equalization Rates
2009 Rate Filing Based on Calendar Year 2008 Production Costs
Several parties intervened in the 2009 rate proceeding at the FERC, including the LPSC and Ameren, which have also filed protests. On July 27, 2009, the FERC accepted Entergy's proposed rates for filing, effective June 1, 2009, subject to refund, and set the proceeding for hearing and settlement procedures. Settlement procedures were terminated and a hearing before the ALJ was held in April 2010. An initial decision is scheduled for August 2010.
Entergy Arkansas and Entergy Mississippi Notices of Termination of System Agreement Participation and Related APSC Investigation
Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
In February 2010 the APSC issued an order announcing a refocus of its ongoing investigation of Entergy Arkansas' post-System Agreement operation. The order describes the APSC's "stated purpose in opening this inquiry to conduct an investigation regarding the prudence of [Entergy Arkansas] entering into a successor ESA [Entergy System Agreement] as opposed to becoming a stand-alone utility upon its exit from the ESA, and whether [Entergy Arkansas], as a standalone utility, should join the SPP RTO. It is the [APSC's] intention to render a decision regarding the prudence of [Entergy Arkansas] entering into a successor ESA as opposed to becoming a stand-alone utility upon its exit from the ESA, as well as [Entergy Arkansas'] RTO participation by the end of calendar year 2010. In parallel with this Docket, the [APSC] will be actively involved and will be closely watching to see if any meaningful enhancement will be made to a new Enhanced Independent Coordinator of Transmission (“E-ICT") Agreement through the efforts of the ETS [Entergy Transmission System] stakeholders, Entergy, and the newly formed and federally-recognized E-RSC in 2010." The schedule set by the order includes evidentiary hearings in March and May 2010.
In March 2010, Entergy Arkansas filed testimony and participated in the scheduled hearing. Entergy Arkansas noted in its testimony that it is not reasonable to complete a comprehensive evaluation of strategic options by the end of 2010 and that forcing a decision would place parties in the untenable position of making critical decisions based on insufficient information. Entergy Arkansas outlined three options for post-System Agreement operation of its electrical system: 1) Entergy Arkansas self providing as a stand-alone company for resource planning; 2) Entergy Arkansas plus new coordination agreements with third parties in which Entergy Arkansas self provides or contracts some functions, but also enters into one or more coordinating or pooling agreements with third parties, such as the Southwest Power Pool RTO; and 3) Successor Arrangements under which Entergy Arkansas plans for its own generation resources but enters into a new generation agreement with other Utility operating companies under a successor agreement intended to benefit all but avoid the litigation previously experienced. Entergy Arkansas’s plan is expected to lead to a decision regarding critical path issues in late 2011; however, Entergy Arkansas anticipates several transition plan elements will move forward in 2010. In an attempt to reach understanding of complex issues, Entergy Arkansas proposes to hold a series of five technical conferences in the coming months targeting specific subjects. The initial technical conference is scheduled for May 5, 2010.
In early April 2010, Entergy Corporation and the Utility operating companies determined in connection with their decision-making process that it is appropriate to agree and commit that no Utility operating company will enter voluntarily into successor arrangements with the other Utility operating companies if its retail regulator finds successor arrangements are not in the public interest. Hugh McDonald, chief executive officer of Entergy Arkansas, notified the APSC of this decision by a letter filed with the APSC on April 26, 2010.
June 2009 LPSC Complaint Proceeding
See the Form 10-K for a discussion of the complaint that the LPSC filed in June 2009 requesting that the FERC determine that certain of Entergy Arkansas' sales of electric energy to third parties: (a) violated the provisions of the System Agreement that allocate the energy generated by Entergy System resources, (b) imprudently denied the Entergy System and its ultimate consumers the benefits of low-cost Entergy System generating capacity, and (c) violated the provision of the System Agreement that prohibits sales to third parties by individual companies absent an offer of a right-of-first-refusal to other Utility operating companies. Settlement procedures were unsuccessful, and a hearing in the matter is scheduled to commence in August 2010. On April 16, 2010, the LPSC filed direct testimony in the proceeding alleging, among other things, that (1) Entergy violated the System Agreement by permitting Entergy Arkansas to make non-requirements sales to non-affiliated third parties rather than making such energy available to the other Utility operating companies’ customers; and (2) that over the period 2000 – 2009, these non-requirements sales caused harm to the Utility operating companies’ customers of $144.4 million and these customers should be compensated for this harm by Entergy’s shareholders. The Utility operating companies believe the LPSC's allegations are without merit and will file their rebuttal testimony by May 25, 2010.
Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
Independent Coordinator of Transmission (ICT)
See the Form 10-K for a discussion of Entergy's ICT and transmission issues. As discussed in the Form 10-K, the Entergy Regional State Committee (E-RSC), which is comprised of one representative from each of the Utility operating companies' retail regulators, has been formed to consider several of the issues related to Entergy's transmission system. Among other things, the E-RSC, in concert with the FERC, is in the process of conducting a cost/benefits analysis comparing the ICT arrangement and a proposal under which Entergy would join the Southwest Power Pool RTO. The E-RSC is also considering proposed modifications to the ICT arrangement that could be implemented commencing November 2010, when the initial term of the ICT ends. It is anticipated that the E-RSC will reach its conclusions on the proposed modifications during the June/July 2010 timeframe, following which the proposed modifications will be filed with one or more of the Utility operating companies' retail regulators and the FERC prior to implementation.
Market and Credit Risk Sensitive Instruments
Commodity Price Risk
Power Generation
As discussed more fully in the Form 10-K, the sale of electricity from the power generation plants owned by Entergy's Non-Utility Nuclear business, unless otherwise contracted, is subject to the fluctuation of market power prices. Following is an updated summary of the amount of the Non-Utility Nuclear business's output that is currently sold forward under physical or financial contracts (2010 represents the remainder of the year):
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
Non-Utility Nuclear:
|
|
|
|
|
|
|
|
|
|
|
|
Percent of planned generation sold forward:
|
|
|
|
|
|
|
|
|
|
|
|
Unit-contingent (1)
|
|
54%
|
|
63%
|
|
31%
|
|
12%
|
|
14%
|
|
Unit-contingent with availability guarantees (2)
|
|
37%
|
|
17%
|
|
14%
|
|
6%
|
|
3%
|
|
Firm LD (3)
|
|
0%
|
|
2%
|
|
2%
|
|
0%
|
|
0%
|
|
Total
|
|
91%
|
|
82%
|
|
47%
|
|
18%
|
|
17%
|
|
Planned generation (TWh)
|
|
30
|
|
41
|
|
41
|
|
40
|
|
41
|
|
Average contracted price per MWh (2)
|
|
$57
|
|
$55
|
|
$55
|
|
$50
|
|
$50
|
|
(1)
|
Unit-contingent is a transaction under which power is supplied from a specific generation asset; if the asset is not operating, seller is generally not liable to buyer for any damages.
|
(2)
|
Unit-contingent with availability guarantees is a transaction under which power is supplied from a specific generation asset; if the asset is not operating, seller is generally not liable to buyer for any damages, unless the actual availability over a specified period of time is below an availability threshold specified in the contract.
|
(3)
|
Firm LD is a transaction that requires receipt or delivery of energy at a specified delivery point (usually at a market hub not associated with a specific asset) or settles financially on notional quantities; if a party fails to deliver or receive energy, defaulting party must compensate the other party as specified in the contract.
|
(4)
|
The Vermont Yankee acquisition included a PPA under which the former owners will buy most of the power produced by the plant through the expiration in 2012 of the current operating license for the plant. The PPA includes an adjustment clause under which the prices specified in the PPA will be adjusted downward monthly if twelve month rolling average power market prices drop below prices specified in the PPA, which has not happened thus far.
|
Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
Some of the agreements to sell the power produced by Entergy's Non-Utility Nuclear power plants contain provisions that require an Entergy subsidiary to provide collateral to secure its obligations under the agreements. The Entergy subsidiary is required to provide collateral based upon the difference between the current market and contracted power prices in the regions where Non-Utility Nuclear sells power. The primary form of collateral to satisfy these requirements is an Entergy Corporation guaranty. Cash and letters of credit are also acceptable forms of collateral. At March 31, 2010, based on power prices at that time, Entergy had no credit exposure under the guarantees in place supporting Entergy Nuclear Power Marketing (a Non-Utility Nuclear subsidiary) transactions, and $2 million of posted cash collateral. As of March 31, 2010, the credit exposure associated with Non-Utility Nuclear assurance requirements would increase by $35 million for each $1 per MMBtu increase in gas prices in both the short-and long-term markets. In the event of a decrease in Entergy Corporation's credit rating to below investment grade, based on power prices as of March 31, 2010, Entergy would have been required to provide approximately $64 million of additional cash or letters of credit under some of the agreements.
As of March 31, 2010, for the planned energy output under contract for Non-Utility Nuclear through 2014, 99.7% of the planned energy output is under contract with counterparties with public investment grade credit ratings and 0.3% is with load-serving entities without public credit ratings.
In addition to selling the power produced by its plants, Non-Utility Nuclear sells unforced capacity that is used to meet requirements placed on load-serving distribution companies by the ISO in their area. Following is a summary of the amount of Non-Utility Nuclear's unforced capacity that is currently sold forward, and the blended amount of Non-Utility Nuclear's planned generation output and unforced capacity that is currently sold forward (2010 represents the remainder of the year):
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
Non-Utility Nuclear:
|
|
|
|
|
|
|
|
|
|
|
Percent of capacity sold forward:
|
|
|
|
|
|
|
|
|
|
|
Bundled capacity and energy contracts
|
|
27%
|
|
25%
|
|
18%
|
|
16%
|
|
16%
|
Capacity contracts
|
|
46%
|
|
26%
|
|
30%
|
|
13%
|
|
0%
|
Total
|
|
73%
|
|
51%
|
|
48%
|
|
29%
|
|
16%
|
Planned net MW in operation
|
|
4,998
|
|
4,998
|
|
4,998
|
|
4,998
|
|
4,998
|
Average capacity contract price per kW per month
|
|
$3.1
|
|
$3.6
|
|
$3.0
|
|
$2.6
|
|
$-
|
Blended Capacity and Energy (based on revenues)
|
|
|
|
|
|
|
|
|
|
|
% of planned generation and capacity sold forward
|
|
92%
|
|
84%
|
|
51%
|
|
18%
|
|
15%
|
Average contract revenue per MWh
|
|
$59
|
|
$57
|
|
$57
|
|
$53
|
|
$50
|
Critical Accounting Estimates
See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates" in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy's accounting for nuclear decommissioning costs, unbilled revenue, impairment of long-lived assets and trust fund investments, qualified pension and other postretirement benefits, and other contingencies. Following is an update to that discussion.
Federal Healthcare Legislation
The Patient Protection and Affordable Care Act (PPACA) became federal law on March 23, 2010, and, on March 30, 2010, the Health Care and Education Reconciliation Act of 2010 became federal law and amended certain provisions of the PPACA. These new federal laws change the law governing employer-sponsored group health plans, like Entergy's plans. All of the effects of these changes are not yet determinable because technical guidance regarding application must still be issued, and Entergy will monitor these developments.
Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
One provision of the new law that is effective in 2013 eliminates the federal income tax deduction for prescription drug expenses of Medicare beneficiaries for which the plan sponsor also receives the retiree drug subsidy under Part D. Entergy receives subsidy payments under the Medicare Part D plan and therefore in the first quarter 2010 recorded a reduction to the deferred tax asset related to the unfunded other postretirement benefit obligation. The offset was recorded as a $16 million charge to income tax expense or, for the Utility, including each Registrant Subsidiary, as a regulatory asset, as detailed in Note 2 to the financial statements herein.
ENTERGY CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED STATEMENTS OF INCOME
|
For the Three Months Ended March 31, 2010 and 2009
|
(Unaudited)
|
|
|
2010
|
|
|
2009
|
|
|
|
(In Thousands, Except Share Data) |
|
|
|
|
|
OPERATING REVENUES
|
|
|
|
|
|
|
Electric
|
|
$ |
2,006,931 |
|
|
$ |
2,026,916 |
|
Natural gas
|
|
|
96,027 |
|
|
|
74,049 |
|
Competitive businesses
|
|
|
656,389 |
|
|
|
688,147 |
|
TOTAL
|
|
|
2,759,347 |
|
|
|
2,789,112 |
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
Operating and Maintenance:
|
|
|
|
|
|
|
|
|
Fuel, fuel-related expenses, and
|
|
|
|
|
|
|
|
|
gas purchased for resale
|
|
|
558,668 |
|
|
|
846,332 |
|
Purchased power
|
|
|
474,903 |
|
|
|
323,255 |
|
Nuclear refueling outage expenses
|
|
|
62,289 |
|
|
|
56,779 |
|
Other operation and maintenance
|
|
|
702,489 |
|
|
|
644,702 |
|
Decommissioning
|
|
|
51,576 |
|
|
|
48,742 |
|
Taxes other than income taxes
|
|
|
135,412 |
|
|
|
134,397 |
|
Depreciation and amortization
|
|
|
269,204 |
|
|
|
257,852 |
|
Other regulatory charges (credits) - net
|
|
|
28,092 |
|
|
|
(29,474 |
) |
TOTAL
|
|
|
2,282,633 |
|
|
|
2,282,585 |
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME
|
|
|
476,714 |
|
|
|
506,527 |
|
|
|
|
|
|
|
|
|
|
OTHER INCOME
|
|
|
|
|
|
|
|
|
Allowance for equity funds used during construction
|
|
|
13,296 |
|
|
|
16,947 |
|
Interest and dividend income
|
|
|
48,209 |
|
|
|
46,387 |
|
Other than temporary impairment losses
|
|
|
- |
|
|
|
(15,737 |
) |
Miscellaneous - net
|
|
|
(522 |
) |
|
|
(13,299 |
) |
TOTAL
|
|
|
60,983 |
|
|
|
34,298 |
|
|
|
|
|
|
|
|
|
|
INTEREST AND OTHER CHARGES
|
|
|
|
|
|
|
|
|
Interest on long-term debt
|
|
|
166,932 |
|
|
|
127,965 |
|
Other interest - net
|
|
|
12,267 |
|
|
|
19,293 |
|
Allowance for borrowed funds used during construction
|
|
|
(8,001 |
) |
|
|
(9,812 |
) |
TOTAL
|
|
|
171,198 |
|
|
|
137,446 |
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES
|
|
|
366,499 |
|
|
|
403,379 |
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
|
147,685 |
|
|
|
163,046 |
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED NET INCOME
|
|
|
218,814 |
|
|
|
240,333 |
|
|
|
|
|
|
|
|
|
|
Preferred dividend requirements of subsidiaries
|
|
|
5,015 |
|
|
|
4,998 |
|
|
|
|
|
|
|
|
|
|
NET INCOME ATTRIBUTABLE TO ENTERGY CORPORATION
|
|
$ |
213,799 |
|
|
$ |
235,335 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per average common share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
1.13 |
|
|
$ |
1.22 |
|
Diluted
|
|
$ |
1.12 |
|
|
$ |
1.20 |
|
Dividends declared per common share
|
|
$ |
0.75 |
|
|
$ |
0.75 |
|
|
|
|
|
|
|
|
|
|
Basic average number of common shares outstanding
|
|
|
189,202,684 |
|
|
|
192,593,601 |
|
Diluted average number of common shares outstanding
|
|
|
191,283,703 |
|
|
|
198,058,002 |
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ENTERGY CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
For the Three Months Ended March 31, 2010 and 2009
|
(Unaudited)
|
|
|
2010
|
|
|
2009
|
|
|
|
(In Thousands) |
|
|
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
Consolidated net income
|
|
$ |
218,814 |
|
|
$ |
240,333 |
|
Adjustments to reconcile consolidated net income to net cash flow
|
|
|
|
|
|
|
|
|
provided by operating activities:
|
|
|
|
|
|
|
|
|
Reserve for regulatory adjustments
|
|
|
438 |
|
|
|
1,210 |
|
Other regulatory charges (credits) - net
|
|
|
28,092 |
|
|
|
(29,474 |
) |
Depreciation, amortization, and decommissioning, including nuclear fuel amortization
|
|
|
423,432 |
|
|
|
348,444 |
|
Deferred income taxes, investment tax credits, and non-current taxes accrued
|
|
|
133,533 |
|
|
|
155,029 |
|
Changes in working capital:
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
43,830 |
|
|
|
102,428 |
|
Fuel inventory
|
|
|
(6,324 |
) |
|
|
(17,631 |
) |
Accounts payable
|
|
|
(79,250 |
) |
|
|
(134,008 |
) |
Taxes accrued
|
|
|
- |
|
|
|
(12,784 |
) |
Interest accrued
|
|
|
(36,676 |
) |
|
|
(37,413 |
) |
Deferred fuel
|
|
|
964 |
|
|
|
275,508 |
|
Other working capital accounts
|
|
|
19,527 |
|
|
|
(120,505 |
) |
Provision for estimated losses and reserves
|
|
|
(35,870 |
) |
|
|
1,281 |
|
Changes in other regulatory assets
|
|
|
(66,248 |
) |
|
|
(447,882 |
) |
Changes in pensions and other postretirement liabilities
|
|
|
(40,884 |
) |
|
|
(29,158 |
) |
Other
|
|
|
70,887 |
|
|
|
79,241 |
|
Net cash flow provided by operating activities
|
|
|
674,265 |
|
|
|
374,619 |
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Construction/capital expenditures
|
|
|
(447,476 |
) |
|
|
(455,737 |
) |
Allowance for equity funds used during construction
|
|
|
13,296 |
|
|
|
16,947 |
|
Nuclear fuel purchases
|
|
|
(65,336 |
) |
|
|
(118,890 |
) |
Proceeds from sale/leaseback of nuclear fuel
|
|
|
- |
|
|
|
11,040 |
|
Proceeds from sale of assets and businesses
|
|
|
9,675 |
|
|
|
- |
|
Collections remitted to securitization recovery trust account
|
|
|
(21,940 |
) |
|
|
(7,831 |
) |
NYPA value sharing payment
|
|
|
(72,000 |
) |
|
|
(72,000 |
) |
Decrease in other investments
|
|
|
96,416 |
|
|
|
7,339 |
|
Proceeds from nuclear decommissioning trust fund sales
|
|
|
770,781 |
|
|
|
583,166 |
|
Investment in nuclear decommissioning trust funds
|
|
|
(798,864 |
) |
|
|
(610,836 |
) |
Net cash flow used in investing activities
|
|
|
(515,448 |
) |
|
|
(646,802 |
) |
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ENTERGY CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
For the Three Months Ended March 31, 2010 and 2009
|
(Unaudited)
|
|
|
2010
|
|
|
2009
|
|
|
|
(In Thousands) |
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
Proceeds from the issuance of:
|
|
|
|
|
|
|
Long-term debt
|
|
|
42,545 |
|
|
|
489,987 |
|
Common stock and treasury stock
|
|
|
6,078 |
|
|
|
927 |
|
Retirement of long-term debt
|
|
|
(100,289 |
) |
|
|
(215,023 |
) |
Changes in credit line borrowings - net
|
|
|
(13,368 |
) |
|
|
25,000 |
|
Dividends paid:
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
(141,892 |
) |
|
|
(142,085 |
) |
Preferred stock
|
|
|
(5,015 |
) |
|
|
(4,998 |
) |
Net cash flow provided by (used in) financing activities
|
|
|
(211,941 |
) |
|
|
153,808 |
|
|
|
|
|
|
|
|
|
|
Effect of exchange rates on cash and cash equivalents
|
|
|
607 |
|
|
|
842 |
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
(52,517 |
) |
|
|
(117,533 |
) |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
1,709,551 |
|
|
|
1,920,491 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$ |
1,657,034 |
|
|
$ |
1,802,958 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
Cash paid (received) during the period for:
|
|
|
|
|
|
|
|
|
Interest - net of amount capitalized
|
|
$ |
171,145 |
|
|
$ |
176,892 |
|
Income taxes
|
|
$ |
(1,385 |
) |
|
$ |
(15,139 |
) |
|
|
|
|
|
|
|
|
|
Noncash financing activities:
|
|
|
|
|
|
|
|
|
Long-term debt retired (equity unit notes)
|
|
|
- |
|
|
$ |
(500,000 |
) |
Common stock issued in settlement of equity unit purchase contracts
|
|
|
- |
|
|
$ |
500,000 |
|
Proceeds from long-term debt issued for the purpose of refunding prior long-term debt
|
|
$ |
150,000 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ENTERGY CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED BALANCE SHEETS
|
ASSETS
|
March 31, 2010 and December 31, 2009
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(In Thousands) |
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
Cash and cash equivalents:
|
|
|
|
|
|
|
Cash
|
|
$ |
75,446 |
|
|
$ |
85,861 |
|
Temporary cash investments
|
|
|
1,581,588 |
|
|
|
1,623,690 |
|
Total cash and cash equivalents
|
|
|
1,657,034 |
|
|
|
1,709,551 |
|
Securitization recovery trust account
|
|
|
35,037 |
|
|
|
13,098 |
|
Accounts receivable:
|
|
|
|
|
|
|
|
|
Customer
|
|
|
570,657 |
|
|
|
553,692 |
|
Allowance for doubtful accounts
|
|
|
(28,432 |
) |
|
|
(27,631 |
) |
Other
|
|
|
144,116 |
|
|
|
152,303 |
|
Accrued unbilled revenues
|
|
|
250,657 |
|
|
|
302,463 |
|
Total accounts receivable
|
|
|
936,998 |
|
|
|
980,827 |
|
Deferred fuel costs
|
|
|
24,678 |
|
|
|
126,798 |
|
Accumulated deferred income taxes
|
|
|
24,155 |
|
|
|
- |
|
Fuel inventory - at average cost
|
|
|
203,179 |
|
|
|
196,855 |
|
Materials and supplies - at average cost
|
|
|
833,715 |
|
|
|
825,702 |
|
Deferred nuclear refueling outage costs
|
|
|
214,155 |
|
|
|
225,290 |
|
System agreement cost equalization
|
|
|
70,000 |
|
|
|
70,000 |
|
Prepayments and other
|
|
|
733,669 |
|
|
|
386,040 |
|
TOTAL
|
|
|
4,732,620 |
|
|
|
4,534,161 |
|
|
|
|
|
|
|
|
|
|
OTHER PROPERTY AND INVESTMENTS
|
|
|
|
|
|
|
|
|
Investment in affiliates - at equity
|
|
|
39,651 |
|
|
|
39,580 |
|
Decommissioning trust funds
|
|
|
3,330,681 |
|
|
|
3,211,183 |
|
Non-utility property - at cost (less accumulated depreciation)
|
|
|
247,296 |
|
|
|
247,664 |
|
Other
|
|
|
111,340 |
|
|
|
120,273 |
|
TOTAL
|
|
|
3,728,968 |
|
|
|
3,618,700 |
|
|
|
|
|
|
|
|
|
|
PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
|
|
|
|
|
Electric
|
|
|
36,508,160 |
|
|
|
36,343,772 |
|
Property under capital lease
|
|
|
782,722 |
|
|
|
783,096 |
|
Natural gas
|
|
|
316,136 |
|
|
|
314,256 |
|
Construction work in progress
|
|
|
1,667,720 |
|
|
|
1,547,319 |
|
Nuclear fuel under capital lease
|
|
|
- |
|
|
|
527,521 |
|
Nuclear fuel
|
|
|
1,240,445 |
|
|
|
739,827 |
|
TOTAL PROPERTY, PLANT AND EQUIPMENT
|
|
|
40,515,183 |
|
|
|
40,255,791 |
|
Less - accumulated depreciation and amortization
|
|
|
16,976,188 |
|
|
|
16,866,389 |
|
PROPERTY, PLANT AND EQUIPMENT - NET
|
|
|
23,538,995 |
|
|
|
23,389,402 |
|
|
|
|
|
|
|
|
|
|
DEFERRED DEBITS AND OTHER ASSETS
|
|
|
|
|
|
|
|
|
Regulatory assets:
|
|
|
|
|
|
|
|
|
Regulatory asset for income taxes - net
|
|
|
625,391 |
|
|
|
619,500 |
|
Other regulatory assets
|
|
|
3,738,435 |
|
|
|
3,647,154 |
|
Deferred fuel costs
|
|
|
172,202 |
|
|
|
172,202 |
|
Goodwill
|
|
|
377,172 |
|
|
|
377,172 |
|
Accumulated deferred income taxes
|
|
|
74,028 |
|
|
|
- |
|
Other
|
|
|
1,121,591 |
|
|
|
1,006,306 |
|
TOTAL
|
|
|
6,108,819 |
|
|
|
5,822,334 |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$ |
38,109,402 |
|
|
$ |
37,364,597 |
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
|
|
|
|
|
|
|
|
|
ENTERGY CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED BALANCE SHEETS
|
LIABILITIES AND EQUITY
|
March 31, 2010 and December 31, 2009
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(In Thousands)
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
Currently maturing long-term debt
|
|
$ |
800,414 |
|
|
$ |
711,957 |
|
Notes payable
|
|
|
175,498 |
|
|
|
30,031 |
|
Accounts payable
|
|
|
877,093 |
|
|
|
998,228 |
|
Customer deposits
|
|
|
325,859 |
|
|
|
323,342 |
|
Accumulated deferred income taxes
|
|
|
7,100 |
|
|
|
48,584 |
|
Interest accrued
|
|
|
161,343 |
|
|
|
192,283 |
|
Deferred fuel costs
|
|
|
118,483 |
|
|
|
219,639 |
|
Obligations under capital leases
|
|
|
2,395 |
|
|
|
212,496 |
|
Pension and other postretirement liabilities
|
|
|
55,710 |
|
|
|
55,031 |
|
System agreement cost equalization
|
|
|
187,314 |
|
|
|
187,204 |
|
Other
|
|
|
348,572 |
|
|
|
215,202 |
|
TOTAL
|
|
|
3,059,781 |
|
|
|
3,193,997 |
|
|
|
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
Accumulated deferred income taxes and taxes accrued
|
|
|
7,906,361 |
|
|
|
7,422,319 |
|
Accumulated deferred investment tax credits
|
|
|
304,132 |
|
|
|
308,395 |
|
Obligations under capital leases
|
|
|
36,620 |
|
|
|
354,233 |
|
Other regulatory liabilities
|
|
|
534,523 |
|
|
|
421,985 |
|
Decommissioning and asset retirement cost liabilities
|
|
|
2,990,604 |
|
|
|
2,939,539 |
|
Accumulated provisions
|
|
|
92,907 |
|
|
|
141,315 |
|
Pension and other postretirement liabilities
|
|
|
2,199,476 |
|
|
|
2,241,039 |
|
Long-term debt
|
|
|
11,136,734 |
|
|
|
10,705,738 |
|
Other
|
|
|
677,464 |
|
|
|
711,334 |
|
TOTAL
|
|
|
25,878,821 |
|
|
|
25,245,897 |
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subsidiaries' preferred stock without sinking fund
|
|
|
216,721 |
|
|
|
217,343 |
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
Common Shareholders' Equity:
|
|
|
|
|
|
|
|
|
Common stock, $.01 par value, authorized 500,000,000 shares;
|
|
|
|
|
|
|
|
|
issued 254,752,788 shares in 2010 and in 2009
|
|
|
2,548 |
|
|
|
2,548 |
|
Paid-in capital
|
|
|
5,373,424 |
|
|
|
5,370,042 |
|
Retained earnings
|
|
|
8,115,010 |
|
|
|
8,043,122 |
|
Accumulated other comprehensive income (loss)
|
|
|
85,392 |
|
|
|
(75,185 |
) |
Less - treasury stock, at cost (65,483,672 shares in 2010 and
|
|
|
|
|
|
|
|
|
65,634,580 shares in 2009)
|
|
|
4,716,295 |
|
|
|
4,727,167 |
|
Total common shareholders' equity
|
|
|
8,860,079 |
|
|
|
8,613,360 |
|
Subsidiaries' preferred stock without sinking fund
|
|
|
94,000 |
|
|
|
94,000 |
|
TOTAL
|
|
|
8,954,079 |
|
|
|
8,707,360 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND EQUITY
|
|
$ |
38,109,402 |
|
|
$ |
37,364,597 |
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
|
|
|
|
|
|
|
|
|
ENTERGY CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS, COMPREHENSIVE INCOME, AND PAID-IN CAPITAL
|
For the Three Months Ended March 31, 2010 and 2009
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(In Thousands) |
|
|
|
|
|
RETAINED EARNINGS
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained Earnings - Beginning of period
|
|
$ |
8,043,122 |
|
|
|
|
|
$ |
7,382,719 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Entergy Corporation
|
|
|
213,799 |
|
|
$ |
213,799 |
|
|
|
235,335 |
|
|
$ |
235,335 |
|
Adjustment related to implementation of new accounting pronouncement
|
|
|
- |
|
|
|
|
|
|
|
6,365 |
|
|
|
|
|
Total
|
|
|
213,799 |
|
|
|
|
|
|
|
241,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deduct:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared on common stock
|
|
|
141,911 |
|
|
|
|
|
|
|
142,090 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained Earnings - End of period
|
|
$ |
8,115,010 |
|
|
|
|
|
|
$ |
7,482,329 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period:
|
|
Accumulated derivative instrument fair value changes
|
|
$ |
117,943 |
|
|
|
|
|
|
$ |
120,830 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension and other postretirement liabilities
|
|
|
(267,939 |
) |
|
|
|
|
|
|
(232,232 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized investment gains (losses)
|
|
|
72,162 |
|
|
|
|
|
|
|
(4,402 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
|
|
|
2,649 |
|
|
|
|
|
|
|
3,106 |
|
|
|
|
|
Total
|
|
|
(75,185 |
) |
|
|
|
|
|
|
(112,698 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net derivative instrument fair value changes
|
|
arising during the period (net of tax expense of $87,259 and $57,186)
|
|
|
142,538 |
|
|
|
142,538 |
|
|
|
87,714 |
|
|
|
87,714 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension and other postretirement liabilities (net of tax expense (benefit) of $891 and ($135))
|
|
|
1,805 |
|
|
|
1,805 |
|
|
|
(857 |
) |
|
|
(857 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized investment gains (losses) (net of tax expense (benefit) of $17,813 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and ($35,977))
|
|
|
16,841 |
|
|
|
16,841 |
|
|
|
(25,417 |
) |
|
|
(25,417 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment related to implementation of new accounting pronouncement
(net of tax benefit of ($4,921))
|
|
|
- |
|
|
|
- |
|
|
|
(6,365 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation (net of tax benefit of ($327) and ($454))
|
|
|
(607 |
) |
|
|
(607 |
) |
|
|
(843 |
) |
|
|
(843 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period:
|
|
Accumulated derivative instrument fair value changes
|
|
|
260,481 |
|
|
|
|
|
|
|
208,544 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension and other postretirement liabilities
|
|
|
(266,134 |
) |
|
|
|
|
|
|
(233,089 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized investment gains (losses)
|
|
|
89,003 |
|
|
|
|
|
|
|
(36,184 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
|
|
|
2,042 |
|
|
|
|
|
|
|
2,263 |
|
|
|
|
|
Total
|
|
$ |
85,392 |
|
|
|
|
|
|
$ |
(58,466 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: preferred dividend requirements of subsidiaries
|
|
|
5,015 |
|
|
|
|
|
|
|
4,998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income
|
|
$ |
379,391 |
|
|
|
|
|
|
$ |
300,930 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PAID-IN CAPITAL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid-in Capital - Beginning of period
|
|
$ |
5,370,042 |
|
|
|
|
|
|
$ |
4,869,303 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issuances in settlement of equity unit purchase contracts
|
|
|
- |
|
|
|
|
|
|
|
499,934 |
|
|
|
|
|
Common stock issuances related to stock plans
|
|
|
3,382 |
|
|
|
|
|
|
|
1,209 |
|
|
|
|
|
Total
|
|
|
3,382 |
|
|
|
|
|
|
|
501,143 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid-in Capital - End of period
|
|
$ |
5,373,424 |
|
|
|
|
|
|
$ |
5,370,446 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ENTERGY CORPORATION AND SUBSIDIARIES
|
SELECTED OPERATING RESULTS
|
For the Three Months Ended March 31, 2010 and 2009
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase/
|
|
|
|
|
Description
|
|
2010
|
|
|
2009
|
|
|
(Decrease)
|
|
|
%
|
|
|
|
(Dollars in Millions) |
|
|
|
|
Utility Electric Operating Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
$ |
818 |
|
|
$ |
756 |
|
|
$ |
62 |
|
|
|
8 |
|
Commercial
|
|
|
526 |
|
|
|
560 |
|
|
|
(34 |
) |
|
|
(6 |
) |
Industrial
|
|
|
521 |
|
|
|
548 |
|
|
|
(27 |
) |
|
|
(5 |
) |
Governmental
|
|
|
50 |
|
|
|
53 |
|
|
|
(3 |
) |
|
|
(6 |
) |
Total retail
|
|
|
1,915 |
|
|
|
1,917 |
|
|
|
(2 |
) |
|
|
- |
|
Sales for resale
|
|
|
83 |
|
|
|
74 |
|
|
|
9 |
|
|
|
12 |
|
Other
|
|
|
9 |
|
|
|
36 |
|
|
|
(27 |
) |
|
|
(75 |
) |
Total
|
|
$ |
2,007 |
|
|
$ |
2,027 |
|
|
$ |
(20 |
) |
|
|
(1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utility Billed Electric Energy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales (GWh):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
|
9,645 |
|
|
|
7,893 |
|
|
|
1,752 |
|
|
|
22 |
|
Commercial
|
|
|
6,472 |
|
|
|
6,194 |
|
|
|
278 |
|
|
|
4 |
|
Industrial
|
|
|
8,733 |
|
|
|
8,139 |
|
|
|
594 |
|
|
|
7 |
|
Governmental
|
|
|
592 |
|
|
|
562 |
|
|
|
30 |
|
|
|
5 |
|
Total retail
|
|
|
25,442 |
|
|
|
22,788 |
|
|
|
2,654 |
|
|
|
12 |
|
Sales for resale
|
|
|
1,317 |
|
|
|
1,387 |
|
|
|
(70 |
) |
|
|
(5 |
) |
Total
|
|
|
26,759 |
|
|
|
24,175 |
|
|
|
2,584 |
|
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Utility Nuclear:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Revenues
|
|
$ |
614 |
|
|
$ |
656 |
|
|
$ |
(42 |
) |
|
|
(6 |
) |
Billed Electric Energy Sales (GWh)
|
|
|
10,255 |
|
|
|
10,074 |
|
|
|
181 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ENTERGY CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. COMMITMENTS AND CONTINGENCIES (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Entergy and the Registrant Subsidiaries are involved in a number of legal, regulatory, and tax proceedings before various courts, regulatory commissions, and governmental agencies in the ordinary course of business. While management is unable to predict the outcome of such proceedings, management does not believe that the ultimate resolution of these matters will have a material adverse effect on Entergy's results of operations, cash flows, or financial condition. Entergy discusses regulatory proceedings in Note 2 to the financial statements in the Form 10-K and herein and discusses tax proceedings in Note 3 to the financial statements in the Form 10-K.
Nuclear Insurance
See Note 8 to the financial statements in the Form 10-K for information on nuclear liability and property insurance associated with Entergy's nuclear power plants.
Conventional Property Insurance
See Note 8 to the financial statements in the Form 10-K for information on Entergy's non-nuclear property insurance program.
Employment Litigation
The Registrant Subsidiaries and other Entergy subsidiaries are responding to various lawsuits in both state and federal courts and to other labor-related proceedings filed by current and former employees and third parties not selected for open positions. These actions include, but are not limited to, allegations of wrongful employment actions; wage disputes and other claims under the Fair Labor Standards Act or its state counterparts; claims of race, gender and disability discrimination; disputes arising under collective bargaining agreements; unfair labor practice proceedings and other administrative proceedings before the National Labor Relations Board; claims of retaliation; and claims for or regarding benefits under various Entergy Corporation sponsored plans. Entergy and the Registrant Subsidiaries are responding to these lawsuits and proceedings and deny liability to the claimants.
Asbestos Litigation (Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas)
See Note 8 to the financial statements in the Form 10-K for information regarding asbestos litigation at Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas.
NOTE 2. RATE AND REGULATORY MATTERS (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Regulatory Assets
See Note 2 to the financial statements in the Form 10-K for information regarding regulatory assets in the Utility business presented on the balance sheets of Entergy and the Registrant Subsidiaries. Following are updates to that information.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Fuel and purchased power cost recovery
See Entergy Corporation and Subsidiaries' "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - System Agreement Proceedings" for updates to the discussion in the Form 10-K regarding the System Agreement proceedings.
Entergy Mississippi
In August 2009 the MPSC retained an independent audit firm to audit Entergy Mississippi's fuel adjustment clause submittals for the period October 2007 through September 2009. The independent audit firm submitted its report to the MPSC in December 2009. The report does not recommend that any costs be disallowed for recovery. The report did suggest that some costs, less than one percent of the fuel and purchased power costs recovered during the period, may have been more reasonably charged to customers through base rates rather than through fuel charges, but the report did not suggest that customers should not have paid for those costs. In November 2009 the MPSC also retained another firm to review processes and practices related to fuel and purchased energy. The results of that review were filed with the MPSC in March 2010. In that report, the independent consulting firm found that the practices and procedures in activities that directly affect the costs recovered through Entergy Mississippi's fuel adjustment clause appear reasonable. Both audit reports were certified by the MPSC to the Mississippi Legislature, as required by Mississippi law. In March 2010, the MPSC opened a docket to consider revisions to its rules regarding recovery of fuel and energy costs and other general matters related to fuel adjustment clauses and fuel audits.
Storm Cost Recovery Filings
Entergy Arkansas Storm Reserve Accounting
The APSC's June 2007 order in Entergy Arkansas' base rate proceeding eliminated storm reserve accounting for Entergy Arkansas. In March 2009 a law was enacted in Arkansas that requires the APSC to permit storm reserve accounting for utilities that request it. Entergy Arkansas filed its request with the APSC, and has reinstated storm reserve accounting effective January 1, 2009. A hearing on Entergy Arkansas' request was held in March 2010, and in April 2010 the ALJ approved Entergy Arkansas’s establishment of a storm cost reserve account.
Entergy Gulf States Louisiana and Entergy Louisiana Hurricane Gustav and Hurricane Ike Filing
As discussed in the Form 10-K, in September 2008, Hurricane Gustav and Hurricane Ike caused catastrophic damage to Entergy's service territory. Entergy Gulf States Louisiana and Entergy Louisiana filed their Hurricane Gustav and Hurricane Ike storm cost recovery case with the LPSC in May 2009. In September 2009, Entergy Gulf States Louisiana and Entergy Louisiana and the Louisiana Utilities Restoration Corporation (LURC), an instrumentality of the State of Louisiana, filed with the LPSC an application requesting that the LPSC grant financing orders authorizing the financing of Entergy Gulf States Louisiana’s and Entergy Louisiana’s storm costs, storm reserves, and issuance costs pursuant to Act 55 of the Louisiana Regular Session of 2007 (Act 55 financings). Entergy Gulf States Louisiana’s and Entergy Louisiana’s Hurricane Katrina and Hurricane Rita storm costs were financed primarily by Act 55 financings, as discussed in the Form 10-K. Entergy Gulf States Louisiana and Entergy Louisiana also filed an application requesting LPSC approval for ancillary issues including the mechanism to flow charges and Act 55 financing savings to customers via a Storm Cost Offset rider. On December 30, 2009, Entergy Gulf States Louisiana and Entergy Louisiana entered into a stipulation agreement with the LPSC Staff that provides for total recoverable costs of approximately $234 million for Entergy Gulf States Louisiana and $394 million for Entergy Louisiana. Under this stipulation, Entergy Gulf States Louisiana agrees not to recover $4.4 million and Entergy Louisiana agrees not to recover $7.2 million of their storm restoration spending. The stipulation also permits replenishing Entergy Gulf States Louisiana's storm reserve in the amount of $90 million and Entergy Louisiana's storm reserve in the amount of $200 million when the Act 55 financings are accomplished. In March and April 2010, Entergy Gulf States Louisiana, Entergy Louisiana, and other parties to the proceeding filed with the LPSC an uncontested stipulated settlement that
Entergy Corporation and Subsidiaries
Notes to Financial Statements
includes these terms and also includes Entergy Gulf States Louisiana’s and Entergy Louisiana's proposals under the Act 55 financings, which includes a commitment to pass on to customers a minimum of $15.5 million and $27.75 million of customer benefits, respectively, through prospective annual rate reductions of $3.1 million and $5.55 million for five years. A stipulation hearing was held before the ALJ on April 13, 2010. On April 21, 2010, the LPSC approved the settlement and subsequently issued two financing orders and one ratemaking order intended to facilitate the implementation of the Act 55 financings. Louisiana State Bond Commission approval is now required before Entergy Gulf States Louisiana and Entergy Louisiana proceed with the Act 55 financings.
Federal Healthcare Legislation
The Patient Protection and Affordable Care Act (PPACA) became federal law on March 23, 2010, and, on March 30, 2010, the Health Care and Education Reconciliation Act of 2010 became federal law and amended certain provisions of the PPACA. These new federal laws change the law governing employer-sponsored group health plans, like Entergy's plans. All of the effects of these changes are not yet determinable because technical guidance regarding application must still be issued, and Entergy will monitor these developments.
One provision of the new law that is effective in 2013 eliminates the federal income tax deduction for prescription drug expenses of Medicare beneficiaries for which the plan sponsor also receives the retiree drug subsidy under Part D. Entergy receives subsidy payments under the Medicare Part D plan and therefore in the first quarter 2010 recorded a reduction to the deferred tax asset related to the unfunded other postretirement benefit obligation. The offset was recorded as a charge to income tax expense or, for the Utility, including each Registrant Subsidiary, as a regulatory asset. The Utility has a regulatory asset of $99 million recorded for this, including $31 million at Entergy Arkansas, $16 million at Entergy Gulf States Louisiana, $19 million at Entergy Louisiana, $10 million at Entergy Mississippi, $7 million at Entergy New Orleans, $11 million at Entergy Texas, and $5 million at System Energy.
Retail Rate Proceedings
See Note 2 to the financial statements in the Form 10-K for information regarding retail rate proceedings involving the Utility operating companies. The following are updates to the Form 10-K.
Filings with the APSC
On September 4, 2009, Entergy Arkansas filed with the APSC for a general change in rates, charges, and tariffs. Entergy Arkansas requested a $223.2 million base rate increase that would become effective in July 2010. In testimony filed in March 2010, Entergy Arkansas lowered its requested base rate increase to $168.6 million. The request now reflects a 10.65% return on common equity, using a projected capital structure, and proposes a formula rate plan mechanism. Proposed formula rate plan provisions include a +/- 25 basis point bandwidth, with earnings outside the bandwidth reset to the 10.65% return on common equity midpoint and rates changing on a prospective basis depending on whether Entergy Arkansas is over or under-earning. The proposed formula rate plan also includes a recovery mechanism for APSC-approved costs for additional capacity purchases or construction/acquisition of new transmission or generating facilities. Entergy Arkansas also lowered its requested annual storm damage accrual to $13.8 million. The latest APSC Staff position filed in testimony proposes a $49 million revenue increase reflecting a 10.1% return on