Entergy Corporation · NYSE:ETR
Entergy — Merrill Lynch Global Power and Gas Leaders Conference 2002
31 slides from Entergy's conference presentation, Sep 18, 2002
Slide 1: Merrill Lynch Global Power and Gas Leaders Conference
Merrill Lynch Global Power and Gas Leaders Conference J. Wayne Leonard Chief Executive Officer September 18, 2002 = En ter Ly
Slide 2: Entergy's Strategy: Process for Managing Industry Change
Entergy’s Strategy Process for Managing Industry Change Legislative/Regulatory Infrastructure . = \ Supply ————__—_s Rigorous 7 Analysis Demand Fuel Prices / Competitive Behavior - Current Climate/Weather Data Long Positions Structured Contracts VAR Point of View Asset Development | Acquisitions Bus
Slide 3: Value Proposition
Value Proposition ustomer Ser Operational Excellence
Slide 4: Utility, Nuclear and Entergy-Koch Business Goals
Utility Ecs Nuclear Business Goals To deliver affordable, reliable service to customers To provide leading risk management products!services & gas transportation Excellence in operations at our nuclear fleet Financial Goal Components + Organic + Operational improvement « Incremental Step-Out Investm
Slide 5: Sources of Growth: 1999 - 2003
Sources of Growth: 1999 - 2003 Intrinsic r Step-Out, > Organic Operational _—_ Incremental New Improvement Investment Investment 99 Op. EPS* $2.08 Utility [ Sales O&M spending | Rate base Nuclear Pilgrim IP2 & IPS FitzPatrick Vermont Yankee Entergy-Koch Pipeline Trading Saltend Power Damhead Creek D
Slide 6: Sources of Growth: 1999 - 2003
Sources of Growth: 1999 Zuu3 Intrinsic Step-Out Organic Operational ~—_ Incremental New Improvement —_ Investment Investment 03 Op. EPS* & 88} Utility ilgrim IP2 & IP3 FitzPatrick Vermont Yankeg, ntergy-Kocl Power Development Parent Total Growth = 05 Op. EPS A PAN J 977 Y Y 22% 22% *Based on midpoin
Slide 7: Sources of Growth: 1999 - 2003
Sources of Growth: 1999 Zuu3 Inti Step-Out Organic Operational Incremental New Improvement Investment Investment 03 Op. EPS* $3.85 ity | Sales Incentives Rate base Nuclear Entergy-Koch Power Development Parent Total Growth = 05 op. EPS K_ PAN J 977 Y Y 22% 22% *Based on midpoint of 2003 EPS guidance
Slide 8: Old Dog with Old Tricks (That Still Work)
Old Dog with Old Tricks (That Still Work) Embedded vs. Marginal Cost* Sales Growth vs. EPS Growth* sikwh % EPS Growth $0.08 AILothe 12 0 Sy 6; Yf : 2 0 H Embedded Marginal 0 1 2 3 4 % Sales Growth tillustrative. 8
Slide 9: Another Old Trick: Capital Investment and Depreciation
other Old Trick Capital Investment and Depreciation $ Millions [5 Capex > Depreciation 1,063
Slide 10: Improving Customer Service
Improving Customer Service Supports Regulatory Relationships Return on Investment 98 vs. 01 Outage Outage Frequency Duration Down Down 40% 42% Call Center Regulatory Outage Answer Time Complaints Down 79% Improved Regulatory Relations Higher Returns Less Disallowances Growth Opportunities ‘i
Slide 11: Either/Or? Why Not Both?
Either /Or? Why Not Both? BENE: 7 Rate Base , ONPV 01 0&MReduction Regulatory — tg 9._ 1% above Lag cost of capital DO capital savings DF sales Growth Potential 0% - 2% ROE Enhancement 1 Fuel Savings LD] Purchased Power Savings LO Fuel! Purchased Power Efficiencies Ey 28M & Capital! Fuel Efficiencie
Slide 12: Aligning Economic Interests of All Stakeholders
Aligning Economic Interests of All Stakeholders Generation Market Capacity and Demand ‘Grossi cw Qe 1am . Saas eotaver 67 Gre aw Ste 1 fe aseccoop Meee? Pant Te anc ver Meive so Sates pans ‘° creesineds a rou et sorg cowry 9 Hemestons Ccunty ree ee ee | een Hat wean TEE ssomagton boner, Onsenie oboe
Slide 13: Sources of Growth: 1999 - 2003
Sources of Growth: 1999 Zuu3 _Intrins. > Step-Out Organic Operational__~—_Incremental New Improvement —_ Investment Investment 03 Op. EPS* $3.85 Utility | Sales Incentive Rate base regulation Nuclear Cost reduction | Uprates Entergy-Koch Power Development Parent Total Growth - 05 Op. EPS $222 aa Y 7
Slide 14: New Math
New Math 1+1 % ver 7 million more MWhrs per year o_O, 98 95 94 94 “ million MWhrs 90, 87 oe 76 [] Before ETR After ETR 43 Pilgrim IPS FitzPatrick IP2 VY ETR 01 Industry Regulated Average Note: Before ETR const of prevbus 8 years performance Avene Source: UO, Internal Analysis 1"
Slide 15: Pursuing Operational Excellence
Pursuing Operational Excellence Production Cost 3-year rolling average, $/MWh $26.48/MWhr Avg. 42 24 $16.49/MWhr Avg. 19 20 19 17 ‘6 14 Pilgim = (PS FitzPatick —_1P2 w ANO Grand Gulf River Bend Waterford Industy Average Note: Enteray plants through 2001. Industry is through 2000. Northeast feet incl
Slide 16: Too Cheap to Meter: Nuclear Plant Schematic
Too Cheap to Metz, Nuclear Plant Schematic Containment Structure Secondary Side / Efficiency Uprates 16
Slide 17: Uprates Add More Than Just MWs
Uprates Add More Than Just MWs Entergy Nuclear South Capacity Entergy Nuclear Northeast mw Capacity mw 5,078 25? $50? $100 million?? 159 Waterford ANO 2 River Bend ANO2 Grand Gulf ANO2 3.955 7
Slide 18: Sources of Growth: 1999 - 2003
Sources of Growth: 1999 Zuu3 Intrinsic Step-Out Organic Operational Incremental New Improvement Investment Investment 03 Op. EPS* $3.85 Utility | Sales Incentive Rate base regulation Nuclear Cost Uprates reduction Entergy-Koch | Financial Cost optimization | reduction Power Development Parent Total
Slide 19: Entergy-Koch Emphasizes Discipline
Entcray -Koch Emphasizes 40% 60% 40% 60% Pipeline Earnings Trading Earnings Discipline 19
Slide 20: Proven Ability to Decrease Unit Cost
Proven Ability to Decrease Unit Cost Gulf South Pipeline Gulf South Operating Expense $ Million, excluding Fuel 122 113 86 “ 83 SG 8A Key Statistics 97 98 99 00 01 Throughput - Befid 25 Miles of Pipeline 8,800 Peak Day Deliveries - Befid 38 ac including 10.6 Bef Magnolia Storage Working Gas - Bcf Ca
Slide 21: Entergy-Koch Emphasizes Balance and Discipline
Entergy-Koch Emphasizes Balance and Discipline 3 Distinct and Complementary Businesses Earnings Composition Target; % Physical Optimization (Value Capture) 35% 40% -60% Bip eline Earnings Discipline Financial Optimization Value Protection) 15% Point-of-View Trading 50% 2
Slide 22: Physical Optimization: Trading Around Owners' Assets
Physical Optimization — Trading Around Owners’ Assets Products and Structures <Ha-DOZZOO HOAMAAPE Revenue Sharing Physical Positions Profit/Loss [impact on... [Risk Volatility Lower dueto ria [Risk hell if consistent with POV| fransfer lor transferred to mutket for a loxin Rewn IMore predictable wah
Slide 23: Financial Optimization: Protects Business Value
Financial Optimization — Protects Business Value Customers Producers c oO 7 Products M M Market Risk and. fa A pte Mitigati ferface Mitigation g structures. | R > ¢ K Financial Margi we ins Participants ng) lor US Y Utilities! LDC’s [impact on. [oustomers FRiavotattity Rak managed to dedred [Risk he
Slide 24: Point-of-View Trading: Consistently Profitable Track Record
Poin f-View Trading: Consistently Profitable Track Reco Trading Track Record Gainiloss days; Ratio 3.0 2.5 2.0 1.5 1.0 0.5 0.0 98 99 Power (1 Gas 00 01 [1 Weather HM Overall 98.01 Daily earnings; Trading days 4324104123 «4 % of annual earnings 24
Slide 25: Potential for Future Growth
Potential for Future Growth Ratings of Top 15 Power Marketers Market Share of Top 15 Power Marketers 2001 2001 Enron ee" Bankrupt ‘AEP be" BBB+ Reliant Energy BBB+ Duke* jae" BBB+ rant [pee Junk iams Leese” Junk Aquila Less Exiting PG&E |e" Bankrupt Cinergy BBB+ Exelon A EIPaso BBB+ Dynegy Leese Jun
Slide 26: Potential for Future Growth: Trading Regions and Products
Potential for Future Growth Trading Regions Trading Products Future : | |Today Opportunity Today Future Opportunity North America #2 Oil Gn + Electricity = Electricity Western vs + Tne @ Gas Gas & Emissions eae Eurooe +a. UK ae Weather a Weather E35 Continental Transmission 26
Slide 27: Potential Sources of Growth: 2003 - 2005
Potential Sources of Growth: 2003 - 2005 Intrinsic Step-Out Organic Operational Incremental New Improvement Investment —_ Investment 03 Op. EPS* $3.85 Utility | Sales Incentive Rate base regulation Nuclear Cost Uprates reduction Entergy-Koch | Financial Cost Storage optimization | reduction 222 Asse
Slide 28: Cash and Balance Sheet to Execute
Cash and Balance Sheet to Execute Net Debt/Net Capital Ratio % 52 50 48 *includes $1.4 billion of new debt. 28
Slide 29: $1B Investment Alternatives
EPS 0.40 0.30 0.20 0.10 EPS 040 030 020 0.10 $1B Investment Yields $0.20 to $0 $1B Investment Alternatives 1) Pipeline Investment O susctear EPS 0.40 ee ae 0.30 ae 7% Earnings 0.20 T Earnings Productivity Productivity 0.10 90 85 80 zai Fels 475 450 «= «425— 400 SIKW lultiple (3) Distressed Generatio
Slide 30: Modest Success Closes Share Gap
Modest Success Closes $0 hare Gap ferent EPS Contribution Historical are Average Since 1998 . 1.00 : . . 05 EPS 0.80 . DB . 0.60 . 2 2 0.40 . . 0.20 05 Gap 0.00 5% 6% T% 8% 9% 10% ROIC assumed for New Investments “Based on cumulative $2.9 billion investment. 30
Slide 31: Merrill Lynch Global Power and Gas Leaders Conference
Merrill Lynch Global Power and Gas Leaders Conference J. Wayne Leonard Chief Executive Officer September 18, 2002 = Fin lergy
Entergy — Merrill Lynch Global Power and Gas Leaders Conference 2002 on 6ix