Entergy Corporation · NYSE:ETR
Entergy — Merger or Acquisition (July 2012)
18 slides from Entergy's merger presentation, Jul 18, 2012
Slide 1: Update on Entergy Transmission Spin/Merger with ITC
Filed by Entergy Corporation Pursuant to Rule 425 Under the Securities Act of 1933 Subject Company: Entergy Corporation Commission File No. 001-11299 Update on Entergy Transmission Spin/Merger with ITC Meeting with TIEC July 18, 2012 Presented by Entergy Texas
Slide 2: Entergy Forward-Looking Information
Entergy Forward-Looking Information In this communication, and from time to time, Entergy makes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Except to the extent required by the federal securities laws, Entergy undertakes no obligat
Slide 3: Additional Information and Where to Find It
Additional Information and Where to Find It ITC and Transco will file registration statements with the Securities and Exchange Commission (“SEC”) registering shares of ITC common stock and Transco common units to be issued to Entergy shareholders in connection with the proposed transactions. ITC wil
Slide 4: Agenda
Agenda ITC Spin-Merge Transaction Overview Benefits of ETR – ITC Spin-Merge Transaction Storm Response Rate Effects of Spin-Merge Transaction 2014 Billing Process Post Spin/Merge Approvals Required 3
Slide 5: The Merger Transaction – End State
The Merger Transaction – End State Illustrative • Entergy Utility Operating Companies comprised of: Entergy Shareholders – Generation – Distribution Parent • ~$1.775B of debt will be issued by Entergy in connection with the internal separation of the Creditors transmission business, the proceeds fro
Slide 6: Agenda: Benefits of ETR – ITC Spin-Merge Transaction
Agenda ITC Spin-Merge Transaction Overview Benefits of ETR – ITC Spin-Merge Transaction Storm Response Rate Effects of Spin-Merge Transaction 2014 Billing Process Post Spin/Merge Approvals Required 5
Slide 7: Overview of Benefits to Customers Through Spin-Merge
Overview of Benefits to Customers Through Spin-Merge Independent • Provides singular focus on transmission system performance, and planning and operations Transparent • Aligns with national policy objectives to facilitate investment ITC Model in local, regional and inter-regional transmission, advan
Slide 8: Agenda: Storm Response
Agenda ITC Spin-Merge Transaction Overview Benefits of ETR – ITC Spin-Merge Transaction Storm Response Rate Effects of Spin-Merge Transaction 2014 Billing Process Post Spin/Merge Approvals Required 7
Slide 9: Storm Response Organization Will Be Modified to Ensure Close Coordination
Storm Response Organization Will Be Modified to Ensure Close Coordination and Interaction Between Entergy and ITC ITC Technical/Mgmt ITC System Incident employee assigned to ETR System Incident Commander (SIC) ETR storm response center in Jackson Commander (SIC) Greg Grillo John Mullins ITC-ETR Syst
Slide 10: Agenda: Rate Effects of Spin-Merge Transaction
Agenda ITC Spin-Merge Transaction Overview Benefits of ETR – ITC Spin-Merge Transaction Storm Response Rate Effects of Spin-Merge Transaction 2014 Billing Process Post Spin/Merge Approvals Required 9
Slide 11: Rate Impacts Split into WACC, Rate Timing, and Net Other Effects
Rate Impacts Split into WACC, Rate Timing, and Net Other Effects for Retail Customers Transition from current retail rate construct to FERC-regulated rate construct expected for ITC Analysis assumes MISO base ROE for Entergy transmission business WACC (12.38%) and capital structure currently utilize
Slide 12: ETI Typical LIPS Customer Bill Not Expected to Increase Post Spin-Merge
ETI Typical LIPS Customer Bill Not Expected to Increase Post Spin-Merge Due to Transaction Effects Illustrative ETI LIPS Bill – 5,000 kW, 80% Load Factor; $ ~(3.33) Over the long term, customer 170,000 0.0% bill effects expected to be mitigated by... 168,000 ~448.58 ~(451.91) Enhanced Financial 166,
Slide 13: Agenda: 2014 Billing Process Post Spin/Merge
Agenda ITC Spin-Merge Transaction Overview Benefits of ETR – ITC Spin-Merge Transaction Storm Response Rate Effects of Spin-Merge Transaction 2014 Billing Process Post Spin/Merge Approvals Required 12
Slide 14: ITC Wholesale Rate Calculation Process
ITC Wholesale Rate Calculation Process Y Updates Proposed Attachment O Rate Prepare MISO Mods Templates Data Attachment O * (includes forward test Req’d? Requested for ITC year estimate and prior year true-up) N Reviews Attachments N Apprvd Y ? Post Reviews Y Attachment Attachment Add’l Data N Revie
Slide 15: ITC Attachment O – Wholesale Rate Calculation
ITC Attachment O – Wholesale Rate Calculation Projected Weighted Projected Rate Projected Allowed Return Step 1 Base x Average Cost of Capital (WACC) = (PAR) Projected Gross Revenue Projected Expenses Requirement before Attachment Step 2 PAR + (O&M, Depreciation, Taxes) = GG (Schedule 26) offset (PG
Slide 16: 2014 Billing Process Post Spin/Merge
2014 Billing Process Post Spin/Merge Network Receive Load Revenue for (usage) Usage of ITC Transmission Billing Calc for OASIS ITC and MISO Srvs Receive Retain (point-to-point per applicable rate Revenue for usage) Cash MISO Srvs schedules N Wholesale End Transmission Retail Submit Receive Bill Wire
Slide 17: Agenda: Approvals Required
Agenda ITC Spin-Merge Transaction Overview Benefits of ETR – ITC Spin-Merge Transaction Storm Response Rate Effects of Spin-Merge Transaction 2014 Billing Process Post Spin/Merge Approvals Required 16
Slide 18: Pathway to Completion – Required Approvals
Pathway to Completion – Required Approvals Authority Requirements Entergy retail • Change of control of transmission assets regulators • Affiliate transaction approvals related to steps in the spin / merge • Authorization to incur debt in some jurisdictions FERC • Change of control of transmission a