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 Arkansas Electric Energy Consumers July 11, 2012
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 Benefits of ETR – ITC Spin-Merge Transaction Financial Flexibility Rate Effects of Spin-Merge Transaction Approvals Required 3
Slide 5: 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 6: Agenda
Agenda Benefits of ETR – ITC Spin-Merge Transaction Financial Flexibility Rate Effects of Spin-Merge Transaction Approvals Required 5
Slide 7: The Utility Industry Is Facing Huge Need for Capital – Estimated at $2.2T Over the Next 20 Years
The Utility Industry Is Facing Huge Need for Capital – Estimated at $2.2T Over the Next 20 Years Issues Facing Utility Industry Over Next 20 Years Projected Industry Capital Investments Over Next 20 Years Growth / Investment $T ??? Other = 0.15 Distribution Transmission Generation Current Market Cap
Slide 8: Capital Trends – Rating Agency Considerations
Capital Trends – Rating Agency Considerations Standard and Poor's Outlook – "Utility Credit Ratings Critical to Raising Capital – Money Needed to Build Wires and Plants Challenges facing the electric utilities industry Addressing challenges Note: Comments sourced from Energy Biz article written by R
Slide 9: Industry Is Responding to Capital Investment Challenges with Different Approaches
Industry Is Responding to Capital Investment Challenges with Different Approaches Create larger footprint; upsize balance sheet Duke / Progress Northeast Utilities / NSTAR Consolidate PPL / LG&E First Energy / Allegheny Exelon / Constellation Build Regulatory Achieve greater certainty in regulations
Slide 10: Capital Trends – Rising Capital for Entergy Overall
Capital Trends – Rising Capital for Entergy Overall Capital spending could significantly increase over the next 10 years due to the potential for new environmental regulations and improvement of infrastructure ??? Entergy Utilities Capital Investment Effect of EPA rules? Total Spend ??? Infrastructu
Slide 11: Capital Trends – Rising Capital for Entergy’s Transmission Business
Capital Trends – Rising Capital for Entergy’s Transmission Business Entergy Projected Transmission Capital Investment 2012E-2014E $M 600 500 400 300 Projected 200 Depreciation Expense 100 0 2012E 2013E 2014E 10
Slide 12: For ETR Utilities, Spend on Major Storms Amounted to ~$3.2B Over 2005-2010
For ETR Utilities, Spend on Major Storms Amounted to ~$3.2B Over 2005-2010 Spend Event Year ($M) 1 In the past, ETR Hurricane Katrina 2005 1,117 utilities have had to effectively Hurricane Rita 2005 645 respond to major Hurricane Gustav 2008 680 storms which Hurricane Ike 2008 626 have required unpl
Slide 13: Capital Trends – Rising Capital for EAI
Capital Trends – Rising Capital for EAI Capital spending could significantly increase over the next 10 years due to the potential for new environmental regulations and improvement of infrastructure ??? Effect of regulation? EAI Capital Investment Infrastructure Total Spend ??? improvements? Effect o
Slide 14: Agenda
Agenda Benefits of ETR – ITC Spin-Merge Transaction Financial Flexibility Rate Effects of Spin-Merge Transaction Approvals Required 13
Slide 15: Significant Variability in Average Residential Bills – Yearly Variation between $3 and $17 over 2001-2011
Significant Variability in Average Residential Bills – Yearly Variation between $3 and $17 over 2001-2011 Illustrative Henry Hub Gas Index EAI Typical Monthly Residential Bill - 1,000 kWh $/mmBtu $ 150 15 13% reduction in customer bills since 2009 +17.10 +2.67 (+23%) (+3%) -13% 108.00 98.17 95.15 97
Slide 16: Transmission Constitutes ~4.5% of Typical EAI Customer Bill
Transmission Constitutes ~4.5% of Typical EAI Customer Bill Typical EAI Customer Bill Transmission Fuel 4.5% 11.9% 83.6% Non-Fuel 15
Slide 17: Rate Impacts Split into Rate Construct, Rate Timing, and Other Effects for Retail Customers
Rate Impacts Split into Rate Construct, Rate Timing, and Other Effects for Retail Customers • Transition from current retail rate construct to FERC-regulated rate construct expected for ITC Rate • Analysis assumes MISO base ROE for Entergy transmission business Construct (12.38%) and capital structu
Slide 18: EAI Typical Residential Customer Bill Expected to Increase 1.3% – Expected Mitigation by Customer Benefits
EAI Typical Residential Customer Bill Expected to Increase 1.3% – Expected Mitigation by Customer Benefits Illustrative EAI Residential Bill -1,000 kWh $ Over the long term, customer 120 ~1.22 bill effects expected to be 110 1.3% mitigated by... 100 94.23 ~1.47 ~(0.25) ~0.00 ~95.45 • Enhanced Financ
Slide 19: EAI Typical LGS Customer Bill Expected to Increase 1.5% – Expected Mitigation by Customer Benefits
EAI Typical LGS Customer Bill Expected to Increase 1.5% – Expected Mitigation by Customer Benefits Illustrative EAI LGS Bill - 250 kW, 55% Load Factor, Summer $ Over the long term, customer 8,000 ~110.30 1.5% bill effects expected to be mitigated by... 7,500 7,241.79 ~133.06 ~(22.76) ~0.00 ~7,352.09
Slide 20: Agenda
Agenda Benefits of ETR – ITC Spin-Merge Transaction Financial Flexibility Rate Effects of Spin-Merge Transaction Approvals Required 19
Slide 21: 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