Entergy Corporation · NYSE:ETR
Entergy — Deutsche Bank Securities 2012 Clean Tech, Utilities & Power Conference
51 slides from Entergy's conference presentation, May 15, 2012
Slide 1: Entergy: Managing Risk and Pursuing Opportunities
Filed by Entergy Corporation Pursuant to Rule 425 Under the Securities Act of 1933 Subject Company: Entergy Corporation Commission File No. 001-11299 Entergy: Managing Risk and Pursuing Opportunities Deutsche Bank Securities 2012 Clean Tech, Utilities & Power Conference May 15, 2012
Slide 2: Caution Regarding Forward-looking Statements and Regulation G Compliance
Caution Regarding Forward-looking Statements and Regulation G Compliance In this presentation, and from time to time, Entergy Corporation makes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Except to the extent required by the federa
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: Business Model Based on Operational Excellence, Portfolio Management and Point of View
Business Model Based on Operational Excellence, Portfolio Management and Point of View Entergy’s Legacy Positions Entergy’s Business Model Entergy’s Businesses Entergy Wholesale Supply / Demand Climate / Weather Data 30,000 MW electric generating Commodities capacity 6 nuclear units owned Environmen
Slide 5: As a POV Company, We Continually Adapt by Managing Risk and Pursuing Opportunities
As a POV Company, We Continually Adapt by Managing Risk and Pursuing Opportunities Illustrative 98 00 02 04 06 08 10 12 Customer Care, Reliability, Storm Response / Recovery, Efficient Rate Recovery Mechanisms Regulated Transition to TTC – TTC TX Legis Competition TX & AR Clarity Businesses E-RSC Tr
Slide 6: Some Examples – Past and Present
Some Examples – Past and Present -----Risk Management----- Strategies Insulate Isolate Separate Grow Back to Basics EWC Entergy-Koch Joint Venture Enexus Spin-off MISO Transco Spin / Merge 5
Slide 7: Entergy Today
Entergy Today Illustrative Today Proposed Future? ETR ETR Shareholders Shareholders Operational Excellence and Portfolio Management Vertically Transco Integrated Isolate, Utility Separate Business Risks Utility to Maximum Extent Possible EWC EWC 6
Slide 8: Paths Forward – The Utility
Paths Forward – The Utility Illustrative 2012 2013 2014 2015 2016… Objectives Operate Regulatory Safely, Major Join MISO The Path Effectively, Investments Transco Forward Efficiently Managing Spin / Merge Human Capital Facilitate Prudent Investments Maintain Credit Generation Distribution Regulatory
Slide 9: Utility Financial Aspirations Consider System Needs and Customer Cost
Utility Financial Aspirations Consider System Needs and Customer Cost System Needs Financial Aspirations To ensure quality service and reliability Utility Income Growth Outlook • 6 – 8% compound annual net income growth from 2010 through 2014 (2009 base) Operating Company Credit Quality and Flexibil
Slide 10: Service and Reliability Are the Foundation
Service and Reliability Are the Foundation Utility Operations Statistics 1998 vs 2000 and 2001 through 2011 Safety / Lost Work Day Incident Rate Regulatory Outage Complaints; # 44% 63% 1.08 535 0.60 196 98 00 01 11 98 00 01 11 Outage Duration / SAIDI Outage Frequency / SAIFI Avg minutes per customer
Slide 11: Regulatory Mechanisms Tailored for Specific Issues
Regulatory Mechanisms Tailored for Specific Issues Regulatory Mechanisms for Cost Recovery Illustrative Example X% Formula Rate Non-fuel O&M Plan Maintenance capital X% Acquisitions Capacity costs Environmental Specific emission costs Cost Recovery Recovery Energy efficiency Renewables Acadia Unit 2
Slide 12: Infrastructure and Service Investment Opportunities
Infrastructure and Service Investment Opportunities Support Operational and Financial Objectives Generation • Gas-Fired Capacity Utility Capital Investment Plan 2012E – 2014E; % of Total – Prepared Jan 2012 Acquire or contract merchant capacity built over the past decade $6.0B • Potential Self-Build
Slide 13: General Regulatory Update
An Active Regulatory Agenda Required to Implement General Regulatory Update Texas • Rate case filed Nov 2011 and hearing recently concluded; procedural schedule calls for final decision by jurisdictional deadline of July 30, 2012 • PUCT voted to include determination of a purchased capacity cost bas
Slide 14: Utility Capital Investment Needs on the Horizon Present Risks and Opportunities
Utility Capital Investment Needs on the Horizon Present Risks and Opportunities Average Annual Utility Investment Illustrative 2002 – 2014E and potential beyond; $B Includes Does not include major storms major storms 1.5 – 2.8 ??? Three-year capital plan 2.0 1.7 1.3 02 – 06 07 – 11 12E – 14E Beyond
Slide 15: Transmission Business Initiatives Help to Address Risks and Opportunities
Transmission Business Initiatives Help to Address Risks and Opportunities ICT (Current) Move to MISO MISO + Spin / Merge Entergy • T planning • T planning • Offer generation or self Utility • T operations • T operations schedule • Balancing authority • Offer generation or self – Gen commitment and s
Slide 16: Recent Events Mark Progress Towards Achieving Transmission Business Objectives
Recent Events Mark Progress Towards Achieving Transmission Business Objectives MISO Regulatory Update Louisiana Arkansas • Application filed Oct 2011 • Application filed Nov 2011 • LPSC Staff conditionally supportive • EAI and coal plant co-owners of joining MISO reached agreement on how the • Heari
Slide 17: Proposed ITC Transaction – The Next Step in Transforming the Business Model
Proposed ITC Transaction – The Next Step in Transforming the Business Model 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 Creditor
Slide 18: Entergy Customers and Other Stakeholders To Benefit from Independent Transco
Entergy Customers and Other Stakeholders To Benefit from Independent Transco • Provides singular focus on transmission system performance, Independent planning and operations and • Aligns with national policy objectives to facilitate investment Transparent in local, regional and inter-regional trans
Slide 19: Paths Forward – EWC
Paths Forward – EWC Illustrative Objectives 2012 2013 2014 2015 2016… Operate Safely, License Securely, Renewal Efficiently Managing Human Obtain License Capital Renewals Preserve Business Option Value Strategically Transact on POV Optimize Margins Meet Owner Expectations 18
Slide 20: Operational Excellence Also Important for EWC
Operational Excellence Also Important for EWC 1 EWC Nuclear Operational Track Record Capability Forced Loss RFO Duration; INPO Index; Prod Cost; Factor; % Rate; % Avg Days # $/MWh % Improved 21 81 70 60 9 vs Pre-ETR 2011 92 2.4 27 89 24.57 1 Indian Point Annual Forced Loss Rate Energy Center 1991 –
Slide 21: Operational Excellence Translates Into Improved Financial Performance
Operational Excellence Translates Into Improved Financial Performance EWC Nuclear Output Illustrative Jan 1999 – Dec 2011; TWh 45 Total Net Generation 40 35 30 Capacity Factor Improvements Uprates 25 20 15 @Pre-ETR Ownership 1 Avg Capacity Factor 10 5 0 99 00 01 02 03 04 05 06 07 08 09 10 11 1 Assum
Slide 22: License Renewal Protects Long-term Value of Nuclear Assets
License Renewal Protects Long-term Value of Nuclear Assets “Timely Renewal Doctrine” (i.e., continue to operate NRC License Renewal Status until NRC decision) Unit Expiration Status Recent Events / Next Steps • Intervenors have taken steps to slow or block license renewal at the NRC, federal court a
Slide 23: Protecting Value Includes Resolving Legal and State Regulatory Uncertainties
Protecting Value Includes Resolving Legal and State Regulatory Uncertainties Issue Description Current Status Continued Operation • Entergy VY v Shumlin before • Briefing expected for most of 2012, of Vermont Yankee Second Circuit Court of Appeals with decision in 2013 • Certificate of Public Good •
Slide 24: Continued Operation of Indian Point Advances New York’s Stated Goals and Objectives
Continued Operation of Indian Point Advances New York’s Stated Goals and Objectives New York Administration Initiatives Independent Analysis “IPEC’s retirement will exert measurable net economic and environmental costs, which we have quantified in part . . . We have not attempted to quantify all the
Slide 25: Natural Gas Market: An Over-supplied Picture for Now
Natural Gas Market: An Over-supplied Picture for Now NYMEX Henry Hub Natural Gas Prices Jan 2011 – May 2012; $/MMBtu 8 Economic concerns Natural gas market 7 oversupply Warm winter 6 5 2020 2016 4 2014 2013 3 Japan Earthquake / Tsunami 2 Jan 11 Apr 11 Jul 11 Oct 11 Jan 12 Apr 12 24
Slide 26: Hedging Strategies Protect Near-term Value, While Retaining Longer-term Option
Hedging Strategies Protect Near-term Value, While Retaining Longer-term Option EWC Nuclear Contracted Revenues Optimizing hedge timing, volumes and products Balance of 2012E – 2016E; as of Apr 26, 2012 around POV % Revenue Contracted Price, $/MWh Firm products with call 100 100 options for post-lice
Slide 27: Paths Forward – Entergy
Paths Forward – Entergy Illustrative Utility EWC EAI EGSL ELL EMI ENOI ETI District Nuclear Fossil Wind Energy G D T LDC Other Utility EWC 26
Slide 28: Bottom Line: Manage Risk, Remain Financially Solid and Rationally Grow the Business
Bottom Line: Manage Risk, Remain Financially Solid and Rationally Grow the Business Debt to Capital, Excl Securitization Debt Total Shareholder Return 2007 – 2011; % 10/30/1998 – 12/31/2011; % Debt to capital 80 600 500 Assumes $100 invested 60 at closing price Entergy 400 on 10/30/1998 1 40 300 Phi
Slide 29: A Full Slate of Issues and Opportunities
A Full Slate of Issues and Opportunities Areas to Manage Opportunities • Safety / Operations • Manage What We Control – Costs • Reasonably-priced reliable – Operations electric service – Investment • EPS • Protect & Grow – Commodity Prices – MISO – ITC Spin / Merge • Free Cash Flow – Others??? – Pro
Slide 30: Summary
Summary • Utility fundamentals are strong – Constructive investment program – Strategic initiatives like MISO and ITC, which will benefit customers and other stakeholders • EWC financial performance expected to decline over next few years – Declining natural gas and power prices – Regulatory and pol
Slide 31: Entergy: Managing Risk and Pursuing Opportunities
Entergy: Managing Risk and Pursuing Opportunities Deutsche Bank Securities 2012 Clean Tech, Utilities & Power Conference May 15, 2012
Slide 32: Appendix I Additional Information
Appendix I Additional Information 31
Slide 33: Revised 2012 Earnings Guidance
Revised 2012 Earnings Guidance As-Reported and Operational EPS 1 2012E Guidance (after-tax) – Updated April 2012 (0.18) (0.26) 5.25 Midpoint (0.24) (0.23) 0.22 4.85 – 5.65 Range 1Q12 0.14 weather Increased impact income tax Increased non- Reduced Decreased Other expense due fuel O&M due operating EW
Slide 34: Transmission Business Initiatives – MISO Change of Control Proceedings
Transmission Business Initiatives – MISO Change of Control Proceedings Key Dates in Retail Regulatory Change of Control Proceedings to Join MISO Mar Apr May Jun Jul Aug Sep Oct Intervenor / Staff testimony 3/14 4/10 Rebuttal 4/19 Hearing 5/2 Decision TBD Intervenor / Staff testimony 3/16 4/27 Rebutt
Slide 35: Transmission Business Initiatives – Spin-Merge Transaction with ITC
Transmission Business Initiatives – Spin-Merge Transaction with ITC Primary Filings and Approvals for Spin / Merge of Transmission Business Authority Requirements Target Timing Entergy retail • Change of control of transmission assets regulators • Affiliate transaction approvals related to steps in
Slide 36: Utility Investments – Hot Spring and Hinds Energy Facilities
Utility Investments – Hot Spring and Hinds Energy Facilities Hot Spring Hinds MW 620 450 (summer rating) Seller KGen Power Corporation Total Investment $277M; $447/kW $246M; $547/kW Transmission Upgrades ~$440K – $25M $580K Hot Spring Plant Type / Fuel Source Combined cycle / natural gas Energy Faci
Slide 37: Utility Investments – Ninemile 6 New CCGT Plant
Utility Investments – Ninemile 6 New CCGT Plant Ninemile 6 MW ~550 Total Investment $721M, excluding transmission Spending Prior to 2012: $26M; 2012E-2014E: $660M Plant Type / Fuel Source Combined cycle / natural gas; new construction Location Westwego, LA Expected In-Service Date First part of 2015
Slide 38: Utility Investments – Grand Gulf Uprate
Utility Investments – Grand Gulf Uprate Grand Gulf Uprate Estimated Power Uprate 178 MW 1 Estimated Cost $874M (total project, including transmission) Spending Prior to 2012: $448M; 2012E: $426M Plant Type / Fuel Nuclear Source Jurisdiction SERI 90% (sales to EAI / ELL / EMI / ENOI); SMEPA 10% Statu
Slide 39: Utility Investments – Waterford 3 Steam Generator Replacement
Utility Investments – Waterford 3 Steam Generator Replacement Waterford 3 Estimated Cost $687M Spending Prior to 2012: $384M; 2012E: $263M; 2013E: $40M Plant Type / Fuel Source Nuclear Status • Installation revised to Fall 2012 outage • Extensive Spring 2011 RFO inspections support continued operati
Slide 40: Vermont Yankee – Legal and State Regulatory Proceedings
Vermont Yankee – Legal and State Regulatory Proceedings Key Dates Authority Milestone 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 U.S. Court of Oral argument on appeal of NRC 5/9 Appeals – license issuance D.C. Circuit Decision TBD State’s opening / reply briefs 6/4 11/5 1 U.S. Court of VY’s opening / reply
Slide 41: Northeast Markets – Forward Energy and Power Prices
Northeast Markets – Forward Energy and Power Prices NYISO Auction-Cleared Capacity Prices ISO-NE Capacity Prices June 2010 – Oct 2012; $/kW-mo June 2010 – May 2016; $/kW-mo 3.0 5.0 Strip 1 2.5 Forward Capacity Auctions 4.0 2.0 3.0 1.5 Spot Auction 1.0 Monthly 2.0 Reconfiguration Auctions 0.5 1.0 0.0
Slide 42: Northeast Markets – New York Zone A Market Prices and Heat Rates
Northeast Markets – New York Zone A Market Prices and Heat Rates NYISO Zone A ATC Forward Prices ($/MWh) 55 2016 45 2015 2014 35 2013 2012 25 01/11 04/11 07/11 10/11 01/12 04/12 Source: Derived from third party data service NYISO Zone A Implied Delivered Heat Rate (Btu/kWh) 9,000 2016 8,000 2015 201
Slide 43: Northeast Markets – New York Zone G Market Prices and Heat Rates
Northeast Markets – New York Zone G Market Prices and Heat Rates NYISO Zone G ATC Forward Prices ($/MWh) 65 2016 2015 50 2014 2013 35 2012 01/11 04/11 07/11 10/11 01/12 04/12 Source: Derived from third party data service NYISO Zone G Implied Delivered Heat Rate (Btu/kWh) 11,000 2016 10,000 2015 2014
Slide 44: Northeast Markets – New England Market Prices and Heat Rates
Northeast Markets – New England Market Prices and Heat Rates ISO-NE MASS Hub ATC Forward Prices ($/MWh) 65 2016 2015 50 2014 2013 2012 35 01/11 04/11 07/11 10/11 01/12 04/12 Source: Derived from third party data service ISO-NE MASS Hub Implied Delivered Heat Rate (Btu/kWh) 9,500 2016 2015 8,500 2014
Slide 45: Appendix II Regulation G Reconciliations
Appendix II Regulation G Reconciliations 44
Slide 46: Regulation G Reconciliations
Regulation G Reconciliations Table 1: Entergy Consolidated Debt to Capital, Excluding Securitization Debt Reconciliation of GAAP to Non-GAAP Measures 2007 – 2011 ($ in millions) 2007 2008 2009 2010 2011 Gross debt (a) 11,123 12,279 12,014 11,816 12,387 Less securitization debt (b) 330 310 838 931 1,
Slide 47: Regulation G Reconciliations
Regulation G Reconciliations Table 2: Entergy Consolidated Net Income Reconciliation of GAAP to Non-GAAP Measures 1999 – 2011 ($ in millions) 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 As-Reported Net Income (a) 552 679 726 599 927 910 898 1,133 1,135 1,221 1,231 1,250 1,346 Le
Slide 48: Regulation G Reconciliations
Regulation G Reconciliations Table 3: Entergy Consolidated Annual Special Items Reconciliation of GAAP to Non-GAAP Measures 1999 – 2011 ($ in millions) 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Special Items Regulatory and reserve adjustments (65) (22) - - - - - - - - - - - Ch
Slide 49: Regulation G Reconciliations
Regulation G Reconciliations Table 3: Entergy Consolidated Annual Special Items (continued) Reconciliation of GAAP to Non-GAAP Measures 1999 – 2011 ($ in millions) 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Special Items (continued) Development costs - - - (21) - - - - - - - -
Slide 50: Regulation G Reconciliations
Regulation G Reconciliations Table 3: Entergy Consolidated Annual Special Items (continued) Reconciliation of GAAP to Non-GAAP Measures 1999 – 2011 ($ in millions) 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Special Items (continued) Restructuring - Entergy-Koch, LP distribution
Slide 51: Regulation G Reconciliations
Regulation G Reconciliations Table 4: Entergy Consolidated EPS Reconciliation of GAAP to Non-GAAP Measures 1 2012E Guidance Range (after-tax) – Updated April 2012 (Per share in U.S. $) 2012E Guidance Range 2 As-Reported (a) 3.55 – 4.35 Less Special Items through 1Q 2012 Vermont Yankee asset impairme
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