Entergy Corporation · NYSE:ETR
Entergy — Wolfe Research Power and Gas Leaders Conference 2013
40 slides from Entergy's conference presentation, Sep 24, 2013
Slide 1: Entergy Update
Filed by Entergy Corporation Pursuant to Rule 425 Under the Securities Act of 1933 Subject Company: Entergy Corporation Commission File No. 001-11299 Entergy Update Wolfe Research Power and Gas Leaders Conference Sept. 24, 2013
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 filed a registration statement on Form S-4 (Registration No. 333-184073) with the SEC registering the offer and sale of shares of ITC common stock to be issued to Entergy shareholders in connection with the proposed transactions. This registration stat
Slide 4: Entergy's Scope of Operations Today
Entergy’s Scope of Operations Today Entergy’s Scope of Operations Entergy’s Businesses • 30,000 MW electric generating capacity • One of the nation’s leading nuclear generators • 2.8 million utility customers • More than $10 billion revenues • ~15,000 employees Utility • 6 vertically integrated elec
Slide 5: Strategic Imperatives – Simplify and Optimize the Business
Strategic Imperatives – Simplify and Optimize the Business • Execute MISO / ITC • Grow Utility business (e.g., economic development) • Continue to develop and implement Our Mission: productive regulatory constructs Create Sustainable Value • Improve EWC results • Optimize the organization through fo
Slide 6: Joining MISO on Track for December 2013 Cutover
Joining MISO on Track for December 2013 Cutover On track to integrate into MISO Projected savings of ~$1.4 billion in Extensive training under way to prepare first ten years for transition Enhanced independence, transparency Over 600 employees have clocked more EAI will respond to APSC’s 9/18/13 Sho
Slide 7: Re-filing ITC Transaction Application in Texas
Re-filing ITC Transaction Application in Texas Singular focus on transmission Opportunities for employees, customers and communities and increased strategic flexibility and strength for Entergy Independent transmission company promotes robust market Ultimately expected to result in lower delivered e
Slide 8: Projecting Moderate Sales Growth
Projecting Moderate Sales Growth Long-term Weather-Adjusted Sales Growth What to Watch For % Industrial development – significant opportunities Economic growth outside of ??? industrial development – region 0.25 – expected to more closely follow 0.50 national trends Energy efficiency – smaller 1.25
Slide 9: Seeking to Capitalize on Regional Advantages
Seeking to Capitalize on Regional Advantages Estimated Capital Expenditures for 1 Announced Economic Development Projects $B 60 Other (15 projects) Approximately 1,500 – 2,000 Wood, Pulp & Paper (6 projects) Steel, Metals (4 projects) MW of potential load 50 Refining (2 projects) Expected to be in s
Slide 10: Focusing on Efficient Operations and Prudent Investment
Focusing on Efficient Operations and Prudent Investment Human Capital Management: Targeting $200 – 250M in Savings Investment Types Estimated Business Segment Split Ninemile 6 CCGT ~$721M through 2015 % Post-Fukushima requirements at Utility EWC ~$230M (capital) for 2012 – 2018 ~35 – 40 Utility ~60
Slide 11: Taking Action to Improve EWC Results
Taking Action to Improve EWC Results Revenue – Lower Hudson Valley Costs Capacity Zone Implementation of HCM organizational changes was accelerated for EWC’s non- “We conclude that creating nuclear operations a new capacity zone is necessary to Looking at other efforts to lower costs provide more ac
Slide 12: Advocating for Wholesale Market Design and Public Policy Changes
Advocating for Wholesale Market Design and Public Policy Changes We believe that the current market design in the Northeast is not sustainable in the long run and needs to be reassessed Any electric system (or market) must meet the following long-term objectives: Ensure reliable service to customers
Slide 13: Summary
Summary • A Growing Utility - A solid utility with reasonable rates, moderate sales growth and continued investment needs - Initiatives to lower costs and improve efficiency for customers and employees, supporting investment, reasonable rates - Regional advantages producing significant development f
Slide 14: Entergy Update
Entergy Update Wolfe Research Power and Gas Leaders Conference Sept. 24, 2013
Slide 15: Appendix I Additional Information
Appendix I Additional Information 14
Slide 16: Utility
Utility Business Purpose We grow the business by providing customers with low- emission, reliable energy at reasonable cost; superior service; a strict focus on safety; operational excellence and engaged employees 15
Slide 17: The Utility Operating Companies
The Utility Operating Companies Electric Retail Customer Overview of Utility Operating Companies Breakdown Entergy Gulf States Entergy Arkansas Entergy Louisiana 2012; % of MWh sales Louisiana • Electric utility • Electric and gas utility • Electric utility • 696,000 electric customers • 387,000 ele
Slide 18: Entergy Arkansas Regulatory Highlights
Entergy Arkansas Regulatory Highlights 2012 Return on Equity; % Rate Case Filed March 1, 2013 (Docket No. 13-028-U) • 12/31/12 test year + known and measurable changes and rate base closed to plant in service through 12/31/13 9.6 9.8 • Rate base (last approved $3.996B) - $4.875B (MISO-only) 2,3 • EA
Slide 19: Entergy Gulf States Louisiana Regulatory Highlights
Entergy Gulf States Louisiana Regulatory Highlights 2 2012 Return on Equity; % Rate Case Filed Feb. 15, 2013 (Docket No. U-32707) • 6/30/12 test year + known and measurable changes and rate base closed to plant in service through 12/31/13 11.7 11.4 • Rate base (last approved $2.405B) - $2.666B (MISO
Slide 20: Entergy Louisiana Regulatory Highlights
Entergy Louisiana Regulatory Highlights 2 2012 Return on Equity; % Rate Case Filed Feb. 15, 2013 (Docket No. U-32708) • 6/30/12 test year + known and measurable changes and rate base closed to plant in service through 12/31/13 10.1 • Rate base (last approved $3.560B) 6.6 - $4.475B (MISO-only), $3.82
Slide 21: Entergy Mississippi Regulatory Highlights
Entergy Mississippi Regulatory Highlights 2012 Return on Equity; % 10.59 2012 Test Year FRP Filed March 15, 2013; Point of Revised April 30, 2013 (Docket No. 2009-UN-388) Adjustment • ROE midpoint is 10.80% ROE (10.06% + 0.74% performance factor); 9.76 – 11.83% range • 48.21% common equity ratio 8.2
Slide 22: Entergy New Orleans Regulatory Highlights
Entergy New Orleans Regulatory Highlights 2012 Return on Equity; % 2011 Test Year FRP (Docket No. UD-08-03) • $0.295B electric rate base, $0.09B gas rate base • Electric: 8.58% WACC and 50.08% common equity ratio 8.5 8.4 • Gas: 8.40% WACC and 50.08% common equity ratio • On 8/8/13, the CCNO approved
Slide 23: Entergy Texas Regulatory Highlights
Entergy Texas Regulatory Highlights 2012 Return on Equity; % Paths for Improving ROE in Texas • ETI currently expects to file a rate case in 3Q13 (Docket No. 41791) 6.4 • Purchased Power Capacity Rider approved 5/9/13 (Docket No. 39246) 4.8 • Appeals of rate case order pending in Travis County Court
Slide 24: System Energy Resources Regulatory Highlights
System Energy Resources Regulatory Highlights 2012 Return on Equity; % Overview • SERI’s principal asset currently consists of an ownership interest and a leasehold interest in the Grand Gulf Nuclear Station • 8.97% WACC (10.94% ROE and 64% common equity ratio at 13.7 14.3 12/31/12, where sale / lea
Slide 25: Entergy Wholesale Commodities
Entergy Wholesale Commodities Business Purpose We focus on best-in-class operational efficiency, safety, security and reliability while continually seeking to optimize our portfolio of assets in an ever-dynamic market Note: Entergy plans to close and decommission the Vermont Yankee plant at the end
Slide 26: EWC – Hedging for Asymmetrical Upside Opportunity
EWC – Hedging for Asymmetrical Upside Opportunity EWC Nuclear Revenue Sensitivity on Contracted Energy 1 Based on market prices as of June 30, 2013 2015 10 2014 Balance 5 of 2013 0 Avg expected contracted (5) revenue/MWh $46 on ~18 TWh $46 on ~30 TWh $48 on ~16 TWh (10) (20) (10) 0 10 20 Market Pric
Slide 27: Northeast Energy Markets – Forward Power Prices
Northeast Energy Markets – Forward Power Prices Northeast Nuclear Fleet Forward Energy Prices January 2012 – September 2013; around-the-clock $/MWh; excludes Palisades 50 At 9/13/13 1 Bal 2013 $44 45 Cal 2014 $45 Cal 2015 $45 40 35 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 1 Starting in Janua
Slide 28: Northeast Capacity Markets – Cleared Auctions
Northeast Capacity Markets – Cleared Auctions NYISO Auction – Cleared Capacity Prices For delivery June 2010 – October 2013; $/kW-mo 6 Spot 5 4 Strip 3 2 Monthly (weighted average by amount sold) 1 0 Jun-10 Oct-10 Feb-11 Jun-11 Oct-11 Feb-12 Jun-12 Oct-12 Feb-13 Jun-13 Oct-13 ISO-NE Capacity Prices
Slide 29: NY Capacity Market – Lower Hudson Valley Zone Status
NY Capacity Market – Lower Hudson Valley Zone Status Rest of State NYISO 2013 Auction Simulation Capacity price estimates with new capacity zone (NCZ), $/kW-mo Zones 1 Scenario NYCA Zone J 2 Zone K 3 NCZ August 2013 (Summer) No NCZ 4.56 15.16 7.59 With NCZ 4.37 15.16 7.59 9.34 G November 2013 (Winte
Slide 30: Indian Point – License Renewal Status
Indian Point – License Renewal Status Proceeding Recent Developments NRC License NRC issued letter in August 2013 acknowledging that Renewal IP2 will enter period of extended operation under its existing license on 9/28/13 In Atomic Safety and Licensing Board hearing process Water NYS Dept. of Envir
Slide 31: Decommissioning – SAFSTOR at Licensee Option
Decommissioning – SAFSTOR at Licensee Option NRC Regulation on Decommissioning Alternatives Licensees may choose from three alternative decommissioning strategies: • DECON (prompt dismantlement) – soon after the nuclear facility closes • SAFSTOR (delayed dismantlement) – facility is maintained and m
Slide 32: Decommissioning – Decon vs SAFSTOR
Decommissioning – Decon vs SAFSTOR DECON SAFSTOR (Prompt Dismantlement) (Delayed Dismantlement) Illustrative • Higher spending in early Illustrative • Put site in “cold and dark” years state for up to ~50 years Cumulative Spending • After transition, site Trust Bal (minimal decontamination) Trust Ba
Slide 33: Decommissioning – Initial Activities
Decommissioning – Initial Activities Regulatory processes include: Operational activities include: Develop and submit Post Shutdown Defuel reactor vessel, move spent Decommissioning Activities Report filing fuel from wet to dry storage, drain (PSDAR) and de-energize systems Due within 2 years after
Slide 34: Decommissioning – SAFSTOR Long-term Process
Decommissioning – SAFSTOR Long-term Process Decommissioning Process Overview Assuming SAFSTOR Illustrative Access to Decommissioning Fund Planning • Up to 3%2 for planning (before Shutdown final shutdown) Move fuel from reactor vessel to fuel pool • Balance available 90 days after Transfer fuel from
Slide 35: Credit and Financial Metrics
Credit and Financial Metrics Credit Ratings Financial Metrics Standard & Poor’s Moody’s Gross Liquidity, $B Entity Rating Outlook Rating Outlook 4.1 Revolver Entergy A- Stable A3 Stable Cash / Cash capacity Arkansas 1 3.8 Equivalents A- Stable A3 Stable 0.3 Entergy Gulf 1 States Louisiana 2Q13 A- St
Slide 36: Preliminary – Key Earnings Drivers for 2014
Preliminary – Key Earnings Drivers for 2014 Preliminary 2014 Drivers Utility • Transmission spin-merge transaction • Rate actions and other regulatory proceedings, including current base rate cases filed in Arkansas and Louisiana, Mississippi FRP (change for 2012 TY approved and to-be-filed 2013 TY)
Slide 37: Appendix II Regulation G Reconciliations
Appendix II Regulation G Reconciliations 36
Slide 38: Regulation G Reconciliations
Regulation G Reconciliations Table 1: Return on Average Common Equity – Reconciliation of GAAP to Non-GAAP Measures 2012 ($ in millions) 1 EAI EGSL ELL EMI ENOI ETI SERI Utility As-reported earnings available to common stock (a) 145.5 158.2 274.1 43.9 16.1 42.0 111.9 943.0 Add back: Preferred divide
Slide 39: Regulation G Reconciliations
Regulation G Reconciliations Table 2: Gross Liquidity Reconciliation of GAAP to Non-GAAP Measures As of June 30, 2013 ($ in millions) 2Q13 Cash and cash equivalents (a) 311 Revolver capacity (b) 3,819 Gross liquidity (a)+(b) 4,130 38
Slide 40: Regulation G Reconciliations
Regulation G Reconciliations Table 3: Debt to Capital Ratio, Excluding Securitization Debt Reconciliation of GAAP to Non-GAAP Measures As of June 30, 2013 ($ in millions) 2Q13 Gross debt (a) 13,747 Less securitization debt (b) 927 Gross debt, excluding securitization debt (c) = (a)-(b) 12,820 Total
Entergy — Wolfe Research Power and Gas Leaders Conference 2013 on 6ix