Slide 1: Safe Harbor statement
The following constitutes a “Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: Investors are cautioned that forward-looking statements contained herein with respect to the revenues, earnings, performance, strategies, prospects and other aspects of the business of Ent
Slide 2: But... at 30,000 feet, our point of view
But... at 30,000 feet, our point of view is pretty clear... ...Lack of clearly stated energy policy and goals will increasingly result in capital destruction.
Slide 3: POV: Energy Policy Will Shape the Industry
POV: Energy Policy Will Shape the Industry Energy Policy Goals Goals for Energy Production National Goals Distribution and Use y, ao Environment? Improve domestic supply from diverse sources Affordable Increase efficiency of production and use Efficient Promote stable, efficient markets and acl Rell
Slide 4: Transmission Right is Top Priority
Transmission Right is Top Priority Energy Policy Goals Goals for Energy Production _National Goals Distribution and Use Improve domestic supply from diverse sources ‘Affordabl iar Environment " ment / \ Increase efficiency of production and use Promote stable, efficient markets and arene pricing Enh
Slide 5: Transmission policy on pricing, expansion, institutions
4. Implement policy on pricing the(use pf the grid efficiently 2. Implement policy on pricing the€pansionot the grid efficiently 3. Establish the right set oginstitutions}o carry out these policies Without thes value destruction will continue
Slide 6: Scenario
Scenario Generation Dispatch and Total Cost Generation here maximizes Generation here would theuse ofthenetwork and. slose te Ineface and ET Ta minimizes total costs - 1800 _ increase total cost- S00 [ete Ass Pa fe Neds. ot MW “transfer limit MW "transfer limit ae jomw soon 4,00 MW \ ZL a Ed { Eeago
Slide 7: Scenario
Scenario Transmission investment of $X would increase capacity on the B.C link, lowering prices at A and C and Increasing prices at B. How should the decision be made? 2000 MAW 71500 NIN bid= $40 bid = $30 Le terse Un eter 600 MW Limit Ginpierayvack ‘on $100 Million InveStifient fo Eliminate Congest
Slide 8: Scenario
Scenario 1500 NAN bid = $30 UP oters20 600 MW Limit 2000 MW load 1000 MW bid = $60 LP ofters60 Options (SF cobacktaverically integrated») monopolies, and let the utility decide Let RTO central planners |S) decide whether the investment Is economic and If so, spread the cost to all transmission users
Slide 9: Real Life: No Market Based LMP Today
Real Life: No Market Based LMP Today Locations of Proposed or Constructed Merchant Generating Facilities on the Entergy Transmission System @ Filed for Interconnection (-25;s00K @ Completed construction (4,700) MW Marginal Cost worse Short « 2004 3 long —_— BE soem Amite South short/old < 2004 > con
Slide 10: Entergy Potential Merchant Generation Transmission Rate Impact
Entergy Potential Merchant Generation ‘Transmission Rate Impact. Transmission Investment Participant Funding “Rolled-in” Rates $in billions millsfewh Total $1,024" Total € 14.4 13% increase in 5D+% ‘customer increase bill Transmission Investment Current Base |] Interconnection || Potent 1] Export Up
Slide 11: FERC Decisions State Response
FERC Decisions State Response Simple ‘State’ stems All Load Under the RTO Tariff Uy Es Bro-apocval due to loss of RTo's Bundled Load Inetctent Congestion Terms & Conditions te Bere a “uplit™ No RTO approval due to Increased retallGosts, RTO approved 4~ ‘Socialized Transmission Expansion No ITC appro
Slide 12: on Organi
Me on Organi
Slide 13: Congestion Management Methodologies
Congestion Management Methodologies [HBB rosso Committed orimplemented LIP HB zonauupursriowgates Hi Undecides (11D non Participating |UCooperatvelPuble Power (no lcte Service area
Slide 14: Higher Returns
Higher Returns “Based on the Information provided by the parties and using the methodology eet forthin Gomimlssion precedent, we believe the resulting zone of reasonablen between 9.25 percent [ROE} and 15.48 percent, wth a midpoint of 12.98 percent and a moaan & 42.0 pepo. The Commission believes ti
Slide 15: POV: Environment — Who, How Much, When?
POV: Environment — > Who, How Much, When? Energy Policy Goals Goals for Energy Production National Goals Distribution and Use Improve domestic supply from diverse sources \ Affordable Environment, Increase efficiency of production and use Promote stable, efficient markets and Reliable pricing Enhanc
Slide 16: Sources
Sources = Entergy NO, SO, co, Mercury (haan) anmnanny bir Wh) 10 20 3008 ‘ =|, [|_| , | High | Electric High Electric High Elect 5 High Electric 5, Eleonic Avs. MOBY" crete Ave. ey Electric Ava. leer Avg. "tera ‘Sources: EPA, DOE, NROC 1"
Slide 17: Emissions projections: SO2, NOx, CO2, Mercury
$0, 5 G NO, ») ion Tons) 4 \ (Million Tons) 10 on ss 3 6 : 2 Tiree o- 4 2 — 2002 2008 «2010 2014 2018 2002 2006 ©2010 2014 2018 28 co, 50 Mercury ae (Bittion Tons) a (Tons) 24 |anremes 35 = agi . 20 i 20 i eteaeenene 10 vseeee 18 ° 2002 2006 2010 2014 2018 2002 2006 ©2010 2014 2018 1 settords Propos
Slide 18: Cost Comparison Vs. Emission Reductions
Cost Comparison Vs. Emission Reductions 5 © 4.5 times cost Clean Energy Group: 52% more reductions © 1.8 times cost Issues Bush/Cheney: 0, Jeffords: Too much Too soon No flexibility Offsets Trading Emission Reduction Score Bush CleanEnergyGroup Jeffords Emission PV of Industry | Cost impact fie: The
Slide 19: Hl osisve impact ee
Hl osisve impact ee 2
Slide 20: POV: Demand-Side Efficiency / Conservation
POV: Demand-Side Efficiency / Conservation Has Bigger Role to Play Energy Policy Goals Goals for Energy Production National Goals Distribution and Use Improve domestic supply from diverse sources ‘Affordable: ’ 4 QEnvironmentD Increase efficiency of production and use Efficient Promate stable, effic
Slide 21: Energy efficiency and greenhouse gas emissions
"Since thelr econor Talich, the result of their target appears tobe aconti rease in greenhouse gas emissi ted to total some 25 percent over the perio “Margaret Beckett, Britain's Environment Secretary in reference to the Bush Administration Pran * @iergy efficiencyghould be at the heart of the natio
Slide 22: California Response to High Prices and Shortages
California Response to High Prices and Shortages 2004 (Same weather and economy as 2000) Voluntary response to high prices Efficiency Improvements Total Peak Reduction Market Size % Change (2,616) (3,743) (6.359) 50,000 Source: California Energy Commission C3%t) B
Slide 23: POV: Low Income Efficiency Programs
POV: Low Income Efficiency Programs Are Good Public Policy What One-Tenth of a Cent Per KWh Will Buy 84 Billion KWh Saved (life of measures) A standard utility low-income aearciy $8.4 Billion in Direct Customer Savings efficiency program is one of the most cost- (medical, earnings, property values,
Slide 24: Supply Is Not the Problem
Supply Is Not the Problem Energy Policy Goals Goals for Energy Production National Goals Distribution and Use Improve domestic: supply from diverse sources Affordable Environment Increase Efficiency of production and use Promote stable, efficient markets and pricing) Enhance distribution \ Infrastru
Slide 25: Gas Prices
Gas Prices ‘ig, Weekly Henry Hub Spot Price; Smmbay Spark Spreads Weehty ERCOT Spot Spread sawn, Reserves ¥ Weather4. Gas Electricity Price Drivers LNG/OIL LT < Economy New Storage / Pipes Rig count ST Storage Demand - Offshore Weather Environment Uprates LT Congestion Economy Capital availability O
Slide 26: Rigged for growth
Rigged for growth Number of active rigs 95 96 S7 88 99 00" OF" o2~ Peak, “As of 220002 Source: CERA, Bakar Hughes 2/2002 Fueled by Canada US. natural gas supply; (Betray 2 =) LNs Imported Canadian Gas Domestic Gas Production 98 OIE OF USF OTF O8F a
Slide 27: Forward Prices Have Dropped As Capacity Is Added
Forward Prices Have Dropped As Capacity Is Added Entergy Region U.S. Reserve Margins % 139 108 145 14 Regional Forward Spark Spreads (2003); smiwh 4a = & 1997 1998 1999 \z000 2001 z002F 101 ont 1201 Cinergy Region Regional Forward Spark Spreads (2003); ant Source: RD! NEW gan Database, CERA, UDI, Mo
Slide 28: Production, Demand, Storage, Weather
Production +/- Demand +/- Storage Weather Electricity Overcapacity = flatter dispatch order, reduced volatility, more grid congestion Most plants unhedged 2003 / 2004 LMP - Eastern Interconnect. Participant funding lot of p:
Slide 29: Getting Rules Right
Getting Rules Right Flow Diagram Doesit create value No —>
Slide 30: POV: Multiple Growth Engines Weather the Storm
POV:Multiple Growth Engines Weather the Storm cost Acquire Customers Invest and Grow (Expand Scope) (What We Have) Energy + Expant new products: Utility + Repowering, fuel switching Gommodity and nEurope Services Energy __« Pipeline andGtorage) Commodity opportunities Services Nuclear + Grow license
Slide 31: POV: Integration Drives Competitive Advantage
POV: Integration Drives Competitive Advantage Integrated Business Model (iiustrative) “Information flaws to capture cross-commodlty advantages Generation Pipeline & Power and Portfolio Storage Information Gas price allows profit | * information maximizing ‘ | allows trading, 1 profitable dispatch an
Slide 32: POV: A World Class Trading Organization Is Essential
POV: A World Class Trading Organization Is Essential Industry Rankings Natural Gas ‘Source: Energy Peover Risk Management
Slide 33: EK Trading: Daily Gross Trading Profits
EK Trading: Daily Gross Trading Profits 100 20 | il ll... _ so Distribution of Daily Gross Trading Profits (Millions)
Slide 34: Entergy-Koch: Growth Opportunities
Products Entergy-Koch: Growth Opportunities Markets deivaives Uselectety eam prmuet Sonate Ces Usher funele weathe? derivatives with derivatives New product derivatives in Precipitation Europe derivatives B
Slide 35: The Changing Nuclear Environment
The Changing Nuclear Environment From To — Economically driven divestiture Forced nuclear asset divestiture as jad cr degalccen = | a inemistentcale) lack of ownership higher concentration of large scale Fragmented nuclear generation } => (fincreasing consolidatiand@ading to owners 90% capacity fact
Slide 36: Capacity Factor, Fuel Cost, Total Production Cost
Capacity Factor Fuel Cost Total Production Cost Three year average; % ‘Three year average; S/MWh Three year average; SIMWh 268 505) 817 185 9 Large Seale subacate Large Seale Sub-seale Large Seale Sub-seale Operators Operators ‘Operators Operstors Operators Operators ‘Note: Lenge Scale Operators ope
Slide 37: POV: 2001 Nuclear Performance Provides Platform for Growth
POV: 2001 Nuclear Performance Provides Platf Growth Entergy: Scale Advantages of Doubling Our Fleet Capacity Factor Refueling Outages Entergy 01 Entergy ‘ODL ow. -<&") oa «—Fitergy 07 Avg. a inustny 90-00 vg. 23 Days Entergy ‘01 High Saba findustry Avg. 40 Days
Slide 38: Potential EPS From Margin Improvements at Indian Point Units
Potential EPS From Margin improvements at indian Point Units Power PPA / Market Reduce O&M Uprate increase Costs per MWh* ons ats os 007 0.07 oa 5h 10% 5h 10% 5h 10% % Improvement "rom actual £909 favaie % Improvement % Improvement 9
Slide 39: Number of Nuclear Plants Likely to Seek Scale Advantages
Number of Nuclear Plants Likely to Seek Scale Advantages Megawatts Regulated i unreguiated 5,000 NW ‘Sub Scale a Nuclear Operator “0
Slide 40: POV: Nuclear Transactions Will Be Innovative
POV: Nuclear Transactions Will Be Innovative Entergy uses multiple methods of providing value — meeting seller needs and minimizing capital High Every deal has been a one-off reallocation of risk based on seller’s risk-eward perception Risk Transfer Exploring alternative service offerings to leverag
Slide 41: Carbon Intensity of Emissions, Entergy Portfolio
Carbon intensity of Emissions Entergy Portfolio (Pounds per KW) (Production) 24 Coal —Natural Gas. oi (econ, a2
Slide 42: Incremental NPV of Entergy Assets
Incremental NPV of Entergy Assets Under “Fair” Outcomes (2002-2030, % increase) es 49% 17% Glean Energy Jeffords Bill ‘Group Plan Note: 1. Analysis includes effects of incroascd gonoration and pricing rosuting trom energy policy "ha" clafhaad os dda toclaa! rcuhicdiean; ouput. obo: 4a
Slide 43: Energy Industry Announcements In Last Months
Energy Industry Announcements In Last 8 Months | 4 Companies Downgraded | 5 Companies Placed on Credit Watch 15 Companies Announce Capital Restructuring Plans © $6.2 B of Equity Issuances * $7.5 B of Asset Sales Announced * DebtiCap goals of 45-50% 4a
Slide 44: Cash Flow Available for Growth
(SB) 22 ca SPELEC ETR Cash ‘01 OCF Cash Flow Available for Growth (2002-2004); ($B) 55 >$2 B —r, 250% ‘AVATABIE For Debt Ratio cos 5 Growth Cash ocr CapX Dividend ‘Planned’ + includes Off Balance Sheet Debt Growth 45
Slide 45: Expected Returns On Generation
Expected Returns On Generation Congestion Determines Under Current Forward Curve Attractiveness of Asset ROE 25% secondary Market Range -\/ J \ 18% 10% i ee Ps we ——— New Build Range o% 180 250 350 450 550 Construction (Acquisition) Cost / KW 46
Slide 46: Annual Earnings
Annual Earnings ($ EPS) 1998 = 1990 «©2000-2001 2002 Projected 8% - 10% Average Annual Growth ‘Commitment ar
Slide 47: Entergy's To Do List
Entergy's To Do List (Get Rules Right } [ Maximize Nuclear Scale/Skil] EON ae Strong Balance Sheet caves * POV: Buyer / Seller * Weather * Congestion i — Nuclear Assets Manage Outside a Party Positions <a Gas Storage ~~ Positions (Source + Sinks) 43
Slide 48: We May Not Be Rocket Scientists...
“We May Not Be Rocket Scientists..." = — Entergy