Entergy Corporation · NYSE:ETR
Entergy — Morgan Stanley 2004 Global Electricity & Energy Conference
37 slides from Entergy's conference presentation, Mar 24, 2004
Slide 1: Fortune brings in some boats that are not steer'd
“Fortune brings in some boats that are not steer’d.” William Shakespeare ... But the odds are against it. Morgan Stanley 2004 Global Electricity & Energy Conference J. Wayne Leonard eos Chief Executive Officer March 24, 2004 = Entergy
Slide 2: Safe Harbor and Regulation G Compliance
Safe Harbor and Regulation G Compliance The following constitutes a "Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995: From time to time, Entergy makes statements concerning its expectations, beliefs, plans, abjectives, goals, strategies, and future events or perform
Slide 3: Top Concerns a Year Ago
Top Concerns a Year Ago 4 ) Indian Point 2) Indian Point OO 4) Rate recovery of investments 8) FERC vs. state jurisdictional issues mm 8) Credit rating 10) Where do we go from here?
Slide 4: Indian Point
Indian Point INPO Plant Performance Index Oy 100 90 NRC Safety Rating 80 March 8, 2004 IP2 IP3 70 ° First time ever green IP3 & JAF rating for both plants | 41100 1p2 60 ° New York residents identifying Indian Point 50-| as Number 1 concern down 80% (2/03 — 3/04) 40 98 99 00 01 02 03 Pilgrim IP3 JAF
Slide 5: Indian Point
Indian Point 7/25/03 — Fe ney Management Agency certifies Indian Point emergency plan “Afi@@earefully consi derinS pl available information, we have reasonable assurance that appropriate protect fect the health and safety of surrounding communities can be taken and are capable of being implemented i
Slide 6: Indian Point
Indian Point 3/1/04 — Private Transmission Project to New York City Stalls “Doubt among lenders about the revenue that could be eamed by a privately owned transmission line supplying power to New York City has resulted in the developer, Conjunction LLC, canceling a planned auction of transmission ac
Slide 7: Under the Microscope
© Entergy-Koch Inder the Microscope Federal Energy _ Regulatory Commission “EKT completed 61 wash trades through Enron Online during various periods of 2001.” The SEC launched an informal > Jinquiry regarding “any wash or *, pine trip trading activities in 2001 3 eS and 2002 conducted by Entergy- Ko
Slide 8: Changing Competition
Changing Competition *° Merchants reduced/exited trading ° Well-capitalized companies with strong credits entered including banks and big oil * “Momentum” traders increasingly active Multiple Industry Investigations ° California market ° Wash trades * Reporting violations Fundamental Change: Natural
Slide 9: Rate Recovery of Investments
Rate Recovery of Investments Ir, HEREFCRE S ORDERED byne Cammtcn Ns hye cenm dee! a: ep ie Lt Stain wan nan msn S416 oe prise eng ese 2003, $4 Jor: Siguaton wih WEAMEIS Aad is “The return on common equit of 11.75%, when combined with the cost of Long Term Bond Debt and Preferred Equity, results ina
Slide 10: Rate Recovery of Investments
Rate Recovery of Investments returns decline as costs go u New Orleans Arkansas Mississippi RESOLUTION IP = says es vv comeuman OR 0 C _ THEREFORE, EAs Rtn fr Delray Onkrin gee THOWAS AND YMLLARDAENMSE BY ORDER OF TIIECONASSION [RESOLUTION AND ORDER ACCEPTING OFPEROP SEFTLEMENT This ATM ca et ey 20,
Slide 11: Rate Recovery of Investments
Rate Recovery of Investments Not all costs are going up ENOI Production Mix » % Before Supply Plan an Gas! Oil! | Purchased e a 63 After Supply Plan 55 48 47 42 45 Rate Case Components $64 M net electric capital investment $30.2 M revenue increase ($18.4 M electric + $11.8 M gas) + $0.08 annual EPS
Slide 12: Rate Recovery of Investments
Rate Recovery of Investments Entergy Louisiana Retail Rates $/NWh (filing 1/9/04) Rate Case Components $120 M reliabi Investment $170 M generation investment $167 M revenue increase 0% - 2% rate increas Baseline Supply Capital ROE Other FiledRates Fuel Net Rateto Plan Investment Change Savings Custo
Slide 13: Supply Plan Issues
Supply Plan Issues RFP — Actual and Projected Results MW San Boy “10% 42 39 35 25 Before After Before After VolatilityJDue to $1/MMBtu ? Gas Price [50% rl 8 4 5 Timeline for Completion After Before After MW eliabilit as Units >30 years old % Ot rea Load 4 ne 307 Sources 1,006 tay
Slide 14: Supply Plan Issues
© Supply Plan Issues Resources Type of Bidder/C ounterparty Contracted Resource Output (MW) Affiliated unregulated: ISES 2 Coal Entergy Power Inc. 101 RS Cogen Gas EWO Marketing LP 185 2
Slide 15: Supply Plan Issues
Supply Plan Issues Supply Plan RFP and Bid Evaluation Process ST purchases implemented fot contin gent o1f egulatory approvg What is impact on prod. cost? eurely, Econom objectives & anon REP Process designed consistent with Bidder decis LPSC rules Proposal proceed selection |LT | developed TR adds
Slide 16: FERC vs. State Jurisdictional Issues
FERC vs. State Jurisdictional Issues ‘Identify i aa independence Seman lng alternatives - ayy, + Best long-term solution + LMP an issue with states + Conditioned on - FERC "give" on jurisdiction; - further suspension of Interconnection Rule = interim participant funding Se Trans Filing ETR Only Fili
Slide 17: FERC vs. State Jurisdictional Issues
© FERC vs. State Jurisdictional Issues Independent SPP/ITC Transmission Proposed Integrated Organi R .° } Proposal Utility 4 y t |More + Separation from Integrated Utility ———————» Less | + 701 Alternate Transmission Org. FERC order e Real-time, substantial oversight ¢ Efficient Transmission Pricing
Slide 18: Nuclear Business Growth
Nuclear Business Growth Entergy Nuclear Earnings 3 99-04E CAGR $/share As-Reported 80% {_| Operational 80% 1.30 1.12 1.12 al 03 vs 02 Drivers 0.88 0.88 Operational: + Outage Amort. > Lower PPA » Blackout + Full year VY 0.22 0.22 As-Reported: > FAS 143 0.06 0.06 | il » VSP 98 99 00 01 02 03 04E Acqui
Slide 19: Nuclear Business Growth
) Nuclear Business Growth Nuclear Value Drivers Energy Contract Portfolio - Sold » % 80% targeted by end of 1Q04 + Improve productivity 28 a Obtain services 17 04E O5E O6E O7E O8E LAs of 4Q02 {_ | Added in 03 4z
Slide 20: Credit Rating
Credit Rating Agencies slow to act or do they know something we don't2, Refinancing Strategy 3Q02 vs. 4Q03 * $3.3 B refinanced, including $0.8 B of Average remaining life Interest expense ($B)* (years) (trailing 12 months) notes issued by. 20% Entergy Corp. since 3Q02 12.4 * $1.45 B revolver 9.5 0.5
Slide 21: Management team
Leo Denault EVP & CFO Richard Smith Group President Utility Operations Gary Taylor CEO Entergy Nuclear +12 years of major transaction experience at ETR/ Cinergy + 22 years utility experience | + Former president of Cinergy non- 25 years utility experience | regulated gas supply business + 24 years n
Slide 22: Where Do We Go from Here?
@® Where Do We Go from Here? EDISON ELECTRIC La INSTITUTE Givi iI Index Award: Governance Me ntemational: jighest TSR 5-Year Period Perfect Global Score Total Shareholder Return “This is another example of a growing body of %from 9130198 through 9/30/03 research suggesting a correlation between corp
Slide 23: Where Do We Go from Here?
Where Do We Go from Here? Future Performance: The Price of Admission Sts Payout Ratio- Dividends Per Share Dividend Yield Operational $/share; 12/31 annualized % 68 1.8 3.9 32 98 OCF $ billions; trailing 12 98 03 98 03 Net Debt Ratio °: trailing 12 months 2098 4Q03 2Q98 4Q03 2
Slide 24: 2003 Progress and Lessons Learned
2003 Progress and Lessons Learned es ee BUt We Cour ; ‘Gane Better 4 ) Indian Point secu, Emergency, plan certification 2) Indian Point More forced outages in the NE fleet a a 4D Rate recovery of investments EGSI 9th earnings review unresolved Ds sil ' 8) FERC vs. state issues System agreement contr
Slide 25: Top Concerns Today
Top Concerns Today ® System agreement outcome Transmission independence 6 ] Institutionalized productivity improvements re Entergy-Koch business plan Use of free cash flow and excess liquidity 2B
Slide 26: If You Don't Know Where You're Going, Any Path Will Do
If You Don’t Know Where You’re Going, Any Path Will Do
Slide 27: Example: Indian Point Emergency Plan in 2003
Example: Indian Point Emergency Plan in 2003 States tell FEMA FEMA R conauets doesnt evaluation haveintoto aed on ett other io Counties 2 Ban refuse to ors FEMA tells. certify to cee ty stiteto ratioves. | (counties ‘tom from: counties rey counties get FEMA NRC Counties invokes Foil | (Ty concludes
Slide 28: Going Forward, the Path Will Be Different
Going Forward, the Path Will Be Different Drill to settle evac plans’ worth PEMA: three courtles to ceri that : State O! ians eouid work. not needed in Indian ele Mie oint determination (WMesondig sacice vtancg ht exalsatlon ofthe efotveness of emergency plans on che stare land county certifications
Slide 29: Regulatory Outcomes in LA
Regulatory Outcomes in LA ELI Proceeding LPSC Order Proceed with on resources Tes ource transaction transactions requests Implement rate Amend $167M rate increase and reassess resource plan increase Cost of service issue Staff / itervener js filed 104 ELI files $167 M rate increase 604 — 9108 Discov
Slide 30: System Agreement Outcome
2 System Agreement Outcome System Agreement Case ‘ALJ Accept ALJ Denied: ook Your Rooms + +/5% bandwidth on 3 year rolling average + Full production cost or baseload equalization + No more than +/-7.5% max in any year+ #/- 10% bandwidth + Vidalia included at full cost es to exchange pool calculation
Slide 31: Texas Resolution
3 Texas Resolution Retail Open Access vs. Regulatory Rate Increase and PUCT auth 6104 - PUCT Accepts independence of transmission organization structure Four steps to Retail Open Access in ie 604 -PUCT Rejects independence Trans: Independence ® Pitot Program @ Market Readiness Business Separation Co
Slide 32: Transmission Independence
4 Transmission Independence Transmission Proposal Develop conceptual design File with FERC Meet with to obtain regulators to approval for proposal (3.04) Proceedings + 2/1804 before APSC, + 3/3/04 LPSC, MPSC, + 3724.04 PUCT & CNO to obtain support as early as 4/04) APSC,LPSC, MPSC, PUCT & CNO decisi
Slide 33: Nuclear Portfolio
Nuclear Portfolio Gas price Pov Generation Power demand growth Transmission Retail market structure and rules Commodity margins Switching and customer acquisition cost Incumbency 5 Nuclear Hedging Plan Hedging Strat: | Re-evaluate hedge {strategy Potential contract risk levels, incl terms/cond. Deve
Slide 34: Use of Free Cash Flow and Excess Liquidity
10 Use of Free Cash Flow and Excess Liquidity Capital Deployment Strategy - | Evaluate Investment |_| mvestment atemnatves | °| wuratose | >| ovealiis a profile? investment ident Risk wo (Sentinal) [excess veg |_ entity Evaluate iveatnert | erty constrained awe cash Investment long-term Canin arts 7
Slide 35: Execution Will Lead to Achievement of Financial Aspirations
Execution Will Lead to Achievement of Financial Aspirations... Entergy’s Results and Aspirations 98 — 03 and 04+ TSR * +119% total return ° NT: Top quartile * Top industry performer ° LT: #1 in any 5 yr period EPS * 6% annual average * NT: 8-10% Growth (es reported) * LT: 5—6% ROIC * From 7.7% to 7.
Slide 36: Increased Visibility for 2004 and 2005 Earnings Growth
... and Increased Visibility for 2004 and 2005 Earnings Growth 2005 Earnings Drivers Estimated EPS Potential Drivers Range of Outcomes Impact vs. 04 Midpoint Utility Sales Growth 1—2% growth 0.10 - 0.20 Supply Plan Acquire 0 GW vs. 2 GW @ $250/KW 0.00 - 0.05 Rate Case Requests 50% vs. 100% of reques
Slide 37: Fortune brings in some boats that are not steer'd
“Fortune brings in some boats that are not steer’d.” William Shakespeare ... But the odds are against it. Morgan Stanley 2004 Global Electricity & Energy Conference J. Wayne Leonard eos Chief Executive Officer March 24, 2004 = Entergy
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