ENTERGY NEW ORLEANS, LLC - Quarter Report: 2011 September (Form 10-Q)

 

(Mark One)
X	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Quarterly Period Ended September 30, 2011
	OR
	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ____________ to ____________

Commission File Number	Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number, and IRS Employer Identification No.		Commission File Number	Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number, and IRS Employer Identification No.
1-11299	ENTERGY CORPORATION (a Delaware corporation) 639 Loyola Avenue New Orleans, Louisiana 70113 Telephone (504) 576-4000 72-1229752		1-31508	ENTERGY MISSISSIPPI, INC. (a Mississippi corporation) 308 East Pearl Street Jackson, Mississippi 39201 Telephone (601) 368-5000 64-0205830
1-10764	ENTERGY ARKANSAS, INC. (an Arkansas corporation) 425 West Capitol Avenue Little Rock, Arkansas 72201 Telephone (501) 377-4000 71-0005900		0-05807	ENTERGY NEW ORLEANS, INC. (a Louisiana corporation) 1600 Perdido Street New Orleans, Louisiana 70112 Telephone (504) 670-3700 72-0273040
0-20371	ENTERGY GULF STATES LOUISIANA, L.L.C. (a Louisiana limited liability company) 446 North Boulevard Baton Rouge, Louisiana 70802 Telephone (800) 368-3749 74-0662730		1-34360	ENTERGY TEXAS, INC. (a Texas corporation) 350 Pine Street Beaumont, Texas 77701 Telephone (409) 981-2000 61-1435798
1-32718	ENTERGY LOUISIANA, LLC (a Texas limited liability company) 446 North Boulevard Baton Rouge, Louisiana 70802 Telephone (800) 368-3749 75-3206126		1-09067	SYSTEM ENERGY RESOURCES, INC. (an Arkansas corporation) Echelon One 1340 Echelon Parkway Jackson, Mississippi 39213 Telephone (601) 368-5000 72-0752777

	Large accelerated filer		Accelerated filer		Non- accelerated filer		Smaller reporting company
Entergy Corporation	Ö
Entergy Arkansas, Inc.					Ö
Entergy Gulf States Louisiana, L.L.C.					Ö
Entergy Louisiana, LLC					Ö
Entergy Mississippi, Inc.					Ö
Entergy New Orleans, Inc.					Ö
Entergy Texas, Inc.					Ö
System Energy Resources, Inc.					Ö

Common Stock Outstanding		Outstanding at October 31, 2011
Entergy Corporation	($0.01 par value)	176,116,403

	Page Number
Forward-looking information	iv
Definitions	vi
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Results of Operations	1
Liquidity and Capital Resources	10
Rate, Cost-recovery, and Other Regulation	15
Market and Credit Risk Sensitive Instruments	16
Nuclear Matters	18
Critical Accounting Estimates	18
New Accounting Pronouncements	18
Consolidated Statements of Income	21
Consolidated Statements of Cash Flows	22
Consolidated Balance Sheets	24
Consolidated Statements of Changes in Equity and Comprehensive Income	26
Selected Operating Results	27
Notes to Financial Statements	28
Part 1. Item 4.  Controls and Procedures	73
Entergy Arkansas, Inc. and Subsidiaries
Management’s Financial Discussion and Analysis
Results of Operations	74
Liquidity and Capital Resources	76
State and Local Rate Regulation	78
Federal Regulation	78
Nuclear Matters	79
Environmental Risks	79
Critical Accounting Estimates	79
Consolidated Income Statements	80
Consolidated Statements of Cash Flows	81
Consolidated Balance Sheets	82
Consolidated Statements of Changes in Common Equity	84
Selected Operating Results	85
Entergy Gulf States Louisiana, L.L.C.
Management’s Financial Discussion and Analysis
Results of Operations	86
Liquidity and Capital Resources	88
State and Local Rate Regulation	91
Federal Regulation	92
Nuclear Matters	92
Environmental Risks	92
Critical Accounting Estimates	92
Income Statements	93
Statements of Cash Flows	95
Balance Sheets	96
Statements of Changes in Equity and Comprehensive Income	98
Selected Operating Results	99

	Page Number
Entergy Louisiana, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
Results of Operations	100
Liquidity and Capital Resources	102
State and Local Rate Regulation	105
Federal Regulation	106
Nuclear Matters	106
Environmental Risks	106
Critical Accounting Estimates	106
Consolidated Income Statements	107
Consolidated Statements of Cash Flows	109
Consolidated Balance Sheets	110
Consolidated Statements of Changes in Equity and Comprehensive Income	112
Selected Operating Results	113
Entergy Mississippi, Inc.
Management’s Financial Discussion and Analysis
Results of Operations	114
Liquidity and Capital Resources	116
State and Local Rate Regulation	119
Federal Regulation	119
Critical Accounting Estimates	119
Income Statements	120
Statements of Cash Flows	121
Balance Sheets	122
Statements of Changes in Common Equity	124
Selected Operating Results	125
Entergy New Orleans, Inc.
Management’s Financial Discussion and Analysis
Results of Operations	126
Liquidity and Capital Resources	128
State and Local Rate Regulation	130
Federal Regulation	130
Environmental Risks	130
Critical Accounting Estimates	130
Income Statements	131
Statements of Cash Flows	133
Balance Sheets	134
Statements of Changes in Common Equity	136
Selected Operating Results	137

	Page Number
Entergy Texas, Inc. and Subsidiaries
Management’s Financial Discussion and Analysis
Results of Operations	138
Liquidity and Capital Resources	141
State and Local Rate Regulation	143
Federal Regulation	143
Environmental Risks	143
Critical Accounting Estimates	143
Consolidated Income Statements	144
Consolidated Statements of Cash Flows	145
Consolidated Balance Sheets	146
Consolidated Statements of Changes in Common Equity	148
Selected Operating Results	149
System Energy Resources, Inc.
Management’s Financial Discussion and Analysis
Results of Operations	150
Liquidity and Capital Resources	150
Nuclear Matters	152
Environmental Risks	152
Critical Accounting Estimates	152
Income Statements	153
Statements of Cash Flows	155
Balance Sheets	156
Statements of Changes in Common Equity	158
Part II.  Other Information
Item 1.    Legal Proceedings	159
Item 1A.  Risk Factors	159
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds	159
Item 5.    Other Information	160
Item 6.    Exhibits	164
Signature	167

·

resolution of pending and future rate cases and negotiations, including various performance-based rate discussions, and other regulatory proceedings, including those related to Entergy’s System Agreement or any successor agreement or arrangement, Entergy’s utility supply plan, recovery of storm costs, and recovery of fuel and purchased power costs

·

changes in utility regulation, including the beginning or end of retail and wholesale competition, the ability to recover net utility assets and other potential stranded costs, the operations of the independent coordinator of transmission for Entergy’s utility service territory and transition to a successor or alternative arrangement, including possible participation in a regional transmission organization, and the application of more stringent transmission reliability requirements or market power criteria by the FERC

·

changes in regulation of nuclear generating facilities and nuclear materials and fuel, including possible shutdown of nuclear generating facilities, particularly those owned or operated by the Entergy Wholesale Commodities business, and the effects of new or existing safety concerns regarding nuclear power plants and nuclear fuel

·	resolution of pending or future applications for license renewals or modifications of nuclear generating facilities

·	the performance of and deliverability of power from Entergy’s generation resources, including the capacity factors at its nuclear generating facilities

·	Entergy’s ability to develop and execute on a point of view regarding future prices of electricity, natural gas, and other energy-related commodities

·	prices for power generated by Entergy’s merchant generating facilities and the ability to hedge, sell power forward or otherwise reduce the market price risk associated with those facilities, including the Entergy Wholesale Commodities nuclear plants

·	the prices and availability of fuel and power Entergy must purchase for its Utility customers, and Entergy’s ability to meet credit support requirements for fuel and power supply contracts

·	volatility and changes in markets for electricity, natural gas, uranium, and other energy-related commodities

·	changes in law resulting from federal or state energy legislation or legislation subjecting energy derivatives used in hedging and risk management transactions to governmental regulation

·	changes in environmental, tax, and other laws, including requirements for reduced emissions of sulfur, nitrogen, carbon, mercury, and other substances, and changes in costs of compliance with environmental and other laws and regulations

·	uncertainty regarding the establishment of interim or permanent sites for spent nuclear fuel and nuclear waste storage and disposal

·

variations in weather and the occurrence of hurricanes and other storms and disasters, including uncertainties associated with efforts to remediate the effects of hurricanes and ice storms and the recovery of costs associated with restoration, including accessing funded storm reserves, federal and local cost recovery mechanisms, securitization, and insurance

·	effects of climate change

·	Entergy’s ability to manage its capital projects and operation and maintenance costs

·	Entergy’s ability to purchase and sell assets at attractive prices and on other attractive terms

·	the economic climate, and particularly economic conditions in Entergy’s Utility service territory and the Northeast United States and events that could influence economic conditions in those areas

·	the effects of Entergy’s strategies to reduce tax payments

·	changes in the financial markets, particularly those affecting the availability of capital and Entergy’s ability to refinance existing debt, execute share repurchase programs, and fund investments and acquisitions

·	actions of rating agencies, including changes in the ratings of debt and preferred stock, changes in general corporate ratings, and changes in the rating agencies’ ratings criteria

·	changes in inflation and interest rates

·	the effect of litigation and government investigations or proceedings

·	advances in technology

·	the potential effects of threatened or actual terrorism, cyber attacks or data security breaches, and war or a catastrophic event such as a nuclear accident or a natural gas pipeline explosion

·	Entergy’s ability to attract and retain talented management and directors

·	changes in accounting standards and corporate governance

·	declines in the market prices of marketable securities and resulting funding requirements for Entergy’s defined benefit pension and other postretirement benefit plans

·	changes in decommissioning trust fund values or earnings or in the timing of or cost to decommission nuclear plant sites

·	factors that could lead to impairment of long-lived assets

·	the ability to successfully complete merger, acquisition, or divestiture plans, regulatory or other limitations imposed as a result of merger, acquisition, or divestiture, and the success of the business following a merger, acquisition, or divestiture

Abbreviation or Acronym	Term
AFUDC	Allowance for Funds Used During Construction
ALJ	Administrative Law Judge
ANO 1 and 2	Units 1 and 2 of Arkansas Nuclear One (nuclear), owned by Entergy Arkansas
APSC	Arkansas Public Service Commission
ASU	Accounting Standards Update issued by the FASB
Board	Board of Directors of Entergy Corporation
bundled energy and capacity contract	A contract for the sale of installed capacity and related energy, priced per megawatt-hour sold
capacity contract	A contract for the sale of the installed capacity product in regional markets managed by ISO New England and the New York Independent System Operator
capacity factor	Actual plant output divided by maximum potential plant output for the period
City Council or Council	Council of the City of New Orleans, Louisiana
D.C. Circuit	U.S. Court of Appeals for the District of Columbia
Entergy	Entergy Corporation and its direct and indirect subsidiaries
Entergy Corporation	Entergy Corporation, a Delaware corporation
Entergy Gulf States, Inc.	Predecessor company for financial reporting purposes to Entergy Gulf States Louisiana that included the assets and business operations of both Entergy Gulf States Louisiana and Entergy Texas
Entergy Gulf States Louisiana	Entergy Gulf States Louisiana, L.L.C., a company created in connection with the jurisdictional separation of Entergy Gulf States, Inc. and the successor company to Entergy Gulf States, Inc. for financial reporting purposes.  The term is also used to refer to the Louisiana jurisdictional business of Entergy Gulf States, Inc., as the context requires.
Entergy Texas	Entergy Texas, Inc., a company created in connection with the jurisdictional separation of Entergy Gulf States, Inc.  The term is also used to refer to the Texas jurisdictional business of Entergy Gulf States, Inc., as the context requires.
Entergy Wholesale Commodities (EWC)	Entergy’s non-utility business segment primarily comprised of the ownership and operation of six nuclear power plants, the ownership of interests in non-nuclear power plants, and the sale of the electric power produced by those plants to wholesale customers
EPA	United States Environmental Protection Agency
ERCOT	Electric Reliability Council of Texas
FASB	Financial Accounting Standards Board
FERC	Federal Energy Regulatory Commission
firm LD	Transaction that requires receipt or delivery of energy at a specified delivery point (usually at a market hub not associated with a specific asset) or settles financially on notional quantities; if a party fails to deliver or receive energy, the defaulting party must compensate the other party as specified in the contract
FitzPatrick	James A. FitzPatrick Nuclear Power Plant (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
Form 10-K	Annual Report on Form 10-K for the calendar year ended December 31, 2010 filed with the SEC by Entergy Corporation and its Registrant Subsidiaries
Grand Gulf	Unit No. 1 of Grand Gulf Nuclear Station (nuclear), 90% owned or leased by System Energy
GWh	Gigawatt-hour(s), which equals one million kilowatt-hours
Independence	Independence Steam Electric Station (coal), owned 16% by Entergy Arkansas, 25% by Entergy Mississippi, and 7% by Entergy Power

Abbreviation or Acronym	Term
Indian Point 2	Unit 2 of Indian Point Energy Center (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
Indian Point 3	Unit 3 of Indian Point Energy Center (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
IRS	Internal Revenue Service
ISO	Independent System Operator
kW	Kilowatt, which equals one thousand watts
kWh	Kilowatt-hour(s)
LPSC	Louisiana Public Service Commission
MISO	Midwest Independent Transmission System Operator, Inc., a regional transmission organization
MMBtu	One million British Thermal Units
MPSC	Mississippi Public Service Commission
MW	Megawatt(s), which equals one thousand kilowatts
MWh	Megawatt-hour(s)
Net MW in operation	Installed capacity owned and operated
NRC	Nuclear Regulatory Commission
NYPA	New York Power Authority
Offsetting positions	Transactions for the purchase of energy, generally to offset a firm LD transaction
Palisades	Palisades Power Plant (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
Pilgrim	Pilgrim Nuclear Power Station (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
percent of capacity sold forward	Percent of planned qualified capacity sold to mitigate price uncertainty under physical or financial transactions
percent of planned generation sold forward	Percent of planned generation output sold or purchased forward under contracts, forward physical contracts, forward financial contracts or options that mitigate price uncertainty that may or may not require regulatory approval
planned net MW in operation	Amount of capacity to be available to generate power and/or sell capacity considering uprates planned to be completed during the year
PPA	Purchased power agreement or power purchase agreement
PUCT	Public Utility Commission of Texas
Registrant Subsidiaries	Entergy Arkansas, Inc., Entergy Gulf States Louisiana, L.L.C., Entergy Louisiana, LLC, Entergy Mississippi, Inc., Entergy New Orleans, Inc., Entergy Texas, Inc., and System Energy Resources, Inc.
River Bend	River Bend Station (nuclear), owned by Entergy Gulf States Louisiana
RTO	Regional transmission organization
SEC	Securities and Exchange Commission
SPP	Southwest Power Pool
System Agreement	Agreement, effective January 1, 1983, as modified, among the Utility operating companies relating to the sharing of generating capacity and other power resources
System Energy	System Energy Resources, Inc.
TWh	Terawatt-hour(s), which equals one billion kilowatt-hours
unit-contingent	Transaction under which power is supplied from a specific generation asset; if the asset is not operating, the seller is generally not liable to the buyer for any damages

Abbreviation or Acronym	Term
Unit Power Sales Agreement	Agreement, dated as of June 10, 1982, as amended and approved by FERC, among Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, relating to the sale of capacity and energy from System Energy’s share of Grand Gulf
Utility	Entergy’s business segment that generates, transmits, distributes, and sells electric power, with a small amount of natural gas distribution
Utility operating companies	Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas
Vermont Yankee	Vermont Yankee Nuclear Power Station (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
Waterford 3	Unit No. 3 (nuclear) of the Waterford Steam Electric Station, 100% owned or leased by Entergy Louisiana
weather-adjusted usage	Electric usage excluding the effects of deviations from normal weather

·	Utility generates, transmits, distributes, and sells electric power in service territories in four states that include portions of Arkansas, Mississippi, Texas, and Louisiana, including the City of New Orleans; and operates a small natural gas distribution business.

·

The Entergy Wholesale Commodities business segment includes the ownership and operation of six nuclear power plants located in the northern United States and the sale of the electric power produced by those plants to wholesale customers.  This business also provides services to other nuclear power plant owners.  Entergy Wholesale Commodities also owns interests in non-nuclear power plants that sell the electric power produced by those plants to wholesale customers.

 

The mark-to-market tax settlement sharing variance results from a regulatory charge because a portion of the benefits of a settlement with the IRS related to the mark-to-market income tax treatment of power purchase contracts will be shared with customers.  See Note 10 to the financial statements for additional discussion of the settlement and benefit sharing.

·	rate actions at Entergy Texas, including a base rate increase effective August 2010 and an additional increase beginning May 2011; and

·	a formula rate plan increase at Entergy Louisiana effective May 2011.

Entergy Wholesale Commodities

·	lower pricing in its contracts to sell power;

·	the absence of the Harrison County plant, which was sold in December 2010; and

·	higher fuel expenses at the nuclear plants.

 

 

 

·	a decrease of $24 million in compensation and benefits costs primarily resulting from an increase in the accrual for incentive-based compensation in 2010;

·

the deferral in 2011 of $13.4 million of 2010 Michoud plant maintenance costs pursuant to the settlement of Entergy New Orleans’ 2010 test year formula rate plan filing approved by the City Council in September 2011.  See Note 2 to the financial statements for further discussion of the 2010 test year formula rate plan filing and settlement; and

·	the amortization of $11 million of Entergy Texas rate case expenses in 2010.  See Note 2 to the financial statements in the Form 10-K for further discussion of the Entergy Texas rate case settlement.

·	the write-off of $25 million of capital costs in 2010, primarily for software that would not be utilized, and $11 million of additional costs incurred in 2010 in connection with Entergy's decision to unwind the infrastructure created for the planned spin-off of its non-utility nuclear business;

·	a decrease in compensation and benefits costs resulting from an increase of $12 million in the accrual for incentive-based compensation in 2010;

·	the write-off of $10 million of capitalized engineering costs in 2010 associated with a potential uprate project; and

·	a decrease of $9 million due to the absence of expenses from the Harrison County plant, which was sold in December 2010.

·

a favorable Tax Court decision holding that the U.K. Windfall Tax can be used as a credit for purposes of computing the U.S. foreign tax credit, which allows Entergy to reverse a previously established partial tax reserve of $43 million, included in Parent and Other, on the issue.  See Note 3 to the financial statements in the Form 10-K for further discussion of this tax litigation;

·	the recognition of a $14 million Louisiana state income tax benefit related to Act 55 storm cost financing; and

·	the reversal of a reserve of $13 million with respect to restructuring of business operations within the non-utility nuclear business.

 

 

 

 

 

 

·	a base rate increase at Entergy Arkansas effective July 2010;

·	rate actions at Entergy Texas, including a base rate increase effective August 2010 and an additional increase beginning May 2011; and

·	a formula rate plan increase at Entergy Louisiana effective May 2011.

 

·	lower pricing in its contracts to sell power;

·	the absence of the Harrison County plant, which was sold in December 2010; and

·	higher fuel expenses at the nuclear plants.

 

·	a decrease of $31 million in compensation and benefits costs primarily resulting from an increase in the accrual for incentive-based compensation in 2010;

·

the deferral in 2011 of $13.4 million of 2010 Michoud plant maintenance costs pursuant to the settlement of Entergy New Orleans’ 2010 test year formula rate plan filing approved by the City Council in September 2011.  See Note 2 to the financial statements for further discussion of the 2010 test year formula rate plan filing and settlement;

·	a decrease of $15 million in fossil expenses resulting from more outages in the first half of 2010; and

·	the amortization of $11 million of Entergy Texas rate case expenses in 2010.  See Note 2 to the financial statements in the Form 10-K for further discussion of the Entergy Texas rate case settlement.

·	the refinancing of long-term debt at lower interest rates by certain of the Utility operating companies;

·	a revision caused by FERC’s acceptance of a change in the treatment of funds received from independent power producers for transmission interconnection projects; and

·	interest expense accrued in 2010 related to the expected result of the LPSC Staff audit of Entergy Gulf States Louisiana’s fuel adjustment clause for the period 1995 through 2004.

·	the write-off of $58 million of capital costs in 2010, primarily for software that would not be utilized, and $12 million of additional costs incurred in 2010 in connection with Entergy’s decision to unwind the infrastructure created for the planned spin-off of its non-utility nuclear business;

·	a decrease of $22 million due to the absence of expenses from the Harrison County plant, which was sold in December 2010;

·	a decrease in compensation and benefits costs resulting from an increase of $18 million in the accrual for incentive-based compensation in 2010;

·	the write-off of $10 million of capitalized engineering costs in 2010 associated with a potential uprate project; and

·	a decrease of $11 million in spending on tritium remediation work.

·

a favorable Tax Court decision holding that the U.K. Windfall Tax can be used as a credit for purposes of computing the U.S. foreign tax credit, which allows Entergy to reverse a previously established partial tax reserve of $43 million, included in Parent and Other, on the issue.  See Note 3 to the financial statements in the Form 10-K for further discussion of this tax litigation;

·	a $19 million tax benefit recorded in the first quarter 2010 in connection with Entergy’s decision to unwind the infrastructure created for the planned spin-off of its non-utility nuclear business;

·	the recognition of a $14 million Louisiana state income tax benefit related to Act 55 storm cost financing; and

·	the reversal of a reserve of $13 million with respect to restructuring of business operations within the non-utility nuclear business.

·

a charge of $16 million recorded in first quarter 2010 resulting from a change in tax law associated with the federal healthcare legislation enacted in March 2010.  See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – Critical Accounting Estimates" in the Form 10-K for a discussion of the federal healthcare legislation;

·	state income taxes; and

·	certain book and tax differences for Utility plant items.

 

Net debt consists of debt less cash and cash equivalents.  Debt consists of notes payable, capital lease obligations, and long-term debt, including the currently maturing portion.  Capital consists of debt, common shareholders’ equity, and subsidiaries’ preferred stock without sinking fund.  Net capital consists of capital less cash and cash equivalents.  Entergy uses the net debt to net capital ratio and the ratios excluding securitization bonds in analyzing its financial condition and believes they provide useful information to its investors and creditors in evaluating Entergy’s financial condition.

 

 

 

 

 

·	the purchase of the Acadia Power Plant by Entergy Louisiana for approximately $300 million in April 2011;

·	the investment in 2010 of a total of $290 million in Entergy Gulf States Louisiana's and Entergy Louisiana's storm reserve escrow accounts as a result of their Act 55 storm cost financings, which are discussed in Note 2 to the financial statements in the Form 10-K;

·	an increase in nuclear fuel purchases, as more plants were preparing for refueling outages in 2011 than in 2010;

·

a change in collateral deposit activity, reflected in the “Decrease (increase) in other investments” line on the Consolidated Statements of Cash Flows, as Entergy received $114 million in net deposits from Entergy Wholesale Commodities’ counterparties during 2010 and returned net deposits of $58 million in 2011.  Entergy Wholesale Commodities’ forward sales contracts are discussed in the Market and Credit Risk Sensitive Instruments section below; and

·

an increase in construction expenditures, primarily in the Utility business.  Entergy’s construction spending plans for 2011 through 2013 are discussed in the Form 10-K.  April 2011 storms that caused damage to transmission and distribution lines, equipment, poles, and other facilities, primarily in Arkansas, also contributed to the increase.  The capital cost of repairing that damage was approximately $55 million.

·	Entergy repurchased $235 million of its common stock in the nine months ended September 30, 2011 and repurchased $666 million of its common stock in the nine months ended September 30, 2010.  Entergy’s share repurchase programs are discussed in the Form 10-K.

·	Long-term debt activity provided approximately $588 million of cash in 2011 compared to $158 million of cash in 2010.  For details of Entergy's long-term debt activity in 2011 see Note 4 to the financial statements herein.

 

 

 

regulatory proceedings.  It is expected that costs will be incurred to obtain regulatory approvals, to revise or implement commercial and legal agreements, to integrate transmission and generation facilities, to develop back-office accounting and settlement systems, and to build out communications infrastructure.  The Utility operating companies also expect to make filings later in 2011 with their retail regulators regarding the transfer of control of their transmission assets to MISO.  As discussed below, Entergy Louisiana and Entergy Gulf States Louisiana made their filing on October 31, 2011.  The target implementation date for joining MISO is December 2013.

 

Energy
		2011		2012		2013		2014		2015		2016
Percent of planned generation sold forward:
Unit-contingent		80%		61%		38%		14%		12%		12%
Unit-contingent with guarantee of availability (1)		14%		14%		16%		13%		13%		13%
Firm LD		3%		24%		24%		8%		-%		-%
Offsetting positions		(3)%		(10)%		-%		-%		-%		-%
Total energy sold forward		94%		89%		78%		35%		25%		25%
Planned generation (TWh) (2) (3)		10		41		40		41		41		40
Average revenue under contract per MWh (4) (5)		$52		$49		$45-51		$49-55		$49-57		$50-59

 
 

Capacity
		2011		2012		2013		2014		2015			2016
Percent of capacity sold forward:
Bundled capacity and energy contracts		26%		18%		16%		16%		16%			16%
Capacity contracts		45%		32%		26%		25%		11%			0%
Total capacity sold forward		71%		50%		42%		41%		27%			16%
Planned net MW in operation (3)		4,998		4,998		4,998		4,998		4,998			4,998
Average revenue under contract per kW per month (applies to capacity contracts only) (4) (5)		$1.8		$2.8		$3.2		$3.1		$2.9			$-
Blended Capacity and Energy Recap (based on revenues)
% of planned generation and capacity sold forward		95%		89%		76%		37%		26%			25%
Blended revenue under contract per MWh		$53		$50		$49		$54		$55			$55

(1)	A sale of power on a unit-contingent basis coupled with a guarantee of availability provides for the payment to the power purchaser of contract damages, if incurred, in the event the seller fails to deliver power as a result of the failure of the specified generation unit to generate power at or above a specified availability threshold.  All of Entergy’s outstanding guarantees of availability provide for dollar limits on Entergy’s maximum liability under such guarantees.
(2)	Amount of output expected to be generated by Entergy Wholesale Commodities nuclear units considering plant operating characteristics, outage schedules, and expected market conditions which impact dispatch.
(3)	Assumes NRC license renewal for plants whose current licenses expire within five years and the continued operation of all six plants.  NRC license renewal applications are in process for three units, as follows (with current license expirations in parentheses): Pilgrim (June 2012), Indian Point 2 (September 2013), and Indian Point 3 (December 2015).  See also Note 11 to the financial statements for a discussion regarding the continued operation of Vermont Yankee.
(4)	The Vermont Yankee acquisition included a 10-year PPA under which the former owners will buy most of the power produced by the plant through March 21, 2012.  The PPA includes an adjustment clause under which the prices specified in the PPA will be adjusted downward monthly, beginning in November 2005, if power market prices drop below PPA prices, which has not happened thus far.
(5)	Revenue on a per unit basis at which generation output, capacity, or a combination of both is expected to be sold to third parties (including offsetting positions), given existing contract or option exercise prices based on expected dispatch or capacity, excluding the revenue associated with the amortization of the below-market PPA for Palisades.  Revenue may fluctuate due to factors including positive or negative basis differentials, option premiums and market prices at time of option expiration, costs to convert firm LD to unit-contingent, and other risk management costs.  Also, average revenue under contract excludes payments owed under the value sharing agreement with NYPA.

 

 

 

 

 

 

 

 

(Page left blank intentionally)

 

 

 

ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Three and Nine Months Ended September 30, 2011 and 2010
(Unaudited)
		Three Months Ended								Nine Months Ended
		2011				2010				2011				2010
		(In Thousands, Except Share Data)
OPERATING REVENUES
Electric		$	2,733,601			$	2,638,752			$	6,811,538			$	6,859,791
Natural gas			26,439				27,263				126,453				154,426
Competitive businesses			635,513				666,161				1,802,050				1,940,256
TOTAL			3,395,553				3,332,176				8,740,041				8,954,473
OPERATING EXPENSES
Operating and Maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale			849,982				748,863				1,921,007				1,939,077
Purchased power			475,335				484,694				1,289,180				1,376,055
Nuclear refueling outage expenses			64,566				64,885				191,517				191,395
Other operation and maintenance			708,821				808,688				2,077,066				2,211,382
Decommissioning			56,467				53,380				167,229				157,423
Taxes other than income taxes			152,044				138,217				406,493				400,597
Depreciation and amortization			283,581				264,621				812,672				789,392
Other regulatory charges (credits) - net			203,848				(1,814	)			204,338				15,555
TOTAL			2,794,644				2,561,534				7,069,502				7,080,876
OPERATING INCOME			600,909				770,642				1,670,539				1,873,597
OTHER INCOME
Allowance for equity funds used during construction			21,516				15,064				59,558				45,990
Interest and investment income			33,238				38,705				95,906				121,869
Miscellaneous - net			(14,137	)			(14,748	)			(40,498	)			(32,050	)
TOTAL			40,617				39,021				114,966				135,809
INTEREST EXPENSE
Interest expense			137,301				136,075				409,484				463,454
Allowance for borrowed funds used during construction			(9,713	)			(8,949	)			(27,397	)			(27,274	)
TOTAL			127,588				127,126				382,087				436,180
INCOME BEFORE INCOME TAXES			513,938				682,537				1,403,418				1,573,226
Income taxes (benefit)			(119,131	)			184,636				196,072				536,227
CONSOLIDATED NET INCOME			633,069				497,901				1,207,346				1,036,999
Preferred dividend requirements of subsidiaries			5,015				5,015				15,046				15,048
NET INCOME ATTRIBUTABLE TO ENTERGY CORPORATION		$	628,054			$	492,886			$	1,192,300			$	1,021,951
Earnings per average common share:
Basic		$	3.55			$	2.65			$	6.70			$	5.44
Diluted		$	3.53			$	2.62			$	6.67			$	5.38
Dividends declared per common share		$	0.83			$	0.83			$	2.49			$	2.41
Basic average number of common shares outstanding			176,950,469				185,962,431				177,857,667				187,968,582
Diluted average number of common shares outstanding			177,723,020				187,777,172				178,805,215				189,914,439
See Notes to Financial Statements.