_________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 March 31, 2001
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission Registrant, State of Incorporation, I.R.S. Employer
File Number Address of Principal Executive Identification No.
Offices and Telephone Number
1-11299 ENTERGY CORPORATION 72-1229752
(a Delaware corporation)
639 Loyola Avenue
New Orleans, Louisiana 70113
Telephone (504) 576-4000
1-10764 ENTERGY ARKANSAS, INC. 71-0005900
(an Arkansas corporation)
425 West Capitol Avenue, 40th Floor
Little Rock, Arkansas 72201
Telephone (501) 377-4000
1-27031 ENTERGY GULF STATES, INC. 74-0662730
(a Texas corporation)
350 Pine Street
Beaumont, Texas 77701
Telephone (409) 838-6631
1-8474 ENTERGY LOUISIANA, INC. 72-0245590
(a Louisiana corporation)
4809 Jefferson Highway
Jefferson, Louisiana 70121
Telephone (504) 840-2734
0-320 ENTERGY MISSISSIPPI, INC. 64-0205830
(a Mississippi corporation)
308 East Pearl Street
Jackson, Mississippi 39201
Telephone (601) 368-5000
0-5807 ENTERGY NEW ORLEANS, INC. 72-0273040
(a Louisiana corporation)
1600 Perdido Street, Building 505
New Orleans, Louisiana 70112
Telephone (504) 670-3674
1-9067 SYSTEM ENERGY RESOURCES, INC. 72-0752777
(an Arkansas corporation)
Echelon One
1340 Echelon Parkway
Jackson, Mississippi 39213
Telephone (601) 368-5000
_________________________________________________________________________
Indicate by check mark whether the registrants (1) have filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrants were required to file such reports), and (2)
have been subject to such filing requirements for the past 90 days.
Yes X No
Common Stock Outstanding Outstanding at April 30, 2001
Entergy Corporation ($0.01 par value) 220,713,500
Entergy Corporation, Entergy Arkansas, Inc., Entergy Gulf States,
Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy New
Orleans, Inc., and System Energy Resources, Inc. separately file this
combined Quarterly Report on Form 10-Q. Information contained herein
relating to any individual company is filed by such company on its own
behalf. Each company reports herein only as to itself and makes no other
representations whatsoever as to any other company. This combined
Quarterly Report on Form 10-Q supplements and updates the Annual Report
on Form 10-K for the calendar year ended December 31, 2000, filed by the
individual registrants with the SEC, and should be read in conjunction
therewith.
Forward-Looking Information
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 Entergy Corporation, Entergy Arkansas, Inc.,
Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy Mississippi,
Inc., Entergy New Orleans, Inc., and System Energy Resources, Inc. and
their affiliated companies may involve risks and uncertainties. A number
of factors could cause actual results or outcomes to differ materially
from those indicated by such forward-looking statements. These factors
include, but are not limited to, risks and uncertainties relating to:
the effects of weather, the performance of generating units and
transmission systems, the possession of nuclear materials, fuel and
purchased power prices and availability, the effects of regulatory
decisions and changes in law, litigation, capital spending requirements,
the onset of competition, including the ability to recover net regulatory
assets and other potential stranded costs, the effects of recent
developments in the California electricity market on the utility industry
nationally, advances in technology, changes in accounting standards,
corporate restructuring and changes in capital structure, the success of
new business ventures, changes in the markets for electricity and other
energy-related commodities, changes in interest rates and in financial
and foreign currency markets generally, the economic climate and growth
in Entergy's service territories, changes in corporate strategies, and
other factors.
ENTERGY CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
March 31, 2001
Page Number
Definitions 1
Management's Financial Discussion and Analysis -
Significant Factors and Known Trends 3
Management's Financial Discussion and Analysis -
Liquidity and Capital Resources 5
Results of Operations and Financial Statements:
Entergy Corporation and Subsidiaries:
Results of Operations 9
Consolidated Statements of Income 13
Consolidated Statements of Cash Flows 14
Consolidated Balance Sheets 16
Consolidated Statements of Retained Earnings,
Comprehensive Income and Paid-In Capital 18
Selected Operating Results 19
Entergy Arkansas, Inc.:
Results of Operations 20
Income Statements 23
Statements of Cash Flows 25
Balance Sheets 26
Selected Operating Results 28
Entergy Gulf States, Inc.:
Results of Operations 29
Income Statements 31
Statements of Cash Flows 33
Balance Sheets 34
Selected Operating Results 36
Entergy Louisiana, Inc.:
Results of Operations 37
Income Statements 39
Statements of Cash Flows 41
Balance Sheets 42
Selected Operating Results 44
Entergy Mississippi, Inc.:
Results of Operations 45
Income Statements 47
Statements of Cash Flows 49
Balance Sheets 50
Selected Operating Results 52
Entergy New Orleans, Inc.:
Results of Operations 53
Income Statements 55
Statements of Cash Flows 57
Balance Sheets 58
Selected Operating Results 60
System Energy Resources, Inc.:
Results of Operations 61
Income Statements 62
Statements of Cash Flows 63
Balance Sheets 64
Notes to Financial Statements for Entergy Corporation
and Subsidiaries 66
Part II:
Item 1. Legal Proceedings 74
Item 5. Other Information 74
Item 6. Exhibits and Reports on Form 8-K 74
Signature 77
DEFINITIONS
Certain abbreviations or acronyms used in the text are defined below:
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 Steam
Electric Generating Station (nuclear)
APSC Arkansas Public Service Commission
Board Board of Directors of Entergy Corporation
BPS British pounds sterling
Cajun Cajun Electric Power Cooperative, Inc.
Capital Funds Agreement Agreement, dated as of June 21, 1974, as
amended, between System Energy and Entergy
Corporation, and the assignments thereof
CitiPower CitiPower Pty., an electric distribution company
serving Melbourne, Australia and surrounding
suburbs, which was acquired by Entergy effective
January 5, 1996, and was sold by Entergy
effective December 31, 1998
Council Council of the City of New Orleans, Louisiana
domestic utility
companies Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, and Entergy New
Orleans, collectively
EPA United States Environmental Protection Agency
EWG Exempt wholesale generator under PUHCA
Entergy Entergy Corporation and its various direct and
indirect subsidiaries
Entergy Arkansas Entergy Arkansas, Inc.
Entergy Corporation Entergy Corporation, a Delaware corporation
Entergy Gulf States Entergy Gulf States, Inc., including its wholly
owned subsidiaries - Varibus Corporation, GSG&T,
Inc., Prudential Oil & Gas, Inc., and Southern
Gulf Railway Company
Entergy-Koch Entergy-Koch, L.P., a joint venture equally
owned by Entergy and Koch Industries, Inc.
Entergy London Entergy London Investments plc, formerly Entergy
Power UK plc (including its wholly owned
subsidiary, London Electricity plc), which was
sold by Entergy effective December 4, 1998
Entergy Louisiana Entergy Louisiana, Inc.
Entergy Mississippi Entergy Mississippi, Inc.
Entergy New Orleans Entergy New Orleans, Inc.
FERC Federal Energy Regulatory Commission
FitzPatrick James A. FitzPatrick nuclear power plant, 825 MW
facility located near Oswego, New York,
purchased in November 2000, from New York Power
Authority by Entergy's domestic non-utility
nuclear business
FUCO Exempt foreign utility company under PUHCA
Form 10-K The combined Annual Report on Form 10-K for the
year ended December 31, 2000 of Entergy, Entergy
Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New
Orleans, and System Energy
Grand Gulf 1 Unit No. 1 of the Grand Gulf Nuclear Generation
Plant
GGART Grand Gulf Accelerated Recovery Tariff
GWH One million kilowatt-hours
Independence Independence Steam Electric Station (coal),
owned 16% by Entergy Arkansas, 25% by Entergy
Mississippi, and 7% by Entergy Power
Indian Point 3 Indian Point 3 nuclear power plant, 980 MW
facility located in Westchester County, New
York, purchased in November 2000, from New York
Power Authority by Entergy's domestic non-
utility nuclear business
LPSC Louisiana Public Service Commission
Abbreviation or Acronym Term
Merger Agreement Agreement and Plan of Merger dated July 30, 2000
by and between FPL Group, Entergy
Corporation, WCB Holding Corporation, Ranger
Acquisition Corporation and Ring Acquisition
Corporation, which was mutually terminated on
April 1, 2001
MPSC Mississippi Public Service Commission
MW Megawatt(s)
Net revenue Operating revenue net of fuel, fuel-related, and
purchased power expenses; other regulatory
credits; and amortization of rate deferrals
NRC Nuclear Regulatory Commission
NYPA New York Power Authority
Pilgrim Pilgrim Nuclear Station, 670 MW facility located
in Plymouth, Massachusetts purchased in July
1999 from Boston Edison by Entergy's non-utility
nuclear power business
PUCT Public Utility Commission of Texas
PUHCA Public Utility Holding Company Act of 1935, as
amended
River Bend River Bend Steam Electric Generating Station
(nuclear)
SEC Securities and Exchange Commission
SFAS Statement of Financial Accounting Standards as
promulgated by the Financial Accounting
Standards Board
System Agreement Agreement, effective January 1, 1983, as
modified, among the domestic utility companies
relating to the sharing of generating capacity
and other power resources
System Energy System Energy Resources, Inc.
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 1
Waterford 3 Unit No. 3 (nuclear) of the Waterford Plant
White Bluff White Bluff Steam Electric Generating Station,
57% owned by Entergy Arkansas
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT
FACTORS AND KNOWN TRENDS" in the Form 10-K for a discussion of the
increasing competitive pressures facing Entergy and the electric utility
industry, as well as market risks and other significant issues affecting
Entergy. See "Item 1. Business - BUSINESS OF ENTERGY - Industry
Restructuring and Competition" in the Form 10-K for issues concerning the
timing and implementation of Entergy's transition to competition,
including potential conflicts among Entergy's regulated jurisdictions.
Although transition to competition filings have been made in all
jurisdictions, proceedings have not yet commenced in all cases. Set
forth below are updates to the information contained therein.
Business Combination with FPL Group
On July 30, 2000, Entergy Corporation and FPL Group, Inc. entered
into a Merger Agreement providing for a business combination that would
have resulted in the creation of a new company. On April 1, 2001,
Entergy Corporation and FPL Group terminated the Merger Agreement by
mutual decision. Both companies agreed that no termination fee is
payable under the terms of the Merger Agreement, unless within nine
months of the termination one party agrees to a substantially similar
transaction with another party. Each company will bear its own merger-
related expenses. Entergy has filed for withdrawal of its merger-related
filings submitted to the FERC, the SEC, and state and local regulatory
agencies.
Domestic Transition to Competition
Federal Regulatory Activity
Open Access Transmission and Entergy's Transco Proposal
See "Open Access Transmission and Entergy's Transco Proposal" in
"MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND
KNOWN TRENDS" in the Form 10-K for a discussion of FERC's Order 2000 and
Entergy's proposed Transco.
In March 2001, FERC issued an order that found the Transco's
governance structure met the independence requirements of Order 2000.
However, FERC concluded that it could not at this time finally approve
the Southwest Power Pool (SPP) Partnership regional transmission
organization (RTO) as satisfying the scope and configuration requirements
of Order 2000. FERC raised the following three issues:
o the current SPP transmission owners that intend to commit their
facilities to the Transco must file an application with the FERC to
transfer control of their transmission facilities to the SPP
Partnership RTO;
o the Transco and SPP should investigate participation in the proposed
RTO by neighboring utilities; and
o the Transco and SPP must provide the FERC with more details on the
structure of the proposed RTO.
FERC directed SPP and Entergy to file a report that responds to
these issues by May 25, 2001.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
State and Local Rate Regulation
The domestic utility companies' retail and wholesale rate matters
and other regulatory proceedings are discussed more thoroughly in Note 2
to the financial statements herein and in the Form 10-K.
In April 2001, Entergy Arkansas filed with the APSC a proposal to
recover, over approximately a five and one-half year period beginning
July 2001, $155 million in costs, plus carrying charges, associated with
power restoration during the December 2000 ice storms. No assurance can
be given as to the outcome or timing of this proceeding.
Continued Application of SFAS 71 and Stranded Cost Exposure
See "Continued Application of SFAS 71 and Stranded Cost Exposure" in
"MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND
KNOWN TRENDS" in the Form 10-K for a discussion of the potential effects
of discontinuation of SFAS 71 for the generation portion of Entergy's
business as well as Entergy's exposure to stranded costs. Final
resolution of the regulatory proceedings regarding the transition to
competition of Entergy Gulf States' Texas generation business will likely
require the discontinuance of the application of SFAS 71 accounting
treatment to that business, which management expects to occur in the
second quarter of 2001. The regulatory proceedings are discussed in
"Domestic Transition to Competition - State Regulatory and Legislative
Activity - Texas" in "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS -
SIGNIFICANT FACTORS AND KNOWN TRENDS" in the Form 10-K and that
discussion is updated in Note 2 to the financial statements herein.
There may be a material adverse impact on Entergy's and Entergy Gulf
States' financial statements upon the discontinuance of SFAS 71
accounting treatment.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
Operations
Net cash flow provided by (used in) operations for Entergy, the
domestic utility companies, and System Energy for the first quarter of
2001 and 2000 was as follows:
First First
Company Quarter Quarter
2001 2000
(In Millions)
Entergy $184.6 $329.7
Entergy Arkansas $ 30.5 $ 36.5
Entergy Gulf States $ 90.7 $ 81.5
Entergy Louisiana $ 49.0 $ 33.9
Entergy Mississippi ($70.7) ($63.6)
Entergy New Orleans ($20.6) $ 4.5
System Energy $ 72.7 $188.5
Entergy's consolidated cash flow from operations decreased primarily
due to a decrease, excluding the effect of money pool activity, of
$195 million in cash provided by the domestic utility companies and
System Energy. The decrease was partially offset by an increase of $56.8
million in cash provided by the domestic non-utility nuclear business,
primarily from the operation of Fitzpatrick and Indian Point 3.
FitzPatrick and Indian Point 3 were purchased in November 2000. The
decrease by the domestic utility companies and System Energy was
primarily due to payments for higher fuel costs and for restoration costs
associated with the December 2000 ice storms in Arkansas. These payments
were made primarily from borrowings from the money pool and external
lines of credit, which are discussed below.
The operating cash flows of the domestic utility companies were also
affected by the following increases (decreases) in money pool borrowings
in 2001:
First Quarter
Company 2001
(In Millions)
Entergy Arkansas $45.1
Entergy Gulf States $69.4
Entergy Mississippi ($32.2)
Entergy New Orleans $ 3.2
For the lenders to the money pool, Entergy Louisiana's money pool
receivables increased $14.4 million and System Energy's money pool
receivables increased $20.4 million in the first quarter of 2001. System
Energy's money pool receivables decreased $105.8 million in the first
quarter of 2000.
The money pool is an inter-company funding arrangement designed to
reduce the domestic utility companies' and System Energy's dependence on
external short-term borrowings. The money pool provides a means by
which, on a daily basis, the excess funds of Entergy Corporation, the
domestic utility companies, and
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
System Energy may be used by the domestic utility companies or System
Energy to fulfill short-term cash requirements. See "Capital Resources -
Sources of Capital" below for a discussion of the limitations on these
borrowings.
Investing Activities
Net cash used in investing activities increased compared with the
first quarter of 2000 primarily due to the following:
o capital contributions made in the formation of Entergy-Koch, L.P., a
joint venture with Koch Industries, Inc.;
o payments made by Entergy Wholesale Operations for turbines;
o the maturity of other temporary investments in 2000; and
o the under-recovery of deferred fuel costs incurred in 2001 at
certain of the domestic utility companies due to higher market
prices of fuel and purchased power expenses. Entergy Arkansas
and the Texas portion of Entergy Gulf States have treated these
costs as regulatory investments because these companies are
allowed by their regulatory jurisdictions to recover the accumulated
fuel cost regulatory asset over longer than a twelve month period,
and the companies will earn a return on the under-recovered
balances.
Decreased construction expenditures due to completion of construction of
the Saltend and Damhead Creek plants partially offset the overall
increase in cash used in 2001.
Financing Activities
Net cash provided by financing activities decreased compared with
the first quarter of 2000 primarily due to:
o a higher amount of debt issued by the domestic utility companies in
2000 than in 2001; and
o no additional borrowings in 2001 under the Saltend and Damhead Creek
credit facilities due to the completion of construction of the plants.
Partially offsetting the overall decrease in cash provided were the
following:
o a lower amount of debt retirements by the domestic utility companies
in 2001; and
o repurchases of Entergy Corporation common stock made in 2000
compared to none made in the first quarter of 2001. Entergy
anticipates limited repurchase activity for the remainder of 2001,
as it considers various growth investment opportunities.
Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi all obtained
credit facilities during the first quarter of 2001 and borrowed under
these facilities to their full capacity during the quarter. The cash
provided by the borrowings from these credit facilities is offset by the
decreased amount of draws made by Entergy Corporation on its credit
facility during the first quarter of 2001 compared to the first quarter
of 2000. See "Capital Resources - Sources of Capital" for further
discussion of these facilities.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Capital Resources
See MANAGEMENT'S DISCUSSION AND ANALYSIS - LIQUIDITY AND CAPITAL
RESOURCES - Capital Resources" in the Form 10-K for a discussion of
Entergy's sources of funds and capital requirements. The following are
updates to the Form 10-K.
Sources of Capital
As discussed in the Form 10-K, certain of the domestic utility
companies have issued or expect to issue debt in 2001. See Note 4 to the
financial statements herein for details regarding debt issued in 2001.
Short-term borrowings by the domestic utility companies and System
Energy, including borrowings under the money pool, are limited to amounts
authorized by the SEC. See Note 4 to the financial statements in the
Form 10-K for further discussion of Entergy's short-term borrowing
limits. In 2001, Entergy received SEC approval to increase the
authorized limits for the following companies, as follows:
Company Previous Limit Current Limit
Entergy Mississippi $103 million $160 million
Entergy New Orleans $ 35 million $100 million
Other Entergy Subsidiaries $265 million $420 million
The approval increased the current SEC authorized short-term borrowing
limits for the domestic utility companies and System Energy from $1.078
billion to $1.2 billion. The SEC authorized limits are effective through
November 30, 2001.
The following companies have borrowings outstanding from the money
pool at March 31, 2001:
Outstanding
Company Borrowings
Entergy Arkansas $ 75.8 million
Entergy Gulf States $ 45.9 million
Entergy Mississippi $ 1.0 million
Entergy New Orleans $ 8.9 million
Other Entergy Subsidiaries $106.3 million
Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi each
obtained 364-day credit facilities in 2001, and the lines have been fully
drawn. Entergy Arkansas used the proceeds primarily to pay for costs
incurred in the December 2000 ice storms. Entergy Louisiana and Entergy
Mississippi used the proceeds for general corporate purposes and working
capital needs. The facilities have variable interest rates and the
average commitment fee is 0.13%. The amounts and dates obtained for the
facilities are as follows:
Amount of
Company Facility Date Obtained
Entergy Arkansas $63 million January 31, 2001
Entergy Louisiana $30 million January 31, 2001
Entergy Mississippi $25 million February 2, 2001
Entergy Corporation has a $500 million bank credit facility, which
was fully drawn as of March 31, 2001. The facility terminates in mid-May
2001, and Entergy expects to renew and possibly increase the facility
prior to its expiration.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Uses of Capital
PUHCA Restrictions on Uses of Capital
Entergy's ability to invest in domestic and foreign generation
businesses is subject to the SEC's regulations under PUHCA. As
authorized by the SEC, Entergy is allowed to invest an amount equal to
100% of its average consolidated retained earnings in domestic and
foreign generation businesses. As of March 31, 2001, Entergy's
investments subject to this rule totaled $918.5 million constituting
28.3% of its average consolidated retained earnings.
See "PUHCA Restrictions on Uses of Capital" in "MANAGEMENT'S
DISCUSSION AND ANALYSIS - LIQUIDITY AND CAPITAL RESOURCES" in the Form 10-
K for a discussion of other PUHCA restrictions affecting Entergy, such as
its capacity to invest in "energy-related" businesses and its ability to
guarantee obligations of its non-utility subsidiaries.
Other Uses of Capital by Entergy Corporation
For the first quarter of 2001, Entergy Corporation paid $66.7
million in cash dividends on its common stock and received dividend
payments and returns of capital totaling $70.1 million from subsidiaries.
Declarations of dividends on Entergy's common stock are made at the
discretion of the Board. The Board evaluates the level of Entergy common
stock dividends based upon Entergy's earnings, financial strength, and
capital requirements. Restrictions on the ability of Entergy's
subsidiaries to pay dividends are discussed in Note 8 to the financial
statements in the Form 10-K.
Non-Utility Nuclear Business
In connection with the acquisition of the FitzPatrick and Indian
Point 3 nuclear power plants, the installment payments due by Entergy to
NYPA must be secured by a letter of credit from an eligible financial
institution. On November 21, 2000, upon closing of the acquisition of
the NYPA plants, Entergy delivered a $577 million letter of credit, with
NYPA as beneficiary, in accordance with the terms of such agreement. The
letter of credit was backed by cash collateral, and this cash is
reflected in the balance sheet as "Special deposits." In January 2001,
Entergy replaced $440 million of the cash collateral with an Entergy
Corporation guarantee. Most of the cash released by this guarantee was
used to fund Entergy's contributions to the Entergy-Koch joint venture
discussed below under "Joint Ventures."
Joint Ventures
On January 31, 2001, subsidiaries of Entergy and Koch Industries,
Inc. formed a new limited partnership called Entergy-Koch, L.P. Entergy
contributed substantially all of its power marketing and trading business
in the United States and the United Kingdom and made other contributions,
including equity and loans, totaling $414 million. Koch Energy, Inc.
contributed to the venture its 9,000-mile Koch Gateway Pipeline, gas
storage facilities including the Bistineau storage facility near
Shreveport, Louisiana, and Koch Energy Trading, which markets and trades
electricity, gas, weather derivatives, and other energy-related
commodities and services.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Entergy's consolidated earnings applicable to common stock were
$154.2 million for the first quarter of 2001, resulting in increases in
basic and diluted earnings per share of 67% and 64%, respectively. The
increases in earnings per share in the first quarter of 2001 were also
affected by Entergy's share repurchase program.
The changes in earnings applicable to common stock by operating
segments for the first quarter of 2001 are as follows:
First Quarter
Operating Segments Increase/(Decrease)
(In Thousands)
Domestic Utility and System Energy $35,933
Entergy-Koch/Power Marketing and Trading 5,028
Domestic Non-Utility Nuclear 18,501
Entergy Wholesale Operations (EWO) 4,012
Other, including parent company (8,179)
-------
Total $55,295
=======
See Note 6 to the financial statements for additional business segment
information.
The increased earnings for the domestic utility and System Energy
were primarily due to an increase in net revenues as a result of colder
than normal weather in 2001, higher prices of electricity sold for
resale, particularly at Entergy Gulf States and Entergy Arkansas, and a
decrease in reserves for potential rate actions at Entergy Louisiana.
The increases to earnings were partially offset by decreases in unbilled
revenue, increases in operating expenses, and the decrease in first
quarter 2000 fuel expense from a true-up of the Entergy Arkansas
deferred fuel balance.
Prior to 2001, revenues and expenses from the operation of
Entergy's power marketing and trading business were consolidated in
Entergy's financial statements. On January 31, 2001, Entergy
contributed substantially all of its power marketing and trading
business to Entergy-Koch. Entergy accounts for its share in the
investment under the equity method. Therefore, in 2001 the Entergy-
Koch/Power Marketing and Trading segment includes Entergy's equity in
earnings attributable to Entergy-Koch. The partnership agreement
contains disproportionate income allocations between the partners for
several different sources of partnership earnings through 2003.
The increase in earnings at the domestic non-utility nuclear
business in 2001 was primarily due to the ownership of the FitzPatrick
and Indian Point 3 plants, which Entergy purchased in November 2000.
The increase in earnings at EWO in 2001 was primarily due to $13.9
million of liquidated damages received from the Damhead contractor as
compensation for lost operating margin from the plant due to
construction delays.
Entergy's income before taxes is discussed according to the
operating segments listed above. "Competitive businesses" operating
revenues in the statements of income include primarily revenues generated
by domestic non-utility nuclear, EWO, and for 2000 only, power marketing
and trading.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Domestic Utility Companies and System Energy
The changes in electric operating revenues for Entergy's domestic
utility companies for the first quarter of 2001 are as follows:
First Quarter
Description Increase/(Decrease)
(In Millions)
Base rate changes $1.3
Rate riders 3.2
Fuel cost recovery 450.3
Volume 9.8
Weather 42.9
Other revenue (including unbilled) (27.2)
Sales for resale 39.3
------
Total $519.6
======
Fuel cost recovery
The domestic utility companies are allowed to recover certain fuel
and purchased power costs through fuel mechanisms included in electric
rates that are recorded as fuel cost recovery revenues. The difference
between revenues collected and current fuel and purchased power costs is
recorded as deferred fuel costs on Entergy's financial statements such
that these costs do not have a material net effect on earnings.
Fuel cost recovery revenues increased primarily due to:
o increased fuel recovery factors at Entergy Arkansas, Entergy Gulf
States in the Texas jurisdiction, and Entergy Mississippi; and
o higher fuel and purchased power costs recovered through fuel
mechanisms at Entergy Gulf States in the Louisiana jurisdiction,
Entergy Louisiana, and Entergy New Orleans due to the increased
market price of natural gas.
Along with the increase in fuel cost recovery revenues, fuel and
purchased power expenses for electric sales increased approximately
$438.9 million in 2001, primarily due to an increase in the market prices
of purchased power, natural gas, and fuel oil, coupled with increased
generation.
Other effects on electric operating revenue
Electric sales vary seasonally in response to weather and usually
peak in the summer. The effect of colder than normal winter weather
conditions contributed to the increase in electric sales. For the first
quarter of 2001, electricity sales volume in the domestic utility
companies' service territories increased 1,052 GWH due to the impact of
weather conditions. The number of customers in the domestic utility
companies' service territories increased only slightly during these
periods.
Sales for resale increased due to higher prices of resale
electricity and increased availability of energy for resale from
increased net generation. The increase was partially offset by a
decrease in unbilled revenues caused by less favorable sales volume in
the period included in the March 2001 unbilled revenue calculation.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Gas operating revenue
Natural gas revenues increased primarily due to increased market
prices for natural gas and additional sales volume due to the colder than
normal winter. The increase in gas revenues was largely offset by an
increase of approximately $58.8 million in fuel expenses for natural gas.
Other impacts on earnings
The following activity also affected 2001 earnings for the domestic
utility companies and System Energy:
o an increase of $12 million in other taxes, primarily from increased
franchise taxes;
o an increase of $14.7 million in depreciation and amortization
expenses due to increased net capital additions; and
o an increase of $5.7 million in interest expense due to increased
borrowings.
Partially offsetting the above is an increase of $13.6 million in
interest income, primarily on deferred fuel costs.
Entergy-Koch/Power Marketing and Trading
As previously discussed, substantially all of Entergy's power
marketing and trading business was contributed to the Entergy-Koch joint
venture in 2001, and earnings from this joint venture are reported as
equity in earnings of unconsolidated equity affiliates in the financial
statements. As a result, this segment experienced decreased revenues and
fuel and purchased power expenses of $327.8 million and $297.3 million,
respectively, in 2001. The impact on earnings from the decreased
revenues is more than offset by the equity in earnings from Entergy's
interest in the joint venture.
Domestic Non-Utility Nuclear
Increased earnings for the domestic non-utility nuclear business
were primarily due to increased revenues of $118.5 million, primarily
from the operation of the FitzPatrick and Indian Point 3 plants. The
increased revenues were partially offset by the following:
o increased operation and maintenance expenses of $55.8 million;
o increased taxes other than income taxes of $9.4 million; and
o increased interest expense of $8.9 million related to debt issued to
purchase the FitzPatrick and Indian Point 3 plants.
Entergy Wholesale Operations
EWO experienced an increase in operating revenues of $450.3 million
primarily due to the results from its interest in Highland Energy, which
was acquired in June 2000, and the results from the Saltend and Damhead
Creek plants, which began commercial operation in late November 2000 and
early 2001, respectively. However, the impact on earnings from the
increased revenues is more than offset by increased fuel and purchased
power expenses of $400.2 million, increased operation and maintenance
expense of $36.8 million, and increased interest expense of $19 million.
The increase in earnings from EWO was primarily due to $13.9 million
($9.7 million net of tax) of liquidated damages received from the Damhead
Creek construction contractor as compensation for lost operating margin
from the plant due to construction delays.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Other
Earnings for Other decreased primarily due to $21.8 million ($13.4
million) of merger-related expenses incurred by Entergy Corporation in
the first quarter of 2001.
Income taxes
The effective income tax rates for the first quarters of 2001 and
2000 were 40.3% and 43.3%, respectively. The decrease was primarily due
to higher pre-tax income, which reduced the effect of flow-through items.
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended March 31, 2001 and 2000
(Unaudited)
2001 2000
(In Thousands, Except Share Data)
OPERATING REVENUES
Domestic electric $1,872,545 $1,352,896
Natural gas 110,384 45,881
Competitive businesses 669,498 412,715
---------- ----------
TOTAL 2,652,427 1,811,492
---------- ----------
OPERATING EXPENSES
Operating and Maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 1,125,863 497,754
Purchased power 363,879 369,544
Nuclear refueling outage expenses 17,207 18,557
Other operation and maintenance 470,459 377,410
Decommissioning 8,901 10,938
Taxes other than income taxes 102,463 79,618
Depreciation and amortization 203,077 178,276
Other regulatory credits - net (4,842) (14,605)
Amortization of rate deferrals 4,453 7,396
---------- ----------
TOTAL 2,291,460 1,524,888
---------- ----------
OPERATING INCOME 360,967 286,604
---------- ----------
OTHER INCOME
Allowance for equity funds used during construction 4,943 7,695
Gain on sale of assets - net 588 517
Equity in earnings of unconsolidated equity affiliates 25,064 -
Miscellaneous - net 55,393 28,982
---------- ----------
TOTAL 85,988 37,194
---------- ----------
INTEREST AND OTHER CHARGES
Interest on long-term debt 128,971 113,659
Other interest - net 47,914 20,283
Distributions on preferred securities of subsidiaries 4,709 4,709
Allowance for borrowed funds used during construction (3,939) (6,088)
---------- ----------
TOTAL 177,655 132,563
---------- ----------
INCOME BEFORE INCOME TAXES 269,300 191,235
Income taxes 108,429 82,825
---------- ----------
CONSOLIDATED NET INCOME 160,871 108,410
Preferred dividend requirements and other 6,716 9,550
---------- ----------
EARNINGS APPLICABLE TO
COMMON STOCK $154,155 $98,860
========== ==========
Earnings per average common share:
Basic $0.70 $0.42
Diluted $0.69 $0.42
Dividends declared per common share $0.32 $0.30
Average number of common shares outstanding:
Basic 219,917,139 236,608,445
Diluted 223,785,716 236,671,604
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2001 and 2000
(Unaudited)
2001 2000
(In Thousands)
OPERATING ACTIVITIES
Consolidated net income $160,871 $108,410
Noncash items included in net income:
Amortization of rate deferrals 4,453 7,396
Reserve for regulatory adjustments 28,791 19,888
Other regulatory credits - net (4,842) (14,605)
Depreciation, amortization, and decommissioning 211,978 189,214
Deferred income taxes and investment tax credits 7,665 (30,652)
Allowance for equity funds used during construction (4,943) (7,695)
Gain on sale of assets - net (588) (517)
Equity in earnings of unconsolidated equity affiliates (25,064) -
Changes in working capital:
Receivables 112,551 37,462
Fuel inventory (48,407) (25,783)
Accounts payable (365,644) (27,239)
Taxes accrued 67,693 44,026
Interest accrued (33,367) (25,053)
Deferred fuel 105,184 51,767
Other working capital accounts 4,182 (4,917)
Provision for estimated losses and reserves 2,326 (19,521)
Changes in other regulatory assets (73,755) (3,741)
Other 35,470 31,298
-------- --------
Net cash flow provided by operating activities 184,554 329,738
-------- --------
INVESTING ACTIVITIES
Construction/capital expenditures (264,946) (388,443)
Allowance for equity funds used during construction 4,943 7,695
Nuclear fuel purchases (36,753) (41,215)
Proceeds from sale/leaseback of nuclear fuel 33,740 13,952
Investment in other non-regulated/non-utility properties (73,990) -
Increase in other investments (365,067) -
Proceeds from other temporary investments - 321,351
Decommissioning trust contributions and realized change in trust assets (16,406) (12,624)
Other regulatory investments (53,637) (19,141)
Other 24,936 (226)
-------- --------
Net cash flow used in investing activities (747,180) (118,651)
-------- --------
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2001 and 2000
(Unaudited)
2001 2000
(In Thousands)
FINANCING ACTIVITIES
Proceeds from the issuance of:
Long-term debt 99,506 370,465
Common stock 15,724 1,972
Retirement of long-term debt (77,363) (103,212)
Repurchase of common stock - (155,981)
Redemption of preferred stock (1,999) (2,493)
Changes in short-term borrowings - net 231,000 230,000
Other 16,673 -
Dividends paid:
Common stock (66,655) (71,040)
Preferred stock (4,785) (7,330)
-------- --------
Net cash flow provided by financing activities 212,101 262,381
-------- --------
Effect of exchange rates on cash and cash equivalents (2,068) (1,091)
-------- --------
Net increase (decrease) in cash and cash equivalents (352,593) 472,377
Cash and cash equivalents at beginning of period 1,382,424 1,213,719
---------- ----------
Cash and cash equivalents at end of period $1,029,831 $1,686,096
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $206,176 $156,560
Income taxes $1,406 $35,995
Noncash investing and financing activities:
Change in unrealized depreciation of
decommissioning trust assets ($8,914) ($9,906)
Net assets contributed to Entergy-Koch $80,145 -
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, 2001 and December 31, 2000
(Unaudited)
2001 2000
(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash $161,420 $157,550
Temporary cash investments - at cost,
which approximates market 722,772 640,038
Special deposits 145,639 584,836
----------- -----------
Total cash and cash equivalents 1,029,831 1,382,424
----------- -----------
Notes receivable 6,543 3,608
Accounts receivable:
Customer 527,433 497,821
Allowance for doubtful accounts (10,161) (9,947)
Other 201,011 395,518
Accrued unbilled revenues 366,039 415,409
----------- -----------
Total receivables 1,084,322 1,298,801
----------- -----------
Deferred fuel costs 537,362 568,331
Fuel inventory - at average cost 142,439 93,679
Materials and supplies - at average cost 437,548 425,357
Rate deferrals 12,130 16,581
Deferred nuclear refueling outage costs 38,324 46,544
Prepayments and other 79,573 122,690
----------- -----------
TOTAL 3,368,072 3,958,015
----------- -----------
OTHER PROPERTY AND INVESTMENTS
Investment in affiliates - at equity 499,247 214
Decommissioning trust funds 1,330,343 1,315,857
Non-utility property - at cost (less accumulated 286,997 262,952
depreciation)
Non-regulated investments 149,801 189,154
Other - at cost (less accumulated depreciation) 70,598 27,036
----------- -----------
TOTAL 2,336,986 1,795,213
----------- -----------
PROPERTY, PLANT AND EQUIPMENT
Electric 25,470,142 25,137,562
Plant acquisition adjustment 386,598 390,664
Property under capital lease 846,006 831,822
Natural gas 192,388 190,989
Construction work in progress 743,421 936,785
Nuclear fuel under capital lease 283,929 277,673
Nuclear fuel 169,062 157,603
----------- -----------
TOTAL PROPERTY, PLANT AND EQUIPMENT 28,091,546 27,923,098
Less - accumulated depreciation and amortization 11,645,521 11,477,352
----------- -----------
PROPERTY, PLANT AND EQUIPMENT - NET 16,446,025 16,445,746
----------- -----------
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
SFAS 109 regulatory asset - net 972,696 980,266
Unamortized loss on reacquired debt 179,336 183,627
Deferred fuel costs 75,083 95,661
Other regulatory assets 873,838 792,515
Long-term receivables 28,710 29,575
Other 911,013 1,171,278
----------- -----------
TOTAL 3,040,676 3,252,922
----------- -----------
TOTAL ASSETS $25,191,759 $25,451,896
=========== ===========
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
March 31, 2001 and December 31, 2000
(Unaudited)
2001 2000
(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt $827,585 $464,215
Notes payable 623,019 388,023
Accounts payable 712,965 1,204,227
Customer deposits 174,520 172,169
Taxes accrued 519,370 451,811
Accumulated deferred income taxes 188,829 225,649
Nuclear refueling outage costs 13,253 10,209
Interest accrued 139,424 172,033
Obligations under capital leases 157,239 156,907
Other 231,586 192,908
----------- -----------
TOTAL 3,587,790 3,438,151
----------- -----------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes 3,282,199 3,249,083
Accumulated deferred investment tax credits 488,509 494,315
Obligations under capital leases 205,830 201,873
FERC settlement - refund obligation 28,965 30,745
Other regulatory liabilities 129,995 104,841
Decommissioning 761,100 749,708
Transition to competition 199,981 191,934
Regulatory reserves 425,581 396,789
Accumulated provisions 346,344 390,116
Other 705,659 853,137
----------- -----------
TOTAL 6,574,163 6,662,541
----------- -----------
Long-term debt 7,351,758 7,732,093
Preferred stock with sinking fund 63,760 65,758
Company-obligated mandatorily redeemable
preferred securities of subsidiary trusts holding
solely junior subordinated deferrable debentures 215,000 215,000
SHAREHOLDERS' EQUITY
Preferred stock without sinking fund 334,687 334,688
Common stock, $.01 par value, authorized 500,000,000
shares; issued 248,174,087 shares in 2001 and
248,094,614 shares in 2000 2,482 2,481
Paid-in capital 4,663,923 4,660,483
Retained earnings 3,275,548 3,190,639
Accumulated other comprehensive loss (117,968) (75,033)
Less - treasury stock, at cost (27,865,077 shares in 2001 and
28,490,031 shares in 2000) 759,384 774,905
----------- -----------
TOTAL 7,399,288 7,338,353
----------- -----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $25,191,759 $25,451,896
=========== ===========
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS, COMPREHENSIVE INCOME, AND
PAID-IN CAPITAL
For the Three Months Ended March 31, 2001 and 2000
(Unaudited)
2001 2000
(In Thousands)
RETAINED EARNINGS
Retained Earnings - Beginning of period $3,190,639 $2,786,467
Add - Earnings applicable to common stock 154,155 $154,155 98,860 $98,860
Deduct:
Dividends declared on common stock 69,246 71,658
Capital stock and other expenses - (830)
---------- ----------
Total 69,246 70,828
---------- ----------
Retained Earnings - End of period $3,275,548 $2,814,499
========== ==========
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS):
Balance at beginning of period ($75,033) ($73,805)
Cumulative effect to January 1, 2001 of accounting
change regarding fair value of derivative instruments (29,067) - - -
Net derivative instrument fair value changes
arising during the period (13,446) (13,446) - -
Foreign currency translation adjustments (2,027) (2,027) (707) (707)
Net unrealized investment gains (losses) 1,605 1,605 (4,935) (4,935)
---------- -------- ---------- -------
Balance at end of period:
Accumulated derivative instrument fair value changes (42,513) -
Other accumulated comprehensive income (loss) items (75,455) (79,447)
---------- ----------
Total ($117,968) ($79,447)
========== -------- ========== -------
Comprehensive Income $140,287 $93,218
======== =======
PAID-IN CAPITAL
Paid-in Capital - Beginning of period $4,660,483 $4,636,163
Add: Common stock issuances related to stock plans 3,440 311
---------- ----------
Paid-in Capital - End of period $4,663,923 $4,636,474
========== ==========
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
SELECTED OPERATING RESULTS
For the Three Months Ended March 31, 2001 and 2000
(Unaudited)
Increase/
Description 2001 2000 (Decrease) %
(In Millions)
Domestic Electric Operating
Revenues:
Residential $ 635.0 $ 468.2 $ 166.8 36
Commercial 451.4 346.9 104.5 30
Industrial 653.6 453.4 200.2 44
Governmental 53.5 38.8 14.7 38
--------- --------- --------
Total retail 1,793.5 1,307.3 486.2 37
Sales for resale 122.5 83.2 39.3 47
Other (43.5) (37.6) (5.9) (16)
--------- --------- --------
Total $ 1,872.5 $ 1,352.9 $ 519.6 38
========= ========= ========
Billed Electric Energy
Sales (GWH):
Residential 7,537 6,512 1,025 16
Commercial 5,574 5,280 294 6
Industrial 10,311 10,617 (306) (3)
Governmental 615 586 29 5
--------- --------- --------
Total retail 24,037 22,995 1,042 5
Sales for resale 2,449 2,272 177 8
--------- --------- --------
Total 26,486 25,267 1,219 5
========= ========= ========
ENTERGY ARKANSAS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income decreased for the first quarter of 2001 primarily due to
increased depreciation expense, increased interest charges, and the
effect on 2000 fuel expense of a $23.5 million true-up of the deferred
fuel balance in the first quarter of 2000. The overall decrease was
partially offset by increased net revenue.
Revenues and Sales
The changes in electric operating revenues for the first quarter of
2001 are as follows:
First Quarter
Description Increase/(Decrease)
(In Millions)
Base rate changes ($9.3)
Rate riders 3.2
Fuel cost recovery 19.6
Volume 8.0
Weather 11.9
Other revenue (including unbilled) (8.9)
Sales for resale 22.4
-----
Total $46.9
=====
Base rate changes
Base rate changes decreased revenues for the first quarter of 2001
primarily due to the effect of block rates on residential customers and
lower prices for industrial and commercial customers.
Fuel cost recovery
Entergy Arkansas is allowed to recover certain fuel and purchased
power costs through fuel mechanisms included in electric rates that are
recorded as fuel cost recovery revenues. The difference between revenues
collected and current fuel and purchased power costs is recorded as
deferred fuel costs on Entergy Arkansas' financial statements such that
these costs generally have no net effect on earnings.
Fuel cost recovery revenue increased for the first quarter of 2001
primarily due to an increase in the energy cost rate, which became
effective in April 2000. The increase in the energy cost rate allows
Entergy Arkansas to recover previously under-recovered fuel expenses.
Volume
Electric sales volume increased for the first quarter of 2001 due to
increased usage of 118 GWH by the residential and commercial sectors.
ENTERGY ARKANSAS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Weather
Electric sales vary seasonally in response to weather and usually
peak in the summer. The effect of colder than normal winter weather in
the first quarter of 2001 contributed to the increase in electric sales.
For the first quarter of 2001, the effect of favorable weather increased
electric sales volume by 261 GWH in the residential and commercial
sectors.
Other revenue (including unbilled)
Unbilled revenue decreased for the first quarter of 2001 primarily
due to the effect of less favorable weather on the period included in the
March 2001 unbilled revenue calculation.
Sales for resale
Sales for resale increased for the first quarter of 2001 primarily
due to an increase in sales volume to municipalities and co-ops coupled
with an increase in the average market price of energy.
Expenses
Fuel and purchased power
Fuel and purchased power expenses increased for the first quarter of
2001 primarily due to:
o increased market prices of natural gas and purchased power; and
o the effect on 2000 expenses of a $23.5 million true-up of the
deferred fuel balance made in the first quarter of 2000 as a
result of the energy cost recovery filing.
Other operation and maintenance
Other operation and maintenance expenses decreased for the first
quarter of 2001 primarily due to decreased nuclear expenses of $4.0
million related to maintenance outages at ANO 1 in the first quarter of
2000.
Depreciation and amortization
Depreciation and amortization expenses increased for the first
quarter of 2001 primarily due to net capital additions of $420 million
during 2000.
Other regulatory credits
Other regulatory credits decreased for the first quarter of 2001
primarily due to an increase in the Grand Gulf 1 rider, which allows for
increased recovery of Grand Gulf 1 costs.
Other
Other income
Other income decreased for the first quarter of 2001 primarily due
to a decrease in the allowance for equity funds used during construction
due to a lower construction work in progress balance in 2001. The
construction balance was lower because the ANO 2 replacement steam
generators were placed in service in 2000. The decrease was partially
offset by increased interest income recorded on the deferred fuel
balance.
ENTERGY ARKANSAS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Interest charges
Interest charges increased for the first quarter of 2001 due to:
o the issuance of $100 million of long-term debt in March 2000;
o interest expense on a $63 million credit facility obtained in
January 2001; and
o a decrease in the allowance for borrowed funds used during
construction because of the lower construction work in progress
balance in 2001.
Income taxes
The effective income tax rates for the first quarter of 2001 and
2000 were 42.2% and 40.9%, respectively. The increase in the effective
tax rate was due to decreased tax benefits from the allowance for equity
funds used during construction.
ENTERGY ARKANSAS, INC.
INCOME STATEMENTS
For the Three Months Ended March 31, 2001 and 2000
(Unaudited)
2001 2000
(In Thousands)
OPERATING REVENUES
Domestic electric $393,800 $346,877
-------- --------
OPERATING EXPENSES
Operating and Maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 70,748 47,677
Purchased power 124,098 98,797
Nuclear refueling outage expenses 6,821 6,439
Other operation and maintenance 71,545 75,925
Decommissioning (3) 2,028
Taxes other than income taxes 8,764 8,716
Depreciation and amortization 46,635 41,301
Other regulatory credits - net (6,455) (10,765)
-------- --------
TOTAL 322,153 270,118
-------- --------
OPERATING INCOME 71,647 76,759
-------- --------
OTHER INCOME
Allowance for equity funds used during construction 1,091 3,578
Miscellaneous - net 3,807 1,545
-------- --------
TOTAL 4,898 5,123
-------- --------
INTEREST AND OTHER CHARGES
Interest on long-term debt 22,436 20,906
Other interest - net 3,390 2,297
Distributions on preferred securities of subsidiary 1,275 1,275
Allowance for borrowed funds used during construction (711) (2,304)
-------- --------
TOTAL 26,390 22,174
-------- --------
INCOME BEFORE INCOME TAXES 50,155 59,708
Income taxes 21,177 24,394
-------- --------
NET INCOME 28,978 35,314
Preferred dividend requirements and other 1,944 1,944
-------- --------
EARNINGS APPLICABLE TO
COMMON STOCK $27,034 $33,370
======== ========
See Notes to Financial Statements.
ENTERGY ARKANSAS, INC.
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2001 and 2000
(Unaudited)
2001 2000
(In Thousands)
OPERATING ACTIVITIES
Net income $28,978 $35,314
Noncash items included in net income:
Other regulatory credits - net (6,455) (10,765)
Depreciation, amortization, and decommissioning 46,632 43,329
Deferred income taxes and investment tax credits 19,910 3,376
Allowance for equity funds used during construction (1,091) (3,578)
Changes in working capital:
Receivables 46,501 (11,532)
Fuel inventory (12,143) (23,485)
Accounts payable (132,596) (58,822)
Taxes accrued 4,880 41,318
Interest accrued (2,397) 1,547
Deferred fuel costs 19,888 7,722
Other working capital accounts 18,541 4,265
Provision for estimated losses and reserves (3,589) (1,377)
Changes in other regulatory assets (25,470) (2,596)
Changes in other deferred credits 22,254 (43)
Other 6,704 11,844
-------- --------
Net cash flow provided by operating activities 30,547 36,517
-------- --------
INVESTING ACTIVITIES
Construction expenditures (67,383) (69,634)
Allowance for equity funds used during construction 1,091 3,578
Nuclear fuel purchases (19,099) (148)
Proceeds from sale/leaseback of nuclear fuel 19,099 148
Decommissioning trust contributions and realized
change in trust assets (2,270) (3,450)
Other regulatory investments (19,921) (18,530)
-------- --------
Net cash flow used in investing activities (88,483) (88,036)
-------- --------
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt - 99,630
Changes in short-term borrowings 63,000 -
Dividends paid:
Common stock (300) -
-------- --------
Net cash flow provided by financing activities 62,700 99,630
-------- --------
Net increase in cash and cash equivalents 4,764 48,111
Cash and cash equivalents at beginning of period 7,838 6,862
-------- --------
Cash and cash equivalents at end of period $12,602 $54,973
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid/(received) during the period for:
Interest - net of amount capitalized $28,237 $21,694
Income taxes ($3) ($15,400)
Noncash investing and financing activities:
Change in unrealized depreciation of
decommissioning trust assets ($3,826) ($4,378)
See Notes to Financial Statements.
ENTERGY ARKANSAS, INC.
BALANCE SHEETS
ASSETS
March 31, 2001 and December 31, 2000
(Unaudited)
2001 2000
(In Thousands)
CURRENT ASSETS
Cash and cash equivalents $12,602 $7,838
Accounts receivable:
Customer 85,105 98,550
Allowance for doubtful accounts (1,667) (1,667)
Associated companies 16,237 22,286
Other 13,476 26,221
Accrued unbilled revenues 51,626 65,887
---------- ----------
Total accounts receivable 164,777 211,277
---------- ----------
Deferred fuel costs 103,003 102,970
Fuel inventory - at average cost 21,952 9,809
Materials and supplies - at average cost 82,144 80,682
Deferred nuclear refueling outage costs 22,082 23,541
Prepayments and other 9,596 5,540
---------- ----------
TOTAL 416,156 441,657
---------- ----------
OTHER PROPERTY AND INVESTMENTS
Investment in affiliates - at equity 11,217 11,217
Decommissioning trust funds 354,296 355,852
Non-utility property - at cost (less accumulated depreciation) 1,468 1,469
Other - at cost (less accumulated depreciation) 2,976 3,032
---------- ----------
TOTAL 369,957 371,570
---------- ----------
UTILITY PLANT
Electric 5,278,241 5,274,066
Property under capital lease 39,745 40,289
Construction work in progress 117,011 87,389
Nuclear fuel under capital lease 103,163 107,023
Nuclear fuel 8,626 6,720
---------- ----------
TOTAL UTILITY PLANT 5,546,786 5,515,487
Less - accumulated depreciation and amortization 2,576,906 2,534,463
---------- ----------
UTILITY PLANT - NET 2,969,880 2,981,024
---------- ----------
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
SFAS 109 regulatory asset - net 161,972 162,952
Unamortized loss on reacquired debt 43,505 44,428
Other regulatory assets 280,853 221,805
Other 8,195 4,775
---------- ----------
TOTAL 494,525 433,960
---------- ----------
TOTAL ASSETS $4,250,518 $4,228,211
========== ==========
See Notes to Financial Statements.
ENTERGY ARKANSAS, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
March 31, 2001 and December 31, 2000
(Unaudited)
2001 2000
(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt $85,000 $100
Notes payable 63,667 667
Accounts payable:
Associated companies 109,128 94,776
Other 84,365 231,313
Customer deposits 30,137 29,775
Taxes accrued 45,143 40,263
Accumulated deferred income taxes 48,138 55,127
Interest accrued 25,227 27,624
Obligations under capital leases 46,025 45,962
Other 39,125 14,942
---------- ----------
TOTAL 575,955 540,549
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes 744,375 715,891
Accumulated deferred investment tax credits 87,007 88,264
Obligations under capital leases 96,883 101,350
Transition to competition 120,883 119,553
Accumulated provisions 38,804 42,393
Other 86,522 64,267
---------- ----------
TOTAL 1,174,474 1,131,718
---------- ----------
Long-term debt 1,157,123 1,239,712
Company-obligated mandatorily redeemable
preferred securities of subsidiary trust holding
solely junior subordinated deferrable debentures 60,000 60,000
SHAREHOLDERS' EQUITY
Preferred stock without sinking fund 116,350 116,350
Common stock, $0.01 par value, authorized 325,000,000
shares; issued and outstanding 46,980,196 shares in 2001
and 2000 470 470
Paid-in capital 591,127 591,127
Retained earnings 575,019 548,285
---------- ----------
TOTAL 1,282,966 1,256,232
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,250,518 $4,228,211
========== ==========
See Notes to Financial Statements.
ENTERGY ARKANSAS, INC.
SELECTED OPERATING RESULTS
For the Three Months Ended March 31, 2001 and 2000
(Unaudited)
Increase/
Description 2001 2000 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 140.0 $ 117.7 $ 22.3 19
Commercial 68.4 62.2 6.2 10
Industrial 78.3 73.7 4.6 6
Governmental 3.5 3.2 0.3 9
------- ------- -------
Total retail 290.2 256.8 33.4 13
Sales for resale
Associated companies 49.6 45.1 4.5 10
Non-associated companies 59.8 41.9 17.9 43
Other (5.8) 3.1 (8.9) (287)
------- ------- -------
Total $ 393.8 $ 346.9 $ 46.9 14
======= ======= =======
Billed Electric Energy
Sales (GWH):
Residential 1,854 1,550 304 20
Commercial 1,150 1,075 75 7
Industrial 1,660 1,652 8 -
Governmental 57 54 3 6
------- ------- -------
Total retail 4,721 4,331 390 9
Sales for resale
Associated companies 1,128 1,681 (553) (33)
Non-associated companies 1,331 1,149 182 16
------- ------- -------
Total 7,180 7,161 19 -
======= ======= =======
ENTERGY GULF STATES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income increased for the first quarter of 2001 primarily due to
increased net revenue, partially offset by an increase in interest
expense.
Revenues and Sales
Electric operating revenues
The changes in electric operating revenues for the first quarter of
2001 are as follows:
First Quarter
Description Increase/(Decrease)
(In Millions)
Base rate changes ($1.7)
Fuel cost recovery 171.2
Volume (0.2)
Weather 15.6
Other revenue (including unbilled) 6.6
Sales for resale 36.6
------
Total $228.1
======
Fuel cost recovery
Entergy Gulf States is allowed to recover certain fuel and purchased
power costs through fuel mechanisms included in electric rates that are
recorded as fuel cost recovery revenues. The difference between revenues
collected and current fuel and purchased power costs is recorded as
deferred fuel costs on Entergy Gulf States' financial statements such
that these costs generally have no net effect on earnings.
Fuel cost recovery revenues increased for the first quarter of 2001
in both operational jurisdictions of Entergy Gulf States. In the
Louisiana jurisdiction, fuel recovery revenues increased $140.7 million
due to the current period recovery through the fuel adjustment clause of
higher fuel and purchased power costs from prior months. In the
Louisiana jurisdiction, these fuel costs are recovered on a two-month
lag. In the Texas jurisdiction, fuel cost recovery revenues increased
$30.5 million due to increases in the fixed fuel factor in August 2000
and March 2001 and due to a fuel recovery surcharge which became
effective in February 2001.
Weather
Electric sales vary seasonally in response to weather and usually
peak in the summer. The effect of colder than normal winter weather in
the first quarter of 2001 contributed to the increase in electric sales.
For the first quarter of 2001, the effect of favorable weather across
both jurisdictions increased electric sales volume by 339 GWH in the
residential and commercial sectors.
ENTERGY GULF STATES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Sales for resale
Sales for resale increased primarily due to:
o increased sales volume to adjoining utility systems because more
power was available for sale;
o increased prices for resale electricity in 2001; and
o increased sales volume to municipal and co-op customers.
Included in the sales for resale is the sale to adjoining utility systems
of power from the 30% share of River Bend acquired from Cajun, which
Entergy Gulf States treats as an asset not subject to state rate
regulation.
Gas operating revenues
Gas operating revenues increased for the first quarter of 2001 due
to the increased market price of natural gas and increased sales due to a
colder than normal winter. The increase in gas revenues was largely
offset by increased fuel expenses for gas purchased for resale.
Expenses
Fuel and purchased power
Fuel and purchased power expenses increased for the first quarter of
2001 due to:
o higher market prices for natural gas, which increased 160% over this
quarter last year;
o higher market prices for purchased power; and
o increased generation requirements.
Depreciation and amortization
Depreciation and amortization increased for the first quarter of
2001 primarily due to $209 million of net capital additions in 2000.
Other
Interest charges
Interest charges increased for the first quarter of 2001 primarily
due to the issuance of $300 million of long-term debt in June 2000.
Preferred dividend requirements
Preferred dividend requirements decreased due to the redemption in
June 2000 of $150 million of preference stock, which paid dividends of 7%
per annum.
Income taxes
The effective income tax rates for the first quarter of 2001 and
2000 were 37.1% and 47.0%, respectively. This decrease is primarily due
to increased tax benefits from depreciation and decreased state income
taxes. These decreases in the effective tax rate were partially offset
by decreased tax benefits from investment tax credits and flow-through
items.
ENTERGY GULF STATES, INC.
INCOME STATEMENTS
For the Three Months Ended March 31, 2001 and 2000
(Unaudited)
2001 2000
(In Thousands)
OPERATING REVENUES
Domestic electric $698,876 $470,817
Natural gas 35,600 12,414
-------- --------
TOTAL 734,476 483,231
-------- --------
OPERATING EXPENSES
Operating and Maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 293,166 191,550
Purchased power 141,953 72,135
Nuclear refueling outage expenses 3,090 5,493
Other operation and maintenance 93,254 95,121
Decommissioning 1,562 1,568
Taxes other than income taxes 30,996 26,854
Depreciation and amortization 49,761 46,818
Other regulatory credits - net (6,890) (8,145)
Amortization of rate deferrals 1,402 1,402
-------- --------
TOTAL 608,294 432,796
-------- --------
OPERATING INCOME 126,182 50,435
-------- --------
OTHER INCOME
Allowance for equity funds used during construction 1,825 1,741
Gain on sale of assets 585 515
Miscellaneous - net 6,521 1,635
-------- --------
TOTAL 8,931 3,891
-------- --------
INTEREST AND OTHER CHARGES
Interest on long-term debt 38,793 32,375
Other interest - net 2,336 1,404
Distributions on preferred securities of subsidiary 1,859 1,859
Allowance for borrowed funds used during construction (1,714) (1,609)
-------- --------
TOTAL 41,274 34,029
-------- --------
INCOME BEFORE INCOME TAXES 93,839 20,297
Income taxes 34,793 9,540
-------- --------
NET INCOME 59,046 10,757
Preferred dividend requirements and other 1,310 4,144
-------- --------
EARNINGS APPLICABLE TO
COMMON STOCK $57,736 $6,613
======== ========
See Notes to Financial Statements.
ENTERGY GULF STATES, INC.
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2001 and 2000
(Unaudited)
2001 2000
(In Thousands)
OPERATING ACTIVITIES
Net income $59,046 $10,757
Noncash items included in net income:
Amortization of rate deferrals 1,402 1,402
Reserve for regulatory adjustments 2,073 333
Other regulatory credits - net (6,890) (8,145)
Depreciation, amortization, and decommissioning 51,323 48,386
Deferred income taxes and investment tax credits 35,990 (19,306)
Allowance for equity funds used during construction (1,825) (1,741)
Gain on sale of assets (585) (515)
Changes in working capital:
Receivables 30,298 6
Fuel inventory (12,574) (8,561)
Accounts payable (95,746) 21,661
Taxes accrued (7,338) (9,828)
Interest accrued 3,030 (7,242)
Deferred fuel costs 23,481 37,296
Other working capital accounts 11,818 10,624
Provision for estimated losses and reserves (1,332) (1,110)
Changes in other regulatory assets (10,298) (6,470)
Other 8,798 13,908
-------- --------
Net cash flow provided by operating activities 90,671 81,455
-------- --------
INVESTING ACTIVITIES
Construction expenditures (60,860) (50,130)
Allowance for equity funds used during construction 1,825 1,741
Nuclear fuel purchases (3,937) (33,304)
Proceeds from sale/leaseback of nuclear fuel 3,937 13,797
Decommissioning trust contributions and realized
change in trust assets (2,807) (2,608)
Other regulatory investments (33,716) -
-------- --------
Net cash flow used in investing activities (95,558) (70,504)
-------- --------
FINANCING ACTIVITIES
Redemption of preferred stock (1,999) (2,493)
Dividends paid:
Common stock (19,000) (3,400)
Preferred stock (1,323) (4,109)
-------- --------
Net cash flow used in financing activities (22,322) (10,002)
-------- --------
Net increase (decrease) in cash and cash equivalents (27,209) 949
Cash and cash equivalents at beginning of period 68,279 32,312
-------- --------
Cash and cash equivalents at end of period $41,070 $33,261
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $38,649 $41,483
Income taxes - $33,835
Noncash investing and financing activities:
Change in unrealized depreciation of
decommissioning trust assets ($2,674) ($2,826)
See Notes to Financial Statements.
ENTERGY GULF STATES, INC.
BALANCE SHEETS
ASSETS
March 31, 2001 and December 31, 2000
(Unaudited)
2001 2000
(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash $12,983 $10,726
Temporary cash investments - at cost,
which approximates market 28,087 57,553
---------- ----------
Total cash and cash equivalents 41,070 68,279
---------- ----------
Accounts receivable:
Customer 119,873 125,412
Allowance for doubtful accounts (2,131) (2,131)
Associated companies 2,447 27,660
Other 20,405 22,837
Accrued unbilled revenues 139,270 136,384
---------- ----------
Total accounts receivable 279,864 310,162
---------- ----------
Deferred fuel costs 298,361 288,126
Fuel inventory - at average cost 49,832 37,258
Materials and supplies - at average cost 100,303 100,018
Rate deferrals 4,205 5,606
Prepayments and other 14,086 22,332
---------- ----------
TOTAL 787,721 831,781
---------- ----------
OTHER PROPERTY AND INVESTMENTS
Decommissioning trust funds 243,688 243,555
Non-utility property - at cost (less accumulated depreciation) 194,376 194,422
Other - at cost (less accumulated depreciation) 15,597 14,826
---------- ----------
TOTAL 453,661 452,803
---------- ----------
UTILITY PLANT
Electric 7,551,047 7,574,905
Property under capital lease 37,166 38,564
Natural gas 56,578 56,163
Construction work in progress 186,604 144,814
Nuclear fuel under capital lease 53,908 57,472
---------- ----------
TOTAL UTILITY PLANT 7,885,303 7,871,918
Less - accumulated depreciation and amortization 3,687,220 3,680,662
---------- ----------
UTILITY PLANT - NET 4,198,083 4,191,256
---------- ----------
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
SFAS 109 regulatory asset - net 406,748 403,934
Unamortized loss on reacquired debt 37,007 37,903
Other regulatory assets 176,889 169,405
Long-term receivables 28,860 29,586
Other 17,216 17,349
---------- ----------
TOTAL 666,720 658,177
---------- ----------
TOTAL ASSETS $6,106,185 $6,134,017
========== ==========
See Notes to Financial Statements.
ENTERGY GULF STATES, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
March 31, 2001 and December 31, 2000
2001 2000
(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt $272,750 $122,750
Accounts payable:
Associated companies 86,896 66,312
Other 142,200 258,529
Customer deposits 38,843 37,489
Taxes accrued 125,031 132,368
Accumulated deferred income taxes 96,602 94,032
Nuclear refueling outage costs 13,253 10,209
Interest accrued 46,568 43,539
Obligations under capital leases 42,808 42,524
Other 18,863 19,418
---------- ----------
TOTAL 883,814 827,170
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes 1,154,831 1,115,119
Accumulated deferred investment tax credits 169,192 171,000
Obligations under capital leases 48,265 53,512
Other regulatory liabilities 268 669
Decommissioning 143,282 142,604
Transition to competition 79,098 72,381
Regulatory reserves 63,039 60,965
Accumulated provisions 66,072 67,404
Other 86,835 98,501
---------- ----------
TOTAL 1,810,882 1,782,155
---------- ----------
Long-term debt 1,658,938 1,808,879
Preferred stock with sinking fund 28,760 30,758
Company-obligated mandatorily redeemable
preferred securities of subsidiary trust holding
solely junior subordinated deferrable debentures 85,000 85,000
SHAREHOLDERS' EQUITY
Preferred stock without sinking fund 47,677 47,677
Common stock, no par value, authorized 200,000,000
shares; issued and outstanding 100 shares in 2001 and 2000 114,055 114,055
Paid-in capital 1,153,233 1,153,195
Retained earnings 323,826 285,128
---------- ----------
TOTAL 1,638,791 1,600,055
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $6,106,185 $6,134,017
========== ==========
See Notes to Financial Statements.
ENTERGY GULF STATES, INC.
SELECTED OPERATING RESULTS
For the Three Months Ended March 31, 2001 and 2000
(Unaudited)
Increase/
Description 2001 2000 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 188.5 $ 137.9 $ 50.6 37
Commercial 145.3 108.3 37.0 34
Industrial 280.6 184.5 96.1 52
Governmental 9.9 7.7 2.2 29
------- ------- -------
Total retail 624.3 438.4 185.9 42
Sales for resale
Associated companies 12.4 6.5 5.9 91
Non-associated companies 51.1 20.4 30.7 150
Other 11.1 5.5 5.6 102
------- ------- -------
Total $ 698.9 $ 470.8 $ 228.1 48
======= ======= =======
Billed Electric Energy
Sales (GWH):
Residential 2,126 1,833 293 16
Commercial 1,744 1,642 102 6
Industrial 4,252 4,370 (118) (3)
Governmental 111 105 6 6
------- ------- -------
Total retail 8,233 7,950 283 4
Sales for resale
Associated companies 107 188 (81) (43)
Non-associated companies 959 799 160 20
------- ------- -------
Total 9,299 8,937 362 4
======= ======= =======
ENTERGY LOUISIANA, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income decreased for the first quarter of 2001 primarily due to
a decrease in unbilled revenues, an increase in other operation and
maintenance expenses, and an increase in depreciation and amortization
expenses. The overall decrease was partially offset by a decrease in
provisions for rate refunds and an increase in interest income.
Revenues and Sales
The changes in electric operating revenues for the first quarter of
2001 are as follows:
First Quarter
Description Increase/(Decrease)
(In Millions)
Base rate changes $15.2
Fuel cost recovery 197.2
Volume 1.0
Weather 9.4
Other revenue (including unbilled) (18.5)
Sales for resale (2.2)
------
Total $202.1
======
Base rate changes
Base rate changes increased primarily due to accruals for potential
rate refunds in 2000, partially offset by additional formula rate plan
reductions effective August 2000.
Fuel cost recovery
Entergy Louisiana is allowed to recover certain fuel and purchased
power costs through fuel mechanisms included in electric rates that are
recorded as fuel cost recovery revenues. The difference between revenues
collected and current fuel and purchased power costs is recorded as
deferred fuel costs on Entergy Louisiana's financial statements such that
these costs generally have no net effect on earnings.
Fuel cost recovery revenues increased as a result of higher fuel and
purchased power expenses primarily due to the increased market price of
natural gas.
Weather
Electric sales vary seasonally in response to weather and usually
peak in the summer. The effect of colder than normal winter weather in
the first quarter of 2001 contributed to the increase in electric sales.
For the first quarter of 2001, the effect of favorable weather increased
electric sales volume by 232 GWH in the residential and commercial
sectors.
ENTERGY LOUISIANA, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Other revenue (including unbilled)
Unbilled revenue decreased for the first quarter of 2001 primarily
due to less favorable sales volume in the period included in the March
2001 unbilled revenue calculation.
Expenses
Fuel and purchased power
Fuel and purchased power expenses increased for the first quarter
of 2001 primarily due to increased market prices of natural gas and
purchased power.
Other operation and maintenance
Other operation and maintenance expenses increased for the first
quarter of 2001 primarily due to:
o an increase of $3.4 million in plant maintenance at certain fossil
plants;
o an increase of $1.3 million in injuries and damages expense; and
o an increase of $1.3 million in customer records and collection
expenses.
Depreciation and amortization
Depreciation and amortization expenses increased for the first
quarter of 2001 primarily due to $179 million of net capital additions
in 2000.
Other
Other income
Interest income increased for the first quarter of 2001, primarily
due to interest from deferred fuel costs and money pool investments.
Interest and other charges
Other interest increased for the first quarter of 2001 primarily due
to interest accrued on reserves provided for fuel-related refunds. The
refunds are expected to occur in the summer of 2001.
Income taxes
The effective income tax rates for the first quarter of 2001 and
2000 were 48.4% and 45.3%, respectively. The increase in the effective
income tax rate is primarily due to lower pre-tax income increasing the
effect of permanent differences and flow-through items.
ENTERGY LOUISIANA, INC.
INCOME STATEMENTS
For the Three Months Ended March 31, 2001 and 2000
(Unaudited)
2001 2000
(In Thousands)
OPERATING REVENUES
Domestic electric $548,914 $346,820
-------- --------
OPERATING EXPENSES
Operating and Maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 234,423 83,191
Purchased power 135,505 88,875
Nuclear refueling outage expenses 3,262 3,410
Other operation and maintenance 69,813 63,075
Decommissioning 2,606 2,606
Taxes other than income taxes 18,552 16,763
Depreciation and amortization 44,946 42,147
Other regulatory charges - net 540 240
-------- --------
TOTAL 509,647 300,307
-------- --------
OPERATING INCOME 39,267 46,513
-------- --------
OTHER INCOME
Allowance for equity funds used during construction 935 683
Miscellaneous - net 1,936 108
-------- --------
TOTAL 2,871 791
-------- --------
INTEREST AND OTHER CHARGES
Interest on long-term debt 24,456 24,163
Other interest - net 3,518 2,050
Distributions on preferred securities of subsidiary 1,575 1,575
Allowance for borrowed funds used during construction (709) (957)
-------- --------
TOTAL 28,840 26,831
-------- --------
INCOME BEFORE INCOME TAXES 13,298 20,473
Income taxes 6,439 9,282
-------- --------
NET INCOME 6,859 11,191
Preferred dividend requirements and other 2,378 2,378
-------- --------
EARNINGS APPLICABLE TO
COMMON STOCK $4,481 $8,813
======== ========
See Notes to Financial Statements.
ENTERGY LOUISIANA, INC.
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2001 and 2000
(Unaudited)
2001 2000
(In Thousands)
OPERATING ACTIVITIES
Net income $6,859 $11,191
Noncash items included in net income:
Reserve for regulatory adjustments 250 -
Other regulatory charges - net 540 240
Depreciation, amortization, and decommissioning 47,552 44,753
Deferred income taxes and investment tax credits (32,902) (12,187)
Allowance for equity funds used during construction (935) (683)
Changes in working capital:
Receivables 27,171 15,211
Accounts payable (104,832) (65,581)
Taxes accrued 49,557 23,218
Interest accrued (10,899) 57
Deferred fuel costs 63,264 (94)
Other working capital accounts 2,198 17,637
Provision for estimated losses and reserves 1,820 381
Changes in other regulatory assets (4,465) 5,249
Other 3,807 (5,513)
-------- --------
Net cash flow provided by operating activities 48,985 33,879
-------- --------
INVESTING ACTIVITIES
Construction expenditures (42,193) (30,345)
Allowance for equity funds used during construction 935 683
Decommissioning trust contributions and realized
change in trust assets (5,637) (776)
-------- --------
Net cash flow used in investing activities (46,895) (30,438)
-------- --------
FINANCING ACTIVITIES
Retirement of long-term debt (16,388) (100,000)
Changes in short-term borrowings 30,000 -
Advances from Parent - 100,000
Dividends paid:
Preferred stock (2,378) (2,378)
-------- --------
Net cash flow provided by (used in) financing activities 11,234 (2,378)
-------- --------
Net increase in cash and cash equivalents 13,324 1,063
Cash and cash equivalents at beginning of period 43,959 7,734
-------- --------
Cash and cash equivalents at end of period $57,283 $8,797
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $38,950 $25,456
Income taxes - $9,900
Noncash investing and financing activities:
Change in unrealized depreciation of
decommissioning trust assets ($1,224) ($1,499)
See Notes to Financial Statements.
ENTERGY LOUISIANA, INC.
BALANCE SHEETS
ASSETS
March 31, 2001 and December 31, 2000
(Unaudited)
2001 2000
(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash $10,120 $14,138
Temporary cash investments - at cost,
which approximates market 47,163 29,821
---------- ----------
Total cash and cash equivalents 57,283 43,959
---------- ----------
Notes receivable 3,025 1,510
Accounts receivable:
Customer 105,537 111,292
Allowance for doubtful accounts (1,771) (1,771)
Associated companies 41,831 30,518
Other 11,070 13,698
Accrued unbilled revenues 122,600 152,700
---------- ----------
Total accounts receivable 279,267 306,437
---------- ----------
Deferred fuel costs 20,787 84,051
Accumulated deferred income taxes 6,777 -
Materials and supplies - at average cost 78,621 77,389
Deferred nuclear refueling outage costs 13,221 16,425
Prepayments and other 12,471 9,996
---------- ----------
TOTAL 471,452 539,767
---------- ----------
OTHER PROPERTY AND INVESTMENTS
Investment in affiliates - at equity 14,230 14,230
Decommissioning trust funds 114,676 110,263
Non-utility property - at cost (less accumulated depreciation) 21,655 21,700
---------- ----------
TOTAL 150,561 146,193
---------- ----------
UTILITY PLANT
Electric 5,369,799 5,357,920
Property under capital lease 238,427 238,427
Construction work in progress 114,260 85,299
Nuclear fuel under capital lease 55,888 63,923
---------- ----------
TOTAL UTILITY PLANT 5,778,374 5,745,569
Less - accumulated depreciation and amortization 2,485,986 2,441,937
---------- ----------
UTILITY PLANT - NET 3,292,388 3,303,632
---------- ----------
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
SFAS 109 regulatory asset - net 206,437 204,810
Unamortized loss on reacquired debt 32,018 33,244
Other regulatory assets 53,719 50,881
Other 13,602 10,882
---------- ----------
TOTAL 305,776 299,817
---------- ----------
TOTAL ASSETS $4,220,177 $4,289,409
========== ==========
See Notes to Financial Statements.
ENTERGY LOUISIANA, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
March 31, 2001 and December 31, 2000
(Unaudited)
2001 2000
(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt $132,668 $35,088
Notes payable 30,000 -
Accounts payable:
Associated companies 20,502 71,948
Other 91,455 144,841
Customer deposits 60,166 60,227
Taxes accrued 72,864 23,307
Accumulated deferred income taxes - 20,545
Interest accrued 24,637 35,536
Obligations under capital leases 34,274 34,274
Other 106,892 102,614
---------- ----------
TOTAL 573,458 528,380
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes 756,012 757,362
Accumulated deferred investment tax credits 116,031 117,393
Obligations under capital leases 21,614 29,649
Regulatory reserves 11,706 11,456
Accumulated provisions 66,021 64,201
Other 65,514 61,724
---------- ----------
TOTAL 1,036,898 1,041,785
---------- ----------
Long-term debt 1,162,792 1,276,696
Preferred stock with sinking fund 35,000 35,000
Company-obligated mandatorily redeemable
preferred securities of subsidiary trust holding
solely junior subordinated deferrable debentures 70,000 70,000
SHAREHOLDERS' EQUITY
Preferred stock without sinking fund 100,500 100,500
Common stock, no par value, authorized 250,000,000
shares; issued and outstanding 165,173,180 shares in 2001
and 2000 1,088,900 1,088,900
Capital stock expense and other (2,171) (2,171)
Retained earnings 154,800 150,319
---------- ----------
TOTAL 1,342,029 1,337,548
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,220,177 $4,289,409
========== ==========
See Notes to Financial Statements.
ENTERGY LOUISIANA, INC.
SELECTED OPERATING RESULTS
For the Three Months Ended March 31, 2001 and 2000
(Unaudited)
Increase/
Description 2001 2000 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 184.7 $ 119.1 $ 65.6 55
Commercial 121.2 83.3 37.9 45
Industrial 245.2 152.7 92.5 61
Governmental 12.3 7.9 4.4 56
------- ------- ------
Total retail 563.4 363.0 200.4 55
Sales for resale
Associated companies 4.1 0.5 3.6 720
Non-associated companies 5.8 11.6 (5.8) (50)
Other (24.4) (28.3) 3.9 14
------- ------- ------
Total $ 548.9 $ 346.8 $202.1 58
======= ======= ======
Billed Electric Energy
Sales (GWH):
Residential 1,944 1,733 211 12
Commercial 1,217 1,148 69 6
Industrial 3,574 3,762 (188) (5)
Governmental 128 113 15 13
------- ------- ------
Total retail 6,863 6,756 107 2
Sales for resale
Associated companies 53 13 40 308
Non-associated companies 96 203 (107) (53)
------- ------- ------
Total 7,012 6,972 40 1
======= ======= ======
ENTERGY MISSISSIPPI, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income increased slightly for the first quarter of 2001
primarily due to increased net revenue, decreased operation and
maintenance expenses, and increased interest income, partially offset by
increased interest charges and an increase in the effective tax rate.
Revenues and Sales
The changes in electric operating revenues for the first quarter of
2001 are as follows:
First Quarter
Description Increase/(Decrease)
(In Millions)
Base rate changes ($2.0)
Fuel cost recovery 23.3
Volume 2.5
Weather 3.9
Other revenue (including unbilled) (2.6)
Sales for resale 48.3
-----
Total $73.4
=====
Fuel cost recovery
Entergy Mississippi is allowed to recover certain fuel and purchased
power costs through fuel mechanisms included in electric rates, recorded
as fuel cost recovery revenues. The difference between revenues
collected and current fuel and purchased power costs is recorded as
deferred fuel costs on Entergy Mississippi's financial statements such
that these costs generally have no net effect on earnings.
Fuel cost recovery revenues increased for the first quarter of 2001
primarily due to an increase in the energy cost recovery rider to collect
the under-recovered fuel and purchased power costs incurred as of
September 30, 2000. The recovery of $136.7 million, plus carrying
charges, will occur over a 24-month period beginning January 2001.
Volume
Increased usage by the residential and commercial sectors, after
adjusting for weather effects, increased electric sales volume by 77 GWH
in the first quarter of 2001.
Weather
Electric sales vary seasonally in response to weather and usually
peak in the summer. The effect of colder than normal winter weather in
the first quarter of 2001 contributed to an increase in electric sales.
For the first quarter of 2001, the effect of favorable weather increased
electric sales volume by 174 GWH in the residential and commercial
sectors.
ENTERGY MISSISSIPPI, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Other revenue (including unbilled)
Unbilled revenue decreased for the first quarter of 2001 primarily
due to the effect of less favorable weather in the period included in the
March 2001 unbilled revenue calculation.
Sales for resale
Sales for resale increased for the first quarter of 2001 primarily
due to increased net generation resulting in more energy available for
sale, coupled with increased prices for resale electricity. The increase
came from sales to affiliates, which are generally made at a low margin.
Expenses
Fuel and purchased power
Fuel and purchased power expenses increased for the first quarter of
2001 primarily due to increased generation requirements and increased
market prices of natural gas and purchased power.
Other operation and maintenance
Other operation and maintenance expenses decreased for the first
quarter of 2001 primarily due to outage costs at certain fossil plants in
2000 and an insurance reimbursement received in 2001 for an October 1999
turbine generator failure.
Other
Other income
Interest income increased for the first quarter of 2001 primarily
due to interest recorded on the deferred fuel balance as a result of an
MPSC order providing for a 24-month recovery of the September 2000 under-
recovered electric deferred fuel balance of $136.7 million.
Interest and other charges
Interest on long-term debt increased for the first quarter of 2001
primarily due to the issuance of $120 million of long-term debt in
February 2000 and the issuance of $70 million of long-term debt in
January 2001.
Income taxes
The effective income tax rates for the first quarter of 2001 and
2000 were 35.8% and 27.3%, respectively. The increase in the effective
income tax rate for 2001 was primarily due to the increase in pre-tax
income reducing the impact of permanent differences and flow-through
items.
ENTERGY MISSISSIPPI, INC.
INCOME STATEMENTS
For the Three Months Ended March 31, 2001 and 2000
(Unaudited)
2001 2000
(In Thousands)
OPERATING REVENUES
Domestic electric $256,158 $182,775
-------- --------
OPERATING EXPENSES
Operating and Maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 110,059 44,287
Purchased power 83,464 76,828
Other operation and maintenance 33,248 35,623
Taxes other than income taxes 11,273 10,176
Depreciation and amortization 13,274 11,725
Other regulatory credits - net (9,684) (9,078)
-------- --------
TOTAL 241,634 169,561
-------- --------
OPERATING INCOME 14,524 13,214
-------- --------
OTHER INCOME
Allowance for equity funds used during construction 423 637
Miscellaneous - net 4,146 2,030
-------- --------
TOTAL 4,569 2,667
-------- --------
INTEREST AND OTHER CHARGES
Interest on long-term debt 11,144 9,454
Other interest - net 1,233 1,020
Allowance for borrowed funds used during construction (347) (504)
-------- --------
TOTAL 12,030 9,970
-------- --------
INCOME BEFORE INCOME TAXES 7,063 5,911
Income taxes 2,528 1,616
-------- --------
NET INCOME 4,535 4,295
Preferred dividend requirements and other 842 842
-------- --------
EARNINGS APPLICABLE TO
COMMON STOCK $3,693 $3,453
======== ========
See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC.
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2001 and 2000
(Unaudited)
2001 2000
(In Thousands)
OPERATING ACTIVITIES
Net income $4,535 $4,295
Noncash items included in net income:
Other regulatory credits - net (9,684) (9,078)
Depreciation and amortization 13,274 11,725
Deferred income taxes and investment tax credits 4,805 3,731
Allowance for equity funds used during construction (423) (637)
Changes in working capital:
Receivables 25,186 (5,521)
Fuel inventory (3,547) 786
Accounts payable (73,374) (54,785)
Taxes accrued (23,597) (27,128)
Interest accrued 2,062 2,528
Deferred fuel costs (12,807) 10,312
Other working capital accounts (4,563) 572
Provision for estimated losses and reserves (784) (473)
Changes in other regulatory assets (9,010) (9,661)
Other 17,250 9,741
-------- --------
Net cash flow used in operating activities (70,677) (63,593)
-------- --------
INVESTING ACTIVITIES
Construction expenditures (22,163) (26,337)
Allowance for equity funds used during construction 423 637
Other regulatory investments - (8,637)
-------- --------
Net cash flow used in investing activities (21,740) (34,337)
-------- --------
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 69,689 119,241
Changes in short-term borrowings 25,000 -
Dividends paid:
Common stock (2,000) (1,000)
Preferred stock (842) (842)
-------- --------
Net cash flow provided by financing activities 91,847 117,399
-------- --------
Net increase (decrease) in cash and cash equivalents (570) 19,469
Cash and cash equivalents at beginning of period 5,113 4,787
-------- --------
Cash and cash equivalents at end of period $4,543 $24,256
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $9,779 $7,317
Income taxes - $4,664
See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC.
BALANCE SHEETS
ASSETS
March 31, 2001 and December 31, 2000
(Unaudited)
2001 2000
(In Thousands)
CURRENT ASSETS
Cash and cash equivalents $4,543 $5,113
Accounts receivable:
Customer 40,346 44,517
Allowance for doubtful accounts (1,044) (1,044)
Associated companies 1,816 10,741
Other 4,174 9,964
Accrued unbilled revenues 27,300 33,600
---------- ----------
Total accounts receivable 72,592 97,778
---------- ----------
Deferred fuel costs 98,335 64,950
Fuel inventory - at average cost 6,983 3,436
Materials and supplies - at average cost 19,632 18,485
Prepayments and other 7,832 3,004
---------- ----------
TOTAL 209,917 192,766
---------- ----------
OTHER PROPERTY AND INVESTMENTS
Investment in affiliates - at equity 5,531 5,531
Non-utility property - at cost (less accumulated depreciation) 6,819 6,851
---------- ----------
TOTAL 12,350 12,382
---------- ----------
UTILITY PLANT
Electric 1,891,384 1,885,501
Property under capital lease 265 290
Construction work in progress 59,395 44,085
---------- ----------
TOTAL UTILITY PLANT 1,951,044 1,929,876
Less - accumulated depreciation and amortization 745,991 733,977
---------- ----------
UTILITY PLANT - NET 1,205,053 1,195,899
---------- ----------
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
SFAS 109 regulatory asset - net 27,164 25,544
Unamortized loss on reacquired debt 14,823 15,122
Deferred fuel costs 75,083 95,661
Other regulatory assets 148,069 140,679
Other 8,032 5,886
---------- ----------
TOTAL 273,171 282,892
---------- ----------
TOTAL ASSETS $1,700,491 $1,683,939
========== ==========
See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
March 31, 2001 and December 31, 2000
(Unaudited)
2001 2000
(In Thousands)
CURRENT LIABILITIES
Notes payable $25,048 $-
Accounts payable:
Associated companies 32,529 92,980
Other 13,963 26,933
Customer deposits 27,247 26,368
Taxes accrued 8,265 31,862
Accumulated deferred income taxes 49,764 47,734
Interest accrued 15,161 13,099
Obligations under capital leases 63 79
Other 3,072 2,540
---------- ----------
TOTAL 175,112 241,595
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes 311,668 306,295
Accumulated deferred investment tax credits 19,033 19,408
Obligations under capital leases 202 211
Accumulated provisions 6,022 6,806
Other 38,445 31,339
---------- ----------
TOTAL 375,370 364,059
---------- ----------
Long-term debt 654,499 584,467
SHAREHOLDERS' EQUITY
Preferred stock without sinking fund 50,381 50,381
Common stock, no par value, authorized
15,000,000 shares; issued and outstanding
8,666,357 shares in 2001 and 2000 199,326 199,326
Capital stock expense and other (59) (59)
Retained earnings 245,862 244,170
---------- ----------
TOTAL 495,510 493,818
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,700,491 $1,683,939
========== ==========
See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC.
SELECTED OPERATING RESULTS
For the Three Months Ended March 31, 2001 and 2000
(Unaudited)
Increase/
Description 2001 2000 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 80.9 $ 66.1 $ 14.8 22
Commercial 67.6 59.5 8.1 14
Industrial 41.3 37.4 3.9 10
Governmental 6.7 5.8 0.9 16
------ ------ ------
Total retail 196.5 168.8 27.7 16
Sales for resale
Associated companies 56.6 5.9 50.7 859
Non-associated companies 4.4 6.8 (2.4) (35)
Other (1.3) 1.3 (2.6) (200)
------ ------ ------
Total $256.2 $182.8 $ 73.4 40
====== ====== ======
Billed Electric Energy
Sales (GWH):
Residential 1,215 1,023 192 19
Commercial 975 918 57 6
Industrial 734 743 (9) (1)
Governmental 90 80 10 13
------ ------ ------
Total retail 3,014 2,764 250 9
Sales for resale
Associated companies 874 125 749 599
Non-associated companies 51 77 (26) (34)
------ ------ ------
Total 3,939 2,966 973 33
====== ====== ======
ENTERGY NEW ORLEANS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income decreased for the first quarter of 2001 primarily due to
increased other operation and maintenance expenses, increased taxes other
than income taxes, and increased interest expense, partially offset by
increased net revenue.
Revenues and Sales
Electric operating revenues
The changes in electric operating revenues for the first quarter of
2001 are as follows:
First Quarter
Description Increase/(Decrease)
(In Millions)
Base rate changes ($0.9)
Fuel cost recovery 39.0
Volume (1.5)
Weather 2.1
Other revenue (including unbilled) 1.5
Sales for resale 2.8
-----
Total $43.0
=====
Fuel cost recovery
Entergy New Orleans is allowed to recover certain fuel and purchased
power costs through fuel mechanisms included in electric rates, recorded
as fuel cost recovery revenues. The difference between revenues
collected and current fuel and purchased power costs is recorded as
deferred fuel costs on Entergy New Orleans' financial statements such
that these costs generally have no net effect on earnings.
Fuel cost recovery revenues increased for the first quarter of 2001
primarily due to the increased market price of natural gas.
Weather
Electric sales vary seasonally in response to weather and usually
peak in the summer. The effect of colder than normal weather in the
first quarter of 2001 increased electric sales. For the first quarter of
2001, the effect of favorable weather increased electric sales volume by
46 GWH in the residential and commercial sectors.
Sales for resale
Sales for resale increased for the first quarter of 2001 primarily
due to an increase in the average price of electricity supplied for
resale sales, partially offset by a decrease in net generation.
ENTERGY NEW ORLEANS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Gas operating revenues
Gas operating revenues increased for the first quarter of 2001 due
to the increased market price of natural gas and increased sales due to a
colder than normal winter. The increase in gas revenues was largely
offset by increased expenses for gas purchased for resale.
Expenses
Fuel and purchased power
Fuel and purchased power expenses increased for the first quarter
of 2001 primarily due to the increased market prices of natural gas and
purchased power.
Other operation and maintenance
Other operation and maintenance expenses increased for the first
quarter of 2001 primarily due to an increase of $1.6 million in
uncollectible accounts expense and an increase of $1.2 million in
maintenance expense due to an unplanned outage.
Taxes other than income taxes
Taxes other than income taxes increased for the first quarter of
2001 primarily due to an increase in local franchise taxes as a result of
higher retail revenue.
Amortization of rate deferrals
Amortization of rate deferrals decreased for the first quarter of
2001 primarily due to a scheduled rate change in the amortization of
Grand Gulf 1 phase-in expenses. The Grand Gulf 1 phase-in plan will be
complete in November 2001.
Other
Interest and other charges
Interest on long-term debt increased for the first quarter of 2001
primarily due to $30 million issuances of long-term debt in July 2000 and
in February 2001.
Income taxes
The effective income tax rates for the first quarter of 2001 and
2000 were 56.3% and 52.2%, respectively. The increase in the tax rate
for the first quarter of 2001 was primarily due to the decrease in pre-
tax income increasing the impact of permanent differences and flow-
through items.
ENTERGY NEW ORLEANS, INC.
INCOME STATEMENTS
For the Three Months Ended March 31, 2001 and 2000
(Unaudited)
2001 2000
(In Thousands)
OPERATING REVENUES
Domestic electric $129,231 $86,259
Natural gas 74,784 33,483
-------- -------
TOTAL 204,015 119,742
-------- -------
OPERATING EXPENSES
Operating and Maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 108,827 41,801
Purchased power 48,467 35,111
Other operation and maintenance 20,960 16,851
Taxes other than income taxes 13,686 9,512
Depreciation and amortization 6,326 5,701
Other regulatory credits - net (1,521) (1,602)
Amortization of rate deferrals 3,052 5,996
-------- -------
TOTAL 199,797 113,370
-------- -------
OPERATING INCOME 4,218 6,372
-------- -------
OTHER INCOME
Allowance for equity funds used during construction 398 325
Miscellaneous - net 693 598
-------- -------
TOTAL 1,091 923
-------- -------
INTEREST AND OTHER CHARGES
Interest on long-term debt 4,118 3,319
Other interest - net 426 416
Allowance for borrowed funds used during construction (320) (238)
-------- -------
TOTAL 4,224 3,497
-------- -------
INCOME BEFORE INCOME TAXES 1,085 3,798
Income taxes 611 1,981
-------- -------
NET INCOME 474 1,817
Preferred dividend requirements and other 241 241
-------- -------
EARNINGS APPLICABLE TO
COMMON STOCK $233 $1,576
======== =======
See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC.
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2001 and 2000
(Unaudited)
2001 2000
(In Thousands)
OPERATING ACTIVITIES
Net income $474 $1,817
Noncash items included in net income:
Amortization of rate deferrals 3,052 5,996
Reserve for regulatory adjustments (1,176) -
Other regulatory credits - net (1,521) (1,602)
Depreciation and amortization 6,326 5,701
Deferred income taxes and investment tax credits (4,608) (3,501)
Allowance for equity funds used during construction (398) (325)
Changes in working capital:
Receivables (5,036) 8,720
Fuel inventory 3,942 828
Accounts payable (18,690) (9,369)
Taxes accrued 3,560 5,095
Interest accrued (3,753) (3,369)
Deferred fuel costs 11,358 4,557
Other working capital accounts (10,275) (8,934)
Provision for estimated losses and reserves (2,243) (579)
Changes in other regulatory assets (3,093) (2,318)
Other 1,496 1,775
-------- -------
Net cash flow provided by (used in) operating activities (20,585) 4,492
-------- -------
INVESTING ACTIVITIES
Construction expenditures (11,194) (8,051)
Allowance for equity funds used during construction 398 325
-------- -------
Net cash flow used in investing activities (10,796) (7,726)
-------- -------
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 29,817 -
Dividends paid:
Preferred stock (241) -
-------- -------
Net cash flow provided by financing activities 29,576 -
-------- -------
Net decrease in cash and cash equivalents (1,805) (3,234)
Cash and cash equivalents at beginning of period 6,302 4,454
-------- -------
Cash and cash equivalents at end of period $4,497 $1,220
======== =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid/(received) during the period for:
Interest - net of amount capitalized $7,758 $7,014
Income taxes - ($45)
See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC.
BALANCE SHEETS
ASSETS
March 31, 2001 and December 31, 2000
(Unaudited)
2001 2000
(In Thousands)
CURRENT ASSETS
Cash and cash equivalents $4,497 $6,302
Notes receivable 1,513 -
Accounts receivable:
Customer 77,361 67,264
Allowance for doubtful accounts (770) (770)
Associated companies 784 2,800
Other 2,307 3,709
Accrued unbilled revenues 25,194 26,838
-------- --------
Total accounts receivable 104,876 99,841
-------- --------
Deferred fuel costs 16,875 28,234
Fuel inventory - at average cost 262 4,204
Materials and supplies - at average cost 9,101 9,630
Rate deferrals 7,925 10,974
Prepayments and other 10,362 1,416
-------- --------
TOTAL 155,411 160,601
-------- --------
OTHER INVESTMENTS
Investment in subsidiary companies - at equity 3,259 3,259
-------- --------
UTILITY PLANT
Electric 572,519 572,061
Natural gas 135,810 134,826
Construction work in progress 45,968 36,489
-------- --------
TOTAL UTILITY PLANT 754,297 743,376
Less - accumulated depreciation and amortization 399,921 394,271
-------- --------
UTILITY PLANT - NET 354,376 349,105
-------- --------
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Unamortized loss on reacquired debt 921 974
Other regulatory assets 47,769 44,676
Other 1,608 616
-------- --------
TOTAL 50,298 46,266
-------- --------
TOTAL ASSETS $563,344 $559,231
======== ========
See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
March 31, 2001 and December 31, 2000
(Unaudited)
2001 2000
(In Thousands)
CURRENT LIABILITIES
Accounts payable:
Associated companies $32,475 $24,637
Other 31,037 57,566
Customer deposits 18,127 18,311
Taxes accrued 9,384 5,823
Accumulated deferred income taxes 869 6,543
Interest accrued 2,365 6,119
Other 3,049 3,211
-------- --------
TOTAL 97,306 122,210
-------- --------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes 44,434 43,754
Accumulated deferred investment tax credits 5,741 5,868
SFAS 109 regulatory liability - net 13,531 12,607
Other regulatory liabilities 388 537
Accumulated provisions 6,228 8,471
Other 12,066 12,356
-------- --------
TOTAL 82,388 83,593
-------- --------
Long-term debt 229,020 199,031
SHAREHOLDERS' EQUITY
Preferred stock without sinking fund 19,780 19,780
Common stock, $4 par value, authorized 10,000,000 shares;
issued and outstanding 8,435,900 shares in 2001 and 2000 33,744 33,744
Paid-in capital 36,294 36,294
Retained earnings 64,812 64,579
-------- --------
TOTAL 154,630 154,397
-------- --------
Commitments and Contingencies (Notes 1 and 2)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $563,344 $559,231
======== ========
See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC.
SELECTED OPERATING RESULTS
For the Three Months Ended March 31, 2001 and 2000
(Unaudited)
Increase/
Description 2001 2000 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 41.0 $ 27.5 $ 13.5 49
Commercial 48.9 33.7 15.2 45
Industrial 8.3 5.1 3.2 63
Governmental 20.9 14.1 6.8 48
------ ------ ------
Total retail 119.1 80.4 38.7 48
Sales for resale
Associated companies 7.0 2.6 4.4 169
Non-associated companies 0.6 2.2 (1.6) (73)
Other 2.5 1.1 1.4 127
------ ------ ------
Total $129.2 $ 86.3 $ 42.9 50
====== ====== ======
Billed Electric Energy
Sales (GWH):
Residential 397 373 24 6
Commercial 488 497 (9) (2)
Industrial 91 91 - -
Governmental 227 233 (6) (3)
------ ------ ------
Total retail 1,203 1,194 9 1
Sales for resale
Associated companies 63 83 (20) (24)
Non-associated companies 13 44 (31) (70)
------ ------ ------
Total 1,279 1,321 (42) (3)
====== ====== ======
SYSTEM ENERGY RESOURCES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income decreased for the first quarter of 2001 primarily due to
a larger provision for potential rate refunds, partially offset by
decreased interest expense.
Revenues
Operating revenues recover operating expenses, depreciation, and
capital costs attributable to Grand Gulf 1. Capital costs are computed
by allowing a return on System Energy's common equity funds allocable to
its net investment in Grand Gulf 1 and adding to such amount System
Energy's effective interest cost for its debt. System Energy's proposed
rate increase, which is subject to refund, is discussed in Note 2 to the
financial statements in the Form 10-K.
Expenses
Other Regulatory Charges
Other regulatory charges increased for the first quarter of 2001
primarily due to charges associated with the GGART in place at Entergy
Arkansas and Entergy Mississippi. The GGART is discussed in Note 2 to
the financial statements.
Other
Interest charges
Interest on long-term debt decreased for the first quarter of 2001
primarily due to:
o a decrease of $1.3 million in the line of credit fees associated
with the sale-leaseback of Grand Gulf 1;
o a decrease of $1.6 million in interest expense associated with the
sale-leaseback of Grand Gulf 1; and
o a decrease of $1.4 million in interest expense due to the retirement
of $75 million of long-term debt in 2000.
Other interest expense increased for the first quarter of 2001 due
to interest on the potential refund of System Energy's proposed rate
increase.
Income taxes
The effective income tax rates for the first quarter of 2001 and
2000 were 45.8% and 47.1%, respectively. The decrease in the effective
tax rate is primarily due to the decrease in pre-tax income increasing
the impact of flow-through items.
SYSTEM ENERGY RESOURCES, INC.
INCOME STATEMENTS
For the Three Months Ended March 31, 2001 and 2000
(Unaudited)
2001 2000
(In Thousands)
OPERATING REVENUES
Domestic electric $151,166 $157,089
-------- --------
OPERATING EXPENSES
Operating and Maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 10,072 10,683
Nuclear refueling outage expenses 4,034 3,214
Other operation and maintenance 16,374 15,272
Decommissioning 4,736 4,736
Taxes other than income taxes 6,708 5,943
Depreciation and amortization 29,481 28,056
Other regulatory charges - net 19,167 14,745
-------- --------
TOTAL 90,572 82,649
-------- --------
OPERATING INCOME 60,594 74,440
-------- --------
OTHER INCOME
Allowance for equity funds used during construction 270 732
Miscellaneous - net 5,071 4,096
-------- --------
TOTAL 5,341 4,828
-------- --------
INTEREST AND OTHER CHARGES
Interest on long-term debt 19,011 24,126
Other interest - net 8,706 6,843
Allowance for borrowed funds used during construction (137) (476)
-------- --------
TOTAL 27,580 30,493
-------- --------
INCOME BEFORE INCOME TAXES 38,355 48,775
Income taxes 17,557 22,989
-------- --------
NET INCOME $20,798 $25,786
======== ========
See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2001 and 2000
(Unaudited)
2001 2000
(In Thousands)
OPERATING ACTIVITIES
Net income $20,798 $25,786
Noncash items included in net income:
Reserve for regulatory adjustments 27,644 19,555
Other regulatory charges - net 19,167 14,745
Depreciation, amortization, and decommissioning 34,217 32,792
Deferred income taxes and investment tax credits (24,524) (19,377)
Allowance for equity funds used during construction (270) (732)
Changes in working capital:
Receivables (37,157) 103,319
Accounts payable 13,389 263
Taxes accrued 26,464 30,056
Interest accrued (23,111) (18,587)
Other working capital accounts 905 (3,424)
Provision for estimated losses and reserves (164) 15
Changes in other regulatory assets 10,306 11,795
Other 5,072 (7,705)
-------- --------
Net cash flow provided by operating activities 72,736 188,501
-------- --------
INVESTING ACTIVITIES
Construction expenditures (7,607) (9,250)
Allowance for equity funds used during construction 270 732
Nuclear fuel purchases (10,704) (7)
Proceeds from sale/leaseback of nuclear fuel 10,704 7
Decommissioning trust contributions and realized
change in trust assets (5,692) (5,790)
-------- --------
Net cash flow used in investing activities (13,029) (14,308)
-------- --------
FINANCING ACTIVITIES
Retirement of long-term debt (16,800) (2,947)
Dividends paid:
Common stock (22,800) (23,600)
-------- --------
Net cash flow used in financing activities (39,600) (26,547)
-------- --------
Net increase in cash and cash equivalents 20,107 147,646
Cash and cash equivalents at beginning of period 202,218 35,152
-------- --------
Cash and cash equivalents at end of period $222,325 $182,798
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid/(received) during the period for:
Interest - net of amount capitalized $49,725 $42,653
Income taxes - ($4,035)
Noncash investing and financing activities:
Change in unrealized depreciation of
decommissioning trust assets ($1,190) ($1,204)
See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
ASSETS
March 31, 2001 and December 31, 2000
(Unaudited)
2001 2000
(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash $31 $44
Temporary cash investments - at cost,
which approximates market 222,294 202,174
---------- ----------
Total cash and cash equivalents 222,325 202,218
---------- ----------
Accounts receivable:
Associated companies 232,870 212,551
Other 19,032 2,194
---------- ----------
Total accounts receivable 251,902 214,745
---------- ----------
Materials and supplies - at average cost 52,179 52,235
Deferred nuclear refueling outage costs 3,020 6,577
Prepayments and other 5,515 2,639
---------- ----------
TOTAL 534,941 478,414
---------- ----------
OTHER INVESTMENTS
Decommissioning trust funds 162,074 157,572
---------- ----------
UTILITY PLANT
Electric 3,093,454 3,093,033
Property under capital lease 449,851 449,851
Construction work in progress 31,205 24,029
Nuclear fuel under capital lease 70,970 49,256
---------- ----------
TOTAL UTILITY PLANT 3,645,480 3,616,169
Less - accumulated depreciation and amortization 1,437,807 1,407,885
---------- ----------
UTILITY PLANT - NET 2,207,673 2,208,284
---------- ----------
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
SFAS 109 regulatory asset - net 183,907 195,634
Unamortized loss on reacquired debt 51,063 51,957
Other regulatory assets 175,938 174,517
Other 8,946 8,172
---------- ----------
TOTAL 419,854 430,280
---------- ----------
TOTAL ASSETS $3,324,542 $3,274,550
========== ==========
See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDER'S EQUITY
March 31, 2001 and December 31, 2000
(Unaudited)
2001 2000
(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt $165,891 $151,800
Accounts payable:
Associated companies 2,433 2,722
Other 37,263 23,585
Taxes accrued 94,994 68,530
Accumulated deferred income taxes 270 1,648
Interest accrued 20,897 44,007
Obligations under capital leases 32,119 32,119
Other 1,839 1,674
---------- ----------
TOTAL 355,706 326,085
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes 363,678 391,505
Accumulated deferred investment tax credits 88,647 89,516
Obligations under capital leases 38,851 17,137
FERC settlement - refund obligation 28,965 30,745
Other regulatory liabilities 132,128 103,634
Decommissioning 158,889 153,197
Regulatory reserves 350,012 322,368
Accumulated provisions 524 689
Other 15,736 15,394
---------- ----------
TOTAL 1,177,430 1,124,185
---------- ----------
Long-term debt 899,982 930,854
SHAREHOLDER'S EQUITY
Common stock, no par value, authorized 1,000,000 shares;
issued and outstanding 789,350 shares in 2001 and 2000 789,350 789,350
Retained earnings 102,074 104,076
---------- ----------
TOTAL 891,424 893,426
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $3,324,542 $3,274,550
========== ==========
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. COMMITMENTS AND CONTINGENCIES
Capital Requirements and Financing (Entergy Corporation, Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi,
Entergy New Orleans, and System Energy)
See Note 9 to the financial statements in the Form 10-K for
information on Entergy's estimated construction expenditures (including
nuclear fuel but excluding AFUDC), long-term debt and preferred stock
maturities, and cash sinking fund requirements.
Sales Warranties and Indemnities (Entergy Corporation)
See Note 9 to the financial statements in the Form 10-K for
information on certain warranties made by Entergy or its subsidiaries in
the Entergy London and CitiPower sales transactions.
Nuclear Insurance, Spent Nuclear Fuel, and Decommissioning Costs
(Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)
See Note 9 to the financial statements in the Form 10-K for
information on nuclear liability, property and replacement power
insurance, related NRC regulations, the disposal of spent nuclear fuel,
other high-level radioactive waste, and decommissioning costs associated
with ANO 1, ANO 2, River Bend, Waterford 3, Grand Gulf 1, Pilgrim, Indian
Point 3, and FitzPatrick.
Environmental Issues
(Entergy Arkansas)
In previous years, Entergy Arkansas has received notices from the
EPA and the Arkansas Department of Environmental Quality (ADEQ) alleging
that Entergy Arkansas, along with others, may be a potentially
responsible party (PRP) for clean-up costs associated with a site in
Arkansas. As of March 31, 2001, a remaining recorded liability of
approximately $5.0 million existed related to the cleanup of that site.
(Entergy Gulf States)
Entergy Gulf States has been designated as a PRP for the cleanup of
certain hazardous waste disposal sites. Entergy Gulf States is currently
negotiating with the EPA and state authorities regarding the cleanup of
these sites. As of March 31, 2001, a remaining recorded liability of
approximately $16.5 million existed related to the cleanup of the
remaining sites at which the EPA has designated Entergy Gulf States as a
PRP.
(Entergy Louisiana and Entergy New Orleans)
During 1993, the Louisiana Department of Environmental Quality
(LDEQ) issued new rules for solid waste regulation, including regulation
of wastewater impoundments. Entergy Louisiana and Entergy New Orleans
have determined that certain of their power plant wastewater impoundments
were affected by these regulations and have chosen to upgrade or close
them. Recorded liabilities in the amounts of $5.8 million for Entergy
Louisiana and $0.5 million for Entergy New Orleans existed at March 31,
2001 for wastewater upgrades and closures. Completion of this work is
awaiting LDEQ approval.
City Franchise Ordinances (Entergy New Orleans)
Entergy New Orleans provides electric and gas service in the City of
New Orleans pursuant to franchise ordinances. These ordinances contain a
continuing option for the City to purchase Entergy New Orleans' electric
and gas utility properties. A resolution to study the advantages for
ratepayers that might result from an acquisition of these properties has
been filed in a committee of the Council. The committee has deferred
consideration of that resolution until May 2001 and no further action has
been taken. The full Council must approve the resolution to commence
such a study before it can become effective.
Waterford 3 Lease Obligations (Entergy Louisiana)
On September 28, 1989, Entergy Louisiana entered into three separate
but substantially identical transactions for the sale and leaseback of
undivided interests (aggregating approximately 9.3%) in Waterford 3,
which were refinanced in 1997. Upon the occurrence of certain events
Entergy Louisiana may be obligated to pay amounts sufficient to permit
the Owner Participants to withdraw from these lease transactions and may
be required to assume the outstanding bonds issued to finance, in part,
the lessors' acquisition of the undivided interests in Waterford 3. See
Note 10 to the financial statements in the Form 10-K for further
information.
Employment Litigation (Entergy Corporation, Entergy Arkansas, Entergy
Gulf States, Entergy Louisiana, and Entergy Mississippi)
Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, and Entergy Mississippi are defendants in numerous lawsuits
filed by former employees asserting that they were wrongfully terminated
and/or discriminated against on the basis of age, race, and/or sex. The
defendant companies are vigorously defending these suits and deny any
liability to the plaintiffs. However, no assurance can be given as to
the outcome of these cases.
Reimbursement Agreement (System Energy)
Under a bank letter of credit and reimbursement agreement, System
Energy has agreed to a number of covenants relating to the maintenance of
certain capitalization and fixed charge coverage ratios. System Energy
agreed, during the term of the agreement, to maintain its equity at not
less than 33% of its adjusted capitalization (defined in the agreement to
include certain amounts not included in capitalization for financial
statement purposes). In addition, System Energy must maintain, with
respect to each fiscal quarter during the term of the agreement, a ratio
of adjusted net income to interest expense (calculated, in each case, as
specified in the agreement) of at least 1.60 times earnings. System
Energy was in compliance with the above covenants at March 31, 2001. See
Note 9 to the financial statements in the Form 10-K for further
information.
Litigation (Entergy Corporation, Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans)
In addition to those proceedings discussed elsewhere herein and in
the Form 10-K, Entergy and the domestic utility companies are involved in
a number of other legal proceedings and claims in the ordinary course of
their businesses. While management is unable to predict the outcome of
these other legal proceedings and claims, it is not expected that their
ultimate resolution individually or collectively will have a material
adverse effect on the results of operations, cash flows, or financial
condition of these entities.
NOTE 2. RATE AND REGULATORY MATTERS
Electric Industry Restructuring
Previous developments and information related to electric industry
restructuring are presented in Note 2 to the financial statements in the
Form 10-K.
Arkansas
(Entergy Corporation and Entergy Arkansas)
As discussed in Note 2 to the financial statements in the Form 10-K,
the target date for retail open access has been delayed until no sooner
than October 1, 2003 and no later than October 1, 2005.
In October 2000, in compliance with the currently enacted
deregulation law, Entergy Arkansas filed a market power study in
accordance with the guidelines adopted by the APSC. In February 2001,
Entergy Arkansas filed supplemental testimony to address the effects of
the proposed Transco on Entergy Arkansas' market power. In December
2000, Entergy Arkansas filed an application for approval to transfer
Entergy Arkansas' transmission assets to the Transco.
Texas
(Entergy Corporation and Entergy Gulf States)
As discussed in Note 2 to the financial statements in the Form 10-K,
the Texas legislature enacted a law providing retail open access by most
investor-owned electric utilities, including Entergy Gulf States, on
January 1, 2002. With retail open access, generation and a new retail
electric provider operation will be competitive businesses, but
transmission and distribution operations will continue to be regulated.
The new retail electric provider will be the primary point of contact
with customers.
In March 2001, Entergy Gulf States filed with the PUCT a non-
unanimous settlement agreement in its unbundled cost of service
proceeding that establishes the Texas distribution company's revenue
requirement. The settlement agreement is between Entergy Gulf States, the
PUCT Staff, and other parties. Pursuant to a generic rule prescribed by
the PUCT, the Texas distribution company's allowed return on equity will
be 11.25%. The capital structure prescribed by the PUCT is 60% debt and
40% equity. A rider to recover nuclear decommissioning costs will be
implemented. Also in the settlement agreement, the parties agree that
Entergy Gulf States' Texas jurisdictional stranded costs and benefits are
$0, and no charge to recover stranded costs or credit to refund excess
mitigation will be implemented. Nevertheless, if legislation passes in
Texas that requires Entergy Gulf States to pass-through or share stranded
benefits with its customers, that legislation will control this issue.
After a hearing in April 2001, the PUCT voted to approve a rate order
consistent with the terms of the settlement. A written interim order is
expected by the end of May 2001.
The LPSC has opened a docket to identify the changes in corporate
structure and operations of Entergy Gulf States, and their potential
impact on Louisiana retail ratepayers, resulting from restructuring in
Texas and Arkansas. Entergy Gulf States and the LPSC staff have reached
a settlement on certain Texas business separation plan issues, and the
terms were submitted in April 2001 to intervenors. The settlement is set
for hearing at the LPSC in May 2001. The settlement term sheet includes
the following features:
o shortens, to the end of 2002, the period for the Texas distribution
company and the unbundled transmission entity to extinguish their
respective assumed portions of Entergy Gulf States' debt obligations;
o adds a contingent indemnity by Entergy Corporation with respect to
the unbundled transmission entity's assumed portion of Entergy Gulf
States' debt obligations in the event that the obligations have not
been extinguished prior to December 31, 2002 (which in no event will
continue beyond December 31, 2004); and
o prohibits the transfer of Texas generation assets to the Texas
generation company until outstanding Entergy Gulf States long-term debt
and preferred stock (or equivalent amount) allocable to the assets
have been paid, which shall be not later than December 31, 2004.
Entergy Gulf States may transfer generation assets either in whole
or in part as portions of the allocable outstanding long-term debt
and preferred stock (or equivalent amount) are paid.
Hearings are scheduled for June 2001 on contested issues in the
proceeding, and a decision is not expected until September 2001. The
outcome of the Louisiana proceeding will be reported to the PUCT and the
Office of Public Utility Counsel and may require additional PUCT action
before the business separation plan is final. Management cannot predict
the outcome of the proceedings on the plan, which is scheduled to be in
effect on January 1, 2002.
Retail Rate Proceedings
Previous developments and information related to retail rate
proceedings are presented in Note 2 to the financial statements in the
Form 10-K.
Filings with the APSC (Entergy Corporation and Entergy Arkansas)
In March 2001, Entergy Arkansas filed its annually redetermined
energy cost rate with the APSC in accordance with the energy cost rate
formula, including a new energy allocation factor. The filing reflected
that an increase was warranted due to the increase in fuel and purchased
power costs and to collect the accumulated under-recovery of energy costs
for 2000. The increased energy cost rate is effective April 2001 through
March 2002.
Filings with the PUCT and Texas Cities
Recovery of River Bend Costs (Entergy Corporation and Entergy Gulf
States)
In March 1998, the PUCT disallowed recovery of $1.4 billion of
company-wide abeyed River Bend plant costs, which have been held in
abeyance since 1988. Entergy Gulf States appealed the PUCT's decision on
this matter to the Travis County District Court in Texas. Subsequent to
the July 1999 settlement agreement discussed in Note 2 to the financial
statements in the Form 10-K, Entergy Gulf States removed the reserve for
River Bend plant costs held in abeyance and reduced the value of the
plant asset. The July 1999 settlement agreement limits potential
recovery of the remaining plant asset, less depreciation, to $115 million
as of January 1, 2002. In the unbundled cost of service proceeding
settlement discussed above, and consistent with the July 1999 settlement,
Entergy Gulf States agrees not to prosecute its appeal until January 1,
2002. Entergy Gulf States also agrees that it will not seek recovery of
the abeyed plant costs through any additional charge to Texas ratepayers.
The financial statement impact of the settlement agreement on the abeyed
plant costs will ultimately depend on several factors, including the
possible discontinuance of SFAS 71 accounting treatment to the Texas
generation business, the determination of the market value of generation
assets, and the possible enactment of legislation in Texas requiring
the pass-through or sharing of any stranded benefits with Texas
ratepayers. No assurance can be given that additional reserves or
write-offs will not be required in the future.
PUCT Fuel Cost Review (Entergy Corporation and Entergy Gulf States)
As determined in the July 1999 settlement agreement discussed in
Note 2 to the financial statements in the Form 10-K, Entergy Gulf States
adopted a methodology for calculating its fixed fuel factor based on the
market price of natural gas. This calculation and any necessary
adjustments occur semi-annually and will continue until December 2001.
The amounts collected under Entergy Gulf States' fixed fuel factor
through December 2001 are subject to fuel reconciliation proceedings
before the PUCT.
In January 2001, Entergy Gulf States filed a fuel reconciliation
case covering the period from March 1, 1999 to August 31, 2000. Entergy
Gulf States is reconciling approximately $583 million of fuel and
purchased power costs. As part of this filing, Entergy Gulf States
requested the collection of $28 million, plus interest, of under-
recovered fuel and purchased power costs. A procedural schedule has been
established calling for a hearing in August 2001.
In March 2001, Entergy Gulf States filed an application with the
PUCT requesting an interim surcharge to collect under-recovered fuel and
purchased power expenses incurred from September 2000 through January
2001. Entergy Gulf States is requesting the recovery of $82 million,
plus interest, from July through December 2001. The request is currently
pending before the PUCT and an order is expected by June 2001. The fuel
and purchased power expenses contained in this surcharge request will be
subject to future fuel reconciliation proceedings.
Filings with the LPSC
Annual Earnings Reviews (Entergy Corporation and Entergy Gulf States)
In May 2000, Entergy Gulf States filed its seventh required post-
merger earnings analysis with the LPSC. This filing will be subject to
review by the LPSC, which may result in a change in rates. Entergy Gulf
States also is proposing that the allowed return on common equity be
increased to 11.60%. Hearings are scheduled for June 2001.
Formula Rate Plan Filings (Entergy Corporation and Entergy Louisiana)
In May 2000, Entergy Louisiana submitted its fifth annual
performance-based formula rate plan filing for the 1999 test year. As a
result of this filing, Entergy Louisiana implemented a $24.8 million base
rate reduction in August 2000. Entergy Louisiana is proposing to
increase prospectively the allowed return on common equity from 10.5% to
11.6%, which, if approved, would reduce the amount of any rate reduction
implemented in its formula rate plan proceedings. This filing will be
subject to review by the LPSC. A procedural schedule has not yet been
established by the LPSC.
In April 2001, Entergy Louisiana submitted its sixth annual
performance-based formula rate plan filing for the 2000 test year. The
filing indicated that an immaterial base rate reduction might be
appropriate for implementation effective August 2001. This filing will
be subject to review by the LPSC. A procedural schedule has not yet been
established by the LPSC.
Fuel Adjustment Clause Litigation (Entergy Corporation and Entergy
Louisiana)
In May 1998, a group of ratepayers filed a complaint against Entergy
Corporation, Entergy Power, and Entergy Louisiana in state court in
Orleans Parish purportedly on behalf of all Entergy Louisiana ratepayers.
The plaintiffs seek treble damages for alleged injuries arising from
alleged violations by the defendants of Louisiana's antitrust laws in
connection with the costs included in fuel filings with the LPSC and
passed through to ratepayers. Plaintiffs also requested that the LPSC
initiate a review of Entergy Louisiana's monthly fuel adjustment charge
filings and force restitution to ratepayers of all costs that the
plaintiffs allege were improperly included in those fuel adjustment
filings. A few parties intervened in the LPSC proceeding. In direct
testimony, plaintiffs purport to quantify many of their claims for the
period 1989 through 1998 in an amount totaling $544 million, plus
interest.
Entergy Louisiana has agreed to settle both of these proceedings.
The LPSC approved the settlement agreement following a fairness hearing
before an ALJ in November 2000. The state court certified the plaintiff
class and approved the settlement after a fairness hearing in April 2001.
Under the terms of the settlement agreement, Entergy Louisiana agrees to
refund to customers approximately $72 million to resolve all claims
arising out of or relating to Entergy Louisiana's fuel adjustment clause
filings from January 1, 1975 through December 31, 1999, except with
respect to purchased power and associated costs included in the fuel
adjustment clause filings for the period May 1 through September 30,
1999. Entergy Louisiana previously provided reserves for the refund,
which Entergy Louisiana expects to make during the summer of 2001.
Also under the terms of the settlement, Entergy Louisiana consents
to future fuel cost recovery under a long-term gas contract based on a
formula that would likely result in an under-recovery of actual costs
under that contract for the remainder of its term, which runs through
2013. The future under-recovery cannot be precisely estimated at this
time because it will depend upon factors that are not certain, such as
the price of gas and the amount of gas purchased under the long-term
contract. In recent years, Entergy Louisiana has made purchases under
that contract totaling from $91 million to $121 million annually. Had
the proposed settlement terms been applicable to such purchases, the
under-recoveries would have ranged from $4 million to $9 million per
year.
Filings with the MPSC (Entergy Corporation and Entergy Mississippi)
In March 2001, Entergy Mississippi submitted its annual performance-
based formula rate plan filing for the 2000 test year. The submittal
indicated a $6.7 million rate increase adjustment to take place under the
formula rate plan. In April 2001, the MPSC Staff and Entergy Mississippi
entered into a stipulation that provides for an increase of $5.6 million,
which was approved by the MPSC and is effective in May 2001.
Filings with the Council
Fuel Adjustment Clause Litigation (Entergy Corporation and Entergy New
Orleans)
In April 1999, a group of ratepayers filed a complaint against
Entergy New Orleans, Entergy Corporation, Entergy Services, and Entergy
Power in state court in Orleans Parish purportedly on behalf of all
Entergy New Orleans ratepayers. The plaintiffs seek treble damages for
alleged injuries arising from the defendants' alleged violations of
Louisiana's antitrust laws in connection with certain costs passed on to
ratepayers in Entergy New Orleans' fuel adjustment filings with the
Council. In particular, plaintiffs allege that Entergy New Orleans
improperly included certain costs in the calculation of fuel charges and
that Entergy New Orleans imprudently purchased high-cost fuel from other
Entergy affiliates. Plaintiffs allege that Entergy New Orleans and the
other defendant Entergy companies conspired to make these purchases to
the detriment of Entergy New Orleans' ratepayers and to the benefit of
Entergy's shareholders, in violation of Louisiana's antitrust laws.
Plaintiffs also seek to recover interest and attorneys' fees. Exceptions
to the plaintiffs' allegations were filed by Entergy, asserting, among
other things, that jurisdiction over these issues rests with the Council
and FERC. If necessary, at the appropriate time, Entergy will also raise
its defenses to the antitrust claims. At present, the suit in state
court is stayed by stipulation of the parties.
Plaintiffs also filed this complaint with the Council in order to
initiate a review by the Council of the plaintiffs' allegations and to
force restitution to ratepayers of all costs they allege were improperly
and imprudently included in the fuel adjustment filings. Discovery has
begun in the proceedings before the Council. In April 2000, testimony
was filed on behalf of the plaintiffs in this proceeding. The testimony
asserts, among other things, that Entergy New Orleans and other
defendants have engaged in fuel procurement and power purchasing
practices that could have resulted in New Orleans customers being
overcharged by more than $59 million over a period of years. However, it
is not clear precisely what periods and damages are being alleged.
Entergy intends to defend this matter vigorously, both in court and
before the Council. Hearings are to be held in October 2001. The
ultimate outcome of the lawsuit and the Council proceeding cannot be
predicted at this time.
Grand Gulf Accelerated Recovery Tariff (Entergy Arkansas)
In April 1998, FERC approved the GGART that Entergy Arkansas filed
as part of the settlement agreement that the APSC approved in December
1997. The GGART was designed to allow Entergy Arkansas to pay down a
portion of its Grand Gulf purchased power obligation in advance of the
implementation of retail access in Arkansas. The GGART provides for the
acceleration of $165.3 million of its obligation over the period January
1, 1999 through June 30, 2004. In April 2001, FERC approved Entergy
Arkansas' filing that requested cessation of the GGART effective July 1,
2001. Entergy Arkansas made the filing pursuant to the terms of a
December 2000 settlement agreement with the APSC, which is discussed in
Note 2 to the financial statements in the Form 10-K.
December 2000 Ice Storms (Entergy Arkansas)
In mid- and late December 2000, two separate ice storms left 226,000
and 212,500 Entergy Arkansas customers, respectively, without electric
power in its service area. The storms were the most severe natural
disasters ever to affect Entergy Arkansas, causing damage to transmission
and distribution lines, equipment, poles, and facilities. In April 2001,
Entergy Arkansas filed with the APSC a proposal to recover, over
approximately a five and one-half year period, $155 million in costs,
plus carrying charges, associated with power restoration caused by the
December 2000 ice storms. After responses filed by the APSC Staff and
other parties regarding, among other things, the procedural schedule,
Entergy Arkansas filed a suggested schedule that calls for a hearing on
its filing in October 2001. No assurance can be given as to the timing
or outcome of this proceeding.
NOTE 3. COMMON STOCK (Entergy Corporation)
During the first quarter of 2001, Entergy Corporation issued 624,954
shares of its previously repurchased common stock to satisfy stock
options exercised and employee stock purchases. In addition, Entergy
Corporation received proceeds of approximately $2.1 million from the
issuance of 79,473 shares of common stock to satisfy stock options
exercised.
NOTE 4. LONG-TERM DEBT
(Entergy Mississippi)
On January 31, 2001, Entergy Mississippi issued $70 million of 6.25%
Series First Mortgage Bonds due February 1, 2003. The proceeds are being
used for general corporate purposes, including the retirement of short-
term indebtedness incurred from money pool borrowings for capital
expenditures and working capital needs.
(Entergy New Orleans)
On February 23, 2001, Entergy New Orleans issued $30 million of
6.65% Series First Mortgage Bonds due March 1, 2004. The proceeds are
being used for general corporate purposes, including the retirement of
short-term indebtedness incurred from money pool borrowings for capital
expenditures and working capital needs.
NOTE 5. RETAINED EARNINGS (Entergy Corporation)
On April 4, 2001, Entergy Corporation's Board of Directors declared
a common stock dividend of $0.315 per share, payable on June 1, 2001, to
holders of record on May 15, 2001.
NOTE 6. BUSINESS SEGMENT INFORMATION (Entergy Corporation)
Entergy's reportable segments as of March 31, 2001, are domestic
utility and System Energy, Entergy-Koch, Entergy Wholesale Operations
(EWO), and domestic non-utility nuclear. Prior to the first quarter of
2001, Entergy also reported its power marketing and trading segment that
engaged in the marketing of wholesale electricity, gas, other generating
fuels, electric capacity, and financial instruments. On January 31,
2001, Entergy contributed substantially all of the power marketing and
trading business to the Entergy-Koch joint venture, and now reports
results from the joint venture as equity in earnings of unconsolidated
equity affiliates in the financial statements. See Note 9 to the
financial statements for further discussion of the investment in Entergy-
Koch, L.P. EWO, which includes Entergy's global power development
business, and domestic non-utility nuclear were formerly reported in "all
other," but they are now reportable segments. "All Other" now includes
the parent company, Entergy Corporation, and other business activity.
Other business activity in the All Other column is principally gains or
losses on the sales of businesses, and the earnings on the proceeds of
those sales.
Entergy's segment financial information for the first quarter of
2001 and 2000 is as follows (in thousands):
Domestic Entergy- EWO* Domestic All Other* Eliminations Consolidated
Utility and Koch/ Non-Utility
System Power Nuclear *
Energy Marketing
and
Trading*
2001
Operating Revenues $1,983,707 $ - $ 477,946 $ 179,375 $12,390 ($991) $2,652,427
Equity in Net Income
(Loss) of Affiliates - 25,668 (604) - - - 25,064
Income Taxes (Benefit) 85,505 10,174 (2,578) 19,919 (4,591) - 108,429
Net Income (Loss) 120,437 16,565 1,780 29,959 (7,870) - 160,871
Total Assets 20,562,033 575,689 2,090,400 1,874,783 983,934 (895,080) 25,191,759
2000
Operating Revenues $1,401,444 $327,786 $ 27,630 $ 60,830 $5,761 ($11,959) $1,811,492
Income Taxes (Benefit) 71,191 5,874 (3,428) 8,564 624 - 82,825
Net Income (Loss) 87,338 11,537 (2,232) 11,458 309 - 108,410
Total Assets 19,556,488 500,175 1,555,280 583,279 1,782,441 (615,436) 23,362,227
Businesses marked with * are sometimes referred to as the "competitive
businesses," with the exception of the parent company, Entergy
Corporation. Eliminations are primarily intersegment activity.
NOTE 7. ENTERGY-FPL GROUP MERGER (Entergy Corporation)
On July 30, 2000, Entergy Corporation and FPL Group, Inc. entered
into a Merger Agreement providing for a business combination that would
have resulted in the creation of a new company. On April 1, 2001,
Entergy Corporation and FPL Group, Inc. terminated the Merger Agreement
by mutual decision. Both companies agreed that no termination fee is
payable under the terms of the Merger Agreement, unless within nine
months of the termination one party agrees to a substantially similar
transaction with another party. Each company will bear its own merger-
related expenses. Entergy has filed for withdrawal of its merger-related
filings submitted to the FERC, the SEC, and state and local regulatory
agencies.
NOTE 8. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Entergy
Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, and System Energy)
In June 1998, the FASB issued SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities," which was implemented effective
January 1, 2001. This statement requires that all derivatives be
recognized in the balance sheet, either as assets or liabilities, at fair
value. The changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive income, depending on
whether a derivative is designated as part of a hedge transaction and, if
it is, the type of hedge transaction. For fair-value hedge transactions
in which Entergy is hedging changes in an asset's, liability's, or firm
commitment's fair value, changes in the fair value of the derivative
instrument will generally be offset in the income statement by changes in
the hedged item's fair value. For cash-flow hedge transactions in which
Entergy is hedging the variability of cash flows related to a variable-
rate asset, liability, or a forecasted transaction, changes in the fair
value of the derivative instrument will be reported in other
comprehensive income. The gains and losses on the derivative instrument
that are reported in other comprehensive income will be reclassified as
earnings in the periods in which earnings are impacted by the variability
of the cash flows of the hedged item. The ineffective portion of all
hedges will be recognized in current-period earnings.
Entergy utilizes derivative financial instruments primarily for the
following purposes:
o trading activity by Entergy Wholesale Operations;
o to ensure adequate power supplies and to mitigate certain risks in
the domestic utility business; and
o to hedge cash flows for various transactions in its competitive
businesses.
The implementation of SFAS 133 did not materially impact the power
marketing and trading business, as its derivative portfolio was already
marked-to-market under the provisions of EITF 98-10, "Measuring the Value
of Energy-Related Contracts". Effective January 1, 2001, Entergy
recorded a net-of-tax cumulative-effect-type adjustment of approximately
$18.0 million reducing accumulated other comprehensive income to
recognize at fair value all derivative instruments that are designated as
cash-flow hedging instruments, primarily interest rate swaps and foreign
currency forward contracts related to Entergy's competitive businesses.
The FASB's Derivatives Implementation Group (DIG) is considering a
number of issues affecting the power industry. Entergy's interpretation
of these issues in its initial implementation of SFAS 133 is based on
management's application of existing accounting literature. To the
extent that the DIG ultimately interprets these issues differently than
Entergy, Entergy's financial statements could be materially affected in
future periods, although the amount of the possible effect cannot be
quantified at this time.
NOTE 9. INVESTMENT IN ENTERGY-KOCH, L.P. (Entergy Corporation)
On January 31, 2001, subsidiaries of Entergy and Koch Industries,
Inc. formed Entergy-Koch, L.P., a limited partnership equally owned by
Entergy and Koch Industries, Inc. An eight-member board of directors,
equally appointed by Entergy and Koch Industries, Inc., governs Entergy-
Koch, L.P. As part of the joint venture agreement, Entergy contributed
substantially all of its power marketing and trading business in the
United States and the United Kingdom and made other contributions,
including equity and loans, totaling $414 million. Koch Industries, Inc.
contributed to the venture its 9,000-mile Koch Gateway Pipeline (which
has been renamed the Gulf South Pipeline), gas storage facilities,
including the Bistineau storage facility near Shreveport, Louisiana, and
Koch Energy Trading, which marketed and traded electricity, gas, weather
derivatives, and other energy-related commodities and services. The
joint venture's trading activities are now conducted under the name Axia
Energy. Entergy's investment in Entergy-Koch, L.P. is accounted for
under the equity method of accounting. The partnership agreement
contains disproportionate income allocations between the partners for
several different sources of partnership earnings through 2003.
__________________________________
In the opinion of the management of Entergy Corporation, Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi,
Entergy New Orleans, and System Energy, the accompanying unaudited
condensed financial statements contain all adjustments (consisting
primarily of normal recurring accruals and reclassification of previously
reported amounts to conform to current classifications) necessary for a
fair statement of the results for the interim periods presented.
However, the business of the domestic utility companies and System Energy
is subject to seasonal fluctuations with the peak periods occurring
during the third quarter. The results for the interim periods presented
should not be used as a basis for estimating results of operations for a
full year.
ENTERGY CORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
See "PART I, Item 1, Other Regulation and Litigation" in the Form 10-
K for a discussion of legal proceedings affecting Entergy. Set forth
below are updates to the information contained in the Form 10-K.
Ratepayer Lawsuits (Entergy Corporation, Entergy Gulf States, Entergy
Louisiana, and Entergy New Orleans)
See "Ratepayer Lawsuits, Entergy Louisiana Fuel Clause Lawsuit" in
Item 1 of Part I of the Form 10-K for a discussion of the complaints
filed by ratepayers with the LPSC and in Louisiana state court in Orleans
Parish. See "Filings with the LPSC, Fuel Adjustment Clause Litigation"
in Note 2 to the financial statements herein for developments that have
occurred since the filing of the Form 10-K.
See "Ratepayer Lawsuits, Vidalia Project Sub-Docket" in Item 1 of
Part I of the Form 10-K for a discussion of the sub-docket established in
the Entergy Louisiana Fuel Clause Lawsuit at the LPSC. In late April and
early May 2001, the LPSC conducted hearings addressing the issues listed
in the Form 10-K, except for the issue of the appropriate regulatory
treatment of the Vidalia contract in the event the LPSC approves
implementation of retail competition. With regard to that issue, the
parties entered a joint stipulation that the issue more appropriately
would be considered in a separate, existing docket specifically devoted
to stranded-cost-related issues.
With regard to the other issues, Entergy Louisiana asserted at the
hearings that it has prudently managed the Vidalia contract and that,
through final orders issued in 1985 and 1990, the LPSC itself previously
has recognized Entergy Louisiana's prudence by formally and expressly
approving the Vidalia contract and the recovery through the fuel
adjustment clause of all amounts paid by Entergy Louisiana pursuant to
the FERC-filed rate. The LPSC staff alleged at the hearings that the
Vidalia project owners' July 30, 1990 request that the LPSC clarify the
LPSC's 1985 order (approving the Entergy Louisiana/Vidalia project
purchase power agreement) and approve a sale and leaseback of the
project, presented Entergy Louisiana with an approximately three-week
"window of opportunity" (prior to the LPSC's issuance of the 1990 order)
during which Entergy Louisiana could have used its purported leverage
either: (1) to attempt to restructure the FERC-filed rate schedule
contained in the Vidalia contract; or (2) to attempt to secure a
concession from the Vidalia project owners whereby, at a minimum, the
owners would share with Entergy Louisiana ratepayers some portion of what
the LPSC staff quantifies as approximately $90 million of tax benefits.
The LPSC staff and intervenors further alleged at the hearings that
Entergy Louisiana was imprudent for not preparing and presenting to the
LPSC during the August 1990 hearings on the Vidalia project owners'
motion for clarification, an updated life cycle economic analysis showing
that, as of August 1990, the Vidalia contract appeared to have become
uneconomic due to the significant drop in projected avoided costs
precipitated by, among other things, the legislative repeal of the Fuel
Use Act of 1978 and the steep decline in oil and gas prices in the mid-
to late-1980s. Additionally, Marathon Oil Company and the Sewerage and
Water Board of New Orleans alleged at the hearings that the Vidalia
project owners had incurred construction cost overruns and escalating
operating costs, and had paid excessive royalties to the Town of Vidalia,
and that these costs were imprudent and should be disallowed, in whole or
in part. However, these intervenors recommended that, although Entergy
Louisiana ratepayers should reap the benefits of any such disallowances,
the Town of Vidalia and the Vidalia project owners, and not Entergy
Louisiana, should bear the cost of any such disallowances.
The LPSC staff has proposed several alternative and non-mutually-
exclusive remedies, including without limitation: reducing prospectively
some portion of the above market Vidalia contract costs that Entergy
Louisiana is allowed to recover through the fuel adjustment clause;
shifting prudently incurred costs to base rates and disallowing
imprudently-incurred costs; imposing a rate of return performance penalty
for some appropriate period of time; and disallowing as part of fuel cost
recovery some portion of the purported tax savings and other benefits
associated with the 1990 clarification motion, plus interest since 1990.
The LPSC staff has recommended that the ALJ who presided over the
hearings make a recommendation to the LPSC with regard to the prudence
and jurisdictional issues and certify the question of remedies to the
LPSC.
Item 5. Other Information
Earnings Ratios (Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)
The domestic utility companies and System Energy have calculated
ratios of earnings to fixed charges and ratios of earnings to combined
fixed charges and preferred dividends pursuant to Item 503 of Regulation
S-K of the SEC as follows:
Ratios of Earnings to Fixed Charges
Twelve Months Ended
December 31, March 31,
1996 1997 1998 1999 2000 2001
Entergy Arkansas 2.93 2.54 2.63 2.08 3.01 2.91
Entergy Gulf States 1.47 1.42 1.40 2.18 2.60 2.92
Entergy Louisiana 3.16 2.74 3.18 3.48 3.33 3.23
Entergy Mississippi 3.40 2.98 3.12 2.44 2.33 2.30
Entergy New Orleans 3.51 2.70 2.65 3.00 2.66 2.44
System Energy 2.21 2.31 2.52 1.90 2.41 2.36
Ratios of Earnings to Combined Fixed Charges
and Preferred Dividends
Twelve Months Ended
December 31, March 31,
1996 1997 1998 1999 2000 2001
Entergy Arkansas 2.44 2.24 2.28 1.80 2.70 2.61
Entergy Gulf States (a) 1.19 1.23 1.20 1.86 2.39 2.77
Entergy Louisiana 2.64 2.36 2.75 3.09 2.93 2.84
Entergy Mississippi 2.95 2.69 2.80 2.18 2.09 2.07
Entergy New Orleans 3.22 2.44 2.41 2.74 2.43 2.22
(a) "Preferred Dividends" in the case of Entergy Gulf States also
include dividends on preference stock.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits*
** 4(a) - Sixteenth Supplemental Indenture, dated as of January 1,
2001, to Entergy Mississippi's Mortgage and Deed of
Trust, dated as of February 1, 1988 (filed as Exhibit A-
2(a) to Rule 24 Certificate dated February 9, 2001 in
File No. 70-9757).
** 4(b) - Ninth Supplemental Indenture, dated as of February 1,
2001, to Entergy New Orleans' Mortgage and Deed of Trust,
dated as of May 1, 1987 (filed as Exhibit C-5(a) to Form
U5S for the year ended December 31, 2000).
99(a)- Entergy Arkansas' Computation of Ratios of Earnings to
Fixed Charges and of Earnings to Combined Fixed Charges
and Preferred Dividends, as defined.
99(b)- Entergy Gulf States' Computation of Ratios of Earnings to
Fixed Charges and of Earnings to Combined Fixed Charges
and Preferred Dividends, as defined.
99(c)- Entergy Louisiana's Computation of Ratios of Earnings to
Fixed Charges and of Earnings to Combined Fixed Charges
and Preferred Dividends, as defined.
99(d)- Entergy Mississippi's Computation of Ratios of Earnings
to Fixed Charges and of Earnings to Combined Fixed
Charges and Preferred Dividends, as defined.
99(e)- Entergy New Orleans' Computation of Ratios of Earnings to
Fixed Charges and of Earnings to Combined Fixed Charges
and Preferred Dividends, as defined.
99(f)- System Energy's Computation of Ratios of Earnings to
Fixed Charges, as defined.
___________________________
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, Entergy Corporation
agrees to furnish to the Commission upon request any instrument with
respect to long-term debt that is not registered or listed herein as an
Exhibit because the total amount of securities authorized under such
agreement does not exceed ten percent of Entergy Corporation and its
subsidiaries on a consolidated basis.
* Reference is made to a duplicate list of exhibits being
filed as a part of this report on Form 10-Q for the quarter
ended March 31, 2001, which list, prepared in accordance
with Item 102 of Regulation S-T of the SEC, immediately
precedes the exhibits being filed with this report on Form
10-Q for the quarter ended March 31, 2001.
** Incorporated herein by reference as indicated.
(b) Reports on Form 8-K
Entergy Corporation
A Current Report on Form 8-K, dated January 9, 2001,
was filed with the SEC on January 9, 2001, reporting
information under Item 7. "Financial Statements, Pro
Forma Financial Statements and Exhibits" and Item 9.
"Regulation FD Disclosure".
Entergy Corporation
A Current Report on Form 8-K, dated February 1, 2001,
was filed with the SEC on February 1, 2001, reporting
information under Item 7. "Financial Statements, Pro
Forma Financial Statements and Exhibits" and Item 9.
"Regulation FD Disclosure".
Entergy Corporation, Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy Mississippi, Entergy New
Orleans, and System Energy
A Current Report on Form 8-K, dated March 19, 2001,
was filed with the SEC on March 19, 2001, reporting
information under Item 5. "Other Events" and Item 7.
"Financial Statements, Pro Forma Financial Statements
and Exhibits".
Entergy Corporation, Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy Mississippi, Entergy New
Orleans, and System Energy
A Current Report on Form 8-K, dated April 2, 2001,
was filed with the SEC on April 2, 2001, reporting
information under Item 5. "Other Events" and Item 7.
"Financial Statements, Pro Forma Financial Statements
and Exhibits".
Entergy Corporation
A Current Report on Form 8-K, dated April 3, 2001,
was filed with the SEC on April 3, 2001, reporting
information under Item 7. "Financial Statements, Pro
Forma Financial Statements and Exhibits" and Item 9.
"Regulation FD Disclosure".
Entergy Corporation
A Current Report on Form 8-K, dated April 25, 2001,
was filed with the SEC on April 25, 2001, reporting
information under Item 7. "Financial Statements, Pro
Forma Financial Statements and Exhibits" and Item 9.
"Regulation FD Disclosure".
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
each registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized. The signature for each
undersigned company shall be deemed to relate only to matters having
reference to such company or its subsidiaries.
ENTERGY CORPORATION
ENTERGY ARKANSAS, INC.
ENTERGY GULF STATES, INC.
ENTERGY LOUISIANA, INC.
ENTERGY MISSISSIPPI, INC.
ENTERGY NEW ORLEANS, INC.
SYSTEM ENERGY RESOURCES, INC.
/s/ Nathan E. Langston
Nathan E. Langston
Vice President and Chief Accounting Officer
(For each Registrant and for each as
Principal Accounting Officer)
Date: May 10, 2001