安特吉 (ETR) 2008 Q4 法說會逐字稿

Good day, everyone and welcome to the Entergy corporation, fourth quarter 2008 earnings conference call. Today's call is being recorded. At this time, for introductions and opening comments, I would like to turn the call over to Ms. Michele Lopiccolo. Please go ahead.

(Editor: Audio starts in progress). -- results, in an effort to accommodate everyone with questions this morning, we request that each person ask no more than two questions. After the Q&A session, I will close with the applicable legal statement. Wayne?

Good morning. I will begin by highlighting the events since we last met with you at EEI, and then turn to a discussion of our 2009 goals. First 2008, to quote the dude in the Big Lebowski, "There was a lot of ups and downs, ins and outs, and what have you". But what year can you think of that wasn't? The best place to start is with regulatory events with utility. Following a number of constructive outcomes earlier in the year, like receiving nearly $1 billion of proceeds from the Louisiana storm securitization process, and obtaining regulatory approvals and legislation supportive of the utility's efforts to continue transforming their generating portfolio for the benefit of customers, recent developments have been more mixed. In Arkansas, the appeals court decision regarding the Entergy Arkansas, appeal of the APSC's rate order on their rate case was kind of a what-have-you. Basically, the court said the regulator had broad discretion to decide these issues and you get whatever they give you.

Consequentially, the appeals court upheld almost all aspects of the APSC rate order, based largely on that simple premise, resulting in a fourth quarter charge of roughly $70 million for nonrecovery of costs previously accumulated Entergy's storm reserve and removal costs associated with the lease termination. While commissions do generally have broad authority determining fact, they are not allowed to substitute their judgment for management's reasonable decisions, nor to exceed their statutory authority and act arbitrarily and unjustly without evidence. In this case, we believe that not only do specific issues fall into these buckets, but the end result was inconsistent with these basic principles, and Entergy Arkansas was not given a fair opportunity to earn the already low, allowed return set by the APSC. It's a time-honored US court test for rates that past constitutional muster case that we believe has been violated. The sum of the parts do not equal the whole. Consequentially the order was (inaudible). While the the appeals court tends to punt on second down, we are going to play this one out. We have filed a petition for a review of the appeals court decision to the Arkansas Supreme Court, which is not an appeal of rights, and is still spending.

On the other hand, constructive release was provided by the APSC when approved Entergy Arkansas recovery of 2008 extraordinary storm's damages. In December, the APSC, approved the process for Entergy Arkansas to recover $22 million of the $26 million extraordinary storm damages through storm damage rider in 2009. The $4 million disallowed, not for prudency, is but for one standard deviation or normal variation above the average storm expense built in the rate. We beg to differ with this approach, especially since no parties to the case insisted on this reductions, and given the low rate of return set by the APSC, and further given that the public interest requires consideration of the interest of all stakeholders, including shareholders economic interests. But, in fact, we don't have to be. We had the opportunity to voice our concerns in a constructive way to the APSC stock that opened in the fall to address innovative regulatory approaches.

Entergy Arkansas specifically recommended that the APSC adopt a rate-setting mechanism, that aligned customers' interests and timely restoration of services following the storms, with the utilities shareholder interest during recovery storm by providing a a workable mechanism to do so. The need for such a mechanism is underscored by recent ice storm that affected northern Arkansas. Whether there are hurricanes in the south, or ice storms in the north, the utility operating companies are the best at restoring the quality of life for its customers safely and quickly. The ice storm in north Arkansas was every bit as devastating in some areas, as the twin ice storms of December 2000. Nearly 400,000 customers statewide were affected. Entergy Arkansas has just under 46,000 customers that remain out of service as of yesterday afternoon, down from a peak of 111,000. More than 3500 tool workers, tree trimmers and support personnel have been mobilized and are on site.

On the cost recovery front, Entergy Arkansas was pleased that the APSC realized the significance of this event , and by the third day of the storm opened the docket for affected utilities to file storm cost recovery requests. Entergy Arkansas expects to file such a request in the very near future. Regarding the innovative regulatory approach docket, Entergy Arkansas also recommended that the APSC consider implementing a formulate rate approach, revisiting the APSC methodology to determine ROE, given the risks they are imputing to shareholders and various dockets and sidings, establish incentives returns to reflect specific areas of focus or concerns, providing preapproval for major investment, including construction work in progress and rate base, and recognizing the continuing need for tariffs that address the recovery of specific costs like fuel, and the addition of new capacity between test periods and/or rate cases. Entergy Arkansas is pleased that the commission is taking the initiative to explore these alternative methodologies, particularly given the new challenges facing utilities, specifically the need for utilities to attract capital required to continue to provide reliable service.

In Texas, an unanimous settlement was ultimately achieved among the parties in the Entergy Texas rate case, following the PUCT rejection of an earlier settlement, that included a broad section of stakeholders, but did not include the PUCT's staff or the Industrial Group. The $46.7 million base rate increase represents the first base rate increase since 1991. It is still subject to final approval by the administrative law judges in the case, and the PUCT. In December, updated analysis were also filed in Entergy Texas' qualified power region proceeding . Pursuant to the procedural schedule, Entergy Texas will submit its updated transition and competition report at the end of February, including Entergy Texas' overall recommendation and cost comparisons of the three alternatives under consideration.

In Mississippi, relatively new commission continues to consider questions associated with fuel costs and issues raised by the Mississippi attorney general going back some 30 years. Entergy Mississippi understands the new commission's interest in obtaining more information about commission action, system tariffs, and other issues including fuel purchases, fuel costs and generation needs, and we'll continue to work with the commission to inform, respond to questions and develop alternative policies or tariffs if they are found to be in the best interest of the customers and fairly balanced with other stakeholders' rights. In the attorney general matter, Entergy Mississippi and other affected companies filed to remove the attorney general's complaint to US district court, the appropriate forum to resolve the types of federal matters raised in the attorney general's lawsuit. The litigation is wide ranging and relates to tariffs and procedures under which Entergy Mississippi obtains power in the wholesale market to meet its electricity demands. Entergy Mississippi believes that the attorney general's complaint is unfounded, and filed a counterclaim for injunctive and other relief based on the Mississippi Public Utility Act and the Federal power act. We believe this should resolved in an appropriate regulatory forum and should not be -- regulatory forum, and should not be tried in the court of public opinion. In a separate action in January, the MPSC rejected Entergy Mississippi's stipulated agreement with the Mississippi public utility staff. Given the order denied the settlement, with virtually no explanation, Entergy Mississippi appealed the decision to the Mississippi Supreme court.

In Louisiana, the commission unanimously approved the Waterford 3 steam generator replacement project, and in December consistent with the LCSC's direction, Entergy Louisiana filed a motion to consolidate its Phase II request for cash earnings on construction work on progress for this project, with a little Gypsy Phase II proceedings which request the same relief. In December, Louisiana Department of Environmental Quality issued a little Gypsy air draft and sent it to the EPA for review. If no objections are received by February 6th, Louisiana's Department of Environmental Quality will issue a final permit. At Entergy New Orleans, its rate case continues pursuant to the procedural schedule. City council advisors filing recommends a net rate reduction, just over 4.5 times the amount of Entergy's New Orleans filing. More specifically an approximate net $45 million reduction compared to Entergy New Orleans proposed net reduction of nearly $10 million. Hearings and proceedings are scheduled in March, with the council's decision expected by the end of April.

Regarding our portfolio transformation electricity , you may recall that last fall we took a pause to reevaluate a number of key considerations, given the rapidly changing markets and the economic outlook. With such consideration, Entergy Texas did elect to go forward with the western region RFP, seeking up to 550 megawatts of load CCGT flexible capacity for 2014 and beyond. The utility operating (inaudible) believes that other resource needs can continue to be managed through shorter term procurement for some period of time. In a related matter, Entergy's new nuclear development temporarily requested suspension of federal regulatory reviews of its two new nuclear license applications that would utilize ESBWR technology at the Grand Gulf and Riverbend sites. Simply put, we need more time to consider alternative technologies and other events. Utility operating companies continue to see value in preserving and developing the new nuclear options, and the temporary suspension of the license application review effort does not reflect the change in position regarding the importance of new nuclear, as it relates to the goals of energy independence, environmental cleanliness and economic growth. Utility operate companies still seek cost effective, new nuclear technology to be part of the future. It's more a matter of with who and when.

At Entergy Nuclear, the nonutility fleet closed out the year with outstanding performance records, achieving the highest level of output since Entergy's ownership. Another record was made at the Indian Point Entergy center for the the longest, safe continuous operational service when Unit 3 reached 617 days of continuous operation on January 8th. Further, in the December issue of "Nuclear Engineering International", Indian Point 3 was ranked second in the world for the 12 month average load factor ending June 2008. Again, we are talking about Indian Point.

In the same issue, Vermont Yankee was ranked in the top ten in the world for equivalent full power output achieved. Committment to ongoing operational excellence was further supported in the state reliability study of Vermont Yankee. Overall conclusions of the report show that Vermont Yankee is reliable now, and can be operated reliably in the future. Vermont Yankee completed its review of the comprehensive vertical audit. and plans to submit its response to the state and public service boards in the near future. In other license renewal developments in November, the Atomic Safety Licensing board ruled in favor of Vermont Yankee on two of the three contentions, and imposed a conditional favorable ruling on the third contention. Vermont Yankee complied with the third condition -- contention, by submitting additional fatigue calculations. Intervener have 59 days to file new contentions, if they can demonstrate that Vermont Yankee did not satisfactory meet the ASLD conditions. Progress on license renewal was achieved at Indian Point. On December 22nd, NRC issued its draft supplemental environmental impact statement with a conclusion supporting license renewal. Almost a month later, the NRC released safety evaluation report with open items regarding additional information for further valuation. Entergy Nuclear will continue to work with the NRC and has since provided responses to all open items requiring follow-up response from Entergy Nuclear.

In closing, our 2008 accomplishments, Entergy was proud to receive a special award of excellence at the 10th annual class Global Energy awards. Entergy was recognized for its extraordinary track record of stand out performance year-after-year over the entire last decade. One of the only four companies worldwide to achieve this special award, Entergy was cited for being a finalist 39 times in the Platts Global Energy awards competitions, far more than any other energy company in the world. This exemplary recognition was made possible, by the extraordinary performance of Entergy's employees both in their everyday responsibilities and the moments of unexpected crisis, a perfect segue into 2009.

There's no question we face extraordinary challenges in our industry and in our society. Certainly some of the toughest we've ever faced. That being said, it's fair to say that both our critics and our supporters who probably agree on one thing about Entergy, we go our own way, as always. We don't run with the herd, and particularly in uncertain times that has generally taken us a different direction. In 2009, the utility had its usual full regulatory agenda. The utility operating companies will continue to work with their conditions, including a number of newly elected or commissioners to pursue constructive outcomes. Despite progress in recent years on regulatory initiatives, even more progress is required. Particularly as utility operating companies move into potentially capital intensive investment phase. In today's environment, the utility operating companies recognize that investors are demanding substantially improved compensation for risk, or at a bare minimum, greater anti-assurance as to the risk taken, and greater certainty that expose that -- the deal is the deal. That translates to the requirement for each utility operating company to give a reasonable opportunity to earn year in, year out a fair return on equity consistent with investments of similar risks in order to assure continued access to capital.

The market is dictating the terms, and capital will simply not be available if we can't compete with the many alternatives that investors and lenders have available. Entergy utility operating companies rates of return, aren't where they need to be to provide those kinds assurances. One of the top priorities for the utility business in 2009, obviously is going to be storm recovery, with regulatory proceedings targeted to be completed around year end, and recovery expected through a securitization process. The utility operating companies will also attempt to gain closures on regulatory procedures across all jurisdictions, including the appeal cases in Arkansas and Mississippi, rate cases in Texas and New Orleans, and Louisiana's formula rate plans, and Phase II proceedings for Little Gypsy and Waterford III. After many years of study, Entergy Texas will seek a final determination on its appropriate qualified power region and a plan to transition the competition for a final determination to just stay put.

At the same time, the utility operating companies will continue to advocate constructive regulation going forward through a variety of means, including the Arkansas commissions request for innovative regulation approaches, the Louisiana commission discussion of potential formula rate plan extensions, the Mississippi commission focus on fuel-related issues, and the New Orlean's city council's provision to potentially reinstate a formula rate plan after this rate case is concluded, and everyone's interest as a potential successor arrangement to the system agreement. Where necessary, plans will be made to file new rate cases or tariffs and legislative actions may be sought to support access to the market, public policy goals or other items in the public interest. As an example, Entergy Texas needs new legislation, similar to that in Louisiana to permit storm securitization that's clearly in the best economic interest of its customers. The utility operating company will also continue advance its portfolio transformation strategy, by resolving remaining issues on construction at Little Gypsy, making new resource decisions pursuant to the western region request for proposal, and seeking new nuclear alternatives to our failed negotiations on the ESBWR. As greater clarity is obtained on the the market related uncertainties, the utility operating company's will make the appropriate determination whether to re-engage the market for other long term resource procurement efforts.

At Entergy Nuclear, the commitment to safety, security, operational excellence with the nuclear fleet remain at the forefront, followed by license renewal. Pilgrim and Vermont Yankee are both in the final stages of licence renewal process with NRC approval expected for Pilgrim by mid-year, and Vermont Yankee by the second half of 2009. Vermont Yankee also continues seek approval for Certificate of Public good for another 20 years in Vermont. On that point, the consultants hired by the Department of Public Service quantifies substantial benefits of the continued operation of Vermont Yankee, including a best expectation of nearly $740 million related to value sharing, and $1.5 billion of value from economic activity and net government revenues. Those benefits alone provide an adequate economic basis for issuance of the CPG. Obviously Vermont has a lot to lose without Vermont Yankee.

Likewise, New York has a lot to lose in Indian Point to the commission. In the 2009 its reliability and needs assessment issued in January 12th, New York ISO identified a series of potential risks through liabilities, including power plant retirement. More specifically, the assessment indicates that unexpected retirement of significant generation facilities, could create reliability concerns and require new resources in New York. Obviously in the -- falls into the unexpected category. Due to its location, in the constraint part of the system, the retirement of the one of the two Indian Point nuclear power plant units, would cause an immediate violation of reliability standards, if other resources are not available immediately to address that need. In the event up to the 2014 retirement of Indian Point 2, the assessment estimates the need for over 1,000 megawatts in the lower Hudson Valley, New York City or the Long Island zones. In the end of 2016 retirement of Indian Point 3, the total need would increase to over 2,000 megawatts. In any event consistent with the process, the Indian Point license renewal process will continue throughout 2009, with license renewal targeted for the first quarter of 2011. In support of license renewal, Indian Point will continue to implement recommendations from the independent safety evaluation report. Likewise, Vermont Yankee will do the same with a comprehensive vertical audit results.

Turning now to the spinoff of the nonutility nuclear plants since we last met with you, Entergy Nuclear engaged in settlement discussion in New York, and executed a credit facility on behalf of Enexus. Let me be as clear as I can be without engaging in speculation on what may or may not happen in these very uncertain times. What we have committed to you, is our diligence in seeking to maximize the value or at least eliminate the value destroyers and our nonutility nuclear fleet. The proposed spinoff provided the opportunity to eliminate most of the value destroying issues. So it was a necessary but not sufficient condition, to maximize the value of the business. The world has changed since then. In particular, the debt markets have changed. The sequence of events may need to change while the markets sort themselves out. The time frame may need to change. Our objective to maximize the value of these assets will not change. Nor do we intend to take a long time out when we have committed to exhaust all reasonable possibilities to maximize the value of this opportunity. We are not bigger is better Company. We are a point of view Company. And I assure you, we are considering all reasonable alternatives to get to where we need to be for our owners.

In the interim, while things sort themselves out in the market and we do what we can on our end, you still own the nonutility nuclear plants and the underlying value continues to accrue to you. I distinguish that from the value of the current markets seems to impute to those assets. On the financial front, our aspirations remain unchanged and our focus remains on the principles of sustainable growth that has successfully served us in the past. While our long term point of view remains bullish, we have a lot of work to do in the near term, both to convince you, and to realize our objectives and our aspirations. Our board is not satisfied with excuses, and you don't want to hear them, and they stick in my throat as well. We are not where we need to be or want to be, but we know what we need to achieve and we will resolve all efforts to get there. In our tenures of success, you know we have been here before. We all expect results and that's our mission in 2009. Now, let me turn

Thank you, Wayne and good morning, everyone. In my remarks, I will cover quarterly results, followed by cash flow performance, including our liquidity position, our share repurchase activity and the review of our '09 earnings guidance. Looking first at our financial results for the quarter, slide two shows a decrease in fourth quarter '08, as reported earnings compared to a year ago. This decrease came from lower results at utility parent and other, which were partially offset by higher results at Entergy Nuclear. As has been our practice in previous quarters, spinoff expenses are reflected as a special item in the current period. Turning to operational earnings, results were lower compared to fourth quarter '07 due to a loss at utility parent and other. Improved nuclear results offset a position of the decrease at the utility. Slide three presents the factors that drove the quarter-on-quarter results. The decrease at utility parent and other, came primarily from the Arkansas regulatory charges and their associated tax treatment. Higher tax expense associated with consolidated tax adjustments we typically make in the fourth quarter of each year, also contributed to the decrease in earnings.

Weather also contributed to the quarter's decrease at the utility and fourth quarter '08, we experienced miler than normal weather, while fourth quarter of '07's weather was warmer than normal. Entergy Nuclear produced another excellent quarter, posting increase of nearly 50% in operational earnings. The increase was produced by higher pricing from energy sold, along with a very strong operational quarter reflected in the 94% capacity factor. Lower income taxes associated with consolidated tax adjustments we typically make in the fourth quarter of each year, also increased earnings. The nonnuclear wholesale business reported operational results this quarter, equal to the $0.14 compared to the fourth quarter of '07. Income tax benefits were primary drivers in both years. The last item contributing to consolidated results this quarter was accretive effect of our share repurchase program.

Moving to full year results, slide 4 reflects as reported an operational results for '08, compared to '07. As reported results were higher in '08, led by strong performance in Entergy Nuclear. On an operational basis results in '08, were improved compared to '07, again to the nearly 50% increase in operational earnings at Entergy Nuclear. The increase in earnings at Nuclear came primarily from higher pricing on energy sold, the highest generation of output ever achieved by the fleet and lower income tax expense. The lower income tax expense was driven primarily by the benefit of consolidated tax savings. Operational results in '08 for utility parent and other were lower compared to '07. It was due to primary operational maintenance expense, higher depreciation and lower net revenue. The increase in O&M -- operation and maintenance expense is due primarily to the regulatory charges at Entergy Arkansas discussed earlier, and higher O&M from Arkansas storm expense and the Washetaw acquisition, partially offset by the minimum bill credit writeoffs taken last year, as well as lower payroll and benefit costs, and O&M diverted to storm restoration in '08.

The increase in depreciation expense was the result of planned additions in '08. Additional depreciation expense recorded at year end, to align regulatory and booked depreciation, in the absence of an '07 adjustment related to the storm settlement achieved last year in Louisiana. Lower net revenue at utility parent and other reflects the effect of two hurricanes, and shows up most clearly in the industrial sales number for the quarter. The magnitude of the sales decrease this quarter looks odd, but is driven in part by how industrial billings cross over reporting periods. Basically what you are seeing is significantly lower usage from September, when the storms hit, coming through customers' bills in the fourth quarter, contributing to the 11% industrial decline for the quarter. On a year-to-date basis, industrial sales are down approximately 3%, reflecting both the storm effect and the weak economy. The results at the nonnuclear wholesale business were lower in '08, compared to last year, due primarily to higher income tax expense. The increase in income tax expense, resulted in the absence of '08 of benefits associated with the resolution of tax audit issues in '07, and higher tax expense from the redemption of an investment this year.

As noted in the third quarter call last October, one element of our overall liquidity management strategy in '08, was to take a measured approach to share repurchases. We continue with that philosophy throughout the fourth quarter while seeing opportunistic share repurchases. The detail of fourth quarter activity are reflected on slide five. At the end of the year we had roughly $600 million of repurchase authority remaining. Slide six reflects a recap of our cash flow performance this quarter, which shows the decrease compared to the same period last year. The major items that contributed to the lower net cash flow provided by operating activities include the net effect of two hurricanes last September that required cash resources for assist and repairs, and also reducing revenues with customer outages with a total impact of $444 million. Higher nuclear refueling outage spending totaling $34 million at the utility, and $29 million in Entergy Nuclear, and the higher working capital requirements of $86 million at the utility, $46 million at Entergy Nuclear. These items were partially offset by increased collections at the utility of deferred fuel recovery totaling $267 million, and higher net revenues at Entergy Nuclear of $80 million. For the year, cash from operations increased over $3 billion primarily due to receipt of just under $1 billion of storm securitization proceeds in Louisiana, lower income tax payments, and higher earnings of Entergy Nuclear. These were partially offset by the Hurricanes Gustav and Ike, and the absence of community development block grant funding received by Entergy New Orleans in 2007.

While the overall market reflects the national economy, it continues to deliver bad news. As reflected on slide 7, our current liquidity position and outlook for '09 remain very solid. At the end of the fourth quarter, we had more than $2.5 billion of liquidity available, nearly which $2 billion of which was cash. We expect to have $3 billion liquidity available at the end of the year, reflecting another strong year of operating cash flow generation, and a successful financing program. We continue to believe the credit markets will improve, as we move through the year. We currently have approximately $500 million of debt maturities in '09, all in the fourth quarter and we anticipate other financing activities as well. Already in '09, we have seen some indication of the rebound in the credit markets. Spreads on 5 and 10 year BBB bond financings are much improved from pricing being quoted in the fourth quarter of '08. We benefits from the improvement, as just last week we successfully closed a $500 million bond for Entergy Texas, upsized from the $300 million initially sought. This was first ever debt issuance by the Company created through our jurisdictional separation. We believe that a 10 year BBB issued at 7 1/8th is another indication of some recovery taking place in the market.

We have seen strength in the bank lending space, as Enexus successfully closed its credit revolver in late December. This $1.175 billion three-year agreement was the only $1 billion plus sub-investment grade, multi-year bank deal closed since the first quarter of 2008, including certain asset-backed and commodity-based facilities. We believe this signals not only some recovery in the credit market, but also very strong support for our nuclear business. We acknowledge that what we have seen recently is may be market windows, rather than structural recovery in the market. However, as we have been telling you for sometime, windows present opportunities and we are constantly working to be positioned to seize on those opportunities.

We are initiating '09 operational earnings guidance on a business as usual basis, projected to be in the range of $6.70 to $7.30 per share with the components shown on slide 8. Our as reported earnings is projected to be in the in $6.56 to $7.16, reflecting $0.14 of the synergies with the nuclear spinoff transaction. We initiated our discussion of '09 earnings at the EEI conference last November, sharing earnings drivers with you. In reconciling our thoughts reflected by those drivers, and the actual guidance details on this slide, you will notice some changes. Since providing our thoughts on drivers, we have had a few items move against us that we expect to affect our results this year. The two regulatory decisions, the Entergy Texas rate case settlement and the Entergy Arkansas rate proceeding appeal fell short of our initial expectations.

In addition, excluding the effect of '08 storms and industrial expansion expected in '08, our projections for overall sales of the utility this year calls for little if any growth due to the slow pace of economic recovery. Also the outlook for power prices has changed, since we discussed earning drivers with you this fall. Prices in the regions where we sell power from the Entergy Nuclear fleet have steadily declined over the past several weeks. Another item worth noting on guidance, is our '09 numbers do not reflect any benefit associated with capital deployment, such as the $0.15 at EEI. We continue to consider a range of options as to how we will deploy capital going forward. Options are available to us, because of the flexibility that comes from having nearly $3 billion of projected net liquidity sources by year end.

Our '09 guidance was developed using the same approach this year as in the past. That is our starting point with '08 actual results. While we are clearly not satisfied with the results last year, we feel that there are achievements that form a base for future success. Absent the regulatory charges at Arkansas, the utility held its own in an extremely challenging economic climate and a very active storm season. At issues at nuclear, we reached the highest level of generation output ever achieved by the fleet. And our consolidated results are the highest ever achieved at Entergy. Finally, we were successful in managing our liquidity through one of the most challenging credit markets of recent times, and generated more than $3 billion from cash flow from operating activities.

In '09, we expect to, again, have to overcome some things that we cannot control, such as a prolonged economic slump and retreating power prices. However, we will actively pursue positive outcomes through actions we can influence, including operating our fleet to achieve the highest level of efficiency in a safe, secure environment, controlling our spending in a way that protects value, and effectively executing on our point of view to create new value in a challenging market. The disruption we see in the market today presents capital deployment opportunities and makes liquidity especially valuable. The flexibility we have available in '09 positions us to achieve positive outcomes in this market. The position with liquidity to protect -- protection for down side risks, liquidity to fuel growth in our existing business, and the liquidity for strategic opportunities.

One last point specific to our '09 numbers, relates to the quarterly buildup of earnings this year as reflected on slide nine. We have three planned refueling outages at Entergy Nuclear this year, all in the spring, including one at our largest plant, Indian Point 3. We had three refueling outages in '08, only one in the spring and the other two being fall outages. In doing quarterly comparisons between '08 and '09, the timing differences of these planned outages will affect the quarterly results.

In summary, the well-known economic challenges of today could attempt us to abandon the financial aspirations we previously shared with you. However, we continue to believe that our fundamental approach to achieving long term financial success can whether even the most difficult of times. As Wayne noted earlier. our aspirations for the utility and nonutility nuclear business are unchanged. We recognize there are challenges on the horizon but we have been tested before and we have never backed away from a challenge. Throughout the course of this year, we expect opportunities will present themselves to us, and we plan to be active in seeking out others that may be less apparent. We know you have come to expect this, and we expect it no less of ourselves. Now the Entergy senior team is available for your questions.

(Operator instructions).

And our first question comes from Greg Gordon from Citi Investment. Your line is open.

Thank you. First question, can you tell us -- I think your guiding to the overall corporate tax rate for 2009 was 37%, but what is the assumed tax rate at nuclear and the assumed tax rate at the utility? Because there's some pretty big swings in the underlying guidance?

Well, we really haven't given out what they are by -- looked at them in terms of -- by business unit. We look at the consolidated tax return and allocate those at the end of the year, so to some extent it jumps around year to year. When you look at that consolidated tax number, Greg, it kind of evens out in terms of where it goes one year versus the other. So for example this year, $76 million or so in those showed up. Its a benefit on one side and it is a reduction to the other. It really depends on how the positions that we've had, over the course of the year play themselves out. You can call Michele and she can get you into more detail in terms of what exactly was in those numbers, and then how we are looking at it in terms of whats going on in '09. But it really does depends on the tax positions that we have take, and how they show have shown up in terms of audits or reserves or what have you.

The second question is on your sales assumptions. Given your exposure to the petrochemical industry, is it reasonable to assume that you will have weather adjusted and hurricane adjusted growth in sales in '09 versus '08? You mentioned that there's an industrial expansion that's a part of the assumption there. Can you go through how you got comfortable with that baseline?

Yes, I think if you look at our sales, and first go back to what Leo talked about in '07 versus '08 results. If you adjust it for the storm, our industrial would have been down 1.8%, but we would seen about a 2% growth in our residential and commercial. Looking forward, as we got comfortable and adjust for the storm, that gets us down to about a 1.5% growth rate, and as Leo said, we do have some expansions. One of those actually complete, and we actually will see that coming forward. And in talking with them, we believe we will still see that expansion in the others that coming along. But as Leo had said, we have clearly seen -- as a result -- if you adjust for those, a basic flat growth in our business from '08 to '09. But we are now starting to see some of those same general economic conditions and impacting our larger customers that you are seeing in other areas, and as a result of that, we may see some further impact going forward into '09.

Okay. Thank you.

And our next question comes from John Kiani with Deutsche Bank. Your line is open.

Good morning. Greg actually asked most of my questions. One thing I was wondering about. If you could give a little bit of additional color on the change that you saw relative to your '08 results in the nonnuclear wholesale assets.

Nuclear wholesale assets in terms of what's going on between '08 and '09?

Exactly, the $0.11 per share decline.

Well, we've got a couple of things. One, you will have the absence of the tax benefits that we saw this year.

Right.

And then we have an above market capacity contract that's going to roll off at one of our plants.

Got you. Okay. And from an amortization perspective, it looks like the, I think the Palisades below market PPA amortizes in a smaller amount in 2009, relative to 2008. How does that look beyond -- beyond '09, as far as the revenue accretion is concerned?

It shows up -- it shows up in a declining basis as it goes forward. If you look into 10-Q, it has more details in terms of how that is calculated. But you are right. It does decline, year-over-year and it will decline again as we go forward.

Okay. All right. Thank you.

Next we'll go to Leslie Rich with Columbia Management. Your line is open.

Thank you. I wondered if you could go into a little bit more detail to the extent that you can about some of your last comments, Leo, about having a lot of financial flexibility to take advantage of opportunities, and you plan to be active in seeking opportunities. Could you frame that for me? Are you talking above and beyond the consideration of the spend, no spend decision? Are you thinking about M & A or acquisition of distressed assets or some other form of restructuring?

Leslie, this is Wayne. Leo is forcing that question on me. I'm sorry.

That's fine. You know the answer too.

Well, I wish I did know the answer. It's -- it is -- it will be an opportunistic answer ultimately. We have certain things that we would like to see happen, that would provide opportunities that may or may not happen. Just like new nuclear, we spent quite a bit of time in those associations and that did not turn out as we had hoped. This particular case, I think, you've -- you got your arms around what we are thinking of. To maximize the value of this business, as we see it, it needs to be more than just a set of assets that are disconnected from one another, each one selling into a different local market, and with a -- with a small number of buyers. So, in order to change that, you can add transmission rights. You can do -- obviously the things that the spend was set up to do, that is financing right, changed the way you are selling the products in the market place, not just unit contingent.

Again, that would involve getting transmission rights, getting rights to options or forwards, or rights to other assets or picking up assets on the market place, or taking that strategy -- those individual pieces into something larger, which could be distressed portfolios or -- or even other companies that matched up well with them. I mean, the range of potential options is pretty large right now. And the -- but the end game is pretty clear in our mind, what it would look like to maximize the value. And a lot of those things could be done in the interim, hopefully be done in the interim, while the debt market sorts itself out. And Leo's working through various structures to make sure that the tax considerations and other things like that don't destroy value along the way. But -- I mean, I think your question was on target, in terms of what we are thinking about, and which comes first, and those kind of things will depend upon which opportunities are more ripe than others and -- but they are all -- there's no perfect sequence here.

And how do you prioritize the net carbon position as you look at these opportunities? And then sort of, what is your view, Leo in terms of -- I mean, Wayne in terms of the outcome for carbon legislation?

Yes, he's not going to take that one either. The carbon -- is -- I think everybody -- everybody's radar screen, even though it's -- I think I have thought it over the years and those that still don't believe in the science, or whatever, they do believe that there's going to be some action taken on carbons. The numbers, you know, that we have used, in terms of price signals, that we think is necessary in order to solve this problem, and around the world are in the range of $40 a ton, and we have seen that in Europe at times. We have seen that in study after study, that same type of number in that 2020 time frame. So we continue to use numbers like that, I think for our own measurement in terms of adding to this portfolio, and it could be a portfolio that has -- obviously a portfolio that has a variety of different types of assets, and the strength of Enexus of course, as you know, it has no emissions at all. And we don't want to destroy that, because we believe strongly that that is the -- that is a value adder, and so the assets for positions or whatever that we look at, we want the overall portfolio to maintain its competitive advantage from a cleanliness standpoint. And the things that we are thinking about looking at, we factored it in, and I'm -- I don't know of anybody that's not, frankly that we talked to, that isn't thinking about carbon as a given.

Okay. Thank you.

Okay.

And our next question comes from Steve Fleishman from Catapult Capital. Your line is open.

Hi, guys.

Good morning, Steve.

Hi. Leslie pretty much asked my exact question. Hi, one other one, which was assuming the Company stays as it is right now, do you still have the same rough balance sheet targets that you've had or roughly 45% equity target or certain cash flow to debt targets?

Leo will take that question.

Yes, Steve, the -- if we kept the Company exactly as it is, we would maintain similar financial metrics and strategies, around the dividend payout, around our balance sheet and around what type of liquidity position we carry. If we stay together, in a slightly different form, for example, it's some of the things that Wayne was just talking about came to fruition, and we still work together, we have to alter those accordingly, to just take into consideration what may or may not change. But I think, just to take that one step further, back to the other question that Leslie asked, as well, that part where we didn't include any capital -- any capital deployment over and above the $600 million of authority we already have, that would certainly be more ammunition going forward in terms of what our balance sheet looks like, and what our capabilities would be associated with the business as usual.

Okay. Thank you.

And next we'll go to the site of Michael Lapides from Goldman Sachs. Your line is open.

Hey, guys. Coming back to the regulated portion of the business, Wayne. Can you talk a little bit about what jurisdictions for the next one or two years you expect to under earn the most. And what is the event or catalyst or proceeding that will reverse that trend?

That's kind of a negative outlook there, Michael.

Tough market right now.

The -- actually, I'm going to let Gary Taylor address that because he's been told none of them are allowed to under earn. I will see how he addresses that question.

Well, thanks, Wayne for that lead in. I think, though, if you look at our business, I think Wayne is exactly right. I mean, we have to look at each one and says, what are the challenges that are really between us and achieving our authorized ROE. I think in each of the businesses, those challenges are a little bit different, that we have to focus going forward in. Clearly, I think you see good performance in Louisiana. In Arkansas, I think we are starting to see better performance, but clearly there going to have to be rate case type action for us to adjust the ROE, and for us to get that business back on track. I think Texas is a little bit different story. I think we made a positive step in our rate case, but I think what we really see there, is that they really are going to have to take legislative type action, that we are going to have to work with, and work with the legislators to address what we think are really some fundamental issues in the process that allows us to set an ROE, but really through precedence, really impedes us from being able to that, ras well as reconcile what we do with TCC . I think having a decision on qualified power reason is really essential to us resolving some of those issues. I think really to Mississippi, Mississippi I think probably more so than all of our jurisdictions, we will have to continue to work to make sure that our business is very transparent, that there's an understanding of our costs and our ability to work, but each of the new commissioners to kind of understand the dynamics of this new business going forward. But Wayne made it very clear to me, it's not under performing. It is --you have to work to how you achieve both that balance for our customers and return to

And can you address for the jurisdictions that have formula rate plans, Louisiana, Mississippi, et cetera. When -- if demand is weak in a particular jurisdiction during a given year,S and that drives you below the low end of the band, when does that get trued up?

Well it gets trued up -- in the case of each of those in the time of FRP, but when you are below the band, in the case of Louisiana, which those FRPs have expired, and we are now renegotiating with the FAS to look at fixing that. But typically there's a sharing mechanism of 60/40 between where you are in the bottom of that band. So you really only trued back up potentially to the bottom, and then depending on what your decreasing costs would be, you could adjust that. In Mississippi, it's a 50/50 split and it's adjusted to the bottom of the band as well.

I guess the question I am trying to get to -- and I'm struggling a little bit process wise and my apologies on that. If you have an abnormal kind of year one, does the revenue adjustment occur in year two? Or do you have a proceeding in year two, a short one and the revenue adjustment occurs really in year three?

It occurs in year two.

Okay. Thank you.

And next we'll go to Andrew Levi from Incremental capital. Your line is open.

Hi, guys. How are you doing? Just a quick question. Just on your guidance for 2009, on the very bottom, you have nuclear spendoff to synergies. Can you go over what they are?

Those are the incremental costs associated with carrying basically three entities, throughout the course of the year. You've got entities, Entergy, Equigen and Enexus. So we have incremental costs associated with the fact that we've got this rolling readiness posture, where we are able to -- we've got staff. We've got systems and things like that that are associated with having an extra Company ready to be spun. So those are the no cost but for the win we wouldn't have those.

Got it. Thank you.

Our next question comes from Paul Rodzin from Keybanc. Please go ahead.

Since EEI, it looks like the midpoint of your guidance is down about $0.40. You named a lot of factors driving that. Can you kind of quantify each of those and kind of put that $0.40 in context with respect to each of those?

I think there's a slide associated with most of that in the webcast and in the release. But, effectively, we've got a significant amount of that's due solely to the drop in power prices and the change in sales that Gary had talked about. Those are the two major drivers associated with what's dropped. The other thing that we don't have, that I mentioned in the prepared remarks is the additional capital deployment that we had on the end of that EEI slide. That $0.15, that additional capital deployment was associated with ,so if you stayed as a business as a usual Company throughout the year and you didn't spend, what capacity is the same -- the same things we were talking about earlier with Steve and Leslie, that opportunity. the liquidity that we have, the balance sheet we have, if you are not going to spend, how might you deploy that capital differently than in the case, which is the case that we intend to spend. But primarily what you are looking at is that, that you've had about a $10 decline or not quite $10 but about 10% decline in the price of power,r associated with what we are doing in the northeast. And that's had a significant decline on the earnings, and then you had the reductions in the sales growth where we about underlying 1.1 and Gary says underlying storm and additions that were about flat. And then we've also -- the Texas rate case settlement, we were going on the basis of the non-unanimous settlement at that point in time, and the actual unanimous settlement was a little bit shy of where we expected it to be.

Can you outline your expectations for how you see the Vermont calender unfolding to resolution?

-- calendar unfolding to resolution. Rick Smith. This is Rick. Well, I mean, we are working through that right now. We've got two proceedings going on. One is the proceeding before the Public Service Commission of Vermont on the spend itself. So all that data is in front of them, and it's ready for a decision before them. Somewhat I think they hesitated because of what's going on in the national market, as it relates to ability to finance but as that opens up, I think they will get back on that. And then the other, is as it relates to the license renewal, and there is committee meetings going on right now related to that in Vermont and we have people testifying before those committees. And that will come to fruition as it relates to the Certificate of Public Good around May time frame.

Thank you.

And our final question today comes from Jonathan Arnold from Merrill Lynch. Please go ahead.

Hey, good morning.

Good morning.

Can I just ask about hedging because on the nuclear side, you obviously didn't do much additional hedging during 2008, but it looks like you did add some extra hedges in the fourth quarter. And from what I can see, they match the average hedge price up a little bit, so they seem to be done at relatively reasonable prices. Can you tell us what your policy is in the rolling readiness state of the targets and the like? And then, is there anything unusual about the hedges without the round-the-close pricing or more weighted to peak or something to that nature?

Taking the second piece of that first, there's nothing unique there. It's the typical kinds of transactions that we normally do. The -- as far as our hedging policies or strategies they really haven't changed. We are still within the guidelines of what we deem the limits around our strategy. We have a little bit more open this year than we have ordinarily. We didn't hedge in excess of what our limits would allow us to do going into 2009, and that's partially a function of where we sit, and where we sit as it relates to what we are doing with the Enexus. It was a conscious decision to go into it that way. As we look at going forward, we are going to continue to monitor where we sit with the spend. Certainly what we have to do, though, is hedge around where we sit today in terms of what Entergy's needs are, what our needs are around credit, what our needs are around liquidity, and what you our needs are around our dividend policy, et cetera. So we continue to reevaluate that on an ongoing basis. So nothing has really changed as it relates to what our strategy is. We are cognizant of having one foot in Entergy and one foot in Enexus, basically.

With no spend, would you anticipate going into 2010, more hedged on that year than you are in '09? Could we read that into what you just said?

I would say that -- our limits would push us to be about the same hedged as what we are going in, whether we did more or less would be based on what our point of view was at that point in time. So we continue to evaluate that as we go through the year.

Okay. Can I just ask one other thing? Within your '09 guidance, what is the -- what kind of assumption is there in there from nuclear fuel and obviously we have seen this run up in the uranium market since fall back. And I know there is a lot of smoothing. But just how should we think about nuclear fuel costs as an earnings driver in '09 and and into the next couple of years and beyond.

Mike Kansler is going to take that.

We have been watching that market as long as with everyone else. As you know it went up pretty high last year. It's settled back down into the 40s. The way we do our nuclear fuel purposes, we look out several years and right now we are well committed for 2010. So we don't expect to see a big run up in our nuclear costs in 2010 and we are working forward for the later years also.

So is it -- is it a meaningful driver in '09 in terms of a step up, and not in '10 or not in neither year?

No, it's pretty levellized. It's not going up much at all, mainly because of how we purchased things going forward. It's all included in our net revenue assumptions and the guidance.

Thank you.

And we have no further questions at this time. I would like to turn the call over to Ms. Michele lopiccolo.

Thank you all for participating this morning. Before we close, we remind you to refer to our release and website for Safe Harbor and Regulation G compliance statements. Our call was recorded, and can be accessed for the next seven days by dialing 719-457-0820, and replay code 6436840. This concludes our call. Thank you.