安特吉 (ETR) 2010 Q2 法說會逐字稿

Good day, everyone and welcome to the Entergy Corporation second quarter 2010 earnings conference call. Today's call is being recorded. At this time for introductions and opening remarks I would like to turn the call over to Paula Waters of Investor Relations.

Good morning and thank you for joining us. We will begin this morning with comments from Entergy's Chairman and CEO Wayne Leonard and then Leo Denault, Entergy's CFO will review 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 statements. Wayne.

Thanks, Paula. Good morning, everybody. I'm pleased to report second -- a solid quarter of financial and operational performance while advancing longer term goals and objectives outlined earlier this year. Leo will review the quarter's financial results and even with severely depressed commodity prices affecting the nonutility business the highest second quarter operational earnings per share in Company history. I'll start with progress on our business and financial objectives.

At the utility one of the financial objectives which we've consistently come up short on is to receive a reasonable opportunity from regulators across the system to earn rates of return consistent with investments of equivalent risk and then actually realize that opportunity when it is available. In that regard, we have struggled in Texas since we first entered the state with the Gulf States Utilities acquisition in 1993 and more recently in Arkansas. This deferred system agreement order on rev production cost equalization. I can't say that we turned the corner yet, but I do believe we are making meaningful progress on all of our retail regulators in developing agreements on the need for solid credit metrics particularly in uncertain financial markets with the need to track capital from these changing regulatory requirements. In transmission for the environment, for the potential new investments needed for reliability and to meet other public policy objectives. On June 23, the Arkansas Public Service Commission approved a unanimous settlement agreement in Entergy Arkansas' rate case filed last year. The settlement allows the $63.7 million base rate increase effective the first billing cycle in July and a 10.2% ROE, up from the 9.9% allowed in the previous case. But more importantly it allows a greater opportunity to actually earn closer to that allowed return. It was certainly not everything we asked for or needed but it recognizes that implementing alternatives operating structures for Arkansas such as a standalone entity within the Entergy family but outside the system agreement will require constructive regulatory treatment to attract needed capital.

We remain encouraged that the ATFC has the authority he to improve upon this outcome for things like formula rate plans and transmission riders. There are open dockets where these issues have been raised and can be addressed if the commission is so inclined. The good news for Entergy Arkansas customers in the short term is that despite this rate action the Arkansas residential electricity rate decreased 22% compared to what it was in July 2009 after factoring in lower fuel costs continued efficient operation of our power plants, and sizable reduction in the amount collected and paid to other jurisdictions under the rough production cost equalization formula established by the FERC.

In Texas, parties in the Entergy Texas rate case are working to complete a stipulation agreement resolving all but one issue in the case. The contested issue, the competitive generation of service tariff was the subject of a limited hearing conducted in July. Regarding this issue legislation enacted in 2009 attended Entergy Texas obligation to establish a competitive framework for all retail customers required the Company to file this proposal and intended that Entergy Texas be made whole for program costs and any loss of revenues from participating customers. Entergy Texas hopes to get the stipulation finalized in the near future. The procedural schedule calls for final commission order by November 1, 2010. In Louisiana and Mississippi, where formula rate plans have been the regulatory construct for for many years each company roughly earned close to midpoint of the earnings made in 2009 as indicated by filings in Louisiana and a settlement in Mississippi this past quarter. The Mississippi Public Service Commission has already approved the terms of that settlement.

While the Louisiana companies earned within their band pursuant to the terms of the FRPs both companies are requesting rate adjustments outside the FRP where capacity costs for PPA is not covered under the fuel clause. At the LPSCs meeting last week the commission improved increases effective in September and nuclear decommissioning funding of approximately $7.8 million in Entergy Gulf States Louisiana and $3.5 million in retail rates at Entergy Louisiana also outside the FRP.

Entergy New Orleans recent formula rate plan filing reflected over earning electric rates during the period and under earning in the gas distribution business. The FRPs direct implementation of rate adjustments in the first billing cycle in October. Since exiting Chapter 11 in May of 2007 Entergy New Orleans has reduced its total residential rate to its customers by 16.5%. This opportunity to reduce electric rates again is due in part to a 9% sales growth increase over the past two years as New Orleans recovery from Hurricane Katrina continues to exceed initial expectations. Along with substantial efforts on the part of our team to be as effective and efficient as possible in the rebuilding of the city's energy infrastructure.

While on the subject of storms, having just prepared for the threat of tropical storm Bonnie which was headed to our service territory before dissipating in the Gulf around a week ago, and predictions of more to come from an active storm season due to the transition from El Nino to a predicted La Nina conditions which hasn't happened yet, by the way, and near record warm electric -- warm Atlantic sea surface temperatures that has happened the Louisiana Bond Commissioner recently acted to close out the very active 2008 storm season approving Act 55 financing for recovery of costs associated with Gustav and Ike and the establishment of cash reserves for future storms under Act 55 that if you don't remember that Act in particular, the bonds are issued on the behalf of the Louisiana Utilities Restoration Corporation not by Entergy. The financings close on July 22, providing collectively over for $400 million in proceeds for the balance of storm restoration cost to Entergy Gulf States Louisiana and Entergy Louisiana as well as $290 million in dedicated cash reserves in the bank for future storms. Just under a 3.3% average coupon on a duration weighted basis these bonds have the lowest yields for any previous rate payer back bonds in its assay class. Substantially benefiting the utilities customers with this low-cost financing source particularly compared to the old rate base approach where we finance this obligation 10 to 15 years or longer using the utilities balance sheets.

At Entergy Arkansas securitization for storm recovery was permitted through legislation enacted in April 2009. In June the APSC financing order authorized the issuance of approximately $126 million in storm recovery bonds for the January 2009 ice storm. With closing anticipated in the third quarter.

Now I have to take a second here to remind everybody particularly those who attended the EEI financial conference in 2005, I suspect many of you remember that day, it occurred shortly after we had completed storm restoration for all customers that could take service following Katrina and Rita. But I want to remind you just how far we've came since those bleak days. In 2005 we had negative account balances and storm reserves before the hurricanes hit. Since then, utility regulators have taken action to bolster storm reserves by over $640 million including authorized and securitization of nearly $570 million of storm reserves and building a $75 million storm reserve for Entergy New Orleans over the next ten years. In addition, utility regulators authorize securitization of nearly $2.4 billion for actual restoration costs. Remember back to that EEI meeting in 2005, I don't think very many people in the audience saw that one coming. We didn't predict it either but we did state at the time that it was one of our objectives.

Staying with the balance sheet potential new investment opportunities remain attractive to investors and customers even with resource additions over the past several years utility operating companies remain in the short position relative to long-term expected demand. Last week the Entergy operating companies concluded the summer 2009 night long-term request for proposals in which the system was initially targeting after 1000 megawatts of long-term resources starting in 2011 as well as 550 megawatts of dispatchable capacity in 2015 localized in the unique South areas to help meet specific liability needs and to meet system needs for capacity and energy. Based on the evaluation of submitted proposals RFP selections were increased to four acquisition proposals totaling approximately 2800 megawatts including the self build option identified in the RFP entry at Louisiana's Nine Mile site and one PPA proposal totaling 500 megawatts. Of course all subjects completion of satisfactory negotiations and execution of definitive agreement which is targeted for late this year or early next year. We also received FERC approval to acquire the 580 megawatt, Acadia unit 2. Closing is targeted first-quarter 2011 subject to receipt of the LTSC approval and HartScottRodino antitrust clearance.

At the end of July the utility also provided notice that it intends to conduct a request proposal for long-term renewable generation resources. More details will be made available in September on that initiative. In addition work began on the 178 megawatt extended power operated at Grand Gulf. Certain activities were performed during Grand Gulf's most recent refueling outage to lay the groundwork for completion of the upgrade project in 2012. Once the upright is installed the reactor at Grand Gulf will have the largest capacity at any single nuclear generating unit of its type in the nation. Finally, regarding the proposed cancellation of the little gypsy repowering project currently a long-term suspension for over three or more years the LTSC staff testimony filed in June agreed it was prudent to cancel the project and that Entergy's recommendations to suspend on a longer-term basis was timely made and indicated that except for $819,000 in compensation related costs the requested costs of $211 million incurred should be deemed recoverable. An allowed recovery of carrying costs and the return on project costs at a rate approximating the cost of debt which is estimated at around 7%.

The LTSC staff also recommended the project costs should be securitized. If legally feasible and found to be in the public interest. To that end, the Louisiana legislature unanimously passed legislation now signed by the governor for that and more. To allow securitizations for canceled construction of electric generating transmission facilities, the purchase of long-term fuel supplies, and any other capital investment above $350 million. That the LTSC deemed suitable for securitization. Little Gypsy quarterly monitoring process proved to be a model framework for working jointly with the utility regulators on the long lead time, large capital projects. Particularly in an uncertain economic climate. It allowed all parties to respond quickly as market conditions changed. It's particularly critical given the capital intensive investing phase that the utility industry is facing. No one wants a repeat of the 1970s and 1980s massive destruction of capital and utilities credit capacity. Clearly, Louisiana is setting the tone that this is a good state to invest in. Louisiana decision makers are eliminating the potential for the unhappy surprises that you all worry about and we worry about and enhancing utilities access to the financial markets for things like Act 55 financing for storm damages.

To summarize during the quarter, the utility made significant progress regarding better actual earnings and better earnings opportunities through more constructive regulatory orders governing existing assets and clear investment opportunities in new assets that will benefit our customers for years to come. While low growth is on track with expectations utilities 5% to 6% net income growth aspirations for 2014 remains in clear view.

Turning to the valuable option represented by the non utility generation business in early June, I announced my first major reorganization in more than 11 years. Internal restructuring is the first step to preserve the valuable options identified in the spinoff and ultimately to unlock that value. The new Entergy wholesale commodities organization led by Rick Smith called EWC as you may hear us say will have P&L accountability for the nonutility business in the same manner that Gary Taylor has for the utility business and in the same manner that Rick had in the utility business before he moved over. This new structure is patterned after what Enexus would've looked like in a spinoff. Rick's new EWC organization places a clear focus on commercial opportunity, government and regulatory affairs, and financial and risk matters for the entire non-utility wholesale business. Mark Savoff, Executive Vice President and Chief Operating Officer now has responsibility for the hour to hour, day-to-day accountability and focus for all utility and nonutility generation operations. Allowing us to maintain the scale and operational excellence for all of Entergy. Mark reports to me, his metrics to Rick and Gary the business unit heads.

In other events related to the spin unwind having still not received an order from the New Your Public Service Commission we submitted a formal request in July to withdraw our petition in order to officially close out the spinoff proceedings in that state. It's clearly time to move on from that failed effort. This action followed the Vermont Public Service Boards order issued in June to close out the spinoff proceedings in that state. Efforts continued in the second quarter on one of our top priorities for the new Entergy wholesale commodity business license renewal. At Pilgrim as expected the NRC dismissed an appeal at Pilgrim Watch in a license renewal proceeding. Remaining activities include submittal of revised commitments and information to allow the NRC to supplement Pilgrim safety evaluation report and resolution of a final manner remanded to the Atomic Safety and Licensing Board for hearing. The hearing date has not yet been set but could begin in late fall. Likewise, at Vermont Yankee the NRC denied one appeal and has remanded one issue back to the ASLB to give parties a chance to amend a challenge to the VY and fatigue monitoring program. A very limited scope issue. In addition, Vermont Yankee received the same request as Pilgrim to submit revised commitments and information to allow the NRC to supplement its safety valuation reports.

In Vermont, in April, findings from the initial comprehensive reliability assessment prepared at the direction of the legislature were reaffirmed by the Department of Public Service and its consultants NSA, more specifically findings that Vermont Yankee can be operated reliably for another 20 years. In July the Public Oversight Board previously empaneled by the legislature also issued its supplemental report essentially reaffirming the central finding of its Marx report that is, if the Company addresses several key concerns the panel's fundamental conclusion remains that Vermont Yankee can operate reliably for an additional two decades. Since the original comprehensive reliability testing was issued in December 2008, Entergy Vermont Yankee has resolved or developed plans to address all of the reports recommendations. Nonetheless Entergy Vermont Yankee recognizes there is still much work ahead to secure the votes in Vermont for license renewal. As we've said before, the key date for substantial commitments remains the second quarter of 2011. We will make every reasonable or practical effort to satisfy the stakeholders in Vermont the plant is safe, secure and critical to the clean energy future for the state.

No one takes the safety of nuclear plans more seriously than we do. But, if for whatever reason the plant ceases operation beyond 2012 while we do not believe that will be the outcome we do believe it is important for you to keep in mind that Entergy's financial aspirations are not dependent upon license renewals of this single plant. We do have approximately 650 employees at the plant that I do lose sleep over however. We are working on how we fairly address that very real concern. We have a very broad organization as you all know and we expect to be able to offer positions to those employees somewhere else in the system. At Indian Point the ASLB issued a detailed schedule order for the hearing process expected to be held in the third quarter 2011 followed by an ASLB decision in mid-2012. Also in Indian Point pretrial hearings began on the water quality certification draft denial. Although raising a variety of issues the weight of petitions filed and comments submitted with the ALJ prior to the hearings echoed Entergy's concern with any decision requiring cooling towers at that facility. For example, the New York City Economic Development Corporation filed a petition for AMICA status in the case, while they did not offer an opinion directly on the cooling tower question their comments echoed statements made by the New York Public Service Commission in its spinoff proceedings on the importance of Indian Point specifically to the New York City electricity supply and meeting air quality and greenhouse gas production goals.

The New York Department of Public Service in its petition for full party status raised concerns including the feasibility and affordability of cooling towers. Others raised similar issues including Independent Power Producers of New York and Central Hudson Gas and Electric. During the public comment portion of the hearing, many interested parties also spoke in support of Indian Point and the importance of getting new consideration to wedge wire screens as a far less invasive and more environmentally friendly alternative.

At the issues conference in response the DEC restated that in their draft denial of the water quality certification in April they were not requiring cooling power. Instead, simply stating in their opinion that wedge wire screens are not the best available controlled technology. While we certainly believe that cooling towers are not the right answer at Indian Point we also believe our results clearly show how the wedge wire screen alternative is a proven solution that will resolve concerns about the plants impact on the Hudson River. The issues conference conference continues today and is scheduled for legal briefing and certain threshold legal issues are expected to be issued soon. However, absent a settlement we don't expect full hearings earlier than around the middle of next year. In addition to added focus on regulatory community matters the new EWC organization is designed to capture value through a greater commercial focus on pricing, hedging, managing risk, and capitalizing on growth opportunities. We will be talking with you more about that in the coming weeks and months as we continue to work to translate our vision to results that reflect the valuable option we own today in this wholesale commodities business.

Before closing I'm pleased to report that once again in June Entergy received Governance Metric Internationals highest global ranking. A perfect 10.0 for best in class corporate performance, a rating Entergy has maintained since June 2006. Only 42 companies or just 1% achieved an overall global rating of 10.0 in GMIs most recent release. As in all things if it is worth doing it is worth doing well. We hold ourselves to stringent corporate governance standards and this recognition reinforces the actions we're taking to achieve that end. And it's through all of you that we understand that particularly in this day and age it's critical that we be above reproach in everything we do. As owners, we know you agree, it is what you expect and it's what our Board of Directors demands.

Before turning it over to Leo I'd also like to note that we have two new participants on our call today. Paula Waters has stepped into the lead role as Vice President of Investor Relations, I can tell you that her background in investor relations and strategic planning along with her superior financial acumen makes her a perfect fit for that role. I can also assure you that she will continue to pursue the standard of excellence we have strived to achieve in our disclosures and our relations with all of you. At the same time Michelle is not going too far away, in fact, she's about 4 feet away from me right now, she has been given broader responsibilities which include responsibilities for Investor Relations will continue to report to her.

Also joining us today is Rod West, the Executive Vice President and Chief Administrative Officer. Rod has been on my reader screen since I joined the Company in 1998. At times it has tried my patience as we have moved Rod through the various chairs to prove his capabilities and really learn the business firsthand and now it is paying off. We have a proven leader with the knowledge and experience that you rarely find in the senior management team and a Chief Administrative Officer. Rod is at the heart of our decision-making process. His operational excellence in managing rebuilding the New Orleans Electric Distribution system after Hurricane Katrina and Rita as well as his financial and legal experience leading Entergy out of bankruptcy and into the successful business that it is today will serve him well in this new role. You may not know Rod as well as many outside the industry do or those inside the industry who have consistently and unsuccessfully tried to recruit Rod away from Entergy. He provided outstanding leadership as President of the LSU Board of Trustees before being enticed at the Board of Trustees at Notre Dame his alma mater. He also served and continues to serve in key roles in various financial committees and organizations that promote and support the public good. I know you will enjoy getting to know him better including at our analyst conference next year in New Orleans.

And speaking of the 2011 analyst conference in the appendix to the webcast presentation we've inserted our save the date notice. This jazz set is one of the most highly attended events in New Orleans, we will communicate often with you about the logistics of the conference. In particular we encourage you to make arrangements will in advance to assure adequate flight selections for travel. Now I'll turn the call over to Leo.

Thank you, Wayne, and good morning, everyone. In my remarks today I will cover quarterly financial results and cash performance, followed by an update on our share repurchase program, our 2010 earnings guidance and then close with some perspective on Entergy's value proposition.

Starting with our financial results on slide two, second quarter 2010 earnings were higher than one year ago at both the utility and nuclear while they were lower at parent and other. Second quarter earnings included accretion from our share repurchases mainly due to those executing in connection with authorized programs completed in 2009. As reported results once again this quarter included charges associated with spinoff dyssynergies and the expenses for outside services that are now focused on the spin unwind process. As we've previously committed we have been aggressively working through the process of unwinding the spin infrastructure to eliminate these costs as soon as possible. Excluding this special item related to the spin operational earnings were up nearly 40% compared to the second quarter of 2009. The strong operational results for the second quarter came from robust growth in utility sales along with solid performance across the fleet and Entergy nuclear. Utility sales increased across all customer classes and included the effect of warmer than normal weather in all the jurisdictions we serve. However each jurisdiction also had positive overall retail sales growth on the the weather adjusted basis.

At Entergy nuclear where lower power pricing continued to affect that segments results the fleet again this quarter delivered solid operational performance including the second-longest run in Vermont Yankee history and the second breaker to breaker run in four and half years before starting its refueling outage in April. An ongoing record operational run at Fitzpatrick and the second longest operational run at Pilgrim. In addition, Palisades was recognized by the Institute of Nuclear Power Operations as achieving excellent -- excellence in overall plant performance for the first time in the plant's history. Employees at Palisades also received the highest honor given by the Nuclear Energy Institute, the top industry practice award.

Turning back now to factors driving quarter on quarter results we will refer you to slide three. First at the utility higher net revenue was the primary factor driving the quarterly earnings increase. Overall the utility retail sales grew by 8.6% led by double-digit performance in the industrial sector. For the second consecutive quarter weather was a significant factor in residential sales growth. Our region experienced record weather once again. With 116 years of data available it was the warmest quarter on record in Louisiana, the second warmest ever in Arkansas and the third warmest in Mississippi. However, we believe the real residential sales news here is that the sector achieved solid growth at 2.1% on a weather adjusted basis.

Turning back to the industrial sector, the positive effects of economic rebound we saw taking shape in the first quarter results continued through the second quarter. The national industrial recovery supported by the need to rebuild diminished inventories and reinforced by a comeback in the auto industry and stronger exports is clearly benefiting our customer base. This rebound is magnified when the comparable period is the first half of last year when the worst of economic recession was affecting our region. In looking at specific industrial segments the results are mixed and tied directly to trends in both the national and global economy. For example, an improving global industrial picture has provided a boost to the chemical segment. This occurred while the weakened national demand for gasoline and high national gas inventory levels have pressured the pipeline segment. The decrease in demand for gasoline also created some resistance to recovery among our refining customers who are relying more on export opportunities. Primary metals are experiencing rebound due to some bounce in the auto industry while a soft housing market continues to depress the wood products business segment. Further evidence of the mixed nature of the recovery can be seen in Arkansas where its industrial sales are benefiting from recovery among small manufacturers tied to global industrial expansion.

Slide four which we've used for a few quarterly calls now clearly reflects this rebound. As a reminder this chart plots month by month the change in cumulative retail sales for a three-month period. Versus the same three-month period in the prior year. After excluding the effects of weather and the 2008 hurricanes we once again can see the effect of an economy that has clearly shown improvement in our service territory. There are some tempering effects included in our industrial sales results as quarter. As was true last quarter the increase in net revenue from higher industrial sales volume was somewhat offset by the price effect associated with demand charges. We called out last year these charges had offset the negative impact of lower volume.

In addition, late in the second quarter we saw indications that the pace of recovery was falling, suggesting that while recovery may hold we could see the improvement moderate in future months. The key take away from all of this is that our weather adjusted sales results to date align well with the assumptions used in our full-year guidance numbers. Finally, regulatory actions in 2009 produced results that benefited this quarter. Including FRP actions and Entergy Gulf States Louisiana, Entergy Louisiana and Entergy Mississippi and the absence in the current quarter of a May 2009 FERC order which resulted in a charge at Entergy Texas.

Turning back for a moment to slide three, we see that an increase in interest expense at the utility partially offset the positive effect of higher net revenue for the current quarter.

Moving to Entergy nuclear the quarter over quarter increase in operational earnings was due primarily to the higher net revenue associated with higher generation due to fewer planned and unplanned outage days and the absence of impairments associated with decommissioning trusts recorded in the second quarter of last year. Fewer planned refueling outage days reflect the timing of our refueling schedule for the fleet. Our schedule for '09 included all three of the refueling outages in the spring while the schedule this year has two spring and two fall refuelings. Reduction in unplanned days reflect strong performance with a 23% decrease in the number of unplanned outage days this quarter compared to a year ago. Partially offsetting the positive results coming from a solid operating quarter at Entergy nuclear were lower net revenue on lower energy pricing for sales on a contracted basis and higher nonfuel operation and maintenance expense due primarily to tritium remediation work at Vermont Yankee the effect of fewer refueling outage days during the quarter and higher benefits expense. Finally, Parent and other results were lower due primarily to higher income tax expense because of the absence of decreases in valuation allowances on loss carryovers that were recorded in the second quarter of 2009.

Moving now to slide type. Entergy's operating cash flow performance for the second quarter 2010 reflecting an increase of approximately $150 million over the second quarter of last year. This net increase in OCF was driven mainly by three factors, higher net revenues at both utility and Entergy nuclear, the absence of storm spending that occurred in the second quarter of 2009 and lower refueling outage costs due to fewer scheduled outages in the second quarter 2010 at Entergy nuclear. Partially offsetting these positive contributors to cash flow was higher working capital requirements at the utility.

In closing the topic of cash I believe it is important to emphasize that as we enter the height of hurricane season our liquidity position remains solid. We had a $1.3 billion of cash and cash equivalents on hand and another $1.3 billion of available liquidity should we need to call on such funds as of the end of June. In addition, we have the ability to access $290 million in cash storm damage reserves from Louisiana securitizations that were funded in July.

Now turning to an update on our share repurchase program as reflected on slide six during the second quarter we completed roughly $138 million of share repurchases. We purchased a total of 1.8 million shares at an average price of $76 per share. About 55% of the repurchases were made through the existing $750 million Board authorized program, the balance was repurchased to offset the dilutive effects of stock options exercised. We continue to expect to complete repurchases under the current program by year end, however consistent with best practice decision on whether to buy back stock are made based on a number of factors including current business conditions and investment needs, our liquidity and financial flexibility to quickly respond to changing conditions, and our point of view on the value of our stock.

Slide seven details our current 2010 earnings guidance which ranges from $5.95 to $6.80 per share on an as reported basis and $6.40 to $7.20 per share on an operational basis. The as reported and operational guidance ranges remained unchanged from the numbers we shared in our first quarter earnings call. As we assess our earnings performance to date we believe we have made good progress through the first half of 2010 and are well-positioned relative to our full-year guidance range. Utility has experienced consecutive quarters of strong sales growth bolstered by positive performance across all of our jurisdictions, particularly among residential and industrial customers. The economic rebound both nationally and globally as yielded benefits to our business as reflected in our utility sales numbers.

And our efforts in the regulatory arena produced constructive rate actions in 2009 which also contributed to improved results. It is noteworthy to recognize that weather's been a significant contributor to results over the first six months of this year, clearly we cannot predict nor control the effect of weather in any given period. In addition third quarter is historically our most significant earnings quarter and we're only about one-third of the way through that period. The point here is that there's more work to do in order to achieve the level of financial success we've targeted for this year at the utility. At Entergy nuclear the fleet continues to perform well in posting a capacity factor of 90% this quarter while working through two planned refueling outages. In addition, there are more planned refuelings in the fall. Also, pricing on the portfolios unsold position continues to work against us relative to our guidance assumption although we've seen a slight rebound since we updated you last quarter. While the power markets may not be as unpredictable as weather many factors beyond our control will drive prices for the uncontracted power we sell over the remainder of the year.

In summation week are pleased with our financial performance for the first half of the year, our efforts will focus on continuing to produce positive financial results through strong operational performance and consistent with our past practice we will not revise our guidance range given the uncertainties of key earnings drivers such as weather, audit schedules and market prices among other uncertainties unless we see factors moving out of our overall guidance range.

To change direction just for a moment as Wayne mentioned earlier we have a couple new players on today's call in Paula Waters and ROD West. I would also like to point out that today is the last earnings call for someone that many of you know and have had interactions with over the last decade. During the third quarter Paul LaRosa will be retiring. Paul has been a key part of the IR team for over 10 years and has been with Entergy for 33 years. I know that many of you had developed a relationship with Paul and I can tell you that for the last six years he's provided me with great counsel on a number of wide-ranging issues. As you all know Paul was slated to leave the Investor Relations team at Enexus. I know that you all want to wish Paul well in your dealings with him over the next couple of months.

So in closing the last script that Paul will help me write we recognize that a current economic environment has created widespread uncertainty for many of our stakeholders; however, we also recognize that the unsteady drawn out pace of economic recovery offers an opportunity for those who remain focused. At Entergy we maintain our focus through the tireless pursuit of our aspirations. As we've discussed with you in the past our aspirations include 5% to 6% growth at the utility driven by sales growth improving ROEs and making productive investments through portfolio transformation. Our focus has produced measurable results against these aspirations as indicated by strong sales growth including sales on a weather adjusted basis.

Constructive regulatory outcomes including meaningful progress in our most challenging jurisdictions and continued progress in our efforts to identify productive investments as demonstrated by the promising results of the utility supply plan RFP. These results include four acquisition proposals totaling nearly 3,000 megawatts and include one self build option. In nuclear, our aspirations continue to focus on preserving the valuable option of this low-cost baseload clean fleet through superior operational performance. Again this quarter our fleet turned in strong performance achieving a 90% capacity factor despite planned outage times for two refuelings.

And finally, we know that retaining focus in our business produces the financial outcomes you expect like solid liquidity and credit and value that is returned to you through dividends and/or share repurchases. As noted earlier our liquidity stands at more than $2.5 billion which excludes nearly $300 million of storm cash reserves. A very solid position for us. And with regard to giving value to you we plan on completing share repurchases for our $750 million program by year-end. These repurchases are an important element of our program forecasted to return to you as much as $5 billion in dividends or share repurchases over the next five years absent additional attractive investment opportunities.

I can assure you that Entergy remains committed in good times and in bad to create value through focus on those things most important to you. And now the Entergy senior team is available for your questions.

(Operator Instructions) First question today will be from Greg Gordon for Morgan Stanley, please go ahead.

Thanks, good morning. As you look through time over the next 18 to 24 months and you look at the cash balance net of the -- and you look at the fairly sizable amount of parent debt, your net balance if you just aggregate up all the cash is around $1.3 billion. I know you're going to be doing a buyback. What others sort of are the big puts and takes and where do you see the quote unquote right parent cash balance for the Company in the long run -- for the parent debt, sorry, in the balance in the long run?

Greg, we've maintained a pretty consistent level of debt at the parent on a net basis over the last few years, we've had some of the term debt that has come due that we've -- as it's matured we paid off over the last couple of years. There was a recapitalization plan associated with the spin the involved a change in that mix up a little bit, as we go forward, we're going to move past what we would've done with the spin and current debt levels will remain reasonably modest but we'll continue to carry some debt there. It just may change in terms of the nature of how it's placed versus -- what we used to have as term debt which now fits potentially in the revolver and the cash that we have will work through maintaining a pretty consistent level of debt there. For the time being but maybe in a different form. Do you envision turning any of the current parent debt out at any of the subsidiary areas including at the nuclear business? Something that would happen in the nuclear business is definitely a longer-term what we used to refer to as plan B type of option but certainly turning out debt at the parent is one of the options that we'd be looking at going forward.

Thank you.

Moving along we will hear from Paul Patterson with Glenrock Associates.

Good morning. Congratulations Paul and I wanted to ask you about Vermont Yankee. It sounded like you were perhaps looking for other positions for the people who work there. How should we think about what your actual outlook for the plant is now?

Well, Paul, like I said, the -- we believe, without getting into all the various options at that plant, we believe that at the end of the day that plant keeps running. And as we always do we plan for the worst and if the various alternatives to keep that plant running all fail for whatever reason then -- or it could be an economic shutdown. People forget that we're pretty clear about that too, if it's not economic to operate it we will do something ourselves but we have began planning some time ago just like we do when a Union contract is up, we begin planning for the possibility of a strike. And in this particular case we began planning for what we would do with the people, what opportunities would be available, obviously in that case there would be people that would need to be there for a while for decommissioning work and things of that nature, but we want to make sure to the extent possible we keep everybody gainfully employed and it's a contingent --- it's a backup plan we do it for hurricanes, strikes, like I said, for everything. It's not a base plan at all, the base plan is that we expect that plant will keep operating in the public interest. And it's the actual plan.

How are the negotiations with the utilities to do a new PPA with them? How are those progressing, do you think -- is there any update you can give us on that or?

That's where Rick seems to be spending all his time on his expenses account at least, so I'll let him tell you what he's been up to.

Hi, Paul. They just keep moving on and I'm having conversations essentially every other week so I take that as a positive sign.

Okay. And then just finally on the $675 million of repurchase, if I understood correctly you guys expect to have that complete by the end of the year?

That's correct.

Okay. Thanks a lot.

Your next question comes from [Leslie Rich] with JPMorgan.

Hi, I wondered if you could walk through again, for me that RFP that you were discussing and you said that in included four acquisition proposals. Am I to assume that that means that you would acquire existing generation and if approved that you would then file to basically put that in rate base, is that what you meant?

That's correct.

Then in addition to that one self build option, build a new combined cycle plant?

That's correct.

Okay. And then one was a PPA just with an interesting generator?

That's correct.

So the timing on approval of all that is what?

We're going to begin the negotiations with the counterparties as we speak and we would expect to go through the regulatory approval and the timeline would be up to one, one and a half years for that approval to put that in the rate base.

Okay. So -- but the RFP for 1000 megawatts, I thought that was for long-term resources by 2011?

Well, we have 500 megawatts of a PPA that will go into effect next year. Once again, we have to reach agreement with the counterparty on that and while we're going through the negotiation on these assets we will go ahead and have short-term PPAs on those and go ahead and have that capacity available to us over the time of those negotiations.

Is the Acadia plant included in that 1000 megawatts or that's in addition to?

That's in addition to..

We will move along to Dan Eggers with Credit Suisse.

Hey, good morning. Wayne, can you just talk a little bit more about New York and I understand you guys withdrew the application but there were still some outstanding issues around how far the commission could reach and their control over debt limits and that sort of stuff, where does that stand in kind with the EWC organizations as it stands, how is that going to maybe impact some of the planning for that business?

Well, the -- by withdrawing the order essentially in our minds I think it takes that issue off the table essentially at this point in time and then it puts the Company back in the position of trying to revisiting some of the things that were said in that case, some of the things that weren't said in that case and coming to some agreement with New York about what is in their best interest and what rights they have and what rights we have. We clearly failed in that -- in our presentation of that case in the manner that we took it on and it was probably too big and all at once and I think we -- in the process of finalizing -- of when we came to that decision we heard a lot more about what their position and interpretation was up a law and their rights and their own particular preferences and needs and it's something that we'll be a lot more sensitive to in the future. It does not mean of course that we have acquiesced to anything at this point in time it just means that we don't need to beat this dead horse any longer, we lost. And we'll continue to pursue what's in the best interests of the Company and its stakeholders and we believe that the people of New York also, but we will have to figure out a different way and a better way to do it than what we did.

Okay. And then I guess on a -- the dyssynergy cost mitigation efforts, how long do you think until you get that number down to an acceptable level from the $0.06 in the second quarter, what do you think it could be the ultimate rate of a cost perspective?

Dan, we still believe we're going to get that or we know we're going to get that all wound up by the end of the year. The issue that we have to some extent with some of these costs is from accounting point of view there are certain things -- certain criteria that have to be met before you can actually take the charge for some of the things you know you're going to take a charge for like relocations and severance and even getting out of leases and the like. So some of that will drag on for a few months while we wind down through some of those things but going into next year the numbers will be -- we won't have any kind of special associated, we can go in next year.

One of the things I probably should have said is one of the reasons, is certainly to pull down that quarter or that petition is we do not want to get an order from the New York Public Service Commission that would require us to have to appeal it. That could happen, they could be something in the order that we simply believe is against the law and that would require us to have to take it to court and that would be an enormous waste of everybody's time if we did that.

Okay. Thank you.

We will take the next question from Andrew Levi with Tudor Pickering.

Hey, guys. Just two quick questions. In Vermont, the tritium, how much was that in the quarter -- the cleanup?

Well, we're struggling with that one. Usually somebody's got that. Maybe Mark's got it. How much?

About 11 million.

That's a good number. And then second question for Wayne, listening to the Duke call, I guess Jim kind of stated that we were at the beginning of the cycle of consolidation within the industry and so I just wanted to get your thoughts on that and what Entergy is thinking along those lines longer term?

I thought Jim said that back in 1988 when he first joined the industry. I didn't hear the context he put that in. There's always an argument for consolidation in this industry, just because of the very dispersed nature of the talent across the board. I think it is a very tough sell to Boards and to regulators on consolidation right now. The way the rules have developed, the antitrust rules, if you merge with somebody that is close to you you are in divestment mode of things that you need to serve your customers and then you're getting most of the benefits to your customers and not much to your shareholders if you're paying a premium, and then a commercial and somebody very far away it's hard to develop a strategic rationale, other than I just want to get bigger. Which doesn't really work for us. As I said -- as a strategic rationale it has got to produce better cash flows or less risk or something.

I think that consolidation is something on Mr. Rogers mind for a long time and he's been successful at it and they may well continue to pursue it. And then like everybody and we said before I think last year that we looked at a lot of stuff and at the end of the day nothing ever seems to really make sense once you count all the costs of the premiums and things. I don't think you're going to see a lot of consolidation in this industry. I think you may see something but it will be unique. I think once you get through this building phase with some of the plans people have there may be some force consolidation that -- like occurred after the last building phase just through financial distress but I don't see it today.

Okay thank you very much. Paul LaRosa, good luck to you. You've been a good guy.

And now we will move along to Steve Fleishman with Bank of America Merrill Lynch.

Hi, guys. Just a question on -- you didn't really touch on the impact of the BP spill on your territory. I know in our past conversation it didn't look like it's having much of an impact on the overall economic growth but could you just give a color on where you see that over the next 6 to 12 months?

I think if you look in the near term and the time frame you're talking about I don't think we're good to see a large impact in anything that's really been impacted has really been offset primarily by the additional resources that are coming into the area to deal with it. I think it's really a question of a lot of people are taking a wait-and-see approach right now as these moratoriums are working their way either through the core process and that's probably longer-term as to how it impacts drilling in that area. It's about 33, there were about 33 deep water wells. And so I think it could be a little bit longer impact but in that timeframe you're talking about I don't think we see a large impact to this Company obviously to the people that are affected it's significant.

Okay, and one separate question, Wayne, on the way you talk about Rick's new job in terms of strategy for this EWC both political regulatory but also kind of commercial hedging and all that, could you or Rick maybe elaborate a little bit more on how you're thinking about kind of the commercial and hedging side of things? What are some of the things you're looking to do differently than what you've been doing.

I'll let Rick do that. I think really the key thing is it's been painfully obvious to us that our structure in the Northeast was totally inadequate. We looked at those plans, we talked a lot about managing them as a business but we continue to manage them functionally without a P&L hit, without all of the function in the Northeast that you would have for example at the utility and it was clear in the spinoff process that most of the states view this still different than a utility and we did not have the functions in place in that area to provide the answers and interface with the people and explain -- understand their positions and explain our positions to come to some agreements and that's a big part now with Rick's job is we're now part of the -- much more part of the communities and we will do a lot better job in terms of I think in terms of execution by being -- having a business unit up there instead of just functions. I'll let Rick talk specifically about some of the things that we're going to do differently.

Steve, near-term you're not going to see much change in what Entergy was doing. We're hedged out for this year about 91%, 90% for next year so there's not a lot of activity that we could do over the next couple of years. But we have been thinking about -- on the years '12, '13 and '14 in what we might do as it relates to capacity additions in the area that will allow us to kind of change the product mix from pretty much solely unit contingent to more firm capacity. So we're just jumping into that. I'd admit that what we dealt with with the spin kind of bogged us down on the regulatory process so I think we'll be able to provide you with some better thoughts over the next couple of quarters, it is in the back of our mind to kind of look at the portfolio more broadly and see what we can do around those existing baseload units to really sell different products.

Great, thank you.

Thanks, Steve.

That does conclude the question-and-answer session for today. At this time I'd like to turn things over to Paula Waters for any additional or closing remarks.

Thank you, operator, and thanks to 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 719-457-0827 replay code 1327346. This concludes our call. Thank you.

And once again, this does conclude today's conference call. Thank you for your participation.