ENTERGY CORPORATION and SUBSIDIARIES 2006
Entergy Corporation is an integrated energy company engaged primarily in electric
power production and retail distribution operations. Entergy owns and operates power
plants with approximately 30,000 megawatts of electric generating capacity and it is
the second-largest nuclear generator in the United States. Entergy delivers electricity to
2.6 million utility customers in Arkansas, Louisiana, Mississippi and Texas. Entergy has
annual revenues of more than $10 billion and approximately 14,000 employees.
HIGHLIGHTS CHANGE 2005 CHANGE 2004
FI NANCIAL RESU LTS
(in millions, except percentages and per share amounts)
Operating revenues $10,932 8.2% $10,106 4.3% $9,685
Consolidated net income $ 1,133 26.2% $ 898 (1.3%) $ 910
Earnings per share
Basic $ 5.46 27.9% $ 4.27 6.5% $ 4.01
Diluted $ 5.36 27.9% $ 4.19 6.6% $ 3.93
Average shares outstanding (in millions)
Basic 207.5 (1.2%) 210.1 (7.4%) 226.9
Diluted 211.5 (1.4%) 214.4 (7.3%) 231.2
Return on average common equity 14.2% 26.8% 11.2% 4.7% 10.7%
Net cash flow provided by operating activities $ 3,419 132.9% $ 1,468 (49.9%) $2,929
UTI LITY ELECTRIC OPERATI NG DATA
Retail kilowatt-hour sales (in millions) 96,663 1.6% 95,153 (6.9%) 102,225
Peak demand (in megawatts) 20,887 (2.4%) 21,391 1.0% 21,174
Retail customers – year end (in thousands) 2,595 (1.3%) 2,629 (1.2%) 2,662
13,814 (2.3%) 14,136 (2.0%) 14,425
TOTAL EMPLOYEES – YEAR EN D
Letter to Stakeholders 2
Financial and Societal Aspirations 10
Utility Operational Aspirations 14
Nuclear Operational Aspirations 18
Immediately preceding the Financial Review in this year’s annual report, we present a special
section on global climate change. In this centerpiece, we offer for your consideration our Climate Change:
The Defining Issue of Our Time Centerpiece
point of view on this urgent issue as well as the views of six independent, well-respected
experts from academia, environmental non-governmental organizations and the media.
Financial Review 23
Investor Information 96
Directors and Officers 97
ENTERGY CORPORATION AND SUBSIDIARIES
Top-quartile shareholder returns. Unlimited energy. Affordable power. Clean air and
water. Safety and security. A healthy, educated and productive society where no one suffers
in poverty. Imagine achieving not just one or two of these ideals; imagine having it all.
At Entergy, we believe it is our responsibility to imagine having it all. First we imagine,
and then we aspire and seek to achieve. In setting our aspirations, we adhere to the
principles of sustainable growth. It is our firm belief that only by consistently delivering
superior financial, operational and societal results can we build a company that is worthy
of your investment and trust.
To Our Stakeholders:
you articulate your point of view when
The theme of this year’s annual report is from what we really did well. Every
“having it all.” Obviously, that phrase decision seemed to come down to doing so only attracts more of the herd
back to your side of the pasture?
means different things to different people. either/or, and in hindsight many of the
To many of our customers it’s the dream choices seemed all wrong. How do you articulate the value of
sustainable growth or being a business
of home ownership, stable employment, We vowed to dig out of that hole and
adequate healthcare and seeing their children never make the same mistakes again – in with a conscience without sounding like
you’ve forgotten investors bought the
head off to college for the first time in their particular, as my mother would say, “having
family’s history. Unfortunately, to a great eyes bigger than your stomach.” Through a stock for one reason – to make money?
How do you articulate what 34 years in
many, it seems little more than a dream. lot of good fortune and the incredible
For some “having it all” means the efforts of 14,000 players, those dark times the business have taught you about the
importance of having dedicated employees
freedom to use the air and water or other are a distant memory. But the temptation
natural resources as if they’re free for to get away from what got us here always who know that the values of the company
align with their own? Or the boost it gives
the taking or the sole property of this exists. Particularly when the market is
generation. To others, it may mean always looking for the next big thing. employee spirit in knowing we have no
hesitation in telling investors or customers
simply accumulating more of anything Compared to many others, our stated
than you can possibly use. strategy sounds just too complicated or that the safety of our employees always
comes before anything else; something we
When I joined Entergy over eight years too fluid. It doesn’t fit on a bumper sticker.
ago we were on the brink. Having strained How do you describe a point-of-view prove in our actions every day?
You can count diversity in the
our financial resources in order to seek driven strategy when that point of view
“growth,” we were rapidly losing touch constantly changes as the “herd” moves in organization in any number of ways. But
how do you compute the real value of
with what really mattered, moving away unison from one idea to the next? How do
ENTERGY CORPORATION AND SUBSIDIARIES
in financial, operational and societal
cultural, socio-economic or ethnic As the rebuilding process began, we
performance, but to separate Entergy from
diversity when it comes to making the worked to educate and influence
the rest. We have demonstrated it is
everyday decisions that affect one of the communities to adopt environmentally
possible to deliver consistently superior
most diverse customer bases in the smart building standards in order to
shareholder returns (multiples of
country? What is the increased value of lower future utility bills for our customers
the industry average), create a safe and
serving communities that know the and reduce environmental emissions.
inclusive workplace, preserve our
company is making a difference in the We redoubled our efforts in support of
environment and contribute to a
lives of the people who can least afford our wetland restoration to reduce flooding
productive society. Using our dynamic
product; not because we have to but risks from future storms in New
point-of-view driven business model,
because it’s simply the right thing to do? Orleans and other communities along
our aspirations will be tomorrow’s
What is the value to the bottom line of the Gulf Coast.
benchmark for what “having it all”
adhering to the principles of sustainable We successfully advocated for
means in business.
growth whether the times are good or not? securitization legislation to preserve
Whether it’s expedient or not? Whether it
affects this generation or the next?
How do you explain to investors the
“The principles of sustainable growth have worked for
seeming paradox that “having it all”
Entergy … contributed to the achievement of the highest total
means giving back and taking no more
shareholder return in the industry over these eight years.”
than absolutely essential from other
stakeholders as you go?
The fact is, I’ve never felt overly
compelled to woo those looking to get rich
overnight. Maybe because I’ve never affordable rates for our customers and
Sustainability in Good Times and Bad
figured how to do that. The principles of The 2005 hurricanes put everything we worked to establish storm reserves to
sustainable growth have worked for believe and have practiced to the test. lower future risks for both our
Entergy even though I couldn’t predict 2006 could easily have been consumed customers and our owners.
how or how much eight years ago when with the near-term recovery of storm- We continued to issue Requests
I was given the opportunity to become related costs but we maintained our for Proposals for long-term and
CEO, nor can I even explain today how it long-term commitment to the principles limited/intermediate-term resources
contributed to the achievement of the of sustainability. For example, even as we under our utility Resource Supply
highest total shareholder return in the pushed diligently for storm restoration Plan in order to drive down prices
industry over these eight years. Entergy’s cost recovery at local, state and federal for our customers and to maintain
average annual TSR was almost three levels in 2006: superior reliability.
times the industry average. And we started We continued to set new standards in We reached an agreement to purchase the
with no financial headroom or margin for emergency restoration not only in our 798-megawatt Palisades Nuclear Plant,
error and have had our share of adversity own service area, but in assisting others. continuing the impressive profitable
along the way, like the unprecedented We were honored to receive Edison growth in our nuclear business.
120,000 square miles of damage from Electric Institute’s Emergency Assistance We operated our nuclear plants more
hurricanes Katrina and Rita in 2005. Award. Entergy has received either EEI’s reliably than ever, setting new records
Today, we continue to assert that the Emergency Assistance Award or for total output at both our regulated
principles of sustainable growth are the Emergency Response Award for nine and Northeast plants.
only way to run the business. We continue consecutive years.
to set aspirations to not only be a leader
We made our second five-year that lead their field in terms of corporate
Last June, the Mississippi Public Service
commitment to voluntarily stabilize sustainability on a global basis. This year
Commission approved recovery of $89
our CO2 emissions at 20 percent below we were the only company in the U.S.
million in storm restoration costs for
year 2000 levels from 2006 to 2010 electricity sector to be so honored. In the
Hurricane Katrina with no finding of
after successfully completing our first electricity sector, Entergy ranked best in
imprudence. Ninety cents on the dollar
commitment with emission levels that class for social responsibility, corporate
was funded by the $81 million
were 23 percent lower than our target. governance, climate strategy, corporate
Community Development Block Grant
In 2006, we delivered total shareholder citizenship/philanthropy, stakeholder
funding received in October. The balance,
return of 38 percent relative to the 20 engagement and occupational health
plus $40 million to increase the storm
percent returned by the Philadelphia and safety. All of which is evidence that
reserve and lower future risks for Entergy
Utility Index – reinforcing our belief the principles of sustainable growth work
Mississippi and its customers, is being
that the real market is not just day – in good times and bad.
funded by securitized bonds to be issued
by the state of Mississippi.
“We made our second five-year commitment to
voluntarily stabilize our CO2 emissions at 20 percent below
In October, the City Council of New
year 2000 levels from 2006 to 2010 after successfully
Orleans unanimously approved a
completing our first commitment with emission levels that
settlement agreement that calls for a
were 23 percent lower than our target.”
phased-in rate increase, and the creation
of a $75 million storm reserve and an
emergency rate relief provision in the
event of another Katrina-type disaster.
traders looking at a screen for a quick Entergy is a stronger company today
The settlement also called for an
buck, but sophisticated investors who than it was before the hurricanes hit in
independent process for certification of
understand long-term value. We 2005. That does not happen when you
storm costs. In early 2007, the City
restored market confidence by build on sand, only when you have a solid
Council advisors issued their reports on
demonstrating that Entergy’s long-term foundation of support from employees
storm costs incurred through December
value proposition remains intact. For and the communities you serve. One that
2006 with no finding of imprudence.
the year 2006, Entergy’s as-reported is built on trust and mutual respect.
This rate relief outcome, combined with
earnings were $5.36 per share, up 28
the award by the Louisiana Recovery
percent from $4.19 per share in 2005. Recovering Storm Costs, Managing Risks
Authority of a $200 million Community
Operational earnings were $4.72 per We began 2006 with a comprehensive
Development Block Grant, will assist
share, up seven percent from $4.40 per total storm cost recovery plan that sought
Entergy New Orleans with its efforts to
share in 2005. to minimize the impact on our customers.
emerge from bankruptcy.
Most importantly, in 2006, our We successfully pursued recovery from
employees achieved the safest year in insurance carriers, federal funds allocated
the history of the company. for community development and state
In December, the Public Utility
securitization of remaining costs. All of
Commission of Texas unanimously
In 2006, for the fifth consecutive year, which substantially lowered the remaining
approved a constructive settlement that
Entergy was named to the Dow Jones costs to customers.
included $353 million of hurricane
Sustainability Index – World, an index Here are the basic elements of our storm
recovery costs, an amount net of
that tracks the performance of companies recovery results in each jurisdiction.
ENTERGY CORPORATION AND SUBSIDIARIES
2006 Results: Generating Clean,
anticipated insurance proceeds, with States-Louisiana and Entergy Louisiana
Affordable, Reliable Power
no finding of imprudence. In February storm restoration cost recovery cases. Both
for Our Customers
2007, the Public Utility Commission the staff and intervenors expressed support
The physical aspects of the storm
of Texas voted to approve securitization for securitization of costs and the creation
restoration effort may well have been the
of the $353 million with an offset of of a storm reserve. While the cases are still
greatest challenge this company has ever
$31.6 million which the commission pending, we are encouraged that the
faced. The cost and financial recovery
determined was the net present value of resolution will be as constructive as the
process consumed considerable time and
accumulated deferred income tax results achieved in Mississippi, New
resources as well. Nonetheless, we refused
benefits related to storm costs. A Orleans and Texas.
to let the storms slow down momentum
financing order is expected from the In 2007, we expect closure for all
in other initiatives in our utility and
commission authorizing issuance of remaining storm-related regulatory matters,
securitized debt in March 2007. receipt of additional insurance proceeds,
receipt of funds from the securitization
Utilities: Executing the
process and the removal of the remaining
Resource Supply Plan
Testimony was filed in early 2007 by the negative credit agency outlook triggered as
In 2006, we continued to execute our
Louisiana Public Service Commission staff a result of the hurricanes.
Resource Supply Plan to meet our
and intervenors in the Entergy Gulf
continued on page 7
THE DEFINING ISSUE OUR TIME
At Entergy, we believe that we are at a defining point in time as a society – a time that
future generations will look back on with either admiration or despair. Today, our global
society is emitting greenhouse gases at ever-escalating rates. While scientists,
politicians and academics debate the extent of the impact of greenhouse gas emissions,
we as a society are running out of time. C L I MATE C H A N G E :
The Defining Issue
of Our Time
When we look up at the sky at night we see the light from stars that was emitted
millions of years ago, only now completing its journey to earth. Greenhouse gas can be
viewed the same way. Once emitted into the atmosphere, the outcome is inevitable.
CO 2 stays in the atmosphere for approximately 100 years. Every day that goes by our
future becomes more certain. There is no ability to turn back.
At Entergy, we believe now is the time to act. We know the issue is complex and the
necessary actions difficult. To further both discussion and action, we have invited
experts on climate change to share their thoughts in the centerpiece to this year’s
annual report. We invite you to form your own opinion and support action on climate
change – the defining issue of our time.
A Lasting Contribution
Robert v.d. Luft
n 2006, Robert v.d. Luft retired as the chairman of our Board of Directors after
eight years of service in that position. Under his leadership, Entergy’s market
capitalization grew from less than $7 billion at the time Bob became chairman to
more than $19 billion at the end of 2006.
A retired senior vice president of DuPont who also served as chairman of the board
of DuPont Dow Elastomers, president of DuPont Europe and chairman of DuPont
International, Bob was elected chairman of Entergy Corporation in mid-1998.
Shortly after Bob became chairman, the Board of Directors launched a turnaround
strategy designed to increase shareholder value by narrowing the company’s focus on
fewer businesses that were aligned with Entergy’s core competencies, by divesting
underperforming businesses and by restoring the company’s overall financial health.
The strategy has delivered strong results for owners and earned recognition from
various industry organizations. Entergy was recognized by Edison Electric Institute for
having the top total shareholder return for the five-year periods ending September 30,
2003 and September 30, 2004. The company twice received EEI’s highest honor, the
Edison Award, in 2002 and 2005 and was named 2002 Power Company of the Year and
2003 Global Energy Company of the Year by Platts/Business Week Global Energy Awards.
With his focus, discipline, attention to the details that matter most to our
customers and owners, and generosity of spirit in dealing with employees, Bob has
had a significant impact on our organization – an impact that has forever changed the
way we do business and the way we see the world around us.
ENTERGY CORPORATION AND SUBSIDIARIES
continued from page 5
Nuclear: Strong Earnings acquisitions, management service contracts
customers’ demand for power, diversify
and Opportunity and other types of agreements. We have
and modernize our generation fleet and
We continue to focus on safety and also continued to preserve our option to
create opportunities to lower our customers’
security first in all our nuclear operations. pursue new nuclear development through
rates. Our portfolio transformation
While our operational excellence is second the construction and operating license
framework assures consistency with our
to none and our aspiration is to continue initiatives at Grand Gulf Nuclear Station
market-based point of view in order to
our growth in this business, we have and River Bend Station.
produce the long-term least cost to
remained disciplined investors.
customers after considering and pricing
In 2006, we seized an opportunity that
all risks. We are actively pursuing a number The Time to Aspire for More
aligned with how we create value for
of attractive opportunities to meet our By any measure, 2006 was a defining year
sellers of plants and for our owners. We
customers’ demand requirements for Entergy. Thanks to a lot of hard work
announced our intent to purchase the
conditioned on the receipt of regulatory by our employees, the support of our
798-megawatt Palisades Nuclear Plant
approval for rate recovery. customers, communities and owners and
near South Haven, Michigan, for a net
We also continued to pursue constructive the collaborative efforts of too many to
amount of $350 million, or $303 per KW.
resolution of other outstanding regulatory mention at the federal, state and local
issues in 2006. Proving the value of
creativity and persistence, our Independent
Coordinator of Transmission was approved,
“Most importantly, in 2006, our employees achieved the
installed and began performing all of its
safest year in the history of the company.”
functions, including tariff administration,
available flowgate capacity calculation,
transmission planning and operation of the
Entergy OASIS. Crossing these milestones
The Palisades plant is of a design and
were significant events for Entergy, as we jurisdiction levels, we recovered from two
vintage that is problematic for most
have worked for nearly a decade to align unprecedented storms that devastated our
operators. Entergy’s experience with this
our transmission operations with changing service territories and much of our
technology and its technical challenges
federal policy, while meeting local infrastructure. Then we moved beyond
was a clear advantage in constructing the
regulators’ and policymakers’ needs. In a survival and recovery. We took steps to
successful bid. We are confident in our
testament to the hard work of all parties manage our regulatory and operating risks,
operating plan to maintain the reliability
involved, on November 17, 2006, the reduce our impact on the environment
and safety of the plant as it meets technical
transition was completed seamlessly. and ensure our customers have access to
challenges in the years ahead. When this
We still have work ahead to resolve reliable, affordable power for years to
transaction closes – expected in the second
outstanding issues associated with the come. Our shareholder return was top-
quarter of 2007 – we will own and operate
System Agreement litigation and Entergy quartile at 38 percent for the year. While
11 nuclear plants in the South, Northeast
Arkansas’ decision to provide its eight-year we are pleased to report progress, we are
and Midwest. We also continue to operate
notice to exit from this agreement. We also far from done. We recognize that after
the Cooper Nuclear Station under a service
expect Entergy Gulf States to separate into overcoming such adversity there is a great
contract with the Nebraska Public Power
Louisiana and Texas operating companies temptation to become satisfied and
District. With our positive point of view
by the end of 2007, allowing the separate complacent. Instead, now is the time to
relative to clean, affordable nuclear
companies to develop plans that are aspire for more.
power generation, we continue to seek
consistent with local public policy,
opportunities to further expand our
including potentially the pursuit of
nuclear business portfolio through
retail customer choice in Texas.
Imagine. Aspire. Achieve. premature to consider dividend action at
We aspire to consistently deliver top-
The legacy of 2005 and 2006 was not that this time. I assure you, it is at the top of
quartile total shareholder returns.
we proved we had achieved our aspirations our list when more certainty and clarity
We aspire to grow earnings per share by
of operational excellence or financial is achieved on other initiatives.
$1.00 each year through 2010, earn
resilience. What we proved was as an returns at or above our risk-adjusted
organization we are capable of more than cost of capital and maintain solid We aspire to provide clean,
we might have ever imagined. The investment grade credit with flexibility reliable and affordable power
adversity in the last two years was beyond to manage risk and act on opportunities. in our utility business.
anything the industry has experienced. We aspire to return cash to our owners We aspire to safe, efficient and effective
The organization’s response was equally through common stock repurchases of operations in all areas – generation,
unprecedented. As 2006 drew to a close, up to $500 million each year and/or transmission and distribution. Our
we took a hard look at our aspirations. We dividends targeting a 60 percent payout service area has unique operational and
assessed our current position, evaluated ratio over time. economic challenges. We strive to
address these challenges while
continually improving customer
satisfaction, increasing productivity
and decreasing costs.
“Entergy was named to the Dow Jones Sustainability Index – World,
the only company in the U.S. electricity sector to be so honored.”
We aspire to operate safe, secure
and vital nuclear resources in an
environment that is both growing
multiple scenarios using our dynamic At the end of 2006, we ended the Safety and security come first in our
points of view on market conditions, suspension of and completed our 2004- nuclear operations. After that, we
our stated strategies, our change in risk 2006 $1.5 billion common stock aspire to uninterrupted operations
profile and our experiences over the last repurchase program. In January 2007, and continuous improvement in
few years, and refined our aspirations. we announced a new $1.5 billion productivity. We are committed to
Underlying our refined aspirations is common stock repurchase program to aggressively pursue opportunities to
our timeless belief in the principles of be implemented over the next two years. expand our nuclear fleet more fully,
sustainable growth, the unlimited human These actions were consistent with our utilizing our talented and deeply
potential and basic human goodness. commitment to fairly compensate skilled workforce.
The long-term success of our company those who provided capital for storm
depends on our ability to ensure our restoration and those who made that We aspire to break the cycle of
employees’ safety, meet our customers’ possible by continuing to believe in our poverty for our customers and
expectations, deliver superior returns to long-term value proposition and not contribute to a society that is
our owners, conserve and protect our selling into a market when we were healthy, educated and productive.
environment and contribute to a healthy, issuing securities. Our societal aspirations encompass our
educated and productive society. It takes Regarding the dividend, no one needs communities, our employees and our
steady progress along every dimension to to remind us that the current level is well environment. No one should have to
generate lasting growth and value. With below our 60 percent target and also well choose between food and heat. We
that in mind, our five-year aspirations for below the average relative to our peers. strive to make our service as affordable
2006 through 2010 are outlined below: Your Board of Directors continues to be as possible. But we do not accept that as
disappointed that we believe it is still the end of our responsibility. We strive
ENTERGY CORPORATION AND SUBSIDIARIES
to contribute to the eradication of focused, financially healthy organization giving us the ability to adapt our strategies
poverty in our utility service territories. driven to produce tangible benefits for and positions quickly as market conditions
We aspire to eliminate lost-time customers and owners. Safety is Bob’s change. Finally, our commitment to
accidents in every area of our business passion. He has engrained that passion in sustainability and our focus on total
and create a workforce as diverse as the the entire Entergy organization. Bob has shareholder return set a clear framework
communities in which we operate. We been an inspirational leader and mentor to for all our decisions and actions. Entergy
strive to be the cleanest power generator me personally. We know Bob’s contribution as an organization remains committed,
in America – one that voluntarily to the good of mankind, while already focused and ready to adapt to whatever
adheres to greenhouse gas emission great, is far from finished. We wish him the future may bring.
levels and conserves natural resources in all the best in retirement. As a leadership team, we are always
as many ways as possible. With Bob Luft’s retirement from the mindful of our fiduciary obligations to
chairman role, the Board of Directors our owners and our moral responsibilities
While all aspirations involve some elected Gary W. Edwards as the Presiding to our customers and communities. We
stretch, our refined aspirations are firmly Director. Gary is widely respected for his believe we have the power to not only
grounded in the reality of our current character and unwavering commitment to financially succeed in the years ahead,
business as well as the future scenarios we the highest standards of conduct. With but to help assure the sustainability of
believe most likely based on our current Gary’s leadership, the Board will continue to the world around us. At Entergy,
point of view. We put these aspirations operate at these same standards of corporate “having it all” means no less.
before you to share our vision for what we governance and provide meaningful and
believe is possible and to challenge expert insights to our management team.
ourselves to continuously reach beyond
our current grasp. The Power to Sustain
We begin 2007 with great momentum and
anticipation. Our diverse, dedicated family J. Wayne Leonard
A Lifetime of Achievement
Chairman and Chief Executive Officer
In 2006, Robert v.d. Luft retired as the of employees continues to deliver truly
chairman of our Board of Directors after outstanding performance, whatever the
eight years of service in that position. obstacles. Our point-of-view driven
Under Bob’s guidance, Entergy became a business model continues to serve us well,
Wayne Leonard (left) was
elected Chairman and Chief
Executive Officer in August
2006 by Entergy’s Board of
Directors, following the
announcement of Bob Luft’s
retirement as Chairman.
Gary Edwards (right), an
independent Entergy board
member, was elected to the
position of Presiding Director.
ENTERGY CORPORATION AND SUBSIDIARIES
by delivering top-quartile
shareholder returns through the generation
of safe, clean, affordable power to a healthy, educated,
productive society where none of our customers live in poverty.
t Entergy, we are committed to the pursuit We assessed our current position, evaluated
of sustainable growth. We aspire to deliver multiple scenarios using our dynamic points of
superior returns to our owners while view on market conditions and our stated
simultaneously making progress toward specific strategies, and refined our aspirations for 2006
societal goals. In 2006, we delivered returns to our through 2010. Our overarching financial aspiration
shareholders that ranked in the top quartile of is to achieve top-quartile total shareholder returns.
our peer group. In 2006, we were also gratified to We will do so by growing earnings per share by
be named to the Dow Jones Sustainability Index – $1.00 each year, earning returns at or above our
World for the fifth consecutive year. We are proud risk-adjusted cost of capital, all the while
to be a leader in sustainable development, the only maintaining solid investment grade credit with
company in the U.S. electricity sector to be flexibility to manage risk and act on opportunities.
included in the 2006 DJSI – World. We also aspire to return cash to our owners
through common stock repurchases of up to $500
million each year and/or dividends targeting a 60
Delivering Top-Quartile Financial Returns
percent target payout ratio over time. In January
We aspire to consistently deliver top-quartile total
2007, we announced a new $1.5 billion common
shareholder returns. In the past five years, we have
stock repurchase program to be implemented over
twice been honored with EEI’s award in recognition
the next two years. Regarding the dividend, we are
of the highest total shareholder return for a large-cap
well aware that the current level is considerably
electric utility over a five-year period.
below our 60 percent target and also well below the
We restored market confidence by demonstrating
average of our peers. Considering our last dividend
that Entergy’s long-term value proposition remained
increase was in 2004, we continue to be disappointed
intact. As a result, we saw Entergy stock rebound
that we believe it is still premature to consider
from post-hurricane weaknesses and deliver top-
dividend action at this time. It is at the top of our list
quartile returns to our owners.
when more certainty and clarity is achieved on
While delivering top-quartile returns over
the past five years, we continually focused on
While there is stretch, we believe our refined
constraining risks – financial, regulatory,
financial aspirations are realistic and achievable.
operational, commodity – in our day-to-day
We also believe they are aligned with our societal
operations. Our risk profile has changed
aspirations. Our commitments to strengthen our
substantially in recent years as our business has
environment and our communities are embodied
evolved. That change, combined with other factors,
in our societal aspirations.
led us to take a hard look at our aspirations.
Delivering Superior Results to Society gas emissions. Entergy was judged among the best
Total Shareholder Return
As we refined our financial aspirations, we also in the North American electric power sector.
reaffirmed our societal aspirations. We are convinced In another of our societal commitments, we aspire
that being a leader in environmental excellence, to contribute to the eradication of extreme poverty in
meeting the particular needs of our low-income the region served by our utilities. We are taking steps
customers and fostering a safe, inclusive work to meet the needs of our low-income customers with
environment are more important than ever to the programs designed to improve the flow of public
long-term success of our company and our society. funds, better manage energy usage and address the
We aspire to be the cleanest generator in underlying causes of poverty. Of special note in 2006
America, to conserve natural resources and to be a were our coordinated jurisdiction efforts to secure
strong advocate for establishing mandatory increased funding for the federal Low Income Home
ETR greenhouse gas levels. More than 80 percent of the Energy Assistance Program. We worked to maximize
power we generate comes from clean sources such funding for Entergy states through meetings with
as nuclear and natural gas. We continue to invest in members of Congress and an aggressive media
clean technologies like combined-cycle gas turbine campaign in all our jurisdictions. Entergy states
plants. We also have programs in each jurisdiction received over $75 million in additional LIHEAP
to inform and help our customers conserve energy funding in 2006 and we made extensive outreach
Total Shareholder Return
1999-2006, % in their homes and businesses. efforts to our LIHEAP-eligible customers to help them
We strongly believe that greenhouse gas secure assistance with their bill payments. In 2006,
emissions harm our environment. In 2001, we Entergy advocacy efforts such as these were recognized
became the first electric utility to commit to a again by the Edison Electric Institute’s Advocacy
voluntary five-year target to stabilize our CO2 Excellence Award – the second consecutive year we’ve
emissions. In 2006, we made a second five-year been so honored.
commitment to voluntarily stabilize our CO2 We faced many challenges in 2006 and made
emissions at 20 percent below year 2000 levels over great strides, including another record year in terms
31 the next five years. Our actions demonstrate that it of safety. However, our proudest day, now clearly in
is possible to economically stabilize greenhouse gas sight, will be when our dedicated employees achieve
emissions. Regardless of the outcome of any debate no lost-time accidents. We completed 2006 with no
on the climate change issue, these are actions we fatalities and reached several safety milestones in
should and will take now. our operations. For example, our transmission team
Our approach to climate change was recognized of approximately 1,000 employees worked one
in 2006 by the Carbon Disclosure Project, an million hours in 2006 without a lost-time accident.
We aspire to
international secretariat for the world’s largest In addition, eight sites earned Star status under the
institutional investor collaboration on the business
shareholder returns. OSHA Voluntary Protection Program in 2006 –
We restored market
implications of climate change. For the third year in the highest possible safety rating for an industrial
demonstrating that a row, Entergy was named to the Climate Leadership work site. As of the end of 2006, 36 of our nuclear,
Index, a prestigious index for global corporations fossil, distribution and transmission sites have
remained intact. As a
addressing the challenges of climate change. achieved OSHA VPP Star status.
result, we saw Entergy
Members of the index were judged to be We also aspire to a workforce that reflects the
stock rebound from
distinguished by their strategic awareness of the diversity of our communities. We have a diversity
deliver top-quartile risks and opportunities of a carbon-constrained strategy that positions our company as an employer
returns to our owners.
environment as well as the quality and effectiveness of choice, a business partner of choice and a good
of programs put in place to reduce overall greenhouse corporate citizen. The commitment to create an
ENTERGY CORPORATION AND SUBSIDIARIES
environment that fosters creativity, productivity At all levels of our organization, we continue to LIHEAP Funding in
and mutual respect for all people reaches from use our point-of-view driven business model to Mississippi and Texas
the office of our CEO throughout our entire develop our strategies and action plans. From
organization. We believe there is no substitute for setting our CO2 emission stabilization targets to 167.5
the experience and insight of a diverse, focused evaluating the purchase of a generation asset, our
Entergy team. dynamic model enables us to form decisive points
of view incorporating sophisticated analyses and
extensive market knowledge. We then execute on
From Aspire to Achieve
Rounding out our financial and societal aspirations, our points of view using discipline and the
we also have operational aspirations to guide our experience of our talented team of employees.
utility and nuclear businesses. Our operational By definition, our aspirations will at times seem
aspirations are outlined in the following sections of out of reach. However, we believe our management We aspire to break
the cycle of poverty
this report along with a discussion of our 2006 team and employees have the expertise and the will
for our customers
operational performance. to achieve superior financial, operational and and contribute to
a society that is
societal results consistent with our aspirations. healthy, educated
and productive. The
federal Low Income
helps needy families
pay their energy bills.
ENTERGY CORPORATION AND SUBSIDIARIES
by safely generating and
delivering clean, reliable and affordable
power while structuring our utility business to
meet the objectives of all stakeholders.
enerating and delivering electricity is a consecutive years, every year that the awards have
unique business. Companies that provide been offered. We are the only utility in the country
power are viewed and regulated as public to have achieved this recognition.
servants yet still must earn equitable returns for private We also continued to make progress in ensuring
owners in order to attract capital. While the goals of the safety of our employees. In 2006, seven of our
our various stakeholders can sometimes diverge, we distribution sites and one transmission site earned
believe it is possible to operate our utilities in a way OSHA Voluntary Protection Program Star status –
that consistently meets the objectives of our bringing our total number of Star sites to 36 as of
customers, regulators, communities and owners. the end of 2006. Another nine sites completed the
rigorous process of applying for OSHA VPP Star status
in 2006. Ensuring the safety of all employees in all our
Customer Service, Reliability and Safety
operations continues to be our number one priority.
Customer satisfaction is driven largely by the day-to-
day operation of our utility business; by maintaining
transmission lines, responding to customer calls and Affordable, Available Power
safely providing power to meet fluctuating demands. We strive to provide clean, reliable and affordable
We continue to invest in our utilities to ensure we meet power to all our customers over the long term.
our customers’ expectations for safe, reliable service. Currently our customers’ demand for power exceeds
In 2006 we began the year challenged by a our generation capacity by two to four gigawatts. At
number of customer service issues related to the the same time, approximately 18 gigawatts of new
storms of 2005. However, as we progressed through merchant capacity have been commissioned in our
the year our performance along a variety of customer service territories in the last six years. This provides
service and reliability measures continued to improve us with the opportunity to meet our capacity
as it has consistently over the past eight years. As of shortfall as well as offer high-quality generation
year-end 2006, routine outage frequency decreased sources to our customers.
48 percent and outage duration decreased 32 percent Our Resource Supply Plan is designed to meet our
over the eight-year period from 1998 to 2006. customers’ demand for power, diversify and modernize
Regulatory outage complaints dropped to 81 in our generation fleet and create opportunities to lower
2006 from 535 in 1998. our customers’ rates. It’s a comprehensive plan that
In 2006, we were once again honored to receive calls for the contract purchase of power, the acquisition
the Edison Electric Institute’s Emergency Assistance of highly efficient assets, as well as the evaluation of
Award. Entergy has won either EEI’s Emergency new fuel and new capacity alternatives, conditioned
Assistance or Emergency Response award for nine on the receipt of regulatory approval.
acquire the 322-megawatt, natural gas-fired,
In early 2006, we issued a Request for Proposal
average number per
simple-cycle Calcasieu Generating Facility in
for 2,000 MW of long-term supply-side resources.
customer per year
southwestern Louisiana. This modern, quick-start
We received 35 proposals for combined-cycle gas
peaking generation resource has substantial
turbine resources and eight proposals for solid fuel
advantages because of its close proximity to big
resources. A year later, we narrowed the field and
industrial customers with large potential load
entered further negotiations for two CCGT
1.83 swings. This natural gas-fired, simple-cycle facility
resources representing over 1,300 MW of capacity
can be dispatched on extremely short notice, which
and two solid fuel resources representing between
is critical in a region where there are natural
approximately 730 and 880 MW of capacity. The
limitations – such as the Gulf of Mexico – on the
solid fuel resources include the selection of Entergy’s
ability to import power.
Little Gypsy repowering self-build option identified
We also continue to see potential in the
in the RFP. At Little Gypsy, we expect to repower
development of new nuclear capacity at our
this gas-fired facility to use petroleum coke as fuel.
average minutes per
customer per year
Grand Gulf Nuclear Station and River Bend
As a refinery waste product, pet-coke is readily and
Station. Nuclear generation is emission-free, less
economically available in southern Louisiana. The
exposed to fuel price volatility and subject to
pet-coke option also introduces more solid fuel
federal incentives. With necessary legislative
capacity into the Louisiana generation fleet, which is
heavily dependent on natural gas with its greater support, including loan guarantee and production
price volatility. tax credit incentives, and state regulatory
In addition to executing our Resource Supply mechanisms to enable timely cost recovery, the
Plan, we took several actions to ensure power is prospect of new nuclear could become a reality.
readily available and affordable to our customers Finally, we continuously strive to reduce our
over the long term. operating costs. Improving efficiency and
In January 2006, we completed the purchase of productivity in our generation fleet is one of the most
We aspire to safe,
the 480-megawatt, natural gas-fired, combined- important steps we can take to ensure our customers
efficient and effective
operations in our
cycle Attala facility near Kosciusko, Mississippi. have ready access to affordable power.
utility business. We
We have purchased the output from the Attala
strive to continually
plant since mid-2004. Through this acquisition, A Constructive Regulatory Environment
1998, outage frequency we added a highly efficient plant to our generation In many respects we experienced a very constructive
has decreased 48
portfolio as we did in 2005 with the purchase of regulatory environment in 2006. For example, we
percent and outage
duration has decreased
the 718-megawatt, natural gas-fired, combined- pushed diligently for storm restoration cost
cycle Perryville plant in Louisiana. recovery at the local, state and federal levels.
After initiating negotiations in late 2006, we We also advocated for securitization legislation to
announced in February 2007 an agreement to preserve affordable rates for our customers and
2006 CO2 Emissions
We made a second voluntary commitment to
stabilize our greenhouse gas emissions at 20 percent
Actual 38.9 below year 2000 levels from 2006 to 2010.
As of year-end 2006, our CO2 emissions were nearly
10 percent below target.
ENTERGY CORPORATION AND SUBSIDIARIES
worked to establish storm reserves to lower future Competition filing at the end of 2006. In its plan, Regulatory Outage
risks for both our customers and our owners from Entergy Gulf States-Texas proposed to join the
the effects of future storms. Electric Reliability Council of Texas. We expect that 535
Local regulators in New Orleans have been the billion dollar investment to electrically connect
supportive of our efforts as Entergy New Orleans our Texas business with ERCOT will provide
continues to make progress in its reorganization plan. customer benefits exceeding this investment.
We are planning to have Entergy New Orleans However, there are important conditions that must
emerge from Chapter 11 in mid-2007 as a financially be met in order to proceed. The Texas PUCT will be
stable utility. Going forward, we will continue to deciding these issues in the coming years. 81
work with the New Orleans City Council to ensure Looking ahead to 2007, we expect closure for all
that the company remains on solid ground financially remaining storm-related matters. We will continue
and to minimize its exposure to future storm risk. to implement the Federal Energy Regulatory The number of
In early 2007, we received approval from the Commission’s rough production cost equalization
Louisiana Public Service Commission to divide remedy for the System Agreement, and at the same from 535 in 1998 to
81 in 2006.
Entergy Gulf States into two separate operating time, we will pursue a replacement agreement that
companies – one in Louisiana and one in Texas. meets the needs of our utility customers without
We expect to complete the separation by the end provoking undue disputes and litigation. In
of 2007 – allowing each company to develop Arkansas, we will pursue constructive resolution of
operating strategies that are consistent with the the rate case we filed in August 2006 as well as the
public policy direction in its jurisdiction. outstanding fuel recovery proceeding. In Texas, we
Pursuant to the legislation passed in 2005, Entergy will file our first base rate increase case in 16 years
Gulf States-Texas made its required Transition to to be effective when the legislative-imposed rate
freeze ends on June 30, 2008.
ENTERGY CORPORATION AND SUBSIDIARIES
by operating safe, secure and
vital resources in a way that maximizes the
inherent asset value and enhances the opportunity to grow this
business, all in an environment that does not pose a threat to future generations.
n the pursuit of sustainable growth, goals often measures, security force and operator training,
appear to be at odds: affordable power or clean controlled access and behavioral observation
air but not both. To sustain growth, however, programs. We work closely with outside security
solutions must be found that drive progress toward experts to continually enhance and reinforce the
multiple goals simultaneously. At Entergy, we firmly security programs at all our nuclear sites.
believe that safe, affordable and emission-free nuclear
generation is vital to sustainable growth. Operating and Management
We are currently the second-largest nuclear Expertise That Makes a Difference
operator in the United States. We own and operate With strong leadership and an experienced, talented
10 plants in the Northeast and South and operate team of engineers, technicians and operators, we
another in the Midwest under a service agreement. have consistently delivered industry-leading
In 2006, we reached an agreement to purchase the performance in our nuclear operations. For example:
Palisades Nuclear Plant near South Haven, Michigan, Our fleet average capability factor was 94
from Consumers Energy for a net amount of $350 percent in 2006, compared to an industry
million. With our positive point of view on nuclear average of 90 percent.
generation, we continue to aggressively pursue Production costs in our regulated fleet remained
opportunities to expand our nuclear business. flat at $16.3 per MWh. We also achieved our
first uninterrupted breaker-to-breaker run at
Arkansas Nuclear One Unit 2.
Safety and Security First
In each of our nuclear plants, we work diligently Our Northeast fleet achieved an average INPO
to maintain safety and security at the highest levels. Index of 97.6 in 2006, up more than 30 percent
Only then do we seek to improve operating since we acquired these plants.
efficiency and productivity.
Our safety performance is world-class. Six of our In 2006, we placed an additional 95 MW of
nuclear plants are currently designated OSHA VPP capacity into production at our Vermont Yankee
Star status. Our Vermont Yankee nuclear plant Nuclear Power Station. Approval from the Nuclear
received Merit designation, which is considered an Regulatory Commission to increase the power
effective stepping stone to Star status. output came after the most extensive engineering
Each of our nuclear sites meets or exceeds the review of any uprate. The review process took 29
security standards set by the Nuclear Regulatory months and resulted in a unanimous approval
Commission. These standards are the highest of any recommendation. Through 2006, we have added
American industry and include site security 512 MW of nuclear capacity through uprates and
capacity improvements. Increasing our nuclear for an additional 20 years, through 2031. Finally,
Fleet Capacity Factor
generation through uprates and high capacity factors in November 2006, we formally announced our
enables us to meet our customers’ growing demand intention to extend the license of our Indian Point
for energy without increasing harmful emissions. Energy Center. Former New York City Mayor
Currently, about one-third of our generation capacity Rudy Giuliani and Greenpeace Co-founder
is supplied by nuclear power. Dr. Patrick Moore joined us in announcing our
In 2006, the Nuclear Regulatory Commission “Right for New York” license extension campaign.
accepted our applications to renew our operating We maintain dynamic points of view on
licenses for an additional 20 years at the Vermont external factors such as commodity prices, the
Yankee Nuclear Power Station in Vermont, the regulation of carbon emissions and infrastructure
Pilgrim Nuclear Power Station in Massachusetts constraints in the generation and transmission of
Before ETR and the James A. FitzPatrick Nuclear Power Plant energy. We use our points of view to guide our
in New York. The operating licenses for Vermont hedging strategy for the output of our Northeast
Yankee, Pilgrim and FitzPatrick are currently fleet. Our hedging strategy seeks to balance the
We strive to increase scheduled to expire in 2012, 2012 and 2014, risks and rewards of volatile commodity prices.
our nuclear generation
respectively. In 2006, the NRC renewed the We layer in hedges to avoid the risk of timing
through high capacity
factors to meet the
operating license for the Palisades Nuclear Plant the market but retain the ability to leave up to
ENTERGY CORPORATION AND SUBSIDIARIES
15 percent open during the year. At the end of dozen small nuclear fleet operators exist across the Northeast Nuclear
Fleet Production Costs
2006, 95 percent of our planned generation for United States that have either below industry $ per MWh
2007 was under contract, 85 percent for 2008 and average capacity factors, above average costs,
64 percent for 2009 at average energy prices per regulatory issues or event risk. We remain open to
MWh of $49, $53 and $57, respectively. expanding our portfolio of nuclear businesses in
the future through acquisitions, management
service agreements or other deal structures.
Opportunities to Drive Growth and Create Value
We continue to seek opportunities to grow and We are also preserving our option to participate
create value in our nuclear business. We will strive to in the next generation of new nuclear development.
close the Palisades acquisition in the second quarter Entergy is on track to receive one of the first early
of 2007 and successfully transition the plant into the site permits to be issued by the Nuclear Regulatory
Entergy fleet over the course of 2007. Commission in first quarter 2007, qualifying the
We also believe opportunity exists to further Grand Gulf Nuclear Station near Port Gibson, 2006
expand our fleet. We have grown our fleet from Mississippi, as an acceptable site for a new nuclear
We aspire to operate
five nuclear units eight years ago to 11 units with reactor. We are also pursuing a combined
safe, secure and vital
the pending acquisition of Palisades. In addition, construction and operating license for the new unit resources.We strive to
the service contract under which we operate the at Grand Gulf, as well as our River Bend Station
Cooper Nuclear Station has also contributed to near St. Francisville, Louisiana. Our decision to driven significant
growth in this business. However, while not proceed with any new nuclear development is production costs in
our Northeast fleet.
currently on the market, we believe a number of contingent on achieving the necessary legislative
consolidation opportunities remain in the U.S. and regulatory actions to enable efficient financing
market for nuclear generation. Roughly two and timely cost recovery.
Entergy OSHA VPP Star Sites
We aspire to a work environment that is free of
accidents. We use the OSHA Voluntary Protection
2004 Program as the model for outstanding safety
performance. We have made steady progress under
OSHA VPP. As of year-end 2006, 36 sites had earned
2006 Star status – the highest possible safety rating for an
industrial work site.
Our aspirations are clear and will guide our We aspire to a workforce that performs every job safely
strategies and decision-making in the years ahead. and that reflects the diversity of our communities.
We continue to aspire to a balanced set of financial As diligently as we will work in the years ahead
aspirations, with top-quartile total shareholder toward our aspirations, we will continue to imagine
returns as the overarching aspiration. a world beyond what we can achieve today. An
While we strive to realize our financial aspirations, environment that poses no threat to future
we strive to meet our societal commitments to all our generations. A society where no one suffers in
stakeholders. We aspire to meet our second five-year poverty. A world with unlimited energy and
CO2 stabilization commitment. We aspire to meet unlimited possibilities. Imagine having all that.
the particular needs of our low-income customers. Imagine, then Aspire and Achieve.
C L I MATE C H A N G E :
The Defining Issue
of Our Time
Climate Change: The Defining Issue of Our Time
J. Wayne Leonard
THE SCIENCE IS REAL. THE PROOF IS EVERYWHERE.
Unequivocal Evidence of a Human Role in Climate Change
Richard H. Moss, Ph.D.
Ecosystem Response to Climate Change
Camille Parmesan, Ph.D.
Clean Energy or No More Crawfish, Cher
WE C R EATED TH IS PROB LEM. WE CAN SOLVE IT.
The Defining Economic Opportunity of the 21st Century
A Call for New Approaches, New Technologies
David Victor, Ph.D.
A Post-2012 International Agreement
Our Point of View Is Clear.
We’re Taking the Right Path Forward.
J. Wayne Leonard