a01513.htm

 __________________________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
 
X
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
   
 
For the Quarterly Period Ended March 31, 2013
 
                                              OR
 
TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
 
For the transition period from ____________ to ____________

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

__________________________________________________________________________________________


Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.  Yes þ No o

Indicate by check mark whether the registrants have submitted electronically and posted on Entergy’s corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Securities Exchange Act of 1934.

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

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No þ

Common Stock Outstanding
 
Outstanding at April 30, 2013
Entergy Corporation
($0.01 par value)
178,184,969

Entergy Corporation, Entergy Arkansas, Inc., Entergy Gulf States Louisiana, L.L.C., Entergy Louisiana, LLC, Entergy Mississippi, Inc., Entergy New Orleans, Inc., Entergy Texas, Inc., and System Energy Resources, Inc. separately file this combined Quarterly Report on Form 10-Q.  Information contained herein relating to any individual company is filed by such company on its own behalf.  Each company reports herein only as to itself and makes no other representations whatsoever as to any other company.  This combined Quarterly Report on Form 10-Q supplements and updates the Annual Report on Form 10-K for the calendar year ended December 31, 2012, filed by the individual registrants with the SEC, and should be read in conjunction therewith.



ENTERGY CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
March 31, 2013

 
Page Number
   
iii
v
Entergy Corporation and Subsidiaries
 
1
16
17
18
20
22
23
24
64
Entergy Arkansas, Inc. and Subsidiaries
 
65
71
73
74
76
77
Entergy Gulf States Louisiana, L.L.C.
 
78
85
86
87
88
90
91
Entergy Louisiana, LLC and Subsidiaries
 
92
99
100
101
102
104
105
Entergy Mississippi, Inc.
 
106
111
113
114
116
117


ENTERGY CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
March 31, 2013

 
Page Number
   
Entergy New Orleans, Inc.
 
118
122
123
124
126
127
Entergy Texas, Inc. and Subsidiaries
 
128
132
133
134
136
137
System Energy Resources, Inc.
 
138
141
143
144
146
 
147
147
147
148
151
153




FORWARD-LOOKING INFORMATION

In this combined report and from time to time, Entergy Corporation and the Registrant Subsidiaries each makes statements as a registrant concerning its expectations, beliefs, plans, objectives, goals, strategies, and future events or performance.  Such statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Words such as “may,” “will,” “could,” “project,” “believe,” “anticipate,” “intend,” “expect,” “estimate,” “continue,” “potential,” “plan,” “predict,” “forecast,” and other similar words or expressions are intended to identify forward-looking statements but are not the only means to identify these statements.  Although each of these registrants believes that these forward-looking statements and the underlying assumptions are reasonable, it cannot provide assurance that they will prove correct.  Any forward-looking statement is based on information current as of the date of this combined report and speaks only as of the date on which such statement is made.  Except to the extent required by the federal securities laws, these registrants undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Forward-looking statements involve a number of risks and uncertainties.  There are factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including those factors discussed or incorporated by reference in (a) Item 1A. Risk Factors in the Form 10-K, (b) Management’s Financial Discussion and Analysis in the Form 10-K and in this report, and (c) the following factors (in addition to others described elsewhere in this combined report and in subsequent securities filings):

·  
resolution of pending and future rate cases and negotiations, including various performance-based rate discussions, Entergy’s utility supply plan, and recovery of fuel and purchased power costs;
·  
the termination of Entergy Arkansas’s and Entergy Mississippi’s participation in the System Agreement in December 2013 and November 2015, respectively, and the potential for other Entergy operating companies to terminate participation in the System Agreement by providing notice pursuant to the current 96-month notice period and/or by seeking an amendment to the System Agreement that would allow for an Entergy operating company to terminate its participation in less than 96 months;
·  
regulatory and operating challenges and uncertainties associated with the Utility operating companies’ proposal to move to the MISO RTO;
·  
risks associated with the proposed spin-off and subsequent merger of Entergy’s electric transmission business into a subsidiary of ITC Holdings Corp., including the risk that Entergy and the Utility operating companies may not be able to timely satisfy the conditions or obtain the approvals required to complete such transaction or such approvals may contain material restrictions or conditions, and the risk that if completed, the transaction may not achieve its anticipated results;
·  
changes in utility regulation, including the beginning or end of retail and wholesale competition, the ability to recover net utility assets and other potential stranded costs, and the application of more stringent transmission reliability requirements or market power criteria by the FERC;
·  
changes in regulation of nuclear generating facilities and nuclear materials and fuel, including possible shutdown of nuclear generating facilities, particularly those owned or operated by the Entergy Wholesale Commodities business, and the effects of new or existing safety or environmental concerns regarding nuclear power plants and nuclear fuel;
·  
resolution of pending or future applications, and related regulatory proceedings and litigation, for license renewals or modifications of nuclear generating facilities;
·  
the performance of and deliverability of power from Entergy’s generation resources, including the capacity factors at its nuclear generating facilities;
·  
Entergy’s ability to develop and execute on a point of view regarding future prices of electricity, natural gas, and other energy-related commodities;
·  
prices for power generated by Entergy’s merchant generating facilities and the ability to hedge, meet credit support requirements for hedges, sell power forward, or otherwise reduce the market price risk associated with those facilities, including the Entergy Wholesale Commodities nuclear plants;



FORWARD-LOOKING INFORMATION (Concluded)

·  
the prices and availability of fuel and power Entergy must purchase for its Utility customers, and Entergy’s ability to meet credit support requirements for fuel and power supply contracts;
·  
volatility and changes in markets for electricity, natural gas, uranium, and other energy-related commodities;
·  
changes in law resulting from federal or state energy legislation or legislation subjecting energy derivatives used in hedging and risk management transactions to governmental regulation;
·  
changes in environmental, tax, and other laws, including requirements for reduced emissions of sulfur, nitrogen, carbon, greenhouse gases, mercury, and other regulated air emissions, and changes in costs of compliance with environmental and other laws and regulations;
·  
uncertainty regarding the establishment of interim or permanent sites for spent nuclear fuel and nuclear waste storage and disposal;
·  
variations in weather and the occurrence of hurricanes and other storms and disasters, including uncertainties associated with efforts to remediate the effects of hurricanes, ice storms, or other weather events and the recovery of costs associated with restoration, including accessing funded storm reserves, federal and local cost recovery mechanisms, securitization, and insurance;
·  
effects of climate change;
·  
changes in the quality and availability of water supplies and the related regulation of water use and diversion;
·  
Entergy’s ability to manage its capital projects and operation and maintenance costs;
·  
Entergy’s ability to purchase and sell assets at attractive prices and on other attractive terms;
·  
the economic climate, and particularly economic conditions in Entergy’s Utility service area and the Northeast United States and events that could influence economic conditions in those areas;
·  
the effects of Entergy’s strategies to reduce tax payments;
·  
changes in the financial markets, particularly those affecting the availability of capital and Entergy’s ability to refinance existing debt, execute share repurchase programs, and fund investments and acquisitions;
·  
actions of rating agencies, including changes in the ratings of debt and preferred stock, changes in general corporate ratings, and changes in the rating agencies’ ratings criteria;
·  
changes in inflation and interest rates;
·  
the effect of litigation and government investigations or proceedings;
·  
advances in technology;
·  
the potential effects of threatened or actual terrorism, cyber attacks or data security breaches, including increased security costs, and war or a catastrophic event such as a nuclear accident or a natural gas pipeline explosion;
·  
Entergy’s ability to attract and retain talented management and directors;
·  
changes in accounting standards and corporate governance;
·  
declines in the market prices of marketable securities and resulting funding requirements for Entergy’s defined benefit pension and other postretirement benefit plans;
·  
future wage and employee benefit costs, including changes in discount rates and returns on benefit plan assets;
·  
changes in decommissioning trust fund values or earnings or in the timing of or cost to decommission nuclear plant sites;
·  
the effectiveness of Entergy’s risk management policies and procedures and the ability and willingness of its counterparties to satisfy their financial and performance commitments;
·  
factors that could lead to impairment of long-lived assets; and
·  
the ability to successfully complete merger, acquisition, or divestiture plans, regulatory or other limitations imposed as a result of merger, acquisition, or divestiture, and the success of the business following a merger, acquisition, or divestiture.


DEFINITIONS

Certain abbreviations or acronyms used in the text and notes are defined below:
 
Abbreviation or Acronym
 
 
Term
AFUDC
Allowance for Funds Used During Construction
ALJ
Administrative Law Judge
ANO 1 and 2
Units 1 and 2 of Arkansas Nuclear One (nuclear), owned by Entergy Arkansas
APSC
Arkansas Public Service Commission
ASLB
Atomic Safety and Licensing Board, the board within the NRC that conducts hearings and performs other regulatory functions that the NRC authorizes
ASU
Accounting Standards Update issued by the FASB
Board
Board of Directors of Entergy Corporation
capacity factor
Actual plant output divided by maximum potential plant output for the period
City Council or Council
Council of the City of New Orleans, Louisiana
D.C. Circuit
U.S. Court of Appeals for the District of Columbia Circuit
DOE
United States Department of Energy
Entergy
Entergy Corporation and its direct and indirect subsidiaries
Entergy Corporation
Entergy Corporation, a Delaware corporation
Entergy Gulf States, Inc.
Predecessor company for financial reporting purposes to Entergy Gulf States Louisiana that included the assets and business operations of both Entergy Gulf States Louisiana and Entergy Texas
Entergy Gulf States Louisiana
Entergy Gulf States Louisiana, L.L.C., a company formally created as part of the jurisdictional separation of Entergy Gulf States, Inc. and the successor company to Entergy Gulf States, Inc. for financial reporting purposes.  The term is also used to refer to the Louisiana jurisdictional business of Entergy Gulf States, Inc., as the context requires.
Entergy Texas
Entergy Texas, Inc., a company formally created as part of the jurisdictional separation of Entergy Gulf States, Inc.  The term is also used to refer to the Texas jurisdictional business of Entergy Gulf States, Inc., as the context requires.
Entergy Wholesale
Commodities (EWC)
Entergy’s non-utility business segment primarily comprised of the ownership and operation of six nuclear power plants, the ownership of interests in non-nuclear power plants, and the sale of the electric power produced by those plants to wholesale customers
 
EPA
United States Environmental Protection Agency
ERCOT
Electric Reliability Council of Texas
FASB
Financial Accounting Standards Board
FERC
Federal Energy Regulatory Commission
FitzPatrick
James A. FitzPatrick Nuclear Power Plant (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
Form 10-K
Annual Report on Form 10-K for the calendar year ended December 31, 2012 filed with the SEC by Entergy Corporation and its Registrant Subsidiaries
Grand Gulf
Unit No. 1 of Grand Gulf Nuclear Station (nuclear), 90% owned or leased by System Energy
GWh
Gigawatt-hour(s), which equals one million kilowatt-hours
Independence
Independence Steam Electric Station (coal), owned 16% by Entergy Arkansas, 25% by Entergy Mississippi, and 7% by Entergy Power
Indian Point 2
Unit 2 of Indian Point Energy Center (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
Indian Point 3
Unit 3 of Indian Point Energy Center (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
IRS
Internal Revenue Service
ISO
Independent System Operator


DEFINITIONS (Concluded)

Abbreviation or Acronym
 
Term
kW
Kilowatt, which equals one thousand watts
kWh
Kilowatt-hour(s)
LPSC
Louisiana Public Service Commission
MISO
Midcontinent Independent System Operator, Inc., a regional transmission organization
MMBtu
One million British Thermal Units
MPSC
Mississippi Public Service Commission
MW
Megawatt(s), which equals one thousand kilowatts
MWh
Megawatt-hour(s)
Net debt to net capital ratio
Gross debt less cash and cash equivalents divided by total capitalization less cash and cash equivalents
Net MW in operation
Installed capacity owned and operated
NRC
Nuclear Regulatory Commission
NYPA
New York Power Authority
Palisades
Palisades Power Plant (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
Pilgrim
Pilgrim Nuclear Power Station (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
PPA
Purchased power agreement or power purchase agreement
PUCT
Public Utility Commission of Texas
Registrant Subsidiaries
Entergy Arkansas, Inc., Entergy Gulf States Louisiana, L.L.C., Entergy Louisiana, LLC, Entergy Mississippi, Inc., Entergy New Orleans, Inc., Entergy Texas, Inc., and System Energy Resources, Inc.
River Bend
River Bend Station (nuclear), owned by Entergy Gulf States Louisiana
RTO
Regional transmission organization
SEC
Securities and Exchange Commission
SMEPA
South Mississippi Electric Power Association, which owns a 10% interest in Grand Gulf
System Agreement
Agreement, effective January 1, 1983, as modified, among the Utility operating companies relating to the sharing of generating capacity and other power resources
System Energy
System Energy Resources, Inc.
TWh
Terawatt-hour(s), which equals one billion kilowatt-hours
Unit Power Sales Agreement
Agreement, dated as of June 10, 1982, as amended and approved by FERC, among Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, relating to the sale of capacity and energy from System Energy’s share of Grand Gulf
Utility
Entergy’s business segment that generates, transmits, distributes, and sells electric power, with a small amount of natural gas distribution
Utility operating companies
Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas
Vermont Yankee
Vermont Yankee Nuclear Power Station (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
Waterford 3
Unit No. 3 (nuclear) of the Waterford Steam Electric Station, 100% owned or leased by Entergy Louisiana
weather-adjusted usage
Electric usage excluding the effects of deviations from normal weather






ENTERGY CORPORATION AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS


Entergy operates primarily through two business segments: Utility and Entergy Wholesale Commodities.

·  
The Utility business segment includes the generation, transmission, distribution, and sale of electric power in portions of Arkansas, Mississippi, Texas, and Louisiana, including the City of New Orleans; and operates a small natural gas distribution business.  As discussed in more detail in “Plan to Spin Off the Utility’s Transmission Business,” in the Form 10-K, in December 2011, Entergy entered into an agreement to spin off its transmission business and merge it with a newly-formed subsidiary of ITC Holdings Corp.
·  
The Entergy Wholesale Commodities business segment includes the ownership and operation of six nuclear power plants located in the northern United States and the sale of the electric power produced by those plants to wholesale customers.  This business also provides services to other nuclear power plant owners.  Entergy Wholesale Commodities also owns interests in non-nuclear power plants that sell the electric power produced by those plants to wholesale customers.

Results of Operations

Following are income statement variances for Utility, Entergy Wholesale Commodities, Parent & Other, and Entergy comparing the first quarter 2013 to the first quarter 2012 showing how much the line item increased or (decreased) in comparison to the prior period:

   
 
Utility
   
Entergy
Wholesale
Commodities
   
Parent &
Other (a)
   
 
Entergy
 
   
(In Thousands)
 
                         
1st Quarter 2012 Consolidated Net Income (Loss)
  $ 67,212     $ (175,949 )   $ (38,003 )   $ (146,740 )
                                 
Net revenue (operating revenue less fuel
  expense, purchased power, and other
  regulatory charges/credits)
      117,644         41,426         1,553         160,623  
Other operation and maintenance expenses
    29,529       (1,400 )     4,494       32,623  
Asset impairment
    -       (355,524 )     -       (355,524 )
Taxes other than income taxes
    10,964       2,978       (17 )     13,925  
Depreciation and amortization
    22,445       (1,829 )     45       20,661  
Other income
    (12,253 )     1,170       1,208       (9,875 )
Interest expense
    6,792       (3,136 )     6,951       10,607  
Other expenses
    3,670       (5,633 )     (1 )     (1,964 )
Income taxes
    (28,632 )     149,077       (3,747 )     116,698  
                                 
1st Quarter 2013 Consolidated Net Income (Loss)
  $ 127,835     $ 82,114     $ (42,967 )   $ 166,982  

(a)
Parent & Other includes eliminations, which are primarily intersegment activity.

Refer to "ENTERGY CORPORATION AND SUBSIDIARIES - SELECTED OPERATING RESULTS" for further information with respect to operating statistics.

In the fourth quarter 2012, Entergy moved two subsidiaries from Parent & Other to the Entergy Wholesale Commodities segment to improve the alignment of certain intercompany items and income tax activity.  The prior period financial information in this Form 10-Q has been restated to reflect this change.

 
1

Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis



As discussed in more detail in Note 11 to the financial statements, first quarter 2012 results of operations include a $355.5 million ($223.5 million after-tax) impairment charge to write down the carrying values of Vermont Yankee and related assets to their fair values.

Net Revenue

Utility

Following is an analysis of the change in net revenue comparing the first quarter 2013 to the first quarter 2012.

  
 
Amount
 
  
 
(In Millions)
 
       
2012 net revenue
  $ 1,106  
Retail electric price
    61  
Grand Gulf recovery
    33  
Volume/weather
    19  
Other
    4  
2013 net revenue
  $ 1,223  

The retail electric price variance is primarily due to:

·  
the recovery of Hinds plant costs through the power management rider at Entergy Mississippi, as approved by the MPSC, effective with the first billing cycle of 2013.  The net income effect of the Hinds plant cost recovery is limited to a portion representing an allowed return on equity on the net plant investment with the remainder offset by the Hinds plant costs in other operation and maintenance expenses, depreciation expenses, and taxes other than income taxes;
·  
an increase in the capacity acquisition rider at Entergy Arkansas, as approved by the APSC, effective with the first billing cycle of December 2012, relating to the Hot Spring plant acquisition.  The net income effect of the Hot Spring plant cost recovery is limited to a portion representing an allowed return on equity on the net plant investment with the remainder offset by the Hot Spring plant costs in other operation and maintenance expenses, depreciation expenses, and taxes other than income taxes;
·  
an increase in the energy efficiency rider, as approved by the APSC, effective July 2012.  Energy efficiency revenues are offset by costs included in other operation and maintenance expenses and have no effect on net income;
·  
a formula rate plan increase at Entergy Louisiana, effective January 2013, which includes an increase relating to the Waterford 3 steam generator replacement project, which was placed in service in December 2012.  The net income effect of the formula rate plan increase is limited to a portion representing an allowed return on equity with the remainder offset by costs included in other operation and maintenance expenses, depreciation expenses, and taxes other than income taxes; and
·  
an annual base rate increase at Entergy Texas, effective July 2012, as a result of the PUCT’s order in the December 2011 rate case that was issued in September 2012.

See Note 2 to the financial statements herein and in the Form 10-K for a discussion of rate proceedings.

                The Grand Gulf recovery variance is primarily due to increased recovery of higher costs resulting from the Grand Gulf uprate.

The volume/weather variance is primarily due to the effect of more favorable weather, primarily on residential sales, in the first quarter 2013 compared to the same period in the prior year.

 
2

Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis



Entergy Wholesale Commodities

Following is an analysis of the change in net revenue comparing the first quarter 2013 to the first quarter 2012.

  
 
Amount
 
  
 
(In Millions)
 
       
2012 net revenue
  $ 452  
Nuclear realized price changes
    66  
Nuclear volume
    (25 )
2013 net revenue
  $ 493  

As shown in the table above, net revenue for Entergy Wholesale Commodities increased by $41 million in the first quarter 2013 compared to the first quarter 2012 primarily due to higher energy and capacity prices partially offset by lower volume in its nuclear fleet resulting from more unplanned and refueling outage days in 2013 compared to the same period in 2012.

Following are key performance measures for Entergy Wholesale Commodities for the first quarter 2013 and 2012:

   
2013
 
2012
         
Owned capacity
 
6,612
 
6,612
GWh billed
 
10,387
 
11,281
Average realized revenue per MWh
 
$58.66
 
$49.29
         
Entergy Wholesale Commodities Nuclear Fleet
Capacity factor
 
83%
 
88%
GWh billed
 
9,246
 
9,838
Average realized revenue per MWh
 
$57.82
 
$50.32
Refueling Outage Days:
       
Indian Point 2
 
-
 
27
Indian Point 3
 
28
 
-
Vermont Yankee
 
22
 
-

Realized Revenue per MWh Trend for Entergy Wholesale Commodities Nuclear Plants

The economic downturn and negative trends in the energy commodity markets have resulted over the past few years in lower natural gas prices and lower market prices for electricity in the New York and New England power regions, which is where five of the six Entergy Wholesale Commodities nuclear power plants are located.  Entergy Wholesale Commodities’ nuclear business experienced a decrease in realized price per MWh to $50.29 in 2012 from $54.73 in 2011 and $59.16 in 2010.  As shown in the contracted sale of energy table in “Market and Credit Risk Sensitive Instruments,” Entergy Wholesale Commodities has sold forward 84% of its planned nuclear energy output for the remainder of 2013 for an expected average contracted energy price of $45 per MWh based on market prices at March 31, 2013.  In addition, Entergy Wholesale Commodities has sold forward 76% of its planned nuclear energy output for 2014 for an expected average contracted energy price of $47 per MWh based on market prices at March 31, 2013.  These near-term price trends present a challenging economic situation for the Entergy Wholesale Commodities plants.  The challenge is greater for some of these plants based on a variety of factors such as their market for both energy and capacity, their size, their contracted positions, and the investment required to maintain the safety and integrity of the plants.  If, in the future, economic conditions or regulatory activity no longer support the continued operation of a plant it could adversely affect Entergy’s
 
 
3

Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis


results of operations through impairment charges, increased depreciation rates, transitional costs, or accelerated decommissioning costs.  Impairment of long-lived assets and nuclear decommissioning costs, and the factors that influence these items, are both discussed in detail in the Form 10-K in “Critical Accounting Estimates.”  See also the discussion below in “Entergy Wholesale Commodities Authorizations to Operate Its Nuclear Power Plants” regarding Entergy Wholesale Commodities nuclear plant operating license and related activity.

Other Income Statement Items

Utility

Other operation and maintenance expenses increased from $490 million for the first quarter 2012 to $520 million for the first quarter 2013 primarily due to:

·  
an increase of $16 million in compensation and benefits costs primarily due to a decrease in the discount rates used to determine net periodic pension and other postretirement benefit costs.  See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – Critical Accounting Estimates" in the Form 10-K and Note 6 to the financial statements herein for further discussion of benefits costs;
·  
an increase of $9 million in nuclear expenses, primarily due to higher labor costs, including higher contract labor;
·  
an increase of $7 million in fossil-fueled generation expenses primarily due to the acquisition of the Hot Spring plant by Entergy Arkansas and the Hinds plant by Entergy Mississippi in November 2012.  Costs related to the Hot Spring and Hinds plants are recovered through the capacity acquisition rider and power management rider, respectively, as previously discussed; and
·  
an increase of $5 million in energy efficiency costs at Entergy Arkansas.  These costs are recovered through the energy efficiency rider and have no effect on net income.

Taxes other than income taxes increased primarily due to an increase in ad valorem taxes resulting from a higher 2013 assessment as compared to 2012 as well as an increase in local franchise taxes resulting from higher residential and commercial revenues as compared with prior year.

Depreciation and amortization expenses increased primarily due to additions to plant in service, including the Hot Spring and Hinds plant acquisitions in 2012 and the completion of the Waterford 3 steam generator replacement project and the Grand Gulf uprate project in 2012.  Also contributing to the increase is an increase in depreciation rates as a result of the rate order approved by the PUCT in September 2012.

Other income decreased primarily due to a decrease in AFUDC accrued on projects under construction resulting from the completion of the Grand Gulf uprate project and Waterford 3 steam generator replacement project in 2012.

Entergy Wholesale Commodities

           The asset impairment variance is due to a $355.5 million ($223.5 million after-tax) impairment charge recorded in first quarter 2012 to write down the carrying values of Vermont Yankee and related assets to their fair values.  See Note 11 to the financial statements for further discussion of this charge.

Income Taxes

The effective income tax rate for the first quarter 2013 was 41.1%. The difference in the effective income tax rate for the first quarter 2013 versus the statutory rate of 35% is due to state income taxes, the provision for uncertain tax positions, and certain book and tax differences related to utility plant items, partially offset by book and tax differences related to the allowance for equity funds used during construction.

The effective income tax rate for the first quarter 2012 was 0.11%.  The difference in the effective income tax rate for the first quarter 2012 versus the statutory rate of 35% was primarily because the expected tax benefit of the pre-tax loss that Entergy incurred in the first quarter 2012 was partially offset by the write-off of a portion of the regulatory asset for income taxes that is discussed in Note 2 to the financial statements in the Form 10-K.
 
 
4

Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis


Plan to Spin Off the Utility’s Transmission Business

See the Form 10-K for a discussion of Entergy’s plan to spin off its transmission business and merge it with a newly formed subsidiary of ITC Holdings Corp.  Following are updates to that discussion.

Filings with Retail Regulators

See the Form 10-K for a discussion of the applications that each of the Utility operating companies has filed with their respective retail regulators seeking approval for the proposal to spin off and merge the transmission business with ITC.  On April 18, 2013, the Public Service Commission of Missouri consolidated for purposes of a hearing in June 2013 Entergy Arkansas’s separate MISO case that is related to Entergy Arkansas’s notice of its intent to integrate into MISO with the Entergy and ITC case that is related to the proposal to spin off and merge the transmission business with ITC.

In April 2013, the LPSC staff, APSC staff, and other parties filed testimony in the proceedings pending at the LPSC and APSC, respectively, identifying concerns with the proposed transaction and concluding that the transaction in its current form does not satisfy the applicable criteria for approval.  The LPSC staff testimony also included a comprehensive set of conditions should the LPSC determine that the transaction is in the public interest.  Conditions were also recommended by the Arkansas Attorney General should the APSC consider approving the transaction.  Intervening parties previously filed testimony in the City Council and MPSC proceedings.  The PUCT staff and the City Council advisors are scheduled to file testimony in May 2013, and staff testimony in the MPSC proceeding is scheduled for June 2013.  Hearings are scheduled for May 2013 in the PUCT proceeding, July 2013 in the APSC, LPSC, and City Council proceedings, and August 2013 in the MPSC proceeding.

Filings with the FERC

See the Form 10-K for a discussion of the series of filings with the FERC made by Entergy, ITC, and certain of their subsidiaries to obtain regulatory approvals related to the proposed transfer to ITC subsidiaries of the transmission assets owned by the Utility operating companies.  In February 2013, Entergy and ITC filed a response to various comments and protests regarding the joint application filed with the FERC.  The response argued, among other things, that the proposed transaction is consistent with the public interest, that the proposed rates for the ITC Midsouth Operating Companies are just and reasonable, and that there is no need for a hearing in the proceeding.  On March 22, 2013, the FERC issued an order concluding that, based on the two comment period extensions granted at the request of state and retail regulators, further consideration is required to determine whether the proposed transaction meets the standards of Federal Power Act section 203.   The FERC therefore extended the time to act on the joint application for an additional 180 days, until September 18, 2013.

Entergy Wholesale Commodities Authorizations to Operate Its Nuclear Power Plants

See the Form 10-K for a discussion of the NRC operating licenses for Indian Point 2 and Indian Point 3 and the NRC license renewal applications in process for these plants.

The New York State Department of Environmental Conservation (NYSDEC) has taken the position that Indian Point must obtain a new state-issued Clean Water Act Section 401 water quality certification as part of the license renewal process.  Entergy submitted its application for a water quality certification to the NYSDEC in April 2009, with a reservation of rights regarding the applicability of Section 401 in this case.  After Entergy submitted certain additional information in response to NYSDEC requests for additional information, in February 2010 the NYSDEC staff determined that Entergy’s water quality certification application was complete.  In April 2010 the NYSDEC staff issued a proposed notice of denial of Entergy’s water quality certification application (the Notice).  NYSDEC staff’s Notice triggered an administrative adjudicatory hearing before NYSDEC ALJs on the proposed Notice.  The NYSDEC staff decision does not restrict Indian Point operations, but the issuance of a certification is potentially required prior to NRC issuance of renewed unit licenses.  In June 2011, Entergy filed notice with the NRC that the NYSDEC, the agency that would issue or deny a water quality certification for the Indian Point license renewal process, has taken longer than one year to take final
 
 
 
5

Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis


action on Entergy’s application for a water quality certification and, therefore, has waived its opportunity to require a certification under the provisions of Section 401 of the Clean Water Act.  The NYSDEC has notified the NRC that it disagrees with Entergy’s position and does not believe that it has waived the right to require a certification.  The NYSDEC ALJs overseeing the agency’s certification adjudicatory process stated in a ruling issued in July 2011 that while the waiver issue is pending before the NRC, the NYSDEC hearing process will continue on selected issues.  The judges held a Legislative Hearing (agency public comment session) and an Issues Conference (pre-trial conference) in July 2010.  Issue-by-issue hearings before the NYSDEC ALJs began in October 2011 and are expected to continue, on an episodic basis, through the end of 2013 and perhaps longer.    After hearings and briefing on all issues, the ALJs will issue a recommended decision to the Commissioner or his delegate, who will then issue the final agency decision.  A party to the proceeding can appeal the decision of the Commissioner to state court.

In addition, the consistency of Indian Point’s operations with New York State’s coastal management policies must be resolved to the extent required by the Coastal Zone Management Act (CZMA).  Entergy has undertaken three independent initiatives to resolve CZMA issues.  First, on July 24, 2012, Entergy filed a supplement to the Indian Point license renewal application currently pending before the NRC.  The supplement states that, based on applicable federal law and in light of prior reviews by the State of New York, the NRC may issue the requested renewed operating licenses for Indian Point without the need for an additional consistency review by the State of New York under the CZMA.  On July 30, 2012, Entergy filed a motion for declaratory order with the ASLB seeking confirmation of its position that no further CZMA consistency determination is required before the NRC may issue renewed licenses.  On April 5, 2013, the State of New York and Riverkeeper filed answers opposing Entergy’s motion.  The State of New York also filed a cross-motion for declaratory order seeking confirmation that Indian Point had not been previously reviewed, and that only the New York State Department of State (NYSDOS) could conduct a CZMA review for NRC license renewal purposes.  On April 15, 2013, the NRC Staff filed answers recommending the ASLB deny both Entergy’s and the State of New York’s motions for declaratory order.  Entergy intends to file an answer to the State of New York’s cross-motion for declaratory order and a reply to the answers of the State of New York and Riverkeeper to Entergy’s motion for declaratory order.  It is uncertain when the ASLB will act on the motions.

Second, Entergy filed with the NYSDOS on November 7, 2012 a petition for declaratory order that Indian Point is grandfathered under either of two criteria prescribed by the New York Coastal Management Program (NYCMP), which sets forth the state coastal policies applied in a CZMA consistency review.   NYSDOS denied the motion by order dated January 9, 2013.  Entergy filed a petition for judicial review of NYSDOS’s decision with the New York State Supreme Court for Albany County on March 13, 2013.  NYSDOS’s opposition (which is expected to be jointly filed with that of NYSDEC, a co-respondent) is due May 10, 2013.  Entergy’s reply is due June 7, 2013.  It is uncertain when the court will act on the petition for review.  The losing party may file an appeal as of right with the next level state appellate court.

Third, on December 17, 2012, Entergy filed with NYSDOS a consistency determination explaining why Indian Point satisfies all applicable NYCMP policies.  Entergy included in the consistency determination a “reservation of rights” clarifying that Entergy does not concede NYSDOS’s right to conduct a new CZMA review for Indian Point.  On January 16, 2013, NYSDOS notified Entergy that it deemed the consistency determination incomplete because it does not include the further supplement to the Final Supplemental Environmental Impact Statement that is targeted for issuance by May 10, 2013.  The six-month federal deadline for state decision on a consistency determination does not begin to run until the submission is complete.

ANO Damage and Outage

On March 31, 2013, during a scheduled refueling outage at ANO 1, a contractor-owned and operated heavy-lifting apparatus collapsed while moving the generator stator out of the turbine building.  The collapse resulted in the death of an ironworker and injuries to several other contract workers, caused ANO 2 to shut down, and damaged the ANO turbine building.  The turbine building serves both ANO 1 and 2 and is a non-radiological area of the plant.  Entergy is still analyzing the incident; the extent of the damage; the cost of assessment, debris removal, and replacing damaged property and equipment; and the schedule for restoring ANO 1 to service, but was able to restart ANO 2 on April 28, 2013.  In addition, Entergy Arkansas incurred replacement power costs for ANO 2 power during its outage and expects to incur incremental replacement power costs for ANO 1 power to the extent its outage extends beyond the originally-planned duration of the refueling outage.  Each of the Utility operating companies has recovery mechanisms in place designed to recover its prudently-incurred fuel and purchased power costs.
 
 
6

Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis



Entergy Arkansas is assessing its options for recovering damages that resulted from the stator drop, including its insurance coverage.  Entergy is a member of Nuclear Electric Insurance Limited (NEIL), a mutual insurance company that provides property damage coverage to the members’ nuclear generating plants, including ANO.  NEIL has notified Entergy that it believes that a $50 million course of construction sublimit applies to any loss associated with the lifting apparatus failure and stator drop at ANO.  Entergy has responded that it disagrees with NEIL's position and is evaluating its options for enforcing its rights under the policy.

Liquidity and Capital Resources

See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources" in the Form 10-K for a discussion of Entergy’s capital structure, capital expenditure plans and other uses of capital, and sources of capital.  Following are updates to that discussion.

Capital Structure

Entergy’s capitalization is balanced between equity and debt, as shown in the following table.

   
March 31,
2013
 
December 31,
2012
         
Debt to capital
 
58.7% 
 
58.7% 
Effect of excluding the securitization bonds
 
(1.8%)
 
(1.8%)
Debt to capital, excluding securitization bonds (a)
 
56.9% 
 
56.9% 
Effect of subtracting cash
 
(0.6%)
 
(1.1%)
Net debt to net capital, excluding securitization bonds (a)
 
56.3% 
 
55.8% 

(a)
Calculation excludes the Arkansas, Louisiana, and Texas securitization bonds, which are non-recourse to Entergy Arkansas, Entergy Louisiana, and Entergy Texas, respectively.

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

Entergy Corporation has in place a credit facility that has a borrowing capacity of $3.5 billion and expires in March 2018.  Entergy Corporation has the ability to issue letters of credit against 50% of the total borrowing capacity of the facility.  Following is a summary of the borrowings outstanding and capacity available under the facility as of March 31, 2013.

 
Capacity (a)
 
 
Borrowings
 
Letters
of Credit
 
Capacity
Available
(In Millions)
             
$3,500
 
$570
 
$8
 
$2,922

(a)
The capacity decreases to $3,490 million in March 2017.

A covenant in Entergy Corporation’s credit facility requires Entergy to maintain a consolidated debt ratio of 65% or less of its total capitalization.  The calculation of this debt ratio under Entergy Corporation’s credit facility is different than the calculation of the debt to capital ratio above.  Entergy is currently in compliance with the covenant.  If Entergy fails to meet this ratio, or if Entergy or one of the Utility operating companies (except Entergy New Orleans) defaults on other indebtedness or is in bankruptcy or insolvency proceedings, an acceleration of the facility’s maturity date may occur.  See Note 4 to the financial statements for additional discussion of the Entergy Corporation credit facility and discussion of the Registrant Subsidiaries’ credit facilities.
 
 
 
7

Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis


See Note 4 to the financial statements for additional discussion of the Entergy Corporation commercial paper program.  As of March 31, 2013, Entergy Corporation had $883.7 million of commercial paper outstanding.

Capital Expenditure Plans and Other Uses of Capital

See the table and discussion in the Form 10-K under "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Capital Expenditure Plans and Other Uses of Capital," that sets forth the amounts of planned construction and other capital investments by operating segment for 2013 through 2015.  As discussed in the Form 10-K, the planned amounts disclosed in the Form 10-K do not include costs for the capital projects that might result from the NRC’s post-Fukushima requirements.  The current preliminary cost estimate (including both capital and operation and maintenance expense) to implement the post-Fukushima requirements is approximately $240 million for Utility and approximately $260 million for Entergy Wholesale Commodities.  These costs are expected to be incurred over the 2012 through 2018 time period, and do not include any amounts for filtered vents, for which the NRC initiated a rulemaking in first quarter 2013.  Also, Entergy now expects a delay in the spending associated with potential wedgewire screens at the Indian Point site from the timing reflected in the amounts in the table in the Form 10-K.

Dividends

Declarations of dividends on Entergy’s common stock are made at the discretion of the Board.  Among other things, the Board evaluates the level of Entergy’s common stock dividends based upon Entergy’s earnings, financial strength, and future investment opportunities.  At its April 2013 meeting, the Board declared a dividend of $0.83 per share, which is the same quarterly dividend per share that Entergy has paid since second quarter 2010.

Cash Flow Activity

As shown in Entergy’s Consolidated Statements of Cash Flows, cash flows for the three months ended March 31, 2013 and 2012 were as follows:

   
2013
   
2012
 
   
(In Millions)
 
             
Cash and cash equivalents at beginning of period
  $ 533     $ 694  
                 
Cash flow provided by (used in):
               
Operating activities
    544       601  
Investing activities
    (661 )     (749 )
Financing activities
    (153 )     139  
Net decrease in cash and cash equivalents
    (270 )     (9 )
                 
Cash and cash equivalents at end of period
  $ 263     $ 685  

Operating Activities

Net cash provided by operating activities decreased by $57 million for the three months ended March 31, 2013 compared to the three months ended March 31, 2012 primarily due to:

·  
higher deferred fuel refunds in 2013 compared to the same period in prior year;
·  
approximately $31 million in storm restoration spending in 2013 resulting from the Arkansas December 2012 Winter storm and Hurricane Isaac; and
·  
an increase of $21 million in spending on nuclear refueling outages in 2013 compared to the same period in prior year.
 
 
8

Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis


These decreases in cash flow were partially offset by:

·  
a decrease of $24 million in income tax payments;
·  
a decrease of $36 million in pension contributions.  See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – Critical Accounting Estimates" in the Form 10-K and Note 6 to the financial statements herein for a discussion of qualified pension and other postretirement benefits funding; and
·  
the increase in Entergy Wholesale Commodities net revenue that is discussed previously.

Investing Activities

Net cash used in investing activities decreased by $88 million for the three months ended March 31, 2013 compared to the three months ended March 31, 2012 primarily due to:

·  
the withdrawal of a total of $252 million from Entergy Gulf States Louisiana’s and Entergy Louisiana’s storm reserve escrow accounts in 2013 after Hurricane Isaac.  See Note 2 to the financial statements herein and in the Form 10-K for a discussion of Hurricane Isaac; and
·  
a decrease in nuclear fuel purchases because of variations from year to year in the timing and pricing of fuel reload requirements, material and services deliveries, and the timing of cash payments during the nuclear fuel cycle.

These decreases were partially offset by an increase in construction expenditures, primarily in the Utility business, resulting from an increase of approximately $62 million in storm restoration spending in 2013 resulting from the Arkansas December 2012 Winter storm and Hurricane Isaac and approximately $51 million in spending on the Ninemile 6 self-build project, partially offset by spending in 2012 on the uprate project at Grand Gulf.

Financing Activities

Entergy’s financing activities used $153 million of cash for the three months ended March 31, 2013 compared to providing $139 million of cash for the three months ended March 31, 2012 primarily due to:

·  
long-term debt activity using approximately $285 million of cash in 2013 compared to providing $175 million of cash in 2012.  Included in the long-term debt activity in 2013 is $225 million repayment of borrowings on the Entergy Corporation long-term credit facility.  Entergy Corporation issued $219 million of commercial paper in 2013 to repay borrowings on its long-term credit facility;
·  
$51 million in proceeds from the sale to a third party in 2012 of a portion of Entergy Gulf States Louisiana’s investment in Entergy Holdings Company’s Class A preferred membership interests; and
·  
a decrease of $25 million in treasury stock issuances in 2013 compared to the same period in 2012.

For details of Entergy's commercial paper program, the nuclear fuel company variable interest entities’ short-term borrowings, and long-term debt activity in 2013 see Note 4 to the financial statements herein.

Rate, Cost-recovery, and Other Regulation

See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Rate, Cost-recovery, and Other Regulation" in the Form 10-K for discussions of rate regulation, federal regulation, and related regulatory proceedings.
 
State and Local Rate Regulation and Fuel-Cost Recovery

See Note 2 to the financial statements herein for updates to the discussion in the Form 10-K regarding these proceedings.
 
 
 
9

Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis


Federal Regulation

See the Form 10-K for a discussion of federal regulatory proceedings.  Following are updates to that discussion.

System Agreement

Utility Operating Company Notices of Termination of System Agreement Participation

As discussed in the Form 10-K, in November 2012 the Utility operating companies filed amendments to the System Agreement with the FERC pursuant to section 205 of the Federal Power Act.  The LPSC, MPSC, PUCT, and City Council filed protests at the FERC regarding the amendments and other aspects of the Utility operating companies’ future operating arrangements, including requests that the continued viability of the System Agreement in MISO (among other issues) be set for hearing by the FERC.  On March 12, 2013, the Utility operating companies filed an answer to the protests.  The answer proposed, among other things, that: (1) the FERC allow the System Agreement revisions to go into effect as of December 19, 2013, without a hearing and for an initial two-year transition period; (2) no later than October 18, 2013, Entergy Services submit a filing pursuant to section 205 of the Federal Power Act that provides Entergy Texas’s notice of cancellation to terminate participation in the System Agreement and responds to the PUCT’s position that Entergy Texas be allowed to terminate its participation prior to the end of the mandatory 96-month notice period; and (3) at least six months prior to the end of the two-year transition period, Entergy Services submits an additional filing under section 205 of the Federal Power Act that addresses the allocation of MISO charges and credits among the Utility operating companies that remain in the System Agreement.  Prior to the filing to be made no later than October 18, 2013, Entergy Services, Entergy Texas, and Entergy will exercise reasonable best efforts to engage the Utility operating companies and their retail regulators in searching for a consensual means of allowing Entergy Texas to exit the System Agreement prior to the end of the mandatory 96-month notice period.  If a consensual resolution is reached on such early termination, the filing will reflect such a resolution.  The matter remains pending at the FERC.

Entergy’s Proposal to Join MISO

See the Form 10-K for a discussion of the Utility operating companies’ proposal to join MISO.  Following are updates to that discussion.

On April 8, 2013, the APSC issued an order resolving the outstanding issues in Entergy Arkansas’s change of control docket and granted Entergy Arkansas’s application subject to the conditions set forth in the APSC’s October 2012 order.  On April 18, 2013, the Public Service Commission of Missouri consolidated for purposes of a hearing in June 2013 Entergy Arkansas’s separate MISO case that is related to Entergy Arkansas’s notice of its intent to integrate into MISO with the Entergy and ITC case that is related to the proposal to spin off and merge the transmission business with ITC.

On April 3, 2013, the PUCT staff filed a study performed by its independent consultant assessing Entergy Texas’s January 2013 updated analysis of the effect of termination of certain power purchase agreements on Entergy Texas’s costs upon Entergy Texas’s exit from the System Agreement.  While the independent consultant study concluded that the adjustments made in Entergy Texas’s updated analysis were analytically correct, the consultant also recommended further study regarding the effect of the termination of the power purchase agreements on the benefits associated with Entergy Texas joining MISO.  On April 5, 2013, Entergy Texas filed a response to the consultant study, noting a number of errors in the analysis and recommending against any further study of this matter.

On March 28, 2013, the FERC issued an order conditionally accepting MISO’s proposed tariff changes related to the allocation of long-term transmission rights and auction revenue rights, subject to a further compliance filing.  The amendments are intended to address the anticipated integration of the Utility operating companies, as well as other load-serving entities and transmission-owning utilities, into the MISO region.
 
 
10

Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis


FERC Reliability Standards Investigation

On March 19, 2013, the FERC issued an order approving a settlement between Entergy Services and the FERC Enforcement Staff (the Staff) arising from the Staff’s November 20, 2012 “Notice of Alleged Violations” which stated that the Staff had concluded that Entergy Services’s practices in certain areas violated various requirements of the North American Electric Reliability Corporation reliability standards.  Under the terms of the settlement, Entergy Services neither admits nor denies the alleged violations, but agrees to pay a civil penalty of $975,000 and undertake certain mitigation activities agreed to during discussions with Staff.

Market and Credit Risk Sensitive Instruments

Commodity Price Risk

Power Generation

As a wholesale generator, Entergy Wholesale Commodities’ core business is selling energy, measured in MWh, to its customers.  Entergy Wholesale Commodities enters into forward contracts with its customers and sells energy in the day ahead or spot markets.  In addition to selling the energy produced by its plants, Entergy Wholesale Commodities sells unforced capacity, which allows load-serving entities to meet specified reserve and related requirements placed on them by the ISOs in their respective areas.  Entergy Wholesale Commodities’ forward physical power contracts consist of contracts to sell energy only, contracts to sell capacity only, and bundled contracts in which it sells both capacity and energy.  While the terminology and payment mechanics vary in these contracts, each of these types of contracts requires Entergy Wholesale Commodities to deliver MWh of energy, make capacity available, or both.  In addition to its forward physical power contracts, Entergy Wholesale Commodities also uses a combination of financial contracts, including swaps, collars, put and/or call options, to manage forward commodity price risk.  Certain hedge volumes have price downside and upside relative to market price movement.  The contracted minimum, expected value, and sensitivity are provided to show potential variations.  While the sensitivity reflects the minimum, it does not reflect the total maximum upside potential from higher market prices.  The information contained in the table below represents projections at a point in time and will vary over time based on numerous factors, such as future market prices, contracting activities, and generation.  Following is a summary of Entergy Wholesale Commodities’ current forward capacity and generation contracts as well as total revenue projections based on market prices as of March 31, 2013 (2013 represents the remainder of the year).


 
11

Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis



Entergy Wholesale Commodities Nuclear Portfolio

   
2013
 
2014
 
2015
 
2016
 
2017
                     
Energy
                   
Percent of planned generation under contract (a):
                   
Unit-contingent (b)
 
41%
 
22%
 
12%
 
12%
 
13%
Unit-contingent with availability guarantees (c)
 
20%
 
15%
 
 13%
 
 13%
 
 13%
Firm LD (d)
 
23%
 
58%
 
14%
 
-%
 
-%
Offsetting positions (e)
 
-%
 
(19)%
 
-%
 
-%
 
-%
Total
 
84%
 
76%
 
39%
 
25%
 
26%
Planned generation (TWh) (f) (g)
 
31
 
41
 
41
 
40
 
41
Average revenue per MWh on contracted volumes:
                   
Minimum
 
$44
 
$44
 
$45
 
$50
 
$51
Expected based on market prices as of March 31, 2013
 
$45
 
$47
 
$48
 
$51
 
$52
Sensitivity: -/+ $10 per MWh market price change
 
$44-$48
 
$44-$51
 
$45-$54
 
$50-$54
 
$51-$55
                     
Capacity
                   
Percent of capacity sold forward (h):
                   
Bundled capacity and energy contracts (i)
 
16%
 
16%
 
16%
 
16%
 
16%
Capacity contracts (j)
 
35%
 
17%
 
 12%
 
 18%
 
 9%
Total
 
51%
 
33%
 
28%
 
34%
 
25%
Planned net MW in operation (g) (k)
 
5,011
 
5,011
 
5,011
 
5,011
 
5,011
Average revenue under contract per kW per month
(applies to capacity contracts only)
 
$2.0
 
$2.4
 
$3.3
 
$3.2
 
$3.2
                     
Total Nuclear Energy and Capacity Revenues
                   
Expected sold and market total revenue per MWh
 
$48
 
$47
 
$47
 
$49
 
$51
Sensitivity: -/+ $10 per MWh market price change
 
$46-$53
 
$44-$53
 
$40-$55
 
$42-$57
 
$43-$58

Entergy Wholesale Commodities Non-Nuclear Portfolio

   
2013
 
2014
 
2015
 
2016
 
2017
                     
Energy
                   
Percent of planned generation under contract (a):
                   
Cost-based contracts (l)
 
35%
 
32%
 
35%
 
32%
 
32%
Firm LD (d)
 
6%
 
6%
 
6%
 
6%
 
6%
Total
 
41%
 
38%
 
41%
 
38%
 
38%
Planned generation (TWh) (f) (m)
 
5
 
6
 
6
 
6
 
6
                     
Capacity
                   
Percent of capacity sold forward (h):
                   
Cost-based contracts (l)
 
30%
 
24%
 
24%
 
24%
 
26%
Bundled capacity and energy contracts (i)
 
9%
 
8%
 
 8%
 
 8%
 
 8%
Capacity contracts (j)
 
45%
 
50%
 
48%
 
47%
 
21%
Total
 
84%
 
82%
 
80%
 
79%
 
55%
Planned net MW in operation (k) (m)
 
1,052
 
1,052
 
1,052
 
1,052
 
977


 
12

Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis




(a)
Percent of planned generation output sold or purchased forward under contracts, forward physical contracts, forward financial contracts, or options that mitigate price uncertainty that may require regulatory approval or approval of transmission rights.
(b)
Transaction under which power is supplied from a specific generation asset; if the asset is not operating, seller is generally not liable to buyer for any damages.
(c)
A sale of power on a unit-contingent basis coupled with a guarantee of availability provides for the payment to the power purchaser of contract damages, if incurred, in the event the seller fails to deliver power as a result of the failure of the specified generation unit to generate power at or above a specified availability threshold.  All of Entergy’s outstanding guarantees of availability provide for dollar limits on Entergy’s maximum liability under such guarantees.
(d)
Transaction that requires receipt or delivery of energy at a specified delivery point (usually at a market hub not associated with a specific asset) or settles financially on notional quantities; if a party fails to deliver or receive energy, defaulting party must compensate the other party as specified in the contract, a portion of which may be capped through the use of risk management products.
(e)
Transactions for the purchase of energy, generally to offset a firm LD transaction.
(f)
Amount of output expected to be generated by Entergy Wholesale Commodities resources considering plant operating characteristics, outage schedules, and expected market conditions that effect dispatch.
(g)
Assumes NRC license renewal for plants whose current licenses expire within five years and uninterrupted normal operation at all plants.  NRC license renewal applications are in process for two units, as follows (with current license expirations in parentheses): Indian Point 2 (September 2013) and Indian Point 3 (December 2015).  For a discussion regarding the continued operation of the Vermont Yankee plant, see “Impairment of Long-Lived Assets” in Note 11 to the financial statements herein and Note 1 to the financial statements in the Form 10-K.  For a discussion regarding the license renewals for Indian Point 2 and Indian Point 3, see “Entergy Wholesale Commodities Authorizations to Operate Its Nuclear Power Plants” above.
(h)
Percent of planned qualified capacity sold to mitigate price uncertainty under physical or financial transactions.
(i)
A contract for the sale of installed capacity and related energy, priced per megawatt-hour sold.
(j)
A contract for the sale of an installed capacity product in a regional market.
(k)
Amount of capacity to be available to generate power and/or sell capacity considering uprates planned to be completed during the year.
(l)
Contracts priced in accordance with cost-based rates, a ratemaking concept used for the design and development of rate schedules to ensure that the filed rate schedules recover only the cost of providing the service; these contracts are on owned non-utility resources located within Entergy’s Utility service area, which do not operate under market-based rate authority.  The percentage sold assumes approval of long-term transmission rights.  Includes sales to the Utility through 2013 of 121 MW of capacity and energy from Entergy Power sourced from Independence Steam Electric Station Unit 2.
(m)
Non-nuclear planned generation and net MW in operation include purchases from affiliated and non-affiliated counterparties under long-term contracts and exclude energy and capacity from Entergy Wholesale Commodities’ wind investment and from the 544 MW Ritchie plant that is not planned to operate.

Entergy estimates that a positive $10 per MWh change in the annual average energy price in the markets in which the Entergy Wholesale Commodities nuclear business sells power, based on March 31, 2013 market conditions, planned generation volumes, and hedged positions, would have a corresponding effect on pre-tax net income of $122 million in 2013.


 
13

Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis



Some of the agreements to sell the power produced by Entergy Wholesale Commodities’ power plants contain provisions that require an Entergy subsidiary to provide collateral to secure its obligations under the agreements.  The Entergy subsidiary is required to provide collateral based upon the difference between the current market and contracted power prices in the regions where Entergy Wholesale Commodities sells power.  The primary form of collateral to satisfy these requirements is an Entergy Corporation guaranty.  Cash and letters of credit are also acceptable forms of collateral.  At March 31, 2013, based on power prices at that time, Entergy had liquidity exposure of $203 million under the guarantees in place supporting Entergy Wholesale Commodities transactions, $20 million of guarantees that support letters of credit, and $7 million of posted cash collateral to the ISOs.  As of March 31, 2013, the liquidity exposure associated with Entergy Wholesale Commodities assurance requirements, including return of previously posted collateral from counterparties, would increase by $82 million for a $1 per MMBtu increase in gas prices in both the short-and long-term markets.  In the event of a decrease in Entergy Corporation’s credit rating to below investment grade, based on power prices as of March 31, 2013, Entergy would have been required to provide approximately $54 million of additional cash or letters of credit under some of the agreements.

As of March 31, 2013, substantially all of the counterparties or their guarantors for 100% of the planned energy output under contract for Entergy Wholesale Commodities nuclear plants through 2017 have public investment grade credit ratings.

Nuclear Matters

See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – Nuclear Matters" in the Form 10-K for a discussion of nuclear matters.

Critical Accounting Estimates

See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates" in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy’s accounting for nuclear decommissioning costs, unbilled revenue, impairment of long-lived assets and trust fund investments, qualified pension and other postretirement benefits, and other contingencies.  Following is an update to that discussion.

Nuclear Decommissioning Costs

In the first quarter of 2013, Entergy Wholesale Commodities recorded a revision to its estimated decommissioning cost liability for a nuclear site as a result of a revised decommissioning cost study.  The revised estimate resulted in a $46.6 million reduction in the decommissioning cost liability, along with a corresponding reduction in the related asset retirement cost asset.

New Accounting Pronouncements

The accounting standard-setting process, including projects between the FASB and the International Accounting Standards Board (IASB) to converge U.S. GAAP and International Financial Reporting Standards, is ongoing and the FASB and the IASB are each currently working on several projects that have not yet resulted in final pronouncements.  Final pronouncements that result from these projects could have a material effect on Entergy’s future net income, financial position, or cash flows.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Page left blank intentionally)
 
 
 
 
 

 
 
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
 
For the Three Months Ended March 31, 2013 and 2012
 
(Unaudited)
 
   
2013
   
2012
 
   
(In Thousands, Except Share Data)
 
             
OPERATING REVENUES
           
Electric
  $ 1,949,280     $ 1,784,841  
Natural gas
    53,321       46,008  
Competitive businesses
    606,273       552,810  
TOTAL
    2,608,874       2,383,659  
                 
OPERATING EXPENSES
               
Operating and Maintenance:
               
   Fuel, fuel-related expenses, and
               
     gas purchased for resale
    510,333       538,837  
   Purchased power
    373,129       284,966  
   Nuclear refueling outage expenses
    60,719       63,884  
   Asset impairment
    -       355,524  
   Other operation and maintenance
    754,258       721,635  
Decommissioning
    59,104       57,903  
Taxes other than income taxes
    151,095       137,170  
Depreciation and amortization
    300,876       280,215  
Other regulatory charges
    5,315       382  
TOTAL
    2,214,829       2,440,516  
                 
OPERATING INCOME (LOSS)
    394,045       (56,857 )
                 
OTHER INCOME
               
Allowance for equity funds used during construction
    12,751       24,307  
Interest and investment income
    38,306       40,992  
Miscellaneous - net
    (13,623 )     (17,990 )
TOTAL
    37,434       47,309  
                 
INTEREST EXPENSE
               
Interest expense
    153,149       146,745  
Allowance for borrowed funds used during construction
    (5,188 )     (9,391 )
TOTAL
    147,961       137,354  
                 
INCOME (LOSS) BEFORE INCOME TAXES
    283,518       (146,902 )
                 
Income taxes
    116,536       (162 )
                 
CONSOLIDATED NET INCOME (LOSS)
    166,982       (146,740 )
                 
Preferred dividend requirements of subsidiaries
    5,582       4,943  
                 
NET INCOME (LOSS) ATTRIBUTABLE TO ENTERGY CORPORATION
  $ 161,400     $ (151,683 )
                 
                 
Earnings (loss) per average common share:
               
    Basic
  $ 0.91     $ (0.86 )
    Diluted
  $ 0.90     $ (0.86 )
Dividends declared per common share
  $ 0.83     $ 0.83  
                 
Basic average number of common shares outstanding
    178,027,961       176,865,363  
Diluted average number of common shares outstanding
    178,413,287       177,388,045  
                 
See Notes to Financial Statements.
               
                 

 
 
 
 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
For the Three Months Ended March 31, 2013 and 2012
 
(Unaudited)
 
             
   
2013
   
2012
 
   
(In Thousands)
 
             
Net Income (loss)
  $ 166,982     $ (146,740 )
                 
Other comprehensive income (loss)
               
   Cash flow hedges net unrealized gain (loss)
               
     (net of tax expense (benefit) of ($41,135) and $75,494)
    (75,975 )     145,435  
   Pension and other postretirement liabilities
               
     (net of tax expense of $5,869 and $3,876)
    9,795       6,266  
   Net unrealized investment gains
               
     (net of tax expense of $54,311 and $49,138)
    56,377       50,107  
   Foreign currency translation
               
     (net of tax expense (benefit) of ($416) and $167)
    (772 )     311  
         Other comprehensive income (loss)
    (10,575 )     202,119  
                 
Comprehensive Income
    156,407       55,379  
                 
Preferred dividend requirements of subsidiaries
    5,582       4,943  
                 
Comprehensive Income Attributable to Entergy Corporation
  $ 150,825     $ 50,436  
                 
                 
See Notes to Financial Statements.
               


 

 
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
For the Three Months Ended March 31, 2013 and 2012
 
(Unaudited)
 
   
2013
   
2012
 
   
(In Thousands)
 
             
OPERATING ACTIVITIES
           
Consolidated net income (loss)
  $ 166,982     $ (146,740 )
Adjustments to reconcile consolidated net income (loss) to net cash flow
               
 provided by operating activities:
               
  Depreciation, amortization, and decommissioning, including nuclear fuel amortization
    472,933       450,009  
  Deferred income taxes, investment tax credits, and non-current taxes accrued
    98,671       38,858  
  Asset impairment
    -       355,524  
  Changes in working capital:
               
     Receivables
    (29,845 )     156,202  
     Fuel inventory
    (5,147 )     (20,213 )
     Accounts payable
    (40,861 )     (145,599 )
     Prepaid taxes and taxes accrued
    (35,648 )     (89,583 )
     Interest accrued
    (30,570 )     (32,194 )
     Deferred fuel costs
    (2,149 )     77,405  
     Other working capital accounts
    (151,958 )     (34,753 )
  Changes in provisions for estimated losses
    (245,972 )     (15,030 )
  Changes in other regulatory assets
    167,634       60,857  
  Changes in pensions and other postretirement liabilities
    32,696       (4,764 )
  Other
    147,223       (49,479 )
Net cash flow provided by operating activities
    543,989       600,500  
                 
  INVESTING ACTIVITIES
               
Construction/capital expenditures
    (631,857 )     (563,539 )
Allowance for equity funds used during construction
    13,672       25,448  
Nuclear fuel purchases
    (145,168 )     (201,059 )
Changes in securitization account
    1,601       940  
NYPA value sharing payment
    (71,736 )     (72,000 )
Payments to storm reserve escrow account
    (2,219 )     (1,483 )
Receipts from storm reserve escrow account
    252,482       861  
Decrease (increase) in other investments
    (44,298 )     93,786  
Proceeds from nuclear decommissioning trust fund sales
    398,010       535,551  
Investment in nuclear decommissioning trust funds
    (432,247 )     (567,780 )
Net cash flow used in investing activities
    (661,760 )     (749,275 )
                 
See Notes to Financial Statements.
               
                 


 

ENTERGY CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
For the Three Months Ended March 31, 2013 and 2012
 
(Unaudited)
 
   
2013
   
2012
 
   
(In Thousands)
 
             
FINANCING ACTIVITIES
           
Proceeds from the issuance of:
           
  Long-term debt
    564,717       1,034,945  
  Mandatorily redeemable preferred membership units of subsidiary
    -       51,000  
  Treasury stock
    8,102       32,826  
Retirement of long-term debt
    (849,860 )     (859,648 )
Changes in credit borrowings and commercial paper - net
    277,886       32,782  
Dividends paid:
               
  Common stock
    (147,902 )     (146,674 )
  Preferred stock
    (5,582 )     (5,582 )
Net cash flow provided by (used in) financing activities
    (152,639 )     139,649  
                 
Effect of exchange rates on cash and cash equivalents
    772       (310 )
                 
Net decrease in cash and cash equivalents
    (269,638 )     (9,436 )
                 
Cash and cash equivalents at beginning of period
    532,569       694,438  
                 
Cash and cash equivalents at end of period
  $ 262,931     $ 685,002  
                 
                 
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
               
  Cash paid during the period for:
               
    Interest - net of amount capitalized
  $ 138,217     $ 134,655  
    Income taxes
  $ 12,341     $ 35,992  
                 
                 
See Notes to Financial Statements.
               


 

 
CONSOLIDATED BALANCE SHEETS
 
ASSETS
 
March 31, 2013 and December 31, 2012
 
(Unaudited)
 
             
   
2013
   
2012
 
   
(In Thousands)
 
             
CURRENT ASSETS
           
Cash and cash equivalents:
           
  Cash
  $ 66,114     $ 112,992  
  Temporary cash investments
    196,817       419,577  
     Total cash and cash equivalents
    262,931       532,569  
Securitization recovery trust account
    44,438       46,040  
Accounts receivable:
               
  Customer
    636,694       568,871  
  Allowance for doubtful accounts
    (32,122 )     (31,956 )
  Other
    157,978       161,408  
  Accrued unbilled revenues
    269,010       303,392  
     Total accounts receivable
    1,031,560       1,001,715  
Deferred fuel costs
    83,758       150,363  
Accumulated deferred income taxes
    192,816       306,902  
Fuel inventory - at average cost
    218,978       213,831  
Materials and supplies - at average cost
    928,103       928,530  
Deferred nuclear refueling outage costs
    318,024       243,374  
System agreement cost equalization
    16,880       16,880  
Prepayments and other
    225,385       242,922  
TOTAL
    3,322,873       3,683,126  
                 
OTHER PROPERTY AND INVESTMENTS
               
Investment in affiliates - at equity
    45,977       46,738  
Decommissioning trust funds
    4,452,707       4,190,108  
Non-utility property - at cost (less accumulated depreciation)
    260,068       256,039  
Other
    188,473       436,234  
TOTAL
    4,947,225       4,929,119  
                 
PROPERTY, PLANT AND EQUIPMENT
               
Electric
    42,064,616       41,944,567  
Property under capital lease
    934,495       935,199  
Natural gas
    356,988       353,492  
Construction work in progress
    1,413,897       1,365,699  
Nuclear fuel
    1,607,352       1,598,430  
TOTAL PROPERTY, PLANT AND EQUIPMENT
    46,377,348       46,197,387  
Less - accumulated depreciation and amortization
    19,067,907       18,898,842  
PROPERTY, PLANT AND EQUIPMENT - NET
    27,309,441       27,298,545  
                 
DEFERRED DEBITS AND OTHER ASSETS
               
Regulatory assets:
               
  Regulatory asset for income taxes - net
    752,696       742,030  
  Other regulatory assets (includes securitization property of
               
     $894,330 as of March 31, 2013 and $914,751 as of
               
     December 31, 2012)
    4,860,886       5,025,912  
  Deferred fuel costs
    172,202       172,202  
Goodwill
    377,172       377,172  
Accumulated deferred income taxes
    66,833       37,748  
Other
    983,645       936,648  
TOTAL
    7,213,434       7,291,712  
                 
TOTAL ASSETS
  $ 42,792,973     $ 43,202,502  
                 
See Notes to Financial Statements.
               


 

ENTERGY CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
 
LIABILITIES AND EQUITY
 
March 31, 2013 and December 31, 2012
 
(Unaudited)
 
             
   
2013
   
2012
 
   
(In Thousands)
 
             
CURRENT LIABILITIES
           
Currently maturing long-term debt
  $ 630,622     $ 718,516  
Notes payable and commercial paper
    1,073,888       796,002  
Accounts payable
    1,036,122       1,217,180  
Customer deposits
    361,299       359,078  
Taxes accrued
    298,071       333,719  
Accumulated deferred income taxes
    15,004       13,109  
Interest accrued
    154,095       184,664  
Deferred fuel costs
    27,684       96,439  
Obligations under capital leases
    3,495       3,880  
Pension and other postretirement liabilities
    97,404       95,900  
System agreement cost equalization
    16,880       25,848  
Other
    181,856       261,986  
TOTAL
    3,896,420       4,106,321  
                 
NON-CURRENT LIABILITIES
               
Accumulated deferred income taxes and taxes accrued
    8,348,976       8,311,756  
Accumulated deferred investment tax credits
    270,912       273,696  
Obligations under capital leases
    33,976       34,541  
Other regulatory liabilities
    1,046,106       898,614  
Decommissioning and asset retirement cost liabilities
    3,525,687       3,513,634  
Accumulated provisions
    116,542       362,226  
Pension and other postretirement liabilities
    3,757,078       3,725,886  
Long-term debt (includes securitization bonds of $951,520 as of
               
  March 31, 2013 and $973,480 as of December 31, 2012)
    11,729,134       11,920,318  
Other
    574,555       577,910  
TOTAL
    29,402,966       29,618,581  
                 
Commitments and Contingencies
               
                 
Subsidiaries' preferred stock without sinking fund
    186,511       186,511  
                 
EQUITY
               
Common Shareholders' Equity:
               
Common stock, $.01 par value, authorized 500,000,000 shares;
               
  issued 254,752,788 shares in 2013 and in 2012
    2,548       2,548  
Paid-in capital
    5,349,885       5,357,852  
Retained earnings
    9,718,171       9,704,591  
Accumulated other comprehensive loss
    (303,658 )     (293,083 )
Less - treasury stock, at cost (76,656,819 shares in 2013 and
               
  76,945,239 shares in 2012)
    5,553,870       5,574,819  
Total common shareholders' equity
    9,213,076       9,197,089  
Subsidiaries' preferred stock without sinking fund
    94,000       94,000  
TOTAL
    9,307,076       9,291,089  
                 
TOTAL LIABILITIES AND EQUITY
  $ 42,792,973     $ 43,202,502  
                 
See Notes to Financial Statements.
               


 

 
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
 
For the Three Months Ended March 31, 2013 and 2012
 
(Unaudited)
 
                                           
         
Common Shareholders' Equity
       
   
Subsidiaries'
Preferred Stock
   
Common Stock
   
Treasury Stock
   
Paid-in Capital
   
Retained Earnings
   
Accumulated Other Comprehensive Income (Loss)
   
Total
 
   
(In Thousands)
 
                                           
Balance at December 31, 2011
  $ 94,000     $ 2,548     $ (5,680,468 )   $ 5,360,682     $ 9,446,960     $ (168,452 )   $ 9,055,270  
                                                         
Consolidated net income (loss) (a)
    4,943       -       -       -       (151,683 )     -       (146,740 )
Other comprehensive income
    -       -       -       -       -       202,119       202,119  
Common stock issuances related to stock plans
    -       -       57,995       (8,426 )     -       -       49,569  
Common stock dividends declared
    -       -       -       -       (147,015 )     -       (147,015 )
Preferred dividend requirements of subsidiaries (a)
    (4,943 )     -       -       -       -       -       (4,943 )
                                                         
Balance at March 31, 2012
  $ 94,000     $ 2,548     $ (5,622,473 )   $ 5,352,256     $ 9,148,262     $ 33,667     $ 9,008,260  
                                                         
                                                         
                                                         
Balance at December 31, 2012
  $ 94,000     $ 2,548     $ (5,574,819 )   $ 5,357,852     $ 9,704,591     $ (293,083 )   $ 9,291,089  
                                                         
Consolidated net income (a)
    5,582       -       -       -       161,400       -       166,982  
Other comprehensive loss
    -       -       -       -       -       (10,575 )     (10,575 )
Common stock issuances related to stock plans
    -       -       20,949       (7,967 )     -       -       12,982  
Common stock dividends declared
    -       -       -       -       (147,820 )     -       (147,820 )
Preferred dividend requirements of subsidiaries (a)
    (5,582 )     -       -       -       -       -       (5,582 )
                                                         
Balance at March 31, 2013
  $ 94,000     $ 2,548     $ (5,553,870 )   $ 5,349,885     $ 9,718,171     $ (303,658 )   $ 9,307,076  
                                                         
See Notes to Financial Statements.
                                                       
                                                         
(a) Consolidated net income and preferred dividend requirements of subsidiaries for 2013 and 2012 include $3.9 million and $3.3 million, respectively, of preferred dividends on subsidiaries' preferred stock without sinking fund that is not presented within equity.
 
                                                         


 

 
SELECTED OPERATING RESULTS
 
For the Three Months Ended March 31, 2013 and 2012
 
(Unaudited)
 
                         
                         
               
Increase/
       
Description
 
2013
   
2012
   
(Decrease)
   
%
 
   
(Dollars in Millions)
       
Utility Electric Operating Revenues:
                       
  Residential
  $ 751     $ 670     $ 81       12  
  Commercial
    523       503       20       4  
  Industrial
    544       489       55       11  
  Governmental
    52       48       4       8  
    Total retail
    1,870       1,710       160       9  
  Sales for resale
    52       39       13       33  
  Other
    27       36       (9 )     (25 )
    Total
  $ 1,949     $ 1,785     $ 164       9  
                                 
Utility Billed Electric Energy