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Important issues for Entergy's customers, employees, investors and other
stakeholders.
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The System Agreement is the contract that governs the interaction of the
Entergy operating companies as one power pool. The current version of the
System Agreement was approved by the Federal Energy Regulatory Commission
(FERC) in 1985. With the extraordinary escalation in the price of natural gas,
the current interpretation of the System Agreement could result in an erosion
of Entergy’s ability to plan resources efficiently.
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Entergy Arkansas relies primarily on coal and nuclear generation. This has
become a relatively inexpensive source of power now that the plants’
construction costs have depreciated. Entergy Louisiana and Entergy Gulf States
rely more heavily on oil- and natural gas-fired generation. This has become
more expensive as the costs of both commodities have soared in recent years.
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Entergy Arkansas (EAI) has provided notice to terminate its participation in
the System Agreement effective 96 months from December 19, 2005 or such
earlier date as authorized by the FERC. However, EAI continues to believe
that, if properly structured, a replacement agreement could allow Entergy’s
operating companies, including EAI, to continue to achieve economies and
efficiencies that result from joint operation of an integrated electric system.
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Entergy continues to work to identify alternative arrangements that could
continue to facilitate the joint operation of all the Operating Companies.
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The Department of Energy (DOE) projects demand for electricity will increase
50 percent — 350,000 to 400,000 megawatts — over the next 20 years. The
electric utility industry must work now to ensure that further supply is
available, which will require exploration of new sources of power, including
the latest nuclear technologies.
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New nuclear energy plants are one of the best ways we know to generate
increasing amounts of electric power dependably, safely, at low cost and
without emitting air pollutants or greenhouse gases (carbon dioxide) that is
believed to be causing global warming.
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The next generation of nuclear energy plants can diversify our energy supply
in the U.S., and help to reduce our growing dependence on fossil fuels
including imported fuels.
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New nuclear plant designs contain advanced safety features such as relying on
passive safety features rather than active components. In an emergency, valves
to large overhead reservoirs of cooling water automatically open and gravity
lets the water flood the reactor. No off-site power or operator actions are
required.
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Next-generation technology has big advantages … 25 percent fewer pumps,
valves, motors and cables, fewer operating systems. Simpler designs mean that
the plant costs less to construct and operate and can be built in less time --
while improving the plant’s level of safety. Result: Improved safety, low
cost, environmentally clean, domestic energy.
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Addressing the Needs of Low Income Customers
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Entergy is committed to sustained efforts to help low-income residents of the
middle South by advocating change and supporting actions that offer
substantive, lasting solutions.
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Low income families spend a disproportionate amount of their income on utility
bills compared to other families.
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Entergy supports increased LIHEAP and WAP funding to assist its low-income
customers.
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Entergy is actively involved in weatherization projects throughout its system
area.
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Weatherization assistance programs reduce the heating and cooling costs
particularly for the elderly, persons with disabilities, and children.
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Rising electricity costs are a challenge for consumers, regulators and
utilities.
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Since the beginning of 2006, the high cost of natural gas has affected the
prices that electric utilities charge their customers. Energy providers do not
profit from these higher prices; rather, they are required by law to pass the
additional charges, known as fuel adjustments, directly to customers.
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At Entergy, we are working to keep our customers’ prices as low as possible.
For example, Entergy uses a diverse fuel mix of nuclear, coal and natural gas
to mitigate the volatility of natural gas costs. Entergy also uses hedging
practices in purchasing natural gas, which allows the company to lock in low
prices when available on natural gas for future use.
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Entergy is one of the largest producers of electric power in the United States
and one of the nation’s cleanest generators.
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Entergy recognizes its environmental leadership role and firmly believes that
it should be proactive in its efforts to protect, preserve, and enhance the
environment. That role is reaffirmed through the company’s investments in
gas-fired and nuclear generation, as well as its commitment to purchase
combined-cycle gas turbines--with state-of-the-art environmental technology--
for ongoing and future development projects.
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Entergy is the only US utility to be named to the Dow Jones Sustainability
Index for 6 consecutive years, and the only US utility to be named to the Dow
Jones Sustainability Index - World in 2006 and 2007.
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Entergy is the second cleanest utility generator among the top 10 generators.
This is due to our clean generation portfolio with significant nuclear and
natural gas generation.
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Entergy's transmission system works like the interstate highway system. It
carries power across state lines, not only to Entergy customers, but also to
neighboring transmission systems owned by other utilities.
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Independent power producers or other generators can use Entergy’s transmission
system to move power. To make sure this takes place without affecting
reliability or compromising the security of Entergy’s system, an Independent
Coordinator of Transmission, totally separate from all Entergy business
interests, works with these producers and Entergy to provide access as needed.
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In some instances, when an independent power producer or other generator wants
access to Entergy’s transmission system to send power to another part of the
country, new interconnecting lines and substations must be built. Entergy
believes the new transmission system users should pay for those expansions.
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Likewise, increased demand for power by Entergy customers in certain areas
requires more transmission facilities. Entergy pays for these projects and
asks state public service commissions for approval to charge customers.
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In September 2007, Entergy Texas asked the Public Utility Commission of Texas
(PUCT) to allow it to increase its base rates by $107.5 million per year. The
company is asking for this increase because, like other businesses, its costs
have increased. Additionally, Entergy Texas’ rates have been frozen for
several years.
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A rate increase is necessary to provide the company with the firm financial
footing it needs to successfully meet future financial and operational
challenges in Southeast Texas.
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Entergy Texas’ rates need to align with the cost of doing business.
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The company’s base rate proposal is subject to the customary rate review
process, which includes review and approval by the PUCT. A decision is
expected in 2008 with new base rates to go into effect no earlier than
September.
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