We aspire to safe, efficient and effective operations in our utility business. We strive to continually improve customer satisfaction. Since 1998, outage frequency has decreased 48 percent and outage duration has decreased 32 percent.

 

The number of regulatory outage complaints dropped from 535 in 1998 to 81 in 2006.

Imagine Having It All... by by safely generating and delivering clean, reliable and affordable power while structuring our utility business to meet the objectives of all stakeholders.

Generating and delivering electricity is a unique business. Companies that provide power are viewed and regulated as public servants yet still must earn equitable returns for private owners in order to attract capital. While the goals of our various stakeholders can sometimes diverge, we believe it is possible to operate our utilities in a way that consistently meets the objectives of our customers, regulators, communities and owners.

Customer Service, Reliability and Safety
Customer satisfaction is driven largely by the day-to-day operation of our utility business; by maintaining transmission lines, responding to customer calls and safely providing power to meet fluctuating demands. We continue to invest in our utilities to ensure we meet our customers' expectations for safe, reliable service.

In 2006 we began the year challenged by a number of customer service issues related to the storms of 2005. However, as we progressed through the year our performance along a variety of customer service and reliability measures continued to improve as it has consistently over the past eight years. As of year-end 2006, routine outage frequency decreased 48 percent and outage duration decreased 32 percent over the eight-year period from 1998 to 2006. Regulatory outage complaints dropped to 81 in 2006 from 535 in 1998.

In 2006, we were once again honored to receive the Edison Electric Institute's Emergency Assistance Award. Entergy has won either EEI's Emergency Assistance or Emergency Response award for nine consecutive years, every year that the awards have been offered. We are the only utility in the country to have achieved this recognition.

We also continued to make progress in ensuring the safety of our employees. In 2006, seven of our distribution sites and one transmission site earned OSHA Voluntary Protection Program Star status – bringing our total number of Star sites to 36 as of the end of 2006. Another nine sites completed the rigorous process of applying for OSHA VPP Star status in 2006. Ensuring the safety of all employees in all our operations continues to be our number one priority.

Affordable, Available Power
We strive to provide clean, reliable and affordable power to all our customers over the long term. Currently our customers' demand for power exceeds our generation capacity by two to four gigawatts. At the same time, approximately 18 gigawatts of new merchant capacity have been commissioned in our service territories in the last six years. This provides us with the opportunity to meet our capacity shortfall as well as offer high-quality generation sources to our customers.

Our Resource Supply Plan is designed to meet our customers' demand for power, diversify and modernize our generation fleet and create opportunities to lower our customers' rates. It's a comprehensive plan that calls for the contract purchase of power, the acquisition of highly efficient assets, as well as the evaluation of new fuel and new capacity alternatives, conditioned on the receipt of regulatory approval.

In early 2006, we issued a Request for Proposal for 2,000 MW of long-term supply-side resources. We received 35 proposals for combined-cycle gas turbine resources and eight proposals for solid fuel resources. A year later, we narrowed the field and entered further negotiations for two CCGT resources representing over 1,300 MW of capacity and two solid fuel resources representing between approximately 730 and 880 MW of capacity. The solid fuel resources include the selection of Entergy's Little Gypsy repowering self-build option identified in the RFP. At Little Gypsy, we expect to repower this gas-fired facility to use petroleum coke as fuel. As a refinery waste product, pet-coke is readily and economically available in southern Louisiana. The pet-coke option also introduces more solid fuel capacity into the Louisiana generation fleet, which is heavily dependent on natural gas with its greater price volatility.

In addition to executing our Resource Supply Plan, we took several actions to ensure power is readily available and affordable to our customers over the long term.

In January 2006, we completed the purchase of the 480-megawatt, natural gas-fired, combined-cycle Attala facility near Kosciusko, Mississippi. We have purchased the output from the Attala plant since mid-2004. Through this acquisition, we added a highly efficient plant to our generation portfolio as we did in 2005 with the purchase of the 718-megawatt, natural gas-fired, combined-cycle Perryville plant in Louisiana.

After initiating negotiations in late 2006, we announced in February 2007 an agreement to acquire the 322-megawatt, natural gas-fired, simple-cycle Calcasieu Generating Facility in southwestern Louisiana. This modern, quick-start peaking generation resource has substantial advantages because of its close proximity to big industrial customers with large potential load swings. This natural gas-fired, simple-cycle facility can be dispatched on extremely short notice, which is critical in a region where there are natural limitations – such as the Gulf of Mexico – on the ability to import power.

We also continue to see potential in the development of new nuclear capacity at our Grand Gulf Nuclear Station and River Bend Station. Nuclear generation is emission-free, less exposed to fuel price volatility and subject to federal incentives. With necessary legislative support, including loan guarantee and production tax credit incentives, and state regulatory mechanisms to enable timely cost recovery, the prospect of new nuclear could become a reality.

Finally, we continuously strive to reduce our operating costs. Improving efficiency and productivity in our generation fleet is one of the most important steps we can take to ensure our customers have ready access to affordable power.

A Constructive Regulatory Environment
In many respects we experienced a very constructive regulatory environment in 2006. For example, we pushed diligently for storm restoration cost recovery at the local, state and federal levels. We also advocated for securitization legislation to preserve affordable rates for our customers and worked to establish storm reserves to lower future risks for both our customers and our owners from the effects of future storms.

Local regulators in New Orleans have been supportive of our efforts as Entergy New Orleans continues to make progress in its reorganization plan. We are planning to have Entergy New Orleans emerge from Chapter 11 in mid-2007 as a financially stable utility. Going forward, we will continue to work with the New Orleans City Council to ensure that the company remains on solid ground financially and to minimize its exposure to future storm risk.

In early 2007, we received approval from the Louisiana Public Service Commission to divide Entergy Gulf States into two separate operating companies – one in Louisiana and one in Texas. We expect to complete the separation by the end of 2007 – allowing each company to develop operating strategies that are consistent with the public policy direction in its jurisdiction.

Pursuant to the legislation passed in 2005, Entergy Gulf States-Texas made its required Transition to Competition filing at the end of 2006. In its plan, Entergy Gulf States-Texas proposed to join the Electric Reliability Council of Texas. We expect that the billion dollar investment to electrically connect our Texas business with ERCOT will provide customer benefits exceeding this investment. However, there are important conditions that must be met in order to proceed. The Texas PUCT will be deciding these issues in the coming years.

Looking ahead to 2007, we expect closure for all remaining storm-related matters. We will continue to implement the Federal Energy Regulatory Commission's rough production cost equalization remedy for the System Agreement, and at the same time, we will pursue a replacement agreement that meets the needs of our utility customers without provoking undue disputes and litigation. In Arkansas, we will pursue constructive resolution of the rate case we filed in August 2006 as well as the outstanding fuel recovery proceeding. In Texas, we will file our first base rate increase case in 16 years to be effective when the legislative-imposed rate freeze ends on June 30, 2008.

Entergy 2006 Annual Report: Overview Entergy 2006 Annual Report: Letter to Stakeholders Entergy 2006 Annual Report: Financial and Societal Aspirations Entergy 2006 Annual Report: Utility Operational Aspirations Entergy 2006 Annual Report: Nuclear Operational Aspirations Entergy 2006 Annual Report: Climate Change Entergy 2006 Annual Report: Financial Review