Entergy
Download the 2009 Annual Report
Download the 2009 Annual Report
Entergy Corporation
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Entergy Corporation

Shaping Our Destiny

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ver the years, Entergy has been dealt some tough cards. Hurricanes Katrina and Rita in 2005 followed by Gustav and Ike in 2008 and a severe ice storm in January 2009. Encountering a global financial crisis in 2008 while responding to two major, back-to-back hurricanes. Yet in the face of these and other challenges, we persevered and even thrived. For example, in the last two years while we pursued the spin-off of our non-utility nuclear assets we achieved the fastest and safest storm restoration in our history in 2008; maintained gross liquidity ranging from $2.5 to $3.2 billion for the quarters following the September 2008 financial crisis through the end of 2009; and delivered record-setting earnings in 2008 and 2009 despite the Great Recession. Through these and many other accomplishments in the past 11 years, we shaped our destiny thanks to our skilled employees, point-of-view driven business model and strong belief in the principles of sustainable development.

Our focus on sustainability compels us to set and strive to achieve multiple aspirations simultaneously, including delivering top-quartile shareholder return, achieving an accident-free work environment, being the cleanest power generator in America and contributing to a society that is healthy, educated and productive. At the same time, we strive to identify and manage business and financial risks. Our point-of-view driven business model enables us to adapt our strategies and tactics to changing circumstances as we work to achieve our aspirations. Finally, in accordance with our business model and beliefs, our employees make decisions and safely take actions every day that drive our success.

As we report here, progress toward our long-term aspirations continued in 2009. Future progress is within our sights by leveraging our unique advantages that form a strong, resilient platform for future success.

Delivering Top-Quartile Shareholder Return

In 2009, despite delivering record earnings, our total shareholder return was 2.4 percent, which ranked in the bottom quartile of our peer group. Last year’s disappointing performance does not track with our cumulative 11-year record of top-quartile returns. From 1998 to 2009, Entergy delivered total shareholder return of 277.7 percent, exceeding by a wide margin returns on the Philadelphia Utility Index and the S&P 500. We will work diligently in 2010 to deliver the top-quartile returns that shareholders have come to expect from Entergy.

In April 2010, following a decision by the New York State Public Service Commission rejecting the proposed spin-off of our non-utility{ continued | 1 of 4 }

 

Entergy Corporation

nuclear assets, we announced the decision to pursue other strategies and unwind the internal organizations created for Enexus Energy Corporation and EquaGen LLC. At the same time, the Board increased Entergy’s dividend to an annualized $3.32 per share, the first increase in the quarterly common stock dividend since July 2007.

Going forward, we continue to project productive investment opportunities in our utility business. As an example, our 2010 to 2012 utility capital forecast increased by $0.7 billion over the previous three-year-period forecast. We also believe Entergy Nuclear offers value creation potential through continued safe, secure and reliable operations in attractive power markets as well as opportunistic capital investments. We aspire to fund our capital needs without issuing traditional common equity, while maintaining a competitive capital return program.

In 2009, we returned approximately $1 billion to our shareholders through dividend payments and share buybacks. In fourth quarter 2009, our Board authorized an incremental $750 million share repurchase program. Absent other attractive investment opportunities, capital deployment through dividends and share repurchases could total as much as $5 billion over the next five years under the current long-term business outlook. The amount of share repurchases may vary as a result of material changes in business results or capital spending or new investment opportunities. In addition, we will maintain strong liquidity and solid credit metrics that support ready access to capital on reasonable terms.

We believe cash is the critical component to long-term success in our industry, particularly during a period of rising investment as we now face. Our goal is to continue to effectively manage our cash-flow profile in order to continue shaping our destiny. As in the past, we will simultaneously pursue continuous improvements, as well as game-changing opportunities using our dynamic point-of-view-driven business model. Our willingness and ability to adapt our strategies in light of changing conditions and points of view and a relentless drive for top-quartile returns have produced a decade of standout results. With a sustainable strategy, we believe history can repeat itself in the decade ahead.

Achieving an Accident-Free Work Environment

We place our safety aspiration above all others. We aspire to achieve an accident-free work environment and we actively promote a safety culture at all levels of our organization. Our performance in 2009 was the safest in our company’s history with the fewest number of accidents and no fatalities.{ continued | 2 of 4 }

Total Shareholder Return 2009, %

In 2009, our total shareholder return ranked in the bottom quartile of our peer group. We are more determined than ever to deliver results more in line with our 11-year track record of top-quartile shareholder returns.

Entergy Corporation

Of particular note is the outstanding long-term performance at our Arkansas Nuclear One and Waterford 3 nuclear plants. ANO employees worked nearly 23 million hours and Waterford 3 employees more than 15 million hours without a lost-time accident – both remarkable accomplishments. As of year-end 2009, this outstanding performance continued at both plants.

ANO, Waterford 3 and River Bend Station were the first three nuclear plants to achieve Star status in the OSHA Voluntary Protection Program, which is the highest rating in the most prestigious workplace safety and health recognition program in the United States. Achieving VPP Star status is an employee-driven achievement. It speaks to the commitment of our employees as well as the policies, systems and metrics that form Entergy’s safety culture. In total, approximately 70 of Entergy’s work sites have achieved OSHA VPP Star status, including nearly 20 fossil sites and over 40 transmission and distribution sites.

Aspiring To Be the Cleanest Power Generator in America

At Entergy we have long believed that carbon dioxide emissions create an adverse impact on the climate. Since 2001, we have voluntarily committed to stabilize CO2 emissions from our operations. In 2009, we were nearly 6 percent below our cumulative emissions goal under our voluntary commitment to stabilize our CO2 emissions from 2006 to 2010 at 20 percent below year 2000 levels.

Also in 2009, we continued our efforts to shape carbon policy in the United States. We believe that to be effective any policy seeking to set declining targets on greenhouse gas emissions must address CO2 emissions from conventional coal plants. We co-sponsored a study with the Massachusetts Institute of Technology that clearly validated this belief. Subsequently, Entergy leaders committed significant time and effort communicating the study’s conclusions to policymakers and stakeholders at all levels of government. Early stages of work recommended in the MIT study are in fact under way.

We also worked on a local level in 2009 to support energy efficiency, conservation and alternative energy sources. For example, Warren Easton Senior High School in New Orleans is now equipped with a 28-kW solar array that will produce roughly enough electricity each year to power three typical residential homes. It’s the first project of the New Orleans Solar Schools Initiative, a partnership of Entergy, Nike Corporation, Winrock International, the Louisiana Chapter of the U.S. Green Building Council and the city of New Orleans. Students and teachers can use the solar array as a learning tool to research and report how energy conservation can integrate with solar power.{ continued | 3 of 4 }

Total Shareholder Return 12/31/1998 - 12/31/2009 %

Entergy Corporation

Contributing to a Society That Is Healthy, Educated and Productive

We believe it is our responsibility to support and enhance the communities in which we conduct business. In particular, with around a quarter of our 2.7 million utility customers living below or near the poverty line, we have a moral responsibility to help. Through our low-income initiatives, we strive to improve the flow of assistance funds to those in need, help customers better manage their energy use and break the cycle of poverty through education, job training and programs that enable individuals and families to accumulate assets.

In 2009, financial assistance bill payments for Entergy’s low-income customers were more than $51 million, an 87 percent increase in dollars and a 75 percent increase in number of transactions over 2008. We raised $2.3 million through our Power to Care fuel fund. These funds go entirely to customers who need help paying their utility bills. We also continued to advocate for increased funding for the Low Income Home Energy Assistance Program. Even with a record appropriation of $5.1 billion for fiscal year 2009, LIHEAP is estimated to reach only one out of every five eligible American households. The shortfall is driven in part by the growing number of first-time applicants created by the economic downturn and related job losses. More than 25 Entergy employees and community advocates met in 2009 with members of congressional delegations from each of the four states served by Entergy’s utility operating companies to emphasize the need to adequately fund LIHEAP.

In 2009, Entergy New Orleans was also selected by the U.S. Department of Energy to receive a matching stimulus grant of approximately $5 million for a pilot project aimed at helping low-income customers better manage their electric bills through the use of smart meters. The project was one of only 100 approved projects out of 400 applications and the only approved project designed specifically for low-income customers. The pilot program involves placing smart meters in approximately 11,500 residences of low-income customers.

Finally, the Entergy Charitable Foundation, a private and nonprofit foundation wholly funded by Entergy Corporation, supports initiatives that create and sustain thriving communities. More specifically, the foundation focuses on low-income initiatives, educational and literacy programs as well as efforts to protect the environment. In 2009, approximately $3.7 million in grants were awarded to nonprofit groups. In addition to the Entergy Charitable Foundation, Entergy Corporation awarded grants totaling more than $10 million to community nonprofits and organizations focused on enhancing the quality of life in the communities it serves.{ 4 of 4 }