10-QPeriod: Q3 FY2001

ENTERGY CORP /DE/ Quarterly Report for Q3 Ended Sep 30, 2001

Filed November 9, 2001For Securities:ETR

Summary

Entergy Corporation's third-quarter 2001 Form 10-Q filing reveals a mixed financial performance, with decreases in operating cash flow for the domestic utility and System Energy segments, partly due to the impact of December 2000 ice storms in Arkansas and increased net cash used by the energy commodity services segment. However, these were offset by an increase in cash provided by the domestic non-utility nuclear business, driven by new plant acquisitions. The company is navigating significant regulatory changes in the electric utility industry, particularly concerning the transition to competition. Delays in retail open access implementation are noted in Arkansas, Texas, and Louisiana, with varying timelines and regulatory proposals. Entergy is also actively involved in federal regulatory proceedings regarding transmission organizations and system agreements, which could impact cost allocations. The company has made substantial investments in acquiring new nuclear power plants, contributing to increased investing activities. Financing activities saw increased borrowings, partly to fund these acquisitions. Overall, Entergy is managing a complex operational and regulatory landscape while facing ongoing industry restructuring.

Key Highlights

  • 1Consolidated net cash flow from operating activities decreased to $1,228.8 million for the nine months ended September 30, 2001, compared to $1,439.2 million in the prior year, primarily due to the energy commodity services segment and higher parent company expenses.
  • 2Investing activities significantly increased due to the acquisition of the Indian Point 2 nuclear plant for approximately $600 million in September 2001.
  • 3Financing activities provided cash in the first nine months of 2001 compared to using cash in the same period of 2000, mainly due to increased borrowings under the credit facility for the Indian Point 2 acquisition and reduced common stock repurchases.
  • 4The domestic utility and System Energy segment experienced decreased earnings due to a decrease in net revenues and increased interest expense, partially offset by lower operational expenses.
  • 5Increased earnings were reported for the domestic non-utility nuclear business, primarily driven by the operation of newly acquired FitzPatrick and Indian Point 3 plants.
  • 6Energy commodity services segment earnings increased, largely attributed to a gain on the sale of the Saltend plant and favorable results from Entergy-Koch.
  • 7Entergy Arkansas incurred approximately $195 million in storm damage costs from the December 2000 ice storms, with recovery efforts ongoing through a rider application.

Frequently Asked Questions

Entergy's consolidated net cash flow from operating activities decreased to $1,228.8 million for the nine months ended September 30, 2001, down from $1,439.2 million in the same period of 2000. This decline was mainly due to higher cash used in the energy commodity services segment and increased interest costs and merger-related expenses at the parent company level. These factors were partially offset by improved cash flow from the domestic non-utility nuclear business.

Investing activities increased significantly in the first nine months of 2001, largely driven by the $600 million acquisition of the Indian Point 2 nuclear plant. Financing activities provided cash in the period compared to using cash in the prior year, primarily due to increased borrowings under the corporate credit facility to fund acquisitions and a reduction in common stock repurchases.

Entergy is actively managing the transition to competition across its domestic utility operations. Key state regulatory activities indicate delays in the implementation of retail open access. In Arkansas, a delay until October 2004 or later is being considered. Texas has delayed retail competition until at least September 15, 2002. Louisiana's regulatory commission has decided not to adopt a plan for retail open access at this time, with potential moves unlikely before 2004. These delays are a significant factor in Entergy's current operational and financial planning.

Entergy faces ongoing legal proceedings and environmental matters. For instance, Entergy Arkansas has incurred approximately $195 million in storm damage costs from the December 2000 ice storms, with recovery efforts underway. Entergy Gulf States is involved in negotiations with the EPA and state authorities regarding hazardous waste cleanup sites. Additionally, the company is defending against numerous employment litigation cases filed by former employees.