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Entergy's CEO Discusses Q1 2012 Results - Earnings Call Transcript

J. Wayne Leonard

Thanks, Paula. Good morning, everyone. The theme of our 2011 Annual Report to Stakeholders is Adapting to a Changing World. Given the schedules involve for design and illustration, each year, we must select our theme 4 to 5 months in advance of production and distribution. As it turns out, looks like -- so now it looks like we have a foreknowledge of what was to come. It would be except in philosophy 101, you learn 2 things on day 1. The first is the beginning of all wisdom is to know thyself. The second is the only constant in life is change. For some time, we've been communicating to you our plans and initiatives to address risks or uncertainties, and given our strengths and limitations with that to the coming reality that we are now facing.

Today, I'll update you on where we stand, and will provide a context for our accomplishments and our challenges. Starting with one of our key utility initiatives, the proposal for each of the utility operating companies to join a regional transmission organization, specifically, the Midwest Independent System Operator, or MISO. Events continue to move us closer to achieving that goal. In a significant development last week, the Federal Energy Regulatory Commission issued its order conditionally accepting MISO's tariff provisions regarding cost allocations for transmission projects upon introduced transition into the MISO RTO.

Just to remind you, last September, FERC denied MISO's request for tariff waiver to implement this same proposal. Moreover, FERC noted in its order that it was not making any findings on the merits of the proposal at that time. The request for the tariff waiver was just a wrong procedural vehicle to implement the proposal. In the April 19 ruling on the merits, FERC founded that it was just and reasonable for MISO and its existing transmission owners to agree to establish a transition period to ensure that no entity must bear the cost of transmission facilities from which it has not been showing the benefit, consistent with traditional cost causation principles. Prior to this FERC ruling, on March 16, Entergy Arkansas reached a settlement with its Arkansas co-owners in its coal-generating plants, including Arkansas Electric Cooperative Corporation, one of the intervenors in the FERC proceeding. The settlement will include how the plant will operate after Entergy Arkansas integrates into MISO. This agreement extends the benefits of MISO participation to all co-owner utilities if the Arkansas Public Service Commission approves the Entergy Arkansas' proposal to join MISO. Combined with Entergy Arkansas, these groups represent 80% of all Arkansas electric customers in the state.

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