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Entergy Unit Could Face Bankruptcy

Entergy New Orleans weighs several options in the wake of Katrina.
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said its New Orleans subsidiary is considering a bankruptcy filing to alleviate liquidity constraints stemming from Hurricane Katrina.

Louisiana-based Entergy says the inability to deliver power to customers will cut revenue at its Entergy Louisiana and Entergy New Orleans units, where up to 170,000 customers remain cut off. The affected customers account for average annual non-fuel revenue of $210 million to $250 million.

"Entergy Corp. continues to believe it has sufficient liquidity to meet its current obligations and to fund its restoration efforts. However, the impact of lower revenues and storm restoration costs, concentrated at

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Entergy New Orleans, are expected to create liquidity constraints at that company," the company said.

The parent says it's weighing a number of alternatives to maintain liquidity at the unit, including open account advances; assigning the unit's power-purchase contracts to other subsidiaries; additional debt issuance; the expansion of borrowing capacity; and equity infusions.


Entergy New Orleans will consider seeking a petition for protection under federal bankruptcy law. Entergy believes this option should be considered to determine whether or not it is the most appropriate course of action to protect any future investment in ENOI and to preserve legal rights while achieving business continuity at ENOI," the company said.

Overall, Entergy has restored power to 874,000 of the 1.1 million customers who lost power at the peak of the storm. The company sees total restoration costs for the repair or replacement of Entergy's electric and gas facilities, plus business continuity expenses, of $750 million to $1.1 billion.