Edgar Filing: ENTERGY CORP /DE/

425

POWERING TOMORROW

An Inside View of Entergy’s Transmission Initiatives

Filed by Entergy Corporation Pursuant to Rule 425

Under the Securities Act of 1933

Subject Company: Entergy Corporation

Commission File No. 001-11299

Entergy SEC Disclosure

FORWARD-LOOKING INFORMATION

In this communication, and from time to time, Entergy makes certain “forward-looking statements” within the meaning of the Private Securities Litigation

Reform Act of 1995. Except to the extent required by the federal securities laws, Entergy undertakes no obligation to publicly update or revise any forward-

looking statements, whether as a result of new information, future events, or otherwise. Forward-looking statements involve a number of risks and

uncertainties. There are factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements,

including (i) those factors discussed in Entergy’s Annual Report on Form 10-K for the year ended December 31, 2011, its Quarterly Reports on Form 10-Q

for the quarters ended March 31, 2012, June 30, 2012 and September 30, 2012, and other filings made by Entergy with the Securities and Exchange

Commission (the “SEC”); (ii) the following transactional factors (in addition to others described elsewhere in this communication, in the preliminary proxy

statement/prospectus included in the registration statement on Form S-4 that ITC filed with the SEC on September 25, 2012 in connection with the

proposed transactions, and in subsequent securities filings) involving risks inherent in the contemplated transaction, including: (1) failure to obtain ITC

shareholder approval, (2) failure of Entergy and its shareholders to recognize the expected benefits of the transaction, (3) failure to obtain regulatory

approvals necessary to consummate the transaction or to obtain regulatory approvals on favorable terms, (4) the ability of Entergy, Mid South TransCo

LLC (TransCo) and ITC to obtain the required financings, (5) delays in consummating the transaction or the failure to consummate the transaction, (6)

exceeding the expected costs of the transaction, and (7) the failure to receive an IRS ruling approving the tax-free status of the transaction; (iii) legislative

and regulatory actions; and (iv) conditions of the capital markets during the periods covered by the forward-looking statements. The transaction is subject

to certain conditions precedent, including regulatory approvals, approval of ITC’s shareholders and the availability of financing. Entergy cannot provide any

assurance that the transaction or any of the proposed transactions related thereto will be completed, nor can it give assurances as to the terms on which

such transactions will be consummated.

ADDITIONAL INFORMATION AND WHERE TO FIND IT

On September 25, 2012, ITC filed a registration statement on Form S-4 (Registration No. 333-184073) with the SEC registering shares of ITC

common stock to be issued to Entergy shareholders in connection with the proposed transactions, but this registration statement has not

become effective. This registration statement includes a proxy statement of ITC that also constitutes a prospectus of ITC, and will be sent to

ITC shareholders. In addition, TransCo will file a registration statement with the SEC registering TransCo common units to be issued to

Entergy shareholders in connection with the proposed transactions. Entergy shareholders are urged to read the proxy statement/prospectus

included in the ITC registration statement and the proxy statement/prospectus to be included in the TransCo registration statement (when

available) and any other relevant documents, because they contain important information about ITC, TransCo and the proposed transactions.

ITC shareholders are urged to read the proxy statement/prospectus included in the ITC Registration Statement and any other relevant

documents because they contain important information about TransCo and the proposed transactions. The proxy statement/prospectus and

other documents relating to the proposed transactions (when they are available) can be obtained free of charge from the SEC’s website at

www.sec.gov. The documents, when available, can also be obtained free of charge from Entergy upon written request to Entergy Corporation,

Investor

Relations,

P.O.

Box

61000

New

Orleans,

70161

calling

Entergy’s

Investor

Relations

information

line

1-888-

ENTERGY

(368-3749),

or from

ITC

upon

written

request

ITC

Holdings

Corp.,

Investor

Relations,

27175

Energy

Way,

Novi,

48377

calling

248-946-3000.

Presenting today:

Rick Riley

Mark McCulla

Jeanne Kenney

Joe Domino

Steps taken

ON BEHALF OF CUSTOMERS

Service improvements

More options

More information

Greater control

Community investment

Continually working to

MEET FUTURE NEEDS

Expanded generation

Maintained some of the nation’s

lowest rates

MISO Initiative

ITC Transaction

Powering

TOMORROW

Rick Riley

VICE PRESIDENT

ENERGY DELIVERY

Entergy’s

TRANSMISSION BUSINESS

15,000 + circuit miles of

transmission lines at voltage

levels of 69 kV and above

Spans portions of five states

Approx. 1,500 substations

Transmission headquarters

Employees, vehicles, other

buildings and more

Developed city-by-city,

in patchwork fashion

not nationally

Fragmented

Inefficient

The existing U.S.

TRANSMISSION GRID

Plans announced April 2011

Manages the dispatch of generation

Regional transmission planning process

Coordinate regional operation of transmission

Brings buyers and sellers Into a centrally

managed organized market

Results in greater efficiency

Drives value to Entergy customers

Features of a

REGIONAL TRANSMISSION ORGANIZATION

Plans announced December 2011

Shifts ownership of Entergy’s

transmission business

A singular focus in transmission,

delivering proven results

Introducing fully separated,

INDEPENDENT TRANSMISSION

Substantial

FUTURE CAPITAL INVESTMENT REQUIRED

Estimates of $1.5 trillion

to $2 trillion

Compliance requirements

Environmental regulations

Mark McCulla

VICE PRESIDENT

TRANSMISSION REGULATORY COMPLIANCE

Entergy’s historical Interest

IN RTOs

Encouragement from Regulators

2000

2003

2006

2012

Joint RTO application with SPP

rejected by FERC

Joint effort with SETRANS fell apart

Establishment of ICT

SPP has served as ICT since then

SPP contract expired November

MISO is now serving as the ICT

Regional focus

Immense energy pool from

Canada to Gulf

Efficient, proven Day 2 market

Projected customer savings of

$1.4B in first decade

One of the country’s

FIRST AND LARGEST RTOs

Jeanne Kenney

VICE PRESIDENT

PERFORMANCE MANAGEMENT

Leading Transmission Regulatory Implementation Team (TRIT)

Invest

Issue Debt

Project Delays

Rate Base

Attrition (CapX > Depn)

Dilution

Rate Case

Issue Equity

Regulatory Lag

Capital Markets

Large and growing

CHALLENGES TO FINANCING GRID

Investment to

CRITICAL INFRASTRUCTURE

Similarly, utilities must

invest in transmission

infrastructure.

CapX/depreciation ratio trends

DEMAND SIGNIFICANT EXTERNAL FINANCING

Note: FERC data from Energy Velocity

The

rapid

increase

capital

expenditures

for

transmission

recent

years,

combined

with

the

long

depreciation

lives

for

transmission

assets,

means that transmission capital expenditures in particular far exceed their related depreciation cash flows.

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

Overall

Generation

Distribution

Transmission

2.6

3.0

1.9

3.7

1.1

0.7

1.8

1.5

Create larger footprint; upsize balance sheet

•

Duke / Progress

•

Northeast Utilities / NSTAR

•

PPL / LG&E

•

First Energy / Allegheny

•

Exelon / Constellation

Achieve greater certainty in regulations

•

e.g., Formula rate plans, future test years,

specific rider recovery, CWIP in rates, etc.

•

e.g., FPL Rate Hike Request

Align business model with capital needs

•

e.g., AEP TransCo

Industry is responding

WITH DIFFERENT APPROACHES

Consolidate

Build Regulatory

Flexibility / Certainty

Change Business Model

Largest company of its kind

More than 15,000 miles of

transmission lines

Operations in seven

states:

Michigan, Iowa, Illinois,

Minnesota, Missouri, Kansas,

Oklahoma

Has RTO experience as

transmission-owning member of

both MISO and SPP

INDEPENDENT TRANSMISSION COMPANY

ITC is the nation’s largest

750 employees

New ITC Midsouth region

Headquartered in Jackson, MS

New corporate citizen

Entergy’s long advocacy for

INDEPENDENT TRANSMISSION

Regulators retain control and influence over

TRANSMISSION ASSETS

Retail Regulators

•

Will

still

set

OpCos’

retail

revenue

requirements

•

Will still have jurisdiction over retail rate design

•

Will have a role on MISO advisory committee

•

Will have siting authority

•

May intervene in some FERC proceedings

HEARINGS ACROSS JURISDICTIONS

LPSC -

EGSL\ELL

Hearings

9/5/12

9/20

NO City Council –ENO

9/12/12

APSC –

EAI

9/28/12

Hearings

MPSC –

EMI

10/5/12

Direct/Rebuttal/Sur-rebuttal/Rejoinder/Protests

Hearings

2/8

7/31

3/29

9/25

PUCT –

ETI

NOTE:

EAI, ELL, EGSL, EMI and ENO schedules have been approved by the Regulators –

rest are in process of finalization. Blue symbols stand for various critical dates related to Staff

Rebuttal, Intervenor Rebuttal, Responses, Sur-rebuttal and Rejoinders

PUCT preference

Filing dates

Hearings

Decision

ITC/ETR –

under discussion

Missouri PSC -

EAI

1/13

EOM May

8/23

proposed

close date

Discussions

between ETR &

ITC

Discussions

w/regulators/

staff/parties

Settlement

Process

Stipula-

tions

finalized

Approval

8/09

Hearings

APSC will typically not discuss settlement until after

direct testimony filed; settlements must be proposed

to commission 10 days before hearings

9/15

FERC

9/26/12

203/5

10/31/12

204

203/5

204

203/5

Technical Conference

Procedural schedules for

2012

2013

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

June

July

Aug

Sep

Expansive, super-regional energy

marketplace

Financial capacity for investment

Improved reliability

Lower long-term costs while

enhancing the grid

Multifaceted

BENEFITS TO ENTERGY CUSTOMERS

UTILITY

OPCOS

ENTERGY

WHOLESALE

COMMODITIES

MID SOUTH

TRANSCO LLC

(NEW HOLDCO)

ITC MERGER

SUB

Transco Subs

ITC After

–

Generation

–

Distribution

–

Retail customer service

ENTERGY SHAREHOLDERS

OWN STOCK IN TWO COMPANIES

ETR After

–

Transmission

Up to $700M

recapitalization

(pre-close)

ETR and

OpCos

reduce

debt by

$1.775B

$1.775B DEBT

TRANSFERRED

WITH ASSETS

TRUST

Up to ~5%

ITC Shares

ITC

ETR

Up to ~5%

Proposed

Spin-Merge

Transmission

Business

ENTERGY

SHAREHOLDERS

ITC

SHAREHOLDERS

The Merger Transaction

END STATE

Transmission

Manager

Directs Regional

Transmission, Dispatch

and Movement of

Electricity

Transmission Owner

Builds, Operates and

Maintains Physical

Transmission Assets

Utility

Generates and

Distributes

Provides Customer

Service

Electricity.

Rick Riley

VICE PRESIDENT

ENERGY DELIVERY

From the Current to the

FUTURE GRID

Current grid is fragmented,

inefficient

211,000 transmission line

miles

More than 140 operators

Huge regional

market

Improved

infrastructure

Efficient use of

transmission system

More secure energy

future

FUTURE GRID

Creating the

Financial strength and flexibility; two balance sheets

to finance investments in the grid

Singular focus in areas of expertise: Entergy on

generation and distribution; ITC on transmission

Opportunity afforded by a new corporate citizen and

new investment in our communities and region

New model creates key benefits:

STRENGTH, EXPERTISE, OPPORTUNITY

•

Estimated impact to average (1,000kWh/mo)

residential customer monthly bill is about a dollar.

•

The benefits of the transaction

improved reliability and efficiency

lower overall costs of delivered energy

are expected to offset the modest change in rates.

For our customers,

WHAT

THE

IMPACT

BILLS?

Closing conditions, regulatory reviews

AND APPROVALS REQUIRED

The transaction is subject to the satisfaction of customary closing conditions.

Primary filings and approvals required are summarized below.

Authority

Entergy’s Retail

Regulators

•

Change of control of transmission assets

•

Affiliate transaction approvals related to steps in the spin/merge

•

Authorization to incur debt in some jurisdictions

Federal Energy

Regulatory Commission

•

Change of control of transmission assets (203 filing)

•

Acceptance of jurisdictional agreements (205 filing)

•

Authorization to assume debt/issue securities (204 filings)

•

Changes to System Agreement to remove provisions related to transmission planning

and equalization

•

ITC filing to establish new rate tariffs for the ITC operating companies

Hart-Scott-Rodino Act

•

Pre-merger notification to review potential antitrust and competition issues

Internal Revenue Service

•

Private letter ruling substantially to the effect that certain requirements for a tax-free

treatment of the distribution of TransCo are met

Securities and Exchange

Commission

•

ITC Form S-4 and Proxy Statement (including audited TransCo financial statements and

disclosures), and

•

TransCo Registration Statement

ITC Shareholders

Approval required for:

•

Merger,

•

Issuance of shares to ITC shareholders, and

•

Amendment to ITC charter to increase authorized number of shares

Requirements

Entergy's current ICT agreement with

SPP is replaced by ICT agreement with

MISO

ITC Midsouth OpCos become TOs in

MISO immediately following

transaction close and participate in

MISO MTEP as TOs

MISO assumes functional control of

transmission system and continues as

Reliability Coordinator; ICT

agreement is terminated

MISO and ITC file with FERC

Attachment O templates and tariff

sheets to implement formula rates; no

rate pancaking

MISO is the Transmission Provider

under MISO Tariff with select Entergy

processes retained under new Module

B-1 for transition period

For the transition period, MISO will

delegate select tasks to ITC via

Appendix I Agreement

Transco Close

MISO replaces SPP as the

Independent Coordinator of

Transmission (ICT)

(December 2012)

ITC Midsouth OpCos become

Transmission Owners in

MISO

(upon closing)

Entergy OpCos become

Market Participants in

MISO

(December 2013)

Entergy MISO Integration and the

ITC TRANSACTION

Entergy OpCos become Market

Participants in MISO

Module B-1 is cancelled

Delegation of Module B-1

functions to ITC under TOA

Appendix I terminates

Joe Domino

CHIEF INTEGRATION OFFICER

PMO Update

https://myentergy.entergy.com/sites/transco/Pages

http://comm.prod.entergy.com/ieFocus

http://www.entergy.com/futurepower

http://www.entergy.com/transmissionmerger

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