Edgar Filing: ENTERGY CORP /DE/

FORM 425

Update on

Entergy Transmission

Spin/Merger with ITC

CLECO/NRG

May 31, 2012

Presented by Entergy Louisiana and Entergy Gulf States Louisiana

Filed

Entergy

Corporation

Pursuant

Rule

425

Under the Securities Act of 1933

Subject

Company:

Entergy

Corporation

Commission File No. 001-11299

Entergy 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 report

on Form 10-Q for the quarter ended March 31, 2012, and other filings made by Entergy with the Securities

and Exchange Commission; (ii) the following transactional factors (in addition to others described

elsewhere in this presentation 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, 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

ITC and Transco will file registration statements with the Securities and Exchange Commission

(“SEC”) registering shares of ITC common stock and Transco common units to be issued to Entergy

shareholders in connection with the proposed transactions. ITC will also file a proxy statement with the

SEC that will be sent to the shareholders of ITC. Entergy shareholders are urged to read the prospectus

and/or information statement that will be included in the registration statements 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 and any other relevant documents

because they contain important information about Transco and the

proposed transactions. The proxy

statement, prospectus and/or information statement, 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, LA 70161

or by

calling Entergy’s Investor Relations information line at 1-888-ENTERGY (368-3749), or from ITC upon

written request to ITC Holdings Corp., Investor Relations, 27175

Energy Way, Novi, MI 48377 or by

calling 248-946-3000.

Agenda

ITC Spin-Merge Transaction Overview

Financial Flexibility

Rate Effects of Spin-Merge Transaction

Benefits

ETR

–

ITC

Spin-Merge

Transaction

Approvals Required

Storm Response

The Merger Transaction –

End State

•

Entergy Utility Operating Companies

comprised of:

–

Generation

–

Distribution

•

Entergy expects to receive gross cash

proceeds of $1.775B from new indebtedness

that will be assumed by ITC at close

•

Each Operating Company's capital structure

anticipated to be consistent with current

state following the transaction

•

Prior to the merger, ITC

expects to effectuate a

$700M recapitalization

currently anticipated

to be a special dividend

•

Entergy shareholders to merge

spun transmission business with

ITC merger subsidiary

•

New Holdco to survive

•

Entergy

shareholders

receive

50.1% of ITC stock

Entergy

Shareholders

Parent

Creditors

Entergy

Utility

OpCos

Entergy

Wholesale

Commodities

OpCo

Creditors

Entergy

Shareholders

Mid South

Transco LLC

(New Holdco)

ITC

Shareholders

ITC

ITC Merger

Sub

Transco Subs

Illustrative

Benefits of ETR –

ITC Spin-Merge Transaction

ITC Spin-Merge Transaction Overview

Agenda

Financial Flexibility

Rate Effects of Spin-Merge Transaction

Approvals Required

Storm Response

•

Increases flexibility of investment alternatives

•

Protects credit quality of Entergy OpCos

•

Supports efficient infrastructure investment

Overview of Benefits to Customers

Through Spin-Merge

•

Combines best operating practices of both companies

•

Brings ITC’s experience and track record of safe and reliable

operations to ensure continued strengthening of overall grid

performance

•

Leverages Entergy employees’

knowledge and experience and

fully utilizes Entergy’s world-class storm restoration process

•

Provides singular focus on transmission system performance,

planning and operations

•

Aligns with national policy objectives to facilitate investment in

local, regional and inter-regional transmission, advance open

access initiatives, and promote access to competitive energy

markets

•

Enhanced credit quality improves access to capital for

Transmission business

Financial

Flexibility

Operational

Excellence

Independent

and

Transparent

ITC Model

ITC Spin-Merge Transaction Overview

Agenda

Benefits

ETR

–

ITC

Spin-Merge

Transaction

Financial Flexibility

Rate Effects of Spin-Merge Transaction

Approvals Required

Storm Response

The Utility Industry Is Facing Huge Need for Capital

–

Estimated at $2.2T Over the Next 20 Years

Growth / Investment

Issues Facing Utility Industry

Over Next 20 Years

Source: Internal analysis; Bloomberg

Generation

Transmission

Distribution

Projected Industry Capital Investments

Over Next 20 Years

???

Current Market Cap

Other = 0.15

Challenges

facing the

electric

utilities

industry

Addressing

challenges

•

"the real tests lie ahead, when federal environmental mandates and consequent

spending requirements are more certain, when state renewable portfolio standards

begin

command

heightened

expenditures

earnest,

and

when

aging

infrastructure reveals its vulnerability“

•

"a sustained, collaborative and open working relationship among the principal vested

interests will be critical to the execution of corporate, environmental and public policy

initiatives"

•

"we view most favorably those commissions that establish rates that reasonably reflect

the costs incurred by a utility, including a return on equity, and where timely

adjustments to these rates are made to recognize changes in costs”

Note:

Comments

sourced

from

Energy

Biz

article

written

Richard

Cortright,

Jr.,

managing

director

Standard

Poor's

U.S.

Utilities and

Infrastructure Ratings group dated Feb 07, 2012

Standard and Poor's Outlook –

"Utility Credit Ratings Critical to Raising Capital –

Money Needed to Build Wires and Plants

Capital Trends –

Rating Agency Considerations

•

"For an industry that is among the most capital-intensive in the United States, failure to

maintain investment grade could have significant upward cost implications"

"public service commissions continue to be reasonably supportive despite frequently lower

authorized returns."

"a preference for expense deferrals may develop, and a proclivity for less competitive

authorized returns will almost certainly prevail. Such a turn of events would likely result

in a shift of our stable outlook on overall U.S. electric utility credit quality to negative."

Duke / Progress

Northeast Utilities / NSTAR

PPL / LG&E

First Energy / Allegheny

Exelon / Constellation

Industry Is Responding to Capital Investment

Challenges with Different Approaches

Create larger footprint; upsize balance sheet

Achieve greater certainty in regulations

Align business model with capital needs

Consolidate

Build

Regulatory

Flexibility /

Certainty

Change

Business

Model

•

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

specific rider recovery, CWIP in rates, etc.

•

e.g., AEP Transco

e.g., FPL Rate Hike Request

•

5.3

7.2

2011-2014

2007-2010

2015-2021

2003-2006

4.3

+21%

Capital Trends –

Rising Capital for Entergy Overall

???

Effect of EPA rules?

???

Effect of EPA rules?

Aging infrastructure?

+37%

Note: Excludes storm Capex for historical data; ETR Utilities includes EAI, ELL, EGSL, EMI, ETI, ENOI, SERI, ESI, EOI, SFI

Entergy Utilities Capital Investment

Total Spend

Capital spending could significantly increase over the next

10 years due to the potential for new environmental

regulations and replacement of aging infrastructure

Capital Trends –

Rising Capital for Entergy’s Transmission Business

Entergy Projected Transmission Capital Investment

2012E-2014E; $M

100

200

300

400

500

600

2012E

2013E

2014E

Projected

Depreciation

Expense

For ETR Utilities, Spend on Major Storms

Amounted to ~$2.6B Over 2005-2010

Event

Year

Spend

($M)

Hurricane Katrina

2005

1,117

Hurricane Rita

2005

645

Hurricane Gustav

2008

680

Hurricane Ike

2008

626

Ice Storm EAI 2009

2009

119

Ice Storm EAI Jan 2010

2010

In the past, ETR

utilities have had to

effectively respond

to major storms

which have required

unplanned capital

expenditures

~$3.2 billion over

2005-2010

Strong balance sheet and credit ratings critical for quickly

mobilizing capital and resources to respond to emergencies

Includes capital and O&M spend

Note: 2011 CapX estimated to be $2.11B. 2011 capital spend related to major storms was $112M

2011-2014

2003-2006

3.5

2007-2010

1.7

2.5

2015-2021

Note: Excludes storm Capex for historical data

+46%

Capital spending could significantly increase over the next

10 years due to the potential for new environmental

regulations and replacement of aging infrastructure

Capital Trends –

Rising Capital for LAU

???

Effect of regulation?

???

Effect of regulations?

Aging infrastructure?

+40%

LAU Capital Investment

Total Spend

Financial Flexibility

ITC Spin-Merge Transaction Overview

Agenda

Benefits

ETR

–

ITC

Spin-Merge

Transaction

Storm Response

Rate Effects of Spin-Merge Transaction

Approvals Required

Storm Response Organization Will Be Modified

to Ensure Close Coordination and Interaction

Between Entergy and ITC

System Section

Chiefs

System Planning

Chief

Supply Chain

Operations

Resource

Logistics

Administration

Planning Support

Branch Director

Restoration

Prioritization

Risk Analysis

Situation Branch

ITC Storm

Response

Organization

(details TBD in

design phase)

ITC-ETR

liaison

(New

position)

ITC Technical/Mgmt

employee assigned to

ETR storm response

center in Jackson

Preliminary pre-design phase vision

Final design scheduled 9/2012

ITC employee

ETR employee

Functional Incident

Commanders

(ex. Fossil, Distribution,

Nuclear, Gas)

ITC System Incident

Commander (SIC)

(Greg Grillo)

ETR System Incident

Commander (SIC)

(John Mullins)

Storm Response

Financial Flexibility

ITC Spin-Merge Transaction Overview

Agenda

Benefits

ETR

–

ITC

Spin-Merge

Transaction

Rate Effects of Spin-Merge Transaction

Approvals Required

Henry Hub Gas Index

$/mmBtu

ELL

Avg.

Monthly

Residential

Bill

1,000

kWh

150

100

2011

95.93

2010

93.70

2009

83.35

2008

109.77

2007

99.55

2006

92.70

2005

96.83

2004

78.99

2003

84.12

2002

72.57

2001

80.97

Significant Variability in Average Residential Bills –

Yearly Variation Between $2 and $26 Over 2001-2011

Illustrative

Note: Residential bills are the average of the Typical Monthly Bills in that year for a residential customer using 1,000 kWh, excluding taxes.

Source: Entergy Regulatory Services, Typical Bill Report

Henry Hub

Gas Index

$/mmBtu

2.7

3.1

5.4

5.9

8.3

6.5

6.9

9.0

3.8

4.4

4.0

ELL Avg. Monthly Residential Bill –

1,000 kWh

Henry Hub Gas Index

13% reduction in customer

bills since 2008

-$26.43

(-24%)

-13%

+$2.23

(+2%)

Henry Hub Gas Index

$/mmBtu

EGSL

Avg.

Monthly

Residential

Bill

1,000

kWh

150

100

2011

93.55

2010

93.91

2009

82.35

2008

108.99

2007

101.47

2006

108.24

2005

101.34

2004

80.95

2003

87.16

2002

75.12

2001

89.25

14% reduction in customer

bills since 2008

Significant Variability in Average Residential Bills –

Yearly Variation Between $1 and $27 Over 2001-2011

Illustrative

Note: Residential bills are the average of the Typical Monthly Bills in that year for a residential customer using 1,000 kWh, excluding taxes.

Source: Entergy Regulatory Services, Typical Bill Report

Henry Hub

Gas Index

$/mmBtu

2.7

3.1

5.4

5.9

8.3

6.5

6.9

9.0

3.8

4.4

4.0

EGSL

Avg.

Monthly

Residential

Bill

–

1,000

kWh

Henry Hub Gas Index

-$26.64

(-24%)

+$0.37

(0%)

-14%

Transmission Constitutes ~12% of ELL Rate Base

and ~13% of EGSL Rate Base (2010)

ELL Last Filed Rate Base

Estimated

RemainCo

Rate Base

2.8

Estimated

Transmission

Rate Base

0.4

Aggregate

Rate Base

3.2

EGSL Last Filed 2010 Rate Base

Estimated

RemainCo

Rate Base

Estimated

Transmission

Rate Base

0.3

Aggregate

Rate Base

2.1

2.4

Estimated ELL

Transmission

Rate Base

Is ~12%

of Total

Estimated

EGSL

Transmission

Rate Base

Is ~13%

of Total

1. Total Electric Rate Base sourced from Jan 2012 Investor News 2. Transmission Rate base sourced from May 2011 annual FERC OATT

filing as of 12/31/10

Note: Figures are rounded for approximation

Rate Impacts: Transmission Constitutes a Small

Portion of an ELL Customer's Total Bill

Typical

ELL

Customer

Bill

Illustrative

Non-Fuel

43.0%

4.0%

53.0%

Transmission

Fuel

Rate Impacts: Transmission Constitutes a Small

Portion of an EGSL Customer's Total Bill

Typical

EGSL

Customer

Bill

Illustrative

Non-Fuel

38.9%

6.6%

54.5%

Transmission

Fuel

•

Transition from current retail rate construct to FERC-regulated rate construct

expected for ITC

•

Analysis assumes MISO base ROE for Entergy transmission business

(12.38%) and capital structure currently utilized by ITC operating companies

(60% equity/40% debt)

•

Benefits

credit

quality

improvement

resulting

from

transition

FERC-

regulated rate construct partially offset ROE and capital structure impacts

Rate Impacts Split into Rate Construct, Rate Timing

and Other Effects for Retail Customers

Rate

Construct

Effects

Rate

Timing

Effects

•

Forward Test Year:

Eliminates regulatory lag in recovery of capital

investments

•

One time impact of conversion to forward test year

•

Reflects amounts that would have been collected in future years

•

MSS-2 construct eliminated post transaction

•

Current

estimation

reflects

effect

paying

load

ratio

Transmission

cost factoring in zonal investment and retail share of Transmission

investments

Other Effects

2014 Benefits

From Higher

Credit Quality

resulting from

Rate

Construct

~(0.27)

2014 Rate

Construct

Effects from

FERC

regulated

model

~0.84

Illustrative

Bill if ETR

owns

T assets –

current state

~95.93

100

~96.31

+0.38

0.4%

Illustrative

Bill if ITC

owns

T assets

post

transaction

~(0.19)

2014 net

other

effects*

ELL

Residential

Bill

1,000 kWh

ELL Typical Residential Customer Bill Expected

Initially Increase 0.4% Due to Rate Construct Effects

–

Expected Mitigation by Customer Benefits

Illustrative

Expected Rate

Construct Effects*

Over the long term,

customer bill effects

expected to be mitigated

by...

•

Enhanced Financial

flexibility

•

Operational Excellence

–

Reliability, System

Performance, Scale

efficiencies etc.

•

Independent and

transparent ITC model

*Refer to previous slide where rate construct and other assumptions are detailed

Note: Illustrative bill is the average of the 2011 Typical Monthly Bills for a residential customer using 1,000 kWh, excluding taxes. Calculation indicative of the

rate effects of Transaction and is not meant to project an actual future customer bill. Estimation does not include effects of move to MISO, changes in fuel

prices or rate cases between now and time of deal close

Note: Contents exclude estimated

one time rate timing effect of $0.65 in

2014 due to conversion to forward

test year -

reflects amounts that

would have been collected in future

years

EGSL Residential Bill-1,000 kWh

100

~94.59

2014 net

other

effects*

~0.36

2014 Benefits

From Higher

Credit Quality

resulting from

Rate

Construct

Illustrative

Bill if ITC

owns

T assets

post

transaction

2014 Rate

Construct

Effects from

FERC

regulated

model

~0.92

Illustrative

Bill if ETR

owns

T assets –

current state

93.55

~(0.24)

EGSL

Typical

Residential

Customer

Bill

Expected

Initially Increase 1.1% Due to Rate Construct Effects

–

Expected Mitigation by Customer Benefits

Illustrative

Expected Rate

Construct Effects*

Over the long term,

customer bill effects

expected to be mitigated

by...

•

Enhanced Financial

flexibility

•

Operational Excellence

–

Reliability, System

Performance, Scale

efficiencies etc.

•

Independent and

transparent ITC model

*Refer to previous slide where rate construct and other assumptions are detailed

Note: Illustrative bill is the average of the 2011 Typical Monthly Bills for a residential customer using 1,000 kWh, excluding taxes. Calculation indicative of the

rate effects of Transaction and is not meant to project an actual future customer bill. Estimation does not include effects of move to MISO, changes in fuel

prices or rate cases between now and time of deal close.

Note: Contents exclude estimated

one time rate timing effect of $0.65 in

2014 due to conversion to forward

test year -

reflects amounts that

would have been collected in future

years

+1.04

1.1%

Storm Response

Financial Flexibility

ITC Spin-Merge Transaction Overview

Agenda

Benefits

ETR

–

ITC

Spin-Merge

Transaction

Approvals Required

Rate Effects of Spin-Merge Transaction

Pathway to Completion –

Required Approvals

Jurisdiction / Authority

Approval(s)

MISO RTO

•

Final approval of move to MISO RTO by all retail jurisdictions

•

Final FERC approval of move to MISO RTO

Entergy Retail

Regulators

(APSC, LPSC, MPSC,

PUCT, CCNO)

•

Change of control of transmission assets

•

Authorization to incur debt in some jurisdictions

FERC

•

Change of control of transmission assets

•

Establishment of new regulatory construct for new ITC

subsidiaries

•

Authorization for operating company financings

Hart-Scott-Rodino Act

(DOJ / FTC)

•

Pre-merger notification to review potential antitrust and

competition issues

IRS Private Letter

Ruling

•

Ruling regarding tax-free treatment of the distribution of Mid

South TransCo LLC (new Holdco)

ITC Shareholders

•

Merger

•

Amendment to ITC Articles of Incorporation to increase the

number of authorized shares

•

Authorization for issuance of greater than 20% of

outstanding shares

*Approval may be required in Missouri due to limited assets in those territories. Approval for Financings may be required in Tennessee. Approval may

be required in Oklahoma for ITC