March 8, 2007 Robert D. Sloan Executive Vice President & General Counsel Entergy Corporation Hurricane Katrina: The Entergy Experience
Jan 19, 2016
March 8, 2007March 8, 2007
Robert D. SloanExecutive Vice President
& General Counsel Entergy Corporation
Hurricane Katrina: The Entergy Experience
August 26: Forecast for Katrina’s 2nd Landfall Shifted 310 Miles to New Orleans
After crossing lower Florida peninsula, Panhandle hit was expected…
…but track abruptly moved much farther west.
Aug. 25
Aug. 26
Forecast Track on August 26 at 3:00 a.m.
Forecast Track on August 26 at 9:00 p.m.
Forecast
Track
Forecast
Track
CAT 5
CAT 4
August 29: Hurricane Katrina Made Its Second Landfall as Strong Category 4
New Orleans, LA
Baton Rouge, LA Gulfport, MS
Biloxi, MS
Mobile, AL
Wind Field Image Map on August 29 at 4:00 a.m.
Louisiana Mississippi Alabama
Tornado activitywithin thestorm
115 miles 126 miles196 miles
Sustained Winds138-150 mph
46-58 mph
CAT 3
CAT 4
CAT 5
August 30: Levees Broke and Floodwaters Inundated New Orleans and Vicinity
Katrina Storm Surge Approaches Entergy’s Michoud Plant
Post-Katrina Flooding in New Orleansand Surrounding Areas
Photo by Entergy’s Michoud plant manager Don McCroskey
Outages Peaked at More Than One Million Customers
Peak Outage Map for Louisiana and MississippiDue to Hurricane Katrina
Out ofof Service (Red) Not Affected (Green)
Flooding
Damage Exceeded Anything Entergy Had Ever Experienced
Extensive flooding and wind damage affected Entergy’s generation, transmission and distribution infrastructure.
Customer outages peaked at over one million customers, more than any previous storm in Entergy’s history.
Affected Area Total Outages
Generation Units Offline 18
Transmission Lines Out 182
Transmission Substations Out 263
Distribution Poles Destroyed 17,400
Distribution Circuit Miles Affected
28,500
Customer Outages (millions) 1.1
Outages at Peak Due to Hurricane Katrina
…and our largest city flooded.
New Orleans elevation cross-section
Lower 9th Ward
New Orleans East
Lakeview
Mid-City
CBD
Early Estimates: 123,000 Will Be Unable to Accept Service for an Extended Period
West Bank Network (not depicted) West Bank Network (not depicted) 6,0006,000
East Orleans Network East Orleans Network 64,00064,000
Orleans Orleans NetworkNetwork23,00023,000
Chalmette Network Chalmette Network 30,00030,000
Storm Surge
Storm Surge
Customers affected by flood waters
Lake Pontchartrain
St. Bernard
Challenges Faced by Entergy New Orleans
The first priority is the safe restoration of service following the destruction to infrastructure caused by Hurricane Katrina.
1
Massive restoration costs for Entergy New Orleans, Inc. (ENOI) and only partial return of customers could more than double electricity rates.
2
ENOI’s customers, over 20% of which were below poverty-level before Katrina, cannot absorb higher rates of this magnitude.
3
Federal assistance is required soon to protect customers from this severe cost burden.
4
The level of rates required absent Federal assistance will stifle business development and the repopulation of New Orleans, which in turn will cripple the opportunity for economic recovery in this region.
5
Katrina’s unique challenges… Corporate HQ evacuated
Employees’ homes destroyed
Resources pre-dedicated to Florida
Security threats in New Orleans
Flooded gas facilities
Contractors’ bankruptcy fears
Inoculations for workforce
Severe substation flooding
Communications knocked out
Massive scale/logistics challenge
Gasoline/Diesel shortages
Inaccessibility
DOE/DHS coordination & reporting
Corporate HQ evacuated
Employees’ homes destroyed
Resources pre-dedicated to Florida
Security threats in New Orleans
Flooded gas facilities
Contractors’ bankruptcy fears
Inoculations for workforce
Severe substation flooding
Communications knocked out
Massive scale/logistics challenge
Gasoline/Diesel shortages
Inaccessibility
DOE/DHS coordination & reporting
Entergy New Orleans’ Restoration CostsAre Highest Relative to Company Size
In comparing expected costs across the three most affected jurisdictions, the potential costs at Entergy New Orleans represent a substantial portion of the entity’s net plant, compared to 10% or less at Entergy Louisiana and Entergy Mississippi.
This places a substantial burden on New Orleans customers.
Entergy New Orleans Entergy Louisiana Entergy Mississippi
Estimated Restoration Costs Due to Hurricane Katrina$ Million
Total Expected Cost
Total Net Plant
260-325 325-37575-90
480
3,700
1,600
% of Plant 54% - 68% 9% - 10% 5% - 6%% of Equity 149% - 186% 30% - 35% 13% - 15%
480
Interrelated Factors Will Shape ENOI’s Future – All Options Are Being Considered
Outcome of Today’s Uncertainties
Determines Rate Levels
Includes:
• Regional economic recovery
• Repopulation of city
• Utility service level desired and ability to pay for it
• Insurance proceeds
• Federal assistance
• Regulatory recovery mechanisms
Factors:
• Number of customers and load
• Cost structure of business
• Sustainable capital structure
And Shapes ENOI’s Exit from Bankruptcy
Outcomes:
• Entergy operates ENOI
• Entergy sells ENOI
• ENOI municipalized
Key Factors in ENOI Bankruptcy Process