Q4 2011 Earnings Call
January 31, 2012 11:00 am ET
Paula Waters - Vice President of Investor Relations
J. Wayne Leonard - Chairman, Chief Executive Officer and Chairman of Executive Committee
Leo P. Denault - Chief Financial Officer and Executive Vice President
Gary J. Taylor - President of Utility Operations
Previous Statements by ETR
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Jonathan P. Arnold - Deutsche Bank AG, Research Division
Steven I. Fleishman - BofA Merrill Lynch, Research Division
Paul B. Fremont - Jefferies & Company, Inc., Research Division
Dan Eggers - Crédit Suisse AG, Research Division
Julien Dumoulin-Smith - UBS Investment Bank, Research Division
Paul Patterson - Glenrock Associates LLC
Greg Gordon - ISI Group Inc., Research Division
Good day, everyone, and welcome to the Entergy Corporation Fourth Quarter 2011 Earnings Release Conference Call. Today's call is being recorded. At this time, for introductions and opening comments, I would like to turn the call over to Vice President of Investor Relations, Ms. Paula Waters. Please go ahead.
Good morning, and thank you for joining us. We'll begin this morning with comments from Entergy's Chairman and CEO, Wayne Leonard; and then Leo Denault, our CFO, will review results. [Operator Instructions] As part of today's conference call, Entergy corporation makes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve a number of risks and uncertainties, and there are factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Additional information concerning these factors is included in the company's SEC filings. Now, I'll turn the call over to Wayne.
J. Wayne Leonard
Okay, thanks, Paula. Good morning, everyone. At our Analyst Conference last April, and since then, we have discussed the plans and strategies to positively resolve overhang issues that are negatively influencing your view of our future prospects. At EEI in November, I made a number of personal predictions on how I felt the future playing out. One was, that we would find the right partner and financial structure to allow a divestiture of our transmission business in a way that is in all stakeholders' best interest. Another was that Vermont Yankee will not be shut down.
While neither of those are closed issues as of today, we are pleased with our progress. As for other viewpoints I expressed, I standby those as well. And while we don't have specific outcomes to report today, we have been equally active in making them a reality.
Starting in Vermont. Consistent with our in-depth analysis on January 19, the U.S. District Court for the District of Vermont declared unconstitutional the state of Vermont's attempts to force the Vermont Yankee nuclear plant to close on March 21 of this year. The court ruled that Vermont Act 160 and a provision in Vermont Act 74 were preempted by the Federal Atomic Energy Act because they were enacted with radiological safety concerns in mind. Act 160, passed by the Vermont Legislature in 2006, required legislative approval for continued operation after March 21, 2012, before the Vermont Public Service Board to decide whether to grant a Certificate of Public Good or CPG to Vermont Yankee. The provision struck down and Act 74 had required legislative approval for storage and suspend nuclear field from operations after March 21, 2012. The court found that "There is overwhelming evidence in a legislative record that Act 160 was grounded in radiological safety concerns and the strong commitment desire to empower the legislature to act on those concerns and deciding the question of Vermont Yankee's continued operation." Similarly, the court concluded that, "Radiological safety concerns were the primary motivating force for enacting Act 74, in particular the requirement for a permanent legislative approval for Penfield storage after March 21, 2012." Furthermore, the court founded the issuance of the CPG for continued operations and not be conditioned on the below wholesale market power purchase agreement with Vermont or the Vermont Utilities, or Vermont Yankee selling power to the Vermont Utilities at rates below those available to wholesale customers in other states.
Over the last few years, there has been a nearly constant Entergy bashing in Vermont. And among other things, our company's integrity and our trustworthiness. We had chosen to not engage those attacks in the media. However, Judge Murtha's meticulous 102-page order rejects the state's assertion, "Entergy comes to the court with unclean hands." By stating, "Dependents have offered no evidence Entergy acted inequitably or in bad faith. And the court holds this argument unpersuasive."
The court's decision is good news, good news for our 600 employees at Vermont Yankee, the environment and the community, and also supports the proposition that the rule of law applies to everyone. The American justice system's blind in this application to see some facts beyond the surface in getting to the truth. Since the ruling was issued a little over a week ago, the #1 question being asked is, "What are the next steps?" We do not know what Vermont's next step will be. If they plan to appeal Judge Murtha's decision to the Second Circuit, Court of Appeals, they are required to file a notice with the Court by February 21. As for us, we are considering our options for recovering from the state of Vermont the costs and attorney's fees incurred in the case thus far. In addition, today, we filed a motion with the Vermont Public Service Board, asking the Board to take action in existing CPG docket without further proceedings, to grant a new CPG or amend the existing one, to permit operation of VY through March 21, 2032. As a reminder, in March 2008, we filed a request with the Board to issue a CPG for operation past March 2012. Hearings were held in the second quarter of 2009, followed with the filing of proposals for decisions and initial brief for the parties in July 2009. With the judge finding that no nuclear safety or power contract issues can be the basis for denial, we believe there is nothing standing in the way of initialing the CPG. We believe the evidence is complete and supports the decision to allow it's continued operation.