Entergy to spin off non-utility nuclear business

5 November 2007 — Entergy’s board of directors approved a plan to separate the non-utility nuclear business from Entergy’s regulated utility business through a tax-free spin-off of the non-utility nuclear business. SpinCo, the term used to identify the new company yet to be named, will be an independent publicly-traded company. In addition, SpinCo and Entergy Corp. intend to enter into a nuclear services joint venture, with equal ownership.

Entergy is targeting third quarter 2008 as the effective date for the spin-off and joint venture transactions to be completed. It expects the transactions to qualify for tax-free treatment for U.S. federal income tax purposes for both Entergy and its shareholders.

Once the transaction is complete, Entergy shareholders will own 100 percent of the common equity in both SpinCo and Entergy. SpinCo’s business is expected to consist of the non-utility nuclear assets, including the Pilgrim Nuclear Station in Plymouth, Mass., the James A. FitzPatrick and Indian Point Energy Center plants in Oswego and Buchanan, N.Y., respectively, the Palisades plant in Covert, Mich., and the Vermont Yankee plant in Vernon, Vt., and a power marketing operation.

Entergy Corp.’s business will consist of the current five regulated utility operating subsidiaries, System Energy Resources, Inc., the related services subsidiaries System Fuels, Inc., Entergy Operations, Inc. and Entergy Services, Inc. and the remaining Entergy subsidiaries. The newly-created joint venture is expected to operate the nuclear assets owned by SpinCo. The joint venture is also expected to offer nuclear services to third parties, including decommissioning, plant relicensing and plant operations for the Cooper Nuclear Station and others.

Entergy Nuclear Operations Inc., the current NRC-licensed operator of the non-utility nuclear plants, would remain the plants’ operator after the separation. Entergy Operations Inc. the current NRC-licensed operator of Entergy’s utility nuclear plants, will also remain in place as a wholly-owned unit of Entergy and will continue to be the operator of the utility nuclear plants.

After completing the separation, Entergy Corp. will consist of the current five electric utility subsidiaries in four contiguous states with generating capacity of more than 22,000 MW and 15,000 miles of transmission lines. The company will deliver electricity to 2.6 million customers in Arkansas, Louisiana, Mississippi and Texas and will remain based in New Orleans, La.

SpinCo is expected to own nearly 5,000 MW of nuclear generation, most in the northeastern United States. The company said this location is a highly capacity-constrained region both in terms of electricity generating capacity and its primary fuel input, natural gas. These factors result in the highest average regional power prices in the United States both today and expected into at least 2020. SpinCo will be positioned as one of the only pure-play, emission-free nuclear generating companies in the United States. The company will be based in Jackson, Miss.

The new joint venture is expected to be owned 50 percent each by Entergy and SpinCo and is expected to have operating responsibility for SpinCo’s nuclear fleet and to continue to supply contracted services currently being provided to the Nebraska Public Power District for the Cooper Nuclear Station. The joint venture will have experience building and operating boiling and pressurized water reactor technologies. The joint venture is expected to be grow through offerings of nuclear operating expertise, as well as ancillary nuclear services to third parties, including plant decommissioning and relicensing. The company will be based in Jackson, Miss.

The transactions are subject to various approvals. Citigroup and Goldman Sachs are serving as Entergy’s financial advisors in this process.