Challenges for New Base Load Generation Dave Harlan Panel Discussion: Traditional Fuels and Technologies Bonbright Center Electric and Natural Gas Conference October 2007

% of Annual Hours That Load Level is Exceeded New Long-term Generation is a Critical Component of Entergy’s Portfolio Transformation Strategy Entergy’s regulated utilities need additional long-term generation capacity ….. …two supply roles are needed, base load and load-following…. ….solid fuel capacity is needed to reduce exposure to natural gas and provide fuel diversity 2012-2017 Supply Requirement and Existing Portfolio Supply requirements; GW, % of peak Generation portfolio; GW 26.5 Reserve and peaking requirements met with existing assets and market sources Reserve Requirement 22.7 Peaking 18.1 Intermediate Excess intermediate capacity 13.6 High Capacity Load Following Requires more solid fuel and CCGT for base load and high capacity load following 9.0 4.5 Base Load Over 3,700 MW of base load generation is needed by 2017, with solid fuel generation needed for fuel diversity and price stability % of Annual Hours That Load Level is Exceeded

Source: Global Energy - Velocity Suite, USA Source: Entergy’s Utility 2006 Fuel Mix Compared to National and Regional Utilities 26% of Entergy’s fuel mix is from gas/oil generation, which is above that of regional peers the national average of 18%. Entergy’s fuel mix relies less on coal than regional and national competitors. Gas/Oil % Fuel Mix 2006 (%) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Entergy CLECO AECC Southern Ameren TVA USA Hydro Nuclear Coal Other Gas & Oil Source: Global Energy - Velocity Suite, USA Source: EIA

$5/ mmBtu (real 2006$) Gas Price Future costs of CO2 emissions and other uncertainties have a major impact upon technology choice. 2017 Project Solid Fuel Production Cost Comparison(1) - ILLUSTRATIVE 2017 view of 30-year Levelized; $/MWh Technology choice for future base load generation depends upon assumptions regarding major uncertainties including Federal incentives, future gas price, cost of labor and materials, and cost of CO2 emissions. (2) (2) $7/ mmBtu Gas $5/ mmBtu (real 2006$) Gas Price (3)

Uncertainties Require a Diversified Portfolio and a Phased Decision Making Process for Major Generation Projects Long lead times are required to plan and construct new generation, and generation planning must consider major uncertainties. Entergy’s Portfolio Transformation strategy is based upon developing multiple new supply options using a phased approach that provides multiple decision points and off-ramps in the event that better options become available in the future. Long-term Generation Decision Uncertainty Resource Supply Strategy Maintain a diversified supply portfolio Gas availability and price level Supply and delivery of fuel to plants Resource additions implemented in several steps over time Future environmental costs (e.g. carbon) Costs and availability of purchased power Create and maintain self-supply options to build new capacity Inflation Construction period costs, timing and risks Phased commitment to major construction projects Technology cost and performance Future market demand and market structure Integrated resource planning considering generation, transmission, and demand side options

Near Term Gas Market Prices Are Above $7/mmBtu, But Forecasters Predict Long-term Prices In $5-$7 Range The price of natural gas has a significant impact on generation planning. Unfortunately, the future prices for natural gas are very uncertain. Recent market prices for future deliveries of gas have been more than $7/mmBtu (2006$ Real). However, while there are a variety of expert opinions regarding long-term gas prices, most forecasting services expect prices within $5 to $7 per mmBtu. NYMEX Henry Hub Gas Futures Curves (left) Long-term Henry Hub Natural Gas Forecasts 2003-2019 (right) $/mmBtu; 2006$ Real 2007-2008 price curves at various points in time Long-term forecasts from nine separate experts $5-$7 Range Dec-08

There Is a Broad Range Of Forecasts For Future Costs Of CO2 Emissions There is a wide range of opinion regarding the future cost of CO2 emissions by various industry experts. These forecasts reflect scenarios anticipated in 2006, recent legislative debate will result in additional scenarios, with some having even higher costs for CO2 emissions. Carbon Dioxide (CO2) Emissions Price Forecast Comparison Nominal $/ton - 20 40 60 80 100 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 ETR Planning Assumption ICF (Reference+CO2) ICF (McCain-Lieberman legislation) ICF (Carper) CERA (Asian Phoenix) CERA (Mercury Rising) SAIC (McCain-Lieberman legislation) Carbon Capture Cost Cap

Economics Of New Nuclear Relative To Alternatives Depend On Gas Prices and CO2 Cost Outcomes Technology Choice Sensitivity Analysis 30-year NPV* Illustrative The economics of new base load generation technology depends upon assumptions and expectations regarding future costs for gas price, technology cost, and CO2 emission costs...... Coal (PC) Lowest NPV Nuclear Lowest NPV Gas @ price =$60/bbl oil Recent Market Gas Price > $7 Forecast Scenarios Gas Price Range CCGT Lowest NPV

New Nuclear Project Overview Entergy Is Working to Develop a New Nuclear Self Supply Option for 2017+ Timeframe New Nuclear Plant Based on GE’s ESBWR Technology New Nuclear Project Overview Option to build two 1,520MW GE ESBWR nuclear plants for 2017+ Focus on qualifying for incentives under the 2005 Energy Policy Act Nuclear development will utilize a phased decision approach Initial phases complete NRC applications for combined Construction and Operating License (COLs) by 12/2008 for Grand Gulf and River Bend GE’s Economic Simplified Boiling Water Reactor (ESBWR) is the current focus technology for Entergy’s new nuclear self supply generation option. As you know for several year Entergy Nuclear has been working to address the issues necessary to enable the next generation of nuclear plant technology and to streamline the nuclear licensing process. Last year the Utilities System Operating Committee agreed to fund up to $31.5 million for development costs and ongoing participation in the NUSTART activities to develop a license application (COL) for a new nuclear plant at Grand Gulf using the GE ESBWR design. A second COL would be developed for a new nuclear plant at the RiverBend site. In order to remain eligible for the incentives provided for new nuclear plants in the 2005 Energy Policy Act, the COLs must be completed and submitted to the NRC by the end of 2008. This Phase 1 funding for the project will provide the indicative cost estimates and plant performance information that is required for the utility to evaluate and possibly select a new nuclear plant as a “self supply” option for customer needs in the 2015 and beyond timeframe. We are working with GE to develop cost estimates and a EPC contract – with the possibility that in late 2006 or early 2007 we may enter a MOU with GE to continue design and development of a plant. Based on the cost estimates we have today, a 1520 MW plant for 2015 COD would cost approximately $3.6 Billion.

Nuclear Technology Development Overview 10+ years lead time for new nuclear generation – 2017 timeframe and beyond for plant COD (Commercial Operating Date) >$6 Billion costs for 1520 MW Plant with AFUDC New licensing approach Single “COLA” (Combined Operating License Application” at NRC for approval of design and operating license at specific site 2+ years to develop application 2-3 years for NRC review of application Design certification and COLA awards expected in 2010-2011 5+ yrs for construction – no construction until COL (>2011)

Implications for Utility Planners and Regulators Significant $ invested to develop viable base load generation options – regardless of technology choice Large uncertainty regarding final costs and “go/no go decisions” 7 to 10+ year lead time – COD uncertain Labor cost and commodity price uncertainty Can’t commit to “fixed price” construction/equipment now Project economics impacted by Greenhouse Gas legislation and federal incentives for new nuclear Timing and need depend on future cost of alternatives and growth in power requirements Plan for uncertainty – Need to maintain a diversified supply portfolio Need multiple options for future base load generation

Implications for Utility Planners and Regulators Size of capital expenditures for new base load will require base rate increases and stress balance sheets Regulatory provisions should support base load strategy Regulatory certainty needed Provide assurance of full and timely cost recovery of Development costs Costs to “preserve option” Construction costs Cancellation costs if warranted Allow CWIP to reduce financing costs and “base rate increase” at COD

Implications for Utility Planners and Regulators Regulatory provisions should support base load strategy (continued) Timely process for decision making “Phased approach” for regulatory approvals Clarity regarding how uncertainties faced in decision making should be considered future costs of labor/commodities CO2 or other environmental compliance costs types and cost of alternative generation and fuels (e.g. CCGT and gas price) value of federal incentives