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

2. % 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
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

3. 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

4. $5/ mmBtu (real 2006$) 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)

5. 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

6. 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 (right)
$/mmBtu; 2006$ Real
price curves at various points in time
Long-term forecasts from nine separate experts
$5-$7
Range
Dec-08

7. 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

8. 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
price =$60/bbl oil
Recent Market Gas Price > $7
Forecast Scenarios Gas Price Range
CCGT Lowest NPV

9. New Nuclear Project Overview
Entergy Is Working to Develop a New Nuclear Self Supply Option for 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
Focus on qualifying for incentives under the 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.

10. 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
5+ yrs for construction – no construction until COL (>2011)

11. 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

12. 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

13. 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