Edgar Filing: ENTERGY CORP /DE/

Form 425

Entergy Transmission Spin-Off

and Merger with ITC

Presentation to ULM Business Symposium

October 25, 2012

Filed by Entergy Corporation Pursuant to Rule 425

Under the Securities Act of 1933

Subject Company: Entergy Corporation

Commission File No. 001-11299

Entergy

Transmission Business

Entergy Forward-Looking Information

this

communication,

and

from

time

time,

Entergy

makes

certain

“forward-looking

statements”

within

the meaning of the Private Securities Litigation Reform Act of 1995. Except to the extent required by the

federal securities laws, Entergy undertakes no obligation to publicly update or revise any forward-looking

statements, whether as a result of new information, future events, or otherwise. Forward-looking statements

involve a number of risks and uncertainties. There are factors that could cause actual results to differ

materially from those expressed or implied in the forward-looking statements, including (i) those factors

discussed in Entergy’s Annual Report on Form 10-K for the year ended December 31, 2011, its Quarterly

Reports on Form 10-Q for the quarters ended March 31, 2012 and June 30, 2012, and other filings made by

Entergy with the Securities and Exchange Commission (the “SEC”); (ii) the following transactional factors

(in addition to others described elsewhere in this communication, in the preliminary proxy

statement/prospectus included in the registration statement on Form S-4 that ITC filed with the SEC on

September 25, 2012 in connection with the proposed transactions,

and in subsequent securities filings)

involving risks inherent in the contemplated transaction, including: (1) failure to obtain ITC shareholder

approval, (2) failure of Entergy and its shareholders to recognize the expected benefits of the transaction, (3)

failure to obtain regulatory approvals necessary to consummate the transaction or to obtain regulatory

approvals on favorable terms, (4) the ability of Entergy, Mid South TransCo LLC (TransCo) and ITC to obtain

the required financings, (5) delays in consummating the transaction or the failure to consummate the

transaction, (6) exceeding the expected costs of the transaction, and (7) the failure to receive an IRS ruling

approving

the

tax-free

status

the

transaction;

(iii)

legislative

and

regulatory

actions;

and

(iv)

conditions

the capital markets during the periods covered by the forward-looking statements. The transaction is

subject to certain conditions precedent, including regulatory approvals, approval of ITC’s shareholders and

the availability of financing. Entergy cannot provide any assurance that the transaction or any of the

proposed transactions related thereto will be completed, nor can

it give assurances as to the terms on

which such transactions will be consummated.

Additional Information and Where to Find It

On September 25, 2012, ITC filed a registration statement on Form S-4 with the SEC registering shares of

ITC common stock to be issued to Entergy shareholders in connection with the proposed transactions,

but this registration statement has not become effective.

This registration statement includes a proxy

statement of ITC that also constitutes a prospectus of ITC, and will be sent to ITC shareholders.

addition, TransCo will file a registration statement with the SEC registering TransCo common units to be

issued to Entergy shareholders in connection with the proposed transactions. Entergy shareholders are

urged to read the proxy statement/prospectus included in the ITC

registration statement and the proxy

statement/prospectus to be included in the TransCo registration statement (when available) and any

other relevant documents, because they contain important information about ITC, TransCo and the

proposed transactions. ITC shareholders are urged to read the proxy statement/prospectus and any

other relevant documents because they contain important information about TransCo and the proposed

transactions. The proxy statement/prospectus and other documents

relating to the proposed

transactions (when they are available) can be obtained free of charge from the SEC’s website at

www.sec.gov. The documents, when available, can also be obtained free of charge from Entergy upon

written request to Entergy Corporation, Investor Relations, P.O.

Box 61000 New Orleans, LA 70161 or by

calling

Entergy’s

Investor

Relations

information

line

1-888-

ENTERGY

(368-3749),

from

ITC

upon

written request to ITC Holdings Corp., Investor Relations, 27175

Energy Way, Novi, MI 48377 or by

calling 248-946-3000.

Vertically Integrated Utility

Topics for Discussion

Overview of the Transaction

•

Industry context, history

•

Transaction parties and structure

Strategy of the Case: Four Pillars of Benefits

Required Approvals

Details on Four Pillars of Benefits

•

Independence

•

Operational Excellence

•

Financial Flexibility and Growth

•

Fosters Regional Planning

Illustration of Vertically Integrated Utility

Topics for Discussion

Strategy of the Case: Four Pillars of Benefits

Required Approvals

Details on Four Pillars of Benefits

•

Independence

•

Operational Excellence

•

Financial Flexibility and Growth

•

Fosters Regional Planning

Vertically Integrated Utility

Overview of the Transaction

•

Industry context, history

•

Transaction parties and structure

Utilities Industry is Facing a Huge Need for Capital –

Estimated at $2.2T Over the Next 20 Years

Growth / Investment

Issues Facing Utility Industry

Over Next 20 Years

Generation

Transmission

Distribution

Projected Industry Capital Investments

Over Next 20 Years

???

Current Market Cap

Other = 0.15

Source: Internal analysis; Bloomberg

Electric Utilities Industry is Consistently the

Second Highest in Capital Investments in the US

CapX

2010

794

287

227

CapX

2009

737

280

188

353

159

CapX

2006

798

319

151

CapX

2008

948

359

210

CapX

2007

883

($B)

1,000

750

500

250

Average

06-11

843

322

179

CapX

2011

900

337

137

Others

Water Utilities

Independent Power Producers & Energy Traders

Industrial Conglomerates

Automobiles

Food & Staples Retailing

Road & Rail

Media

Multi-Utilities

Diversified Telecommunication Services

Consumer Finance

Electric Utilities

Oil, Gas & Consumable Fuels

Note: Only US-incorporated active publicly traded companies in North America

Source: Compustat/GlobalVantage

Total Capital Expenditures Per Year

(%)

Oil, Gas &

Consumable

Fuels

13.5

Multi-

Utilities

21.0

Gas

Utilities

21.2

Road

& Rail

21.4

Wireless

Telecommunication

Services

22.7

Airlines

28.2

Electric

Utilities

34.9

Consumer

Finance

46.1

Independent

Power

Producers &

Energy

Traders

48.5

Automobiles

61.2

Water

Utilities

18.2

Top 10 Industries by Ratio, Average 2006-2011

CapEx/

Market

Cap

Dividend

Yield

(%)

Oil, Gas &

Consumable

Fuels

2.4

Gas

Utilities

3.7

Multi-

Utilities

4.0

Electric

Utilities

4.0

Diversified

Financial

Services

4.1

Tobacco

5.1

Diversified

Telecomm

unication

Services

5.1

Real

Estate

Investment

Trusts

(REITs)

5.7

Transportation

Infrastructure

7.1

Thrifts &

Mortgage

Finance

17.4

Paper &

Forest

Products

3.6

Oil & Gas well

below electric

utilities in CapEx as

% of market cap

and dividend yield

Electric Utilities Industry has 4th-Largest Ratio of CapEx to

Market Capitalization and 7th-Highest Dividend Yield

Note: Only US-incorporated companies

Source: Compustat/GlobalVantage

Across the Electric Utility Industry, In All Functional Areas

but Distribution, Capx/Depreciation Ratios Show

a Strong Upward

Trend Over the Last Decade,

Creating the Need for Significant External Financing

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

Overall

Generation

Distribution

Transmission

2.6

3.0

1.9

3.7

1.1

0.7

1.8

1.5

Note: FERC data from Energy Velocity

The

rapid

increase

capital

expenditures

for

transmission

recent

years,

combined

with

the long depreciation lives for transmission assets, means that transmission capital

expenditures

particular

far

exceed

their

depreciation

cash

flows.

Industry Is Responding to Capital Investment

Challenges with Different Approaches

Create larger footprint; upsize balance sheet

•

Duke / Progress

•

Northeast Utilities / NSTAR

•

PPL / LG&E

•

First Energy / Allegheny

•

Exelon / Constellation

Achieve greater certainty in regulations

•

e.g., Formula rate plans, future test years,

specific rider recovery, CWIP in rates, etc.

•

e.g., FPL Rate Hike Request

Align business model with capital needs

•

e.g., AEP TransCo

Consolidate

Build

Regulatory

Flexibility /

Certainty

Change

Business Model

Companies Forming Transcos to Take on New Multistate

Investment, Relieving Capital Demand on Local Utilities

Company

Year

Transco Activities

AEP

2010

2000s

Formed the Transco for on-system, wholly-owned investment, including

greenfield projects, station additions and system upgrades. Seeking state

utility status for the Transco in each of the 11 states

Pursue opportunities using numerous JVs with MidAmerican, Duke etc.

Exelon

2009

Set up Exelon Transmission. Developing the Reliability Interregional

Transmission Extension line to link up with new lines developed by Pioneer

power (Duke/AEP) and ETA (AEP/Midamerican)

Ameren

2010

Established

Ameren

Transmission

Co.

build

greenfield

projects

expand

the existing 7,400 mile system. Identified $3 billion projects in IL and MO,

with the potential for expanding to other areas in the future

Duke

2011

2008

Established 50/50 Duke-American Transmission Co. (DATC) with ATC, to

pursue out-of-territory investment

Set up 50/50 Pioneer Transmission LLC with AEP to build Indiana project

Mid

American

2007

Set up 50/50 Electric Transmission Texas with AEP to invest in ERCOT, and

Electric Transmission America for outside of ERCOT

US Electric Transmission Grid

Historically Fragmented and Inefficient

Historically, transmission

infrastructure development

in the U.S.

primarily focused on connecting

load and resources within

balancing authority areas,

with little interregional

or national perspective

In contrast,…

U.S. Electric Power Transmission Grid

•

More than 211,000 high voltage

transmission line miles

•

Operated by ~130 balancing authority

areas (ownership is even more

fragmented)

Source: FEMA

115

138

161

230

345

500

Federal Policy Created Incentives to Address Grid

Optimization Through Independent Transmission

Energy Policy Act

of 2005

FERC Presumption

on Independence

--As presented 11/8/2011

Not later than 1 year after the date of

enactment of this section, the Commission

shall establish, by rule, incentive-based

(including performance-based) rate

treatments for the transmission of electric

energy in interstate commerce by public

utilities for the purpose of benefiting

consumers by ensuring reliability and

reducing the cost of delivered power

by reducing congestion.

"[B]y creating an independent stand-alone

transmission company from a vertically

integrated utility, the proposed transaction

furthers

the

Commission's

open

access

and

RTO initiatives, accelerates the transition to

competitive regional bulk power markets, and

will

result

significant benefits to

transmission customers.”

--Trans-Elect,

Inc,

FERC

61,368

62,591-92

(2002)

"This order benefits customers because the

transfer of transmission facilities to an

independent

entity

one

the

most

effective

means of separating transmission interests from

generation

interests

and

achieving

independence

through a for-profit transmission company.”

--ITC

Holdings

Corp,

102

FERC

61,182

1-2

(2003)

Entergy Leadership Long Held Belief that Independent

Transmission is an Optimal Path for the Industry

Topics for Discussion

Strategy of the Case: Four Pillars of Benefits

Required Approvals

Details on Four Pillars of Benefits

•

Independence

•

Operational Excellence

•

Financial Flexibility and Growth

•

Fosters Regional Planning

Vertically Integrated Utility

Overview of the Transaction

•

Industry context, history

•

Transaction parties and structure

The Transaction Parties –

ITC and Entergy

Entergy

Transmission Operations

•

~15,500 transmission line miles

•

Serves Arkansas, Louisiana,

Mississippi, and Texas

•

Pursuing proposal to join MISO

ITC

•

~15,100 transmission line miles

•

Serves Michigan, Iowa, Minnesota,

Illinois, and Missouri

•

Member of MISO and SPP

The Merger Transaction –

End State

Utility

OpCos

Entergy

Wholesale

Commodities

Mid South

TransCo LLC

(New Holdco)

ITC

Shareholders

ITC Merger

Sub

Transco Subs

Proposed Spin-Merge of Transmission Business

ITC After

–

Generation

–

Distribution

–

Retail

customer

service

Entergy Shareholders own stock in two companies

ETR After

–

Transmission

$700M

recapitalization

(pre-close)

Trust

Up to ~5%

ITC Shares

ITC

ETR

5.0%

Entergy

Shareholders

ETR and

OpCos

reduce

debt by

$1.775B

$1.775B debt

transferred

with assets

Strategy of the Case: Four Pillars of Benefits

Topics for Discussion

Overview of the Transaction

•

Industry context, history

•

Transaction parties and structure

Required Approvals

Details on Four Pillars of Benefits

•

Independence

•

Operational Excellence

•

Financial Flexibility and Growth

•

Fosters Regional Planning

Vertically Integrated Utility

Benefits to Customers and Other Stakeholders

Improves access to capital for transmission business and focuses

financial resources solely on transmission system performance

Strengthens ability of Entergy Operating Companies to make needed

investment in other areas of utility business

Ensures safe and reliable operations and continued strengthening

of overall grid performance through ITC’s singular focus on

transmission system performance, planning and operations

Leverages

Entergy

employees’

knowledge

and

experience

and

fully

utilizes Entergy’s world-class storm restoration process

Provides proven business model for owning and operating

transmission systems

Aligns with national policy objectives to facilitate investment in local,

regional and inter-regional transmission, advance open access

initiatives and promote access to competitive energy markets

Financial

Flexibility

and Growth

Operational

Excellence

Independence

Instills confidence in wholesale markets by encouraging greater

participation and disclosure by third parties

Leads to a more comprehensive planning process and a broader

regional view than would otherwise be possible

Fosters

Regional

Planning

Topics for Discussion

Overview of the Transaction

•

Industry context, history

•

Transaction parties and structure

Required Approvals

Strategy of the Case: Four Pillars of Benefits

Vertically Integrated Utility

Details on Four Pillars of Benefits

•

Independence

•

Operational Excellence

•

Financial Flexibility and Growth

•

Fosters Regional Planning

Transparency &

stakeholder

engagement

Attributes of Transaction

Associated With Independence

Independence

enables

transparent

disclosure

and

communication

with

stakeholders

•

Impacts transmission planning, transparent management of formula

rate making, operations,

and customer driven transmission maintenance

•

Independence model allows more robust stakeholder discussion and

evaluation of

transmission projects, and alternatives to those projects

ITC does not own generation or distribution assets; business model singularly focused on

owning, operating, and maintaining transmission

•

All capital generated from transmission and invested in transmission

•

No internal competition for capital with other functions (i.e., Generation or Distribution)

•

Independent Board of Directors

•

Management and employees divested of utility or market participant holdings

Independent model greatly enhances transmission planning for local systems

•

Eliminates perception of bias in the planning process or to one set of customers

•

Improved collaboration with 3rd parties including active & engaged input from stakeholders

•

Independent planning promotes transmission builds that takes into account all grid users

Independent

governance and

sole focus on

transmission

Independent

bottom-up

planning

ITC's sole focus on transmission facilitates investment in transmission infrastructure

•

Goal to achieve best-in-class performance and improved reliability

•

Timely and effective interconnection of new generating resources

•

Expanded grid and market access through investments in transmission, lower cost of energy

Infrastructure

investment

Independent

model

achieves

financial

success

actively

meeting

the

needs

end

customers

•

Design and plan transmission that meets needs of all customers

•

Work to connect generators in a timely manner

•

Investments in infrastructure needed to deliver power reliably

Customer

responsiveness

ITC policies encourage new entrants and increases competition to

bring liquidity to the market

•

No perception that ITC favors any generators or forms of generation

•

Independent model promotes regional planning processes that facilitate development

•

ITC works to interconnect customers efficiently and in a timely manner, and to design and plan

transmission that meets their needs

Facilitate

Generator

Connections

ITC's Bottom-Up Planning Process Differs From

Integrated Utilities Under MISO in 3 Crucial Ways

Difference

Description

Implication

Broader

customer

focus

An independent transmission company is

incentivized to look at all utility customers

when evaluating benefits

•

A vertically integrated utility’s tariffed

planning processes may define the

benefit analysis for economic projects

by reference to the utility’s customers

•

Beyond MISO's borders, ITC also

incentivized to identify multi-region

projects

Potential to identify more economic

projects as costs are tallied up against

larger customer benefits

Larger infrastructure projects become

part of the scope of the transmission

business

Increased

stakeholder

information

sharing

An integrated utility is more likely to be

perceived by independent parties as

being biased towards its own generation

regardless of actual openness and

transparency

•

Limits amount of market information

shared

Increases accuracy of system

modeling as participants share

economics information they wouldn't

with a perceived competitor

collaboration

with

stakeholders

Stakeholders engaged more often in the

project planning process

•

Involves stakeholders in project pre-

screening for suggestions as well as in

the vetting process for proposed

solutions

Higher willingness to discuss possible

plans and integrated generation-

transmission projects

•

Creates a virtuous cycle with

increased information sharing

Details on Four Pillars of Benefits

•

Independence

•

Operational Excellence

•

Financial Flexibility and Growth

•

Fosters Regional Planning

Topics for Discussion

Overview of the Transaction

•

Industry context, history

•

Transaction parties and structure

Required Approvals

Strategy of the Case: Four Pillars of Benefits

Vertically Integrated Utility

Sole Transmission Focus Has Four Primary Sources of

Benefits for Independent Transmission Company

Attribute

Rationale

Example impact

Upper

management

attention and

focus

Upper management can focus full-time on

transmission business

Increased ability to reach higher level

of detail

Improved performance management

due to higher leadership engagement

in transmission business

Faster

decision

making

Leadership can make faster decisions

since freed from internal competition

between businesses for attention and

capital

Simplifies capital planning process

Reduces steps from project

identification to approval to execution

Incentive for

best-in-class

transmission

performance

An independent transmission company

only has one business to be judged by,

with a clear set of standards

•

Incentivizes the company to look for

ways of improving transmission

performance

Operational excellence

•

Improved reliability and

maintenance processes

High specifications for equipment

Ability to

achieve

scale faster

Single focus on transmission increases

the rate of business growth

•

Accelerates benefits from scale

Reduced procurement costs from

larger orders

Benefits of ITC's Operational Excellence

•

ITC has achieved top decile reliability and system performance with two

of its three subsidiaries, exceeding performance of region and peers

•

ITC has demonstrated track-record of improving system performance

post-acquisition

•

ITC has achieved positive system performance trends while keeping

Operations & Maintenance (O&M) spend in line with peer average

•

ITC OpCos show O&M spend per mile in line with peer average

•

Preventative maintenance emphasized to reduce costly reactive

maintenance

•

Infrastructure replaced before it begins to cause problems

•

Proactive maintenance measures to meet and exceed NERC standards

•

Focus on finding and fixing all outage causes

ITC O&M

philosophy is

key driver

O&M spend per

mile in line with

peer average

Reliability and

system

performance

Details on Four Pillars of Benefits

•

Independence

•

Operational Excellence

•

Financial Flexibility and Growth

•

Fosters Regional Planning

Topics for Discussion

Overview of the Transaction

•

Industry context, history

•

Transaction parties and structure

Required Approvals

Strategy of the Case: Four Pillars of Benefits

Vertically Integrated Utility

Utilities industry is facing significant need to increase capital

investment in coming years

•

Compliance requirements, environmental regulations, and infrastructure

needs projected to drive $2.2T in capital needs over next 20 years

In line with industry, Entergy CapEx requirements expected to total

nearly ~$13B over 2012-2018 without accounting for any emergency

storm reserves, an increase of 33% over the 2005-2011 period

(excluding storm capital)

•

ETR utilities transmission investment requirements expected to total

~$3.5B over 2012-2018, an increase of nearly 100% over the 2005-2011

period (three times as fast as total capital)

•

Transmission capital accounts for over half (~51%) of Entergy Utilities'

CapEx over depreciation

Financial Flexibility –

Forecasted Future Capital Needs

Credit ratings have material effect on interest costs borne

by utilities

Rating agencies (S&P, Moody's) give significant weight to

regulatory construct and financial credit metrics of utilities

when deciding on credit ratings

Over the last 10 years rating agencies have frequently

downgraded utilities

Financial Flexibility –

Industry Response Focused on Protecting Credit Quality

•

~54% of comparable utilities ended 2011 at a lower credit rating

than where they started in 2001

Financial Flexibility –

Cash Release, Debt Reduction and Improved Credit Metrics

Spin-merge releases cash flow of ~$860M for ETR

OpCos from 2014-2018

•

Additional cash flow can be used to fund increased investments,

pay dividends or reduce debt

Spin-merge

releases cash

flow

Spin-merge

enables

reduction in

debt for

stronger

balance sheet

By 2018, Spin-merge enables ~$2.7B reduction in Total

OpCo debt from 2014-18

Strengthens the balance sheet as OpCos face

significant capital spending needs in coming years

Spin-merge

improves

credit metrics

Due to cash generation and debt reduction key credit

metric

FFO

Debt

improves

average

–

differs

OpCos and by year due to different T-Capital needs

•

Improvement in credit metrics

can improve credit ratings assigned

by S&P or Moody's but credit metrics are one of many factors used

to assign credit ratings

Details on Four Pillars of Benefits

•

Independence

•

Operational Excellence

•

Financial Flexibility and Growth

•

Fosters Regional Planning

Topics for Discussion

Overview of the Transaction

•

Industry context, history

•

Transaction parties and structure

Required Approvals

Strategy of the Case: Four Pillars of Benefits

Vertically Integrated Utility

Regional Planning Enabled

by Independent Business Model

Focus on

regional

needs

Illustrative regional projects

Portfolio

Group

Project

Year

Installed

Major Benefits

State

Voltage

(kV)

Cost

(2012

$millions)

Cypress -

Lewis Creek -

Grimes 500

2018

500

Upgrade Amelia -

Helbig 230 kV

2018

230

Bayou LaButte -

Nine Mile 500 kV

2018

500

Waterford -

Tezcuco -

Gypsy 230 kV

2018

230

Second 500/230 kV Autotransformer

at Coly

2023

500/230

SPP Intertie

Mt. Olive -

Longwood 500 kV

2018

Improve transfer capability with SPP

500

$326

Freeport -

Shelby 500 kV

2018

MS/TN

500

Upgrade Horn Lake -

Allen 161 kV

2023

MS/TN

161

ESSO –

Delmont –

Hazel upgrade

2018

230

Second line between Addis –

Tiger

2018

230

Total

$1,443

$525

Western

Amite S. /

DSG

Congestion

Relief Projects

Improve transfer capability into Western

region load pocket; reduce Lewis Creek

RMR; storm hardening; improved load

serving capability

Reduce congestion within Entergy

footprint

Improve transfer capability with

TVA/Southern

Improve flows in Amite South and DSG

load pocket; reduce Nine Mile Point

RMR; storm hardening; improved load

serving capability

$365

$209

$18

Northeastern

An independent transmission company

coupled with RTO participation will

enhance economic benefits for regional

customers through:

•

Potentially connecting Entergy's

region with other regions

(i.e., ERCOT, SPP)

•

Broader view on Transmission

investments

•

MISO, as an RTO, has no ability

or mandate to build transmission

facilities to meet the demands of

the wholesale market

•

Beyond MISO's borders, ITC is

incentivized to identify multi-

region projects

•

ITC proved it has expertise,

resources, and capital to plan

and execute needed investment

Green Power Express (GPE) project

exemplifies how ITC's regional focus

enables beneficial projects that would

other remain unrealized

•

Identified by ITC as the most efficient

means to develop and interconnect the

wind-rich Upper Midwest with load centers

further east

•

Project to cross two RTO regions, non-

RTO regions, seven states, and 20 utility

service territories, in addition to ITC’s

current footprint

•

When initially proposed, no process in

place to consider a project like GPE

because of its inter-regional scope and

because the criteria then employed by

RTOs to define beneficial projects were

too narrow

•

GPE became the impetus for a number of

projects that are now part of MISO’s

regional transmission plan across the

Midwest

Green Power Express (GPE) project

exemplifies how ITC's regional focus

enables beneficial projects that would

other remain unrealized

•

Identified by ITC as the most efficient

means to develop and interconnect the

wind-rich Upper Midwest with load centers

further east

•

Project to cross two RTO regions, non-

RTO regions, seven states, and 20 utility

service territories, in addition to ITC’s

current footprint

•

When initially proposed, no process in

place to consider a project like GPE

because of its inter-regional scope and

because the criteria then employed by

RTOs to define beneficial projects were

too narrow

•

GPE became the impetus for a number of

projects that are now part of MISO’s

regional transmission plan across the

Midwest

ITC Looks Across Utility and RTO Boundaries to Identify

Solutions to System Needs That Provide

Local and Regional Benefits

Goal of ITC's regional focus is always to reduce

the delivered cost of energy to customers

To do so, ITC looks both inside and outside its

footprint to understand where transmission

investment could result in the greatest benefits

not only within its footprint, but also regionally

and inter-regionally

Consistent with and supported by public policy

initiatives going forward

•

Order No. 1000 supports the construction of needed

regional and interregional transmission projects and

includes the basic tenets for which ITC had been

advocating prior to the Order’s issuance, such as larger

coordinated planning areas between regional and inter-

regional entities.

As a result, policy environment is more conducive to

efficiently

meeting

customers’

needs

through

regional

and interregional view.

Required Approvals

Topics for Discussion

Overview of the Transaction

•

Industry context, history

•

Transaction parties and structure

Strategy of the Case: Four Pillars of Benefits

Vertically Integrated Utility

Details on Four Pillars of Benefits

•

Independence

•

Operational Excellence

•

Financial Flexibility and Growth

•

Fosters Regional Planning

Pathway to Completion –

Required Approvals

Authority

Requirements

Entergy retail

regulators

•

Change of control of transmission assets

•

Affiliate transaction approvals related to steps in the spin / merge

•

Authorization to incur debt in some jurisdictions

FERC

•

Change of control of transmission assets (203 filing)

•

Acceptance of jurisdictional agreements (205 filing)

•

Authorization to assume debt / issue securities (204 filings)

•

Changes to System Agreement to remove provisions related to

transmission planning and equalization

•

ITC filing to establish new rate tariffs for the ITC operating companies

Nuclear Regulatory

Commission

•

Required for internal corporate reorganization in connection with spin-

merge, and to satisfy license conditions

Hart-Scott-Rodino

Act

•

Pre-merger notification to review potential antitrust and competition issues

IRS

•

Private letter ruling substantially to the effect that certain requirements for

the tax-free treatment of the distribution of Transco are met

Securities and

Exchange

Commission

•

ITC Form S-4 and Proxy Statement (including audited Transco financial

statements and disclosures), and

•

Transco Registration Statement

ITC shareholders

Approvals required for:

•

Merger,

•

Issuance of shares to ETR shareholders, and

•

Amendment to ITC charter to increase authorized number of shares

Questions?