Entergy Arkansas parent posts 4Q loss of $66 million on nuclear impairments

by Wesley Brown (wesbrocomm@gmail.com) 450 views 

Entergy Arkansas' White Bluff plant.

Entergy Corp. posted a hefty fourth quarter loss related to the New Orleans-based electricity provider’s decision to sell its merchant nuclear and wholesale power fleet and go back to its roots as a pure-play regulated utility.

For the period ended Dec. 31, the parent company of Entergy Arkansas on Wednesday (Feb. 20) reported a fourth quarter loss of $66 million, or 36 cents per share, compared to a fourth quarter 2017 loss of $479 million, or $2.66 per share, in the same period a year ago. Excluding one-time items, Entergy reported fourth quarter earnings of $110 million, or 60 cents per share, on revenue of $2.5 billion.

For the full year, the utility operator reported 2018 earnings of $849 million, or $4.63 per share, on an as-reported basis and $1.34 billion or $7.31 per share, on an operational basis. That compared to 2017 earnings of $412 million, or $2.28 per share, on an as-reported basis and earnings of $1.3 billion, or $7.20 per share, on an operational basis. Yearly revenue rose to $11.01 billion, down from $11.07 billion a year ago.

“Today we are reporting strong results for another successful year, and we are firmly on track to achieve our long-term goals,” said Entergy Chairman and CEO Leo Denault. “In 2018 we executed on our strategy and met major milestones in our transition to a pure-play utility. We expect 2019 will be no different.”

For fourth quarter 2018, Entergy’s utility business reported earnings of $388 million, or $2.12 per share, on an as-reported basis. This compared to a fourth quarter 2017 loss of $47 million or 26 cents share a year ago. Those results included a favorable income tax item, with a net of a portion reserved for sharing with Entergy Arkansas customers, which increased earnings by approximately $140 million.

The company’s wholesale commodities  or EWC, recorded a loss attributable of $373 million, or $2.04 per share for the period ended Dec. 31. Those results included one-time impairments and other expenses recorded as a result of the strategic decision to exit the EWC business that owns and operates six nuclear facilities, including the two nuclear reactors in Russellville, Ark.

The decision more than a year ago to exit the merchant power business led to Entergy’s aggressive efforts to sell most of its financially-strapped nuclear power fleet, which Denault said had been hampered by increased regulatory scrutiny and lower margins. Over the past three years, Entergy has announced the shutdown and decommissioning of the Buchanan, N.Y.-based Indian Point and (Vernon) Vermont Yankee nuclear plants, as well as the March 2017 sale of the James A. Fitzpatrick Nuclear power plant to Exelon Generation in upstate New York State.

Entergy also announced the sale of the Rhode Island State Energy Center natural gas-fired power plant, and the planned shutdowns of the Pilgrim nuclear plant in Massachusetts and the Palisades nuclear plant in Michigan as part of the company’s departure from the merchant power business to focus on its utility operations.

For 2019, Energy adjusted its yearly earnings guidance range of $5.10 to $5.50 per share. In early trading Wednesday, Entergy shares (NYSE: ETR) were down 10 cents at $89.95. The company’s shares have traded in the range of $73.55 and $91.17 over the past 52 weeks.