Entergy To Cut 165 Jobs In Arkansas, 800 Overall (UPDATED)

An unfavorable tax ruling dropped Entergy Corp. net income by 55% and the New Orleans-based electric utility company said it would cut nearly 800 jobs across its multi-state footprint.

Nearly 165 jobs will be shed in Arkansas, where Entergy is the state’s largest electric utility provider.  The company employs approximately 2,750 workers in Arkansas.

A spokesman for Entergy said that Louisiana will see job cuts of 240, Texas will lose 115, New York 110, and Mississippi will see layoffs of 80 workers. In Massachusetts, Michigan and Vermont about 30 per state will be cut as part of a companywide workforce restructuring.

The layoffs are expected to equal about 5% of the company’s total workforce and will result in expense savings of $200-$250 million by 2016.

“Difficult decisions like job reductions are sometimes the very tough outcome of making long-term, fundamental improvements in the way a company works,” said Leo Denault, Entergy’s chairman and CEO. “The redesign process has been comprehensive, thoughtful and focused squarely on being fair to our employees throughout the process and being responsive to the needs of our customers, our employees, our communities and our owners.”

Entergy reported second quarter earnings of $163.7 million, or 92 cents per share, for the three months ended June 30. That compares with $365 million, or $2.06 per share, a year earlier.

Company officials said the year-ago period included favorable tax terms on financing costs for fixing damage to lines and equipment caused by hurricanes Katrina and Rita. Entergy realized a gain of $122 million as a result of the tax ruling.

UPDATE: Entergy Arkansas President Hugh McDonald tells Talk Business that factors impacting the layoffs announced today included efforts to streamline the energy company’s business, adjust for changing customer needs and handle rising costs related to capital investments.

“We have been in a comprehensive redesign of the entire organization for quite some time, today we announced the results. If you look at our industry and our company within our industry, there’s a multitude of reasons that we need to reconfigure our business to make it more competitive, better for our customers, and better for our employees for a longer sustainable period,” he said.

McDonald said capital investments in the utility business have “ramped up dramatically” in recent years, which has led to pressure on the company’s bottom line.

He said that customers also now have different expectations today than they did 10 years ago.

“They want to get information from us on their terms, when they want it, and they don’t want to have to call us. They want to do it on their hand-held device when they’re sitting at home,” he said.

As a result, in Arkansas a call center will eventually close as Entergy consolidates its six call centers to just one. That center will be eliminated by mid-2014, McDonald predicted.

McDonald said in an effort to adapt to social media and customer demands for more information and data, the company will ultimately outsource some of its customer service efforts to firms that have specific new skills sets.

He said no linemen, journeymen or field supervisors would be laid off and that management positions throughout Entergy’s core four-state footprint would bear a high percentage of the layoffs, as much as 17%.

Right now, McDonald said specific decisions on who would be laid off in Arkansas are not completely known. He added that severance packages will be provided to those who lose their jobs.

“With things like this, the headline is always the ‘fewer jobs,’ but we’re doing it to better prepare the company long-term, to make sure the savings that result from this can be sustained. That translates into maintaining competitive rates for our customers going forward. This will help that as well,” McDonald said.