Fitch Ratings maintains the Negative Rating Outlook on Entergy Louisiana LLC (ELL), Entergy Louisiana Holdings, Inc., and Entergy Gulf States, Inc. (EGSI) following the decision by the Louisiana Public Service Commission (LPSC) to allow interim recovery of up to US$20 million of storm costs. The companies had jointly requested interim recovery of $64 million over ten years to provide the financial community with some assurance that costs will ultimately be recovered. From March to September 2006, ELL and EGSI can collect from customers up to $14 million and $6 million, respectively. The amounts actually recovered will depend on actual fuel costs and over-earnings in 2006 and may be less than the authorized $20 million, which is a minor amount relative to the utilities' combined $700 million of storm repair and restoration costs.
The LPSC's decision reinforces the fact that many hurdles to storm cost recovery still face ELI and ESGI. These hurdles include submission of a final storm cost bill, currently estimated at $510 million for ELI and $195 million for the Louisiana portion of ESGI; an audit of the final bill by LPSC staff; a decision from the LPSC on the permanent recovery amount; and the approval of a recovery plan by the LPSC, which may include securitization. Fitch believes that the LPSC is unlikely to issue an order for the permanent recovery amount until the amount of federal and state aid and insurance proceeds becomes certain. The resolution of these matters may not occur until late 2006 or early 2007. A favorable decision by the LPSC on permanent recovery amount and the companies' securitization plans would be positive on credit quality and could raise the Rating Outlook. However, a substantial delay in recovery or an under-recovery could result in ratings downgrades for one or both companies.