Edgar Filing: ENTERGY CORP /DE/

425

ITC/EMI

Technical Conference

March 7, 2013

Transmission Business

Filed by Entergy Corporation Pursuant to Rule 425

Under the Securities Act of 1933

Subject Company: Entergy Corporation

Commission File No. 001-11299

Entergy Forward-Looking Information

In this communication, and from time to 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 most recent Annual Report on Form 10-K , any subsequent

Quarterly Reports on Form 10-Q , 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 proxy

statement/prospectus included in the registration statement on Form S-4 that was filed by ITC Holdings Corp. (“ITC”) with

the SEC in connection with the proposed transactions) 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 of

the transaction; (iii) legislative and regulatory actions; and (iv) conditions of 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.

ITC Forward-Looking Information

This document and the exhibits hereto contain certain statements that describe ITC management’s beliefs concerning future business

conditions and prospects, growth opportunities and the outlook for ITC’s business, including ITC’s business and the electric transmission

industry based upon information currently available. Such statements are “forward-looking” statements within the meaning of the Private

Securities Litigation Reform Act of 1995. Wherever possible, ITC has identified these forward-looking statements by words such as

“anticipates”, “believes”, “intends”, “estimates”, “expects”, “projects” and similar phrases. These forward-looking statements are based

upon assumptions ITC management believes are reasonable. Such forward-looking statements are subject to risks and uncertainties

which could cause ITC’s actual results, performance and achievements to differ materially from those expressed in, or implied by, these

statements, including, among other things, (a) the risks and uncertainties disclosed in ITC’s most recent Annual Report on Form 10-K and

any subsequent Quarterly Reports on Form 10-Q filed with the SEC from time to time and (b) the following transactional factors (in addition

to others described elsewhere in this document, in the proxy statement/prospectus included in the registration statement on Form S-4 that

was filed by ITC with the SEC in connection with the proposed transactions): (i) risks inherent in the contemplated transaction, including:

(A) failure to obtain approval by the Company’s shareholders; (B) failure to obtain regulatory approvals necessary to consummate the

transaction or to obtain regulatory approvals on favorable terms; (C) the ability to obtain the required financings; (D) delays in

consummating the transaction or the failure to consummate the transactions; and (E) exceeding the expected costs of the transactions; (ii)

legislative and regulatory actions, and (iii) conditions of the capital markets during the periods covered by the forward-looking statements.

Because ITC’s forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and

competitive uncertainties, many of which are beyond ITC’s control or are subject to change, actual results could be materially different and

any or all of ITC’s forward-looking statements may turn out to be wrong. They speak only as of the date made and can be affected by

assumptions ITC might make or by known or unknown risks and uncertainties. Many factors mentioned in this document and the exhibits

hereto and in ITC’s annual and quarterly reports will be important in determining future results. Consequently, ITC cannot assure you that

ITC’s expectations or forecasts expressed in such forward-looking statements will be achieved. Actual future results may vary materially.

Except as required by law, ITC undertakes no obligation to publicly update any of ITC’s forward-looking or other statements, whether as a

result of new information, future events, or otherwise.

The transaction is subject to certain conditions precedent, including regulatory approvals, approval of ITC’s shareholders and the availability

of financing. ITC cannot provide any assurance that 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

ITC filed a registration statement on Form S-4 (Registration No. 333-184073) with the SEC registering the offer and

sale of shares of ITC common stock to be issued to Entergy shareholders in connection with the proposed

transactions. This registration statement includes a proxy statement of ITC that also constitutes a prospectus of ITC.

This registration statement was declared effective by the SEC on February 25, 2013. ITC mailed the proxy

statement/prospectus to its shareholders on or about February 28, 2013. ITC shareholders are urged to read the

proxy statement/prospectus included in the ITC registration statement and any other relevant documents because

they contain important information about TransCo and the proposed transactions. In addition, TransCo will file a

registration statement with the SEC registering the offer and sale of 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 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.

The proxy statement/prospectus, 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 at 1-888- ENTERGY (368-3749), or from ITC upon written request to ITC Holdings Corp.,

Investor Relations, 27175 Energy Way, Novi, MI 48377 or by calling 248-946-3000.

This communication is not a solicitation of a proxy from any security holder of ITC. However, Entergy, ITC and certain

of their respective directors and executive officers and certain other members of management and employees may be

deemed to be participants in the solicitation of proxies from shareholders of ITC in connection with the proposed

transaction under the rules of the SEC. Information about the directors and executive officers of Entergy, may be

found in its 2012 Annual Report on Form 10-K filed with the SEC on February 27, 2013, and its definitive proxy

statement relating to its 2012 Annual Meeting of Shareholders filed with the SEC on March 23, 2012. Information

about the directors and executive officers of ITC may be found in its 2012 Annual Report on Form 10-K filed with the

SEC on March 1, 2013, and its definitive proxy statement relating to its 2012 Annual Meeting of Shareholders filed

with the SEC on April 12, 2012.

Agenda

03/07/13

ITC/EMI Technical Conference

Transaction Structure &

EMI

Specific

Implications

–

11:00

–

12:30

Bready, Lewis

Lunch–

12:30 –

1:15

Afternoon

Session

(1:15

–

4:00

pm)

Rate

Effects

1:15

–

3:15

Bready, Lewis

EMI Retail Customer Rate Effects

–

Rate Construct

–

Forward Test Year

–

Bill Effects

Any Potential Impacts on EMI

Generation/Distribution Business

Wholesale Rate Effects Post-MISO

Wrap

–

3:15

–

4:00

Grenfell

Morning

Session

(8:00

–

12:30

pm)

Welcome

Logistics

–

8:00

–

8:15

Fisackerly, Whitelocke

Transformation

Vision

–

8:15

–

9:15

Welch, Bunting, Fisackerly

•

Why is this transformation necessary?

•

Why this structure?

•

Why with ITC?

•

Why now?

•

Why for EMI?

Rationale

for

Transaction

9:15

–

11:00

•

Independence

Welch

•

Operational

Excellence

Jipping,

Riley

–

Storm Response

•

Regional

Planning

Vitez

•

IPL

Transaction

Experience

Results

Jipping

•

Local Presence

Break –

15 mins

•

Financial

Flexibility

and

Growth

Lewis

•

Financial Strength of ITC Bready

& Engagement

w/Retail

Regulators

Jipping

Transaction Structure

EMI credit impact & debt issuance/retirement

Pre/Post Transaction Capital Structure

Transaction Impact on ADIT Liability

EMI Credit Ratings Impacts

Agenda

03/07/13

ITC/EMI Technical Conference

Transaction Structure &

Bready, Lewis

Lunch–

12:30

–

1:15

Afternoon

Session

(1:15

–

4:00

pm)

Bready, Lewis

•

EMI Retail Customer Rate Effects

–

Rate Construct

–

Forward Test Year

–

Bill Effects

•

Any Potential Impacts on EMI

Generation/Distribution Business

•

Wholesale Rate Effects Post-MISO

Grenfell

Fisackerly, Whitelocke

Welch, Bunting, Fisackerly

•

Why is this transformation necessary?

•

Why this structure?

•

Why with ITC?

•

Why now?

•

Why for EMI?

•

Independence

Welch

•

Operational

Excellence

Jipping,

Riley

–

Storm Response

•

Regional

Planning

Vitez

•

IPL

Transaction

Experience

Results

Jipping

•

Local Presence

Break –

15 mins

•

Financial

Flexibility

and

Growth

Lewis

•

Financial

Strength

ITC

Bready

Rationale for Transaction - 9:15 – 11:00

Rate Effects 1:15 – 3:15

Wrap Up – 3:15 – 4:00

EMI Specific Implications – 11:00 – 12:30

Welcome & Logistics – 8:00 – 8:15

Morning Session (8:00 am – 12:30 pm)

Engagement

w/Retail

Regulators

Jipping

•

Transaction Structure

•

EMI credit impact & debt issuance/retirement

•

Pre/Post Transaction Capital Structure

•

Transaction Impact on ADIT Liability

•

EMI Credit Ratings Impacts

Transformation Vision – 8:15 – 9:15

•

Significant capital requirements to continue modernizing the grid best handled by

an independent company who can better manage the transmission portion of

capital spend

•

Affords the EOCs financial flexibility to manage the necessary investment in G&D

•

Independent ownership and operation of Entergy Transmission System (ETS)

extracts the greatest benefits in an RTO with a Day 2 market

•

Consistent with efforts towards independent transmission operation and ownership

•

Nation's first, largest, & only publicly-traded independent transmission company

•

A proven track record of best-in-class performance, improving reliability for ETS

•

Extensive

experience

with

MISO

and

committed

facilitating

the

MISO

Day

Market

•

Inter-RTO experience applicable to ETS's seams with SPP and other regions

•

Financially sound with strong investment grade credit ratings & access to capital

•

Opportunities for greater economies and efficiencies

•

Final step in over a decade of work to pursue best management structure for ETS

•

Eliminates perception of bias in transmission system planning and operations

•

Comparable

sizes

ITC's

and

the

EOCs’

(Entergy

Operating

Companies)

transmission businesses allows for a tax efficient transaction not necessarily

available in future

The right

transaction...

...with the

right

partner...

at the right

time

This transaction creates the right model

for the benefit of our customers...now and into the future

ITC Transaction is the Right Transaction

with the Right Partner at the Right Time

U.S. 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, NERC

115

138

161

230

345

500

•

Introduction

•

Industry Evolution

•

ITC’s Business Model

•

ITC’s Proven Track Record

•

Benefits Beyond MISO

•

Commitment to Louisiana & Communities we serve

•

Transaction Value for Louisiana

Strategic Overview

ITC

Agenda

03/07/13

ITC/EMI Technical Conference

Transaction Structure &

EMI Specific Implications –

11:00 –

12:30

Bready, Lewis

Lunch–

12:30 –

1:15

Afternoon Session (1:15 pm –

4:00 pm)

Rate Effects 1:15 –

3:15

Bready, Lewis

•

EMI Retail Customer Rate Effects

–

Rate Construct

–

Forward Test Year

–

Bill Effects

•

Any Potential Impacts on EMI

Generation/Distribution Business

•

Wholesale Rate Effects Post-MISO

Wrap Up –

3:15 –

4:00

Grenfell

Morning

Session

(8:00

–

12:30

pm)

Welcome

Logistics

–

8:00

–

8:15

Fisackerly, Whitelocke

Welch, Bunting, Fisackerly

•

Why is this transformation necessary?

•

Why this structure?

•

Why with ITC?

•

Why now?

•

Why for EMI?

Rationale

for

Transaction

9:15

–

11:00

•

Independence

Welch

•

Operational Excellence

Jipping, Riley

–

Storm Response

•

Regional Planning

Vitez

•

IPL Transaction Experience & Results

Jipping

•

Local Presence

Break –

15 mins

•

Financial Flexibility and Growth

Lewis

•

Financial Strength of ITC

Bready

& Engagement w/Retail Regulators

Jipping

•

Transaction Structure

•

EMI credit impact & debt issuance/retirement

•

Pre/Post Transaction Capital Structure

•

Transaction Impact on ADIT Liability

•

EMI Credit Ratings Impacts

Transformation Vision – 8:15 – 9:15

Transaction Rationale:

In the Public Interest

Independent model

•

Singular focus

•

Transaction

results

two

companies

that

are

specialized

and

focused

—

ITC

on transmission and Entergy on generation and distribution

•

Operational excellence, cost efficiency, customer focus

Wholesale markets and a regional planning view

•

Transaction

facilitates

infrastructure

investment

and

fosters

competition

–

activities

that enhance wholesale electricity markets

•

Structural separation of the transmission business from generation and distribution

businesses encourages greater participation in the transmission planning process

and disclosure of information by third parties

•

Independent model aligns with national policy objectives

Financial strength and flexibility

•

Transaction will yield separate companies with strong balance sheets and greater

capability

finance

the

infrastructure

investment

requirements

today

and

the

future

Proven independent business model for owning and operating transmission systems

Independence from all buyers and sellers of electric energy allows ITC to plan

improvements to the electric transmission grid for the broadest public benefit

Operational Excellence:

Quantitative Value of Reliability

•

Data from the SGS Study benchmarking study can be used to

quantify the resulting improved reliability

The U.S. Department of Energy’s Office

of Electricity Delivery and Energy

Reliability has developed a tool to

estimate interruption costs and the

benefits associated with reliability

improvements

A one minute improvement in System

Average Interruption Duration Index

(SAIDI) for ITCTransmission

and METC

results in one year savings of $7.7M

•

Compared to the performance of the median utility in the SGS Study,

this amounts to a value of about $153 million per year delivered

by ITC’s Michigan utilities

•

The calculation is based on data for the two largest load serving entities in Michigan from 2010 and 2011, with major storms excluded. The ITCT

and METC data reflect a three year average SAIDI from the SGS Study, given that performance changes year over year.

Operational Excellence:

Improving Reliability of Acquired Systems

Fewer outages:

According to the SGS Statistical Services' Transmission Reliability

Benchmarking Study, ITCTransmission

and METC now perform with the best 10% of

companies for number of sustained outages per circuit. As ITC's

most recently acquired

system, ITC Midwest improvement programs have had less time to be effective. However,

performance showed continued improvement in 2011.

Operational Excellence:

Improving Reliability of Acquired Systems

Shorter

outages:

According

the

SGS

Study,

average

circuit

outage

duration

for

all

three

ITC operating companies is less than the Region and Peer Group. Transmission circuit

outages do not equate to end-use customer outages in most cases, except for ITC Midwest.

•

Utilize standard equipment when possible to drive greater

efficiencies (e.g. breaker replacement completed in two versus

six weeks)

•

Utilize equipment with track record of longer life, resulting in

lower maintenance and replacement costs

•

Engage in strategic alliances to ensure that needed equipment is

available to meet project timelines

•

Purchasing power leads to better pricing when buying large

volume of transmission equipment

Cost Efficiencies

Standardization and Specialization

•

Ability to attract and retain

personnel with high levels of

interest and expertise in electric

transmission avoids turnover and

training costs (important when

facing near-term shortage of

skilled workers)

Customer Focus

•

Dedicated Stakeholder Relations group for all stakeholders,

providing advocacy and issue resolution at ITC

–

Stakeholders include investor-owned, municipal and cooperative utilities,

independent power producers and retail load of large industrial and commercial

retail customers connected at transmission level voltages

•

Proactively meet with stakeholders to identify stakeholder issues

and resolve any concerns through one-on-one meetings and semi-

annual

“Partners

Business”

meetings

–

Energy policy, legislative and regulatory matters

–

Capital project, transmission planning and preventive maintenance

–

Operations preparedness for summer peak load and storm events

–

Transmission rates

•

Timely customer communication

–

Storm restoration

–

Planned outages to eliminate or

minimize any potential risk and costs to

industrial processes

–

Unplanned outages regarding cause,

estimated duration, and future prevention

Storm Response –

Utilizing Best Practices

ITC Technical/Management

employee assigned to

ETR System Command

Center in Jackson, MS

ITC employee

ETR employee

Storm response organization will be modified to ensure

close coordination and interaction between Entergy and ITC

Customer

Transmission Prioritization

Resource Coordination

ETR System Incident

Commander (SIC)

ITC System Incident

Commander (SIC)

System Section

Chiefs

System Planning

Section Chief

System Resource

Section

System Logistics

Section

Restoration

Prioritization Branch

Director

ITC Section

Chiefs

Entergy Liaison

Coord.

(New position)

Functional Incident

Commanders

EMI

Customer

ITC Planning

Section

ITC Logistics

Section

ITC Resource

Section

Logistics Coordination

(ex. Fossil, EOC,

Nuclear, Gas)

Fosters Regional Planning

•

ITC has track record of planning its transmission systems to:

–

Address local, state, and regional reliability needs

–

Increase the economic efficiency of the overall grid

–

Respond to transmission needs identified in state and regional processes

•

When deficiencies are identified on the transmission system, such as

inadequate capacity to meet load under certain contingency conditions,

ITC plans, develops and constructs transmission projects to address

such deficiencies

•

ITC is committed to planning its transmission system in an open and

transparent manner; ITC has its own processes that supplement the

already open and transparent processes used by MISO

•

Transaction enhances customer benefits beyond what could be achieved

through the Entergy Operating Companies’

proposed MISO membership

•

ITC has proven it has the expertise, resources, and capital not only to

plan but also to construct needed investment

•

ITC’s regional approach to transmission planning will enhance

deliverability of generation throughout the region to provide a more

economic source of energy for customers

IPL Transaction Experience & Results

•

ITC has invested approximately $1.1 billion to improve the ITC

Midwest transmission system since acquisition of IPL assets

–

Projects needed to upgrade and improve existing lines and substations,

construct new lines to serve load growth and improve reliability, resolve

system constraints and provide interconnection for new load and generation

Major activities:

•

Built 26 new substations

•

Completed 32 major substation upgrades/expansions

•

Built nearly 26 miles of new line

•

Rebuilt nearly 400 miles of existing lines

•

Added four and replaced three major transformers

ITC Midwest reduced sustained outages from those experienced in 2008 (the last year

IPL operated and maintained the system) by 50% in 2009, 24% in 2010, and 58% in 2011

Key

Project:

Salem-Hazleton

•

81-mile,

345

line

connecting

Dubuque

and

Buchanan

Counties

eastern

lowa

•

Regional planning had long identified as needed to

resolve system constraints and reduce energy costs.

•

Expected completion: 2013

ITC Midsouth Regulatory and External Affairs Organization

ITC

Chief Business Officer

ITC

Midsouth

Director,

Regulatory

Affairs

ITC Midsouth

Director,

State Gov’t

Affairs

ITC Midsouth

Director,

Local Gov’t

& Comm.

Affairs

ITC Midsouth

Director,

Stakeholder

Relations

An ITC executive (VP and BU Head)

will be responsible for the following

ITC Midsouth functions:

—

Regulatory Affairs

—

State Government Affairs

—

Local Government and

Community Affairs

—

Stakeholder Relations

ITC Midsouth staff will be located

throughout the Entergy footprint to

perform these functions

—

Regulatory Affairs Managers

will be located in each state

capital

—

Managers and other support

staff will be geographically

dispersed to cover the other

functions

These employees and functions will

report to ITC’s Chief Business

Officer

Mississippi

Arkansas

Louisiana

Texas

ITC Midsouth

VP and Business Unit Head

Mississippi

Arkansas

Louisiana

Texas

Mississippi

Arkansas

Louisiana

Texas

Mississippi

Arkansas

Louisianan

Texas

ETR Utilities’

Capital Needs

Could Total ~$13B-16B Over 2012-2018

Actual and Forecast Entergy Utilities

Investment

($B)

1999-2004

2005-2011

2012-2018

Average

= $1.9B -

$2.3B

Total = $13.0B -

$15.8B

Average

= $1.4B -

$1.7B

Total = $9.7B -

$11.7B

Average

= $1.1B

Total = $6.5B

???

Effect of EPA rules?

Aging infrastructure?

1. Range

based

actuals

plus

storm

capital.

Range

based

projections

ETR

Utilities’

base

capital

plan

plus

potential

spend

Potential

spend

potential

economic

development

projects,

potential

new

generation

investment,

and

potential

new

storm

spend.

Potential

storm

spend

for

forward looking period is an estimate based on annual average spend over 2005-10 to illustrate potential of capital requirements of event risks.

Potential spend is not included in base capital plan

Note: ETR Utilities includes EAI, ELL, EGSL, EMI, ETI, ENO, SERI, ESI,

EOI, SFI; EOCs include EAI, ELL, EGSL, EMI, ETI, and ENO

Actual excluding storms (Transmission and Non-Transmission)

Potential spend

Past storm spend

Base case –

conservative (Transmission and Non-Transmission)

EOC Transmission

EOC

Transmission

EOC

Transmission

EMI Total Capital Needs Could Total

~$1.5B –

$1.6B Over 2012-2018

Actual and Forecast Capital Investment

for EMI ($B)

0.5

1.5

2012-2018

2005-2011

1999-2004

Average

= $213M -

$232M

Total = $1.5B -

$1.6B

Average

= $164M -

$177M

Total = $1.2B -

$1.2B

Average

= $148M

Total = $0.9B

Actual excluding storms (Transmission and Non-Transmission)

Past storm spend

Potential spend

???

Effect of EPA rules?

Aging infrastructure?

1. Range

based

actuals

plus

storm

capital.

Range

based

projections

EMI’s

base

capital

plan

plus

potential

spend

Potential

spend

potential

economic

development

projects,

potential

new

generation

investment,

and

potential

new

storm

spend.

Potential

storm spend for forward looking period is an estimate based on annual average spend over 2005-10 to illustrate potential of capital

requirements

event

risks.

Potential

spend

not

included

base

capital

plan.

Transmission

Base case –

conservative (Transmission and Non-Transmission)

Note: Historical data excludes storm capital, as there is no capital associated with future storms in base capital plan projections.

Numbers presented are only for EOCs (EAI, EGSL, ELL, EMI, ETI, ENO) and excludes SERI/ESI

EOCs’

Transmission Capital

Could Total ~$3.5B Over 2012-2018

Average = $254M

Total = $1.8B

Average= $502M

Total = $3.5B

Actual and Forecast Transmission Investment for EOCs

($B)

2005-2011

1999-2004

2012-2018

Projected base case capital

plan as of August 2012

Actual

Average= $200M

Total = $1.2B

Transmission Capital Spending for EOCs Could Increase

Nearly 100% in the Next Seven Years

EMI Transmission Capital

Could Total ~$0.5B Over 2012-2018

Average= $68M

Total = $474M

Actual and Forecast Transmission Investment for

EMI

($M)

200

2012-2018

2005-2011

1999-2004

400

100

300

500

Average= $36M

Total = $216M

Projected base case capital

plan as of August 2012

Transmission Capital Spending for EMI Could Increase

Nearly 83% in the Next Seven Years

Actual

Average = $37M

Total = $259M

Note: Historical data excludes storm capital, as there is no capital associated with future storms in base capital plan projections.

EMI Transmission CapX as Multiple of Depreciation

Nearly Twice as High as Non-Transmission

EMI Average CapX as Multiple of

Depreciation (2012-18 Average)

For EMI,

Transmission

Constitutes ~47% of

Capital in Excess of

Depreciation, despite

being 22% of rate

base

3.0

1.6

Transmission

Non-

Transmission

Note: Based on figures filed in testimony at MPSC

Benefits from

Financial Flexibility for Entergy

Transmission-Related Cash

Capital Requirements Go Away

Utility Operating Cash Flow Minus

Cash Construction Expenditures

2014E –

2018E; $B

Status Quo

With ITC

Transaction

Utility Debt Obligations

2018E; $B

Stronger Utility Balance Sheet Improves Ability

to Invest in Generation and Distribution

Status Quo

With ITC

Transaction

Note: As detailed in direct testimony, Transaction has two separate effects on remaining entity's cash flow:

OCF: EOCs no longer earn on transmission rate base spun-off (negative effect on cash flow)

Cash Construction Expenditures: transmission related cash capital requirements go away (positive effect on cash flow for EOCs)

Net

effect

EOCs

positive

transmission

Cash

Construction

Expenditures

over

2014-2018

higher

than

transmission

OCF

20%

$2.7B

4.34

5.20

Benefits

from

Financial

Flexibility

for

EMI

Transmission-Related Cash

Capital Requirements Go Away

EMI Operating Cash Flow Minus

Cash Construction Expenditures

2014E –

2018E ($M)

EMI Debt Obligations

2018E ($M)

Stronger Balance Sheet Improves Ability

to Invest in Generation and Distribution

Status Quo

With ITC

Transaction

Status Quo

With ITC

Transaction

100

200

300

400

1,000

500

1,500

298

334

Note: As detailed in direct testimony, Transaction has two separate effects on remaining entity's cash flow:

OCF: EOCs no longer earn on transmission rate base spun-off (negative effect on cash flow)

Cash Construction Expenditures: transmission related cash capital requirements go away (positive effect on cash flow for EOCs)

Net

effect

EOCs

positive

transmission

Cash

Construction

Expenditures

over

2014-2018

higher

than

transmission

OCF

12%

$353M

Financial Strength and Flexibility

•

Transaction offers the financial strength of ITC and improves that of EMI to

support the escalating capital investment requirements facing the electric

industry

—

ITC has a singular focus with no internal competition or competing priorities for

capital or other resources; provides a stronger, separate balance sheet to support

the transmission capital requirements

—

ITC better positioned to efficiently capitalize the significant and sustained level of

transmission investment required in the Entergy region, including Mississippi

—

Post-close, EMI would be better positioned to attract capital separately to finance

needed

investments

generation

and

distribution

lower

costs

and

manage

future uncertainty regarding event risk (e.g., new regulatory requirements or major

storms)

•

ITC’s MISO operating companies are deemed to be of higher credit quality

than EMI, as well as most vertically-integrated utilities

—

Enables consistent and predictable access to cost-effective capital, even during

challenging economic times; supports enhanced liquidity

—

Given significant and sustained level of transmission capital investment

requirements, as well as unforeseen needs, credit quality and access to capital are

paramount

Credit Quality Enhancement Overview

Debt Cost Savings

•

Expect new ITC operating companies to have ratings equivalent to

that of

ITC’s existing MISO operating companies

FERC rate construct utilized by ITC’s operating companies viewed favorably by the

rating agencies and investors, which supports lower debt financing costs

ITC is seeking FERC rate construct for its new operating companies as part of this

transaction

Results in lower borrowing costs of approximately 45 bps to 205 bps relative to the

status quo EOCs, depending on Op Co and market conditions

Merger between Entergy’s Transmission Business and ITC is expected to

lead to material interest expense savings, which will benefit Entergy’s

customers

Reflected in both the initial capitalization of the new ITC operating companies,

including ITC Mississippi, as well as future debt financings to fund transmission

investment requirements

Aggregate debt financing cost savings estimated in the range of $24 million to $27

million in 2014 (first full year of ownership) for the new ITC operating companies

Over a five-year period (2014-2018), estimate debt financing cost savings for the

new ITC operating companies in a range of approximately $125 million to $156

million (in nominal dollars)

Agenda

03/07/13

ITC/EMI Technical Conference

Transaction Structure &

Bready, Lewis

Lunch–

12:30 –

1:15

Afternoon Session (1:15 pm –

4:00 pm)

Bready, Lewis

•

EMI Retail Customer Rate Effects

–

Rate Construct

–

Forward Test Year

–

Bill Effects

•

Any Potential Impacts on EMI

Generation/Distribution Business

•

Wholesale Rate Effects Post-MISO

Grenfell

Fisackerly, Whitelocke

Welch, Bunting, Fisackerly

•

Why is this transformation necessary?

•

Why this structure?

•

Why with ITC?

•

Why now?

•

Why for EMI?

•

Independence

Welch

•

Operational

Excellence

Jipping,

Riley

–

Storm Response

•

Regional

Planning

Vitez

•

IPL

Transaction

Experience

Results

Jipping

•

Local Presence

Break –

15 mins

•

Financial

Flexibility

and

Growth

Lewis

•

Financial

Strength

ITC

Bready

Morning Session (8:00 am – 12:30 pm)

Wrap Up – 3:15 – 4:00

Rate Effects 1:15 – 3:15

EMI Specific Implications – 11:00 – 12:30

Welcome & Logistics – 8:00 – 8:15

Engagement

w/Retail

Regulators

Jipping

Rationale for Transaction - 9:15 – 11:00

•

Transaction Structure

•

EMI credit impact & debt issuance/retirement

•

Pre/Post Transaction Capital Structure

•

Transaction Impact on ADIT Liability

•

EMI Credit Ratings Impacts

Transformation Vision – 8:15 – 9:15

Transaction Overview

Entergy

Shareholders

Transmission

Business

$1,775M of new

debt will be raised

~$1.2B of the new

debt will be raised

at the transmission

operating

companies

~$575M will be

raised directly by

Entergy and will be

subject to a debt-

for-debt exchange

with debt issued by

MidSouth TransCo

Mid South

TransCo

OpCos

(Six)

Entergy will create

and distribute

shares of Mid South

TransCo to Entergy

shareholders

(Mid South TransCo

will own all of

Entergy’s

transmission

operating

companies upon

separation)

Immediately

prior to the

merger, ITC will

distribute $700M

to existing

shareholders,

funded by new

debt at ITC

Holdings

(Required to

align ITC’s

equity value with

that of the

Entergy

Transmission

Business)

ITC

Shareholders

Entergy

Shareholders

Mid South

TransCo

OpCos

(Six)

Entergy

Shareholders

ITC

Shareholders

Merger Sub

Mid South TransCo will immediately merge

with ITC Merger Sub and will become a

wholly-owned subsidiary of ITC; Entergy

shareholders will receive 50.1% ownership in

the combined company

Post Spin-Merge

Transaction Structure

100%

Entergy

Shareholders

Mid South

TransCo LLC

OpCos

ITC

Shareholders

ITC

OpCos

49.9%

Note: Chart represents ownership structure immediately upon closing of the transaction.

$1.775B of Debt Proceeds Used to Retire Preferred and

Pay Down Debt in Proportion to Transmission Assets

The allocation for EMI was estimated in

order to:

•

Retire all Preferred at each Operating

Company

•

Target a post-transaction weighted

average cost of capital (WACC) that is

substantially unchanged from the pre-

transaction WACC

EOC

Amount ($M)

EAI

502

EGSL

263

ELL

413

EMI

290

ENO

ETI

284

Total

1,775

The amount of debt proceeds allocated to

each EOC is an estimate based on a forecast

The final amounts allocated to each EOC

may vary to the extent forecast assumptions

differ from the circumstances that exist at

the time of closing.

EMI Credit Metrics are Expected to be

Maintained Through the Transaction

Direct Testimony of Expert Witness Dr. Michael Tennican

•

“…will reduce the Operating Companies' total debt and total capitalization...”

•

“...will eliminate substantial capital expenditures for transmission…”

•

“...will reduce EMl‘s needs for debt financing...”

•

"...should not affect EMl’s current investment-grade rating...”

•

“...should help preserve or possibly enhance Entergy's S&P rating...”

•

“...should preserve EMI's access to debt capital on reasonable terms even in

difficult market conditions...”

1. Testimony of Dr. Michael Tennican before the MPSC, Docket 12-UA-358

Any potential credit ratings improvement for EMI could result in

savings for Mississippi customers through lower cost of debt

EEI Data: 54% of Utilities Ended at a

Lower Credit Grade in 2011 Compared to 2001

Cumulative % of Companies at Lower/Higher Rating

in 2011 Compared to 2001

Downgrades

No changes

Total

100

Upgrades

Source: EEI 2011 Q3 Credit Ratings Charts

Transaction Protects EMI from

Negative Impact to Credit Ratings

Current EMI

credit rating at

Baa3

Transaction

protects EMI from

credit downgrade

risk; one notch

hypothetical

downgrade could

increase cost of

debt by 75 bps

Transaction

protects EMI from

credit downgrade

which could cost

customers ~$4.4M

in additional

interest costs

from 2014-2018

Estimates are hypothetical forecasts to illustrate effect on cost of debt and

benefits to customers –

exact values will depend on market conditions

Source: Bloomberg Fair Value 10-year credit ratings for utilities.

Utility Bond Yields by

Credit Rating vs. Treasury

Bills (Ten-Year Average

Spreads)

155

Baa3

400

200

129

Baa1

Baa2

171

208

Ba2

357

bps

Illustrative

-149

-37

-16

-25

Re-Measurement of ADIT

•

Comparable

equity

values

ITC

and

the

Entergy

Operating

Companies’

combined

T-business at this point

in time enable execution of a Reverse Morris Trust

transaction structure where T-business is spun-off to existing ETR shareholders and

merged with ITC

•

Through the Reverse Morris Trust Transaction structure,

EMI

will

not

incur

tax

liability

•

Under a taxable transaction, the tax basis of EMI’s transmission assets would be

reset and

Accumulated

Deferred

Income

Taxes

(“ADIT”)

would

re-measured,

resulting

lower

balances

ADIT

•

Because ADIT ultimately lowers T-rates in cost of service ratemaking, re-measuring

ADIT would otherwise result in higher T-rates in a taxable transaction, all other

things being equal

•

As a result of the RMT transaction structure,

EMI’s

transmission

assets

will

have

the

same

tax

basis

post-transaction

as they had prior to the Transaction

•

Accordingly,

the

negative

rate

effects

for

customers

that

otherwise

would

have

resulted

from

change

tax

basis

under

taxable

transaction

are

avoided

RMT Transaction Structure Avoids

Preserving Tax Basis for EMI and Protecting Customers

from Negative Rate Effects of a Taxable Transaction

Agenda

03/07/13

ITC/EMI Technical Conference

Afternoon Session (1:15 pm –

4:00 pm)

Rate Effects 1:15 –

3:15

Bready, Lewis

•

EMI Retail Customer Rate Effects

–

Rate Construct

–

Forward Test Year

–

Bill Effects

•

Any Potential Impacts on EMI

Generation/Distribution Business

•

Wholesale Rate Effects Post-MISO

Wrap Up –

3:15 –

4:00

Grenfell

Morning Session (8:00 am –

12:30 pm)

Welcome

Logistics

–

8:00

–

8:15

Fisackerly, Whitelocke

Welch, Bunting, Fisackerly

•

Why is this transformation necessary?

•

Why this structure?

•

Why with ITC?

•

Why now?

•

Why for EMI?

Rationale

for

Transaction

9:15

–

11:00

•

Independence

Welch

•

Operational Excellence

Jipping, Riley

–

Storm Response

•

Regional Planning

Vitez

•

IPL Transaction Experience & Results

Jipping

•

Local Presence

Break –

15 mins

•

Financial Flexibility and Growth

Lewis

•

Financial Strength of ITC

Bready

& Engagement w/Retail Regulators

Jipping

Transaction Structure

EMI credit impact & debt issuance/retirement

Pre/Post Transaction Capital Structure

Transaction Impact on ADIT Liability

EMI Credit Ratings Impacts

•

Bready, Lewis

EMI

Specific

Implications

–

11:00 –

12:30

Transaction Structure &

Lunch–

12:30 –

1:15

Transformation Vision – 8:15 – 9:15

Significant variability in average residential bills –

yearly variation between $1 and $18 over 2001-2011

Henry Hub

Gas Index

($/mmBtu)

2.7

3.1

5.4

5.9

8.3

6.5

6.9

9.0

3.8

4.4

4.0

Henry Hub Gas Index

($/mmBtu)

EMI

Avg.

Monthly

Residential

Bill

–

1,000

kWh

($)

150

100

2011

91.28

2010

89.81

2009

92.18

2008

99.44

2007

96.30

2006

111.07

2005

98.93

2004

80.78

2003

85.28

2002

77.37

2001

83.46

18% reduction in customer

bills since 2006

EMI Avg. Monthly Residential Bill-

1,000 kWh($)

Henry Hub Gas Index

Note: Residential bills are the average of the Typical Monthly Bills in that year for a residential customer using 1,000 kWh, excluding taxes.

Source: Entergy Regulatory Services, Typical Bill Report

Illustrative

-18%

+1.47

(+2%)

+18.14

(+22%)

Transmission Constitutes a Small Portion of a

Typical Mississippi Customer's Total Bill

6.6%

Transmission

Non-Transmission

93.4%

Typical EMI Customer Bill

Note: Average of January 2011 – December 2011 typical bills for a residential customer using 1,000 kWh per month; non-transmission portion of

monthly bill includes fuel and portions of the fixed customer charge and energy charge allocated to generation and distribution functions, as well

as the inclusion of various riders.

•

Transition from current retail rate construct to FERC-regulated rate construct

expected for ITC

•

Analysis assumes MISO base ROE for new ITC operating companies

(12.38%) and capital structure currently utilized by ITC operating companies

(60% equity/40% debt)

•

Benefits

credit

quality

improvement

resulting

from

transition

FERC-

regulated rate construct partially offset impacts

Rate Impacts Split into Rate Construct, Rate Timing,

and Other Effects for Retail Customers

•

Forward Test Year: Eliminates regulatory lag in recovery of capital

investments

–

One-time impact of conversion to forward test year

–

Reflects amounts that would have been collected in future years

•

Schedule MSS-2 construct eliminated post-Transaction

•

Current

estimation

reflects

effect

paying

load

ratio

Transmission

cost factoring in zonal investment (single MS zone) and retail share of

Transmission investments

Rate

Construct

Effects

Rate Timing

Effects

Other

Effects

120

EMI Residential Bill –

1,000 kWh

($)

100

Illustrative Bill

if ITC owns

T assets –

post-transaction

~91.94

2014

WACC

Effects

~0.66

Illustrative Bill if ETR

owns

T assets –

status quo

91.28

EMI Typical Residential Customer Bill

Expected

Increase

0.7%

–

Expected

Mitigation by Customer Benefits

Note:

Contents exclude estimated

one-time 2014 rate timing

effects of $0.73 due to

conversion to forward test year

–

reflects amount that would

have been collected in future

years –

and of $0.93 due to

accelerated elimination of

MSS-2 for EMI

Illustrative

~0.66

0.7%

Note: $91.28 is the average of the 2011 Typical Monthly Bill for a residential customer using 1,000 kWh, excluding taxes. Calculation is

indicative of the rate effects of the spin-merge transaction and is not meant to project an actual future customer bill. Illustration does not

include rate timing effects such as adoption of forward test year.

Over the long term,

customer bill effects

expected to be mitigated

by...

•

Enhanced Financial

Flexibility

•

Operational Excellence

•

Independent and

transparent ITC model

•

Regional Planning

Modest Bill Effect of 0.7% on

Selected Commercial and Industrial Class –

Expected Mitigation by Customer Benefits

2014 Transaction Bill Effects

Selected

Retail Class

Description

Typical

Bill

WACC

Effects

Total

Effect

Change

EMI

25 kW, 30% Load Factor

$548.50

3.86

0.7%

Illustrative

Note: Calculation indicative and illustrative of the rate effects of the spin-merge transaction and is not meant to project an actual future

customer bill. Illustration does not include effect of $5.45 due to accelerated elimination of MSS-2 for EMI or rate timing effect of $4.32

due to adoption of forward test year.

Sensitivity of Residential Rate Effects

to Variations in Spend

Sensitivity to

10% Increase

in Spend

Total

Transaction

Bill Effect

Sensitivity to

10% Increase

in Spend

Total

Transaction

Bill Effect

Sensitivity to

10% Decrease

in Spend

Sensitivity to

10% Decrease

in Spend

Typical

EMI

bill

$91.28

reflects

the

average

the

2011

Typical

Monthly

Bills

for

residential

customer

using

1,000

kWh,

excluding

taxes.

Note: Calculation is indicative and illustrative of the rate effects of the spin-merge transaction and is not meant to project an actual future

customer bill.

EMI

–

$91.28

EMI

–

$91.28

+ $0.11

O&M

Spend

+ $0.03

Capital

Expenditure

Spend

$0.66

$0.11

$0.03

Typical Monthly

Residential

Bill

Typical Monthly

Residential

Bill

Change in How Wholesale Rates are Determined Due to

Adoption of MISO's 12 CP Demand Methodology

Note:

Amount

paid

remains

the

same

because

the

customer

consumes

the

same

amount

transmission

service

both

methodologies.

The

methodology affects the units of measuring rates and the units of measuring consumption but the amount paid is same and is reflective of services

consumed

In both methodologies aggregate amount paid by customer consuming a certain

amount

Transmission

service

will

remain

the

same

Current ETR OATT

ETR OATT with 12 CP

2014 Transmission Net Revenue Requirement

Single annual peak demand x 12 months

Aggregated 12 coincident peaks (CP) demand

over year

Same Revenue Requirement numerator

Single highest peak in a month x 12

Sum of peak demands in each month of year

Higher demand denominator

Lower demand denominator

$ 2.43 / kWm

$ 1.85 / kWm

Wholesale Rates for EMI Customers

Increase Post-Transition to MISO

Estimated 2014 WS rates post

transition to MISO with 4

Transmission Pricing Zones

3.65

Estimated Net Rate Effect

of adopting default MISO

ROE and implementing 4

Transmission Pricing Zones

1.22

Estimated 2014 WS rates paid

under ETR OATT under One

Transmission Pricing Zone

2.43

Estimated 2014 Wholesale Transmission Rate Effects

***using 12 CP methodology***

($/kWm)

Note:

Calculation

indicative

and

illustrative

not

meant

project

actual

future

customer

bill.

Estimates

are

preliminary

and

draft

prior

rate

filings

in first quarter of 2013

Wholesale rate

effects estimation

does not factor

in any production

costs savings and

other benefits to

be achieved

through transition

to MISO RTO

Rates have been estimated using 12 CP methodology used under MISO Attachment O. Current ETR OATT

methodology uses a single annual peak rather than 12 CP. Change in methodology does not imply a change in

Revenue Requirements hence customers do not pay different amounts under 12 CP employed by MISO vs. single

annual peak employed by ETR. The equivalent number to $2.43 /kWm

under 12 CP would be a $1.85 /kWm under

single annual peak. The per unit estimation may be different but

the amount paid by the customer is the same.

Illustrative

Includes estimated one-time rate

effect of ~$0.30 due to conversion to

forward test year – reflects amounts

that would have been collected in

future years

Transaction-Related Filings Pending Before the

Federal Energy Regulatory Commission

1Q2013, EMI and other EOCs will file MISO Attachment O formula rate at the FERC

to be effective in the event the ITC transaction is not consummated

Joint ITC/Entergy Corp/ESI/EOCs filing:

•

EC12-145-000

Transaction approval (FPA 203)

•

ER12-2681-000

Formula rate and related agreements approval (FPA 205)

•

EL12-107-000

Declaratory Order regarding dividend payments from capital

accounts (FPA 305)

•

ER12-2682-000

transmission assets into MISO if Transaction closes before full

•

ER12-2683-000

potential period before MISO provision)

•

ER12-2693-000

•

ES13-5-000

•

ES13-6-000

financing

(FPA 204)

•

ES11-40-002

MISO

filing:

Module

B-1,

Interim

provisions

for

integration

the

ESI

filing

behalf

EOCs:

Ancillary

services

tariff

(to

cover

ESI

filing

behalf

EOCs:

Amends

the

Entergy

System

Agreement to delete MSS-2 upon closing of the Transaction

ITC filing:

Authorization for financing (FPA 204)

ESI

filing

behalf

the

Wires

Subs:

Authorization

for

Entergy-MISO integration

EOCs

filing:

Authorization

for

financing

(FPA

204)

2014 Rate Effect from ITC Transaction for

Typical Mississippi Wholesale Customer –

Expected Mitigation by Customer Benefits

Note:

Includes estimated one-

time rate effect of ~$0.30

due to conversion to

forward test year –

reflects

amounts that would have

been collected in future

years; excludes offsetting

depreciation study impact

of ~$0.15

Estimated EMI Wholesale Transmission Rate Effects

($/kWm)

(1)

3.75

ITC Ownership

(0.13)

Credit Quality Impacts

Rate Construct

Effects from FERC

Regulated Model

0.23

Estimated ETR

Ownership in MISO *

3.65

* Reflects ETR transition into MISO including establishment of four transmission pricing zones

and 12.38% ROE

(1) Does not apply to GFA customers

Illustrative

Net Effect of

~$0.10 or 2.7%

Expected FERC Construct

Effects

Customer bill effects

expected to be mitigated

by...

•

Operational Excellence –

Reliability, System

Performance, etc.

•

Independent and

Transparent ITC Model

•

Enhanced Financial

Flexibility

•

Regional Planning

Agenda

03/07/13

ITC/EMI Technical Conference

Transaction Structure &

EMI Specific Implications –

11:00 –

12:30

Bready, Lewis

Lunch–

12:30 –

1:15

Afternoon Session (1:15 pm –

4:00 pm)

Rate

Effects

1:15

–

3:15

Bready, Lewis

•

EMI Retail Customer Rate Effects

–

Rate Construct

–

Forward Test Year

–

Bill Effects

•

Any Potential Impacts on EMI

Generation/Distribution Business

•

Wholesale Rate Effects Post-MISO

Wrap Up –

3:15 –

4:00

Grenfell

Morning Session (8:00 am –

12:30 pm)

Welcome

Logistics

–

8:00

–

8:15

Fisackerly, Whitelocke

Welch, Bunting, Fisackerly

•

Why is this transformation necessary?

•

Why this structure?

•

Why with ITC?

•

Why now?

•

Why for EMI?

Rationale

for

Transaction

9:15

–

11:00

•

Independence

Welch

•

Operational Excellence

Jipping, Riley

–

Storm Response

•

Regional Planning

Vitez

•

IPL Transaction Experience & Results

Jipping

•

Local Presence

Break –

15 mins

•

Financial Flexibility and Growth

Lewis

•

Financial Strength of ITC

Bready

& Engagement w/Retail Regulators

Jipping

•

Transaction Structure

•

EMI credit impact & debt issuance/retirement

•

Pre/Post Transaction Capital Structure

•

Transaction Impact on ADIT Liability

•

EMI Credit Ratings Impacts

Transformation Vision – 8:15 – 9:15