UPDATE: Entergy Profit Rises; Indian Point Approvals Drag On

--Entergy second-quarter earnings up on tax benefit, lower costs

--Company says obtaining license for Indian Point nuclear plant could take years

--Entergy plans to spin off, merge transmission system with ITC Holdings, pending approvals

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   By Cassandra Sweet and Tess Stynes 
 

Entergy Corp. (ETR) reported higher second-quarter earnings, thanks largely to a tax benefit, and said it remained focused on winning approvals to operate the Indian Point nuclear plant for another 20 years.

Entergy owns utilities in Arkansas, Louisiana, Mississippi and Texas, and also sells power on the wholesale market, where prices have fallen to historic lows, driven by low natural-gas prices.

The company plans to spin off its electric-transmission business and merge the operation with ITC Holdings Corp. (ITC). Entergy has been pursuing regulatory approvals to switch grid operators in connection with the deal.

Louisiana regulators approved Entergy's move to the Midwest Independent System Operator, from the Southwest Power Pool. But the company still needs approval from regulators in Arkansas, Mississippi, New Orleans and Texas.

Entergy obtained a license from the Nuclear Regulatory Commission in May to operate the Pilgrim nuclear-power plant in Plymouth, Mass., for another 20 years. While that licensing process took several years, Entergy said obtaining a new license to operate the Indian Point nuclear plant in Buchanan, N.Y., for another 20 years will likely take longer, as several groups are opposing the license at the NRC.

The plant needs a water-quality permit from New York regulators, but the company has been locked in a disagreement with state officials over the type of equipment the plant should use to protect aquatic wildlife. The plant, located next to the Hudson River, uses river water to cool its power turbines. New state regulations require that these types of water-cooling systems be phased out to prevent fish, fish larvae and other wildlife from being killed when they are sucked into a plant's water-intake pipes.

State regulators want Entergy to install cooling towers rather than using river water for cooling. But Entergy has argued that cooling towers would be too expensive and that it should instead use screens to keep wildlife out of the intake pipes.

"It will be years until we reach a final decision before the [Nuclear Regulatory] Commission," Entergy Chief Executive J. Wayne Leonard said Tuesday during a conference call with analysts. Mr. Leonard said he was confident the plant could continue operating after its current licenses expire, in September 2013 and December 2015.

Entergy has asked the NRC for a waiver that would excuse the company from having to obtain the water-quality permit.

Entergy reported a second-quarter profit of $370.6 million, up from $320.6 million a year earlier. On a per-share basis, which reflects the effects of preferred dividends, earnings were $2.06 compared with $1.76 a year earlier. The latest period included a tax benefit of $122.2 million. Excluding decommissioning expenses and other items, earnings rose to $2.11 a share from $1.76. The company recently expected about $2.10.

Revenue decreased 10% to $2.52 billion. Analysts polled by Thomson Reuters most recently projected $2.7 billion.

Operating margin fell to 13.6% from 19.9%, despite overall operating costs declining 3.1%.

Earnings at its utilities business grew nearly 24%. The wholesale-commodities business reported profit rose nearly 28%.

Total electricity-sales volume edged up 0.8% as growth in its commercial, governmental and industrial segments offset declines in residential and wholesale volumes.

Shares of Entergy, which affirmed its 2012 earnings outlook, were recently trading 0.6% lower at about $72.63.