Entergy reports record profit of nearly $1.4 billion even as demand was hit by pandemic – NOLA.com


Leo Denault, Chairman and Chief Executive of Entergy since 2013. Louisiana Public Service Commissioner Foster Campbell criticized Denault for his $16 million-a-year compensation and for passing over $1.5 billion in dividends in the past two years, while customers have seen soaring bills.
Leo Denault, Chairman and Chief Executive of Entergy since 2013. Louisiana Public Service Commissioner Foster Campbell criticized Denault for his $16 million-a-year compensation and for passing over $1.5 billion in dividends in the past two years, while customers have seen soaring bills.
Entergy Corp. reported a record profit of nearly $1.4 billion last year, up 11% from 2019, despite lower sales across the board as demand for power from retailers, offices, industry and even residential consumers fell during the pandemic.
Entergy Chairman and Chief Executive Leo Denault said Wednesday that the shareholder-owned utility, the only Fortune 500 company headquartered in New Orleans, was able to increase profit despite lower sales due to sharp cuts in fixed costs, including “workforce attrition,” trimming employee expenses and by delaying spending on some projects.
The City Council is launching an independent investigation into Entergy New Orleans’ handling of the rolling blackouts Mardi Gras night, after…
The results, which beat Wall Street expectations for the fourth quarter, come a day after officials from Entergy’s New Orleans subsidiary faced down irate New Orleans City Council members over the utility’s actions during rolling power outages last week.
The executives on Tuesday revealed that the utility had cut more than three times the power to city residents than it was required to by the independent grid operator. The cuts left 26,000 residents and businesses without power for a little under two hours during the bitter cold last week.
New Orleans makes up only about 15% of Entergy’s 1.2 million electricity customers in Louisiana but the city accounted for 43% of the 60,000 statewide who lost power on Mardi Gras.
Council members have launched an investigation to determine the reasons behind the power cuts, which they said might result in fines for the utility.
On Wednesday, Craig Greene, chairman of Louisiana’s Public Service Commission, which regulates Entergy Louisiana, weighed in.
“You’re a multi-billion-dollar company with penny-club customer service,” Greene told Phillip May, Entergy Louisiana’s CEO, at Wednesday’s PSC meeting.
“I know that last week’s winter storm was unprecedented and utility crews and their linemen worked hard,” Greene said, according to a statement released by his office after the meeting. “But the weather cannot be a blanket excuse for what Louisiana utility customers endured last week.”
Denault didn’t address the controversy directly on a conference call to discuss financial results on Wednesday.
But he said the freeze, which hit all four states in which it operates, resulted in more than $500 million of costs, both for repairs and for extra power purchases from other providers. That comes on top of the approximately $2 billion costs from Hurricane Laura and other storms in the region last year, which Entergy has yet to recoup from ratepayers.
Entergy can pass those costs on to consumers but Denault said the company would try to minimize the hit.
“We will work with our regulators to recover these costs in a manner that mitigates the impact on customer bills,” he said.
Logan Atkinson Burke, executive director of the Alliance for Affordable Energy, a consumer watchdog, noted that the cost savings that Entergy reported from its head office expenses go straight to the bottom line. She suggested that some of those profits ought to be used to provide more help to struggling customers.
“Bills are up and are going to continue to go up again because of the cost of the storms last year and now this latest round,” she said. “I have a real struggle understanding why this company should be seeing record profits and is not sharing the burden with ratepayers who’ve been struggling through the pandemic.”
Entergy said Wednesday that bad debt and arrears were about three times higher than normal last year, at $125 million and $300 million respectively.
Drew Marsh, Entergy’s chief financial officer, said that had begun to level off recently. “But we need to see where it goes with this latest round of storms, and a little bit of backtracking on disconnects because of the storms,” he said, referring to the recent uptick in the company’s disconnection of non-payers.
The company also reported its fourth-quarter profit on Wednesday, which was 14.5% above consensus forecasts by Wall Street analysts. Profit for the final three months of the year was $388 million, little changed from $385 million in the same period a year earlier.
Entergy Corp. reported on Wednesday that third-quarter earnings were $521 million, up 43% from the same period last year and a little ahead of…
Entergy also reported earnings after adjusting for volatile items, particularly its wholesale commodities business where it is shutting down nuclear power plants resulting in highly unpredictable costs. After these adjustments, full-year earnings were nearly $1.14 billion, up 6.5%, with earnings per share of $5.66.
Fourth-quarter adjusted earnings were 71 cents per share, compared to a 62 cents consensus forecast by Wall Street analysts.
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The higher profit came even as sales fell across the board. Entergy’s operating revenue for the full year was down 7% at just over $10 billion as sales of gas and electricity to customers fell by 3.3% measured in gigawatt hours.
The commercial sector, which includes shops and office buildings, fell by 8%, while residential and industrial sales fell by 2.6% and 2.8%, respectively.
As well as cutting its fixed costs by $85 million, the company saw a sharp decline in its variable costs amid last year’s recession. Entergy’s total operating expenses last year were just over $8.3 billion, down more than $1.1 billion from 2019.
The biggest savings came from lower costs of fuel purchases, as lower demand for natural gas and other power plant feedstocks kept prices down.
Charles Fishman, an analyst at investment advisor Morningstar who follows Entergy, said the company’s sharp pencil on costs had helped it hit record profit despite the recession.
“This aggressive action (on costs) allowed them to achieve earnings for 2020 within their earnings guidance even with the headwind of COVID-19,” and has allowed them to keep their promise to raise dividends for shareholders, he said.
Entergy on Wednesday reported annual profit above $1 billion for the first time since 2011, as the New Orleans-based gas and electricity compa…
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