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ETR Investigating SuperBowl Blackout

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Entergy Corporation (ETR - Free Report) along with SMG, the management company of the Mercedes-Benz Superdome, is investigating the partial power loss during the Super Bowl in New Orleans.

Earlier on Sunday shortly after the beginning of the second half of the Super Bowl in the Mercedes Benz Superdome, a piece of equipment that is designed to monitor electrical load sensed an abnormality in the system. Once the issue was detected, the sensing equipment operated as designed and opened a breaker, causing power to be partially cut to the Superdome in order to isolate the issue. Backup generators kicked in immediately as designed. Entergy and SMG subsequently coordinated start up procedures, ensuring that full power was safely restored to the Superdome. The fault-sensing equipment activated where the Superdome equipment intersects with Entergy's feed into the facility. There were no additional issues detected.

New Orleans, Louisiana based Entergy is primarily engaged in electric power production and retail distribution of power. With 30,000MW of generating capacity, the company distributes electricity to 2.8 million customers in Arkansas, Louisiana, Mississippi, and Texas. Of this, 14,631MW are gas/oil based, 2,259 are coal based, 70MW are hydro based and the rest are nuclear based. The company also distributes natural gas to 240,000 customers in Louisiana. Entergy is the second largest U.S. nuclear power generator after Exelon Corporation (EXC - Free Report) .

Entergy affirmed its 2013 operational earnings guidance in the range of $4.60 to $5.40 per share. Entergy noted it currently expects earnings to be on the lower half of the operational guidance range due to updated pension and post-retirement cost estimates, which include an approximate 75 basis point decrease in the discount rate assumption.

Entergy had earlier, in December 2011, entered into a definitive agreement with ITC Holdings Corporation , under which the former will divest its electric transmission business to the latter for gross cash of $1.775 billion. The divested business would be merged with the operations of ITC Holdings. Recently, Entergy Arkansas Inc. along with ITC Holdings Corp. and ITC Midsouth LLC, filed a request at the Arkansas Public Service Commission to spin off the Arkansas electric transmission business and merge it into a subsidiary of ITC. The company expects the transaction to complete by 2013.

Entergy is expected to release its fourth-quarter 2012 earnings on Feb 8, 2013. The Zacks Consensus Estimates for fourth-quarter 2012 and fiscal 2012 are currently pegged at $1.34 per share and $5.78 per share, respectively.

Entergy is well positioned with its geographically diverse mix of regulated and merchant operations. The company is focused on maximizing its shareholder value through steady investment for rate base growth, as well as through its ongoing stock buyback program and incremental dividend.

However, we are concerned regarding the tepid growth of its competitive business due to lukewarm power demand in the Northeast, pending regulatory approvals and the fate of its Indian Point plant.

Entergy faces competition from CenterPoint Energy Inc. (CNP - Free Report) . The latter is also focusing hard on the development of its pipeline assets. Entergy has a short-term Zacks Rank #3 (Hold rating) in view of the continued weak economic environment in the U.S. which will weigh on the company’s power sales.

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