At least 1 electric utility company is seriously damaged by the ravages of Hurricane Katrina, writes utility analyst Sandy Cohen. While we do not want to be ghoulish, obviously, Entergy, based in New Orleans, with a service territory that encompasses New Orleans, Louisiana and Mississippi (and Texas) is seriously affected by the aftermath of Hurricane Katrina.
Just this morning, Entergy, understandably, issued a press release that explained why the company could no longer stand by its previously revealed earnings guidance (ETR News Release On Financial Guidance).
Entergy has much larger fish to fry than worrying about its shareholders, as is appropriate. And expenses incurred by Entergy to repair and restore its service territory should be able to be recovered fully through regulatory means ... and therefore the costs might be deferred (meaning not show up as a hit against earnings). But, nevertheless, a large portion of its service territory has been destroyed (the Gulf Coast of Mississippi and New Orleans), and there has to be doubt as to when ETR may ever recover the cash costs of these efforts. Plus, lost revenues may never be recovered.
Therefore, ETR faces a question as to timing of recovery of cash costs of repairs and rebuilding (whihc would hurt cahs flow more than reported earnings), but also a reduction in revenues and earnings that derive from electricity USAGE ... and this could be much delayed recovery, and may in some cases never return to previous levels.