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Entergy Finds 'Extensive Damage' to Gas System; Atmos Sees Year-Long Restoration Process

September 12, 2005
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Besides the extensive power infrastructure that has to be rebuilt, Entergy Corp. said last week there was "extensive damage" to its natural gas system, affecting service to many of its 147,000 customers in the New Orleans area. And Atmos Energy Corp., the largest natural gas distributor in Louisiana and Mississippi, hopes to have 70% of its most affected customers back in service within six months and 90% in service within a year.

Entergy Gas Operations sent damage control personnel into Algiers, LA and some other areas of Orleans Parish on Sept. 4, and employees were planning to send assessment and restoration workers, beginning in Algiers, and moving into other areas of the city as they become accessible enough for damage assessment and repairs over the following days and weeks."

Gas services to many areas of the city, including the French Quarter, had to be shut off before repairs are made. Shutting off the gas service will reduce gas leakage in New Orleans, which has been a public safety issue, the company said.

Entergy also is working to preserve gas flow to the New Orleans Sewage and Water Board to allow power generation for the pumps, which are critical to pump water out of flooded areas of the city.

Atmos CFO J. Patrick Reddy said last week the utility is continuing to assess its damaged Gulf Coast operations. Atmos is not expecting to find as much physical damage as electric suppliers because the gas pipeline infrastructure is underground.

"Understandably, Atmos is right now focused on the safety and well being of our employees," Reddy told financial analysts at the Lehman Brothers CEO Energy/Power Conference in New York City last Wednesday. It also is reviewing how to rebuild service to the most devastated areas around New Orleans.

Reluctant to offer damage assessments, Reddy said he offered the time frame for repairs based on "numbers that are raw...We don't serve New Orleans, but we serve several parishes surrounding the city," including the devastated St. Bernard and Plaquemines Parishes, along with St. Tammany and Jefferson.

The storm affected 230,000 of Atmos' Louisiana and Mississippi customers, or about 7% of its customer base. Overall, Atmos serves 654,000 utility customers in Louisiana and Mississippi, and 3.1 million across the country.

Reddy also noted Atmos does not plan to bill customers affected 'for the foreseeable future..when we can determine whether a place is inhabitable."

"We'll take this premise by premise to validate these results," he said. "We're about 10 days into the process of assessing...We're gathering information, but in some cases, we're not able to get into some of those neighborhoods. We will need to do a home-by-home assessment in some cases."

Despite the massive storm, Atmos still expects to earn in the middle of it projected range of $1.65-1.75/share for fiscal 2005.

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