NEW YORK — Entergy Corp.’s net income rose 16 percent in the second quarter after the power company received favorable tax terms on financing costs for fixing damage to lines and equipment caused by hurricanes Katrina and Rita.
The increase also reflected stronger sales to Entergy’s utility customers.
The New Orleans-based company reported Tuesday that its net income rose to $365 million, or $2.06 per share, for the three months ended June 30, up from $315.6 million, or $1.76 per share, a year ago.
Revenue fell 10 percent to $2.52 billion from $2.8 billion a year earlier. The decline was because of lower sales and lower prices for wholesale electricity.
Entergy realized a gain of $122 million as a result of the tax ruling. In the prior year’s quarter, the company paid $151 million in income taxes. Some of the tax benefit will be returned to ratepayers in the form of lower rates.
Entergy CFO Leo Denault said the net effect of the tax ruling increased earnings by 44 cents per share. Excluding the tax benefit, Entergy would have earned $1.62 per share.
Analysts had estimated that the company would earn $1.61 per share on revenue of $2.94 billion, according to FactSet. The analysts’ estimates typically exclude the impact of one-time items.
Entergy serves 2.8 million customers in Arkansas, Louisiana, Mississippi and Texas. Retail sales to those customers rose 1.6 percent. Adjusted for the effects of weather, which was slightly milder in Entergy’s service territories in the second quarter, retail sales rose 4 percent. Weather-adjusted sales is a closely-watched measure because it shows the underlying demand for power from homes and businesses.
Denault said in a call with investors that Entergy’s service territory enjoyed a “reasonably healthy economy,” especially the industrial sector.
Entergy also operates a fleet of power plants, including 12 nuclear reactors, that sell wholesale electric power to utilities who then deliver it to customers. Wholesale electricity prices dropped sharply across much of the nation because of lower natural gas prices. The price of natural gas-fired power sets the rate for all wholesale power in much of the country.
Entergy shares fell 39 cents to $72.67 in trading Tuesday.