Deregulation has paid off for Entergy, and, as long as conventional energy costs keep rising, the power producer will maintain a healthy glow.Entergy's first-quarter earnings rose 45.5%, fueled by rising energy prices in the Northeast, where its nuclear power plants can charge market rates. Nuclear power has also gained significant cost advantages given the sharp rise in price of coal and natural gas. Its nuclear power operations posted a 72.9% increase in first-quarter earnings, to $221.7 million from $128.2 million.

"What's happening is they hedge a good portion of their nuclear segment," said Mike Worms of BMO Capital Markets. "As those contracts expire they roll them over to new contracts and over time the newer contracts are set at higher prices as the price of electricity goes up."

For the most part this is done with its unregulated nuclear plants in the Northeast, while its regulated power plants are part of a rate structure that the company has with states such as Arkansas, Louisiana and Mississippi. "The power plants under a regulated framework earn a return on investment," Worms said, meaning a minimal, legislated return on investment. The company also reaffirmed its 2008 earnings guidance to range between $6.50 and $6.90 per share. Wall Street, for its part, anticipates $6.81 per share. "We have established aggressive goals for 2008, and while it's early in the year, we are on track for a year of solid accomplishments," said Chief Executive Wayne Leonard.

Later this year, Entergy plans to spin off six of its nuclear power plants into a new publicly traded company called Enexus. The two companies will then set up a 50-50 joint venture called EquaGen to run the plants. Overall, the New Orleans-based energy company racked up a 45.5% increase in earnings, to $308.7 million, or $1.56 per share, from $212.2 million, or $1.03 per share, in last year's corresponding period. Wall Street was expecting $1.51 per share.

The good news was already baked into the cake a week before Friday's earnings release when Entergy announced its preliminary earnings, leaving its stock effectively flat Friday, with a 51 cent slip, to close at $113.21.