ENTERGY CORPORATION AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

Entergy operates primarily through two business segments: Utility and Entergy Wholesale Commodities.

•

•The Utility business segment includes the generation, transmission, distribution, and sale of electric power in portions of Arkansas, Mississippi, Texas, and Louisiana, including the City of New Orleans; and operation of a small natural gas distribution business.

•The Entergy Wholesale Commodities business segment includes the ownership, operation, and decommissioning of nuclear power plants located in the northern United States and the sale of the electric power produced by its operating plants to wholesale customers. Entergy Wholesale Commodities also provides services to other nuclear power plant owners and owns interests in non-nuclear power plants that sell the electric power produced by those plants to wholesale customers. See “Entergy Wholesale Commodities Exit from the Merchant Power Business” below and in the Form 10-K for discussion of the operation and planned shutdown and sale of each of the Entergy Wholesale Commodities nuclear power plants.

~~Utility~~ business segment includes the generation, transmission, distribution, and sale of electric power in portions of Arkansas, Mississippi, Texas, and Louisiana, including the City of New Orleans; and operation of a small natural gas distribution business.

•

~~The~~ ~~Entergy Wholesale Commodities~~ business segment includes the ownership, operation, and decommissioning of nuclear power plants located in the northern United States and the sale of the electric power produced by its operating plants to wholesale customers. Entergy Wholesale Commodities also provides services to other nuclear power plant owners and owns interests in non-nuclear power plants that sell the electric power produced by those plants to wholesale customers. See “~~Entergy Wholesale Commodities Exit from the Merchant Power Business” below and in the Form 10-K for discussion of the operation and planned shutdown and sale of each of the Entergy Wholesale Commodities nuclear power plants.~~

See Note 7 to the financial statements herein for financial information regarding Entergy’s business segments.

The COVID-19 Pandemic

The COVID-19 pandemic and the measures to control it have adversely affected economic activity and conditions worldwide and have affected the demand for the products and services of many businesses in Entergy’s service area. Entergy expects a decline in sales volume for the year 2020 due to the COVID-19 pandemic, especially in the commercial and industrial sectors. In addition, Entergy has experienced negative changes to its customers’ payment patterns and its operating cash flow activity due to the COVID-19 pandemic, and expects them to continue throughout 2020. These negative changes include an increase in uncollectible accounts.

Entergy provides critical services to its customers and has implemented its comprehensive incident response plan, which contemplates major events such as storms or pandemics. Entergy’s focus during the pandemic has been on the safety and wellness of its employees; providing safe, reliable service for its customers; analyzing and addressing the financial effects of the COVID-19 pandemic; and continuing its plans for the future. Entergy implemented precautionary measures for safety on and off the job for employees and contractors working at plants and in the field and implemented telecommuting practices for employees who can work from home. Entergy temporarily suspended service disconnections for customers and is working with regulators to address routine and non-routine matters and allow continuation of capital spending plans. The Utility operating companies have received accounting orders to defer costs associated with COVID-19. To date, Entergy has not had material effects to its major projects or capital spending plans. Entergy is working with suppliers and contractors for continued availability of resources, equipment, and supplies to keep operations and major projects going forward and on schedule. Entergy is implementing expense-related spending reductions in 2020, which it does not expect to affect safety or service reliability, in order to offset some of the financial effects of the COVID-19 pandemic. Beginning in March 2020 the Utility operating companies issued a total of $2.51 billion of long-term mortgage bonds, Entergy Corporation issued $2.0 billion of senior notes, and Entergy Arkansas and Entergy Mississippi renewed their short-term credit facilities. In addition to cash on hand, Entergy’s sources of liquidity are outlined in “Capital Structure and Resources”and in Note 4 to the financial statements herein.

Although Entergy has taken these actions in response to the COVID-19 pandemic, uncertainty exists regarding the full depth and length of the effects of COVID-19 on Entergy’s sales volume, revenue, collections and cash flows, expenses, liquidity, and capital needs. Entergy will continue to monitor actively the COVID-19 pandemic and related developments affecting its workforce, customers, suppliers, operations, and financial condition.

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Entergy Corporation and Subsidiaries

Management's Financial Discussion and Analysis

Hurricane Laura

In August 2020, Hurricane Laura caused severe damage to the Entergy distribution and transmission systems across Louisiana and Texas. The storm resulted in widespread power outages and as a result of the storm’s extensive damage to the grid infrastructure serving the impacted area, large portions of the underlying transmission system required nearly a complete rebuild. Total restoration costs for the repair and/or replacement of the electrical system damaged by Hurricane Laura are currently estimated to be in the range of $1.5 billion to $1.7 billion. The majority of the costs were incurred by Entergy Louisiana and Entergy Texas. Entergy also expects Utility revenues in 2020 to be adversely affected, primarily due to power outages resulting from the hurricane. Entergy is considering all available avenues to recover storm-related costs from Hurricane Laura, including accessing funded storm reserve escrows and securitization. Storm cost recovery or financing will be subject to review by applicable regulatory authorities.

Entergy has recorded accounts payable for the estimated costs incurred that were necessary to return customers to service. Entergy recorded corresponding regulatory assets of approximately $205 million and construction work in progress of approximately $1.295 billion. Entergy recorded the regulatory assets in accordance with its accounting policies and based on the historic treatment of such costs in its service area because management believes that recovery through some form of regulatory mechanism is probable. There are well established mechanisms and precedent for addressing these catastrophic events and providing for recovery of prudently incurred storm costs in accordance with applicable regulatory and legal principles. Because Entergy has not gone through the regulatory process regarding these storm costs, there is an element of risk, and Entergy is unable to predict with certainty the degree of success it may have in its recovery initiatives, the amount of restoration costs that it may ultimately recover, or the timing of such recovery.

Hurricane Delta

In October 2020, Hurricane Delta caused significant damage to portions of Entergy's service area in Louisiana, and to a lesser extent in Mississippi and Texas. The storm resulted in widespread power outages, significant damage primarily to distribution infrastructure, and the loss of sales during the power outages. Total restoration costs for the repair and/or replacement of Entergy's electric facilities in areas with damage from Hurricane Delta are currently estimated to be in the range of $250 million to $300 million, including $180 million to $205 million at Entergy Louisiana, $30 million to $35 million at Entergy Mississippi, and $40 million to $50 million at Entergy Texas. Entergy is considering all available avenues to recover storm-related costs from Hurricane Delta, including accessing funded storm reserve escrows and securitization. Storm cost recovery or financing will be subject to review by applicable regulatory authorities.

Hurricane Zeta

In October 2020, Hurricane Zeta caused significant damage to portions of Entergy's service area in Louisiana, including New Orleans. The storm resulted in widespread power outages, significant damage to distribution and transmission infrastructure, and the loss of sales during the power outages. Entergy is still assessing and developing an estimate of the total restoration costs for the repair and/or replacement of the infrastructure damaged by Hurricane Zeta. Entergy is considering all available avenues to recover storm-related costs from Hurricane Zeta, including accessing funded storm reserve escrows and securitization. Storm cost recovery or financing will be subject to review by applicable regulatory authorities.

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Entergy Corporation and Subsidiaries

Management's Financial Discussion and Analysis

Results of Operations

Third Quarter ~~2019~~2020 Compared to Third Quarter ~~2018~~2019

Following are income statement variances for Utility, Entergy Wholesale Commodities, Parent & Other, and Entergy comparing the third quarter ~~2019~~2020 to the third quarter ~~2018~~2019 showing how much the line item increased or (decreased) in comparison to the prior period:


	Utility	Entergy Wholesale Commodities	Parent & Other (a)	Entergy
	(In Thousands)
2019 Net Income (Loss) Attributable to Entergy Corporation	$578,291	($141,048)	($72,003)	$365,240

Operating revenues	(151,036)	(85,992)	21	(237,007)
Fuel, fuel-related expenses, and gas purchased for resale	(163,986)	(11,290)	5	(175,271)
Purchased power	(62,312)	10,902	(5)	(51,415)
Other regulatory charges (credits)	(34,161)	—	—	(34,161)
Other operation and maintenance	(26,190)	(22,648)	(5,521)	(54,359)
Asset write-offs, impairments, and related charges	—	(193,625)	—	(193,625)
Taxes other than income taxes	8,402	(2,795)	87	5,694
Depreciation and amortization	39,576	(17,136)	(81)	22,359

Other income (deductions)	(31,142)	52,757	6,873	28,488
Interest expense	14,815	(642)	(4,081)	10,092
Other expenses	(3,865)	(10,451)	—	(14,316)
Income taxes	71,924	43,176	5,143	120,243
Preferred dividend requirements of subsidiaries	361	—	—	361

2020 Net Income (Loss) Attributable to Entergy Corporation	$551,549	$30,226	($60,656)	$521,119

Utility

Entergy
Wholesale
Commodities

Parent &
Other (a)

Entergy
(In Thousands)
3rd Quarter 2018 Consolidated Net Income (Loss)
$507,745

$105,571

($73,498 )
$539,818

Operating revenues 115,943
(79,717 ) 30
36,256
Fuel, fuel-related expenses, and gas purchased for resale (138,700 ) 6,349
21
(132,330 )
Purchased power (120,948 ) (2,072 ) (21 ) (123,041 )
Other regulatory charges (credits) (32,316 ) —
—
(32,316 )
Other operation and maintenance 23,668
(72,791 ) 806
(48,317 )
Asset write-offs, impairments, and related charges —
42,871
—
42,871
Taxes other than income taxes 10,379
(6,268 ) (296 ) 3,815
Depreciation and amortization 55,786
(1,716 ) 521
54,591
Other income (18,467 ) (82,237 ) 230
(100,474 )
Interest expense 10,273
(2,766 ) (935 ) 6,572
Other expenses 6,382
15,707
—
22,089
Income taxes 208,733
104,804
(1,330 ) 312,207

3rd Quarter 2019 Consolidated Net Income (Loss)
$581,964

($140,501 )
($72,004 )
$369,459

(a)Parent & Other includes eliminations, which are primarily intersegment activity.


~~(a)~~	~~Parent & Other includes eliminations, which are primarily intersegment activity.~~

Refer to “ENTERGY CORPORATION AND SUBSIDIARIES - SELECTED OPERATING RESULTS” for further information with respect to operating statistics.

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~~Entergy Corporation and Subsidiaries~~

~~Management's Financial Discussion and Analysis~~

~~Third~~operations for the third quarter 2019 ~~results of operations includes~~include a loss of $191 million ($156 million net-of-tax) as a result of the sale of the Pilgrim plant in August 2019. See Note ~~16 to the financial statements herein and Note 13~~14 to the financial statements in the Form 10-K for further discussion of the sale of the Pilgrim plant.

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Management's Financial Discussion and Analysis

Third quarter 2018 results of operations includes impairment charges of $155 million ($123 million net-of-tax) due to costs being charged directly to expense as a result of the impaired value of the Entergy Wholesale Commodities nuclear plants’ long-lived assets due to the significantly reduced remaining estimated operating lives associated with management’s strategy to exit the Entergy Wholesale Commodities’ merchant power business, a $107 million reduction of income tax expense, recognized by Entergy Wholesale Commodities, as a result of a restructuring of the investment holdings in one of its nuclear plant decommissioning trust funds, and a $23 million reduction of income tax expense, recognized by Entergy Wholesale Commodities, as a result of a state income tax audit. See “~~MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS~~ - ~~Entergy Wholesale Commodities Exit from the Merchant Power Business~~” below and in the Form 10-K for a discussion of management’s strategy to shut down and sell all of the remaining plants in Entergy Wholesale Commodities’ merchant nuclear fleet. See Note 3 to the financial statements in the Form 10-K for discussion of the state income tax audit and restructuring of its interest in the decommissioning trust fund.

Operating Revenues

Utility

Following is an analysis of the change in operating revenues comparing the third quarter ~~2019~~2020 to the third quarter ~~2018:~~

2019:



		Amount
		(In Millions)
~~2018~~2019 operating revenues		$2,840	~~$2,724~~
Fuel, rider, and other revenues that do not significantly affect net income		~~(218~~(237)	)
Volume/weather		(81)
Return of unprotected excess accumulated deferred income taxes to customers		~~186~~75
Retail electric price		9992
~~Volume/weather~~		49
~~2019~~2020 operating revenues	$2,689	~~$2,840~~

The Utility operating companies’ results include revenues from rate mechanisms designed to recover fuel, purchased power, and other costs such that the revenues and expenses associated with these items generally offset and do not affect net income. “Fuel, rider, and other revenues that do not significantly affect net income” includes the revenue variance associated with these items.

The volume/weather variance is primarily due to decreased commercial and industrial usage as a result of the COVID-19 pandemic and the effects of Hurricane Laura in addition to the effect of less favorable weather on residential sales, partially offset by an increase in residential usage as a result of the COVID-19 pandemic. The decrease in industrial usage is partially offset by an increase in demand from expansion projects, primarily in the transportation and chemicals industries. Entergy continues to expect a decline in sales volume during 2020 due to the COVID-19 pandemic, especially in the commercial and industrial customer classes. See “The COVID-19 Pandemic” above for discussion of the COVID-19 pandemic. See “Hurricane Laura” above for discussion of Hurricane Laura.

The return of unprotected excess accumulated deferred income taxes to customers resulted from activity at the Utility operating companies in response to the enactment of the Tax Cuts and Jobs Act. The return of unprotected excess accumulated deferred income taxes began in second quarter 2018. In third quarter ~~2019, $91~~2020, $16 million was returned to customers through reductions in operating revenues as compared to ~~$277~~$91 million in third quarter ~~2018.~~2019. There is no effect on net income as the reductions in operating revenues were offset by reductions in income tax expense. See Note 2 to the financial statements herein and in the Form 10-K for further discussion of regulatory activity regarding the Tax Cuts and Jobs Act.

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~~Entergy Corporation and Subsidiaries~~

~~Management's Financial Discussion and Analysis~~

The retail electric price variance is primarily due to:

•an interim increase in Entergy Louisiana’s formula rate plan revenues effective ~~September 2018 at Entergy Louisiana and an interim increase in formula rate plan revenues effective June 2019~~April 2020 due to the inclusion of the first-year revenue requirement for ~~St.~~the Lake Charles Power Station ~~each as approved by the LPSC;~~and increases in formula rate plan revenues effective September 2019 and September 2020;

•an increase in Entergy Mississippi’s formula rate plan rates effective with the first billing cycle of April 2020 and an interim capacity rate adjustment to the formula rate plan to recover non-fuel related costs of acquiring and operating the Choctaw Generating Station;

•an increase in Entergy Arkansas’s formula rate plan rates effective with the first billing cycle of January ~~2019 at Entergy Arkansas, as approved by~~ 2020;

•the ~~APSC;~~

implementation of a ~~base rate increase effective October 2018 at Entergy Texas, as approved by the PUCT; and~~

~~an increase in formula rate plan revenues~~vegetation management rider at Entergy Mississippi effective with the ~~first~~ April 2020

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Management's Financial Discussion and Analysis

billing ~~cycle of July 2019, as approved by the MPSC.~~cycle; and

•an increase in Entergy Texas’s transmission cost recovery factor rider in January 2020.

See Note 2 to the financial statements herein and in the Form 10-K for further discussion of the regulatory proceedings discussed above.

~~The volume/weather variance is primarily due to increased usage during the unbilled sales period.~~

Entergy Wholesale Commodities

Operating revenues for Entergy Wholesale Commodities decreased from ~~$380~~$300 million for the third quarter ~~2018~~2019 to ~~$300~~$214 million for the third quarter ~~2019~~2020 primarily due to the shutdown of ~~Pilgrim~~Indian Point 2 in ~~May 2019 and lower capacity prices.~~April 2020.

Following are key performance measures for Entergy Wholesale Commodities for the third quarters ~~2019~~2020 and ~~2018:~~2019:


	2020	2019
Owned capacity (MW) (a)	2,246	3,274
GWh billed	4,332	6,847

Entergy Wholesale Commodities Nuclear Fleet
Capacity factor	83%	98%
GWh billed	3,943	6,210
Average energy price ($/MWh)	$39.51	$37.29
Average capacity price ($/kW-month)	$3.62	$4.50
Refueling outage days:
Palisades	32	—

2019 2018
Owned capacity (MW) (a) 3,274 3,962
GWh billed 6,847 7,576

Entergy Wholesale Commodities Nuclear Fleet (b)
Capacity factor 98% 90%
GWh billed 6,210 6,976
Average energy price ($/MWh) $37.29 $38.01
Average capacity price ($/kW-month) $4.50 $9.32

(a)The reduction in owned capacity is due to the shutdown of the 1,028 MW Indian Point 2 plant in April 2020.


~~(a)~~	~~The reduction in owned capacity is due to the shutdown of the 688 MW Pilgrim plant in May 2019.~~


~~(b)~~	~~The Entergy Wholesale Commodities nuclear power plants had no refueling outage days in the third quarters 2019 and 2018.~~

Other Income Statement Items

Utility

Other operation and maintenance expenses ~~increased~~decreased from ~~$635 million for the third quarter 2018 to~~ $658 million for the third quarter 2019 to $632 million for the third quarter 2020 primarily due to:

~~an increase~~•a decrease of ~~$11~~$9 million primarily due to contract costs in ~~spending on customer~~2019 related to initiatives to explore new ~~technologies~~customer products and ~~services and continuous customer improvement;~~services;

~~an increase of $10 million in information technology costs primarily due to higher costs related to improved infrastructure, enhanced security, and upgrades and maintenance;~~

~~an increase~~•a decrease of $9 million in loss provisions; and

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~~Management's Financial Discussion and Analysis~~

an increase of $4 million in distribution operations and asset management costs primarily due to higher advanced metering customer education costs and higher contract costs for meter reading services; and

~~an increase of $4 million in storm damage provisions at Entergy Mississippi. See Note 2 to the financial statements herein and in the Form 10-K for discussion of storm cost recovery.~~

~~The increase was partially offset by:~~

a decrease of ~~$11~~$7 million in ~~nuclear~~non-nuclear generation expenses ~~primarily~~ due to lower long-term service agreement expenses and a lower scope of work performed in ~~the third quarter 2019~~2020 as compared to the ~~third quarter 2018~~same period in 2019, including a delay in plant outages as a result of the COVID-19 pandemic.

The decrease was partially offset by an increase of $5 million in compensation and ~~the effect~~benefits costs primarily due to an increase in net periodic pension and other postretirement benefits costs as a result of ~~recording the final court decision~~a decrease in the ~~River Bend lawsuit against~~discount rate used to value the ~~DOE related to spent nuclear fuel storage costs. The damages awarded included~~ benefit liabilities. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the ~~reimbursement of approximately $5 million of spent nuclear fuel storage costs previously recorded as other operation and maintenance expense. See~~Form 10-K, Note 16 to the financial statements herein, ~~for discussion of the spent nuclear fuel litigation;~~

a $6 million loss in third quarter 2018 on the sale of fuel oil inventory per an agreement approved by the MPSC in June 2018 resulting from the stipulation related to the effects of the Tax Act. There is no effect on net income as the loss on the sale of fuel oil inventory is offset by a reduction in income tax expense; and

~~a decrease of $5 million in energy efficiency costs due to the timing of recovery from customers.~~

~~Depreciation~~ and ~~amortization expenses increased primarily due to:~~

~~additions to plant in service, including the St. Charles Power Station;~~

~~a reduction of approximately $26 million in depreciation expense recorded in the third quarter 2018 as part of a settlement approved by the FERC in the Unit Power Sales Agreement proceeding; and~~

~~new depreciation rates at Entergy Mississippi, as approved by the MPSC, and at Entergy Texas, as approved by the PUCT.~~

The increase was partially offset by updated depreciation rates used in calculating Grand Gulf plant depreciation and amortization expenses under the Unit Power Sales Agreement, as approved by the FERC. See Note 211 to the financial statements in the Form 10-K for further discussion of pension and other postretirement benefit costs.

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Management's Financial Discussion and Analysis

Depreciation and amortization expenses increased primarily due to additions to plant in service, including the ~~Unit~~Lake Charles Power ~~Sales Agreement proceeding.~~Station and the Choctaw Generating Station.

Other regulatory charges (credits) include regulatory charges of $18 million recorded in third quarter 2018 to reflect the effects of regulatory agreements to return the benefits of the lower income tax rate in 2018 to Entergy Louisiana customers. See Note 2 to the financial statements in the Form 10-K for further discussion of regulatory activity regarding the Tax Cuts and Jobs Act.

Other income decreased primarily due to changes in decommissioning trust fund activity ~~including portfolio rebalancing of certain of the decommissioning trust funds~~and a decrease in the ~~third quarter 2018.~~allowance for equity funds used during construction due to higher construction work in progress in 2019, including the Lake Charles Power Station project.

Interest expense increased primarily due to to:

•the ~~issuance in March 2019~~issuances by Entergy Louisiana of ~~$525~~$350 million of 2.90% Series mortgage bonds and $300 million of 4.20% Series mortgage bonds, each in March 2020;

•the issuance by Entergy ~~Louisiana and the issuance in March 2019~~Texas of ~~$350~~$175 million of ~~4.20%~~3.55% Series mortgage bonds in March 2020; and

•the issuances by Entergy ~~Arkansas.~~Mississippi of $135 million of 3.85% Series mortgage bonds in November 2019 and $170 million of 3.50% Series mortgage bonds in May 2020.

Entergy Wholesale Commodities

Other operation and maintenance expenses decreased from ~~$209 million for the third quarter 2018 to~~ $136 million for the third quarter 2019 ~~primarily due to:~~

~~a decrease of $37~~to $114 million ~~in nuclear generation expenditures~~for the third quarter 2020 primarily due to the absence of ~~other operation and maintenance~~ expenses from Indian Point 2 after it was shut down in the third quarter 2019 from the Pilgrim plant, which was sold in August 2019. See Note 16 to the financial statements herein and Note 13 to the financial statements in the Form 10-K for further discussion of the sale of the Pilgrim plant; andApril 2020.

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•

a decrease of $26 million in severance and retention expenses in the third quarter 2019 compared to the third quarter 2018. Severance and retention expenses were incurred in 2019 and 2018 due to management’s strategy to exit the Entergy Wholesale Commodities’ merchant power business. See “~~MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS~~ - ~~Entergy Wholesale Commodities Exit from the Merchant Power Business~~” below and in the Form 10-K for a discussion of management’s strategy to shut down and sell all of the remaining plants in the Entergy Wholesale Commodities’ merchant nuclear fleet. See Note 7 to the financial statements herein for further discussion of severance and retention expenses resulting from management’s strategy to shut down and sell all of the remaining plants in the Entergy Wholesale Commodities’ merchant nuclear fleet.

Asset write-offs, impairments, and related charges for the third quarter 2019 include a loss of $191 million ($156 million net-of-tax) as a result of the sale of the Pilgrim plant in August 2019. Asset write-offs, impairments, and related charges for the third quarter 2018 include impairment charges of $155 million ($123 million net-of-tax) as a result of an asset retirement obligation revision and expenditures for capital assets. These costs were charged to expense as incurred as a result of the impaired fair value of the Entergy Wholesale Commodities nuclear plants’ long-lived assets due to the significantly reduced remaining estimated operating lives associated with management’s strategy to exit the Entergy Wholesale Commodities’ merchant power business. See “~~MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS~~ - Entergy Wholesale Commodities Exit from the Merchant Power Business” below and in the Form 10-K for a discussion of management’s strategy to shut down and sell all of the remaining plants in the Entergy Wholesale ~~Commodities’~~Commodities merchant nuclear fleet. ~~See Note 9 to the financial statements in the Form 10-K for a discussion of asset retirement obligations.~~ See Note 14 to the financial statements in the Form 10-K for a discussion of the sale of the Pilgrim plant and for a discussion of impairment of long-lived assets.

Depreciation and amortization expenses decreased primarily due to the absence of depreciation expense from the Indian Point 2 plant, after it was shut down in April 2020.

Other income increased primarily due to higher gains on decommissioning trust fund investments in third quarter 2020 as compared to third quarter 2019 and settlement charges recognized in third quarter 2019 on previously deferred pension plan losses. See Notes 8 and 9 to the financial statements herein for a discussion of decommissioning trust fund investments. See Note 166 to the financial statements herein and Note 1311 to the financial statements in the Form 10-K for a discussion of retirement plans.

Other expenses decreased primarily due to the absence of decommissioning expense from the Pilgrim plant, after it was sold in August 2019. See Note 14 to the financial statements in the Form 10-K for further discussion of the sale of the Pilgrim plant.

Income Taxes

~~Other~~

The effective income ~~decreased~~tax rate was 22.1% for the third quarter 2020. The difference in the effective income tax rate for the third quarter 2020 versus the federal statutory rate of 21% was primarily due to ~~lower gains on decommissioning trust fund investments in~~state income taxes, offset by the ~~third quarter 2019 compared~~amortization of excess accumulated deferred income taxes and certain book and tax differences related to ~~the third quarter 2018, including the effect of portfolio rebalancing in the third quarter 2018.~~utility plant items. See ~~Notes 8 and 9~~Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of ~~decommissioning trust fund investments.~~the effects and regulatory activity regarding the Tax Cuts and Jobs Act.

~~Other expenses increased primarily due to an increase in nuclear refueling outage expenses as a result of the amortization in 2019 of costs associated with a refueling outage at Palisades.~~

~~Income Taxes~~

The effective income tax rate was 7.3% for the third quarter 2019. The difference in the effective income tax rate for the third quarter 2019 versus the federal statutory rate of 21% was primarily due to the amortization of excess accumulated deferred income taxes and certain book and tax differences related to utility plant items,

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partially offset by state income taxes. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act.

The effective income tax rate was (110.2%) for the third quarter 2018. The difference in the effective income tax rate for the third quarter 2018 versus the federal statutory rate of 21% was primarily due to amortization of excess accumulated deferred income taxes, a restructuring of the investment holdings in one of the Entergy Wholesale Commodities’ nuclear plant decommissioning trusts for which additional tax basis is now recoverable, and the conclusion of a state income tax audit involving Entergy Wholesale Commodities. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act. See Note 3 to the financial statements in the Form 10-K for a discussion of the restructuring and the conclusion of the state income tax audit.

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~~Management's Financial Discussion and Analysis~~

Nine Months Ended September 30, ~~2019~~2020 Compared to Nine Months Ended September 30, ~~2018~~2019

Following are income statement variances for Utility, Entergy Wholesale Commodities, Parent & Other, and Entergy comparing the nine months ended September 30, ~~2019~~2020 to the nine months ended September 30, ~~2018~~2019 showing how much the line item increased or (decreased) in comparison to the prior period:


	Utility	Entergy Wholesale Commodities	Parent & Other (a)	Entergy
	(In Thousands)
2019 Net Income (Loss) Attributable to Entergy Corporation	$1,140,066	($70,445)	($213,420)	$856,201

Operating revenues	(395,765)	(277,128)	60	(672,833)
Fuel, fuel-related expenses, and gas purchased for resale	(357,583)	(24,950)	17	(382,516)
Purchased power	(308,721)	530	(17)	(308,208)
Other regulatory charges (credits)	(23,608)	—	—	(23,608)
Other operation and maintenance	(107,329)	(127,708)	(5,899)	(240,936)
Asset write-offs, impairments, and related charges	—	(272,151)	—	(272,151)
Taxes other than income taxes	14,085	(1,321)	(115)	12,649
Depreciation and amortization	137,981	(32,914)	—	105,067

Other income (deductions)	(43,127)	(169,527)	13,978	(198,676)
Interest expense	47,565	(6,549)	(3,967)	37,049
Other expenses	(1,852)	(36,405)	—	(38,257)
Income taxes	83,100	(19,514)	30,350	93,936
Preferred dividend requirements of subsidiaries	1,301	—	—	1,301

2020 Net Income (Loss) Attributable to Entergy Corporation	$1,216,235	$3,882	($219,751)	$1,000,366

Utility

Entergy
Wholesale
Commodities

Parent &
Other (a)

Entergy
(In Thousands)
2018 Consolidated Net Income (Loss)
$1,104,078

$31,456

($210,657 )
$924,877

Operating revenues 3,164
(83,849 ) 82
(80,603 )
Fuel, fuel-related expenses, and gas purchased for resale (114,405 ) 18,559
71
(95,775 )
Purchased power (244,938 ) (5,725 ) (67 ) (250,730 )
Other regulatory charges (credits) (262,114 ) —
—
(262,114 )
Other operation and maintenance 42,858
(86,812 ) (3,128 ) (47,082 )
Asset write-offs, impairments, and related charges —
(8,599 ) —
(8,599 )
Taxes other than income taxes 15,137
(11,962 ) (1,142 ) 2,033
Depreciation and amortization 79,223
(2,501 ) 1,169
77,891
Other income 1,676
123,799
(4,894 ) 120,581
Interest expense 21,800
(1,431 ) 6,743
27,112
Other expenses 14,077
46,036
—
60,113
Income taxes 406,417
192,645
(5,695 ) 593,367

2019 Consolidated Net Income (Loss)
$1,150,863

($68,804 )
($213,420 )
$868,639

(a)Parent & Other includes eliminations, which are primarily intersegment activity.


~~(a)~~	~~Parent & Other includes eliminations, which are primarily intersegment activity.~~

Refer to “ENTERGY CORPORATION AND SUBSIDIARIES - SELECTED OPERATING RESULTS” for further information with respect to operating statistics.

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Entergy Corporation and Subsidiaries

Management's Financial Discussion and Analysis

Results of operations for the nine months ended September 30, 2019 include a loss of $191 million ($156 million net-of-tax) as a result of the sale of the Pilgrim plant in August 2019 and impairment charges of $98 million ($77 million net-of-tax) due to costs being charged directly to expense as incurred as a result of the impaired value of the Entergy Wholesale Commodities nuclear plants’ long-lived assets due to the significantly reduced remaining estimated operating lives associated with management’s strategy to exit the Entergy Wholesale Commodities’ merchant power business. See Note ~~16 to the financial statements herein and Note 13~~14 to the financial statements in the Form 10-K for further discussion of the sale of the Pilgrim plant. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Entergy Wholesale Commodities Exit from the Merchant Power Business” below and in the Form 10-K for discussion of management’s strategy to shut down and sell all of the remaining plants in Entergy Wholesale Commodities’ merchant nuclear fleet.

Results of operations for the nine months ended September 30, 2018 include impairment charges of $297 million ($235 million net-of-tax) due to costs being charged directly to expense as a result of the impaired value of the Entergy Wholesale Commodities nuclear plants’ long-lived assets due to the significantly reduced remaining estimated operating lives associated with management’s strategy to exit the Entergy Wholesale Commodities’ merchant power business, a $107 million reduction of income tax expense, recognized by Entergy Wholesale Commodities, as a result of a restructuring of the investment holdings in one of its nuclear plant decommissioning trust funds, a $52 million income tax benefit, recognized by Entergy Louisiana, as a result of the settlement of the 2012-2013 IRS audit, associated

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~~Entergy Corporation and Subsidiaries~~

~~Management's Financial Discussion and Analysis~~

Operating Revenues

with the Hurricane Katrina and Hurricane Rita contingent sharing obligation associated with the Louisiana Act 55 financing, and a $23 million reduction of income tax expense, recognized by Entergy Wholesale Commodities, as a result of a state income tax audit. See “
~~MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS~~ - ~~Entergy Wholesale Commodities Exit from the Merchant Power Business~~” below and in the Form 10-K for a discussion of management’s strategy to shut down and sell all of the remaining plants in Entergy Wholesale Commodities’ merchant nuclear fleet. See Note 3 to the financial statements in the Form 10-K for discussion of the IRS audit settlement, the state income tax audit, and restructuring of its interest in the decommissioning trust fund.

Utility

Following is an analysis of the change in operating revenues comparing the nine months ended September 30, ~~2019~~2020 to the nine months ended September 30, ~~2018:~~

2019:



		Amount
		(In Millions)
~~2018~~2019 operating revenues		$7,393	~~$7,390~~
Fuel, rider, and other revenues that do not significantly affect net income		~~(381~~(635)	)
Volume/weather		(144)
Return of unprotected excess accumulated deferred income taxes to customers		~~215~~157
Retail electric price		~~200~~226
~~Volume/weather~~		~~(31~~	)
~~2019~~2020 operating revenues	$6,997	~~$7,393~~

The volume/weather variance is primarily due to decreased commercial and industrial usage as a result of the COVID-19 pandemic and the effects of Hurricane Laura in addition to the effect of less favorable weather on residential sales, partially offset by an increase in residential usage as a result of the COVID-19 pandemic. The decrease in industrial usage is partially offset by an increase in demand from expansion projects, primarily in the transportation and chemicals industries. Entergy continues to expect declines in sales volume during 2020 due to the COVID-19 pandemic, especially in the commercial and industrial customer classes. See “The COVID-19 Pandemic” above for discussion of the COVID-19 pandemic. See “Hurricane Laura” above for discussion of Hurricane Laura.

The return of unprotected excess accumulated deferred income taxes to customers resulted from activity at the Utility operating companies in response to the enactment of the Tax Cuts and Jobs Act. The return of unprotected excess accumulated deferred income taxes began in second quarter 2018. In the nine months ended September 30, ~~2019, $212~~2020, $55 million was returned to customers through reductions in operating revenues as compared to ~~$427~~$212 million in the nine months ended September 30, ~~2018.~~2019. There is no effect on net income as the reductions in operating revenues were offset by reductions in income tax expense. See Note 2 to the financial statements herein and in the Form 10-K for further discussion of regulatory activity regarding the Tax Cuts and Jobs Act.

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Entergy Corporation and Subsidiaries

Management's Financial Discussion and Analysis

The retail electric price variance is primarily due to:

~~an increase~~•interim increases in ~~formula rate plan revenues effective September 2018 at~~ Entergy ~~Louisiana and an interim increase in~~Louisiana’s formula rate plan revenues effective June 2019 due to the inclusion of the first-year revenue requirement for the J. Wayne Leonard Power Station (formerly St. Charles Power Station) and effective April 2020 due to the inclusion of the first-year revenue requirement for the Lake Charles Power Station ~~each as approved by~~and increases in formula rate plan revenues effective September 2019 and September 2020;

•increases in Entergy Mississippi’s formula rate plan rates effective with the ~~LPSC;~~first billing cycles of July 2019 and April 2020 and an interim capacity rate adjustment to the formula rate plan to recover non-fuel related costs of acquiring and operating the Choctaw Generating Station;

•an increase in Entergy Arkansas’s formula rate plan rates effective with the first billing cycle of January ~~2019 at Entergy Arkansas, as approved by~~ 2020;

•the ~~APSC;~~

implementation of a ~~base rate increase effective October 2018 at Entergy Texas, as approved by the PUCT; and~~

~~an increase in formula rate plan revenues~~vegetation management rider at Entergy Mississippi effective with the ~~first~~April 2020 billing ~~cycle of July 2019, as approved~~cycle; and

•an increase in Entergy Texas’s transmission cost recovery factor rider in January 2020.

The increase was partially offset by the ~~MPSC.~~effects of Entergy New Orleans’s rate reduction implemented with April 2020 bills that was effective August 2019 in accordance with the City Council resolution and related agreement in principle reached in the 2018 base rate case.

See Note 2 to the financial statements herein and in the Form 10-K for further discussion of the regulatory proceedings discussed above.

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~~Management's Financial Discussion and Analysis~~

The volume/weather variance is primarily due to a decrease of 1,741 GWh, or 2%, in billed electricity usage, including the effect of less favorable weather on residential and commercial sales, partially offset by increased usage during the unbilled sales period.

Entergy Wholesale Commodities

Operating revenues for Entergy Wholesale Commodities decreased from ~~$1,108 million for the nine months ended September 30, 2018 to~~ $1,024 million for the nine months ended September 30, 2019 to $747 million for the nine months ended September 30, 2020 primarily due to the shutdown of Pilgrim in May 2019, the shutdown of Indian Point 2 in April 2020, and lower realized wholesale energy and capacity ~~prices,~~prices. The decrease was partially offset by higher volume in the remaining Entergy Wholesale Commodities nuclear fleet resulting from fewer ~~non-refueling~~ outage ~~days.~~days and a larger exercise of resupply options provided for in purchase power agreements where Entergy Wholesale Commodities may elect to supply power from another source when plants are not running.

Following are key performance measures for Entergy Wholesale Commodities for the nine months ended September 30, ~~2019~~2020 and ~~2018:~~2019:


	2020	2019
Owned capacity (MW) (a)	2,246	3,274
GWh billed	16,047	21,308

Entergy Wholesale Commodities Nuclear Fleet
Capacity factor	94%	91%
GWh billed	14,782	19,602
Average energy price ($/MWh)	$41.61	$40.85
Average capacity price ($/kW-month)	$2.06	$4.83
Refueling outage days:

Indian Point 3	—	29
Palisades	32	—

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Management's Financial Discussion and Analysis

2019 2018
Owned capacity (MW) (a) 3,274 3,962
GWh billed 21,308 21,853

Entergy Wholesale Commodities Nuclear Fleet
Capacity factor 91% 86%
GWh billed 19,602 20,096
Average energy price ($/MWh) $40.85 $40.72
Average capacity price ($/kW-month) $4.83 $7.01
Refueling outage days:
Indian Point 2 — 33
Indian Point 3 29 —
(a)The reduction in owned capacity is due to the shutdown of the 1,028 MW Indian Point 2 plant in April 2020.


~~(a)~~	~~The reduction in owned capacity is due to the shutdown of the 688 MW Pilgrim plant in May 2019.~~

Other Income Statement Items

Utility

Other operation and maintenance expenses ~~increased~~decreased from ~~$1,852 million for the nine months ended September 30, 2018 to~~ $1,894 million for the nine months ended September 30, 2019 to $1,787 million for the nine months ended September 30, 2020 primarily due to:

~~an increase of $27 million in spending on customer initiatives to explore new technologies and services and continuous customer improvement;~~

~~an increase of $26 million in information technology costs primarily due to higher costs related to improved infrastructure, enhanced security, and upgrades and maintenance; and~~

an increase of $13 million in distribution operations and asset management costs primarily due to higher advanced metering customer education costs and higher contract costs for meter reading services.

~~The increase was partially offset by:~~

•a decrease of ~~$22~~$48 million in non-nuclear generation expenses due to a lower scope of work performed during plant outages in 2020 as compared to the same period in 2019, including a delay in plant outages as a result of the COVID-19 pandemic, and lower long-term service agreement expenses;

•a decrease of $41 million in nuclear generation expenses primarily due to a lower scope of work performed in ~~2019~~2020 as compared to ~~2018;~~2019 and lower nuclear labor costs, including contract labor, in part as a result of the COVID-19 pandemic;

•a decrease of ~~$11~~$22 million primarily due to contract costs in 2019 related to initiatives to explore new customer products and services;

•higher nuclear insurance refunds of $18 million; and

•a decrease of $10 million in ~~energy efficiency costs due to the timing of recovery from customers.~~loss provisions.

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~~Entergy Corporation and Subsidiaries~~

~~Management's Financial Discussion and Analysis~~

~~Depreciation and amortization expenses increased primarily due to:~~

~~additions to plant in service, including the St. Charles Power Station;~~

~~a reduction of approximately $26 million in depreciation expense recorded in the third quarter 2018 as part of a settlement approved by the FERC in the Unit Power Sales Agreement proceeding; and~~

~~new depreciation rates at Entergy Mississippi, as approved by the MPSC, and at Entergy Texas, as approved by the PUCT.~~

The ~~increase~~decrease was partially offset ~~by updated depreciation rates~~by:

•an increase of $19 million in compensation and benefits costs primarily due to an increase in net periodic pension and other postretirement benefits costs as a result of a decrease in the discount rate used to value the benefit liabilities. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in ~~calculating Grand Gulf plant depreciation~~the Form 10-K, Note 6 to the financial statements herein, and ~~amortization expenses under~~Note 11 to the ~~Unit Power Sales Agreement, as approved by~~financial statements in the ~~FERC.~~Form 10-K for further discussion of pension and other postretirement benefit costs; and

•an increase of $9 million in storm damage provisions at Entergy Mississippi. See Note 2 to the financial statements in the Form 10-K for ~~further~~ discussion of ~~the Unit Power Sales Agreement proceeding.~~storm recovery.

~~Other regulatory charges (credits) include the following significant activity:~~

a regulatory charge recorded in second quarter 2018 to reflect the return of unprotected excess accumulated deferred income taxes per an agreement approved by the MPSC in June 2018 that resulted in a reduction in net utility plant of $127 million. There is no effect on net income as the regulatory charge was offset by a reduction in income tax expense in 2018;Depreciation and

~~regulatory charges of $73 million recorded in 2018 to reflect the effects of regulatory agreements to return the benefits of the lower income tax rate in 2018 to Entergy Louisiana customers.~~

~~See Note 2 to the financial statements in the Form 10-K for further discussion of regulatory activity regarding the Tax Cuts and Jobs Act.~~

~~Other income~~ amortization expenses increased primarily due to ~~an increase~~additions to plant in service, including the J. Wayne Leonard Power Station (formerly St. Charles Power Station), the Lake Charles Power Station, and the Choctaw Generating Station, and new depreciation rates at Entergy Mississippi, as approved by the MPSC.

Other income decreased primarily due to:

•changes in decommissioning trust fund activity;

•a decrease in the allowance for equity funds used during construction due to higher construction work in progress in 2019, ~~which included~~including the J. Wayne Leonard Power Station (formerly St. Charles Power Station) project and the Lake Charles Power Station project, partially offset by construction work in progress in 2020 related to the Montgomery County Power Station project; and

•an increase in net periodic pension and ~~New Orleans Power Station projects. The increase was substantially offset by changes~~other postretirement benefits non-service pension costs as a result of a decrease in ~~decommissioning trust fund activity, including portfolio rebalancing of certain decommissioning trust funds~~the discount rate used to value the benefits liabilities. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in ~~2018.~~

~~Interest expense increased primarily due to:~~

~~the issuance in March 2019 of $525 million of 4.20% Series mortgage bonds by Entergy Louisiana;~~

~~the issuance in March 2019 of $350 million of 4.20% Series mortgage bonds by Entergy Arkansas; and~~

~~the issuance in May 2018 of $250 million of 4.00% Series mortgage bonds by Entergy Arkansas.~~

~~See Note 5 to the financial statements in~~ the Form 10-K, ~~and~~ Note ~~4 to the financial statements herein for a discussion of long-term debt.~~

~~Entergy Wholesale Commodities~~

~~Other operation and maintenance expenses decreased from $600 million for the nine months ended September 30, 2018 to $513 million for the nine months ended September 30, 2019 primarily due to:~~

a decrease of $49 million in nuclear generation expenditures primarily due to the absence of other operation and maintenance expenses in the nine months ended September 30, 2019 from the Pilgrim plant, which was sold in August 2019. See Note 166 to the financial statements herein, and Note 1311 to the financial statements in the Form 10-K for further discussion of ~~the sale of the Pilgrim plant;~~pension and other postretirement benefit costs.

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Management's Financial Discussion and Analysis

•

a decrease of $29 million in severance and retention expenses in the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. Severance and retention expenses were incurred in 2019 and 2018 due to management’s strategy to exit the Entergy Wholesale Commodities’ merchant power business. See “~~MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS~~ - ~~Entergy Wholesale Commodities Exit from the Merchant Power Business~~” below and in the Form 10-K for a discussion of management’s strategy to shut down and sell all of the remaining plants in the Entergy Wholesale Commodities’ merchant nuclear fleet. See Note 7 to the financial statements herein for further discussion of severance and retention expenses resulting from management’s strategy to shut down and sell all of the remaining plants in the Entergy Wholesale Commodities’ merchant nuclear fleet.

Interest expense increased primarily due to:

•the issuances by Entergy Texas of $300 million in September 2019 and $175 million in March 2020 of 3.55% Series mortgage bonds;

•the issuances by Entergy Louisiana of $300 million of 4.20% Series mortgage bonds and $350 million of 2.90% Series mortgage bonds, each in March 2020, and $525 million of 4.20% Series mortgage bonds in March 2019;

•the issuances by Entergy Arkansas of $350 million of 4.20% Series mortgage bonds in March 2019 and $100 million of 4.0% Series mortgage bonds in March 2020; and

•the issuances by Entergy Mississippi of $135 million of 3.85% Series mortgage bonds in November 2019 and $170 million of 3.50% Series mortgage bonds in May 2020.

Entergy Wholesale Commodities

Other operation and maintenance expenses decreased from $513 million for the nine months ended September 30, 2019 to $385 million for the nine months ended September 30, 2020 primarily due to:

•a decrease of $112 million resulting from the absence of expenses from the Pilgrim plant after it was shut down in May 2019 and the Indian Point 2 plant after it was shut down in April 2020; and

•a decrease of $17 million in severance and retention expenses. Severance and retention expenses were incurred in 2020 and 2019 due to management’s strategy to exit the Entergy Wholesale Commodities merchant power business. See “Entergy Wholesale Commodities Exit from the Merchant Power Business” below and in the Form 10-K for a discussion of management’s strategy to shut down and sell all of the remaining plants in the Entergy Wholesale Commodities merchant nuclear fleet. See Note 7 to the financial statements herein for further discussion of severance and retention expenses resulting from management’s strategy to shut down and sell all of the remaining plants in the Entergy Wholesale Commodities merchant nuclear fleet.

Asset write-offs, impairments, and related charges for the nine months ended September 30, 2020 include impairment charges of $16 million ($13 million net-of-tax) primarily as a result of expenditures for capital assets. Asset write-offs, impairments, and related charges for the nine months ended September 30, 2019 include ~~a loss~~impairment charges of $191 million ($156 million net-of-tax) as a result of the sale of the Pilgrim plant in August 2019 and impairment charges of $98 million ($77 million net-of-tax) related to nuclear refueling outage spending and expenditures for capital assets. Asset write-offs, impairments, and related charges for the nine months ended September 30, 2018 include impairment charges of $297 million ($235 million net-of-tax) related to an asset retirement obligation revision, nuclear refueling outage spending and expenditures for capital assets. These costs were charged to expense as incurred as a result of the impaired fair value of the Entergy Wholesale Commodities nuclear plants’ long-lived assets due to the significantly reduced remaining estimated operating lives associated with management’s strategy to exit the Entergy Wholesale ~~Commodities’~~Commodities merchant power business. See “~~MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS~~ - Entergy Wholesale Commodities Exit from the Merchant Power Business” below and in the Form 10-K for a discussion of management’s strategy to shut down and sell all of the remaining plants in the Entergy Wholesale ~~Commodities’~~Commodities merchant nuclear fleet. ~~See Note 9 to the financial statements in the Form 10-K for a discussion of asset retirement obligations.~~ See Note 14 to the financial statements in the Form 10-K for a discussion of ~~impairment of long-lived assets. See Note 16 to the financial statements herein and Note 13 to the financial statements in the Form 10-K for further discussion of~~ the sale of the Pilgrim ~~plant.~~plant and for a discussion of impairment of long-lived assets.

Depreciation and amortization expenses decreased primarily due to the absence of depreciation expense from the Indian Point 2 plant, after it was shut down in April 2020.

Other income ~~increased~~decreased primarily due to ~~higher~~lower gains on decommissioning trust fund investments in the nine months ended September 30, ~~2019~~2020 compared to the nine months ended September 30, ~~2018.~~2019. See Notes 8 and 9 to the financial statements herein for a discussion of decommissioning trust fund investments.

Other expenses ~~increased~~decreased primarily due to ~~an increase~~the absence of decommissioning expense from the Pilgrim plant, after it was sold in ~~nuclear refueling outage expenses as a result~~August 2019. See Note 14 to the financial statements in the Form 10-K for further discussion of the ~~amortization in 2019~~sale of ~~costs associated with a refueling outage at Palisades.~~the Pilgrim plant.

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Entergy Corporation and Subsidiaries

Management's Financial Discussion and Analysis

Income Taxes

The effective income tax rate was 14.2% for the nine months ended September 30, 2020. The difference in the effective income tax rate for the nine months ended September 30, 2020 versus the federal statutory rate of 21% was primarily due to amortization of excess accumulated deferred income taxes, certain book and tax differences related to utility plant items, the settlement with the IRS on the treatment of funds received in conjunction with the Act 55 financing of Hurricane Isaac storm costs, and permanent differences related to income tax deductions for stock-based compensation, partially offset by state income taxes. See Note 10 to the financial statements herein for discussion of the IRS settlement and the income tax deductions for stock-based compensation. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act.

The effective income tax rate was 7.8% for the nine months ended September 30, 2019. The difference in the effective income tax rate for the nine months ended September 30, 2019 versus the federal statutory rate of 21% was primarily due to amortization of excess accumulated deferred income taxes and certain book and tax differences related to utility plant items, partially offset by state income taxes and the tax effects of the disposition of Vermont Yankee. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act. See Note ~~10 to the financial statements herein for a discussion of the tax effects of the Vermont Yankee disposition.~~

The effective income tax rate was (128.4%) for the nine months ended September 30, 2018. The difference in the effective income tax rate for the nine months ended September 30, 2018 versus the federal statutory rate of 21% was primarily due to amortization of excess accumulated deferred income taxes, a restructuring of the investment holdings in one of the Entergy Wholesale Commodities’ nuclear plant decommissioning trusts for which additional tax basis is now recoverable, and an IRS audit settlement for the 2012-2013 tax returns. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the tax effects ~~and regulatory activity regarding the Tax Cuts and Jobs Act. See Note 3 to the financial statements in the Form 10-K for a discussion~~ of the ~~IRS audit settlement and the restructuring.~~Vermont Yankee disposition.

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~~Entergy Corporation and Subsidiaries~~

~~Management's Financial Discussion and Analysis~~

Income Tax Legislation

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Income Tax Legislation” in the Form 10-K for a discussion of the Tax Cuts and Jobs Act, the federal income tax legislation enacted in December 2017. Note 3 to the financial statements in the Form 10-K contains additional discussion of the effect of the Tax Act on 2019, 2018, and 2017 results of operations and financial position, the provisions of the Tax Act, and the uncertainties associated with accounting for the Tax Act, and Note 10 to the financial statements herein contains updates to that discussion. Note 2 to the financial statements in the Form 10-K contains a discussion of the regulatory proceedings that have considered the effects of the Tax Act.

Entergy Wholesale Commodities Exit from the Merchant Power Business

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Entergy Wholesale Commodities Exit from the Merchant Power Business” in the Form 10-K for a discussion of management’s strategy to shut down and sell all remaining plants in the Entergy Wholesale ~~Commodities’~~Commodities merchant nuclear fleet. Following are updates to that discussion.

~~Vermont Yankee Disposition~~

As discussed in more detail in Note 16 to the financial statements herein, in January 2019, Entergy transferred 100% of the membership interests in Entergy Nuclear Vermont Yankee, LLC, the owner of the Vermont Yankee plant, to a subsidiary of NorthStar.

Shutdown and Sale of Pilgrim

As discussed in the Form 10-K, ~~Entergy entered into a purchase and sale agreement with Holtec International to sell to a Holtec subsidiary 100% of the equity interests~~Pilgrim ceased operations in ~~Entergy Nuclear Generation Company, the owner of Pilgrim, for $1,000 (subject to adjustments for net liabilities and other amounts).~~May 2019. On August 22, 2019, the NRC approved the transfer of Pilgrim’s facility licenses to ~~Holtec.~~Holtec International. At that time, hearing requests filed by the Commonwealth of Massachusetts and Pilgrim Watch challenging Holtec’s financial qualifications and the sufficiency of the NRC’s review of the associated environmental impacts of the license transfer were pending with the NRC Commissioners. The NRC approval order included a condition acknowledging the NRC’s longstanding authority to modify, condition, or rescind the license transfer order as a result of any hearing that may be conducted. On August 26, 2019, as permitted by the August 22 order, Entergy and Holtec closed the transaction. On September 3 and 4, 2019, Pilgrim Watch and Massachusetts each filed with the NRC motions to stay the effectiveness of the August 22 order pending the resolution of the NRC hearing process. The NRC has not yet ruled on the Pilgrim Watch and Massachusetts hearing requests or the stay motions. In addition, on September 25, 2019, Massachusetts filed a petition with the U.S. Court of Appeals for the District of Columbia Circuit, asking the court to vacate the NRC’s August 22 license transfer approval order and related approvals. On ~~October 16,~~November 22, 2019, Entergy and Holtec filed a motion to ~~intervene in~~dismiss Massachusetts’s petition; the ~~U.S. Court of Appeals proceeding.~~NRC also filed a motion to dismiss on the same date. On ~~October 28, 2019,~~January 22, 2020, Massachusetts filed a ~~motion for~~second petition with the D.C. Circuit asking the court to review the NRC’s December 17 order denying its stay ~~pending appeal. The court~~motion. On June 16, 2020, Holtec

Table of ~~appeals has not yet ruled on Massachusetts’ petition.~~Contents

Entergy Corporation and Subsidiaries

~~The sale of Entergy Nuclear Generation Company~~Management's Financial Discussion and Analysis

and Massachusetts reached a settlement to Holtec included the transfer of the nuclear decommissioning trust and obligation for spent fuel management and plant decommissioning. The transaction resulted in a loss of $191 million ($156 million net-of-tax) in the third quarter 2019. See Note 16resolve issues related to the ~~financial statements herein~~Pilgrim transaction. Pursuant to the settlement agreement, Massachusetts withdrew its hearing request pending before the NRC and withdrew both of its petitions for ~~discussion of~~review before the ~~closing of~~D.C. Circuit, thereby terminating Massachusetts’s pending legal challenges to the Pilgrim ~~transaction.~~transfer.

Planned Shutdown and Sale of Indian Point ~~Energy Center~~

2 and Indian Point 3

As discussed in the Form 10-K, in April 2019, Entergy entered into an agreement to sell, directly or indirectly, 100% of the equity interests in the subsidiaries that own Indian Point 1, Indian Point 2, and Indian Point 3, after Indian Point 3 has been shut down and defueled, to a Holtec ~~International~~ subsidiary for decommissioning. The sale ~~includes~~will include the transfer of the licenses, spent fuel, decommissioning liabilities, and nuclear decommissioning trusts for the three units.

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~~Management's Financial Discussion and Analysis~~

~~The~~ Subject to the conditions discussed in the Form 10-K, the transaction is ~~subject~~targeted to closing conditions, including approval from the NRC. Entergy and Holtec also plan to seek an order from the New York State Public Service Commission disclaiming jurisdiction, or alternatively approving the transaction. Closing is also conditioned on obtaining from the New York State Department of Environmental Conservation an agreement related to Holtec’s decommissioning plan as being consistent with applicable standards. The transaction closing is targeted forclose in May 2021, following the defueling of Indian Point 3.

The NRC publicly stated it expects to complete its technical and financial assurance review of the license transfer application by the end of 2020. As consideration for the transfer to Holtec of its interest in Indian Point, Entergy will receive nominal cash consideration. The terms of the transaction do not require a minimum level of funding in the nuclear decommissioning trusts as a condition to closing. The Indian Point transaction is expected to result in a loss based on the difference between Entergy’s adjusted net investment in the subsidiaries at closing and the sale price net of any agreed adjustments. As of September 30, ~~2019,~~2020, Entergy’s adjusted net investment in the Indian Point units was ~~$240~~$210 million. The primary variables in the ultimate loss that Entergy will incur are the values of the nuclear decommissioning trusts and the asset retirement obligations at closing, the financial results from plant operations until the closing, and the level of any unrealized deferred tax balances at closing. ~~The terms~~Indian Point 2 permanently ceased operations on April 30, 2020.

Planned Shutdown and Sale of Palisades

As discussed in the Form 10-K, in July 2018, Entergy entered into a purchase and sale agreement to sell 100% of the ~~transaction~~equity interests in the subsidiary that owns Palisades and the Big Rock Point Site, for $1,000 (subject to adjustment for net liabilities and other amounts). The sale will include ~~limitations on withdrawals from~~the transfer of the nuclear decommissioning ~~trusts~~trust and obligation for spent fuel management and plant decommissioning. In February 2020 the parties signed an amendment to ~~fund decommissioning activities~~the purchase and ~~controls on how Entergy manages~~sale agreement to remove the ~~investment of~~closing condition that the nuclear decommissioning trust ~~assets between signing~~fund must have a specified amount and ~~closing; however, the agreement does not require a minimum level of funding in~~Entergy agreed to contribute $20 million to the nuclear decommissioning ~~trusts as a condition~~trust fund at closing, among other amendments. Subject to the conditions discussed in the Form 10-K, the transaction is expected to close by the end of 2022. As of September 30, 2020, Entergy’s adjusted net investment in Palisades was $75 million. The primary variables in the ultimate loss or gain that Entergy will incur on the transaction are the values of the nuclear decommissioning trust and the asset retirement obligations at closing, the financial results from plant operations until the closing, and the level of any unrealized deferred tax balances at closing. Palisades completed its final refueling outage in October 2020.

Costs Associated with Entergy Wholesale Commodities Strategic Transactions

Entergy expects to incur employee retention and severance expenses associated with management’s strategy to exit the Entergy Wholesale ~~Commodities’~~Commodities merchant power business of approximately ~~$100~~$70 million in ~~2019,~~2020, of which ~~$70~~$57 million has been incurred as of September 30, ~~2019,~~2020, and a total of approximately ~~$135~~$55 million from ~~2020~~2021 through 2022. In addition, Entergy Wholesale Commodities incurred impairment charges related to nuclear fuel spending, nuclear refueling outage spending, and expenditures for capital assets of $8$4 million for the three months ended September 30, ~~2019~~2020 and ~~$98~~$16 million for the nine months ended September 30, ~~2019.~~2020. These costs were charged to expense as incurred as a result of the impaired value of certain of the Entergy Wholesale Commodities nuclear plants’ long-lived assets due to the significantly reduced remaining estimated operating lives associated with management’s strategy to exit the Entergy Wholesale ~~Commodities’~~Commodities merchant power business. Entergy expects to continue to incur costs associated with nuclear fuel-related spending and expenditures for capital assets and, except for Palisades, expects to continue to charge these costs to expense as incurred because Entergy expects the value of the plants to continue to be impaired.

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Entergy Corporation and Subsidiaries

Management's Financial Discussion and Analysis

Liquidity and Capital Resources

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources” in the Form 10-K for a discussion of Entergy’s capital structure, capital expenditure plans and other uses of capital, and sources of capital. Following are updates to that discussion.

Entergy has experienced negative changes during 2020 to its customer payment patterns and its operating cash flow activity due to the COVID-19 pandemic, and expects them to continue throughout 2020. See “The COVID-19 Pandemic” above for discussion of the COVID-19 pandemic. Additional discussion of Entergy’s liquidity and capital resources follows.

Capital Structure and Resources

Entergy’s debt to capital ratio is shown in the following table. The ~~decrease~~increase in the debt to capital ratio for Entergy as of September 30, ~~2019~~2020 is primarily due to the ~~settlement~~net issuance of debt in 2020.


	September 30, 2020		December 31, 2019
Debt to capital	66.7	%	65.5	%
Effect of excluding securitization bonds	(0.2	%)	(0.4	%)
Debt to capital, excluding securitization bonds (a)	66.5	%	65.1	%
Effect of subtracting cash	(1.3	%)	(0.5	%)
Net debt to net capital, excluding securitization bonds (a)	65.2	%	64.6	%

(a)Calculation excludes the ~~remaining equity forwards in 2019. See Note 3~~Arkansas, Louisiana, New Orleans, and Texas securitization bonds, which are non-recourse to ~~the financial statements herein for a discussion of the equity forward sale agreements.~~Entergy Arkansas, Entergy Louisiana, Entergy New Orleans, and Entergy Texas, respectively.

September 30,
2019

December 31,
2018
Debt to capital 65.4 % 66.7 %
Effect of excluding securitization bonds (0.4 %) (0.6 %)
Debt to capital, excluding securitization bonds (a) 65.0 % 66.1 %
Effect of subtracting cash (1.2 %) (0.6 %)
Net debt to net capital, excluding securitization bonds (a) 63.8 % 65.5 %

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~~(a)~~	Calculation excludes the Arkansas, Louisiana, New Orleans, and Texas securitization bonds, which are non-recourse to Entergy Arkansas, Entergy Louisiana, Entergy New Orleans, and Entergy Texas, respectively.

Net debt consists of debt less cash and cash equivalents. Debt consists of notes payable and commercial paper, ~~financing~~finance lease obligations, and long-term debt, including the currently maturing portion. Capital consists of debt, common shareholders’ equity, and subsidiaries’ preferred stock without sinking fund. Net capital consists of capital less cash and cash equivalents. Entergy uses the debt to capital ratios excluding securitization bonds in analyzing its financial condition and believes they provide useful information to its investors and creditors in evaluating Entergy’s financial condition because the securitization bonds are non-recourse to Entergy, as more fully described in Note 5 to the financial statements in the Form 10-K. Entergy also uses the net debt to net capital ratio excluding securitization bonds in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy’s financial condition because net debt indicates Entergy’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.

Entergy Corporation has in place a credit facility that has a borrowing capacity of $3.5 billion and expires in September 2024. The facility includes fronting commitments for the issuance of letters of credit against $20 million of the total borrowing capacity of the credit facility. The commitment fee is currently 0.225% of the undrawn commitment amount. Commitment fees and interest rates on loans under the credit facility can fluctuate depending on the senior unsecured debt ratings of Entergy Corporation. The weighted average interest rate for the nine months ended September 30, ~~2019~~2020 was ~~3.94%~~2.50% on the drawn portion of the facility. Following is a summary of the borrowings outstanding and capacity available under the facility as of September 30, ~~2019:~~2020:


Capacity	Borrowings	Letters of Credit	Capacity Available
(In Millions)
$3,500	$150	$6	$3,344

Capacity Borrowings
Letters
of Credit

Capacity
Available
(In Millions)
$3,500 $155 $6 $3,339

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A covenant in Entergy Corporation’s credit facility requires Entergy to maintain a consolidated debt ratio, as defined, of 65% or less of its total capitalization. The calculation of this debt ratio under Entergy Corporation’s credit facility is different than the calculation of the debt to capital ratio above. One such difference is that it excludes the effects, among other things, of certain impairments related to the Entergy Wholesale Commodities nuclear generation assets. Entergy is currently in compliance with the covenant and expects to remain in compliance with this covenant. If Entergy fails to meet this ratio, or if Entergy or one of the ~~Utility operating companies~~Registrant Subsidiaries (except Entergy New Orleans) defaults on other indebtedness or is in bankruptcy or insolvency proceedings, an acceleration of the facility’s maturity date may occur. See Note 4 to the financial statements herein for additional discussion of the Entergy Corporation credit facility and discussion of the Registrant Subsidiaries’ credit facilities.

Entergy Corporation has a commercial paper program with a Board-approved program limit of up to $2 billion. As of September 30, ~~2019,~~2020, Entergy Corporation had approximately ~~$1,918~~$1,398 million of commercial paper outstanding. The weighted-average interest rate for the nine months ended September 30, ~~2019~~2020 was ~~2.88%~~1.66%.

In January 2019, Entergy Nuclear Vermont Yankee was transferred to NorthStar and its credit facility was assumed by Vermont Yankee Asset Retirement Management, LLC, Entergy Nuclear Vermont Yankee’s parent company that remains an Entergy subsidiary afterCertain of the ~~transfer. The credit facility has~~Utility operating companies have a ~~borrowing capacity~~total of ~~$139~~$373 million ~~and expires~~ in ~~November 2020. As of~~storm reserve escrow accounts at September 30, 2019, $139 million in cash borrowings were outstanding under the credit facility. The weighted average interest rate for the nine months ended September 30, 2019 was 4.07% on the drawn portion of the facility. See Note 14 to the financial statements in the Form 10-K and Note 16 to the financial statements herein for discussion of the transfer of Entergy Nuclear Vermont Yankee to NorthStar.2020.

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Capital Expenditure Plans and Other Uses of Capital

See the table and discussion in the Form 10-K under “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Capital Expenditure Plans and Other Uses of Capital,” that sets forth the amounts of planned construction and other capital investments by operating segment for ~~2019~~2020 through ~~2021.~~2022. Following are updates to that discussion.

Preliminary Capital Investment Plan Estimate for ~~2020-2022~~2021-2023

Entergy is developing its capital investment plan for ~~2020~~2021 through ~~2022~~2023 and currently anticipates that the Utility will make approximately ~~$11.4~~$11.9 billion in capital investments during that period and that Entergy Wholesale Commodities will make approximately ~~$65~~$20 million in capital investments, not including nuclear fuel, during that period.The preliminary Utility estimate includes specific investments such as the ~~Lake Charles~~Montgomery County Power Station, ~~Washington Parish Energy Center,~~ Sunflower Solar Facility, ~~New Orleans Power Station, New Orleans~~Searcy Solar ~~Station~~Facility, Walnut Bend Solar Facility, and ~~Montgomery~~Liberty County ~~Power Station;~~Solar Facility; transmission projects to enhance reliability, reduce congestion, and enable economic growth; distribution spending to enhance reliability and improve service to customers, including advanced meters and related investments; resource planning, including potential generation projects; system improvements; investments in Entergy’s nuclear fleet; software and security; and other investments.The preliminary Entergy Wholesale Commodities estimate includes amounts associated with specific investments, such as component replacement, software and security, and dry cask storage.Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of business restructuring, regulatory constraints and requirements, environmental regulations, business opportunities, market volatility, economic trends, changes in project plans, and the ability to access capital.

~~St.~~Lake Charles Power Station

As discussed in the Form 10-K, the LPSC issued an order in ~~December 2016~~July 2017 approving certification that the public necessity and convenience would be served by the construction of the ~~St.~~Lake Charles Power Station. ~~Commercial~~The plant commenced commercial operation ~~commenced~~ in ~~May 2019.~~

~~Choctaw Generating Station~~

March 2020.

In August 2018, Entergy Mississippi announced that it signed an asset purchase agreement to acquire from a subsidiary of GenOn Energy Inc. the Choctaw Generating Station, an 810 MW natural gas fired combined-cycle turbine plant located near French Camp, Mississippi. The purchase price is expected to be approximately $314 million. Entergy Mississippi also expects to invest in various plant upgrades at the facility after closing and expects the total cost of the acquisition to be approximately $401 million. The purchase was contingent upon, among other things, obtaining necessary approvals, including full cost recovery, from applicable federal and state regulatory and permitting agencies. These included regulatory approvals from the MPSC and the FERC. Clearance under the Hart-Scott-Rodino Antitrust Improvements Act has occurred. In September 2019 the FERC approved the acquisition. In October 2018, Entergy Mississippi filed an application with the MPSC seeking approval of the acquisition and cost recovery. In a separate filing in October 2018, Entergy Mississippi proposed revisions to its formula rate plan that would provide for a mechanism, the interim capacity rate adjustment mechanism, in the formula rate plan to recover the non-fuel related costs of additional owned capacity acquired by Entergy Mississippi, including the non-fuel annual ownership costs of the Choctaw Generating Station, as well as to allow similar cost recovery treatment for other future capacity additions approved by the MPSC. Entergy Mississippi executed a joint stipulation as to all issues with the Mississippi Public Utilities Staff and, in October 2019, the MPSC adopted the joint stipulation which approved Entergy Mississippi’s request to acquire, own, operate, improve, and maintain the facility. The MPSC approved the expected total cost of the acquisition of approximately $401 million and authorized Entergy Mississippi to recover acquisition and ownership costs of the facility through its formula rate plan, including costs incurred before the effective date of the interim capacity rate mechanism, which Entergy Mississippi expects to be approved later this year. Entergy Mississippi purchased the plant in October 2019.

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New Orleans Power Station

In June 2016, Entergy New Orleans filed an application with the City Council seeking a public interest determination and authorization to construct the New Orleans Power Station, a 226 MW advanced combustion turbine in New Orleans, Louisiana, at the site of the existing Michoud generating facility, which was retired effective May 31, 2016. In January 2017 several intervenors filed testimony opposing the construction of the New Orleans Power Station on various grounds. In July 2017, Entergy New Orleans submitted a supplemental and amending application to the City Council seeking approval to construct either the originally proposed 226 MW advanced combustion turbine, or alternatively, a 128 MW unit composed of natural gas-fired reciprocating engines and a related cost recovery plan. The cost estimate for the alternative 128 MW unit is $210 million. In addition, the application renewed the commitment to pursue up to 100 MW of renewable resources to serve New Orleans. In March 2018 the City Council adopted a resolution approving construction of the 128 MW unit. The targeted commercial operation date is mid-2020, subject to receipt of all necessary permits.

In April 2018 intervenors opposing the construction of the New Orleans Power Station filed with the City Council a request for rehearing, which was subsequently denied, and a petition for judicial review of the City Council’s decision, and also filed a lawsuit challenging the City Council’s approval based on Louisiana’s open meeting law. In May 2018 the City Council announced that it would initiate an investigation into allegations that Entergy New Orleans, Entergy, or some other entity paid or participated in paying certain attendees and speakers in support of the New Orleans Power Station to attend or speak at certain meetings organized by the City Council. In June 2018, Entergy New Orleans produced documents in response to a City Council resolution relating to this investigation. In October 2018 investigators for the City Council released their report, concluding that individuals were paid to attend and/or speak in support of the New Orleans Power Station and that Entergy New Orleans “knew or should have known that such conduct occurred or reasonably might occur.” The City Council issued a resolution requiring Entergy New Orleans to show cause why it should not be fined $5 million as a result of the findingsAs discussed in the report. In November 2018, Entergy New Orleans submitted its response to the show cause resolution, disagreeing with certain characterizations and omissions of fact in the report and asserting that the City Council could not legally impose the proposed fine. Simultaneous with the filing of its response to the show cause resolution, Entergy New Orleans sent a letter to the City Council re-asserting that the City Council’s imposition of the proposed fine would be unlawful, but acknowledging that the actions of a subcontractor, which was retained by an Entergy New Orleans contractor without the knowledge or contractually-required consent of Entergy New Orleans, were contrary to Entergy’s values. In that letter, Entergy New Orleans offered to donate $5 million to the City Council to resolve the show cause proceeding. In January 2019, Entergy New Orleans submitted a new settlement proposal to the City Council. The proposal retains the components of the first offer but adds to it a commitment to make reasonable efforts to limit the costs of the project to the $210 million cost estimate with advanced notification of anticipated cost overruns, additional reporting requirements for cost and environmental items, and a commitment regarding reliability investment and to work with the New Orleans Sewerage and Water Board to provide a reliable source of power. In February 2019 the City Council approved a resolution approving the settlement proposal and allowing the construction of the New Orleans Power Station to commence.

Also in February 2019, certain intervenors in the City Council proceeding on the New Orleans Power Station filed suit in Louisiana state court challenging the Louisiana Department of Environmental Quality’s issuance of the New Orleans Power Station’s air permit. Entergy New Orleans intervened in that lawsuit and, along with the Louisiana Department of Environmental Quality, filed exceptions seeking dismissal of the lawsuit. In June 2019 the state court judge sustained the exceptions and dismissed the plaintiffs’ petition with prejudice. AlsoForm 10-K, in June 2019, a state court judge in New Orleans affirmed the City Council’s approval of the New Orleans Power Station and dismissed the petition for judicial review of that decision that had been filed in April 2018. The petitioners have filed an appeal of that ruling. Also in June 2019, with regard to the lawsuit challenging the City Council’s decision on the basis of a violation of the open meetings law, the same state court judge in New Orleans ruled that there was a violation of the open meetings law at the February 2018 meeting of the City Council’s ~~Utilities, Cable, Telecommunications and Technology~~Utility Committee at which that Committee considered the New Orleans Power Station approval, and further ruled that, although there was no violation of the open meetings law at the March 2018 ~~full~~ City Council meeting at which the New Orleans Power Station was

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approved, both the approval of the Utility Committee and the approval of the ~~full~~ City Council were void. The City Council and Entergy New Orleans ~~have~~ each filed a suspensive appeal of the open meetings law ruling. A suspensive appeal suspends the effect of the judgment in the open meetings law proceeding while the appeal is being taken. The petitioners sought in the state appellate court, and then at the Louisiana Supreme Court, to terminate the suspension of the effect of the judgment, but both courts declined to do so. ~~Appellate briefing on~~Oral argument in both cases was heard in January 2020. In February 2020 the ~~merits both in~~state appellate court reversed the ~~open meetings law appeal and in~~lower court’s ruling that the ~~judicial review appeal is scheduled to begin in November 2019. The New Orleans Power Station related settlement that was approved by the full~~ City ~~Council in February 2019 and that allowed Entergy New Orleans to move forward with the construction~~Council’s approval of the New Orleans Power Station was ~~not affected by~~void due to a violation of the open meetings law at the City Council’s Utility Committee meeting in February 2018. The state appellate court ruled that there was no violation of the open meetings law at the City Council meeting in March 2018 and that the lower court erred in voiding the City Council resolution approving the New Orleans Power Station. In March 2020 the appellees in that proceeding filed a writ application with the Louisiana Supreme Court seeking review of the appellate court’s decision and several New Orleans-based organizations filed an amicus brief in support of the appellees’ writ application. Entergy New Orleans and the City Council each filed an opposition to the writ application in June 2020, and the City Council also filed its own writ application seeking reversal of the appellate court’s holding that there was a violation of the open meetings law at the February 2018 City Council’s Utility Committee meeting. In its writ application the City Council requested that the Louisiana Supreme Court deny the appellees’ writ application, and grant the City Council’s writ application only if the Supreme Court grants the appellees’ writ application. In April 2020 the state appellate court ~~judge’s open meetings~~affirmed the district court’s judicial review decision that affirmed the City Council’s approval of the New Orleans Power Station as in the public interest. In June 2020 appellants in that case filed a writ application with the Louisiana Supreme Court seeking review and reversal of that appellate court ruling. ~~Construction~~In July 2020 the City Council and Entergy New Orleans each filed an opposition to appellants’ writ application in the judicial review case. Commercial operation of the plant ~~is underway and continuing.~~

~~Searcy Solar Facility~~

commenced in May 2020. In March 2019, Entergy Arkansas announced that it signed an agreement for the purchase of an approximately 100 MW to-be-constructed solar energy facility that will be sited on approximately 800 acres in White County near Searcy, Arkansas. The purchase is contingent upon, among other things, obtaining necessary approvals from applicable federal and state regulatory and permitting agencies. The project will be constructed by a subsidiary of NextEra Energy Resources. Entergy Arkansas will purchase the facility upon completion and after the other purchase contingencies have been met. Closing is expected to occur by the end of 2021. In May 2019, Entergy Arkansas filed a petitionaccordance with the ~~APSC seeking a finding that the transaction is~~City Council resolution issued in the ~~public interest and requesting~~2018 base rate case proceeding, Entergy New Orleans has been deferring the New Orleans Power Station non-fuel costs pending the conclusion of the appellate proceedings. In October 2020 the Louisiana Supreme Court denied all ~~necessary approvals. In September 2019 other parties filed testimony largely supporting~~writ applications relating to the ~~resource acquisition but disputing~~New Orleans Power Station. With those denials, Entergy ~~Arkansas’s proposed method of cost recovery. Entergy Arkansas filed its rebuttal testimony~~New Orleans expects to begin recovering New Orleans Power Station costs in ~~October 2019. A hearing is scheduled in January~~rates as early as November 2020.

Sunflower Solar Facility

In November 2018, Entergy Mississippi announced that it signed an agreement for the purchase of an approximately 100 MW to-be-constructed solar photovoltaic facility that will be sited on approximately 1,000 acres in Sunflower County, Mississippi. The estimated base purchase price is approximately $138.4 million. The estimated total investment, including the base purchase price and other related costs, for Entergy Mississippi to acquire the Sunflower Solar Facility is approximately $153.2 million. The purchase is contingent upon, among other things, obtaining necessary approvals, including full cost recovery, from applicable federal and state regulatory and permitting agencies. The project will be built by Sunflower County Solar Project, LLC, ~~a sub-subsidiary~~an indirect subsidiary of Recurrent Energy, LLC. Entergy Mississippi will purchase the facility upon mechanical completion and after the other purchase contingencies have been met. In December 2018, Entergy Mississippi filed a joint petition with Sunflower Solar Project at the MPSC for Sunflower Solar Project to construct and for Entergy Mississippi to acquire and thereafter own, operate, improve, and maintain the solar facility. Entergy Mississippi has proposed revisions to its formula rate plan that would provide for a mechanism, the interim capacity rate adjustment mechanism, in the formula rate plan to recover the non-fuel related costs of additional owned capacity acquired by

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Entergy Mississippi, including the annual ownership costs of the Sunflower Solar Facility. In December 2019 the MPSC approved Entergy Mississippi’s proposed revisions to its formula rate plan to provide for an interim capacity rate adjustment mechanism. Recovery through the interim capacity rate adjustment requires MPSC approval for each new resource. In August 2019 consultants retained by the Mississippi Public Utilities Staff filed a report expressing concerns regarding the project ~~economics and recommended that, should the MPSC wish to approve the project,~~economics. In March 2020, Entergy Mississippi ~~should be required to guarantee~~filed supplemental testimony addressing questions and observations raised by the ~~energy output of~~consultants retained by the ~~unit. Entergy~~ Mississippi Public Utilities Staff and proposing an alternative structure for the ~~Staff are engaged in settlement discussions to address these concerns.~~transaction that would reduce its cost. A hearing before the MPSC ~~is targeted~~was held in March 2020. In April 2020 the MPSC issued an order approving certification of the Sunflower Solar Facility and its recovery through the interim capacity rate adjustment mechanism, subject to ~~occur in~~certain conditions including: (i) that Entergy Mississippi pursue a partnership structure through which the ~~fourth quarter~~partnership would acquire and own the facility under the build-own-transfer agreement and (ii) that if Entergy Mississippi does not consummate the partnership structure under the terms of ~~2019.~~the order, there will be a cap of $136 million on the level of recoverable costs. Closing is targeted to occur by the end of 2021.

Searcy Solar Facility

As discussed in the Form 10-K, in May 2019, Entergy Arkansas filed a petition with the APSC seeking a finding that the purchase of the Searcy Solar Facility was in the public interest. In April 2020 the APSC issued an order approving Entergy Arkansas’s acquisition of the Searcy Solar facility as being in the public interest, but declined to approve Entergy Arkansas’s preferred cost recovery rider mechanism, finding instead, based on the particular facts and circumstances presented, that the formula rate plan rider was a sufficient recovery mechanism for this resource.

Dividends

Declarations of dividends on Entergy’s common stock are made at the discretion of the Board. Among other things, the Board evaluates the level of Entergy’s common stock dividends based upon earnings per share from the Utility operating segment and the Parent and Other portion of the business, financial strength, and future investment opportunities. At its October ~~2019~~2020 meeting, the Board declared a dividend of ~~$0.93~~$0.95 per share, an increase from the previous ~~$0.91~~$0.93 quarterly dividend per share that Entergy has paid since the third quarter ~~2018.~~2019.

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Cash Flow Activity

As shown in Entergy’s Consolidated Statements of Cash Flows, cash flows for the nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 were as follows:


	2020	2019
	(In Millions)
Cash and cash equivalents at beginning of period	$426	$481

Cash flow provided by (used in):
Operating activities	2,370	2,118
Investing activities	(3,256)	(3,025)
Financing activities	1,700	1,382
Net increase in cash and cash equivalents	814	475

Cash and cash equivalents at end of period	$1,240	$956

2019 2018
(In Millions)
Cash and cash equivalents at beginning of period
$481

$781

Cash flow provided by (used in):

Operating activities 2,118
1,860
Investing activities (3,025 ) (3,000 )
Financing activities 1,382
1,347
Net increase in cash and cash equivalents 475
207

Cash and cash equivalents at end of period
$956

$988

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Operating Activities

Net cash flow provided by operating activities increased ~~$258~~$252 million for the nine months ended September 30, ~~2019~~2020 compared to the nine months ended September 30, ~~2018~~2019 primarily due to:


•	~~a decrease of $193 million in pension contributions in 2019 as compared to the same period in 2018. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS -~~ ~~Critical Accounting Estimates” in the Form 10-K and Note 6 to the financial statements herein for a discussion of qualified pension and other postretirement benefits funding;~~

the decrease in the return of unprotected excess accumulated deferred income taxes to Utility customers. See Note 2 to the financial statements ~~herein and~~ in the Form 10-K for a discussion of the regulatory activity regarding the Tax Cuts and Jobs Act;

•a decrease of $125 million in severance and retention payments in 2020 as compared to prior year. See “Entergy Wholesale Commodities Exit from the Merchant Power Business” above for a discussion of management’s strategy to exit the Entergy Wholesale Commodities’ merchant power business;

•a decrease of $58 million in spending on nuclear refueling outages;

•an increase ~~due~~of $36 million in proceeds received from the DOE resulting from litigation regarding spent nuclear fuel storage costs that were previously expensed. See Note 1 to the ~~timing~~financial statements herein and Note 8 to the financial statements in the Form 10-K for discussion of ~~recovery~~the spent nuclear fuel litigation; and

•an increase of ~~fuel and purchased power costs~~$25 million of nuclear insurance refunds.

The increase was partially offset by:

•an increase of $66 million in ~~2019~~pension contributions in 2020 as compared to the same period in ~~2018.~~2019. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K and Note 26 to the financial statements herein ~~and in the Form 10-K~~ for a discussion of ~~fuel~~qualified pension and ~~purchased power cost recovery;~~other postretirement benefits funding;

~~an increase~~•the timing of ~~$94 million~~collections of receivables from customers, in part due to ~~Vermont Yankee decommissioning spending in 2018; and~~the COVID-19 pandemic;

~~a decrease of $30 million in spending on nuclear refueling outage expenses in 2019 as compared to the same period in 2018.~~

~~The increase was partially offset by:~~


•	~~$140 million in severance and retention payments paid in 2019. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS -~~ ~~Entergy Wholesale Commodities Exit from the Merchant Power Business” herein and in the Form 10-K for a discussion of management’s strategy to exit the Entergy Wholesale Commodities’ merchant power business;~~

~~lower Entergy Wholesale Commodities revenues in 2019; and~~

the effect of less favorable weather on billed Utility sales in ~~2019.~~2020; and

•an increase of $32 million in incentive-based compensation payments in 2020.

Investing Activities

Net cash flow used in investing activities increased ~~$25~~$231 million for the nine months ended September 30, ~~2019~~2020 compared to the nine months ended September 30, ~~2018~~2019 primarily due to to:

•an increase of ~~$197~~$132 million in construction expenditures ~~primarily~~ in the Utility business, as discussed ~~below, partially offset by:~~below;

~~Table~~•an increase of ~~Contents~~

~~Entergy Corporation and Subsidiaries~~

~~Management's Financial Discussion and Analysis~~

~~a decrease of $116~~$122 million in nuclear fuel purchases due to variations from year to year in the timing and pricing of fuel reload requirements, ~~material~~materials and services deliveries, and the timing of cash payments during the nuclear fuel cycle; ~~and~~

~~a decrease~~•an increase of ~~$67~~$40 million primarily due to changes in collateral posted to provide credit support to secure ~~its~~ obligations under agreements to sell power produced by Entergy Wholesale Commodities’ power ~~plants.~~plants; and

•$25 million in plant upgrades for the Choctaw Generating Station in March 2020. See Note 14 to the financial statements in the Form 10-K for further discussion of the Choctaw Generating Station purchase.

The increase was partially offset by:

•an increase of $65 million in proceeds received from the DOE in 2020 resulting from litigation regarding spent nuclear fuel storage costs that were previously capitalized. See Note 1 to the financial statements herein and Note 8 to the financial statements in the Form 10-K for discussion of the spent nuclear fuel litigation; and

•an increase of $45 million in net receipts from storm reserve escrow accounts.

The increase in construction expenditures in the Utility business is primarily due ~~to:~~

to an increase of ~~$138~~$211 million ~~primarily due to~~in storm spending in 2020, including spending on Hurricane Laura restoration efforts, and an increase of

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$156 million largely resulting from investment in the infrastructure of the distribution system, including increased spending on advanced metering ~~infrastructure;~~

~~an increase of $76 million in storm spending in 2019; and~~

~~an increase of $164 million in transmission construction expenditures due to a higher scope of work performed in 2019 on various projects.~~

infrastructure. The increase ~~in construction expenditures~~ was partially offset ~~by:~~

by a decrease of ~~$60~~$206 million in ~~nuclear construction expenditures primarily due to lower spending in 2019 on various nuclear projects;~~

~~a decrease of $40 million in fossil-fueled~~non-nuclear generation construction expenditures primarily due to higher spending in 2019 on the Montgomery County Power Station, Lake Charles Power Station, and J. Wayne Leonard Power Station (formerly St. Charles Power Station) projects and a ~~lower scope~~decrease of $34 million in transmission construction expenditures primarily due to the timing of work performed in ~~2019 on various projects; and~~2020 as compared to the same period in 2019.

~~a decrease of $36 million in information technology capital expenditures primarily due to lower spending in 2019 on critical infrastructure protection.~~

Financing Activities

Net cash flow provided by financing activities increased ~~$35~~$318 million for the nine months ended September 30, ~~2019~~2020 compared to the nine months ended September 30, ~~2018~~2019 primarily due to:

proceeds of $608 million from the issuance of common stock as a result of the settlement of the remaining equity forwards in May 2019. See Note 3 to the financial statements herein for discussion of the equity forward sale agreements;

~~net repayments of short-term borrowings of $111 million in 2018 by the nuclear fuel company variable interest entities;~~

~~an increase of $65 million in treasury stock issuances in 2019 due to a larger amount of previously repurchased Entergy Corporation common stock issued in 2019 to satisfy stock option exercises; and~~

~~the issuance of $35 million aggregate liquidation value 5.375% Series A preferred stock in September 2019 by Entergy Texas.~~

~~The increase was partially offset by:~~

•long-term debt activity providing approximately $2,784 million of cash in 2020 compared to providing approximately $1,274 million of cash in ~~2019 compared to approximately $1,422 million in 2018;~~2019; and

•the repurchase in first quarter 2019 of $50 million of Class A mandatorily redeemable preferred membership units in Entergy Holdings Company LLC, a wholly-owned Entergy subsidiary, that were held by a third ~~party;~~party.

The increase was partially offset by:

•proceeds of $608 million from the issuance of common stock in May 2019 as a result of the settlement of equity forwards. See Note 7 to the financial statements in the Form 10-K for discussion of the equity forward sale agreements;

•an increase of ~~$44~~$523 million in net repayments of commercial paper in 2020 compared to 2019;

•a decrease of $48 million in treasury stock issuances in 2020 due to a larger amount of previously repurchased Entergy Corporation common stock issued in 2019 to satisfy stock option exercises;

•the issuance of $35 million aggregate liquidation value 5.375% Series A preferred stock in September 2019 by Entergy Texas; and

•an increase of $32 million in common stock dividends paid as a result of an increase in the number of shares outstanding and an increase in the ~~quarterly~~ dividend ~~paid~~per share in ~~2019~~2020 compared to ~~2018; and~~2019.

~~net repayments of $25 million of commercial paper in 2019 compared to net issuances of $480 million in 2018.~~

For ~~the~~ details of Entergy’s commercial paper program ~~the nuclear fuel company variable interest entities’ short-term borrowings,~~ and long-term debt, see Note 4 to the financial statements herein and Note 5 to the financial statements in the Form 10-K.

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Rate, Cost-recovery, and Other Regulation

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Rate, Cost-recovery, and Other Regulation” in the Form 10-K for discussions of rate regulation, federal regulation, and related regulatory proceedings.

State and Local Rate Regulation and Fuel-Cost Recovery

See Note 2 to the financial statements herein for updates to the discussion in the Form 10-K regarding these proceedings.

Federal Regulation

See Note 2 to the financial statements herein for updates to the discussion in the Form 10-K regarding federal regulatory proceedings.

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Market and Credit Risk Sensitive Instruments

Commodity Price Risk

Power Generation

As a wholesale generator, Entergy Wholesale Commodities’ core business is selling energy, measured in MWh, to its customers. Entergy Wholesale Commodities enters into forward contracts with its customers and also sells energy in the day ahead or spot markets. Entergy Wholesale Commodities also sells unforced capacity, which allows load-serving entities to meet specified reserve and related requirements placed on them by the ISOs in their respective areas. Entergy Wholesale Commodities’ forward physical power contracts consist of contracts to sell energy only, contracts to sell capacity only, and bundled contracts in which it sells both capacity and energy. While the terminology and payment mechanics vary in these contracts, each of these types of contracts requires Entergy Wholesale Commodities to deliver MWh of energy, make capacity available, or both. In addition to its forward physical power contracts, Entergy Wholesale Commodities may also use a combination of financial contracts, including swaps, collars, and options, to manage forward commodity price risk. The sensitivities may not reflect the total maximum upside potential from higher market prices. The information contained in the following table represents projections at a point in time and will vary over time based on numerous factors, such as future market prices, contracting activities, and generation. Following is a summary of Entergy Wholesale Commodities’ current forward capacity and generation contracts as well as total revenue projections based on market prices as of September 30, ~~2019 (2019~~2020 (2020 represents the remainder of the year):

Entergy Wholesale Commodities Nuclear Portfolio


	2020	2021	2022
Energy
Percent of planned generation under contract (a):
Unit-contingent (b)	97%	98%	99%
Planned generation (TWh) (c) (d)	3.5	9.6	2.8
Average revenue per MWh on contracted volumes:
Expected based on market prices as of September 30, 2020	$36.8	$54.5	$47.1

Capacity
Percent of capacity sold forward (e):
Bundled capacity and energy contracts (f)	42%	68%	97%
Capacity contracts (g)	37%	15%	—%
Total	79%	83%	97%
Planned net MW in operation (average) (d)	1,852	1,158	338
Average revenue under contract per kW per month (applies to capacity contracts only)	$1.9	$0.2	$—

Total Energy and Capacity Revenues (h)
Expected sold and market total revenue per MWh	$40.6	$54.1	$46.8
Sensitivity: -/+ $10 per MWh market price change	$40.5-$40.7	$53.9-$54.3	$46.7-$47.0

(a)Percent of planned generation output sold or purchased forward under contracts, forward physical contracts, forward financial contracts, or options that mitigate price uncertainty. Positions that are not classified as hedges are netted in the planned generation under contract.

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Entergy Corporation and Subsidiaries

Management's Financial Discussion and Analysis

(b)Transaction under which power is supplied from a specific generation asset; if the asset is not operating, the seller is generally not liable to the buyer for any damages. Certain unit-contingent sales include a guarantee of availability. Availability guarantees provide for the payment to the power purchaser of contract damages, if incurred, in the event the seller fails to deliver power as a result of the failure of the specified generation unit to generate power at or above a specified availability threshold. All of Entergy’s outstanding guarantees of availability provide for dollar limits on Entergy’s maximum liability under such guarantees.

(c)Amount of output expected to be generated by Entergy Wholesale Commodities nuclear resources considering plant operating characteristics and outage schedules.

(d)Assumes the planned shutdown of Indian Point 3 on April 30, 2021 and planned shutdown of Palisades on May 31, 2022. For a discussion regarding the planned shutdown of the Indian Point 3 and Palisades plants, see “Entergy Wholesale Commodities ~~Nuclear Portfolio~~ Exit from the Merchant Power Business” above.

2019 2020 2021 2022
Energy
Percent of planned generation under contract (a):
Unit-contingent (b) 97% 97% 92% 66%
Planned generation (TWh) (c) (d) 6.1 17.8 9.6 2.8
Average revenue per MWh on contracted volumes:
Expected based on market prices as of September 30, 2019 $34.4 $41.6 $56.8 $58.8

Capacity
Percent of capacity sold forward (e):
Bundled capacity and energy contracts (f) 28% 37% 68% 97%
Capacity contracts (g) 38% 28% —% —%
Total 66% 65% 68% 97%
Planned net MW in operation (average) (d) 3,167 2,195 1,158 338
Average revenue under contract per kW per month (applies to capacity contracts only) $3.5 $3.3 $— $—

Total Energy and Capacity Revenues (h)
Expected sold and market total revenue per MWh $36.7 $44.9 $54.5 $46.8
Sensitivity: -/+ $10 per MWh market price change $36.4-$36.9 $44.7-$45.1 $53.6-$55.3 $43.4-$50.3


~~(a)~~	Percent of planned generation output sold or purchased forward under contracts, forward physical contracts, forward financial contracts, or options that mitigate price uncertainty. Positions that are not classified as hedges are netted in the planned generation under contract.

~~(b)~~

Transaction under which power is supplied from a specific generation asset; if the asset is not operating, the seller is generally not liable to the buyer for any damages. Certain unit-contingent sales include a guarantee of availability. Availability guarantees provide for the payment to the power purchaser of contract damages, if incurred, in the event the seller fails to deliver power as a result of the failure of the specified generation unit to generate power at or above a specified availability threshold. All of Entergy’s outstanding guarantees of availability provide for dollar limits on Entergy’s maximum liability under such guarantees.


~~(c)~~	~~Amount of output expected to be generated by Entergy Wholesale Commodities nuclear resources considering plant operating characteristics and outage schedules.~~

~~(d)~~

Assumes the planned shutdown of Indian Point 2 on April 30, 2020, planned shutdown of Indian Point 3 on April 30, 2021, and planned shutdown of Palisades on May 31, 2022. For a discussion regarding the planned shutdown of the Indian Point 2, Indian Point 3, and Palisades plants, see “(e)Percent of planned qualified capacity sold to mitigate price uncertainty under physical or financial transactions.~~Entergy Wholesale Commodities Exit from the Merchant Power Business” above.~~


~~(e)~~	~~Percent of planned qualified capacity sold to mitigate price uncertainty under physical or financial transactions.~~


~~(f)~~	~~A contract for the sale of installed capacity and related energy, priced per megawatt-hour sold.~~


~~(g)~~	~~A contract for the sale of an installed capacity product in a regional market.~~


~~(h)~~	Includes assumptions on converting a portion of the portfolio to contracted with fixed price and excludes non-cash revenue from the amortization of the Palisades below-market purchased power agreement, mark-to-market activity, and service revenues.

(f)A contract for the sale of installed capacity and related energy, priced per megawatt-hour sold.

(g)A contract for the sale of an installed capacity product in a regional market.

(h)Includes assumptions on converting a portion of the portfolio to contracted with fixed price and excludes non-cash revenue from the amortization of the Palisades below-market purchased power agreement, mark-to-market activity, and service revenues.

As of September 30, 2020, a positive $10 per MWh change and a negative $10 per MWh change would each have an insignificant corresponding effect on pre-tax income for the remainder of 2020. Entergy estimates that a positive $10 per MWh change in the annual average energy price in the markets in which the Entergy Wholesale Commodities nuclear business sells power, based on September 30, 2019 market conditions, planned generation volumes, and hedged positions, would have ~~a corresponding effect on pre-tax income~~

~~Table of Contents~~

~~Entergy Corporation and Subsidiaries~~

~~Management's Financial Discussion and Analysis~~

~~of $2 million for the remainder of 2019. As of September 30, 2018, a positive $10 per MW change would have~~ had a corresponding effect on pre-tax income of ~~($1)~~$2 million for the remainder of ~~2018.~~2019. A negative $10 per MWh change in the annual average energy price in the markets based on September 30, 2019 market conditions, planned generation volumes, and hedged positions, would have had a corresponding effect on pre-tax income of ($2) million for the remainder of 2019. ~~As of September 30, 2018, a negative $10 per MW change would have had a corresponding effect on pre-tax income of $1 million for the remainder of 2018.~~

Some of the agreements to sell the power produced by Entergy Wholesale Commodities’ power plants contain provisions that require an Entergy subsidiary to provide credit support to secure its obligations under the agreements. The Entergy subsidiary is required to provide credit support based upon the difference between the current market prices and contracted power prices in the regions where Entergy Wholesale Commodities sells power. The primary form of credit support to satisfy these requirements is an Entergy Corporation guarantee. Cash and letters of credit are also acceptable forms of credit support. At September 30, ~~2019,~~2020, based on power prices at that time, Entergy had liquidity exposure of ~~$85~~$58 million under the guarantees in place supporting Entergy Wholesale Commodities transactions and ~~$21~~$20 million of posted cash collateral. In the event of a decrease in Entergy Corporation’s credit rating to below investment grade, based on power prices as of September 30, ~~2019,~~2020, Entergy would have been required to provide approximately $30 million of additional cash or letters of credit under some of the agreements. As of September 30, ~~2019,~~2020, the liquidity exposure associated with Entergy Wholesale Commodities assurance requirements, including return of previously posted collateral from counterparties, would increase by ~~$140~~$40 million for a $1 per MMBtu increase in gas prices in both the short- and long-term markets.

As of September 30, ~~2019,~~2020, substantially all of the credit exposure associated with the planned energy output under contract for Entergy Wholesale Commodities nuclear plants through 2022 is with counterparties or their guarantors that have public investment grade credit ratings.

Nuclear Matters

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – Nuclear Matters” in the Form 10-K for a discussion of nuclear matters.

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Entergy Corporation and Subsidiaries

Management's Financial Discussion and Analysis

NRC Reactor Oversight Process

As discussed in the Form 10-K, the NRC’s Reactor Oversight Process is a program to collect information about plant performance, assess the information for its safety significance, and provide for appropriate licensee and NRC response. The ~~following is an update to that discussion.~~

~~Pilgrim~~

~~In March 2019~~NRC evaluates plant performance by analyzing two distinct inputs: inspection findings resulting from the ~~NRC moved Pilgrim from its~~NRC’s inspection program and performance indicators reported by the licensee. The evaluations result in the placement of each plant in one of the NRC’s Reactor Oversight Process Action Matrix columns: “licensee response column,” or Column 1, “regulatory response column,” or Column 2, “degraded cornerstone column,” or Column 3, and “multiple/repetitive degraded cornerstone column,” or Column ~~4, of its Reactor Oversight Process Action Matrix~~4. Plants in Column 1 are subject to ~~its “licensee response column,”~~normal NRC inspection activities. Plants in Column 2, Column 3, or Column 4 are subject to progressively increasing levels of inspection by the NRC with, in general, progressively increasing levels of associated costs. The nuclear generating plants owned and operated by Entergy’s Utility and Entergy Wholesale Commodities businesses are currently in Column 1. ~~Pilgrim ceased operations~~Grand Gulf, however, is expected to be placed in ~~May 2019. In August 2019, Entergy transferred 100%~~Column 2 by the NRC based on the incidence of unplanned plant scrams during the ~~equity interests in Entergy Nuclear Generation Company, the owner of Pilgrim, to a subsidiary of Holtec International.~~third quarter 2020.

Critical Accounting Estimates

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy’s accounting for nuclear decommissioning costs, utility regulatory accounting, impairment of long-lived assets and trust fund investments, taxation and uncertain tax positions, qualified pension and other postretirement benefits, and other contingencies. Following are updates to the discussion in the Form 10-K.

Qualified Pension and Other Postretirement Benefits

As discussed in the Form 10-K, Entergy sponsors qualified, defined benefit pension plans that cover substantially all employees, including cash balance plans and final average pay plans. Entergy’s reported costs of providing these benefits, as described in Note 11 to the financial statements in the Form 10-K, are affected by numerous factors. Key actuarial assumptions utilized in determining qualified pension and other postretirement health care and life insurance costs include the expected long-term rate of return on plan assets. For 2020, Entergy assumed a long-term rate of return on its qualified pension plan assets of 7.00%. Through September 30, 2020, Entergy experienced a 5.7% positive return on its qualified pension plan assets.

As described more fully in the Form 10-K, in accordance with pension accounting standards, Entergy utilizes a number of accounting mechanisms that reduce the volatility of reported pension costs. Differences between actuarial assumptions and actual plan results are deferred and are amortized into expense when the accumulated differences exceed 10% of the greater of the projected benefit obligation or the market-related value of plan assets. The excess is amortized over the average remaining service period of active employees.

Minimum required funding calculations as determined under Pension Protection Act guidance are performed annually as of January 1 of each year and are based on measurements of the assets and funding liabilities as measured at that date, and Entergy’s expected contributions for 2020 are reported in Note 6 to the financial statements herein. Any excess of the funding liability over the calculated fair market value of assets results in a funding shortfall that, under the Pension Protection Act, must be funded over a seven-year rolling period. The Pension Protection Act also imposes certain plan limitations if the funded percentage, which is based on calculated fair market values of assets divided by funding liabilities, does not meet specified thresholds. For funding purposes, asset gains and losses are smoothed in to the calculated fair market value of assets. The funding liability is based upon a weighted average 24-month corporate bond rate published by the U.S. Treasury which is generally subject to a corridor of the 25-year average of prior segment rates. Periodic changes in asset returns and interest rates can affect funding shortfalls and future cash contributions.

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Entergy Corporation and Subsidiaries

Management's Financial Discussion and Analysis

As described in Note 6 to the financial statements herein, in March 2020, Entergy announced changes to its other postretirement benefits. As a result, Entergy now expects 2020 other postretirement health care and life insurance benefit income, including amounts capitalized, of $17.2 million.

Taxation and Uncertain Tax Positions

As described more fully in the Form 10-K, management exercises significant judgment in evaluating the potential tax effects of Entergy’s operations, transactions, and other events. Entergy accounts for uncertain tax positions using a recognition model under a two-step approach with a more likely than not recognition threshold and a measurement approach based on the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Income tax expense and tax positions recorded could be significantly affected by events such as additional transactions contemplated or consummated by Entergy as well as audits by taxing authorities. Included in the current IRS examination of Entergy’s 2015 tax returns is the tax effect of the October 2015 combination of two Entergy utility companies, Entergy Gulf States Louisiana and Entergy Louisiana. Entergy Louisiana maintained a carryover tax basis in the assets received and the tax consequences provided for an increase in tax basis as well. This resulted in recognition in 2015 of a $334 million permanent difference and income tax benefit, net of the uncertain tax position recorded on the transaction. As discussed in Note 3 to the financial statements in the Form 10-K, Entergy expects the IRS to complete its examination of the 2014 and 2015 tax years before the end of 2020, the result of which could affect the amount of the permanent difference and uncertain tax position.

In addition, as discussed in Note 3 to the financial statements in the Form 10-K and Note 10 to the financial statements herein, in 2015, System Energy and Entergy Louisiana adopted a new method of accounting for income tax return purposes in which nuclear decommissioning liabilities are treated as production costs of electricity includable in cost of goods sold. The new method resulted in a reduction of taxable income of $1.2 billion for System Energy and $2.2 billion for Entergy Louisiana in 2015. In the third quarter 2020 the IRS issued Notices of Proposed Adjustment concerning this uncertain tax position allowing System Energy to include $102 million of its decommissioning liability in cost of goods sold and Entergy Louisiana to include $221 million of its decommissioning liability in cost of goods sold. The Notices of Proposed Adjustment will not be appealed.

As a result of System Energy being allowed to include part of its decommissioning liability in cost of goods sold, System Energy and Entergy recorded a deferred tax liability of $26 million. System Energy also recorded federal and state taxes payable of $402 million; on a consolidated basis, however, Entergy utilized tax loss carryovers to offset the federal taxable income adjustment and accordingly did not record federal taxes payable as a result of the outcome of this uncertain tax position.

As a result of Entergy Louisiana being allowed to include part of its decommissioning liability in cost of goods sold, Entergy Louisiana and Entergy recorded a deferred tax liability of $60 million. Both Entergy Louisiana and Entergy utilized tax loss carryovers to offset the taxable income adjustment and accordingly did not record taxes payable as a result of the outcome of this uncertain tax position.

The partial disallowance of the uncertain tax position to include the decommissioning liability in cost of goods sold resulted in a $1.5 billion decrease in the balance of unrecognized tax benefits related to federal and state taxes for Entergy. Additionally, both System Energy and Entergy Louisiana recorded a reduction to their balances of unrecognized tax benefits for federal and state taxes of $461 million and $1.1 billion, respectively.

The tax treatment of Entergy Louisiana’s accrued regulatory liabilities associated with the Vidalia purchased power agreement and business combination guaranteed customer credits, which are discussed in Note 2 to the financial statements in the Form 10-K, has been resolved in a manner that results in a $190 million increase to previously reported taxable income. Entergy Louisiana and Entergy utilized tax loss carryovers to offset the taxable income adjustment, however, which allowed both Entergy Louisiana and Entergy to reduce their balances of federal and state unrecognized tax benefits by $74 million.

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Entergy Corporation and Subsidiaries

Management's Financial Discussion and Analysis

New Accounting Pronouncements

See Note 1 to the financial statements in the Form 10-K for discussion of new accounting pronouncements.

ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
For the Three and Nine Months Ended September 30, 2019 and 2018
(Unaudited)

Three Months Ended Nine Months Ended
2019 2018 2019 2018
(In Thousands, Except Share Data)
OPERATING REVENUES
Electric
$2,812,934

$2,697,887

$7,279,683

$7,276,374
Natural gas 27,269
26,352
112,916
112,990
Competitive businesses 300,372
380,080
1,023,768
1,107,606
TOTAL 3,140,575
3,104,319
8,416,367
8,496,970

OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale 596,939
729,269
1,542,592
1,638,367
Purchased power 316,339
439,380
1,001,707
1,252,437
Nuclear refueling outage expenses 52,044
37,937
153,447
116,057
Other operation and maintenance 805,696
854,013
2,430,617
2,477,699
Asset write-offs, impairments, and related charges 198,086
155,215
288,483
297,082
Decommissioning 101,811
93,829
308,557
285,834
Taxes other than income taxes 165,731
161,916
487,715
485,682
Depreciation and amortization 379,219
324,628
1,099,990
1,022,099
Other regulatory charges (credits) 4,781
37,097
(38,698 ) 223,416
TOTAL 2,620,646
2,833,284
7,274,410
7,798,673

OPERATING INCOME 519,929
271,035
1,141,957
698,297

OTHER INCOME
Allowance for equity funds used during construction 33,161
32,354
108,546
92,367
Interest and investment income 82,295
177,081
406,663
265,086
Miscellaneous - net (50,086 ) (43,591 ) (160,614 ) (123,439 )
TOTAL 65,370
165,844
354,595
234,014

INTEREST EXPENSE
Interest expense 201,412
195,311
603,517
570,548
Allowance for borrowed funds used during construction (14,773 ) (15,244 ) (49,034 ) (43,177 )
TOTAL 186,639
180,067
554,483
527,371

INCOME BEFORE INCOME TAXES 398,660
256,812
942,069
404,940

Income taxes 29,201
(283,006 ) 73,430
(519,937 )

CONSOLIDATED NET INCOME 369,459
539,818
868,639
924,877

Preferred dividend requirements of subsidiaries 4,219
3,439
12,438
10,317

NET INCOME ATTRIBUTABLE TO ENTERGY CORPORATION
$365,240

$536,379

$856,201

$914,560

Earnings per average common share:
Basic
$1.84

$2.96

$4.42

$5.06
Diluted
$1.82

$2.92

$4.38

$5.01

Basic average number of common shares outstanding 198,932,387
181,002,303
193,876,557
180,845,440
Diluted average number of common shares outstanding 200,492,935
183,664,583
195,685,851
182,692,325

See Notes to Financial Statements.

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ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
For the Three and Nine Months Ended September 30, 2020 and 2019
(Unaudited)

	Three Months Ended		Nine Months Ended
	2020	2019	2020	2019
	(In Thousands, Except Share Data)
OPERATING REVENUES
Electric	$2,666,805	$2,812,934	$6,907,999	$7,279,683
Natural gas	22,357	27,269	88,829	112,916
Competitive businesses	214,406	300,372	746,706	1,023,768
TOTAL	2,903,568	3,140,575	7,743,534	8,416,367

OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale	421,668	596,939	1,160,076	1,542,592
Purchased power	264,924	316,339	693,499	1,001,707
Nuclear refueling outage expenses	44,384	52,044	139,496	153,447
Other operation and maintenance	751,337	805,696	2,189,681	2,430,617
Asset write-offs, impairments, and related charges	4,461	198,086	16,332	288,483
Decommissioning	95,155	101,811	284,251	308,557
Taxes other than income taxes	171,425	165,731	500,364	487,715
Depreciation and amortization	401,578	379,219	1,205,057	1,099,990
Other regulatory charges (credits)	(29,380)	4,781	(62,306)	(38,698)
TOTAL	2,125,552	2,620,646	6,126,450	7,274,410

OPERATING INCOME	778,016	519,929	1,617,084	1,141,957

OTHER INCOME
Allowance for equity funds used during construction	24,915	33,161	89,238	108,546
Interest and investment income	127,857	82,295	195,826	406,663
Miscellaneous - net	(58,914)	(50,086)	(129,145)	(160,614)
TOTAL	93,858	65,370	155,919	354,595

INTEREST EXPENSE
Interest expense	207,811	201,412	630,199	603,517
Allowance for borrowed funds used during construction	(11,080)	(14,773)	(38,667)	(49,034)
TOTAL	196,731	186,639	591,532	554,483

INCOME BEFORE INCOME TAXES	675,143	398,660	1,181,471	942,069

Income taxes	149,444	29,201	167,366	73,430

CONSOLIDATED NET INCOME	525,699	369,459	1,014,105	868,639

Preferred dividend requirements of subsidiaries	4,580	4,219	13,739	12,438

NET INCOME ATTRIBUTABLE TO ENTERGY CORPORATION	$521,119	$365,240	$1,000,366	$856,201

Earnings per average common share:
Basic	$2.60	$1.84	$5.00	$4.42
Diluted	$2.59	$1.82	$4.98	$4.38

Basic average number of common shares outstanding	200,220,018	198,932,387	200,063,256	193,876,557
Diluted average number of common shares outstanding	201,115,768	200,492,935	200,957,465	195,685,851

See Notes to Financial Statements.

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ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Three and Nine Months Ended September 30, 2019 and 2018
(Unaudited)

Three Months Ended Nine Months Ended
2019 2018 2019 2018
(In Thousands)

Net Income
$369,459

$539,818

$868,639

$924,877

Other comprehensive income (loss)
Cash flow hedges net unrealized gain (loss) (net of tax expense (benefit) of ($5,343), ($8,517), $14,547, and ($480)) (20,103 ) (32,004 ) 62,453
(1,645 )
Pension and other postretirement liabilities (net of tax expense of $6,760, $4,126, $13,086, and $12,919) 25,464
15,265
48,510
47,404
Net unrealized investment gain (loss) (net of tax expense (benefit) of $1,303, ($825), $17,472, and $1,078) 5,271
(1,745 ) 33,244
(37,242 )
Other comprehensive income (loss) 10,632
(18,484 ) 144,207
8,517

Comprehensive Income 380,091
521,334
1,012,846
933,394
Preferred dividend requirements of subsidiaries 4,219
3,439
12,438
10,317
Comprehensive Income Attributable to Entergy Corporation
$375,872

$517,895

$1,000,408

$923,077

See Notes to Financial Statements.

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ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2019 and 2018
(Unaudited)
2019 2018
(In Thousands)
OPERATING ACTIVITIES
Consolidated net income
$868,639

$924,877
Adjustments to reconcile consolidated net income to net cash flow provided by operating activities:
Depreciation, amortization, and decommissioning, including nuclear fuel amortization 1,634,677
1,517,344
Deferred income taxes, investment tax credits, and non-current taxes accrued 373,723
82,641
Asset write-offs, impairments, and related charges 225,175
210,263
Changes in working capital:
Receivables (231,005 ) (153,703 )
Fuel inventory (14,399 ) 49,728
Accounts payable (175,246 ) 79,949
Taxes accrued (2,420 ) 43,510
Interest accrued (2,314 ) (9,398 )
Deferred fuel costs 90,319
(25,284 )
Other working capital accounts (19,232 ) (86,063 )
Changes in provisions for estimated losses 14,114
28,599
Changes in other regulatory assets (92,861 ) 207,135
Changes in other regulatory liabilities (19,115 ) (413,684 )
Changes in pensions and other postretirement liabilities (132,044 ) (345,526 )
Other (400,064 ) (250,884 )
Net cash flow provided by operating activities 2,117,947
1,859,504

INVESTING ACTIVITIES
Construction/capital expenditures (3,079,726 ) (2,883,047 )
Allowance for equity funds used during construction 108,867
92,829
Nuclear fuel purchases (55,176 ) (170,819 )
Proceeds from sale of assets 19,801
12,915
Insurance proceeds received for property damages 7,040
10,523
Changes in securitization account (4,213 ) (12,985 )
Payments to storm reserve escrow account (6,184 ) (4,515 )
Decrease (increase) in other investments 30,370
(36,140 )
Litigation proceeds for reimbursement of spent nuclear fuel storage costs 2,369
—
Proceeds from nuclear decommissioning trust fund sales 3,518,616
4,177,919
Investment in nuclear decommissioning trust funds (3,566,690 ) (4,187,161 )
Net cash flow used in investing activities (3,024,926 ) (3,000,481 )

See Notes to Financial Statements.

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ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Three and Nine Months Ended September 30, 2020 and 2019
(Unaudited)

	Three Months Ended		Nine Months Ended
	2020	2019	2020	2019

	(In Thousands)

Net Income	$525,699	$369,459	$1,014,105	$868,639

Other comprehensive income (loss)
Cash flow hedges net unrealized gain (loss) (net of tax expense (benefit) of ($4,408), ($5,343), ($16,945), and $14,547)	(16,558)	(20,103)	(63,674)	62,453
Pension and other postretirement liabilities (net of tax expense of $4,697, $6,760, $24,487, and $13,086)	17,437	25,464	88,560	48,510
Net unrealized investment gain (net of tax expense (benefit) of ($1,513), $1,303, $18,042, and $17,472)	(2,695)	5,271	31,614	33,244
Other comprehensive income (loss)	(1,816)	10,632	56,500	144,207

Comprehensive Income	523,883	380,091	1,070,605	1,012,846
Preferred dividend requirements of subsidiaries	4,580	4,219	13,739	12,438
Comprehensive Income Attributable to Entergy Corporation	$519,303	$375,872	$1,056,866	$1,000,408

See Notes to Financial Statements.

ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2019 and 2018
(Unaudited)
2019 2018
(In Thousands)
FINANCING ACTIVITIES
Proceeds from the issuance of:
Long-term debt 7,133,571
5,604,131
Preferred stock of subsidiary 33,486
—
Treasury stock 89,303
24,646
Common stock 607,650
—
Retirement of long-term debt (5,859,714 ) (4,181,820 )
Repurchase of preferred membership units (50,000 ) —
Changes in credit borrowings and commercial paper - net (24,550 ) 368,370
Other (9,175 ) 25,540
Dividends paid:
Common stock (526,408 ) (482,865 )
Preferred stock (12,328 ) (10,317 )
Net cash flow provided by financing activities 1,381,835
1,347,685

Net increase in cash and cash equivalents 474,856
206,708

Cash and cash equivalents at beginning of period 480,975
781,273

Cash and cash equivalents at end of period
$955,831

$987,981

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized
$584,622

$558,381
Income taxes
($8,649 )
$18,200

See Notes to Financial Statements.

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ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2020 and 2019
(Unaudited)
	2020	2019
	(In Thousands)
OPERATING ACTIVITIES
Consolidated net income	$1,014,105	$868,639
Adjustments to reconcile consolidated net income to net cash flow provided by operating activities:
Depreciation, amortization, and decommissioning, including nuclear fuel amortization	1,694,904	1,634,677
Deferred income taxes, investment tax credits, and non-current taxes accrued	320,726	373,723
Asset write-offs, impairments, and related charges	16,117	225,175

Changes in working capital:
Receivables	(200,990)	(231,005)
Fuel inventory	(608)	(14,399)
Accounts payable	174,083	(175,246)
Taxes accrued	206,769	(2,420)
Interest accrued	10,866	(2,314)
Deferred fuel costs	(48,162)	90,319
Other working capital accounts	(114,492)	(19,232)
Changes in provisions for estimated losses	(38,029)	14,114
Changes in other regulatory assets	(130,533)	(92,861)
Changes in other regulatory liabilities	(38,371)	(19,115)
Changes in pension and other postretirement liabilities	(270,144)	(132,044)
Other	(226,075)	(400,064)
Net cash flow provided by operating activities	2,370,166	2,117,947

INVESTING ACTIVITIES
Construction/capital expenditures	(3,175,559)	(3,079,726)
Allowance for equity funds used during construction	89,238	108,867
Nuclear fuel purchases	(177,385)	(55,176)
Payment for purchase of assets	(24,633)	0
Proceeds from sale of assets	0	19,801
Insurance proceeds received for property damages	0	7,040
Changes in securitization account	791	(4,213)
Payments to storm reserve escrow account	(2,244)	(6,184)
Receipts from storm reserve escrow account	40,647	0
Decrease (increase) in other investments	(9,821)	30,370
Litigation proceeds for reimbursement of spent nuclear fuel storage costs	67,252	2,369
Proceeds from nuclear decommissioning trust fund sales	1,597,492	3,518,616
Investment in nuclear decommissioning trust funds	(1,661,660)	(3,566,690)
Net cash flow used in investing activities	(3,255,882)	(3,024,926)

See Notes to Financial Statements.

Table of Contents

ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, 2019 and December 31, 2018
(Unaudited)
2019 2018
(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash
$70,395

$56,690
Temporary cash investments 885,436
424,285
Total cash and cash equivalents 955,831
480,975
Accounts receivable:
Customer 732,763
558,494
Allowance for doubtful accounts (7,987 ) (7,322 )
Other 132,547
167,722
Accrued unbilled revenues 481,048
395,511
Total accounts receivable 1,338,371
1,114,405
Deferred fuel costs —
27,251
Fuel inventory - at average cost 131,703
117,304
Materials and supplies - at average cost 803,843
752,843
Deferred nuclear refueling outage costs 173,229
230,960
Prepayments and other 258,695
234,326
TOTAL 3,661,672
2,958,064

OTHER PROPERTY AND INVESTMENTS
Decommissioning trust funds 6,128,647
6,920,164
Non-utility property - at cost (less accumulated depreciation) 326,704
304,382
Other 448,140
437,265
TOTAL 6,903,491
7,661,811

PROPERTY, PLANT, AND EQUIPMENT
Electric 52,705,142
49,831,486
Natural gas 533,217
496,150
Construction work in progress 2,871,054
2,888,639
Nuclear fuel 707,198
861,272
TOTAL PROPERTY, PLANT, AND EQUIPMENT 56,816,611
54,077,547
Less - accumulated depreciation and amortization 22,695,886
22,103,101
PROPERTY, PLANT, AND EQUIPMENT - NET 34,120,725
31,974,446

DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Other regulatory assets (includes securitization property of $268,177 as of September 30, 2019 and $360,790 as of December 31, 2018) 4,839,357
4,746,496
Deferred fuel costs 239,793
239,496
Goodwill 377,172
377,172
Accumulated deferred income taxes 67,438
54,593
Other 296,620
262,988
TOTAL 5,820,380
5,680,745

TOTAL ASSETS
$50,506,268

$48,275,066

See Notes to Financial Statements.


ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2020 and 2019
(Unaudited)
	2020	2019
	(In Thousands)
FINANCING ACTIVITIES
Proceeds from the issuance of:
Long-term debt	8,170,607	7,133,571
Preferred stock of subsidiary	0	33,486
Treasury stock	41,784	89,303
Common stock	0	607,650
Retirement of long-term debt	(5,386,227)	(5,859,714)

Repurchase of preferred membership units	0	(50,000)
Changes in credit borrowings and commercial paper - net	(548,522)	(24,550)
Other	(5,941)	(9,175)
Dividends paid:
Common stock	(558,121)	(526,408)
Preferred stock	(13,922)	(12,328)
Net cash flow provided by financing activities	1,699,658	1,381,835



Net increase in cash and cash equivalents	813,942	474,856

Cash and cash equivalents at beginning of period	425,722	480,975

Cash and cash equivalents at end of period	$1,239,664	$955,831

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized	$599,683	$584,622
Income taxes	($2,484)	($8,649)

See Notes to Financial Statements.

ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
September 30, 2019 and December 31, 2018
(Unaudited)
2019 2018
(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt
$520,012

$650,009
Notes payable and commercial paper 1,917,788
1,942,339
Accounts payable 1,328,631
1,496,058
Customer deposits 409,090
411,505
Taxes accrued 251,821
254,241
Interest accrued 190,877
193,192
Deferred fuel costs 115,761
52,396
Pension and other postretirement liabilities 57,374
61,240
Current portion of unprotected excess accumulated deferred income taxes 117,575
248,127
Other 194,117
134,437
TOTAL 5,103,046
5,443,544

NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued 4,552,456
4,107,152
Accumulated deferred investment tax credits 206,837
213,101
Regulatory liability for income taxes-net 1,677,707
1,817,021
Other regulatory liabilities 1,871,005
1,620,254
Decommissioning and asset retirement cost liabilities 6,068,323
6,355,543
Accumulated provisions 528,172
514,107
Pension and other postretirement liabilities 2,487,906
2,616,085
Long-term debt (includes securitization bonds of $338,408 as of September 30, 2019 and $423,858 as of December 31, 2018) 16,938,014
15,518,303
Other 783,330
1,006,249
TOTAL 35,113,750
33,767,815

Commitments and Contingencies

Subsidiaries' preferred stock without sinking fund 219,411
219,402

EQUITY
Common stock, $.01 par value, authorized 500,000,000 shares; issued 270,035,180 shares in 2019 and 261,587,009 shares in 2018 2,700
2,616
Paid-in capital 6,553,009
5,951,431
Retained earnings 9,057,749
8,721,150
Accumulated other comprehensive loss (419,772 ) (557,173 )
Less - treasury stock, at cost (70,947,950 shares in 2019 and 72,530,866 shares in 2018) 5,158,625
5,273,719
Total common shareholder's equity 10,035,061
8,844,305
Subsidiary's preferred stock without sinking fund 35,000
—
TOTAL 10,070,061
8,844,305

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$50,506,268

$48,275,066

See Notes to Financial Statements.

Table of Contents


ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, 2020 and December 31, 2019
(Unaudited)
	2020	2019
	(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash	$43,859	$34,242
Temporary cash investments	1,195,805	391,480
Total cash and cash equivalents	1,239,664	425,722
Accounts receivable:
Customer	844,794	595,509
Allowance for doubtful accounts	(73,426)	(7,404)
Other	122,674	219,870
Accrued unbilled revenues	453,378	400,617
Total accounts receivable	1,347,420	1,208,592
Deferred fuel costs	6,798	0
Fuel inventory - at average cost	146,084	145,476
Materials and supplies - at average cost	918,962	824,989
Deferred nuclear refueling outage costs	171,081	157,568
Prepayments and other	232,796	283,645
TOTAL	4,062,805	3,045,992

OTHER PROPERTY AND INVESTMENTS

Decommissioning trust funds	6,786,957	6,404,030
Non-utility property - at cost (less accumulated depreciation)	341,190	332,864
Other	465,903	496,452
TOTAL	7,594,050	7,233,346

PROPERTY, PLANT, AND EQUIPMENT
Electric	57,185,891	54,271,467

Natural gas	577,349	547,110
Construction work in progress	3,477,386	2,823,291
Nuclear fuel	613,298	677,181
TOTAL PROPERTY, PLANT, AND EQUIPMENT	61,853,924	58,319,049
Less - accumulated depreciation and amortization	23,852,928	23,136,356
PROPERTY, PLANT, AND EQUIPMENT - NET	38,000,996	35,182,693

DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:

Other regulatory assets (includes securitization property of $147,813 as of September 30, 2020 and $239,219 as of December 31, 2019)	5,422,588	5,292,055
Deferred fuel costs	240,290	239,892
Goodwill	377,172	377,172
Accumulated deferred income taxes	76,247	64,461
Other	296,103	288,301
TOTAL	6,412,400	6,261,881

TOTAL ASSETS	$56,070,251	$51,723,912

See Notes to Financial Statements.

Table of Contents

ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the Nine Months Ended September 30, 2018
(Unaudited)

Common Shareholders’ Equity

Subsidiaries’ Preferred Stock
Common
Stock

Treasury
Stock

Paid-in
Capital
Retained Earnings Accumulated Other Comprehensive Loss Total
(In Thousands)
Balance at December 31, 2017
$—

$2,548

($5,397,637 )
$5,433,433

$7,977,702

($23,531 )
$7,992,515
Implementation of accounting standards —
—
—
—
576,257
(632,617 ) (56,360 )
Balance at January 1, 2018 —
2,548
(5,397,637 ) 5,433,433
8,553,959
(656,148 ) 7,936,155

Consolidated net income 3,439
—
—
—
132,761
—
136,200
Other comprehensive income —
—
—
—
—
79,145
79,145
Common stock issuances related to stock plans —
—
20,477
(16,170 ) —
—
4,307
Common stock dividends declared —
—
—
—
(160,887 ) —
(160,887 )
Preferred dividend requirements of subsidiaries (3,439 ) —
—
—
—
—
(3,439 )
Reclassification pursuant to ASU 2018-02 —
—
—
—
(32,043 ) 15,505
(16,538 )
Balance at March 31, 2018 —
2,548
(5,377,160 ) 5,417,263
8,493,790
(561,498 ) 7,974,943

Consolidated net income 3,439
—
—
—
245,421
—
248,860
Other comprehensive loss —
—
—
—
—
(52,144 ) (52,144 )
Common stock issuances related to stock plans —
—
3,035
12,141
—
—
15,176
Common stock dividends declared —
—
—
—
(160,935 ) —
(160,935 )
Preferred dividend requirements of subsidiaries (3,439 ) —
—
—
—
—
(3,439 )
Balance at June 30, 2018 —
2,548
(5,374,125 ) 5,429,404
8,578,276
(613,642 ) 8,022,461

Consolidated net income 3,439
—
—
—
536,379
—
539,818
Other comprehensive loss —
—
—
—
—
(18,484 ) (18,484 )
Common stock issuances related to stock plans —
—
21,108
12,292
—
—
33,400
Common stock dividends declared —
—
—
—
(161,044 ) —
(161,044 )
Preferred dividend requirements of subsidiaries (3,439 ) —
—
—
—
—
(3,439 )
Balance at September 30, 2018
$—

$2,548

($5,353,017 )
$5,441,696

$8,953,611

($632,126 )
$8,412,712

See Notes to Financial Statements.


ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
September 30, 2020 and December 31, 2019
(Unaudited)
	2020	2019
	(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt	$1,050,015	$795,012
Notes payable and commercial paper	1,398,205	1,946,727
Accounts payable	2,872,447	1,499,861
Customer deposits	408,764	409,171
Taxes accrued	440,224	233,455
Interest accrued	204,995	194,129
Deferred fuel costs	156,721	197,687

Pension and other postretirement liabilities	59,552	66,184
Current portion of unprotected excess accumulated deferred income taxes	63,261	76,457
Other	221,342	201,780
TOTAL	6,875,526	5,620,463

NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued	4,668,846	4,401,190
Accumulated deferred investment tax credits	200,914	207,113

Regulatory liability for income taxes-net	1,542,122	1,633,159
Other regulatory liabilities	2,026,867	1,961,005
Decommissioning and asset retirement cost liabilities	6,390,445	6,159,212
Accumulated provisions	495,999	534,028
Pension and other postretirement liabilities	2,534,753	2,798,265
Long-term debt (includes securitization bonds of $209,177 as of September 30, 2020 and $297,981 as of December 31, 2019)	19,612,664	17,078,643
Other	695,866	852,749
TOTAL	38,168,476	35,625,364

Commitments and Contingencies

Subsidiaries' preferred stock without sinking fund	219,410	219,410

EQUITY
Common stock, $.01 par value, authorized 500,000,000 shares; issued 270,035,180 shares in 2020 and 2019	2,700	2,700
Paid-in capital	6,535,541	6,564,436
Retained earnings	9,699,435	9,257,609
Accumulated other comprehensive loss	(390,420)	(446,920)
Less - treasury stock, at cost (69,803,566 shares in 2020 and 70,886,400 shares in 2019)	5,075,417	5,154,150
Total common shareholders' equity	10,771,839	10,223,675
Subsidiaries' preferred stock without sinking fund	35,000	35,000
TOTAL	10,806,839	10,258,675

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$56,070,251	$51,723,912

See Notes to Financial Statements.

ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the Nine Months Ended September 30, 2019
(Unaudited)

Common Shareholders’ Equity
Subsidiaries' Preferred Stock Common
Stock Treasury
Stock Paid-in
Capital Retained Earnings Accumulated Other Comprehensive Loss Total
(In Thousands)
Balance at December 31, 2018
$—

$2,616

($5,273,719 )
$5,951,431

$8,721,150

($557,173 )
$8,844,305
Implementation of accounting standards —
—
—
—
6,806
(6,806 ) —
Balance at January 1, 2019 —
2,616
(5,273,719 ) 5,951,431
8,727,956
(563,979 ) 8,844,305

Consolidated net income 4,109
—
—
—
254,537
—
258,646
Other comprehensive income —
—
—
—
—
12,827
12,827
Common stock issuances related to stock plans —
—
62,537
(31,248 ) —
—
31,289
Common stock dividends declared —
—
—
—
(172,591 ) —
(172,591 )
Preferred dividend requirements of subsidiaries (4,109 ) —
—
—
—
—
(4,109 )
Balance at March 31, 2019 —
2,616
(5,211,182 ) 5,920,183
8,809,902
(551,152 ) 8,970,367

Consolidated net income 4,109
—
—
—
236,424
—
240,533
Other comprehensive income —
—
—
—
—
120,748
120,748
Settlement of equity forwards through common stock issuance —
84
—
607,566
—
—
607,650
Common stock issuance costs —
—
—
(7 ) —
—
(7 )
Common stock issuances related to stock plans —
—
23,391
11,791
—
—
35,182
Common stock dividends declared —
—
—
—
(172,861 ) —
(172,861 )
Preferred dividend requirements of subsidiaries (4,109 ) —
—
—
—
—
(4,109 )
Balance at June 30, 2019 —
2,700
(5,187,791 ) 6,539,533
8,873,465
(430,404 ) 9,797,503

Consolidated net income 4,219
—
—
—
365,240
—
369,459
Other comprehensive income —
—
—
—
—
10,632
10,632
Common stock issuances related to stock plans —
—
29,166
13,476
—
—
42,642
Common stock dividends declared —
—
—
—
(180,956 ) —
(180,956 )
Subsidiary's preferred stock issuance 35,000
—
—
—
—
—
35,000
Preferred dividend requirements of subsidiaries (4,219 ) —
—
—
—
—
(4,219 )
Balance at September 30, 2019
$35,000

$2,700

($5,158,625 )
$6,553,009

$9,057,749

($419,772 )
$10,070,061

See Notes to Financial Statements.

Table of Contents


ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the Nine Months Ended September 30, 2020
(Unaudited)

		Common Shareholders’ Equity
	Subsidiaries’ Preferred Stock	Common Stock	Treasury Stock	Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss	Total
	(In Thousands)
Balance at December 31, 2019	$35,000	$2,700	($5,154,150)	$6,564,436	$9,257,609	($446,920)	$10,258,675
Implementation of accounting standards	0	0	0	0	(419)	0	(419)
Balance at January 1, 2020	35,000	2,700	(5,154,150)	6,564,436	9,257,190	(446,920)	10,258,256

Consolidated net income (a)	4,580	0	0	0	118,714	0	123,294
Other comprehensive income	0	0	0	0	0	47,933	47,933
Common stock issuances related to stock plans	0	0	73,580	(53,753)	0	0	19,827
Common stock dividends declared	0	0	0	0	(185,763)	0	(185,763)
Preferred dividend requirements of subsidiaries (a)	(4,580)	0	0	0	0	0	(4,580)
Balance at March 31, 2020	$35,000	$2,700	($5,080,570)	$6,510,683	$9,190,141	($398,987)	$10,258,967

Consolidated net income (a)	4,580	0	0	0	360,533	0	365,113
Other comprehensive income	0	0	0	0	0	10,383	10,383


Common stock issuances related to stock plans	0	0	3,609	13,647	0	0	17,256
Common stock dividends declared	0	0	0	0	(186,151)	0	(186,151)
Preferred dividend requirements of subsidiaries (a)	(4,580)	0	0	0	0	0	(4,580)
Balance at June 30, 2020	$35,000	$2,700	($5,076,961)	$6,524,330	$9,364,523	($388,604)	$10,460,988

Consolidated net income (a)	4,580	0	0	0	521,119	0	525,699
Other comprehensive loss	0	0	0	0	0	(1,816)	(1,816)
Common stock issuances related to stock plans	0	0	1,544	11,211	0	0	12,755
Common stock dividends declared	0	0	0	0	(186,207)	0	(186,207)
Preferred dividend requirements of subsidiaries (a)	(4,580)	0	0	0	0	0	(4,580)
Balance at September 30, 2020	$35,000	$2,700	($5,075,417)	$6,535,541	$9,699,435	($390,420)	$10,806,839

See Notes to Financial Statements.

(a) Consolidated net income and preferred dividend requirements of subsidiaries for first quarter 2020, second quarter 2020, and third quarter 2020 each includes $4.1 million of preferred dividends on subsidiaries’ preferred stock without sinking fund that is not presented as equity.

Table of Contents

ENTERGY CORPORATION AND SUBSIDIARIES
SELECTED OPERATING RESULTS
For the Three and Nine Months Ended September 30, 2019 and 2018
(Unaudited)

Three Months Ended Increase/

2019 2018 (Decrease) %

(Dollars in Millions)
Utility electric operating revenues:
Residential
$1,155

$1,139

$16
1
Commercial 722
694
28
4
Industrial 686
683
3
—
Governmental 62
61
1
2
Total billed retail 2,625
2,577
48
2
Sales for resale 63
76
(13 ) (17 )
Other 125
45
80
178
Total
$2,813

$2,698

$115
4

Utility billed electric energy sales (GWh):
Residential 11,627
11,821
(194 ) (2 )
Commercial 8,499
8,726
(227 ) (3 )
Industrial 12,861
12,879
(18 ) —
Governmental 705
714
(9 ) (1 )
Total retail 33,692
34,140
(448 ) (1 )
Sales for resale 3,025
2,978
47
2
Total 36,717
37,118
(401 ) (1 )

Entergy Wholesale Commodities:
Operating revenues
$300

$380

($80 ) (21 )
Billed electric energy sales (GWh) 6,847
7,576
(729 ) (10 )

Nine Months Ended Increase/

2019 2018 (Decrease) %

(Dollars in Millions)
Utility electric operating revenues:
Residential
$2,727

$2,800

($73 ) (3 )
Commercial 1,872
1,871
1
—
Industrial 1,929
1,905
24
1
Governmental 172
174
(2 ) (1 )
Total billed retail 6,700
6,750
(50 ) (1 )
Sales for resale 223
215
8
4
Other 357
311
46
15
Total
$7,280

$7,276

$4
—

Utility billed electric energy sales (GWh):
Residential 27,749
28,857
(1,108 ) (4 )
Commercial 21,764
22,401
(637 ) (3 )
Industrial 36,509
36,503
6
—
Governmental 1,932
1,934
(2 ) —
Total retail 87,954
89,695
(1,741 ) (2 )
Sales for resale 10,009
8,788
1,221
14
Total 97,963
98,483
(520 ) (1 )

Entergy Wholesale Commodities:
Operating revenues
$1,024

$1,108

($84 ) (8 )
Billed electric energy sales (GWh) 21,308
21,853
(545 ) (2 )


ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the Nine Months Ended September 30, 2019
(Unaudited)

		Common Shareholders’ Equity
	Subsidiaries' Preferred Stock	Common Stock	Treasury Stock	Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss	Total
	(In Thousands)
Balance at December 31, 2018	$0	$2,616	($5,273,719)	$5,951,431	$8,721,150	($557,173)	$8,844,305
Implementation of accounting standards	0	0	0	0	6,806	(6,806)	0
Balance at January 1, 2019	0	2,616	(5,273,719)	5,951,431	8,727,956	(563,979)	8,844,305

Consolidated net income (a)	4,109	0	0	0	254,537	0	258,646
Other comprehensive income	0	0	0	0	0	12,827	12,827
Common stock issuances related to stock plans	0	0	62,537	(31,248)	0	0	31,289
Common stock dividends declared	0	0	0	0	(172,591)	0	(172,591)
Preferred dividend requirements of subsidiaries (a)	(4,109)	0	0	0	0	0	(4,109)
Balance at March 31, 2019	$0	$2,616	($5,211,182)	$5,920,183	$8,809,902	($551,152)	$8,970,367

Consolidated net income (a)	4,109	0	0	0	236,424	0	240,533
Other comprehensive income	0	0	0	0	0	120,748	120,748
Settlement of equity forwards through common stock issuance	0	84	0	607,566	0	0	607,650
Common stock issuance costs	0	0	0	(7)	0	0	(7)
Common stock issuances related to stock plans	0	0	23,391	11,791	0	0	35,182
Common stock dividends declared	0	0	0	0	(172,861)	0	(172,861)
Preferred dividend requirements of subsidiaries (a)	(4,109)	0	0	0	0	0	(4,109)
Balance at June 30, 2019	$0	$2,700	($5,187,791)	$6,539,533	$8,873,465	($430,404)	$9,797,503

Consolidated net income (a)	4,219	0	0	0	365,240	0	369,459
Other comprehensive income	0	0	0	0	0	10,632	10,632
Common stock issuances related to stock plans	0	0	29,166	13,476	0	0	42,642
Common stock dividends declared	0	0	0	0	(180,956)	0	(180,956)
Subsidiary's preferred stock issuance	35,000	0	0	0	0	0	35,000
Preferred dividend requirements of subsidiaries (a)	(4,219)	0	0	0	0	0	(4,219)
Balance at September 30, 2019	$35,000	$2,700	($5,158,625)	$6,553,009	$9,057,749	($419,772)	$10,070,061

See Notes to Financial Statements.

(a) Consolidated net income and preferred dividend requirements of subsidiaries for the first quarter 2019, second quarter 2019, and third quarter 2019 each includes $4.1 million of preferred dividends on subsidiaries’ preferred stock without sinking fund that is not presented as equity.

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ENTERGY CORPORATION AND SUBSIDIARIES
SELECTED OPERATING RESULTS
For the Three and Nine Months Ended September 30, 2020 and 2019
(Unaudited)

	Three Months Ended		Increase/
	2020	2019	(Decrease)	%
	(Dollars in Millions)
Utility electric operating revenues:
Residential	$1,153	$1,155	($2)	—
Commercial	647	722	(75)	(10)
Industrial	590	686	(96)	(14)
Governmental	57	62	(5)	(8)
Total billed retail	2,447	2,625	(178)	(7)
Sales for resale	145	63	82	130
Other	75	125	(50)	(40)
Total	$2,667	$2,813	($146)	(5)

Utility billed electric energy sales (GWh):
Residential	11,634	11,627	7	—
Commercial	7,791	8,499	(708)	(8)
Industrial	11,994	12,861	(867)	(7)
Governmental	660	705	(45)	(6)
Total retail	32,079	33,692	(1,613)	(5)
Sales for resale	4,881	3,025	1,856	61
Total	36,960	36,717	243	1

Entergy Wholesale Commodities:
Operating revenues	$214	$300	($86)	(29)
Billed electric energy sales (GWh)	4,332	6,847	(2,515)	(37)


	Nine Months Ended		Increase/
	2020	2019	(Decrease)	%
	(Dollars in Millions)
Utility electric operating revenues:
Residential	$2,742	$2,727	$15	1
Commercial	1,712	1,872	(160)	(9)
Industrial	1,723	1,929	(206)	(11)
Governmental	157	172	(15)	(9)
Total billed retail	6,334	6,700	(366)	(5)
Sales for resale	252	223	29	13
Other	322	357	(35)	(10)
Total	$6,908	$7,280	($372)	(5)

Utility billed electric energy sales (GWh):
Residential	27,519	27,749	(230)	(1)
Commercial	20,106	21,764	(1,658)	(8)
Industrial	35,655	36,509	(854)	(2)
Governmental	1,826	1,932	(106)	(5)
Total retail	85,106	87,954	(2,848)	(3)
Sales for resale	11,109	10,009	1,100	11
Total	96,215	97,963	(1,748)	(2)

Entergy Wholesale Commodities:
Operating revenues	$747	$1,024	($277)	(27)
Billed electric energy sales (GWh)	16,047	21,308	(5,261)	(25)

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ENTERGY CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. COMMITMENTS AND CONTINGENCIES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Entergy and the Registrant Subsidiaries are involved in a number of legal, regulatory, and tax proceedings before various courts, regulatory commissions, and governmental agencies in the ordinary course of business. While management is unable to predict with certainty the outcome of such proceedings, management does not believe that the ultimate resolution of these matters will have a material adverse effect on Entergy’s results of operations, cash flows, or financial condition, except as otherwise discussed in the Form 10-K or in this report. Entergy discusses regulatory proceedings in Note 2 to the financial statements in the Form 10-K and herein and discusses tax proceedings in Note 3 to the financial statements in the Form 10-K and Note 10 to the financial statements herein.

Vidalia Purchased Power Agreement

See Note 8 to the financial statements in the Form 10-K for information on Entergy Louisiana’s Vidalia purchased power agreement.

ANO Damage, Outage, and NRC Reviews

See Note 8 to the financial statements in the Form 10-K for a discussion of the ANO stator incident, subsequent NRC reviews, and the deferral of replacement power costs.

~~Pilgrim NRC Oversight and Shutdown~~

See Note 8 to the financial statements in the Form 10-K for a discussion of the NRC’s enhanced inspections of Pilgrim and Entergy’s shutdown of Pilgrim. In March 2019 the NRC moved Pilgrim from its “multiple/repetitive degraded cornerstone column,” or Column 4, of its Reactor Oversight Process Action Matrix to its “licensee response column,” or Column 1. Pilgrim ceased operations in May 2019. In June 2019, following permanent defueling of the reactor, Pilgrim was removed from the NRC’s Reactor Oversight Process and is now subject to the NRC’s normal decommissioning inspection program. In August 2019 the NRC approved the transfer of the Pilgrim operating license from Entergy to Holtec and the transaction closed on August 26, 2019. See Note 16 to the financial statements herein for further discussion of the sale of Pilgrim.

Spent Nuclear Fuel Litigation

See Note 8 to the financial statements in the Form 10-K for information on Entergy’s spent nuclear fuel litigation. ~~The following is an update~~

As discussed in the Form 10-K, in December 2019 the U.S. Court of Federal Claims issued a judgment in the amount of $80 million in favor of Entergy Arkansas to ~~that discussion.~~resolve claims in the third round ANO damages case and issued a judgment in the amount of $7 million in favor of Entergy FitzPatrick Properties (formerly Entergy Nuclear FitzPatrick) in the second round FitzPatrick damages case. Payment of both judgments was received from the U.S. Treasury in January 2020.

In ~~August 2019~~April 2020 the U.S. Court of Federal Claims issued a final judgment in the amount of ~~$19~~$33 million in favor of Entergy Louisiana against the DOE in the second round ~~River Bend~~Waterford 3 damages case. Entergy Louisiana received payment from the U.S. Treasury in ~~September 2019.~~June 2020. The effects of recording the judgment were reductions to plant, nuclear fuel expense, and other operation and maintenance expense. The ~~River Bend~~Waterford 3 damages awarded included ~~$12~~$20 million related to costs previously recorded as nuclear fuel expense, $5$8 million related to costs previously recorded as other operation and maintenance ~~expense,~~expenses, and $2$5 million in costs previously capitalized.

Nuclear Insurance

See Note 8 to the financial statements in the Form 10-K for information on nuclear liability and property insurance associated with Entergy’s nuclear power plants.

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Entergy Corporation and Subsidiaries

Notes to Financial Statements

Non-Nuclear Property Insurance

See Note 8 to the financial statements in the Form 10-K for information on Entergy’s non-nuclear property insurance program.

Employment and Labor-related Proceedings

See Note 8 to the financial statements in the Form 10-K for information on Entergy’s employment and labor-related proceedings.

Asbestos Litigation (Entergy Arkansas, Entergy Louisiana, Entergy New Orleans, and Entergy Texas)

See Note 8 to the financial statements in the Form 10-K for information regarding asbestos litigation.

Grand Gulf-Related Agreements

See Note 8 to the financial statements in the Form 10-K for information regarding Grand Gulf-related agreements. ~~The following is an update to that discussion.~~

~~Capital Funds Agreement (Entergy Corporation and System Energy)~~

Pursuant to the terms of the Capital Funds Agreement, Entergy Corporation had agreed to supply System Energy with sufficient capital to (i) maintain System Energy’s equity capital at an amount equal to a minimum of 35% of its total capitalization (excluding short-term debt), (ii) permit the continued commercial operation of Grand Gulf, and (iii) pay in full when due all indebtedness for borrowed money of System Energy. Effective July 19, 2019, the Capital Funds Agreement was terminated.

NOTE 2. RATE AND REGULATORY MATTERS (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Regulatory Assets and Regulatory Liabilities

See Note 2 to the financial statements in the Form 10-K for information regarding regulatory assets and regulatory liabilities in the Utility business presented on the balance sheets of Entergy and the Registrant Subsidiaries. The following are updates to that discussion.

Other Regulatory Assets

Hurricane Laura

In August 2020, Hurricane Laura caused severe damage to the Entergy distribution and transmission systems across Louisiana and Texas. The storm resulted in widespread power outages and, as a result of the storm’s extensive damage to the grid infrastructure serving the impacted area, large portions of the underlying transmission system required nearly a complete rebuild. Total restoration costs for the repair and/or replacement of the electrical system damaged by Hurricane Laura are currently estimated to be in the range of $1.5 billion to $1.7 billion, including $1.25 billion to $1.4 billion at Entergy Louisiana and $230 million to $260 million at Entergy Texas. Entergy also expects Utility revenues in 2020 to be adversely affected, primarily due to power outages resulting from the hurricane. Entergy is considering all available avenues to recover storm-related costs from Hurricane Laura, including accessing funded storm reserve escrows and securitization. Storm cost recovery or financing will be subject to review by applicable regulatory authorities.

Entergy has recorded accounts payable for the estimated costs incurred that were necessary to return customers to service. Entergy recorded corresponding regulatory assets of approximately $205 million, including $155 million at Entergy Louisiana and $40 million at Entergy Texas, and construction work in progress of approximately $1.295 billion, including $1.095 billion at Entergy Louisiana and $190 million at Entergy Texas. Entergy recorded the regulatory assets in accordance with its accounting policies and based on the historic treatment of such costs in its service area because management believes that recovery through some form of regulatory mechanism is probable. There are well established mechanisms and precedent for addressing these catastrophic events and providing for recovery of prudently incurred storm costs in accordance with applicable regulatory and legal principles. Because Entergy has not gone through the regulatory process regarding these storm costs, there is

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Entergy Corporation and Subsidiaries

Notes to Financial Statements

an element of risk, and Entergy is unable to predict with certainty the degree of success it may have in its recovery initiatives, the amount of restoration costs that it may ultimately recover, or the timing of such recovery.

Regulatory activity regarding the Tax Cuts and Jobs Act

System Energy

In a filing made with the FERC in March 2018, ~~Entergy~~System Energy proposed revisions to the Unit Power Sales Agreement ~~among other agreements,~~ to reflect the effects of the Tax Act. In the filing System Energy proposed to return ~~all~~identified quantities of ~~its~~ unprotected excess accumulated deferred income taxes to its customers by the end of 2018. In May 2018 the FERC accepted System Energy’s proposed tax revisions with an effective date of June 1, 2018, subject to refund and the outcome of settlement and hearing procedures. Settlement discussions were terminated in April 2019, and the hearing ~~is scheduled for~~was held in March 2020. The retail regulators of the Utility operating companies that are parties to the Unit Power Sales Agreement ~~are challenging~~challenged the treatment and amount of excess accumulated deferred income tax liabilities associated with uncertain tax positions related to nuclear decommissioning. In July 2020 the presiding ALJ in the proceeding issued an initial decision finding that there is an additional $147 million in unprotected excess accumulated deferred income taxes related to System Energy’s uncertain decommissioning tax deduction. The initial decision determined that System Energy should have included the $147 million in its March 2018 filing. System Energy had not included credits related to the effect of the Tax Act on the uncertain decommissioning tax position because it was uncertain whether the IRS would allow the deduction.The initial decision rejected both System Energy’s alternative argument that any crediting should occur over a ten-year period and the retail regulators’ argument that any crediting should occur over a two-year period.Instead, the initial decision concluded that System Energy should credit the additional unprotected excess accumulated deferred income taxes in a single lump sum revenue requirement reduction following a FERC order addressing the initial decision.

The ALJ initial decision is an interim step in the FERC litigation process. In September 2020, System Energy filed a brief on exceptions with the FERC, re-urging its positions and requesting the reversal of the ALJ’s initial decision. Briefs opposing exceptions are scheduled for December 2020. The FERC will then review the case and issue an order in the proceeding, and the FERC may accept, reject, or modify the ALJ’s initial decision in whole or in part. Credits, if any, that might be required will only become due after the FERC issues its order reviewing the initial decision.

As discussed below in “Grand Gulf Sale-leaseback Renewal Complaint and Uncertain Tax Position Rate Base Issue,” in September 2020 the IRS issued a Notice of Proposed Adjustment (NOPA) and Entergy executed it. In September 2020, System Energy filed a motion to lodge the NOPA into the record in the FERC proceeding. In October 2020 the LPSC, APSC, MPSC, City Council, and FERC trial staff filed oppositions to System Energy’s motion. As a result of the NOPA, System Energy filed, in October 2020, a new Federal Power Act section 205 filing at the FERC to credit the excess accumulated deferred income taxes resulting from the decommissioning uncertain tax position. System Energy proposes to credit the entire amount of the excess accumulated deferred income taxes arising from the successful portion of the decommissioning uncertain tax position by issuing a one-time credit of $17.8 million on the October 2020 bill. Comments, protests, and interventions in this filing are due in November 2020.

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Entergy Corporation and Subsidiaries

Notes to Financial Statements

Fuel and purchased power cost recovery

Entergy Arkansas

~~Production Cost Allocation Rider~~

In May 2019, Entergy Arkansas filed its annual redetermination pursuant to the production cost allocation rider, which reflected a credit to customers for the recovery of the true-up adjustment resulting from the 2018 over-recovered retail balance of $0.1 million and the recovery of a $4.2 million payment to Entergy Arkansas as a result of the FERC’s May 2018 decision in the 2005 bandwidth proceeding, in which the FERC directed a compliance filing to be made that consisted of the comprehensive recalculation of the bandwidth formula rate with true-up payments and receipts based on test period data for June 1, 2005 through December 31, 2005. The rates for the 2019 production cost allocation rider update are effective July 2019 through June 2020.

Energy Cost Recovery Rider

In March ~~2019,~~2020, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which reflected a decrease from ~~$0.01882~~$0.01462 per kWh to ~~$0.01462~~$0.01052 per ~~kWh and~~kWh. The redetermined rate became effective with the first billing cycle in April ~~2019. In March 2019~~2020 through the Arkansas Attorney General filed a response to Entergy Arkansas’s annual adjustment and included with its filing a motion for investigation of alleged overcharges to customers in connection with the FERC’s October 2018 order in the opportunity sales proceeding. Entergy Arkansas filed its response to the Attorney General’s motion in April 2019 in which Entergy Arkansas stated its intent to initiate a proceeding to address recovery issues related to the October 2018 FERC order. In May 2019, Entergy Arkansas initiated the opportunity sales recovery proceeding, discussed below, and requested that the APSC establish that proceeding as the single designated proceeding in which interested parties may assert claims related to the appropriate retail rate treatmentnormal operation of the FERC October 2018 order and related FERC orders in the opportunity sales proceeding. In June 2019 the APSC granted Entergy Arkansas’s request and also denied the Attorney General’s motion in the energy cost recovery proceeding seeking an investigation into Entergy Arkansas’s annual energy cost recovery rider adjustment and referred the evaluation of such matters to the opportunity sales recovery proceeding.tariff.

Entergy Louisiana

In ~~July 2014~~March 2020 the LPSC ~~authorized its~~ staff ~~to initiate~~provided notice of an audit of Entergy Louisiana’s fuel adjustment clause filings. The audit includes a review of the reasonableness of charges flowed bythrough Entergy ~~Louisiana through its~~Louisiana’s fuel adjustment clause for the period from ~~2010~~2016 through 2013. In January 2019 the LPSC staff issued its audit report recommending that Entergy Louisiana refund approximately $7.3 million, plus interest, to customers based upon the imputation of a claim of vendor fault in servicing its nuclear plant. Entergy Louisiana recorded a provision in the first quarter 2019 for the potential outcome of the audit. In August 2019, Entergy Louisiana filed direct testimony challenging the basis for the LPSC staff’s recommended disallowance and providing an alternative calculation of replacement power costs should it be determined that a disallowance is appropriate. Entergy Louisiana’s calculation would require a refund to customers of approximately $4.2 million, plus interest, as compared to the LPSC staff’s recommendation of $7.3 million, plus interest. Responsive testimony was filed by the LPSC staff and intervenors2019. Discovery commenced in September 2019; all parties either agreed with or did not oppose Entergy Louisiana’s alternative calculation of replacement power costs. In September 2019 the procedural schedule was suspended to facilitate settlement negotiations.2020.

Entergy Mississippi

~~Mississippi Attorney General Complaint~~

As discussed in the Form 10-K, the Mississippi Attorney General filed a complaint in state court in December 2008 against Entergy Corporation, Entergy Mississippi, Entergy Services, and Entergy Power alleging, among other things, violations of Mississippi statutes, fraud, and breach of good faith and fair dealing, and requesting an accounting

~~Table of Contents~~

~~Entergy Corporation and Subsidiaries~~

~~Notes to Financial Statements~~

~~and restitution. Entergy believes the complaint is unfounded.~~ In December 2008 the Attorney General’s lawsuit was removed to U.S. District Court in Jackson, Mississippi. Pre-trial and settlement conferences were held in October 2018. In October 2018 the District Court rescheduled the trial to April 2019. In AprilNovember 2019, the District Court remanded the Attorney General’s lawsuit to the Hinds County Chancery Court in Jackson, Mississippi. A hearing on procedural and dispositive motions was held in August 2019. Following the parties’ oral arguments, the Attorney General filed a post hearing brief, to which Entergy Mississippi filed ~~a response. The motions remain pending before the chancellor~~its annual redetermination of the ~~Hinds County Chancery Court.~~annual factor to be applied under the energy cost recovery rider. The calculation included $39.6 million of prior over-recovery flowing back to customers beginning February 2020. Entergy Mississippi’s balance in its deferred fuel account did not decrease as expected after implementation of the new factor. In an effort to assist customers during the COVID-19 pandemic, in May 2020, Entergy Mississippi requested an interim adjustment to the energy cost recovery rider to credit approximately $50 million from the over-recovered balance in the deferred fuel account to customers over four consecutive billing months. The MPSC approved this interim adjustment in May 2020 effective for June through September 2020 bills.

Entergy Texas

In September 2019, Entergy Texas filed an application to reconcile its fuel and purchased power costs for the period from April 2016 through March 2019. During the reconciliation period, Entergy Texas incurred approximately $1.6 billion in Texas jurisdictional eligible fuel and purchased power expenses, net of certain revenues credited to such expenses and other adjustments. Entergy Texas estimated an under-recovery balance of approximately $25.8 million, including interest, which Entergy Texas requested authority to carry over as the beginning balance for the subsequent reconciliation period beginning April 2019. In March 2020 an intervenor filed testimony proposing that the PUCT disallow: (1) $2 million in replacement power costs associated with generation outages during the reconciliation period; and (2) $24.4 million associated with the operation of the Spindletop natural gas storage facility during the reconciliation period. In April 2020, Entergy Texas filed rebuttal testimony refuting all points raised by the intervenor. In June 2020 the parties filed a stipulation and settlement agreement, which included a $1.2 million disallowance not associated with any particular issue raised by any party.The ~~proceeding is currently pending.~~PUCT approved the settlement in August 2020.

In July 2020, Entergy Texas filed an application with the PUCT to implement an interim fuel refund of $25.5 million, including interest. Entergy Texas proposed that the interim fuel refund be implemented beginning with the first August 2020 billing cycle over a three-month period for smaller customers and in a lump sum amount in the billing month of August 2020 for transmission-level customers. The interim fuel refund was approved in July 2020, and Entergy Texas began refunds in August 2020.

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Entergy Corporation and Subsidiaries

Notes to Financial Statements

Retail Rate Proceedings

See Note 2 to the financial statements in the Form 10-K for information regarding retail rate proceedings involving the Utility operating companies. The following are updates to that discussion.

Filings with the APSC (Entergy Arkansas)

Retail Rates

~~2019~~2020 Formula Rate Plan Filing

In July ~~2019,~~2020, Entergy Arkansas filed with the APSC its ~~2019~~2020 formula rate plan filing to set its formula rate for the ~~2020~~2021 calendar year. The filing contained an evaluation of Entergy Arkansas’s earnings for the projected year ~~2020~~2021, as amended through subsequent filings in the proceeding, and a netting adjustment for the historical year ~~2018.~~2019. Entergy Arkansas’s earned rate of return on common equity is 8.22% for the 2021 projected year and 9.07% for the 2019 historical year. The total revenue change is based upon a deficiency of approximately $64.3 million for the 2021 projected year and approximately $23.9 million for the 2019 historical year netting adjustment. The total proposed formula rate plan rider revenue change ~~designed~~for 2021 is $88.2 million to produce a target rate of return ~~on common equity~~ of 9.75% ~~is $15.3 million, which is based upon a deficiency of approximately $61.9 million~~ for the ~~2020~~ projected year ~~netted with a credit of approximately $46.6 million in the 2018 historical year netting adjustment. During 2018, Entergy Arkansas experienced higher-than expected sales volume,~~ and ~~actual costs were lower than forecasted. These changes, coupled with a reduced income tax rate resulting from the Tax Cuts and Jobs Act, resulted in the credit for~~ the historical ~~year netting adjustment. In the fourth quarter 2018, Entergy Arkansas recorded a provision of $35.1 million that reflected the estimate~~year. By operation of the ~~historical year netting adjustment that was expected to be included in the 2019 filing. In 2019,~~formula rate plan, Entergy ~~Arkansas recorded additional provisions totaling $11.5 million to reflect the updated estimate~~Arkansas’s recovery of the ~~historical year netting adjustment included~~revenue requirement is subject to a 4 percent annual revenue constraint. Because Entergy Arkansas’s revenue requirement in this filing exceeds the ~~2019 filing.~~constraint, the resulting increase is limited to $72.6 million. In October ~~2019~~2020 other parties in the proceeding filed their errors and objections ~~requesting~~recommending certain adjustments to Entergy Arkansas’s filing, which, if granted, would reduce or eliminate Entergy Arkansas’s proposed revenue change. Entergy Arkansas filed its response addressing the requested adjustments in October 2019. In its response, Entergy Arkansas accepted certain of the adjustments recommended by the General Staff of the APSC that would reduce the ~~proposed formula rate plan rider~~initially-proposed $74.3 million revenue ~~change to $14 million.~~requirement increase, and Entergy Arkansas ~~disputed the remaining adjustments proposed by the parties.~~filed responsive testimony disputing these adjustments. In October ~~2019,~~2020, Entergy Arkansas filed with the APSC a unanimous settlement agreement reached with the other parties that resolved all but one issue. As a result of the settlement agreement, Entergy Arkansas’s requested revenue increase is $68.4 million, which is below the $72.6 million cap constraint. The remaining issue to be litigated concerns the methodology used to account for historical year revenues in the ~~proceeding seeking~~netting adjustment. Two parties have proposed a new methodology that, if adopted, effectively would reduce Entergy Arkansas’s request to $0.9 million for the 2021 projected year. This remaining issue will go to hearing in November 2020 and a final decision by the APSC ~~approval of a revised total formula rate plan rider revenue change of $10.1 million. The proposed new formula rates would go into effect~~is expected in ~~January~~December 2020. ~~In its July 2019~~Also with the formula rate plan filing, Entergy Arkansas ~~proposed to recover~~is requesting an ~~$11.2 million regulatory asset, amortized over five years, associated with specific costs related to~~extension of the potential construction of scrubbers at the White Bluff plant. While Entergy Arkansas does not concede that the regulatory asset does not have merit, for purposes of reaching a settlement amount on the total formula rate plan rider ~~change~~for a second five-year term. A decision by the APSC on the extension is requested before February 2021.

COVID-19 Orders

In April 2020, in light of the COVID-19 pandemic, the APSC issued an order requiring utilities, to the extent they had not already done so, to suspend service disconnections during the remaining pendency of the Arkansas Governor’s emergency declaration or until the APSC rescinds the directive. The order also authorizes utilities to establish a regulatory asset to record costs resulting from the suspension of service disconnections, directs that in future proceedings the APSC will consider whether the request for recovery of these regulatory assets is reasonable and necessary, and requires utilities to track and report the costs and any savings directly attributable to suspension of disconnects. In May 2020 the APSC approved Entergy Arkansas ~~agreed not~~expanding deferred payment agreements to ~~include~~assist customers during the ~~amounts~~pandemic. Quarterly reporting began in August 2020 and the APSC ordered additional reporting in October 2020 regarding utilities’ transitional plans for ending the moratorium on service disconnects. As of September 30, 2020, Entergy Arkansas recorded a regulatory asset of $6.1 million for costs associated with the ~~White Bluff scrubber regulatory asset in the 2019 formula rate plan filing or future filings. Entergy Arkansas will record a~~COVID-19 pandemic.

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Entergy Corporation and Subsidiaries

Notes to Financial Statements

~~write off of the $11.2 million White Bluff scrubber regulatory asset.~~

Filings with the LPSC (Entergy Louisiana)

Retail Rates - Electric

2017 Formula Rate Plan Filing

~~Commercial operation at St. Charles Power Station commenced~~As discussed in ~~May 2019. In~~the Form 10-K, in May 2019, Entergy Louisiana filed an update to its 2017 formula rate plan evaluation report to include the estimated first-year revenue requirement of $109.5 million associated with the J. Wayne Leonard Power Station (formerly St. Charles Power Station). The resulting interim adjustment to rates became effective with the first billing cycle of June 2019. In June 2020, Entergy Louisiana submitted information to the LPSC to review the prudence of Entergy Louisiana’s management of the project. In August 2020 discovery commenced and a procedural schedule was established with a hearing in July 2021.

2018 Formula Rate Plan Filing

Commercial operation at Lake Charles Power Station commenced in March 2020. In March 2020, Entergy Louisiana filed an update to its 2018 formula rate plan evaluation report to include the estimated first-year revenue requirement of $108 million associated with the Lake Charles Power Station. The resulting interim adjustment to rates became effective with the first billing cycle of ~~June 2019.~~April 2020.

~~2018~~2019 Formula Rate Plan Filing

In May ~~2019,~~2020, Entergy Louisiana filed with the LPSC its formula rate plan evaluation report for its ~~2018~~2019 calendar year operations. The ~~2018~~2019 test year evaluation report produced an earned return on common equity of ~~10.61% leading~~9.66%. As such, no change to a base rider formula rate plan revenue ~~decrease of $8.9 million. While~~is required. Although base rider formula rate plan revenue ~~decreased~~will not change as a result of this filing, overall formula rate plan revenues ~~increased~~will increase by approximately ~~$118.7~~$103 million. This outcome is ~~primarily~~ driven by ~~a reduction to~~ the removal of prior year credits ~~previously flowed through~~associated with the ~~tax reform adjustment mechanism~~sale of the Willow Glen Power Station and an increase in the transmission recovery ~~mechanism, partially offset by reductions~~mechanism. Also contributing to the overall change is an increase in ~~the additional capacity mechanism~~legacy formula rate plan revenue requirements ~~and extraordinary cost items. The filing is subject to review~~driven by ~~the LPSC. Resulting rates were implemented in September 2019, subject to refund due to contested issues.~~

~~Entergy Louisiana also included in its filing a presentation of an initial proposal to combine the~~ legacy Entergy Louisiana capacity cost true-ups and higher annualized legacy Entergy Gulf States Louisiana ~~residential rates,~~revenues due to higher billing determinants, offset by reductions in MISO cost recovery mechanism and tax reform adjustment mechanism revenue requirements. In August 2020 the LPSC staff submitted a list of items for which ~~combination, if approved, would be accomplished on a revenue-neutral basis intended not~~it needs additional information to ~~affect~~confirm the ~~rates of other customer classes. Entergy Louisiana contemplates that any combination of residential rates resulting from this request would be implemented with the results~~accuracy and compliance of the 2019 test year ~~formula rate plan filing.~~

Several parties intervened in the proceeding and the LPSC staff filed its report of objections/reservations in accordance with the applicable provisions of the formula rate plan. In its report the LPSC staff re-urged reservations with respect to the outstanding issues from the 2017 test year formula rate plan filing and disputed the inclusion of certain affiliate costs for test years 2017 and 2018.evaluation report. The LPSC staff objected to ~~Entergy Louisiana’s proposal to combine residential rates but~~a proposed revenue neutral adjustment regarding a certain rider as being beyond the ~~setting~~scope of ~~a status conference to establish a procedural schedule to more fully address the issue. The LPSC staff also reserved its right to object to the treatment of the sale of Willow Glen~~permitted formula rate plan adjustments. Rates reflected in the ~~evaluation report~~May 2020 filing, with the exception of the revenue neutral rider adjustment, and as updated in an August 2020 filing, were implemented in September 2020, subject to the August 2019 compliance update, which was made primarily to update the capital additions reflected in the formula rate plan’s transmission recovery mechanism, based on limited time to review it. Additionally, since the completion of certain transmission projects, the LPSC staff has issued supplemental data requests addressing the prudence of Entergy Louisiana’s expenditures in connection with those projects.refund. Entergy Louisiana is in the process of ~~responding to those requests.~~providing additional information and details on the May 2020 filing as requested by the LPSC staff.

~~Investigation~~Request for Extension and Modification of ~~Costs Billed by Entergy Services~~Formula Rate Plan

In ~~November 2018~~May 2020, Entergy Louisiana filed with the LPSC ~~issued~~its application for authority to extend its formula rate plan. In its application, Entergy Louisiana seeks to maintain a ~~notice~~9.8% return on equity, with a bandwidth of ~~proceeding initiating an investigation into costs~~60 basis points above and below the midpoint, with a first-year midpoint reset. Entergy Louisiana also seeks to maintain its existing additional capacity mechanism, tax reform adjustment mechanism, transmission recovery mechanism, and the MISO cost recovery mechanism. Entergy Louisiana also seeks to add a distribution cost recovery mechanism which operates in substantially the same manner as the transmission recovery mechanism, seeks to utilize end of period rate base to calculate cost of service, and requests a deferral of certain expenses incurred ~~by Entergy Services that are included in the retail rates~~for outside of Entergy Louisiana. As noted in the notice of proceeding, the LPSC observed an increase in capital construction-related costs that have been incurred by Entergy Services. Discovery is ongoing and has included efforts to seek highly detailed information on a broad range of matters unrelated to the scope of the audit.right-of-way vegetation programs.

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Entergy Corporation and Subsidiaries

Notes to Financial Statements

Retail Rates - Gas

2017 Rate Stabilization Plan Filing

As discussed in the Form 10-K, in January 2018 Entergy Louisiana filed with the LPSC its gas rate stabilization plan for the test year ended September 30, 2017. As-filed rates from the supplemental filing were implemented, subject to refund, with customers receiving a cost reduction of approximately $0.7 million effective with bills rendered on and after the first billing cycle of May 2018, as well as a $0.2 million reduction in the gas infrastructure rider effective with bills rendered on and after the first billing cycle of July 2018. In October 2019 the LPSC staff issued its report finding that Entergy Louisiana’s filing complied with the terms of the rate stabilization plan but recommending an additional refund of $0.7 million related to the Tax Act. In June 2020, the LPSC approved a joint report acknowledging Entergy Louisiana’s prior refunds and offsets for flood recovery costs, and required a further refund of $0.8 million, inclusive of carrying costs.

2018 Rate Stabilization Plan Filing

As discussed in the Form 10-K, in January 2019 Entergy Louisiana filed with the LPSC its gas rate stabilization plan for the test year ended September 30, 2018. ~~Entergy Louisiana made~~The filing of the evaluation report for the test year 2018 reflected an earned return on common equity of 2.69%. This earned return is below the earning sharing band of the gas rate stabilization plan and results in a ~~compliance filing in April 2019 and rates~~rate increase of $2.8 million. Rates were implemented during the first billing cycle of May 2019, subject to refund and final LPSC review.

~~Gas Rate Stabilization Plan Extension Request~~

In August ~~2019, Entergy Louisiana submitted an application to~~2020 the LPSC ~~seeking extension of~~staff filed its report concurring with Entergy Louisiana’s calculation that the gas rate stabilization plan ~~for the 2019-2021 test years.~~required a rate increase of $2.8 million. The LPSC accepted the staff’s report at its September 2020 meeting.

COVID-19 Orders

In April 2020 the LPSC issued an order authorizing utilities to record as a regulatory asset expenses incurred from the suspension of disconnections and collection of late fees imposed by LPSC orders associated with the COVID-19 pandemic. In addition, utilities may seek future recovery, subject to LPSC review and approval, of losses and expenses incurred due to compliance with the LPSC’s COVID-19 orders. While the suspension of late fees and disconnects for non-pay was only extended until the first billing cycle after July 16, 2020, Entergy Louisiana has ~~established~~not yet resumed disconnections and continues to defer the associated costs. Utilities seeking to recover the regulatory asset must formally petition the LPSC to do so, identifying the direct and indirect costs for which recovery is sought. Any such request is subject to LPSC review and approval. As of September 30, 2020, Entergy Louisiana recorded a ~~procedural schedule to address this request~~regulatory asset of $27.4 million for costs associated with ~~a hearing scheduled in May 2020.~~the COVID-19 pandemic.

Filings with the MPSC (Entergy Mississippi)

Formula Rate Plan

Filings

See the Form 10-K for revisions to Entergy Mississippi’s formula rate plan approved by the MPSC in December 2019. In January 2020 Entergy Mississippi began billing an interim capacity rate adjustment rider to recover the $59 million first-year annual revenue requirement associated with the non-fuel ownership costs of the Choctaw Generating Station. Also, effective with the April 2020 billing cycle, Entergy Mississippi implemented a rider to recover $22 million in vegetation management costs. Vegetation management costs were previously recovered through the formula rate plan.

In March ~~2019,~~2020, Entergy Mississippi submitted its formula rate plan ~~2019~~2020 test year filing and ~~2018~~2019 look-back filing showing Entergy Mississippi’s earned return for the historical ~~2018~~2019 calendar year to be ~~above~~below the formula rate plan bandwidth and projected earned return for the ~~2019~~2020 calendar year to be below the formula rate plan bandwidth. The ~~2019~~2020 test year filing shows a ~~$36.8~~$24.6 million rate increase is necessary to reset Entergy Mississippi’s earned return on common equity to the specified point of adjustment of ~~6.94%~~6.51% return on rate base,

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Entergy Corporation and Subsidiaries

Notes to Financial Statements

within the formula rate plan bandwidth. The ~~2018~~2019 look-back filing compares actual ~~2018~~2019 results to the approved benchmark return on rate base and ~~shows~~reflects the need for a ~~$10.1~~$7.3 million interim ~~decrease~~increase in formula rate plan ~~revenues is necessary.~~revenues. In accordance with the fourth quarter 2018, Entergy Mississippi recorded a provision of $9.3 million that reflected the estimate of the difference between the 2018 expected earned rate of return on rate base and an established performance-adjusted benchmark rate of return underMPSC-approved revisions to the formula rate plan, ~~performance-adjusted bandwidth mechanism. In the first quarter 2019,~~ Entergy Mississippi ~~recorded an~~implemented a $24.3 million interim rate increase, reflecting a cap equal to 2% of ~~$0.8 million in~~2019 retail revenues, effective with the ~~provision~~April 2020 billing cycle, subject to ~~reflect the amount shown in the look-back filing.~~refund. In June ~~2019,~~2020, Entergy Mississippi and the Mississippi Public Utilities Staff entered into a joint stipulation that confirmed that the ~~2019~~2020 test year filing showed that a ~~$32.8~~$23.8 million rate increase is necessary to reset Entergy Mississippi’s earned return on common equity to the specified point of adjustment of ~~6.93%~~6.51% return on rate base, within the formula rate plan bandwidth. ~~Additionally, pursuant~~Pursuant to the joint stipulation, Entergy Mississippi’s ~~2018~~2019 look-back filing reflected an earned return on rate base of ~~7.81%~~6.75% in calendar year ~~2018~~2019, which is ~~above~~within the look-back ~~benchmark return on rate base of 7.13%, resulting in an $11 million decrease~~bandwidth. As a result, there is no change in formula rate plan revenues ~~on an interim basis through June 2020. In the second quarter 2019, Entergy Mississippi recorded an additional $0.9 million increase~~ in the ~~provision to reflect the $11 million shown in the~~2019 look-back filing. In June ~~2019~~2020 the MPSC approved the joint stipulation with rates effective for the first billing cycle of July ~~2019.~~2020.

COVID-19 Orders

In March 2020 the MPSC issued an order suspending disconnections for a period of sixty days. The MPSC extended the order on disconnections through May 26, 2020. In April 2020 the MPSC issued an order authorizing utilities to defer incremental costs and expenses associated with COVID-19 compliance and to seek future recovery through rates of the prudently incurred incremental costs and expenses. While the MPSC order on suspension of disconnections has expired, Entergy Mississippi has not yet resumed disconnections and continues to defer the associated costs. As of September 30, 2020, Entergy Mississippi recorded a regulatory asset of $10.4 million for costs associated with the COVID-19 pandemic.

Filings with the City Council (Entergy New Orleans)

~~Retail Rates~~Energy Efficiency

As discussed in the Form 10-K, in December 2019, Entergy New Orleans filed an application with the City Council seeking approval of an implementation plan for the Energy Smart energy efficiency program from April 2020 through December 2022. Entergy New Orleans proposed to recover the costs of the program through mechanisms previously approved by the City Council or through the energy efficiency cost recovery rider, which was approved in the 2018 combined rate case resolution. In February 2020 the City Council approved Entergy New Orleans’s application.

2018 Base Rate Case Filing

See the Form 10-K for discussion of the electric and gas base rate case filed byin September 2018. In response to the City Council’s November 2019 resolution in the rate case, Entergy New Orleans made a compliance filing in ~~September 2018. The evidentiary~~December 2019 and also filed timely a petition for appeal and judicial review and for stay of or injunctive relief alleging that the resolution is unlawful in failing to produce just and reasonable rates. A hearing on the requested injunction was scheduled in ~~this proceeding was held in June 2019. The record~~Civil District Court for February 2020, but by joint motion of the City Council and ~~post-hearing briefs were submitted in July 2019. In August 2019,~~ Entergy New Orleans, ~~sent~~the Civil District Court issued an order for a ~~letter~~limited remand to the City Council ~~proposing~~to consider a ~~framework for settlement of the rate case. That framework includes, among other things: (1) a total reduction~~potential agreement in ~~revenues of approximately $30 million ($27 million electric, $3 million gas); (2) a reduced return on common equity lower than 10.5%, but still commensurate with~~principle/stipulation at its February 20, 2020 meeting. On February 17, 2020, Entergy New ~~Orleans’s level of risk, paired~~Orleans filed with ~~three-year electric~~the City Council an agreement in principle between Entergy New Orleans and ~~gas formula rate plans with forward-looking features; (3) a demand-side management program intended to achieve greater penetration of~~ the City Council’s ~~Energy Smart programs and make progress towards~~advisors. On February 20, 2020, the City ~~Council’s energy efficiency goals.~~Council voted to approve the proposed agreement in principle and issued a resolution modifying the required treatment of certain accumulated deferred income taxes. As a result of the agreement in principle, the total annual revenue requirement reduction will be approximately $45 million ($42 million electric, including $29 million in rider reductions; and $3 million gas). Entergy New Orleans fully implemented the new rates in April 2020. In ~~October 2019~~accordance with the provisions of the agreement in principle approved by the City ~~Council’s Utility Committee approved a resolution for consideration by~~Council related to the 2020 formula rate plan filing, Entergy New Orleans anticipates moving forward with dismissal of its judicial review petition in the Civil District Court.

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Entergy Corporation and Subsidiaries

Notes to Financial Statements

2020 Formula Rate Plan Filing

the full City Council that included a 9.35% return on common equity, a total reduction in revenues of approximately $39 million ($36 million electric; $3 million gas), and an equity ratio of the lesser of 50% or

Entergy New Orleans’s ~~actual~~first annual filing under the three-year formula rate plan approved by the City Council in November 2019 was originally due to be filed in April 2020. The authorized return on equity ~~ratio. Also in October 2019,~~under the approved three-year formula rate plan is 9.35% for both electric and gas operations. The City Council approved several extensions of the deadline to allow additional time to assess the effects of the COVID-19 pandemic on the New Orleans community, Entergy New Orleans ~~sent another letter to~~customers, and Entergy New Orleans itself. In October 2020 the City Council ~~identifying~~approved an agreement in principle filed by Entergy New Orleans that results in Entergy New Orleans foregoing its 2020 formula rate plan filing and shifting the three-year formula rate plan to filings in 2021, 2022, and 2023. Key provisions of the agreement in principle include: changing the lower of actual equity ratio or 50% equity ratio approved in the rate case to a hypothetical capital structure of 51% equity and 49% debt for the duration of the three-year formula rate plan; changing the 2% depreciation rate for the New Orleans Power Station approved in the rate case to 3%; retention of over-recovery of $2.2 million in rider revenues; recovery of $1.4 million of certain ~~issues with~~rate case expenses outside of the ~~proposed resolution~~earnings band; recovery of the New Orleans Solar Station costs upon commercial operation; and ~~inviting~~Entergy New Orleans’s dismissal of its 2018 rate case appeal.

COVID-19 Orders

In March 2020, Entergy New Orleans voluntarily suspended customer disconnections for non-payment of utility bills through May 2020. Subsequently, the City Council ordered that the moratorium be extended to ~~resume negotiations in an effort to address these issues. The~~August 1, 2020. In May 2020 the City Council ~~may consider~~issued an accounting order authorizing Entergy New Orleans to establish a regulatory asset for incremental COVID-19-related expenses. While the ~~resolution at its November 7, 2019 meeting.~~City Council moratorium on customer disconnections has expired, Entergy New Orleans has not yet resumed disconnections and continues to defer the associated costs. As of September 30, 2020, Entergy New Orleans recorded a regulatory asset of $8.4 million for costs associated with the COVID-19 pandemic.

In June 2020 the City Council established the City Council Cares Program and directed Entergy New Orleans to use the approximately $7 million refund received from the Entergy Arkansas opportunity sales FERC proceeding, currently being held in escrow, and approximately $15 million of non-securitized storm reserves to fund this program, which is intended to provide temporary bill relief to customers who become unemployed during the COVID-19 pandemic. The program became effective July 1, 2020, and offers qualifying residential customers bill credits of $100 per month for up to four months, for a maximum of $400 in residential customer bill credits. As of September 30, 2020, credits of $1.9 million have been applied to customer bills under the City Council Cares Program.

Filings with the PUCT (Entergy Texas)

~~Base Rate Case~~

Distribution Cost Recovery Factor (DCRF) Rider

In January 2019, Entergy Texas filed for recovery of rate case expenses totaling $7.2 million. The amounts requested primarily include internal and external expenses related to litigating the 2018 base rate case. Parties filed testimony in April 2019 recommending a disallowance ranging from $3.2 million to $4.2 million of the $7.2 million requested. In May 2019, Entergy Texas filed rebuttal testimony responding to the parties’ positions
. In September 2019 an order was issued abating the procedural schedule and scheduled hearing to allow the finalization of a settlement in principle reached among the parties. The settlement provides for a black box disallowance of $1.4 million. In the third quarter 2019, Entergy Texas recorded a provision for the 2018 base rate case expenses based on the settlement in principle. In October 2019 the settlement was filed for review by the PUCT.

~~Other Filings~~

In March ~~2019,~~2020, Entergy Texas filed with the PUCT a request to ~~set a new distribution cost recovery factor (DCRF)~~amend its DCRF rider. The proposed ~~new DCRF~~ rider is designed to collect ~~approximately $3.2 million annually~~ from Entergy Texas’s retail customers approximately $23.6 million annually, or $20.4 million in incremental annual DCRF revenue beyond Entergy Texas’s currently effective DCRF rider, based on its capital invested in distribution between January 1, ~~2018~~2019 and December 31, ~~2018.~~2019. In May and June 2020 intervenors filed testimony recommending reductions in Entergy Texas’s annual revenue requirement of approximately $0.3 million and $4.1 million. The parties briefed the contested issues in this matter and a proposal for decision was issued in September ~~2019~~2020 recommending a $4.1 million revenue reduction related to non-Advanced Metering System meters included in the DCRF calculation. The parties filed exceptions to the proposal for decision and replies to those exceptions in September 2020. In October 2020 the PUCT issued ana final order approving ~~rates, which had been effective on an interim basis since June 2019, at the level proposed in~~ a $16.3 million incremental annual DCRF revenue increase.

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Entergy ~~Texas’s application.~~Corporation and Subsidiaries

Notes to Financial Statements

In ~~December 2018,~~October 2020, Entergy Texas filed with the PUCT a request to ~~set a new transmission cost recovery factor (TCRF)~~amend its DCRF rider. The proposed ~~new TCRF~~ rider is designed to collect ~~approximately $2.7 million annually~~ from Entergy Texas’s retail customers approximately $26.3 million annually, or $6.8 million in incremental annual revenues beyond Entergy Texas’s currently effective DCRF rider based on its capital invested in ~~transmission~~distribution between January 1, ~~2018~~2020 and ~~September 30, 2018. In April 2019 parties filed testimony proposing a load growth adjustment, which would have fully offset Entergy Texas’s proposed TCRF revenue requirement. In July 2019~~August 31, 2020.

Transmission Cost Recovery Factor (TCRF) Rider

As discussed in the PUCT granted Entergy Texas’s application as filed to begin recovery of the requested $2.7 million annual revenue requirement, rejecting opposing parties’ proposed adjustment; however, the PUCT found that the question of prudence of the actual investment costs should be determinedForm 10-K, in Entergy Texas’s next rate case similar to the procedure used for the costs recovered through the DCRF rider. In October 2019 the PUCT issued an order on a motion for rehearing, clarifying and affirming its prior order granting Entergy Texas’s application as filed. Also in October 2019 a second motion for rehearing was filed, and Entergy Texas filed a response in opposition to the motion. The second motion for rehearing is pending before the PUCT.

In August 2019, Entergy Texas filed with the PUCT a request to amend its TCRF rider. The ~~proposed~~ new TCRF rider is designed to collect approximately $19.4 million annually from Entergy Texas’s retail customers based on its capital invested in transmission between January 1, 2018 and June 30, ~~2019, which~~2019. In January 2020 the PUCT issued an order approving an unopposed settlement providing for recovery of the requested revenue requirement. Entergy Texas implemented the amended rider beginning with bills covering usage on and after January 23, 2020.

In October 2020, Entergy Texas filed with the PUCT a request to amend its TCRF rider. The proposed rider is ~~$16.7~~designed to collect from Entergy Texas’s retail customers approximately $51 million annually, or $31.6 million in incremental annual ~~revenue above~~revenues beyond Entergy Texas’s currently effective TCRF rider based on its capital invested in transmission between July 1, 2019 and August 31, 2020.

COVID-19 Orders

In March 2020 the ~~$2.7~~PUCT authorized electric utilities to record as a regulatory asset expenses resulting from the effects of COVID-19. In future proceedings the PUCT will consider whether each utility's request for recovery of these regulatory assets is reasonable and necessary, the appropriate period of recovery, and any amount of carrying costs thereon. In March 2020 the PUCT ordered a moratorium on disconnections for nonpayment for all customer classes, but, in April 2020, revised the disconnect moratorium to apply only to residential customers. The PUCT allowed the moratorium to expire on June 13, 2020, but on July 17, 2020, the PUCT re-established the disconnect moratorium for residential customers until August 31, 2020. While the PUCT moratorium on disconnections has expired, Entergy Texas has not yet resumed disconnections and continues to defer the associated costs. As of September 30, 2020, Entergy Texas recorded a regulatory asset of $8.7 million ~~approved~~for costs associated with the COVID-19 pandemic.

Generation Rider

In October 2020, Entergy Texas filed an application to establish a generation cost recovery rider to begin recovering a return of and on its capital investment in the ~~prior pending TCRF~~Montgomery County Power Station. In October 2020 the administrative law judge set a procedural schedule that will result in an administrative approval of Entergy Texas’s application in December 2020 if it is unopposed by parties to the proceeding. ~~The proceeding is currently pending.~~

System Agreement Cost Equalization Proceedings

Rough Production Cost Equalization Rates

Consolidated 2011, 2012, 2013, and 2014 Rate Filing Proceedings

As discussed in the Form 10-K, in April 2018 the ~~hearing on~~LPSC requested rehearing of the ~~bandwidth calculation for~~FERC’s March 2018 order affirming the ~~seven months June 1, 2005 through December 31, 2005 occurred in July 2016. The presiding judge issued an~~ALJ’s initial decision in ~~November 2016.~~the consolidated proceedings. Entergy filed in May 2018 the bandwidth true-up payments and receipts for the 2011-2014 rate filings and the payments were made in May 2018. In April 2020 the FERC issued an order partially granting the LPSC’s rehearing request. In the ~~initial decision,~~order the ~~presiding judge agreed with~~FERC reversed its prior finding and determined that the ~~Utility operating companies’ position that: (1) interest on~~tax gain portion of the Waterford 3 financing accumulated deferred income tax should be included in the bandwidth calculation. The order requires Entergy Services to redetermine bandwidth true-up payments and receipts for the ~~2005~~2010-2012 test ~~period should be accrued from June 1, 2006 until the date that the bandwidth payments for that calculation are paid, which is consistent with how the Utility operating companies performed the~~years.

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Entergy Corporation and Subsidiaries

Notes to Financial Statements

~~calculation;~~In May 2020, Entergy and (2) a portion of Entergy Louisiana’s 2001-vintage Louisiana state net operating loss accumulated deferred income tax that results from the Vidalia tax deduction should be excluded from the 2005 test period bandwidth calculation. Various participants filed briefs on exceptions and/or briefs opposing exceptions related to the initial decision, including the LPSC both separately requested rehearing of the ~~APSC,~~FERC’s April 2020 order partially granting the ~~FERC trial staff, and Entergy Services.~~ LPSC’s rehearing request.In ~~May 2018~~June 2020 the FERC issued an order affirming the initial decision and ordered a comprehensive recalculation of the bandwidth payments/receipts for the seven months June 1, 2005 through December 31, 2005 and a recalculation of the 2006 and 2007 test years as a result of limited revisions. Entergy filed the comprehensive recalculation of the bandwidth payments/receipts for the seven months June 1, 2005 through December 31, 2005 and the 2006 and 2007 test years in July 2018. The filing shows the additional following payments and receipts among the Utility operating companies:



	~~Payments (Receipts)~~
	~~(In Millions)~~
~~Entergy Arkansas~~	~~($4)~~
~~Entergy Louisiana~~	~~($23)~~
~~Entergy Mississippi~~	~~$16~~
~~Entergy New Orleans~~	$5
~~Entergy Texas~~	$6

~~These payments were made in July 2018. In January 2019 the FERC denied the LPSC’s request for rehearing of~~accepting the May 2018 ~~order. In May 2019~~true-up filing for the ~~FERC accepted the July 2018 compliance filing, and the LPSC sought rehearing of that decision~~2011-2014 rate filings.Also in June ~~2019.~~

~~Rough Production Cost Equalization~~

~~2010 Rate Filing Based on Calendar Year 2009 Production Costs~~

~~In May 2010,~~2020, Entergy filed with the FERC the 2010 rates in accordance with the FERC’s orders in the System Agreement proceeding, and supplemented the filing in September 2010. Several parties intervened in the proceeding at the FERC, including the LPSC and the City Council, which also filed protests. In July 2010 the FERC accepted Entergy’s proposed rates for filing, effective June 1, 2010, subject to refund. After an abeyance of the proceeding schedule, a hearing was held in March 2014 and in December 2015 the FERC issued an order. Among other things, the December 2015 order directed Entergy to submit a compliance filing. In January 2016 the LPSC, the APSC, and Entergy filed requests for rehearing of the FERC’s December 2015 order. In February 2016, Entergy submitted the compliance filing ordered in the December 2015 order. The result of thebandwidth true-up payments and receipts for the ~~recalculation of production costs resulted in~~2010-2012 test years to address the ~~following payments/receipts among the Utility operating companies:~~FERC’s April 2020 rehearing order:


		Payments (Receipts)
		~~Payments (Receipts)~~(In Millions)
Entergy Arkansas		~~(In Millions)~~($2.8)
Entergy ~~Arkansas~~Louisiana		$22.3
Entergy ~~Louisiana~~Mississippi		$60.2
~~Entergy Mississippi~~		~~($4)~~
Entergy New Orleans	($1)0.1)
Entergy Texas		~~($3)~~$0.4

In ~~September 2016 the FERC accepted the February 2016 compliance filing subject to~~July 2020, Entergy filed a further compliance filing made in November 2016. The further compliance filing was required as a result of an order issued in September 2016 ruling on the January 2016 rehearing requests filed by the LPSC, the APSC, and Entergy. In the order addressing the rehearing requests, the FERC granted the LPSC’s rehearing request and directed that interest be calculated on the

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~~Entergy Corporation and Subsidiaries~~

~~Notes to Financial Statements~~

payment/receipt amounts. The FERC also granted the APSC’s and Entergy’s rehearing request and ordered the removal of both securitized asset accumulated deferred income taxes and contra-securitization accumulated deferred income taxes from the calculation. In November 2016, Entergy submitted its compliance filing in responsecorrection to the ~~FERC’s order on rehearing. The compliance~~June 2020 filing ~~included a revised calculation of~~to address an error in the ~~bandwidth true-up payments and receipts based on 2009~~2012 test year ~~data and interest calculations. The LPSC protested the interest calculations.~~ I~~n November 2017 the FERC issued an order rejecting the November 2016 compliance filing. The FERC determined that the~~calculation. This resulted in additional payments ~~detailed in the November 2016 compliance filing did not include adequate interest for the payments~~of $1.5 million from Entergy Arkansas to Entergy ~~Louisiana because it did not include interest on~~Louisiana. In August 2020 both Entergy and the ~~principal portion of~~LPSC filed petitions for review, at the payment that was made in February 2016. In December 2017, Entergy recalculated the interest pursuant to the November 2017 order. As a result of the recalculations, Entergy Arkansas owed very minor payments to Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. In June 2019 the FERC issued an order denying the LPSC’s rehearing requestD.C. Circuit, of FERC’s ~~September 2016 order. The LPSC rehearing request asked~~orders in the ~~FERC to reverse its decision that both securitized asset accumulated deferred income taxes~~consolidated 2011, 2012, 2013, and ~~contra-securitization accumulated deferred income taxes should be removed from the bandwidth calculation.~~2014 rate filings.

Entergy Arkansas Opportunity Sales Proceeding

As discussed in the Form 10-K, ~~in December 2018, Entergy made a compliance filing in response~~the FERC’s opportunity sales orders have been appealed to the ~~FERC’s October 2018 order~~D.C. Circuit by Entergy, the LPSC, and the APSC. In February 2020 all of the appeals were consolidated and in April 2020 the ~~opportunity sales proceeding. The compliance filing provided~~D.C. Circuit established a ~~final calculation of Entergy Arkansas’s payments to the other Utility operating companies, including interest. No protests were filed~~briefing schedule. Briefing was completed in ~~response to the~~September 2020 and oral argument is scheduled for December ~~2018 compliance filing. The December 2018 compliance filing is pending FERC action.~~2020.

In February 2019 the LPSC filed a new complaint relating to two issues that were raised in the opportunity sales proceeding, but that, in its October 2018 order, the FERC held were outside the scope of the proceeding.In March 2019, Entergy Services filed an answer and motion to dismiss the new complaint.In November 2019 the FERC issued an order denying the LPSC’s complaint.The order concluded that the settlement agreement approved by the FERC in December 2015 terminating the System Agreement barred the LPSC’s new complaint.In December 2019 the LPSC requested rehearing of the FERC’s November 2019 order, and in July 2020 the FERC issued an order dismissing the LPSC’s request for rehearing.In September 2020 the LPSC appealed the FERC’s orders dismissing the new opportunity sales complaint to the D.C. Circuit.

InAlso as discussed in the Form 10-K, in May 2019, Entergy Arkansas filed an application ~~and supporting testimony~~ with the APSC requesting approval of a special rider tariff to recover the costs of ~~these~~its opportunity sales payments from its retail customers over a 24-month period. ~~The application requested~~In January 2020 the Attorney General and Arkansas Electric Energy Consumers, Inc. filed testimony opposing the recovery by Entergy Arkansas of the opportunity sales payment but also claiming that certain components of the payment should be segregated and refunded to customers. In March 2020, Entergy Arkansas filed rebuttal testimony.

In July 2020 the APSC ~~approve~~issued a decision finding that Entergy Arkansas’s application is not in the ~~rider~~public interest. The order also directs Entergy Arkansas to ~~take effect~~refund to its retail customers within 30 days ~~or, if suspended by the APSC as allowed by commission rule, approve the rider to take effect in the first billing cycle~~ of the ~~first month occurring 30 days after issuance~~order the FERC-determined over-collection of $13.7 million, plus interest, associated with a recalculated bandwidth remedy. In addition to these primary findings, the order also denied the Attorney General’s request for Entergy Arkansas to prepare a compliance filing detailing all of the APSC’s order approving the rider. In June 2019 the APSC suspended Entergy Arkansas’s tariff and granted Entergy Arkansas’s motion asking the APSC to establish the proceeding as the single designated proceeding in which interested parties may assert claims related to the appropriate retail ~~rate treatment of the FERC’s October 2018 order and related FERC orders in~~impacts from the opportunity sales ~~proceeding.~~

~~Complaints Against System~~and denied a request by the Arkansas Electric Energy

~~Return on Equity and Capital Structure Complaints~~

~~See~~ Consumers to recalculate all costs using the ~~Form 10-K~~revised responsibility ratio. Entergy Arkansas filed a motion for temporary stay of the 30-day requirement to allow Entergy Arkansas a reasonable opportunity to seek rehearing of the APSC order, but in July 2020 the APSC denied Entergy Arkansas’s request for a ~~discussion~~stay and directed Entergy Arkansas to refund to its retail ratepayers the component of the return on equity complaints filed by the APSC and the MPSC and by the LPSC against System Energy. The LPSC’s complaint also includes a challenge to System Energy’s capital structure. In August 2018 the FERC issued an order dismissing the LPSC’s request to investigate System Energy’s capital structure and setting for hearing the return on equity complaint, with a refund effective date of April 27, 2018. The portion of the LPSC’s complaint dealing with return on equity was subsequently consolidated with the APSC and MPSC complaint for hearing. The parties are required to address an order (issued in a separate proceeding involving New England transmission owners) that proposed modifying the FERC’s standard methodology for determining return on equity. In September 2018, System Energy filed a request for rehearing and the LPSC filed a request for rehearing or reconsideration of the FERC’s August 2018 order. The LPSC’s request referenced an amended complaint that it filed on the same day raising the same capital structure claim the FERC had earlier dismissed. The FERC initiated a new proceeding for the amended capital structure complaint, and System Energy submitted a response in October 2018. In January 2019 the FERC set the amended capital structure complaint for settlement and hearing proceedings. Settlement procedures in the capital structure proceeding commenced in February 2019. As noted below, in June 2019

total FERC-determined

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Entergy Corporation and Subsidiaries

Notes to Financial Statements

~~settlement discussions~~opportunity sales payment that was associated with increased bandwidth remedy payments of $13.7 million, plus interest. The refunds were ~~terminated and~~issued in the ~~amended capital structure complaint was consolidated with the ongoing return on equity proceeding.~~

~~In January 2019 the LPSC and~~August 2020 billing cycle. While the APSC denied Entergy Arkansas’s stay request, Entergy Arkansas believes its actions were prudent and, ~~MPSC~~therefore, the costs, including the $13.7 million, plus interest, are recoverable. In July 2020, Entergy Arkansas requested rehearing of the APSC order, which rehearing was denied by the APSC in August 2020. In September 2020, Entergy Arkansas filed ~~direct testimony~~a complaint in the U. S. District Court for the Eastern District of Arkansas challenging the APSC’s order denying Entergy Arkansas’s request to recover the costs of these payments. In October 2020 the APSC filed a motion to dismiss Entergy Arkansas’s complaint. Entergy Arkansas expects to file a response opposing the APSC’s motion.

Complaints Against System Energy

Return on Equity and Capital Structure Complaints

As discussed in the Form 10-K, in November 2019, in a proceeding that did not involve System Energy, the FERC issued an order addressing the methodology for determining the return on equity ~~proceeding.~~applicable to transmission owners in MISO. Thereafter, the procedural schedule in the System Energy proceeding was amended to allow the participants to file supplemental testimony addressing the order in the MISO transmission owner proceeding (Opinion No. 569).

In February 2020 the LPSC, the MPSC and APSC, and the FERC trial staff filed supplemental testimony addressing Opinion No. 569 and how it would affect the return on equity evaluation for the two complaint periods concerning System Energy. For the first refund period, ~~January 23, 2017 through April 23, 2018,~~based on their respective interpretations and applications of the Opinion No. 569 methodology, the LPSC argues for an authorized return on equity for System Energy of ~~7.81%~~8.44%; the MPSC and ~~the~~ APSC ~~and MPSC~~ argue for an authorized return on equity of 8.41%; and the FERC trial staff argues for ~~System Energy~~an authorized return on equity of ~~8.24%~~9.22%. For the second refund period ~~April 27, 2018 through July 27, 2019,~~ and ~~for application~~ on a prospective basis, based on their respective interpretations and applications of the Opinion No. 569 methodology, the LPSC argues for an authorized return on equity for System Energy of ~~7.97%~~7.89%; the MPSC and APSC argue that an authorized return on equity of 8.01% may be appropriate; and the FERC trial staff argues for an authorized return on equity of 8.66%.

In April 2020, System Energy filed supplemental answering testimony addressing Opinion No. 569. System Energy argues that the Opinion No. 569 methodology is conceptually and analytically defective for purposes of establishing just and reasonable authorized return on equity determinations and proposes an alternative approach. As its primary recommendation, System Energy continues to support the return on equity determinations in its March 2019 testimony for the first refund period and its June 2019 testimony for the second refund period. Under the Opinion No. 569 methodology, System Energy calculates a “presumptively just and reasonable range” for the authorized return on equity for the first refund period of 8.57% to 9.52%, and for the second refund period of 8.28% to 9.11%. System Energy argues that these ranges are not just and reasonable results. Under its proposed alternative methodology, System Energy calculates an authorized return on equity of 10.26% for the first refund period, which also falls within the presumptively just and reasonable range calculated for the second refund period and prospectively.

In May 2020 the FERC issued an order on rehearing of Opinion No. 569 (Opinion No. 569-A).In June 2020 the procedural schedule in the System Energy proceeding was further revised in order to allow parties to address the Opinion No. 569-A methodology.Pursuant to the revised schedule, in June 2020, the LPSC, the MPSC and APSC, and ~~MPSC argue~~the FERC trial staff filed supplemental testimony addressing Opinion No. 569-A and how it would affect the return on equity evaluation for the two complaint periods concerning System Energy.For the first refund period, based on their respective interpretations and applications of the Opinion No. 569-A methodology, the LPSC argues for an authorized return on equity for System Energy of ~~8.41%. In March 2019, System Energy submitted answering testimony in~~7.97%; the ~~return on equity proceeding. For the first refund period, System Energy’s testimony argues~~MPSC and APSC argue for a return on equity of 10.10% (median) or 10.70% (midpoint). For the second refund period, System Energy’s testimony shows that the calculated returns on equity for the first period fall within the range of presumptively just and reasonable returns on equity, and thus the second complaint should be dismissed (and the first period return on equity used going forward). If the FERC nonetheless were to set a new return on equity for the second period (and going forward), System Energy argues the return on equity should be either 10.32% (median) or 10.69% (midpoint).

In May 2019 the FERC trial staff filed its direct and answering testimony in the return on equity proceeding. For the first refund period, the FERC trial staff calculates an authorized return on equity for System Energy of 9.89% based on the application of FERC’s proposed methodology. The FERC trial staff’s direct and answering testimony noted that an authorized return on equity of ~~9.89%~~9.24%; and the FERC trial staff argues for ~~the first refund period was within the range of presumptively just and reasonable returns~~an authorized return on equity ~~for~~of 9.49%.For the second refund period ~~as calculated using~~and on a ~~study period ending January 31, 2019 for the second refund period.~~

In June 2019, System Entergy filed testimony responding to the testimony filed by the FERC trial staff. Among other things, System Energy’s testimony rebutted arguments raised by the FERC trial staff and provided updated calculations for the second refund periodprospective basis, based on ~~the study period ending May 31, 2019. For that refund period, System Energy’s testimony shows that strict application~~their respective interpretations and applications of the return on equity methodology proposed by the FERC trial staff indicates that the second complaint would not be dismissed, and the new return on equity would be set at 9.65% (median) or 9.74% (midpoint). System Energy’s testimony argues that these results are insufficient in light of benchmarks such as state returns on equity and treasury bond yields, and instead proposes that the calculated returns on equity for the second period should be either 9.91% (median) or 10.3% (midpoint). System Energy’s testimony also argues that, under application of its proposed modifiedOpinion No. 569-A methodology, the 10.10% return on equity calculated for the first refund period would fall within the range of presumptively just and reasonable returns on equity for the second refund period. System Energy is recording a provision against revenue for the potential outcome of this proceeding.

Also in June 2019, the FERC’s Chief ALJ issued an order terminating settlement discussions in the amended complaint addressing System Energy’s capital structure. The ALJ consolidated the amended complaint with the ongoing return on equity proceeding and set new procedural deadlines for the consolidated hearing, such that the hearing will commence in January 2020 and the initial decision will be due in June 2020.

~~In August 2019 the~~ LPSC ~~and the APSC and MPSC filed rebuttal testimony in the return on equity proceeding and direct and answering testimony relating to System Energy’s capital structure. The LPSC reargues~~argues for an authorized return on equity for System Energy of ~~7.81% for~~7.78%; the ~~first refund period~~MPSC and ~~7.97% for the second refund period. The~~ APSC ~~and MPSC~~ argue ~~for~~that an authorized return on equity ~~for System Energy~~ of ~~8.26% for the first refund period and 8.32% for~~9.15% may be appropriate if the second refund period. With respect to capital structure, the LPSC proposes that the FERC establish a hypothetical capital structure for System Energy for ratemaking purposes. Specifically, the LPSC proposes that System Energy’s common equity ratio be set to Entergy Corporation’s equity ratio of 37% equity and 63% debt. In the alternative, the LPSC argues that the equity ratio should be no higher than 49%, the composite equity ratio of System Energy and the other Entergy operating companies who purchase under the Unit Power Sales Agreement. The APSC and MPSC recommend that 35.98% be set as the common equity ratio for System Energy. As an alternative, the APSC and MPSC propose that System Energy’s common equity be set at 46.75% based on the median equity ratio of the proxy group for setting the return on equity.complaint

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Notes to Financial Statements

~~In September 2019~~is not dismissed; and the FERC trial staff ~~filed its rebuttal testimony in the~~argues for an authorized return on equity ~~proceeding. For~~of 9.09% if the second complaint is not dismissed.

Pursuant to the revised procedural schedule, in July 2020, System Energy filed supplemental testimony addressing Opinion No. 569-A. System Energy argues that strict application of the Opinion No. 569-A methodology produces results inconsistent with investor requirements and does not provide a sound basis on which to evaluate System Energy’s authorized return on equity. As its primary recommendation, System Energy argues for the use of a methodology that incorporates four separate financial models, including the constant growth form of the discounted cash flow model and the empirical capital asset pricing model. Based on application of its recommended methodology, System Energy argues for an authorized return on equity of 10.12% for the first refund period, which also falls within the ~~FERC trial staff~~presumptively just and reasonable range calculated for the second refund period and prospectively. Under the Opinion No. 569-A methodology, System Energy calculates an authorized return on equity of 9.44% for ~~System Energy of 9.40% based on~~ the ~~application of~~first refund period, which also falls within the ~~FERC’s proposed methodology~~presumptively just and ~~an updated proxy group. For~~reasonable range calculated for the second refund period ~~based on the study period ending May 31, 2019, the~~and prospectively.

The parties and FERC trial staff ~~rebuttal~~filed final rounds of testimony ~~argues for a return on equity of 9.63%. In September 2019 the FERC trial staff also filed direct and answering testimony relating to System Energy’s capital structure.~~in August 2020. The FERC trial staff argues that the average capital structure of the proxy group used to develop System Energy’s return on equity should be used to establish the capital structure. Using this approach, the FERC trial staff calculates the average capital structure for its proposed proxy group of 46.74% common equity, and 53.26% debt.

~~In October 2019, System Energy filed answering testimony disputing the FERC trial staff’s, the LPSC’s,~~hearing occurred in late-September through early-October 2020, and the ~~APSC’s and MPSC’s arguments for the use of a hypothetical capital structure and arguing that the use of System Energy’s actual capital structure~~initial decision is ~~just and reasonable.~~due in February 2021.

Grand Gulf Sale-leaseback Renewal Complaint and Uncertain Tax Position Rate Base Issue

As discussed in the Form 10-K, in May 2018 the LPSC filed a complaint against System Energy and Entergy Services related to System Energy’s renewal of a sale-leaseback transaction originally entered into in December 1988 for an 11.5% undivided interest in Grand Gulf Unit 1.

In February 2019 the presiding ALJ ruled that the hearing ordered by the FERC includes the issue of whether specific subcategories of accumulated deferred income tax should be included in, or excluded from, System Energy’s formula rate. In March 2019 the LPSC, MPSC, APSC, and City Council filed direct testimony. The LPSC testimony ~~seeks~~sought refunds that include the renewal lease payments (approximately $17.2 million per year since July 2015), rate base reductions for accumulated deferred income taxes associated with uncertain tax positions, ~~(claimed to be approximately $334.5 million as of December 2018),~~ and the cost of capital additions associated with the sale-leaseback interest, ~~(claimed to be approximately $274.8 million),~~ as well as interest on those amounts. The direct testimony of the City Council and the APSC and MPSC address various issues raised by the LPSC. System Energy disputes that any refunds are owed for billings under the Unit Power Sales Agreement. A hearing has been scheduled for November 2019.

In June 2019 System Energy filed answering testimony ~~in the sale-leaseback complaint proceeding~~ arguing that the FERC should reject all claims for refunds. Among other things, System Energy argued that claims for refunds of the costs of lease renewal payments and capital additions should be rejected because those costs were recovered consistent with the Unit Power Sales Agreement formula rate, System Energy was not over or double recovering any costs, and customers will save ~~approximately $850 million~~costs over the initial and renewal terms of the leases. System Energy argued that claims for refunds associated with liabilities arising from uncertain tax positions should be rejected because the liabilities do not provide cost-free capital, the repayment timing of the liabilities is uncertain, and the outcome of the underlying tax positions is uncertain. System Energy’s testimony also challenged the refund calculations supplied by the other parties.

In August 2019 the FERC trial staff filed direct and answering testimony seeking refunds for rate base reductions for the liabilities associated with uncertain tax ~~positions (claimed to be up to approximately $602 million plus interest).~~positions. The FERC trial staff also argued that System Energy recovered $32 million more than it should have in depreciation expense for capital additions. In September 2019, System Energy filed cross-answering testimony disputing the FERC trial staff’s arguments for refunds, stating that the FERC trial staff’s position regarding depreciation rates for capital additions is not unreasonable, ~~and~~but explaining that any change in depreciation expense is only one element of a Unit Power Sales Agreement ~~rebilling~~re-billing calculation. Adjustments to depreciation expense in any ~~rebilling~~re-billing under the Unit Power Sales Agreement formula rate will also involve changes to accumulated depreciation, accumulated deferred income taxes, and other formula elements as needed. In October 2019 the LPSC filed rebuttal testimony increasing the amount of refunds sought for the liabilities associated with uncertain tax positions. The LPSC ~~now~~ seeks approximately $512 million, plus ~~interest. At the same time, the~~interest, which is approximately $185 million through September 30, 2020. The FERC trial staff also filed rebuttal testimony ~~conceding that~~in which it ~~was no longer seeking up to $602 million related to~~seeks refunds of a similar amount as the LPSC for the liabilities associated with uncertain tax ~~positions; instead, it is seeking approximately $511~~

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Notes to Financial Statements

Tax Accounting Methods

As discussed in Note 3 to the financial statements in the Form 10-K, in 2015, System Energy and Entergy Louisiana adopted a new method of accounting for income tax return purposes in which nuclear decommissioning liabilities are treated as production costs of electricity includable in cost of goods sold. The new method resulted in a reduction of taxable income of $1.2 billion for System Energy and $2.2 billion for Entergy Louisiana in 2015. In the third quarter 2020 the IRS issued Notices of Proposed Adjustment concerning this uncertain tax position allowing System Energy to include $102 million of its decommissioning liability in cost of goods sold, and Entergy Louisiana to include $221 million of its decommissioning liability in cost of goods sold. The Notices of Proposed Adjustment will not be appealed.

The partial disallowance of this uncertain tax position to include the decommissioning liability in cost of goods sold resulted in a $1.5 billion decrease in the balance of unrecognized tax benefits related to federal and state taxes for Entergy. Additionally, both System Energy and Entergy Louisiana recorded a reduction to their balances of unrecognized tax benefits for federal and state taxes of $461 million and $1.1 billion, respectively.

Coronavirus Aid, Relief, and Economic Security Act

In response to the economic impacts of the COVID-19 pandemic, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) into law on March 27, 2020. The CARES Act provisions that result in the most significant opportunities for tax relief to Entergy and the Registrant Subsidiaries are permitting a five-year carryback of 2018-2020 net operating losses, removing the 80 percent limitation on the carryback of 2018-2020 net operating losses, increasing the limitation on interest expense deductibility for 2019 and 2020, accelerating available refunds for minimum tax credit carryforwards, modifying limitations on charitable contributions during 2020, and delaying the payment of employer payroll taxes. Based on current estimates, Entergy could defer approximately $64 million of 2020 payroll tax payments, which would be payable in two installments of $32 million on December 31, 2021 and December 31, 2022.

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Notes to Financial Statements

NOTE 11. PROPERTY, PLANT, AND EQUIPMENT (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Construction Expenditures in Accounts Payable

Construction expenditures included in accounts payable at September 30, ~~2019 are $306 million~~2020 were $1.4 billion for Entergy, ~~$41.7~~$50.4 million for Entergy Arkansas, ~~$74 million~~$1.1 billion for Entergy Louisiana, ~~$14.7~~$24.1 million for Entergy Mississippi, ~~$13.9~~$6.4 million for Entergy New Orleans, ~~$81.6~~$204.3 million for Entergy Texas, and ~~$24.6~~$18.0 million for System Energy. Construction expenditures included in accounts payable at December 31, ~~2018 are $311~~2019 were $406 million for Entergy, ~~$35.7~~$67.9 million for Entergy Arkansas, ~~$104.6~~$115.1 million for Entergy Louisiana, ~~$13.6~~$34.2 million for Entergy Mississippi, ~~$5.8~~$18.4 million for Entergy New Orleans, ~~$55.6~~$88.1 million for Entergy Texas, and ~~$26.3~~$23.2 million for System Energy. See Note 2 to the financial statements herein for discussion of construction expenditures related to Hurricane Laura recorded as of September 30, 2020.

NOTE 12. VARIABLE INTEREST ENTITIES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

See Note 17 to the financial statements in the Form 10-K for a discussion of variable interest entities. See Note 4 to the financial statements herein for details of the nuclear fuel companies’ credit facilities, ~~and~~ commercial paper borrowings, and long-term debt.

System Energy is considered to hold a variable interest in the lessor from which it leases an undivided interest representing approximately 11.5% of the Grand Gulf nuclear plant. System Energy is the lessee under this arrangement, which is described in more detail in Note 105 to the financial statements in the Form 10-K. System Energy made payments under this arrangement, including interest, of $8.6 million in the three months ended September 30, ~~2019~~2020 and in the three months ended September 30, ~~2018.~~2019. System Energy made payments under this arrangement, including interest, of $17.2 million in the nine months ended September 30, ~~2019~~2020 and in the nine months ended September 30, ~~2018.~~2019.

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Notes to Financial Statements

NOTE 13. REVENUE ~~RECOGNITION~~ (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Operating Revenues

See Note 19 to the financial statements in the Form 10-K for a discussion of revenue recognition. Entergy’s total revenues for the three months ended September 30, 2020 and 2019 ~~and 2018 are~~were as follows:


	2020	2019

	(In Thousands)
Utility:
Residential	$1,153,220	$1,154,455
Commercial	647,119	722,334
Industrial	589,648	686,122
Governmental	56,710	61,697
Total billed retail	2,446,697	2,624,608

Sales for resale (a)	145,187	63,082
Other electric revenues (b)	69,122	115,352
Revenues from contracts with customers	2,661,006	2,803,042
Other revenues (c)	5,799	9,892
Total electric revenues	2,666,805	2,812,934

Natural gas	22,357	27,269

Entergy Wholesale Commodities:
Competitive businesses sales from contracts with customers (a)	195,184	282,420
Other revenues (c)	19,222	17,952
Total competitive businesses revenues	214,406	300,372

Total operating revenues	$2,903,568	$3,140,575

2019 2018
(In Thousands)
Utility:
Residential
$1,154,455

$1,138,744
Commercial 722,334
693,760
Industrial 686,122
682,823
Governmental 61,697
60,647
    Total billed retail 2,624,608
2,575,974

Sales for resale (a) 63,082
76,247
Other electric revenues (b) 115,352
42,847
Non-customer revenues (c) 9,892
2,819
    Total electric revenues 2,812,934
2,697,887

Natural gas 27,269
26,352

Entergy Wholesale Commodities:
Competitive businesses sales (a) 282,420
407,763
Non-customer revenues (c) 17,952
(27,683 )
    Total competitive businesses 300,372
380,080

    Total operating revenues
$3,140,575

$3,104,319

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Notes to Financial Statements

Entergy’s total revenues for the nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 are as follows:


	2020	2019

	(In Thousands)
Utility:
Residential	$2,742,118	$2,727,367
Commercial	1,712,179	1,871,416
Industrial	1,723,367	1,928,857
Governmental	156,251	172,280
Total billed retail	6,333,915	6,699,920

Sales for resale (a)	251,674	222,834
Other electric revenues (b)	288,009	326,771
Revenues from contracts with customers	6,873,598	7,249,525
Other revenues (c)	34,401	30,158
Total electric revenues	6,907,999	7,279,683

Natural gas	88,829	112,916

Entergy Wholesale Commodities:
Competitive businesses sales from contracts with customers (a)	586,906	923,288
Other revenues (c)	159,800	100,480
Total competitive businesses revenues	746,706	1,023,768

Total operating revenues	$7,743,534	$8,416,367

2019 2018
(In Thousands)
Utility:
Residential
$2,727,367

$2,799,539
Commercial 1,871,416
1,871,380
Industrial 1,928,857
1,904,828
Governmental 172,280
173,949
    Total billed retail 6,699,920
6,749,696

Sales for resale (a) 222,834
214,984
Other electric revenues (b) 326,771
289,668
Non-customer revenues (c) 30,158
22,026
    Total electric revenues 7,279,683
7,276,374

Natural gas 112,916
112,990

Entergy Wholesale Commodities:
Competitive businesses sales (a) 923,288
1,148,460
Non-customer revenues (c) 100,480
(40,854 )
    Total competitive businesses 1,023,768
1,107,606

    Total operating revenues
$8,416,367

$8,496,970

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Notes to Financial Statements

The Registrant Subsidiaries’ total revenues for the three months ended September 30, ~~2019~~2020 and ~~2018~~2019 were as follows:


2020	Entergy Arkansas	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas
	(In Thousands)

Residential	$274,496	$413,442	$161,031	$83,242	$221,009
Commercial	137,764	248,276	109,432	50,565	101,082
Industrial	138,037	316,876	34,062	7,219	93,454
Governmental	5,133	17,449	10,917	17,187	6,024
Total billed retail	555,430	996,043	315,442	158,213	421,569
Sales for resale (a)	64,494	81,843	29,535	9,057	67,643
Other electric revenues (b)	17,677	35,097	9,612	2,403	5,685
Revenues from contracts with customers	637,601	1,112,983	354,589	169,673	494,897
Other revenues (c)	6,788	(2,766)	1,907	(161)	25
Total electric revenues	644,389	1,110,217	356,496	169,512	494,922
Natural gas	0	9,805	0	12,552	0
Total operating revenues	$644,389	$1,120,022	$356,496	$182,064	$494,922

2019
Entergy
Arkansas

Entergy
Louisiana

Entergy
Mississippi

Entergy
New
Orleans

Entergy
Texas
(In Thousands)

Residential
$253,627

$426,012

$177,785

$81,468

$215,563
Commercial 162,564
277,071
131,596
56,430
94,673
Industrial 156,024
376,595
44,054
8,613
100,836
Governmental 5,907
18,731
12,551
19,030
5,478
    Total billed retail 578,122

1,098,409

365,986

165,541

416,550

Sales for resale (a) 58,953
81,664
9,569
6,876
16,704
Other electric revenues (b) 47,085
37,521
20,499
2,537
9,177
Non-customer revenues (c) 3,366
4,280
2,678
1,784
446
    Total electric revenues 687,526

1,221,874

398,732

176,738

442,877

Natural gas —
9,803
—
17,466
—

    Total operating revenues
$687,526

$1,231,677

$398,732

$194,204

$442,877

~~Table of Contents~~

~~Entergy Corporation and Subsidiaries~~

~~Notes to Financial Statements~~

2018
Entergy
Arkansas

Entergy
Louisiana

Entergy
Mississippi

Entergy
New
Orleans

Entergy
Texas
(In Thousands)

Residential
$250,081

$408,680

$170,258

$86,014

$223,711
Commercial 119,950
272,985
126,987
62,428
111,409
Industrial 126,079
393,884
44,383
9,655
108,823
Governmental 4,445
17,566
11,488
20,364
6,785
    Total billed retail 500,555
1,093,115
353,116
178,461
450,728

Sales for resale (a) 60,338
71,634
7,876
4,863
23,290
Other electric revenues (b) 4,446
34,220
4,079
(1,107 ) 2,735
Non-customer revenues (c) 3,060
(2,691 ) 2,663
1,947
478
    Total electric revenues 568,399
1,196,278
367,734
184,164
477,231

Natural gas —
10,334
—
16,018
—

    Total operating revenues
$568,399

$1,206,612

$367,734

$200,182

$477,231

~~The Registrant Subsidiaries’ total revenues for the nine months ended September 30, 2019 and 2018 were as follows:~~

2019
Entergy
Arkansas

Entergy
Louisiana

Entergy
Mississippi

Entergy
New
Orleans

Entergy
Texas
(In Thousands)

Residential
$621,208

$980,443

$423,395

$192,165

$510,156
Commercial 412,697
715,983
331,785
156,152
254,799
Industrial 396,515
1,108,193
120,490
24,353
279,306
Governmental 15,776
53,547
33,108
53,916
15,933
    Total billed retail 1,446,196
2,858,166
908,778
426,586
1,060,194

Sales for resale (a) 213,038
248,827
19,377
25,680
48,251
Other electric revenues (b) 107,599
130,269
47,887
8,093
37,329
Non-customer revenues (c) 9,434
15,564
7,671
4,414
1,157
    Total electric revenues 1,776,267
3,252,826
983,713
464,773
1,146,931

Natural gas —
44,498
—
68,418
—

    Total operating revenues
$1,776,267

$3,297,324

$983,713

$533,191

$1,146,931

~~Table of Contents~~

~~Entergy Corporation and Subsidiaries~~

~~Notes to Financial Statements~~

2018
Entergy
Arkansas

Entergy
Louisiana

Entergy
Mississippi

Entergy
New
Orleans

Entergy
Texas
(In Thousands)

Residential
$644,735

$972,113

$451,331

$208,821

$522,539
Commercial 334,325
719,652
354,799
171,224
291,380
Industrial 335,529
1,114,898
133,012
26,493
294,896
Governmental 12,859
51,581
33,788
56,503
19,218
    Total billed retail 1,327,448
2,858,244
972,930
463,041
1,128,033

Sales for resale (a) 179,637
272,690
21,645
24,390
71,828
Other electric revenues (b) 98,571
124,749
35,055
7,404
28,468
Non-customer revenues (c) 8,372
7,390
7,536
4,749
1,328
    Total electric revenues 1,614,028
3,263,073
1,037,166
499,584
1,229,657

Natural gas —
45,671
—
67,319
—

    Total operating revenues
$1,614,028

$3,308,744

$1,037,166

$566,903

$1,229,657

~~(a)~~

Sales for resale and competitive businesses sales include day-ahead sales of energy in a market administered by an ISO. These sales represent financially binding commitments for the sale of physical energy the next day. These sales are adjusted to actual power generated and delivered in the real time market. Given the short duration of these transactions, Entergy does not consider them to be derivatives subject to fair value adjustments, and includes them as part of customer revenues.


~~(b)~~	~~Other electric revenues consist primarily of transmission and ancillary services provided to participants of an ISO-administered market and unbilled revenue.~~


~~(c)~~	~~Non-customer revenues include the settlement of financial hedges, occasional sales of inventory, alternative revenue programs, provisions for revenue subject to refund, and late fees.~~

~~NOTE 14. ASSET RETIREMENT OBLIGATIONS (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)~~

~~See Note 9 to the financial statements in the Form 10-K for a discussion of asset retirement obligations. The following are updates to that discussion.~~

In the first quarter 2019, Entergy Arkansas recorded a revision to its estimated decommissioning cost liabilities for ANO 1 and ANO 2 as a result of a revised decommissioning cost study. The revised estimates resulted in a $126.2 million increase in its decommissioning cost liabilities, along with corresponding increases in the related asset retirement cost assets that will be depreciated over the remaining lives of the units.

In the second quarter 2019, Entergy Louisiana recorded a revision to its estimated decommissioning cost liability for Waterford 3 as a result of a revised decommissioning cost study. The revised estimate resulted in a $147.5 million increase in its decommissioning cost liability, along with a corresponding increase in the related asset retirement cost asset that will be depreciated over the remaining useful life of the unit.

~~Table of Contents~~

~~Entergy Corporation and Subsidiaries~~

~~Notes to Financial Statements~~

~~NOTE 15. LEASES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)~~

Entergy implemented ASU 2016-02, “Leases (Topic 842),” effective January 1, 2019. The ASU’s core principle is that “a lessee should recognize the assets and liabilities that arise from leases.” The ASU considers that “all leases create an asset and a liability,” and accordingly requires recording the assets and liabilities related to all leases with a term greater than 12 months. Concurrent with the implementation of ASU 2016-02, Entergy implemented ASU 2018-01, “Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842,” which provided Entergy the option to elect not to evaluate existing land easements that are not currently accounted for under the previous lease standard, and ASU 2018-11, “Leases (Topic 842): Targeted Improvements,” which intended to simplify the transition requirement giving Entergy the option to apply the transition provisions of the new standard at the date of adoption instead of at the earliest comparative period. In implementing these ASUs, Entergy elected the options provided in both ASU 2018-01 and ASU 2018-11. This accounting was applied to all lease agreements using the modified retrospective method, which required an adjustment to retained earnings for the cumulative effect of adopting the standard as of the effective date, and when implemented with ASU 2018-11, allowed Entergy to recognize the leased assets and liabilities on its balance sheet beginning on January 1, 2019 without restating prior periods. In adopting the standard, in January 2019 Entergy recognized right-of-use assets and corresponding lease liabilities totaling approximately $263 million, including $59 million for Entergy Arkansas, $51 million for Entergy Louisiana, $26 million for Entergy Mississippi, $7 million for Entergy New Orleans, and $16 million for Entergy Texas. Implementation of the standards had no material effect on consolidated net income; therefore, no adjustment to retained earnings was recorded. The adoption of the standards had no effect on cash flows.

~~General~~

As of September 30, 2019, Entergy and the Registrant Subsidiaries held operating and financing leases for fleet vehicles used in operations, real estate, and aircraft. Excluded from this are power purchase agreements not meeting the definition of a lease, nuclear fuel leases, and the Grand Gulf sale-leaseback which were determined not to be leases.

Leases have remaining terms of one year to 52 years. Real estate leases generally include at least one five-year renewal option; however, renewal is not typically considered reasonably certain unless Entergy or a Registrant Subsidiary makes significant leasehold improvements or other modifications which would hinder its ability to easily move. In certain of the lease agreements for fleet vehicles used in operations, Entergy and the Registrant Subsidiaries provide residual value guarantees to the lessor; however, due to the nature of the agreements and Entergy’s continuing relationship with the lessor, Entergy and the Registrant Subsidiaries expect to renegotiate or refinance the leases prior to conclusion of the lease. As such, Entergy and the Registrant Subsidiaries do not believe it is probable that they will be required to pay anything pertaining to the residual value guarantee, and the lease liabilities and right-of-use assets are measured accordingly.

~~Entergy incurred the following total lease costs for the three months ended September 30, 2019:~~


2019	Entergy Arkansas	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas
	(In Thousands)

Residential	$253,627	$426,012	$177,785	$81,468	$215,563
Commercial	162,564	277,071	131,596	56,430	94,673
Industrial	156,024	376,595	44,054	8,613	100,836
Governmental	5,907	18,731	12,551	19,030	5,478
Total billed retail	578,122	1,098,409	365,986	165,541	416,550
Sales for resale (a)	58,953	81,664	9,569	6,876	16,704
Other electric revenues (b)	47,085	37,521	20,499	2,537	9,177
Revenues from contracts with customers	684,160	1,217,594	396,054	174,954	442,431
Other revenues (c)	3,366	4,280	2,678	1,784	446
Total electric revenues	687,526	1,221,874	398,732	176,738	442,877
Natural gas	0	9,803	0	17,466	0
Total operating revenues	$687,526	$1,231,677	$398,732	$194,204	$442,877



	~~(In Thousands)~~
~~Operating lease cost~~		~~$16,086~~
~~Financing lease cost:~~
~~Amortization of right-of-use assets~~		~~$2,945~~
~~Interest on lease liabilities~~		~~$763~~

~~Of the lease costs disclosed above, Entergy had $15 thousand in short-term lease costs for the three months ended September 30, 2019.~~

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~~Notes to Financial Statements~~

~~Entergy incurred the following total lease costs for the nine months ended September 30, 2019:~~



	~~(In Thousands)~~
~~Operating lease cost~~		~~$47,061~~
~~Financing lease cost:~~
~~Amortization of right-of-use assets~~		~~$10,837~~
~~Interest on lease liabilities~~		~~$2,597~~

~~Of the lease costs disclosed above, Entergy had $15 thousand in short-term lease costs for the nine months ended September 30, 2019.~~

The lease costs disclosed above materially approximate the cash flows used by Entergy for leases with all costs included within operating activities on the Consolidated Statements of Cash Flows, except for the financing lease costs which are included in financing activities.

~~The Registrant Subsidiaries incurred the following lease costs for the three months ended September 30, 2019:~~

Entergy Arkansas Entergy Louisiana Entergy Mississippi
Entergy
New Orleans
Entergy Texas
(In Thousands)
Operating lease cost
$3,306

$3,003

$1,752

$349

$1,074
Financing lease cost:
Amortization of right-of-use assets
$621

$1,014

$369

$178

$335
Interest on lease liabilities
$105

$161

$65

$29

$54

~~Of the lease costs disclosed above, Entergy Louisiana had $15 thousand in short-term lease costs for the three months ended September 30, 2019.~~

~~The Registrant Subsidiaries incurred the following lease costs for the nine months ended September 30, 2019:~~

Entergy Arkansas Entergy Louisiana Entergy Mississippi
Entergy
New Orleans
Entergy Texas
(In Thousands)
Operating lease cost
$9,724

$8,854

$5,220

$1,058

$3,135
Financing lease cost:
Amortization of right-of-use assets
$2,448

$4,014

$1,408

$696

$965
Interest on lease liabilities
$408

$612

$241

$114

$153

~~Of the lease costs disclosed above, Entergy Louisiana had $15 thousand in short-term lease costs for the nine months ended September 30, 2019.~~

The lease costs disclosed above materially approximate the cash flows used by the Registrant Subsidiaries for leases with all costs included within operating activities on the respective Statements of Cash Flows, except for the financing lease costs which are included in financing activities.

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~~Entergy has elected to account for short-term leases in accordance with policy options provided by accounting guidance; therefore, there are no related lease liabilities or right-of-use assets~~The Registrant Subsidiaries’ total revenues for the ~~costs recognized above by Entergy or by its Registrant Subsidiaries in the table below.~~

~~Included within Property, Plant, and Equipment on Entergy’s consolidated balance sheet at~~nine months ended September 30, 2020 and 2019 ~~are $236 million related to operating leases and $60 million related to financing leases.~~were as follows:


2020	Entergy Arkansas	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas
	(In Thousands)

Residential	$665,355	$974,407	$400,495	$187,561	$514,300
Commercial	355,112	659,641	295,823	132,470	269,133
Industrial	345,378	974,419	106,327	17,632	279,611
Governmental	13,508	50,984	31,043	43,512	17,204
Total billed retail	1,379,353	2,659,451	833,688	381,175	1,080,248
Sales for resale (a)	142,590	243,071	62,383	27,245	89,459
Other electric revenues (b)	82,811	120,209	45,448	7,166	36,426
Revenues from contracts with customers	1,604,754	3,022,731	941,519	415,586	1,206,133
Other revenues (c)	13,314	1,628	6,853	12,256	319
Total electric revenues	1,618,068	3,024,359	948,372	427,842	1,206,452
Natural gas	0	37,962	0	50,867	0
Total operating revenues	$1,618,068	$3,062,321	$948,372	$478,709	$1,206,452

~~Included within Utility Plant on the Registrant Subsidiaries’ respective balance sheets at September 30, 2019 are the following amounts:~~

Entergy Arkansas Entergy Louisiana Entergy Mississippi Entergy New Orleans Entergy Texas
(In Thousands)
Operating leases
$49,503

$34,248

$18,149

$3,894

$13,074
Financing leases
$11,094

$16,795

$6,994

$2,913

$5,515

~~The following lease-related liabilities are recorded within the respective Other lines on Entergy’s consolidated balance sheet as of September 30, 2019:~~


2019	Entergy Arkansas	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas
	(In Thousands)

Residential	$621,208	$980,443	$423,395	$192,165	$510,156
Commercial	412,697	715,983	331,785	156,152	254,799
Industrial	396,515	1,108,193	120,490	24,353	279,306
Governmental	15,776	53,547	33,108	53,916	15,933
Total billed retail	1,446,196	2,858,166	908,778	426,586	1,060,194
Sales for resale (a)	213,038	248,827	19,377	25,680	48,251
Other electric revenues (b)	107,599	130,269	47,887	8,093	37,329
Revenues from contracts with customers	1,766,833	3,237,262	976,042	460,359	1,145,774
Other revenues (c)	9,434	15,564	7,671	4,414	1,157
Total electric revenues	1,776,267	3,252,826	983,713	464,773	1,146,931
Natural gas	0	44,498	0	68,418	0
Total operating revenues	$1,776,267	$3,297,324	$983,713	$533,191	$1,146,931

~~(In Thousands)~~

~~Current liabilities:~~

~~Operating leases~~

~~$52,348~~

~~Financing leases~~

~~$11,482~~

~~Non-current liabilities:~~

~~Operating leases~~

~~$184,404~~

~~Financing leases~~

~~$53,252~~

~~The following lease-related liabilities are recorded within the respective Other lines on the Registrant Subsidiaries’ respective balance sheets at September 30, 2019:~~

Entergy Arkansas Entergy Louisiana Entergy Mississippi Entergy New Orleans Entergy Texas
(In Thousands)
Current liabilities:
Operating leases
$10,662

$9,969

$6,137

$1,138

$3,427
Financing leases
$2,600

$3,860

$1,473

$626

$1,252
Non-current liabilities:
Operating leases
$38,881

$24,289

$12,254

$2,755

$9,689
Financing leases
$8,665

$12,925

$5,521

$2,286

$4,221

~~The following information contains the weighted average remaining lease term in years and the weighted average discount rate for the operating and financing leases of Entergy at September 30, 2019:~~

~~Weighted average remaining lease terms:~~

~~Operating leases~~

~~5.10~~

~~Financing leases~~

~~6.79~~

~~Weighted average discount rate:~~

~~Operating leases~~

~~3.91~~

~~Financing leases~~

~~4.67~~

(a)Sales for resale and competitive businesses sales include day-ahead sales of energy in a market administered by an ISO. These sales represent financially binding commitments for the sale of physical energy the next day. These sales are adjusted to actual power generated and delivered in the real time market. Given the short duration of these transactions, Entergy does not consider them to be derivatives subject to fair value adjustments, and includes them as part of customer revenues.

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(b)Other electric revenues consist primarily of transmission and ancillary services provided to participants of an ISO-administered market and unbilled revenue.

(c)Other revenues include the settlement of financial hedges, occasional sales of inventory, alternative revenue programs, provisions for revenue subject to refund, and late fees.

The following information contains the weighted average remaining lease term in years and the weighted average discount rate for the operating and financing leases of the Registrant Subsidiaries at September 30, 2019:

Entergy Arkansas Entergy Louisiana Entergy Mississippi Entergy New Orleans Entergy Texas

Weighted average remaining lease terms:
Operating leases 6.09
4.28
4.65
3.99
4.49
Financing leases 5.44
5.41
5.41
5.72
5.25
Weighted average discount rate:
Operating leases 3.75 % 3.74 % 3.77 % 3.94 % 3.86 %
Financing leases 3.75 % 3.75 % 3.71 % 3.93 % 3.84 %

Allowance for doubtful accounts

~~Maturity~~

The allowance for doubtful accounts reflects Entergy’s best estimate of expected losses on its accounts receivable balances. Due to the essential nature of utility services, Entergy has historically experienced a low rate of default on its accounts receivables. Due to the effect of the ~~lease liabilities~~COVID-19 pandemic on customer receivables, however, Entergy recorded an increase in its allowance for doubtful accounts, as shown below:


	Entergy	Entergy Arkansas	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas
	(In Millions)
Balance as of December 31, 2019	$7.4	$1.2	$1.9	$0.6	$3.2	$0.5
Provisions (a)	66.9	10.6	26.3	11.0	8.8	10.2
Write-offs	(8.6)	(1.8)	(3.5)	(1.2)	(1.0)	(1.1)
Recoveries	7.7	2.2	2.5	1.0	1.0	1.0
Balance as of September 30, 2020	$73.4	$12.2	$27.2	$11.4	$12.0	$10.6

(a)Provisions include estimated incremental bad debt expenses resulting from the COVID-19 pandemic of $51 million for Entergy, $6.1 million for Entergy Arkansas, $20.9 million for Entergy Louisiana, $8.4 million for Entergy Mississippi, $7.7 million for Entergy New Orleans, and $7.9 million for Entergy Texas that have been deferred as ~~of September 30, 2019 are as follows:~~

Year Operating Leases Financing Leases
(In Thousands)

Remainder for 2019
$16,088

$3,608
2020 59,965
13,521
2021 53,791
11,973
2022 45,391
10,775
2023 35,050
9,664
Years thereafter 56,906
26,889
Minimum lease payments 267,191
76,430
Less: amount representing interest 30,438
11,696
Present value of net minimum lease payments
$236,753

$64,734

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~~Notes to Financial Statements~~

~~Maturity of the lease liabilities for the Registrant Subsidiaries as of September 30, 2019 are as follows:~~

~~Operating Leases~~

Year Entergy Arkansas Entergy Louisiana Entergy Mississippi Entergy New Orleans Entergy Texas
(In Thousands)

Remainder of 2019
$3,168

$2,863

$1,968

$332

$1,022
2020 11,756
10,518
6,066
1,196
4,014
2021 9,911
8,787
4,937
939
3,279
2022 7,613
6,068
3,503
659
2,338
2023 6,341
4,079
1,376
497
1,994
Years thereafter 16,421
4,702
2,642
729
2,193
Minimum lease payments 55,210
37,017
20,492
4,352
14,840
Less: amount representing interest 5,667
2,759
2,101
459
1,724
Present value of net minimum lease payments
$49,543

$34,258

$18,391

$3,893

$13,116

~~Financing Leases~~

Year Entergy Arkansas Entergy Louisiana Entergy Mississippi Entergy New Orleans Entergy Texas
(In Thousands)

Remainder of 2019
$713

$1,135

$429

$204

$375
2020 2,654
4,191
1,655
660
1,364
2021 2,258
3,536
1,490
549
1,171
2022 1,969
3,096
1,297
499
965
2023 1,728
2,635
1,078
451
827
Years thereafter 2,905
3,818
1,740
881
1,316
Minimum lease payments 12,227
18,411
7,689
3,244
6,018
Less: amount representing interest 961
1,626
695
332
545
Present value of net minimum lease payments
$11,266

$16,785

$6,994

$2,912

$5,473

In allocating consideration in lease contracts to the lease and non-lease components, Entergy and the Registrant Subsidiaries have made the accounting policy election to combine lease and non-lease components related to fleet vehicles used in operations, fuel storage agreements, and purchased power agreements and to allocate the contract consideration to both lease and non-lease components for real estate leases.

~~In accordance with ASU 2018-11, below is the lease disclosure from~~regulatory assets. See Note 102 to the financial statements inherein for discussion of the ~~Form 10-K.~~

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~~Notes to Financial Statements~~

~~General~~

As of December 31, 2018, Entergy had capital leases and non-cancelable operating leases for equipment, buildings, vehicles, and fuel storage facilities with minimum lease payments as follows (excluding power purchase agreement operating leases, nuclear fuel leases, and the Grand Gulf sale and leaseback transaction, all of which are discussed elsewhere):

Year

Operating
Leases

Capital
Leases
(In Thousands)
2019
$94,043

$2,887
2020 82,191
2,887
2021 75,147
2,887
2022 60,808
2,887
2023 47,391
2,887
Years thereafter 88,004
16,117
Minimum lease payments 447,584
30,552
Less: Amount representing interest —
8,555
Present value of net minimum lease payments
$447,584

$21,997

COVID-19 orders issued by retail regulators.

~~Total rental expenses~~The allowance for ~~all leases (excluding power purchase agreement operating leases, nuclear fuel leases,~~currently expected credit losses is calculated as the historical rate of customer write-offs multiplied by the current accounts receivable balance, taking into account the length of time the receivable balances have been outstanding. Although the rate of customer write-offs has historically experienced minimal variation, management monitors the current condition of individual customer accounts to manage collections and ~~the Grand Gulf and Waterford 3 sale and leaseback transactions) amounted to $47.8 million in 2018, $53.1 million in 2017, and $44.4 million in 2016.~~

As of December 31, 2018, the Registrant Subsidiaries had non-cancelable operating leases for equipment, buildings, vehicles, and fuel storage facilities with minimum lease payments as follows (excluding power purchase agreement operating leases, nuclear fuel leases, and the Grand Gulf lease obligation, all of which are discussed elsewhere):

~~Operating Leases~~

Year

Entergy
Arkansas

Entergy
Louisiana

Entergy
Mississippi

Entergy
New Orleans

Entergy
Texas
(In Thousands)
2019
$20,421

$25,970

$9,344

$2,493

$5,744
2020 13,918
21,681
8,763
2,349
4,431
2021 11,931
19,514
7,186
1,901
3,625
2022 9,458
15,756
5,675
1,314
2,218
2023 7,782
12,092
2,946
1,043
1,561
Years thereafter 23,297
22,003
4,417
2,323
2,726
Minimum lease payments
$86,807

$117,016

$38,331

$11,423

$20,305

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~~Notes to Financial Statements~~

~~Rental Expenses~~

Year

Entergy
Arkansas

Entergy
Louisiana

Entergy
Mississippi

Entergy
New Orleans

Entergy
Texas

System
Energy
(In Millions)
2018
$6.2

$20.2

$4.6

$2.5

$3.1

$1.9
2017
$7.5

$23.0

$5.6

$2.5

$3.4

$2.2
2016
$8.0

$17.8

$4.0

$0.9

$2.8

$1.6

~~In addition to the above rental~~ensure bad debt expense ~~railcar operating lease payments and oil tank facilities lease payments are~~is recorded in fuel expense in accordance with regulatory treatment. Railcar operating lease payments were $2.8 million in 2018, $4 million in 2017, and $3.4 million in 2016 for Entergy Arkansas and $0.4 million in 2018, $0.3 million in 2017, and $0.3 million in 2016 for Entergy Louisiana. Oil tank facilities lease payments for Entergy Mississippi were $0.1 million in 2018, $1.6 million in 2017, and $1.6 million in 2016.

On January 1, 2019, Entergy implemented ASU No. 2016-02, “Leases (Topic 842)” along with the practical expedients provided by ASU No. 2018-01, “Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842,” and ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements.” See Note 1 to the financial statements in the Form 10-K for further discussion of ASU No. 2016-02.

~~Power Purchase Agreements~~

~~As of December 31, 2018, Entergy Texas had~~ a power purchase agreement that is accounted for as an operating lease under the accounting standards. The lease payments are recovered in fuel expense in accordance with regulatory treatment. The minimum lease payments under the power purchase agreement are as follows:

Year Entergy Texas (a) Entergy
(In Thousands)
2019
$31,159

$31,159
2020 31,876
31,876
2021 32,609
32,609
2022 10,180
10,180
Minimum lease payments
$105,824

$105,824


~~(a)~~	Amounts reflect 100% of minimum payments. Under a separate contract, which expires May 31, 2022, Entergy Louisiana purchases 50% of the capacity and energy from the power purchase agreement from Entergy Texas.

~~Total capacity expense under the power purchase agreement accounted for as an operating lease at Entergy Texas was $30.5 million in 2018, $34.1 million in 2017, and $26.1 million in 2016.~~

~~Sales and Leaseback Transactions~~

~~Waterford 3 Lease Obligation~~

In 1989, in three separate but substantially identical transactions, Entergy Louisiana sold and leased back undivided interests in Waterford 3 for the aggregate sum of $353.6 million. The leases were scheduled to expire in July 2017. Entergy Louisiana was required to report the sale-leaseback as a financing transaction in its financial statements.

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In December 2015, Entergy Louisiana agreed to purchase the undivided interests in Waterford 3 that were previously being leased. The purchase was accomplished in a two-step transaction in which Entergy Louisiana first acquired the equity participant’s beneficial interest in the leased assets, followed by a termination of the leases and transfer of the leased assets to Entergy Louisiana when the outstanding lessor debt is paid.

In March 2016, Entergy Louisiana completed the first step in the two-step transaction by acquiring the equity participant’s beneficial interest in the leased assets. Entergy Louisiana paid $60 million in cash and $52 million through the issuance of a non-interest bearing collateral trust mortgage note, payable in installments through July 2017. Entergy Louisiana continued to make payments on the lessor debt that remained outstanding and which matured in January 2017. The combination of payments on the $52 million collateral trust mortgage note issued and the debt service on the lessor debt was equal in timing and amount to the remaining lease payments due from the closing of the transaction through the end of the lease term in July 2017.

Throughout the term of the lease, Entergy Louisiana had accrued a liability for the amount it expected to pay to retain the use of the undivided interests in Waterford 3 at the end of the lease term. Since the sale-leaseback transaction was accounted for as a financing transaction, the accrual of this liability was accounted for as additional interest expense. As of December 2015, the balance of this liability was $62.7 million. Upon entering into the agreement to purchase the equity participant’s beneficial interest in the undivided interests, Entergy Louisiana reduced the balance of the liability to $60 million, and recorded the $2.7 million difference as a credit to interest expense. The $60 million remaining liability was eliminated upon payment of the cash portion of the purchase price in 2016.

As of December 31, 2016, Entergy Louisiana, in connection with the Waterford 3 lease obligation, had a future minimum lease payment (reflecting an interest rate of 8.09%) of $57.5 million, including $2.3 million in interest, due January 2017 that was recorded as long-term debt.

~~In February 2017 the leases were terminated and the leased assets were conveyed to Entergy Louisiana.~~

~~Grand Gulf Lease Obligations~~

In 1988, in two separate but substantially identical transactions, System Energy sold and leased back undivided ownership interests in Grand Gulf for the aggregate sum of $500 million. The initial term of the leases expired in July 2015. System Energy renewed the leases in December 2013 for fair market value with renewal terms expiring in July 2036. At the end of the new lease renewal terms, System Energy has the option to repurchase the leased interests in Grand Gulf or renew the leases at fair market value. In the event that System Energy does not renew or purchase the interests, System Energy would surrender such interests and their associated entitlement of Grand Gulf’s capacity and energy.

System Energy is required to report the sale-leaseback as a financing transaction in its financial statements. For financial reporting purposes, System Energy expenses the interest portion of the lease obligation and the plant depreciation. However, operating revenues include the recovery of the lease payments because the transactions are accounted for as a sale and leaseback for ratemaking purposes. Consistent with a recommendation contained in a FERC audit report, System Energy initially recorded as a net regulatory asset the difference between the recovery of the lease payments and the amounts expensed for interest and depreciation and continues to record this difference as a regulatory asset or liability on an ongoing basis, resulting in a 0 net balance for the regulatory asset at the end of the lease term. The amount was a net regulatory liability of $55.6 million as of December 31, 2018 and 2017.

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~~Notes to Financial Statements~~

As of December 31, 2018, System Energy, in connection with the Grand Gulf sale and leaseback transactions, had future minimum lease payments that are recorded as long-term debt, as follows, which reflects the effect of the December 2013 renewal:

Amount
(In Thousands)

2019
$17,188
2020 17,188
2021 17,188
2022 17,188
2023 17,188
Years thereafter 223,437
Total 309,377
Less: Amount representing interest 275,025
Present value of net minimum lease payments
$34,352

~~NOTE 16. DISPOSITIONS (Entergy Corporation)~~

~~Vermont Yankee~~

As discussed in Note 14 to the financial statements in the Form 10-K, in January 2019, Entergy transferred 100% of the membership interests in Entergy Nuclear Vermont Yankee, LLC, the owner of the Vermont Yankee plant, to a subsidiary of NorthStar.

Entergy Nuclear Vermont Yankee had an outstanding credit facility that was used to pay for dry fuel storage costs. This credit facility was guaranteed by Entergy Corporation. Vermont Yankee Asset Retirement Management, LLC, a subsidiary of Entergy, assumed the obligations under the credit facility. At the closing of the transaction, NorthStar caused Entergy Nuclear Vermont Yankee, renamed NorthStar Vermont Yankee, to issue a $139 million promissory note to Vermont Yankee Asset Retirement Management. The amount of the note included the balance outstanding on the credit facility, as well as borrowing fees and costs incurred by Entergy in connection with the credit facility.

Upon closing of the transaction in January 2019, the Vermont Yankee decommissioning trust, along with the decommissioning obligation for the plant, was transferred to NorthStar. The Vermont Yankee spent fuel disposal contract was assigned to NorthStar as part of the transaction. The Vermont Yankee transaction resulted in Entergy generating a net deferred tax asset in January 2019. The deferred tax asset could not be fully realized by Entergy in the first quarter of 2019; accordingly, Entergy accrued a net tax expense of $29 million on the disposition of Vermont Yankee. The transaction also resulted in other charges of $5.4 million ($4.2 million net-of-tax) in the first quarter 2019.

~~Pilgrim~~

In July 2018, Entergy entered into a purchase and sale agreement with Holtec International to sell to a Holtec subsidiary 100% of the equity interests in Entergy Nuclear Generation Company, the owner of the Pilgrim plant. In August 2019 the NRC approved the sale of the plant to Holtec. The transaction closed in August 2019 for a purchase price of $1,000 (subject to adjustments for net liabilities and other amounts). The sale included the transfer of the Pilgrim nuclear decommissioning trust and obligation for spent fuel management and plant decommissioning. The transaction resulted in a loss of $191 million ($156 million net-of-tax) in the third quarter 2019. The disposition-date fair value of the nuclear decommissioning trust fund was approximately $1,030 million and the disposition-date fair

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~~Entergy Corporation and Subsidiaries~~

~~Notes to Financial Statements~~

~~value of the asset retirement obligation was $837 million. The transaction also included property, plant, and equipment with a net book value of 0, materials and supplies, and prepaid assets.~~

timely manner.

________________

In the opinion of the management of Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy, the accompanying unaudited financial statements contain all adjustments (consisting primarily of normal recurring accruals and reclassification of previously reported amounts to conform to current classifications) necessary for a fair statement of the results for the interim periods presented. Entergy’s business is subject to seasonal fluctuations, however, with peak periods occurring typically during the first and third quarters. The results for the interim periods presented should not be used as a basis for estimating results of operations for a full year.

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Part I, Item 3. Quantitative and Qualitative Disclosures About Market Risk

See “Market and Credit Risk Sensitive Instruments” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis.

Part I, Item 4. Controls and Procedures

Disclosure Controls and Procedures

As of September 30, ~~2019,~~2020, evaluations were performed under the supervision and with the participation of Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy (individually “Registrant” and collectively the “Registrants”) management, including their respective Principal Executive Officers (PEO) and Principal Financial Officers (PFO). The evaluations assessed the effectiveness of the Registrants’ disclosure controls and procedures. Based on the evaluations, each PEO and PFO has concluded that, as to the Registrant or Registrants for which they serve as PEO or PFO, the Registrant’s or Registrants’ disclosure controls and procedures are effective to ensure that information required to be disclosed by each Registrant in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms; and that the Registrant’s or Registrants’ disclosure controls and procedures are also effective in reasonably assuring that such information is accumulated and communicated to the Registrant’s or Registrants’ management, including their respective PEOs and PFOs, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls over Financial Reporting

Under the supervision and with the participation of each Registrants’ management, including its respective PEO and PFO, each Registrant evaluated changes in internal control over financial reporting that occurred during the quarter ended September 30, ~~2019~~2020 and found no change that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

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ENTERGY ARKANSAS, LLC AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

The COVID-19 Pandemic

See “The COVID-19 Pandemic” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of the COVID-19 pandemic.

Results of Operations

Net Income

Third Quarter ~~2019~~2020 Compared to Third Quarter ~~2018~~2019

Net income ~~increased $20.8~~decreased $13.9 million primarily due to ~~higher retail electric price and higher~~lower volume/weather, partially offset by ~~higher depreciation and amortization expenses and~~ lower other ~~income.~~operation and maintenance expenses.

Nine Months Ended September 30, ~~2019~~2020 Compared to Nine Months Ended September 30, ~~2018~~2019

Net income ~~decreased $8.6~~increased $1.5 million primarily due to ~~higher depreciation and amortization expenses, higher interest expense,~~ lower ~~volume/weather, and higher~~ other operation and maintenance expenses, ~~partially offset by~~a formula rate plan regulatory provision recorded in the first quarter 2019 to reflect the historical year netting adjustment, higher retail electric ~~price.~~price, and lower nuclear refueling outage expenses, substantially offset by lower volume/weather and higher depreciation and amortization expenses.

Operating Revenues

Third Quarter ~~2019~~2020 Compared to Third Quarter ~~2018~~2019

Following is an analysis of the change in operating revenues comparing the third quarter ~~2019~~2020 to the third quarter ~~2018:~~

2019:



		Amount
		(In Millions)
~~2018~~2019 operating revenues		$687.5	~~$568.4~~
Fuel, rider, and other revenues that do not significantly affect net income		~~(30.8~~(48.6)	)
Volume/weather		(40.8)
Retail electric price		2.6
Return of unprotected excess accumulated deferred income taxes to customers		~~111.4~~43.7
~~Retail electric price~~		~~22.9~~
~~Volume/weather~~	~~15.6~~
~~2019~~2020 operating revenues	$644.4	~~$687.5~~

Entergy Arkansas’s results include revenues from rate mechanisms designed to recover fuel, purchased power, and other costs such that the revenues and expenses associated with these items generally offset and do not affect net income. “Fuel, rider, and other revenues that do not significantly affect net income” includes the revenue variance associated with these items.

The volume/weather variance is primarily due to a decrease of 228 GWh, or 4%, in billed electricity usage, including decreased commercial and industrial usage as a result of the COVID-19 pandemic, and the effect of less favorable weather on residential sales, partially offset by an increase in residential usage as a result of the

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COVID-19 pandemic. Entergy Arkansas continues to expect declines in sales volume during 2020 due to the COVID-19 pandemic, especially in the commercial and industrial customer classes. See “The COVID-19 Pandemic” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the COVID-19 pandemic.

The retail electric price variance is primarily due to an increase in formula rate plan rates effective with the first billing cycle of January 2020. See Note 2 to the financial statements in the Form 10-K for further discussion of the formula rate plan filing.

The return of unprotected excess accumulated deferred income taxes to customers resulted from the return of unprotected excess accumulated deferred income taxes through a tax adjustment rider beginning in April 2018. In third quarter ~~2019,~~2020, $2.3 million was collected from customers as a result of a true-up to the tax adjustment rider as compared to $41.4 million ~~was~~ returned to customers ~~as compared to $152.8 million~~ in third quarter ~~2018.~~2019. There is no effect on net income as the reduction in operating revenues in each period was offset by a reduction in income tax expense. See Note 2 to the financial statements in the Form 10-K for further discussion of regulatory activity regarding the Tax Cuts and Jobs Act.

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The retail electric price variance is primarily due to an increase in formula rate plan rates effective with the first billing cycle of January 2019, as approved by the APSC. See Note 2 to the financial statements in the Form 10-K for further discussion of the formula rate plan filing.

The volume/weather variance is primarily due to an increase in usage during the unbilled sales period, partially offset by a decrease of 302 GWh, or 5%, in billed electricity usage, including a decrease in industrial usage primarily due to a decrease in small industrial sales.

Nine Months Ended September 30, ~~2019~~2020 Compared to Nine Months Ended September 30, ~~2018~~2019

Following is an analysis of the change in operating revenues comparing the nine months ended September 30, ~~2019~~2020 to the nine months ended September 30, ~~2018:~~

2019:



		Amount
		(In Millions)
~~2018~~2019 operating revenues		$1,776.3	~~$1,614.0~~
Fuel, rider, and other revenues that do not significantly affect net income		~~(29.8~~(182.5)	)
Volume/weather		(74.1)
Retail electric price		9.2
Return of unprotected excess accumulated deferred income taxes to customers		~~161.7~~89.2
~~Retail electric price~~		~~50.6~~
~~Volume/weather~~	~~(20.2~~	)
~~2019~~2020 operating revenues	$1,618.1	~~$1,776.3~~

The volume/weather variance is primarily due to a decrease of 754 GWh, or 5%, in billed electricity usage, including decreased commercial and industrial usage as a result of the COVID-19 pandemic, and the effect of less favorable weather on residential sales, partially offset by an increase in residential usage as a result of the COVID-19 pandemic. Entergy Arkansas continues to expect declines in sales volume during 2020 due to the COVID-19 pandemic, especially in the commercial and industrial customer classes. See “The COVID-19 Pandemic” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the COVID-19 pandemic.

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The return of unprotected excess accumulated deferred income taxes to customers resulted from the return of unprotected excess accumulated deferred income taxes through a tax adjustment rider beginning in April 2018. In the nine months ended September 30, ~~2019, $98.7~~2020, $9.5 million was returned to customers as compared to ~~$260.4~~$98.7 million in the nine months ended September 30, ~~2018.~~2019. There is no effect on net income as the reduction in operating revenues in each period was offset by a reduction in income tax expense. See Note 2 to the financial statements in the Form 10-K for further discussion of regulatory activity regarding the Tax Cuts and Jobs Act.

~~The retail electric price variance is~~Other Income Statement Variances

Third Quarter 2020 Compared to Third Quarter 2019

Other operation and maintenance expenses decreased primarily due to:

•a decrease of $5 million in non-nuclear generation expenses primarily due to ~~an increase~~lower long-term service agreement expenses;

•a decrease of $3.9 million in nuclear generation expenses primarily due to lower nuclear labor costs, including contract labor, and a lower scope of work performed in 2020 as compared to 2019, in part as a result of the COVID-19 pandemic;

•the deferral in third quarter 2020 of $3 million in estimated incremental bad debt expenses resulting from the COVID-19 pandemic that were incurred in second quarter 2020; and

•a decrease of $2.2 million primarily due to contract costs in 2019 related to initiatives to explore new customer products and services.

Other regulatory charges (credits) in the third quarter 2020 included $13.6 million in amortization of the 2018 historical year netting adjustment reflected in the 2019 formula rate plan ~~rates effective with the first billing cycle of January 2019, as approved by the APSC.~~filing. See Note 2 to the financial statements in the Form 10-K for ~~further~~ discussion of the 2019 formula rate plan filing.

The volume/weather variance is primarily due to a decrease of 719 GWh, or 4%, in billed electricity usage, including the effect of less favorable weather on residential and commercial sales and a decrease in industrial usage. The decrease in industrial usage is primarily due to a decrease in small industrial sales.

~~Other Income Statement Variances~~

~~Third Quarter 2019 Compared to Third Quarter 2018~~

Depreciation and amortization expenses increased primarily due to additions to plant in service.

Other income decreased primarily due to changes in decommissioning trust fund investment activity.

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~~Interest expense increased primarily due to the issuance of $350 million of 4.20% Series mortgage bonds in March 2019.~~

Nine Months Ended September 30, ~~2019~~2020 Compared to Nine Months Ended September 30, ~~2018~~2019

Nuclear refueling outage expenses decreased primarily due to the amortization of lower costs associated with the most recent outages as compared to previous outages.

Other operation and maintenance expenses ~~increased~~decreased primarily due to:


•	~~an increase of $5.9 million due to~~ ~~spending on customer initiatives to explore new technologies and services and continuous customer improvement;~~

~~an increase~~•a decrease of ~~$5.7~~$22.2 million in ~~information technology costs primarily due to higher costs related to improved infrastructure, enhanced security, and upgrades and maintenance;~~

an increase of $3.8 million in distribution operations and asset management costs primarily due to higher advanced metering customer education costs and higher contract costs for meter reading services;

~~an increase of $3.3 million in fossil-fueled~~non-nuclear generation expenses primarily due to lower long-term service agreement expenses and a ~~higher~~lower scope of work performed during plant outages in ~~2019~~2020 as compared to the same period in ~~2018; and~~2019, including a delay in plant outages as a result of the COVID-19 pandemic;

~~lower nuclear insurance refunds of $3 million.~~

~~The increase was offset by~~ •a decrease of ~~$12~~$15 million in nuclear generation expenses primarily due to lower nuclear labor costs, including contract labor, in part as a ~~lower scope~~result of ~~work performed in 2019 as compared to~~ the ~~same period in 2018~~COVID-19 pandemic; and ~~a decrease~~

•higher nuclear insurance refunds of ~~$5.9 million in energy efficiency costs due to the timing of recovery from customers.~~$7.8 million.

Depreciation and amortization expenses increased primarily due to additions to plant in service.

Other regulatory credits for the nine months ended September 30, 2020 included $35.8 million in amortization of the 2018 historical year netting adjustment reflected in the 2019 formula rate plan filing. Other regulatory credits for the nine months ended September 30, 2019 included an additional provision of $11.5 million to reflect the current estimate of the historical year netting adjustment that was to be included in the 2019 formula

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rate plan filing. See Note 2 to the financial statements in the Form 10-K for discussion of the 2019 formula rate plan filing.

Income Taxes

The effective income ~~decreased~~tax rate was 26.2% for the third quarter 2020. The difference in the effective income tax rate for the third quarter 2020 versus the federal statutory rate of 21% was primarily due to ~~changes~~state income taxes, partially offset by certain book and tax differences related to utility plant items. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in ~~decommissioning trust fund investment activity.~~the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act.

~~Interest expense increased~~The effective income tax rate was 20.2% for the nine months ended September 30, 2020. The difference in the effective income tax rate for the nine months ended September 30, 2020 versus the federal statutory rate of 21% was primarily due to the ~~issuance~~amortization of ~~$350 million~~excess accumulated deferred income taxes, certain book and tax differences related to utility plant items, and permanent differences related to income tax deductions for stock-based compensation, partially offset by state income taxes. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of ~~4.20% Series mortgage bonds in March 2019~~the effects and regulatory activity regarding the ~~issuance~~Tax Cuts and Jobs Act. See Note 10 to the financial statements herein for discussion of ~~$250 million of 4.00% Series mortgage bonds in May 2018.~~the income tax deductions for stock-based compensation.

~~Income Taxes~~

The effective income tax rates were 4.5% for the third quarter 2019 and (13.1%) for the nine months ended September 30, 2019. The differences in the effective income tax rates for the third quarter 2019 and the nine months ended September 30, 2019 versus the federal statutory rate of 21% were primarily due to the amortization of excess accumulated deferred income taxes and certain book and tax differences related to utility plant items, partially offset by state income taxes. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act.

The effective income tax rate was (631.3%) for the third quarter 2018. The difference in the effective income tax rate for the third quarter 2018 versus the federal statutory rate of 21% was primarily due to the amortization of excess accumulated deferred income taxes and certain book and tax differences related to utility plant items, partially offset by state income taxes and the provision for uncertain tax positions. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act.

The effective income tax rate was (286.4%) for the nine months ended September 30, 2018. The difference in the effective income tax rate for the nine months ended September 30, 2018 versus the federal statutory rate of 21% was primarily due to the amortization of excess accumulated deferred income taxes and certain book and tax differences related to utility plant items, partially offset by state income taxes. See Note 10 to the financial statements herein and

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~~Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act.~~

Income Tax Legislation

See the “Income Tax Legislation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis in the Form 10-K for a discussion of the Tax Cuts and Jobs Act, the federal income tax legislation enacted in December 2017. Note 3 to the financial statements in the Form 10-K contains additional discussion of the effect of the Tax Act on 2019, 2018, and 2017 results of operations and financial position, the provisions of the Tax Act, and the uncertainties associated with accounting for the Tax Act, and Note 10 to the financial statements herein contains updates to that discussion. Note 2 to the financial statements in the Form 10-K contains a discussion of the regulatory proceedings that have considered the effects of the Tax Act.

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Liquidity and Capital Resources

Cash Flow

Cash flows for the nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 were as follows:


	2020	2019
	(In Thousands)
Cash and cash equivalents at beginning of period	$3,519	$119

Cash flow provided by (used in):
Operating activities	511,952	576,612
Investing activities	(634,739)	(506,676)
Financing activities	717,172	7,014
Net increase in cash and cash equivalents	594,385	76,950

Cash and cash equivalents at end of period	$597,904	$77,069

2019 2018
(In Thousands)
Cash and cash equivalents at beginning of period
$119

$6,216

Cash flow provided by (used in):

Operating activities 576,612
362,585
Investing activities (506,676 ) (574,337 )
Financing activities 7,014
427,318
Net increase in cash and cash equivalents 76,950
215,566

Cash and cash equivalents at end of period
$77,069

$221,782

Operating Activities

Net cash flow provided by operating activities ~~increased $214~~decreased $64.7 million for the nine months ended September 30, ~~2019~~2020 compared to the nine months ended September 30, ~~2018~~2019 primarily due to:

•the timing of recovery of fuel and purchased power costs;

•an increase of $24.8 million in pension contributions in 2020. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K and Note 6 to the financial statements herein for a discussion of qualified pension and other postretirement benefits funding; and

•an increase of $22.8 million in spending on nuclear refueling outages in 2020.

The decrease was partially offset by:

•a decrease in the return of unprotected excess accumulated deferred income taxes to customers in ~~2019~~2020 as compared to the same period in ~~2018.~~2019. See Note 2 to the financial statements ~~herein and~~ in the Form 10-K for further discussion of regulatory activity regarding the Tax Cuts and Jobs Act; and

~~a decrease of $33.9~~•$25 million in ~~spending on~~proceeds received from the DOE in 2020 resulting from litigation regarding spent nuclear ~~refueling outages~~fuel storage costs that were previously expensed. See Note 8 to the financial statements in ~~2019;~~


•	~~a decrease of $33.8 million in pension contributions in 2019. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS -~~ ~~Critical Accounting Estimates” in the Form 10-K and Note 6 to the financial statements herein for a discussion of qualified pension and other postretirement benefits funding; and~~

the ~~timing~~Form 10-K for discussion of ~~recovery of~~the spent nuclear fuel ~~and purchased power costs.~~litigation.

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Investing Activities

Net cash flow used in investing activities ~~decreased $67.7~~increased $128.1 million for the nine months ended September 30, ~~2019~~2020 compared to the nine months ended September 30, ~~2018~~2019 primarily due to:

~~a decrease~~•an increase of ~~$43.3~~$71.2 million in storm spending;

•money pool activity;

•an increase of $38.1 million as a result of fluctuations in nuclear fuel activity because of variations from year to year in the timing and pricing of fuel reload requirements in the Utility business, material and service deliveries, and the timing of cash payments during the nuclear fuel cycle;

~~a decrease~~•an increase of ~~$42.6~~$30.8 million in nuclear construction expenditures primarily as a result of work performed in ~~2018~~2020 on various ANO ~~1 and~~ 2 outage projects;

~~a decrease~~

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•an increase of $27 million in ~~fossil-fueled~~non-nuclear generation construction ~~expenditures due to a decrease in spending on various fossil-fueled generation projects in 2019 as compared to the same period in 2018;~~

~~a decrease of $10.8 million in transmission construction expenditures due to a lower scope of work performed in 2019 on various projects; and~~

~~a decrease of $11.7 million in information technology capital~~ expenditures primarily due to ~~lower~~increased spending on various projects in ~~2019 on critical infrastructure protection.~~2020; and

~~The decrease was partially offset by~~ •an increase of ~~$39.3~~$18.7 million in distribution construction expenditures primarily due to investment in the reliability and infrastructure of Entergy Arkansas’s distribution system, including increased spending on advanced metering ~~infrastructure, and an~~infrastructure.

The increase ~~of $13.3~~was partially offset by:

•$55 million in ~~storm spending.~~proceeds received from the DOE in 2020 resulting from litigation regarding spent nuclear fuel storage costs that were previously capitalized. See Note 8 to the financial statements in the Form 10-K for discussion of the spent nuclear fuel litigation; and

•a decrease of $44.1 million in transmission construction expenditures primarily due to a lower scope of work performed in 2020 as compared to 2019.

Increases in Entergy Arkansas’s receivable from the money pool are a use of cash flow, and Entergy Arkansas’s receivable from the money pool increased by $51.7 million for the nine months ended September 30, 2020 compared to increasing by $6.9 million for the nine months ended September 30, 2019. The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings.

Financing Activities

Net cash flow provided by financing activities ~~decreased $420.3~~increased $710.2 million for the nine months ended September 30, ~~2019~~2020 compared to the nine months ended September 30, ~~2018~~2019 primarily due to:

~~a $350 million capital contribution from Entergy Corporation in 2018 in anticipation~~•issuances of ~~the return of unprotected excess accumulated deferred income taxes to customers and upcoming planned capital investments;~~

~~the issuance of $250~~$100 million of 4.00% Series mortgage bonds in ~~May 2018;~~March 2020 and $675 million of 2.65% Series mortgage bonds in September 2020;

•money pool activity;

•a decrease of $90 million in common equity ~~distribution of $115 million~~distributions in ~~2019~~2020 in order to maintain ~~the targeted~~Entergy Arkansas’s capital structure; and

~~net repayments~~•a decrease of ~~long-term borrowings of $29.3~~$23.3 million in ~~2019 compared to~~ net long-term ~~borrowings of $45.5 million~~repayments in ~~2018~~2020 on the Entergy Arkansas nuclear fuel company variable interest entity credit ~~facility; and~~facility.

~~money pool activity.~~

The ~~decrease~~increase was partially offset by the issuance of $350 million of 4.20% Series mortgage bonds in March ~~2019 and net repayments of short-term borrowings of $50 million on the Entergy Arkansas nuclear fuel company variable interest entity credit facility in 2018.~~2019.

Decreases in Entergy Arkansas’s payable to the money pool are a use of cash flow, and Entergy Arkansas’s payable to the money pool decreased by ~~$182.7~~$21.6 million ~~in 2019~~for the nine months ended September 30, 2020 compared to decreasing by ~~$166.1~~$182.7 million ~~in 2018. The money pool is an inter-company borrowing arrangement designed to reduce~~for the ~~Utility subsidiaries’ need for external short-term borrowings.~~nine months ended September 30, 2019.

See Note 4 to the financial statements herein and Note 5 to the financial statements in the Form 10-K for more details on long-term debt.

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Capital Structure

Entergy Arkansas’s debt to capital ratio is shown in the following table. The increase in the debt to capital ratio is primarily due to the issuance of ~~$350 million of mortgage~~long-term debt in 2020.


	September 30, 2020		December 31, 2019
Debt to capital	56.2	%	53.0	%
Effect of excluding the securitization bonds	—	%	—	%
Debt to capital, excluding securitization bonds (a)	56.2	%	53.0	%
Effect of subtracting cash	(3.7	%)	—	%
Net debt to net capital, excluding securitization bonds (a)	52.5	%	53.0	%

(a)Calculation excludes the securitization bonds, ~~in March 2019.~~which are non-recourse to Entergy Arkansas.

September 30,
2019

December 31,
2018
Debt to capital 53.3 % 52.0 %
Effect of excluding the securitization bonds (0.1 %) (0.2 %)
Debt to capital, excluding securitization bonds (a) 53.2 % 51.8 %
Effect of subtracting cash (0.5 %) — %
Net debt to net capital, excluding securitization bonds (a) 52.7 % 51.8 %


~~(a)~~	~~Calculation excludes the securitization bonds, which are non-recourse to Entergy Arkansas.~~

Net debt consists of debt less cash and cash equivalents. Debt consists of short-term borrowings, ~~financing~~finance lease obligations, and long-term debt, including the currently maturing portion. Capital consists of debt and equity. Net capital consists of capital less cash and cash equivalents. Entergy Arkansas uses the debt to capital ratios excluding securitization bonds in analyzing its financial condition and believes they provide useful information to its investors and creditors in evaluating Entergy Arkansas’s financial condition because the securitization bonds are non-recourse to Entergy Arkansas, as more fully described in Note 5 to the financial statements in the Form 10-K. Entergy Arkansas also uses the net debt to net capital ratio excluding securitization bonds in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Arkansas’s financial condition because net debt indicates Entergy Arkansas’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.

Uses and Sources of Capital

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources” in the Form 10-K for a discussion of Entergy Arkansas’s uses and sources of capital. Following are updates to the information provided in the Form 10-K.

Entergy Arkansas has experienced negative changes during 2020 to its customer payment patterns and its operating cash flow activity due to the COVID-19 pandemic, and expects them to continue throughout 2020. See “The COVID-19 Pandemic” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the COVID-19 pandemic. Despite the effects of the pandemic on financial markets, Entergy Arkansas issued $100 million and $675 million of long-term mortgage bonds in March 2020 and September 2020, respectively, and renewed its short-term credit facility. Additional discussion of Entergy Arkansas’s liquidity and capital resources follows.

Entergy Arkansas is developing its capital investment plan for ~~2020~~2021 through ~~2022~~2023 and currently anticipates making $2.5 billion in capital investments during that period.The preliminary estimate includes specific investments such as the Searcy Solar Facility and Walnut Bend Solar Facility; transmission projects to enhance reliability, reduce congestion, and enable economic growth; distribution spending to enhance reliability and improve service to customers, including advanced meters and related investments; resource planning, including potential generation projects; system improvements; investments in ANO 1 and 2; software and security; and other investments.Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital.

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Entergy Arkansas’s receivables from or (payables to) the money pool were as follows:


September 30, 2020	December 31, 2019	September 30, 2019	December 31, 2018
(In Thousands)
$51,697	($21,634)	$6,896	($182,738)

September 30,
2019

December 31,
2018

September 30,
2018

December 31,
2017
(In Thousands)
$6,896 ($182,738) $13,421 ($166,137)

See Note 4 to the financial statements in the Form 10-K for a description of the money pool.

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Entergy Arkansas has a credit facility in the amount of $150 million scheduled to expire in September 2024. Entergy Arkansas also has a ~~$20~~$25 million credit facility scheduled to expire in April ~~2020.~~2021. The $150 million credit facility includes fronting commitments for the issuance of letters of credit against $5 million of the borrowing capacity of the facility. As of September 30, ~~2019,~~2020, no cash borrowings and no letters of credit were outstanding under the credit facilities. In addition, Entergy Arkansas is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO. As of September 30, ~~2019,~~2020, a $1$3 million letter of credit was outstanding under Entergy Arkansas’s uncommitted letter of credit facility. See Note 4 to the financial statements herein for additional discussion of the credit facilities.

The Entergy Arkansas nuclear fuel company variable interest entity has a credit facility in the amount of $80 million scheduled to expire in September ~~2021.~~2022. As of September 30, ~~2019, $30.3~~2020, $9.1 million in loans were outstanding under the credit facility for the Entergy Arkansas nuclear fuel company variable interest entity. See Note 4 to the financial statements herein for additional discussion of the nuclear fuel company variable interest entity credit facility.

Searcy Solar Facility

~~In March 2019, Entergy Arkansas announced that it signed an agreement for~~As discussed in the ~~purchase of an approximately 100 MW to-be-constructed solar energy facility that will be sited on approximately 800 acres~~Form 10-K, in White County near Searcy, Arkansas. The purchase is contingent upon, among other things, obtaining necessary approvals from applicable federal and state regulatory and permitting agencies. The project will be constructed by a subsidiary of NextEra Energy Resources. Entergy Arkansas will purchase the facility upon completion and after the other purchase contingencies have been met. Closing is expected to occur by the end of 2021. In May 2019, Entergy Arkansas filed a petition with the APSC seeking a finding that the ~~transaction~~purchase of the Searcy Solar Facility was in the public interest. In April 2020 the APSC issued an order approving Entergy Arkansas’s acquisition of the Searcy Solar facility as being in the public interest, but declined to approve Entergy Arkansas’s preferred cost recovery rider mechanism, finding instead, based on the particular facts and circumstances presented, that the formula rate plan rider was a sufficient recovery mechanism for this resource.

Walnut Bend Solar Facility

In October 2020, Entergy Arkansas filed a petition with the APSC seeking a finding that the purchase of the 100 MW Walnut Bend Solar Facility is in the public interest and requesting all necessary approvals. In September 2019 other parties filed testimony largely supporting the resource acquisition but disputing Entergy Arkansas’s proposed method of cost recovery.interest. Entergy Arkansas ~~filed its rebuttal testimony in October 2019. A hearing is scheduled in January 2020.~~ requested a decision by the APSC within 180 days of the filing and primarily requests cost recovery through the formula rate plan rider.

State and Local Rate Regulation and Fuel-Cost Recovery

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – State and Local Rate Regulation and Fuel-Cost Recovery” in the Form 10-K for a discussion of state and local rate regulation and fuel-cost recovery. The following are updates to that discussion.

Retail Rates

~~2019~~2020 Formula Rate Plan Filing

116



Commission File Number	Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number, and IRS Employer Identification No.	Commission File Number	Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number, and IRS Employer Identification No.

1-11299	ENTERGY CORPORATION	1-35747	ENTERGY NEW ORLEANS, LLC
	(a Delaware corporation) 639 Loyola Avenue New Orleans, Louisiana 70113 Telephone (504) 576-4000		(a Texas limited liability company) 1600 Perdido Street New Orleans, Louisiana 70112 Telephone (504) 670-3700
	72-1229752		82-2212934


1-10764	ENTERGY ARKANSAS, LLC	1-34360	ENTERGY TEXAS, INC.
	(a Texas limited liability company) 425 West Capitol Avenue Little Rock, Arkansas 72201 Telephone (501) 377-4000		(a Texas corporation) 10055 Grogans Mill Road The Woodlands, Texas 77380 Telephone (409) 981-2000
	83-1918668		61-1435798


1-32718	ENTERGY LOUISIANA, LLC	1-09067	SYSTEM ENERGY RESOURCES, INC.
	(a Texas limited liability company) 4809 Jefferson Highway Jefferson, Louisiana 70121 Telephone (504) 576-4000		(an Arkansas corporation) 1340 Echelon Parkway Jackson, Mississippi 39213 Telephone (601) 368-5000
	47-4469646		72-0752777


1-31508	ENTERGY MISSISSIPPI, LLC
	(a Texas limited liability company) 308 East Pearl Street Jackson, Mississippi 39201 Telephone (601) 368-5000
	83-1950019


Registrant			Title of Class			Trading Symbol		Name of Each Exchange on Which Registered

~~Registrant~~			~~Title of Class~~	~~Trading~~ ~~Symbol~~	~~Name of Each Exchange~~ ~~on Which Registered~~

Entergy Corporation	Common Stock, $0.01 Par Value			ETR			New York Stock Exchange
			Common Stock, $0.01 Par Value			ETR		NYSE Chicago, Inc.

Entergy Arkansas, LLC			~~Mortgage Bonds, 4.90% Series due December 2052~~	~~EAB~~	~~New York Stock Exchange~~
	~~Mortgage Bonds, 4.75% Series due June 2063~~	~~EAE~~	~~New York Stock Exchange~~
	Mortgage Bonds, 4.875% Series due September 2066			EAI			New York Stock Exchange

Entergy Louisiana, LLC			Mortgage Bonds, 5.25% Series due July 2052			ELJ		New York Stock Exchange
			Mortgage Bonds, 4.70% Series due June 2063			ELU		New York Stock Exchange
			Mortgage Bonds, 4.875% Series due September 2066			ELC		New York Stock Exchange

Entergy Mississippi, LLC			Mortgage Bonds, 4.90% Series due October 2066			EMP		New York Stock Exchange

Entergy New Orleans, LLC			Mortgage Bonds, 5.0% Series due December 2052			ENJ		New York Stock Exchange
			Mortgage Bonds, 5.50% Series due April 2066			ENO		New York Stock Exchange

Entergy Texas, Inc.			~~Mortgage Bonds, 5.625% Series due June 2064~~	~~EZT~~	~~New York Stock Exchange~~
	5.375% Series A Preferred Stock, Cumulative, No Par Value (Liquidation Value $25 Per Share)			ETI/PR			New York Stock Exchange



Common Stock Outstanding		Outstanding at October ~~31, 2019~~30, 2020
Entergy Corporation	($0.01 par value)	~~199,102,083~~200,232,522


		Page Number

		~~Page Number~~

Forward-looking ~~information~~Information	iii
Definitions		vi

Part I. Financial Information

Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis		1
Consolidated Income Statements		2225
Consolidated Statements of Comprehensive Income		2327
Consolidated Statements of Cash Flows		2428
Consolidated Balance Sheets		2630
Consolidated Statements of Changes in Equity		2832
Selected Operating Results		3034
Notes to Financial Statements
Note 1. Commitments and Contingencies		3135
Note 2. Rate and Regulatory Matters		3236
Note 3. Equity		4250
Note 4. Revolving Credit Facilities, Lines of Credit, Short-term Borrowings, and Long-term Debt		5056
Note 5. Stock-based Compensation		5461
Note 6. Retirement and Other Postretirement Benefits		5663
Note 7. Business Segment Information		6371
Note 8. Risk Management and Fair Values		6573
Note 9. Decommissioning Trust Funds		8692
Note 10. Income Taxes		93100
Note 11. Property, Plant, and Equipment		95101
Note 12. Variable Interest Entities		95102
Note 13. Revenue ~~Recognition~~		96103
~~Note 14. Asset Retirement Obligations~~		99
~~Note 15. Leases~~	~~100~~
~~Note 16. Dispositions~~	~~108~~
Item 3. Quantitative and Qualitative Disclosures About Market Risk	~~109~~108
Item 4. Controls and Procedures		~~109~~108
Entergy Arkansas, LLC and Subsidiaries
Management’s Financial Discussion and Analysis		~~110~~109
Consolidated Income Statements		~~119~~120
Consolidated Statements of Cash Flows		121
Consolidated Balance Sheets		122
Consolidated Statements of Changes in Member’s Equity		124
Selected Operating Results		125
Entergy Louisiana, LLC and Subsidiaries
Management’s Financial Discussion and Analysis		126
Consolidated Income Statements		~~136~~138


		Page Number

		~~Page Number~~

Consolidated Statements of Comprehensive Income	~~137~~139
Consolidated Statements of Cash Flows		~~139~~141
Consolidated Balance Sheets		~~140~~142
Consolidated Statements of Changes in Equity		~~142~~144
Selected Operating Results		~~143~~145
Entergy Mississippi, LLC
Management’s Financial Discussion and Analysis		~~144~~146
Income Statements		~~153~~155
Statements of Cash Flows		~~155~~157
Balance Sheets		~~156~~158
Statements of Changes in Member’s Equity		~~158~~160
Selected Operating Results		~~159~~161
Entergy New Orleans, LLC and Subsidiaries
Management’s Financial Discussion and Analysis		~~160~~162
Consolidated Income Statements		~~168~~172
Consolidated Statements of Cash Flows		~~169~~173
Consolidated Balance Sheets		~~170~~174
Consolidated Statements of Changes in Member’s Equity		~~172~~176
Selected Operating Results		~~173~~177
Entergy Texas, Inc. and Subsidiaries
Management’s Financial Discussion and Analysis		~~174~~178
Consolidated Income Statements		~~182~~188
Consolidated Statements of Cash Flows		~~183~~189
Consolidated Balance Sheets		~~184~~190
Consolidated Statements of Changes in Equity		~~186~~192
Selected Operating Results		~~187~~193
System Energy Resources, Inc.
Management’s Financial Discussion and Analysis		~~188~~194
Income Statements		~~194~~203
Statements of Cash Flows		~~195~~205
Balance Sheets		~~196~~206
Statements of Changes in Common Equity		~~198~~208

Part II. Other Information

Item 1. Legal Proceedings		~~199~~209
Item 1A. Risk Factors		~~199~~209
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		~~199~~210
Item 5. Other Information		~~200~~210
Item 6. Exhibits		~~201~~212
Signature		~~204~~214



(Mark One)
☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

			For the transition period from ____________ to ____________



Abbreviation or Acronym		Term

ALJ		Administrative Law Judge
ANO 1 and 2		Units 1 and 2 of Arkansas Nuclear One (nuclear), owned by Entergy Arkansas
APSC		Arkansas Public Service Commission
ASU		Accounting Standards Update issued by the FASB
Board		Board of Directors of Entergy Corporation
Cajun		Cajun Electric Power Cooperative, Inc.
capacity factor		Actual plant output divided by maximum potential plant output for the period
City Council		Council of the City of New Orleans, Louisiana
COVID-19		The novel coronavirus disease declared a pandemic by the World Health Organization and the Centers for Disease Control and Prevention in March 2020
D.C. Circuit		U.S. Court of Appeals for the District of Columbia Circuit
DOE		United States Department of Energy
Entergy		Entergy Corporation and its direct and indirect subsidiaries
Entergy Corporation		Entergy Corporation, a Delaware corporation
Entergy Gulf States, Inc.		Predecessor company for financial reporting purposes to Entergy Gulf States Louisiana that included the assets and business operations of both Entergy Gulf States Louisiana and Entergy Texas
Entergy Gulf States Louisiana		Entergy Gulf States Louisiana, L.L.C., a Louisiana limited liability company formally created as part of the jurisdictional separation of Entergy Gulf States, Inc. and the successor company to Entergy Gulf States, Inc. for financial reporting purposes. The term is also used to refer to the Louisiana jurisdictional business of Entergy Gulf States, Inc., as the context requires. Effective October 1, 2015, the business of Entergy Gulf States Louisiana was combined with Entergy Louisiana.
Entergy Louisiana		Entergy Louisiana, LLC, a Texas limited liability company formally created as part of the combination of Entergy Gulf States Louisiana and the company formerly known as Entergy Louisiana, LLC (Old Entergy Louisiana) into a single public utility company and the successor to Old Entergy Louisiana for financial reporting purposes.
Entergy Texas		Entergy Texas, Inc., a Texas corporation formally created as part of the jurisdictional separation of Entergy Gulf States, Inc. The term is also used to refer to the Texas jurisdictional business of Entergy Gulf States, Inc., as the context requires.
Entergy Wholesale Commodities		Entergy’s non-utility business segment primarily comprised of the ownership, operation, and decommissioning of nuclear power plants, the ownership of interests in non-nuclear power plants, and the sale of the electric power produced by its operating power plants to wholesale customers
EPA		United States Environmental Protection Agency
FASB		Financial Accounting Standards Board
FERC		Federal Energy Regulatory Commission
~~FitzPatrick~~		~~James A. FitzPatrick Nuclear Power Plant (nuclear), previously owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment, which was sold in March 2017~~
Form 10-K	Annual Report on Form 10-K for the calendar year ended December 31, ~~2018~~2019 filed with the SEC by Entergy Corporation and its Registrant Subsidiaries
Grand Gulf		Unit No. 1 of Grand Gulf Nuclear Station (nuclear), 90% owned or leased by System Energy
GWh		Gigawatt-hour(s), which equals one million kilowatt-hours
Independence		Independence Steam Electric Station (coal), owned 16% by Entergy Arkansas, 25% by Entergy Mississippi, and 7% by Entergy Power, LLC



Abbreviation or Acronym		Term

Indian Point 2		Unit 2 of Indian Point Energy Center (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment, which ceased power production in April 2020
Indian Point 3		Unit 3 of Indian Point Energy Center (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
IRS		Internal Revenue Service
ISO		Independent System Operator
kW		Kilowatt, which equals one thousand watts
kWh		Kilowatt-hour(s)
LPSC		Louisiana Public Service Commission
MISO		Midcontinent Independent System Operator, Inc., a regional transmission organization
MMBtu		One million British Thermal Units
MPSC		Mississippi Public Service Commission
MW		Megawatt(s), which equals one thousand kilowatts
MWh		Megawatt-hour(s)
Nelson Unit 6		Unit No. 6 (coal) of the Nelson Steam Electric Generating Station, 70% of which is co-owned by Entergy Louisiana (57.5%) and Entergy Texas (42.5%) and 10.9% of which is owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
Net debt to net capital ratio		Gross debt less cash and cash equivalents divided by total capitalization less cash and cash equivalents
Net MW in operation		Installed capacity owned and operated
NRC		Nuclear Regulatory Commission
~~NYPA~~	~~New York Power Authority~~
Palisades		Palisades Nuclear Plant (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
Parent & Other		The portions of Entergy not included in the Utility or Entergy Wholesale Commodities segments, primarily consisting of the activities of the parent company, Entergy Corporation
Pilgrim		Pilgrim Nuclear Power Station (nuclear), previously owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment, which ceased power production in May 2019 and was sold in August 2019
PPA		Purchased power agreement or power purchase agreement
PUCT		Public Utility Commission of Texas
Registrant Subsidiaries		Entergy Arkansas, LLC, Entergy Louisiana, LLC, Entergy Mississippi, LLC, Entergy New Orleans, LLC, Entergy Texas, Inc., and System Energy Resources, Inc.
River Bend		River Bend Station (nuclear), owned by Entergy Louisiana
SEC		Securities and Exchange Commission
System Agreement		Agreement, effective January 1, 1983, as modified, among the Utility operating companies relating to the sharing of generating capacity and other power resources. The agreement terminated effective August 2016.
System Energy		System Energy Resources, Inc.
TWh		Terawatt-hour(s), which equals one billion kilowatt-hours


Abbreviation or Acronym			Term

Unit Power Sales Agreement			Agreement, dated as of June 10, 1982, as amended and approved by the FERC, among Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, relating to the sale of capacity and energy from System Energy’s share of Grand Gulf
Utility			Entergy’s business segment that generates, transmits, distributes, and sells electric power, with a small amount of natural gas distribution
Utility operating companies			Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas



~~Abbreviation or Acronym~~	~~Term~~

Vermont Yankee		Vermont Yankee Nuclear Power Station (nuclear), previously owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment, which ceased power production in December 2014 and was disposed of in January 2019
Waterford 3		Unit No. 3 (nuclear) of the Waterford Steam Electric Station, owned by Entergy Louisiana
weather-adjusted usage		Electric usage excluding the effects of deviations from normal weather
White Bluff		White Bluff Steam Electric Generating Station, 57% owned by Entergy Arkansas



	2019	2018
Owned capacity (MW) (a)	3,274	3,962
GWh billed	6,847	7,576

Entergy Wholesale Commodities Nuclear Fleet (b)
Capacity factor	98%	90%
GWh billed	6,210	6,976
Average energy price ($/MWh)	$37.29	$38.01
Average capacity price ($/kW-month)	$4.50	$9.32


	For the Three Months Ended September 30,
	2020			2019
	(In Millions, Except Per Share Data)
	Income	Shares	$/share	Income	Shares	$/share
Basic earnings per share
Net income attributable to Entergy Corporation	$521.1	200.2	$2.60	$365.2	198.9	$1.84
Average dilutive effect of:
Stock options		0.4	0		0.7	(0.01)
Other equity plans		0.5	(0.01)		0.9	(0.01)

Diluted earnings per share	$521.1	201.1	$2.59	$365.2	200.5	$1.82


	For the Nine Months Ended September 30,
	2020			2019
	(In Millions, Except Per Share Data)
	Income	Shares	$/share	Income	Shares	$/share
Basic earnings per share
Net income attributable to Entergy Corporation	$1,000.4	200.1	$5.00	$856.2	193.9	$4.42
Average dilutive effect of:
Stock options		0.4	(0.01)		0.5	(0.01)
Other equity plans		0.5	(0.01)		0.7	(0.02)
Equity forwards		0	0		0.6	(0.01)
Diluted earnings per share	$1,000.4	201.0	$4.98	$856.2	195.7	$4.38



	Cash flow hedges net unrealized gain (loss)	Pension and other postretirement liabilities	Net unrealized investment gain (loss)	Total Accumulated Other Comprehensive Income (Loss)
	(In Thousands)
Beginning balance, July 1, 2020	$37,090	($485,949)	$60,255	($388,604)

Other comprehensive income (loss) before reclassifications	(4,964)	0	181	(4,783)
Amounts reclassified from accumulated other comprehensive income (loss)	(11,594)	17,437	(2,876)	2,967
Net other comprehensive income (loss) for the period	(16,558)	17,437	(2,695)	(1,816)

Ending balance, September 30, 2020	$20,532	($468,512)	$57,560	($390,420)


	Pension and Other Postretirement Liabilities
	2020	2019
	(In Thousands)
Beginning balance, July 1,	$13,084	($8,091)

Amounts reclassified from accumulated other comprehensive income (loss)	(800)	(969)
Net other comprehensive income (loss) for the period	(800)	(969)

Ending balance, September 30,	$12,284	($9,060)



	Amounts reclassified from AOCI						Income Statement Location
	2019			2018
	(In Thousands)
Cash flow hedges net unrealized gain (loss)
Power contracts		$18,925			($10,566	)	Competitive business operating revenues
Interest rate swaps	(48		)	(63		)	Miscellaneous - net
Total realized gain (loss) on cash flow hedges	18,877			(10,629		)
	(3,964		)	2,232			Income taxes
Total realized gain (loss) on cash flow hedges (net of tax)		$14,913			($8,397	)

Pension and other postretirement liabilities
Amortization of prior-service credit		$5,325			$5,425		(a)
Amortization of loss	(20,919		)	(24,740		)	(a)
Settlement loss	(16,630		)	(76		)	(a)
Total amortization	(32,224		)	(19,391		)
	6,760			4,126			Income taxes
Total amortization (net of tax)		($25,464	)		($15,265	)

Net unrealized investment gain (loss)
Realized gain (loss)		$4,872			($8,589	)	Interest and investment income
	(1,793		)	3,161			Income taxes
Total realized investment gain (loss) (net of tax)		$3,079			($5,428	)

Total reclassifications for the period (net of tax)		($7,472	)		($29,090	)


~~(a)~~	These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension and other postretirement cost. See Note 6 to the financial statements herein for additional details.


Company	Expiration Date	Amount of Facility	Interest Rate (a)	Amount Drawn as of September 30, 2020	Letters of Credit Outstanding as of September 30, 2020
Entergy Arkansas	April 2021	$25 million (b)	1.27%	$0	$0
Entergy Arkansas	September 2024	$150 million (c)	1.27%	$0	$0
Entergy Louisiana	September 2024	$350 million (c)	1.27%	$0	$0
Entergy Mississippi	April 2021	$37.5 million (d)	1.65%	$0	$0
Entergy Mississippi	April 2021	$35 million (d)	1.65%	$0	$0
Entergy Mississippi	April 2021	$10 million (d)	1.65%	$0	$0
Entergy New Orleans	November 2021	$25 million (c)	1.42%	$0	$0.8 million
Entergy Texas	September 2024	$150 million (c)	1.65%	$0	$1.3 million



~~Company~~	~~Expiration~~ ~~Date~~	~~Amount of~~ ~~Facility~~	~~Interest Rate (a)~~	~~Amount Drawn~~ ~~as of~~ ~~September 30, 2019~~	~~Letters of Credit~~ ~~Outstanding as of~~ ~~September 30, 2019~~
~~Entergy Arkansas~~	~~April 2020~~	~~$20 million (b)~~	~~3.17%~~	$—	$—
~~Entergy Arkansas~~	~~September 2024~~	~~$150 million (c)~~	~~3.17%~~	$—	$—
~~Entergy Louisiana~~	~~September 2024~~	~~$350 million (c)~~	~~3.17%~~	$—	$—
~~Entergy Mississippi~~	~~May 2020~~	~~$37.5 million (d)~~	~~3.54%~~	$—	$—
~~Entergy Mississippi~~	~~May 2020~~	~~$35 million (d)~~	~~3.54%~~	$—	$—
~~Entergy Mississippi~~	~~May 2020~~	~~$10 million (d)~~	~~3.54%~~	$—	$—
~~Entergy New Orleans~~	~~November 2021~~	~~$25 million (c)~~	~~3.32%~~	$—	~~$0.8 million~~
~~Entergy Texas~~	~~September 2024~~	~~$150 million (c)~~	~~3.54%~~	$—	~~$1.3 million~~


~~(a)~~	~~The interest rate is the estimated interest rate as of September 30, 2019 that would have been applied to outstanding borrowings under the facility.~~


~~(b)~~	~~Borrowings under the Entergy Arkansas credit facility may be secured by a security interest in its accounts receivable at Entergy Arkansas’s option.~~


~~(c)~~	The credit facility includes fronting commitments for the issuance of letters of credit against a portion of the borrowing capacity of the facility as follows: $5 million for Entergy Arkansas; $15 million for Entergy Louisiana; $10 million for Entergy New Orleans; and $30 million for Entergy Texas.


~~(d)~~	~~Borrowings under the Entergy Mississippi credit facilities may be secured by a security interest in its accounts receivable at Entergy Mississippi’s option.~~


~~(a)~~	As of September 30, 2019, letters of credit posted with MISO covered financial transmission rights exposure of $0.2 million for Entergy Mississippi. See Note 8 to the financial statements herein for discussion of financial transmission rights.


	Authorized	Borrowings
	(In Millions)
Entergy Arkansas	$250	$0
Entergy Louisiana	$450	$0
Entergy Mississippi	$175	$0
Entergy New Orleans	$150	$5
Entergy Texas	$200	$54
System Energy	$200	$0



Company	Expiration Date	Amount of Facility	Weighted Average Interest Rate on Borrowings (a)	Amount Outstanding as of September 30, 2019
		(Dollars in Millions)
Entergy Arkansas VIE	September 2021	$80	3.41%	$30.3
Entergy Louisiana River Bend VIE	September 2021	$105	3.37%	$84.3
Entergy Louisiana Waterford VIE	September 2021	$105	3.41%	$65.5
System Energy VIE	September 2021	$120	3.42%	$53.6


~~(a)~~	Includes letter of credit fees and bank fronting fees on commercial paper issuances, if any, by the nuclear fuel company variable interest entities for Entergy Arkansas, Entergy Louisiana, and System Energy. The nuclear fuel company variable interest entity for Entergy Louisiana River Bend does not issue commercial paper, but borrows directly on its bank credit facility.


	Book Value of Long-Term Debt	Fair Value of Long-Term Debt (a)
	(In Thousands)
Entergy	$20,662,679	$22,925,661
Entergy Arkansas	$4,280,229	$4,648,483
Entergy Louisiana	$7,651,976	$8,756,480
Entergy Mississippi	$1,780,310	$1,997,431
Entergy New Orleans	$674,832	$663,388
Entergy Texas	$2,047,749	$2,318,713
System Energy	$592,611	$615,602



	Book Value of Long-Term Debt		Fair Value of Long-Term Debt (a) (b)
	(In Thousands)
Entergy		$17,458,026		$18,628,268
Entergy Arkansas		$3,538,384		$3,621,073
Entergy Louisiana		$7,344,160		$8,038,675
Entergy Mississippi		$1,469,454		$1,586,199
Entergy New Orleans		$478,619		$522,688
Entergy Texas		$1,938,303		$2,128,842
System Energy		$570,001		$554,374


~~(a)~~	~~The fair value excludes lease obligations of $34 million at System Energy and long-term DOE obligations of $190 million at Entergy Arkansas, and include debt due within one year.~~


~~(b)~~	~~Fair values are classified as Level 2 in the fair value hierarchy discussed in Note 8 to the financial statements herein.~~


~~(a)~~	~~The values exclude the lease obligations of $34 million at System Energy and long-term DOE obligations of $187 million at Entergy Arkansas, and include debt due within one year.~~


2020	Qualified Pension Costs	Other Postretirement Costs	Non-Qualified Pension Costs	Total
	(In Thousands)
Entergy
Amortization of prior service (cost) credit	$0	$5,739	($57)	$5,682
Amortization of net loss	(26,462)	(327)	(831)	(27,620)

Settlement loss	(196)	0	0	(196)
	($26,658)	$5,412	($888)	($22,134)
Entergy Louisiana
Amortization of prior service credit	$0	$1,695	$0	$1,695
Amortization of net gain (loss)	(497)	81	(1)	(417)
Settlement loss	(196)	0	0	($196)
	($693)	$1,776	($1)	$1,082


	Utility			Entergy Wholesale Commodities			All Other			Eliminations			Entergy				Utility	Entergy Wholesale Commodities	All Other	Eliminations	Entergy
																	(In Thousands)
2020																2020
Operating revenues																Operating revenues	$2,689,186	$214,371	$25	($14)	$2,903,568
Income taxes																Income taxes	$143,622	$12,321	($6,499)	$0	$149,444
Consolidated net income (loss)																Consolidated net income (loss)	$555,583	$30,773	($28,758)	($31,899)	$525,699
	(In Thousands)
2019																2019
Operating revenues		$2,840,222			$300,363			$9			($19	)		$3,140,575		Operating revenues	$2,840,222	$300,363	$9	($19)	$3,140,575
Income taxes		$71,698			($30,855	)		($11,642	)		$—			$29,201		Income taxes	$71,698	($30,855)	($11,642)	$0	$29,201
Consolidated net income (loss)		$581,964			($140,501	)		($40,105	)		($31,899	)		$369,459		Consolidated net income (loss)	$581,964	($140,501)	($40,105)	($31,899)	$369,459
2018
Operating revenues		$2,724,279			$380,080			$—			($40	)		$3,104,319
Income taxes		($137,035	)		($135,659	)		($10,312	)		$—			($283,006	)
Consolidated net income (loss)		$507,745			$105,571			($41,601	)		($31,897	)		$539,818