Entergy Texas (ETI-P) 10-Q 2013 Q1 Quarterly report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
X	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Quarterly Period Ended March 31, 2013
	OR
	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ____________ to ____________

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 (a Delaware corporation) 639 Loyola Avenue New Orleans, Louisiana 70113 Telephone (504) 576-4000 72-1229752	1-31508	ENTERGY MISSISSIPPI, INC. (a Mississippi corporation) 308 East Pearl Street Jackson, Mississippi 39201 Telephone (601) 368-5000 64-0205830
1-10764	ENTERGY ARKANSAS, INC. (an Arkansas corporation) 425 West Capitol Avenue Little Rock, Arkansas 72201 Telephone (501) 377-4000 71-0005900	0-05807	ENTERGY NEW ORLEANS, INC. (a Louisiana corporation) 1600 Perdido Street New Orleans, Louisiana 70112 Telephone (504) 670-3700 72-0273040
0-20371	ENTERGY GULF STATES LOUISIANA, L.L.C. (a Louisiana limited liability company) 446 North Boulevard Baton Rouge, Louisiana 70802 Telephone (800) 368-3749 74-0662730	1-34360	ENTERGY TEXAS, INC. (a Texas corporation) 350 Pine Street Beaumont, Texas 77701 Telephone (409) 981-2000 61-1435798
1-32718	ENTERGY LOUISIANA, LLC (a Texas limited liability company) 446 North Boulevard Baton Rouge, Louisiana 70802 Telephone (800) 368-3749 75-3206126	1-09067	SYSTEM ENERGY RESOURCES, INC. (an Arkansas corporation) Echelon One 1340 Echelon Parkway Jackson, Mississippi 39213 Telephone (601) 368-5000 72-0752777

__________________________________________________________________________________________

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.  Yes þ No o

Indicate by check mark whether the registrants have submitted electronically and posted on Entergy’s corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Securities Exchange Act of 1934.

	Large accelerated filer	Accelerated filer	Non- accelerated filer	Smaller reporting company
Entergy Corporation	Ö
Entergy Arkansas, Inc.			Ö
Entergy Gulf States Louisiana, L.L.C.			Ö
Entergy Louisiana, LLC			Ö
Entergy Mississippi, Inc.			Ö
Entergy New Orleans, Inc.			Ö
Entergy Texas, Inc.			Ö
System Energy Resources, Inc.			Ö

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No þ

Common Stock Outstanding		Outstanding at April 30, 2013
Entergy Corporation	($0.01 par value)	178,184,969

Entergy Corporation, Entergy Arkansas, Inc., Entergy Gulf States Louisiana, L.L.C., Entergy Louisiana, LLC, Entergy Mississippi, Inc., Entergy New Orleans, Inc., Entergy Texas, Inc., and System Energy Resources, Inc. separately file this combined Quarterly Report on Form 10-Q.  Information contained herein relating to any individual company is filed by such company on its own behalf.  Each company reports herein only as to itself and makes no other representations whatsoever as to any other company.  This combined Quarterly Report on Form 10-Q supplements and updates the Annual Report on Form 10-K for the calendar year ended December 31, 2012, filed by the individual registrants with the SEC, and should be read in conjunction therewith.

ENTERGY CORPORATION AND SUBSIDIARIES

INDEX TO QUARTERLY REPORT ON FORM 10-Q

March 31, 2013

	Page Number
Forward-looking information	iii
Definitions	v
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis	1
Consolidated Statements of Income (Loss)	16
Consolidated Statements of Comprehensive Income	17
Consolidated Statements of Cash Flows	18
Consolidated Balance Sheets	20
Consolidated Statements of Changes in Equity	22
Selected Operating Results	23
Notes to Financial Statements	24
Part 1. Item 4.  Controls and Procedures	64
Entergy Arkansas, Inc. and Subsidiaries
Management’s Financial Discussion and Analysis	65
Consolidated Income Statements	71
Consolidated Statements of Cash Flows	73
Consolidated Balance Sheets	74
Consolidated Statements of Changes in Common Equity	76
Selected Operating Results	77
Entergy Gulf States Louisiana, L.L.C.
Management’s Financial Discussion and Analysis	78
Income Statements	85
Statements of Comprehensive Income	86
Statements of Cash Flows	87
Balance Sheets	88
Statements of Changes in Equity	90
Selected Operating Results	91
Entergy Louisiana, LLC and Subsidiaries
Management’s Financial Discussion and Analysis	92
Consolidated Income Statements	99
Consolidated Statements of Comprehensive Income	100
Consolidated Statements of Cash Flows	101
Consolidated Balance Sheets	102
Consolidated Statements of Changes in Equity	104
Selected Operating Results	105
Entergy Mississippi, Inc.
Management’s Financial Discussion and Analysis	106
Income Statements	111
Statements of Cash Flows	113
Balance Sheets	114
Statements of Changes in Common Equity	116
Selected Operating Results	117

i

ENTERGY CORPORATION AND SUBSIDIARIES

INDEX TO QUARTERLY REPORT ON FORM 10-Q

March 31, 2013

	Page Number
Entergy New Orleans, Inc.
Management’s Financial Discussion and Analysis	118
Income Statements	122
Statements of Cash Flows	123
Balance Sheets	124
Statements of Changes in Common Equity	126
Selected Operating Results	127
Entergy Texas, Inc. and Subsidiaries
Management’s Financial Discussion and Analysis	128
Consolidated Income Statements	132
Consolidated Statements of Cash Flows	133
Consolidated Balance Sheets	134
Consolidated Statements of Changes in Common Equity	136
Selected Operating Results	137
System Energy Resources, Inc.
Management’s Financial Discussion and Analysis	138
Income Statements	141
Statements of Cash Flows	143
Balance Sheets	144
Statements of Changes in Common Equity	146
Part II.  Other Information
Item 1.    Legal Proceedings	147
Item 1A.  Risk Factors	147
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds	147
Item 5.    Other Information	148
Item 6.    Exhibits	151
Signature	153

ii

FORWARD-LOOKING INFORMATION

In this combined report and from time to time, Entergy Corporation and the Registrant Subsidiaries each makes statements as a registrant concerning its expectations, beliefs, plans, objectives, goals, strategies, and future events or performance.  Such statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Words such as “may,” “will,” “could,” “project,” “believe,” “anticipate,” “intend,” “expect,” “estimate,” “continue,” “potential,” “plan,” “predict,” “forecast,” and other similar words or expressions are intended to identify forward-looking statements but are not the only means to identify these statements.  Although each of these registrants believes that these forward-looking statements and the underlying assumptions are reasonable, it cannot provide assurance that they will prove correct.  Any forward-looking statement is based on information current as of the date of this combined report and speaks only as of the date on which such statement is made.  Except to the extent required by the federal securities laws, these registrants undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Forward-looking statements involve a number of risks and uncertainties.  There are factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including those factors discussed or incorporated by reference in (a) Item 1A. Risk Factors in the Form 10-K, (b) Management’s Financial Discussion and Analysis in the Form 10-K and in this report, and (c) the following factors (in addition to others described elsewhere in this combined report and in subsequent securities filings):

·   resolution of pending and future rate cases and negotiations, including various performance-based rate discussions, Entergy’s utility supply plan, and recovery of fuel and purchased power costs;

·   the termination of Entergy Arkansas’s and Entergy Mississippi’s participation in the System Agreement in December 2013 and November 2015, respectively, and the potential for other Entergy operating companies to terminate participation in the System Agreement by providing notice pursuant to the current 96-month notice period and/or by seeking an amendment to the System Agreement that would allow for an Entergy operating company to terminate its participation in less than 96 months;

·   regulatory and operating challenges and uncertainties associated with the Utility operating companies’ proposal to move to the MISO RTO;

·   risks associated with the proposed spin-off and subsequent merger of Entergy’s electric transmission business into a subsidiary of ITC Holdings Corp., including the risk that Entergy and the Utility operating companies may not be able to timely satisfy the conditions or obtain the approvals required to complete such transaction or such approvals may contain material restrictions or conditions, and the risk that if completed, the transaction may not achieve its anticipated results;

·   changes in utility regulation, including the beginning or end of retail and wholesale competition, the ability to recover net utility assets and other potential stranded costs, and the application of more stringent transmission reliability requirements or market power criteria by the FERC;

·   changes in regulation of nuclear generating facilities and nuclear materials and fuel, including possible shutdown of nuclear generating facilities, particularly those owned or operated by the Entergy Wholesale Commodities business, and the effects of new or existing safety or environmental concerns regarding nuclear power plants and nuclear fuel;

·   resolution of pending or future applications, and related regulatory proceedings and litigation, for license renewals or modifications of nuclear generating facilities;

·   the performance of and deliverability of power from Entergy’s generation resources, including the capacity factors at its nuclear generating facilities;

·   Entergy’s ability to develop and execute on a point of view regarding future prices of electricity, natural gas, and other energy-related commodities;

·   prices for power generated by Entergy’s merchant generating facilities and the ability to hedge, meet credit support requirements for hedges, sell power forward, or otherwise reduce the market price risk associated with those facilities, including the Entergy Wholesale Commodities nuclear plants;

iii

FORWARD-LOOKING INFORMATION (Concluded)

·   the prices and availability of fuel and power Entergy must purchase for its Utility customers, and Entergy’s ability to meet credit support requirements for fuel and power supply contracts;

·   volatility and changes in markets for electricity, natural gas, uranium, and other energy-related commodities;

·   changes in law resulting from federal or state energy legislation or legislation subjecting energy derivatives used in hedging and risk management transactions to governmental regulation;

·   changes in environmental, tax, and other laws, including requirements for reduced emissions of sulfur, nitrogen, carbon, greenhouse gases, mercury, and other regulated air emissions, and changes in costs of compliance with environmental and other laws and regulations;

·   uncertainty regarding the establishment of interim or permanent sites for spent nuclear fuel and nuclear waste storage and disposal;

·   variations in weather and the occurrence of hurricanes and other storms and disasters, including uncertainties associated with efforts to remediate the effects of hurricanes, ice storms, or other weather events and the recovery of costs associated with restoration, including accessing funded storm reserves, federal and local cost recovery mechanisms, securitization, and insurance;

·   effects of climate change;

·   changes in the quality and availability of water supplies and the related regulation of water use and diversion;

·   Entergy’s ability to manage its capital projects and operation and maintenance costs;

·   Entergy’s ability to purchase and sell assets at attractive prices and on other attractive terms;

·   the economic climate, and particularly economic conditions in Entergy’s Utility service area and the Northeast United States and events that could influence economic conditions in those areas;

·   the effects of Entergy’s strategies to reduce tax payments;

·   changes in the financial markets, particularly those affecting the availability of capital and Entergy’s ability to refinance existing debt, execute share repurchase programs, and fund investments and acquisitions;

·   actions of rating agencies, including changes in the ratings of debt and preferred stock, changes in general corporate ratings, and changes in the rating agencies’ ratings criteria;

·   changes in inflation and interest rates;

·   the effect of litigation and government investigations or proceedings;

·   advances in technology;

·   the potential effects of threatened or actual terrorism, cyber attacks or data security breaches, including increased security costs, and war or a catastrophic event such as a nuclear accident or a natural gas pipeline explosion;

·   Entergy’s ability to attract and retain talented management and directors;

·   changes in accounting standards and corporate governance;

·   declines in the market prices of marketable securities and resulting funding requirements for Entergy’s defined benefit pension and other postretirement benefit plans;

·   future wage and employee benefit costs, including changes in discount rates and returns on benefit plan assets;

·   changes in decommissioning trust fund values or earnings or in the timing of or cost to decommission nuclear plant sites;

·   the effectiveness of Entergy’s risk management policies and procedures and the ability and willingness of its counterparties to satisfy their financial and performance commitments;

·   factors that could lead to impairment of long-lived assets; and

·   the ability to successfully complete merger, acquisition, or divestiture plans, regulatory or other limitations imposed as a result of merger, acquisition, or divestiture, and the success of the business following a merger, acquisition, or divestiture.

iv

DEFINITIONS

Certain abbreviations or acronyms used in the text and notes are defined below:

Abbreviation or Acronym	Term
AFUDC	Allowance for Funds Used During Construction
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
ASLB	Atomic Safety and Licensing Board, the board within the NRC that conducts hearings and performs other regulatory functions that the NRC authorizes
ASU	Accounting Standards Update issued by the FASB
Board	Board of Directors of Entergy Corporation
capacity factor	Actual plant output divided by maximum potential plant output for the period
City Council or Council	Council of the City of New Orleans, Louisiana
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 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.
Entergy Texas	Entergy Texas, Inc., a company 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 (EWC)	Entergy’s non-utility business segment primarily comprised of the ownership and operation of six nuclear power plants, the ownership of interests in non-nuclear power plants, and the sale of the electric power produced by those plants to wholesale customers
EPA	United States Environmental Protection Agency
ERCOT	Electric Reliability Council of Texas
FASB	Financial Accounting Standards Board
FERC	Federal Energy Regulatory Commission
FitzPatrick	James A. FitzPatrick Nuclear Power Plant (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
Form 10-K	Annual Report on Form 10-K for the calendar year ended December 31, 2012 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
Indian Point 2	Unit 2 of Indian Point Energy Center (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
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

v

DEFINITIONS (Concluded)

Abbreviation or Acronym	Term
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)
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 Power Plant (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
Pilgrim	Pilgrim Nuclear Power Station (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
PPA	Purchased power agreement or power purchase agreement
PUCT	Public Utility Commission of Texas
Registrant Subsidiaries	Entergy Arkansas, Inc., Entergy Gulf States Louisiana, L.L.C., Entergy Louisiana, LLC, Entergy Mississippi, Inc., Entergy New Orleans, Inc., Entergy Texas, Inc., and System Energy Resources, Inc.
River Bend	River Bend Station (nuclear), owned by Entergy Gulf States Louisiana
RTO	Regional transmission organization
SEC	Securities and Exchange Commission
SMEPA	South Mississippi Electric Power Association, which owns a 10% interest in Grand Gulf
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
System Energy	System Energy Resources, Inc.
TWh	Terawatt-hour(s), which equals one billion kilowatt-hours
Unit Power Sales Agreement	Agreement, dated as of June 10, 1982, as amended and approved by 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 Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas
Vermont Yankee	Vermont Yankee Nuclear Power Station (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
Waterford 3	Unit No. 3 (nuclear) of the Waterford Steam Electric Station, 100% owned or leased by Entergy Louisiana
weather-adjusted usage	Electric usage excluding the effects of deviations from normal weather

vi

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 operates a small natural gas distribution business.  As discussed in more detail in “Plan to Spin Off the Utility’s Transmission Business,” in the Form 10-K, in December 2011, Entergy entered into an agreement to spin off its transmission business and merge it with a newly-formed subsidiary of ITC Holdings Corp.

·   The Entergy Wholesale Commodities business segment includes the ownership and operation of six nuclear power plants located in the northern United States and the sale of the electric power produced by those plants to wholesale customers.  This business also provides services to other nuclear power plant owners.  Entergy Wholesale Commodities also owns interests in non-nuclear power plants that sell the electric power produced by those plants to wholesale customers.

Results of Operations

Following are income statement variances for Utility, Entergy Wholesale Commodities, Parent & Other, and Entergy comparing the first quarter 2013 to the first quarter 2012 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)
1st Quarter 2012 Consolidated Net Income (Loss)	$	67,212		$	(175,949	)	$	(38,003	)	$	(146,740	)
Net revenue (operating revenue less fuel   expense, purchased power, and other   regulatory charges/credits)		117,644			41,426			1,553			160,623
Other operation and maintenance expenses		29,529			(1,400	)		4,494			32,623
Asset impairment		-			(355,524	)		-			(355,524	)
Taxes other than income taxes		10,964			2,978			(17	)		13,925
Depreciation and amortization		22,445			(1,829	)		45			20,661
Other income		(12,253	)		1,170			1,208			(9,875	)
Interest expense		6,792			(3,136	)		6,951			10,607
Other expenses		3,670			(5,633	)		(1	)		(1,964	)
Income taxes		(28,632	)		149,077			(3,747	)		116,698
1st Quarter 2013 Consolidated Net Income (Loss)	$	127,835		$	82,114		$	(42,967	)	$	166,982

(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.

In the fourth quarter 2012, Entergy moved two subsidiaries from Parent & Other to the Entergy Wholesale Commodities segment to improve the alignment of certain intercompany items and income tax activity.  The prior period financial information in this Form 10-Q has been restated to reflect this change.

1

Entergy Corporation and Subsidiaries

Management’s Financial Discussion and Analysis

As discussed in more detail in Note 11 to the financial statements, first quarter 2012 results of operations include a $355.5 million ($223.5 million after-tax) impairment charge to write down the carrying values of Vermont Yankee and related assets to their fair values.

Net Revenue

Utility

Following is an analysis of the change in net revenue comparing the first quarter 2013 to the first quarter 2012.

	Amount
	(In Millions)
2012 net revenue	$	1,106
Retail electric price		61
Grand Gulf recovery		33
Volume/weather		19
Other		4
2013 net revenue	$	1,223

The retail electric price variance is primarily due to:

·   the recovery of Hinds plant costs through the power management rider at Entergy Mississippi, as approved by the MPSC, effective with the first billing cycle of 2013.  The net income effect of the Hinds plant cost recovery is limited to a portion representing an allowed return on equity on the net plant investment with the remainder offset by the Hinds plant costs in other operation and maintenance expenses, depreciation expenses, and taxes other than income taxes;

·   an increase in the capacity acquisition rider at Entergy Arkansas, as approved by the APSC, effective with the first billing cycle of December 2012, relating to the Hot Spring plant acquisition.  The net income effect of the Hot Spring plant cost recovery is limited to a portion representing an allowed return on equity on the net plant investment with the remainder offset by the Hot Spring plant costs in other operation and maintenance expenses, depreciation expenses, and taxes other than income taxes;

·   an increase in the energy efficiency rider, as approved by the APSC, effective July 2012.  Energy efficiency revenues are offset by costs included in other operation and maintenance expenses and have no effect on net income;

·   a formula rate plan increase at Entergy Louisiana, effective January 2013, which includes an increase relating to the Waterford 3 steam generator replacement project, which was placed in service in December 2012.  The net income effect of the formula rate plan increase is limited to a portion representing an allowed return on equity with the remainder offset by costs included in other operation and maintenance expenses, depreciation expenses, and taxes other than income taxes; and

·   an annual base rate increase at Entergy Texas, effective July 2012, as a result of the PUCT’s order in the December 2011 rate case that was issued in September 2012.

See Note 2 to the financial statements herein and in the Form 10-K for a discussion of rate proceedings.

                The Grand Gulf recovery variance is primarily due to increased recovery of higher costs resulting from the Grand Gulf uprate.

The volume/weather variance is primarily due to the effect of more favorable weather, primarily on residential sales, in the first quarter 2013 compared to the same period in the prior year.

2

Entergy Corporation and Subsidiaries

Management’s Financial Discussion and Analysis

Entergy Wholesale Commodities

Following is an analysis of the change in net revenue comparing the first quarter 2013 to the first quarter 2012.

	Amount
	(In Millions)
2012 net revenue	$	452
Nuclear realized price changes		66
Nuclear volume		(25	)
2013 net revenue	$	493

As shown in the table above, net revenue for Entergy Wholesale Commodities increased by $41 million in the first quarter 2013 compared to the first quarter 2012 primarily due to higher energy and capacity prices partially offset by lower volume in its nuclear fleet resulting from more unplanned and refueling outage days in 2013 compared to the same period in 2012.

Following are key performance measures for Entergy Wholesale Commodities for the first quarter 2013 and 2012:

	2013	2012
Owned capacity	6,612	6,612
GWh billed	10,387	11,281
Average realized revenue per MWh	$58.66	$49.29
Entergy Wholesale Commodities Nuclear Fleet
Capacity factor	83%	88%
GWh billed	9,246	9,838
Average realized revenue per MWh	$57.82	$50.32
Refueling Outage Days:
Indian Point 2	-	27
Indian Point 3	28	-
Vermont Yankee	22	-

Realized Revenue per MWh Trend for Entergy Wholesale Commodities Nuclear Plants

The economic downturn and negative trends in the energy commodity markets have resulted over the past few years in lower natural gas prices and lower market prices for electricity in the New York and New England power regions, which is where five of the six Entergy Wholesale Commodities nuclear power plants are located.  Entergy Wholesale Commodities’ nuclear business experienced a decrease in realized price per MWh to $50.29 in 2012 from $54.73 in 2011 and $59.16 in 2010.  As shown in the contracted sale of energy table in “Market and Credit Risk Sensitive Instruments,” Entergy Wholesale Commodities has sold forward 84% of its planned nuclear energy output for the remainder of 2013 for an expected average contracted energy price of $45 per MWh based on market prices at March 31, 2013.  In addition, Entergy Wholesale Commodities has sold forward 76% of its planned nuclear energy output for 2014 for an expected average contracted energy price of $47 per MWh based on market prices at March 31, 2013.  These near-term price trends present a challenging economic situation for the Entergy Wholesale Commodities plants.  The challenge is greater for some of these plants based on a variety of factors such as their market for both energy and capacity, their size, their contracted positions, and the investment required to maintain the safety and integrity of the plants.  If, in the future, economic conditions or regulatory activity no longer support the continued operation of a plant it could adversely affect Entergy’s

3

Entergy Corporation and Subsidiaries

Management’s Financial Discussion and Analysis

results of operations through impairment charges, increased depreciation rates, transitional costs, or accelerated decommissioning costs.  Impairment of long-lived assets and nuclear decommissioning costs, and the factors that influence these items, are both discussed in detail in the Form 10-K in “Critical Accounting Estimates.”  See also the discussion below in “Entergy Wholesale Commodities Authorizations to Operate Its Nuclear Power Plants” regarding Entergy Wholesale Commodities nuclear plant operating license and related activity.

Other Income Statement Items

Utility

Other operation and maintenance expenses increased from $490 million for the first quarter 2012 to $520 million for the first quarter 2013 primarily due to:

·   an increase of $16 million in compensation and benefits costs primarily due to a decrease in the discount rates used to determine net periodic pension and other postretirement benefit costs.  See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – Critical Accounting Estimates" in the Form 10-K and Note 6 to the financial statements herein for further discussion of benefits costs;

·   an increase of $9 million in nuclear expenses, primarily due to higher labor costs, including higher contract labor;

·   an increase of $7 million in fossil-fueled generation expenses primarily due to the acquisition of the Hot Spring plant by Entergy Arkansas and the Hinds plant by Entergy Mississippi in November 2012.  Costs related to the Hot Spring and Hinds plants are recovered through the capacity acquisition rider and power management rider, respectively, as previously discussed; and

·   an increase of $5 million in energy efficiency costs at Entergy Arkansas.  These costs are recovered through the energy efficiency rider and have no effect on net income.

Taxes other than income taxes increased primarily due to an increase in ad valorem taxes resulting from a higher 2013 assessment as compared to 2012 as well as an increase in local franchise taxes resulting from higher residential and commercial revenues as compared with prior year.

Depreciation and amortization expenses increased primarily due to additions to plant in service, including the Hot Spring and Hinds plant acquisitions in 2012 and the completion of the Waterford 3 steam generator replacement project and the Grand Gulf uprate project in 2012.  Also contributing to the increase is an increase in depreciation rates as a result of the rate order approved by the PUCT in September 2012.

Other income decreased primarily due to a decrease in AFUDC accrued on projects under construction resulting from the completion of the Grand Gulf uprate project and Waterford 3 steam generator replacement project in 2012.

Entergy Wholesale Commodities

           The asset impairment variance is due to a $355.5 million ($223.5 million after-tax) impairment charge recorded in first quarter 2012 to write down the carrying values of Vermont Yankee and related assets to their fair values.  See Note 11 to the financial statements for further discussion of this charge.

Income Taxes

The effective income tax rate for the first quarter 2013 was 41.1%. The difference in the effective income tax rate for the first quarter 2013 versus the statutory rate of 35% is due to state income taxes, the provision for uncertain tax positions, and certain book and tax differences related to utility plant items, partially offset by book and tax differences related to the allowance for equity funds used during construction.

The effective income tax rate for the first quarter 2012 was 0.11%.  The difference in the effective income tax rate for the first quarter 2012 versus the statutory rate of 35% was primarily because the expected tax benefit of the pre-tax loss that Entergy incurred in the first quarter 2012 was partially offset by the write-off of a portion of the regulatory asset for income taxes that is discussed in Note 2 to the financial statements in the Form 10-K.

4

Entergy Corporation and Subsidiaries

Management’s Financial Discussion and Analysis

Plan to Spin Off the Utility’s Transmission Business

See the Form 10-K for a discussion of Entergy’s plan to spin off its transmission business and merge it with a newly formed subsidiary of ITC Holdings Corp.  Following are updates to that discussion.

Filings with Retail Regulators

See the Form 10-K for a discussion of the applications that each of the Utility operating companies has filed with their respective retail regulators seeking approval for the proposal to spin off and merge the transmission business with ITC.  On April 18, 2013, the Public Service Commission of Missouri consolidated for purposes of a hearing in June 2013 Entergy Arkansas’s separate MISO case that is related to Entergy Arkansas’s notice of its intent to integrate into MISO with the Entergy and ITC case that is related to the proposal to spin off and merge the transmission business with ITC.

In April 2013, the LPSC staff, APSC staff, and other parties filed testimony in the proceedings pending at the LPSC and APSC, respectively, identifying concerns with the proposed transaction and concluding that the transaction in its current form does not satisfy the applicable criteria for approval.  The LPSC staff testimony also included a comprehensive set of conditions should the LPSC determine that the transaction is in the public interest.  Conditions were also recommended by the Arkansas Attorney General should the APSC consider approving the transaction.  Intervening parties previously filed testimony in the City Council and MPSC proceedings.  The PUCT staff and the City Council advisors are scheduled to file testimony in May 2013, and staff testimony in the MPSC proceeding is scheduled for June 2013.  Hearings are scheduled for May 2013 in the PUCT proceeding, July 2013 in the APSC, LPSC, and City Council proceedings, and August 2013 in the MPSC proceeding.

Filings with the FERC

See the Form 10-K for a discussion of the series of filings with the FERC made by Entergy, ITC, and certain of their subsidiaries to obtain regulatory approvals related to the proposed transfer to ITC subsidiaries of the transmission assets owned by the Utility operating companies.  In February 2013, Entergy and ITC filed a response to various comments and protests regarding the joint application filed with the FERC.  The response argued, among other things, that the proposed transaction is consistent with the public interest, that the proposed rates for the ITC Midsouth Operating Companies are just and reasonable, and that there is no need for a hearing in the proceeding.  On March 22, 2013, the FERC issued an order concluding that, based on the two comment period extensions granted at the request of state and retail regulators, further consideration is required to determine whether the proposed transaction meets the standards of Federal Power Act section 203.   The FERC therefore extended the time to act on the joint application for an additional 180 days, until September 18, 2013.

Entergy Wholesale Commodities Authorizations to Operate Its Nuclear Power Plants

See the Form 10-K for a discussion of the NRC operating licenses for Indian Point 2 and Indian Point 3 and the NRC license renewal applications in process for these plants.

The New York State Department of Environmental Conservation (NYSDEC) has taken the position that Indian Point must obtain a new state-issued Clean Water Act Section 401 water quality certification as part of the license renewal process.  Entergy submitted its application for a water quality certification to the NYSDEC in April 2009, with a reservation of rights regarding the applicability of Section 401 in this case.  After Entergy submitted certain additional information in response to NYSDEC requests for additional information, in February 2010 the NYSDEC staff determined that Entergy’s water quality certification application was complete.  In April 2010 the NYSDEC staff issued a proposed notice of denial of Entergy’s water quality certification application (the Notice).  NYSDEC staff’s Notice triggered an administrative adjudicatory hearing before NYSDEC ALJs on the proposed Notice.  The NYSDEC staff decision does not restrict Indian Point operations, but the issuance of a certification is potentially required prior to NRC issuance of renewed unit licenses.  In June 2011, Entergy filed notice with the NRC that the NYSDEC, the agency that would issue or deny a water quality certification for the Indian Point license renewal process, has taken longer than one year to take final

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action on Entergy’s application for a water quality certification and, therefore, has waived its opportunity to require a certification under the provisions of Section 401 of the Clean Water Act.  The NYSDEC has notified the NRC that it disagrees with Entergy’s position and does not believe that it has waived the right to require a certification.  The NYSDEC ALJs overseeing the agency’s certification adjudicatory process stated in a ruling issued in July 2011 that while the waiver issue is pending before the NRC, the NYSDEC hearing process will continue on selected issues.  The judges held a Legislative Hearing (agency public comment session) and an Issues Conference (pre-trial conference) in July 2010.  Issue-by-issue hearings before the NYSDEC ALJs began in October 2011 and are expected to continue, on an episodic basis, through the end of 2013 and perhaps longer.    After hearings and briefing on all issues, the ALJs will issue a recommended decision to the Commissioner or his delegate, who will then issue the final agency decision.  A party to the proceeding can appeal the decision of the Commissioner to state court.

In addition, the consistency of Indian Point’s operations with New York State’s coastal management policies must be resolved to the extent required by the Coastal Zone Management Act (CZMA).  Entergy has undertaken three independent initiatives to resolve CZMA issues.  First, on July 24, 2012, Entergy filed a supplement to the Indian Point license renewal application currently pending before the NRC.  The supplement states that, based on applicable federal law and in light of prior reviews by the State of New York, the NRC may issue the requested renewed operating licenses for Indian Point without the need for an additional consistency review by the State of New York under the CZMA.  On July 30, 2012, Entergy filed a motion for declaratory order with the ASLB seeking confirmation of its position that no further CZMA consistency determination is required before the NRC may issue renewed licenses.  On April 5, 2013, the State of New York and Riverkeeper filed answers opposing Entergy’s motion.  The State of New York also filed a cross-motion for declaratory order seeking confirmation that Indian Point had not been previously reviewed, and that only the New York State Department of State (NYSDOS) could conduct a CZMA review for NRC license renewal purposes.  On April 15, 2013, the NRC Staff filed answers recommending the ASLB deny both Entergy’s and the State of New York’s motions for declaratory order.  Entergy intends to file an answer to the State of New York’s cross-motion for declaratory order and a reply to the answers of the State of New York and Riverkeeper to Entergy’s motion for declaratory order.  It is uncertain when the ASLB will act on the motions.

Second, Entergy filed with the NYSDOS on November 7, 2012 a petition for declaratory order that Indian Point is grandfathered under either of two criteria prescribed by the New York Coastal Management Program (NYCMP), which sets forth the state coastal policies applied in a CZMA consistency review.   NYSDOS denied the motion by order dated January 9, 2013.  Entergy filed a petition for judicial review of NYSDOS’s decision with the New York State Supreme Court for Albany County on March 13, 2013.  NYSDOS’s opposition (which is expected to be jointly filed with that of NYSDEC, a co-respondent) is due May 10, 2013.  Entergy’s reply is due June 7, 2013.  It is uncertain when the court will act on the petition for review.  The losing party may file an appeal as of right with the next level state appellate court.

Third, on December 17, 2012, Entergy filed with NYSDOS a consistency determination explaining why Indian Point satisfies all applicable NYCMP policies.  Entergy included in the consistency determination a “reservation of rights” clarifying that Entergy does not concede NYSDOS’s right to conduct a new CZMA review for Indian Point.  On January 16, 2013, NYSDOS notified Entergy that it deemed the consistency determination incomplete because it does not include the further supplement to the Final Supplemental Environmental Impact Statement that is targeted for issuance by May 10, 2013.  The six-month federal deadline for state decision on a consistency determination does not begin to run until the submission is complete.

ANO Damage and Outage

On March 31, 2013, during a scheduled refueling outage at ANO 1, a contractor-owned and operated heavy-lifting apparatus collapsed while moving the generator stator out of the turbine building.  The collapse resulted in the death of an ironworker and injuries to several other contract workers, caused ANO 2 to shut down, and damaged the ANO turbine building.  The turbine building serves both ANO 1 and 2 and is a non-radiological area of the plant.  Entergy is still analyzing the incident; the extent of the damage; the cost of assessment, debris removal, and replacing damaged property and equipment; and the schedule for restoring ANO 1 to service, but was able to restart ANO 2 on April 28, 2013.  In addition, Entergy Arkansas incurred replacement power costs for ANO 2 power during its outage and expects to incur incremental replacement power costs for ANO 1 power to the extent its outage extends beyond the originally-planned duration of the refueling outage.  Each of the Utility operating companies has recovery mechanisms in place designed to recover its prudently-incurred fuel and purchased power costs.

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Entergy Arkansas is assessing its options for recovering damages that resulted from the stator drop, including its insurance coverage.  Entergy is a member of Nuclear Electric Insurance Limited (NEIL), a mutual insurance company that provides property damage coverage to the members’ nuclear generating plants, including ANO.  NEIL has notified Entergy that it believes that a $50 million course of construction sublimit applies to any loss associated with the lifting apparatus failure and stator drop at ANO.  Entergy has responded that it disagrees with NEIL's position and is evaluating its options for enforcing its rights under the policy.

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.

Capital Structure

Entergy’s capitalization is balanced between equity and debt, as shown in the following table.

	March 31, 2013	December 31, 2012
Debt to capital	58.7%	58.7%
Effect of excluding the securitization bonds	(1.8%)	(1.8%)
Debt to capital, excluding securitization bonds (a)	56.9%	56.9%
Effect of subtracting cash	(0.6%)	(1.1%)
Net debt to net capital, excluding securitization bonds (a)	56.3%	55.8%

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

Net debt consists of debt less cash and cash equivalents.  Debt consists of notes payable and commercial paper, capital 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 net debt to net capital ratio and the 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.

Entergy Corporation has in place a credit facility that has a borrowing capacity of $3.5 billion and expires in March 2018.  Entergy Corporation has the ability to issue letters of credit against 50% of the total borrowing capacity of the facility.  Following is a summary of the borrowings outstanding and capacity available under the facility as of March 31, 2013.

Capacity (a)	Borrowings	Letters of Credit	Capacity Available
(In Millions)
$3,500	$570	$8	$2,922

(a) The capacity decreases to $3,490 million in March 2017.

A covenant in Entergy Corporation’s credit facility requires Entergy to maintain a consolidated debt ratio 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.  Entergy is currently in compliance with the covenant.  If Entergy fails to meet this ratio, or if Entergy or one of the Utility operating companies (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 for additional discussion of the Entergy Corporation credit facility and discussion of the Registrant Subsidiaries’ credit facilities.

 

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See Note 4 to the financial statements for additional discussion of the Entergy Corporation commercial paper program.  As of March 31, 2013, Entergy Corporation had $883.7 million of commercial paper outstanding.

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 2013 through 2015.  As discussed in the Form 10-K, the planned amounts disclosed in the Form 10-K do not include costs for the capital projects that might result from the NRC’s post-Fukushima requirements.  The current preliminary cost estimate (including both capital and operation and maintenance expense) to implement the post-Fukushima requirements is approximately $240 million for Utility and approximately $260 million for Entergy Wholesale Commodities.  These costs are expected to be incurred over the 2012 through 2018 time period, and do not include any amounts for filtered vents, for which the NRC initiated a rulemaking in first quarter 2013.  Also, Entergy now expects a delay in the spending associated with potential wedgewire screens at the Indian Point site from the timing reflected in the amounts in the table in the Form 10-K.

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 Entergy’s earnings, financial strength, and future investment opportunities.  At its April 2013 meeting, the Board declared a dividend of $0.83 per share, which is the same quarterly dividend per share that Entergy has paid since second quarter 2010.

Cash Flow Activity

As shown in Entergy’s Consolidated Statements of Cash Flows, cash flows for the three months ended March 31, 2013 and 2012 were as follows:

	2013			2012
	(In Millions)
Cash and cash equivalents at beginning of period	$	533		$	694
Cash flow provided by (used in):
Operating activities		544			601
Investing activities		(661	)		(749	)
Financing activities		(153	)		139
Net decrease in cash and cash equivalents		(270	)		(9	)
Cash and cash equivalents at end of period	$	263		$	685

Operating Activities

Net cash provided by operating activities decreased by $57 million for the three months ended March 31, 2013 compared to the three months ended March 31, 2012 primarily due to:

·   higher deferred fuel refunds in 2013 compared to the same period in prior year;

·   approximately $31 million in storm restoration spending in 2013 resulting from the Arkansas December 2012 Winter storm and Hurricane Isaac; and

·   an increase of $21 million in spending on nuclear refueling outages in 2013 compared to the same period in prior year.

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These decreases in cash flow were partially offset by:

·   a decrease of $24 million in income tax payments;

·   a decrease of $36 million in pension contributions.  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 increase in Entergy Wholesale Commodities net revenue that is discussed previously.

Investing Activities

Net cash used in investing activities decreased by $88 million for the three months ended March 31, 2013 compared to the three months ended March 31, 2012 primarily due to:

·   the withdrawal of a total of $252 million from Entergy Gulf States Louisiana’s and Entergy Louisiana’s storm reserve escrow accounts in 2013 after Hurricane Isaac.  See Note 2 to the financial statements herein and in the Form 10-K for a discussion of Hurricane Isaac; and

·   a decrease in nuclear fuel purchases because of variations from year to year in the timing and pricing of fuel reload requirements, material and services deliveries, and the timing of cash payments during the nuclear fuel cycle.

These decreases were partially offset by an increase in construction expenditures, primarily in the Utility business, resulting from an increase of approximately $62 million in storm restoration spending in 2013 resulting from the Arkansas December 2012 Winter storm and Hurricane Isaac and approximately $51 million in spending on the Ninemile 6 self-build project, partially offset by spending in 2012 on the uprate project at Grand Gulf.

Financing Activities

Entergy’s financing activities used $153 million of cash for the three months ended March 31, 2013 compared to providing $139 million of cash for the three months ended March 31, 2012 primarily due to:

·   long-term debt activity using approximately $285 million of cash in 2013 compared to providing $175 million of cash in 2012.  Included in the long-term debt activity in 2013 is $225 million repayment of borrowings on the Entergy Corporation long-term credit facility.  Entergy Corporation issued $219 million of commercial paper in 2013 to repay borrowings on its long-term credit facility;

·   $51 million in proceeds from the sale to a third party in 2012 of a portion of Entergy Gulf States Louisiana’s investment in Entergy Holdings Company’s Class A preferred membership interests; and

·   a decrease of $25 million in treasury stock issuances in 2013 compared to the same period in 2012.

For details of Entergy's commercial paper program, the nuclear fuel company variable interest entities’ short-term borrowings, and long-term debt activity in 2013 see Note 4 to the financial statements herein.

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.

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Federal Regulation

See the Form 10-K for a discussion of federal regulatory proceedings.  Following are updates to that discussion.

System Agreement

Utility Operating Company Notices of Termination of System Agreement Participation

As discussed in the Form 10-K, in November 2012 the Utility operating companies filed amendments to the System Agreement with the FERC pursuant to section 205 of the Federal Power Act.  The LPSC, MPSC, PUCT, and City Council filed protests at the FERC regarding the amendments and other aspects of the Utility operating companies’ future operating arrangements, including requests that the continued viability of the System Agreement in MISO (among other issues) be set for hearing by the FERC.  On March 12, 2013, the Utility operating companies filed an answer to the protests.  The answer proposed, among other things, that: (1) the FERC allow the System Agreement revisions to go into effect as of December 19, 2013, without a hearing and for an initial two-year transition period; (2) no later than October 18, 2013, Entergy Services submit a filing pursuant to section 205 of the Federal Power Act that provides Entergy Texas’s notice of cancellation to terminate participation in the System Agreement and responds to the PUCT’s position that Entergy Texas be allowed to terminate its participation prior to the end of the mandatory 96-month notice period; and (3) at least six months prior to the end of the two-year transition period, Entergy Services submits an additional filing under section 205 of the Federal Power Act that addresses the allocation of MISO charges and credits among the Utility operating companies that remain in the System Agreement.  Prior to the filing to be made no later than October 18, 2013, Entergy Services, Entergy Texas, and Entergy will exercise reasonable best efforts to engage the Utility operating companies and their retail regulators in searching for a consensual means of allowing Entergy Texas to exit the System Agreement prior to the end of the mandatory 96-month notice period.  If a consensual resolution is reached on such early termination, the filing will reflect such a resolution.  The matter remains pending at the FERC.

Entergy’s Proposal to Join MISO

See the Form 10-K for a discussion of the Utility operating companies’ proposal to join MISO.  Following are updates to that discussion.

On April 8, 2013, the APSC issued an order resolving the outstanding issues in Entergy Arkansas’s change of control docket and granted Entergy Arkansas’s application subject to the conditions set forth in the APSC’s October 2012 order.  On April 18, 2013, the Public Service Commission of Missouri consolidated for purposes of a hearing in June 2013 Entergy Arkansas’s separate MISO case that is related to Entergy Arkansas’s notice of its intent to integrate into MISO with the Entergy and ITC case that is related to the proposal to spin off and merge the transmission business with ITC.

On April 3, 2013, the PUCT staff filed a study performed by its independent consultant assessing Entergy Texas’s January 2013 updated analysis of the effect of termination of certain power purchase agreements on Entergy Texas’s costs upon Entergy Texas’s exit from the System Agreement.  While the independent consultant study concluded that the adjustments made in Entergy Texas’s updated analysis were analytically correct, the consultant also recommended further study regarding the effect of the termination of the power purchase agreements on the benefits associated with Entergy Texas joining MISO.  On April 5, 2013, Entergy Texas filed a response to the consultant study, noting a number of errors in the analysis and recommending against any further study of this matter.

On March 28, 2013, the FERC issued an order conditionally accepting MISO’s proposed tariff changes related to the allocation of long-term transmission rights and auction revenue rights, subject to a further compliance filing.  The amendments are intended to address the anticipated integration of the Utility operating companies, as well as other load-serving entities and transmission-owning utilities, into the MISO region.

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FERC Reliability Standards Investigation

On March 19, 2013, the FERC issued an order approving a settlement between Entergy Services and the FERC Enforcement Staff (the Staff) arising from the Staff’s November 20, 2012 “Notice of Alleged Violations” which stated that the Staff had concluded that Entergy Services’s practices in certain areas violated various requirements of the North American Electric Reliability Corporation reliability standards.  Under the terms of the settlement, Entergy Services neither admits nor denies the alleged violations, but agrees to pay a civil penalty of $975,000 and undertake certain mitigation activities agreed to during discussions with Staff.

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 sells energy in the day ahead or spot markets.  In addition to selling the energy produced by its plants, Entergy Wholesale Commodities 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 also uses a combination of financial contracts, including swaps, collars, put and/or call options, to manage forward commodity price risk.  Certain hedge volumes have price downside and upside relative to market price movement.  The contracted minimum, expected value, and sensitivity are provided to show potential variations.  While the sensitivity reflects the minimum, it does not reflect the total maximum upside potential from higher market prices.  The information contained in the table below 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 March 31, 2013 (2013 represents the remainder of the year).

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Entergy Wholesale Commodities Nuclear Portfolio

	2013	2014	2015	2016	2017
Energy
Percent of planned generation under contract (a):
Unit-contingent (b)	41%	22%	12%	12%	13%
Unit-contingent with availability guarantees (c)	20%	15%	13%	13%	13%
Firm LD (d)	23%	58%	14%	-%	-%
Offsetting positions (e)	-%	(19)%	-%	-%	-%
Total	84%	76%	39%	25%	26%
Planned generation (TWh) (f) (g)	31	41	41	40	41
Average revenue per MWh on contracted volumes:
Minimum	$44	$44	$45	$50	$51
Expected based on market prices as of March 31, 2013	$45	$47	$48	$51	$52
Sensitivity: -/+ $10 per MWh market price change	$44-$48	$44-$51	$45-$54	$50-$54	$51-$55
Capacity
Percent of capacity sold forward (h):
Bundled capacity and energy contracts (i)	16%	16%	16%	16%	16%
Capacity contracts (j)	35%	17%	12%	18%	9%
Total	51%	33%	28%	34%	25%
Planned net MW in operation (g) (k)	5,011	5,011	5,011	5,011	5,011
Average revenue under contract per kW per month (applies to capacity contracts only)	$2.0	$2.4	$3.3	$3.2	$3.2
Total Nuclear Energy and Capacity Revenues
Expected sold and market total revenue per MWh	$48	$47	$47	$49	$51
Sensitivity: -/+ $10 per MWh market price change	$46-$53	$44-$53	$40-$55	$42-$57	$43-$58

Entergy Wholesale Commodities Non-Nuclear Portfolio

	2013	2014	2015	2016	2017
Energy
Percent of planned generation under contract (a):
Cost-based contracts (l)	35%	32%	35%	32%	32%
Firm LD (d)	6%	6%	6%	6%	6%
Total	41%	38%	41%	38%	38%
Planned generation (TWh) (f) (m)	5	6	6	6	6
Capacity
Percent of capacity sold forward (h):
Cost-based contracts (l)	30%	24%	24%	24%	26%
Bundled capacity and energy contracts (i)	9%	8%	8%	8%	8%
Capacity contracts (j)	45%	50%	48%	47%	21%
Total	84%	82%	80%	79%	55%
Planned net MW in operation (k) (m)	1,052	1,052	1,052	1,052	977

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Management’s Financial Discussion and Analysis

(a)	Percent of planned generation output sold or purchased forward under contracts, forward physical contracts, forward financial contracts, or options that mitigate price uncertainty that may require regulatory approval or approval of transmission rights.
(b)	Transaction under which power is supplied from a specific generation asset; if the asset is not operating, seller is generally not liable to buyer for any damages.
(c)	A sale of power on a unit-contingent basis coupled with a guarantee of availability provides 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.
(d)	Transaction that requires receipt or delivery of energy at a specified delivery point (usually at a market hub not associated with a specific asset) or settles financially on notional quantities; if a party fails to deliver or receive energy, defaulting party must compensate the other party as specified in the contract, a portion of which may be capped through the use of risk management products.
(e)	Transactions for the purchase of energy, generally to offset a firm LD transaction.
(f)	Amount of output expected to be generated by Entergy Wholesale Commodities resources considering plant operating characteristics, outage schedules, and expected market conditions that effect dispatch.
(g)	Assumes NRC license renewal for plants whose current licenses expire within five years and uninterrupted normal operation at all plants.  NRC license renewal applications are in process for two units, as follows (with current license expirations in parentheses): Indian Point 2 (September 2013) and Indian Point 3 (December 2015).  For a discussion regarding the continued operation of the Vermont Yankee plant, see “Impairment of Long-Lived Assets” in Note 11 to the financial statements herein and Note 1 to the financial statements in the Form 10-K.  For a discussion regarding the license renewals for Indian Point 2 and Indian Point 3, see “Entergy Wholesale Commodities Authorizations to Operate Its Nuclear Power Plants” above.
(h)	Percent of planned qualified capacity sold to mitigate price uncertainty under physical or financial transactions.
(i)	A contract for the sale of installed capacity and related energy, priced per megawatt-hour sold.
(j)	A contract for the sale of an installed capacity product in a regional market.
(k)	Amount of capacity to be available to generate power and/or sell capacity considering uprates planned to be completed during the year.
(l)	Contracts priced in accordance with cost-based rates, a ratemaking concept used for the design and development of rate schedules to ensure that the filed rate schedules recover only the cost of providing the service; these contracts are on owned non-utility resources located within Entergy’s Utility service area, which do not operate under market-based rate authority.  The percentage sold assumes approval of long-term transmission rights.  Includes sales to the Utility through 2013 of 121 MW of capacity and energy from Entergy Power sourced from Independence Steam Electric Station Unit 2.
(m)	Non-nuclear planned generation and net MW in operation include purchases from affiliated and non-affiliated counterparties under long-term contracts and exclude energy and capacity from Entergy Wholesale Commodities’ wind investment and from the 544 MW Ritchie plant that is not planned to operate.

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 March 31, 2013 market conditions, planned generation volumes, and hedged positions, would have a corresponding effect on pre-tax net income of $122 million in 2013.

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Management’s Financial Discussion and Analysis

Some of the agreements to sell the power produced by Entergy Wholesale Commodities’ power plants contain provisions that require an Entergy subsidiary to provide collateral to secure its obligations under the agreements.  The Entergy subsidiary is required to provide collateral based upon the difference between the current market and contracted power prices in the regions where Entergy Wholesale Commodities sells power.  The primary form of collateral to satisfy these requirements is an Entergy Corporation guaranty.  Cash and letters of credit are also acceptable forms of collateral.  At March 31, 2013, based on power prices at that time, Entergy had liquidity exposure of $203 million under the guarantees in place supporting Entergy Wholesale Commodities transactions, $20 million of guarantees that support letters of credit, and $7 million of posted cash collateral to the ISOs.  As of March 31, 2013, the liquidity exposure associated with Entergy Wholesale Commodities assurance requirements, including return of previously posted collateral from counterparties, would increase by $82 million for a $1 per MMBtu increase in gas prices in both the short-and long-term markets.  In the event of a decrease in Entergy Corporation’s credit rating to below investment grade, based on power prices as of March 31, 2013, Entergy would have been required to provide approximately $54 million of additional cash or letters of credit under some of the agreements.

As of March 31, 2013, substantially all of the counterparties or their guarantors for 100% of the planned energy output under contract for Entergy Wholesale Commodities nuclear plants through 2017 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.

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, unbilled revenue, impairment of long-lived assets and trust fund investments, qualified pension and other postretirement benefits, and other contingencies.  Following is an update to that discussion.

Nuclear Decommissioning Costs

In the first quarter of 2013, Entergy Wholesale Commodities recorded a revision to its estimated decommissioning cost liability for a nuclear site as a result of a revised decommissioning cost study.  The revised estimate resulted in a $46.6 million reduction in the decommissioning cost liability, along with a corresponding reduction in the related asset retirement cost asset.

New Accounting Pronouncements

The accounting standard-setting process, including projects between the FASB and the International Accounting Standards Board (IASB) to converge U.S. GAAP and International Financial Reporting Standards, is ongoing and the FASB and the IASB are each currently working on several projects that have not yet resulted in final pronouncements.  Final pronouncements that result from these projects could have a material effect on Entergy’s future net income, financial position, or cash flows.

14

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15

ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
	2013			2012
	(In Thousands, Except Share Data)
OPERATING REVENUES
Electric	$	1,949,280		$	1,784,841
Natural gas		53,321			46,008
Competitive businesses		606,273			552,810
TOTAL		2,608,874			2,383,659
OPERATING EXPENSES
Operating and Maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale		510,333			538,837
Purchased power		373,129			284,966
Nuclear refueling outage expenses		60,719			63,884
Asset impairment		-			355,524
Other operation and maintenance		754,258			721,635
Decommissioning		59,104			57,903
Taxes other than income taxes		151,095			137,170
Depreciation and amortization		300,876			280,215
Other regulatory charges		5,315			382
TOTAL		2,214,829			2,440,516
OPERATING INCOME (LOSS)		394,045			(56,857	)
OTHER INCOME
Allowance for equity funds used during construction		12,751			24,307
Interest and investment income		38,306			40,992
Miscellaneous - net		(13,623	)		(17,990	)
TOTAL		37,434			47,309
INTEREST EXPENSE
Interest expense		153,149			146,745
Allowance for borrowed funds used during construction		(5,188	)		(9,391	)
TOTAL		147,961			137,354
INCOME (LOSS) BEFORE INCOME TAXES		283,518			(146,902	)
Income taxes		116,536			(162	)
CONSOLIDATED NET INCOME (LOSS)		166,982			(146,740	)
Preferred dividend requirements of subsidiaries		5,582			4,943
NET INCOME (LOSS) ATTRIBUTABLE TO ENTERGY CORPORATION	$	161,400		$	(151,683	)
Earnings (loss) per average common share:
Basic	$	0.91		$	(0.86	)
Diluted	$	0.90		$	(0.86	)
Dividends declared per common share	$	0.83		$	0.83
Basic average number of common shares outstanding		178,027,961			176,865,363
Diluted average number of common shares outstanding		178,413,287			177,388,045
See Notes to Financial Statements.

16

ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
	2013			2012
	(In Thousands)
Net Income (loss)	$	166,982		$	(146,740	)
Other comprehensive income (loss)
Cash flow hedges net unrealized gain (loss)
(net of tax expense (benefit) of ($41,135) and $75,494)		(75,975	)		145,435
Pension and other postretirement liabilities
(net of tax expense of $5,869 and $3,876)		9,795			6,266
Net unrealized investment gains
(net of tax expense of $54,311 and $49,138)		56,377			50,107
Foreign currency translation
(net of tax expense (benefit) of ($416) and $167)		(772	)		311
Other comprehensive income (loss)		(10,575	)		202,119
Comprehensive Income		156,407			55,379
Preferred dividend requirements of subsidiaries		5,582			4,943
Comprehensive Income Attributable to Entergy Corporation	$	150,825		$	50,436
See Notes to Financial Statements.

17

ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
	2013			2012
	(In Thousands)
OPERATING ACTIVITIES
Consolidated net income (loss)	$	166,982		$	(146,740	)
Adjustments to reconcile consolidated net income (loss) to net cash flow
provided by operating activities:
Depreciation, amortization, and decommissioning, including nuclear fuel amortization		472,933			450,009
Deferred income taxes, investment tax credits, and non-current taxes accrued		98,671			38,858
Asset impairment		-			355,524
Changes in working capital:
Receivables		(29,845	)		156,202
Fuel inventory		(5,147	)		(20,213	)
Accounts payable		(40,861	)		(145,599	)
Prepaid taxes and taxes accrued		(35,648	)		(89,583	)
Interest accrued		(30,570	)		(32,194	)
Deferred fuel costs		(2,149	)		77,405
Other working capital accounts		(151,958	)		(34,753	)
Changes in provisions for estimated losses		(245,972	)		(15,030	)
Changes in other regulatory assets		167,634			60,857
Changes in pensions and other postretirement liabilities		32,696			(4,764	)
Other		147,223			(49,479	)
Net cash flow provided by operating activities		543,989			600,500
INVESTING ACTIVITIES
Construction/capital expenditures		(631,857	)		(563,539	)
Allowance for equity funds used during construction		13,672			25,448
Nuclear fuel purchases		(145,168	)		(201,059	)
Changes in securitization account		1,601			940
NYPA value sharing payment		(71,736	)		(72,000	)
Payments to storm reserve escrow account		(2,219	)		(1,483	)
Receipts from storm reserve escrow account		252,482			861
Decrease (increase) in other investments		(44,298	)		93,786
Proceeds from nuclear decommissioning trust fund sales		398,010			535,551
Investment in nuclear decommissioning trust funds		(432,247	)		(567,780	)
Net cash flow used in investing activities		(661,760	)		(749,275	)
See Notes to Financial Statements.

18

ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
	2013			2012
	(In Thousands)
FINANCING ACTIVITIES
Proceeds from the issuance of:
Long-term debt		564,717			1,034,945
Mandatorily redeemable preferred membership units of subsidiary		-			51,000
Treasury stock		8,102			32,826
Retirement of long-term debt		(849,860	)		(859,648	)
Changes in credit borrowings and commercial paper - net		277,886			32,782
Dividends paid:
Common stock		(147,902	)		(146,674	)
Preferred stock		(5,582	)		(5,582	)
Net cash flow provided by (used in) financing activities		(152,639	)		139,649
Effect of exchange rates on cash and cash equivalents		772			(310	)
Net decrease in cash and cash equivalents		(269,638	)		(9,436	)
Cash and cash equivalents at beginning of period		532,569			694,438
Cash and cash equivalents at end of period	$	262,931		$	685,002
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized	$	138,217		$	134,655
Income taxes	$	12,341		$	35,992
See Notes to Financial Statements.

19

ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, 2013 and December 31, 2012
(Unaudited)
	2013			2012
	(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash	$	66,114		$	112,992
Temporary cash investments		196,817			419,577
Total cash and cash equivalents		262,931			532,569
Securitization recovery trust account		44,438			46,040
Accounts receivable:
Customer		636,694			568,871
Allowance for doubtful accounts		(32,122	)		(31,956	)
Other		157,978			161,408
Accrued unbilled revenues		269,010			303,392
Total accounts receivable		1,031,560			1,001,715
Deferred fuel costs		83,758			150,363
Accumulated deferred income taxes		192,816			306,902
Fuel inventory - at average cost		218,978			213,831
Materials and supplies - at average cost		928,103			928,530
Deferred nuclear refueling outage costs		318,024			243,374
System agreement cost equalization		16,880			16,880
Prepayments and other		225,385			242,922
TOTAL		3,322,873			3,683,126
OTHER PROPERTY AND INVESTMENTS
Investment in affiliates - at equity		45,977			46,738
Decommissioning trust funds		4,452,707			4,190,108
Non-utility property - at cost (less accumulated depreciation)		260,068			256,039
Other		188,473			436,234
TOTAL		4,947,225			4,929,119
PROPERTY, PLANT AND EQUIPMENT
Electric		42,064,616			41,944,567
Property under capital lease		934,495			935,199
Natural gas		356,988			353,492
Construction work in progress		1,413,897			1,365,699
Nuclear fuel		1,607,352			1,598,430
TOTAL PROPERTY, PLANT AND EQUIPMENT		46,377,348			46,197,387
Less - accumulated depreciation and amortization		19,067,907			18,898,842
PROPERTY, PLANT AND EQUIPMENT - NET		27,309,441			27,298,545
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Regulatory asset for income taxes - net		752,696			742,030
Other regulatory assets (includes securitization property of
$894,330 as of March 31, 2013 and $914,751 as of
December 31, 2012)		4,860,886			5,025,912
Deferred fuel costs		172,202			172,202
Goodwill		377,172			377,172
Accumulated deferred income taxes		66,833			37,748
Other		983,645			936,648
TOTAL		7,213,434			7,291,712
TOTAL ASSETS	$	42,792,973		$	43,202,502
See Notes to Financial Statements.

20

ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
March 31, 2013 and December 31, 2012
(Unaudited)
	2013			2012
	(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt	$	630,622		$	718,516
Notes payable and commercial paper		1,073,888			796,002
Accounts payable		1,036,122			1,217,180
Customer deposits		361,299			359,078
Taxes accrued		298,071			333,719
Accumulated deferred income taxes		15,004			13,109
Interest accrued		154,095			184,664
Deferred fuel costs		27,684			96,439
Obligations under capital leases		3,495			3,880
Pension and other postretirement liabilities		97,404			95,900
System agreement cost equalization		16,880			25,848
Other		181,856			261,986
TOTAL		3,896,420			4,106,321
NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued		8,348,976			8,311,756
Accumulated deferred investment tax credits		270,912			273,696
Obligations under capital leases		33,976			34,541
Other regulatory liabilities		1,046,106			898,614
Decommissioning and asset retirement cost liabilities		3,525,687			3,513,634
Accumulated provisions		116,542			362,226
Pension and other postretirement liabilities		3,757,078			3,725,886
Long-term debt (includes securitization bonds of $951,520 as of
March 31, 2013 and $973,480 as of December 31, 2012)		11,729,134			11,920,318
Other		574,555			577,910
TOTAL		29,402,966			29,618,581
Commitments and Contingencies
Subsidiaries' preferred stock without sinking fund		186,511			186,511
EQUITY
Common Shareholders' Equity:
Common stock, $.01 par value, authorized 500,000,000 shares;
issued 254,752,788 shares in 2013 and in 2012		2,548			2,548
Paid-in capital		5,349,885			5,357,852
Retained earnings		9,718,171			9,704,591
Accumulated other comprehensive loss		(303,658	)		(293,083	)
Less - treasury stock, at cost (76,656,819 shares in 2013 and
76,945,239 shares in 2012)		5,553,870			5,574,819
Total common shareholders' equity		9,213,076			9,197,089
Subsidiaries' preferred stock without sinking fund		94,000			94,000
TOTAL		9,307,076			9,291,089
TOTAL LIABILITIES AND EQUITY	$	42,792,973		$	43,202,502
See Notes to Financial Statements.

21

ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
				Common Shareholders' Equity
	Subsidiaries' Preferred Stock			Common Stock		Treasury Stock			Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
	(In Thousands)
Balance at December 31, 2011	$	94,000		$	2,548	$	(5,680,468	)	$	5,360,682		$	9,446,960		$	(168,452	)	$	9,055,270
Consolidated net income (loss) (a)		4,943			-		-			-			(151,683	)		-			(146,740	)
Other comprehensive income		-			-		-			-			-			202,119			202,119
Common stock issuances related to stock plans		-			-		57,995			(8,426	)		-			-			49,569
Common stock dividends declared		-			-		-			-			(147,015	)		-			(147,015	)
Preferred dividend requirements of subsidiaries (a)		(4,943	)		-		-			-			-			-			(4,943	)
Balance at March 31, 2012	$	94,000		$	2,548	$	(5,622,473	)	$	5,352,256		$	9,148,262		$	33,667		$	9,008,260
Balance at December 31, 2012	$	94,000		$	2,548	$	(5,574,819	)	$	5,357,852		$	9,704,591		$	(293,083	)	$	9,291,089
Consolidated net income (a)		5,582			-		-			-			161,400			-			166,982
Other comprehensive loss		-			-		-			-			-			(10,575	)		(10,575	)
Common stock issuances related to stock plans		-			-		20,949			(7,967	)		-			-			12,982
Common stock dividends declared		-			-		-			-			(147,820	)		-			(147,820	)
Preferred dividend requirements of subsidiaries (a)		(5,582	)		-		-			-			-			-			(5,582	)
Balance at March 31, 2013	$	94,000		$	2,548	$	(5,553,870	)	$	5,349,885		$	9,718,171		$	(303,658	)	$	9,307,076
See Notes to Financial Statements.
(a) Consolidated net income and preferred dividend requirements of subsidiaries for 2013 and 2012 include $3.9 million and $3.3 million, respectively, of preferred dividends on subsidiaries' preferred stock without sinking fund that is not presented within equity.

22

ENTERGY CORPORATION AND SUBSIDIARIES
SELECTED OPERATING RESULTS
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
					Increase/
Description	2013		2012		(Decrease)			%
	(Dollars in Millions)
Utility Electric Operating Revenues:
Residential	$	751	$	670	$	81			12
Commercial		523		503		20			4
Industrial		544		489		55			11
Governmental		52		48		4			8
Total retail		1,870		1,710		160			9
Sales for resale		52		39		13			33
Other		27		36		(9	)		(25	)
Total	$	1,949	$	1,785	$	164			9
Utility Billed Electric Energy
Sales (GWh):
Residential		8,344		7,760		584			8
Commercial		6,421		6,414		7			-
Industrial		9,868		9,958		(90	)		(1	)
Governmental		584		578		6			1
Total retail		25,217		24,710		507			2
Sales for resale		630		732		(102	)		(14	)
Total		25,847		25,442		405			2
Entergy Wholesale Commodities:
Operating Revenues	$	614	$	560	$	54			10
Billed Electric Energy Sales (GWh)		10,387		11,281		(894	)		(8	)

23

ENTERGY CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

NOTE 1.  COMMITMENTS AND CONTINGENCIES  (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, 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 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, discusses tax proceedings in Note 3 to the financial statements in the Form 10-K and Note 10 to the financial statements herein, and discusses a judicial proceeding involving Vermont Yankee in Note 1 to the financial statements in the Form 10-K and in Note 11 to the financial statements herein.

ANO Damage and Outage

On March 31, 2013, during a scheduled refueling outage at ANO 1, a contractor-owned and operated heavy-lifting apparatus collapsed while moving the generator stator out of the turbine building.  The collapse resulted in the death of an ironworker and injuries to several other contract workers, caused ANO 2 to shut down, and damaged the ANO turbine building.  The turbine building serves both ANO 1 and 2 and is a non-radiological area of the plant.  Entergy is still analyzing the incident; the extent of the damage; the cost of assessment, debris removal, and replacing damaged property and equipment; and the schedule for restoring ANO 1 to service, but was able to restart ANO 2 on April 28, 2013.  In addition, Entergy Arkansas incurred replacement power costs for ANO 2 power during its outage and expects to incur incremental replacement power costs for ANO 1 power to the extent its outage extends beyond the originally-planned duration of the refueling outage.  Each of the Utility operating companies has recovery mechanisms in place designed to recover its prudently-incurred fuel and purchased power costs.

Entergy Arkansas is assessing its options for recovering damages that resulted from the stator drop, including its insurance coverage.  Entergy is a member of Nuclear Electric Insurance Limited (NEIL), a mutual insurance company that provides property damage coverage to the members’ nuclear generating plants, including ANO.  NEIL has notified Entergy that it believes that a $50 million course of construction sublimit applies to any loss associated with the lifting apparatus failure and stator drop at ANO.  Entergy has responded that it disagrees with NEIL's position and is evaluating its options for enforcing its rights under the policy.

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.

Conventional Property Insurance

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

24

Entergy Corporation and Subsidiaries

Notes to Financial Statements

Employment Litigation

The Registrant Subsidiaries and other Entergy subsidiaries are responding to various lawsuits in both state and federal courts and to other labor-related proceedings filed by current and former employees and third parties not selected for open positions.  These actions include, but are not limited to, allegations of wrongful employment actions; wage disputes and other claims under the Fair Labor Standards Act or its state counterparts; claims of race, gender and disability discrimination; disputes arising under collective bargaining agreements; unfair labor practice proceedings and other administrative proceedings before the National Labor Relations Board; claims of retaliation; and claims for or regarding benefits under various Entergy Corporation sponsored plans.  Entergy and the Registrant Subsidiaries are responding to these lawsuits and proceedings and deny liability to the claimants.

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

See Note 8 to the financial statements in the Form 10-K for information regarding asbestos litigation at Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas.

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

Regulatory Assets

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

Fuel and Purchased Power Cost Recovery

Entergy Louisiana

In April 2010 the LPSC authorized its staff to initiate an audit of Entergy Louisiana’s fuel adjustment clause filings.  The audit includes a review of the reasonableness of charges flowed through the fuel adjustment clause by Entergy Louisiana for the period from 2005 through 2009.  The LPSC Staff issued its audit report in January 2013.  The LPSC staff recommended that Entergy Louisiana refund approximately $1.9 million, plus interest, to customers and realign the recovery of approximately $1 million from Entergy Louisiana’s fuel adjustment clause to base rates.  Two parties have intervened in the proceeding.  A procedural schedule has been established for the identification of issues by the intervenors and for Entergy Louisiana to submit comments regarding the LPSC Staff report, with this process to be completed by October 4, 2013.  If any open issues remain, a procedural schedule will be established to address those issues.  Entergy Louisiana has recorded provisions for the estimated outcome of this proceeding.

Entergy Texas

In November 2012, Entergy Texas filed a pleading seeking a PUCT finding that special circumstances exist for limited cost recovery of capacity costs associated with two power purchase agreements until such time that these costs are included in base rates or a purchased capacity recovery rider or other recovery mechanism.  In March 2013 the PUCT Staff and intervenors filed a joint motion to dismiss Entergy Texas’s application seeking special circumstances recovery of these capacity costs.  Entergy Texas filed a response and the matter remains pending.

     At the April 11, 2013 open meeting, the PUCT Commissioners discussed their view that a purchased power capacity rider was good public policy.  The PUCT subsequently proposed a second draft of the rule that incorporates a pre-approval process as discussed at the meeting.  A final decision is expected by the end of May 2013.  If the PUCT finalizes the rule, Entergy Texas would have the option to recover its capacity costs under the new rider mechanism or could proceed with a full base rate proceeding.

25

Entergy Corporation and Subsidiaries

Notes to Financial Statements

Retail Rate Proceedings

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

Filings with the APSC (Entergy Arkansas)

Retail Rates

2013 Base Rate Filing

In March 2013, Entergy Arkansas filed with the APSC for a general change in rates, charges, and tariffs.  Recognizing that the final structure of Entergy Arkansas’s transmission business has not been determined, the filing presents two alternative scenarios for the APSC to establish the appropriate level of rates for Entergy Arkansas.  In the primary scenario, which assumes that Entergy Arkansas will transition to MISO in December 2013, Entergy Arkansas requests a rate increase of $174 million, including $49 million of revenue being transferred from collection in riders to base rates.  The alternate scenario, which also assumes completion of the proposed spin-merge of the transmission business with ITC, reflects a $218 million total rate increase request.  Both scenarios propose a new transmission rider and a capacity cost recovery rider.  The filing requests a 10.4% return on common equity.  The APSC established a procedural schedule that includes hearings in the proceeding beginning in October 2013. New rates are expected to become effective by January 2014.

Filings with the LPSC

Retail Rates - Electric

(Entergy Gulf States Louisiana)

In November 2011 the LPSC approved a one-year extension of Entergy Gulf States Louisiana’s formula rate plan.  In May 2012, Entergy Gulf States Louisiana made its formula rate plan filing with the LPSC for the 2011 test year.  The filing reflected an 11.94% earned return on common equity, which is above the earnings bandwidth and would indicate a $6.5 million cost of service rate change was necessary under the formula rate plan.  The filing also reflected a $22.9 million rate decrease for incremental capacity costs.  Subsequently, in August 2012, Entergy Gulf States Louisiana submitted a revised filing that reflected an earned return on common equity of 11.86% indicating a $5.7 million cost of service rate decrease is necessary under the formula rate plan.  The revised filing also indicates that a reduction of $20.3 million should be reflected in the incremental capacity rider.  The rate reductions were implemented, subject to refund, effective for bills rendered the first billing cycle of September 2012.  The September 2012 rate change reduced Entergy Gulf States Louisiana’s revenues by approximately $8.7 million in 2012.  Subsequently, in December 2012, Entergy Gulf States Louisiana submitted a revised evaluation report that reflects expected retail jurisdictional cost of $16.9 million for the first-year capacity charges for the purchase from Entergy Louisiana of one-third of Acadia Unit 2 capacity and energy.  This rate change was implemented effective with the first billing cycle of January 2013.  The 2011 test year filings, as revised, were approved by the LPSC in February 2013.  In April 2013, Entergy Gulf States Louisiana submitted a revised evaluation report increasing the incremental capacity rider by approximately $7.3 million to reflect the cost of an additional capacity contract.

See Note 2 to the financial statements in the Form 10-K for a discussion of the base rate case filed by Entergy Gulf States Louisiana with the LPSC in February 2013.  In April 2013 the LPSC established a procedural schedule providing for hearings in November 2013, with a decision by the LPSC expected by February 2014.

(Entergy Louisiana)

In November 2011 the LPSC approved a one-year extension of Entergy Louisiana’s formula rate plan.  In May 2012, Entergy Louisiana made its formula rate plan filing with the LPSC for the 2011 test year.  The filing reflected a 9.63% earned return on common equity, which is within the earnings bandwidth and results in no cost of service rate change under the formula rate plan.  The filing also reflected an $18.1 million rate increase for incremental capacity costs.  In August 2012, Entergy Louisiana submitted a revised filing that reflects an earned return on common equity of 10.38%, which is still within the earnings bandwidth, resulting in no cost of service rate change.  The revised filing also indicates that an increase of $15.9 million should be reflected in the

26

Entergy Corporation and Subsidiaries

Notes to Financial Statements

incremental capacity rider.  The rate change was implemented, subject to refund, effective for bills rendered the first billing cycle of September 2012.  The September 2012 rate change contributed approximately $5.3 million to Entergy Louisiana’s revenues in 2012.  Subsequently, in December 2012, Entergy Louisiana submitted a revised evaluation report that reflects two items: 1) a $17 million reduction for the first-year capacity charges for the purchase by Entergy Gulf States Louisiana from Entergy Louisiana of one-third of Acadia Unit 2 capacity and energy, and 2) an $88 million increase for the first-year retail revenue requirement associated with the Waterford 3 replacement steam generator project, which was in-service in December 2012.  These rate changes were implemented, subject to refund, effective with the first billing cycle of January 2013.  In April 2013, Entergy Louisiana and the LPSC staff filed a joint report resolving the 2011 test year formula rate plan and recovery related to the Grand Gulf uprate.  This report was approved by the LPSC in April 2013.  With completion of the Waterford 3 replacement steam generator project, the LPSC will undertake a prudence review in connection with a filing made by Entergy Louisiana in April 2013 with regard to the following aspects of the replacement project: 1) project management; 2) cost controls; 3) success in achieving stated objectives; 4) the costs of the replacement project; and 5) the outage length and replacement power costs.

See Note 2 to the financial statements in the Form 10-K for a discussion of the base rate case filed by Entergy Louisiana with the LPSC in February 2013.  In April 2013 the LPSC established a procedural schedule providing for hearings in December 2013, with a decision by the LPSC expected by February 2014.

Retail Rates - Gas (Entergy Gulf States Louisiana)

In January 2013, Entergy Gulf States Louisiana filed with the LPSC its gas rate stabilization plan for the test year ended September 30, 2012.  The filing showed an earned return on common equity of 11.18%, which results in a $43 thousand rate reduction.  In March 2013 the LPSC Staff issued its proposed findings and recommended two adjustments.  The first is to normalize property insurance expense, and the second is to modify the return on equity for gas operations to reflect the return on equity that ultimately is approved by the LPSC in the investigation previously initiated by the LPSC to review the return on equity for Louisiana gas utilities.  Exceptions to the LPSC Staff report were due April 25, 2013, however, the parties have agreed to an extension of time through May 10, 2013 for Entergy Gulf States Louisiana to submit its response to the LPSC Staff’s findings.

Filings with the MPSC (Entergy Mississippi)

Formula Rate Plan Filings

In March 2013, Entergy Mississippi submitted its formula rate plan 2012 test year filing.  The filing requests a $36.3 million revenue increase to reset Entergy Mississippi's return on common equity to 10.55%, which is a point within the formula rate plan bandwidth.  The formula rate plan calls for new rates to be implemented in June 2013 (or in July 2013 if any part of the filing is disputed by the Mississippi Public Utilities Staff).  The filing is currently subject to MPSC review.  A scheduling order was filed in April 2013 setting a hearing for July 2, 2013, with a final order to be issued on or before July 15, 2013 and revised rate adjustments to begin billing on July 28, 2013.

Filings with the City Council (Entergy Louisiana)

In March 2013, Entergy Louisiana filed a rate case for the Algiers area, which is in New Orleans and is regulated by the City Council.  Entergy Louisiana is requesting a rate increase of $13 million over three years, including a 10.4% return on common equity and a formula rate plan mechanism identical to its LPSC request.  New rates are currently expected to become effective in second quarter 2014.

System Agreement Cost Equalization Proceedings

See Note 2 to the financial statements in the Form 10-K for a discussion of the proceedings regarding the System Agreement.  Following are updates to that discussion.

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Notes to Financial Statements

Rough Production Cost Equalization Rates

2008 Rate Filing Based on Calendar Year 2007 Production Costs

See Note 2 to the financial statements in the Form 10-K for a discussion of this proceeding.  In March 2013 the LPSC filed a petition for review with the U.S. Court of Appeals for the Fifth Circuit seeking appellate review of the FERC’s earlier orders addressing the ALJ’s initial decision.

2009 Rate Filing Based on Calendar Year 2008 Production Costs

See Note 2 to the financial statements in the Form 10-K for a discussion of this proceeding.  In January 2013 the LPSC filed a protest of Entergy’s July 2012 compliance filing submitted in response to the FERC’s May 2012 order.

Interruptible Load Proceeding

See Note 2 to the financial statements in the Form 10-K for a discussion of the proceeding regarding the treatment under the System Agreement of the Utility operating companies’ interruptible loads.  On March 21, 2013, the FERC issued an order denying the LPSC's request for rehearing of the FERC's June 2011 order wherein the FERC concluded it would exercise its discretion and not order refunds in the interruptible load proceeding.  Based on its review of the LPSC’s request for rehearing and the briefs filed as part of the paper hearing established in October 2011, the FERC affirmed its earlier ruling and declined to order refunds under the circumstances of the case.

Storm Cost Recovery Filings with Retail Regulators

Entergy Gulf States Louisiana and Entergy Louisiana

Hurricane Isaac

See Note 2 to the financial statements in the Form 10-K for a discussion of Hurricane Isaac and the damage caused to portions of Entergy’s service area in Louisiana.  In January 2013, Entergy Gulf States Louisiana and Entergy Louisiana withdrew $65 million and $187 million, respectively, from their storm reserve escrow accounts.  In April 2013, Entergy Gulf States Louisiana and Entergy Louisiana filed a joint application with the LPSC relating to Hurricane Isaac system restoration costs.  Specifically, Entergy Gulf States Louisiana and Entergy Louisiana requested that the LPSC determine the amount of such costs that were prudently incurred and are, thus, eligible for recovery from customers.  Including carrying costs and additional storm escrow funds, Entergy Gulf States Louisiana is seeking an LPSC determination that $73.8 million in system restoration costs were prudently incurred and Entergy Louisiana is seeking an LPSC determination that $247.7 million in system restoration costs were prudently incurred.  Entergy Gulf States Louisiana and Entergy Louisiana intend to replenish their storm escrow accounts to $90 million and $200 million, respectively, primarily through traditional debt markets and have requested special rate treatment of any borrowings for that purpose.  This filing does not, however, seek to implement any rate change; rather, Entergy Gulf States Louisiana and Entergy Louisiana anticipate filing a supplemental application in May 2013 proposing a specific means to finance system restoration costs.  Entergy Gulf States Louisiana and Entergy Louisiana plan to pursue Louisiana Act 55 financing of the costs, which was the same method they used for Hurricanes Katrina, Rita, Gustav, and Ike.

Texas Power Price Lawsuit

See Note 2 to the financial statements in the Form 10-K for a discussion of the lawsuit filed in August 2003 in the district court of Chambers County, Texas by Texas residents on behalf of a purported class of the Texas retail customers of Entergy Gulf States, Inc. who were billed and paid for electric power from January 1, 1994 to the present.  The case is pending in state district court, and in March 2012 the court found that the case met the requirements to be maintained as a class action under Texas law.  In April 2012 the court entered an order certifying the class.  The defendants have appealed the order to the Texas Court of Appeals – First District.  The appeal is pending, and proceedings in district court are stayed until the appeal is resolved.  Oral arguments before the court of appeals were conducted on April 23, 2013, and the matter awaits that court’s decision.

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Notes to Financial Statements

Entergy Arkansas Opportunity Sales Proceeding

See Note 2 to the financial statements in the Form 10-K for a discussion of the Entergy Arkansas opportunity sales proceeding.  As required by the procedural schedule established in the calculation proceeding, Entergy filed its direct testimony that included a proposed illustrative re-run, consistent with the directives in FERC’s order, of intra-system bills for 2003, 2004, and 2006, the three years with the highest volume of opportunity sales.  Entergy’s proposed illustrative re-run of intra-system bills shows that the potential cost for Entergy Arkansas would be up to $12 million for the years 2003, 2004, and 2006, and the potential benefit would be significantly less than that for each of the other Utility operating companies.  Entergy’s proposed illustrative re-run of the intra-system bills also shows an offsetting potential benefit to Entergy Arkansas for the years 2003, 2004, and 2006 resulting from the effects of the FERC’s order on System Agreement Service Schedules MSS-1, MSS-2, and MSS-3, and the potential offsetting cost would be significantly less than that for each of the other Utility operating companies.  Entergy provided to the LPSC an illustrative intra-system bill recalculation as specified by the LPSC for the years 2003, 2004, and 2006, and the LPSC then filed answering testimony in December 2012.  In its testimony the LPSC claims that the damages that should be paid by Entergy Arkansas to the other Utility operating companies’ customers for 2003, 2004, and 2006 are $42 million to Entergy Gulf States, Inc., $7 million to Entergy Louisiana, $23 million to Entergy Mississippi, and $4 million to Entergy New Orleans; and that Entergy Arkansas “shareholders” should pay Entergy Arkansas customers $34 million.  The FERC staff and certain intervenors filed direct and answering testimony in February 2013.  In April 2013, Entergy filed its rebuttal testimony in that proceeding, including a revised illustrative re-run of the intra-system bills for the years 2003, 2004, and 2006.  The revised calculation determines the re-pricing of the opportunity sales based on consideration of moveable resources only and the removal of exchange energy received by Entergy Arkansas, which increases the potential cost for Entergy Arkansas over the three years 2003, 2004, and 2006 by $2.3 million from the potential costs identified in the Utility operating companies’ prior filings in September and October 2012.  A hearing is scheduled for May 2013, and the ALJ’s initial decision on the calculation of the effects is due by August 28, 2013.

NOTE 3.  EQUITY  (Entergy Corporation, Entergy Gulf States Louisiana, and Entergy Louisiana)

Common Stock

Earnings per Share

The following table presents Entergy’s basic and diluted earnings per share calculations included on the consolidated income statements:

	For the Three Months Ended March 31,
	2013							2012
	(In Millions, Except Per Share Data)
Basic earnings per share	Income		Shares		$/share			Income			Shares		$/share
Net income attributable to Entergy Corporation	$	161.4		178.0	$	0.91		$	(151.7	)		176.9	$	(0.86	)
Average dilutive effect of:
Stock options				0.1		-						0.5		-
Other equity plans				0.3		(0.01	)					-		-
Diluted earnings per share	$	161.4		178.4	$	0.90		$	(151.7	)		177.4	$	(0.86	)

Entergy’s stock options and other equity compensation plans are discussed in Note 5 herein and in Note 12 to the financial statements in the Form 10-K.

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Entergy Corporation and Subsidiaries

Notes to Financial Statements

Treasury Stock

During the three months ended March 31, 2013, Entergy Corporation issued 288,420 shares of its previously repurchased common stock to satisfy stock option exercises, vesting of shares of restricted stock, and other stock-based awards.  Entergy Corporation did not repurchase any of its common stock during the three months ended March 31, 2013.

Retained Earnings

On April 17, 2013, Entergy Corporation’s Board of Directors declared a common stock dividend of $0.83 per share, payable on June 3, 2013 to holders of record as of May 9, 2013.

Comprehensive Income

Accumulated other comprehensive loss is included in the equity section of the balance sheets of Entergy, Entergy Gulf States Louisiana, and Entergy Louisiana.  The following table presents changes in accumulated other comprehensive income (loss) for Entergy for the three months ended March 31, 2013 by component:

	Cash flow hedges net unrealized gain			Pension and other postretirement liabilities			Net unrealized investment gains			Foreign currency translation			Total Accumulated Other Comprehensive Loss
	(In Thousands)
Beginning balance, December 31, 2012	$	79,905		$	(590,712	)	$	214,547		$	3,177		$	(293,083	)
Other comprehensive income (loss) before reclassifications		(77,561	)		-			57,372			(772	)		(20,961	)
Amounts reclassified from accumulated other comprehensive income (loss)		1,586			9,795			(995	)		-			10,386
Net other comprehensive income (loss) for the period		(75,975	)		9,795			56,377			(772	)		(10,575	)
Ending balance, March 31, 2013	$	3,930		$	(580,917	)	$	270,924		$	2,405		$	(303,658	)

The following table presents changes in accumulated other comprehensive loss for Entergy Gulf States Louisiana and Entergy Louisiana for the three months ended March 31, 2013:

	Pension and Other Postretirement Liabilities
	Entergy Gulf States Louisiana			Entergy Louisiana
	(In Thousands)
Beginning balance, December 31, 2012	$	(65,229	)	$	(46,132	)
Amounts reclassified from accumulated other comprehensive loss		955			678
Net other comprehensive income for the period		955			678
Ending balance, March 31, 2013	$	(64,274	)	$	(45,454	)

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Entergy Corporation and Subsidiaries

Notes to Financial Statements

Total reclassifications out of accumulated other comprehensive loss (AOCI) for Entergy for the three months ended March 31, 2013 are as follows:

	Amounts reclassified from AOCI			Income Statement Location
	(In Thousands)
Cash flow hedges net unrealized gain
Power contracts	$	(2,117	)	Competitive business operating revenues
Interest rate swaps		(405	)	Miscellaneous - net
Total realized losses on cash flow hedges		(2,522	)
		936		Income taxes
Total realized losses on cash flow hedges (net of tax)	$	(1,586	)
Pension and other postretirement liabilities
Amortization of prior-service costs		2,384		(a)
Amortization of loss		(18,048	)	(a)
Total amortization		(15,664	)
		5,869		Income taxes
Total amortization (net of tax)	$	(9,795	)
Net unrealized investment gains
Realized gains (net of tax expense of $956)	$	995		Interest and investment income
Total reclassifications for the period (net of tax)	$	(10,386	)

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

Total reclassifications out of accumulated other comprehensive loss (AOCI) for Entergy Gulf States Louisiana and Entergy Louisiana for the three months ended March 31, 2013 are as follows:

	Amounts reclassified from AOCI
	Entergy Gulf States Louisiana			Entergy Louisiana			Income Statement Location
	(In Thousands)
Pension and other postretirement liabilities
Amortization of prior-service costs	$	206		$	62		(a)
Amortization of loss		(1,947	)		(1,287	)	(a)
Total amortization		(1,741	)		(1,225	)
		786			547		Income taxes
Total amortization (net of tax)		(955	)		(678	)
Total reclassifications for the period (net of tax)	$	(955	)	$	(678	)

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

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Entergy Corporation and Subsidiaries

Notes to Financial Statements

NOTE 4.  REVOLVING CREDIT FACILITIES, LINES OF CREDIT, SHORT-TERM BORROWINGS, AND LONG-TERM DEBT(Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Entergy Corporation has in place a credit facility that has a borrowing capacity of $3.5 billion and expires in March 2018.  Entergy Corporation also has the ability to issue letters of credit against 50% of the total borrowing capacity of the credit facility.  The commitment fee is currently 0.275% 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 three months ended March 31, 2013 was 1.98% on the drawn portion of the facility.  Following is a summary of the borrowings outstanding and capacity available under the facility as of March 31, 2013.

Capacity (a)	Borrowings	Letters of Credit	Capacity Available
(In Millions)
$3,500	$570	$8	$2,922

(a) The capacity decreases to $3,490 million in March 2017.

Entergy Corporation’s facility requires it to maintain a consolidated debt ratio of 65% or less of its total capitalization.  Entergy is in compliance with this covenant.  If Entergy fails to meet this ratio, or if Entergy Corporation or one of the Utility operating companies (except Entergy New Orleans) defaults on other indebtedness or is in bankruptcy or insolvency proceedings, an acceleration of the facility maturity date may occur.

Entergy Corporation has a commercial paper program with a program limit of up to $1 billion.  As of March 31, 2013, Entergy Corporation had $883.7 million of commercial paper outstanding.  The weighted-average interest rate for the three months ended March 31, 2013 was 0.84%.

Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas each had credit facilities available as of March 31, 2013 as follows:

Company	Expiration Date	Amount of Facility	Interest Rate (a)	Amount Drawn as of March 31, 2013
Entergy Arkansas	April 2013	$20 million (b)	1.78%	$-
Entergy Arkansas	March 2018	$150 million (c)	1.70%	$-
Entergy Gulf States Louisiana	March 2018	$150 million (d)	1.70%	$50 million
Entergy Louisiana	March 2018	$200 million (e)	1.70%	$-
Entergy Mississippi	May 2013	$35 million (f)	1.95%	$35 million
Entergy Mississippi	May 2013	$25 million (f)	1.95%	$25 million
Entergy Mississippi	May 2013	$10 million (f)	1.95%	$10 million
Entergy New Orleans	November 2013	$25 million (g)	1.68%	$25 million
Entergy Texas	March 2018	$150 million (h)	1.95%	$-

(a)	The interest rate is the rate as of March 31, 2013 that would most likely apply to outstanding borrowings under the facility.
(b)	The credit facility requires Entergy Arkansas to maintain a debt ratio of 65% or less of its total capitalization.  Borrowings under the Entergy Arkansas credit facility may be secured by a security interest in its accounts receivable.  The credit facility expired in April 2013.  Entergy Arkansas plans to renew the credit facility.
(c)	The credit facility allows Entergy Arkansas to issue letters of credit against 50% of the borrowing capacity of the facility.  As of March 31, 2013, no letters of credit were outstanding.  The credit facility requires Entergy Arkansas to maintain a consolidated debt ratio of 65% or less of its total capitalization.

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Notes to Financial Statements

(d)	The credit facility allows Entergy Gulf States Louisiana to issue letters of credit against 50% of the borrowing capacity of the facility.  As of March 31, 2013, no letters of credit were outstanding.  The credit facility requires Entergy Gulf States Louisiana to maintain a consolidated debt ratio of 65% or less of its total capitalization.
(e)	The credit facility allows Entergy Louisiana to issue letters of credit against 50% of the borrowing capacity of the facility.  As of March 31, 2013, no letters of credit were outstanding.  The credit facility requires Entergy Louisiana to maintain a consolidated debt ratio of 65% or less of its total capitalization.
(f)	Borrowings under the Entergy Mississippi credit facilities may be secured by a security interest in its accounts receivable.  Entergy Mississippi is required to maintain a consolidated debt ratio of 65% or less of its total capitalization.  Prior to expiration on May 31, 2013, Entergy Mississippi expects to renew all of its credit facilities.
(g)	The credit facility requires Entergy New Orleans to maintain a debt ratio of 65% or less of its total capitalization.
(h)	The credit facility allows Entergy Texas to issue letters of credit against 50% of the borrowing capacity of the facility.  As of March 31, 2013, no letters of credit were outstanding.  The credit facility requires Entergy Texas to maintain a consolidated debt ratio of 65% or less of its total capitalization.

The commitment fees on the credit facilities range from 0.125% to 0.275% of the undrawn commitment amount.

The short-term borrowings of the Registrant Subsidiaries are limited to amounts authorized by the FERC.  The current FERC-authorized limits are effective through October 31, 2013.  In addition to borrowings from commercial banks, these companies are authorized under a FERC order to borrow from the Entergy System money pool.  The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries’ dependence on external short-term borrowings.  Borrowings from the money pool and external borrowings combined may not exceed the FERC-authorized limits.  The following are the FERC-authorized limits for short-term borrowings and the outstanding short-term borrowings as of March 31, 2013 (aggregating both money pool and external short-term borrowings) for the Registrant Subsidiaries:

	Authorized	Borrowings
	(In Millions)
Entergy Arkansas	$250	$-
Entergy Gulf States Louisiana	$200	$59
Entergy Louisiana	$250	$-
Entergy Mississippi	$175	$74
Entergy New Orleans	$100	$25
Entergy Texas	$200	$-
System Energy	$200	$-

Variable Interest Entities (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, and System Energy)

See Note 18 to the financial statements in the Form 10-K for a discussion of the consolidation of the nuclear fuel company variable interest entities (VIE).  The nuclear fuel company variable interest entities have credit facilities and also issue commercial paper to finance the acquisition and ownership of nuclear fuel as follows as of March 31, 2013:

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Notes to Financial Statements

Company	Expiration Date	Amount of Facility	Weighted Average Interest Rate on Borrowings (a)	Amount Outstanding as of March 31, 2013
	(Dollars in Millions)
Entergy Arkansas VIE	July 2013	$85	2.28%	$21.4
Entergy Gulf States Louisiana VIE	July 2013	$85	n/a	$-
Entergy Louisiana VIE	July 2013	$90	2.32%	$54.4
System Energy VIE	July 2013	$100	2.32%	$20.2

(a) Includes letter of credit fees and bank fronting fees on commercial paper issuances 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 Gulf States Louisiana does not issue commercial paper, but borrows directly on its bank credit facility.

Amounts outstanding on the Entergy Gulf States Louisiana nuclear fuel company variable interest entity’s credit facility, if any, are included in long-term debt on its balance sheet and commercial paper outstanding for the other nuclear fuel company variable interest entities is classified as a current liability on the respective balance sheets.  The commitment fees on the credit facilities are 0.20% of the undrawn commitment amount.  Each credit facility requires the respective lessee of nuclear fuel (Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, or Entergy Corporation as guarantor for System Energy) to maintain a consolidated debt ratio of 70% or less of its total capitalization.

The nuclear fuel company variable interest entities had notes payable that are included in debt on the respective balance sheets as of March 31, 2013 as follows:

Company	Description	Amount
Entergy Arkansas VIE	9% Series H due June 2013	$30 million
Entergy Arkansas VIE	5.69% Series I due July 2014	$70 million
Entergy Arkansas VIE	3.23% Series J due July 2016	$55 million
Entergy Arkansas VIE	2.62% Series K due December 2017	$60 million
Entergy Gulf States Louisiana VIE	5.56% Series N due May 2013	$75 million
Entergy Gulf States Louisiana VIE	3.25% Series Q due July 2017	$75 million
Entergy Gulf States Louisiana VIE	3.38% Series R due August 2020	$70 million
Entergy Louisiana VIE	5.69% Series E due July 2014	$50 million
Entergy Louisiana VIE	3.30% Series F due March 2016	$20 million
Entergy Louisiana VIE	3.25% Series G due July 2017	$25 million
System Energy VIE	6.29% Series F due September 2013	$70 million
System Energy VIE	5.33% Series G due April 2015	$60 million
System Energy VIE	4.02% Series H due February 2017	$50 million

In accordance with regulatory treatment, interest on the nuclear fuel company variable interest entities’ credit facilities, commercial paper, and long-term notes payable is reported in fuel expense.

Debt Issuances and Redemptions

(Entergy Arkansas)

In January 2013, Entergy Arkansas arranged for the issuance by (i) Independence County, Arkansas of $45 million of 2.375% Pollution Control Revenue Refinancing Bonds (Entergy Arkansas, Inc. Project) Series 2013 due January 2021, and (ii) Jefferson County, Arkansas of $54.7 million of 1.55% Pollution Control Revenue Refunding Bonds (Entergy Arkansas, Inc. Project) Series 2013 due October 2017, each of which series is secured by a separate series of non-interest bearing first mortgage bonds of Entergy Arkansas.  The proceeds of these issuances were applied to the refunding of outstanding series of pollution control revenue bonds previously issued by the respective issuers.

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Entergy Corporation and Subsidiaries

Notes to Financial Statements

(Entergy Mississippi)

           In February 2013, Entergy Mississippi redeemed, at maturity, its $100 million 5.15% Series first mortgage bonds.

Fair Value

The book value and the fair value of long-term debt for Entergy Corporation and the Registrant Subsidiaries as of March 31, 2013 are as follows:

	Book Value of Long-Term Debt	Fair Value of Long-Term Debt (a) (b)
	(In Thousands)
Entergy	$12,359,756	$12,866,746
Entergy Arkansas	$2,123,945	$2,020,198
Entergy Gulf States Louisiana	$1,637,489	$1,805,683
Entergy Louisiana	$2,813,918	$2,913,342
Entergy Mississippi	$1,139,556	$1,211,692
Entergy New Orleans	$221,302	$225,865
Entergy Texas	$1,595,957	$1,833,724
System Energy	$742,926	$667,758

(a)	The values exclude lease obligations of $151 million at Entergy Louisiana and $98 million at System Energy, long-term DOE obligations of $181 million at Entergy Arkansas, and the note payable to NYPA of $110 million at Entergy, 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 and are based on prices derived from inputs such as benchmark yields and reported trades.

The book value and the fair value of long-term debt for Entergy Corporation and the Registrant Subsidiaries as of December 31, 2012 were as follows:

	Book Value of Long-Term Debt	Fair Value of Long-Term Debt (a) (b)
	(In Thousands)
Entergy	$12,638,834	$12,849,330
Entergy Arkansas	$2,123,895	$1,876,335
Entergy Gulf States Louisiana	$1,517,429	$1,668,819
Entergy Louisiana	$2,826,095	$2,921,322
Entergy Mississippi	$1,169,519	$1,230,714
Entergy New Orleans	$196,300	$200,725
Entergy Texas	$1,617,813	$1,885,672
System Energy	$783,799	$664,670

(a) The values exclude lease obligations of $163 million at Entergy Louisiana and $139 million at System Energy, long-term DOE obligations of $181 million at Entergy Arkansas, and the note payable to NYPA of $110 million at Entergy, and include debt due within one year.

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Entergy Corporation and Subsidiaries

Notes to Financial Statements

(b) Fair values are classified as Level 2 in the fair value hierarchy discussed in Note 8 to the financial statements and are based on prices derived from inputs such as benchmark yields and reported trades.

NOTE 5.  STOCK-BASED COMPENSATION (Entergy Corporation)

Entergy grants stock awards, which are described more fully in Note 12 to the financial statements in the Form 10-K.  Awards under Entergy’s plans generally vest over three years.

Stock Options

Entergy granted 600,700 stock options during the first quarter 2013 with a weighted-average fair value of $8.00 per option.  At March 31, 2013, there are 9,757,536 stock options outstanding with a weighted-average exercise price of $79.66.  The intrinsic value, which has no effect on net income, of the outstanding stock options is calculated by the difference in the weighted average exercise price of the stock options granted and Entergy Corporation’s common stock price as of March 31, 2013.  Because Entergy’s stock price at March 31, 2013 is less than the weighted average exercise price, the aggregate intrinsic value of the stock options outstanding as of March 31, 2013 is zero.  The intrinsic value of “in the money” stock options is $4 million as of March 31, 2013.

The following table includes financial information for stock options for the first quarters of 2013 and 2012:

	2013	2012
	(In Millions)
Compensation expense included in Entergy’s net income	$1.3	$2.1
Tax benefit recognized in Entergy’s net income	$0.5	$0.8
Compensation cost capitalized as part of fixed assets and inventory	$0.2	$0.4

Other Equity Plans

In January 2013 the Board approved and Entergy granted 361,700 restricted stock awards and 201,474 long-term incentive awards under the 2011 Equity Ownership and Long-term Cash Incentive Plan.  The restricted stock awards were made effective as of January 31, 2013 and were valued at $64.60 per share, which was the closing price of Entergy’s common stock on that date.  One-third of the restricted stock awards will vest upon each anniversary of the grant date.  The long-term incentive awards are granted in the form of performance units, which are equal to the cash value of shares of Entergy Corporation at the end of the performance period, which is the last day of the year.  The performance units were made effective as of January 31, 2013 and were valued at $65.36 per share.  Entergy considers various factors, primarily market conditions, in determining the value of the performance units.  Shares of the restricted stock awards have the same dividend and voting rights as other common stock, are considered issued and outstanding shares of Entergy upon vesting, and are expensed ratably over the three-year vesting period.  Shares of the performance units have the same dividend rights as other common stock, are considered issued and outstanding shares of Entergy upon vesting, and are expensed ratably over the three-year vesting period.

The following table includes financial information for other equity plans for the first quarters of 2013 and 2012:

	2013	2012
	(In Millions)
Compensation expense included in Entergy’s net income	$5.9	$2.9
Tax benefit recognized in Entergy’s net income	$2.3	$1.1
Compensation cost capitalized as part of fixed assets and inventory	$0.7	$0.5

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Notes to Financial Statements

NOTE 6.  RETIREMENT AND OTHER POSTRETIREMENT BENEFITS (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Components of Qualified Net Pension Cost

Entergy’s qualified pension cost, including amounts capitalized, for the first quarters of 2013 and 2012, included the following components:

	2013			2012
	(In Thousands)
Service cost - benefits earned during the period	$	44,051		$	37,691
Interest cost on projected benefit obligation		65,266			65,232
Expected return on assets		(81,748	)		(79,356	)
Amortization of prior service cost		567			683
Amortization of loss		54,951			41,820
Net pension costs	$	83,087		$	66,070

The Registrant Subsidiaries’ qualified pension cost, including amounts capitalized, for the first quarters of 2013 and 2012, included the following components:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy  Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Service cost - benefits earned
during the period	$	6,371		$	3,599		$	4,334		$	1,842		$	832		$	1,637		$	1,836
Interest cost on projected
benefit obligation		13,550			6,657			8,644			3,930			1,849			4,055			3,016
Expected return on assets		(16,717	)		(8,734	)		(10,454	)		(5,279	)		(2,270	)		(5,566	)		(4,299	)
Amortization of prior service
cost		6			2			21			2			-			2			3
Amortization of loss		12,544			5,933			8,727			3,344			2,011			3,373			2,429
Net pension cost	$	15,754		$	7,457		$	11,272		$	3,839		$	2,422		$	3,501		$	2,985

2012	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy  Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Service cost - benefits earned
during the period	$	5,542		$	3,068		$	3,669		$	1,602		$	706		$	1,421		$	1,480
Interest cost on projected
benefit obligation		13,922			6,420			8,800			4,070			1,902			4,206			3,247
Expected return on assets		(16,441	)		(8,593	)		(10,209	)		(5,236	)		(2,215	)		(5,581	)		(4,109	)
Amortization of prior service
cost		50			5			52			7			2			4			3
Amortization of loss		10,193			4,043			7,050			2,633			1,719			2,544			2,251
Net pension cost	$	13,266		$	4,943		$	9,362		$	3,076		$	2,114		$	2,594		$	2,872

37

Entergy Corporation and Subsidiaries

Notes to Financial Statements

Entergy recognized $5.5 million and $5.1 million in pension cost for its non-qualified pension plans in the first quarters of 2013 and 2012, respectively.

The Registrant Subsidiaries recognized the following pension cost for their non-qualified pension plans in the first quarters of 2013 and 2012:

	Entergy Arkansas	Entergy Gulf States Louisiana	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas
	(In Thousands)
Non-qualified pension cost  first quarter 2013	$103	$38	$3	$47	$23	$149
Non-qualified pension cost   first quarter 2012	$107	$39	$3	$46	$19	$163

Components of Net Other Postretirement Benefit Cost

Entergy’s other postretirement benefit cost, including amounts capitalized, for the first quarters of 2013 and 2012, included the following components:

	2013			2012
	(In Thousands)
Service cost - benefits earned during the period	$	18,917		$	17,221
Interest cost on accumulated postretirement benefit      obligation (APBO)		19,766			20,640
Expected return on assets		(9,950	)		(8,626	)
Amortization of transition obligation		-			794
Amortization of prior service cost		(3,334	)		(4,541	)
Amortization of loss		11,304			9,113
Net other postretirement benefit cost	$	36,703		$	34,601

The Registrant Subsidiaries’ other postretirement benefit cost, including amounts capitalized, for the first quarters of 2013 and 2012, included the following components:

2013	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Service cost - benefits earned
during the period	$	2,414		$	2,001		$	2,172		$	819		$	447		$	950		$	907
Interest cost on APBO		3,360			2,226			2,349			1,074			785			1,515			729
Expected return on assets		(4,149	)		-			-			(1,317	)		(1,014	)		(2,321	)		(825	)
Amortization of prior service
cost		(133	)		(206	)		(62	)		(35	)		10			(107	)		(16	)
Amortization of loss		2,041			1,174			1,287			662			396			976			479
Net other postretirement
benefit cost	$	3,533		$	5,195		$	5,746		$	1,203		$	624		$	1,013		$	1,274

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Entergy Corporation and Subsidiaries

Notes to Financial Statements

2012	Entergy Arkansas			Entergy Gulf States Louisiana			Entergy Louisiana			Entergy Mississippi			Entergy New Orleans			Entergy Texas			System Energy
	(In Thousands)
Service cost - benefits earned
during the period	$	2,272		$	1,880		$	1,949		$	773		$	422		$	913		$	823
Interest cost on APBO		3,613			2,398			2,445			1,179			856			1,663			757
Expected return on assets		(3,507	)		-			-			(1,130	)		(928	)		(2,104	)		(650	)
Amortization of transition
obligation		205			60			96			88			297			47			2
Amortization of prior service
cost		(133	)		(206	)		(62	)		(35	)		10			(107	)		(16	)
Amortization of loss		2,077			1,184			1,090			730			390			1,079			493
Net other postretirement
benefit cost	$	4,527		$	5,316		$	5,518		$	1,605		$	1,047		$	1,491		$	1,409

Reclassification out of Accumulated Other Comprehensive Income

For the first quarter of 2013, Entergy’s and the Registrant Subsidiaries’ reclassified the following costs out of accumulated other comprehensive income (before taxes and including amounts capitalized):

	Qualified Pension Costs			Other Postretirement Costs			Non-Qualified Pension Costs			Total
	(In Thousands)
Entergy
Amortization of prior service cost	$	(502	)	$	3,007		$	(121	)	$	2,384
Amortization of loss		(11,845	)		(5,486	)		(717	)		(18,048	)
	$	(12,347	)	$	(2,479	)	$	(838	)	$	(15,664	)
Entergy Gulf States Louisiana
Amortization of prior service cost	$	-		$	206		$	-		$	206
Amortization of loss		(771	)		(1,174	)		(2	)	$	(1,947	)
	$	(771	)	$	(968	)	$	(2	)	$	(1,741	)
Entergy Louisiana
Amortization of prior service cost	$	-		$	62		$	-		$	62
Amortization of loss		-			(1,287	)		-			(1,287	)
	$	-		$	(1,225	)	$	-		$	(1,225	)

39

Entergy Corporation and Subsidiaries

Notes to Financial Statements

Employer Contributions

Based on current assumptions, Entergy expects to contribute $163.4 million to its qualified pension plans in 2013.  As of March 31, 2013, Entergy had contributed $3.6 million to its pension plans.  Based on current assumptions, the Registrant Subsidiaries expect to contribute the following to qualified pension plans in 2013:

	Entergy Arkansas	Entergy Gulf States Louisiana	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas	System Energy
	(In Thousands)
Expected 2013 pension   contributions	$35,382	$11,550	$21,151	$8,152	$4,175	$6,880	$8,304
Pension contributions made   through March 2013	$ -	$ -	$ -	$ -	$ -	$ -	$ -
Remaining estimated pension   contributions to be made in 2013	$35,382	$11,550	$21,151	$8,152	$4,175	$6,880	$8,304

NOTE 7.  BUSINESS SEGMENT INFORMATION (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Entergy Corporation

Entergy’s reportable segments as of March 31, 2013 are Utility and Entergy Wholesale Commodities.  Utility includes the generation, transmission, distribution, and sale of electric power in portions of Arkansas, Louisiana, Mississippi, and Texas, and natural gas utility service in portions of Louisiana.  Entergy Wholesale Commodities includes the ownership and operation of six nuclear power plants located in the northern United States and the sale of the electric power produced by those plants to wholesale customers.  Entergy Wholesale Commodities also includes the ownership of interests in non-nuclear power plants that sell the electric power produced by those plants to wholesale customers.  “All Other” includes the parent company, Entergy Corporation, and other business activity, including the earnings on the proceeds of sales of previously-owned businesses.

In the fourth quarter 2012, Entergy moved two subsidiaries from All Other to the Entergy Wholesale Commodities segment to improve the alignment of certain intercompany items and income tax activity.  The 2012 information in the table below has been restated to reflect the change.

Entergy’s segment financial information for the first quarters of 2013 and 2012 is as follows:

	Utility		Entergy Wholesale Commodities*			All Other			Eliminations			Entergy
	(In Thousands)
2013
Operating revenues	$	2,003,441	$	613,733		$	1,000		$	(9,300	)	$	2,608,874
Income taxes	$	71,075	$	56,936		$	(11,475	)	$	-		$	116,536
Consolidated net income (loss)	$	127,835	$	82,114		$	(16,572	)	$	(26,395	)	$	166,982
2012
Operating revenues	$	1,831,640	$	560,251		$	959		$	(9,191	)	$	2,383,659
Income taxes	$	99,707	$	(92,141	)	$	(7,728	)	$	-		$	(162	)
Consolidated net income (loss)	$	67,212	$	(175,949	)	$	(10,968	)	$	(27,035	)	$	(146,740	)

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Entergy Corporation and Subsidiaries

Notes to Financial Statements

Businesses marked with * are sometimes referred to as the “competitive businesses.”  Eliminations are primarily intersegment activity.

Registrant Subsidiaries

Each of the Registrant Subsidiaries has one reportable segment, which is an integrated utility business, except for System Energy, which is an electricity generation business.  Each of the Registrant Subsidiaries’ operations is managed on an integrated basis by that company because of the substantial effect of cost-based rates and regulatory oversight on the business process, cost structures, and operating results.

NOTE 8.  RISK MANAGEMENT AND FAIR VALUES (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Market and Commodity Risks

In the normal course of business, Entergy is exposed to a number of market and commodity risks.  Market risk is the potential loss that Entergy may incur as a result of changes in the market or fair value of a particular instrument or commodity.  All financial and commodity-related instruments, including derivatives, are subject to market risk.  Entergy is subject to a number of commodity and market risks, including:

Type of Risk	Affected Businesses
Power price risk	Utility, Entergy Wholesale Commodities
Fuel price risk	Utility, Entergy Wholesale Commodities
Equity price and interest rate risk - investments	Utility, Entergy Wholesale Commodities

Entergy manages a portion of these risks using derivative instruments, some of which are classified as cash flow hedges due to their financial settlement provisions while others are classified as normal purchase/normal sale transactions due to their physical settlement provisions.  Normal purchase/normal sale risk management tools include power purchase and sales agreements, fuel purchase agreements, capacity contracts, and tolling agreements.  Financially-settled cash flow hedges can include natural gas and electricity swaps and options, and interest rate swaps.  Entergy will occasionally enter into financially settled swap and option contracts to manage market risk under certain hedging transactions which may or may not be designated as hedging instruments. Entergy enters into derivatives only to manage natural risks inherent in its physical or financial assets or liabilities.

Entergy manages fuel price volatility for its Louisiana jurisdictions (Entergy Gulf States Louisiana and Entergy Louisiana) and Entergy Mississippi primarily through the purchase of short-term natural gas swaps.  These swaps are marked-to-market with offsetting regulatory assets or liabilities.  The notional volumes of these swaps are based on a portion of projected annual exposure to gas for electric generation and projected winter purchases for gas distribution at Entergy Gulf States Louisiana.

Entergy’s exposure to market risk is determined by a number of factors, including the size, term, composition, and diversification of positions held, as well as market volatility and liquidity.  For instruments such as options, the time period during which the option may be exercised and the relationship between the current market price of the underlying instrument and the option’s contractual strike or exercise price also affects the level of market risk.  A significant factor influencing the overall level of market risk to which Entergy is exposed is its use of hedging techniques to mitigate such risk.  Entergy manages market risk by actively monitoring compliance with stated risk management policies as well as monitoring the effectiveness of its hedging policies and strategies.  Entergy’s risk management policies limit the amount of total net exposure and rolling net exposure during the stated periods.  These policies, including related risk limits, are regularly assessed to ensure their appropriateness given Entergy’s objectives.

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Entergy Corporation and Subsidiaries

Notes to Financial Statements

Derivatives

The fair values of Entergy’s derivative instruments in the consolidated balance sheet as of March 31, 2013 are shown in the table below.  Certain investments, including those not designated as hedging instruments, are subject to master netting arrangements and are presented in the balance sheet on a net basis in accordance with accounting guidance for derivatives and hedging.

Instrument	Balance Sheet Location	Fair Value (a)	Offset (b)	Net (c) (d)	Business
		(In Millions)
Derivatives designated as hedging instruments
Assets:
Electricity swaps and options	Prepayments and other (current portion)	$46	($26)	$20	Entergy Wholesale Commodities
Electricity swaps and options	Other deferred debits and other assets (non-current portion)	$36	($14)	$22	Entergy Wholesale Commodities
Liabilities:
Electricity swaps and options	Other current liabilities (current portion)	$30	($20)	$10	Entergy Wholesale Commodities
Electricity swaps and options	Other non-current liabilities (non-current portion)	$25	($16)	$9	Entergy Wholesale Commodities

Derivatives not designated as hedging instruments
Assets:
Electricity swaps and options	Prepayments and other (current portion)	$58	($25)	$33	Entergy Wholesale Commodities
Electricity swaps and options	Other deferred debits and other assets (non-current portion)	$15	($10)	$5	Entergy Wholesale Commodities
Natural gas swaps	Prepayments and other	$24	($-)	$24	Utility
Liabilities:
Electricity swaps and options	Other current liabilities (current portion)	$36	($31)	$5	Entergy Wholesale Commodities
Electricity swaps and options	Other non-current liabilities (non-current portion)	$11	($7)	$4	Entergy Wholesale Commodities

42

Entergy Corporation and Subsidiaries

Notes to Financial Statements

The fair values of Entergy’s derivative instruments in the consolidated balance sheet as of December 31, 2012 are shown in the table below.  Certain investments, including those not designated as hedging instruments, are subject to master netting arrangements and are presented in the balance sheet on a net basis in accordance with accounting guidance for derivatives and hedging.

Instrument	Balance Sheet Location	Fair Value (a)	Offset (b)	Net (c) (d)	Business
		(In Millions)
Derivatives designated as hedging instruments
Assets:
Electricity swaps and options	Prepayments and other (current portion)	$123	($-)	$123	Entergy Wholesale Commodities
Electricity swaps and options	Other deferred debits and other assets (non-current portion)	$46	($10)	$36	Entergy Wholesale Commodities
Liabilities:
Electricity swaps and options	Other non-current liabilities (non-current portion)	$18	($11)	$7	Entergy Wholesale Commodities

Derivatives not designated as hedging instruments
Assets:
Electricity swaps and options	Prepayments and other (current portion)	$22	($-)	$22	Entergy Wholesale Commodities
Electricity swaps and options	Other deferred debits and other assets (non-current portion)	$24	($14)	$10	Entergy Wholesale Commodities
Liabilities:
Electricity swaps and options	Other non-current liabilities (non-current portion)	$19	($13)	$6	Entergy Wholesale Commodities
Natural gas swaps	Other current liabilities	$8	($-)	$8	Utility

(a)	Represents the gross amounts of recognized assets/liabilities
(b)	Represents the netting of fair value balances with the same counterparty
(c)	Represents the net amounts of assets /liabilities presented on the Entergy Consolidated Balance Sheets
(d)	Excludes cash collateral in the amounts of $12 million and $56 million held as of March 31, 2013 and December 31, 2012, respectively

43

Entergy Corporation and Subsidiaries

Notes to Financial Statements

The effect of Entergy’s derivative instruments designated as cash flow hedges on the consolidated income statements for the three months ended March 31, 2013 and 2012 are as follows:

Instrument	Amount of gain (loss) recognized in other comprehensive income	Income Statement location	Amount of gain (loss)  reclassified from AOCI into income
2013
Electricity swaps and options	($120) million	Competitive businesses operating revenues	($2) million
2012
Electricity swaps and options	$291 million	Competitive businesses operating revenues	$71 million

Electricity over-the-counter instruments that financially settle against day-ahead power pool prices are used to manage price exposure for Entergy Wholesale Commodities generation.  Unrealized gains or losses recorded in other comprehensive income result from hedging power output at the Entergy Wholesale Commodities power plants.  The related gains or losses from hedging power are included in operating revenues when realized.  Gains (losses) totaling approximately ($2) million and $71 million were realized on the maturity of cash flow hedges, before taxes (benefit) of ($1) million and $25 million, for the three months ended March 31, 2013 and 2012, respectively.  The change in fair value of Entergy’s cash flow hedges due to ineffectiveness during the three months ended March 31, 2013 and March 31, 2012 was ($1.3) million and $0.2 million, respectively. The ineffective portion of cash flow hedges is recorded in competitive businesses operating revenues.

Based on market prices as of March 31, 2013, unrealized gains (losses) recorded in AOCI on cash flow hedges relating to power sales totaled $15 million of net unrealized gains.  Approximately $5 million is expected to be reclassified from AOCI to operating revenues in the next twelve months.  The actual amount reclassified from AOCI, however, could vary due to future changes in market prices.  The maximum length of time over which Entergy is currently hedging the variability in future cash flows with derivatives for forecasted power transactions at March 31, 2013 is approximately 1.75 years.  Planned generation currently under contract from Entergy Wholesale Commodities nuclear power plants is 84% for the remaining three quarters of 2013, of which approximately 51% is sold under financial derivatives and the remainder under normal purchase/normal sale contracts.

Certain of the agreements to sell the power produced by Entergy Wholesale Commodities power plants contain provisions that require an Entergy subsidiary to provide collateral to secure its obligations when the current market prices exceed the contracted power prices.  The primary form of collateral to satisfy these requirements is an Entergy Corporation guarantee.  As of March 31, 2013, hedge contracts with six counterparties were in a liability position (approximately $25 million total), but were significantly below the amount of the guarantee provided under the contract and no cash collateral was required. As of March 31, 2012, there were no hedge contracts with counterparties in a liability position.  If the Entergy Corporation credit rating falls below investment grade, the effect of the corporate guarantee is typically ignored and Entergy would have to post collateral equal to the estimated outstanding liability under the contract at the applicable date.

Entergy may effectively liquidate a cash flow hedge instrument by entering into a contract offsetting the original hedge, and then de-designating the original hedge in this situation.  Gains or losses accumulated in other comprehensive income prior to de-designation continue to be deferred in other comprehensive income until they are included in income as the original hedged transaction settles. From the point of de-designation, the gains or losses on the original hedge and the offsetting contract are recorded as assets or liabilities on the balance sheet and offset as they flow through to earnings.

44

Entergy Corporation and Subsidiaries

Notes to Financial Statements

Natural gas over-the-counter swaps that financially settle against NYMEX futures are used to manage fuel price volatility for the Utility’s Louisiana and Mississippi customers.  All benefits or costs of the program are recorded in fuel costs.  The total volume of natural gas swaps outstanding as of March 31, 2013 is 60,540,000 MMBtu for Entergy, 18,270,000 MMBtu for Entergy Gulf States Louisiana, 25,140,000 MMBtu for Entergy Louisiana, and 17,130,000 MMBtu for Entergy Mississippi.  Credit support for these natural gas swaps is covered by master agreements that do not require collateralization based on mark-to-market value, but do carry adequate assurance language that may lead to collateralization requests.

The effect of Entergy’s derivative instruments not designated as hedging instruments on the consolidated income statements for the three months ended March 31, 2013 and 2012 is as follows:

Instrument	Amount of gain recognized in AOCI	Income Statement location	Amount of gain (loss) recorded in income
2013
Natural gas swaps	-	Fuel, fuel-related expenses, and gas purchased for resale	($20) million
Electricity swaps and options de-designated as hedged items	$1 million	Competitive businesses operating revenues	($1) million
2012
Natural gas swaps	-	Fuel, fuel-related expenses, and gas purchased for resale	($51) million
Electricity swaps and options de-designated as hedged items	$3 million	Competitive businesses operating revenues	($2) million

Due to regulatory treatment, the natural gas swaps are marked to market through fuel, fuel-related expenses, and gas purchased for resale and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability.  The gains or losses recorded as fuel expenses when the swaps are settled are recovered or refunded through fuel cost recovery mechanisms.

The fair values of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their balance sheets as of March 31, 2013 are as follows:

Instrument	Balance Sheet Location	Fair Value	Registrant
Assets:
Natural gas swaps	Gas hedge contracts	$7.5 million	Entergy Gulf States Louisiana
Natural gas swaps	Gas hedge contracts	$10.0 million	Entergy Louisiana
Natural gas swaps	Gas hedge contracts	$6.6 million	Entergy Mississippi

45

Entergy Corporation and Subsidiaries

Notes to Financial Statements

The fair values of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their balance sheets as of December 31, 2012 are as follows:

Instrument	Balance Sheet Location	Fair Value	Registrant
Liabilities:
Natural gas swaps	Gas hedge contracts	$2.6 million	Entergy Gulf States Louisiana
Natural gas swaps	Gas hedge contracts	$3.4 million	Entergy Louisiana
Natural gas swaps	Other current liabilities	$2.2 million	Entergy Mississippi

The effects of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their statements of income for the three months ended March 31, 2013 and 2012 are as follows:

Instrument	Statement of Income Location	Amount of loss recorded in income	Registrant
2013
Natural gas swaps	Fuel, fuel-related expenses, and gas purchased for resale	($6.2) million	Entergy Gulf States Louisiana
Natural gas swaps	Fuel, fuel-related expenses, and gas purchased for resale	($8.3) million	Entergy Louisiana
Natural gas swaps	Fuel, fuel-related expenses, and gas purchased for resale	($5.4) million	Entergy Mississippi
2012
Natural gas swaps	Fuel, fuel-related expenses, and gas purchased for resale	($15.0) million	Entergy Gulf States Louisiana
Natural gas swaps	Fuel, fuel-related expenses, and gas purchased for resale	($20.7) million	Entergy Louisiana
Natural gas swaps	Fuel, fuel-related expenses, and gas purchased for resale	($13.4) million	Entergy Mississippi
Natural gas swaps	Fuel, fuel-related expenses, and gas purchased for resale	($1.5) million	Entergy New Orleans

Fair Values

The estimated fair values of Entergy’s financial instruments and derivatives are determined using bid prices, market quotes, and financial modeling.  Considerable judgment is required in developing the estimates of fair value.  Therefore, estimates are not necessarily indicative of the amounts that Entergy could realize in a current market exchange.  Gains or losses realized on financial instruments other than those instruments held by the Entergy Wholesale Commodities business are reflected in future rates and therefore do not accrue to the benefit or detriment of shareholders.  Entergy considers the carrying amounts of most financial instruments classified as current assets and liabilities to be a reasonable estimate of their fair value because of the short maturity of these instruments.

Accounting standards define fair value as an exit price, or the price that would be received to sell an asset or the amount that would be paid to transfer a liability in an orderly transaction between knowledgeable market participants at the date of measurement.  Entergy and the Registrant Subsidiaries use assumptions or market input data that market participants would use in pricing assets or liabilities at fair value.  The inputs can be readily observable, corroborated by market data, or generally unobservable.  Entergy and the Registrant Subsidiaries endeavor to use the best available information to determine fair value.

46

Entergy Corporation and Subsidiaries

Notes to Financial Statements

Accounting standards establish a fair value hierarchy that prioritizes the inputs used to measure fair value.  The hierarchy establishes the highest priority for unadjusted market quotes in an active market for the identical asset or liability and the lowest priority for unobservable inputs.  The three levels of the fair value hierarchy are:

·   Level 1 - Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.  Level 1 primarily consists of individually owned common stocks, cash equivalents (temporary cash investments, securitization recovery trust account, and escrow accounts), debt instruments, and gas hedge contracts. See Note 1 to the financial statements in the Form 10-K for a discussion of cash and cash equivalents.

·   Level 2 - Level 2 inputs are inputs other than quoted prices included in Level 1 that are, either directly or indirectly, observable for the asset or liability at the measurement date.  Assets are valued based on prices derived by independent third parties that use inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads.  Prices are reviewed and can be challenged with the independent parties and/or overridden by Entergy if it is believed such would be more reflective of fair value.  Level 2 inputs include the following:

-   quoted prices for similar assets or liabilities in active markets;

-   quoted prices for identical assets or liabilities in inactive markets;

-   inputs other than quoted prices that are observable for the asset or liability; or

-   inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 2 consists primarily of individually-owned debt instruments or shares in common trusts.  Common trust funds are stated at estimated fair value based on the fair market value of the underlying investments.

·   Level 3 - Level 3 inputs are pricing inputs that are generally less observable or unobservable from objective sources.  These inputs are used with internally developed methodologies to produce management’s best estimate of fair value for the asset or liability.  Level 3 consists primarily of derivative power contracts used as cash flow hedges of power sales at merchant power plants.

The values for power contract assets or liabilities are based on both observable inputs including public market prices and interest rates, and unobservable inputs such as implied volatilities, unit contingent discounts, expected basis differences, and credit adjusted counterparty interest rates.  They are classified as Level 3 assets and liabilities.  The valuations of these assets and liabilities are performed by the Entergy Wholesale Commodities Risk Control group and sent to the Entergy Wholesale Commodities Back Office and Entergy Nuclear Finance groups for evaluation.  The primary functions of the Entergy Wholesale Commodities Risk Control Group include: gathering, validating and reporting market data, providing market and credit risk analyses and valuations in support of Entergy Wholesale Commodities’ commercial transactions, developing and administering protocols for the management of market and credit risks, implementing and maintaining controls around changes to market data in the energy trading and risk management system, reviewing creditworthiness of counterparties, supporting contract negotiations with new counterparties, administering credit support for contracts, and managing the daily margining process.  The primary functions of the Entergy Wholesale Commodities Back Office are managing the energy trading and risk management system, forecasting revenues, forward positions and analysis, performing contract administration, market and counterparty settlements and revenue reporting and analysis along with maintaining related controls for Entergy Wholesale Commodities.  Both Entergy Wholesale Commodities Risk Control and Entergy Wholesale Commodities Back Office report to the Entergy Wholesale Commodities VP, Finance & Risk Group.  Entergy Nuclear Finance is primarily responsible for the financial planning of Entergy’s utility and non-utility nuclear businesses and has a significant role in accounting for the activities and transactions of the associated companies.  The VP, Chief Financial Officer – Nuclear Operations within Entergy Nuclear Finance reports to the Chief Accounting Officer.

47

Entergy Corporation and Subsidiaries

Notes to Financial Statements

The amounts reflected as the fair value of electricity swaps are based on the estimated amount that the contracts are in-the-money at the balance sheet date (treated as an asset) or out-of-the-money at the balance sheet date (treated as a liability) and would equal the estimated amount receivable or payable by Entergy if the contracts were settled at that date.  These derivative contracts include cash flow hedges that swap fixed for floating cash flows for sales of the output from the Entergy Wholesale Commodities business.  The fair values are based on the mark-to-market comparison between the fixed contract prices and the floating prices determined each period from quoted forward power market prices.  The differences between the fixed price in the swap contract and these market-related prices multiplied by the volume specified in the contract and discounted at the counterparties’ credit adjusted risk free rate are recorded as derivative contract assets or liabilities.  For contracts that have unit contingent terms, a further discount is applied based on the historical relationship between contract and market prices for similar contract terms.

The amounts reflected as the fair values of electricity options are valued based on a Black Scholes model, and are calculated at the end of each month for accounting purposes.  Inputs to the valuation  include end of day forward market prices for the period when the transactions will settle, implied volatilities based on market volatilities provided by a third party data aggregator, and US Treasury rates for a risk-free return rate.  As described further below, prices and implied volatilities are reviewed and can be adjusted if it is determined that there is a better representation of fair value.  As of March 31, 2013, Entergy had in-the-money derivative contracts with a fair value of $77 million with counterparties or their guarantor who are all currently investment grade.  $25 million of the derivative contracts as of March 31, 2013 are out-of-the-money contracts supported by corporate guarantees, which would require additional cash or letters of credit in the event of a decrease in Entergy Corporation’s credit rating to below investment grade.

On a daily basis, Entergy Wholesale Commodities calculates the mark-to-market for all derivative transactions.  Entergy Wholesale Commodities Risk Control Group also validates forward market prices by comparing them to other sources of forward market prices and/or to settlement prices of actual market transactions.  Significant differences are analyzed and potentially adjusted based on these other sources of forward market prices and/or settlement prices of actual market transactions.  Implied volatilities used to value options are also validated using actual counterparty quotes for Entergy Wholesale Commodities transactions when available, and using multiple sources of market implied volatilities.  Moreover, on at least a monthly basis the Office of Corporate Risk Oversight confirms the mark-to-market calculations and prepares price scenarios and credit downgrade scenario analysis.  The scenario analysis is communicated to senior management within Entergy and within Entergy Wholesale Commodities.  Finally, for all proposed derivative transactions an analysis is completed to assess the risk of adding the proposed derivative to Entergy Wholesale Commodities’ portfolio.  In particular, the credit, liquidity, and financial metrics impacts are calculated for this analysis.  This analysis is communicated to senior management within Entergy and Entergy Wholesale Commodities.

The following tables set forth, by level within the fair value hierarchy, Entergy’s assets and liabilities that are accounted for at fair value on a recurring basis as of March 31, 2013 and December 31, 2012.  The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect their placement within the fair value hierarchy levels.

48

Entergy Corporation and Subsidiaries

Notes to Financial Statements

2013	Level 1		Level 2		Level 3		Total
	(In Millions)
Assets:
Temporary cash investments	$	197	$	-	$	-	$	197
Decommissioning trust funds (a):
Equity securities		386		2,319		-		2,705
Debt securities		745		1,003		-		1,748
Power contracts		-		-		80		80
Gas hedge contracts		24		-		-		24
Securitization recovery trust account		44		-		-		44
Escrow accounts		138		-		-		138
	$	1,534	$	3,322	$	80	$	4,936
Liabilities:
Power contracts	$	-	$	-	$	28	$	28

2012	Level 1		Level 2		Level 3		Total
	(In Millions)
Assets:
Temporary cash investments	$	420	$	-	$	-	$	420
Decommissioning trust funds (a):
Equity securities		358		2,101		-		2,459
Debt securities		769		962		-		1,731
Power contracts		-		-		191		191
Securitization recovery trust account		46		-		-		46
Escrow accounts		386		-		-		386
	$	1,979	$	3,063	$	191	$	5,233
Liabilities:
Power contracts	$	-	$	-	$	13	$	13
Gas hedge contracts		8		-		-		8
	$	8	$	-	$	13	$	21

(a) The decommissioning trust funds hold equity and fixed income securities. Equity securities are invested to approximate the returns of major market indices.  Fixed income securities are held in various governmental and corporate securities.  See Note 9 for additional information on the investment portfolios.

49

Entergy Corporation and Subsidiaries

Notes to Financial Statements

The following table sets forth a reconciliation of changes in the net assets (liabilities) for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the three months ended March 31, 2013 and 2012:

	2013			2012
	(In Millions)
Balance as of January 1,	$	178		$	312
Unrealized gains (losses) from price changes		(115	)		286
Unrealized gains on originations		1			1
Realized losses included in earnings		(14	)		-
Realized (gains) losses on settlements		2			(71	)
Balance as of March 31,	$	52		$	528

The following table sets forth a description of the types of transactions classified as Level 3 in the fair value hierarchy, and the valuation techniques and significant unobservable inputs to each which cause that classification, as of March 31, 2013:

Transaction Type	Fair Value as of March 31, 2013	Significant Unobservable Inputs	Range from Average %	Effect on Fair Value
Electricity swaps	$12 million	Unit contingent discount	+/-3%	$1 million
Electricity options	$40 million	Implied volatility	+/-9%	$27 million

The following table sets forth an analysis of each of the types of unobservable inputs impacting the fair value of items classified as Level 3 within the fair value hierarchy, and the sensitivity to changes to those inputs:

Significant Unobservable Input	Transaction Type	Position	Change to Input	Effect on Fair Value
Unit contingent discount	Electricity swaps	Sell	Increase (Decrease)	Decrease (Increase)
Implied volatility	Electricity options	Sell	Increase (Decrease)	Increase (Decrease)
Implied volatility	Electricity options	Buy	Increase (Decrease)	Increase (Decrease)

The following table sets forth, by level within the fair value hierarchy, the Registrant Subsidiaries’ assets that are accounted for at fair value on a recurring basis as of March 31, 2013 and December 31, 2012.  The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect its placement within the fair value hierarchy levels.

50

Entergy Corporation and Subsidiaries

Notes to Financial Statements

Entergy Arkansas

2013	Level 1		Level 2		Level 3		Total
	(In Millions)
Assets:
Temporary cash investments	$	12.4	$	-	$	-	$	12.4
Decommissioning trust funds (a):
Equity securities		2.8		417.0		-		419.8
Debt securities		70.3		153.1		-		223.4
Securitization recovery trust account		7.9		-		-		7.9
Escrow accounts		38.0		-		-		38.0
	$	131.4	$	570.1	$	-	$	701.5

2012	Level 1		Level 2		Level 3		Total
	(In Millions)
Assets:
Temporary cash investments	$	24.9	$	-	$	-	$	24.9
Decommissioning trust funds (a):
Equity securities		9.5		374.5		-		384.0
Debt securities		94.3		122.3		-		216.6
Securitization recovery trust account		4.4		-		-		4.4
Escrow accounts		38.0		-		-		38.0
	$	171.1	$	496.8	$	-	$	667.9

Entergy Gulf States Louisiana

2013	Level 1		Level 2		Level 3		Total
	(In Millions)
Assets:
Temporary cash investments	$	0.8	$	-	$	-	$	0.8
Decommissioning trust funds (a):
Equity securities		5.0		315.2		-		320.2
Debt securities		53.0		138.5		-		191.5
Gas hedge contracts		7.5		-		-		7.5
Escrow accounts		21.5		-		-		21.5
	$	87.8	$	453.7	$	-	$	541.5

2012	Level 1		Level 2		Level 3		Total
	(In Millions)
Assets:
Temporary cash investments	$	0.6	$	-	$	-	$	0.6
Decommissioning trust funds (a):
Equity securities		5.5		283.0		-		288.5
Debt securities		49.5		139.4		-		188.9
Escrow accounts		87.0		-		-		87.0
	$	142.6	$	422.4	$	-	$	565.0
Liabilities:
Gas hedge contracts	$	2.6	$	-	$	-	$	2.6

51

Entergy Corporation and Subsidiaries

Notes to Financial Statements

Entergy Louisiana

2013	Level 1		Level 2		Level 3		Total
	(In Millions)
Assets:
Temporary cash investments	$	9.6	$	-	$	-	$	9.6
Decommissioning trust funds (a):
Equity securities		2.9		193.2		-		196.1
Debt securities		52.2		60.2		-		112.4
Securitization recovery trust account		9.7		-		-		9.7
Gas hedge contracts		10.0		-		-		10.0
	$	84.4	$	253.4	$	-	$	337.8

2012	Level 1		Level 2		Level 3		Total
	(In Millions)
Assets:
Temporary cash investments	$	29.3	$	-	$	-	$	29.3
Decommissioning trust funds (a):
Equity securities		2.0		173.5		-		175.5
Debt securities		52.6		59.3		-		111.9
Securitization recovery trust account		4.4		-		-		4.4
Escrow accounts		187.0		-		-		187.0
	$	275.3	$	232.8	$	-	$	508.1
Liabilities:
Gas hedge contracts	$	3.4	$	-	$	-	$	3.4

Entergy Mississippi

2013	Level 1		Level 2		Level 3		Total
	(In Millions)
Assets:
Gas hedge contracts	$	6.6	$	-	$	-	$	6.6
Escrow accounts		61.8		-		-		61.8
	$	68.4	$	-	$	-	$	68.4

2012	Level 1		Level 2		Level 3		Total
	(In Millions)
Assets:
Temporary cash investments	$	52.4	$	-	$	-	$	52.4
Escrow accounts		61.8		-		-		61.8
	$	114.2	$	-	$	-	$	114.2
Liabilities:
Gas hedge contracts	$	2.2	$	-	$	-	$	2.2

52

Entergy Corporation and Subsidiaries

Notes to Financial Statements

Entergy New Orleans

2013	Level 1		Level 2		Level 3		Total
	(In Millions)
Assets:
Temporary cash investments	$	4.3	$	-	$	-	$	4.3
Escrow accounts		12.8		-		-		12.8
	$	17.1	$	-	$	-	$	17.1

2012	Level 1		Level 2		Level 3		Total
	(In Millions)
Assets:
Temporary cash investments	$	9.1	$	-	$	-	$	9.1
Escrow accounts		10.6		-		-		10.6
	$	19.7	$	-	$	-	$	19.7

Entergy Texas

2013	Level 1		Level 2		Level 3		Total
	(In Millions)
Assets:
Securitization recovery trust account	$	26.9	$	-	$	-	$	26.9

2012	Level 1		Level 2		Level 3		Total
	(In Millions)
Assets:
Temporary cash investments	$	59.7	$	-	$	-	$	59.7
Securitization recovery trust account		37.3		-		-		37.3
	$	97.0	$	-	$	-	$	97.0

System Energy

2013	Level 1		Level 2		Level 3		Total
	(In Millions)
Assets:
Temporary cash investments	$	15.4	$	-	$	-	$	15.4
Decommissioning trust funds (a):
Equity securities		2.6		315.5		-		318.1
Debt securities		144.5		65.6		-		210.1
	$	162.5	$	381.1	$	-	$	543.6

2012	Level 1		Level 2		Level 3		Total
	(In Millions)
Assets:
Temporary cash investments	$	83.5	$	-	$	-	$	83.5
Decommissioning trust funds (a):
Equity securities		1.6		282.0		-		283.6
Debt securities		141.1		65.9		-		207.0
	$	226.2	$	347.9	$	-	$	574.1

(a) The decommissioning trust funds hold equity and fixed income securities. Equity securities are invested to approximate the returns of major market indices.  Fixed income securities are held in various governmental and corporate securities.  See Note 9 for additional information on the investment portfolios.

53

Entergy Corporation and Subsidiaries

Notes to Financial Statements

NOTE 9.  DECOMMISSIONING TRUST FUNDS (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, and System Energy)

Entergy holds debt and equity securities, classified as available-for-sale, in nuclear decommissioning trust accounts.  The NRC requires Entergy subsidiaries to maintain trusts to fund the costs of decommissioning ANO 1, ANO 2, River Bend, Waterford 3, Grand Gulf, Pilgrim, Indian Point 1 and 2, Vermont Yankee, and Palisades (NYPA currently retains the decommissioning trusts and liabilities for Indian Point 3 and FitzPatrick).  The funds are invested primarily in equity securities, fixed-rate fixed-income securities, and cash and cash equivalents.

Entergy records decommissioning trust funds on the balance sheet at their fair value.  Because of the ability of the Registrant Subsidiaries to recover decommissioning costs in rates and in accordance with the regulatory treatment for decommissioning trust funds, the Registrant Subsidiaries have recorded an offsetting amount of unrealized gains/(losses) on investment securities in other regulatory liabilities/assets.  For the nonregulated portion of River Bend, Entergy Gulf States Louisiana has recorded an offsetting amount of unrealized gains/(losses) in other deferred credits.  Decommissioning trust funds for Pilgrim, Indian Point 1 and 2, Vermont Yankee, and Palisades do not meet the criteria for regulatory accounting treatment.  Accordingly, unrealized gains recorded on the assets in these trust funds are recognized in the accumulated other comprehensive income component of shareholders’ equity because these assets are classified as available for sale.  Unrealized losses (where cost exceeds fair market value) on the assets in these trust funds are also recorded in the accumulated other comprehensive income component of shareholders’ equity unless the unrealized loss is other than temporary and therefore recorded in earnings.  Generally, Entergy records realized gains and losses on its debt and equity securities using the specific identification method to determine the cost basis of its securities.

The securities held as of March 31, 2013 and December 31, 2012 are summarized as follows:

	Fair Value		Total Unrealized Gains		Total Unrealized Losses
	(In Millions)
2013
Equity Securities	$	2,705	$	897	$	-
Debt Securities		1,748		102		5
Total	$	4,453	$	999	$	5

	Fair Value		Total Unrealized Gains		Total Unrealized Losses
	(In Millions)
2012
Equity Securities	$	2,459	$	662	$	1
Debt Securities		1,731		116		5
Total	$	4,190	$	778	$	6

Deferred taxes on unrealized gains/(losses) are recorded in other comprehensive income for the decommissioning trusts which do not meet the criteria for regulatory accounting treatment as described above. Unrealized gains/(losses) above are reported before deferred taxes of $265 million and $211 million as of March 31, 2013 and December 31, 2012, respectively.  The amortized cost of debt securities was $1,654 million as of March 31, 2013 and $1,637 million as of December 31, 2012.  As of March 31, 2013, the debt securities have an average coupon rate of approximately 3.71%, an average duration of approximately 5.27 years, and an average maturity of approximately 8.08 years.  The equity securities are generally held in funds that are designed to approximate or somewhat exceed the return of the Standard & Poor’s 500 Index.  A relatively small percentage of the securities are held in funds intended to replicate the return of the Wilshire 4500 Index or the Russell 3000 Index.

54

Entergy Corporation and Subsidiaries

Notes to Financial Statements

The fair value and gross unrealized losses of available-for-sale equity and debt securities, summarized by investment type and length of time that the securities have been in a continuous loss position, are as follows as of March 31, 2013:

	Equity Securities				Debt Securities
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In Millions)
Less than 12 months	$	3	$	-	$	223	$	2
More than 12 months		-		-		36		3
Total	$	3	$	-	$	259	$	5

The fair value and gross unrealized losses of available-for-sale equity and debt securities, summarized by investment type and length of time that the securities have been in a continuous loss position, are as follows as of December 31, 2012:

	Equity Securities				Debt Securities
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In Millions)
Less than 12 months	$	37	$	1	$	175	$	1
More than 12 months		20		-		48		4
Total	$	57	$	1	$	223	$	5

The unrealized losses in excess of twelve months on equity securities above relate to Entergy’s Utility operating companies and System Energy.

The fair value of debt securities, summarized by contractual maturities, as of March 31, 2013 and December 31, 2012 are as follows:

	2013		2012
	(In Millions)
less than 1 year	$	71	$	53
1 year - 5 years		692		681
5 years - 10 years		558		562
10 years - 15 years		161		164
15 years - 20 years		69		61
20 years+		197		210
Total	$	1,748	$	1,731

During the three months ended March 31, 2013 and 2012, proceeds from the dispositions of securities amounted to $398 million and $536 million, respectively.  During the three months ended March 31, 2013 and 2012, gross gains of $6 million and $12 million, respectively, and gross losses of $2 million and $2 million, respectively, were reclassified out of other comprehensive income or other regulatory liabilities/assets into earnings.

55

Entergy Corporation and Subsidiaries

Notes to Financial Statements

Entergy Arkansas

Entergy Arkansas holds debt and equity securities, classified as available-for-sale, in nuclear decommissioning trust accounts.  The securities held as of March 31, 2013 and December 31, 2012 are summarized as follows:

	Fair Value		Total Unrealized Gains		Total Unrealized Losses
	(In Millions)
2013
Equity Securities	$	419.8	$	156.1	$	-
Debt Securities		223.4		12.2		0.5
Total	$	643.2	$	168.3	$	0.5
2012
Equity Securities	$	384.0	$	116.1	$	-
Debt Securities		216.6		14.5		0.2
Total	$	600.6	$	130.6	$	0.2

The amortized cost of debt securities was $211.7 million as of March 31, 2013 and $202.3 million as of December 31, 2012.  As of March 31, 2013, the debt securities have an average coupon rate of approximately 3.12%, an average duration of approximately 5.06 years, and an average maturity of approximately 5.77 years.  The equity securities are generally held in funds that are designed to approximate the return of the Standard & Poor’s 500 Index.  A relatively small percentage of the securities are held in funds intended to replicate the return of the Wilshire 4500 Index.

The fair value and gross unrealized losses of available-for-sale equity and debt securities, summarized by investment type and length of time that the securities have been in a continuous loss position, are as follows as of March 31, 2013:

	Equity Securities				Debt Securities
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In Millions)
Less than 12 months	$	-	$	-	$	35.5	$	0.4
More than 12 months		-		-		2.0		0.1
Total	$	-	$	-	$	37.5	$	0.5

           The fair value and gross unrealized losses of available-for-sale equity and debt securities, summarized by investment type and length of time that the securities have been in a continuous loss position, are as follows as of December 31, 2012:

56

Entergy Corporation and Subsidiaries

Notes to Financial Statements

	Equity Securities				Debt Securities
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In Millions)
Less than 12 months	$	0.2	$	-	$	24.4	$	0.2
More than 12 months		-		-		1.0		-
Total	$	0.2	$	-	$	25.4	$	0.2

The fair value of debt securities, summarized by contractual maturities, as of March 31, 2013 and December 31, 2012 are as follows:

	2013		2012
	(In Millions)
less than 1 year	$	5.3	$	8.8
1 year - 5 years		115.2		98.6
5 years - 10 years		90.3		93.1
10 years - 15 years		4.0		5.1
15 years - 20 years		1.0		-
20 years+		7.6		11.0
Total	$	223.4	$	216.6

During the three months ended March 31, 2013 and 2012, proceeds from the dispositions of securities amounted to $56.1 million and $54.7 million, respectively.  During the three months ended March 31, 2013 and 2012, gross gains of $1.4 million and $2 million, respectively, were reclassified out of other regulatory liabilities/assets into earnings. During the three months ended March 31, 2013 gross losses of $0.1 million were reclassified out of other regulatory liabilities/assets into earnings. During the three months ended March 31, 2012, gross losses were insignificant.

Entergy Gulf States Louisiana

Entergy Gulf States Louisiana holds debt and equity securities, classified as available-for-sale, in nuclear decommissioning trust accounts.  The securities held as of March 31, 2013 and December 31, 2012 are summarized as follows:

	Fair Value		Total Unrealized Gains		Total Unrealized Losses
	(In Millions)
2013
Equity Securities	$	320.2	$	99.3	$	-
Debt Securities		191.5		14.0		0.3
Total	$	511.7	$	113.3	$	0.3
2012
Equity Securities	$	288.5	$	69.8	$	-
Debt Securities		188.9		15.8		0.1
Total	$	477.4	$	85.6	$	0.1

57

Entergy Corporation and Subsidiaries

Notes to Financial Statements

The amortized cost of debt securities was $175.2 million as of March 31, 2013 and $174.1 million as of December 31, 2012.  As of March 31, 2013, the debt securities have an average coupon rate of approximately 4.60%, an average duration of approximately 5.47 years, and an average maturity of approximately 8.36 years.  The equity securities are generally held in funds that are designed to approximate the return of the Standard & Poor’s 500 Index.  A relatively small percentage of the securities are held in funds intended to replicate the return of the Wilshire 4500 Index.

The fair value and gross unrealized losses of available-for-sale equity and debt securities, summarized by investment type and length of time that the securities have been in a continuous loss position, are as follows as of March 31, 2013:

	Equity Securities				Debt Securities
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In Millions)
Less than 12 months	$	-	$	-	$	18.4	$	0.3
More than 12 months		-		-		-		-
Total	$	-	$	-	$	18.4	$	0.3

The fair value and gross unrealized losses of available-for-sale equity and debt securities, summarized by investment type and length of time that the securities have been in a continuous loss position, are as follows as of December 31, 2012:

	Equity Securities				Debt Securities
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In Millions)
Less than 12 months	$	1.2	$	-	$	9.1	$	0.1
More than 12 months		1.0		-		-		-
Total	$	2.2	$	-	$	9.1	$	0.1

The fair value of debt securities, summarized by contractual maturities, as of March 31, 2013 and December 31, 2012 are as follows:

	2013		2012
	(In Millions)
less than 1 year	$	6.8	$	8.0
1 year - 5 years		40.9		43.5
5 years - 10 years		64.8		63.5
10 years - 15 years		58.0		55.8
15 years - 20 years		9.5		8.5
20 years+		11.5		9.6
Total	$	191.5	$	188.9

During the three months ended March 31, 2013 and 2012, proceeds from the dispositions of securities amounted to $23.3 million and $38.1 million, respectively.  During the three months ended March 31, 2013 and 2012, gross gains of $1.1 million and $1.5 million, respectively, and gross losses of $1.7 thousand and $5.5 thousand, respectively, were reclassified out of other regulatory liabilities/assets into earnings.

58

Entergy Corporation and Subsidiaries

Notes to Financial Statements

Entergy Louisiana

Entergy Louisiana holds debt and equity securities, classified as available-for-sale, in nuclear decommissioning trust accounts.  The securities held as of March 31, 2013 and December 31, 2012 are summarized as follows:

	Fair Value		Total Unrealized Gains		Total Unrealized Losses
	(In Millions)
2013
Equity Securities	$	196.1	$	67.3	$	-
Debt Securities		112.4		8.5		0.2
Total	$	308.5	$	75.8	$	0.2
2012
Equity Securities	$	175.5	$	48.9	$	0.1
Debt Securities		111.9		9.4		0.1
Total	$	287.4	$	58.3	$	0.2

The amortized cost of debt securities was $104.5 million as of March 31, 2013 and $102.6 million as of December 31, 2012.  As of March 31, 2013, the debt securities have an average coupon rate of approximately 3.57%, an average duration of approximately 5.21 years, and an average maturity of approximately 9.18 years.  The equity securities are generally held in funds that are designed to approximate the return of the Standard & Poor’s 500 Index.  A relatively small percentage of the securities are held in funds intended to replicate the return of the Wilshire 4500 Index.

The fair value and gross unrealized losses of available-for-sale equity and debt securities, summarized by investment type and length of time that the securities have been in a continuous loss position, are as follows as of March 31, 2013:

	Equity Securities				Debt Securities
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In Millions)
Less than 12 months	$	-	$	-	$	9.5	$	0.1
More than 12 months		-		-		0.5		0.1
Total	$	-	$	-	$	10.0	$	0.2

The fair value and gross unrealized losses of available-for-sale equity and debt securities, summarized by investment type and length of time that the securities have been in a continuous loss position, are as follows as of December 31, 2012:

	Equity Securities				Debt Securities
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In Millions)
Less than 12 months	$	0.7	$	-	$	3.4	$	-
More than 12 months		5.6		0.1		0.5		0.1
Total	$	6.3	$	0.1	$	3.9	$	0.1

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Entergy Corporation and Subsidiaries

Notes to Financial Statements

 The fair value of debt securities, summarized by contractual maturities, as of March 31, 2013 and December 31, 2012 are as follows:

	2013		2012
	(In Millions)
less than 1 year	$	10.9	$	1.9
1 year - 5 years		34.8		42.3
5 years - 10 years		25.7		24.9
10 years - 15 years		17.4		18.8
15 years - 20 years		2.3		1.7
20 years+		21.3		22.3
Total	$	112.4	$	111.9

During the three months ended March 31, 2013 and 2012, proceeds from the dispositions of securities amounted to $3.6 million and $6.8 million, respectively.  During the three months ended March 31, 2013 and 2012, gross gains of $0.04 million and $0.03 million, respectively, and gross losses of $0.01 million and $2.8 thousand, respectively, were reclassified out of other regulatory liabilities/assets into earnings.

System Energy

System Energy holds debt and equity securities, classified as available-for-sale, in nuclear decommissioning trust accounts.  The securities held as of March 31, 2013 and December 31, 2012 are summarized as follows:

	Fair Value		Total Unrealized Gains		Total Unrealized Losses
	(In Millions)
2013
Equity Securities	$	318.1	$	93.4	$	-
Debt Securities		210.1		8.4		0.1
Total	$	528.2	$	101.8	$	0.1
2012
Equity Securities	$	283.6	$	63.6	$	0.2
Debt Securities		207.0		9.3		0.1
Total	$	490.6	$	72.9	$	0.3

The amortized cost of debt securities was $203.3 million as of March 31, 2013 and $197.8 million as of December 31, 2012.  As of March 31, 2013, the debt securities have an average coupon rate of approximately 2.75%, an average duration of approximately 4.59 years, and an average maturity of approximately 6.21 years.  The equity securities are generally held in funds that are designed to approximate the return of the Standard & Poor’s 500 Index.  A relatively small percentage of the securities are held in funds intended to replicate the return of the Wilshire 4500 Index.

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Entergy Corporation and Subsidiaries

Notes to Financial Statements

The fair value and gross unrealized losses of available-for-sale equity and debt securities, summarized by investment type and length of time that the securities have been in a continuous loss position, are as follows as of March 31, 2013:

	Equity Securities				Debt Securities
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In Millions)
Less than 12 months	$	-	$	-	$	17.0	$	0.1
More than 12 months		-		-		-		-
Total	$	-	$	-	$	17.0	$	0.1

The fair value and gross unrealized losses of available-for-sale equity and debt securities, summarized by investment type and length of time that the securities have been in a continuous loss position, are as follows as of December 31, 2012:

	Equity Securities				Debt Securities
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In Millions)
Less than 12 months	$	1.4	$	-	$	15.5	$	0.1
More than 12 months		13.0		0.2		-		-
Total	$	14.4	$	0.2	$	15.5	$	0.1

The fair value of debt securities, summarized by contractual maturities, as of March 31, 2013 and December 31, 2012 are as follows:

	2013		2012
	(In Millions)
less than 1 year	$	6.5	$	1.3
1 year - 5 years		119.5		128.7
5 years - 10 years		62.7		53.9
10 years - 15 years		2.4		2.3
15 years - 20 years		1.7		1.4
20 years+		17.3		19.4
Total	$	210.1	$	207.0

During the three months ended March 31, 2013 and 2012, proceeds from the dispositions of securities amounted to $25.6 million and $125.4 million, respectively.  During the three months ended March 31, 2013 and 2012, gross gains of $0.02 million and $1.2 million, respectively, and gross losses of $0.07 million and $0.1 million, respectively, were reclassified out of other regulatory liabilities/assets into earnings.

Other-than-temporary impairments and unrealized gains and losses

Entergy, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, and System Energy evaluate unrealized losses at the end of each period to determine whether an other-than-temporary impairment has occurred.  The assessment of whether an investment in a debt security has suffered an other-than-temporary impairment is based on whether Entergy has the intent to sell or more likely than not will be required to sell the debt security before recovery of its amortized costs.  Further, if Entergy does not

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Entergy Corporation and Subsidiaries

Notes to Financial Statements

expect to recover the entire amortized cost basis of the debt security, an other-than-temporary impairment is considered to have occurred and it is measured by the present value of cash flows expected to be collected less the amortized cost basis (credit loss).  Entergy did not have any material other-than-temporary impairments relating to credit losses on debt securities for the three months ended March 31, 2013 and 2012.  The assessment of whether an investment in an equity security has suffered an other-than-temporary impairment continues to be based on a number of factors including, first, whether Entergy has the ability and intent to hold the investment to recover its value, the duration and severity of any losses, and, then, whether it is expected that the investment will recover its value within a reasonable period of time.  Entergy’s trusts are managed by third parties who operate in accordance with agreements that define investment guidelines and place restrictions on the purchases and sales of investments.  Entergy did not record material charges to other income in the three months ended March 31, 2013 and 2012, respectively, resulting from the recognition of the other-than-temporary impairment of certain equity securities held in its decommissioning trust funds.

NOTE 10.  INCOME TAXES(Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

See Income Tax Litigation, Income Tax Audits, and Other Tax Matters in Note 3 to the financial statements in the Form 10-K for a discussion of income tax proceedings, income tax audits, and other income tax matters involving Entergy.  As discussed in the Form 10-K, oral argument in PPL’s U.K. Windfall Tax case at the U.S. Supreme Court was heard in February 2013, and the U.S. Supreme Court’s decision is pending.  Also, in March 2013, Entergy Louisiana distributed to its parent, Entergy Louisiana Holdings, Inc., Louisiana income tax credits of $20.6 million which resulted in a decrease in Entergy Louisiana’s member’s equity account.

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

Construction Expenditures in Accounts Payable

Construction expenditures included in accounts payable at March 31, 2013 are $161.9 million for Entergy, $12 million for Entergy Arkansas, $27.1 million for Entergy Gulf States Louisiana, $54.1 million for Entergy Louisiana, $1.7 million for Entergy Mississippi, $1.6 million for Entergy New Orleans, $3.6 million for Entergy Texas, and $6 million for System Energy.  Construction expenditures included in accounts payable at December 31, 2012 are $267 million for Entergy, $56.3 million for Entergy Arkansas, $9.7 million for Entergy Gulf States Louisiana, $110.4 million for Entergy Louisiana, $4.8 million for Entergy Mississippi, $1.9 million for Entergy New Orleans, $8.6 million for Entergy Texas, and $13.5 million for System Energy.

Impairment of Long-Lived Assets

See “Impairment of Long-Lived Assets” in Note 1 to the financial statements in the Form 10-K for a discussion of the periodic reviews that Entergy performs whenever events or changes in circumstances indicate that the recoverability of long-lived assets is uncertain.  Following is an update to that discussion regarding the Vermont Yankee nuclear power plant.

As discussed in the Form 10-K, the New England Coalition in December 2012 filed a complaint in the Vermont Supreme Court seeking an order to shut down Vermont Yankee while its Certificate of Public Good application is pending, and Entergy moved to dismiss that complaint.  On March 25, 2013, the Vermont Supreme Court granted Entergy’s motion and dismissed the complaint.  As also discussed in the 10-K, Entergy appealed a January 2013 order of the VPSB that made ripe for appeal two earlier orders in which

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Entergy Corporation and Subsidiaries

Notes to Financial Statements

the VPSB had found that the state’s timely renewal law, 3 V.S.A. § 814(b), did not apply to certain conditions in the orders issued by the VPSB in 2002 and 2006 precluding Vermont Yankee’s operation after March 21, 2012.  Entergy filed its appeal brief on March 28, 2013 and briefing will continue into June 2013.  The remaining schedule for that appeal has not yet been determined.  Additionally, as discussed in the 10-K, in February 2013, the VPSB issued a notice allowing comments to be filed regarding Vermont Yankee’s petition for a Certificate of Public Good to install a diesel generator to enable it to comply with the NRC’s station blackout requirements.  The VPSB has since invited further comments and other submissions, and has issued a scheduling order that allows the assigned hearing officer to issue a proposal for decision in the second half of May 2013.  Because Vermont Yankee must commence installation of the generator by mid-June 2013 in order to be confident that it will be operational by September 1, 2013, the date by which it will be needed to meet the NRC’s station blackout requirements, on April 25, 2013, Entergy as a precaution filed a complaint in the United States District Court for the District of Vermont seeking a determination that federal law preempts Vermont from enforcing any state law that would prevent Vermont Yankee from installing the generator to comply with the NRC’s requirements, as well as preliminary and permanent injunctive relief against such enforcement.

Impairment of Vermont Yankee in First Quarter 2012

See the Form 10-K for a discussion of the impairment charge recorded for the Vermont Yankee plant in the first quarter 2012.

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

See Note 18 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 facility and commercial paper borrowings and long-term debt.

Entergy Louisiana and System Energy are each considered to hold a variable interest in the lessors from which they lease, respectively, undivided interests representing approximately 9.3% of the Waterford 3 and 11.5% of the Grand Gulf nuclear plants.  Entergy Louisiana and System Energy are the lessees under these arrangements, which are described in more detail in Note 10 to the financial statements in the Form 10-K.  Entergy Louisiana made payments on its lease, including interest, of $18.5 million and $26.8 million in the three months ended March 31, 2013 and 2012, respectively.  System Energy made payments on its lease, including interest, of $46.8 million and $48.1 million in the three months ended March 31, 2013 and 2012, respectively.

NOTE 13.  ASSET RETIREMENT OBLIGATIONS  (Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, 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.  Following is an update to that discussion.

 In the first quarter of 2013, Entergy Wholesale Commodities recorded a revision to its estimated decommissioning cost liability for a nuclear site as a result of a revised decommissioning cost study.  The revised estimate resulted in a $46.6 million reduction in the decommissioning cost liability, along with a corresponding reduction in the related asset retirement cost asset.

__________________________________

In the opinion of the management of Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, 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.  The business of the Registrant Subsidiaries is subject to seasonal fluctuations, however, with the peak periods occurring during the third quarter.  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 4. Controls and Procedures

Disclosure Controls and Procedures

As of March 31, 2013, evaluations were performed under the supervision and with the participation of Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, 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 March 31, 2013 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, INC. AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

Plan to Spin Off the Utility’s Transmission Business

See the “Plan to Spin Off the Utility’s Transmission Business” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis in the Form 10-K and herein for a discussion of Entergy’s plan to spin off its transmission business and merge it with a newly formed subsidiary of ITC Holdings Corp., including the planned retirement of debt and preferred securities.

Results of Operations

Net Income

Net income increased slightly, by $0.8 million, primarily due to higher net revenue, substantially offset by higher other operation and maintenance expenses, higher depreciation and amortization expenses, higher taxes other than income taxes, and higher interest expense.

Net Revenue

Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory credits.  Following is an analysis of the change in net revenue comparing the first quarter 2013 to the first quarter 2012.

	Amount
	(In Millions)
2012 net revenue	$	262.8
Retail electric price		16.8
Volume/weather		5.1
Net wholesale revenue		3.2
Other		1.0
2013 net revenue	$	288.9

The retail electric price variance is primarily due to:

·   an increase in the capacity acquisition rider, as approved by the APSC, effective with the first billing cycle of December 2012, relating to the Hot Spring plant acquisition.  The net income effect of the Hot Spring plant cost recovery is limited to a portion representing an allowed return on equity on the net plant investment with the remainder offset by the Hot Spring plant costs in other operation and maintenance expenses, depreciation expenses, and taxes other than income taxes; and

·   an increase in the energy efficiency rider, as approved by the APSC, effective July 2012.  Energy efficiency revenues are offset by costs included in other operation and maintenance expenses and have no effect on net income.

The volume/weather variance is primarily due to the effect of more favorable weather, primarily on residential sales, in the first quarter 2013 as compared to the same period in prior year.

The net wholesale revenue variance is primarily due to higher margins on co-owner contracts.

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Entergy Arkansas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

Gross operating revenues and fuel and purchased power expenses

Gross operating revenues increased primarily due to:

·   an increase of $29.5 million in gross wholesale revenues primarily due to increased sales to affiliated customers;

·   an increase of $10.6 million in rider revenues related to higher System Agreement production cost equalization payments.  These revenues are offset in deferred fuel expenses.  See Note 2 to the financial statements herein and in the Form 10-K for a discussion of the FERC orders in the System Agreement production cost equalization proceedings;

·   an increase of $10 million primarily due to the increase in the capacity acquisition rider, as discussed above;

·   an increase of $5.9 million in rider revenues due to an increase in the energy efficiency rider effective July 2012, as discussed above; and

·   the increase related to volume/weather, as discussed above.

Fuel and purchased power expenses increased primarily due to an increase in gas-fired generation as a result of the Hot Spring plant acquisition, an increase in the average market price of purchased power, and higher System Agreement production cost equalization payments, as discussed above.  The increase was partially offset by a decrease in the recovery from customers of deferred fuel costs.

Other Income Statement Variances

Other operation and maintenance expenses increased primarily due to:

·   an increase of $5.9 million in fossil-fueled generation expenses primarily due to higher plant outage costs in 2013 and the addition of the Hot Spring plant in November 2012;

·   an increase of $5.3 million in energy efficiency costs.  These costs are recovered through the energy efficiency rider and have no effect on net income;

·   an increase of $3.4 million in compensation and benefits costs primarily due to a decrease in the discount rates used to determine net periodic pension and other postretirement benefit costs.  See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – Critical Accounting Estimates" in the Form 10-K and Note 6 to the financial statements herein for further discussion of benefits costs; and

·   an increase of $2.6 million in nuclear generation expenses primarily due to higher nuclear labor costs.

Taxes other than income taxes increased primarily due to an increase in ad valorem taxes resulting from higher assessments and an expiring exemption and an increase in local franchise taxes resulting from higher residential and commercial revenues compared to the same period in prior year.  Franchise taxes have no effect on net income as these taxes are recovered through the franchise tax rider.

Depreciation and amortization expenses increased primarily due to the acquisition of the Hot Spring plant in November 2012.

Interest expense increased primarily due to the issuance of $200 million of 4.9% Series first mortgage bonds in December 2012.

Income Taxes

The effective income tax rate for the first quarter 2013 was 48.1%.  The difference in the effective income tax rate for the first quarter 2013 versus the federal statutory rate of 35% is due to state income taxes, certain book and tax differences related to utility plant items, and the provision for uncertain tax positions, partially offset by book and tax differences related to the allowance for equity funds used during construction.

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Entergy Arkansas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

The effective income tax rate for the first quarter 2012 was 45.9%.  The difference in the effective income tax rate for the first quarter 2012 versus the federal statutory rate of 35% was due to state income taxes and certain book and tax differences related to utility plant items, partially offset by book and tax differences related to the allowance for equity funds used during construction.

ANO Damage and Outage

On March 31, 2013, during a scheduled refueling outage at ANO 1, a contractor-owned and operated heavy-lifting apparatus collapsed while moving the generator stator out of the turbine building.  The collapse resulted in the death of an ironworker and injuries to several other contract workers, caused ANO 2 to shut down, and damaged the ANO turbine building.  The turbine building serves both ANO 1 and 2 and is a non-radiological area of the plant.  Entergy is still analyzing the incident; the extent of the damage; the cost of assessment, debris removal, and replacing damaged property and equipment; and the schedule for restoring ANO 1 to service, but was able to restart ANO 2 on April 28, 2013.  In addition, Entergy Arkansas incurred replacement power costs for ANO 2 power during its outage and expects to incur incremental replacement power costs for ANO 1 power to the extent its outage extends beyond the originally-planned duration of the refueling outage.  Each of the Utility operating companies has recovery mechanisms in place designed to recover its prudently-incurred fuel and purchased power costs.

Entergy Arkansas is assessing its options for recovering damages that resulted from the stator drop, including its insurance coverage.  Entergy is a member of Nuclear Electric Insurance Limited (NEIL), a mutual insurance company that provides property damage coverage to the members’ nuclear generating plants, including ANO.  NEIL has notified Entergy that it believes that a $50 million course of construction sublimit applies to any loss associated with the lifting apparatus failure and stator drop at ANO.  Entergy has responded that it disagrees with NEIL's position and is evaluating its options for enforcing its rights under the policy.

Liquidity and Capital Resources

Cash Flow

Cash flows for the three months ended March 31, 2013 and 2012 were as follows:

	2013			2012
	(In Thousands)
Cash and cash equivalents at beginning of period	$	34,533		$	22,599
Cash flow provided by (used in):
Operating activities		173,391			11,046
Investing activities		(159,889	)		(53,146	)
Financing activities		(33,113	)		25,184
Net decrease in cash and cash equivalents		(19,611	)		(16,916	)
Cash and cash equivalents at end of period	$	14,922		$	5,683

Operating Activities

           Net cash flow provided by operating activities increased $162.3 million for the three months ended March 31, 2013 compared to the three months ended March 31, 2012 primarily due to the $156 million System Agreement bandwidth remedy payment made in January 2012 as a result of the payment required to implement the FERC’s remedy for the period June – December 2005 and $9.1 million in pension contributions in 2012, partially offset by $18 million in storm restoration spending in 2013 resulting from the December 2012 Winter storm which caused significant damage to Entergy Arkansas’s distribution lines, equipment, poles, and other facilities and income tax payments of $4.1 million in 2013 compared to income tax refunds of $10.6 million in 2012.  See Note 2 to the

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Entergy Arkansas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

financial statements in the Form 10-K for a discussion of the System Agreement bandwidth remedy payment.  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.

Investing Activities

Net cash flow used in investing activities increased $106.7 million for the three months ended March 31, 2013 compared to the three months ended March 31, 2012 primarily due to:

·   money pool activity;

·   an increase of $37.3 million in distribution expenditures due to the December 2012 Winter storm;

·   an increase in nuclear construction expenditures due to the increase in scope of various nuclear projects; and

·   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 services deliveries, and the timing of cash payments during the nuclear fuel cycle.

The increase was partially offset by a decrease in transmission construction expenditures due to higher reliability work performed in 2012.

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 $33.4 million for the three months ended March 31, 2013 compared to decreasing by $17.4 million for the three months ended March 31, 2012.  The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings.

Financing Activities

Financing activities used $33.1 million of cash for the three months ended March 31, 2013 compared to providing $25.2 million of cash for the three months ended March 31, 2012 primarily due to money pool activity and $15 million in dividends paid on common stock in 2013, partially offset by a decrease in net repayments of borrowings from the nuclear fuel company variable interest entity credit facility.

Increases in Entergy Arkansas’s payable to the money pool are a source of cash flow, and Entergy Arkansas’s payable to the money pool increased by $49 million for the three months ended March 31, 2012.

In January 2013, Entergy Arkansas arranged for the issuance by (i) Independence County, Arkansas of $45 million of 2.375% Pollution Control Revenue Refinancing Bonds (Entergy Arkansas, Inc. Project) Series 2013 due January 2021, and (ii) Jefferson County, Arkansas of $54.7 million of 1.55% Pollution Control Revenue Refunding Bonds (Entergy Arkansas, Inc. Project) Series 2013 due October 2017, each of which series is secured by a separate series of non-interest bearing first mortgage bonds of Entergy Arkansas.  The proceeds of these issuances were applied to the refunding of outstanding series of pollution control revenue bonds previously issued by the respective issuers.

Capital Structure

Entergy Arkansas’s capitalization is balanced between equity and debt, as shown in the following table.

	March 31,  2013	December 31, 2012
Debt to capital	55.9%	56.0%
Effect of excluding the securitization bonds	(1.2%)	(1.2%)
Debt to capital, excluding securitization bonds (a)	54.7%	54.8%
Effect of subtracting cash	(0.2%)	(0.4%)
Net debt to net capital, excluding securitization bonds (a)	54.5%	54.4%

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

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Entergy Arkansas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

Net debt consists of debt less cash and cash equivalents.  Debt consists of short-term borrowings and long-term debt, including the currently maturing portion.  Capital consists of debt, preferred stock without sinking fund, and common equity.  Net capital consists of capital less cash and cash equivalents.  Entergy Arkansas uses the net debt to net capital ratio and the 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.

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 additional updates to the information provided in the Form 10-K.  As discussed in the Form 10-K, the planned construction and capital investment amounts in the table do not include significant costs for the capital projects that might result from the NRC post-Fukushima requirements.  The current preliminary cost estimate (including both capital and operation and maintenance expense) to implement the post-Fukushima requirements for Entergy Arkansas is approximately $90 million.  These costs are expected to be incurred over the 2012 through 2018 time period.

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

March 31, 2013	December 31, 2012	March 31, 2012	December 31, 2011
(In Thousands)
$41,478	$8,035	($49,043)	$17,362

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

Entergy Arkansas has a credit facility in the amount of $150 million scheduled to expire in March 2018.  Entergy Arkansas also had a $20 million credit facility that expired in April 2013.  Entergy Arkansas plans to renew the $20 million credit facility.  No borrowings were outstanding under the credit facilities as of March 31, 2013.  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 $85 million scheduled to expire in July 2013.  As of March 31, 2013, $21.4 million in letters of credit were outstanding under the credit facility to support a like amount of commercial paper issued by the Entergy Arkansas nuclear fuel company variable interest entity.  See Note 4 to the financial statements for additional discussion of the nuclear fuel company variable interest entity credit facility.

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.  Following are updates to that discussion.

2013 Base Rate Filing

In March 2013, Entergy Arkansas filed with the APSC for a general change in rates, charges, and tariffs.  Recognizing that the final structure of Entergy Arkansas’s transmission business has not been determined, the filing presents two alternative scenarios for the APSC to establish the appropriate level of rates for Entergy Arkansas.  In the primary scenario, which assumes that Entergy Arkansas will transition to MISO in December 2013, Entergy Arkansas requests a rate increase of $174 million, including $49 million of revenue being transferred from collection in riders to base rates.  The alternate scenario, which also assumes completion of the proposed spin-merge of the transmission business with ITC, reflects a $218 million total rate increase request.  Both scenarios propose a new transmission rider and a capacity cost recovery rider.  The filing requests a 10.4% return on common equity.  The APSC established a procedural schedule that includes hearings in the proceeding beginning in October 2013. New rates are expected to become effective by January 2014.

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Entergy Arkansas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

Opportunity Sales Proceeding

See Note 2 to the financial statements for an update to the discussion of the opportunity sales proceeding.

Federal Regulation

See “System Agreement” and “Entergy’s Proposal to Join MISO” in the “Rate, Cost-recovery, and Other Regulation – Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for updates to the Federal Regulation discussion in the Form 10-K.

Nuclear Matters

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

Environmental Risks

See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Environmental Risks" in the Form 10-K for a discussion of environmental risks.

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 Arkansas’s accounting for nuclear decommissioning costs, unbilled revenue, and qualified pension and other postretirement benefits.

70

ENTERGY ARKANSAS, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
	2013			2012
	(In Thousands)
OPERATING REVENUES
Electric	$	542,392		$	475,178
OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale		147,773			134,802
Purchased power		106,314			78,796
Nuclear refueling outage expenses		11,540			11,787
Other operation and maintenance		141,620			125,373
Decommissioning		10,517			9,888
Taxes other than income taxes		23,252			20,684
Depreciation and amortization		58,636			55,241
Other regulatory credits - net		(574	)		(1,209	)
TOTAL		499,078			435,362
OPERATING INCOME		43,314			39,816
OTHER INCOME
Allowance for equity funds used during construction		2,226			1,725
Interest and investment income		5,775			5,857
Miscellaneous - net		(1,165	)		(1,453	)
TOTAL		6,836			6,129
INTEREST EXPENSE
Interest expense		22,579			20,750
Allowance for borrowed funds used during construction		(776	)		(442	)
TOTAL		21,803			20,308
INCOME BEFORE INCOME TAXES		28,347			25,637
Income taxes		13,628			11,763
NET INCOME		14,719			13,874
Preferred dividend requirements		1,718			1,718
EARNINGS APPLICABLE TO
COMMON STOCK	$	13,001		$	12,156
See Notes to Financial Statements.

71

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72

ENTERGY ARKANSAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
	2013			2012
	(In Thousands)
OPERATING ACTIVITIES
Net income	$	14,719		$	13,874
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation, amortization, and decommissioning, including nuclear fuel amortization		92,988			88,981
Deferred income taxes, investment tax credits, and non-current taxes accrued		24,215			34,625
Changes in assets and liabilities:
Receivables		2,124			17,958
Fuel inventory		5,103			(2,455	)
Accounts payable		(9,139	)		(211,524	)
Prepaid taxes and taxes accrued		(6,164	)		(9,127	)
Interest accrued		(10,117	)		(10,974	)
Deferred fuel costs		43,740			53,521
Other working capital accounts		(2,572	)		14,682
Provisions for estimated losses		95			(112	)
Other regulatory assets		16,763			21,956
Pension and other postretirement liabilities		(1,327	)		(9,770	)
Other assets and liabilities		2,963			9,411
Net cash flow provided by operating activities		173,391			11,046
INVESTING ACTIVITIES
Construction expenditures		(126,629	)		(81,518	)
Allowance for equity funds used during construction		3,147			2,865
Nuclear fuel purchases		(32,561	)		(34,595	)
Proceeds from sale of nuclear fuel		36,478			49,879
Proceeds from nuclear decommissioning trust fund sales		56,118			54,727
Investment in nuclear decommissioning trust funds		(59,540	)		(57,898	)
Change in money pool receivable - net		(33,443	)		17,362
Remittances to transition charge account		(3,459	)		(3,968	)
Net cash flow used in investing activities		(159,889	)		(53,146	)
FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt		98,660			-
Retirement of long-term debt		(99,703	)		-
Changes in short-term borrowings - net		(15,352	)		(21,376	)
Changes in money pool payable - net		-			49,043
Dividends paid:
Common stock		(15,000	)		-
Preferred stock		(1,718	)		(1,718	)
Other		-			(765	)
Net cash flow provided by (used in) financing activities		(33,113	)		25,184
Net decrease in cash and cash equivalents		(19,611	)		(16,916	)
Cash and cash equivalents at beginning of period		34,533			22,599
Cash and cash equivalents at end of period	$	14,922		$	5,683
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized	$	31,358		$	30,476
Income taxes	$	4,107		$	(10,584	)
See Notes to Financial Statements.

73

ENTERGY ARKANSAS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, 2013 and December 31, 2012
(Unaudited)
	2013			2012
	(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash	$	2,561		$	9,597
Temporary cash investments		12,361			24,936
Total cash and cash equivalents		14,922			34,533
Securitization recovery trust account		7,862			4,403
Accounts receivable:
Customer		111,366			98,036
Allowance for doubtful accounts		(28,430	)		(28,343	)
Associated companies		95,046			67,277
Other		70,602			71,956
Accrued unbilled revenues		64,563			72,902
Total accounts receivable		313,147			281,828
Accumulated deferred income taxes		81,471			72,196
Deferred fuel costs		53,565			97,305
Fuel inventory - at average cost		43,872			48,975
Materials and supplies - at average cost		151,712			148,682
Deferred nuclear refueling outage costs		38,950			38,410
Prepayments and other		13,481			10,586
TOTAL		718,982			736,918
OTHER PROPERTY AND INVESTMENTS
Decommissioning trust funds		643,190			600,578
Non-utility property - at cost (less accumulated depreciation)		1,669			1,671
Other		41,182			41,182
TOTAL		686,041			643,431
UTILITY PLANT
Electric		8,674,092			8,693,659
Property under capital lease		1,133			1,154
Construction work in progress		208,581			205,982
Nuclear fuel		268,976			303,825
TOTAL UTILITY PLANT		9,152,782			9,204,620
Less - accumulated depreciation and amortization		4,074,302			4,104,882
UTILITY PLANT - NET		5,078,480			5,099,738
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Regulatory asset for income taxes - net		78,572			80,751
Other regulatory assets (includes securitization property of
$90,245 as of March 31, 2013 and $93,238 as of
December 31, 2012)		1,207,053			1,221,636
Other		41,046			36,971
TOTAL		1,326,671			1,339,358
TOTAL ASSETS	$	7,810,174		$	7,819,445
See Notes to Financial Statements.

74

ENTERGY ARKANSAS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
March 31, 2013 and December 31, 2012
(Unaudited)
	2013		2012
	(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt	$	330,000	$	330,000
Short-term borrowings		21,383		36,735
Accounts payable:
Associated companies		40,826		39,288
Other		143,875		200,964
Customer deposits		86,143		85,198
Taxes accrued		208,805		214,969
Accumulated deferred income taxes		3,824		5,927
Interest accrued		18,301		28,418
Other		48,196		45,208
TOTAL		901,353		986,707
NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued		1,865,020		1,829,281
Accumulated deferred investment tax credits		40,450		40,947
Other regulatory liabilities		176,769		143,901
Decommissioning		691,229		680,712
Accumulated provisions		5,917		5,822
Pension and other postretirement liabilities		613,441		614,805
Long-term debt (includes securitization bonds of $101,548 as of
March 31, 2013 and $101,547 as of December 31, 2012)		1,793,945		1,793,895
Other		28,083		27,409
TOTAL		5,214,854		5,136,772
Commitments and Contingencies
Preferred stock without sinking fund		116,350		116,350
COMMON EQUITY
Common stock, $0.01 par value, authorized 325,000,000
shares; issued and outstanding 46,980,196 shares in 2013
and 2012		470		470
Paid-in capital		588,444		588,444
Retained earnings		988,703		990,702
TOTAL		1,577,617		1,579,616
TOTAL LIABILITIES AND EQUITY	$	7,810,174	$	7,819,445
See Notes to Financial Statements.

75

ENTERGY ARKANSAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON EQUITY
For the Three Months Ended March 31, 2013 and 2012
(Unaudited) (In Thousands)
	Common Equity
	Common Stock		Paid-in Capital		Retained Earnings			Total
Balance at December 31, 2011	$	470	$	588,444	$	855,210		$	1,444,124
Net income		-		-		13,874			13,874
Preferred stock dividends		-		-		(1,718	)		(1,718	)
Balance at March 31, 2012	$	470	$	588,444	$	867,366		$	1,456,280
Balance at December 31, 2012	$	470	$	588,444	$	990,702		$	1,579,616
Net income		-		-		14,719			14,719
Common stock dividends		-		-		(15,000	)		(15,000	)
Preferred stock dividends		-		-		(1,718	)		(1,718	)
Balance at March 31, 2013	$	470	$	588,444	$	988,703		$	1,577,617
See Notes to Financial Statements.

76

ENTERGY ARKANSAS, INC. AND SUBSIDIARIES
SELECTED OPERATING RESULTS
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
					Increase/
Description	2013		2012		(Decrease)			%
	(Dollars In Millions)
Electric Operating Revenues:
Residential	$	201	$	175	$	26			15
Commercial		109		102		7			7
Industrial		99		94		5			5
Governmental		5		5		-			-
Total retail		414		376		38			10
Sales for resale:
Associated companies		106		77		29			38
Non-associated companies		17		17		-			-
Other		5		5		-			-
Total	$	542	$	475	$	67			14
Billed Electric Energy
Sales (GWh):
Residential		2,175		1,987		188			9
Commercial		1,355		1,340		15			1
Industrial		1,555		1,599		(44	)		(3	)
Governmental		57		63		(6	)		(10	)
Total retail		5,142		4,989		153			3
Sales for resale:
Associated companies		2,690		2,111		579			27
Non-associated companies		185		265		(80	)		(30	)
Total		8,017		7,365		652			9

77

ENTERGY GULF STATES LOUISIANA, L.L.C.

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

Plan to Spin Off the Utility’s Transmission Business

See the “Plan to Spin Off the Utility’s Transmission Business” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis in the Form 10-K and herein for a discussion of Entergy’s plan to spin off its transmission business and merge it with a newly formed subsidiary of ITC Holdings Corp., including the planned retirement of debt and preferred securities.

Results of Operations

Net Income

Net income decreased slightly, by $1.2 million, primarily due to higher other operation and maintenance expenses, substantially offset by higher net revenue.

Net Revenue

Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges.  Following is an analysis of the change in net revenue comparing the first quarter 2013 to the first quarter 2012.

	Amount
	(In Millions)
2012 net revenue	$	203.9
Volume/weather		2.7
Net wholesale revenue		2.6
Net gas revenue		1.7
Retail electric price		(2.6	)
Other		1.3
2013 net revenue	$	209.6

The volume/weather variance is primarily due to the effect of more favorable weather on residential sales in the first quarter 2013 as compared to the same period in prior year.

The net wholesale revenue variance is primarily due to increased sales volume to municipal and co-op customers and higher prices.

The net gas revenue variance is primarily due to the effect of more favorable weather, primarily in the residential sector, in the first quarter 2013 as compared to the same period in prior year.

The retail electric price variance is primarily due to decreased rider revenues.

78

Entergy Gulf States Louisiana, L.L.C.

Management’s Financial Discussion and Analysis

Gross operating revenues and fuel and purchased power expenses

Gross operating revenues increased primarily due to an increase of $9.2 million in fuel cost recovery revenues primarily due to higher fuel rates, an increase of $9.1 million in gross wholesale revenues, as discussed above, and an increase in natural gas revenues, as discussed above.

Fuel and purchased power expenses increased primarily due to an increase in the average market price of purchased power and increased demand, partially offset by a decrease in deferred fuel expense due to fuel and purchased power expense increases in excess of higher fuel cost recovery revenues.

Other Income Statement Variances

Other operation and maintenance expenses increased primarily due to:

·   an increase of $3.5 million in compensation and benefits costs primarily due to a decrease in the discount rates used to determine net periodic pension and other postretirement benefit costs.  See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – Critical Accounting Estimates" in the Form 10-K and Note 6 to the financial statements herein for further discussion of benefits costs; and

·   an increase of $3 million in nuclear generation expenses primarily due to higher nuclear labor costs, including higher contract labor.

Income Taxes

The effective income tax rate for the first quarter 2013 was 36%.  The difference in the effective income tax rate for the first quarter 2013 versus the federal statutory rate of 35% is primarily due to the provision for uncertain tax positions and state income taxes, partially offset by book and tax differences related to the non-taxable income distributions earned on preferred membership interests. 

The effective income tax rate for the first quarter 2012 was 38.3%.  The difference in the effective income tax rate for the first quarter 2012 versus the federal statutory rate of 35% was due to state income taxes and certain book and tax differences related to utility plant items, partially offset by book and tax differences related to the non-taxable income distributions earned on preferred membership interests. 

Hurricane Isaac

See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – Hurricane Isaac" in the Form 10-K for a discussion of Hurricane Isaac and the damage caused to Entergy Gulf States Louisiana’s service area in August 2012.  In April 2013, Entergy Gulf States Louisiana and Entergy Louisiana filed a joint application with the LPSC relating to Hurricane Isaac system restoration costs.  Specifically, Entergy Gulf States Louisiana requested that the LPSC determine the amount of such costs that were prudently incurred and are, thus, eligible for recovery from customers.  Including carrying costs and additional storm escrow funds, Entergy Gulf States Louisiana is seeking determination that $73.8 million in system restoration costs were prudently incurred.  Entergy Gulf States Louisiana intends to replenish its storm escrow accounts to $90 million primarily through traditional debt markets and has requested special rate treatment of any borrowings for that purpose.  This filing does not, however, seek to implement any rate change; rather, Entergy Gulf States Louisiana anticipates filing a supplemental application in May 2013 proposing a specific means to recover the system restoration costs.  Entergy Gulf States Louisiana plans to pursue Louisiana Act 55 financing of the costs, which was the same method it used for Hurricanes Katrina, Rita, Gustav, and Ike.

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Entergy Gulf States Louisiana, L.L.C.

Management’s Financial Discussion and Analysis

Liquidity and Capital Resources

Cash Flow

Cash flows for the three months ended March 31, 2013 and 2012 were as follows:

	2013			2012
	(In Thousands)
Cash and cash equivalents at beginning of period	$	35,686		$	24,845
Cash flow provided by (used in):
Operating activities		86,639			191,558
Investing activities		(119,776	)		(51,137	)
Financing activities		1,360			(36,219	)
Net increase (decrease) in cash and cash equivalents		(31,777	)		104,202
Cash and cash equivalents at end of period	$	3,909		$	129,047

Operating Activities

Net cash flow provided by operating activities decreased $104.9 million for the three months ended March 31, 2013 compared to the three months ended March 31, 2012 primarily due to:

·   the receipt, in January 2012, of $75 million in System Agreement bandwidth remedy payments required to implement the FERC’s remedy in an October 2011 order for the period June – December 2005.  See Note 2 to the financial statements herein and in the Form 10-K for a discussion of the System Agreement proceedings; and

·   higher nuclear refueling outage spending at River Bend.  River Bend had a refueling outage in 2013 and did not have one in 2012.

Investing Activities

Net cash flow used in investing activities increased $68.6 million for the three months ended March 31, 2013 compared to the three months ended March 31, 2012 primarily due to:

·   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 services deliveries, and the timing of cash payments during the nuclear fuel cycle;

·   $51 million in proceeds in 2012 from the sale of a portion of Entergy Gulf States Louisiana’s investment in Entergy Holdings Company’s Class A preferred membership interests to a third party; and

·   an increase in nuclear construction expenditures as a result of spending on nuclear projects during the River Bend refueling outage in 2013.

The increase was partially offset by the withdrawal of $65.5 million from the storm reserve escrow account in 2013 and money pool activity.

Increases in Entergy Gulf States Louisiana’s receivable from the money pool are a use of cash flow, and Entergy Gulf States Louisiana’s receivable from the money pool increased by $49.6 million for the three months ended March 31, 2012. The money pool is an inter-company borrowing arrangement designed to reduce the Utility operating companies’ need for external short-term borrowings.

80

Entergy Gulf States Louisiana, L.L.C.

Management’s Financial Discussion and Analysis

Financing Activities

Financing activities provided cash of $1.4 million for the three months ended March 31, 2013 compared to using cash of $36.2 million for the three months ended March 31, 2012 primarily due to:

·   the issuance of $70 million of 3.38% Series R notes by the nuclear fuel company variable interest entity in February 2013; and

·   an increase of $50 million in credit borrowings for the three months ended March 31, 2013 compared to payments of $12.7 million on credit borrowings for the three months ended March 31, 2012 against the nuclear fuel company variable interest entity credit facility.

Cash flows provided by financing activities were offset by an increase of $97.3 million in common equity distributions.

Capital Structure

Entergy Gulf States Louisiana’s capitalization is balanced between equity and debt, as shown in the following table.  The increase in the debt to capital ratio for Entergy Gulf States Louisiana as of March 31, 2013 is primarily due to a decrease in member’s equity as a result of an increase of $97.3 million in common equity distributions.

	March 31, 2013	December 31, 2012
Debt to capital	55.9%	52.3%
Effect of subtracting cash	-%	(0.6%)
Net debt to net capital	55.9%	51.7%

Net debt consists of debt less cash and cash equivalents.  Debt consists of short-term borrowings 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 Gulf States Louisiana uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Gulf States Louisiana’s financial condition.

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 Gulf States Louisiana’s uses and sources of capital.  Following are updates to the information provided in the Form 10-K.  As discussed in the Form 10-K, the planned construction and capital investment amounts in the table do not include significant costs for the capital projects that might result from the NRC post-Fukushima requirements.  The current preliminary cost estimate (including both capital and operation and maintenance expense) to implement the post-Fukushima requirements for Entergy Gulf States Louisiana is approximately $45 million.  These costs are expected to be incurred over the 2012 through 2018 time period.

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

March  31, 2013	December 31, 2012	March 31, 2012	December 31, 2011
(In Thousands)
($8,736)	($7,074)	$73,180	$23,596

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

81

Entergy Gulf States Louisiana, L.L.C.

Management’s Financial Discussion and Analysis

Entergy Gulf States Louisiana has a credit facility in the amount of $150 million scheduled to expire in March 2018.  As of March 31, 2013, $50 million was outstanding on the credit facility.  See Note 4 to the financial statements herein for additional discussion of the credit facility.

The Entergy Gulf States Louisiana nuclear fuel company variable interest entity has a credit facility in the amount of $85 million scheduled to expire in July 2013.  No borrowings were outstanding on the variable interest entity credit facility as of March 31, 2013.  See Note 4 to the financial statements for additional discussion of the variable interest entity credit facility.

In February 2013, the Entergy Gulf States Louisiana nuclear fuel company variable interest entity issued $70 million of 3.38% Series R notes due August 2020.  The Entergy Gulf States Louisiana nuclear fuel company variable interest entity used the proceeds principally to purchase additional nuclear fuel.

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.  Following are updates to that discussion.

Retail Rates - Electric

In November 2011 the LPSC approved a one-year extension of Entergy Gulf States Louisiana’s formula rate plan.  In May 2012, Entergy Gulf States Louisiana made its formula rate plan filing with the LPSC for the 2011 test year.  The filing reflected an 11.94% earned return on common equity, which is above the earnings bandwidth and would indicate a $6.5 million cost of service rate change was necessary under the formula rate plan.  The filing also reflected a $22.9 million rate decrease for incremental capacity costs.  Subsequently, in August 2012, Entergy Gulf States Louisiana submitted a revised filing that reflected an earned return on common equity of 11.86% indicating a $5.7 million cost of service rate decrease is necessary under the formula rate plan.  The revised filing also indicates that a reduction of $20.3 million should be reflected in the incremental capacity rider.  The rate reductions were implemented, subject to refund, effective for bills rendered the first billing cycle of September 2012.  The September 2012 rate change reduced Entergy Gulf States Louisiana’s revenues by approximately $8.7 million in 2012.  Subsequently, in December 2012, Entergy Gulf States Louisiana submitted a revised evaluation report that reflects expected retail jurisdictional cost of $16.9 million for the first-year capacity charges for the purchase from Entergy Louisiana of one-third of Acadia Unit 2 capacity and energy.  This rate change was implemented effective with the first billing cycle of January 2013.  The 2011 test year filings, as revised, were approved by the LPSC in February 2013.  In April 2013, Entergy Gulf States Louisiana submitted a revised evaluation report increasing the incremental capacity rider by approximately $7.3 million to reflect the cost of an additional capacity contract.

See Note 2 to the financial statements in the Form 10-K for a discussion of the base rate case filed by Entergy Gulf States Louisiana with the LPSC in February 2013.  In April 2013 the LPSC established a procedural schedule providing for hearings in November 2013, with a decision by the LPSC expected by February 2014.

Retail Rates - Gas

In January 2013, Entergy Gulf States Louisiana filed with the LPSC its gas rate stabilization plan for the test year ended September 30, 2012.  The filing showed an earned return on common equity of 11.18%, which results in a $43 thousand rate reduction.  In March 2013 the LPSC Staff issued its proposed findings and recommended two adjustments.  The first is to normalize property insurance expense, and the second is to modify the return on equity for gas operations to reflect the return on equity that ultimately is approved by the LPSC in the investigation previously initiated by the LPSC to review the return on equity for Louisiana gas utilities.  Exceptions to the LPSC Staff report were due April 25, 2013, however, the parties have agreed to an extension of time through May 10, 2013 for Entergy Gulf States Louisiana to submit its response to the Staff’s findings.

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Entergy Gulf States Louisiana, L.L.C.

Management’s Financial Discussion and Analysis

Industrial and Commercial Customers

See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – Industrial and Commercial Customers" in the Form 10-K for a discussion of industrial and commercial customers.

Federal Regulation

See “System Agreement” and “Entergy’s Proposal to Join MISO” in the “Rate, Cost-recovery, and Other Regulation – Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for updates to the Federal Regulation discussion in the Form 10-K.

Nuclear Matters

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

Environmental Risks

See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Environmental Risks" in the Form 10-K for a discussion of environmental risks.

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 Gulf States Louisiana’s accounting for nuclear decommissioning costs, unbilled revenue, and qualified pension and other postretirement benefits.

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84

ENTERGY GULF STATES LOUISIANA, L.L.C.
INCOME STATEMENTS
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
	2013			2012
	(In Thousands)
OPERATING REVENUES
Electric	$	399,137		$	382,186
Natural gas		20,818			17,436
TOTAL		419,955			399,622
OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale		47,838			71,297
Purchased power		162,077			124,164
Nuclear refueling outage expenses		4,326			4,365
Other operation and maintenance		92,722			85,635
Decommissioning		3,892			3,676
Taxes other than income taxes		19,238			18,895
Depreciation and amortization		37,372			36,097
Other regulatory charges - net		407			267
TOTAL		367,872			344,396
OPERATING INCOME		52,083			55,226
OTHER INCOME
Allowance for equity funds used during construction		1,650			2,262
Interest and investment income		10,855			11,238
Miscellaneous - net		(2,640	)		(2,628	)
TOTAL		9,865			10,872
INTEREST EXPENSE
Interest expense		20,199			21,055
Allowance for borrowed funds used during construction		(691	)		(899	)
TOTAL		19,508			20,156
INCOME BEFORE INCOME TAXES		42,440			45,942
Income taxes		15,275			17,584
NET INCOME		27,165			28,358
Preferred distribution requirements		206			206
EARNINGS APPLICABLE TO
COMMON EQUITY	$	26,959		$	28,152
See Notes to Financial Statements.

85

ENTERGY GULF STATES LOUISIANA, L.L.C.
STATEMENTS OF COMPREHENSIVE INCOME
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
	2013		2012
	(In Thousands)
Net Income	$	27,165	$	28,358
Other comprehensive income
Pension and other postretirement liabilities
(net of tax expense of $786 and $781)		955		1,028
Other comprehensive income		955		1,028
Comprehensive Income	$	28,120	$	29,386
See Notes to Financial Statements.

86

ENTERGY GULF STATES LOUISIANA, L.L.C.
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
	2013			2012
	(In Thousands)
OPERATING ACTIVITIES
Net income	$	27,165		$	28,358
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation, amortization, and decommissioning, including nuclear fuel amortization		51,283			53,528
Deferred income taxes, investment tax credits, and non-current taxes accrued		27,177			(56,657	)
Changes in working capital:
Receivables		(38,252	)		97,172
Fuel inventory		(5,231	)		(7,611	)
Accounts payable		36,618			(35,277	)
Prepaid taxes and taxes accrued		383			85,148
Interest accrued		5,631			5,137
Deferred fuel costs		(16,866	)		8,144
Other working capital accounts		(42,526	)		4,806
Changes in provisions for estimated losses		(64,253	)		(2,870	)
Changes in other regulatory assets		27,154			5,634
Changes in pension and other postretirement liabilities		4,004			513
Other		74,352			5,533
Net cash flow provided by operating activities		86,639			191,558
INVESTING ACTIVITIES
Construction expenditures		(70,474	)		(57,921	)
Allowance for equity funds used during construction		1,650			2,262
Nuclear fuel purchases		(130,406	)		(18,614	)
Proceeds from the sale of nuclear fuel		19,401			26,820
Payment to storm reserve escrow account		(15	)		(17	)
Receipts from storm reserve escrow account		65,475			52
Proceeds from nuclear decommissioning trust fund sales		23,305			38,087
Investment in nuclear decommissioning trust funds		(28,712	)		(43,222	)
Change in money pool receivable - net		-			(49,584	)
Proceeds from the sale of investment		-			51,000
Net cash flow used in investing activities		(119,776	)		(51,137	)
FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt		69,804			(713	)
Change in money pool payable - net		1,662			-
Changes in credit borrowings - net		50,000			(12,700	)
Dividends/distributions paid:
Common equity		(119,900	)		(22,600	)
Preferred membership interests		(206	)		(206	)
Net cash flow provided by (used in) financing activities		1,360			(36,219	)
Net increase (decrease) in cash and cash equivalents		(31,777	)		104,202
Cash and cash equivalents at beginning of period		35,686			24,845
Cash and cash equivalents at end of period	$	3,909		$	129,047
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized	$	13,845		$	15,152
See Notes to Financial Statements.

87

ENTERGY GULF STATES LOUISIANA, L.L.C.
BALANCE SHEETS
ASSETS
March 31, 2013 and December 31, 2012
(Unaudited)
	2013			2012
	(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash	$	3,133		$	35,085
Temporary cash investments		776			601
Total cash and cash equivalents		3,909			35,686
Accounts receivable:
Customer		68,683			53,480
Allowance for doubtful accounts		(550	)		(711	)
Associated companies		94,524			71,697
Other		22,359			18,736
Accrued unbilled revenues		48,024			51,586
Total accounts receivable		233,040			194,788
Deferred fuel costs		15,918			-
Fuel inventory - at average cost		32,198			26,967
Materials and supplies - at average cost		119,196			121,289
Deferred nuclear refueling outage costs		39,110			5,953
Gas hedge contracts		7,511			-
Prepayments and other		10,256			7,911
TOTAL		461,138			392,594
OTHER PROPERTY AND INVESTMENTS
Investment in affiliate preferred membership interests		289,664			289,664
Decommissioning trust funds		511,678			477,391
Non-utility property - at cost (less accumulated depreciation)		170,993			165,410
Storm reserve escrow account		21,524			86,984
Other		13,847			13,404
TOTAL		1,007,706			1,032,853
UTILITY PLANT
Electric		7,301,763			7,279,953
Natural gas		137,571			135,723
Construction work in progress		117,203			125,448
Nuclear fuel		225,482			146,768
TOTAL UTILITY PLANT		7,782,019			7,687,892
Less - accumulated depreciation and amortization		4,026,450			4,003,385
UTILITY PLANT - NET		3,755,569			3,684,507
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Regulatory asset for income taxes - net		170,894			171,051
Other regulatory assets		382,656			409,653
Deferred fuel costs		100,124			100,124
Other		16,243			12,337
TOTAL		669,917			693,165
TOTAL ASSETS	$	5,894,330		$	5,803,119
See Notes to Financial Statements.

88

ENTERGY GULF STATES LOUISIANA, L.L.C.
BALANCE SHEETS
LIABILITIES AND EQUITY
March 31, 2013 and December 31, 2012
(Unaudited)
	2013			2012
	(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt	$	75,000		$	75,000
Accounts payable:
Associated companies		96,723			89,377
Other		127,931			97,509
Customer deposits		48,527			48,265
Taxes accrued		21,404			21,021
Accumulated deferred income taxes		40,640			22,249
Interest accrued		31,068			25,437
Deferred fuel costs		-			948
Pension and other postretirement liabilities		7,909			7,803
Gas hedge contracts		-			2,620
Other		12,751			11,999
TOTAL		461,953			402,228
NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued		1,414,707			1,403,195
Accumulated deferred investment tax credits		77,558			78,312
Other regulatory liabilities		134,869			103,444
Decommissioning and asset retirement cost liabilities		386,269			380,822
Accumulated provisions		32,977			97,230
Pension and other postretirement liabilities		420,118			416,220
Long-term debt		1,562,489			1,442,429
Long-term payables - associated companies		29,107			29,510
Other		83,275			66,725
TOTAL		4,141,369			4,017,887
Commitments and Contingencies
EQUITY
Preferred membership interests without sinking fund		10,000			10,000
Member's equity		1,345,282			1,438,233
Accumulated other comprehensive loss		(64,274	)		(65,229	)
TOTAL		1,291,008			1,383,004
TOTAL LIABILITIES AND EQUITY	$	5,894,330		$	5,803,119
See Notes to Financial Statements.

89

ENTERGY GULF STATES LOUISIANA, L.L.C.
STATEMENTS OF CHANGES IN EQUITY
For the Three Months Ended March 31, 2013 and 2012
(Unaudited) (In Thousands)
			Common Equity
	Preferred Membership Interests		Member's Equity			Accumulated Other Comprehensive Income (Loss)			Total
Balance at December 31, 2011	$	10,000	$	1,393,386		$	(69,610	)	$	1,333,776
Net income		-		28,358			-			28,358
Member contribution		-		1,000			-			1,000
Other comprehensive income		-		-			1,028			1,028
Dividends/distributions declared on common equity		-		(22,600	)		-			(22,600	)
Dividends/distributions declared on preferred membership interests		-		(206	)		-			(206	)
Other		-		(5	)		-			(5	)
Balance at March 31, 2012	$	10,000	$	1,399,933		$	(68,582	)	$	1,341,351
Balance at December 31, 2012	$	10,000	$	1,438,233		$	(65,229	)	$	1,383,004
Net income		-		27,165			-			27,165
Other comprehensive income		-		-			955			955
Dividends/distributions declared on common equity		-		(119,900	)		-			(119,900	)
Dividends/distributions declared on preferred membership interests		-		(206	)		-			(206	)
Other		-		(10	)		-			(10	)
Balance at March 31, 2013	$	10,000	$	1,345,282		$	(64,274	)	$	1,291,008
See Notes to Financial Statements.

90

ENTERGY GULF STATES LOUISIANA, L.L.C.
SELECTED OPERATING RESULTS
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
					Increase/
Description	2013		2012		(Decrease)			%
	(Dollars In Millions)
Electric Operating Revenues:
Residential	$	94	$	88	$	6			7
Commercial		89		86		3			3
Industrial		107		106		1			1
Governmental		5		5		-			-
Total retail		295		285		10			4
Sales for resale:
Associated companies		85		84		1			1
Non-associated companies		11		3		8			267
Other		8		10		(2	)		(20	)
Total	$	399	$	382	$	17			4
Billed Electric Energy
Sales (GWh):
Residential		1,112		1,059		53			5
Commercial		1,167		1,178		(11	)		(1	)
Industrial		2,058		2,195		(137	)		(6	)
Governmental		58		59		(1	)		(2	)
Total retail		4,395		4,491		(96	)		(2	)
Sales for resale:
Associated companies		1,228		1,843		(615	)		(33	)
Non-associated companies		228		170		58			34
Total		5,851		6,504		(653	)		(10	)

91

ENTERGY LOUISIANA, LLC AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

Plan to Spin Off the Utility’s Transmission Business

See the “Plan to Spin Off the Utility’s Transmission Business” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis in the Form 10-K and herein for a discussion of Entergy’s plan to spin off its transmission business and merge it with a newly formed subsidiary of ITC Holdings Corp., including the planned retirement of debt and preferred securities.

Results of Operations

Net Income

Net income increased $12.1 million primarily due to higher net revenue and lower other operation and maintenance expenses, partially offset by a higher effective income tax rate, higher depreciation and amortization expenses, and higher interest expense.

Net Revenue

Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory credits.  Following is an analysis of the change in net revenue comparing the first quarter 2013 to the first quarter 2012.

	Amount
	(In Millions)
2012 net revenue	$	235.7
Retail electric price		15.7
Volume/weather		8.6
Other		0.6
2013 net revenue	$	260.6

The retail electric price variance is primarily due to a formula rate plan increase effective January 2013.  See Note 2 to the financial statements herein and in the Form 10-K for more discussion of the formula rate plan increase.

The volume/weather variance is primarily due to increased billed electricity usage in all sectors, including increased industrial usage primarily in the petroleum industry, and the effect of more favorable weather on residential sales in the first quarter 2013 as compared to the same period in prior year.  Billed electricity usage increased 232 GWh, or 3%.

Gross operating revenues and fuel and purchased power expenses

Gross operating revenues increased primarily due to:

·   an increase of $102.1 million in fuel cost recovery revenues primarily due to higher fuel rates;

·   the formula rate plan increase, as discussed above; and

·   the increase related to volume/weather, as discussed above.

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Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Fuel and purchased power expenses increased primarily due to an increase in the recovery of deferred fuel costs as a result of higher fuel revenues and an increase in the average market price of purchased power.

Other Income Statement Variances

Other operation and maintenance expenses decreased primarily due to:

·   a decrease of $6.5 million in fossil-fueled generation expenses due to an overall lower scope of work done during plant outages compared to prior year;

·   a decrease of $1.5 million in nuclear insurance expenses primarily due to decreases in premiums;

·   a decrease of $1.1 million as a result of lower write-offs of uncollectible customer accounts in 2013; and

·   several individually insignificant items.

The decrease was partially offset by an increase of $2.8 million in compensation and benefits costs primarily due to a decrease in the discount rates used to determine net periodic pension and other postretirement benefit costs.  See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – Critical Accounting Estimates" in the Form 10-K and Note 6 to the financial statements herein for further discussion of benefits costs.

Depreciation and amortization expenses increased primarily due to additions to plant in service, including the completion of the Waterford 3 steam generator replacement project in December 2012.

Interest expense increased primarily due to the issuance of $200 million of 5.25% Series first mortgage bonds in July 2012 and the issuance of $200 million of 3.3% Series first mortgage bonds in December 2012.

Income Taxes

The effective income tax rate for the first quarter 2013 was 21%.  The difference in the effective income tax rate for the first quarter 2013 versus the federal statutory rate of 35% is due to book and tax differences related to the non-taxable income distributions earned on preferred membership interests and book and tax differences related to the allowance for equity funds used during construction.

The effective income tax rate for the first quarter 2012 was 6.6%.  The difference in the effective income tax rate for the first quarter 2012 versus the federal statutory rate of 35% was due to book and tax differences related to the non-taxable income distributions earned on preferred membership interests and book and tax differences related to the allowance for equity funds used during construction.

Hurricane Isaac

See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – Hurricane Isaac" in the Form 10-K for a discussion of Hurricane Isaac and the damage caused to Entergy Louisiana’s service area in August 2012.  In April 2013, Entergy Gulf States Louisiana and Entergy Louisiana filed a joint application with the LPSC relating to Hurricane Isaac system restoration costs.  Specifically, Entergy Louisiana requested that the LPSC determine the amount of such costs that were prudently incurred and are, thus, eligible for recovery from customers.  Including carrying costs and additional storm escrow funds, Entergy Louisiana is seeking determination that $247.7 million in system restoration costs were prudently incurred.  Entergy Louisiana intends to replenish its storm escrow accounts to $200 million primarily through traditional debt markets and has requested special rate treatment of any borrowings for that purpose.  This filing does not, however, seek to implement any rate change; rather, Entergy Louisiana anticipates filing a supplemental application in May 2013 proposing a specific means to recover the system restoration costs.  Entergy Louisiana plans to pursue Louisiana Act 55 financing of the costs, which was the same method it used for Hurricanes Katrina, Rita, Gustav, and Ike.

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Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Liquidity and Capital Resources

Cash Flow

Cash flows for the three months ended March 31, 2013 and 2012 were as follows:

	2013			2012
	(In Thousands)
Cash and cash equivalents at beginning of period	$	30,086		$	878
Cash flow provided by (used in):
Operating activities		69,934			79,357
Investing activities		(55,482	)		(97,949	)
Financing activities		(34,525	)		42,348
Net increase (decrease) in cash and cash equivalents		(20,073	)		23,756
Cash and cash equivalents at end of period	$	10,013		$	24,634

Operating Activities

Net cash flow provided by operating activities decreased $9.4 million for the three months ended March 31, 2013 compared to the three months ended March 31, 2012 primarily due to $8.4 million in Hurricane Isaac storm restoration spending in 2013 and income tax refunds of $3.6 million in 2012, offset by $8.9 million in pension contributions in 2012.  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.

Investing Activities

Net cash flow used in investing activities decreased $42.5 million for the three months ended March 31, 2013 compared to the three months ended March 31, 2012 primarily due to the receipt of $187 million from the storm reserve escrow account in 2013, partially offset by an increase in fossil construction expenditures due to spending on the Ninemile Unit 6 self-build project, an increase in transmission construction expenditures due to additional reliability work performed in 2013, an increase in distribution expenditures due to Hurricane Isaac, and money pool activity.

Increases in Entergy Louisiana’s receivable from the money pool are a use of cash flow, and Entergy Louisiana’s receivable from the money pool increased by $22.9 million for the three months ended March 31, 2013 compared to increasing by $13.4 million for the three months ended March 31, 2012.  The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings.

Financing Activities

Entergy Louisiana’s financing activities used $34.5 million of cash for the three months ended March 31, 2013 compared to providing $42.3 million of cash for the three months ended March 31, 2012 primarily due to the issuance of $250 million of 1.875% Series first mortgage bonds in January 2012 and an increase of $19.4 million in common equity dividends in 2013, partially offset by the following:

·   money pool activity;

·   the net repayment of credit borrowings of $50 million on Entergy Louisiana’s credit facility in 2012;

·   the net repayment of borrowings of $15 million on the nuclear fuel company variable interest entity’s credit facility in 2012; and

·   a principal payment of $12.2 million in 2013 for the Waterford 3 sale-leaseback obligation compared to a principal payment of $19.6 million in 2012.

94

Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Decreases in Entergy Louisiana’s payable to the money pool are a use of cash flow, and Entergy Louisiana’s payable to the money pool decreased by $118.4 million for the three months ended March 31, 2012.

Capital Structure

Entergy Louisiana’s capitalization is balanced between equity and debt, as shown in the following table.

	March 31, 2013	December 31, 2012
Debt to capital	48.3%	48.4%
Effect of excluding securitization bonds	(1.7%)	(1.6%)
Debt to capital, excluding securitization bonds (a)	46.6%	46.8%
Effect of subtracting cash	(0.1%)	(0.3%)
Net debt to net capital, excluding securitization bonds (a)	46.5%	46.5%

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

Net debt consists of debt less cash and cash equivalents.  Debt consists of short-term borrowings and long-term debt, including the currently maturing portion.  Capital consists of debt and member’s equity.  Net capital consists of capital less cash and cash equivalents.  Entergy Louisiana uses the net debt to net capital ratio and the ratios excluding securitization bonds in analyzing its financial condition and believes they provide useful information to its investors and creditors in evaluating Entergy Louisiana’s financial condition.

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 Louisiana’s uses and sources of capital.  Following are additional updates to the information provided in the Form 10-K.  As discussed in the Form 10-K, the planned construction and capital investment amounts in the table do not include significant costs for the capital projects that might result from the NRC post-Fukushima requirements.  The current preliminary cost estimate (including both capital and operation and maintenance expense) to implement the post-Fukushima requirements for Entergy Louisiana is approximately $40 million.  These costs are expected to be incurred over the 2012 through 2018 time period.

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

March 31, 2013	December 31, 2012	March 31, 2012	December 31, 2011
(In Thousands)
$32,342	$9,433	$13,383	($118,415)

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

Entergy Louisiana has a credit facility in the amount of $200 million scheduled to expire in March 2018.  No borrowings were outstanding under the facility as of March 31, 2013.  See Note 4 to the financial statements herein for additional discussion of the credit facility.

The Entergy Louisiana nuclear fuel company variable interest entity has a credit facility in the amount of $90 million scheduled to expire in July 2013.  As of March 31, 2013, $54.4 million in letters of credit were outstanding under the credit facility to support a like amount of commercial paper issued by the Entergy Louisiana nuclear fuel company variable interest entity.  See Note 4 to the financial statements for additional discussion of the nuclear fuel company variable interest entity credit facility.

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Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

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.  Following are updates to that discussion.

In November 2011 the LPSC approved a one-year extension of Entergy Louisiana’s formula rate plan.  In May 2012, Entergy Louisiana made its formula rate plan filing with the LPSC for the 2011 test year.  The filing reflected a 9.63% earned return on common equity, which is within the earnings bandwidth and results in no cost of service rate change under the formula rate plan.  The filing also reflected an $18.1 million rate increase for incremental capacity costs.  In August 2012, Entergy Louisiana submitted a revised filing that reflects an earned return on common equity of 10.38%, which is still within the earnings bandwidth, resulting in no cost of service rate change.  The revised filing also indicates that an increase of $15.9 million should be reflected in the incremental capacity rider.  The rate change was implemented, subject to refund, effective for bills rendered the first billing cycle of September 2012.  The September 2012 rate change contributed approximately $5.3 million to Entergy Louisiana’s revenues in 2012.  Subsequently, in December 2012, Entergy Louisiana submitted a revised evaluation report that reflects two items: 1) a $17 million reduction for the first-year capacity charges for the purchase by Entergy Gulf States Louisiana from Entergy Louisiana of one-third of Acadia Unit 2 capacity and energy, and 2) an $88 million increase for the first-year retail revenue requirement associated with the Waterford 3 replacement steam generator project, which was in-service in December 2012.  These rate changes were implemented, subject to refund, effective with the first billing cycle of January 2013.  In April 2013, Entergy Louisiana and the LPSC staff filed a joint report resolving the 2011 test year formula rate plan and recovery related to the Grand Gulf uprate.  This report was approved by the LPSC in April 2013.  With completion of the Waterford 3 replacement steam generator project, the LPSC will undertake a prudence review in connection with a filing made by Entergy Louisiana in April 2013 with regard to the following aspects of the replacement project: 1) project management; 2) cost controls; 3) success in achieving stated objectives; 4) the costs of the replacement project; and 5) the outage length and replacement power costs.

See Note 2 to the financial statements in the Form 10-K for a discussion of the base rate case filed by Entergy Louisiana with the LPSC in February 2013.  In April 2013 the LPSC established a procedural schedule providing for hearings in December 2013, with a decision by the LPSC expected by February 2014.

In March 2013, Entergy Louisiana filed a rate case for the Algiers area, which is in New Orleans and is regulated by the City Council.  Entergy Louisiana is requesting a rate increase of $13 million over three years, including a 10.4% return on common equity and a formula rate plan mechanism identical to its LPSC request. New rates are currently expected to become effective in second quarter 2014.

Federal Regulation

See “System Agreement” and “Entergy’s Proposal to Join MISO” in the “Rate, Cost-recovery, and Other Regulation – Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for updates to the Federal Regulation discussion in the Form 10-K.

Nuclear Matters

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

Environmental Risks

See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Environmental Risks" in the Form 10-K for a discussion of environmental risks.

96

Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

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 Louisiana’s accounting for nuclear decommissioning costs, unbilled revenue, and qualified pension and other postretirement benefits.

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98

ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
	2013			2012
	(In Thousands)
OPERATING REVENUES
Electric	$	606,085		$	482,358
OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale		118,707			72,059
Purchased power		229,009			178,213
Nuclear refueling outage expenses		6,852			6,386
Other operation and maintenance		105,127			115,741
Decommissioning		5,301			6,444
Taxes other than income taxes		18,800			17,282
Depreciation and amortization		59,838			53,679
Other regulatory credits - net		(2,277	)		(3,588	)
TOTAL		541,357			446,216
OPERATING INCOME		64,728			36,142
OTHER INCOME
Allowance for equity funds used during construction		5,742			8,449
Interest and investment income		21,789			21,248
Miscellaneous - net		(860	)		(1,371	)
TOTAL		26,671			28,326
INTEREST EXPENSE
Interest expense		36,429			32,668
Allowance for borrowed funds used during construction		(2,448	)		(3,859	)
TOTAL		33,981			28,809
INCOME BEFORE INCOME TAXES		57,418			35,659
Income taxes		12,042			2,364
NET INCOME		45,376			33,295
Preferred dividend requirements		1,738			1,738
EARNINGS APPLICABLE TO
COMMON EQUITY	$	43,638		$	31,557
See Notes to Financial Statements.

99

ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
	2013		2012
	(In Thousands)
Net Income	$	45,376	$	33,295
Other comprehensive income
Pension and other postretirement liabilities
(net of tax expense of $547 and $470)		678		653
Other comprehensive income		678		653
Comprehensive Income	$	46,054	$	33,948
See Notes to Financial Statements.

100

ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
	2013			2012
	(In Thousands)
OPERATING ACTIVITIES
Net income	$	45,376		$	33,295
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation, amortization, and decommissioning, including nuclear fuel amortization		79,633			76,616
Deferred income taxes, investment tax credits, and non-current taxes accrued		41,558			22,771
Changes in working capital:
Receivables		(57,924	)		27,098
Fuel inventory		454			57
Accounts payable		(69,131	)		(57,561	)
Prepaid taxes and taxes accrued		3,550			(4,447	)
Interest accrued		(2,113	)		(4,574	)
Deferred fuel costs		30,741			(21,520	)
Other working capital accounts		(8,040	)		19,986
Changes in provisions for estimated losses		(186,070	)		(10,981	)
Changes in other regulatory assets		82,089			7,800
Changes in pension and other postretirement liabilities		5,231			(3,965	)
Other		104,580			(5,218	)
Net cash flow provided by operating activities		69,934			79,357
INVESTING ACTIVITIES
Construction expenditures		(223,758	)		(93,844	)
Allowance for equity funds used during construction		5,742			8,449
Nuclear fuel purchases		(16,368	)		(22,327	)
Proceeds from the sale of nuclear fuel		23,438			32,168
Receipts from storm reserve escrow account		186,985			770
Remittances to transition charge account		(5,270	)		(6,716	)
Proceeds from nuclear decommissioning trust fund sales		3,639			6,795
Investment in nuclear decommissioning trust funds		(6,981	)		(9,861	)
Change in money pool receivable - net		(22,909	)		(13,383	)
Net cash flow used in investing activities		(55,482	)		(97,949	)
FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt		-			247,725
Changes in short-term borrowings - net		-			(65,021	)
Retirement of long-term debt		(12,237	)		(19,603	)
Change in money pool payable - net		-			(118,415	)
Distributions paid:
Common equity		(20,000	)		(600	)
Preferred membership interests		(1,738	)		(1,738	)
Other		(550	)		-
Net cash flow provided by (used in) financing activities		(34,525	)		42,348
Net increase (decrease) in cash and cash equivalents		(20,073	)		23,756
Cash and cash equivalents at beginning of period		30,086			878
Cash and cash equivalents at end of period	$	10,013		$	24,634
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized	$	37,215		$	36,039
Income taxes	$	-		$	(3,601	)
See Notes to Financial Statements.

101

ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, 2013 and December 31, 2012
(Unaudited)
	2013			2012
	(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash	$	375		$	814
Temporary cash investments		9,638			29,272
Total cash and cash equivalents		10,013			30,086
Securitization recovery trust account		9,652			4,382
Accounts receivable:
Customer		157,052			86,072
Allowance for doubtful accounts		(1,119	)		(867	)
Associated companies		60,405			42,938
Other		8,224			9,354
Accrued unbilled revenues		73,122			79,354
Total accounts receivable		297,684			216,851
Accumulated deferred income taxes		51,809			113,319
Deferred fuel costs		-			26,568
Fuel inventory		23,129			23,583
Materials and supplies - at average cost		151,452			152,170
Deferred nuclear refueling outage costs		40,561			44,457
Prepaid taxes		4,387			7,937
Gas hedge contracts		10,016			-
Prepayments and other		15,543			12,129
TOTAL		614,246			631,482
OTHER PROPERTY AND INVESTMENTS
Investment in affiliate preferred membership interests		807,423			807,423
Decommissioning trust funds		308,524			287,418
Storm reserve escrow account		-			186,985
Non-utility property - at cost (less accumulated depreciation)		533			578
TOTAL		1,116,480			1,282,404
UTILITY PLANT
Electric		8,605,593			8,603,319
Property under capital lease		324,440			324,440
Construction work in progress		452,639			404,714
Nuclear fuel		179,235			204,019
TOTAL UTILITY PLANT		9,561,907			9,536,492
Less - accumulated depreciation and amortization		3,634,215			3,590,146
UTILITY PLANT - NET		5,927,692			5,946,346
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Regulatory asset for income taxes - net		196,216			193,114
Other regulatory assets (includes securitization property of
$168,940 as of March 31, 2013 and
$172,838 as of December 31, 2012)		828,371			913,562
Deferred fuel costs		67,998			67,998
Other		44,043			39,178
TOTAL		1,136,628			1,213,852
TOTAL ASSETS	$	8,795,046		$	9,074,084
See Notes to Financial Statements.

102

ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
March 31, 2013 and December 31, 2012
(Unaudited)
	2013			2012
	(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt	$	19,016		$	14,236
Short-term borrowings		54,396			54,657
Accounts payable:
Associated companies		72,759			103,454
Other		160,721			266,904
Customer deposits		89,094			88,805
Accumulated deferred income taxes		3,533			-
Interest accrued		35,151			37,264
Deferred fuel costs		4,173			-
Pension and other postretirement liabilities		9,253			9,170
Gas hedge contracts		-			3,442
Other		17,311			13,382
TOTAL		465,407			591,314
NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued		913,296			930,606
Accumulated deferred investment tax credits		69,481			70,193
Other regulatory liabilities		428,595			376,801
Decommissioning		423,422			418,122
Accumulated provisions		10,404			196,474
Pension and other postretirement liabilities		544,851			539,703
Long-term debt (includes securitization bonds of
$181,554 as of March 31, 2013 and
$181,553 as of December 31, 2012)		2,794,902			2,811,859
Other		70,477			68,516
TOTAL		5,255,428			5,412,274
Commitments and Contingencies
EQUITY
Preferred membership interests without sinking fund		100,000			100,000
Member's equity		3,019,665			3,016,628
Accumulated other comprehensive loss		(45,454	)		(46,132	)
TOTAL		3,074,211			3,070,496
TOTAL LIABILITIES AND EQUITY	$	8,795,046		$	9,074,084
See Notes to Financial Statements.

103

ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the Three Months Ended March 31, 2013 and 2012
(Unaudited) (In Thousands)
			Common Equity
	Preferred Membership Interests		Member's Equity			Accumulated Other Comprehensive Income (Loss)			Total
Balance at December 31, 2011	$	100,000	$	2,504,436		$	(39,507	)	$	2,564,929
Net income		-		33,295			-			33,295
Other comprehensive income		-		-			653			653
Dividends/distributions declared on common equity		-		(600	)		-			(600	)
Dividends/distributions declared on preferred membership interests		-		(1,738	)		-			(1,738	)
Balance at March 31, 2012	$	100,000	$	2,535,393		$	(38,854	)	$	2,596,539
Balance at December 31, 2012	$	100,000	$	3,016,628		$	(46,132	)	$	3,070,496
Net income		-		45,376			-			45,376
Distribution to parent		-		(20,601	)		-			(20,601	)
Other comprehensive income		-		-			678			678
Dividends/distributions declared on common equity		-		(20,000	)		-			(20,000	)
Dividends/distributions declared on preferred membership interests		-		(1,738	)		-			(1,738	)
Balance at March 31, 2013	$	100,000	$	3,019,665		$	(45,454	)	$	3,074,211
See Notes to Financial Statements.

104

ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
SELECTED OPERATING RESULTS
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
					Increase/
Description	2013		2012		(Decrease)			%
	(Dollars In Millions)
Electric Operating Revenues:
Residential	$	187	$	146	$	41			28
Commercial		134		110		24			22
Industrial		245		184		61			33
Governmental		12		9		3			33
Total retail		578		449		129			29
Sales for resale:
Associated companies		19		21		(2	)		(10	)
Other		9		12		(3	)		(25	)
Total	$	606	$	482	$	124			26
Billed Electric Energy
Sales (GWh):
Residential		2,002		1,890		112			6
Commercial		1,377		1,361		16			1
Industrial		4,202		4,107		95			2
Governmental		125		116		9			8
Total retail		7,706		7,474		232			3
Sales for resale:
Associated companies		209		436		(227	)		(52	)
Non-associated companies		7		11		(4	)		(36	)
Total		7,922		7,921		1			-

105

ENTERGY MISSISSIPPI, INC.

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

Plan to Spin Off the Utility’s Transmission Business

See the “Plan to Spin Off the Utility’s Transmission Business” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis in the Form 10-K and herein for a discussion of Entergy’s plan to spin off its transmission business and merge it with a newly formed subsidiary of ITC Holdings Corp., including the planned retirement of debt and preferred securities.

Results of Operations

Net Income

Net income increased $5.3 million primarily due to higher net revenue, partially offset by higher other operation and maintenance expenses and higher depreciation expense.

Net Revenue

Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory credits.  Following is an analysis of the change in net revenue comparing the first quarter 2013 to the first quarter 2012.

	Amount
	(In Millions)
2012 net revenue	$	119.2
Retail electric price		17.9
Reserve equalization		4.4
Other		0.1
2013 net revenue	$	141.6

The retail electric price variance is primarily due to the recovery of Hinds plant costs through the power management rider, as approved by the MPSC, effective with the first billing cycle of 2013.  The net income effect of the Hinds plant cost recovery is limited to a portion representing an allowed return on equity on the net plant investment with the remainder offset by the Hinds plant costs in other operation and maintenance expenses, depreciation expenses, and taxes other than income taxes. 

The reserve equalization variance is primarily due to increased reserve equalization revenue resulting from the acquisition of the Hinds plant in November 2012.

Gross operating revenues and fuel and purchased power expenses

Gross operating revenues increased primarily due to:

·   an increase of $14.4 million in power management rider revenue, as approved by the MPSC, primarily resulting from the acquisition of the Hinds plant in November 2012, as discussed above;

·   an increase of $12.8 million in gross wholesale revenues due to an increase in sales to affiliated customers; and

·   an increase of $11.4 million in rider revenue primarily due to an increase in the Grand Gulf rate effective October 2012.

106

Entergy Mississippi, Inc.

Management’s Financial Discussion and Analysis

The increase was partially offset by a decrease of $9.5 million in fuel cost recovery revenues primarily due to lower fuel rates.

Fuel and purchased power expenses increased primarily due to an increase in net area demand and an increase in the average market price of purchased power, partially offset by a decrease in the recovery of deferred fuel costs from customers.

Other Income Statement Variances

Other operation and maintenance expenses increased primarily due to an increase of $11.8 million in fossil-fueled generation expenses resulting from a higher scope of work done during plant outages in 2013 compared to the same period in 2012 and the acquisition of the Hinds plant in November 2012.

Depreciation and amortization expenses increased primarily due to an increase in plant in service, including the acquisition of the Hinds plant in November 2012.

Income Taxes

The effective income tax rate for the first quarter 2013 was 37.5%.  The difference in the effective income tax rate for the first quarter 2013 versus the federal statutory rate of 35% is due to state income taxes and certain book and tax differences related to utility plant items, partially offset by the reversal of the provision for uncertain tax positions and book and tax differences related to the allowance for equity funds used during construction.

The effective income tax rate for the first quarter 2012 was 40.2%.  The difference in the effective income tax rate for the first quarter 2012 versus the federal statutory rate of 35% was due to state income taxes and certain book and tax differences related to utility plant items, partially offset by book and tax differences related to the allowance for equity funds used during construction.

Liquidity and Capital Resources

Cash Flow

Cash flows for the three months ended March 31, 2013 and 2012 were as follows:

	2013			2012
	(In Thousands)
Cash and cash equivalents at beginning of period	$	52,970		$	16
Cash flow provided by (used in):
Operating activities		4,659			61,339
Investing activities		(22,123	)		(43,489	)
Financing activities		(34,044	)		(2,770	)
Net increase (decrease) in cash and cash equivalents		(51,508	)		15,080
Cash and cash equivalents at end of period	$	1,462		$	15,096

107

Entergy Mississippi, Inc.

Management’s Financial Discussion and Analysis

Operating Activities

Net cash provided by operating activities decreased $56.7 million for the three months ended March 31, 2013 compared to the three months ended March 31, 2012 primarily due to:

·   a decrease in the recovery of fuel costs, including System Agreement bandwidth remedy payments of $33 million received in January 2012 to implement the FERC’s remedy in an October 2011 order for the period June-December 2005.  See Note 2 to the financial statements herein and in the Form 10-K for a discussion of the System Agreement proceedings; and

·   income tax refunds of $8.4 million in the three months ended March 31, 2012.

Investing Activities

Net cash used in investing activities decreased $21.4 million for the three months ended March 31, 2013 compared to the three months ended March 31, 2012 primarily due to money pool activity.

Decreases in Entergy Mississippi’s receivable from the money pool are a source of cash flow, and Entergy Mississippi’s receivable from the money pool decreased $16.9 million for the three months ended March 31, 2013 compared to increasing $8 million for the three months ended March 31, 2012.  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 used in financing activities increased $31.3 million for the three months ended March 31, 2013 compared to the three months ended March 31, 2012 primarily due to the payment at maturity of $100 million of 5.15% Series first mortgage bonds in February 2013, partially offset by borrowings of $70 million on Entergy Mississippi’s credit facilities in 2013.  See Note 4 to the financial statements herein for a discussion of long-term debt and credit facilities.

Capital Structure

Entergy Mississippi’s capitalization is balanced between equity and debt, as shown in the following table.

	March 31, 2013	December 31, 2012
Debt to capital	55.1%	55.9%
Effect of subtracting cash	(0.1%)	(1.2%)
Net debt to net capital	55.0%	54.7%

Net debt consists of debt less cash and cash equivalents.  Debt consists of short-term borrowings, capital lease obligations, and long-term debt, including the currently maturing portion.  Capital consists of debt, preferred stock without sinking fund, and common equity.  Net capital consists of capital less cash and cash equivalents.  Entergy Mississippi uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Mississippi’s financial condition.

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 Mississippi’s uses and sources of capital.  Following are additional updates to the information provided in the Form 10-K.

108

Entergy Mississippi, Inc.

Management’s Financial Discussion and Analysis

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

March 31, 2013	December 31, 2012	March 31, 2012	December 31, 2011
(In Thousands)
($4,101)	$16,878	$7,978	($1,999)

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

Entergy Mississippi has three separate credit facilities in the aggregate amount of $70 million scheduled to expire in May 2013.  Entergy Mississippi expects to renew all of its credit facilities prior to expiration.  As of March 31, 2013, there was an aggregate of $70 million in borrowings outstanding under the credit facilities.  See Note 4 to the financial statements herein for additional discussion of the credit facilities.

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 the formula rate plan and fuel and purchased power cost recovery. Following are updates to that discussion.

Formula Rate Plan

In March 2013, Entergy Mississippi submitted its formula rate plan 2012 test year filing.  The filing requests a $36.3 million revenue increase to reset Entergy Mississippi's return on common equity to 10.55%, which is a point within the formula rate plan bandwidth.  The formula rate plan calls for new rates to be implemented in June 2013 (or in July 2013 if any part of the filing is disputed by the Mississippi Public Utilities Staff).  The filing is currently subject to MPSC review.  A scheduling order was filed in April 2013 setting a hearing for July 2, 2013, with a final order to be issued on or before July 15, 2013 and revised rate adjustments to begin billing on July 28, 2013.

In August 2012 the MPSC opened inquiries to review whether the current formulaic methodology used to calculate the return on common equity in both Entergy Mississippi’s formula rate plan and Mississippi Power Company’s annual formula rate plan is still appropriate or can be improved to better serve the public interest. The intent of this inquiry and review is for informational purposes only; the evaluation of any recommendations for changes to the existing methodology would take place in a general rate case or in the existing formula rate plan docket.  In March 2013 the Staff filed its consultant’s report which noted the return on common equity estimation methods used by Entergy Mississippi and Mississippi Power Company are commonly used throughout the electric utility industry.  The report suggested ways in which the methods used by Entergy Mississippi and Mississippi Power Company might be improved, but did not recommend specific changes in the return on common equity formulas or calculations at this time.

Federal Regulation

See “System Agreement” and “Entergy’s Proposal to Join MISO” in the “Rate, Cost-recovery, and Other Regulation – Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for updates to the Federal Regulation discussion in the Form 10-K.

Nuclear Matters

See “Nuclear Matters” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis in the Form 10-K for a discussion of nuclear matters.

109

Entergy Mississippi, Inc.

Management’s Financial Discussion and Analysis

Environmental Risks

See “Environmental” in the “Other Contingencies” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis in the Form 10-K for a discussion of environmental risks.

 environmental risks.

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 Mississippi’s accounting for unbilled revenue and qualified pension and other postretirement benefits.

110

ENTERGY MISSISSIPPI, INC.
INCOME STATEMENTS
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
	2013			2012
	(In Thousands)
OPERATING REVENUES
Electric	$	291,641		$	261,760
OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale		73,561			84,559
Purchased power		84,912			65,428
Other operation and maintenance		57,950			48,336
Taxes other than income taxes		19,887			18,784
Depreciation and amortization		26,651			23,787
Other regulatory credits - net		(8,443	)		(7,472	)
TOTAL		254,518			233,422
OPERATING INCOME		37,123			28,338
OTHER INCOME
Allowance for equity funds used during construction		733			1,165
Interest and investment income		139			10
Miscellaneous - net		(858	)		(1,055	)
TOTAL		14			120
INTEREST EXPENSE
Interest expense		15,293			14,545
Allowance for borrowed funds used during construction		(455	)		(616	)
TOTAL		14,838			13,929
INCOME BEFORE INCOME TAXES		22,299			14,529
Income taxes		8,365			5,847
NET INCOME		13,934			8,682
Preferred dividend requirements		707			707
EARNINGS APPLICABLE TO
COMMON STOCK	$	13,227		$	7,975
See Notes to Financial Statements.

111

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112

ENTERGY MISSISSIPPI, INC.
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
	2013			2012
	(In Thousands)
OPERATING ACTIVITIES
Net income	$	13,934		$	8,682
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation and amortization		26,651			23,787
Deferred income taxes, investment tax credits, and non-current taxes accrued		4,806			(8,348	)
Changes in assets and liabilities:
Receivables		(3,831	)		56,711
Fuel inventory		(255	)		(1,861	)
Accounts payable		(5,222	)		(16,700	)
Taxes accrued		(41,260	)		(14,046	)
Interest accrued		1,892			(4,633	)
Deferred fuel costs		12,216			26,247
Other working capital accounts		(8,852	)		4,981
Provisions for estimated losses		(1	)		196
Other regulatory assets		(1,169	)		(6,491	)
Pension and other postretirement liabilities		(174	)		(2,793	)
Other assets and liabilities		5,924			(4,393	)
Net cash flow provided by operating activities		4,659			61,339
INVESTING ACTIVITIES
Construction expenditures		(39,730	)		(36,664	)
Allowance for equity funds used during construction		733			1,165
Change in money pool receivable - net		16,878			(7,978	)
Other		(4	)		(12	)
Net cash flow used in investing activities		(22,123	)		(43,489	)
FINANCING ACTIVITIES
Retirement of long-term debt		(100,000	)		-
Changes in credit borrowing, net		70,000			-
Change in money pool payable - net		4,101			(1,999	)
Dividends paid:
Common stock		(7,400	)		-
Preferred stock		(707	)		(707	)
Other		(38	)		(64	)
Net cash flow used in financing activities		(34,044	)		(2,770	)
Net increase (decrease) in cash and cash equivalents		(51,508	)		15,080
Cash and cash equivalents at beginning of period		52,970			16
Cash and cash equivalents at end of period	$	1,462		$	15,096
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized	$	12,700		$	18,522
Income taxes	$	901		$	(8,407	)
See Notes to Financial Statements.

113

ENTERGY MISSISSIPPI, INC.
BALANCE SHEETS
ASSETS
March 31, 2013 and December 31, 2012
(Unaudited)
	2013			2012
	(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash	$	1,452		$	585
Temporary cash investments		10			52,385
Total cash and cash equivalents		1,462			52,970
Accounts receivable:
Customer		67,163			49,836
Allowance for doubtful accounts		(902	)		(910	)
Associated companies		6,903			25,504
Other		7,569			11,072
Accrued unbilled revenues		34,767			43,045
Total accounts receivable		115,500			128,547
Deferred fuel costs		14,274			26,490
Accumulated deferred income taxes		38,263			44,027
Fuel inventory - at average cost		49,033			48,778
Materials and supplies - at average cost		40,606			40,331
Gas hedge contracts		6,608			-
Prepayments and other		7,712			5,329
TOTAL		273,458			346,472
OTHER PROPERTY AND INVESTMENTS
Non-utility property - at cost (less accumulated depreciation)		4,691			4,698
Escrow accounts		61,840			61,836
TOTAL		66,531			66,534
UTILITY PLANT
Electric		3,729,781			3,708,743
Property under capital lease		7,430			8,112
Construction work in progress		73,964			62,876
TOTAL UTILITY PLANT		3,811,175			3,779,731
Less - accumulated depreciation and amortization		1,348,567			1,324,627
UTILITY PLANT - NET		2,462,608			2,455,104
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Regulatory asset for income taxes - net		62,936			63,614
Other regulatory assets		403,318			401,471
Other		22,828			20,832
TOTAL		489,082			485,917
TOTAL ASSETS	$	3,291,679		$	3,354,027
See Notes to Financial Statements.

114

ENTERGY MISSISSIPPI, INC.
BALANCE SHEETS
LIABILITIES AND EQUITY
March 31, 2013 and December 31, 2012
(Unaudited)
	2013			2012
	(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt	$	-		$	100,000
Short-term borrowings		70,021			21
Accounts payable:
Associated companies		45,539			42,377
Other		36,250			44,856
Customer deposits		72,221			71,182
Taxes accrued		11,067			52,327
Interest accrued		20,118			18,226
Accumulated deferred income taxes		32			218
Other		20,459			21,490
TOTAL		275,707			350,697
NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued		760,975			761,812
Accumulated deferred investment tax credits		7,565			7,257
Obligations under capital lease		5,051			5,329
Other regulatory liabilities		7,981			1,235
Asset retirement cost liabilities		6,128			6,039
Accumulated provisions		35,819			35,820
Pension and other postretirement liabilities		160,693			160,866
Long-term debt		1,069,556			1,069,519
Other		26,350			25,426
TOTAL		2,080,118			2,073,303
Commitments and Contingencies
Preferred stock without sinking fund		50,381			50,381
COMMON EQUITY
Common stock, no par value, authorized 12,000,000
shares; issued and outstanding 8,666,357 shares in 2013 and 2012		199,326			199,326
Capital stock expense and other		(690	)		(690	)
Retained earnings		686,837			681,010
TOTAL		885,473			879,646
TOTAL LIABILITIES AND EQUITY	$	3,291,679		$	3,354,027
See Notes to Financial Statements.

115

ENTERGY MISSISSIPPI, INC.
STATEMENTS OF CHANGES IN COMMON EQUITY
For the Three Months Ended March 31, 2013 and 2012
(Unaudited) (In Thousands)
	Common Equity
	Common Stock		Capital Stock Expense and Other			Retained Earnings			Total
Balance at December 31, 2011	$	199,326	$	(690	)	$	637,070		$	835,706
Net income		-		-			8,682			8,682
Preferred stock dividends		-		-			(707	)		(707	)
Balance at March 31, 2012	$	199,326	$	(690	)	$	645,045		$	843,681
Balance at December 31, 2012	$	199,326	$	(690	)	$	681,010		$	879,646
Net income		-		-			13,934			13,934
Common stock dividends		-		-			(7,400	)		(7,400	)
Preferred stock dividends		-		-			(707	)		(707	)
Balance at March 31, 2013	$	199,326	$	(690	)	$	686,837		$	885,473
See Notes to Financial Statements.

116

ENTERGY MISSISSIPPI, INC.
SELECTED OPERATING RESULTS
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
					Increase/
Description	2013		2012		(Decrease)			%
	(Dollars In Millions)
Electric Operating Revenues:
Residential	$	124	$	109		15			14
Commercial		96		92		4			4
Industrial		36		35		1			3
Governmental		10		9		1			11
Total retail		266		245		21			9
Sales for resale:
Associated companies		16		4		12			300
Non-associated companies		5		5		-			-
Other		5		8		(3	)		(38	)
Total	$	292	$	262	$	30			11
Billed Electric Energy
Sales (GWh):
Residential		1,360		1,245		115			9
Commercial		1,091		1,114		(23	)		(2	)
Industrial		532		546		(14	)		(3	)
Governmental		94		93		1			1
Total retail		3,077		2,998		79			3
Sales for resale:
Associated companies		237		25		212			848
Non-associated companies		44		29		15			52
Total		3,358		3,052		306			10

117

ENTERGY NEW ORLEANS, INC.

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

Plan to Spin Off the Utility’s Transmission Business

See the “Plan to Spin Off the Utility’s Transmission Business” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis in the Form 10-K and herein for a discussion of Entergy’s plan to spin off its transmission business and merge it with a newly formed subsidiary of ITC Holdings Corp., including the planned retirement of debt and preferred securities.

Results of Operations

Net Income

Net income increased $1.3 million primarily due to higher net revenue and a lower effective income tax rate, partially offset by higher taxes other than income taxes.

Net Revenue

Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges.  Following is an analysis of the changes in net revenue comparing the first quarter 2013 to the first quarter 2012.

	Amount
	(In Millions)
2012 net revenue	$	53.8
Volume/weather		1.1
Net gas revenue		1.0
Other		1.3
2013 net revenue	$	57.2

The volume/weather variance is primarily due to an increase in electricity usage primarily in the residential sector due to a 3% increase in the average number of residential customers and the effect of more favorable weather in the residential sector in the first quarter 2013 as compared to the same period in prior year.

The net gas revenue variance is primarily due to the effect of more favorable weather, primarily in the residential and commercial sectors, in the first quarter 2013 as compared to the same period in prior year.

Gross operating revenues and purchased power expenses

Gross operating revenues increased primarily due to:

·   an increase of $14 million in electric fuel cost recovery revenues due to higher fuel rates.  Entergy New Orleans’s fuel and purchased power recovery mechanism is discussed in Note 2 to the financial statements in the Form 10-K;

·   an increase of $3.9 million in gross gas revenues primarily due to the effect of more favorable weather, as discussed above; and

·   more favorable volume/weather, as discussed above.

Purchased power expenses increased primarily due to an increase in the average market price of purchased power.

118

Entergy New Orleans, Inc.

Management’s Financial Discussion and Analysis

Other Income Statement Variances

Taxes other than income taxes increased primarily due to an increase in local franchise taxes resulting from higher electric and gas retail revenues as compared to prior year.

Income Taxes

The effective income tax rate for the first quarter 2013 was (26.9%).  The difference in the effective income tax rate for the first quarter 2013 versus the federal statutory rate of 35% is primarily due to flow-through tax accounting, partially offset by certain book and tax differences related to utility plant items and state income taxes.

The effective income tax rate for the first quarter 2012 was 83.8%.  The difference in the effective income tax rate for the first quarter 2012 versus the federal statutory rate of 35% was due to certain book and tax differences related to utility plant items, the provision for uncertain tax positions, and state income taxes.

Liquidity and Capital Resources

Cash Flow

Cash flows for the three months ended March 31, 2013 and 2012 were as follows:

	2013			2012
	(In Thousands)
Cash and cash equivalents at beginning of period	$	9,391		$	9,834
Cash flow provided by (used in):
Operating activities		2,344			(6,726	)
Investing activities		(31,945	)		(7,128	)
Financing activities		24,781			5,372
Net decrease in cash and cash equivalents		(4,820	)		(8,482	)
Cash and cash equivalents at end of period	$	4,571		$	1,352

Operating Activities

Entergy New Orleans’s operating activities provided $2.3 million in cash for the three months ended March 31, 2013 compared to using $6.7 million in cash for the three months ended March 31, 2012 primarily due to the increased recovery of fuel costs and $1.8 million in pension contributions in 2012.  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.

Investing Activities

Net cash flow used in investing activities increased $24.8 million for the three months ended March 31, 2013 compared to the three months ended March 31, 2012 primarily due to money pool activity.

Increases in Entergy New Orleans’s receivable from the money pool are a use of cash flow, and Entergy New Orleans’s receivable from the money pool increased $11.4 million for the three months ended March 31, 2013 compared to decreasing $9.1 million for the three months ended March 31, 2012.  The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings.

119

Entergy New Orleans, Inc.

Management’s Financial Discussion and Analysis

Financing Activities

Net cash provided by financing activities increased $19.4 million for the three months ended March 31, 2013 compared to the three months ended March 31, 2012 primarily due to borrowings of $25 million under Entergy New Orleans’s credit facility in 2013, partially offset by money pool activity.

Increases in Entergy New Orleans’s payable to the money pool are a source of cash flow, and Entergy New Orleans’s payable to the money pool increased by $7.4 million for the three months ended March 31, 2012.

Capital Structure

Entergy New Orleans’s capitalization is balanced between equity and debt, as shown in the following table.  The increase in debt to capital ratio is due to borrowings of $25 million under Entergy New Orleans’s credit facility in 2013.

	March 31,  2013	December 31, 2012
Debt to capital	50.6%	47.7%
Effect of subtracting cash	(0.6%)	(1.2%)
Net debt to net capital	50.0%	46.5%

Net debt consists of debt less cash and cash equivalents.  Debt consists of short-term borrowings and long-term debt, including the currently maturing portion.  Capital consists of debt, preferred stock without sinking fund, and common equity.  Net capital consists of capital less cash and cash equivalents.  Entergy New Orleans uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy New Orleans’s financial condition.

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 New Orleans’s uses and sources of capital.  Following are additional updates to the information provided in the Form 10-K.

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

March 31, 2013	December 31, 2012	March 31, 2012	December 31, 2011
(In Thousands)
$14,327	$2,923	($7,353)	$9,074

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

Entergy New Orleans has a credit facility in the amount of $25 million scheduled to expire in November 2013.  As of March 31, 2013, $25 million was outstanding on the credit facility.  See Note 4 to the financial statements herein for additional discussion of the credit facility.

State and Local Rate Regulation

See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – State and Local Rate Regulation"in the Form 10-K for a discussion of state and local rate regulation.

120

Entergy New Orleans, Inc.

Management’s Financial Discussion and Analysis

Federal Regulation

See “System Agreement” and “Entergy’s Proposal to Join MISO” in the “Rate, Cost-recovery, and Other Regulation – Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for updates to the Federal Regulation discussion in the Form 10-K.

Nuclear Matters

See “Nuclear Matters” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis in the Form 10-K for a discussion of nuclear matters.

Environmental Risks

See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Environmental Risks" in the Form 10-K for a discussion of environmental risks.

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 New Orleans’s accounting for unbilled revenue and qualified pension and other postretirement benefits.

121

ENTERGY NEW ORLEANS, INC.
INCOME STATEMENTS
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
	2013			2012
	(In Thousands)
OPERATING REVENUES
Electric	$	113,963		$	100,584
Natural gas		32,503			28,572
TOTAL		146,466			129,156
OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale		28,863			27,682
Purchased power		60,159			47,231
Other operation and maintenance		31,233			30,896
Taxes other than income taxes		12,246			10,548
Depreciation and amortization		9,443			9,069
Other regulatory charges - net		250			480
TOTAL		142,194			125,906
OPERATING INCOME		4,272			3,250
OTHER INCOME
Allowance for equity funds used during construction		170			149
Interest and investment income		21			15
Miscellaneous - net		(316	)		(405	)
TOTAL		(125	)		(241	)
INTEREST EXPENSE
Interest expense		3,203			2,833
Allowance for borrowed funds used during construction		(86	)		(71	)
TOTAL		3,117			2,762
INCOME BEFORE INCOME TAXES		1,030			247
Income taxes		(277	)		207
NET INCOME		1,307			40
Preferred dividend requirements		241			241
EARNINGS (LOSS) APPLICABLE TO
COMMON STOCK	$	1,066		$	(201	)
See Notes to Financial Statements.

122

ENTERGY NEW ORLEANS, INC.
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
	2013			2012
	(In Thousands)
OPERATING ACTIVITIES
Net income	$	1,307		$	40
Adjustments to reconcile net income to net cash flow provided by (used in) operating activities:
Depreciation and amortization		9,443			9,069
Deferred income taxes, investment tax credits, and non-current taxes accrued		(11,851	)		(3,531	)
Changes in other assets and liabilities:
Receivables		281			2,182
Fuel inventory		368			1,423
Accounts payable		(7,777	)		(11,069	)
Prepaid taxes and taxes accrued		(399	)		1,116
Interest accrued		(1,126	)		(1,128	)
Deferred fuel costs		4,936			1,800
Other working capital accounts		(8,668	)		(11,241	)
Provisions for estimated losses		2,261			746
Other regulatory assets		3,421			5,519
Pensions and other postretirement liabilities		(42	)		(1,896	)
Other assets and liabilities		10,190			244
Net cash flow provided by (used in) operating activities		2,344			(6,726	)
INVESTING ACTIVITIES
Construction expenditures		(18,533	)		(14,938	)
Allowance for equity funds used during construction		170			149
Change in money pool receivable - net		(11,404	)		9,074
Payments to storm reserve escrow account		(2,178	)		(1,413	)
Net cash flow used in investing activities		(31,945	)		(7,128	)
FINANCING ACTIVITIES
Change in credit borrowings - net		25,000			-
Change in money pool payable - net		-			7,353
Dividends paid:
Common stock		-			(1,700	)
Preferred stock		(241	)		(241	)
Other		22			(40	)
Net cash flow provided by financing activities		24,781			5,372
Net decrease in cash and cash equivalents		(4,820	)		(8,482	)
Cash and cash equivalents at beginning of period		9,391			9,834
Cash and cash equivalents at end of period	$	4,571		$	1,352
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized	$	4,066		$	3,719
See Notes to Financial Statements.

123

ENTERGY NEW ORLEANS, INC.
BALANCE SHEETS
ASSETS
March 31, 2013 and December 31, 2012
(Unaudited)
	2013			2012
	(In Thousands)
CURRENT ASSETS
Cash and cash equivalents
Cash	$	301		$	319
Temporary cash investments		4,270			9,072
Total cash and cash equivalents		4,571			9,391
Accounts receivable:
Customer		44,461			33,142
Allowance for doubtful accounts		(486	)		(446	)
Associated companies		34,165			29,326
Other		3,505			3,115
Accrued unbilled revenues		12,739			18,124
Total accounts receivable		94,384			83,261
Accumulated deferred income taxes		10,164			9,517
Fuel inventory - at average cost		1,409			1,777
Materials and supplies - at average cost		10,690			10,889
Prepaid taxes		1,776			1,377
Prepayments and other		14,280			3,201
TOTAL		137,274			119,413
OTHER PROPERTY AND INVESTMENTS
Non-utility property at cost (less accumulated depreciation)		1,016			1,016
Storm reserve escrow account		12,783			10,605
TOTAL		13,799			11,621
UTILITY PLANT
Electric		866,738			860,358
Natural gas		219,417			217,769
Construction work in progress		13,821			11,135
TOTAL UTILITY PLANT		1,099,976			1,089,262
Less - accumulated depreciation and amortization		557,099			549,587
UTILITY PLANT - NET		542,877			539,675
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Deferred fuel costs		4,080			4,080
Other regulatory assets		198,582			202,003
Other		6,656			4,997
TOTAL		209,318			211,080
TOTAL ASSETS	$	903,268		$	881,789
See Notes to Financial Statements.

124

ENTERGY NEW ORLEANS, INC.
BALANCE SHEETS
LIABILITIES AND EQUITY
March 31, 2013 and December 31, 2012
(Unaudited)
	2013		2012
	(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt	$	70,000	$	70,000
Short-term borrowings		25,000		-
Accounts payable:
Associated companies		29,120		28,778
Other		21,099		31,209
Customer deposits		22,206		21,974
Interest accrued		1,894		3,020
Deferred fuel costs		7,093		2,157
System agreement cost equalization		16,880		16,880
Other		5,460		3,479
TOTAL CURRENT LIABILITIES		198,752		177,497
NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued		175,342		172,790
Accumulated deferred investment tax credits		1,246		1,300
Regulatory liability for income taxes - net		11,016		24,291
Other regulatory liabilities		22,754		11,060
Asset retirement cost liabilities		2,231		2,193
Accumulated provisions		17,292		15,031
Pension and other postretirement liabilities		83,748		83,790
Long-term debt		126,302		126,300
Gas system rebuild insurance proceeds		40,859		44,207
Other		7,315		7,985
TOTAL NON-CURRENT LIABILITIES		488,105		488,947
Commitments and Contingencies
Preferred stock without sinking fund		19,780		19,780
COMMON EQUITY
Common stock, $4 par value, authorized 10,000,000
shares; issued and outstanding 8,435,900 shares in 2013
and 2012		33,744		33,744
Paid-in capital		36,294		36,294
Retained earnings		126,593		125,527
TOTAL		196,631		195,565
TOTAL LIABILITIES AND EQUITY	$	903,268	$	881,789
See Notes to Financial Statements.

125

ENTERGY NEW ORLEANS, INC.
STATEMENTS OF CHANGES IN COMMON EQUITY
For the Three Months Ended March 31, 2013 and 2012
(Unaudited) (In Thousands)
	Common Equity
	Common Stock		Paid-in Capital		Retained Earnings			Total
Balance at December 31, 2011	$	33,744	$	36,294	$	111,127		$	181,165
Net income		-		-		40			40
Common stock dividends		-		-		(1,700	)		(1,700	)
Preferred stock dividends		-		-		(241	)		(241	)
Balance at March 31, 2012	$	33,744	$	36,294	$	109,226		$	179,264
Balance at December 31, 2012	$	33,744	$	36,294	$	125,527		$	195,565
Net income		-		-		1,307			1,307
Preferred stock dividends		-		-		(241	)		(241	)
Balance at March 31, 2013	$	33,744	$	36,294	$	126,593		$	196,631
See Notes to Financial Statements.

126

ENTERGY NEW ORLEANS, INC.
SELECTED OPERATING RESULTS
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
						Increase/
Description	2013			2012		(Decrease)			%
	(Dollars In Millions)
Electric Operating Revenues:
Residential	$	45		$	35	$	10			29
Commercial		42			36		6			17
Industrial		8			7		1			14
Governmental		16			14		2			14
Total retail		111			92		19			21
Sales for resale:
Associated companies		4			7		(3	)		(43	)
Other		(1	)		2		(3	)		(150	)
Total	$	114		$	101	$	13			13
Billed Electric Energy
Sales (GWh):
Residential		432			383		49			13
Commercial		451			447		4			1
Industrial		103			111		(8	)		(7	)
Governmental		182			181		1			1
Total retail		1,168			1,122		46			4
Sales for resale:
Associated companies		86			139		(53	)		(38	)
Non-associated companies		1			1		-			-
Total		1,255			1,262		(7	)		(1	)

127

ENTERGY TEXAS, INC. AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

Plan to Spin Off the Utility’s Transmission Business

See the “Plan to Spin Off the Utility’s Transmission Business” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis in the Form 10-K and herein for a discussion of Entergy’s plan to spin off its transmission business and merge it with a newly formed subsidiary of ITC Holdings Corp., including the planned retirement of debt.

Results of Operations

Net Income

Net income decreased slightly, by $0.8 million, primarily due to higher depreciation and amortization expenses and a higher effective income tax rate, substantially offset by higher net revenue.

Net Revenue

Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges.  Following is an analysis of the change in net revenue comparing the first quarter 2013 to the first quarter 2012.

	Amount
	(In Millions)
2012 net revenue	$	117.4
Retail electric price		8.8
Reserve equalization		3.7
Net wholesale revenue		(3.5	)
Purchased power capacity		(4.4	)
Other		(1.2	)
2013 net revenue	$	120.8

The retail electric price variance is primarily due to an annual base rate increase of $28 million, effective July 2012, as a result of the PUCT’s order in the December 2011 rate case. See Note 2 to the financial statements in the Form 10-K for further discussion of the rate case.

The reserve equalization variance is primarily due to decreased reserve equalization expense as a result of changes in the Entergy System generation mix compared to the same period in 2012.

The net wholesale revenue variance is primarily due to a decrease in sales to municipal and co-op customers compared to the same period in 2012.

The purchased power capacity variance is primarily due to additional capacity purchases.

Gross operating revenues and fuel and purchased power expenses

Gross operating revenues decreased primarily due to a decrease of $58.7 million in fuel cost recovery revenues primarily attributable to lower fuel rates, partially offset by an increase of $32 million in gross wholesale revenues as a result of an increase in sales to affiliated customers and higher prices and the annual base rate increase effective July 2012, as discussed above.

128

Entergy Texas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

Fuel and purchased power expenses decreased primarily due to a decrease in deferred fuel expense as a result of higher interim fuel refunds in 2013 compared to 2012, partially offset by increases in the average market prices of natural gas and purchased power and increased demand.

Other Income Statement Variances

Depreciation and amortization expenses increased primarily due to additions to plant in service and an increase in depreciation rates as a result of the rate order approved by the PUCT in September 2012.  See Note 2 to the financial statements in the Form 10-K for further discussion of the PUCT rate order.

Income Taxes

The effective income tax rate for the first quarter 2013 was 76.4%.  The difference in the effective income tax rate for the first quarter 2013 versus the federal statutory rate of 35% is due to certain book and tax differences related to utility plant items and state income taxes.

The effective income tax rate for the first quarter 2012 was 53.3%.  The difference in the effective income tax rate for the first quarter 2012 versus the federal statutory rate of 35% was due to certain book and tax differences related to utility plant items and state income taxes, partially offset by the amortization of investment tax credits and book and tax differences related to the allowance for equity funds used during construction.

Liquidity and Capital Resources

Cash Flow

Cash flows for the three months ended March 31, 2013 and 2012 were as follows:

	2013			2012
	(In Thousands)
Cash and cash equivalents at beginning of period	$	60,236		$	65,289
Cash flow provided by (used in):
Operating activities		(25,061	)		78,976
Investing activities		(13,118	)		(22,265	)
Financing activities		(21,947	)		(22,358	)
Net increase (decrease) in cash and cash equivalents		(60,126	)		34,353
Cash and cash equivalents at end of period	$	110		$	99,642

Operating Activities

Entergy Texas’s operating activities used $25.1 million of cash for the three months ended March 31, 2013 compared to providing $79 million of cash for the three months ended March 31, 2012 primarily due to:

·   $86.1 million of fuel cost refunds for the three months ended March 31, 2013 compared to $35.8 million of fuel cost refunds for the three months ended March 31, 2012.  See Note 2 to the financial statements herein and in the Form 10-K for discussion of the fuel cost refunds; and

·   the receipt, in January 2012, of $43 million in System Agreement bandwidth remedy payments required to implement the FERC’s remedy in an October 2011 order for the period June-December 2005.  As of March 31, 2013, all of the $43 million, plus interest, had been credited to Entergy Texas customers, with the final $9.5 million being credited in the first quarter 2013.  See Note 2 to the financial statements herein and in the Form 10-K for a discussion of the System Agreement proceedings.

129

Entergy Texas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

Investing Activities

Net cash flow used in investing activities decreased $9.1 million for the three months ended March 31, 2013 compared to the three months ended March 31, 2012 primarily due to money pool activity.

Decreases in Entergy Texas’s receivable from the money pool are a source of cash flow, and Entergy Texas’s receivable from the money pool decreased by $19.2 million for the three months ended March 31, 2013 compared to decreasing by $7.2 million for the three months ended March 31, 2012.  The money pool is an inter-company borrowing arrangement designed to reduce Entergy’s subsidiaries’ need for external short-term borrowings.

Capital Structure

Entergy Texas’s capitalization is balanced between equity and debt, as shown in the following table.

	March 31,  2013	December 31, 2012
Debt to capital	65.1%	65.4%
Effect of excluding the securitization bonds	(13.1%)	(13.3%)
Debt to capital, excluding securitization bonds (a)	52.0%	52.1%
Effect of subtracting cash	-%	(1.7%)
Net debt to net capital, excluding securitization bonds (a)	52.0%	50.4%

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

Net debt consists of debt less cash and cash equivalents.  Debt consists of long-term debt, including the currently maturing.  Capital consists of debt and common equity.  Net capital consists of capital less cash and cash equivalents.  Entergy Texas uses the net debt to net capital ratio and the ratios excluding securitization bonds in analyzing its financial condition and believes they provide useful information to its investors and creditors in evaluating Entergy Texas’s financial condition.

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 Texas’s uses and sources of capital.  Following are updates to the information provided in the Form 10-K.

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

March 31, 2013	December 31, 2012	March 31, 2012	December 31, 2011
(In Thousands)
($180)	$19,175	$56,007	$63,191

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

Entergy Texas has a credit facility in the amount of $150 million scheduled to expire in March 2018.  No borrowings were outstanding under the facility as of March 31, 2013.  See Note 4 to the financial statements herein for additional discussion of the credit facility.

130

Entergy Texas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

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.  Following is an update to that discussion.

In November 2012, Entergy Texas filed a pleading seeking a PUCT finding that special circumstances exist for limited cost recovery of capacity costs associated with two power purchase agreements until such time that these costs are included in base rates or a purchased capacity recovery rider or other recovery mechanism.  In March 2013 the PUCT Staff and intervenors filed a joint motion to dismiss Entergy Texas’s application seeking special circumstances recovery of these capacity costs.  Entergy Texas filed a response and the matter remains pending.

At the April 11, 2013 open meeting, the PUCT Commissioners discussed their view that a purchased power capacity rider was good public policy.  The PUCT subsequently proposed a second draft of the rule that incorporates a pre-approval process as discussed at the meeting.  A final decision is expected by the end of May 2013.  If the PUCT finalizes the rule, Entergy Texas would have the option to recover its capacity costs under the new rider mechanism or could proceed with a full base rate proceeding.

Federal Regulation

See “System Agreement” and “Entergy’s Proposal to Join MISO” in the “Rate, Cost-recovery, and Other Regulation – Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for updates to the Federal Regulation discussion in the Form 10-K.

Industrial and Commercial Customers

See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – Industrial and Commercial Customers" in the Form 10-K for a discussion of industrial and commercial customers.

Nuclear Matters

See “Nuclear Matters” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis in the Form 10-K for a discussion of nuclear matters.

Environmental Risks

See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Environmental Risks" in the Form 10-K for a discussion of environmental risks.

Critical Accounting Estimates

See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates" in the Form 10-K for a discussion of the unbilled revenue and qualified pension and other postretirement benefits.

131

ENTERGY TEXAS, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
	2013			2012
	(In Thousands)
OPERATING REVENUES
Electric	$	306,173		$	326,924
OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale		(26,100	)		44,038
Purchased power		192,719			152,123
Other operation and maintenance		56,490			55,823
Taxes other than income taxes		14,650			15,794
Depreciation and amortization		23,360			20,727
Other regulatory charges - net		18,777			13,356
TOTAL		279,896			301,861
OPERATING INCOME		26,277			25,063
OTHER INCOME
Allowance for equity funds used during construction		759			1,089
Interest and investment income		347			1,460
Miscellaneous - net		(858	)		(795	)
TOTAL		248			1,754
INTEREST EXPENSE
Interest expense		23,181			23,810
Allowance for borrowed funds used during construction		(555	)		(726	)
TOTAL		22,626			23,084
INCOME BEFORE INCOME TAXES		3,899			3,733
Income taxes		2,977			1,988
NET INCOME	$	922		$	1,745
See Notes to Financial Statements.

132

ENTERGY TEXAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
	2013			2012
	(In Thousands)
OPERATING ACTIVITIES
Net income	$	922		$	1,745
Adjustments to reconcile net income to net cash flow provided by (used in) operating activities:
Depreciation and amortization		23,360			20,727
Deferred income taxes, investment tax credits, and non-current taxes accrued		(31,998	)		3,184
Changes in assets and liabilities:
Receivables		21,476			82,506
Fuel inventory		(3,453	)		(7,173	)
Accounts payable		12,838			(10,370	)
Taxes accrued		17,881			(17,324	)
Interest accrued		(8,763	)		(8,608	)
Deferred fuel costs		(76,915	)		9,213
Other working capital accounts		(3,839	)		(3,131	)
Provisions for estimated losses		1,689			(192	)
Other regulatory assets		24,771			18,716
Pension and other postretirement liabilities		(2,114	)		(3,097	)
Other assets and liabilities		(916	)		(7,220	)
Net cash flow provided by (used in) operating activities		(25,061	)		78,976
INVESTING ACTIVITIES
Construction expenditures		(43,382	)		(42,162	)
Allowance for equity funds used during construction		759			1,089
Change in money pool receivable - net		19,175			7,184
Remittances to transition charge account		(20,274	)		(19,070	)
Payments from transition charge account		30,604			30,694
Net cash flow used in investing activities		(13,118	)		(22,265	)
FINANCING ACTIVITIES
Retirement of long-term debt		(21,967	)		(21,670	)
Change in money pool payable - net		180			-
Other		(160	)		(688	)
Net cash flow used in financing activities		(21,947	)		(22,358	)
Net increase (decrease) in cash and cash equivalents		(60,126	)		34,353
Cash and cash equivalents at beginning of period		60,236			65,289
Cash and cash equivalents at end of period	$	110		$	99,642
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized	$	30,909		$	31,320
Income taxes	$	(1,941	)	$	-
See Notes to Financial Statements.

133

ENTERGY TEXAS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, 2013 and December 31, 2012
(Unaudited)
	2013			2012
	(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash	$	80		$	528
Temporary cash investments		30			59,708
Total cash and cash equivalents		110			60,236
Securitization recovery trust account		26,925			37,255
Accounts receivable:
Customer		41,105			53,836
Allowance for doubtful accounts		(635	)		(680	)
Associated companies		45,539			68,750
Other		8,324			10,450
Accrued unbilled revenues		35,625			38,252
Total accounts receivable		129,958			170,608
Accumulated deferred income taxes		28,754			34,988
Fuel inventory - at average cost		58,841			55,388
Materials and supplies - at average cost		30,515			32,853
System agreement cost equalization		16,880			16,880
Prepaid taxes		35,787			53,668
Prepayments and other		14,125			18,206
TOTAL		341,895			480,082
OTHER PROPERTY AND INVESTMENTS
Investments in affiliates - at equity		668			678
Non-utility property - at cost (less accumulated depreciation)		565			638
Other		17,753			17,263
TOTAL		18,986			18,579
UTILITY PLANT
Electric		3,511,218			3,475,776
Construction work in progress		84,711			90,469
TOTAL UTILITY PLANT		3,595,929			3,566,245
Less - accumulated depreciation and amortization		1,347,393			1,332,349
UTILITY PLANT - NET		2,248,536			2,233,896
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Regulatory asset for income taxes - net		130,490			131,287
Other regulatory assets (includes securitization property        of $635,271 as of March 31, 2013 and        $648,863 as of December 31, 2012)		1,090,563			1,114,536
Long-term receivables - associated companies		29,107			29,510
Other		21,208			17,891
TOTAL		1,271,368			1,293,224
TOTAL ASSETS	$	3,880,785		$	4,025,781
See Notes to Financial Statements.

134

ENTERGY TEXAS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
March 31, 2013 and December 31, 2012
(Unaudited)
	2013		2012
	(In Thousands)
CURRENT LIABILITIES
Accounts payable:
Associated companies	$	108,481	$	88,743
Other		53,508		65,261
Customer deposits		38,319		38,859
Interest accrued		23,403		32,166
Deferred fuel costs		16,419		93,334
Pension and other postretirement liabilities		837		853
System agreement cost equalization		-		8,968
Other		2,091		2,839
TOTAL		243,058		331,023
NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued		971,241		1,009,081
Accumulated deferred investment tax credits		17,344		17,743
Other regulatory liabilities		6,760		6,150
Asset retirement cost liabilities		4,163		4,103
Accumulated provisions		8,298		6,609
Pension and other postretirement liabilities		153,143		155,241
Long-term debt (includes securitization bonds of        $668,418 as of March 31, 2013 and        $690,380 as of December 31, 2012)		1,595,957		1,617,813
Other		25,753		23,872
TOTAL		2,782,659		2,840,612
Commitments and Contingencies
COMMON EQUITY
Common stock, no par value, authorized 200,000,000 shares;
issued and outstanding 46,525,000 shares in 2013 and 2012		49,452		49,452
Paid-in capital		481,994		481,994
Retained earnings		323,622		322,700
TOTAL		855,068		854,146
TOTAL LIABILITIES AND EQUITY	$	3,880,785	$	4,025,781
See Notes to Financial Statements.

135

ENTERGY TEXAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON EQUITY
For the Three Months Ended March 31, 2013 and 2012
(Unaudited) (In Thousands)
	Common Equity
	Common Stock		Paid-in Capital		Retained Earnings		Total
Balance at December 31, 2011	$	49,452	$	481,994	$	367,909	$	899,355
Net income		-		-		1,745		1,745
Balance at March 31, 2012	$	49,452	$	481,994	$	369,654	$	901,100
Balance at December 31, 2012	$	49,452	$	481,994	$	322,700	$	854,146
Net income		-		-		922		922
Balance at March 31, 2013	$	49,452	$	481,994	$	323,622	$	855,068
See Notes to Financial Statements.

136

ENTERGY TEXAS, INC. AND SUBSIDIARIES
SELECTED OPERATING RESULTS
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
					Increase/
Description	2013		2012		(Decrease)			%
	(Dollars In Millions)
Electric Operating Revenues:
Residential	$	101	$	117	$	(16	)		(14	)
Commercial		53		77		(24	)		(31	)
Industrial		50		63		(13	)		(21	)
Governmental		4		6		(2	)		(33	)
Total retail		208		263		(55	)		(21	)
Sales for resale:
Associated companies		84		52		32			62
Non-associated companies		9		8		1			13
Other		5		4		1			25
Total	$	306	$	327	$	(21	)		(6	)
Billed Electric Energy
Sales (GWh):
Residential		1,263		1,195		68			6
Commercial		981		974		7			1
Industrial		1,419		1,399		20			1
Governmental		68		67		1			1
Total retail		3,731		3,635		96			3
Sales for resale:
Associated companies		1,325		730		595			82
Non-associated companies		162		256		(94	)		(37	)
Total		5,218		4,621		597			13

137

SYSTEM ENERGY RESOURCES, INC.

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

Results of Operations

System Energy’s principal asset currently consists of an ownership interest and a leasehold interest in Grand Gulf.  The capacity and energy from its 90% interest is sold under the Unit Power Sales Agreement to its only four customers, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans.  System Energy’s operating revenues are derived from the allocation of the capacity, energy, and related costs associated with its 90% interest in Grand Gulf pursuant to the Unit Power Sales Agreement.  Payments under the Unit Power Sales Agreement are System Energy’s only source of operating revenues.

Net income increased $1.5 million primarily due to increased operating income partially offset by lower other income.  Operating income was higher because of higher rate base compared to 2012 resulting from capital spending at Grand Gulf, including the uprate project.  Other income was lower due to AFUDC accrued on the Grand Gulf uprate project in the first quarter 2012.  Grand Gulf’s spring 2012 refueling outage was completed in June 2012, and the majority of uprate-related capital improvements were completed during this outage.

Liquidity and Capital Resources

Cash Flow

Cash flows for the three months ended March 31, 2013 and 2012 were as follows:

	2013			2012
	(In Thousands)
Cash and cash equivalents at beginning of period	$	83,622		$	185,157
Cash flow provided by (used in):
Operating activities		94,178			67,536
Investing activities		(49,239	)		(218,619	)
Financing activities		(111,456	)		49,106
Net decrease in cash and cash equivalents		(66,517	)		(101,977	)
Cash and cash equivalents at end of period	$	17,105		$	83,180

Operating Activities

Net cash provided by operating activities increased $26.6 million for the three months ended March 31, 2013 compared to the three months ended March 31, 2012 primarily due to spending on the Grand Gulf refueling outage in 2012.

Investing Activities

Net cash used in investing activities decreased $169.4 million for the three months ended March 31, 2013 compared to the three months ended March 31, 2012 primarily due to an increase in nuclear fuel activity primarily due to the Grand Gulf refueling outage in 2012 and a decrease in construction expenditures resulting from spending on the uprate project at Grand Gulf completed during the refueling outage in 2012.  The decrease was partially offset by money pool activity.

138

System Energy Resources, Inc.

Management’s Financial Discussion and Analysis

Increases in System Energy’s receivable from the money pool are a use of cash flow, and System Energy’s receivable from the money pool increased $24.7 million for the three months ended March 31, 2013 compared to decreasing by $73.3 million for the three months ended March 31, 2012.  The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings.

Financing Activities

System Energy’s financing activities used $111.5 million of cash for the three months ended March 31, 2013 compared to providing $49.1 million of cash for the three months ended March 31, 2012 primarily due to the following cash flow activity:

·   the repayment of borrowings of $19.8 million on the nuclear fuel company variable interest entity’s credit facility in 2013 compared to an increase in borrowings of $69.2 million on the nuclear fuel company variable interest entity’s credit facility in 2012;

·   the issuance of $50 million of 4.02% Series H notes by the nuclear fuel company variable interest entity in February 2012; and

·   an increase of $21.3 million in common stock dividends in 2013.

Capital Structure

System Energy’s capitalization is balanced between equity and debt, as shown in the following table.

	March 31,  2013	December 31, 2012
Debt to capital	48.5%	49.7%
Effect of subtracting cash	(0.6%)	(2.6%)
Net debt to net capital	47.9%	47.1%

Net debt consists of debt less cash and cash equivalents.  Debt consists of short-term borrowings and long-term debt, including the currently maturing portion.  Capital consists of debt and common equity.  Net capital consists of capital less cash and cash equivalents.  System Energy uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating System Energy’s financial condition.

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 System Energy’s uses and sources of capital.  Following are updates to the information provided in the Form 10-K.  As discussed in the Form 10-K, the planned construction and capital investment amounts in the table do not include significant costs for the capital projects that might result from the NRC post-Fukushima requirements.  The current preliminary cost estimate (including both capital and operation and maintenance expense) to implement the post-Fukushima requirements for System Energy is approximately $65 million.  These costs are expected to be incurred over the 2012 through 2018 time period.

System Energy’s receivables from the money pool were as follows:

March 31, 2013	December 31, 2012	March 31, 2012	December 31, 2011
(In Thousands)
$51,602	$26,915	$47,129	$120,424

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

139

System Energy Resources, Inc.

Management’s Financial Discussion and Analysis

The System Energy nuclear fuel company variable interest entity has a credit facility in the amount of $100 million scheduled to expire in July 2013.  As of March 31, 2013, $20.2 million in letters of credit were outstanding under the credit facility to support a like amount of commercial paper issued by the System Energy nuclear fuel company variable interest entity.  See Note 4 to the financial statements for additional discussion of the variable interest entity credit facility.

Nuclear Matters

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

Environmental Risks

See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – Environmental Risks" in the Form 10-K for a discussion of environmental risks.

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 System Energy’s accounting for nuclear decommissioning costs and qualified pension and other postretirement benefits.

140

SYSTEM ENERGY RESOURCES, INC.
INCOME STATEMENTS
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
	2013			2012
	(In Thousands)
OPERATING REVENUES
Electric	$	168,578		$	126,034
OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale		21,517			10,361
Nuclear refueling outage expenses		7,357			4,164
Other operation and maintenance		39,941			34,284
Decommissioning		8,631			8,034
Taxes other than income taxes		6,489			5,513
Depreciation and amortization		35,416			29,674
Other regulatory credits - net		(2,825	)		(1,452	)
TOTAL		116,526			90,578
OPERATING INCOME		52,052			35,456
OTHER INCOME
Allowance for equity funds used during construction		1,471			9,469
Interest and investment income		2,677			3,526
Miscellaneous - net		(168	)		(157	)
TOTAL		3,980			12,838
INTEREST EXPENSE
Interest expense		9,204			10,849
Allowance for borrowed funds used during construction		(178	)		(2,777	)
TOTAL		9,026			8,072
INCOME BEFORE INCOME TAXES		47,006			40,222
Income taxes		19,000			13,686
NET INCOME	$	28,006		$	26,536
See Notes to Financial Statements.

141

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142

SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
	2013			2012
	(In Thousands)
OPERATING ACTIVITIES
Net income	$	28,006		$	26,536
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation, amortization, and decommissioning, including nuclear fuel amortization		61,067			45,391
Deferred income taxes, investment tax credits, and non-current taxes accrued		16,477			45,966
Changes in assets and liabilities:
Receivables		10,146			11,964
Accounts payable		(11,351	)		8,260
Taxes accrued and prepaid taxes		(17,238	)		(46,362	)
Interest accrued		161			(2,300	)
Other working capital accounts		33			(23,236	)
Other regulatory assets		5,784			2,716
Pensions and other postretirement liabilities		266			(2,859	)
Other assets and liabilities		827			1,460
Net cash flow provided by operating activities		94,178			67,536
INVESTING ACTIVITIES
Construction expenditures		(21,349	)		(140,334	)
Allowance for equity funds used during construction		1,471			9,469
Nuclear fuel purchases		(22,932	)		(152,928	)
Proceeds from sale of nuclear fuel		26,522			-
Proceeds from nuclear decommissioning trust fund sales		25,612			125,431
Investment in nuclear decommissioning trust funds		(33,876	)		(133,552	)
Changes in money pool receivable - net		(24,687	)		73,295
Net cash flow used in investing activities		(49,239	)		(218,619	)
FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt		-			50,000
Retirement of long-term debt		(40,902	)		(39,892	)
Changes in credit borrowings - net		(19,797	)		69,179
Dividends paid:
Common stock		(50,000	)		(28,750	)
Other		(757	)		(1,431	)
Net cash flow provided by (used in) financing activities		(111,456	)		49,106
Net decrease in cash and cash equivalents		(66,517	)		(101,977	)
Cash and cash equivalents at beginning of period		83,622			185,157
Cash and cash equivalents at end of period	$	17,105		$	83,180
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized	$	5,938		$	9,805
Income taxes	$	4,334		$	(1,020	)
See Notes to Financial Statements.

143

SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
ASSETS
March 31, 2013 and December 31, 2012
(Unaudited)
	2013		2012
	(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash	$	1,728	$	100
Temporary cash investments		15,377		83,522
Total cash and cash equivalents		17,105		83,622
Accounts receivable:
Associated companies		109,567		93,381
Other		4,259		5,904
Total accounts receivable		113,826		99,285
Accumulated deferred income taxes		53,719		74,331
Materials and supplies - at average cost		83,194		82,443
Deferred nuclear refueling outage costs		27,556		35,155
Prepayments and other		8,906		2,080
TOTAL		304,306		376,916
OTHER PROPERTY AND INVESTMENTS
Decommissioning trust funds		528,162		490,572
TOTAL		528,162		490,572
UTILITY PLANT
Electric		3,995,665		3,987,672
Property under capital lease		569,355		569,355
Construction work in progress		39,513		40,392
Nuclear fuel		225,466		252,682
TOTAL UTILITY PLANT		4,829,999		4,850,101
Less - accumulated depreciation and amortization		2,600,781		2,568,862
UTILITY PLANT - NET		2,229,218		2,281,239
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Regulatory asset for income taxes - net		124,604		126,503
Other regulatory assets		326,189		330,074
Other		17,703		18,212
TOTAL		468,496		474,789
TOTAL ASSETS	$	3,530,182	$	3,623,516
See Notes to Financial Statements.

144

SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
LIABILITIES AND EQUITY
March 31, 2013 and December 31, 2012
(Unaudited)
	2013		2012
	(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt	$	119,229	$	111,854
Short-term borrowings		20,189		39,986
Accounts payable:
Associated companies		7,400		5,564
Other		19,536		44,433
Taxes accrued		164,239		181,477
Accumulated deferred income taxes		1,420		1,789
Interest accrued		15,780		15,619
Other		2,440		2,429
TOTAL		350,233		403,151
NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued		791,637		782,469
Accumulated deferred investment tax credits		55,547		56,188
Other regulatory liabilities		268,378		256,024
Decommissioning		487,002		478,371
Pension and other postretirement liabilities		142,883		142,617
Long-term debt		623,697		671,945
Other		70		22
TOTAL		2,369,214		2,387,636
Commitments and Contingencies
COMMON EQUITY
Common stock, no par value, authorized 1,000,000 shares;
issued and outstanding 789,350 shares in 2013 and 2012		789,350		789,350
Retained earnings		21,385		43,379
TOTAL		810,735		832,729
TOTAL LIABILITIES AND EQUITY	$	3,530,182	$	3,623,516
See Notes to Financial Statements.

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SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF CHANGES IN COMMON EQUITY
For the Three Months Ended March 31, 2013 and 2012
(Unaudited) (In Thousands)
	Common Equity
	Common Stock		Retained Earnings			Total
Balance at December 31, 2011	$	789,350	$	11,213		$	800,563
Net income		-		26,536			26,536
Common stock dividends		-		(28,750	)		(28,750	)
Balance at March 31, 2012	$	789,350	$	8,999		$	798,349
Balance at December 31, 2012	$	789,350	$	43,379		$	832,729
Net income		-		28,006			28,006
Common stock dividends		-		(50,000	)		(50,000	)
Balance at March 31, 2013	$	789,350	$	21,385		$	810,735
See Notes to Financial Statements.

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ENTERGY CORPORATION AND SUBSIDIARIES

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

See "PART I, Item 1, Litigation" in the Form 10-K for a discussion of legal, administrative, and other regulatory proceedings affecting Entergy.  Following is an update to that discussion.  Also see "Item 5, Other Information, Environmental Regulation", below, for updates regarding environmental proceedings and regulation.

Texas Power Price Lawsuit

See the Form 10-K for a discussion of the lawsuit filed in August 2003 in the district court of Chambers County, Texas by Texas residents on behalf of a purported class of the Texas retail customers of Entergy Gulf States, Inc. who were billed and paid for electric power from January 1, 1994 to the present.  The case is pending in state district court, and in March 2012 the court found that the case met the requirements to be maintained as a class action under Texas law.  On April 30, 2012, the court entered an order certifying the class.  The defendants have appealed the order to the Texas Court of Appeals – First District.  The appeal is pending, and proceedings in district court are stayed until the appeal is resolved.  Oral arguments before the court of appeals were conducted on April 23, 2013, and the matter awaits that court’s decision.

Item 1A.  Risk Factors

There have been no material changes to the risk factors discussed in "PART I, Item 1A, Risk Factors" in the Form 10-K.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities (a)

Period	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of a Publicly Announced Plan	Maximum $ Amount of Shares that May Yet be Purchased Under a Plan (b)
1/01/2013-1/31/2013	-	$-	-	$350,052,918
2/01/2013-2/28/2013	-	$-	-	$350,052,918
3/01/2013-3/31/2013	-	$-	-	$350,052,918
Total	-	$-	-

In accordance with Entergy’s stock-based compensation plans, Entergy periodically grants stock options to key employees, which may be exercised to obtain shares of Entergy’s common stock.  According to the plans, these shares can be newly issued shares, treasury stock, or shares purchased on the open market.  Entergy’s management has been authorized by the Board to repurchase on the open market shares up to an amount sufficient to fund the exercise of grants under the plans.  The amount of share repurchases under these programs may vary as a result of material changes in business results or capital spending or new investment opportunities.  In addition, in the first quarter 2013, Entergy withheld 62,841 shares of its common stock at $64.45 per share to pay taxes due upon vesting of restricted stock granted as part of its long-term incentive program.

(a)	See Note 12 to the financial statements in the Form 10-K for additional discussion of the stock-based compensation plans.
(b)	Maximum amount of shares that may yet be repurchased does not include an estimate of the amount of shares that may be purchased to fund the exercise of grants under the stock-based compensation plans.

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Item 5.  Other Information

Regulation of the Nuclear Power Industry

Nuclear Waste Policy Act of 1982

Spent Nuclear Fuel

See the discussion in Part I, Item 1 in the Form 10-K for information regarding litigation against the DOE related to the DOE’s breach of its obligation to remove spent fuel from nuclear sites.  Following is an update to that discussion.  On April 2, 2013, the U.S. Court of Appeals for the Federal Circuit issued a ruling in favor of Entergy Nuclear FitzPatrick and Entergy Nuclear Indian Point 3 and against the DOE that the DOE may not raise as a defense to damages claims in the spent fuel litigation a claim that it was unavoidably delayed in commencing performance.  On April 5, 2013, the U.S. Treasury paid Entergy Nuclear Generation Company $4.2 million representing the judgment in favor of Entergy Nuclear Generation Company against the DOE for the Pilgrim plant.  On April 11, 2013, the U.S. Treasury paid Entergy Nuclear Vermont Yankee $40.8 million representing the judgment in favor of Entergy Nuclear Vermont Yankee against the DOE for the Vermont Yankee plant.  On April 23, 2013, the U.S. Court of Federal Claims issued a judgment in favor of Entergy Arkansas and against the DOE in the remanded spent fuel case for damages in the amount of $47.8 million.  This decision may be appealed by either party.  Management cannot predict the timing or amount of receipt of funds pursuant to this judgment.

Nuclear Plant Decommissioning

See the discussion in Part I, Item 1 in the Form 10-K for information regarding decommissioning funding for the nuclear plants.  Following is an update to that discussion.  On March 29, 2013, Entergy Operations and Entergy Nuclear Operations made filings with the NRC reporting on decommissioning funding for its nuclear plants.  Those reports all showed that decommissioning funding for the nuclear plants met the NRC’s financial assurance requirements.

Environmental Regulation

Following are updates to the Environmental Regulation section of Part I, Item 1 of the Form 10-K.

Clean Air Act and Subsequent Amendments

Potential SO2Nonattainment

The EPA issued a final rule in June 2010 adopting an SO2 1-hour national ambient air quality standard of 75 parts per billion.  The EPA designations for counties in attainment and nonattainment were originally due in June 2012, but the EPA has indicated that it will delay designations except for those areas with existing monitoring data from 2009 to 2011 indicating violations of the new standard. In those few areas, final designations are expected in the summer of 2013.  In all other areas, analysis is required once EPA issues additional final regulations and guidance.  Additional capital projects or operational changes may be required for Entergy facilities in these areas.

Hazardous Air Pollutants

The EPA released the final Mercury and Air Toxics Standard (MATS) rule in December 2011 and the rule became effective in April 2012.  Entergy currently is developing compliance plans to meet requirements of the rule, which could result in significant capital expenditures for Entergy’s coal-fired units.  Compliance with MATS is required by the Clean Air Act within three years, or by 2015, although certain extensions of this deadline are available from state permit authorities and the EPA.  Entergy has applied for a one-year extension, as allowed by the Clean Air Act, for its affected facilities in Arkansas and Louisiana.

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Cross-State Air Pollution

See the Form 10-K for a discussion of the Clean Air Interstate Rule (CAIR) and the Cross-State Air Pollution Rule (CSAPR, which previously was referred to as the Transport Rule).  In December 2011 the D.C. Circuit Court of Appeals stayed CSAPR and instructed the EPA to continue administering CAIR, pending further judicial review.  In August 2012 the court issued a decision vacating CSAPR and leaving CAIR in place pending the promulgation of a lawful replacement for both rules.  In January 2013 the court denied petitions for reconsideration filed by the EPA and certain states and intervenors.  In March 2013 the EPA and other parties filed petitions for certiorari with the U.S. Supreme Court.  Entergy is complying with CAIR as it continues to be implemented until further instruction from the court or the EPA.

Clean Water Act

Effluent Limitation Guidelines

On April 19, 2013, the EPA issued proposed effluent limitation guidelines that, if adopted as final, would apply to discharges from Entergy’s generating facilities that hold national pollutant discharge elimination system permits under the Clean Water Act.  The proposal includes several options for public consideration.  Entergy is in the process of reviewing the proposal and will engage in the public comment process as appropriate. 

Indian Point Units 1 and 2 Hazardous Waste Remediation

Prior to Entergy’s purchase of Indian Point Unit 1, the previous owner completed the cleanup and desludging of the Unit 1 water storage pool, generating mixed waste.  The existing mixed waste storage permit and an associated order on consent were transferred to Entergy upon purchasing the unit.  The waste is stored in the Unit 1 containment building in accordance with NRC regulations controlling low level radioactive waste.  An order on consent with NYSDEC requires a quarterly survey of the availability of any commercial facility capable of treating, processing, and disposing of this waste in a commercially reasonable manner.  However, in 2005, NYSDEC revised its regulations to conditionally exempt the storage and disposal of mixed waste that is regulated by the NRC.   Thus, in October 2005 and again in January 2013, Entergy requested that NYSDEC terminate the mixed waste permit and order on consent because the waste falls within the mixed waste exemption.  NYSDEC has not yet completed any action on Entergy’s request.  Therefore, pursuant to the terms of the order on consent, Entergy continues to review this matter and to conduct its quarterly searches for a commercially reasonable vendor that is acceptable both to the NRC and the NYSDEC.  The cost of this disposal cannot be estimated at this time due to the many variables existing in the type and manner of disposal.

Earnings Ratios (Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

The Registrant Subsidiaries have calculated ratios of earnings to fixed charges and ratios of earnings to combined fixed charges and preferred dividends/distributions pursuant to Item 503 of Regulation S-K of the SEC as follows:

	Ratios of Earnings to Fixed Charges
	Twelve Months Ended
	December 31,					March 31,
	2008	2009	2010	2011	2012	2013
Entergy Arkansas	2.33	2.39	3.91	4.31	3.79	3.76
Entergy Gulf States Louisiana	2.44	2.99	3.58	4.36	3.48	3.46
Entergy Louisiana	3.14	3.52	3.41	1.86	2.08	2.20
Entergy Mississippi	2.92	3.31	3.35	3.55	2.79	2.89
Entergy New Orleans	3.71	3.61	4.43	5.37	3.02	3.03
Entergy Texas	2.04	1.92	2.10	2.34	1.76	1.77
System Energy	3.29	3.73	3.64	3.85	5.12	5.42

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	Ratios of Earnings to Combined Fixed Charges and Preferred Dividends/Distributions
	Twelve Months Ended
	December 31,					March 31,
	2008	2009	2010	2011	2012	2013
Entergy Arkansas	1.95	2.09	3.60	3.83	3.36	3.34
Entergy Gulf States Louisiana	2.42	2.95	3.54	4.30	3.43	3.41
Entergy Louisiana	2.87	3.27	3.19	1.70	1.93	2.04
Entergy Mississippi	2.67	3.06	3.16	3.27	2.59	2.69
Entergy New Orleans	3.45	3.33	4.08	4.74	2.67	2.69

The Registrant Subsidiaries accrue interest expense related to unrecognized tax benefits in income tax expense and do not include it in fixed charges.

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Item 6.  Exhibits *

12(a) -	Entergy Arkansas’s Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined.
12(b) -	Entergy Gulf States Louisiana’s Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Distributions, as defined.
12(c) -	Entergy Louisiana’s Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Distributions, as defined.
12(d) -	Entergy Mississippi’s Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined.
12(e) -	Entergy New Orleans’s Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Pre­ferred Dividends, as defined.
12(f) -	Entergy Texas’s Computation of Ratios of Earnings to Fixed Charges, as defined.
12(g) -	System Energy’s Computation of Ratios of Earnings to Fixed Charges, as defined.
31(a) -	Rule 13a-14(a)/15d-14(a) Certification for Entergy Corporation.
31(b) -	Rule 13a-14(a)/15d-14(a) Certification for Entergy Corporation.
31(c) -	Rule 13a-14(a)/15d-14(a) Certification for Entergy Arkansas.
31(d) -	Rule 13a-14(a)/15d-14(a) Certification for Entergy Arkansas.
31(e) -	Rule 13a-14(a)/15d-14(a) Certification for Entergy Gulf States Louisiana.
31(f) -	Rule 13a-14(a)/15d-14(a) Certification for Entergy Gulf States Louisiana.
31(g) -	Rule 13a-14(a)/15d-14(a) Certification for Entergy Louisiana.
31(h) -	Rule 13a-14(a)/15d-14(a) Certification for Entergy Louisiana.
31(i) -	Rule 13a-14(a)/15d-14(a) Certification for Entergy Mississippi.
31(j) -	Rule 13a-14(a)/15d-14(a) Certification for Entergy Mississippi.
31(k) -	Rule 13a-14(a)/15d-14(a) Certification for Entergy New Orleans.
31(l) -	Rule 13a-14(a)/15d-14(a) Certification for Entergy New Orleans.
31(m) -	Rule 13a-14(a)/15d-14(a) Certification for Entergy Texas.
31(n) -	Rule 13a-14(a)/15d-14(a) Certification for Entergy Texas.
31(o) -	Rule 13a-14(a)/15d-14(a) Certification for System Energy.
31(p) -	Rule 13a-14(a)/15d-14(a) Certification for System Energy.
32(a) -	Section 1350 Certification for Entergy Corporation.
32(b) -	Section 1350 Certification for Entergy Corporation.

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32(c) -	Section 1350 Certification for Entergy Arkansas.
32(d) -	Section 1350 Certification for Entergy Arkansas.
32(e) -	Section 1350 Certification for Entergy Gulf States Louisiana.
32(f) -	Section 1350 Certification for Entergy Gulf States Louisiana.
32(g) -	Section 1350 Certification for Entergy Louisiana.
32(h) -	Section 1350 Certification for Entergy Louisiana.
32(i) -	Section 1350 Certification for Entergy Mississippi.
32(j) -	Section 1350 Certification for Entergy Mississippi.
32(k) -	Section 1350 Certification for Entergy New Orleans.
32(l) -	Section 1350 Certification for Entergy New Orleans.
32(m) -	Section 1350 Certification for Entergy Texas.
32(n) -	Section 1350 Certification for Entergy Texas.
32(o) -	Section 1350 Certification for System Energy.
32(p) -	Section 1350 Certification for System Energy.
101 INS -	XBRL Instance Document.
101 SCH -	XBRL Taxonomy Extension Schema Document.
101 PRE -	XBRL Taxonomy Presentation Linkbase Document.
101 LAB -	XBRL Taxonomy Label Linkbase Document.
101 CAL -	XBRL Taxonomy Calculation Linkbase Document.
101 DEF -	XBRL Definition Linkbase Document.

___________________________

Pursuant to Item 601(b)(4)(iii) of Regulation S-K, Entergy Corporation agrees to furnish to the Commission upon request any instrument with respect to long-term debt that is not registered or listed herein as an Exhibit because the total amount of securities authorized under such agreement does not exceed ten percent of the total assets of Entergy Corporation and its subsidiaries on a consolidated basis.

* Incorporated herein by reference as indicated.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.  The signature for each undersigned company shall be deemed to relate only to matters having reference to such company or its subsidiaries.

ENTERGY CORPORATION

ENTERGY ARKANSAS, INC.

ENTERGY GULF STATES LOUISIANA, L.L.C.

ENTERGY LOUISIANA, LLC

ENTERGY MISSISSIPPI, INC.

ENTERGY NEW ORLEANS, INC.

ENTERGY TEXAS, INC.

SYSTEM ENERGY RESOURCES, INC.

/s/ Alyson M. Mount

Alyson M. Mount

Senior Vice President and Chief Accounting Officer

(For each Registrant and for each as

Principal Accounting Officer)

Date:           May 8, 2013

153