false2024FY0000065984CHXFALSE0000007323FALSE0001348952FALSE0000066901FALSE0000071508FALSE0001427437FALSE0000202584FALSE2025-12-312037-12-312028-12-312042-12-312025-12-312028-12-312025-12-312044-12-312035-12-312037-12-312037-12-312028-12-312039-12-312028-12-312040-12-312032-12-312042-12-312044-12-312038-12-312035-12-312038-12-312037-12-312039-12-312029-12-312044-12-312044-12-312044-12-312044-12-312044-12-312044-12-312025-12-312027-12-312025-12-312028-12-312033-12-312028-12-312026-04-302029-06-302029-06-302029-06-302027-06-302029-06-302027-06-302027-06-302027-06-302027-06-30P1Y0Dhttp://fasb.org/us-gaap/2024#PublicUtilitiesPropertyPlantAndEquipmentNethttp://fasb.org/us-gaap/2024#PublicUtilitiesPropertyPlantAndEquipmentNethttp://fasb.org/us-gaap/2024#PublicUtilitiesPropertyPlantAndEquipmentNethttp://fasb.org/us-gaap/2024#PublicUtilitiesPropertyPlantAndEquipmentNethttp://fasb.org/us-gaap/2024#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2024#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2024#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2024#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2024#DeferredCreditsAndOtherLiabilitieshttp://fasb.org/us-gaap/2024#DeferredCreditsAndOtherLiabilitieshttp://fasb.org/us-gaap/2024#DeferredCreditsAndOtherLiabilitieshttp://fasb.org/us-gaap/2024#DeferredCreditsAndOtherLiabilitieshttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpenseMaintenanceOperationsAndOtherCostsAndExpenseshttp://fasb.org/us-gaap/2024#PrepaidExpenseAndOtherAssetsCurrenthttp://fasb.org/us-gaap/2024#PrepaidExpenseAndOtherAssetsCurrenthttp://fasb.org/us-gaap/2024#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2024#PrepaidExpenseAndOtherAssetsCurrenthttp://fasb.org/us-gaap/2024#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpenseFuelUsedhttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpensePurchasedPowerhttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpenseFuelUsedhttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpensePurchasedPowerhttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpenseFuelUsedhttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpensePurchasedPowerhttp://fasb.org/us-gaap/2024#PrepaidExpenseAndOtherAssetsCurrenthttp://fasb.org/us-gaap/2024#PrepaidExpenseAndOtherAssetsCurrenthttp://fasb.org/us-gaap/2024#PrepaidExpenseAndOtherAssetsCurrenthttp://fasb.org/us-gaap/2024#PrepaidExpenseAndOtherAssetsCurrenthttp://fasb.org/us-gaap/2024#PrepaidExpenseAndOtherAssetsCurrenthttp://fasb.org/us-gaap/2024#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2024#PrepaidExpenseAndOtherAssetsCurrenthttp://fasb.org/us-gaap/2024#PrepaidExpenseAndOtherAssetsCurrenthttp://fasb.org/us-gaap/2024#PrepaidExpenseAndOtherAssetsCurrenthttp://fasb.org/us-gaap/2024#PrepaidExpenseAndOtherAssetsCurrenthttp://fasb.org/us-gaap/2024#PrepaidExpenseAndOtherAssetsCurrenthttp://fasb.org/us-gaap/2024#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2024#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2024#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpenseFuelUsedhttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpenseFuelUsedhttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpensePurchasedPowerhttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpensePurchasedPowerhttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpensePurchasedPowerhttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpensePurchasedPowerhttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpensePurchasedPowerhttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpenseFuelUsedhttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpenseFuelUsedhttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpenseFuelUsedhttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpensePurchasedPowerhttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpensePurchasedPowerhttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpensePurchasedPowerhttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpensePurchasedPowerhttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpensePurchasedPowerhttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpenseFuelUsedhttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpenseFuelUsedhttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpenseFuelUsedhttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpensePurchasedPowerhttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpensePurchasedPowerhttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpensePurchasedPowerhttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpensePurchasedPowerhttp://fasb.org/us-gaap/2024#UtilitiesOperatingExpensePurchasedPower2024-11-192025-12-150000065984us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMemberetr:OtherPostretirementTaxableAssetsMember2023-01-012023-12-31
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
| | | | | |
| (Mark One) | |
| ☑ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 |
For the Fiscal Year Ended December 31, 2024
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 | | 1-35747 | ENTERGY NEW ORLEANS, LLC |
| (a Delaware corporation) 639 Loyola Avenue New Orleans, Louisiana 70113 Telephone (504) 576-4000 | | | (a Texas limited liability company) 1600 Perdido Street New Orleans, Louisiana 70112 Telephone (504) 670-3702 |
| 72-1229752 | | | 82-2212934 |
| | | | |
| | | | |
| 1-10764 | ENTERGY ARKANSAS, LLC | | 1-34360 | ENTERGY TEXAS, INC. |
| (a Texas limited liability company) 425 West Capitol Avenue Little Rock, Arkansas 72201 Telephone (501) 377-4000 | | | (a Texas corporation) 2107 Research Forest Drive The Woodlands, Texas 77380 Telephone (409) 981-2000 |
| 83-1918668 | | | 61-1435798 |
| | | | |
| | | | |
| 1-32718 | ENTERGY LOUISIANA, LLC | | 1-09067 | SYSTEM ENERGY RESOURCES, INC. |
| (a Texas limited liability company) 4809 Jefferson Highway Jefferson, Louisiana 70121 Telephone (504) 576-4000 | | | (an Arkansas corporation) 1340 Echelon Parkway Jackson, Mississippi 39213 Telephone (601) 368-5000 |
| 47-4469646 | | | 72-0752777 |
| | | | |
| | | | |
| 1-31508 | ENTERGY MISSISSIPPI, LLC | | | |
| (a Texas limited liability company) 308 East Pearl Street Jackson, Mississippi 39201 Telephone (601) 368-5000 | | | |
| 83-1950019 | | | |
| | | | |
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | |
| Registrant | Title of Class | Trading
Symbol | Name of Each Exchange
on Which Registered |
| | | |
| Entergy Corporation | Common Stock, $0.01 Par Value | ETR | New York Stock Exchange |
| Common Stock, $0.01 Par Value | ETR | NYSE Chicago, Inc. |
| | | |
| Entergy Arkansas, LLC | Mortgage Bonds, 4.875% Series due September 2066 | EAI | New York Stock Exchange |
| | | |
| Entergy Louisiana, LLC | Mortgage Bonds, 4.875% Series due September 2066 | ELC | New York Stock Exchange |
| | | |
| Entergy Mississippi, LLC | Mortgage Bonds, 4.90% Series due October 2066 | EMP | New York Stock Exchange |
| | | |
| Entergy New Orleans, LLC | Mortgage Bonds, 5.0% Series due December 2052 | ENJ | New York Stock Exchange |
| Mortgage Bonds, 5.50% Series due April 2066 | ENO | New York Stock Exchange |
| | | |
| Entergy Texas, Inc. | 5.375% Series A Preferred Stock, Cumulative, No Par Value (Liquidation Value $25 Per Share) | ETI/PR | New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act:
| | | | | |
| Registrant | Title of Class |
| |
| Entergy Texas, Inc. | Common Stock, no par value |
Indicate by check mark if the registrants are well-known seasoned issuers, as defined in Rule 405 of the Securities Act.
| | | | | | | | | | | |
| | Yes | | No |
| | | |
| Entergy Corporation | ü | | |
| Entergy Arkansas, LLC | ü | | |
| Entergy Louisiana, LLC | ü | | |
| Entergy Mississippi, LLC | | | ü |
| Entergy New Orleans, LLC | | | ü |
| Entergy Texas, Inc. | ü | | |
| System Energy Resources, Inc. | | | ü |
Indicate by check mark if the registrants are not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
| | | | | | | | | | | |
| | Yes | | No |
| | | |
| Entergy Corporation | | | ü |
| Entergy Arkansas, LLC | | | ü |
| Entergy Louisiana, LLC | | | ü |
| Entergy Mississippi, LLC | | | ü |
| Entergy New Orleans, LLC | | | ü |
| Entergy Texas, Inc. | | | ü |
| System Energy Resources, Inc. | | | ü |
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 every Interactive Data File required to be submitted 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 registrants were required to submit such files). Yes þ No o
Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Large accelerated filer | | Accelerated filer | | Non-accelerated filer | | Smaller
reporting
company | | Emerging
growth
company |
| Entergy Corporation | ü | | | | | | | | |
| Entergy Arkansas, LLC | | | | | ü | | | | |
| Entergy Louisiana, LLC | | | | | ü | | | | |
| Entergy Mississippi, LLC | | | | | ü | | | | |
| Entergy New Orleans, LLC | | | | | ü | | | | |
| Entergy Texas, Inc. | | | | | ü | | | | |
| System Energy Resources, Inc. | | | | | ü | | | | |
If an emerging growth company, indicate by check mark if the registrants have elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
| | | | | | | | | | | |
| Entergy Corporation | ü | | |
| Entergy Arkansas, LLC | | | |
| Entergy Louisiana, LLC | | | |
| Entergy Mississippi, LLC | | | |
| Entergy New Orleans, LLC | | | |
| Entergy Texas, Inc. | | | |
| System Energy Resources, Inc. | | | |
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrants included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrants’ executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Act).
Yes ☐ No þ
The aggregate market value of Entergy Corporation Common Stock, $0.01 Par Value, held by non-affiliates at June 30, 2024 was $22.9 billion. Entergy Corporation is the sole holder of the common stock of Entergy Texas, Inc. and System Energy Resources, Inc. Entergy Corporation is the direct and indirect holder of the common membership interests of Entergy Utility Holding Company, LLC, which is the sole holder of the common membership interests of Entergy Arkansas, LLC, Entergy Louisiana, LLC, Entergy Mississippi, LLC, and Entergy New Orleans, LLC.
| | | | | | | | |
| Common Stock Outstanding | | Outstanding at January 31, 2025 |
| Entergy Corporation | ($0.01 par value) | 430,412,580 |
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement of Entergy Corporation to be filed in connection with its Annual Meeting of Stockholders, to be held May 2, 2025, are incorporated by reference into Part III hereof.
System Energy Resources, Inc. meets the requirements set forth in General Instruction I(1) of Form 10-K and is therefore filing this Form 10-K with reduced disclosure as allowed in General Instruction I(2). System Energy Resources, Inc. is reducing its disclosure by not including Part III, Items 10 through 13 in its Form 10-K.
(Page left blank intentionally)
TABLE OF CONTENTS | | | | | | | | |
| | SEC Form 10-K Reference Number | Page Number |
| | | |
| | |
| | |
| Entergy Corporation and Subsidiaries | | |
| Part II. Item 7. | |
| | |
| | |
| Part II. Item 8. | |
| Part II. Item 8. | |
| Part II. Item 8. | |
| Part II. Item 8. | |
| Part II. Item 8. | |
| Notes to Financial Statements | Part II. Item 8. | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Entergy’s Business | Part I. Item 1. | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Part I. Item 1A. | |
| Part I. Item 1B. | |
| | | | | | | | |
| Part I. Item 1C. | |
| Entergy Arkansas, LLC and Subsidiaries | | |
| Part II. Item 7. | |
| | |
| Part II. Item 8. | |
| Part II. Item 8. | |
| Part II. Item 8. | |
| Part II. Item 8. | |
| Entergy Louisiana, LLC and Subsidiaries | | |
| Part II. Item 7. | |
| | |
| Part II. Item 8. | |
| Part II. Item 8. | |
| Part II. Item 8. | |
| Part II. Item 8. | |
| Part II. Item 8. | |
| Entergy Mississippi, LLC and Subsidiaries | | |
| Part II. Item 7. | |
| | |
| Part II. Item 8. | |
| Part II. Item 8. | |
| Part II. Item 8. | |
| Part II. Item 8. | |
| Entergy New Orleans, LLC and Subsidiaries | | |
| Part II. Item 7. | |
| | |
| Part II. Item 8. | |
| Part II. Item 8. | |
| Part II. Item 8. | |
| Part II. Item 8. | |
| Entergy Texas, Inc. and Subsidiaries | | |
| Part II. Item 7. | |
| | |
| Part II. Item 8. | |
| Part II. Item 8. | |
| Part II. Item 8. | |
| Part II. Item 8. | |
| | | | | | | | |
| System Energy Resources, Inc. | | |
| Part II. Item 7. | |
| | |
| Part II. Item 8. | |
| Part II. Item 8. | |
| Part II. Item 8. | |
| Part II. Item 8. | |
| Part I. Item 2. | |
| Part I. Item 3. | |
| Part I. Item 4. | |
| Part I. and Part III. Item 10. | |
| Part II. Item 5. | |
| Part II. Item 6. | |
| Part II. Item 7. | |
| Part II. Item 7A. | |
| Part II. Item 8. | |
| Part II. Item 9. | |
| Part II. Item 9A. | |
| Part II. Item 9A. | |
| Part II. Item 9B. | |
| Part II. Item 9C. | |
| Part III. Item 10. | |
| Part III. Item 11. | |
| Part III. Item 12. | |
| Part III. Item 13. | |
| Part III. Item 14. | |
| Part IV. Item 15. | |
| Part IV. Item 16. | |
| | |
| | |
| | |
| | |
| | |
This combined Form 10-K is separately filed by Entergy Corporation and its six Registrant Subsidiaries: Entergy Arkansas, LLC, Entergy Louisiana, LLC, Entergy Mississippi, LLC, Entergy New Orleans, LLC, Entergy Texas, Inc., and System Energy Resources, Inc. Information contained herein relating to any individual company is filed by such company on its own behalf. Each company makes representations only as to itself and makes no other representations whatsoever as to any other company.
The report should be read in its entirety as it pertains to each respective reporting company. No one section of the report deals with all aspects of the subject matter. Separate Item 7 and 8 sections are provided for each reporting company, except for the Notes to the financial statements. The Notes to the financial statements for all of the reporting companies are combined. All Items other than 7 and 8 are combined for the reporting companies.
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, projections, 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,” “goal,” “commitment,” “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, each registrant undertakes 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 (a) those factors discussed or incorporated by reference in Item 1A. Risk Factors in this report, (b) those factors discussed or incorporated by reference in Management’s Financial Discussion and Analysis in this report, and (c) the following factors (in addition to others described elsewhere in this combined report and in subsequent filings with the SEC):
•resolution of pending and future rate cases and related litigation, formula rate proceedings and related negotiations, including various performance-based rate discussions, Entergy’s utility supply plan, and recovery of fuel and purchased power costs, as well as delays in cost recovery resulting from these proceedings;
•regulatory and operating challenges and uncertainties and economic risks associated with the Utility operating companies’ participation in MISO, including the benefits of continued MISO participation, the effect of current or projected MISO market rules, market design and market and system conditions in the MISO markets, the allocation of MISO system transmission upgrade costs, delays in developing or interconnecting new generation or other resources or other adverse effects arising from the volume of requests in the MISO transmission interconnection queue, which delays or other adverse effects may be exacerbated by significant current and expected load growth, the MISO-wide base rate of return on equity allowed or any MISO-related charges and credits required by the FERC, and the effect of planning decisions that MISO makes with respect to future transmission investments by the Utility operating companies;
•changes in utility regulation, including, with respect to retail and wholesale competition, the ability to recover net utility assets and other potential stranded costs, including those capital investments associated with unrealized customer growth expectations, and the application of more stringent return on equity criteria, transmission reliability requirements, or market power criteria by the FERC or the U.S. Department of Justice;
•changes in the regulation or regulatory oversight of Entergy’s owned or operated nuclear generating facilities, nuclear materials and fuel, and the effects of new or existing safety or environmental concerns regarding nuclear power plants and fuel;
•resolution of pending or future applications, as well as regulatory proceedings and litigation, relating to generation, transmission, or other facilities (including license modifications or other authorizations for nuclear generating facilities) and the effect of public and political opposition on these applications, regulatory proceedings, and litigation, including without limitation opposition to the employment of technologies to capture, transport, and store carbon dioxide from gas plants, land use opposition to new solar facilities and transmission lines, and land use and other environmental opposition to wind turbines;
•the performance of and deliverability of power from Entergy’s generation resources, including the capacity factors at Entergy’s nuclear generating facilities;
FORWARD-LOOKING INFORMATION (Continued)
•increases in costs and capital expenditures that could result from changing regulatory requirements, changing governmental policies, priorities, programs and actions, including as a result of tariffs and other measures, changing economic conditions, and emerging operating and industry issues, such as growth in demand from large data centers, and the risks related to recovery of these costs and capital expenditures from Entergy’s customers (especially in an increasing cost environment);
•the commitment of substantial human and capital resources required for the safe and reliable operation and maintenance of Entergy’s utility system, including 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;
•the prices and availability of fuel and power Entergy must purchase for its Utility customers, particularly given the recent and ongoing significant growth in liquified natural gas exports and the associated significantly increased demand for natural gas and resulting fluctuation in natural gas prices, increasing challenges with respect to natural gas transportation arrangements, 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, emissions allowances, and other energy-related commodities, including as a result of trade-related governmental actions, such as tariffs and other measures, and the effect of those changes on Entergy and its customers;
•changes in environmental laws and regulations, agency positions, or associated litigation, including requirements for reduced emissions of sulfur dioxide, nitrogen oxide, greenhouse gases, mercury, particulate matter and other regulated air emissions, heat and other regulated discharges to water, waste management and disposal, remediation of contaminated sites, wetlands protection and permitting, and reporting, and changes in costs of compliance with environmental laws and regulations, as well as changes to governmental policies incentivizing the development or utilization of alternative sources of generation;
•changes in laws and regulations, agency positions, or associated litigation related to protected species and associated critical habitat designations;
•the effects of changes in federal, state, or local laws and regulations, and other governmental actions or policies, including changes in monetary, fiscal, tax, environmental, trade/tariff, domestic purchase requirements, or energy policies and related laws, regulations, and other governmental actions, including as a result of prolonged litigation over proposed legislation or regulatory actions;
•the effects of full or partial shutdowns of the federal government or delays in obtaining government or regulatory actions or decisions;
•uncertainty regarding the establishment of interim or permanent sites for spent nuclear fuel and nuclear waste storage and disposal and the level of spent fuel and nuclear waste disposal fees charged by the U.S. government or other providers related to such sites;
•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, wildfires, or other weather events and the recovery of costs associated with restoration, including the ability to access funded storm reserves, federal and local cost recovery mechanisms, securitization, and insurance, as well as any related unplanned outages;
•effects of climate change, including the potential for increases in the frequency or severity of extreme weather events, such as hurricanes, heat waves, drought or wildfires, and rising sea levels or coastal land and wetland loss, and Entergy’s ability to effectively prepare for such effects and events, including through accelerated resilience plans and projects, and any challenges in execution thereof and/or in obtaining any necessary regulatory approvals for appropriate scope and timing of such plans and projects now and in the future;
•the risk that as a result of Entergy’s membership in Nuclear Electric Insurance Limited (NEIL), an incident at a NEIL member-insured nuclear generation facility could lead to a significant retrospective assessment;
•the risk that an incident at a nuclear generation facility participating in a secondary financial protection system could lead to a significant retrospective insurance premium;
FORWARD-LOOKING INFORMATION (Continued)
•changes in the quality and availability of water supplies and the related regulation of water use and diversion;
•Entergy’s ability to manage and execute on its capital projects, including any capital projects to serve the growing demand for electricity driven in part by the development of large data centers, and to complete such capital projects timely and within budget, to obtain the anticipated performance or other benefits of such capital projects, and to manage its capital and operation and maintenance costs;
•the effects of supply chain disruptions, including those driven by geopolitical developments or trade-related governmental actions, including tariffs and other measures, on Entergy’s ability to complete its capital projects in a timely and cost-effective manner;
•Entergy’s ability to purchase and sell assets at attractive prices and on other attractive terms;
•the economic climate, and particularly economic conditions in the Utility service area and events and circumstances that could influence economic conditions in those areas, including power prices and inflation, and the risk that anticipated load growth may not materialize;
•changes to or the repeal of federal income tax laws, regulations, and interpretive guidance and policies, including the Inflation Reduction Act of 2022 and the continuing impact of the Tax Cuts and Jobs Act of 2017, and any related intended or unintended consequences on financial results and future cash flows;
•the effects of Entergy’s strategies to reduce tax payments;
•the effect of interest rate volatility and other changes in the financial markets and regulatory requirements for the issuance of securities, particularly as they affect access to and cost of capital and Entergy’s ability to refinance existing securities 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 and the impacts of inflation or a recession on our customers;
•the effects of government investigations, proceedings, or audits;
•changes in technology, including (i) Entergy’s ability to effectively assess, implement, and manage new or emerging technologies, including its ability to maintain and protect personally identifiable information while doing so; (ii) the emergence of artificial intelligence (including machine learning), which may present increased electricity demand, as well as ethical, security, legal, operational, or regulatory challenges; (iii) advances in artificial intelligence (including machine learning) technologies that could reduce the expected electricity demand for these technologies and data centers; (iv) the impact of changes relating to new, developing, or alternative sources of generation such as distributed energy and energy storage, renewable energy, energy efficiency, demand side management, and other measures that reduce load and government policies impacting development or utilization of the foregoing; and (v) competition from other companies offering products and services to Entergy’s customers based on new or emerging technologies or alternative sources of generation;
•Entergy’s ability to effectively formulate and implement plans to increase its carbon-free energy capacity and to reduce its carbon emission rate and aggregate carbon emissions, including its commitment to achieve net-zero carbon emissions by 2050 and the related increasing investment in renewable power generation sources and carbon capture and storage, the potential impact on its business and financial condition of attempting to achieve such objectives, and Entergy’s ability to achieve its climate goals and commitments due to expected load growth;
•the effects, including increased security costs, of threatened or actual terrorism, cyber attacks or data security breaches, physical attacks on or other interference with facilities or infrastructure, natural or man-made electromagnetic pulses that affect transmission or generation infrastructure, accidents, and war or a catastrophic event such as a nuclear accident or a natural gas pipeline explosion;
•impacts of perceived or actual cybersecurity or data security threats or events on Entergy and its subsidiaries, its vendors, suppliers or other third parties interconnected through the grid, which could, among other things, result in disruptions to its operations, including but not limited to, the loss of operational control, temporary or extended outages, or loss of data, including but not limited to, sensitive customer, employee, financial or operations data;
FORWARD-LOOKING INFORMATION (Concluded)
•the effects of a catastrophe, pandemic (or other health-related event), or a global or geopolitical event such as the military activities between Russia and Ukraine, or Israel and Hamas, including resultant economic and societal disruptions; fuel procurement disruptions; volatility in the capital markets (and any related increased cost of capital or any inability to access the capital markets or draw on available bank credit facilities); reduced demand for electricity, particularly from commercial and industrial customers; increased or unrecoverable costs; supply chain, vendor, and contractor disruptions, including as a result of trade-related sanctions; delays in completion of capital or other construction projects, maintenance, and other operations activities, including prolonged or delayed outages; impacts to Entergy’s workforce availability, health, or safety; increased cybersecurity risks as a result of many employees telecommuting and/or working partially remotely; increased late or uncollectible customer payments; regulatory delays; executive orders affecting, or increased regulation of, Entergy’s business; changes in credit ratings or outlooks as a result of any of the foregoing; or other adverse impacts on Entergy’s ability to execute on its business strategies and initiatives or, more generally, on Entergy’s results of operations, financial condition, and liquidity;
•Entergy’s ability to attract and retain talented management, directors, and employees with specialized skills, institutional knowledge, capacity, and abilities, including the ability to effectively execute on Entergy’s growth strategy;
•Entergy’s ability to attract, retain, and manage an appropriately qualified and sufficiently staffed workforce;
•changes in accounting standards and corporate governance best practices;
•declines in the market prices of marketable securities and changes in interest rates and resulting pension and retiree welfare plan funding requirements and the effects on benefits costs for Entergy’s defined benefit pension and other postretirement benefits plans;
•future wage and employee benefits 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, requirements for, or cost to decommission Entergy’s nuclear plant sites and the implementation of decommissioning of such sites following shutdown;
•the effectiveness of Entergy’s risk management policies and procedures and the ability and willingness of its counterparties, including lending, hedging, credit support, and major customer counterparties, to satisfy their financial and performance commitments;
•reductions in the demand for electricity to power hyperscale data centers and the potential for stranded assets;
•concentration of business with a small number of customers in an industry based on emerging technologies, including artificial intelligence and machine learning; and
•Entergy and its subsidiaries’ ability to successfully execute on their business strategies, including their ability to complete strategic transactions that they may undertake, and their ability to meet the rapidly growing demand for electricity, including from hyperscale data center and other large customers, and to manage the impacts of growth in demand for electricity on customers and Entergy’s business.
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 |
| ASU | Accounting Standards Update issued by the FASB |
| Board | Board of Directors of Entergy Corporation |
| Cajun | Cajun Electric Power Cooperative, Inc. |
| capacity factor | Actual plant output divided by maximum potential plant output for the period |
| City Council | Council of the City of New Orleans, Louisiana |
| COVID-19 | The novel coronavirus disease declared a pandemic by the World Health Organization and the Centers for Disease Control and Prevention in March 2020 |
| D.C. Circuit | U.S. Court of Appeals for the District of Columbia Circuit |
| DOE | United States Department of Energy |
| Entergy | Entergy Corporation and its direct and indirect subsidiaries |
| Entergy Corporation | Entergy Corporation, a Delaware corporation |
| Entergy Gulf States, Inc. | Predecessor company for financial reporting purposes to Entergy Gulf States Louisiana that included the assets and business operations of both Entergy Gulf States Louisiana and Entergy Texas |
| Entergy Gulf States Louisiana | Entergy Gulf States Louisiana, L.L.C., a Louisiana limited liability company formally created as part of the jurisdictional separation of Entergy Gulf States, Inc. and the successor company to Entergy Gulf States, Inc. for financial reporting purposes. The term is also used to refer to the Louisiana jurisdictional business of Entergy Gulf States, Inc., as the context requires. Effective October 1, 2015, the business of Entergy Gulf States Louisiana was combined with Entergy Louisiana. |
| Entergy Louisiana | Entergy Louisiana, LLC, a Texas limited liability company formally created as part of the combination of Entergy Gulf States Louisiana and the company formerly known as Entergy Louisiana, LLC (Old Entergy Louisiana) into a single public utility company and the successor to Old Entergy Louisiana for financial reporting purposes |
| Entergy Texas | Entergy Texas, Inc., a Texas corporation formally created as part of the jurisdictional separation of Entergy Gulf States, Inc. The term is also used to refer to the Texas jurisdictional business of Entergy Gulf States, Inc., as the context requires. |
| Entergy Wholesale Commodities | Prior to January 1, 2023, one of Entergy’s reportable business segments consisting of non-utility business activities primarily comprised of the ownership, operation, and decommissioning of nuclear power plants, the ownership of interests in non-nuclear power plants, and the sale of the electric power produced by its operating power plants to wholesale customers |
| EPA | United States Environmental Protection Agency |
| ERCOT | Electric Reliability Council of Texas |
| FASB | Financial Accounting Standards Board |
| FERC | Federal Energy Regulatory Commission |
| FitzPatrick | James A. FitzPatrick Nuclear Power Plant (nuclear), previously owned as part of Entergy’s non-utility business, which was sold in March 2017 |
| GAAP | Generally Accepted Accounting Principles |
| Grand Gulf | Unit No. 1 of Grand Gulf Nuclear Station (nuclear), 90% owned or leased by System Energy |
DEFINITIONS (Continued) | | | | | |
| Abbreviation or Acronym | Term |
| |
| GWh | Gigawatt-hour(s), which equals one million kilowatt-hours |
| HLBV | Hypothetical liquidation at book value |
| Independence | Independence Steam Electric Station (coal), owned 16% by Entergy Arkansas, 25% by Entergy Mississippi, and 7% by Entergy Power, LLC |
| Indian Point 2 | Unit 2 of Indian Point Energy Center (nuclear), previously owned as part of Entergy’s non-utility business, which ceased power production in April 2020 and was sold in May 2021 |
| Indian Point 3 | Unit 3 of Indian Point Energy Center (nuclear), previously owned as part of Entergy’s non-utility business, which ceased power production in April 2021 and was sold in May 2021 |
| IRS | Internal Revenue Service |
| ISO | Independent System Operator |
| kV | Kilovolt |
| kW | Kilowatt, which equals one thousand watts |
| kWh | Kilowatt-hour(s) |
| LDEQ | Louisiana Department of Environmental Quality |
| LPSC | Louisiana Public Service Commission |
| LURC | Louisiana Utilities Restoration Corporation |
| Mcf | 1,000 cubic feet of gas |
| MISO | Midcontinent Independent System Operator, Inc., a regional transmission organization |
| MMBtu | One million British Thermal Units |
| MPSC | Mississippi Public Service Commission |
| MW | Megawatt(s), which equals one thousand kilowatts |
| MWh | Megawatt-hour(s) |
| Nelson Unit 6 | Unit No. 6 (coal) of the Nelson Steam Electric Generating Station, 70% of which is co-owned by Entergy Louisiana (57.5%) and Entergy Texas (42.5%) and 10.9% of which is owned by EAM Nelson Holding, LLC |
| Net debt to net capital ratio | Gross debt less cash and cash equivalents divided by total capitalization less cash and cash equivalents, which is a non-GAAP measure |
| NRC | Nuclear Regulatory Commission |
| Palisades | Palisades Nuclear Plant (nuclear), previously owned as part of Entergy’s non-utility business, which ceased power production in May 2022 and was sold in June 2022 |
| Parent & Other | The portions of Entergy not included in the Utility segment, primarily consisting of the activities of the parent company, Entergy Corporation, and other business activity, including Entergy’s non-utility operations business which owns interests in non-nuclear power plants that sell the electric power produced by those plants to wholesale customers and also provides decommissioning services to nuclear power plants owned by non-affiliated entities in the United States |
| Pilgrim | Pilgrim Nuclear Power Station (nuclear), previously owned as part of Entergy’s non-utility business, which ceased power production in May 2019 and was sold in August 2019 |
| PPA | Purchased power agreement or power purchase agreement |
| PRP | Potentially responsible party (a person or entity that may be responsible for remediation of environmental contamination) |
| PUCT | Public Utility Commission of Texas |
DEFINITIONS (Concluded)
| | | | | |
| Abbreviation or Acronym | Term |
| |
| Registrant Subsidiaries | Entergy Arkansas, LLC, Entergy Louisiana, LLC, Entergy Mississippi, LLC, Entergy New Orleans, LLC, Entergy Texas, Inc., and System Energy Resources, Inc. |
| River Bend | River Bend Station (nuclear), owned by Entergy Louisiana |
| RTO | Regional transmission organization |
| SEC | Securities and Exchange Commission |
| System Agreement | Agreement, effective January 1, 1983, as modified, among the Utility operating companies relating to the sharing of generating capacity and other power resources. The agreement terminated effective August 2016. |
| System Energy | System Energy Resources, Inc. |
| Unit Power Sales Agreement | Agreement, dated as of June 10, 1982, as amended and approved by the FERC, among Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, relating to the sale of capacity and energy from System Energy’s share of Grand Gulf |
| Utility | Entergy’s reportable segment that generates, transmits, distributes, and sells electric power, with a small amount of natural gas distribution in portions of Louisiana |
| Utility operating companies | Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas |
| Vermont Yankee | Vermont Yankee Nuclear Power Station (nuclear), previously owned as part of Entergy’s non-utility business, which ceased power production in December 2014 and was disposed of in January 2019 |
| Waterford 3 | Unit No. 3 (nuclear) of the Waterford Steam Electric Station, owned by Entergy Louisiana |
| weather-adjusted usage | Electric usage excluding the effects of deviations from normal weather |
| White Bluff | White Bluff Steam Electric Generating Station, 57% owned by Entergy Arkansas |
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS
Entergy operates primarily through a single reportable segment, Utility. The Utility segment includes the generation, transmission, distribution, and sale of electric power in portions of Arkansas, Mississippi, Texas, and Louisiana, including the City of New Orleans; and operation of a small natural gas distribution business in portions of Louisiana. See the “Held for Sale - Natural Gas Distribution Businesses” section in Note 14 to the financial statements for discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses. Entergy completed its multi-year strategy to exit the merchant nuclear power business in 2022. See Note 13 to the financial statements for discussion of and financial information regarding Entergy’s business segments.
Results of Operations
2024 Compared to 2023
Following are income statement variances for Utility, Parent & Other, and Entergy comparing 2024 to 2023 showing how much the line item increased or (decreased) in comparison to the prior period.
| | | | | | | | | | | | | | | | | |
| | Utility | | Parent & Other (a) | | Entergy |
| | (In Thousands) |
| 2023 Net Income (Loss) Attributable to Entergy Corporation | $2,507,127 | | | ($150,591) | | | $2,356,536 | |
| | | | | |
| Operating revenues | (217,142) | | | (50,617) | | | (267,759) | |
| Fuel, fuel-related expenses, and gas purchased for resale | (541,322) | | | (3,384) | | | (544,706) | |
| Purchased power | (97,538) | | | (31,262) | | | (128,800) | |
| Other regulatory charges (credits) - net | 132,336 | | | — | | | 132,336 | |
| Other operation and maintenance | 13,108 | | | (13,084) | | | 24 | |
| Asset write-offs, impairments, and related charges (credits) | 51,813 | | | 12,642 | | | 64,455 | |
| Taxes other than income taxes | (2,107) | | | (519) | | | (2,626) | |
| Depreciation and amortization | 168,117 | | | 48 | | | 168,165 | |
| Other income (deductions) | 244,652 | | | (362,917) | | | (118,265) | |
| Interest expense | 83,012 | | | 61,402 | | | 144,414 | |
| Other expenses | 10,182 | | | 96 | | | 10,278 | |
| Income taxes | 890,512 | | | 181,050 | | | 1,071,562 | |
| Preferred dividend requirements of subsidiaries and noncontrolling interests | (180) | | | — | | | (180) | |
| 2024 Net Income (Loss) Attributable to Entergy Corporation | $1,826,704 | | | ($771,114) | | | $1,055,590 | |
(a)Parent & Other includes eliminations, which are primarily intersegment activity.
Results of operations for 2024 include: (1) a $320 million ($253 million net-of-tax) settlement charge, reflected in Parent & Other above, recognized as a result of a group annuity contract purchased in 2024 to settle certain pension liabilities; (2) expenses of $151 million ($112 million net-of-tax), recorded at Utility in second quarter 2024, primarily consisting of regulatory charges to reflect the effects of an agreement in principle between Entergy Louisiana and the LPSC staff and the intervenors in July 2024 to renew Entergy Louisiana’s formula rate
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
plan and resolve a number of other retail dockets and matters, including all formula rate plan test years prior to 2023; (3) a $132 million ($97 million net-of-tax) charge, recorded at Utility, to reflect the write-off of a previously recorded regulatory asset as a result of an adverse decision in the Entergy Arkansas opportunity sales proceeding in March 2024; and (4) a $78 million ($57 million net-of-tax) regulatory charge, recorded at Utility in first quarter 2024, primarily to reflect a settlement in principle between Entergy New Orleans and the City Council in April 2024 for additional sharing with customers of income tax benefits from the resolution of the 2016-2018 IRS audit. See Note 11 to the financial statements for discussion of the group annuity contract and settlement charge. See Note 2 to the financial statements for discussion of the Entergy Louisiana agreement in principle and the subsequently filed global stipulated settlement agreement. See Note 2 to the financial statements for discussion of the Entergy Arkansas opportunity sales proceeding. See Note 3 to the financial statements for discussion of the Entergy New Orleans April 2024 settlement in principle and discussion of the resolution of the 2016-2018 IRS audit.
Results of operations for 2023 include: (1) a $568 million reduction, recorded at Utility, and a $275 million reduction, recorded at Parent & Other, in income tax expense as a result of the resolution of the 2016-2018 IRS audit, partially offset by $98 million ($72 million net-of-tax) of regulatory charges, recorded at Utility, to reflect credits expected to be provided to customers by Entergy Louisiana and Entergy New Orleans as a result of the resolution of the 2016-2018 IRS audit; (2) the reversal of a $106 million regulatory liability, primarily associated with the Hurricane Isaac securitization, recognized in 2017 as a result of the Tax Cuts and Jobs Act, recorded at Utility, as part of the settlement of Entergy Louisiana’s test year 2017 formula rate plan filing; (3) a $129 million reduction in income tax expense as a result of Entergy Louisiana’s storm cost securitization in March 2023, partially offset by a $103 million ($76 million net-of-tax) regulatory charge, recorded at Utility, to reflect Entergy Louisiana’s obligation to provide credits to its customers as described in an LPSC ancillary order issued as part of the securitization regulatory proceeding; and (4) write-offs of $78 million ($59 million net-of-tax), recorded at Utility, as a result of Entergy Arkansas’s approved motion to forgo recovery of identified costs resulting from the 2013 ANO stator incident. See Note 3 to the financial statements for discussion of the resolution of the 2016-2018 IRS audit and discussion of the Tax Cuts and Jobs Act. See Note 2 to the financial statements for further discussion of the Entergy Louisiana formula rate plan global settlement. See Notes 2 and 3 to the financial statements for further discussion of the Entergy Louisiana March 2023 storm cost securitization. See Note 8 to the financial statements for further discussion of the ANO stator incident and the approved motion to forgo recovery.
Operating Revenues
Utility
Following is an analysis of the change in operating revenues comparing 2024 to 2023:
| | | | | |
| Amount |
| (In Millions) |
| 2023 operating revenues | $12,023 | |
| Fuel, rider, and other revenues that do not significantly affect net income | (393) | |
| Retail one-time bill credit | (92) | |
| Storm restoration carrying costs | (36) | |
| Volume/weather | 87 | |
| Retail electric price | 217 | |
| 2024 operating revenues | $11,806 | |
The Utility operating companies’ results include revenues from rate mechanisms designed to recover fuel, purchased power, and other costs such that the revenues and expenses associated with these items generally offset
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
and do not affect net income. “Fuel, rider, and other revenues that do not significantly affect net income” includes the revenue variance associated with these items.
The retail one-time bill credit represents the disbursement of settlement proceeds in the form of a one-time bill credit provided to Entergy Arkansas’s retail customers during the August 2024 billing cycle through the Grand Gulf credit rider as a result of the System Energy settlement with the APSC. There is no effect on net income because Entergy previously recorded a regulatory liability at the time of the global black box settlement reached between System Energy and the MPSC in June 2022. See Note 2 to the financial statements for discussion of the System Energy settlements with the APSC and the MPSC and discussion of Entergy Arkansas’s Grand Gulf credit rider.
Storm restoration carrying costs, representing the equity component of storm restoration carrying costs, includes $31 million recognized by Entergy Louisiana as part of its March 2023 storm cost securitization and $5 million recognized by Entergy New Orleans as part of the City Council’s approval of the Entergy New Orleans storm cost certification report in December 2023. See Note 2 to the financial statements for discussion of the storm cost securitizations.
The volume/weather variance is primarily due to an increase in weather-adjusted residential and commercial usage, partially offset by the effect of less favorable weather on residential and commercial sales. The increase in weather-adjusted residential usage is the result of higher fixed charges, partially offset by lower volumetric rates, applied to lower usage. Adding to this was an increase in industrial usage primarily due to an increase in demand from large industrial customers, primarily in the petroleum refining and chlor-alkali industries and from new customers in the technology industry.
The retail electric price variance is primarily due to:
•an increase in Entergy Arkansas’s formula rate plan rates effective January 2024;
•increases in Entergy Louisiana’s formula rate plan revenues, including increases in the distribution and transmission recovery mechanisms, effective September 2023 and September 2024;
•increases in Entergy Mississippi’s formula rate plan rates effective April 2024 and July 2024, including the implementation of the interim facilities rate adjustment effective over six months beginning in July 2024;
•increases in Entergy New Orleans’s formula rate plan rates effective September 2023 and September 2024; and
•an increase in Entergy Texas’s base rates effective June 2023 and the implementation of the distribution cost recovery factor rider effective with the first billing cycle in October 2024, partially offset by the implementation of the generation cost recovery relate-back rider for the Hardin County Peaking Facility effective over three months beginning in May 2023.
See Note 2 to the financial statements for further discussion of the regulatory proceedings discussed above.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Total electric energy sales for Utility for the years ended December 31, 2024 and 2023 are as follows:
| | | | | | | | | | | | | | | | | |
| 2024 | | 2023 | | % Change |
| (GWh) | | |
| Residential | 36,039 | | | 36,372 | | | (1) | |
| Commercial | 28,251 | | | 28,221 | | | — | |
| Industrial | 57,081 | | | 52,807 | | | 8 | |
| Governmental | 2,480 | | | 2,458 | | | 1 | |
| Total retail | 123,851 | | | 119,858 | | | 3 | |
| Sales for resale | 14,010 | | | 15,189 | | | (8) | |
| Total | 137,861 | | | 135,047 | | | 2 | |
See Note 19 to the financial statements for additional discussion of operating revenues.
Other Income Statement Items
Utility
Other operation and maintenance expenses increased from $2,838 million for 2023 to $2,851 million for 2024 primarily due to:
•an increase of $38 million in compensation and benefits costs primarily due to higher healthcare claims activity, including lower prescription drug rebates in 2024 as compared to 2023, and higher incentive-based accruals in 2024 as compared to 2023;
•an increase of $19 million in energy efficiency expenses primarily due to the timing of recovery from customers;
•an increase of $15 million in transmission costs allocated by MISO. See Note 2 to the financial statements for discussion of the recovery of these costs;
•the effects of recording a final judgment in first quarter 2023 to resolve claims in the ANO damages case against the DOE related to spent nuclear fuel storage costs. The damages awarded included the reimbursement of approximately $10 million of spent nuclear fuel storage costs previously recorded as other operation and maintenance expenses. See Note 8 to the financial statements for discussion of the spent nuclear fuel litigation;
•an increase of $10 million in loss provisions;
•an increase of $8 million in storm damage provisions;
•an increase of $7 million in bad debt expense; and
•a gain of $7 million on the partial sale of a service center at Entergy Texas in April 2023 as part of an eminent domain proceeding.
The increase was partially offset by:
•a decrease of $54 million in power delivery expenses primarily due to lower vegetation maintenance costs;
•a decrease of $15 million in nuclear generation expenses primarily due to a lower scope of work performed in 2024 as compared to 2023 and lower nuclear labor costs;
•a decrease of $12 million in non-nuclear generation expenses primarily due to a lower scope of work, including during plant outages, performed in 2024 as compared to 2023;
•a decrease of $10 million in information technology costs primarily due to enhancements made in 2023 to certain information technology systems; and
•a decrease of $9 million in customer service center support costs primarily due to lower contract costs.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Asset write-offs, impairments, and related charges (credits) includes:
•a $132 million charge to reflect the write-off, at Entergy Arkansas, of a previously recorded regulatory asset as a result of an adverse decision in the Entergy Arkansas opportunity sales proceeding in March 2024. See Note 2 to the financial statements for discussion of the Entergy Arkansas opportunity sales proceeding; and
•the effects of Entergy Arkansas forgoing recovery of identified costs resulting from the 2013 ANO stator incident. In third quarter 2023, Entergy Arkansas recorded write-offs of its regulatory asset for deferred fuel of $68.9 million and the undepreciated balance of $9.5 million in capital costs related to the ANO stator incident. See Note 8 to the financial statements for further discussion of the ANO stator incident and the approved motion to forgo recovery.
Depreciation and amortization expenses increased primarily due to:
•additions to plant in service;
•a reduction in depreciation expense of $41 million, recorded in third quarter 2023 at System Energy, representing the cumulative difference in depreciation expense resulting from the depreciation rates used from March 2022 through June 2023 and the depreciation rates included in the depreciation amendment proceeding settlement filing approved by the FERC in August 2023;
•the recognition of $28 million in depreciation expense in 2024 at Entergy Texas for the 2022 base rate case relate back period, effective over six months beginning January 2024. The recognition of depreciation expense for the relate back period was effective over the same period as collections from the relate back surcharge rider and results in no effect on net income. See Note 2 to the financial statements for discussion of the 2022 base rate case at Entergy Texas; and
•an increase in nuclear depreciation rates at Entergy Louisiana effective September 2024 in accordance with the global stipulated settlement agreement approved by the LPSC in August 2024. See Note 2 to the financial statements for discussion of the global stipulated settlement agreement.
The increase was partially offset by a decrease in depreciation rates at System Energy effective June 2023. See Note 2 to the financial statements for discussion of the Unit Power Sales Agreement depreciation amendment proceeding.
Other regulatory charges (credits) - net includes:
•the reversal in third quarter 2024 of a $92 million regulatory liability recognized for Entergy Arkansas’s obligation to return to customers the refund from the System Energy settlement with the APSC. The reversal of the regulatory liability offsets a reduction in gross revenues from the retail one-time bill credits provided to customers in the August 2024 billing cycle through the Grand Gulf credit rider. See Note 2 to the financial statements for discussion of the System Energy settlement with the APSC and discussion of Entergy Arkansas’s Grand Gulf credit rider;
•a regulatory credit of $16 million, recorded by Entergy Arkansas in fourth quarter 2024, to reflect the amount of the 2023 historical year netting adjustment included in the 2024 formula rate plan filing that it expects to collect from its customers during the 2025 rate effective period. See Note 2 to the financial statements for discussion of the Entergy Arkansas 2024 formula rate plan filing;
•a regulatory charge of $103 million, recorded by Entergy Louisiana in first quarter 2023, to reflect its obligation to provide credits to its customers as described in an LPSC ancillary order issued in the Hurricane Ida securitization regulatory proceeding. See Note 2 to the financial statements for discussion of the Entergy Louisiana March 2023 storm cost securitization;
•a regulatory charge of $38 million, recorded by Entergy Louisiana in fourth quarter 2023, to reflect credits expected to be provided to customers as a result of the resolution of the 2016-2018 IRS audit. See Note 3 to the financial statements for discussion of the resolution of the 2016-2018 IRS audit;
•regulatory charges of $150 million, recorded by Entergy Louisiana in second quarter 2024, to reflect the effects of an agreement in principle between Entergy Louisiana and the LPSC staff and the intervenors in
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
July 2024 to renew Entergy Louisiana’s formula rate plan and resolve a number of other retail dockets and matters, including all formula rate plan test years prior to 2023. See Note 2 to the financial statements for discussion of the Entergy Louisiana agreement in principle and the subsequently filed global stipulated settlement agreement;
•a regulatory charge of $60 million, recorded by Entergy New Orleans in fourth quarter 2023, to reflect credits expected to be provided to customers as a result of the resolution of the 2016-2018 IRS audit. See Note 3 to the financial statements for discussion of the resolution of the 2016-2018 IRS audit;
•a regulatory charge of $78 million, recorded by Entergy New Orleans in first quarter 2024, primarily to reflect a settlement in principle between Entergy New Orleans and the City Council in April 2024 for additional sharing with customers of income tax benefits from the resolution of the 2016-2018 IRS audit. See Note 3 to the financial statements for discussion of the April 2024 settlement in principle and discussion of the resolution of the 2016-2018 IRS audit; and
•the reversal in third quarter 2023 of $22 million of regulatory liabilities to reflect the recognition of certain receipts by Entergy Texas under affiliated PPAs that have been resolved. See Note 2 to the financial statements for discussion of Entergy Texas’s 2022 base rate case.
In addition, Entergy records a regulatory charge or credit for the difference between asset retirement obligation-related expenses and nuclear decommissioning trust earnings plus asset retirement obligation-related costs collected in revenue.
Other income increased primarily due to:
•changes in decommissioning trust fund activity, including portfolio rebalancing of decommissioning trust funds in 2024;
•a decrease of $56 million in non-service pension costs primarily as a result of pension settlement charges recorded in 2023 and a reduction in 2024 in the amortization of deferred pension losses as a result of an amendment to a qualified pension plan spinning-off predominantly inactive participants into a new qualified plan, extending the amortization period for deferred losses. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” below and Note 11 to the financial statements for further discussion of pension and other postretirement benefits costs;
•an increase in the allowance for equity funds used during construction due to higher construction work in progress in 2024, including the Orange County Advanced Power Station project at Entergy Texas;
•a $15 million charge, recorded by Entergy Louisiana in first quarter 2023, for the LURC’s 1% beneficial interest in the storm trust II established as part of the March 2023 storm cost securitization; and
•an increase of $14 million in intercompany dividend income from affiliated preferred membership interests related to storm cost securitizations. The intercompany dividend income on the affiliate preferred membership interests is eliminated for consolidation purposes and has no effect on net income since the investment is in another Entergy subsidiary.
See Note 2 to the financial statements for discussion of the Entergy Louisiana storm cost securitizations.
Interest expense increased primarily due to:
•the issuance by Entergy Arkansas of $300 million of 5.30% Series mortgage bonds in August 2023;
•the issuances by Entergy Arkansas of $400 million of 5.75% Series mortgage bonds and $400 million of 5.45% Series mortgage bonds, each in May 2024;
•the issuances by Entergy Louisiana of $500 million of 5.35% Series mortgage bonds and $700 million of 5.70% Series mortgage bonds, each in March 2024;
•the issuance by Entergy Louisiana of $700 million of 5.15% Series mortgage bonds in August 2024;
•the issuance by Entergy Mississippi of $300 million of 5.85% Series mortgage bonds in May 2024;
•the issuance by Entergy Texas of $350 million of 5.80% Series mortgage bonds in August 2023; and
•the issuance by Entergy Texas of $350 million of 5.55% Series mortgage bonds in August 2024.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
The increase was partially offset by:
•the repayment by Entergy Arkansas of $375 million of 3.70% Series mortgage bonds in June 2024;
•the repayment by Entergy Louisiana of $325 million of 4.05% Series mortgage bonds in August 2023;
•the repayment by Entergy Louisiana of $300 million of 5.59% Series mortgage bonds in December 2023; and
•the repayment by Entergy Louisiana of $400 million of 5.40% Series mortgage bonds in April 2024.
See Note 5 to the financial statements for a discussion of long-term debt.
Parent and Other
Asset write-offs, impairments, and related charges (credits) includes:
•the effects of recording a favorable final judgment of $20 million in fourth quarter 2024 to resolve claims in the Northstar Vermont Yankee, LLC (previously Entergy Nuclear Vermont Yankee) final round Vermont Yankee damages case against the DOE;
•the effects of recording a favorable final judgment of $7 million in fourth quarter 2024 to resolve claims in the Holtec Palisades, LLC (previously Entergy Nuclear Palisades) final round Palisades damages case against the DOE; and
•the effects of recording a favorable final judgment of $40 million in third quarter 2023 to resolve claims in the Indian Point 2 fourth round and Indian Point 3 third round combined damages case against the DOE.
See Note 8 to the financial statements for discussion of the spent nuclear fuel litigation.
Other income (deductions) decreased primarily due to:
•a $320 million ($253 million net-of-tax) non-cash settlement charge recognized as a result of a group annuity contract purchased in 2024 to settle certain pension liabilities. See Note 11 to the financial statements for discussion of the group annuity contract and settlement charge;
•lower non-service pension income. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” below and Note 11 to the financial statements for further discussion of pension and other postretirement benefits costs; and
•an increase of $14 million in the amount of the elimination for consolidation purposes of intercompany dividend income from affiliated preferred membership interest, as discussed above.
Interest expense increased primarily due to the issuance of $1.2 billion of junior subordinated debentures in May 2024 and higher commercial paper balances. See Note 4 to the financial statements for discussion of Entergy’s commercial paper program.
Income Taxes
The effective income tax rates were 26.4% for 2024 and (41.3%) for 2023. See Note 3 to the financial statements for a reconciliation of the federal statutory rate of 21% to the effective income tax rates and for additional discussion regarding income taxes.
2023 Compared to 2022
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Results of Operations” in Item 7 of Entergy’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of results of operations for 2023 compared to 2022.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Income Tax Legislation and Regulation
The Inflation Reduction Act of 2022 (IRA), signed into law on August 16, 2022, significantly expanded federal tax incentives for clean energy production, including the extension of production tax credits to solar projects and certain qualified nuclear power facilities. Additionally, the IRA enacted a 1% excise tax on the buyback of public company stock and a new corporate alternative minimum tax (CAMT). Effective for tax years beginning after December 31, 2022, the CAMT imposes a 15% tax on the Adjusted Financial Statement Income (AFSI) on each corporation in a group of corporations that averages greater than $1 billion in AFSI over a three-year period. Taxpayers subject to the CAMT regime must pay the greater of 15% of AFSI or their regular federal tax liability. In September 2024 the IRS issued proposed regulations regarding the application of the CAMT. Entergy and the Registrant Subsidiaries are closely monitoring any potential impact associated with the expansion of federal tax incentives, the 1% excise tax, and CAMT. Based on current IRS guidance and internal forecasts, Entergy and the Registrant Subsidiaries may be subject to the CAMT beginning in the next two to four years. The U.S. Treasury is expected to issue further guidance that will clarify how the tax credit provisions and CAMT provisions will be interpreted and applied. This guidance will determine the amount of tax credits and incremental cash tax payments Entergy expects in the future as a result of the legislation. Prior to receiving this guidance, Entergy cannot adequately assess the expected future effects on its results of operations, financial position, and cash flows.
In March and April of 2024 the IRS issued final regulations related to applicable tax credit transferability and direct pay provisions of the IRA. In June 2024 the IRS issued final regulations related to the prevailing wage and apprenticeship requirements under the IRA. In December 2024 the IRS issued final regulations related to technology neutral production tax credits and investment tax credits. Entergy and the Registrant Subsidiaries are closely monitoring any potential effects associated with such federal tax incentives to assess the expected future effects on their results of operations, cash flows, and financial condition. Entergy Arkansas has accrued approximately $5 million of solar production tax credits associated with the Walnut Bend Solar facility, the Driver Solar facility, and the West Memphis Solar facility in 2024. As the value of such credits is expected to be provided to customers, a regulatory liability has been recorded for all credits recognized in 2024.
In April 2023 the IRS issued Revenue Procedure 2023-15, which provides a safe harbor method of accounting that taxpayers may use to determine whether expenses to repair, maintain, replace, or improve natural gas transmission and distribution property must be capitalized and provides procedures for taxpayers to obtain automatic consent to change their method of accounting. Entergy adopted this new method of income tax accounting beginning with the 2023 federal income tax return utilizing the safe harbor method in accordance with Revenue Procedure 2023-15. The additional temporary deductions taken using the new method resulted in the recognition of deferred tax liabilities of $14.2 million for Entergy, $7.6 million for Entergy Louisiana, and $6.6 million for Entergy New Orleans.
Entergy Arkansas, Entergy Louisiana, and System Energy have the potential to generate zero-emission nuclear power production tax credits for electricity generated by their respective nuclear power facilities. Based on guidance provided by the U.S. Treasury and the IRS, the nuclear production tax credits will be calculated by multiplying the kWh of qualifying electricity by $0.003, with the value of the credits decreasing ratably, or phasing out, once the annual gross receipts from the sale of nuclear power exceed a certain threshold. If certain prevailing wage requirements are satisfied, the calculation of the credit, as described in the preceding sentence, is multiplied by a factor of five. Additional guidance is needed from the U.S. Treasury and/or the IRS to determine how the value of these credits will be calculated for power generated from nuclear facilities of rate-regulated utilities. Due to the uncertainty of value, if any, of credits Entergy Arkansas, Entergy Louisiana, or System Energy may receive, such credits have not been recognized for the nuclear power produced in 2024. Depending on the specifics of the expected additional guidance from the U.S. Treasury and/or the IRS, Entergy Arkansas, Entergy Louisiana, or System Energy may not recognize any production tax credits for their nuclear facilities, or they could recognize a significant amount each year, beginning for 2024. If the IRS does not issue any technical guidance before the due date of Entergy’s 2024 tax return, Entergy Arkansas, Entergy Louisiana, and System Energy will be required to
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
reassess the determination of the availability of such credits based on any other additional information or regulatory requests. If credits are recognized in future periods, the value of such credits is expected to be provided to customers. As such, recognition of nuclear production tax credits is not expected to have a material effect on the results of operations of Entergy, Entergy Arkansas, Entergy Louisiana, or System Energy.
Entergy is not able to predict the effects of any change to or repeal of the above tax legislation, including any federal tax incentives or tax credits, on its or the Registrant Subsidiaries’ results of operations, financial position, and cash flows.
Louisiana Tax Reform
In November 2024, during the Louisiana Third Special Legislative Session of 2024, the Louisiana legislature enacted comprehensive tax reform measures, including the reduction of the corporate state income tax rate to a flat 5.5% from the current highest marginal rate of 7.5%, effective January 1, 2025. Additional enacted measures include the repeal of the Louisiana corporate franchise tax effective January 1, 2026, and an increase in the state sales tax rate to 5%, effective January 1, 2025, until January 1, 2030, when the rate decreases to 4.75%. Additionally, certain digital products and services, such as remotely accessed software and information services, will be subject to sales tax effective January 1, 2025. These products and services will also be taxable at the local level. See Note 3 to the financial statements for further discussion on the 2024 Louisiana tax reform.
Entergy Wholesale Commodities Exit from the Merchant Power Business
Entergy completed its multi-year strategy to exit the merchant nuclear power business in 2022. See Note 13 to the financial statements for discussion of the exit from the merchant nuclear power business.
Shutdown and Sale of Palisades
In July 2018, Entergy entered into a purchase and sale agreement with Holtec International to sell to a Holtec subsidiary 100% of the equity interests in the subsidiary that owns Palisades and the Big Rock Point Site, with a subsequent amendment to the purchase and sale agreement in February 2020. In December 2020, Entergy and Holtec submitted a license transfer application to the NRC requesting approval to transfer the Palisades and Big Rock Point licenses from Entergy to Holtec. In February 2021 several parties filed with the NRC petitions to intervene and requests for hearing challenging the license transfer application. In March 2021, Entergy and Holtec filed answers opposing the petitions to intervene and hearing requests, and the petitioners filed replies. In March 2021 an additional party also filed a petition to intervene and request for hearing. Entergy and Holtec filed an answer to the March 2021 petition in April 2021. The NRC issued an order approving the application in December 2021, subject to the NRC’s authority to condition, revise, or rescind the approval order based on the resolution of four pending requests for hearing. These petitions and requests for hearing remained pending with the NRC at the time of the closing of the Palisades transaction in June 2022. In July 2022 the NRC issued an order granting the Michigan Attorney General’s petition hearing request. The hearing was held in February 2023. A decision from the NRC is pending. See Note 14 to the financial statements for discussion of the sale of the Palisades plant.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Liquidity and Capital Resources
This section discusses Entergy’s capital structure, capital spending plans and other uses of capital, sources of capital, and the cash flow activity presented in the cash flow statement.
Capital Structure
Entergy’s debt to capital ratio is shown in the following table. The increase in the debt to capital ratio is primarily due to the net issuance of long-term debt in 2024.
| | | | | | | | | | | |
| | December 31,
2024 | | December 31,
2023 |
| Debt to capital | 65.3% | | 63.8% |
| Effect of excluding securitization bonds | (0.2%) | | (0.3%) |
| Debt to capital, excluding securitization bonds (non-GAAP) (a) | 65.1% | | 63.5% |
| Effect of subtracting cash | (0.7%) | | (0.1%) |
| Net debt to net capital, excluding securitization bonds (non-GAAP) (a) | 64.4% | | 63.4% |
(a)Calculation excludes the New Orleans and Texas securitization bonds, which are non-recourse to Entergy New Orleans and Entergy Texas, respectively.
As of December 31, 2024, 21.1% of the debt outstanding is at the parent company, Entergy Corporation, and 78.9% is at the Utility. Net debt consists of debt less cash and cash equivalents. Debt consists of notes payable and commercial paper, finance lease obligations, and long-term debt, including the currently maturing portion. Capital consists of debt, equity, and subsidiaries’ preferred stock without sinking fund. Net capital consists of capital less cash and cash equivalents. The debt to capital ratio excluding securitization bonds and net debt to net capital ratio excluding securitization bonds are non-GAAP measures. Entergy uses the debt to capital ratios excluding securitization bonds in analyzing its financial condition and believes they provide useful information to its investors and creditors in evaluating Entergy’s financial condition because the securitization bonds are non-recourse to Entergy, as more fully described in Note 5 to the financial statements. Entergy also uses the net debt to net capital ratio excluding securitization bonds in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy’s financial condition because net debt indicates Entergy’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.
The Utility operating companies and System Energy seek to optimize their capital structures in accordance with regulatory requirements and to control their cost of capital while also maintaining equity capitalization at a level consistent with investment-grade debt ratings. To the extent that their operating cash flows are in excess of planned investments, cash may be used to reduce outstanding debt or may be paid as a dividend to their parent, to the extent funds are legally available to do so, or both, in appropriate amounts to maintain the capital structure. To the extent that their operating cash flows are insufficient to support planned investments, the Utility operating companies and System Energy may issue incremental debt or reduce dividends, or both, to maintain their capital structures. In addition, Entergy may make equity contributions to the Utility operating companies and System Energy to maintain their capital structures in certain circumstances such as financing of large transactions or payments that would materially alter the capital structure if financed entirely with debt and reduced dividends.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Long-term debt, including the currently maturing portion, makes up most of Entergy’s total debt outstanding. Following are Entergy’s long-term debt principal maturities and estimated interest payments as of December 31, 2024. To estimate future interest payments for variable rate debt, Entergy used the rate as of December 31, 2024. The amounts below include payments on System Energy’s Grand Gulf sale-leaseback transaction, which are included in long-term debt on the balance sheet.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Long-term debt maturities and estimated interest payments | | 2025 | | 2026 | | 2027 | | 2028-2029 | | after 2029 |
| | | (In Millions) |
| Utility | | $1,535 | | | $2,540 | | | $1,927 | | | $3,490 | | | $29,370 | |
| Parent & Other | | 917 | | | 855 | | | 90 | | | 810 | | | 5,669 | |
| Total | | $2,452 | | | $3,395 | | | $2,017 | | | $4,300 | | | $35,039 | |
See Note 5 to the financial statements for further details of long-term debt.
Entergy Corporation has in place a credit facility that has a borrowing capacity of $3 billion and expires in June 2029. The facility includes fronting commitments for the issuance of letters of credit against $20 million of the total borrowing capacity of the credit facility. The commitment fee is currently 0.225% of the undrawn commitment amount. Commitment fees and interest rates on loans under the credit facility can fluctuate depending on the senior unsecured debt ratings of Entergy Corporation. The estimated interest rate for the year ended December 31, 2024 that would have been applied to outstanding borrowings under the facility was 5.96%. The following is a summary of the amounts outstanding and capacity available under the credit facility as of December 31, 2024:
| | | | | | | | | | | | | | | | | | | | |
| Capacity | | Borrowings | | Letters of Credit | | Capacity Available |
| (In Millions) |
| $3,000 | | $— | | $3 | | $2,997 |
Entergy Corporation’s credit facility includes a covenant requiring Entergy to maintain a consolidated debt ratio, as defined, of 65% or less of its total capitalization. The calculation of this debt ratio under Entergy Corporation’s credit facility is different than the calculation of the debt to capital ratio above. Entergy is currently in compliance with the covenant and expects to remain in compliance with this covenant. If Entergy fails to meet this ratio, or if Entergy Corporation or one of the Registrant Subsidiaries (except Entergy New Orleans and System Energy) defaults on other indebtedness or is in bankruptcy or insolvency proceedings, an acceleration of the Entergy Corporation credit facility’s maturity date may occur.
Entergy Corporation has a commercial paper program with a Board-approved program limit of $2 billion. As of December 31, 2024, Entergy Corporation had $927.3 million of commercial paper outstanding. The weighted-average interest rate for the year ended December 31, 2024 was 5.52%.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas each had credit facilities available as of December 31, 2024 as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Company | | Expiration Date | | Amount of Facility | | Interest Rate (a) | | Amount Drawn as of December 31, 2024 | | Letters of Credit Outstanding as of December 31, 2024 |
| Entergy Arkansas | | April 2026 | | $25 million (b) | | 6.31% | | — | | — |
| Entergy Arkansas | | June 2029 | | $300 million (c) | | 5.58% | | — | | — |
| Entergy Louisiana | | June 2029 | | $400 million (c) | | 5.71% | | — | | — |
| Entergy Mississippi | | June 2029 | | $300 million (c) | | 5.58% | | — | | — |
| Entergy New Orleans | | June 2027 | | $25 million (c) | | 6.08% | | — | | — |
| Entergy Texas | | June 2029 | | $300 million (c) | | 5.71% | | — | | $1.1 million |
(a)The interest rate is the estimated interest rate as of December 31, 2024 that would have been applied to outstanding borrowings under the facility.
(b)Borrowings under this Entergy Arkansas credit facility may be secured by a security interest in its accounts receivable at Entergy Arkansas’s option.
(c)The credit facility includes fronting commitments for the issuance of letters of credit against a portion of the borrowing capacity of the facility as follows: $5 million for Entergy Arkansas; $15 million for Entergy Louisiana; $5 million for Entergy Mississippi; $10 million for Entergy New Orleans; and $25 million for Entergy Texas.
Each of the credit facilities requires the Registrant Subsidiary borrower to maintain a debt ratio, as defined, of 65% or less of its total capitalization. Each Registrant Subsidiary is in compliance with this covenant.
In addition, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas each has an uncommitted standby letter of credit facility as a means to post collateral to support their obligations to MISO and for other purposes. The following is a summary of the uncommitted standby letter of credit facilities as of December 31, 2024:
| | | | | | | | | | | | | | | | | | | | |
| Company | | Amount of Uncommitted Facility | | Letter of Credit Fee | | Letters of Credit Issued as of December 31, 2024 (a) (b) |
| Entergy Arkansas | | $25 million | | 0.78% | | $18.1 million |
| Entergy Louisiana | | $125 million | | 0.78% | | $46.2 million |
| Entergy Mississippi | | $65 million | | 0.78% | | $33.1 million |
| Entergy New Orleans | | $1 million | | 1.625% | | $0.5 million |
| Entergy Texas | | $150 million | | 1.250% | | $93.4 million |
(a)As of December 31, 2024, letters of credit posted with MISO covered financial transmission rights exposure of $0.5 million for Entergy Arkansas, $0.1 million for Entergy Louisiana, $0.8 million for Entergy Mississippi, $0.1 million for Entergy New Orleans, and $0.3 million for Entergy Texas. See Note 15 to the financial statements for discussion of financial transmission rights.
(b)As of December 31, 2024, the letters of credit issued for Entergy Mississippi include $31.8 million in MISO letters of credit and $1.3 million in non-MISO letters of credit outstanding under this facility.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Finance lease obligations are a minimal part of Entergy’s overall capital structure. Following are Entergy’s payment obligations under those leases.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2025 | | 2026 | | 2027 | | 2028-2029 | | after 2029 |
| | (In Millions) |
| Finance lease payments | $24 | | $22 | | $20 | | $30 | | $55 |
Finance leases are discussed in Note 10 to the financial statements.
Operating Lease Obligations and Guarantees of Unconsolidated Obligations
Entergy has a minimal amount of operating lease obligations and guarantees in support of unconsolidated obligations. Entergy’s guarantees in support of unconsolidated obligations are not likely to have a material effect on Entergy’s financial condition, results of operations, or cash flows. Following are Entergy’s payment obligations as of December 31, 2024 on non-cancelable operating leases with a term over one year:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2025 | | 2026 | | 2027 | | 2028-2029 | | after 2029 |
| | (In Millions) |
| Operating lease payments | $77 | | $69 | | $58 | | $65 | | $48 |
Operating leases are discussed in Note 10 to the financial statements.
Other Obligations
Entergy currently expects to contribute approximately $240 million to its qualified pension plans and approximately $42.8 million to its other postretirement plans in 2025, although the 2025 required pension contributions will be known with more certainty when the January 1, 2025 valuations are completed, which is expected by April 1, 2025. See “Critical Accounting Estimates - Qualified Pension and Other Postretirement Benefits” below and Note 11 to the financial statements for a discussion of qualified pension and other postretirement benefits funding.
Entergy has $248 million of unrecognized tax benefits net of unused tax attributes plus interest for which the timing of payments beyond 12 months cannot be reasonably estimated due to uncertainties in the timing of effective settlement of tax positions. See Note 3 to the financial statements for additional information regarding unrecognized tax benefits.
In addition, the Registrant Subsidiaries enter into fuel and purchased power agreements that contain minimum purchase obligations. The Registrant Subsidiaries each have rate mechanisms in place to recover fuel, purchased power, and associated costs incurred under these purchase obligations.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Capital Expenditure Plans and Other Uses of Capital
Following are the amounts of Entergy’s planned construction and other capital investments for 2025 through 2027.
| | | | | | | | | | | | | | | | | | | | |
| Planned construction and capital investments | | 2025 | | 2026 | | 2027 |
| | | (In Millions) |
| Generation | | $4,105 | | | $4,850 | | | $4,190 | |
| Transmission | | 1,550 | | | 2,120 | | | 2,335 | |
| Distribution | | 2,345 | | | 2,335 | | | 1,835 | |
| Utility Support | | 395 | | | 340 | | | 445 | |
| Total | | $8,395 | | | $9,645 | | | $8,805 | |
Planned construction and capital investments refer to amounts Entergy plans to spend on routine capital projects that are necessary to support reliability of its service, equipment, or systems and to support normal customer growth. In addition to routine capital projects, they also refer to amounts Entergy plans to spend on non-routine capital investments for which Entergy is either contractually obligated, has Board approval, or otherwise expects to make to satisfy regulatory or legal requirements. Amounts include the following types of construction and capital investments:
•investments in generation projects to modernize, decarbonize, expand, and diversify Entergy’s portfolio, as well as to support customer growth, including St. Jacques Facility, Bayou Power Station, Delta Blues Advanced Power Station, Delta Solar, Penton Solar, Orange County Advanced Power Station, Lone Star Power Station, Segno Solar, Votaw Solar, and potential construction of additional generation;
•investments in the Utility nuclear fleet;
•transmission spending to improve reliability and resilience while also supporting renewables expansion and customer growth; and
•distribution and Utility support spending to improve reliability, resilience, and customer experience through projects focused on asset renewals and enhancements and grid stability.
For the next several years, the Utility’s owned and contracted generating capacity is projected to be adequate to meet MISO reserve requirements; however, MISO has implemented changes to its resource adequacy construct that generally move from an annual to a seasonal design and that changes the way that resources are assigned capacity credit. MISO has also recently obtained FERC approval to implement additional changes that further affect the assignment of capacity credit to resources. As a result of these changes, there may be seasonal variations in the capacity credit afforded to the Utility operating companies’ resources by MISO, and some resource types generally may be assigned less capacity credit than they have historically. MISO continues to pursue market design changes related to its resource adequacy construct. The FERC recently approved a reliability-based demand curve that may have the effect of increasing the clearing prices in the MISO planning resource auction and increasing the planning reserve margin requirement for the Utility operating companies. MISO is also pursuing changes to the market rules governing load modifying resources, which could affect the accreditation of these resources and, as a result, the capacity positions of the Utility operating companies. These market design changes may have an effect on both the Utility operating companies’ liquidity and the capital investment needed for long-term resources. Entergy is monitoring the evolution and application of these rules, which may require the Utility operating companies to procure additional capacity credits from the MISO market and in the longer-term may impact the incremental additional supply resources needed. The Utility’s supply plan initiative will continue to seek to transform its generation portfolio with new generation resources. Opportunities resulting from the supply plan initiative, including new projects or the exploration of alternative financing sources, could result in increases or decreases in the capital expenditure estimates given above. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of business restructuring, regulatory constraints and requirements, governmental actions, including trade-related governmental actions, such as tariffs and other
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
measures, environmental regulations, business opportunities, market volatility, economic trends, changes in project plans, and the ability to access capital, including any changes to governmental programs, such as loans, grants, guarantees, and other subsidies. Entergy is not able to predict the effect of potential changes in regulation and law, changes to governmental programs, such as loans, grants, guarantees, and other subsidies, and trade-related governmental actions, such as tariffs and other measures, on its current and planned capital projects.
Renewables
2021 Solar Certification and the Geaux Green Option
In November 2021, Entergy Louisiana filed an application with the LPSC seeking certification of and approval for the addition of four new solar photovoltaic resources with a combined nameplate capacity of 475 megawatts (the 2021 Solar Portfolio) and the implementation of a new green tariff, the Geaux Green Option (Rider GGO). The 2021 Solar Portfolio consists of four resources that are expected to provide $242 million in net benefits to Entergy Louisiana’s customers. These resources, all of which would be constructed in Louisiana, include (i) the Vacherie Facility, a 150 megawatt resource in St. James Parish; (ii) the Sunlight Road Facility, a 50 megawatt resource in Washington Parish; (iii) the St. Jacques Facility, a 150 megawatt resource in St. James Parish; and (iv) the Elizabeth Facility, a 125 megawatt resource in Allen Parish. The St. Jacques Facility would be acquired through a build-own-transfer agreement; the remaining resources involve power purchase agreements. The Sunlight Road Facility and the Elizabeth Facility each achieved commercial operation in 2024, and the Vacherie Facility and the St. Jacques Facility originally had estimated in service dates in 2025, but are now expected to be no sooner than 2027. The filing proposed to recover the costs of the power purchase agreements through the fuel adjustment clause and the formula rate plan and the acquisition costs through the formula rate plan.
The proposed Rider GGO is a voluntary rate schedule that will enhance Entergy Louisiana’s ability to help customers meet their sustainability goals by allowing customers to align some or all of their electricity requirements with renewable energy from the resources. Because subscription fees from Rider GGO participants are expected to help offset the cost of the resources, the design of Rider GGO also preserves the benefits of the 2021 Solar Portfolio for non-participants by providing them with the reliability and capacity benefits of locally-sited solar generation at a discounted price.
In March 2022 direct testimony from Walmart, the Louisiana Energy Users Group (LEUG), and the LPSC staff was filed. Each party recommended that the LPSC approve the resources proposed in Entergy Louisiana’s application, and the LPSC staff witness indicated that the process through which Entergy Louisiana solicited or obtained the proposals for the resources complied with applicable LPSC orders. The LPSC staff and LEUG’s witnesses made recommendations to modify the proposed Rider GGO and Entergy Louisiana’s proposed rate relief. In April 2022 the LPSC staff and LEUG filed cross-answering testimony concerning each other’s proposed modifications to Rider GGO and the proposed rate recovery. Entergy Louisiana filed rebuttal testimony in June 2022. In August 2022 the parties reached a settlement certifying the 2021 Solar Portfolio and approving implementation of Rider GGO. In September 2022 the LPSC approved the settlement. Following the LPSC approval, the St. James Parish council issued a moratorium on new land use permits for solar facilities until the later of March 2023 or the completion of an environmental and economic impact study. In November 2023, St. James Parish lifted the moratorium and adopted an ordinance modifying the parish’s land use plan to establish solar as an approved land use and defining corresponding solar regulations. In March 2024 the project developer submitted a solar energy facility farm permit application to the St. James Parish planning commission to request approval for the Vacherie and St. Jacques Facilities. In June 2024 the St. James Parish council denied the application and following this denial, the project developer and one of the project’s ground lessors filed separate lawsuits seeking to overturn the council’s decision. Entergy Louisiana is currently monitoring the status of the aforementioned lawsuits and also considering alternate paths forward.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Alternative RFP and Certification
In 2023, Entergy Louisiana made a filing to seek approval from the LPSC for an alternative to the requests for proposals (RFP) process that would enable the acquisition of up to 3 GW of solar resources on a faster timeline than the current RFP and certification process allows. The initial phase of the filing established the need for the acquisition of additional resources and the need for an alternative to the RFP process. The second phase of the filing contained the details of the proposal for the alternative competitive procurement process and the information necessary to support certification. In addition to the acquisition of up to 3 GW of solar resources, the filing also sought approval of a new renewable energy credits-based tariff, the Geaux ZERO rider. In June 2024 the LPSC issued an order approving the application. In August 2024, Entergy Louisiana issued the first RFP pursuant to this order in solicitation of solar resources that meet the requirements of the LPSC’s order. For the first RFP, the initial selection of proposals has been completed, and negotiations are in progress.
Delta Solar
In December 2024 the Bolivar County Board of Supervisors approved Entergy Mississippi’s plans to construct, own, and operate the Delta Solar facility, an 80 MW solar facility to be located in Bolivar County, Mississippi. The Delta Solar facility will cost an estimated $157.2 million, inclusive of estimated transmission interconnection costs. Construction of the Delta Solar facility qualifies for pre-certification under the State legislation providing for the pre-certification of construction of certain types of facilities that directly or indirectly provide electric service to customers who own certain data processing center projects as specified in the legislation. The Delta Solar facility is expected to be in service by the end of 2027.
Penton Solar
Entergy Mississippi plans to construct, own, and operate the Penton Solar facility, a 190 MW solar facility. The Penton Solar facility will cost an estimated $327.2 million, inclusive of estimated transmission interconnection and upgrade costs. Construction of the Penton Solar facility qualifies for pre-certification under the State legislation providing for the pre-certification of construction of certain types of facilities that directly or indirectly provide electric service to customers who own certain data processing center projects as specified in the legislation. The Penton Solar facility is expected to be in service by early 2028.
Segno Solar and Votaw Solar
In July 2024, Entergy Texas filed an application seeking PUCT approval to amend Entergy Texas’s certificate of convenience and necessity to construct, own, and operate the Segno Solar facility, a 170 MW solar facility to be located in Polk County, Texas, and the Votaw Solar facility, a 141 MW solar facility to be located in Hardin County, Texas. The Segno Solar facility will cost an estimated $351.6 million, and the Votaw Solar facility will cost an estimated $303.8 million, in each case inclusive of estimated transmission interconnection and upgrade costs. In September 2024 the PUCT referred the proceeding to the State Office of Administrative Hearings. In December 2024 the ALJs with the State Office of Administrative Hearings adopted a revised agreed procedural schedule, with a hearing on the merits to be held in March 2025. In January 2025 certain intervenors and the PUCT staff filed testimony opposing Entergy Texas’s application. The opposing testimony argues that the proposed generation additions will have a net cost to customers, and it also challenges the design and effectiveness of the voluntary renewable energy tariff. In addition, the opposing testimony recommends that the PUCT impose conditions on any approval of Entergy Texas’s application. The conditions that certain intervenors and the PUCT staff propose include guarantees related to customer net benefits, resource production, independent investigation of any material cost overruns, and the addition of a mandatory sleeving tariff. Entergy Texas plans to file rebuttal testimony in February 2025. A PUCT decision is expected in third quarter 2025. Subject to receipt of required regulatory approval and other conditions, the Segno Solar facility is expected to be in service by early 2027, and the Votaw Solar facility is expected to be in service by mid-2028.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Other Generation
Lake Catherine Unit 5
In November 2024, Entergy Arkansas filed an application with the APSC seeking a certificate of environmental compatibility and public need for the construction and operation of Lake Catherine Unit 5, a 446 MW hydrogen-capable simple-cycle natural gas combustion turbine facility to be located at the existing Lake Catherine facility site in Hot Spring County, Arkansas. In December 2024 other parties, including the APSC general staff, filed testimony opposing the resource, although the APSC general staff recognized the capacity need for the resource. Entergy Arkansas filed testimony in January 2025 further supporting its application, and in February 2025 the opposing parties filed responsive rebuttal testimony continuing to dispute the estimated costs and to dispute that Entergy Arkansas performed a market solicitation sufficient to demonstrate that this resource is the most reasonable option for customers. Also in February 2025, Entergy Arkansas filed surrebuttal testimony responding to the opposing parties’ testimony. A hearing, if necessary, is scheduled for early March 2025, with an APSC decision requested by the end of March 2025. Subject to receipt of required regulatory approval and other conditions, the facility is expected to be in service by the end of 2028.
Bayou Power Station
In March 2024, Entergy Louisiana filed an application with the LPSC seeking certification that the public convenience and necessity would be served by the construction of the Bayou Power Station, a 112 MW aggregated capacity floating natural gas power station with black-start capability in Leeville, Louisiana and an associated microgrid that would serve nearby areas, including Port Fourchon, Golden Meadow, Leeville, and Grand Isle. In its application, Entergy Louisiana noted that the estimated cost of the Bayou Power Station was $411 million, including estimated costs of transmission interconnection and other related costs. In October 2024, Entergy Louisiana filed a motion to suspend the procedural schedule in this proceeding in order to evaluate certain recent developments related to the project including potential changes to the estimated cost of the project. Entergy Louisiana will determine next steps for the project after fully evaluating these developments. Subject to timely approval by the LPSC and receipt of other permits and approvals, commercial operation is expected to occur by the end of 2028.
Entergy Louisiana Additional Generation and Transmission Resources
In October 2024, Entergy Louisiana filed an application with the LPSC seeking approval of a variety of generation and transmission resources proposed in connection with establishing service to a new data center to be developed by a subsidiary of Meta Platforms, Inc. in north Louisiana, for which an electric service agreement has been executed. The filing requests LPSC certification of three new combined cycle combustion turbine generation resources totaling 2,262 MW, each of which will be enabled for future carbon capture and storage, a new 500 kV transmission line, and 500 kV substation upgrades. The application also requests approval to implement a corporate sustainability rider applicable to the new customer. The corporate sustainability rider contemplates the new customer contributing to the costs of the planned future addition of 1,500 MW of new solar and energy storage resources, agreements involving carbon capture and storage at Entergy Louisiana’s existing Lake Charles Power Station, and potential future wind and nuclear resources. The combined cost of the first two new combined cycle combustion turbine generation resources is estimated to be approximately $2,387 million, and these units are expected to achieve commercial operation in 2028. The third new generation resource is currently expected to have an estimated cost similar to the first two new generation resources and is expected to achieve commercial operation in 2029. The cost of the new 500 kV transmission line is estimated to be $546 million. Entergy Louisiana anticipates funding the incremental cost to serve the customer through direct financial contributions from the customer and the revenues it expects to earn under the electric service agreement. The electric service agreement also contains provisions for termination payments that will help ensure that there is no harm to Entergy Louisiana and its customers in the event of early termination. A directive was issued at the LPSC’s November 2024 meeting for the matter to be decided by October 2025. Consistent with this directive, a procedural schedule was adopted
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
setting the matter for hearing in July 2025. In February 2025 intervenors filed a motion asking the LPSC to deny Entergy Louisiana’s requested exemption from the LPSC’s order addressing competitive solicitation procedures and further asking the LPSC to dismiss the application.
In February 2025, Entergy Louisiana filed supplemental testimony with the LPSC stating that the third combined cycle combustion turbine resource presented in the October 2024 application would be sited at Entergy Louisiana’s Waterford site in Killona, Louisiana, alongside existing Entergy Louisiana generation resources. The testimony also notes that Entergy Louisiana is negotiating with the customer to increase the load associated with the customer’s project in north Louisiana and that the additional load can be served without additional generation capacity beyond what was presented in the October 2024 application, but that additional transmission facilities, which will be funded directly by the customer, are needed to serve this additional load.
Entergy Louisiana Transmission Projects
In March 2024, Entergy Louisiana filed an application seeking an exemption determination, or alternatively, a certificate of public convenience and necessity, for a transmission project that includes a new 500 kV/230 kV Commodore substation and an approximately 60-mile 230 kV line connecting the new Commodore substation to the Waterford substation. The project, which was approved by MISO in the 2023 MISO Transmission Expansion Plan, also includes certain common elements with, and right-of-way acquisition for, a future transmission project in the same area consisting of 500 kV elements. The estimated cost of the project is $498.8 million. In February 2025, Entergy Louisiana and the LPSC staff jointly filed, for consideration by the LPSC, an uncontested stipulated settlement agreement resolving all issues in the proceeding. In the motion requesting approval of the uncontested stipulated settlement agreement, the parties requested a settlement hearing in March 2025.
In December 2024, Entergy Louisiana filed an application seeking a certificate of public convenience and necessity for a 500 kV transmission project that includes the construction of a new 84-mile Commodore to Churchill 500 kV transmission line, the expansion of the Waterford 500 kV substation, the construction of a new Churchill 500 kV substation and improvements to the Churchill 230 kV substation, and the conversion of the existing 230 kV Waterford to Churchill transmission line to 500 kV, forming a 500 kV loop into the Downstream of Gypsy load pocket. The project, which was approved by MISO in the 2023 MISO Transmission Expansion Plan, shares common elements with a future transmission project in the same area consisting of 230 kV elements. The estimated cost of the project is $954.7 million.
Entergy Mississippi Additional Generation and Transmission Resources
In January 2024, Amazon Web Services announced its plan to invest in two data centers located in Madison County, Mississippi. In March 2024, Entergy Mississippi executed a large customer supply and service agreement to serve the two data centers. Entergy Mississippi will need generation and transmission resources to reliably serve all Entergy Mississippi customers, including the data centers. The large customer supply and service agreement also contains provisions which cover Entergy Mississippi’s incremental investment costs in the event of early termination. In May 2024 the MPSC approved Entergy Mississippi’s revisions to its formula rate plan to comply with state legislation passed in January 2024 allowing Entergy Mississippi to make interim rate adjustments, including the collection of a return on construction-work-in-process on a cash basis, to recover the non-fuel related annual ownership cost of certain facilities that directly or indirectly provide service to customers who own certain data processing center projects as specified in the legislation. Entergy Mississippi anticipates recovering the incremental cost to serve the customer through the revenues it expects to collect under the large customer supply and service agreement.
In February 2025, Entergy Mississippi entered into a new large customer supply and service agreement with a customer. The planned capital investment estimates for 2025-2027, shown above, include amounts related to the generation and transmission resources needed to reliably serve all Entergy Mississippi customers.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Delta Blues Advanced Power Station
In September 2024, Entergy Mississippi announced plans to construct, own, and operate the Delta Blues Advanced Power Station, a 754 MW combined-cycle combustion turbine facility, to be located in Washington County, Mississippi. The facility will primarily be powered by natural gas, and it will also be enabled for future carbon capture and storage and for hydrogen co-firing optionality. The Delta Blues Advanced Power Station will cost an estimated $1.2 billion. State legislation passed in January 2024 provides for the pre-certification of construction for certain types of facilities that directly or indirectly provide electric service to customers who own certain data processing center projects as specified in the legislation. Construction of the Delta Blues Advanced Power Station qualifies under this legislation for pre-certification. As enabled by this legislation, Entergy Mississippi began recovery of certain costs of construction of the Delta Blues Advanced Power Station through the interim facilities rate adjustments provision of its formula rate plan rider, which rates became effective in July 2024. Non-fuel revenue collected from the data center customer will be included in the formula rate plan to offset the facility’s revenue requirement. Construction is in progress and the facility is expected to be in service by the end of 2028.
Orange County Advanced Power Station
In September 2021, Entergy Texas filed an application seeking PUCT approval to amend Entergy Texas’s certificate of convenience and necessity to construct, own, and operate the Orange County Advanced Power Station, a new 1,215 MW combined-cycle combustion turbine facility to be located in Bridge City, Texas at an initially-estimated expected total cost of $1.2 billion inclusive of the estimated costs of the generation facilities, transmission upgrades, contingency, an allowance for funds used during construction, and necessary regulatory expenses, among others. The project includes combustion turbine technology with dual fuel capability, able to co-fire up to 30% hydrogen by volume upon commercial operation and upgradable to support 100% hydrogen operations in the future. In December 2021 the PUCT referred the proceeding to the State Office of Administrative Hearings. In March 2022 certain intervenors filed testimony opposing the hydrogen co-firing component of the proposed project and others filed testimony opposing the project outright. Also in March 2022 the PUCT staff filed testimony opposing the hydrogen co-firing component of the proposed project, but otherwise taking no specific position on the merits of the project. The PUCT staff also proposed that the PUCT establish a maximum amount that Entergy Texas may recover in rates attributable to the project. In April 2022, Entergy Texas filed rebuttal testimony addressing and rebutting these various arguments. The hearing on the merits was held in June 2022, and post-hearing briefs were submitted in July 2022. In September 2022 the ALJs with the State Office of Administrative Hearings issued a proposal for decision recommending the PUCT approve Entergy Texas’s application for certification of Orange County Advanced Power Station subject to certain conditions, including a cap on cost recovery at $1.37 billion, the exclusion of investment associated with co-firing hydrogen, weatherization requirements, and customer receipt of any contractual benefits associated with the facility’s guaranteed heat rate. In October 2022 the parties in the proceeding filed exceptions and replies to exceptions to the proposal for decision. Also in October 2022, Entergy Texas filed with the PUCT information regarding a new fixed pricing option for an estimated project cost of approximately $1.55 billion associated with Entergy Texas’s issuance of limited notice to proceed by mid-November 2022. In November 2022 the PUCT issued a final order approving the requested amendment to Entergy Texas’s certificate of convenience and necessity to construct, own, and operate the Orange County Advanced Power Station without the investment associated with hydrogen co-firing capability, without a cap on cost recovery, and subject to certain conditions, including weatherization requirements and customer receipt of any contractual benefits associated with the facility’s guaranteed heat rate.
In December 2022, Texas Industrial Energy Consumers and Sierra Club filed motions for rehearing of the PUCT’s final order alleging the PUCT erred in granting the certification of the Orange County Advanced Power Station, in not imposing a cost cap, in including certain findings related to the reasonableness of Entergy Texas’s request for proposals from which the Orange County Advanced Power Station was selected, and in other regards. Also in December 2022, Entergy Texas filed a response to the motions for rehearing refuting the points raised therein. In January 2023 the PUCT issued letters noting that it voted to consider Texas Industrial Energy
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Consumers’ motion for rehearing at its upcoming January 2023 open meeting and voted not to consider Sierra Club’s motion for rehearing at an open meeting. At the January 2023 open meeting, the PUCT voted to grant Texas Industrial Energy Consumers’ motion for rehearing for the limited purpose of issuing an order on rehearing that excludes three findings related to Entergy Texas’s request for proposals. The order on rehearing does not change the PUCT’s certification of the Orange County Advanced Power Station or the conditions placed thereon in the PUCT’s November 2022 final order. Construction is in progress, and subject to receipt of required permits, the facility is expected to be in service by mid-2026.
Legend Power Station and Lone Star Power Station
In June 2024, Entergy Texas filed an application seeking PUCT approval to amend Entergy Texas’s certificate of convenience and necessity to construct, own, and operate the Legend Power Station, a 754 MW combined-cycle combustion turbine facility, which will be enabled for future carbon capture and storage and for hydrogen co-firing optionality, to be located in Jefferson County, Texas, and the Lone Star Power Station, a 453 MW simple-cycle combustion turbine facility, which will be enabled with hydrogen co-firing optionality, to be located in Liberty County, Texas. In its application, Entergy Texas noted that the Legend Power Station was expected to cost an estimated $1.46 billion and the Lone Star Power Station was expected to cost an estimated $735.3 million, in each case inclusive of the estimated costs of the generation facilities, interconnection costs, transmission network upgrades, and an allowance for funds used during construction. As described in the application, Entergy Texas is considering alternative financing approaches for the Legend Power Station and plans to pursue the financing option that is in the best interest of its customers. In July 2024 the PUCT referred the proceeding to the State Office of Administrative Hearings and, also in July 2024, the ALJ with the State Office of Administrative Hearings adopted a procedural schedule, with a hearing on the merits scheduled to begin in October 2024. In September 2024, Entergy Texas filed, and the ALJ with the State Office of Administrative Hearings granted, a motion to extend the procedural schedule in this proceeding in order to address certain developments relating to the cost and scope of the Legend Power Station and the Lone Star Power Station. In December 2024, Entergy Texas filed supplemental testimony and exhibits addressing the cost and scope developments associated with the Legend Power Station and the Lone Star Power Station in further support of its application. The cost and scope developments include cost estimate increases of $139 million for Legend Power Station and $63.7 million for Lone Star Power Station and the consideration of an alternate site for Lone Star Power Station, which would reduce the estimated cost increase of the Lone Star Power Station to $36.2 million. Also in December 2024, the ALJ with the State Office of Administrative Hearings adopted a procedural schedule with a hearing on the merits to be held in April 2025. A PUCT decision is expected in July 2025. Subject to receipt of required regulatory approval and other conditions, both facilities are expected to be in service by mid-2028.
Resilience and Grid Hardening
Entergy Louisiana
In December 2022, Entergy Louisiana filed an application with the LPSC seeking a public interest finding regarding Phase I of Entergy Louisiana’s Future Ready resilience plan and approval of a rider mechanism to recover the program’s costs. Phase I in the December 2022 application reflected the first five years of a ten-year resilience plan and included investment of approximately $5 billion, including hardening investment, transmission dead-end structures, enhanced vegetation management, and telecommunications improvement. In April 2024 the LPSC approved a framework which includes an initial five-year resilience plan providing for an investment of approximately $1.9 billion with cost recovery via a forward-looking rider with semi-annual true-ups. The plan is subject to specified reporting requirements and includes a performance review of the hardened assets. The LPSC order approving the framework does not include any restrictions on Entergy Louisiana’s ability to file applications for approval of additional investments in resilience.
The LPSC had previously opened a formal rulemaking proceeding in December 2021 to investigate efforts to improve resilience of electric utility infrastructure. In April 2023 the LPSC staff issued a draft rule in the
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
rulemaking proceeding related to a requirement to file a grid resilience plan. The procedural schedule entered in the rulemaking proceeding contemplated adoption of a final rule in October 2023, but this did not occur, and a new date has not been set. The LPSC also has pending rulemakings addressing issues related to pole viability and grid maintenance practices. In December 2023, in those rulemakings, the LPSC staff issued a report and recommendation proposing to impose significant new reporting and compliance obligations related to jurisdictional utilities’ distribution and transmission operations, including new obligations related to grid hardening plans, pole inspections, pole replacement, vegetation management, storm restoration plans, new reliability metrics, software for handling customer complaints and complaint resolution, required use of drone technology, and new penalties and incentives for reliability performance and for compliance with the new obligations. In February 2024, Entergy Louisiana and other parties filed comments on the LPSC staff’s report.
Entergy New Orleans
In October 2021 the City Council passed a resolution and order establishing a docket and procedural schedule with respect to system resiliency and storm hardening. In July 2022, Entergy New Orleans filed with the City Council a response identifying a preliminary plan for storm hardening and resiliency projects, including microgrids, to be implemented over ten years at an approximate cost of $1.5 billion. In February 2023 the City Council approved a revised procedural schedule requiring Entergy New Orleans to make a filing in April 2023 containing a narrowed list of proposed hardening projects. In April 2023, Entergy New Orleans filed the required application and supporting testimony seeking City Council approval of the first phase (five years and $559 million) of a ten-year infrastructure hardening plan totaling approximately $1 billion. Entergy New Orleans also sought, among other relief, City Council approval of a resilience and storm hardening cost recovery rider to recover from customers the costs of the infrastructure hardening plan. In February 2024 the City Council approved a resolution authorizing Entergy New Orleans to implement a resilience project to be partially funded by $55 million of matching funding through the DOE’s Grid Resilience and Innovation Partnerships program. The resolution also required Entergy New Orleans to submit, no later than July 2024, a revised resilience plan consisting of projects over a three-year period. In March 2024, Entergy New Orleans filed with the City Council for approval the requested three-year resilience plan, which includes $168 million in hardening projects. The three-year resilience plan was to be in addition to the previously authorized resilience project to be partially funded by the DOE’s Grid Resilience and Innovation Partnerships program. In October 2024 the City Council approved a resolution authorizing a two-year resilience plan totaling $100 million and approved the requested resilience and storm hardening cost recovery rider. In December 2024, Entergy New Orleans notified the City Council of the subset of hardening projects from the revised three-year resilience plan to be included in the two-year resilience plan. Entergy New Orleans implemented the approved resilience and storm hardening cost recovery rider effective with the first billing cycle of January 2025.
Entergy Texas
In June 2024, Entergy Texas filed an application with the PUCT requesting approval of Phase I of its Texas Future Ready Resiliency Plan, a cost-effective set of measures to begin accelerating the resiliency of Entergy Texas’s transmission and distribution system. Phase I is comprised of projects totaling approximately $335.1 million, including approximately $137 million of projects to be funded by Entergy Texas and approximately $198 million of projects contingent upon Entergy Texas’s receipt of grant funds in that amount from the Texas Energy Fund. The projects in Phase I include distribution and transmission hardening and modernization projects and targeted vegetation management projects to mitigate the risk of wildfire. These projects are expected to be implemented within approximately three years of PUCT approval. In October 2024, Entergy Texas filed an unopposed settlement that would resolve all issues in the proceeding and the PUCT staff filed testimony in support of the unopposed settlement. In January 2025 the PUCT unanimously approved Phase I of Entergy Texas’s Texas Future Ready Resiliency Plan, including the approximately $137 million of projects to be funded by Entergy Texas and application of performance metrics consistent with the unopposed settlement. The PUCT clarified that, while not part of Entergy Texas’s Phase I plan, Entergy Texas is permitted to pursue the remaining $198 million of identified projects and Texas Energy Fund grant funding for those projects. In February 2025 the PUCT issued an
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
order adopting a new rule establishing the procedures for application to the grant fund and Entergy Texas intends to pursue an application.
Dividends and Stock Repurchases
Declarations of dividends on Entergy Corporation common stock are made at the discretion of the Board. Among other things, the Board evaluates the level of Entergy Corporation common stock dividends based upon earnings per share from the Utility segment and the Parent and Other portion of the business, financial strength, and future investment opportunities. In January 2025, the Board declared a dividend of $0.60 per share. Entergy paid $982 million in 2024, $918 million in 2023, and $842 million in 2022 in cash dividends on its common stock.
In accordance with Entergy’s stock-based compensation plans, Entergy periodically grants stock options, restricted stock, performance units, and restricted stock units to key employees, which may be exercised to obtain shares of Entergy Corporation 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.
In addition to the authority to fund grant exercises, the Board has authorized share repurchase programs to enable opportunistic purchases in response to market conditions. In October 2010 the Board granted authority for a $500 million share repurchase program. As of December 31, 2024, $350 million of authority remains under the $500 million share repurchase program. The amount of repurchases may vary as a result of material changes in business results or capital spending or new investment opportunities, or if limitations in the credit markets continue for a prolonged period.
Sources of Capital
Entergy’s sources to meet its capital requirements and to fund potential investments include:
•internally generated funds;
•cash on hand ($860 million as of December 31, 2024);
•storm reserve escrow accounts;
•debt and equity issuances in the capital markets, including debt issuances to refund or retire currently outstanding or maturing indebtedness;
•bank financing under new or existing facilities or commercial paper; and
•sales of assets.
Circumstances such as weather patterns, fuel and purchased power price fluctuations, and unanticipated expenses, including unscheduled plant outages and storms, could affect the timing and level of internally generated funds in the future. In addition to the financings necessary to meet capital requirements and contractual obligations, the Registrant Subsidiaries expect to continue, when economically feasible, to retire higher-cost debt and replace it with lower-cost debt if market conditions permit.
Provisions within the organizational documents relating to preferred stock or membership interests of certain of Entergy Corporation’s subsidiaries could restrict the payment of cash dividends or other distributions on their common and preferred equity. All debt and preferred equity issuances by the Registrant Subsidiaries require prior regulatory approval and their debt issuances are also subject to requirements set forth in bond indentures and other agreements. Entergy believes that the Registrant Subsidiaries have sufficient capacity under these tests to meet foreseeable capital needs for the next twelve months and beyond.
The FERC has jurisdiction over securities issuances by the Utility operating companies and System Energy. The City Council has concurrent jurisdiction over Entergy New Orleans’s securities issuances with maturities longer than one year. The APSC has concurrent jurisdiction over Entergy Arkansas’s issuances of securities secured by
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Arkansas property, including first mortgage bond issuances. No regulatory approvals are necessary for Entergy Corporation to issue securities. The current FERC-authorized short-term borrowing limits and long-term financing authorization for Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy are effective through January 2027. Entergy Arkansas has obtained first mortgage bond/secured financing authorization from the APSC that extends through December 2025. Entergy New Orleans also has obtained long-term financing authorization from the City Council that extends through December 2025. Entergy Arkansas, Entergy Louisiana, and System Energy each has obtained long-term financing authorization from the FERC that extends through January 2027 for issuances by the nuclear fuel company variable interest entities. In addition to borrowings from commercial banks, the Registrant Subsidiaries may also borrow from the Entergy system money pool and from other internal short-term borrowing arrangements. The money pool is an intercompany cash management program that makes possible intercompany borrowing and lending arrangements, and the money pool and the other internal borrowing arrangements are designed to reduce Entergy’s subsidiaries’ dependence on external short-term borrowings. Borrowings from internal and external short-term borrowings combined may not exceed the FERC-authorized limits. See Notes 4 and 5 to the financial statements for further discussion of Entergy’s borrowing limits, authorizations, and amounts outstanding.
Equity Issuances and Equity Distribution Program
In January 2021, Entergy Corporation entered into an equity distribution sales agreement with several counterparties establishing an at the market equity distribution program, pursuant to which Entergy Corporation may offer and sell from time to time shares of its common stock. The sales agreement provides that, in addition to the issuance and sale of shares of Entergy Corporation common stock, Entergy Corporation may enter into forward sale agreements for the sale of its common stock. The aggregate number of shares of common stock sold under this sales agreement and under any forward sale agreement may not exceed an aggregate gross sales price of $3 billion. Through 2022, 2023, and 2024, Entergy Corporation utilized the equity distribution program either to sell or to enter into forward sale agreements with respect to shares of common stock with an aggregate gross sales price of approximately $2.6 billion, of which approximately $2.4 billion of aggregate gross sales price was the subject of forward sale agreements, subject to adjustment pursuant to the forward sale agreements. Entergy Corporation settled the forward sales agreements for cash proceeds of $853 million in November 2022, $48 million in November 2023, and $83 million in December 2023. There were no settlements of forward sale agreements for the year ended December 31, 2024. Entergy Corporation currently expects to issue approximately $4.7 billion of equity through 2028, which it may issue under its at the market equity distribution program or otherwise, with approximately $1.4 billion already contracted under forward sale agreements as of December 31, 2024. See Note 7 to the financial statements for discussion of the forward sales agreements and common stock issuances and sales under the equity distribution program.
Hurricane Francine
In September 2024, Hurricane Francine caused damage to the areas served by Entergy Louisiana and Entergy New Orleans. The storm resulted in widespread power outages, primarily due to damage to distribution infrastructure as a result of strong winds and heavy rain, and the loss of sales during the power outages. See Note 2 to the financial statements for discussion of Entergy Louisiana’s December 2024 storm cost recovery filing related to Hurricane Francine.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Cash Flow Activity
As shown in Entergy’s Consolidated Statements of Cash Flows, cash flows for the years ended December 31, 2024, 2023, and 2022 were as follows:
| | | | | | | | | | | | | | | | | |
| | 2024 | | 2023 | | 2022 |
| | (In Millions) |
| Cash and cash equivalents at beginning of period | $133 | | | $224 | | | $443 | |
| | | | | |
| Net cash provided by (used in): | | | | | |
| Operating activities | 4,488 | | | 4,294 | | | 2,585 | |
| Investing activities | (5,849) | | | (4,629) | | | (5,710) | |
| Financing activities | 2,088 | | | 244 | | | 2,906 | |
| Net increase (decrease) in cash and cash equivalents | 727 | | | (91) | | | (219) | |
| | | | | |
| Cash and cash equivalents at end of period | $860 | | | $133 | | | $224 | |
2024 Compared to 2023
Operating Activities
Net cash flow provided by operating activities increased $194 million in 2024 primarily due to lower fuel and purchased power costs and the receipt of a $152 million advance payment in 2024 from a customer related to a generation agreement. The increase was partially offset by:
•an increase of $127 million in interest paid;
•lower collections from Utility customers, including the effect of higher deferred fuel collections in 2023; and
•one-time bill credits of $92 million in 2024 to Entergy Arkansas’s retail customers through the Grand Gulf credit rider as a result of the System Energy settlement with the APSC. See Note 2 to the financial statements for discussion of the System Energy settlement agreement with the APSC and Entergy Arkansas’s Grand Gulf credit rider.
Investing Activities
Net cash flow used in investing activities increased $1,220 million in 2024 primarily due to:
•the initial and substantial completion payments totaling approximately $393 million in 2024 for the purchase of the Driver Solar facility by Entergy Arkansas;
•an increase of $291 million in non-nuclear generation construction expenditures primarily due to higher spending by Entergy Louisiana on new generation resources in north Louisiana, by Entergy Mississippi on the Delta Blues Advanced Power Station project, and by Entergy Texas on the Legend Power Station project;
•the initial and substantial completion payments totaling approximately $240 million in 2024 for the purchase of the West Memphis Solar facility by Entergy Arkansas;
•the initial and substantial completion payments totaling approximately $186 million in 2024 for the purchase of the Walnut Bend Solar facility by Entergy Arkansas;
•an increase of $183 million in transmission construction expenditures primarily due to higher capital expenditures as a result of increased development in the Utility service area and increased spending on various transmission projects in 2024, partially offset by lower capital expenditures for storm restoration in
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
2024. The decrease in storm restoration expenditures is primarily due to Hurricane Ida restoration efforts in 2023;
•net payments to storm reserve escrow accounts of $17 million in 2024 as compared to net receipts from storm reserve escrow accounts of $79 million in 2023;
•an increase of $89 million in distribution construction expenditures primarily due to increased investment in the resilience of the Utility distribution system, partially offset by lower capital expenditures for storm restoration in 2024; and
•an increase of $38 million in nuclear fuel purchases due to variations from year to year in the timing and pricing of fuel reload requirements, materials and services deliveries, and the timing of cash payments during the nuclear fuel cycle.
The increase was partially offset by:
•a decrease of $111 million in nuclear construction expenditures primarily due to decreased spending on various nuclear projects in 2024;
•an increase of $59 million in proceeds received in 2024 as compared to 2023 from the DOE resulting from litigation regarding spent nuclear fuel storage costs. See Note 8 to the financial statements for discussion of the spent nuclear fuel storage litigation;
•the substantial completion and final payments totaling approximately $35 million in 2023 for the purchase of the Sunflower Solar facility by the Entergy Mississippi tax equity partnership;
•a decrease of $28 million in facilities construction expenditures primarily due to decreased spending on various facilities projects in 2024 and the construction at Entergy Mississippi of a new transmission office in 2023; and
•a decrease of $25 million in information technology capital expenditures primarily due to decreased spending on various technology projects in 2024.
See Note 14 to the financial statements for discussion of the Driver Solar facility, the West Memphis Solar facility, the Walnut Bend Solar facility, and the Sunflower Solar facility purchases.
Financing Activities
Net cash flow provided by financing activities increased $1,844 million in 2024 primarily due to:
•long-term debt activity providing approximately $2,845 million of cash in 2024 compared to using approximately $862 million of cash in 2023;
•an increase of $192 million in advance payments from customers for construction related to transmission, distribution, and generator interconnection agreements; and
•an increase of $127 million in proceeds received from the exercise of stock options in 2024 as compared to 2023.
The increase was partially offset by:
•proceeds from securitization of $1.5 billion received by the storm trust II at Entergy Louisiana in 2023;
•net repayments of $211 million of commercial paper in 2024 as compared to net issuances of $311 million of commercial paper in 2023;
•$131 million in net proceeds from the issuance of common stock under the at the market equity distribution program in 2023. There were no issuances of common stock under the at the market equity distribution program in 2024; and
•an increase of $63 million in common stock dividends paid in 2024 as a result of an increase in the dividend paid per share in 2024 as compared to 2023.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
See Note 5 to the financial statements for details of long-term debt. See Note 2 to the financial statements for a discussion of the Entergy Louisiana March 2023 storm cost securitization. See Note 4 to the financial statements for details of Entergy’s commercial paper program. See Note 7 to the financial statements for discussion of the equity distribution program.
2023 Compared to 2022
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Cash Flow Activity” in Item 7 of Entergy’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of operating, investing, and financing cash flow activities for 2023 compared to 2022.
Rate, Cost-recovery, and Other Regulation
State and Local Rate Regulation and Fuel-Cost Recovery
The rates that the Utility operating companies charge for their services significantly influence Entergy’s financial position, results of operations, and liquidity. These companies are regulated, and the rates charged to their customers are determined in regulatory proceedings. Governmental agencies, including the APSC, the LPSC, the MPSC, the City Council, and the PUCT, are primarily responsible for approval of the rates charged to customers. Following is a summary of the Utility operating companies’ authorized returns on common equity:
| | | | | | | | |
| Company | | Authorized Return on Common Equity |
| | | |
| Entergy Arkansas | | 9.15% - 10.15% |
| Entergy Louisiana | | 9.3% - 10.1% Electric; 9.3% - 10.3% Gas |
| Entergy Mississippi | | 9.91% - 11.92% |
| Entergy New Orleans | | 8.85% - 9.85% |
| Entergy Texas | | 9.57% |
Rate regulation and related regulatory proceedings and fuel and purchased power cost recovery proceedings for the Utility operating companies are discussed in Note 2 to the financial statements.
Federal Regulation
The FERC regulates wholesale sales of electricity rates and interstate transmission of electricity, including rates for System Energy’s sales of capacity and energy from Grand Gulf to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans pursuant to the Unit Power Sales Agreement. The current return on equity under the Unit Power Sales Agreement is 9.65%. See Note 2 and Note 8 to the financial statements for discussion of Entergy Louisiana’s divestiture from the Unit Power Sales Agreement.
Market and Credit Risk Sensitive Instruments
Market risk is the risk of changes in the value of commodity and financial instruments, or in future net income or cash flows, in response to changing market conditions. Entergy holds commodity and financial instruments that are exposed to the following significant market risks:
•The commodity price risk associated with the sale of electricity by Entergy’s non-utility operations business.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
•The interest rate and equity price risk associated with Entergy’s investments in qualified pension and other postretirement benefits trust funds. See Note 11 to the financial statements for details regarding Entergy’s qualified pension and other postretirement benefits trust funds.
•The interest rate and equity price risk associated with Entergy’s investments in nuclear plant decommissioning trust funds. See Note 16 to the financial statements for details regarding Entergy’s decommissioning trust funds.
•The interest rate risk associated with changes in interest rates as a result of Entergy’s outstanding indebtedness. Entergy manages its interest rate exposure by monitoring current interest rates and its debt outstanding in relation to total capitalization. See Notes 4 and 5 to the financial statements for the details of Entergy’s debt outstanding.
The Utility has limited exposure to the effects of market risk because it operates primarily under cost-based rate regulation. To the extent approved by their retail regulators, the Utility operating companies use commodity and financial instruments to hedge the exposure to price volatility inherent in their purchased power, fuel, and gas purchased for resale costs that are recovered from customers.
Entergy’s commodity and financial instruments are also exposed to credit risk. Credit risk is the risk of loss from nonperformance by suppliers, customers, or financial counterparties to a contract or agreement. Entergy is also exposed to a potential demand on liquidity due to credit support requirements within its supply or sales agreements.
Some of the agreements to sell the power produced by Entergy’s non-utility operations business contain provisions that require an Entergy subsidiary to provide credit support to secure its obligations under such agreement. The primary form of credit support used to satisfy these requirements is an Entergy Corporation guarantee. Cash and letters of credit are also acceptable forms of credit support. At December 31, 2024, based on power prices at that time, Entergy had liquidity exposure of $5 million under the guarantees in place supporting its non-utility operations business transactions and $3 million of posted cash collateral.
In addition, each of the Utility operating companies has uncommitted standby letter of credit facilities as a means to post collateral to support its obligations to MISO and for other purposes. See Note 4 to the financial statements for discussion of these letter of credit facilities.
Nuclear Matters
Entergy’s Utility business includes the ownership and operation of nuclear generating plants and is, therefore, subject to the risks related to such ownership and operation. These include risks related to: the use, storage, and handling and disposal of high-level and low-level radioactive materials; the substantial financial requirements, both for capital investments and operational needs, including the financial requirements to address emerging issues related to equipment reliability, to position Entergy’s nuclear fleet to meet its operational goals; the performance and capacity factors of these nuclear plants; regulatory requirements and potential future regulatory changes, including changes affecting the regulations governing nuclear plant ownership, operations, license amendments, and decommissioning; the availability of interim or permanent sites for the disposal of spent nuclear fuel and nuclear waste, including the fees charged for such disposal; the sufficiency of nuclear decommissioning trust fund assets and earnings to complete decommissioning of each site when required; and limitations on the amounts of insurance recoveries for losses in connection with nuclear plant operations and catastrophic events such as a nuclear accident.
NRC Reactor Oversight Process
The NRC’s Reactor Oversight Process is a program to collect information about plant performance, assess the information for its safety significance, and provide for appropriate licensee and NRC response. The NRC evaluates plant performance by analyzing two distinct inputs: inspection findings resulting from the NRC’s
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
inspection program and performance indicators reported by the licensee. The evaluations result in the placement of each plant in one of the NRC’s Reactor Oversight Process Action Matrix columns: “licensee response column,” or Column 1, “regulatory response column,” or Column 2, “degraded cornerstone column,” or Column 3, “multiple/repetitive degraded cornerstone column,” or Column 4, and “unacceptable performance,” or Column 5. Plants in Column 1 are subject to normal NRC inspection activities. Plants in Column 2, Column 3, or Column 4 are subject to progressively increasing levels of inspection by the NRC with, in general, progressively increasing levels of associated costs. Continued plant operation is not permitted for plants in Column 5. All of the nuclear generating plants owned and operated by Entergy’s Utility business are currently in Column 1.
Critical Accounting Estimates
The preparation of Entergy’s financial statements in conformity with GAAP requires management to apply appropriate accounting policies and to make estimates and judgments that can have a significant effect on reported financial position, results of operations, and cash flows. Management has identified the following accounting estimates as critical because they are based on assumptions and measurements that involve a high degree of uncertainty, and the potential for future changes in these assumptions and measurements could produce estimates that would have a material effect on the presentation of Entergy’s financial position, results of operations, or cash flows.
Nuclear Decommissioning Costs
Certain of the Utility operating companies and System Energy own nuclear generation facilities. Regulations require these Entergy subsidiaries to decommission the nuclear power plants after each facility is taken out of service, and cash is deposited in trust funds during the facilities’ operating lives in order to provide for this obligation. Entergy conducts periodic decommissioning cost studies to estimate the costs that will be incurred to decommission the facilities. The following key assumptions have a significant effect on these estimates.
•Timing - In projecting decommissioning costs, two assumptions must be made to estimate the timing of plant decommissioning. First, the date of the plant’s retirement must be estimated for those plants that do not have an announced shutdown date. The estimate may include assumptions regarding the possibility that the plant may have an operating life shorter than the operating license expiration. Second, an assumption must be made regarding whether all decommissioning activity will proceed immediately upon plant retirement, or whether the plant will be placed in SAFSTOR status. SAFSTOR is decommissioning a facility by placing it in a safe, stable condition that is maintained until it is subsequently decontaminated and dismantled to levels that permit license termination, normally within 60 years from permanent cessation of operations. A change of assumption regarding either the period of continued operation, the use of a SAFSTOR period, or whether Entergy will continue to hold the plant or the plant is held for sale can change the present value of the asset retirement obligation.
•Cost Escalation Factors - Entergy’s current decommissioning cost studies include an assumption that decommissioning costs will escalate over present cost levels by factors ranging from approximately 2% to 3% annually. A 50-basis point change in this assumption could change the estimated present value of the decommissioning liabilities by approximately 8% to 15%. The timing assumption influences the significance of the effect of a change in the estimated inflation or cost escalation rate because the effect increases with the length of time assumed before decommissioning activity ends.
•Spent Fuel Disposal - Federal law requires the DOE to provide for the permanent storage of spent nuclear fuel, and legislation has been passed by Congress to develop a repository at Yucca Mountain, Nevada. The DOE has not yet begun accepting spent nuclear fuel and is in non-compliance with federal law. The DOE continues to delay meeting its obligation and Entergy’s nuclear plant owners are continuing to pursue damage claims against the DOE for its failure to provide timely spent fuel storage. Until a federal site is available, however, nuclear plant operators must provide for interim spent fuel storage on the nuclear plant site, which can require the construction and maintenance of dry cask storage sites or other facilities. The costs of developing and maintaining these facilities during the decommissioning period can have a
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
significant effect (as much as an average of 20% to 30% of total estimated decommissioning costs). Entergy’s decommissioning studies include cost estimates for spent fuel storage. These estimates could change in the future, however, based on the expected timing of when the DOE begins to fulfill its obligation to receive and store spent nuclear fuel. See Note 8 to the financial statements for further discussion of Entergy’s spent nuclear fuel litigation.
•Technology and Regulation - Over the past several years, more practical experience with the actual decommissioning of nuclear facilities has been gained and that experience has been incorporated into Entergy’s current decommissioning cost estimates. Given the long duration of decommissioning projects, additional experience, including technological advancements in decommissioning, could be gained and affect current cost estimates. In addition, if regulations regarding nuclear decommissioning were to change, this could affect cost estimates.
•Interest Rates - The estimated decommissioning costs that are the basis for the recorded decommissioning liability are discounted to present value using a credit-adjusted risk-free rate. When the decommissioning liability is revised, increases in cash flows are discounted using the current credit-adjusted risk-free rate. Decreases in estimated cash flows are discounted using the credit-adjusted risk-free rate used previously in estimating the decommissioning liability that is being revised. Therefore, to the extent that a revised cost study results in an increase in estimated cash flows, a change in interest rates from the time of the previous cost estimate will affect the calculation of the present value of the revised decommissioning liability.
Revisions of estimated decommissioning costs that decrease the liability also result in a decrease in the asset retirement cost asset. Revisions of estimated decommissioning costs that increase the liability result in an increase in the asset retirement cost asset, which is then depreciated over the asset’s remaining economic life. See Note 9 to the financial statements for further discussion of asset retirement obligations.
Utility Regulatory Accounting
Entergy’s Utility operating companies and System Energy are subject to retail regulation by their respective state and local regulators and to wholesale regulation by the FERC. Because these regulatory agencies set the rates the Utility operating companies and System Energy are allowed to charge customers based on allowable costs, including a reasonable return on equity, the Utility operating companies and System Energy apply accounting standards that require the financial statements to reflect the effects of rate regulation, including the recording of regulatory assets and liabilities. Regulatory assets represent incurred costs that have been deferred because they are probable of future recovery from customers through regulated rates. Regulatory liabilities represent (1) revenue or gains that have been deferred because it is probable such amounts will be credited to customers through future regulated rates or (2) billings in advance of expenditures for approved regulatory programs. See Note 2 to the financial statements for a discussion of rate and regulatory matters, including details of Entergy’s and the Registrant Subsidiaries’ regulatory assets and regulatory liabilities.
For each regulatory jurisdiction in which they conduct business, the Utility operating companies and System Energy assess whether the regulatory assets and regulatory liabilities continue to meet the criteria for probable future recovery or settlement at each balance sheet date and when regulatory events occur. This assessment includes consideration of recent rate orders, historical regulatory treatment for similar costs, and factors such as changes in applicable regulatory and political environments. If the assessments made by the Utility operating companies and System Energy are ultimately different than actual regulatory outcomes, it could materially affect the results of operations, financial position, and cash flows of Entergy or the Registrant Subsidiaries.
Taxation and Uncertain Tax Positions
Management exercises significant judgment in evaluating the potential tax effects of Entergy’s operations, transactions, and other events. Entergy accounts for uncertain income tax positions using a recognition model under a two-step approach with a more likely-than-not recognition threshold and a measurement approach based on the
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Management evaluates each tax position based on the technical merits and facts and circumstances of the position, assuming the position will be examined by a taxing authority having full knowledge of all relevant information. Significant judgment is required to determine whether available information supports the assertion that the recognition threshold has been met. Additionally, measurement of unrecognized tax benefits to be recorded in the consolidated financial statements is based on the probability of different potential outcomes. Income tax expense and tax positions recorded could be significantly affected by events such as additional transactions contemplated or consummated by Entergy as well as audits by taxing authorities of the tax positions taken in transactions. Management believes that the financial statement tax balances are accounted for and adjusted appropriately each quarter, as necessary, in accordance with applicable authoritative guidance; however, the ultimate outcome of tax matters could result in favorable or unfavorable effects on the consolidated financial statements.
Certain Entergy subsidiaries have elected to apply the mark-to-market method of accounting for income tax return purposes to wholesale power purchase agreements as appropriate under the Internal Revenue Code and U.S. Treasury Regulations. The mark-to-market tax gain or loss computed each year is based on an estimated fair market valuation which includes analyses of market prices and conditions. Entergy’s and the Registrant Subsidiaries’ mark-to-market tax position could be affected by the outcome of federal and state income tax audits should taxing authorities challenge such valuations.
Entergy’s income taxes, including unrecognized tax benefits, open audits, and other significant tax matters, are discussed in Note 3 to the financial statements. See “Income Tax Legislation and Regulation” above for discussion of income tax legislation and regulation.
Qualified Pension and Other Postretirement Benefits
Entergy sponsors qualified, defined benefit pension plans, including cash balance plans and final average pay plans. Generally, plan participation is determined based on the employee’s most recent date of hire and collective bargaining agreement, where applicable. Additionally, Entergy currently provides other postretirement health care and life insurance benefits for full-time employees whose most recent date of hire or rehire is before July 1, 2014, and who reach retirement age and meet certain eligibility requirements while still working for Entergy.
Entergy’s reported costs of providing these benefits, as described in Note 11 to the financial statements, are affected by numerous factors including the provisions of the plans, changing employee demographics, and various actuarial calculations, assumptions, and accounting mechanisms. Because of the complexity of these calculations, the long-term nature of these obligations, and the importance of the assumptions utilized, Entergy’s estimate of these costs is a critical accounting estimate for Entergy and the Registrant Subsidiaries.
Assumptions
Key actuarial assumptions utilized in determining qualified pension and postretirement health care and life insurance costs include discount rates, projected healthcare cost rates, expected long-term rate of return on plan assets, rate of increase in future compensation levels, retirement rates, expected timing and form of payments, and mortality rates.
Annually, Entergy reviews and, when necessary, adjusts the assumptions for the qualified pension and other postretirement plans. Every three-to-five years, a formal actuarial assumption experience study that compares assumptions to the actual experience of the qualified pension and postretirement health care and life insurance plans is conducted. The interest rate environment over the past few years and volatility in the financial equity markets have affected Entergy’s funding and reported costs for these benefits.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Discount rates
In selecting an assumed discount rate to calculate benefit obligations, Entergy uses a yield curve based on high-quality corporate debt with cash flows matching the expected plan benefit payments. In estimating the service cost and interest cost components of net periodic benefit cost, Entergy discounts the expected cash flows by the applicable spot rates.
Projected health care cost trend rates
Entergy’s health care cost trend is affected by both medical cost inflation and, with respect to capped costs under the plan, the effects of general inflation. Entergy reviews actual recent cost trends and projected future trends in establishing its health care cost trend rates.
Expected long-term rate of return on plan assets
In determining its expected long-term rate of return on plan assets used in the calculation of benefit plan costs, Entergy reviews past performance, current and expected future asset allocations, and capital market assumptions of its investment consultant and some of its investment managers. Entergy conducts periodic asset/liability studies in order to set its target asset allocations.
In 2023, Entergy implemented a new asset allocation strategy for its pension assets, based on the funded status of each plan within the trust. The new strategy no longer focuses on targeting an overall asset allocation for the trust, but rather a target asset allocation for each plan within the trust that adjusts dynamically based on the funded status. The ultimate asset allocation for each plan is expected to be attained when the plan is 110% funded. The 2024 weighted-average target pension asset allocation is 35% equity and 65% fixed income securities, of which 61% is long duration fixed income.
In 2017, Entergy implemented a new asset allocation strategy for its non-taxable and taxable other postretirement assets, based on the funded status of each sub-account within each trust. The new strategy no longer focuses on targeting an overall asset allocation for each trust, but rather a target asset allocation for each sub-account within each trust that adjusts dynamically based on the funded status. This strategy was reaffirmed based upon an asset/liability study in 2024. The 2024 weighted-average target postretirement asset allocation is 24% equity and 76% fixed income securities.
See Note 11 to the financial statements for discussion of the current asset allocations for Entergy’s pension and other postretirement assets.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Costs and Sensitivities
The estimated 2025 and actual 2024 qualified pension and other postretirement costs and related underlying assumptions and sensitivities are shown below:
| | | | | | | | | | | | | | |
| Costs | | Estimated 2025 | | 2024 |
| | (In Millions) |
| Qualified pension cost | | $85.3 | | $391.5 (a) |
| Other postretirement income | | ($29.4) | | ($24.3) |
| | | | |
| Assumptions | | 2025 | | 2024 |
| Discount rates | | | | |
| Qualified pension | | | | |
| Service cost | | 5.75% | | 5.08% |
| Interest cost | | 5.46% | | 4.97% |
| | | | |
| Other postretirement | | | | |
| Service cost | | 5.50% | | 4.82% |
| Interest cost | | 5.36% | | 4.91% |
| | | | |
| Expected long-term rates of return | | | | |
| Qualified pension assets | | 6.00% - 7.00% Blended 6.75% | | 6.75% |
| Other postretirement - non-taxable assets | | 6.00% - 7.00% | | 6.50% - 7.25% |
| Other postretirement - taxable assets - after tax rate | | 4.75% | | 5.25% |
| | | | |
| Weighted-average rate of increase in future compensation | | 3.98% - 4.45% | | 3.98% - 4.40% |
| | | | |
| Assumed health care cost trend rates | | | | |
| Pre-65 retirees | | 8.15% | | 6.95% |
| Post-65 retirees | | 10.13% | | 7.88% |
| Ultimate health care cost trend rate | | 4.75% | | 4.75% |
| Year ultimate health care cost trend rate is reached and beyond | | | | |
| Pre-65 retirees | | 2035 | | 2032 |
| Post-65 retirees | | 2035 | | 2032 |
(a) In 2024, qualified pension cost included settlement costs of $328 million.
Actual asset returns have an effect on Entergy’s qualified pension and other postretirement costs. In 2024, Entergy’s actual annual return on qualified pension assets was approximately 6.7% and on other postretirement assets was approximately 7%, as compared to the 2024 expected long-term rates of return discussed above.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
The following chart reflects the sensitivity of qualified pension cost and qualified pension projected benefit obligation to changes in certain actuarial assumptions (dollars in millions):
| | | | | | | | | | | | | | | | | | | | |
| Actuarial Assumption | | Change in Assumption | | Impact on 2025 Qualified Pension Cost | | Impact on 2024 Qualified Pension Projected Benefit Obligation |
| | | Increase/(Decrease) |
| Discount rate | | (0.25%) | | $4 | | $104 |
| Rate of return on plan assets | | (0.25%) | | $11 | | $— |
| Rate of increase in compensation | | 0.25% | | $4 | | $23 |
The following chart reflects the sensitivity of postretirement benefits cost and accumulated postretirement benefit obligation to changes in certain actuarial assumptions (dollars in millions):
| | | | | | | | | | | | | | | | | | | | |
| Actuarial Assumption | | Change in Assumption | | Impact on 2025 Postretirement Benefits Cost | | Impact on 2024 Accumulated Postretirement Benefit Obligation |
| | | Increase/(Decrease) |
| Discount rate | | (0.25%) | | $1 | | $18 |
| Health care cost trend | | 0.25% | | $2 | | $11 |
Each fluctuation above assumes that the other components of the calculation are held constant.
Accounting Mechanisms
In accordance with pension accounting standards, Entergy utilizes a number of accounting mechanisms that reduce the volatility of reported pension costs. Differences between actuarial assumptions and actual plan results are deferred and are amortized into expense only when the accumulated differences exceed 10% of the greater of the projected benefit obligation or the market-related value of plan assets. If necessary, the excess is amortized over the average remaining service period of active employees. If almost all of the plan participants are inactive, as is the case for certain qualified pension plans, the excess is amortized over the remaining life expectancy of plan participants. Additionally, accounting standards allow for the deferral of prior service costs/credits arising from plan amendments that attribute an increase or decrease in benefits to employee service in prior periods. Prior service costs/credits are then amortized into expense over the average future working life of active employees. Certain decisions, including workforce reductions, plan amendments, and plant shutdowns, may significantly reduce the expense amortization period and result in immediate recognition of certain previously-deferred costs and gains/losses in the form of curtailment gains or losses. Similarly, payments made to settle benefit obligations, including lump sum benefit payments, can also result in accelerated recognition in the form of settlement losses or gains. Several Entergy subsidiaries received regulatory approval to defer the expense portion of settlement charges and amortize into expense over time. See Note 11 to the financial statements for further discussion.
Entergy calculates the expected return on pension and other postretirement benefits plan assets by multiplying the long-term expected rate of return on assets by the market-related value (MRV) of plan assets. Entergy determines the MRV of its pension plan assets, except for the long duration fixed income assets, by calculating a value that uses a 20-quarter phase-in of the difference between actual and expected returns. For the long duration fixed income assets in the pension trust and for its other postretirement benefits plan assets, Entergy uses fair value as the MRV.
Accounting standards require an employer to recognize in its balance sheet the funded status of its benefit plans. See Note 11 to the financial statements for further discussion of Entergy’s funded status.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Employer Contributions
Entergy contributed $270 million to its qualified pension plans in 2024. Entergy estimates pension contributions will be approximately $240 million in 2025 although the 2025 required pension contributions will be known with more certainty when the January 1, 2025, valuations are completed, which is expected by April 1, 2025.
Minimum required funding calculations as determined under Pension Protection Act guidance, as amended by the American Rescue Plan Act of 2021, are performed annually as of January 1 of each year and are based on measurements of the assets and funding liabilities as measured at that date. Any excess of the funding liability over the calculated fair market value of assets results in a funding shortfall that must be funded over a fifteen-year rolling period. The Pension Protection Act also imposes certain plan limitations if the funded percentage, which is based on calculated fair market values of assets divided by funding liabilities, does not meet certain thresholds. For funding purposes, asset gains and losses are smoothed into the calculated fair market value of assets. The funding liability is based upon a weighted-average 24-month corporate bond rate published by the U.S. Treasury which is generally subject to a corridor of the 25-year average of prior segment rates. Periodic changes in asset returns and interest rates can affect funding shortfalls and future cash contributions.
Entergy contributed $45.4 million to its other postretirement plans in 2024 and plans to contribute $42.8 million in 2025.
Other Contingencies
As a company with multi-state utility operations, Entergy is subject to a number of federal and state laws and regulations and other factors and conditions in the areas in which it operates, which potentially subjects it to environmental, litigation, and other risks. Entergy periodically evaluates its exposure for such risks and records a provision for those matters which are considered probable and estimable in accordance with GAAP.
Environmental
Entergy must comply with environmental laws and regulations applicable to air emissions, water discharges, solid waste (including coal combustion residuals), hazardous waste, toxic substances, protected species, and other environmental matters. Under these various laws and regulations, Entergy could incur substantial costs to comply or address any impacts to the environment. Entergy conducts studies to determine the extent of any required remediation and has recorded liabilities based upon its evaluation of the likelihood of loss and expected dollar amount for each issue. Additional sites or issues could be identified which require environmental remediation or corrective action for which Entergy could be liable. The amounts of environmental liabilities recorded can be significantly affected by the following external events or conditions.
•Changes to existing federal, state, or local regulation or related policies by governmental authorities having jurisdiction over air quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental matters.
•The identification of additional impacts, sites, issues, or the filing of other complaints in which Entergy may be asserted to be a potentially responsible party.
•The resolution or progression of existing matters through the court system or resolution by the EPA or relevant state or local authority.
Litigation
Entergy is regularly named as a defendant in a number of lawsuits involving employment, customers, and injuries and damages issues, among other matters. Entergy periodically reviews the cases in which it has been named as defendant and assesses the likelihood of loss in each case as probable, reasonably possible, or remote and records liabilities for cases that have a probable likelihood of loss and the loss can be estimated. Given the
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
environment in which Entergy operates, and the unpredictable nature of many of the cases in which Entergy is named as a defendant, the ultimate outcome of the litigation to which Entergy is exposed has the potential to materially affect the results of operations, financial position, and cash flows of Entergy or the Registrant Subsidiaries.
New Accounting Pronouncements
See Note 1 to the financial statements for discussion of new accounting pronouncements.
ENTERGY CORPORATION AND SUBSIDIARIES
REPORT OF MANAGEMENT
Management of Entergy Corporation and its subsidiaries has prepared and is responsible for the financial statements and related financial information included in this document. To meet this responsibility, management establishes and maintains a system of internal controls over financial reporting designed to provide reasonable assurance regarding the preparation and fair presentation of financial statements in accordance with generally accepted accounting principles. This system includes communication through written policies and procedures, an employee Code of Entegrity, and an organizational structure that provides for appropriate division of responsibility and training of personnel. This system is also tested by a comprehensive internal audit program.
Entergy management assesses the design and effectiveness of Entergy’s internal control over financial reporting on an annual basis. In making this assessment, management uses the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework. The 2013 COSO Framework was utilized for management’s assessment. Management acknowledges, however, that all internal control systems, no matter how well designed, have inherent limitations and can provide only reasonable assurance with respect to financial statement preparation and presentation.
Entergy Corporation’s independent registered public accounting firm, Deloitte & Touche LLP, has issued an attestation report on the effectiveness of Entergy Corporation’s internal control over financial reporting as of December 31, 2024.
In addition, the Audit Committee of the Board of Directors, composed solely of independent Directors, meets with the independent auditors, internal auditors, management, and internal accountants periodically to discuss internal controls, and auditing and financial reporting matters. The Audit Committee appoints the independent auditors annually, seeks shareholder ratification of the appointment, and reviews with the independent auditors the scope and results of the audit effort. The Audit Committee also meets periodically with the independent auditors and the chief internal auditor without management present, providing free access to the Audit Committee.
Based on management’s assessment of internal controls using the 2013 COSO criteria, management believes that Entergy and each of the Registrant Subsidiaries maintained effective internal control over financial reporting as of December 31, 2024. Management further believes that this assessment, combined with the policies and procedures noted above, provides reasonable assurance that Entergy’s and each of the Registrant Subsidiaries’ financial statements are fairly and accurately presented in accordance with generally accepted accounting principles.
| | | | | |
ANDREW S. MARSH
Chair of the Board and Chief Executive Officer of Entergy Corporation | KIMBERLY A. FONTAN
Executive Vice President and Chief Financial Officer of Entergy Corporation, Entergy Arkansas, LLC, Entergy Louisiana, LLC, Entergy Mississippi, LLC, Entergy New Orleans, LLC, Entergy Texas, Inc., and System Energy Resources, Inc.
Chair of the Board and President of System Energy Resources, Inc. |
LAURA R. LANDREAUX
Chair of the Board, President, and Chief Executive Officer of Entergy Arkansas, LLC | PHILLIP R. MAY, JR.
Chairman of the Board, President, and Chief Executive Officer of Entergy Louisiana, LLC |
HALEY R. FISACKERLY
Chairman of the Board, President, and Chief Executive Officer of Entergy Mississippi, LLC | DEANNA D. RODRIGUEZ
Chair of the Board, President, and Chief Executive Officer of Entergy New Orleans, LLC |
ELIECER VIAMONTES
Chairman of the Board, President, and Chief Executive Officer of Entergy Texas, Inc. | |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and Board of Directors of
Entergy Corporation and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Entergy Corporation and Subsidiaries (the “Corporation”) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, cash flows, and changes in equity for each of the three years in the period ended December 31, 2024, and the related notes (collectively, referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Corporation as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Corporation’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 18, 2025, expressed an unqualified opinion on the Corporation’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on the Corporation’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Corporation in accordance with the US federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Rate and Regulatory Matters — Entergy Corporation and Subsidiaries — Refer to Note 2 to the financial statements
Critical Audit Matter Description
The Corporation is subject to rate regulation by their respective state or local utility regulatory agencies and wholesale regulation by the Federal Energy Regulatory Commission (collectively, the “Commissions”). Management has determined it meets the requirements under accounting principles generally accepted in the United States of America to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation. Accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures.
The Corporation’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Because the Commissions set the rates, the Corporation is allowed to charge customers based on allowable costs, including a
reasonable return on equity, and the Corporation applies accounting standards that require the financial statements to reflect the effects of rate regulation, including the recording of regulatory assets and liabilities. The Corporation assesses whether the regulatory assets and regulatory liabilities continue to meet the criteria for probable future recovery or settlement at each balance sheet date and when regulatory events occur. This assessment includes consideration of recent rate orders, historical regulatory treatment for similar costs, and factors such as changes in applicable regulatory and political environments. While the Corporation has indicated it expects to recover costs from customers through regulated rates, there is a risk that the Commissions will not approve: (1) full recovery of the costs of providing utility service or (2) full recovery of amounts invested in the utility business and a reasonable return on that investment.
We identified the impact of rate regulation as a critical audit matter due to the judgments made by management to support its assertions about impacted account balances and disclosures and the high degree of subjectivity involved in assessing the impact of future regulatory orders on the financial statements. Management judgments include assessing the (1) likelihood of recovery in future rates of incurred costs and the (2) likelihood of refunds to customers. Auditing management’s judgments regarding the outcome of future decisions by the Commissions, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities involved specialized knowledge of accounting for rate regulation and the rate-setting process due to its inherent complexities and auditor judgment to evaluate management estimates and the subjectivity of audit evidence.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the uncertainty of future decisions by the Commissions, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities included the following, among others:
•We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of regulatory assets; and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We also tested the effectiveness of management’s controls over the initial recognition of amounts as regulatory assets or liabilities and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates.
•We evaluated the Corporation’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.
•We read relevant regulatory orders issued by the Commissions for the Corporation to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared to management’s recorded regulatory asset and liability balances for completeness.
•For regulatory matters in process, we inspected the Corporation’s and intervenors’ filings with the Commissions, initial Administrative Law Judge decisions and orders issued, and settlement offers and agreements with the Commissions for any evidence that might contradict management’s assertions.
•We obtained an analysis from management and support from the Corporation’s internal and external legal counsel, as appropriate, regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities not yet addressed in a regulatory order, to assess management’s assertion that amounts are probable of recovery or refund or a future reduction in rates.
•We obtained representation from management regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities to assess management’s assertion that amounts are probable of recovery, refund, or a future reduction in rates.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 18, 2025
We have served as the Corporation’s auditor since 2001.
| | | | | | | | | | | | | | | | | | | | |
| ENTERGY CORPORATION AND SUBSIDIARIES |
| CONSOLIDATED INCOME STATEMENTS |
| | |
| | | For the Years Ended December 31, |
| | | 2024 | | 2023 | | 2022 |
| | | (In Thousands, Except Share Data) |
| | | | | | |
| OPERATING REVENUES | | | | | | |
| Electric | | $11,627,732 | | | $11,842,454 | | | $13,186,845 | |
| Natural gas | | 178,070 | | | 180,490 | | | 233,920 | |
| Other | | 73,851 | | | 124,468 | | | 343,472 | |
| TOTAL | | 11,879,653 | | | 12,147,412 | | | 13,764,237 | |
| | | | | | |
| OPERATING EXPENSES | | | | | | |
| Operation and Maintenance: | | | | | | |
| Fuel, fuel-related expenses, and gas purchased for resale | | 2,256,874 | | | 2,801,580 | | | 3,732,851 | |
| Purchased power | | 839,236 | | | 968,036 | | | 1,561,544 | |
| Nuclear refueling outage expenses | | 147,019 | | | 150,147 | | | 156,032 | |
| Other operation and maintenance | | 2,898,237 | | | 2,898,213 | | | 3,038,459 | |
| Asset write-offs, impairments, and related charges (credits) | | 107,134 | | | 42,679 | | | (163,464) | |
| Decommissioning | | 220,080 | | | 206,674 | | | 224,076 | |
| Taxes other than income taxes | | 752,948 | | | 755,574 | | | 733,538 | |
| Depreciation and amortization | | 2,013,168 | | | 1,845,003 | | | 1,761,023 | |
| Other regulatory charges (credits) - net | | (6,133) | | | (138,469) | | | 669,403 | |
| TOTAL | | 9,228,563 | | | 9,529,437 | | | 11,713,462 | |
| | | | | | |
| OPERATING INCOME | | 2,651,090 | | | 2,617,975 | | | 2,050,775 | |
| | | | | | |
| OTHER INCOME (DEDUCTIONS) | | | | | | |
| Allowance for equity funds used during construction | | 133,046 | | | 98,493 | | | 72,832 | |
| Interest and investment income (loss) | | 298,865 | | | 162,726 | | | (75,581) | |
| Miscellaneous - net | | (489,970) | | | (201,013) | | | (77,629) | |
| TOTAL | | (58,059) | | | 60,206 | | | (80,378) | |
| | | | | | |
| INTEREST EXPENSE | | | | | | |
| Interest expense | | 1,203,588 | | | 1,046,164 | | | 940,060 | |
| Allowance for borrowed funds used during construction | | (52,768) | | | (39,758) | | | (27,823) | |
| TOTAL | | 1,150,820 | | | 1,006,406 | | | 912,237 | |
| | | | | | |
| INCOME BEFORE INCOME TAXES | | 1,442,211 | | | 1,671,775 | | | 1,058,160 | |
| | | | | | |
| Income taxes | | 381,027 | | | (690,535) | | | (38,978) | |
| | | | | | |
| CONSOLIDATED NET INCOME | | 1,061,184 | | | 2,362,310 | | | 1,097,138 | |
| | | | | | |
| Preferred dividend requirements of subsidiaries and noncontrolling interests | | 5,594 | | | 5,774 | | | (6,028) | |
| | | | | | |
| NET INCOME ATTRIBUTABLE TO ENTERGY CORPORATION | | $1,055,590 | | | $2,356,536 | | | $1,103,166 | |
| | | | | | |
| Earnings per average common share: | | | | | | |
| Basic | | $2.47 | | | $5.57 | | | $2.70 | |
| Diluted | | $2.45 | | | $5.55 | | | $2.68 | |
| | | | | | |
| Basic average number of common shares outstanding | | 427,713,121 | | | 423,139,862 | | | 408,900,708 | |
| Diluted average number of common shares outstanding | | 431,581,696 | | | 424,752,990 | | | 411,095,156 | |
| | | | | | |
| See Notes to Financial Statements. | | | | | | |
(Page left blank intentionally)
| | | | | | | | | | | | | | | | | |
| ENTERGY CORPORATION AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
| |
| | For the Years Ended December 31, |
| | 2024 | | 2023 | | 2022 |
| | (In Thousands) |
| | | | | |
| Net Income | $1,061,184 | | | $2,362,310 | | | $1,097,138 | |
| | | | | |
| Other comprehensive income | | | | | |
| Cash flow hedges net unrealized gain | — | | | — | | | 1,035 | |
| | | | | |
| Pension and other postretirement plan changes | | | | | |
| (net of tax expense of $54,711, $9,248, and $46,789) | 205,229 | | | 29,294 | | | 146,893 | |
| Net unrealized investment loss | | | | | |
| (net of tax benefit of $—, $—, and ($2,231)) | — | | | — | | | (7,154) | |
| Other comprehensive income | 205,229 | | | 29,294 | | | 140,774 | |
| | | | | |
| Comprehensive Income | 1,266,413 | | | 2,391,604 | | | 1,237,912 | |
| Preferred dividend requirements of subsidiaries and noncontrolling interests | 5,594 | | | 5,774 | | | (6,028) | |
| Comprehensive Income Attributable to Entergy Corporation | $1,260,819 | | | $2,385,830 | | | $1,243,940 | |
| | | | | |
| See Notes to Financial Statements. | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| ENTERGY CORPORATION AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| | |
| | | For the Years Ended December 31, |
| | | 2024 | | 2023 | | 2022 |
| | | (In Thousands) |
| | | | | | |
| OPERATING ACTIVITIES | | | | | | |
| Consolidated net income | | $1,061,184 | | | $2,362,310 | | | $1,097,138 | |
| Adjustments to reconcile consolidated net income to net cash flow provided by operating activities: | | | | | | |
| Depreciation, amortization, and decommissioning, including nuclear fuel amortization | | 2,443,562 | | | 2,244,479 | | | 2,190,371 | |
| Deferred income taxes, investment tax credits, and non-current taxes accrued | | 320,705 | | | (707,822) | | | (47,154) | |
| Asset write-offs, impairments, and related charges (credits) | | 107,134 | | | 42,679 | | | (163,464) | |
| Pension settlement charge | | 319,675 | | | — | | | — | |
| Changes in working capital: | | | | | | |
| Receivables | | 3,056 | | | 101,801 | | | (157,267) | |
| Fuel inventory | | 21,898 | | | (45,166) | | | 6,943 | |
| Accounts payable | | 111,839 | | | (135,048) | | | (102,013) | |
| Taxes accrued | | 22,893 | | | 10,122 | | | 4,263 | |
| Interest accrued | | 45,357 | | | 18,933 | | | 4,113 | |
| Deferred fuel costs | | 182,578 | | | 759,361 | | | (393,746) | |
| Other working capital accounts | | (19,177) | | | (210,038) | | | (157,235) | |
| Changes in provisions for estimated losses | | 43,493 | | | (68,631) | | | 374,079 | |
| Changes in regulatory assets | | 378,514 | | | 435,877 | | | 576,859 | |
| Changes in other regulatory liabilities | | 660,559 | | | 463,805 | | | (266,559) | |
| Effect of securitization on regulatory asset | | — | | | (491,150) | | | (941,035) | |
| Changes in pension and other postretirement funded status | | (469,721) | | | (610,479) | | | (699,261) | |
| Other | | (745,039) | | | 123,295 | | | 1,259,458 | |
| Net cash flow provided by operating activities | | 4,488,510 | | | 4,294,328 | | | 2,585,490 | |
| | | | | | |
| INVESTING ACTIVITIES | | | | | | |
| Construction/capital expenditures | | (4,838,339) | | | (4,440,652) | | | (5,065,126) | |
| Allowance for equity funds used during construction | | 133,046 | | | 98,493 | | | 72,832 | |
| Nuclear fuel purchases | | (309,437) | | | (270,973) | | | (223,613) | |
| Payment for purchase of plant and assets | | (821,934) | | | (35,094) | | | (106,193) | |
| Net proceeds (payments) from sale of assets | | — | | | 11,000 | | | (1,195) | |
| Insurance proceeds received for property damages | | 7,907 | | | 19,493 | | | — | |
| Litigation proceeds from settlement agreement | | — | | | — | | | 9,829 | |
| Changes in securitization account | | 3,308 | | | 5,493 | | | 15,514 | |
| Payments to storm reserve escrow accounts | | (17,990) | | | (19,780) | | | (1,494,048) | |
| Receipts from storm reserve escrow accounts | | 736 | | | 98,529 | | | 1,125,279 | |
| Decrease (increase) in other investments | | 212 | | | (16,733) | | | (3,328) | |
| Litigation proceeds for reimbursement of spent nuclear fuel storage costs | | 82,412 | | | 23,655 | | | 32,367 | |
| Proceeds from nuclear decommissioning trust fund sales | | 2,805,145 | | | 1,082,722 | | | 1,636,686 | |
| Investment in nuclear decommissioning trust funds | | (2,894,076) | | | (1,185,130) | | | (1,708,901) | |
| Net cash flow used in investing activities | | (5,849,010) | | | (4,628,977) | | | (5,709,897) | |
| | | | | | |
| See Notes to Financial Statements. | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| ENTERGY CORPORATION AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| | |
| | | For the Years Ended December 31, |
| | | 2024 | | 2023 | | 2022 |
| | | (In Thousands) |
| | | | | | |
| FINANCING ACTIVITIES | | | | | | |
| Proceeds from the issuance of: | | | | | | |
| Long-term debt | | 7,898,968 | | | 4,273,297 | | | 6,019,835 | |
| Treasury stock | | 136,794 | | | 9,823 | | | 32,042 | |
| Common stock | | — | | | 130,649 | | | 852,555 | |
| Retirement of long-term debt | | (5,054,094) | | | (5,135,753) | | | (5,995,903) | |
| Changes in commercial paper - net | | (210,880) | | | 310,550 | | | (373,556) | |
| Capital contributions from noncontrolling interests | | — | | | 25,708 | | | 24,702 | |
| Proceeds received by storm trusts related to securitization | | — | | | 1,457,676 | | | 3,163,572 | |
| Other | | 316,845 | | | 107,595 | | | 42,761 | |
| Dividends paid: | | | | | | |
| Common stock | | (981,659) | | | (918,193) | | | (841,677) | |
| Preferred stock | | (18,319) | | | (18,319) | | | (18,319) | |
| Net cash flow provided by financing activities | | 2,087,655 | | | 243,033 | | | 2,906,012 | |
| | | | | | |
| Net increase (decrease) in cash and cash equivalents | | 727,155 | | | (91,616) | | | (218,395) | |
| | | | | | |
| Cash and cash equivalents at beginning of period | | 132,548 | | | 224,164 | | | 442,559 | |
| | | | | | |
| Cash and cash equivalents at end of period | | $859,703 | | | $132,548 | | | $224,164 | |
| | | | | | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | | | |
| Cash paid during the period for: | | | | | | |
| Interest - net of amount capitalized | | $1,114,631 | | | $987,252 | | | $901,884 | |
| Income taxes | | $41,551 | | | $42,821 | | | $28,354 | |
| Noncash investing activities: | | | | | | |
| Accrued construction expenditures | | $615,490 | | | $487,439 | | | $461,748 | |
| | | | | | |
| See Notes to Financial Statements. | | | | | | |
| | | | | | | | | | | | | | |
| ENTERGY CORPORATION AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| ASSETS |
| | |
| | | December 31, |
| | | 2024 | | 2023 |
| | | (In Thousands) |
| | | | |
| CURRENT ASSETS | | | | |
| Cash and cash equivalents: | | | | |
| Cash | | $48,424 | | | $71,609 | |
| Temporary cash investments | | 811,279 | | | 60,939 | |
| Total cash and cash equivalents | | 859,703 | | | 132,548 | |
| Accounts receivable: | | | | |
| Customer | | 681,504 | | | 699,411 | |
| Allowance for doubtful accounts | | (17,919) | | | (25,905) | |
| Other | | 204,868 | | | 225,334 | |
| Accrued unbilled revenues | | 521,946 | | | 494,615 | |
| Total accounts receivable | | 1,390,399 | | | 1,393,455 | |
| Deferred fuel costs | | — | | | 169,967 | |
| Fuel inventory - at average cost | | 166,408 | | | 192,799 | |
| Materials and supplies | | 1,631,056 | | | 1,418,969 | |
| Deferred nuclear refueling outage costs | | 99,885 | | | 140,115 | |
| Current assets held for sale | | 15,574 | | | — | |
| Prepayments and other | | 233,212 | | | 213,016 | |
| TOTAL | | 4,396,237 | | | 3,660,869 | |
| | | | |
| OTHER PROPERTY AND INVESTMENTS | | | | |
| Decommissioning trust funds | | 5,562,575 | | | 4,863,710 | |
| Non-utility property - at cost (less accumulated depreciation) | | 423,764 | | | 418,546 | |
| Storm reserve escrow accounts | | 340,460 | | | 323,206 | |
| Other | | 82,344 | | | 69,494 | |
| TOTAL | | 6,409,143 | | | 5,674,956 | |
| | | | |
| PROPERTY, PLANT, AND EQUIPMENT | | | | |
| Electric | | 70,818,667 | | | 66,850,474 | |
| Natural gas | | 77,054 | | | 717,503 | |
| Construction work in progress | | 3,206,308 | | | 2,109,703 | |
| Nuclear fuel | | 765,661 | | | 707,852 | |
| TOTAL PROPERTY, PLANT, AND EQUIPMENT | | 74,867,690 | | | 70,385,532 | |
| Less - accumulated depreciation and amortization | | 27,444,740 | | | 26,551,203 | |
| PROPERTY, PLANT, AND EQUIPMENT - NET | | 47,422,950 | | | 43,834,329 | |
| | | | |
| DEFERRED DEBITS AND OTHER ASSETS | | | | |
| Regulatory assets: | | | | |
| Other regulatory assets (includes securitization property of $234,112 as of December 31, 2024 and $250,830 as of December 31, 2023) | | 5,255,509 | | | 5,669,404 | |
| Deferred fuel costs | | 172,201 | | | 172,201 | |
| Goodwill | | 367,625 | | | 374,099 | |
| Accumulated deferred income taxes | | 18,986 | | | 16,367 | |
| Non-current assets held for sale | | 462,797 | | | — | |
| Other | | 284,584 | | | 301,171 | |
| TOTAL | | 6,561,702 | | | 6,533,242 | |
| | | | |
| TOTAL ASSETS | | $64,790,032 | | | $59,703,396 | |
| | | | |
| See Notes to Financial Statements. | | | | |
| | | | | | | | | | | | | | |
| ENTERGY CORPORATION AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| LIABILITIES AND EQUITY |
| | |
| | | December 31, |
| | | 2024 | | 2023 |
| | | (In Thousands) |
| | | | |
| CURRENT LIABILITIES | | | | |
| Currently maturing long-term debt | | $1,378,090 | | | $2,099,057 | |
| Notes payable and commercial paper | | 927,291 | | | 1,138,171 | |
| Accounts payable | | 1,929,162 | | | 1,566,745 | |
| Customer deposits | | 462,436 | | | 446,146 | |
| Taxes accrued | | 457,093 | | | 434,213 | |
| Interest accrued | | 259,554 | | | 214,197 | |
| Deferred fuel costs | | 237,146 | | | 218,927 | |
| Pension and other postretirement liabilities | | 64,854 | | | 59,508 | |
| Other | | 395,411 | | | 219,528 | |
| TOTAL | | 6,111,037 | | | 6,396,492 | |
| | | | |
| NON-CURRENT LIABILITIES | | | | |
| Accumulated deferred income taxes and taxes accrued | | 4,467,748 | | | 4,245,982 | |
| Accumulated deferred investment tax credits | | 194,146 | | | 205,973 | |
| Regulatory liability for income taxes - net | | 1,168,078 | | | 1,033,242 | |
| Other regulatory liabilities | | 3,609,463 | | | 3,116,926 | |
| Decommissioning and asset retirement cost liabilities | | 4,713,426 | | | 4,505,782 | |
| Accumulated provisions | | 506,063 | | | 462,570 | |
| Pension and other postretirement liabilities | | 254,704 | | | 648,413 | |
| Long-term debt (includes securitization bonds of $239,622 as of December 31, 2024 and $263,007 as of December 31, 2023) | | 26,613,505 | | | 23,008,839 | |
| Customer advances for construction | | 634,587 | | | 292,077 | |
| Other | | 1,112,881 | | | 824,584 | |
| TOTAL | | 43,274,601 | | | 38,344,388 | |
| | | | |
| Commitments and Contingencies | | | | |
| | | | |
Subsidiaries’ preferred stock without sinking fund | | 219,410 | | | 219,410 | |
| | | | |
| EQUITY | | | | |
| Preferred stock, no par value, authorized 1,000,000 shares in 2024 and 2023; issued shares in 2024 and 2023 - none | | — | | | — | |
| Common stock, $0.01 par value, authorized 998,000,000 shares in 2024 and 2023; issued 561,950,696 shares in 2024 and 2023 | | 5,620 | | | 5,620 | |
| Paid-in capital | | 7,833,525 | | | 7,792,601 | |
| Retained earnings | | 12,014,315 | | | 11,940,384 | |
| Accumulated other comprehensive income (loss) | | 42,769 | | | (162,460) | |
| Less - treasury stock, at cost (132,370,280 shares in 2024 and 136,253,556 shares in 2023) | | 4,812,321 | | | 4,953,498 | |
Total shareholders’ equity | | 15,083,908 | | | 14,622,647 | |
Subsidiaries’ preferred stock without sinking fund and noncontrolling interests | | 101,076 | | | 120,459 | |
| TOTAL | | 15,184,984 | | | 14,743,106 | |
| | | | |
| TOTAL LIABILITIES AND EQUITY | | $64,790,032 | | | $59,703,396 | |
| | | | |
| See Notes to Financial Statements. | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ENTERGY CORPORATION AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY |
| For the Years Ended December 31, 2024, 2023, and 2022 |
| | | | | |
| | | | Shareholders’ Equity | | |
| | Subsidiaries’ Preferred Stock and Noncontrolling Interests | | Common Stock | | Treasury Stock | | Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Income (Loss) | | Total |
| | (In Thousands) |
| Balance at December 31, 2021 | $68,110 | | | $5,440 | | | ($5,039,699) | | | $6,763,519 | | | $10,240,552 | | | ($332,528) | | | $11,705,394 | |
| Consolidated net income (loss) (a) | (6,028) | | | — | | | — | | | — | | | 1,103,166 | | | — | | | 1,097,138 | |
| Other comprehensive income | — | | | — | | | — | | | — | | | — | | | 140,774 | | | 140,774 | |
| Common stock issuances and sales under the at the market equity distribution program | — | | | 154 | | | — | | | 861,839 | | | — | | | — | | | 861,993 | |
| Common stock issuance costs | — | | | — | | | — | | | (9,438) | | | — | | | — | | | (9,438) | |
| Common stock issuances related to stock plans | — | | | — | | | 60,705 | | | 14,178 | | | — | | | — | | | 74,883 | |
| Common stock dividends declared | — | | | — | | | — | | | — | | | (841,677) | | | — | | | (841,677) | |
| Beneficial interest in storm trust | 31,636 | | | — | | | — | | | — | | | — | | | — | | | 31,636 | |
| Capital contributions from noncontrolling interests | 24,702 | | | — | | | — | | | — | | | — | | | — | | | 24,702 | |
| Distributions to noncontrolling interests | (2,194) | | | — | | | — | | | — | | | — | | | — | | | (2,194) | |
| Preferred dividend requirements of subsidiaries (a) | (18,319) | | | — | | | — | | | — | | | — | | | — | | | (18,319) | |
| Balance at December 31, 2022 | $97,907 | | | $5,594 | | | ($4,978,994) | | | $7,630,098 | | | $10,502,041 | | | ($191,754) | | | $13,064,892 | |
| Consolidated net income (a) | 5,774 | | | — | | | — | | | — | | | 2,356,536 | | | — | | | 2,362,310 | |
| Other comprehensive income | — | | | — | | | — | | | — | | | — | | | 29,294 | | | 29,294 | |
| Common stock issuances and sales under the at the market equity distribution program | — | | | 26 | | | — | | | 132,391 | | | — | | | — | | | 132,417 | |
| Common stock issuance costs | — | | | — | | | — | | | (1,768) | | | — | | | — | | | (1,768) | |
| Common stock issuances related to stock plans | — | | | — | | | 25,496 | | | 31,880 | | | — | | | — | | | 57,376 | |
| Common stock dividends declared | — | | | — | | | — | | | — | | | (918,193) | | | — | | | (918,193) | |
| Beneficial interest in storm trust | 14,577 | | | — | | | — | | | — | | | — | | | — | | | 14,577 | |
| Capital contributions from noncontrolling interest | 25,708 | | | — | | | — | | | — | | | — | | | — | | | 25,708 | |
| Distributions to noncontrolling interests | (5,188) | | | — | | | — | | | — | | | — | | | — | | | (5,188) | |
| Preferred dividend requirements of subsidiaries (a) | (18,319) | | | — | | | — | | | — | | | — | | | — | | | (18,319) | |
| Balance at December 31, 2023 | $120,459 | | | $5,620 | | | ($4,953,498) | | | $7,792,601 | | | $11,940,384 | | | ($162,460) | | | $14,743,106 | |
| Consolidated net income (a) | 5,594 | | | — | | | — | | | — | | | 1,055,590 | | | — | | | 1,061,184 | |
| Other comprehensive income | — | | | — | | | — | | | — | | | — | | | 205,229 | | | 205,229 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Common stock issuances related to stock plans | — | | | — | | | 141,177 | | | 40,924 | | | — | | | — | | | 182,101 | |
| Common stock dividends declared | — | | | — | | | — | | | — | | | (981,659) | | | — | | | (981,659) | |
| Distributions to noncontrolling interests | (6,658) | | | — | | | — | | | — | | | — | | | — | | | (6,658) | |
| Preferred dividend requirements of subsidiaries (a) | (18,319) | | | — | | | — | | | — | | | — | | | — | | | (18,319) | |
| Balance at December 31, 2024 | $101,076 | | | $5,620 | | | ($4,812,321) | | | $7,833,525 | | | $12,014,315 | | | $42,769 | | | $15,184,984 | |
| | | | | | | | | | | | | |
| See Notes to Financial Statements. | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| (a) Consolidated net income (loss) and preferred dividend requirements of subsidiaries include $16 million for 2024, 2023, and 2022 of preferred dividends on subsidiaries’ preferred stock without sinking fund that is not presented as equity. |
ENTERGY CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
The accompanying consolidated financial statements include the accounts of Entergy Corporation and its subsidiaries. As required by GAAP in the United States of America, all intercompany transactions have been eliminated in the consolidated financial statements. Entergy’s Registrant Subsidiaries (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy) also include their separate financial statements in this Form 10-K. Historical share and share-based data presented herein, including share-based compensation, has been retroactively adjusted to reflect the two-for-one forward stock split of Entergy Corporation common stock effective December 12, 2024. See Note 7 to the financial statements for discussion of the stock split. Certain previously reported amounts in the financial statements have been reclassified to conform to current classification, with no effect on results of operations, financial positions, or cash flows. The Registrant Subsidiaries and many other Entergy subsidiaries also maintain accounts in accordance with FERC and other regulatory guidelines.
Use of Estimates in the Preparation of Financial Statements
In conformity with GAAP in the United States of America, the preparation of Entergy Corporation’s consolidated financial statements and the separate financial statements of the Registrant Subsidiaries requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities. Adjustments to the reported amounts of assets and liabilities may be necessary in the future to the extent that future estimates or actual results are different from the estimates used.
Revenues and Fuel Costs
See Note 19 to the financial statements for a discussion of Entergy’s and the Registrant Subsidiaries’ revenues and fuel costs.
Property, Plant, and Equipment
Property, plant, and equipment is stated at original cost less regulatory disallowances and impairments. Depreciation is computed on the straight-line basis at rates based on the applicable estimated service lives of the various classes of property. For the Registrant Subsidiaries, the original cost of plant retired or removed, less salvage, is charged to accumulated depreciation. Normal maintenance, repairs, and minor replacement costs are charged to operating expenses. Certain combined-cycle gas turbine generating units are maintained under long-term service agreements with third-party service providers. The costs under these agreements are split between operating expenses and capital additions based upon the nature of the work performed. Substantially all of the Registrant Subsidiaries’ plant is subject to mortgage liens.
Customers may be required to make advance payments for construction of new utility plants to reimburse the Utility operating companies for costs that are not expected to be recovered through existing retail rates. Under the regulatory framework, these payments are required to ensure the cost to serve a particular customer does not increase the utility rates charged to other utility customers. These advance payments do not reduce the retail rate charged to the customer making the payment and do not create any additional obligation for the respective Utility operating company to provide electrical service beyond the general obligation to serve all customers in its service area. Because the cost is fully reimbursed by the customer through the advance payment, the Utility operating
Entergy Corporation and Subsidiaries
Notes to Financial Statements
company does not earn a return or recover through retail rates the cost of utility plants reimbursed by these payments. These advance payments are initially recorded as a non-current liability, which is then reduced by the costs incurred to construct the associated utility plant. This results in Entergy and the Utility operating companies recording utility plant funded by customer advances at a net cost of zero, consistent with utility ratemaking treatment. As of December 31, 2024 and 2023, Entergy and the Utility operating companies have customer advances for construction as follows:
| | | | | | | | | | | |
| 2024 | | 2023 |
| (In Millions) |
| Entergy | $635 | | | $292 | |
| Entergy Arkansas | $166 | | | $96 | |
| Entergy Louisiana | $292 | | | $115 | |
| Entergy Mississippi | $113 | | | $33 | |
| Entergy New Orleans | $1 | | | $1 | |
| Entergy Texas | $63 | | | $47 | |
Electric plant includes the portion of Grand Gulf that was sold and leased back in a prior period. For financial reporting purposes, this sale and leaseback arrangement is reported as a financing transaction.
Net property, plant, and equipment (including property under lease and associated accumulated amortization) for Entergy by functional category, as of December 31, 2024 and 2023, is shown below:
| | | | | | | | | | | | | | |
| | 2024 | | 2023 |
| | | (In Millions) |
| Production | | | | |
| Nuclear | | $8,024 | | | $7,944 | |
| Other | | 7,809 | | | 7,045 | |
| Transmission | | 10,414 | | | 9,927 | |
| Distribution | | 14,321 | | | 12,927 | |
| Other | | 3,286 | | | 3,173 | |
| Construction work in progress | | 3,209 | | | 2,110 | |
| Nuclear fuel | | 766 | | | 708 | |
| Property, plant, and equipment - net (a) | | $47,829 | | | $43,834 | |
(a)Includes $403 million of natural gas property, plant, and equipment and accumulated depreciation and $3 million of construction work in progress classified as held for sale in “Non-current assets held for sale” on Entergy’s consolidated balance sheet as of December 31, 2024. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
Depreciation rates on average depreciable property for Entergy approximated 2.9% in 2024, 2.9% in 2023, and 2.8% in 2022.
Entergy amortizes nuclear fuel using a units-of-production method. Nuclear fuel amortization is included in fuel expense in the income statements.
Non-utility property - at cost (less accumulated depreciation) for Entergy is reported net of accumulated depreciation of $231 million as of December 31, 2024 and $193 million as of December 31, 2023.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Net property, plant, and equipment (including property under lease and associated accumulated amortization) for the Registrant Subsidiaries by functional category, as of December 31, 2024 and 2023, is shown below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | (In Millions) |
| Production | | | | | | | | | | | | |
| Nuclear | | $1,887 | | | $4,121 | | | $— | | | $— | | | $— | | | $2,016 | |
| Other | | 1,721 | | | 3,532 | | | 980 | | | 374 | | | 1,154 | | | — | |
| Transmission | | 2,267 | | | 4,339 | | | 1,567 | | | 155 | | | 2,054 | | | 30 | |
| Distribution | | 3,615 | | | 4,973 | | | 2,418 | | | 761 | | | 2,554 | | | — | |
| Other | | 606 | | | 1,175 | | | 385 | | | 384 | | | 318 | | | 44 | |
| Construction work in progress | | 320 | | | 762 | | | 487 | | | 20 | | | 1,513 | | | 85 | |
| Nuclear fuel | | 258 | | | 288 | | | — | | | — | | | — | | | 220 | |
| Property, plant, and equipment - net (a) | | $10,674 | | | $19,190 | | | $5,837 | | | $1,694 | | | $7,593 | | | $2,395 | |
(a)Includes $164 million of natural gas property, plant, and equipment and accumulated depreciation and $1 million of construction work in progress for Entergy Louisiana and $239 million of natural gas property, plant, and equipment and accumulated depreciation and $2 million of construction work in progress for Entergy New Orleans classified as held for sale in “Non-current assets held for sale” on their respective consolidated balance sheet as of December 31, 2024. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | (In Millions) |
| Production | | | | | | | | | | | | |
| Nuclear | | $1,859 | | | $4,153 | | | $— | | | $— | | | $— | | | $1,932 | |
| Other | | 892 | | | 3,583 | | | 958 | | | 386 | | | 1,177 | | | — | |
| Transmission | | 2,102 | | | 4,283 | | | 1,483 | | | 143 | | | 1,882 | | | 32 | |
| Distribution | | 3,395 | | | 4,371 | | | 2,272 | | | 692 | | | 2,197 | | | — | |
| Other | | 571 | | | 1,156 | | | 395 | | | 370 | | | 311 | | | 38 | |
| Construction work in progress | | 341 | | | 593 | | | 140 | | | 25 | | | 858 | | | 131 | |
| Nuclear fuel | | 214 | | | 333 | | | — | | | — | | | — | | | 161 | |
| Property, plant, and equipment - net | | $9,374 | | | $18,472 | | | $5,248 | | | $1,616 | | | $6,425 | | | $2,294 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Depreciation rates on average depreciable property for the Registrant Subsidiaries are shown below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| 2024 | 2.7% | | 2.7% | | 3.5% | | 3.3% | | 3.8% | | 2.1% |
| 2023 | 2.7% | | 2.6% | | 3.6% | | 3.3% | | 4.0% | | 1.6% |
| 2022 | 2.7% | | 2.4% | | 3.6% | | 3.2% | | 3.1% | | 2.0% |
Non-utility property - at cost (less accumulated depreciation) for Entergy Louisiana is reported net of accumulated depreciation of $225.4 million as of December 31, 2024 and $187.2 million as of December 31, 2023. Non-utility property - at cost (less accumulated depreciation) for Entergy Mississippi is reported net of accumulated depreciation of $0.5 million as of December 31, 2024 and $0.5 million as of December 31, 2023.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Jointly-Owned Generating Stations
Certain Entergy subsidiaries jointly own electric generating facilities with affiliates or third parties. All parties are required to provide their own financing. The investments, fuel expenses, and other operation and maintenance expenses associated with these generating stations are recorded by the Entergy subsidiaries to the extent of their respective undivided ownership interests. As of December 31, 2024, the subsidiaries’ investment and accumulated depreciation in each of these generating stations were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Generating Stations | | Fuel Type | | Total Megawatt Capability (a) | | Ownership | | Investment | | Accumulated Depreciation |
| | | | | | | | | | (In Millions) |
| Utility: | | | | | | | | | | | |
| Entergy Arkansas - | | | | | | | | | | | |
| Independence | Unit 1 | | Coal | | 820 | | | 31.50 | % | | $152 | | | $109 | |
| Independence | Common Facilities | | Coal | | | | 15.75 | % | | $42 | | | $32 | |
| White Bluff | Units 1 and 2 | | Coal | | 1,244 | | | 57.00 | % | | $622 | | | $412 | |
| Ouachita (b) | Common Facilities | | Gas | | | | 66.67 | % | | $174 | | | $160 | |
| Union (c) | Common Facilities | | Gas | | | | 25.00 | % | | $29 | | | $13 | |
| Entergy Louisiana - | | | | | | | | | | | |
| Roy S. Nelson | Unit 6 | | Coal | | 514 | | | 40.25 | % | | $301 | | | $231 | |
| Roy S. Nelson | Unit 6 Common Facilities | | Coal | | | | 40.25 | % | | $22 | | | $11 | |
| Big Cajun 2 | Unit 3 | | Coal | | 551 | | | 24.15 | % | | $149 | | | $140 | |
| Big Cajun 2 | Unit 3 Common Facilities | | Coal | | | | 8.05 | % | | $5 | | | $3 | |
| Ouachita (b) | Common Facilities | | Gas | | | | 33.33 | % | | $91 | | | $79 | |
| Acadia | Common Facilities | | Gas | | | | 50.00 | % | | $22 | | | $3 | |
| Union (c) | Common Facilities | | Gas | | | | 50.00 | % | | $58 | | | $15 | |
| Entergy Mississippi - | | | | | | | | | | | |
| Independence | Units 1 and 2 and Common Facilities | | Coal | | 1,662 | | | 25.00 | % | | $304 | | | $195 | |
| Entergy New Orleans - | | | | | | | | | | | |
| Union (c) | Common Facilities | | Gas | | | | 25.00 | % | | $30 | | | $11 | |
| Entergy Texas - | | | | | | | | | | | |
| Roy S. Nelson | Unit 6 | | Coal | | 514 | | | 29.75 | % | | $212 | | | $160 | |
| Roy S. Nelson | Unit 6 Common Facilities | | Coal | | | | 29.75 | % | | $8 | | | $4 | |
| Big Cajun 2 | Unit 3 | | Coal | | 551 | | | 17.85 | % | | $112 | | | $115 | |
| Big Cajun 2 | Unit 3 Common Facilities | | Coal | | | | 5.95 | % | | $4 | | | $2 | |
| Montgomery County | Unit 1 | | Gas | | 915 | | 92.44 | % | | $759 | | | $40 | |
| System Energy - | | | | | | | | | | | |
| Grand Gulf (d) | Unit 1 | | Nuclear | | 1,390 | | | 90.00 | % | | $5,674 | | | $3,580 | |
| Other: | | | | | | | | | | | |
| Independence | Unit 2 | | Coal | | 842 | | | 14.37 | % | | $81 | | | $61 | |
| Independence | Common Facilities | | Coal | | | | 7.18 | % | | $20 | | | $16 | |
| Roy S. Nelson | Unit 6 | | Coal | | 514 | | | 10.90 | % | | $121 | | | $76 | |
| Roy S. Nelson | Unit 6 Common Facilities | | Coal | | | | 10.90 | % | | $3 | | | $2 | |
(a)“Total Megawatt Capability” is the dependable summer load carrying capability as demonstrated under actual operating conditions based on the primary fuel (assuming no curtailments) that each station was designed to utilize.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
(b)Ouachita Units 1 and 2 are owned 100% by Entergy Arkansas and Ouachita Unit 3 is owned 100% by Entergy Louisiana. The investment and accumulated depreciation numbers above are only for the common facilities and not for the generating units.
(c)Union Unit 1 is owned 100% by Entergy New Orleans, Union Unit 2 is owned 100% by Entergy Arkansas, Union Units 3 and 4 are owned 100% by Entergy Louisiana. The investment and accumulated depreciation numbers above are only for the specified common facilities and not for the generating units.
(d)Includes a leasehold interest held by System Energy. System Energy’s Grand Gulf lease obligations are discussed in Note 5 to the financial statements.
Nuclear Refueling Outage Costs
Nuclear refueling outage costs are deferred during the outage and amortized over the estimated period to the next outage because these refueling outage expenses are incurred to prepare the units to operate for the next operating cycle without having to be taken off line.
Allowance for Funds Used During Construction (AFUDC)
AFUDC represents the approximate net composite interest cost of borrowed funds and a reasonable return on the equity funds used for construction by the Registrant Subsidiaries. AFUDC increases both the plant balance and earnings and is realized in cash through depreciation provisions included in the rates charged to customers.
Certain large industrial customers make advance payments to provide Entergy and the Utility operating companies the return on their investment in utility plant that they would otherwise have received by the recognition of AFUDC. When such advances are made, AFUDC is not added to the associated utility plant, which results in a lower amount of utility plant recovered through utility rates. These advance payments are initially recorded as a current liability and then amortized to income over the construction period of the related plant. As of December 31, 2024, Entergy and Entergy Louisiana have $152 million in such advances from customers recorded as current liabilities on their respective consolidated balance sheets.
Income Taxes
Entergy Corporation and the majority of its subsidiaries file a United States consolidated federal income tax return. Each tax-paying entity records income taxes as if it were a separate taxpayer and consolidating adjustments are allocated to the tax filing entities in accordance with Entergy’s intercompany income tax allocation agreements. Deferred income taxes are recorded for temporary differences between the book and tax basis of assets and liabilities, and for certain losses and credits available for carryforward.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates in the period in which the tax or rate was enacted. See the “Other Tax Matters - Tax Cuts and Jobs Act” section in Note 3 to the financial statements for discussion of the effects of the enactment of the Tax Cuts and Jobs Act in December 2017.
The benefits of investment tax credits are deferred and amortized over the average useful life of the related property, as a reduction of income tax expense, for such credits associated with rate-regulated operations in accordance with ratemaking treatment.
Accounting for the Effects of Regulation
Entergy’s Utility operating companies and System Energy are rate-regulated entities that are required to reflect the effects of rate regulation in their financial statements, including the recording of regulatory assets and liabilities, as the Utility operating companies and System Energy have rates that meet the following three criteria:
Entergy Corporation and Subsidiaries
Notes to Financial Statements
(1) are approved by a third-party regulator; (2) are designed to recover the entities’ cost of providing the regulated services or products; and (3) can reasonably be assumed will be charged to and collected from customers. These criteria may also be applied to separable portions of a utility’s business, such as the generation or transmission functions, or to specific classes of customers.
Regulatory assets represent incurred costs that have been deferred because they are probable of future recovery from customers through regulated rates. Regulatory liabilities represent (1) revenue or gains that have been deferred because it is probable such amounts will be credited to customers through future regulated rates or (2) billings in advance of expenditures for approved regulatory programs. To the extent that all or portions of the Utility operating companies or System Energy’s operations cease to be subject to rate regulation, or future recovery or settlement is no longer probable as a result of changes in regulation or other reasons, the related regulatory assets and liabilities are eliminated from the balance sheet and the impact is recognized on the income statement.
In addition, regulatory accounting requires recognition of an impairment loss if it becomes probable that part of the cost of a recently completed plant asset will be disallowed for rate-making purposes and a reasonable estimate of the amount of the disallowance can be made.
Entergy Louisiana does not apply regulatory accounting standards to the Louisiana retail deregulated portion of River Bend or to the 30% interest in River Bend formerly owned by Cajun unless specific cost recovery is provided for in tariff rates. The Louisiana retail deregulated portion of River Bend is operated under a deregulated asset plan representing a portion (approximately 15%) of River Bend plant costs, generation, revenues, and expenses established under a 1992 LPSC order. The plan allows Entergy Louisiana to sell the electricity from the deregulated assets to Louisiana retail customers at 4.6 cents per kWh or off-system at higher prices, with certain provisions for sharing incremental revenue above 4.6 cents per kWh between customers and shareholders.
Regulatory Asset or Liability for Income Taxes
Accounting standards for income taxes provide that a regulatory asset or liability be recorded if it is probable that the currently determinable future increase or decrease in regulatory income tax expense will be recovered from or credited to customers through future rates. There are two main sources of Entergy’s regulatory asset or liability for income taxes. There is a regulatory asset related to the ratemaking treatment of the tax effects of book depreciation for the equity component of AFUDC that has been capitalized to property, plant, and equipment but for which there is no corresponding tax basis. Equity-AFUDC is a component of property, plant, and equipment that is included in rate base when the plant is placed in service. There is a regulatory liability related to the adjustment of Entergy’s net deferred income taxes that was required by the enactment in December 2017 of a change in the federal corporate income tax rate, which is discussed in Note 2 and 3 to the financial statements.
Cash and Cash Equivalents
Entergy considers all unrestricted highly liquid debt instruments with an original maturity of three months or less at date of purchase to be cash equivalents.
Securitization Recovery Trust Accounts
The funds that Entergy New Orleans and Entergy Texas hold in their securitization recovery trust accounts are not classified as cash and cash equivalents or restricted cash and cash equivalents because of their nature, uses, and restrictions. These funds are classified as part of other current assets and other investments, depending on the timeframe within which the Registrant Subsidiary expects to use the funds.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Allowance for Doubtful Accounts
The allowance for doubtful accounts reflects Entergy’s best estimate of expected losses on its accounts receivable balances. The allowance is calculated as the historical rate of customer write-offs multiplied by the current accounts receivable balance, taking into account the length of time the receivable balances have been outstanding. Although the rate of customer write-offs has historically experienced minimal variation, management monitors the current condition of individual customer accounts to manage collections and ensure bad debt expense is recorded in a timely manner. The Utility operating companies’ customer accounts receivable are written off consistent with approved regulatory requirements. See Note 19 to the financial statements for further details on the allowance for doubtful accounts.
Materials and Supplies
Materials and supplies consist of tangible goods, equipment, and other materials that Entergy holds for use or consumption in the normal course of business, whether for capital projects or operation and maintenance activities, or that are required to be kept for regulatory reasons or service reliability. Materials and supplies are valued at a weighted average unit cost when expensed or capitalized, as appropriate, when used or installed. Materials and supplies are valued at the lower of weighted average cost or net realizable value, net of provisions for excess and obsolete materials and supplies.
Investments
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, for unrealized gains/(losses) on investment securities, the Registrant Subsidiaries record an offsetting amount in other regulatory liabilities/assets. For the 30% interest in River Bend formerly owned by Cajun, Entergy Louisiana records an offsetting amount in other long-term liabilities on the consolidated balance sheets of Entergy and Entergy Louisiana for the unrealized trust earnings not currently expected to be needed to decommission the plant. Decommissioning trust funds for the nuclear plants previously owned by Entergy’s non-utility operations, all of which have been sold as of June 2022, did not meet the criteria for regulatory accounting treatment. Accordingly, unrealized gains/(losses) recorded on the equity securities in the trust funds for these plants were recognized in earnings with no offsetting regulatory liability/asset amount. Unrealized gains/(losses) recorded on the available-for-sale debt securities in the trust funds were recognized in the accumulated other comprehensive income component of shareholders’ equity. 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. See Note 16 to the financial statements for details on the decommissioning trust funds.
Partnerships with Disproportionate Allocation of Earnings and Losses in Relation to an Investor’s Ownership Interest
Entergy Arkansas and Entergy Mississippi, as managing members, each control a tax equity partnership with a third party tax equity investor and consolidate the partnerships for financial reporting purposes. For each respective partnership, the limited liability company agreement with the tax equity investor stipulates a disproportionate allocation of tax attributes, earnings, and cash flows between the Registrant Subsidiary and the tax equity investor with the tax equity investor being allocated a significant portion of the tax attributes, earnings, and cash flows until it receives its target return, at which point the earnings and cash flows will primarily be allocated to the Registrant Subsidiary. Each Registrant Subsidiary has the option to purchase, at a future date specified in their respective partnership agreement, the tax equity investor’s interests at the then-current fair market value, plus an amount that results in the tax equity investor reaching its target return, if needed.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Because of this disproportionate allocation, each Registrant Subsidiary accounts for its earnings in the partnership using the HLBV method of accounting. Under the HLBV method, the amounts of income and loss attributable to both the Registrant Subsidiary and the tax equity investor reflect changes in the amount each would hypothetically receive at the balance sheet date under the respective liquidation provisions of the limited liability company agreement, assuming the net assets of the partnership were liquidated at book value, after consideration of contributions and distributions, between the Registrant Subsidiary and the tax equity investor. Once the tax equity investor reaches its target return in the hypothetical liquidation, the remaining proceeds are primarily allocated to the Registrant Subsidiary. This allocation may result in fluctuations of income on a periodic basis that differ significantly from what would otherwise be recognized if the earnings were allocated under the relative ownership percentages between the Registrant Subsidiary and the tax equity investor. Entergy Arkansas and Entergy Mississippi have determined these differences are primarily due to timing, and both the APSC and the MPSC have approved that, for purposes of ratemaking, each Registrant Subsidiary reflect its interest in its respective partnership using its relative ownership percentage and disregard the effects of the HLBV method of accounting. Because of this, each Registrant Subsidiary has recorded a regulatory liability for the difference between the earnings allocated to it under the HLBV method of accounting and the earnings that would have been allocated to it under its respective ownership percentage in the partnership.
Derivative Financial Instruments and Commodity Derivatives
The accounting standards for derivative instruments and hedging activities require that all derivatives be recognized at fair value on the balance sheet, either as assets or liabilities, unless they meet various exceptions including the normal purchase/normal sale criteria. The changes in the fair value of recognized derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and the type of hedge transaction. Due to regulatory treatment, an offsetting regulatory asset or liability is recorded for changes in fair value of recognized derivatives for the Registrant Subsidiaries.
Contracts for commodities that will be physically delivered in quantities expected to be used or sold in the ordinary course of business, including certain purchases and sales of power and fuel, meet the normal purchase, normal sales criteria and are not recognized on the balance sheet. Revenues and expenses from these contracts are reported on a gross basis in the appropriate revenue and expense categories as the commodities are received or delivered.
Entergy has determined that contracts to purchase uranium do not meet the definition of a derivative under the accounting standards for derivative instruments because they do not provide for net settlement and the uranium markets are not sufficiently liquid to conclude that forward contracts are readily convertible to cash. If the uranium markets do become sufficiently liquid in the future and Entergy begins to account for uranium purchase contracts as derivative instruments, the fair value of these contracts would be accounted for consistent with Entergy’s other derivative instruments. See Note 15 to the financial statements for further details on Entergy’s derivative instruments and hedging activities.
Fair Values
The estimated fair values of Entergy’s financial instruments and derivatives are determined using historical prices, 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 are reflected in future rates and therefore do not affect net income. 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. See Note 15 to the financial statements for further discussion of fair value.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Impairment of Long-lived Assets
Entergy periodically reviews long-lived assets whenever events or changes in circumstances indicate that recoverability of these assets is uncertain. Generally, the determination of recoverability is based on the undiscounted net cash flows expected to result from such operations and assets. Projected net cash flows depend on the expected operating life of the assets, the future operating costs associated with the assets, the efficiency and availability of the assets and generating units, and the future market and price for energy and capacity over the remaining life of the assets.
Assets Held for Sale
A long-lived asset or component of an entity meets the criteria to be classified as held for sale, generally, when management with requisite approvals commits to a plan to sell and it is probable that the sale will be completed within one year. When held for sale criteria is met, the assets and liabilities of the disposal group are separately presented as assets and liabilities held for sale on the balance sheet. Any long-lived assets of the disposal group are measured at the lower of their carrying value or their estimated fair value less costs to sell. If the disposal group meets the definition of a business, then a portion of any goodwill with that reporting unit is allocated to the disposal group based on the relative fair value of the components representing a business that will be retained and disposed.
As described in Note 14 to the financial statements, the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses met the criteria to be to classified as held for sale as of December 31, 2024.
Reacquired Debt
The premiums and costs associated with reacquired debt of Entergy’s Utility operating companies and System Energy (except that portion allocable to the deregulated operations of Entergy Louisiana) are included in regulatory assets and are being amortized over the life of the related new issuances, or over the life of the original debt issuance if the debt is not refinanced, in accordance with ratemaking treatment.
Taxes Imposed on Revenue-Producing Transactions
Governmental authorities assess taxes that are both imposed on and concurrent with a specific revenue-producing transaction between a seller and a customer, including, but not limited to, sales, use, value added, and some excise taxes. Entergy presents these taxes on a net basis, excluding them from revenues, unless required to report them differently by a regulatory authority.
New Accounting Pronouncements
The accounting standard-setting process is ongoing, and the FASB is 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 results of operations, financial positions, or cash flows.
In December 2023 the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in the ASU require enhanced income tax disclosures, primarily related to consistent categorization and disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. The ASU also removes certain disclosures that are no longer considered cost beneficial or relevant. ASU 2023-09 is effective for Entergy for fiscal years beginning after December 15, 2024. Entergy does not expect ASU 2023-09 to materially affect its results of operations, financial positions, or cash flows.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
In March 2024 the SEC issued final rules that require registrants to provide certain climate-related disclosures in annual reports and registration statements in order to enhance and standardize climate-related disclosures for investors. The final rules require a registrant to disclose, among other things: material climate-related risks; activities to mitigate or adapt to such risks; information about the registrant’s board of directors’ oversight of climate-related risks and management’s role in managing material climate-related risks; and information on any climate-related targets or goals that are material to the registrant’s business, results of operations, or financial condition. In addition, the final rules require disclosure of Scope 1 and/or Scope 2 greenhouse gas emissions on a phased-in basis by certain larger registrants when those emissions are material; the filing of an attestation report covering the required disclosure of such registrant’s Scope 1 and/or Scope 2 emissions, also on a phased-in basis; and disclosure of the financial statement effects of severe weather events and other natural conditions. The final rules provide that the phase-in compliance period is effective for Entergy beginning with its annual report for the fiscal year ending December 31, 2025. In April 2024 the SEC stayed the final rules, pending judicial review of consolidated challenges to the rules by the Court of Appeals for the Eighth Circuit. In February 2025 the Acting SEC Chairman directed the SEC staff to request that the court not schedule the case for argument to provide time for the SEC to deliberate and determine the appropriate next steps in these cases. Entergy is evaluating the effect the final rules will have on its disclosures and will continue to monitor developments related to the SEC’s stay of the rules and the litigation challenging such rules.
In November 2024 the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40).” The ASU is intended to improve disclosures around income statement expenses by requiring disaggregated information within the footnotes to the financial statements about specific expense categories in commonly presented income statement expense captions. ASU 2024-03 is effective for Entergy for fiscal years beginning after December 15, 2026. Entergy does not expect ASU 2024-03 to materially affect its results of operations, financial positions, or cash flows.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
NOTE 2. RATE AND REGULATORY MATTERS (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Regulatory Assets and Regulatory Liabilities
Regulatory assets represent incurred costs that have been deferred because they are probable of future recovery from customers through regulated rates. Regulatory liabilities represent (1) revenue or gains that have been deferred because it is probable such amounts will be credited to customers through future regulated rates or (2) billings in advance of expenditures for approved regulatory programs. In addition to the regulatory assets and liabilities that are specifically disclosed on the face of the balance sheets, the tables below provide detail of “Other regulatory assets” and “Other regulatory liabilities” that are included on Entergy’s and the Registrant Subsidiaries’ balance sheets as of December 31, 2024 and 2023 (as noted in footnotes to the tables, a portion of these regulatory assets and regulatory liabilities is classified as held for sale in the balance sheets as of December 31, 2024):
Other Regulatory Assets
Entergy
| | | | | | | | | | | |
| 2024 | | 2023 |
| | (In Millions) |
Pension & postretirement costs (Note 11 - Qualified Pension Plans, Other Postretirement Benefits, and Non-Qualified Pension Plans) (a) | $1,387.6 | | | $1,655.5 | |
Asset retirement obligation - recovery dependent upon timing of decommissioning of nuclear units or shutdown of non-nuclear power plants and solar facilities (Note 9) (a) | 1,358.7 | | | 1,285.0 | |
Removal costs (Note 9) | 1,107.6 | | | 1,010.7 | |
Storm damage costs, including hurricane costs - recovered through securitization and retail rates (Note 2 - Storm Cost Recovery Filings with Retail Regulators and Note 5 - Securitization Bonds) | 547.3 | | | 536.9 | |
Qualified pension settlement cost deferral - recovered through June 2047 (Note 11 - Qualified Pension Settlement Cost) | 227.1 | | | 250.9 | |
Retail rate deferrals - recovered through formula rates or rate riders as rates are redetermined by retail regulators | 195.1 | | | 248.6 | |
Retired electric and gas meters - recovered through retail rates as determined by retail regulators (Note 2 - Retail Rate Proceedings) | 135.7 | | | 153.8 | |
Deferred COVID-19 costs - recovered through retail rates as determined by retail regulators (Note 2 - Retail Rate Proceedings) | 104.0 | | | 118.0 | |
Unamortized loss on reacquired debt - recovered over term of debt | 57.9 | | | 63.1 | |
Advanced metering system surcharge for residential customers - recovered through December 2029 | 39.7 | | | 20.2 | |
Formula rate plan historical year rate adjustment (Note 2 - Retail Rate Proceedings) (b) | 15.5 | | | — | |
Pension & postretirement benefits expense deferral - recovered through retail rates (Note 2 - Retail Rate Proceedings and Note 11 - Entergy Texas Reserve) | 15.0 | | | 32.7 | |
| | | |
Rate case depreciation relate back deferral - recovered over a six-month period beginning January 2024 (Note 2 - Retail Rate Proceedings) | — | | | 27.6 | |
Opportunity sales - (Note 2 - Entergy Arkansas Opportunity Sales Proceeding) (b) | — | | | 131.8 | |
| Other | 99.7 | | | 134.6 | |
Entergy Total (c) | $5,290.9 | | | $5,669.4 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy Arkansas
| | | | | | | | | | | |
| | 2024 | | 2023 |
| | (In Millions) |
Asset retirement obligation - recovery dependent upon timing of decommissioning of nuclear units or shutdown of non-nuclear power plants and solar facilities (Note 9) (a) | $693.0 | | | $639.1 | |
Pension & postretirement costs (Note 11 - Qualified Pension Plans, Other Postretirement Benefits, and Non-Qualified Pension Plans) (a) | 433.3 | | | 536.6 | |
Removal costs (Note 9) | 337.9 | | | 319.7 | |
Qualified pension settlement cost deferral - recovered through June 2047 (Note 11 - Qualified Pension Settlement Cost) | 75.8 | | | 84.1 | |
Deferred COVID-19 costs - recovered over a 10-year period through December 2033 | 35.1 | | | 39.0 | |
Retired electric meters - recovered over a 15-year period through March 2034 | 32.8 | | | 36.3 | |
Storm damage costs - recovered through retail rates | 29.8 | | | 33.1 | |
Unamortized loss on reacquired debt - recovered over term of debt | 18.6 | | | 19.9 | |
Formula rate plan historical year rate adjustment (Note 2 - Retail Rate Proceedings) (b) | 15.5 | | | — | |
Retail rate deferrals - recovered through rate riders as rates are redetermined annually (b) | 13.6 | | | 24.9 | |
ANO Fukushima and Flood Barrier costs - recovered through retail rates through February 2026 (b) | 2.1 | | | 3.8 | |
Opportunity sales - (Note 2 - Entergy Arkansas Opportunity Sales Proceeding) (b) | — | | | 131.8 | |
| Other | 12.6 | | | 17.1 | |
| Entergy Arkansas Total | $1,700.1 | | | $1,885.4 | |
Entergy Louisiana
| | | | | | | | | | | |
| | 2024 | | 2023 |
| | (In Millions) |
Asset retirement obligation - recovery dependent upon timing of decommissioning of nuclear units or shutdown of non-nuclear power plants (Note 9) (a) | $421.5 | | | $408.7 | |
Pension & postretirement costs (Note 11 - Qualified Pension Plans and Non-Qualified Pension Plans) (a) | 367.7 | | | 412.0 | |
Removal costs (Note 9) | 323.2 | | | 262.3 | |
Storm damage costs, including hurricane costs - recovered through securitization and retail rates (Note 2 - Storm Cost Recovery Filings with Retail Regulators) | 226.6 | | | 202.6 | |
Qualified pension settlement cost deferral - recovered through June 2047 (Note 11 - Qualified Pension Settlement Cost) | 111.4 | | | 123.0 | |
Retired electric and gas meters - recovered over a 22-year period through July 2041 | 78.5 | | | 83.2 | |
Deferred COVID-19 costs - recovery period to be determined (Note 2 - Retail Rate Proceedings) (a) | 47.8 | | | 47.8 | |
Unamortized loss on reacquired debt - recovered over term of debt | 21.7 | | | 23.4 | |
| Other | 48.5 | | | 85.9 | |
Entergy Louisiana Total (c) | $1,646.9 | | | $1,648.9 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy Mississippi
| | | | | | | | | | | |
| | 2024 | | 2023 |
| (In Millions) |
Removal costs (Note 9) | $184.8 | | | $188.0 | |
Retail rate deferrals - recovered through formula rates or rate riders as rates are redetermined annually | 162.5 | | | 192.8 | |
Pension & postretirement costs (Note 11 - Qualified Pension Plans, Other Postretirement Benefits, and Non-Qualified Pension Plans) (a) | 112.1 | | | 127.6 | |
Qualified pension settlement cost deferral - recovered through June 2047 (Note 11 - Qualified Pension Settlement Cost) | 29.1 | | | 32.0 | |
Asset retirement obligation - recovery dependent upon timing of shutdown of non-nuclear power plants and solar facility (Note 9) (a) | 9.4 | | | 6.8 | |
Unamortized loss on reacquired debt - recovered over term of debt | 9.1 | | | 10.0 | |
Attorney General litigation costs - recovered over a six-year period through March 2026 (b) | 6.0 | | | 10.9 | |
| | | |
| Other | 12.8 | | | 11.0 | |
| Entergy Mississippi Total | $525.8 | | | $579.1 | |
Entergy New Orleans
| | | | | | | | | | | |
| | 2024 | | 2023 |
| | (In Millions) |
Removal costs (Note 9) | $62.5 | | | $61.1 | |
Pension & postretirement costs (Note 11 - Qualified Pension Plans, Other Postretirement Benefits, and Non-Qualified Pension Plans) (a) | 22.9 | | | 41.4 | |
Retired electric and gas meters - recovered over a 12-year period through July 2031 (b) | 13.5 | | | 15.5 | |
Gas cross-boring costs - recovered through formula rates as rates are redetermined by retail regulators | 11.9 | | | 10.9 | |
Qualified pension settlement cost deferral - recovered through June 2047 (Note 11 - Qualified Pension Settlement Cost) | 10.8 | | | 11.8 | |
Deferred COVID-19 costs - recovered over a five-year period through August 2028 (b) | 10.2 | | | 13.0 | |
Storm damage costs, including hurricane costs - recovered through securitization and retail rates (Note 2 - Storm Cost Recovery Filings with Retail Regulators and Note 5 - Entergy New Orleans Securitization Bonds - Hurricane Isaac) | 4.0 | | | 3.9 | |
Unamortized loss on reacquired debt - recovered over term of debt | 0.5 | | | 0.8 | |
| Other | 20.7 | | | 24.0 | |
Entergy New Orleans Total (c) | $157.0 | | | $182.4 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy Texas
| | | | | | | | | | | |
| | 2024 | | 2023 |
| | (In Millions) |
Storm damage costs, including hurricane costs - recovered through securitization and retail rates (Note 2 - Storm Cost Recovery Filings with Retail Regulators and Note 5 - Entergy Texas Securitization Bonds - Hurricane Laura, Hurricane Delta, and Winter Storm Uri) | $286.5 | | | $297.3 | |
Removal costs (Note 9) | 102.3 | | | 77.5 | |
Pension & postretirement costs (Note 11 - Qualified Pension Plans, Other Postretirement Benefits, and Non-Qualified Pension Plans) (a) | 62.9 | | | 85.6 | |
Advanced metering system surcharge for residential customers - recovered through December 2029 | 39.7 | | | 20.2 | |
Pension & postretirement benefits expense deferral - recovered through retail rates (Note 2 - Retail Rate Proceedings and Note 11 - Entergy Texas Reserve) | 15.0 | | | 32.7 | |
Retired electric meters - recovered through retail rates (Note 2 - Retail Rate Proceedings) | 10.9 | | | 18.8 | |
Neches and Sabine costs - recovered over a 10-year period through September 2028 | 9.2 | | | 11.6 | |
Unamortized loss on reacquired debt - recovered over term of debt | 7.6 | | | 8.3 | |
Rate case depreciation relate back deferral - recovered over a six-month period beginning January 2024 (Note 2 - Retail Rate Proceedings) | — | | | 27.6 | |
| Other | 15.6 | | | 17.0 | |
| Entergy Texas Total | $549.7 | | | $596.6 | |
System Energy
| | | | | | | | | | | |
| | 2024 | | 2023 |
| | (In Millions) |
Asset retirement obligation - recovery dependent upon timing of decommissioning of nuclear unit (Note 9) (b) | $224.8 | | | $222.0 | |
Pension & postretirement costs (Note 11 - Qualified Pension Plans and Other Postretirement Benefits) (a) | 104.4 | | | 121.6 | |
Removal costs - recovered through depreciation rates (Note 9) | 96.9 | | | 102.1 | |
Unamortized loss on reacquired debt - recovered over term of debt | 0.4 | | | 0.7 | |
| System Energy Total | $426.5 | | | $446.4 | |
(a)Does not earn a return on investment, but is offset by related liabilities.
(b)Does not earn a return on investment.
(c)Includes $35.4 million at Entergy, $8.9 million at Entergy Louisiana, and $23.7 million at Entergy New Orleans as of December 31, 2024 of regulatory assets related to the respective natural gas distribution businesses classified as held for sale and included within “Non-current assets held for sale” on the respective consolidated balance sheets. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Other Regulatory Liabilities
Entergy
| | | | | | | | | | | |
| 2024 | | 2023 |
| (In Millions) |
Unrealized gains on nuclear decommissioning trust funds (Note 16) (a) | $2,262.5 | | | $1,826.2 | |
Securitization financing savings obligation (Note 3) | 371.3 | | | 405.2 | |
Retail rate rider over-recovery - refunded through formula rate or rate riders as rates are redetermined by retail regulators | 164.9 | | | 142.7 | |
Credits from resolution of the 2016-2018 IRS audit (Note 3) | 163.3 | | | 98.0 | |
Customer rate credits from global stipulated settlement with the LPSC - returned to customers September 2024 through August 2026 (Note 2) | 121.7 | | | — | |
Refund from System Energy settlement with the LPSC - to be returned to customers January 2025 through August 2027 (Note 2) | 75.8 | | | — | |
Deferred tax equity partnership earnings (Note 1) | 69.9 | | | 57.9 | |
Vidalia purchased power agreement (Note 8) | 67.4 | | | 82.5 | |
Refund from System Energy settlement with the City Council - returned to customers over a 25-year period beginning September 2024 (Note 2) | 64.7 | | | — | |
Shorter-term financing interest earnings (Note 2 - Retail Rate Proceedings) (a) | 48.9 | | | 36.8 | |
Entergy Arkansas’s accumulated accelerated Grand Gulf amortization - will be returned to customers when approved by the APSC and the FERC | 44.4 | | | 44.4 | |
Asset retirement obligation - return to customers dependent upon timing of decommissioning (Note 9) (a) | 40.9 | | | 44.3 | |
Refund from System Energy settlement with the City Council - return to customers to be determined (Note 2) | 32.0 | | | — | |
Refund from System Energy settlement with the APSC - refunded through a rate rider as rates are re-determined periodically (Note 2) | 8.2 | | | 93.0 | |
Complaints against System Energy - potential future refunds (Note 2) | — | | | 177.9 | |
| Other | 75.2 | | | 108.0 | |
Entergy Total (b) | $3,611.1 | | | $3,116.9 | |
Entergy Arkansas
| | | | | | | | | | | |
| | 2024 | | 2023 |
| | (In Millions) |
Unrealized gains on nuclear decommissioning trust funds (Note 16) (a) | $761.3 | | | $621.6 | |
Deferred tax equity partnership earnings (Note 1) | 32.4 | | | 27.4 | |
Retail rate rider over-recovery - refunded through rate riders as rates are redetermined annually | 27.9 | | | 10.6 | |
Refund from System Energy settlement with the APSC - refunded through a rate rider as rates are re-determined periodically (Note 2) | 8.2 | | | 93.0 | |
Internal restructuring guaranteed customer credits - returned to customers over a six-year period through December 2024 | — | | | 6.6 | |
| Other | 1.4 | | | — | |
| Entergy Arkansas Total | $831.2 | | | $759.2 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy Louisiana
| | | | | | | | | | | |
| | 2024 | | 2023 |
| | (In Millions) |
Unrealized gains on nuclear decommissioning trust funds (Note 16) (a) | $798.4 | | | $644.0 | |
Securitization financing savings obligation (Note 3) | 371.3 | | | 405.2 | |
Customer rate credits from global stipulated settlement with the LPSC - returned to customers September 2024 through August 2026 (Note 2) | 121.7 | | | — | |
Retail rate rider over-recovery - refunded through rate riders as rates are redetermined annually | 96.3 | | | 86.4 | |
Refund from System Energy settlement with the LPSC - to be returned to customers January 2025 through August 2027 (Note 2) | 75.8 | | | — | |
Vidalia purchased power agreement (Note 8) | 67.4 | | | 82.5 | |
Shorter-term financing interest earnings (Note 2 - Retail Rate Proceedings) (a) | 48.9 | | | 36.8 | |
Asset retirement obligation - return to customers dependent upon timing of decommissioning (Note 9) (a) | 40.9 | | | 44.3 | |
Hurricane Ida insurance proceeds - returned to customers August 2024 to July 2025 | 26.0 | | | 32.3 | |
Credits from resolution of the 2016-2018 IRS audit - returned to customers September 2024 through August 2025 (Note 3) | 25.3 | | | 38.0 | |
Sale-leaseback and depreciation refunds - returned to customers September 2023 through August 2024 | — | | | 14.1 | |
| Other | 21.7 | | | 24.1 | |
Entergy Louisiana Total (b) | $1,693.7 | | | $1,407.7 | |
Entergy Mississippi
| | | | | | | | | | | |
| 2024 | | 2023 |
| | (In Millions) |
Deferred tax equity partnership earnings (Note 1) | $37.5 | | | $30.5 | |
Retail rate rider over-recovery - refunded through formula rate or rate riders as rates are redetermined annually | 12.2 | | | 2.4 | |
Other postretirement benefits (Note 11 - Entergy Mississippi Other Postretirement Benefits) | 7.4 | | | — | |
| Other | 2.4 | | | 0.8 | |
| Entergy Mississippi Total | $59.5 | | | $33.7 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy New Orleans
| | | | | | | | | | | |
| 2024 | | 2023 |
| | (In Millions) |
Credits from resolution of the 2016-2018 IRS audit - to be returned to customers over a 25-year period beginning January 2025 (Note 3) | $138.0 | | | $60.0 | |
Refund from System Energy settlement with the City Council - returned to customers over a 25-year period beginning September 2024 (Note 2) | 64.7 | | | — | |
Refund from System Energy settlement with the City Council - return to customers to be determined (Note 2) | 32.0 | | | — | |
Retail rate rider over-recovery - refunded through rate riders as rates are redetermined annually | 16.3 | | | 20.1 | |
Sale-leaseback and depreciation refunds - returned to customers over a 10-year period beginning September 2023 (Note 2) | 5.2 | | | 9.8 | |
| Other | 4.5 | | | 0.5 | |
Entergy New Orleans Total (b) | $260.7 | | | $90.4 | |
Entergy Texas
| | | | | | | | | | | |
| | 2024 | | 2023 |
| | (In Millions) |
Retail rate rider over-recovery - return to customers to be determined | $12.2 | | | $23.8 | |
Retail refunds - return to customers to be determined | 6.2 | | | 6.2 | |
Rate case settlement relate back - amortized over a six-month period beginning January 2024 (Note 2 - Retail Rate Proceedings) | — | | | 10.3 | |
| | | |
| Other | 0.3 | | | 2.7 | |
| Entergy Texas Total | $18.7 | | | $43.0 | |
System Energy
| | | | | | | | | | | |
| | 2024 | | 2023 |
| | (In Millions) |
Unrealized gains on nuclear decommissioning trust funds (Note 16) (a) | $702.8 | | | $560.6 | |
Entergy Arkansas’s accumulated accelerated Grand Gulf amortization - will be returned to customers when approved by the APSC and the FERC | 44.4 | | | 44.4 | |
Complaints against System Energy - potential future refunds (Note 2) | — | | | 177.9 | |
| System Energy Total | $747.2 | | | $782.9 | |
(a)Offset by related asset.
(b)Includes $1.6 million at Entergy, $1.2 million at Entergy Louisiana, and $0.4 million at Entergy New Orleans as of December 31, 2024 of regulatory liabilities related to the respective natural gas distribution businesses classified as held for sale and included within other non-current liabilities on the respective consolidated balance sheets. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Regulatory activity regarding the Tax Cuts and Jobs Act
See the “Other Tax Matters - Tax Cuts and Jobs Act” section in Note 3 to the financial statements for discussion of the effects of the December 2017 enactment of the Tax Cuts and Jobs Act (Tax Act), including its effects on Entergy’s and the Registrant Subsidiaries’ regulatory asset/liability for income taxes.
Entergy Louisiana
In an electric formula rate plan settlement approved by the LPSC in April 2018, the parties agreed that Entergy Louisiana would return to customers one-half of its eligible unprotected excess deferred income taxes from May 2018 through December 2018 and return to customers the other half from January 2019 through August 2022. In addition, the settlement provided that in order to flow back to customers certain other tax benefits created by the Tax Act, Entergy Louisiana established a regulatory liability effective January 1, 2018 in the amount of $9.1 million per month to reflect these tax benefits already included in retail rates until new base rates under the formula rate plan were established in September 2018, and this regulatory liability was returned to customers over the September 2018 through August 2019 formula rate plan rate-effective period. The LPSC staff and intervenors in the settlement reserved the right to obtain data from Entergy Louisiana to confirm the determination of excess accumulated deferred income taxes resulting from the Tax Act and the analysis thereof as part of the formula rate plan review proceeding for the 2017 test year filing. As discussed below in “Retail Rate Proceedings - Filings with the LPSC (Entergy Louisiana) - Retail Rates - Electric - Formula Rate Plan Global Settlement”, a global settlement resolving the outstanding issues related to the 2017 formula rate plan filing was reached in October 2023 and approved by the LPSC in November 2023.
System Energy
In a filing made with the FERC in March 2018, System Energy proposed revisions to the Unit Power Sales Agreement to reflect the effects of the Tax Act. In the filing System Energy proposed to return identified quantities of unprotected excess accumulated deferred income taxes to its customers by the end of 2018. In May 2018 the FERC accepted System Energy’s proposed tax revisions with an effective date of June 1, 2018, subject to refund and the outcome of settlement and hearing procedures. Settlement discussions were terminated in April 2019, and a hearing was held in March 2020. In December 2022 the FERC issued an order requiring System Energy to compute the amount of excess accumulated deferred income taxes associated with a previously uncertain decommissioning tax position with consideration for the resolution of the tax position by the IRS. In February 2023, System Energy submitted its compliance filing. This matter was ultimately settled as a result of System Energy’s settlements with the MPSC, the APSC, the City Council, and the LPSC. See “Complaints Against System Energy” below for further discussion of the System Energy settlements with the MPSC, the APSC, the City Council, and the LPSC.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Fuel and purchased power cost recovery
The Utility operating companies are allowed to recover fuel and purchased power costs through fuel mechanisms included in electric and gas rates that are recorded as fuel cost recovery revenues. The difference between revenues collected and the current fuel and purchased power costs is generally recorded as “Deferred fuel costs” on the Utility operating companies’ financial statements. The table below shows the amount of deferred fuel costs as of December 31, 2024 and 2023 that each Utility operating company expects to recover (or return to customers) through fuel mechanisms, subject to subsequent regulatory review.
| | | | | | | | | | | |
| | 2024 | | 2023 |
| | (In Millions) |
| Entergy Arkansas | ($45.2) | | | ($88.3) | |
| Entergy Louisiana (a) (b) | $163.4 | | | $192.9 | |
| Entergy Mississippi | ($126.3) | | | ($130.6) | |
| Entergy New Orleans (a) (b) | $8.0 | | | $10.2 | |
| Entergy Texas | ($59.3) | | | $139.0 | |
(a)Includes $168.1 million in both years for Entergy Louisiana and $4.1 million in both years for Entergy New Orleans of fuel, purchased power, and capacity costs, which do not currently earn a return on investment and whose recovery periods are indeterminate but are expected to be recovered over a period greater than twelve months.
(b)Includes $0.7 million at Entergy Louisiana and $4.9 million at Entergy New Orleans as of December 31, 2024 of deferred fuel assets related to the respective natural gas distribution businesses classified as held for sale and included within “Current assets held for sale” on the respective consolidated balance sheets. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
Entergy Arkansas
Energy Cost Recovery Rider
Entergy Arkansas’s retail rates include an energy cost recovery rider to recover fuel and purchased energy costs in monthly customer bills. The rider utilizes the prior calendar-year energy costs and projected energy sales for the twelve-month period commencing on April 1 of each year to develop an energy cost rate, which is redetermined annually and includes a true-up adjustment reflecting the over- or under-recovery, including carrying charges, of the energy costs for the prior calendar year. The energy cost recovery rider tariff also allows an interim rate request depending upon the level of over- or under-recovery of fuel and purchased energy costs.
In January 2014, Entergy Arkansas filed a motion with the APSC relating to its upcoming energy cost rate redetermination filing that was made in March 2014. In that motion, Entergy Arkansas requested that the APSC authorize Entergy Arkansas to exclude from the redetermination of its 2014 energy cost rate $65.9 million of incremental fuel and replacement energy costs incurred in 2013 as a result of the ANO stator incident. Entergy Arkansas requested that the APSC authorize Entergy Arkansas to retain that amount in its deferred fuel balance, with recovery to be reviewed in a later period after more information was available regarding various claims associated with the ANO stator incident. In February 2014 the APSC approved Entergy Arkansas’s request to retain that amount in its deferred fuel balance. In July 2017, Entergy Arkansas filed for a change in rates pursuant to its formula rate plan rider. In that proceeding, the APSC approved a settlement agreement agreed upon by the parties, including a provision that requires Entergy Arkansas to initiate a regulatory proceeding for the purpose of recovering funds currently withheld from rates and related to the stator incident, including the $65.9 million of deferred fuel and purchased energy costs and costs related to the incremental oversight previously noted, subject to certain timelines and conditions set forth in the settlement agreement. In October 2023, Entergy Arkansas made a
Entergy Corporation and Subsidiaries
Notes to Financial Statements
commitment to the APSC to make a filing to forgo its opportunity to seek recovery of the incremental fuel and purchased energy expense, among other identified costs, resulting from the ANO stator incident. As a result, in third quarter 2023, Entergy Arkansas recorded a write-off of its regulatory asset for deferred fuel of $68.9 million, which includes interest, related to the ANO stator incident. Consistent with its October 2023 commitment, Entergy Arkansas filed a motion to forgo recovery in November 2023, and the motion was approved by the APSC in December 2023. See the “ANO Damage, Outage, and NRC Reviews” section in Note 8 to the financial statements for further discussion of the ANO stator incident and the approved motion to forgo recovery.
In March 2017, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which reflected an increase in the rate from $0.01164 per kWh to $0.01547 per kWh. The APSC staff filed testimony in March 2017 recommending that the redetermined rate be implemented with the first billing cycle of April 2017 under the normal operation of the tariff. Accordingly, the redetermined rate went into effect on March 31, 2017 pursuant to the tariff. In July 2017 the Arkansas Attorney General requested additional information to support certain of the costs included in Entergy Arkansas’s 2017 energy cost rate redetermination.
In March 2018, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which reflected an increase in the rate from $0.01547 per kWh to $0.01882 per kWh. The Arkansas Attorney General filed a response to Entergy Arkansas’s annual redetermination filing requesting that the APSC suspend the proposed tariff to investigate the amount of the redetermination or, alternatively, to allow recovery subject to refund. Among the reasons the Attorney General cited for suspension were questions pertaining to how Entergy Arkansas forecasted sales and potential implications of the Tax Cuts and Jobs Act. Entergy Arkansas replied to the Attorney General’s filing and stated that, to the extent there are questions pertaining to its load forecasting or the operation of the energy cost recovery rider, those issues exceed the scope of the instant rate redetermination. Entergy Arkansas also stated that potential effects of the Tax Cuts and Jobs Act are appropriately considered in the APSC’s separate proceeding regarding potential implications of the tax law. The APSC general staff filed a reply to the Attorney General’s filing and agreed that Entergy Arkansas’s filing complied with the terms of the energy cost recovery rider. The redetermined rate became effective with the first billing cycle of April 2018. Subsequently in April 2018 the APSC issued an order declining to suspend Entergy Arkansas’s energy cost recovery rider rate and declining to require further investigation at that time of the issues suggested by the Attorney General in the proceeding. Following a period of discovery, the Attorney General filed a supplemental response in October 2018 raising new issues with Entergy Arkansas’s March 2018 rate redetermination and asserting that $45.7 million of the increase should be collected subject to refund pending further investigation. Entergy Arkansas filed to dismiss the Attorney General’s supplemental response, the APSC general staff filed a motion to strike the Attorney General’s filing, and the Attorney General filed a supplemental response disputing Entergy Arkansas and the APSC staff’s filing. Applicable APSC rules and processes authorize its general staff to initiate periodic audits of Entergy Arkansas’s energy cost recovery rider. In late-2018 the APSC general staff notified Entergy Arkansas it initiated an audit of the 2017 fuel costs. The time in which the audit will be complete is uncertain at this time.
In March 2022, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which reflected an increase in the rate from $0.00959 per kWh to $0.01785 per kWh. The primary reason for the rate increase was a large under-recovered balance as a result of higher natural gas prices in 2021, particularly in the fourth quarter 2021. At the request of the APSC general staff, Entergy Arkansas deferred its request for recovery of $32 million from the under-recovery related to the February 2021 winter storms until the 2023 energy cost rate redetermination, unless a request for an interim adjustment to the energy cost recovery rider is necessary. This resulted in a redetermined rate of $0.016390 per kWh, which became effective with the first billing cycle in April 2022 through the normal operation of the tariff. In February 2023 the APSC issued orders initiating proceedings with the utilities under its jurisdiction to address the prudence of costs incurred and appropriate cost allocation of the February 2021 winter storms. With respect to any prudence review of Entergy Arkansas fuel costs, as part of the APSC’s draft report issued in its February 2021 winter storms investigation docket, the APSC included findings that the load shedding plans of the investor-owned utilities and some cooperatives were appropriate and comprehensive, and, further, that Entergy Arkansas’s emergency plan was
Entergy Corporation and Subsidiaries
Notes to Financial Statements
comprehensive and had a multilayered approach supported by a system-wide response plan, which is considered an industry standard. In September 2023 the APSC issued an order in Entergy Arkansas's company-specific proceeding and found that Entergy Arkansas’s practices during the winter storms were prudent.
In March 2023, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which reflected an increase in the rate from $0.01639 per kWh to $0.01883 per kWh. The primary reason for the rate increase is a large under-recovered balance as a result of higher natural gas prices in 2022 and a $32 million deferral related to the February 2021 winter storms consistent with the APSC general staff’s request in 2022. The under-recovered balance included in the filing was partially offset by the proceeds of the $41.7 million refund that System Energy made to Entergy Arkansas in January 2023 related to the sale-leaseback renewal costs and depreciation litigation as calculated in System Energy’s January 2023 compliance report filed with the FERC. See “Complaints Against System Energy - Grand Gulf Sale-leaseback Renewal Complaint and Uncertain Tax Position Rate Base Issue” below for discussion of the compliance report filed by System Energy with the FERC in January 2023. The redetermined rate of $0.01883 per kWh became effective with the first billing cycle in April 2023 through the normal operation of the tariff.
In March 2024, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which reflected a decrease in the rate from $0.01883 per kWh to $0.00882 per kWh. Due to a change in law in the State of Arkansas, the annual redetermination included $9 million, recorded as a credit to fuel expense in first quarter 2024, for recovery attributed to net metering costs in 2023. The primary reason for the rate decrease is a large over-recovered balance as a result of lower natural gas prices in 2023. To mitigate the effect of projected increases in natural gas prices in 2024, Entergy Arkansas adjusted the over-recovered balance included in the March 2024 annual redetermination filing by $43.7 million. This adjustment is expected to reduce the rate change that will be reflected in the 2025 energy cost rate redetermination. The redetermined rate of $0.00882 per kWh became effective with the first billing cycle in April 2024 through the normal operation of the tariff.
Entergy Louisiana
Entergy Louisiana recovers electric fuel and purchased power costs for the billing month based upon the level of such costs incurred two months prior to the billing month. Entergy Louisiana’s purchased gas adjustments include estimates for the billing month adjusted by a surcharge or credit that arises from an annual reconciliation of fuel costs incurred with fuel cost revenues billed to customers, including carrying charges.
To mitigate high electric bills, primarily driven by high summer usage and elevated gas prices, Entergy Louisiana deferred approximately $225 million of fuel expense incurred in April, May, June, July, August, and September 2022 (as reflected on June, July, August, September, October, and November 2022 bills). These deferrals were included in the over/under calculation of the fuel adjustment clause, which is intended to recover the full amount of the costs included on a rolling twelve-month basis.
In March 2020 the LPSC staff provided notice of an audit of Entergy Louisiana’s fuel adjustment clause filings. The audit includes a review of the reasonableness of charges flowed through Entergy Louisiana’s fuel adjustment clause for the period from 2016 through 2019. The LPSC staff issued its audit report in September 2021, and although certain internal record keeping recommendations were made, the LPSC staff did not recommend any disallowances. The next step is for the LPSC to review the report, but there is not a deadline for the review.
In January 2023 the LPSC staff provided notice of an audit of Entergy Louisiana’s purchased gas adjustment clause filings. The audit includes a review of the reasonableness of charges flowed through Entergy Louisiana’s purchased gas adjustment clause for the period from 2021 through 2022. Discovery is ongoing, and no audit report has been filed.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
In January 2023 the LPSC staff provided notice of an audit of Entergy Louisiana’s fuel adjustment clause filings. The audit includes a review of the reasonableness of charges flowed through Entergy Louisiana’s fuel adjustment clause for the period from 2020 through 2022. Discovery is ongoing, and no audit report has been filed.
Entergy Mississippi
Entergy Mississippi’s rate schedules include an energy cost recovery rider and a power management rider, both of which are adjusted annually to reflect accumulated over- or under-recoveries. Entergy Mississippi recovers fuel and purchased energy costs through its energy cost recovery rider and recovers costs associated with natural gas hedging and capacity payments through its power management rider. Entergy Mississippi’s fuel cost recoveries are subject to annual audits conducted pursuant to the authority of the MPSC.
In November 2021, Entergy Mississippi filed its annual redetermination of the annual factor to be applied under the energy cost recovery rider. The calculation of the annual factor included an under-recovery of approximately $80.6 million as of September 30, 2021. In December 2021, at the request of the MPSC, Entergy Mississippi submitted a proposal to mitigate the impact of rising fuel costs on customer bills during 2022. Entergy Mississippi proposed that the deferred fuel balance as of December 31, 2021, which was $121.9 million, be amortized over three years and that the MPSC authorize Entergy Mississippi to apply its weighted-average cost of capital as the carrying cost for the unamortized fuel balance. In January 2022 the MPSC approved the amortization of $100 million of the deferred fuel balance over two years and authorized Entergy Mississippi to apply its weighted-average cost of capital as the carrying cost for the unamortized fuel balance. The MPSC approved the proposed energy cost factor effective for February 2022 bills.
See “Complaints Against System Energy - System Energy Settlement with the MPSC” below for discussion of the settlement agreement filed with the FERC in June 2022. The settlement, which was approved by the FERC in November 2022, provided for a refund of $235 million from System Energy to Entergy Mississippi. In July 2022 the MPSC directed the disbursement of settlement proceeds, ordering Entergy Mississippi to provide a one-time $80 bill credit to each of its approximately 460,000 retail customers to be effective during the September 2022 billing cycle and to apply the remaining proceeds to Entergy Mississippi’s under-recovered deferred fuel balance. In accordance with the MPSC’s directive, Entergy Mississippi provided approximately $36.7 million in customer bill credits as a result of the settlement. In November 2022, Entergy Mississippi applied the remaining settlement proceeds in the amount of approximately $198.3 million to Entergy Mississippi’s under-recovered deferred fuel balance.
Entergy Mississippi had a deferred fuel balance of approximately $291.7 million under the energy cost recovery rider as of July 31, 2022, along with an over-recovery balance of $51.1 million under the power management rider. Without further action, Entergy Mississippi anticipated a year-end deferred fuel balance of approximately $200 million after application of a portion of the System Energy settlement proceeds, as discussed above. In September 2022, Entergy Mississippi filed for interim adjustments under both the energy cost recovery rider and the power management rider. Entergy Mississippi proposed five monthly incremental adjustments to the net energy cost factor designed to collect the under-recovered fuel balance as of July 31, 2022 and to reflect the recovery of a higher natural gas price. Entergy Mississippi also proposed five monthly incremental adjustments to the power management adjustment factor designed to flow through to customers the over-recovered power management rider balance as of July 31, 2022. In October 2022 the MPSC approved modified interim adjustments to Entergy Mississippi’s energy cost recovery rider and power management rider. The MPSC approved dividing the energy cost recovery rider interim adjustment into two components that would allow Entergy Mississippi to (1) recover a natural gas fuel rate that is better aligned with current prices; and (2) recover the estimated under-recovered deferred fuel balance as of September 30, 2022 over a period of 20 months. The MPSC approved six monthly incremental adjustments to the net energy cost factor designed to reflect the recovery of a higher natural gas price. The MPSC also approved six monthly incremental adjustments to the power management adjustment factor designed to flow through to customers the over-recovered power management rider balance. In accordance
Entergy Corporation and Subsidiaries
Notes to Financial Statements
with the order of the MPSC, Entergy Mississippi did not file an annual redetermination of the energy cost recovery rider or the power management rider in November 2022.
In June 2023 the MPSC approved the joint stipulation agreement between Entergy Mississippi and the Mississippi Public Utilities Staff for Entergy Mississippi’s 2023 formula rate plan filing. The stipulation directed Entergy Mississippi to make a compliance filing to revise its power management cost adjustment factor, to revise its grid modernization cost adjustment factor, and to include a revision to reduce the net energy cost factor to a level necessary to reflect an average natural gas price of $4.50 per MMBtu. The MPSC approved the compliance filing in June 2023, effective for July 2023 bills. See “Retail Rate Proceedings - Filings with the MPSC (Entergy Mississippi) - Retail Rates - 2023 Formula Rate Plan Filing” below for further discussion of the 2023 formula rate plan filing and the joint stipulation agreement.
In November 2023 Entergy Mississippi filed its annual redeterminations of the energy cost factor and the power management cost adjustment factor. The calculation of the annual factor for the energy cost recovery rider included a projected over-recovery balance of approximately $142 million at the end of January 2024. The calculation of the annual factor for the power management rider included a projected under-recovery of $47 million at the end of January 2024. In January 2024 the MPSC approved the proposed energy cost factor and the proposed power management cost factor effective for February 2024 bills.
In June 2024 the MPSC approved the joint stipulation agreement between Entergy Mississippi and the Mississippi Public Utilities Staff for Entergy Mississippi’s 2024 formula rate plan filing. The 2024 formula rate plan filing included the conclusion of the modified interim adjustments to Entergy Mississippi’s energy cost recovery rider and power management rider, which were approved in October 2022 and allowed Entergy Mississippi to recover certain under-collected fuel balances, effective for July 2024 bills. The stipulation provided for Entergy Mississippi to reduce its net energy cost factor. See “Retail Rate Proceedings - Filings with the MPSC (Entergy Mississippi) - Retail Rates - 2024 Formula Rate Plan Filing” below for further discussion of the 2024 formula rate plan filing and the joint stipulation agreement.
In November 2024, Entergy Mississippi filed its annual redeterminations of the energy cost factor and the power management cost adjustment factor. The calculation of the annual factor for the energy cost recovery rider included a projected over-recovery balance of approximately $144.6 million as of September 2024. The calculation of the annual factor for the power management rider included a projected under-recovery of $60.1 million as of September 2024. In January 2025 the MPSC approved a revised energy cost factor, effective for February 2025 bills, that did not reflect the fuel savings associated with Entergy Mississippi’s incremental increase in its share of capacity and energy in connection with Entergy Mississippi’s assumption of Entergy Louisiana’s entitlements to Grand Gulf capacity and energy, which was subject to the MPSC’s review at such time. In February 2025 the MPSC approved Entergy Mississippi’s notice of intent for Entergy Mississippi’s assumption of Entergy Louisiana’s entitlements to Grand Gulf capacity and energy, with associated fuel savings to be reflected in Entergy Mississippi’s energy cost recovery rider, effective for March 2025 bills. Additionally, in February 2025 the MPSC approved the proposed power management cost adjustment factor, effective for March 2025 bills.
Entergy New Orleans
Entergy New Orleans’s electric rate schedules include a fuel adjustment tariff designed to reflect no more than targeted fuel and purchased power costs, adjusted by a surcharge or credit for deferred fuel expense arising from the monthly reconciliation of actual fuel and purchased power costs incurred with fuel cost revenues billed to customers, including carrying charges.
Entergy New Orleans’s gas rate schedules include a purchased gas adjustment to reflect estimated gas costs for the billing month, adjusted by a surcharge or credit similar to that included in the electric fuel adjustment clause, including carrying charges.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy Texas
Entergy Texas’s rate schedules include a fixed fuel factor to recover fuel and purchased power costs, including interest, not recovered in base rates. Historically, semi-annual revisions of the fixed fuel factor have been made in March and September based on the market price of natural gas and changes in fuel mix. The amounts collected under Entergy Texas’s fixed fuel factor and any interim surcharge or refund are subject to fuel reconciliation proceedings before the PUCT. In 2023 the Texas legislature modified the Texas Utilities Code to provide that material over- and under-recovered fuel balances are to be refunded or surcharged through interim fuel adjustments and that fuel reconciliations must be filed at least once every two years. Entergy Texas expects the PUCT to undertake a rulemaking to effectuate the new legislation in 2025.
In May 2022, Entergy Texas filed an application with the PUCT to implement an interim fuel surcharge to collect the cumulative under-recovery of approximately $51.7 million, including interest, of fuel and purchased power costs incurred from May 1, 2020 through December 31, 2021. The under-recovery balance was primarily attributable to the impacts of Winter Storm Uri, including historically high natural gas prices, partially offset by settlements received by Entergy Texas from MISO related to Hurricane Laura. Entergy Texas proposed that the interim fuel surcharge be assessed over a period of six months beginning with the first billing cycle after the PUCT issues a final order, but no later than the first billing cycle of September 2022. Also in May 2022, the PUCT referred the proceeding to the State Office of Administrative Hearings. In July 2022, Entergy Texas filed on behalf of the parties an unopposed settlement resolving all issues in the proceeding. In addition, Entergy Texas filed on behalf of the parties a motion to admit evidence, to approve interim rates as requested in the initial application, and to remand the proceeding to the PUCT to consider the unopposed settlement. In August 2022 the ALJ with the State Office of Administrative Hearings issued an order granting Entergy Texas’s motion, approving interim rates effective with the first billing cycle of September 2022, and remanding the case to the PUCT for final approval. The interim fuel surcharge was approved by the PUCT in January 2023.
In September 2022, Entergy Texas filed an application with the PUCT to reconcile its fuel and purchased power costs for the period from April 2019 through March 2022. During the reconciliation period, Entergy Texas incurred approximately $1.7 billion in eligible fuel and purchased power expenses, net of certain revenues credited to such expenses and other adjustments. As of the end of the reconciliation period, Entergy Texas’s cumulative under-recovery balance was approximately $103.1 million, including interest, which Entergy Texas requested authority to carry over as the beginning balance for the subsequent reconciliation period beginning April 2022, pending future surcharges or refunds as approved by the PUCT. In November 2022 the PUCT referred the proceeding to the State Office of Administrative Hearings. In July 2023, Entergy Texas filed an unopposed settlement, supporting testimony, and an agreed motion to admit evidence and remand the proceeding to the PUCT. Pursuant to the unopposed settlement, Entergy Texas would receive no disallowance of fuel costs incurred over the three-year reconciliation period and retain $9.3 million in margins from off-system sales made during the reconciliation period, resulting in a cumulative under-recovery balance of approximately $99.7 million, including interest, as of the end of the reconciliation period. In July 2023 the ALJ with the State Office of Administrative Hearings granted the motion to admit evidence and remanded the proceeding to the PUCT for consideration of the unopposed settlement. The PUCT approved the settlement in September 2023.
In September 2024, Entergy Texas filed an application with the PUCT to reconcile its fuel and purchased power costs for the period from April 2022 through March 2024. During the reconciliation period, Entergy Texas incurred approximately $1.6 billion in eligible fuel and purchased power expenses to generate and purchase electricity to serve its customers, net of certain revenues credited to such expenses and other adjustments. Entergy Texas’s cumulative under-recovery balance for the reconciliation period was approximately $30 million, including interest, which Entergy Texas requested authority to carry over as part of the cumulative fuel balance for the subsequent reconciliation period beginning April 2024. In November 2024 the PUCT referred the proceeding to the State Office of Administrative Hearings. In December 2024 the ALJs with the State Office of Administrative Hearings adopted a procedural schedule, with a hearing on the merits scheduled for May 2025. A PUCT decision is expected in third quarter 2025.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
In December 2024, Entergy Texas filed an application with the PUCT to implement an interim fuel refund of $45.5 million, including interest. Entergy Texas proposed that the interim fuel refund be implemented over a three-month period beginning with the first billing cycle in February 2025 for residential and other small customers and through a one-time credit, or surcharge depending on historical usage for the respective customer, for certain transmission voltage level and seasonal agricultural customers in February 2025. Also in December 2024 the PUCT referred the proceeding to the State Office of Administrative Hearings. In January 2025 the ALJ with the State Office of Administrative Hearings issued an order approving the interim fuel refund consistent with Entergy Texas’s application and, because no hearing was requested in the proceeding, dismissing the case from the State Office of Administrative Hearings and the PUCT.
Retail Rate Proceedings
Filings with the APSC (Entergy Arkansas)
Retail Rates
2022 Formula Rate Plan Filing
In July 2022, Entergy Arkansas filed with the APSC its 2022 formula rate plan filing to set its formula rate for the 2023 calendar year. The filing contained an evaluation of Entergy Arkansas’s earnings for the projected year 2023 and a netting adjustment for the historical year 2021. The filing showed that Entergy Arkansas’s earned rate of return on common equity for the 2023 projected year was 7.40% resulting in a revenue deficiency of $104.8 million. The earned rate of return on common equity for the 2021 historical year was 8.38% resulting in a $15.2 million netting adjustment. The total proposed revenue change for the 2023 projected year and 2021 historical year netting adjustment was $119.9 million. By operation of the formula rate plan, Entergy Arkansas’s recovery of the revenue requirement is subject to a four percent annual revenue constraint. Because Entergy Arkansas’s revenue requirement in this filing exceeded the constraint, the resulting increase was limited to $79.3 million. In October 2022 other parties filed their testimony recommending various adjustments to Entergy Arkansas’s overall proposed revenue deficiency, and Entergy Arkansas filed a response including an update to actual revenues through August 2022, which raised the constraint to $79.8 million. In November 2022, Entergy Arkansas filed with the APSC a settlement agreement reached with other parties resolving all issues in the proceeding. As a result of the settlement agreement, the total revenue change was $102.8 million, including a $87.7 million increase for the 2023 projected year and a $15.2 million netting adjustment. Because Entergy Arkansas’s revenue requirement exceeded the constraint, the resulting increase was limited to $79.8 million. In December 2022 the APSC approved the settlement agreement as being in the public interest and approved Entergy Arkansas’s compliance tariff effective with the first billing cycle of January 2023.
2023 Formula Rate Plan Filing
In July 2023, Entergy Arkansas filed with the APSC its 2023 formula rate plan filing to set its formula rate for the 2024 calendar year. The filing contained an evaluation of Entergy Arkansas’s earnings for the projected year 2024 and a netting adjustment for the historical year 2022. The filing showed that Entergy Arkansas’s earned rate of return on common equity for the 2024 projected year was 8.11% resulting in a revenue deficiency of $80.5 million. The earned rate of return on common equity for the 2022 historical year was 7.29% resulting in a $49.8 million netting adjustment. The total proposed revenue change for the 2024 projected year and 2022 historical year netting adjustment was $130.3 million. By operation of the formula rate plan, Entergy Arkansas’s recovery of the revenue requirement is subject to a four percent annual revenue constraint. Because Entergy Arkansas’s revenue requirement in this filing exceeded the constraint, the resulting increase was limited to $88.6 million. The APSC general staff and intervenors filed their errors and objections in October 2023, proposing certain adjustments, including the APSC general staff’s update to annual filing year revenues which lowers the constraint to $87.7 million. Entergy Arkansas filed its rebuttal in October 2023. In October 2023, Entergy
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Arkansas filed with the APSC a settlement agreement reached with other parties resolving all issues in the proceeding, none of which affected Entergy Arkansas’s requested recovery up to the constraint of $87.7 million. The settlement agreement provided for amortization of the approximately $39 million regulatory asset for costs associated with the COVID-19 pandemic over a 10-year period as well as recovery of $34.9 million related to the resolution of the 2016 and 2017 IRS audits from previous tax positions that are no longer uncertain, partially offset by $24.7 million in excess accumulated deferred income taxes from reductions in state income tax rates, each before consideration of their respective tax gross-up. See Note 3 to the financial statements for further discussion of the resolution of the 2016-2018 IRS audit and the State of Arkansas corporate income tax rate changes. In December 2023 the APSC approved the settlement agreement as being in the public interest and approved Entergy Arkansas’s compliance tariff effective with the first billing cycle of January 2024.
2024 Formula Rate Plan Filing
In July 2024, Entergy Arkansas filed with the APSC its 2024 formula rate plan filing to set its formula rate for the 2025 calendar year. The filing contained an evaluation of Entergy Arkansas’s earnings for the 2025 projected year and a netting adjustment for the 2023 historical year. The filing showed that Entergy Arkansas’s earned rate of return on common equity for the 2025 projected year was 8.43% resulting in a revenue deficiency of $69.5 million. The earned rate of return on common equity for the 2023 historical year was 7.48% resulting in a $33.1 million netting adjustment. The total proposed revenue change for the 2025 projected year and 2023 historical year netting adjustment is $102.6 million. By operation of the formula rate plan, Entergy Arkansas’s recovery of the revenue requirement is subject to a four percent annual revenue constraint. Because Entergy Arkansas’s revenue requirement in this filing exceeded the constraint, the resulting increase was limited to $82.6 million. The APSC general staff and intervenors filed their errors and objections in October 2024, proposing certain adjustments, including the APSC general staff’s update to annual filing year revenues that increases the constraint to $83.5 million. Entergy Arkansas filed its rebuttal in October 2024, and later in October 2024 the parties submitted a joint issues list and stipulations setting forth the disputed issues and the noncontested issues. In December 2024 the APSC approved the parties’ stipulations without modification, approved Entergy Arkansas’s adjustment with respect to storm costs, directed Entergy Arkansas to adjust its projected year distribution reliability capital closings, and deferred the recoverability of Entergy Arkansas’s opportunity sales legal fees until the next general rate case. Also in December 2024 the APSC approved Entergy Arkansas’s compliance tariff effective with the first billing cycle of January 2025. As a result of the proceeding, the total revenue change was $82.7 million, including a $63.7 million increase for the 2025 projected year and a $31.4 million netting adjustment for the 2023 historical year. In fourth quarter 2024, Entergy Arkansas recorded a regulatory asset of $15.5 million to reflect the amount of the 2023 historical year netting adjustment that it expects to collect from its customers during the 2025 rate effective period. Pursuant to the terms of the parties’ stipulations, Entergy Arkansas made a filing with the APSC in January 2025 to refund customers $30.1 million in excess accumulated deferred income taxes resulting from the reduction in the State of Arkansas’s income tax rate from 4.8% to 4.3% in 2024. Entergy Arkansas will make this refund over a 24-month period effective with the first billing cycle of February 2025.
Grand Gulf Credit Rider
In June 2024, Entergy Arkansas filed with the APSC a tariff to provide retail customers a credit resulting from the terms of the settlement agreement between Entergy Arkansas, System Energy, additional named Entergy parties, and the APSC pertaining to System Energy’s billings for wholesale sales of energy and capacity from the Grand Gulf nuclear plant. See “Complaints Against System Energy - System Energy Settlement with the APSC” below for discussion of the settlement. In July 2024 the APSC approved the tariff, under which Entergy Arkansas will refund to retail customers a total of $100.6 million. To date, Entergy Arkansas has refunded $92.3 million of the total through one-time bill credits during the August 2024 billing cycle and is finalizing plans for the refund of the remaining regulatory liability balance.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Filings with the LPSC (Entergy Louisiana)
Retail Rates - Electric
2020 Formula Rate Plan Filing
In June 2021, Entergy Louisiana filed its formula rate plan evaluation report for its 2020 calendar year operations. The 2020 test year evaluation report produced an earned return on common equity of 8.45%, with a base formula rate plan revenue increase of $63 million. Certain reductions in formula rate plan revenue driven by lower sales volumes, reductions in capacity cost and net MISO cost, and higher credits resulting from the Tax Cuts and Jobs Act offset the base formula rate plan revenue increase, leading to a net increase in formula rate plan revenue of $50.7 million. The report also included multiple new adjustments to account for, among other things, the calculation of distribution recovery mechanism revenues. The effects of the changes to total formula rate plan revenue were different for each legacy company, primarily due to differences in the legacy companies’ capacity cost changes, including the effect of true-ups. Legacy Entergy Louisiana formula rate plan revenues increased by $27 million and legacy Entergy Gulf States Louisiana formula rate plan revenues increased by $23.7 million. Subject to LPSC review, the resulting changes became effective for bills rendered during the first billing cycle of September 2021, subject to refund. Discovery commenced in the proceeding. In August 2021, Entergy Louisiana submitted an update to its evaluation report to account for various changes. Relative to the June 2021 filing, the total formula rate plan revenue increased by $14.2 million to an updated total of $64.9 million. Legacy Entergy Louisiana formula rate plan revenues increased by $32.8 million and legacy Entergy Gulf States Louisiana formula rate plan revenues increased by $32.1 million. The results of the 2020 test year evaluation report bandwidth calculation were unchanged as there was no change in the earned return on common equity of 8.45%. In September 2021 the LPSC staff filed a letter with a general statement of objections/reservations because it had not completed its review and indicated it would update the letter once its review was complete.
In November 2023 the LPSC approved a global settlement which resolved all outstanding issues related to the 2017, 2018, and 2019 formula rate plan filings and resolved certain issues with respect to the 2020 and 2021 formula rate plan filings. See “Formula Rate Plan Global Settlement” below for further discussion of the settlement. In September 2024 the LPSC issued an order approving a settlement that resolved, with prejudice, all other issues identified by the staff in the matter and closed the docket. See “2023 Entergy Louisiana Rate Case and Formula Rate Plan Extension Request” below for further discussion.
2021 Formula Rate Plan Filing
In May 2022, Entergy Louisiana filed its formula rate plan evaluation report for its 2021 calendar year operations. The 2021 test year evaluation report produced an earned return on common equity of 8.33%, with a base formula rate plan revenue increase of $65.3 million. Other increases in formula rate plan revenue driven by reductions in Tax Cut and Jobs Act credits and additions to transmission and distribution plant in service reflected through the transmission recovery mechanism and distribution recovery mechanism are partly offset by an increase in net MISO revenues, leading to a net increase in formula rate plan revenue of $152.9 million. The effects of the changes to total formula rate plan revenue are different for each legacy company, primarily due to differences in the legacy companies’ capacity cost changes, including the effect of true-ups. Legacy Entergy Louisiana formula rate plan revenues increased by $86 million and legacy Entergy Gulf States Louisiana formula rate plan revenues increased by $66.9 million. In August 2022 the LPSC staff filed a list of objections/reservations, including outstanding issues from the test years 2017-2020 formula rate plan filings, utilizing the extraordinary cost mechanism to address one-time changes such as state tax rate changes, and failing to include an adjustment for revenues not received as a result of Hurricane Ida. Subject to LPSC review, the resulting changes to formula rate plan revenues became effective for bills rendered during the first billing cycle of September 2022, subject to refund.
In November 2023 the LPSC approved a global settlement which resolved all outstanding issues related to the 2017, 2018, and 2019 formula rate plan filings and resolved certain issues with respect to the 2020 and 2021
Entergy Corporation and Subsidiaries
Notes to Financial Statements
formula rate plan filings. See “Formula Rate Plan Global Settlement” below for further discussion of the settlement. In September 2024 the LPSC issued an order approving a settlement that resolved, with prejudice, all other issues identified by the staff in the matter and closed the docket. See “2023 Entergy Louisiana Rate Case and Formula Rate Plan Extension Request” below for further discussion.
2022 Formula Rate Plan Filing
In May 2023, Entergy Louisiana filed its formula rate plan evaluation report for its 2022 calendar year operations. The 2022 test year evaluation report produced an earned return on common equity of 8.33%, requiring an approximately $70.7 million increase to base rider revenue. Due to a cap for the 2021 and 2022 test years, however, base rider formula rate plan revenues were only increased by approximately $4.9 million, resulting in a revenue deficiency of approximately $65.9 million and providing for prospective return on common equity opportunity of approximately 8.38%. Other changes in formula rate plan revenue driven by increases in capacity costs, primarily legacy capacity costs, additions eligible for recovery through the transmission recovery mechanism and distribution recovery mechanism, and higher sales during the test period were offset by reductions in net MISO costs as well as credits for FERC-ordered refunds. Also included in the 2022 test year distribution recovery mechanism revenue requirement was a $6 million credit relating to the distribution recovery mechanism performance accountability standards and requirements. In total, the net increase in formula rate plan revenues, including base formula rate plan revenues inside the formula rate plan bandwidth and subject to the cap, as well as other formula rate plan revenues outside of the bandwidth, was $85.2 million. In August 2023 the LPSC staff filed a list of objections/reservations, including outstanding issues from the test years 2017-2021 formula rate plan filings, the calculation of certain refunds from System Energy, and certain calculations relating to the tax reform adjustment mechanism. Subject to LPSC review, the resulting net increase in formula rate plan revenues of $85.2 million became effective for bills rendered during the first billing cycle of September 2023, subject to refund. In September 2024 the LPSC issued an order approving a settlement that resolved, with prejudice, all other issues identified by the staff in the matter and closed the docket. See “2023 Entergy Louisiana Rate Case and Formula Rate Plan Extension Request” below for further discussion.
2023 Entergy Louisiana Rate Case and Formula Rate Plan Extension Request
In August 2023, Entergy Louisiana filed an application for approval of a regulatory blueprint necessary for it to strengthen the electric grid for the State of Louisiana, which contained a dual-path request to update rates through either: (1) extension of Entergy Louisiana’s current formula rate plan (with certain modifications) for three years (the Rate Mitigation Proposal), which is Entergy Louisiana’s recommended path; or (2) implementation of rates resulting from a cost-of-service study (the Rate Case path). The application complied with Entergy Louisiana’s previous formula rate plan extension order requiring that for Entergy Louisiana to obtain another extension of its formula rate plan that included a rate reset, Entergy Louisiana would need to submit a full cost-of-service rate case. Entergy Louisiana’s filing supported the need to extend Entergy Louisiana’s formula rate plan with credit supportive mechanisms needed to facilitate investment in the distribution, transmission, and generation functions.
In July 2024, Entergy Louisiana reached an agreement in principle with the LPSC staff and the intervenors in the proceeding and filed with the LPSC a joint motion to suspend the procedural schedule to allow for all parties to finalize a stipulated settlement agreement.
In August 2024, Entergy Louisiana and the LPSC staff jointly filed a global stipulated settlement agreement for consideration by the LPSC with key terms as follows:
•continuation of the formula rate plan for 2024-2026 (test years 2023-2025);
•a base formula rate plan revenue increase of $120 million for test year 2023, effective for rates beginning September 2024;
Entergy Corporation and Subsidiaries
Notes to Financial Statements
•a $140 million cumulative cap on base formula rate plan revenue increases, if needed, for test years 2024 and 2025, excluding outside the bandwidth items;
•$184 million of customer rate credits to be given over two years, including increasing customer sharing of income tax benefits resulting from the 2016-2018 IRS audit, to resolve any remaining disputed issues stemming from formula rate plan test years prior to test year 2023, including but not limited to the investigation into Entergy Services costs billed to Entergy Louisiana. As discussed in Note 3 to the financial statements, a $38 million regulatory liability was recorded in 2023 in connection with the 2016-2018 IRS audit;
•$75.5 million of customer rate credits, as provided for in the System Energy global settlement, to be credited over three years subject to and conditioned upon FERC approval of the System Energy global settlement, which was approved in November 2024. See “Complaints Against System Energy – System Energy Settlement with the LPSC” below for further details of the System Energy global settlement;
•$5.8 million of customer rate credits provided for in the Entergy Louisiana formula rate plan global settlement agreement approved by the LPSC in November 2023 credited over one year. See “Formula Rate Plan Global Settlement” below for further discussion of the settlement;
•an increase in the allowed midpoint return on common equity from 9.5% to 9.7%, with a bandwidth of 40 basis points above and below the midpoint, for the extended term of the formula rate plan, except that for test year 2023 in which the authorized return on common equity shall have no bearing on the change in base formula rate plan revenue described above and, for test year 2024, any earnings above the authorized return on common equity shall be returned to customers through a credit;
•an increase in nuclear depreciation rates by $15 million in each of the 2023, 2024, and 2025 test years outside of the formula rate plan bandwidth calculation; and
•for the transmission recovery mechanism and the distribution recovery mechanism, no change to the existing floors, but the caps for both would be $350 million for test year 2023, $375 million for test year 2024, and $400 million for test year 2025. Transmission projects filed with the LPSC will be exempt from the transmission recovery mechanism cap.
The global stipulated settlement agreement was unanimously approved by the LPSC in August 2024 and an order was issued by the LPSC in September 2024 reflecting the approval of the settlement.
Based on the July 2024 agreement in principle, in second quarter 2024 Entergy Louisiana recorded expenses of $151 million ($112 million net-of-tax) primarily consisting of regulatory charges to reflect the effects of the agreement in principle.
Formula Rate Plan Global Settlement
In October 2023 the LPSC staff and Entergy Louisiana reached a global settlement which resolved all outstanding issues related to the 2017, 2018, and 2019 formula rate plan filings and resolved certain issues with respect to the 2020 and 2021 formula rate plan filings. The settlement was approved by the LPSC in November 2023. The settlement resulted in a one-time cost of service credit to customers of $5.8 million, allowed Entergy Louisiana to retain approximately $6.2 million of securitization over-collection as recovery of a regulatory asset associated with late fees related to the 2016 Baton Rouge flood, and resulted in Entergy Louisiana recording the reversal of a $105.6 million regulatory liability, primarily associated with the Hurricane Isaac securitization, recognized in 2017 as a result of the Tax Cuts and Jobs Act. See Note 3 to the financial statements for further discussion of the reversal of the regulatory liability.
2023 Formula Rate Plan Filing
In August 2024, pursuant to the global stipulated settlement agreement, Entergy Louisiana filed its formula rate plan evaluation report for its 2023 calendar year operations. Consistent with the global stipulated settlement agreement, the filing reflected a 9.7% allowed return on common equity with a bandwidth of 40 basis points above and below the midpoint. For the 2023 test year, however, the bandwidth provisions of the formula rate plan were
Entergy Corporation and Subsidiaries
Notes to Financial Statements
temporarily suspended and, pursuant to the terms of the global stipulated settlement agreement, Entergy Louisiana implemented the September 2024 formula rate plan rate adjustments effective with the first billing cycle of September 2024. Those adjustments included a $120 million increase in base rider formula rate plan revenue and a $101.8 million one-time incremental net decrease consistent with the terms of the global stipulated settlement. The formula rate plan rate adjustments reflected in the evaluation report also include a redetermination of the transmission recovery mechanism, the distribution recovery mechanism, the additional capacity mechanism, the tax adjustment mechanism, the MISO cost recovery mechanism, and other one-time adjustments. In January 2025, Entergy Louisiana and the LPSC filed a joint report indicating that no disputed issues remained in the proceeding and requesting that the LPSC issue an order accepting Entergy Louisiana’s evaluation report and, ultimately, resolving this matter. Entergy Louisiana expects a decision on the joint report in first quarter 2025.
Investigation of Costs Billed by Entergy Services
In November 2018 the LPSC issued a notice of proceeding initiating an investigation into costs incurred by Entergy Services that are included in the retail rates of Entergy Louisiana. As stated in the notice of proceeding, the LPSC observed an increase in capital construction-related costs incurred by Entergy Services. Discovery was issued and included efforts to seek highly detailed information on a broad range of matters unrelated to the scope of the audit. In September 2024 the LPSC issued an order approving a settlement that resolved, with prejudice, all other issues identified by the staff in the matter and closed the docket. See “2023 Entergy Louisiana Rate Case and Formula Rate Plan Extension Request” above for further discussion.
COVID-19 Orders
In April 2020 the LPSC issued an order authorizing utilities to record as a regulatory asset expenses incurred from the suspension of disconnections and collection of late fees imposed by LPSC orders associated with the COVID-19 pandemic. In April 2023, Entergy Louisiana filed an application proposing to utilize approximately $1.6 billion in certain low interest debt to generate earnings to apply toward the reduction of the COVID-19 regulatory asset, as well as to conduct additional outside right-of-way vegetation management activities and fund the minor storm reserve account. In that filing, Entergy Louisiana proposed to delay repayment of certain shorter-term first mortgage bonds that were issued to finance storm restoration costs until the costs could be securitized, and to invest the funds that otherwise would be used to repay those bonds in the money pool to take advantage of the spread between prevailing interest rates on investments in the money pool and the interest rates on the bonds. The LPSC approved Entergy Louisiana’s requested relief in June 2023. In November 2024, Entergy Louisiana submitted a filing to the LPSC requesting that the LPSC review Entergy Louisiana’s computation of the COVID-19 regulatory asset as well as Entergy Louisiana’s proposal to offset the regulatory asset against the interest earned on the short-term debt funds, resulting in no increased costs to customers. At the time of the filing, Entergy Louisiana had a regulatory asset of $47.8 million for costs associated with the COVID-19 pandemic. As of December 31, 2024, Entergy Louisiana had a regulatory liability of $48.9 million for the deferred earnings related to the approximately $1.6 billion in low interest debt, which had been fully repaid by August 2024. In granting Entergy Louisiana’s requested relief in June 2023, the LPSC ordered that any amount of earnings exceeding the amount of the COVID-19 regulatory asset be transferred to Entergy Louisiana’s storm reserve escrow account.
Additional Generation and Transmission Resources
In October 2024, Entergy Louisiana filed an application with the LPSC seeking approval of a variety of generation and transmission resources proposed in connection with establishing service to a new data center to be developed by a subsidiary of Meta Platforms, Inc. in north Louisiana, for which an electric service agreement has been executed. The filing requests LPSC certification of three new combined cycle combustion turbine generation resources totaling 2,262 MW, each of which will be enabled for future carbon capture and storage, a new 500 kV transmission line, and 500 kV substation upgrades. The application also requests approval to implement a corporate sustainability rider applicable to the new customer. The corporate sustainability rider contemplates the new customer contributing to the costs of the planned future addition of 1,500 MW of new solar and energy storage
Entergy Corporation and Subsidiaries
Notes to Financial Statements
resources, agreements involving carbon capture and storage at Entergy Louisiana’s existing Lake Charles Power Station, and potential future wind and nuclear resources. The combined cost of the first two new combined cycle combustion turbine generation resources is estimated to be approximately $2,387 million, and these units are expected to achieve commercial operation in 2028. The third new generation resource is currently expected to have an estimated cost similar to the first two new generation resources and is expected to achieve commercial operation in 2029. The cost of the new 500 kV transmission line is estimated to be $546 million. Entergy Louisiana anticipates funding the incremental cost to serve the customer through direct financial contributions from the customer and the revenues it expects to earn under the electric service agreement. The electric service agreement also contains provisions for termination payments that will help ensure that there is no harm to Entergy Louisiana and its customers in the event of early termination. A directive was issued at the LPSC’s November 2024 meeting for the matter to be decided by October 2025. Consistent with this directive, a procedural schedule was adopted setting the matter for hearing in July 2025. In February 2025 intervenors filed a motion asking the LPSC to deny Entergy Louisiana’s requested exemption from the LPSC’s order addressing competitive solicitation procedures and further asking the LPSC to dismiss the application.
In February 2025, Entergy Louisiana filed supplemental testimony with the LPSC stating that the third combined cycle combustion turbine resource presented in the October 2024 application would be sited at Entergy Louisiana’s Waterford site in Killona, Louisiana, alongside existing Entergy Louisiana generation resources. The testimony also notes that Entergy Louisiana is negotiating with the customer to increase the load associated with the customer’s project in north Louisiana and that the additional load can be served without additional generation capacity beyond what was presented in the October 2024 application, but that additional transmission facilities, which will be funded directly by the customer, are needed to serve this additional load.
Filings with the MPSC (Entergy Mississippi)
Retail Rates
2022 Formula Rate Plan Filing
In March 2022, Entergy Mississippi submitted its formula rate plan 2022 test year filing and 2021 look-back filing showing Entergy Mississippi’s earned return for the historical 2021 calendar year to be below the formula rate plan bandwidth and projected earned return for the 2022 calendar year to be below the formula rate plan bandwidth. The 2022 test year filing showed a $69 million rate increase was necessary to reset Entergy Mississippi’s earned return on common equity to the specified point of adjustment of 6.70% return on rate base, within the formula rate plan bandwidth. The change in formula rate plan revenues, however, was capped at 4% of retail revenues, which equated to a revenue change of $48.6 million. The 2021 look-back filing compared actual 2021 results to the approved benchmark return on rate base and reflected the need for a $34.5 million interim increase in formula rate plan revenues. In fourth quarter 2021, Entergy Mississippi recorded a regulatory asset of $19 million to reflect the then-current estimate in connection with the look-back feature of the formula rate plan. In accordance with the provisions of the formula rate plan, Entergy Mississippi implemented a $24.3 million interim rate increase, reflecting a cap equal to 2% of 2021 retail revenues, effective in April 2022. With the implementation of the interim formula rate plan rates, Entergy Mississippi began recovery of the bad debt expense deferral resulting from the COVID-19 pandemic over a three-year period.
In June 2022, Entergy Mississippi and the Mississippi Public Utilities Staff entered into a joint stipulation that confirmed the 2022 test year filing that resulted in a total rate increase of $48.6 million. Pursuant to the joint stipulation, Entergy Mississippi’s 2021 look-back filing reflected an earned return on rate base of 5.99% in calendar year 2021, which was below the look-back bandwidth, resulting in a $34.3 million increase in the formula rate plan revenues on an interim basis through June 2023. In July 2022 the MPSC approved the joint stipulation with rates effective in August 2022. In July 2022, Entergy Mississippi recorded regulatory credits of $22.6 million to reflect the effects of the joint stipulation.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
In July 2022 the MPSC directed Entergy Mississippi to flow $14.1 million of the power management rider over-recovery balance to customers beginning in August 2022 through December 2022 to mitigate the bill impact of the increase in formula rate plan revenues.
2023 Formula Rate Plan Filing
In March 2023, Entergy Mississippi submitted its formula rate plan 2023 test year filing and 2022 look-back filing showing Entergy Mississippi’s earned return on rate base for the historical 2022 calendar year to be below the formula rate plan bandwidth and projected earned return for the 2023 calendar year to be below the formula rate plan bandwidth. The 2023 test year filing showed a $39.8 million rate increase was necessary to reset Entergy Mississippi’s earned return on rate base to the specified point of adjustment of 6.67%, within the formula rate plan bandwidth. The 2022 look-back filing compared actual 2022 results to the approved benchmark return on rate base and reflected the need for a $19.8 million temporary increase in formula rate plan revenues, including the refund of a $1.3 million over-recovery resulting from the demand-side management costs true-up for 2022. In fourth quarter 2022, Entergy Mississippi recorded a regulatory asset of $18.2 million in connection with the look-back feature of the formula rate plan to reflect that the 2022 estimated earned return was below the formula rate plan bandwidth. In accordance with the provisions of the formula rate plan, Entergy Mississippi implemented a $27.9 million interim rate increase, reflecting a cap equal to 2% of 2022 retail revenues, effective in April 2023.
In May 2023, Entergy Mississippi and the Mississippi Public Utilities Staff entered into a joint stipulation that confirmed a 2023 test year filing resulting in a total revenue increase of $26.5 million for 2023. Pursuant to the joint stipulation, Entergy Mississippi’s 2022 look-back filing reflected an earned return on rate base of 6.10% in calendar year 2022, which was below the look-back bandwidth, resulting in a $19.0 million increase in the formula rate plan revenues on an interim basis through June 2024. Entergy Mississippi recorded a regulatory credit of $0.8 million in June 2023 to reflect the increase in the look-back regulatory asset. In addition, certain long-term service agreement and conductor handling costs were authorized for realignment from the formula rate plan to the annual power management and grid modernization riders effective January 2023, resulting in regulatory credits recorded in June 2023 of $4.1 million and $4.3 million, respectively. Also, the amortization of Entergy Mississippi’s COVID-19 bad debt expense deferral was suspended for calendar year 2023, but resumed in July 2024. In June 2023 the MPSC approved the joint stipulation with rates effective in July 2023.
2024 Formula Rate Plan Filing
In March 2024, Entergy Mississippi submitted its formula rate plan 2024 test year filing and 2023 look-back filing showing Entergy Mississippi’s earned return on rate base for the historical 2023 calendar year to be within the formula rate plan bandwidth and projected earned return for the 2024 calendar year to be below the formula rate plan bandwidth. The 2024 test year filing showed a $63.4 million rate increase was necessary to reset Entergy Mississippi’s earned return on rate base to the specified point of adjustment of 7.10%, within the formula rate plan bandwidth. The 2023 look-back filing compared actual 2023 results to the approved benchmark return on rate base and reflected no change in formula rate plan revenues. In accordance with the provisions of the formula rate plan, Entergy Mississippi implemented a $32.6 million interim rate increase, reflecting a cap equal to 2% of 2023 retail revenues, effective April 2024.
In December 2014 the MPSC ordered Entergy Mississippi to file an updated depreciation study at least once every four years. Pursuant to this order and Entergy Mississippi’s filing cycle, Entergy Mississippi would have filed an updated depreciation report with its formula rate plan filing in 2023. However, in July 2022 the MPSC directed Entergy Mississippi to file its next depreciation study in connection with its 2024 formula rate plan filing notwithstanding the MPSC’s prior order. Accordingly, Entergy Mississippi filed a depreciation study in February 2024. The study showed a need for an increase in annual depreciation expense of $55.2 million. The calculated increase in annual depreciation expense was excluded from Entergy Mississippi’s 2024 formula rate plan revenue increase request because the MPSC had not yet approved the proposed depreciation rates.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
In June 2024, Entergy Mississippi and the Mississippi Public Utilities Staff entered into a joint stipulation that confirmed the 2024 test year filing, with the exception of immaterial adjustments to certain operation and maintenance expenses. After performance adjustments, the formula rate plan reflected an earned return on rate base of 6.08% for calendar year 2024, which resulted in a total revenue increase of $64.6 million for 2024. The joint stipulation also recommended approval of a revised customer charge of $31.82 per month for residential customers and $53.10 per month for general service customers. Pursuant to the stipulation, Entergy Mississippi’s 2023 look-back filing reflected an earned return on rate base of 6.81%, resulting in an increase of $0.3 million in the formula rate plan revenues for 2023. Finally, the stipulation recommended approval of Entergy Mississippi’s proposed depreciation rates with those rates to be implemented upon request and approval at a later date. In June 2024 the MPSC approved the joint stipulation with rates effective in July 2024. The approval also included a reduction to the energy cost factor, resulting in a net bill decrease for a typical residential customer using 1,000 kWh per month. Also in June 2024, Entergy Mississippi recorded regulatory credits of $7.3 million to reflect the difference between interim rates placed in effect in April 2024 and the rates reflected in the joint stipulation.
In May 2024, Entergy Mississippi received approval from the MPSC for formula rate plan revisions that were necessary for Entergy Mississippi to comply with state legislation passed in January 2024. The legislation allows Entergy Mississippi to make interim rate adjustments to recover the non-fuel related annual ownership cost of certain facilities that directly or indirectly provide service to customers who own certain data processing center projects as specified in the legislation. Entergy Mississippi filed the first of its annual interim facilities rate adjustment reports in May 2024 to recover approximately $8.7 million of these costs over a six-month period with rates effective beginning in July 2024. Entergy Mississippi filed its second annual interim facilities rate adjustment report in December 2024 to recover approximately $46.7 million of these costs over a 12-month period with rates effective beginning in January 2025.
Grand Gulf Capacity Filing
In September 2024, Entergy Mississippi filed a notice of intent with the MPSC to implement revisions to its unit power cost recovery rider that would allow Entergy Mississippi to recover the first year of costs associated with the transfer of Entergy Louisiana’s entitlements to Grand Gulf capacity and energy, which consists of Energy Louisiana’s interest in and purchases of Grand Gulf capacity and energy under the revised rider schedule, effective by January 1, 2025. This notice filing related to the divestiture of Entergy Louisiana’s 14% share of Grand Gulf capacity and energy under the Unit Power Sales Agreement and 2.43% share of capacity and energy from Entergy Arkansas under the MSS-4 replacement tariff. This divestiture is being effectuated initially through Entergy Mississippi’s purchases from Entergy Louisiana pursuant to a PPA governed by the MSS-4 replacement tariff, a tariff governing the sales of energy and capacity among the Utility operating companies as described in the System Energy global settlement with the LPSC and Entergy Louisiana. The MSS-4 replacement PPA to effectuate this divestiture was approved by the FERC in November 2024. In February 2025 the MPSC approved Entergy Mississippi’s notice of intent, finding that it was just and reasonable for Entergy Mississippi to obtain Entergy Louisiana’s entitlements to Grand Gulf capacity and energy and that Entergy Mississippi should be allowed to recover the costs associated with the transfer of such entitlements to Grand Gulf capacity and energy, as described above. The MPSC approved the MSS-4 replacement PPA, effective as of January 1, 2025. See “Complaints Against System Energy – System Energy Settlement with the LPSC” below for further details of the System Energy global settlement with the LPSC and Note 8 to the financial statements for discussion of the Unit Power Sales Agreement.
Additional Generation and Transmission Resources
In January 2024, Amazon Web Services announced its plan to invest in two data centers located in Madison County, Mississippi. In March 2024, Entergy Mississippi executed a large customer supply and service agreement to serve the two data centers. Entergy Mississippi will need generation and transmission resources to reliably serve all Entergy Mississippi customers, including the data centers. The large customer supply and service agreement also contains provisions which cover Entergy Mississippi’s incremental investment costs in the event of early
Entergy Corporation and Subsidiaries
Notes to Financial Statements
termination. In May 2024 the MPSC approved Entergy Mississippi’s revisions to its formula rate plan to comply with state legislation passed in January 2024 allowing Entergy Mississippi to make interim rate adjustments, including the collection of a return on construction-work-in-process on a cash basis, to recover the non-fuel related annual ownership cost of certain facilities that directly or indirectly provide service to customers who own certain data processing center projects as specified in the legislation. Entergy Mississippi anticipates recovering the incremental cost to serve the customer through the revenues it expects to collect under the large customer supply and service agreement.
In February 2025, Entergy Mississippi entered into a new large customer supply and service agreement with a customer.
Filings with the City Council (Entergy New Orleans)
Retail Rates
2022 Formula Rate Plan Filing
In April 2022, Entergy New Orleans submitted to the City Council its formula rate plan 2021 test year filing. The 2021 test year evaluation report, subsequently updated in a July 2022 filing, produced an earned return on equity of 6.88% compared to the authorized return on equity of 9.35%. Entergy New Orleans sought approval of a $42.1 million rate increase based on the formula set by the City Council in the 2018 rate case. The formula resulted in an increase in authorized electric revenues of $34.1 million and an increase in authorized gas revenues of $3.3 million. Entergy New Orleans also sought to commence collecting $4.7 million in electric revenues that were previously approved by the City Council for collection through the formula rate plan. In July 2022 the City Council’s advisors issued a report seeking a reduction to Entergy New Orleans’s proposed increase of approximately $17.1 million in total for electric and gas revenues. Effective with the first billing cycle of September 2022, Entergy New Orleans implemented rates reflecting an amount agreed upon by Entergy New Orleans and the City Council including adjustments filed in the City Council’s advisors’ report, per the approved process for formula rate plan implementation. The total formula rate plan increase implemented was $24.7 million, which includes an increase of $18.2 million in electric revenues, $4.7 million in previously approved electric revenues, and an increase of $1.8 million in gas revenues. Additionally, credits of $13.9 million funded by certain regulatory liabilities currently held by Entergy New Orleans for customers were issued over an eight-month period beginning September 2022.
2023 Formula Rate Plan Filing
In April 2023, Entergy New Orleans submitted to the City Council its formula rate plan 2022 test year filing. The 2022 test year evaluation report produced an electric earned return on equity of 7.34% and a gas earned return on equity of 3.52% compared to the authorized return on equity for each of 9.35%. Entergy New Orleans sought approval of a $25.6 million rate increase based on the formula set by the City Council in the 2018 rate case. The formula would result in an increase in authorized electric revenues of $17.4 million and an increase in authorized gas revenues of $8.2 million. Entergy New Orleans also sought to commence collecting $3.4 million in electric revenues that were previously approved by the City Council for collection through the formula rate plan. In July 2023, Entergy New Orleans filed a report to decrease its requested formula rate plan revenues by approximately $0.5 million to account for minor errors discovered after the filing. The City Council advisors issued a report seeking a reduction in the requested formula rate plan revenues of approximately $8.3 million, combined for electric and gas, due to alleged errors. The City Council advisors proposed additional rate mitigation in the amount of $12 million through offsets to the formula rate plan rate increase by certain regulatory liabilities. In September 2023 the City Council approved an agreement to settle the 2023 formula rate plan filing. Effective with the first billing cycle of September 2023, Entergy New Orleans implemented rates reflecting an amount agreed upon by Entergy New Orleans and the City Council, per the approved process for formula rate plan implementation. The agreement provides for a total increase in electric revenues of $10.5 million and a total increase in gas revenues of
Entergy Corporation and Subsidiaries
Notes to Financial Statements
$6.9 million. The agreement also provides for a minor storm accrual of $0.5 million per year and the distribution of $8.9 million of currently held customer credits to implement the City Council advisors’ mitigation recommendations.
Request for Extension and Modification of Formula Rate Plan
In September 2023, Entergy New Orleans filed a motion seeking City Council approval of a three-year extension of Entergy New Orleans’s electric and gas formula rate plans. In October 2023 the City Council granted Entergy New Orleans’s request for an extension, subject to minor modifications which included a 55% equity ratio for rate setting purposes.
2024 Formula Rate Plan Filing
In April 2024, Entergy New Orleans submitted to the City Council its formula rate plan 2023 test year filing. Without the requested rate change in 2024, the 2023 test year evaluation report produced an electric earned return on equity of 8.66% and a gas earned return on equity of 5.87% compared to the authorized return on equity for each of 9.35%. Entergy New Orleans sought approval of a $12.6 million rate increase based on the formula set by the City Council in the 2018 rate case and approved again by the City Council in 2023. The formula would result in an increase in authorized electric revenues of $7.0 million and an increase in authorized gas revenues of $5.6 million. Following City Council review, the City Council’s advisors issued a report in July 2024 seeking a reduction in Entergy New Orleans’s requested formula rate plan revenues in an aggregate amount of approximately $1.6 million for electric and gas together due to alleged errors. Effective with the first billing cycle of September 2024, Entergy New Orleans implemented rates reflecting an amount agreed upon by Entergy New Orleans and the City Council, per the approved process for formula rate plan implementation. The total formula rate plan increase implemented was $11.2 million, which includes an increase of $5.8 million in electric revenues and an increase of $5.4 million in gas revenues.
Filings with the PUCT and Texas Cities (Entergy Texas)
Retail Rates
2022 Base Rate Case
In July 2022, Entergy Texas filed a base rate case with the PUCT seeking a net increase in base rates of approximately $131.4 million. The base rate case was based on a 12-month test year ending December 31, 2021. Key drivers of the requested increase were changes in depreciation rates as the result of a depreciation study and an increase in the return on equity. In addition, Entergy Texas included capital additions placed into service for the period of January 1, 2018 through December 31, 2021, including those additions reflected in the then-effective distribution and transmission cost recovery factor riders and the generation cost recovery rider, all of which were reset to zero in June 2023 as a result of this proceeding. In July 2022 the PUCT referred the proceeding to the State Office of Administrative Hearings. In October 2022 intervenors filed direct testimony challenging and supporting various aspects of Entergy Texas’s rate case application. The key issues addressed included the appropriate return on equity, generation plant deactivations, depreciation rates, and proposed tariffs related to electric vehicles. In November 2022 the PUCT staff filed direct testimony addressing a similar set of issues and recommending a reduction of $50.7 million to Entergy Texas’s overall cost of service associated with the requested net increase in base rates of approximately $131.4 million. Entergy Texas filed rebuttal testimony in November 2022.
In May 2023, Entergy Texas filed on behalf of the parties an unopposed settlement resolving all issues in the proceeding, except for issues related to electric vehicle charging infrastructure which were eventually severed to a separate proceeding and resolved in October 2024, and Entergy Texas filed an agreed motion for interim rates, subject to refund or surcharge to the extent that the interim rates differ from the final approved rates. The unopposed settlement reflected a net base rate increase to be effective and relate back to December 2022 of
Entergy Corporation and Subsidiaries
Notes to Financial Statements
$54 million, exclusive of, and incremental to, the costs being realigned from the distribution and transmission cost recovery factor riders and the generation cost recovery rider and $4.8 million of rate case expenses to be recovered through a rider over a period of 36 months. The net base rate increase of $54 million includes updated depreciation rates and a total annual revenue requirement of $14.5 million for the accrual of a self-insured storm reserve and the recovery of the regulatory assets for the pension and postretirement benefits expense deferral, costs associated with the COVID-19 pandemic, and retired non-advanced metering system electric meters. In May 2023 the ALJ with the State Office of Administrative Hearings granted the motion for interim rates, which became effective in June 2023. Additionally, the ALJ remanded the proceeding to the PUCT to consider the settlement. In August 2023 the PUCT issued an order approving the unopposed settlement. Concurrently, Entergy Texas recorded the reversal of $21.9 million of regulatory liabilities to reflect the recognition of certain receipts by Entergy Texas under affiliated PPAs that have been resolved.
Following the PUCT’s approval of the unopposed settlement in August 2023, Entergy Texas recorded a regulatory liability of $10.3 million, which reflected the net effects of higher depreciation and amortizations for the relate back period, partially offset by the relate back of base rate revenues that would have been collected had the approved rates been in effect for the period from December 2022 through June 2023, the date the new base rates were implemented on an interim basis. In October 2023, Entergy Texas filed a relate back surcharge rider to collect over six months beginning in January 2024 an additional approximately $24.6 million, which was the revenue requirement associated with the relate back of rates from December 2022 through June 2023, including carrying costs, as authorized by the PUCT’s August 2023 order. In November 2023, Entergy Texas filed an amended relate back surcharge rider to collect approximately $24.1 million based on a revised carrying cost rate. The amended relate back surcharge rider was approved by the PUCT in December 2023. The higher depreciation and amortizations for the relate back period were also recognized over the six months beginning in January 2024, resulting in no effect on net income from the collection of the relate back surcharge rider.
Distribution Cost Recovery Factor (DCRF) Rider
In June 2024, Entergy Texas filed with the PUCT a request to set a new DCRF rider. The new rider was designed to collect from Entergy Texas’s retail customers approximately $40.3 million annually based on its capital invested in distribution between January 1, 2022 and March 31, 2024. In September 2024 the PUCT approved the DCRF rider, consistent with Entergy Texas’s as-filed request, and rates became effective with the first billing cycle in October 2024.
In September 2024, Entergy Texas filed with the PUCT a request to amend its DCRF rider. The amended rider was designed to collect from Entergy Texas’s retail customers approximately $48.9 million annually, or $8.6 million in incremental annual revenues beyond Entergy Texas’s then-effective DCRF rider based on its capital invested in distribution between April 1, 2024 and June 30, 2024. In December 2024, Entergy Texas filed an errata to revise its DCRF application for minor corrections, which decreased the requested annual revenue requirement to $48.5 million. The amended request represented an incremental increase of $8.2 million in annual revenues beyond Entergy Texas’s then-effective DCRF rider. Also in December 2024 the PUCT approved the DCRF rider, consistent with Entergy Texas’s filed errata, and rates became effective on December 20, 2024.
Transmission Cost Recovery Factor (TCRF) Rider
In December 2018, Entergy Texas filed with the PUCT a request to set a new TCRF rider. The new TCRF rider was designed to collect approximately $2.7 million annually from Entergy Texas’s retail customers based on its capital invested in transmission between January 1, 2018 and September 30, 2018. In April 2019 parties filed testimony proposing a load growth adjustment, which would fully offset Entergy Texas’s proposed TCRF revenue requirement. In July 2019 the PUCT granted Entergy Texas’s application as filed to begin recovery of the requested $2.7 million annual revenue requirement, rejecting opposing parties’ proposed adjustment; however, the PUCT found that the question of prudence of the actual investment costs should be determined in Entergy Texas’s next rate case similar to the procedure used for the costs recovered through the DCRF rider. In October 2019 the PUCT
Entergy Corporation and Subsidiaries
Notes to Financial Statements
issued an order on a motion for rehearing, clarifying and affirming its prior order granting Entergy Texas’s application as filed. Also in October 2019 a second motion for rehearing was filed, and Entergy Texas filed a response in opposition to the motion. The second motion for rehearing was overruled by operation of law. In December 2019, Texas Industrial Energy Consumers filed an appeal to the PUCT order in district court alleging that the PUCT erred in declining to apply a load growth adjustment.
In October 2021, Entergy Texas filed with the PUCT a request to amend its TCRF rider. The amended rider was designed to collect from Entergy Texas’s retail customers approximately $66.1 million annually, or $15.1 million in incremental annual revenues beyond Entergy Texas’s then-effective TCRF rider based on its capital invested in transmission between September 1, 2020 and July 31, 2021 and changes in approved transmission charges. In January 2022 the PUCT referred the proceeding to the State Office of Administrative Hearings. In February 2022 the parties filed an unopposed settlement recommending that Entergy Texas be allowed to collect its full requested TCRF revenue requirement with interim rates effective March 2022. In February 2022 the ALJ granted the motion for interim rates, admitted evidence, and remanded the case to the PUCT for consideration of a final order at a future open meeting. In June 2022 the PUCT issued an order approving the settlement.
In October 2024, Entergy Texas filed with the PUCT a request to amend its TCRF rider, which was previously reset to zero in June 2023 as a result of the 2022 base rate case. The proposed rider is designed to collect from Entergy Texas’s retail customers approximately $9.7 million annually based on its capital invested in transmission between January 1, 2022 and June 30, 2024 and changes in other transmission charges. In December 2024 the PUCT staff filed a recommendation that the PUCT approve Entergy Texas’s as-filed application. In February 2025 the PUCT staff issued a proposed order that, if approved by the PUCT, would approve Entergy Texas’s TCRF rider as filed.
Generation Cost Recovery Rider
In October 2020, Entergy Texas filed an application to establish a generation cost recovery rider to begin recovering a return of and on its generation capital investment in the Montgomery County Power Station. Entergy Texas filed an unopposed settlement agreement in December 2020, and the PUCT approved the generation cost recovery rider settlement rates on an interim basis in January 2021. In March 2021, Entergy Texas filed to update its generation cost recovery rider, and an unopposed settlement agreement filed by Entergy Texas on behalf of the parties in October 2021 was approved by the PUCT in January 2022. In February 2022, Entergy Texas filed a relate-back rider to collect over five months an additional approximately $5 million, which was the difference between the interim revenue requirement approved in January 2021 and the revenue requirement approved in January 2022 reflecting Entergy Texas’s full generation capital investment and ownership in Montgomery County Power Station on January 1, 2021, plus carrying costs from January 2021 through January 2022 when the updated revenue requirement took effect. The PUCT approved the relate-back rider consistent with Entergy Texas’s as-filed request, and rates became effective over a five-month period, in August 2022.
In December 2020, Entergy Texas also filed an application to amend its generation cost recovery rider to reflect its acquisition of the Hardin County Peaking Facility, which closed in June 2021. Because Hardin was to be acquired in the future, the initial generation cost recovery rider rates proposed in the application represented no change from the generation cost recovery rider rates established in Entergy Texas’s previous generation cost recovery rider proceeding. In July 2021 the PUCT issued an order approving the application. In August 2021, Entergy Texas filed an update application to recover its actual investment in the acquisition of the Hardin County Peaking Facility, and in January 2022, Entergy Texas filed an update to its application to align the requested revenue requirement with the terms of the generation cost recovery rider settlement approved by the PUCT in January 2022. In April 2022, Entergy Texas filed on behalf of the parties a unanimous settlement agreement that would adjust its generation cost recovery rider to recover an annual revenue requirement of approximately $92.8 million, which was $4.5 million in incremental annual revenue above the revenue requirement approved in January 2022 described above and related to Entergy Texas’s investment in the Montgomery County Power Station. The PUCT approved the settlement agreement and rates became effective in August 2022. In September 2022,
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy Texas filed a relate-back rider designed to collect over three months an additional approximately $5.7 million, which is the revenue requirement, plus carrying costs, associated with Entergy Texas’s acquisition of Hardin County Peaking Facility from June 2021 through August 2022 when the updated revenue requirement took effect. In April 2023 the PUCT approved Entergy Texas’s as-filed request with rates effective over three months beginning in May 2023.
Entergy Arkansas Opportunity Sales Proceeding
In June 2009 the LPSC filed a complaint requesting that the FERC determine that certain of Entergy Arkansas’s sales of electric energy to third parties: (a) violated the provisions of the System Agreement that allocated the energy generated by Entergy System resources; (b) imprudently denied the Entergy System and its ultimate consumers the benefits of low-cost Entergy System generating capacity; and (c) violated the provision of the System Agreement that prohibited sales to third parties by individual companies absent an offer of a right-of-first-refusal to other Utility operating companies. The LPSC’s complaint challenged sales made beginning in 2002 and requested refunds. In July 2009 the Utility operating companies filed a response to the complaint arguing among other things that the System Agreement contemplates that the Utility operating companies may make sales to third parties for their own account, subject to the requirement that those sales be included in the load (or load shape) for the applicable Utility operating company. The FERC subsequently ordered a hearing in the proceeding.
After a hearing, the ALJ issued an initial decision in December 2010. The ALJ found that the System Agreement allowed for Entergy Arkansas to make the sales to third parties but concluded that the sales should be accounted for in the same manner as joint account sales. The ALJ concluded that “shareholders” should make refunds of the damages to the Utility operating companies, along with interest. Entergy disagreed with several aspects of the ALJ’s initial decision and in January 2011 filed with the FERC exceptions to the decision.
The FERC issued a decision in June 2012 and held that, while the System Agreement is ambiguous, it does provide authority for individual Utility operating companies to make opportunity sales for their own account and Entergy Arkansas made and priced these sales in good faith. The FERC found, however, that the System Agreement does not provide authority for an individual Utility operating company to allocate the energy associated with such opportunity sales as part of its load but provides a different allocation authority. The FERC further found that the after-the-fact accounting methodology used to allocate the energy used to supply the sales was inconsistent with the System Agreement. The FERC in its decision established further hearing procedures to quantify the effect of repricing the opportunity sales in accordance with the FERC’s June 2012 decision. The hearing was held in May 2013 and the ALJ issued an initial decision in August 2013. The LPSC, the APSC, the City Council, and FERC staff filed briefs on exceptions and/or briefs opposing exceptions. Entergy filed a brief on exceptions requesting that the FERC reverse the initial decision and a brief opposing certain exceptions taken by the LPSC and FERC staff.
In April 2016 the FERC issued orders addressing requests for rehearing filed in July 2012 and the ALJ’s August 2013 initial decision. The first order denied Entergy’s request for rehearing and affirmed the FERC’s earlier rulings that Entergy’s original methodology for allocating energy costs to the opportunity sales was incorrect and, as a result, Entergy Arkansas must make payments to the other Utility operating companies to put them in the same position that they would have been in absent the incorrect allocation. The FERC clarified that interest should be included with the payments. The second order affirmed in part, and reversed in part, the rulings in the ALJ’s August 2013 initial decision regarding the methodology that should be used to calculate the payments Entergy Arkansas is to make to the other Utility operating companies. The FERC affirmed the ALJ’s ruling that a full re-run of intra-system bills should be performed but required that methodology be modified so that the sales have the same priority for purposes of energy allocation as joint account sales. The FERC reversed the ALJ’s decision that any payments by Entergy Arkansas should be reduced by 20%. The FERC also reversed the ALJ’s decision that adjustments to other System Agreement service schedules and excess bandwidth payments should not be taken into account when calculating the payments to be made by Entergy Arkansas. The FERC held that such adjustments and excess bandwidth payments should be taken into account but ordered further proceedings before an ALJ to address
Entergy Corporation and Subsidiaries
Notes to Financial Statements
whether a cap on any reduction due to bandwidth payments was necessary and to implement the other adjustments to the calculation methodology.
In May 2016, Entergy Services filed a request for rehearing of the FERC’s April 2016 order arguing that payments made by Entergy Arkansas should be reduced as a result of the timing of the LPSC’s approval of certain contracts. Entergy Services also filed a request for clarification and/or rehearing of the FERC’s April 2016 order addressing the ALJ’s August 2013 initial decision. The APSC and the LPSC also filed requests for rehearing of the FERC’s April 2016 order. In September 2017 the FERC issued an order denying the request for rehearing on the issue of whether any payments by Entergy Arkansas to the other Utility operating companies should be reduced due to the timing of the LPSC’s approval of Entergy Arkansas’s wholesale baseload contract with Entergy Louisiana. In November 2017 the FERC issued an order denying all of the remaining requests for rehearing of the April 2016 order. In November 2017, Entergy Services filed a petition for review in the D.C. Circuit of the FERC’s orders in the first two phases of the opportunity sales case. In December 2017 the D.C. Circuit granted Entergy Services’ request to hold the appeal in abeyance pending final resolution of the related proceeding before the FERC. In January 2018 the APSC and the LPSC filed separate petitions for review in the D.C. Circuit, and the D.C. Circuit consolidated the appeals with Entergy Services’ appeal.
The hearing required by the FERC’s April 2016 order was held in May 2017. In July 2017 the ALJ issued an initial decision addressing whether a cap on any reduction due to bandwidth payments was necessary and whether to implement the other adjustments to the calculation methodology. In August 2017 the Utility operating companies, the LPSC, the APSC, and FERC staff filed individual briefs on exceptions challenging various aspects of the initial decision. In September 2017 the Utility operating companies, the LPSC, the APSC, the MPSC, the City Council, and FERC staff filed separate briefs opposing exceptions taken by various parties.
Based on testimony previously submitted in the case and its assessment of the April 2016 FERC orders, in the first quarter 2016, Entergy Arkansas recorded a liability of $87 million, which included interest, for its estimated increased costs and payment to the other Utility operating companies, and a deferred fuel regulatory asset of $75 million. Following its assessment of the course of the proceedings, including the FERC’s denial of rehearing in November 2017 described above, in the fourth quarter 2017, Entergy Arkansas recorded an additional liability of $35 million and a regulatory asset of $31 million.
In October 2018 the FERC issued an order addressing the ALJ’s July 2017 initial decision. The FERC reversed the ALJ’s decision to cap the reduction in Entergy Arkansas’s payment to account for the increased bandwidth payments that Entergy Arkansas made to the other operating companies. The FERC also reversed the ALJ’s decision that Grand Gulf sales from January through September 2000 should be included in the calculation of Entergy Arkansas’s payment. The FERC affirmed on other grounds the ALJ’s rejection of the LPSC’s claim that certain joint account sales should be accounted for as part of the calculation of Entergy Arkansas’s payment. In November 2018 the LPSC requested rehearing of the FERC’s October 2018 decision. In December 2019 the FERC denied the LPSC’s request for rehearing. In January 2020 the LPSC appealed the December 2019 decision to the D.C. Circuit.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
In December 2018, Entergy made a compliance filing in response to the FERC’s October 2018 order. The compliance filing provided a final calculation of Entergy Arkansas’s payments to the other Utility operating companies, including interest. No protests were filed in response to the December 2018 compliance filing. Refunds and interest in the following amounts were paid by Entergy Arkansas to the other operating companies in December 2018:
| | | | | | | | | | | |
| | Total refunds including interest |
| Payment/(Receipt) |
| | (In Millions) |
| Principal | Interest | Total |
| Entergy Arkansas | $68 | $67 | $135 |
| Entergy Louisiana | ($30) | ($29) | ($59) |
| Entergy Mississippi | ($18) | ($18) | ($36) |
| Entergy New Orleans | ($3) | ($4) | ($7) |
| Entergy Texas | ($17) | ($16) | ($33) |
Entergy Arkansas previously recognized a regulatory asset with a balance of $116 million as of December 31, 2018 for a portion of the payments due as a result of this proceeding.
As described above, the FERC’s opportunity sales orders were appealed to the D.C. Circuit. In February 2020 all of the appeals were consolidated and in April 2020 the D.C. Circuit established a briefing schedule. Briefing was completed in September 2020 and oral argument was heard in December 2020. In July 2021 the D.C. Circuit issued a decision denying all of the petitions for review filed in response to the FERC’s opportunity sales orders.
In February 2019 the LPSC filed a new complaint relating to two issues that were raised in the opportunity sales proceeding, but that, in its October 2018 order, the FERC held were outside the scope of the proceeding. In March 2019, Entergy Services filed an answer and motion to dismiss the new complaint. In November 2019 the FERC issued an order denying the LPSC’s complaint. The order concluded that the settlement agreement approved by the FERC in December 2015 terminating the System Agreement barred the LPSC’s new complaint. In December 2019 the LPSC requested rehearing of the FERC’s November 2019 order, and in July 2020 the FERC issued an order dismissing the LPSC’s request for rehearing. In September 2020 the LPSC appealed to the D.C. Circuit the FERC’s orders dismissing the new opportunity sales complaint. In November 2020 the D.C. Circuit issued an order establishing that briefing will occur in January 2021 through April 2021. Oral argument was held in September 2021. In December 2021 the D.C. Circuit denied the LPSC’s Petition for Review of the new opportunity sales complaint. The opportunity sales cases are complete at FERC and at the D.C. Circuit and no additional refund amounts are owed by Entergy Arkansas.
In May 2019, Entergy Arkansas filed an application and supporting testimony with the APSC requesting approval of a special rider tariff to recover the costs of these payments from its retail customers over a 24-month period. The application requested that the APSC approve the rider to take effect within 30 days or, if suspended by the APSC as allowed by commission rule, approve the rider to take effect in the first billing cycle of the first month occurring 30 days after issuance of the APSC’s order approving the rider. In June 2019 the APSC suspended Entergy Arkansas’s tariff and granted Entergy Arkansas’s motion asking the APSC to establish the proceeding as the single designated proceeding in which interested parties may assert claims related to the appropriate retail rate treatment of the FERC’s October 2018 order and related FERC orders in the opportunity sales proceeding. In January 2020 the APSC adopted a procedural schedule with a hearing in April 2020. In January 2020 the Attorney General and Arkansas Electric Energy Consumers, Inc. filed a joint motion seeking to dismiss Entergy Arkansas’s application alleging that the APSC, in a prior proceeding, ruled on the issues addressed in the application and determined that Entergy Arkansas’s requested relief violates the filed rate doctrine and the prohibition against retroactive ratemaking. Entergy Arkansas responded to the joint motion in February 2020 rebutting these
Entergy Corporation and Subsidiaries
Notes to Financial Statements
arguments, including demonstrating that the claims in this proceeding differ substantially from those the APSC addressed previously and that the payment resulting from a FERC tariff violation for which Entergy Arkansas seeks retail cost recovery in this proceeding differs materially from the refunds resulting from a FERC tariff amendment that the APSC previously rejected on filed rate doctrine and the retroactive ratemaking grounds. In addition, in January 2020 the Attorney General and Arkansas Electric Energy Consumers, Inc. filed testimony opposing the recovery by Entergy Arkansas of the opportunity sales payment but also claiming that certain components of the payment should be segregated and refunded to customers. In March 2020, Entergy Arkansas filed rebuttal testimony.
In July 2020 the APSC issued a decision finding that Entergy Arkansas’s application is not in the public interest. The order also directed Entergy Arkansas to refund to its retail customers within 30 days of the order the FERC-determined over-collection of $13.7 million, plus interest, associated with a recalculated bandwidth remedy. In addition to these primary findings, the order also denied the Attorney General’s request for Entergy Arkansas to prepare a compliance filing detailing all of the retail impacts from the opportunity sales and denied a request by the Arkansas Electric Energy Consumers to recalculate all costs using the revised responsibility ratio. Entergy Arkansas filed a motion for temporary stay of the 30-day requirement to allow Entergy Arkansas a reasonable opportunity to seek rehearing of the APSC order, but in July 2020 the APSC denied Entergy Arkansas’s request for a stay and directed Entergy Arkansas to refund to its retail customers the component of the total FERC-determined opportunity sales payment that was associated with increased bandwidth remedy payments of $13.7 million, plus interest. The refunds were issued in the August 2020 billing cycle. While the APSC denied Entergy Arkansas’s stay request, Entergy Arkansas believes its actions were prudent and, therefore, the costs, including the $13.7 million, plus interest, are recoverable. In July 2020, Entergy Arkansas requested rehearing of the APSC order, which rehearing was denied by the APSC in August 2020. In September 2020, Entergy Arkansas filed a complaint in the U.S. District Court for the Eastern District of Arkansas challenging the APSC’s order denying Entergy Arkansas’s request to recover the costs of these payments. In October 2020 the APSC filed a motion to dismiss Entergy Arkansas’s complaint, to which Entergy Arkansas responded. Also in December 2020, Entergy Arkansas and the APSC held a pre-trial conference, and filed a report with the court in January 2021. The court held a hearing in February 2021 regarding issues addressed in the pre-trial conference report, and in June 2021 the court stayed all discovery until it rules on pending motions, after which the court will issue an amended schedule if necessary. In March 2022 the court denied the APSC’s motion to dismiss, and, in April 2022, issued a scheduling order including a trial date in February 2023. In June 2022, Entergy Arkansas filed a motion asserting that it is entitled to summary judgment because Entergy Arkansas’s position that the APSC’s order is pre-empted by the filed rate doctrine and violates the Dormant Commerce Clause is premised on facts that are not subject to genuine dispute. In July 2022, Arkansas Electric Energy Consumers, Inc., an industrial customer association, filed a motion to intervene and to hold Entergy Arkansas’s motion for summary judgment in abeyance pending a ruling on the motion to intervene. Entergy Arkansas filed a consolidated opposition to both motions. In August 2022 the APSC filed a motion for summary judgment arguing that there is no genuine issue as to any material fact and the APSC is entitled to judgment as a matter of law. In September 2022, Entergy Arkansas filed an opposition to the motion. In October 2022 the APSC filed a motion asking the court to hold further proceedings in abeyance pending a decision on the motions for summary judgment filed by Entergy Arkansas and the APSC. Also in October 2022, Entergy Arkansas filed an opposition to the motion, and the APSC filed a reply in support of its motion for summary judgment. In January 2023 the judge assigned to the case, on her own motion, identified facts that may present a conflict and recused herself; a new judge was assigned to the case, but he also recused due to a conflict. The case again was reassigned to a new judge. In January 2023 the court denied all pending motions (including those described above) except for a motion by the APSC to exclude certain testimony and further ruled that the matter would proceed to trial. In January 2023, Arkansas Electric Energy Consumers, Inc. filed a notice of appeal of the court’s order denying its motion to intervene to the United States Court of Appeals for the Eighth Circuit and a motion with the district court to stay the proceedings pending the appeal, which was denied. In February 2023, Arkansas Electric Energy Consumers, Inc. filed a motion with the United States Court of Appeals for the Eighth Circuit to stay the proceedings pending the appeal, which also was denied. The trial was held in February 2023. Following the trial, Entergy Arkansas filed a motion with the United States Court of Appeals for the Eighth Circuit to expedite the appeal filed by Arkansas Electric Energy Consumers, Inc. The United States Court of Appeals for
Entergy Corporation and Subsidiaries
Notes to Financial Statements
the Eighth Circuit granted Entergy Arkansas’s request, and oral arguments were held in June 2023. In August 2023 the United States Court of Appeals for the Eighth Circuit affirmed the order of the court denying Arkansas Electric Energy Consumers, Inc.’s motion to intervene.
In March 2024 the U.S. District Court for the Eastern District of Arkansas issued a judgment in favor of the APSC and against Entergy Arkansas. In March 2024 Entergy Arkansas filed a notice of appeal and a motion to expedite oral arguments with the United States Court of Appeals for the Eighth Circuit and the court granted the motion to expedite. Briefing to the United States Court of Appeals for the Eighth Circuit concluded in July 2024 and oral arguments concluded in September 2024. As a result of the adverse decision by the U.S. District Court for the Eastern District of Arkansas, Entergy Arkansas concluded that it could no longer support the recognition of its $131.8 million regulatory asset reflecting the previously-expected recovery of a portion of the costs at issue in the opportunity sales proceeding and recorded a $131.8 million ($99.1 million net-of-tax) charge to earnings in first quarter 2024. In December 2024 the United States Court of Appeals for the Eighth Circuit affirmed the decision of the U.S. District Court for the Eastern District of Arkansas, and Entergy Arkansas filed a petition for rehearing en banc. In January 2025 the United States Court of Appeals for the Eighth Circuit denied Entergy Arkansas’s petition. Entergy Arkansas is evaluating a petition for certiorari with the United States Supreme Court.
MSS-4 Replacement Tariff – Net Operating Loss Carryforward Proceeding
In January 2021, pursuant to section 205 of the Federal Power Act, Entergy Services filed an amendment to the MSS-4 replacement tariff, a tariff governing the sales of energy and capacity among the Utility operating companies, in order to provide for the inclusion of specified accumulated deferred income taxes, including net operating loss carryforward accumulated deferred income taxes (NOLC ADIT), in the rate for sales of energy among the Utility operating companies on a prospective basis. In March 2021, the FERC accepted the filing, subject to refund and hearing procedures.
In October 2021 the LPSC filed a complaint with the FERC alleging that Entergy Services improperly excluded NOLC ADIT from MSS-4 replacement tariff rates in the period before March 20, 2021. The LPSC argued that sales from Entergy Louisiana to Entergy Texas and Entergy New Orleans were charged at rates lower than they otherwise should have been, and it accordingly seeks surcharges for the period prior to March 20, 2021. The FERC set the complaint for hearing procedures and subsequently the hearing for this complaint proceeding was consolidated with the hearing procedures for Entergy Services’ January 2021 NOLC ADIT filing.
Testimony was filed by parties in 2023, and the hearing before a FERC ALJ was concluded in February 2024. In June 2024, the FERC ALJ issued an initial decision addressing three major issues: (1) whether Entergy Services’ proposed prospective inclusion and allocation of NOLC ADIT in MSS-4 replacement tariff rates using a modified with-and-without methodology is just and reasonable; (2) whether Entergy Services correctly calculated excess and deficient accumulated deferred income taxes in accordance with the terms of a prior settlement; and (3) whether NOLC ADIT should have been included in MSS-4 replacement tariff rates prior to the effective date of the January 2021 MSS-4 replacement tariff filing.
With respect to issues (1) and (2), the presiding ALJ concluded that Entergy Services’ proposed methodology for allocating and including NOLC ADIT in MSS-4 replacement tariff rates was just and reasonable and that Entergy Services correctly performed the excess and deficient accumulated deferred income taxes calculations. With respect to issue (3), however, the presiding ALJ agreed with the LPSC that NOLC ADIT should have been included in MSS-4 replacement tariff rates since September 1, 2016, and as a result, the presiding ALJ ordered that Entergy Louisiana and Entergy Arkansas recalculate bills for the period of September 1, 2016 through November 11, 2023 with surcharges expected to be due to those operating companies from the purchasing operating companies, Entergy New Orleans, Entergy Texas, and Entergy Louisiana (for some Entergy Arkansas sales). The presiding ALJ also ordered Entergy Services to pay the interest owed to Entergy Louisiana on these surcharges.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The surcharge methodology that the presiding ALJ recommended in connection with issue (3) was not supported by any participant in the hearing. As part of their exceptions to the initial decision, all parties to the proceeding opposed the use of the ALJ’s methodology, except for the FERC trial staff, which took no position. During the hearing, the LPSC and the FERC trial staff advocated that the alleged tariff violation should be remedied by the application of Entergy Services’ January 2021 proposed methodology. All other parties, including the PUCT, the City Council, and Entergy Services, opposed any surcharges for the period prior to the March 20, 2021 effective date of the January 2021 filing.
Entergy Services disputes the presiding ALJ's rulings on issue (3) and filed exceptions to these rulings in July 2024. The ALJ's initial decision is not binding on the FERC and is an interim step in the hearing process. No refunds will be owed in connection with this proceeding unless and until the FERC requires them in a final order.
Complaints Against System Energy
System Energy’s operating revenues are derived from the allocation of the capacity, energy, and related costs associated with its 90% ownership/leasehold interest in Grand Gulf. System Energy sells its Grand Gulf capacity and energy to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans pursuant to the Unit Power Sales Agreement. System Energy and the Unit Power Sales Agreement have been the subject of several litigation proceedings at the FERC, including challenges with respect to System Energy’s authorized return on equity and capital structure, renewal of its sale-leaseback arrangement, treatment of uncertain tax positions, a broader investigation of rates under the Unit Power Sales Agreement, and two prudence complaints, one challenging the extended power uprate completed at Grand Gulf in 2012 and the operation and management of Grand Gulf, particularly in the 2016-2020 time period, and the second challenging the operation and management of Grand Gulf in the 2021-2022 time period. Settlements that resolve all significant aspects of these complaints have been reached with the MPSC, the APSC, the City Council, and the LPSC, and these settlements have been approved by the FERC. Following are discussions of the proceedings.
Return on Equity and Capital Structure Complaints
In January 2017 the APSC and the MPSC filed a complaint with the FERC against System Energy. The complaint sought a reduction in the return on equity component of the Unit Power Sales Agreement pursuant to which System Energy sells its Grand Gulf capacity and energy to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. Entergy Arkansas also sells some of its Grand Gulf capacity and energy to Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans under separate agreements. The return on equity under the Unit Power Sales Agreement at the time of the complaint was 10.94%, which was established in a rate proceeding that became final in July 2001.
The APSC and the MPSC complaint alleged that the return on equity was unjust and unreasonable because capital market and other considerations indicated that it was excessive. The complaint requested proceedings to investigate the return on equity and establish a lower return on equity, and also requested that the FERC establish January 23, 2017 as a refund effective date. The complaint included a return on equity analysis that purported to establish that the range of reasonable return on equity for System Energy was between 8.37% and 8.67%. System Energy answered the complaint in February 2017 and disputed that a return on equity of 8.37% to 8.67% was just and reasonable. The LPSC and the City Council intervened in the proceeding expressing support for the complaint. In September 2017 the FERC established a refund effective date of January 23, 2017 and directed the parties to engage in settlement proceedings before an ALJ. The parties were unable to settle the return on equity issue and a FERC hearing judge was assigned in July 2018. The 15-month refund period in connection with the APSC/MPSC complaint expired on April 23, 2018.
In April 2018 the LPSC filed a complaint with the FERC against System Energy seeking an additional 15-month refund period. The LPSC complaint requested similar relief from the FERC with respect to System Energy’s
Entergy Corporation and Subsidiaries
Notes to Financial Statements
return on equity and also requested the FERC to investigate System Energy’s capital structure. The APSC, the MPSC, and the City Council intervened in the proceeding, filed an answer expressing support for the complaint, and asked the FERC to consolidate this proceeding with the proceeding initiated by the complaint of the APSC and the MPSC in January 2017. System Energy answered the LPSC complaint in May 2018 and also filed a motion to dismiss the complaint. In August 2018 the FERC issued an order dismissing the LPSC’s request to investigate System Energy’s capital structure and setting for hearing the return on equity complaint, with a refund effective date of April 27, 2018. The 15-month refund period in connection with the LPSC return on equity complaint expired on July 26, 2019.
The portion of the LPSC’s complaint dealing with return on equity was subsequently consolidated with the APSC and the MPSC complaint for hearing. The parties also addressed an order (issued in a separate FERC proceeding involving New England transmission owners) that proposed modifying the FERC’s standard methodology for determining return on equity. In September 2018 the LPSC filed an amended complaint raising the same capital structure claim the FERC had earlier dismissed. The FERC initiated a new proceeding for the amended capital structure complaint, and System Energy answered the complaint in October 2018. In January 2019 the FERC set the amended complaint for settlement and hearing proceedings. Settlement proceedings in the capital structure proceeding commenced in February 2019, but were terminated in June 2019, and the amended capital structure complaint was consolidated with the ongoing return on equity proceeding. The 15-month refund period in connection with the capital structure complaint was from September 24, 2018 to December 23, 2019.
Several rounds of testimony were filed by the parties in these proceedings between January 2019 and August 2020. Some of these rounds of testimony were precipitated by developments in an unrelated proceeding in which the FERC issued orders addressing the methodology for determining the return on equity applicable to transmission owners in MISO (Opinion Nos. 569 and 569-A). The final positions of the parties, after the submission of all pre-filed testimony, were as follows. With regard to the return on equity complaints for the first refund period, based on their respective interpretations and applications of the Opinion No. 569-A methodology, the LPSC argued for an authorized return on equity for System Energy of 7.97%; the MPSC and the APSC argued for an authorized return on equity of 9.24%; and the FERC trial staff argued for an authorized return on equity of 9.49%. For the second refund period and on a prospective basis, based on their respective interpretations and applications of the Opinion No. 569-A methodology, the LPSC argued for an authorized return on equity for System Energy of 7.78%; the MPSC and the APSC argued that an authorized return on equity of 9.15% may be appropriate if the second complaint was not dismissed; and the FERC trial staff argued for an authorized return on equity of 9.09% if the second complaint was not dismissed. The LPSC also continued to support as its primary recommendation, based on an alternative analysis to the Opinion No. 569-A methodology, an authorized return on equity for System Energy as low as 7.56% for the first complaint refund period and as low as 7.18% for the second complaint refund period and prospectively. The MPSC and the APSC also continued to support as their primary recommendation, based on an alternative analysis to the Opinion No. 569-A methodology, an authorized return on equity for System Energy as low as 8.26% for the first complaint refund period and as low as 8.32% for the second complaint refund period and prospectively. System Energy argued that strict application of the Opinion No. 569-A methodology produces results inconsistent with investor requirements and does not provide a sound basis on which to evaluate System Energy’s authorized return on equity. Therefore, as its primary recommendation, System Energy argued for the use of a methodology that incorporates four separate financial models and, based on application of this recommended methodology, an authorized return on equity of 10.12% for the first refund period, which also fell within the presumptively just and reasonable range calculated for the second refund period and prospectively. Under the Opinion No. 569-A methodology, System Energy calculated an authorized return on equity of 9.44% for the first refund period, which also fell within the presumptively just and reasonable range calculated for the second refund period and prospectively.
With regard to the capital structure, the LPSC’s primary recommendation was that the FERC establish a hypothetical capital structure for System Energy for ratemaking purposes, according to which System Energy’s common equity ratio would be set to Entergy Corporation’s equity ratio of 37% equity and 63% debt. The APSC and the MPSC recommended that 35.98% be set as the common equity ratio for System Energy. The FERC trial
Entergy Corporation and Subsidiaries
Notes to Financial Statements
staff argued that the average capital structure of the proxy group used to develop System Energy’s return on equity should be used to establish the capital structure. Using this approach, the FERC trial staff calculated the average capital structure for its proposed proxy group of 46.74% common equity and 53.26% debt. System Energy disputed all of these recommendations and argued that the use of its actual capital structure was just and reasonable.
After conducting a hearing, in March 2021 the FERC ALJ issued an initial decision. With regard to System Energy’s authorized return on equity, the ALJ determined that the existing return on equity of 10.94% was no longer just and reasonable, and that the replacement authorized return on equity, based on application of the Opinion No. 569-A methodology, should be 9.32%. The ALJ further determined that System Energy should pay refunds for a fifteen-month refund period (January 2017-April 2018) based on the difference between the current return on equity and the replacement authorized return on equity. The ALJ determined that the April 2018 complaint concerning the authorized return on equity should be dismissed, and that no refunds for a second fifteen-month refund period should be due. With regard to System Energy’s capital structure, the ALJ determined that System Energy’s actual equity ratio was excessive and that the just and reasonable equity ratio was 48.15% equity, based on the average equity ratio of the proxy group used to evaluate the return on equity for the second complaint. The ALJ further determined that System Energy should pay refunds for a fifteen-month refund period (September 2018-December 2019) based on the difference between the actual equity ratio and the 48.15% equity ratio.
In April 2021, System Energy filed its brief on exceptions, in which it challenged the initial decision’s findings on both the return on equity and capital structure issues. Also in April 2021 the LPSC, the APSC, the MPSC, the City Council, and the FERC trial staff filed briefs on exceptions. Reply briefs opposing exceptions were filed in May 2021 by System Energy, the FERC trial staff, the LPSC, the APSC, the MPSC, and the City Council.
As discussed below in “System Energy Settlement with the MPSC,” “System Energy Settlement with the APSC,” “System Energy Settlement with the City Council,” and “System Energy Settlement with the LPSC,” the MPSC, the APSC, the City Council, and the LPSC have settled their claims related to these proceedings. As part of the settlements with their respective retail regulators, effective July 2022 for Entergy Mississippi, November 2023 for Entergy Arkansas, June 2024 for Entergy New Orleans, and September 2024 for Entergy Louisiana, bills issued under the Unit Power Sales Agreement reflect a return on equity of 9.65% and a capital structure not to exceed 52% equity.
In August 2022 the D.C. Circuit issued an order addressing appeals of FERC’s Opinion No. 569 and 569-A, which established the methodology applied in the ALJ’s initial decision in the proceeding against System Energy discussed above. The appellate order addressed the methodology for determining the return on equity applicable to transmission owners in MISO. The D.C. Circuit found the FERC’s use of the Risk Premium model as part of the methodology to be arbitrary and capricious, and remanded the case back to the FERC. In October 2024, after System Energy had reached settlements with each of the retail regulators involved in the return on equity and capital structure proceeding discussed above, the FERC issued a remand order in the MISO transmission owners’ return on equity case, concluding that the record supported the methodology that it originally directed in Opinion No. 569 utilizing an equal weighting of the two-step discounted cash flow model and capital asset pricing model. As a result, it determined that the just and reasonable return on equity for the MISO transmission owners is 9.98%. In light of the System Energy settlements detailed below, the FERC’s changes to its return on equity methodology in the decision on the MISO transmission owners’ return on equity will not have any immediate effect on System Energy’s return on equity because System Energy’s return on equity has been set at 9.65% through the global settlement through the end of June 2026.
Grand Gulf Sale-leaseback Renewal Complaint and Uncertain Tax Position Rate Base Issue
In May 2018 the LPSC filed a complaint against System Energy and Entergy Services related to System Energy’s renewal of a sale-leaseback transaction originally entered into in December 1988 for an 11.5% undivided interest in Grand Gulf Unit 1. The complaint alleged that System Energy violated the filed rate and the FERC’s ratemaking and accounting requirements when it included in Unit Power Sales Agreement billings the cost of
Entergy Corporation and Subsidiaries
Notes to Financial Statements
capital additions associated with the sale-leaseback interest, and that System Energy was double-recovering costs by including both the lease payments and the capital additions in Unit Power Sales Agreement billings. The complaint also claimed that System Energy was imprudent in entering into the sale-leaseback renewal because the Utility operating companies that purchase Grand Gulf’s output from System Energy could have obtained cheaper capacity and energy in the MISO markets. The complaint further alleged that System Energy violated various other reporting and accounting requirements and should have sought prior FERC approval of the lease renewal. The complaint sought various forms of relief from the FERC, including refunds for capital addition costs for all years in which they were recorded in allegedly non-formula accounts or, alternatively, the disallowance of the return on equity for the capital additions in those years plus interest; a disallowance and refund of the lease costs of the sale-leaseback renewal on grounds of imprudence; an investigation into System Energy’s treatment of a DOE litigation payment; and the imposition of certain forward-looking procedural protections, including audit rights for retail regulators of the Unit Power Sales Agreement formula rates. The APSC, the MPSC, and the City Council intervened in the proceeding.
In June 2018, System Energy and Entergy Services filed a motion to dismiss and an answer to the LPSC complaint denying that System Energy’s treatment of the sale-leaseback renewal and capital additions violated the terms of the filed rate or any other FERC ratemaking, accounting, or legal requirements or otherwise constituted double recovery. The response also argued that the complaint was inconsistent with a FERC-approved settlement to which the LPSC is a party and that explicitly authorized System Energy to recover its lease payments. Finally, the response argued that both the capital additions and the sale-leaseback renewal were prudent investments and the LPSC complaint failed to justify any disallowance or refunds. The response also offered to submit formula rate protocols for the Unit Power Sales Agreement similar to the procedures used for reviewing transmission rates under the MISO tariff. In September 2018 the FERC issued an order setting the complaint for hearing and settlement proceedings and establishing a refund effective date of May 18, 2018.
In February 2019 the presiding ALJ ruled that the hearing ordered by the FERC includes the issue of whether specific subcategories of accumulated deferred income tax should be included in, or excluded from, System Energy’s formula rate. Testimony was filed by the LPSC, the MPSC, the APSC, the City Council, the FERC trial staff, and System Energy between March 2019 and October 2019. The final positions of the parties, after all pre-filed testimony was submitted, were as follows. The LPSC sought refunds that included the renewal lease payments (approximately $17.2 million per year since July 2015), rate base reductions for accumulated deferred income tax associated with uncertain tax positions (with a corresponding refund of approximately $512 million), and the cost of capital additions associated with the sale-leaseback interest, as well as interest on those amounts. The LPSC also argued that adjustments to depreciation rates should require retroactive depreciation expense refunds but only prospective rate base adjustments. The APSC, the MPSC, and the City Council generally agreed with the LPSC’s positions. The FERC trial staff argued for refunds for rate base reductions for liabilities associated with uncertain tax positions, and also argued that System Energy recovered $32 million more than it should have in depreciation expense for capital additions. System Energy filed testimony asking the FERC to reject all of the LPSC’s claims for refunds and opposing the FERC trial staff’s position regarding the uncertain tax position issue. System Energy also argued that the FERC trial staff’s position regarding depreciation rates for capital additions was not unreasonable, but any change in depreciation expense is only one element of a Unit Power Sales Agreement re-billing calculation. Adjustments to depreciation expense in any re-billing under the Unit Power Sales Agreement formula rate would also involve changes to accumulated depreciation, accumulated deferred income taxes, and other formula elements as needed.
After holding a hearing in November 2019, in April 2020 the FERC ALJ issued the initial decision. Among other things, the ALJ determined that refunds were due on three main issues. First, with regard to the lease renewal payments, the ALJ determined that System Energy was recovering an unjust acquisition premium through the lease renewal payments, and that System Energy’s recovery from customers through rates should be limited to the cost of service based on the remaining net book value of the leased assets, which was approximately $70 million. The ALJ found that the remedy for this issue should be the refund of lease payments (approximately $17.2 million per year since July 2015) with interest determined at the FERC quarterly interest rate, which would be offset by the addition
Entergy Corporation and Subsidiaries
Notes to Financial Statements
of the net book value of the leased assets in the cost of service. The ALJ did not calculate a value for the refund expected as a result of this remedy. In addition, System Energy would no longer recover the lease payments in rates prospectively. Second, with regard to the liabilities associated with uncertain tax positions, the ALJ determined that the liabilities are accumulated deferred income taxes and that System Energy’s rate base should have been reduced for those liabilities. The ALJ also found that System Energy should include liabilities associated with uncertain tax positions as a rate base reduction going forward. Third, with regard to the depreciation expense adjustments, the ALJ found that System Energy should correct for the error in re-billings retroactively and prospectively, but that System Energy should not be permitted to recover interest on any retroactive return on enhanced rate base resulting from such corrections.
In June 2020, System Energy, the LPSC, and the FERC trial staff filed briefs on exceptions, challenging several of the initial decision’s findings. System Energy’s brief on exceptions challenged the initial decision’s limitations on recovery of the lease renewal payments, its proposed rate base refund for the liabilities associated with uncertain tax positions, and its proposal to asymmetrically treat interest on bill corrections for depreciation expense adjustments. The LPSC’s and the FERC trial staff’s briefs on exceptions each challenged the initial decision’s allowance for recovery of the cost of service associated with the lease renewal based on the remaining net book value of the leased assets, its calculation of the remaining net book value of the leased assets, and the amount of the initial decision’s proposed rate base refund for the liabilities associated with uncertain tax positions. The LPSC’s brief on exceptions also challenged the initial decision’s proposal that depreciation expense adjustments include retroactive adjustments to rate base and its finding that section 203 of the Federal Power Act did not apply to the lease renewal. The FERC trial staff’s brief on exceptions also challenged the initial decision’s finding that the FERC need not institute a formal investigation into System Energy’s tariff. In October 2020, System Energy, the LPSC, the MPSC, the APSC, and the City Council filed briefs opposing exceptions. System Energy opposed the exceptions filed by the LPSC and the FERC trial staff. The LPSC, the MPSC, the APSC, the City Council, and the FERC trial staff opposed the exceptions filed by System Energy. Also in October 2020 the MPSC, the APSC, and the City Council filed briefs adopting the exceptions of the LPSC and the FERC trial staff.
In addition, in September 2020, the IRS issued a Notice of Proposed Adjustment (NOPA) and Entergy executed it. The NOPA memorialized the IRS’s decision to adjust the 2015 consolidated federal income tax return of Entergy Corporation and certain of its subsidiaries, including System Energy, with regard to the uncertain decommissioning tax position. Pursuant to the audit resolution documented in the NOPA, the IRS allowed System Energy’s inclusion of $102 million of future nuclear decommissioning costs in System Energy’s cost of goods sold for the 2015 tax year, roughly 10% of the requested deduction, but disallowed the balance of the position. In September 2020, System Energy filed a motion to lodge the NOPA into the record in the FERC proceeding. In October 2020 the LPSC, the APSC, the MPSC, the City Council, and the FERC trial staff filed oppositions to System Energy’s motion. As a result of the NOPA issued by the IRS in September 2020, System Energy filed, in October 2020, a new Federal Power Act section 205 filing at FERC to establish an ongoing rate base credit for the accumulated deferred income taxes resulting from the decommissioning uncertain tax position. On a prospective basis beginning with the October 2020 bill, System Energy proposed to include the accumulated deferred income taxes arising from the successful portion of the decommissioning uncertain tax position as a credit to rate base under the Unit Power Sales Agreement. In November 2020 the LPSC, the APSC, the MPSC, and the City Council filed a protest to the filing, and System Energy responded.
In November 2020 the IRS issued a Revenue Agent’s Report (RAR) for the 2014/2015 tax year and in December 2020 Entergy executed it. The RAR contained the same adjustment to the uncertain nuclear decommissioning tax position as that which the IRS had announced in the NOPA. In December 2020, System Energy filed a motion to lodge the RAR into the record in the FERC proceeding addressing the uncertain tax position rate base issue. In January 2021 the LPSC, the APSC, the MPSC, and the City Council filed a protest to the motion.
As a result of the RAR, in December 2020, System Energy filed amendments to its new Federal Power Act section 205 filings to establish an ongoing rate base credit for the accumulated deferred income taxes resulting from
Entergy Corporation and Subsidiaries
Notes to Financial Statements
the decommissioning uncertain tax position and to credit excess accumulated deferred income taxes arising from the successful portion of the decommissioning uncertain tax position. The amendments both proposed the inclusion of the RAR as support for the filings. In December 2020 the LPSC, the APSC, and the City Council filed protests to the amendments. In February 2021 the FERC issued an order accepting System Energy’s Federal Power Act section 205 filings subject to refund, setting them for hearing, and holding the hearing in abeyance.
In December 2020, System Energy filed a new Federal Power Act section 205 filing to provide a one-time, historical credit of $25.2 million for the accumulated deferred income taxes that would have been created by the decommissioning uncertain tax position if the IRS’s decision had been known in 2016. In January 2021 the LPSC, APSC, MPSC, and City Council filed a protest to the filing. In February 2021 the FERC issued an order accepting System Energy’s Federal Power Act section 205 filing subject to refund, setting it for hearing, and holding the hearing in abeyance. System Energy provided the one-time credit during the first quarter 2021.
In December 2022 the FERC issued an order on the ALJ’s initial decision, which affirmed it in part and modified it in part. The FERC’s order directed System Energy to calculate refunds on three issues, and to provide a compliance report detailing the calculations. The FERC’s order also disallowed the future recovery of sale-leaseback renewal costs, which is estimated at approximately $11.5 million annually for purchases from Entergy Arkansas, Entergy Louisiana, and Entergy New Orleans through July 2036. The three refund issues were rental expenses related to the renewal of the sale-leaseback arrangements; refunds, if any, for the revenue requirement impact of including accumulated deferred income taxes resulting from the decommissioning uncertain tax positions from 2004 through the present; and refunds for the net effect of correcting the depreciation inputs for capital additions attributable to the portion of plant subject to the sale-leaseback.
As a result of the FERC order’s directives regarding the recovery of the sale-leaseback transaction, in December 2022 System Energy reduced the Grand Gulf sale-leaseback regulatory liability by $56 million, reduced the related accumulated deferred income tax asset by $94 million, and reduced the Grand Gulf sale-leaseback accumulated deferred income tax regulatory liability by $25 million, resulting in an increase in income tax expense of $13 million. In addition, the FERC determined that System Energy recognized excess depreciation expense related to property subject to the sale-leaseback. As a result, in December 2022, System Energy recorded a reduction in depreciation expense and the related accumulated depreciation of $33 million.
In January 2023, System Energy filed its compliance report with the FERC. With respect to the sale-leaseback renewal costs, System Energy calculated a refund of $89.8 million, which represented all of the sale-leaseback renewal rental costs that System Energy recovered in rates, with interest. With respect to the decommissioning uncertain tax position issue, System Energy calculated that no additional refunds were owed because it had already provided a one-time historical credit (for the period January 2016 through September 2020) of $25.2 million based on the accumulated deferred income taxes that resulted from the IRS’s partial acceptance of the decommissioning tax position, and because it has been providing an ongoing rate base credit for the accumulated deferred income taxes that resulted from the IRS’s partial acceptance of the decommissioning tax position since October 2020. With respect to the depreciation refund, System Energy calculated a refund of $13.7 million, which is the net total of a refund to customers for excess depreciation expense previously collected, plus interest, offset by the additional return on rate base that System Energy previously did not collect, without interest. See “System Energy Settlement with the MPSC” below for discussion of the regulatory charge and corresponding regulatory liability recorded in June 2022 related to these proceedings. In January 2023, System Energy paid the refunds of $103.5 million, which included refunds of $41.7 million to Entergy Arkansas, $27.8 million to Entergy Louisiana, and $34 million to Entergy New Orleans.
In February 2023 the LPSC, the APSC, and the City Council filed protests to System Energy’s January 2023 compliance report, in which they challenged System Energy’s calculation of the refunds associated with the decommissioning tax position but did not protest the other components of the compliance report. Each of them argued that System Energy should have paid additional refunds for the decommissioning tax position issue, and the City Council estimated the total additional refunds owed to customers of Entergy Louisiana, Entergy New Orleans,
Entergy Corporation and Subsidiaries
Notes to Financial Statements
and Entergy Arkansas for that issue as $493 million, including interest (and without factoring in the $25.2 million refund that System Energy already paid in 2021).
In January 2023, System Energy filed a request for rehearing of the FERC’s determinations in the December 2022 order on sale-leaseback refund issues and future lease cost disallowances, the FERC’s prospective policy on uncertain tax positions, and the proper accounting of System Energy’s accumulated deferred income taxes adjustment for the Tax Cuts and Jobs Act of 2017; and a motion for confirmation of its interpretation of the December 2022 order’s remedy concerning the decommissioning tax position. In January 2023 the retail regulators filed a motion for confirmation of their interpretation of the refund requirement in the December 2022 FERC order and a provisional request for rehearing. In February 2023 the FERC issued a notice that the rehearing requests were denied by operation of law. In March 2023, System Energy filed in the United States Court of Appeals for the Fifth Circuit a petition for review of the December 2022 order. In March 2023, System Energy also filed an unopposed motion to stay the proceeding in the Fifth Circuit pending the FERC’s disposition of the pending motions, and the court granted the motion to stay.
In February 2023, System Energy submitted a tariff compliance filing with the FERC to clarify that, consistent with the releases provided in the MPSC settlement, Entergy Mississippi will continue to be charged for its allocation of the sale-leaseback renewal costs under the Unit Power Sales Agreement. See “System Energy Settlement with the MPSC” below for discussion of the settlement. In March 2023 the MPSC filed a protest to System Energy’s tariff compliance filing. The MPSC argues that the settlement did not specifically address post-settlement sale-leaseback renewal costs and that the sale-leaseback renewal costs may not be recovered under the Unit Power Sales Agreement. Entergy Mississippi’s allocated sale-leaseback renewal costs are estimated at $5.7 million annually for the remaining term of the sale-leaseback renewal.
In August 2023 the FERC issued an order addressing arguments raised on rehearing and partially setting aside the prior order (rehearing order). The rehearing order addressed rehearing requests that were filed in January 2023 separately by System Energy and the LPSC, the APSC, and the City Council.
In the rehearing order, the FERC directed System Energy to recalculate refunds for two issues: (1) refunds of rental expenses related to the renewal of the sale-leaseback arrangements and (2) refunds for the net effect of correcting the depreciation inputs for capital additions associated with the sale-leaseback. With regard to the sale-leaseback renewal rental expenses, the rehearing order allowed System Energy to recover an implied return of and on the depreciated cost of the portion of the plant subject to the sale-leaseback as of the expiration of the initial lease term. With regard to the depreciation input issue, the rehearing order allowed System Energy to offset refunds so that System Energy may collect interest on the rate base recalculations that were part of the overall depreciation rate recalculations. The rehearing order further directed System Energy to submit within 60 days of the date of the rehearing order an additional compliance filing to revise the total refunds for these two issues. As discussed above, System Energy’s January 2023 compliance filing calculated $103.5 million in total refunds, and the refunds were paid in January 2023. In October 2023, System Energy filed its compliance report with the FERC as directed in the August 2023 rehearing order. The October 2023 compliance report reflected recalculated refunds totaling $35.7 million for the two issues resulting in $67.8 million in refunds that could be recouped by System Energy. As discussed below in “System Energy Settlement with the APSC,” System Energy reached a settlement in principle with the APSC to resolve several pending cases under the FERC’s jurisdiction, including this one, pursuant to which it agreed not to recoup the $27.3 million calculated for Entergy Arkansas in the compliance filing. As a result of the FERC’s rulings on the sale-leaseback and depreciation input issues in the August 2023 rehearing order, in third quarter 2023, System Energy recorded a regulatory asset and corresponding regulatory credit of $40 million to reflect the portion of the January 2023 refunds to be recouped from Entergy Louisiana and Entergy New Orleans. Consistent with the compliance filing, in October 2023, Entergy Louisiana and Entergy New Orleans paid recoupment amounts of $18.2 million and $22.3 million, respectively, to System Energy.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
On the third refund issue identified in the rehearing requests, concerning the decommissioning uncertain tax positions, the rehearing order denied all rehearing requests, re-affirmed the remedy contained in the December 2022 order, and did not direct System Energy to recalculate refunds or to submit an additional compliance filing.
In September 2023, System Energy filed a protective appeal of the rehearing order with the United States Court of Appeals for the Fifth Circuit. The appeal was consolidated with System Energy’s prior appeal of the December 2022 order.
In September 2023 the LPSC filed with the FERC a request for rehearing and clarification of the rehearing order. The LPSC requested that the FERC reverse its determination in the rehearing order that System Energy may collect an implied return of and on the depreciated cost of the portion of the plant subject to the sale-leaseback, as of the expiration of the initial lease term, as well as its determination in the rehearing order that System Energy may offset the refunds for the depreciation rate input issue and collect interest on the rate base recalculations that were part of the overall depreciation rate recalculations. In addition, the LPSC requested that the FERC either confirm the LPSC’s interpretation of the refund associated with the decommissioning uncertain tax positions or explain why it is not doing so. In October 2023 the FERC issued a notice that the rehearing request was deemed denied by operation of law. In November 2023 the FERC issued a further notice stating that it would not issue any further order addressing the rehearing request. Also in November 2023 the LPSC filed with the United States Court of Appeals for the Fifth Circuit a petition for review of the FERC’s August 2023 rehearing order and denials of the September 2023 rehearing request.
In December 2023 the United States Court of Appeals for the Fifth Circuit lifted the abeyance on the consolidated System Energy appeals and it also consolidated the LPSC’s appeal with the System Energy appeals. Briefing of the appeals occurred between March 2024 and July 2024. In September 2024 the parties filed a joint motion to continue and stay oral argument, previously scheduled for October 2024, pending the FERC’s decision whether to approve the settlement between System Energy and the LPSC, and the United States Court of Appeals for the Fifth Circuit granted the motion. In November 2024, after the FERC issued the order approving the settlement between System Energy and the LPSC, System Energy, the LPSC, the APSC, and the FERC filed a joint stipulation to dismiss the pending appeals, which the United States Court of Appeals for the Fifth Circuit granted.
As discussed below in “System Energy Settlement with the MPSC,” “System Energy Settlement with the APSC,” “System Energy Settlement with the City Council,” and “System Energy Settlement with the LPSC,” the MPSC, the APSC, the City Council, and the LPSC have settled their claims related to this proceeding.
LPSC Additional Complaints
In May 2020 the LPSC authorized its staff to file additional complaints at the FERC related to the rates charged by System Energy for Grand Gulf energy and capacity supplied to Entergy Louisiana under the Unit Power Sales Agreement. The LPSC directive noted that the initial decision issued by the presiding ALJ in the Grand Gulf sale-leaseback complaint proceeding did not address, for procedural reasons, certain rate issues raised by the LPSC and declined to order further investigation of rates charged by System Energy.
Unit Power Sales Agreement Complaint
The first of the additional complaints was filed by the LPSC, the APSC, the MPSC, and the City Council in September 2020. The first complaint raised two sets of rate allegations: violations of the filed rate and a corresponding request for refunds for prior periods; and elements of the Unit Power Sales Agreement are unjust and unreasonable and a corresponding request for refunds for the 15-month refund period and changes to the Unit Power Sales Agreement prospectively. Several of the filed rate allegations overlapped with the previous complaints. The filed rate allegations not previously raised were that System Energy: failed to provide a rate base credit to customers for the “time value” of sale-leaseback lease payments collected from customers in advance of the time those payments were due to the owner-lessors; improperly included certain sale-leaseback transaction costs in rate base as
Entergy Corporation and Subsidiaries
Notes to Financial Statements
prepayments; improperly included nuclear refueling outage costs in rate base; wrongly included categories of accumulated deferred income taxes as increases to rate base; charged customers based on a higher equity ratio than would be appropriate due to excessive retained earnings; and did not correctly reflect money pool investments and imprudently invested cash into the money pool. The elements of the Unit Power Sales Agreement that the complaint alleged were unjust and unreasonable include: the current cash working capital allowance of zero, uncapped recovery of incentive and executive compensation, lack of an equity re-opener, and recovery of lobbying and private airplane travel expenses. The complaint also requested a rate investigation into the Unit Power Sales Agreement and System Energy’s billing practices pursuant to section 206 of the Federal Power Act, including any issue relevant to the Unit Power Sales Agreement and its inputs. System Energy filed its answer opposing the complaint in November 2020. In its answer, System Energy argued that all of the claims raised in the complaint should be dismissed and agreed that bill adjustment with respect to two discrete issues were justified. System Energy argued that dismissal was warranted because all claims fell into one or more of the following categories: the claims had been raised and were being litigated in another proceeding; the claims did not present a prima facie case and did not satisfy the threshold burden to establish a complaint proceeding; the claims were premised on a theory or request relief that is incompatible with federal law or FERC policy; the claims request relief that is inconsistent with the filed rate; the claims were barred or waived by the legal doctrine of laches; and/or the claims had been fully addressed and do not warrant further litigation. In December 2020, System Energy filed a bill adjustment report indicating that $3.4 million had been credited to customers in connection with the two discrete issues concerning the inclusion of certain accumulated deferred income taxes balances in rates.
In May 2021 the FERC issued an order addressing the complaint, establishing a refund effective date of September 21, 2020, establishing hearing procedures, and holding those procedures in abeyance pending the FERC’s review of the initial decision in the Grand Gulf sale-leaseback renewal complaint discussed above. System Energy agreed that the hearing should be held in abeyance but sought rehearing of FERC’s decision as related to matters set for hearing that were beyond the scope of FERC’s jurisdiction or authority. The complainants sought rehearing of FERC’s decision to hold the hearing in abeyance and filed a motion to proceed, which motion System Energy opposed. In June 2021, System Energy’s request for rehearing was denied by operation of law, and System Energy filed an appeal of FERC’s orders in the Court of Appeals for the Fifth Circuit. In November 2021 the Fifth Circuit dismissed the appeal as premature.
In August 2021 the FERC issued an order addressing System Energy’s and the complainants’ rehearing requests. The FERC dismissed part of the complaint seeking an equity re-opener, maintained the abeyance for issues related to the proceeding addressing the sale-leaseback renewal and uncertain tax positions, lifted the abeyance for issues unrelated to that proceeding, and clarified the scope of the hearing.
In November 2021 the LPSC, the APSC, and the City Council filed direct testimony and requested the FERC to order refunds for prior periods and prospective amendments to the Unit Power Sales Agreement. The LPSC’s refund claims included, among other things, allegations that: (1) System Energy should not have included certain sale-leaseback transaction costs in prepayments; (2) System Energy should have credited rate base to reflect the time value of money associated with the advance collection of lease payments; (3) System Energy incorrectly included refueling outage costs that were recorded in account 174 in rate base; and (4) System Energy should have excluded several accumulated deferred income tax balances in account 190 from rate base. The LPSC also sought a retroactive adjustment to retained earnings and capital structure in conjunction with the implementation of its proposed refunds. In addition, the LPSC sought amendments to the Unit Power Sales Agreement going forward to address below-the-line costs, incentive compensation, the working capital allowance, litigation expenses, and the 2019 termination of the capital funds agreement. The APSC argued that: (1) System Energy should have included borrowings from the Entergy system money pool in its determination of short-term debt in its cost of capital; and (2) System Energy should credit customers with System Energy’s allocation of earnings on money pool investments. The City Council alleged that System Energy has maintained excess cash on hand in the money pool and that retention of excess cash was imprudent. Based on this allegation, the City Council’s witness recommended a refund of approximately $98.8 million for the period 2004-September 2021 or other alternative relief. The City Council
Entergy Corporation and Subsidiaries
Notes to Financial Statements
further recommended that the FERC impose a hypothetical equity ratio such as 48.15% equity to capital on a prospective basis.
In January 2022, System Energy filed answering testimony arguing that the FERC should not order refunds for prior periods or any prospective amendments to the Unit Power Sales Agreement. In response to the LPSC’s refund claims, System Energy argued, among other things, that: (1) the inclusion of sale-leaseback transaction costs in prepayments was correct; (2) that the filed rate doctrine bars the request for a retroactive credit to rate base for the time value of money associated with the advance collection of lease payments; (3) that an accounting misclassification for deferred refueling outage costs had been corrected, caused no harm to customers, and requires no refunds; and (4) that its accounting and ratemaking treatment of specified accumulated deferred income tax balances in account 190 had been correct. System Energy further responded that no retroactive adjustment to retained earnings or capital structure should be ordered because there was no general policy requiring such a remedy, and there was no showing that the retained earnings element of the capital structure was incorrectly implemented. Further, System Energy presented evidence that all of the costs that were being challenged were long known to the retail regulators and were approved by them for inclusion in retail rates, and the attempt to retroactively challenge these costs, some of which had been included in rates for decades, was unjust and unreasonable. In response to the LPSC’s proposed going-forward adjustments, System Energy presented evidence to show that none of the proposed adjustments were needed. On the issue of below-the-line expenses, during discovery procedures System Energy identified a historical allocation error in certain months and agreed to provide a bill credit to customers to correct the error. In response to the APSC’s claims, System Energy argued that the Unit Power Sales Agreement did not include System Energy’s borrowings from the Entergy system money pool or earnings on deposits to the Entergy system money pool in the determination of the cost of capital; and accordingly, no refunds were appropriate on those issues. In response to the City Council’s claims, System Energy argued that it has reasonably managed its cash and that the City Council’s theory of cash management was defective because it failed to adequately consider the relevant cash needs of System Energy and it made faulty presumptions about the operation of the Entergy system money pool. System Energy further pointed out that the issue of its capital structure was already subject to pending FERC litigation.
In March 2022 the FERC trial staff filed direct and answering testimony in response to the LPSC, the APSC, and the City Council’s direct testimony. In its testimony, the FERC trial staff recommended refunds for two primary reasons: (1) it concluded that System Energy should have excluded specified accumulated deferred income tax balances in account 190 associated with rate refunds; and (2) it concluded that System Energy should have excluded specified accumulated deferred income tax balances in account 190 associated with a deemed contract satisfaction and reissuance that occurred in 2005. The FERC trial staff recommended refunds of $84.1 million, exclusive of any tax gross-up or FERC interest. In addition, the FERC trial staff recommended the following prospective modifications to the Unit Power Sales Agreement: (1) inclusion of a rate base credit to recognize the time value of money associated with the advance collection of lease payments; (2) exclusion of executive incentive compensation costs for members of the Office of the Chief Executive and long-term performance unit costs where awards are based solely or primarily on financial metrics; and (3) exclusion of unvested, accrued amounts for stock options, performance units, and restricted stock awards. With respect to issues that ultimately concerned the reasonableness of System Energy’s rate of return, the FERC trial staff stated that it was unnecessary to consider such issues in the proceeding, in light of the pending case concerning System Energy’s return on equity and capital structure. On all other material issues raised by the LPSC, the APSC, and the City Council, the FERC trial staff recommended either no refunds or no modification to the Unit Power Sales Agreement.
In April 2022, System Energy filed cross-answering testimony in response to the FERC trial staff’s recommendations of refunds for the accumulated deferred income taxes issues and proposed modifications to the Unit Power Sales Agreement for the executive incentive compensation issues. In June 2022 the FERC trial staff submitted revised answering testimony, in which it recommended additional refunds associated with the accumulated deferred income tax balances in account 190 associated with a deemed contract satisfaction and reissuance that occurred in 2005. Based on the testimony revisions, the FERC trial staff’s recommended refunds total $106.6 million, exclusive of any tax gross-up or FERC awarded interest. Also in June 2022, System Energy
Entergy Corporation and Subsidiaries
Notes to Financial Statements
filed revised and supplemental cross-answering testimony to respond to the FERC trial staff’s testimony and oppose its revised recommendation.
In May 2022 the LPSC, the APSC, and the City Council filed rebuttal testimony. The LPSC’s testimony asserted new claims, including that: (1) certain of the sale-leaseback transaction costs may have been imprudently incurred; (2) accumulated deferred income taxes associated with sale-leaseback transaction costs should have been included in rate base; (3) accumulated deferred income taxes associated with federal investment tax credits should have been excluded from rate base; (4) monthly net operating loss accumulated deferred income taxes should have been excluded from rate base; and (5) several categories of proposed rate changes, including executive incentive compensation, air travel, industry dues, and legal costs, also warranted historical refunds. The LPSC’s rebuttal testimony argued that refunds for the alleged tariff violations and other claims must be calculated by rerunning the Unit Power Sales Agreement formula rate; however, it included estimates of refunds associated with some, but not all, of its claims, totaling $286 million without interest. The City Council’s rebuttal testimony also proposed a new, alternate theory and claim for relief regarding System Energy’s participation in the Entergy system money pool, under which it calculates estimated refunds of approximately $51.7 million. The APSC’s rebuttal testimony agreed with the LPSC’s direct testimony that retained earnings should be adjusted in a comprehensive refund calculation. The testimony quantified the estimated impacts of three issues: (1) a $1.5 million reduction in the revenue requirement under the Unit Power Sales Agreement if System Energy’s borrowings from the money pool were included in short-term debt; (2) a $1.9 million reduction in the revenue requirement if System Energy’s allocated share of money pool earnings were credited through the Unit Power Sales Agreement; and (3) a $1.9 million reduction in the revenue requirement for every $50 million of refunds ordered in a given year, without interest. In total, excluding the settled issues noted below, the claims sought more than $700 million in refunds and interest, based on charges to all Unit Power Sales Agreement purchasers including Entergy Mississippi. The hearing before a FERC ALJ occurred between September and December 2022.
In November 2022, System Energy filed a partial settlement agreement with the APSC, the City Council, and the LPSC that resolved the following issues raised in the Unit Power Sales Agreement complaint: advance collection of lease payments, aircraft costs, executive incentive compensation, money pool borrowings, advertising expenses, deferred nuclear refueling outage costs, industry association dues, and termination of the capital funds agreement. The settlement provided that System Energy would provide a black box refund of $18 million (inclusive of interest), plus additional refund amounts with interest to be calculated for certain issues to be distributed to Entergy Arkansas, Entergy Louisiana, and Entergy New Orleans as the Utility operating companies other than Entergy Mississippi purchasing under the Unit Power Sales Agreement. The settlement further provided that if the APSC, the City Council, or the LPSC agreed to the global settlement System Energy entered into with the MPSC (discussed below), and such global settlement included a black box refund amount, then the black box refund for this settlement agreement would not be incremental or in addition to the global black box refund amount. The settlement agreement addressed other matters as well, including adjustments to rate base beginning in October 2022, exclusion of certain other costs, and inclusion of money pool borrowings, if any, in short-term debt within the cost of capital calculation used in the Unit Power Sales Agreement. In April 2023 the FERC approved the settlement agreement. The refund provided for in the settlement agreement was included in the May 2023 service month bills under the Unit Power Sales Agreement.
In May 2023 the presiding ALJ issued an initial decision finding that System Energy should have excluded multiple identified categories of accumulated deferred income taxes from rate base when calculating Unit Power Sales Agreement bills. The initial decision also found that the Unit Power Sales Agreement should be modified such that a cash working capital allowance of negative $36.4 million is applied prospectively. On the other non-settled issues for which the complainants sought refunds or changes to the Unit Power Sales Agreement, the initial decision ruled against the complainants.
System Energy disagreed with the ALJ’s findings concerning the accumulated deferred income taxes issues and cash working capital. In July 2023, System Energy filed a brief on exceptions to the initial decision’s accumulated deferred income taxes findings. Also in July 2023, the APSC, the LPSC, the City Council, and the
Entergy Corporation and Subsidiaries
Notes to Financial Statements
FERC trial staff filed separate briefs on exceptions. In August 2023 all parties filed separate briefs opposing exceptions.
As discussed below in “System Energy Settlement with the MPSC,” “System Energy Settlement with the APSC,” and “System Energy Settlement with the City Council,” and “System Energy Settlement with the LPSC,” the MPSC, the APSC, and the City Council, and the LPSC have settled their claims related to this proceeding.
Grand Gulf Prudence Complaints
The second of the additional complaints was filed at the FERC in March 2021 by the LPSC, the APSC, and the City Council against System Energy, Entergy Services, Entergy Operations, and Entergy Corporation. The second complaint contained two primary allegations. First, it alleged that, based on the plant’s capacity factor and alleged safety performance, System Energy and the other respondents imprudently operated Grand Gulf during the period 2016-2020, and it sought refunds of at least $360 million in alleged replacement energy costs, in addition to other costs, including those that could only be identified upon further investigation. Second, it alleged that the performance and/or management of the 2012 extended power uprate of Grand Gulf was imprudent, and it sought refunds of all costs of the 2012 uprate that were determined to result from imprudent planning or management of the project. In addition to the requested refunds, the complaint asked that the FERC modify the Unit Power Sales Agreement to provide for full cost recovery only if certain performance indicators were met and to require pre-authorization of capital improvement projects in excess of $125 million before related costs could be passed through to customers in rates. In April 2021, System Energy and the other respondents filed their motion to dismiss and answer to the complaint. System Energy requested that the FERC dismiss the claims within the complaint. With respect to the claim concerning operations, System Energy argued that the complaint did not meet its legal burden because, among other reasons, it failed to allege any specific imprudent conduct. With respect to the claim concerning the uprate, System Energy argued that the complaint failed because, among other reasons, the complainants’ own conduct prevented them from raising a serious doubt as to the prudence of the uprate. System Energy also requested that the FERC dismiss other elements of the complaint, including the proposed modifications to the Unit Power Sales Agreement, because they were not warranted. In February 2023 the FERC issued an order denying rehearing and thereby affirming its order setting the complaint for settlement and hearing procedures. In July 2023 the FERC chief ALJ terminated settlement procedures and appointed a presiding ALJ to oversee hearing procedures. In September 2023 a procedural schedule for hearing procedures was established. Also in September 2023 the LPSC authorized its staff to file an additional complaint concerning the prudence of System Energy’s operation and management of Grand Gulf in the year 2022. In October 2023 the LPSC, the APSC, and the City Council filed what they styled as an amended and supplemental complaint with the FERC against System Energy, Entergy Services, and Entergy Operations. In November 2023, System Energy answered the amended and supplemental complaint. Pursuant to the procedural schedule, the complainants’ testimony in the original complaint proceeding was filed in December 2023. System Energy’s answering testimony was filed in May 2024, and the FERC trial staff’s direct and answering testimony was filed in June 2024.
As discussed below in “System Energy Settlement with the APSC,” “System Energy Settlement with the City Council,” and “System Energy Settlement with the LPSC,” the APSC, the City Council, and the LPSC have settled all of their claims related to this proceeding.
System Energy Settlement with the MPSC
In June 2022, System Energy, Entergy Mississippi, and additional named Entergy parties involved in thirteen docketed proceedings before the FERC filed with the FERC a partial settlement agreement and offer of settlement. The settlement memorialized the Entergy parties’ agreement with the MPSC to globally resolve all actual and potential claims between the Entergy parties and the MPSC associated with those FERC proceedings and with System Energy’s past implementation of the Unit Power Sales Agreement. The Unit Power Sales Agreement is a FERC-jurisdictional formula rate tariff for sales of energy and capacity from System Energy’s owned and
Entergy Corporation and Subsidiaries
Notes to Financial Statements
leased share of Grand Gulf to Entergy Mississippi, Entergy Arkansas, Entergy Louisiana, and Entergy New Orleans. Entergy Mississippi purchases the greatest single amount, nearly 40% of System Energy’s share of Grand Gulf, after its additional purchases from affiliates are considered.
The settlement provided for a black box refund of $235 million from System Energy to Entergy Mississippi. In addition, beginning with the July 2022 service month, the settlement provided for Entergy Mississippi’s bills from System Energy to be adjusted to reflect: an authorized rate of return on equity of 9.65%, a capital structure not to exceed 52% equity, a rate base reduction for the advance collection of sale-leaseback rental costs, and the exclusion of certain long-term incentive plan performance unit costs from rates. The settlement was approved by the MPSC in June 2022 and the FERC in November 2022.
System Energy had previously recorded a provision and associated liability of $37 million for elements of the applicable litigation. In June 2022, System Energy recorded a regulatory charge of $551 million ($413 million net-of-tax), increasing the regulatory liability to $588 million, which consisted of $235 million for the settlement with the MPSC and $353 million for potential future refunds to Entergy Arkansas, Entergy Louisiana, and Entergy New Orleans. System Energy paid the black box refund of $235 million to Entergy Mississippi in November 2022.
System Energy Settlement with the APSC
In October 2023, System Energy, Entergy Arkansas, and additional named Entergy parties involved in multiple docketed proceedings pending before the FERC reached a settlement in principle with the APSC to globally resolve all of their actual and potential claims in those dockets and with System Energy’s past implementation of the Unit Power Sales Agreement. The settlement also covered the amended and supplemental complaint, discussed above in “Grand Gulf Prudence Complaint,” filed at the FERC in October 2023. System Energy, Entergy Arkansas, additional Entergy parties, and the APSC filed the settlement agreement and supporting materials with the FERC in November 2023.
The terms of the settlement with the APSC aligned with the $588 million global black box settlement reached between System Energy and the MPSC in June 2022 and provided for Entergy Arkansas to receive a black box refund of $142 million from System Energy, inclusive of $49.5 million already received by Entergy Arkansas from System Energy. In addition, beginning with the November 2023 service month, the settlement provided for Entergy Arkansas’s bills from System Energy to be adjusted to reflect an authorized rate of return on equity of 9.65% and a capital structure not to exceed 52% equity. In March 2024 the FERC approved the settlement, and System Energy paid the remaining black box refund of $93 million to Entergy Arkansas in 2024.
System Energy Settlement with the City Council
In April 2024, System Energy, Entergy New Orleans, and additional named Entergy parties involved in multiple docketed proceedings pending before the FERC reached a settlement in principle with the City Council to globally resolve all of their actual and potential claims in those dockets and with System Energy’s past implementation of the Unit Power Sales Agreement. The settlement also covered the amended and supplemental complaint, discussed in “Grand Gulf Prudence Complaints” above, filed by the LPSC, the APSC, and the City Council at the FERC in October 2023. In May 2024, System Energy, Entergy New Orleans, additional named Entergy parties, and the City Council filed the settlement agreement and supporting materials with the FERC.
The terms of the settlement with the City Council aligned with the $588 million global black box settlement amount reflected in the prior settlements reached between System Energy and the MPSC in June 2022 and between System Energy and the APSC in November 2023. The settlement provided for Entergy New Orleans to receive a black box refund of $116 million from System Energy, inclusive of approximately $18 million already received by Entergy New Orleans from System Energy. In addition, beginning with the June 2024 service month, the settlement provided for Entergy New Orleans’s bills from System Energy to be adjusted to reflect an authorized rate of return on equity of 9.65% and a capital structure not to exceed 52% equity. In August 2024 the FERC approved the
Entergy Corporation and Subsidiaries
Notes to Financial Statements
settlement, and System Energy paid the remaining black box refund of $98 million to Entergy New Orleans in October 2024.
System Energy Settlement with the LPSC
In July 2024, System Energy and the LPSC staff reached a settlement in principle to globally resolve all of the LPSC’s actual and potential claims in multiple docketed proceedings pending before the FERC (including all docketed proceedings resolved by the MPSC, the APSC, and the City Council settlements) and with System Energy’s past implementation of the Unit Power Sales Agreement. The settlement also covered the amended and supplemental complaint, discussed above in “Grand Gulf Prudence Complaints,” filed by the LPSC, the APSC, and the City Council at the FERC in October 2023. In August 2024 the LPSC approved the settlement. In September 2024 the settling parties filed the settlement for approval by the FERC.
The terms of the settlement with the LPSC staff aligned with the $588 million global black box settlement amount reflected in the prior settlements reached between System Energy and the MPSC in June 2022, between System Energy and the APSC in November 2023, and between System Energy and the City Council in April 2024. The settlement in principle provided for Entergy Louisiana to receive a black box refund of $95 million from System Energy, inclusive of approximately $15 million already received by Entergy Louisiana from System Energy. In addition, beginning with the September 2024 service month, the settlement provided for Entergy Louisiana’s bills from System Energy to be adjusted to reflect an authorized rate of return on equity of 9.65% and a capital structure not to exceed 52% equity. In November 2024 the FERC approved the settlement, and System Energy paid the remaining black box refund of $80 million to Entergy Louisiana in December 2024.
The settlement also included an agreement that, subject to the receipt of necessary regulatory approvals, Entergy Louisiana will divest to Entergy Mississippi all of its interest in Grand Gulf capacity and energy under the Unit Power Sales Agreement and its purchases from Entergy Arkansas under the MSS-4 replacement tariff. In October 2024 Entergy Louisiana and Entergy Mississippi filed with the FERC a PPA under which Entergy Mississippi would purchase Entergy Louisiana’s purchases of Grand Gulf capacity and energy. The PPA is governed by the MSS-4 replacement tariff, a tariff governing the sales of energy and capacity among the Utility operating companies. The requisite approvals for the PPA were issued by the FERC in November 2024 and the MPSC in February 2025. The divestiture is effective as of January 1, 2025.
System Energy Regulatory Liability for Pending Complaints
Prior to June 2022, System Energy recorded a provision and associated liability of $37 million for elements of the complaints against System Energy. In June 2022, as discussed in “System Energy Settlement with the MPSC” above, System Energy recorded a regulatory charge of $551 million ($413 million net-of-tax), increasing System Energy’s regulatory liability to $588 million, which consisted of $235 million for the settlement with the MPSC and $353 million for potential future refunds to Entergy Arkansas, Entergy New Orleans, and Entergy Louisiana. System Energy paid the black box refund of $235 million to Entergy Mississippi in November 2022. As discussed above in “Grand Gulf Sale-leaseback Renewal Complaint and Uncertain Tax Position Rate Base Issue,” in January 2023 System Energy paid refunds of $103.5 million as a result of the FERC’s order in December 2022 in that proceeding and recouped $40.5 million of the $103.5 million from Entergy Louisiana and Entergy New Orleans in October 2023. In addition, as discussed above in “Unit Power Sales Agreement Complaint,” a black box refund of $18 million was made by System Energy in 2023 in connection with a partial settlement in that proceeding. Based on analysis of the then-pending complaints against System Energy and potential future settlement negotiations with the LPSC and the City Council, in third quarter 2023, System Energy recorded a regulatory charge of $40 million to increase System Energy’s regulatory liability related to complaints against System Energy. In December 2023 the $93 million black box refund to Entergy Arkansas was reclassified from the regulatory liability to accounts payable - associated companies on System Energy’s balance sheet. System Energy paid the remaining black box refunds of $93 million to Entergy Arkansas, $98 million to Entergy New Orleans, and $80 million to Entergy Louisiana in 2024.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Unit Power Sales Agreement
System Energy Formula Rate Annual Protocols Formal Challenge Concerning 2020 Calendar Year Bills
System Energy’s Unit Power Sales Agreement includes formula rate protocols that provide for the disclosure of cost inputs, an opportunity for informal discovery procedures, and a challenge process. In February 2022, pursuant to the protocols procedures, the LPSC, the APSC, the MPSC, the City Council, and the Mississippi Public Utilities Staff filed with the FERC a formal challenge to System Energy’s implementation of the formula rate during calendar year 2020. This formal challenge was ultimately settled as a result of System Energy’s global settlements with the MPSC, the APSC, the City Council, and the LPSC. See “Complaints Against System Energy” above for further discussion of the System Energy settlements with the MPSC, the APSC, the City Council, and the LPSC.
System Energy Formula Rate Annual Protocols Formal Challenge Concerning 2021 Calendar Year Bills
In March 2023, pursuant to the protocols procedures discussed above, the LPSC, the APSC, and the City Council filed with the FERC a formal challenge to System Energy’s implementation of the formula rate during calendar year 2021. This formal challenge was ultimately settled as a result of System Energy’s global settlements with the MPSC, the APSC, the City Council, and the LPSC. See “Complaints Against System Energy” above for further discussion of the System Energy settlements with the MPSC, the APSC, the City Council, and the LPSC.
System Energy Formula Rate Annual Protocols Formal Challenge Concerning 2022 Calendar Year Bills
In February 2024, pursuant to the protocols procedures, the LPSC and the City Council filed with the FERC a formal challenge to System Energy’s implementation of the formula rate during calendar year 2022. This formal challenge was ultimately settled as a result of System Energy’s global settlements with the MPSC, the APSC, the City Council, and the LPSC. See “Complaints Against System Energy” above for further discussion of the System Energy settlements with the MPSC, the APSC, the City Council, and the LPSC.
Depreciation Amendment Proceeding
In December 2021, System Energy submitted to the FERC proposed amendments to the Unit Power Sales Agreement to adopt updated rates for use in calculating Grand Gulf plant depreciation and amortization expenses. The proposed amendments would result in higher charges to the Utility operating companies that buy capacity and energy from System Energy under the Unit Power Sales Agreement. In February 2022 the FERC accepted System Energy’s proposed increased depreciation rates with an effective date of March 1, 2022, subject to refund pending the outcome of the settlement and/or hearing procedures. In June 2023 System Energy filed with the FERC an unopposed offer of settlement that it had negotiated with intervenors to the proceeding. In August 2023 the FERC approved the settlement, which resolves the proceeding. In third quarter 2023, System Energy recorded a reduction in depreciation expense of $41 million representing the cumulative difference in depreciation expense resulting from the depreciation rates used from March 2022 through June 2023 and the depreciation rates included in the settlement filing approved by the FERC. In October 2023, System Energy filed a refund report with the FERC. The refund provided for in the refund report was included in the September 2023 service month bills under the Unit Power Sales Agreement. No comments or protests to the refund report were filed.
Pension Costs Amendment Proceeding
In October 2021, System Energy submitted to the FERC proposed amendments to the Unit Power Sales Agreement to include in rate base the prepaid and accrued pension costs associated with System Energy’s qualified pension plans. Based on data ending in 2020, the increased annual revenue requirement associated with the filing is approximately $8.9 million. In March 2022 the FERC accepted System Energy’s proposed amendments with an
Entergy Corporation and Subsidiaries
Notes to Financial Statements
effective date of December 1, 2021, subject to refund pending the outcome of the settlement and/or hearing procedures. In August 2023 the FERC chief ALJ terminated settlement procedures and designated a presiding ALJ to oversee hearing procedures. Testimony was filed by the parties from October 2023 through April 2024, and the hearing concluded in June 2024.
In September 2024 the presiding ALJ issued an initial decision recommending that the FERC approve inclusion of a line item in rate base for prepaid and accrued pension costs; however, the presiding ALJ did not agree with System Energy’s proposed methodology to calculate the value of the prepaid and accrued pension cost input. Instead, the presiding ALJ recommended limiting System Energy’s recovery to the prepaid and accrued pension costs that were incurred beginning in 2015 and later.
System Energy disputes the presiding ALJ's determination concerning the methodology used to calculate the prepaid and accrued pension input, and System Energy filed exceptions to these rulings in October 2024. In October 2024, the LPSC, the APSC, and the FERC trial staff filed separate briefs on exceptions; these parties generally argue that the presiding ALJ should have rejected System Energy’s filing entirely, rather than limit System Energy’s recovery of the prepaid and accrued pension costs. Later in October 2024, System Energy, the LPSC, the APSC, and the FERC trial staff filed separate briefs opposing exceptions.
If the ALJ’s determination is affirmed by the FERC, System Energy estimates refunds, including interest through December 31, 2024, of approximately $16 million to $21 million would be owed. The ALJ's initial decision is not binding on the FERC and is an interim step in the hearing process. No refunds will be owed in connection with this proceeding and no changes to System Energy’s pension cost recovery methodology will be implemented unless and until the FERC requires them in a final order. This proceeding is not covered by the global settlements described above.
Storm Cost Recovery Filings with Retail Regulators
Entergy Louisiana
Hurricane Francine
In September 2024, Hurricane Francine caused damage to the areas served by Entergy Louisiana and Entergy New Orleans. The storm resulted in widespread power outages, primarily due to damage to distribution infrastructure as a result of strong winds and heavy rain, and the loss of sales during the power outages.
In December 2024, and subsequently amended in an errata filed in February 2025, Entergy Louisiana submitted an application to the LPSC seeking a determination that approximately $183.6 million in storm restoration costs associated with Hurricane Francine were reasonable and necessary and, therefore, eligible for recovery from customers, as well as approval to recover approximately $3.6 million in certain carrying costs from customers. The $183.6 million includes approximately $152.8 million in distribution capital costs and approximately $29.8 million in non-capital costs; the balance consists of transmission and generation capital costs. Entergy Louisiana proposes in its application to recover its distribution-related capital costs of $152.8 million through the distribution recovery mechanism of its formula rate plan. Entergy Louisiana has further requested the LPSC to authorize recovery of these distribution-related capital expenses through an interim rate adjustment, subject to true-up and refund, that would begin with the first billing cycle of March 2025. Entergy Louisiana also requested to recover, from its storm reserve escrow account, $33.5 million, which consists of non-capital costs and certain carrying costs. Entergy Louisiana has also proposed to recover the transmission and generation capital costs through separate ratemaking proceedings. In February 2025, Entergy Louisiana withdrew the $33.5 million from its storm reserve escrow account. The period for intervention has expired, and a status conference for the purpose of establishing a procedural schedule has been set for March 2025.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Hurricane Laura, Hurricane Delta, Hurricane Zeta, Winter Storm Uri, and Hurricane Ida
In August 2020 and October 2020, Hurricane Laura, Hurricane Delta, and Hurricane Zeta caused significant damage to portions of Entergy Louisiana’s service area. The storms resulted in widespread outages, significant damage to distribution and transmission infrastructure, and the loss of sales during the outages. Additionally, as a result of Hurricane Laura’s extensive damage to the grid infrastructure serving the impacted area, large portions of the underlying transmission system required nearly a complete rebuild.
In October 2020, Entergy Louisiana filed an application at the LPSC seeking approval of certain ratemaking adjustments in connection with the issuance of shorter-term mortgage bonds to provide interim financing for restoration costs associated with Hurricane Laura, Hurricane Delta, and Hurricane Zeta. Subsequently, Entergy Louisiana and the LPSC staff filed a joint motion seeking approval to exclude from the derivation of Entergy Louisiana’s capital structure and cost rate of debt for ratemaking purposes, including the allowance for funds used during construction, shorter-term debt up to $1.1 billion issued by Entergy Louisiana to fund costs associated with Hurricane Laura, Hurricane Delta, and Hurricane Zeta costs on an interim basis. In November 2020 the LPSC issued an order approving the joint motion, and Entergy Louisiana issued $1.1 billion of 0.62% Series mortgage bonds due November 2023. Also in November 2020, Entergy Louisiana withdrew $257 million from its funded storm reserves.
In February 2021 two winter storms (collectively, Winter Storm Uri) brought freezing rain and ice to Louisiana. Ice accumulation sagged or downed trees, limbs, and power lines, causing damage to Entergy Louisiana’s transmission and distribution systems. The additional weight of ice caused trees and limbs to fall into power lines and other electric equipment. When the ice melted, it affected vegetation and electrical equipment, causing additional outages. Entergy Louisiana recovered the incremental fuel costs associated with Winter Storm Uri over a five-month period from April 2021 through August 2021.
In April 2021, Entergy Louisiana filed an application with the LPSC relating to Hurricane Laura, Hurricane Delta, Hurricane Zeta, and Winter Storm Uri restoration costs and in July 2021, Entergy Louisiana made a supplemental filing updating the total restoration costs. Total restoration costs for the repair and/or replacement of Entergy Louisiana’s electric facilities damaged by these storms were estimated to be approximately $2.06 billion, including approximately $1.68 billion in capital costs and approximately $380 million in non-capital costs. Including carrying costs through January 2022, Entergy Louisiana sought an LPSC determination that $2.11 billion was prudently incurred and, therefore, was eligible for recovery from customers. Additionally, Entergy Louisiana requested that the LPSC determine that re-establishment of a storm escrow account to the previously authorized amount of $290 million was appropriate. In July 2021, Entergy Louisiana supplemented the application with a request regarding the financing and recovery of the recoverable storm restoration costs. Specifically, Entergy Louisiana requested approval to securitize its restoration costs pursuant to Louisiana Act 55 financing, as supplemented by Act 293 of the Louisiana Legislature’s Regular Session of 2021.
In August 2021, Hurricane Ida caused extensive damage to Entergy Louisiana’s distribution and, to a lesser extent, transmission systems resulting in widespread power outages. In September 2021, Entergy Louisiana filed an application at the LPSC seeking approval of certain ratemaking adjustments in connection with the issuance of approximately $1 billion of shorter-term mortgage bonds to provide interim financing for restoration costs associated with Hurricane Ida, which bonds were issued in October 2021. Also in September 2021, Entergy Louisiana sought approval for the creation and funding of a $1 billion restricted escrow account for Hurricane Ida related restoration costs, subject to a subsequent prudence review.
After filing of testimony by the LPSC staff and intervenors, which generally supported or did not oppose Entergy Louisiana’s requests in regard to Hurricane Laura, Hurricane Delta, Hurricane Zeta, Winter Storm Uri, and Hurricane Ida, the parties negotiated and executed an uncontested stipulated settlement which was filed with the LPSC in February 2022. The settlement agreement contained the following key terms: $2.1 billion of restoration costs from Hurricane Laura, Hurricane Delta, Hurricane Zeta, and Winter Storm Uri were prudently incurred and
Entergy Corporation and Subsidiaries
Notes to Financial Statements
eligible for recovery; carrying costs of $51 million were recoverable; a $290 million cash storm reserve should be re-established; a $1 billion reserve should be established to partially pay for Hurricane Ida restoration costs; and Entergy Louisiana was authorized to finance $3.186 billion utilizing the securitization process authorized by Act 55, as supplemented by Act 293. The LPSC issued an order approving the settlement in March 2022. As a result of the financing order, Entergy Louisiana reclassified $1.942 billion from utility plant to other regulatory assets.
In May 2022 the securitization financing closed, resulting in the issuance of $3.194 billion principal amount of bonds by Louisiana Local Government Environmental Facilities and Community Development Authority (LCDA), a political subdivision of the State of Louisiana. The securitization was authorized pursuant to the Louisiana Utilities Restoration Corporation Act, Part VIII of Chapter 9 of Title 45 of the Louisiana Revised Statutes, as supplemented by Act 293 of the Louisiana legislature approved in 2021. The LCDA loaned the proceeds to the LURC. Pursuant to Act 293, the LURC contributed the net bond proceeds to a State legislatively authorized and LURC-sponsored trust, Restoration Law Trust I (the storm trust I).
Pursuant to Act 293, the net proceeds of the bonds were used by the storm trust I to purchase 31,635,718.7221 Class A preferred, non-voting membership interest units (the preferred membership interests) issued by Entergy Finance Company. Entergy Finance Company is required to make annual distributions (dividends) commencing on December 15, 2022 on the preferred membership interests issued to the storm trust I. These annual dividends received by the storm trust I will be distributed to Entergy Louisiana and the LURC, as beneficiaries of the storm trust I. Specifically, 1% of the annual dividends received by the storm trust I will be distributed to the LURC, for the benefit of customers, and 99% will be distributed to Entergy Louisiana, net of storm trust expenses. The preferred membership interests have a stated annual cumulative cash dividend rate of 7% and a liquidation price of $100 per unit. The terms of the preferred membership interests include certain financial covenants to which Entergy Finance Company is subject. Semi-annual redemptions of the preferred membership interests, subject to certain conditions, are expected to occur over the next 15 years.
Entergy and Entergy Louisiana do not report the bonds issued by the LCDA on their balance sheets because the bonds are the obligation of the LCDA. The bonds are secured by system restoration property, which is the right granted by law to the LURC to collect a system restoration charge from customers. The system restoration charge is adjusted at least semi-annually to ensure that it is sufficient to service the bonds. Entergy Louisiana collects the system restoration charge on behalf of the LURC and remits the collections to the bond indenture trustee. Entergy Louisiana began collecting the system restoration charge effective with the first billing cycle of June 2022 and the system restoration charge is expected to remain in place for up to 15 years. Entergy and Entergy Louisiana do not report the collections as revenue because Entergy Louisiana is merely acting as a billing and collection agent for the LCDA and the LURC. In the remote possibility that the system restoration charge, as well as any funds in the excess subaccount and funds in the debt service reserve account, are insufficient to service the bonds resulting in a payment default, the storm trust I is required to liquidate Entergy Finance Company preferred membership interests in an amount equal to what would be required to cure the default. The estimated value of this indirect guarantee is immaterial.
From the proceeds from the issuance of the preferred membership interests, Entergy Finance Company distributed $1.4 billion to its parent, Entergy Holdings Company, LLC, a company wholly-owned and consolidated by Entergy. Subsequently, Entergy Holdings Company liquidated, distributing the $1.4 billion it received from Entergy Finance Company to Entergy Louisiana as holder of 6,843,780.24 units of Class A, 4,126,940.15 units of Class B, and 2,935,152.69 units of Class C preferred membership interests. Entergy Louisiana had acquired these preferred membership interests with proceeds from previous securitizations of storm restoration costs. Entergy Finance Company loaned the remaining $1.7 billion from the preferred membership interests proceeds to Entergy which used the cash to redeem $650 million of 4.00% Series senior notes due July 2022 and indirectly contributed $1 billion to Entergy Louisiana as a capital contribution.
Entergy Louisiana used the $1 billion capital contribution to fund its Hurricane Ida escrow account and subsequently withdrew the $1 billion from the escrow account. With a portion of the $1 billion withdrawn from the
Entergy Corporation and Subsidiaries
Notes to Financial Statements
escrow account and the $1.4 billion from the Entergy Holdings Company liquidation, Entergy Louisiana deposited $290 million in a restricted escrow account as a storm damage reserve for future storms, used $1.2 billion to repay its unsecured term loan due June 2023, and used $435 million to redeem a portion of its 0.62% Series mortgage bonds due November 2023.
As discussed in Note 3 to the financial statements, the securitization resulted in recognition of a reduction of income tax expense of approximately $290 million by Entergy Louisiana. Entergy’s recognition of reduced income tax expense was partially offset by other tax charges resulting in a net reduction of income tax expense of $283 million. In recognition of obligations described in an LPSC ancillary order issued as part of the securitization regulatory proceeding, Entergy Louisiana recorded a $224 million ($165 million net-of-tax) regulatory charge and a corresponding regulatory liability to reflect its obligation to provide credits to its customers.
As discussed in Note 6 and Note 17 to the financial statements, Entergy Louisiana consolidates the storm trust I as a variable interest entity and the LURC’s 1% beneficial interest is presented as noncontrolling interest in the financial statements. In second quarter 2022, Entergy Louisiana recorded a charge of $31.6 million in other income to reflect the LURC’s beneficial interest in the storm trust I.
In April 2022, Entergy Louisiana filed an application with the LPSC relating to Hurricane Ida restoration costs. Total restoration costs for the repair and/or replacement of Entergy Louisiana’s electric facilities damaged by Hurricane Ida were estimated to be approximately $2.54 billion, including approximately $1.96 billion in capital costs and approximately $586 million in non-capital costs. Including carrying costs of $57 million through December 2022, Entergy Louisiana was seeking an LPSC determination that $2.60 billion was prudently incurred and, therefore, eligible for recovery from customers. As part of this filing, Entergy Louisiana also was seeking an LPSC determination that an additional $32 million in costs associated with the restoration of Entergy Louisiana’s electric facilities damaged by Hurricane Laura, Hurricane Delta, and Hurricane Zeta as well as Winter Storm Uri was prudently incurred. This amount was exclusive of the requested $3 million in carrying costs through December 2022. In total, Entergy Louisiana was requesting an LPSC determination that $2.64 billion was prudently incurred and, therefore, eligible for recovery from customers. As discussed above, in March 2022 the LPSC approved financing of a $1 billion storm escrow account from which funds were withdrawn to finance costs associated with Hurricane Ida restoration. In June 2022, Entergy Louisiana supplemented the application with a request regarding the financing and recovery of the recoverable storm restoration costs. Specifically, Entergy Louisiana requested approval to securitize its restoration costs pursuant to Louisiana Act 55 financing, as supplemented by Act 293 of the Louisiana Legislature’s Regular Session of 2021. In October 2022 the LPSC staff recommended a finding that the requested storm restoration costs of $2.64 billion, including associated carrying costs of $59.1 million, were prudently incurred and eligible for recovery from customers. The LPSC staff further recommended approval of Entergy Louisiana’s plans to securitize these costs, net of the $1 billion in funds withdrawn from the storm escrow account described above. The parties negotiated and executed an uncontested stipulated settlement which was filed with the LPSC in December 2022. The settlement agreement contains the following key terms: $2.57 billion of restoration costs from Hurricane Ida, Hurricane Laura, Hurricane Delta, Hurricane Zeta, and Winter Storm Uri were prudently incurred and eligible for recovery; carrying costs of $59.2 million were recoverable; and Entergy Louisiana was authorized to finance $1.657 billion utilizing the securitization process authorized by Act 55, as supplemented by Act 293. A procedural motion to consider the uncontested settlement at the December 2022 LPSC meeting did not pass and the settlement was not voted on. In January 2023 an ALJ with the LPSC conducted a settlement hearing to receive the uncontested settlement and supporting testimony into evidence and issued a report of proceedings, which allows the LPSC to consider the uncontested settlement without the procedural motion that did not pass in December. In January 2023 the LPSC approved the stipulated settlement subject to certain modifications. These modifications include the recognition of accumulated deferred income tax benefits related to damaged assets and system restoration costs as a reduction of the amount authorized to be financed utilizing the securitization process authorized by Act 55, as supplemented by Act 293, from $1.657 billion to $1.491 billion. These modifications did not affect the LPSC’s conclusion that all system restoration costs sought by Entergy Louisiana were reasonable and prudent. In February 2023 the Louisiana Bond Commission voted to authorize the LCDA to issue the bonds authorized in the LPSC’s financing order.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
In March 2023 the Hurricane Ida securitization financing closed, resulting in the issuance of approximately $1.491 billion principal amount of bonds by the LCDA and a remaining regulatory asset of $180 million to be recovered through the exclusion of the accumulated deferred income taxes related to damaged assets and system restoration costs from the determination of future rates. The securitization was authorized pursuant to the Louisiana Utilities Restoration Corporation Act, Part VIII of Chapter 9 of Title 45 of the Louisiana Revised Statutes, as supplemented by Act 293 of the Louisiana Legislature’s Regular Session of 2021. The LCDA loaned the proceeds to the LURC. Pursuant to Act 293, the LURC contributed the net bond proceeds to a State legislatively authorized and LURC-sponsored trust, Restoration Law Trust II (the storm trust II).
Pursuant to Act 293, the net proceeds of the bonds were used by the storm trust II to purchase 14,576,757.48 Class B preferred, non-voting membership interest units (the preferred membership interests) issued by Entergy Finance Company. Entergy Finance Company is required to make annual distributions (dividends) commencing on December 15, 2023 on the preferred membership interests issued to the storm trust II. These annual dividends received by the storm trust II will be distributed to Entergy Louisiana and the LURC, as beneficiaries of the storm trust II. Specifically, 1% of the annual dividends received by the storm trust II will be distributed to the LURC for the benefit of customers, and 99% will be distributed to Entergy Louisiana, net of storm trust expenses. The preferred membership interests have a stated annual cumulative cash dividend rate of 7.5% and a liquidation price of $100 per unit. The terms of the preferred membership interests include certain financial covenants to which Entergy Finance Company is subject. Semi-annual redemptions of the preferred membership interests, subject to certain conditions, are expected to occur over the next 15 years.
Entergy and Entergy Louisiana do not report the bonds issued by the LCDA on their balance sheets because the bonds are the obligation of the LCDA. The bonds are secured by system restoration property, which is the right granted by law to the LURC to collect a system restoration charge from customers. The system restoration charge is adjusted at least semi-annually to ensure that it is sufficient to service the bonds. Entergy Louisiana collects the system restoration charge on behalf of the LURC and remits the collections to the bond indenture trustee. Entergy Louisiana began collecting the system restoration charge effective with the first billing cycle of April 2023 and the system restoration charge is expected to remain in place for up to 15 years. Entergy and Entergy Louisiana do not report the collections as revenue because Entergy Louisiana is merely acting as a billing and collection agent for the LCDA and the LURC. In the remote possibility that the system restoration charge, as well as any funds in the excess subaccount and funds in the debt service reserve account, are insufficient to service the bonds resulting in a payment default, the storm trust II is required to liquidate Entergy Finance Company preferred membership interests in an amount equal to what would be required to cure the default. The estimated value of this indirect guarantee is immaterial.
From the proceeds from the issuance of the preferred membership interests, Entergy Finance Company loaned approximately $1.5 billion to Entergy, which was indirectly contributed to Entergy Louisiana as a capital contribution.
As discussed in Note 3 to the financial statements, the securitization resulted in recognition of a net reduction of income tax expense of approximately $133 million, after taking into account a provision for uncertain tax positions, by Entergy Louisiana. Entergy’s recognition of reduced income tax expense was offset by other tax charges resulting in a net reduction of income tax expense of $129 million, after taking into account a provision for uncertain tax positions. In recognition of its obligations described in an LPSC ancillary order issued as part of the securitization regulatory proceeding, Entergy Louisiana recorded in first quarter 2023 a $103 million ($76 million net-of-tax) regulatory charge and a corresponding regulatory liability to reflect its obligation to provide credits to its customers.
As discussed in Note 6 and Note 17 to the financial statements, Entergy Louisiana consolidates the storm trust II as a variable interest entity and the LURC’s 1% beneficial interest is presented as noncontrolling interest in
Entergy Corporation and Subsidiaries
Notes to Financial Statements
the financial statements. In first quarter 2023, Entergy Louisiana recorded a charge of $14.6 million in other income to reflect the LURC’s beneficial interest in the storm trust II.
Hurricane Isaac
In August 2012, Hurricane Isaac caused extensive damage to Entergy Louisiana’s service area. In June 2014 the LPSC authorized Entergy Louisiana to utilize Louisiana Act 55 financing for Hurricane Isaac system restoration costs. Entergy Louisiana committed to pass on to customers a minimum of $30.8 million of customer benefits through annual customer credits of approximately $6.2 million for five years. Approvals for the Act 55 financings were obtained from the LURC and the Louisiana State Bond Commission.
In August 2014 the LCDA issued $314.85 million in bonds under Louisiana Act 55. From the $309 million of bond proceeds loaned by the LCDA to the LURC, the LURC deposited $16 million in a restricted escrow account as a storm damage reserve for Entergy Louisiana and transferred $293 million directly to Entergy Louisiana. Entergy Louisiana used the $293 million received from the LURC to acquire 2,935,152.69 Class C preferred, non-voting, membership interest units of Entergy Holdings Company that carry a 7.5% annual distribution rate. Distributions were payable quarterly commencing on September 15, 2014, and the membership interests had a liquidation price of $100 per unit. The preferred membership interests were callable at the option of Entergy Holdings Company after ten years under the terms of the LLC agreement. The terms of the membership interests included certain financial covenants to which Entergy Holdings Company was subject, including the requirement to maintain a net worth of at least $1.75 billion. As discussed above in “Hurricane Laura, Hurricane Delta, Hurricane Zeta, Winter Storm Uri, and Hurricane Ida”, in May 2022, Entergy Holdings Company liquidated and distributed cash to Entergy Louisiana as holder of the 2,935,152.69 units of Class C preferred membership interests.
Entergy and Entergy Louisiana do not report the bonds issued by the LCDA on their balance sheets because the bonds are the obligation of the LCDA and there is no recourse against Entergy or Entergy Louisiana in the event of a bond default. To service the bonds, Entergy Louisiana collects a system restoration charge on behalf of the LURC and remits the collections to the bond indenture trustee. Entergy and Entergy Louisiana do not report the collections as revenue because Entergy Louisiana is merely acting as the billing and collection agent for the state.
Hurricane Gustav and Hurricane Ike
In September 2008, Hurricane Gustav and Hurricane Ike caused catastrophic damage to Entergy Louisiana’s service territory. In December 2009, Entergy Louisiana entered into a stipulation agreement with the LPSC staff regarding its storm costs. In March and April 2010, Entergy Louisiana and other parties to the proceeding filed with the LPSC an uncontested stipulated settlement that included Entergy Louisiana’s proposal to utilize Act 55 financing, which included a commitment to pass on to customers a minimum of $43.3 million of customer benefits through a prospective annual rate reduction of $8.7 million for five years. In April 2010 the LPSC approved the settlement and subsequently issued financing orders and a ratemaking order intended to facilitate the implementation of the Act 55 financings. In June 2010 the Louisiana State Bond Commission approved the Act 55 financing. The settlement agreement allowed for an adjustment to the credits if there was a change in the applicable federal or state income tax rate. As a result of the enactment of the Tax Cuts and Jobs Act, in December 2017, and the lowering of the federal corporate income tax rate from 35% to 21%, the Louisiana Act 55 financing savings obligation regulatory liability related to Hurricane Gustav and Hurricane Ike was reduced by $2.7 million, with a corresponding increase to Other regulatory credits on the income statement. The effects of the Tax Cuts and Jobs Act are discussed further in Note 3 to the financial statements.
In July 2010 the LCDA issued two series of bonds totaling $713.0 million under Act 55. From the $702.7 million of bond proceeds loaned by the LCDA to the LURC, the LURC deposited $290 million in a restricted escrow account as a storm damage reserve for Entergy Louisiana and transferred $412.7 million directly to Entergy Louisiana. From the bond proceeds received by Entergy Louisiana from the LURC, Entergy Louisiana
Entergy Corporation and Subsidiaries
Notes to Financial Statements
used $412.7 million to acquire 4,126,940.15 Class B preferred, non-voting, membership interest units of Entergy Holdings Company that carry a 9% annual distribution rate. Distributions were payable quarterly commencing on September 15, 2010, and the membership interests had a liquidation price of $100 per unit. The preferred membership interests were callable at the option of Entergy Holdings Company after ten years under the terms of the LLC agreement. The terms of the membership interests included certain financial covenants to which Entergy Holdings Company was subject, including the requirement to maintain a net worth of at least $1 billion. As discussed above in “Hurricane Laura, Hurricane Delta, Hurricane Zeta, Winter Storm Uri, and Hurricane Ida”, in May 2022, Entergy Holdings Company liquidated and distributed cash to Entergy Louisiana as holder of the 4,126,940.15 units of Class B preferred membership interests.
The bonds were repaid in 2022. Entergy and Entergy Louisiana did not report the bonds issued by the LCDA on their balance sheets because the bonds were the obligation of the LCDA, and there was no recourse against Entergy or Entergy Louisiana in the event of a bond default. To service the bonds, Entergy Louisiana collected a system restoration charge on behalf of the LURC and remitted the collections to the bond indenture trustee. Entergy and Entergy Louisiana do not report the collections as revenue because Entergy Louisiana is merely acting as the billing and collection agent for the state.
Hurricane Katrina and Hurricane Rita
In August and September 2005, Hurricanes Katrina and Rita caused catastrophic damage to Entergy Louisiana’s service territory. In March 2008, Entergy Louisiana and the LURC filed at the LPSC an application requesting that the LPSC grant a financing order authorizing the financing of Entergy Louisiana storm costs, storm reserves, and issuance costs pursuant to Louisiana Act 55. Entergy Louisiana also filed an application requesting LPSC approval for ancillary issues including the mechanism to flow charges and savings to customers via a storm cost offset rider. In April 2008 the Louisiana Public Facilities Authority (LPFA), which is the issuer of the bonds pursuant to the Act 55 financing, approved requests for the Act 55 financing. Also in April 2008, Entergy Louisiana and the LPSC staff filed with the LPSC an uncontested stipulated settlement that included Entergy Louisiana’s proposal under the Act 55 financing, which included a commitment to pass on to customers a minimum of $40 million of customer benefits through a prospective annual rate reduction of $8 million for five years. The LPSC subsequently approved the settlement and issued two financing orders and one ratemaking order intended to facilitate implementation of the Act 55 financing. In May 2008 the Louisiana State Bond Commission granted final approval of the Act 55 financing. The settlement agreement allowed for an adjustment to the credits if there was a change in the applicable federal or state income tax rate. As a result of the enactment of the Tax Cuts and Jobs Act, in December 2017, and the lowering of the federal corporate income tax rate from 35% to 21%, the Louisiana Act 55 financing savings obligation regulatory liability related to Hurricanes Katrina and Rita was reduced by $22.3 million, with a corresponding increase to Other regulatory credits on the income statement. The effects of the Tax Cuts and Jobs Act are discussed further in Note 3 to the financial statements.
In July 2008 the LPFA issued $687.7 million in bonds under the aforementioned Act 55. From the $679 million of bond proceeds loaned by the LPFA to the LURC, the LURC deposited $152 million in a restricted escrow account as a storm damage reserve for Entergy Louisiana and transferred $527 million directly to Entergy Louisiana. From the bond proceeds received by Entergy Louisiana from the LURC, Entergy Louisiana invested $545 million, including $17.8 million that was withdrawn from the restricted escrow account as approved by the April 16, 2008 LPSC orders, in exchange for 5,449,861.85 Class A preferred, non-voting, membership interest units of Entergy Holdings Company that carry a 10% annual distribution rate. In August 2008 the LPFA issued $278.4 million in bonds under the aforementioned Act 55. From the $274.7 million of bond proceeds loaned by the LPFA to the LURC, the LURC deposited $87 million in a restricted escrow account as a storm damage reserve for Entergy Louisiana and transferred $187.7 million directly to Entergy Louisiana. From the bond proceeds received by Entergy Louisiana from the LURC, Entergy Louisiana invested $189.4 million, including $1.7 million that was withdrawn from the restricted escrow account as approved by the April 16, 2008 LPSC orders, in exchange for 1,893,918.39 Class A preferred, non-voting, membership interest units of Entergy Holdings Company that carry a 10% annual distribution rate. Distributions were payable quarterly commencing on September 15, 2008 and had a
Entergy Corporation and Subsidiaries
Notes to Financial Statements
liquidation price of $100 per unit. The preferred membership interests were callable at the option of Entergy Holdings Company after ten years under the terms of the LLC agreement. The terms of the membership interests included certain financial covenants to which Entergy Holdings Company was subject, including the requirement to maintain a net worth of at least $1 billion. In February 2012, Entergy Louisiana sold 500,000 of its Class A preferred membership units in Entergy Holdings Company to a third party. Those preferred membership units were subsequently repurchased by Entergy Holdings Company in March 2019. As discussed above in “Hurricane Laura, Hurricane Delta, Hurricane Zeta, Winter Storm Uri, and Hurricane Ida”, in May 2022, Entergy Holdings Company liquidated and distributed cash to Entergy Louisiana as holder of the remaining 6,843,780.24 units of Class A preferred membership interests.
The bonds were repaid in 2018. Entergy and Entergy Louisiana did not report the bonds issued by the LPFA on their balance sheets because the bonds were the obligation of the LPFA, and there was no recourse against Entergy or Entergy Louisiana in the event of a bond default. To service the bonds, Entergy Louisiana collected a system restoration charge on behalf of the LURC and remitted the collections to the bond indenture trustee. Entergy and Entergy Louisiana did not report the collections as revenue because Entergy Louisiana was merely acting as the billing and collection agent for the state.
Entergy Mississippi
Prior to June 2024, Entergy Mississippi had approval from the MPSC to collect a storm damage provision of $1.75 million per month. If Entergy Mississippi’s accumulated storm damage provision balance exceeded $15 million, the collection of the storm damage provision ceased until such time that the accumulated storm damage provision became less than $10 million. Entergy Mississippi’s storm damage provision balance had been less than $10 million since May 2019, and Entergy Mississippi had been billing the monthly storm damage provision since July 2019.
In December 2023, Entergy Mississippi filed a Notice of Storm Escrow Disbursement and Request for Interim Relief notifying the MPSC that Entergy Mississippi had requested disbursement of approximately $34.5 million of storm escrow funds from its restricted storm escrow account. The filing also requested authorization from the MPSC, on a temporary basis, that the $34.5 million of storm escrow funds be credited to Entergy Mississippi’s storm damage provision, pending the MPSC’s review of Entergy Mississippi’s storm-related costs, and that Entergy Mississippi continue to bill its monthly storm damage provision without suspension in the event the storm damage provision balance exceeded $15 million, in anticipation of a subsequent filing by Entergy Mississippi in this proceeding. The storm damage provision exceeded $15 million upon receipt of the storm escrow funds. Because the MPSC had not entered an order on Entergy Mississippi’s filing on the requested relief to continue billing this provision, Entergy Mississippi suspended billing the monthly storm damage provision effective with February 2024 bills.
In March 2024, Entergy Mississippi made a combined dual filing which included a notice of intent to make routine change in rates and schedules and a motion for determination relating to the above-described notice of storm escrow disbursement. The notice of intent proposed a new storm damage mitigation and restoration rider to supersede both the then-current storm damage rate schedule and the vegetation management rider schedule, in which the collection of both expenses would be combined. The proposal requested that the MPSC authorize Entergy Mississippi to collect approximately $5.2 million per month for vegetation management and a storm damage provision. Furthermore, if Entergy Mississippi’s accumulated vegetation management and storm damage provision balance were to exceed $70 million, collection under the storm damage mitigation and restoration rider would cease until such time that the accumulated vegetation management and storm damage provision would become less than $60 million.
The Mississippi Public Utilities Staff reviewed the storm-related costs submitted by Entergy Mississippi and found them prudent. In June 2024 the MPSC considered and unanimously granted the relief sought by Entergy Mississippi, including authorization to credit any remaining funds in the storm escrow account to Entergy
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Mississippi’s storm damage provision and to close the storm escrow account and approving the new storm damage mitigation and restoration rider. Entergy Mississippi’s storm escrow account was liquidated in July 2024, and the new combined storm damage mitigation and restoration rider became effective with the July 2024 billing cycle. Additionally, Entergy Mississippi made a compliance filing to cease billing under the existing vegetation management rider schedule as of the same billing cycle.
Entergy New Orleans
Hurricane Ida
In August 2021, Hurricane Ida caused significant damage to Entergy New Orleans’s service area, including Entergy’s electrical grid. The storm resulted in widespread power outages, including the loss of 100% of Entergy New Orleans’s load and damage to distribution and transmission infrastructure, including the loss of connectivity to the eastern interconnection. In September 2021, Entergy New Orleans withdrew $39 million from its funded storm reserves. In June 2022, Entergy New Orleans filed an application with the City Council requesting approval and certification that storm restoration costs associated with Hurricane Ida of approximately $170 million, which included $11 million in estimated costs, were reasonable, necessary, and prudently incurred to enable Entergy New Orleans to restore electric service to its customers and to repair Entergy New Orleans’s electric utility infrastructure. In addition, estimated carrying costs through December 2022 related to Hurricane Ida restoration costs were $9 million. Also, Entergy New Orleans requested approval that the $39 million withdrawal from its funded storm reserve in September 2021 and $7 million in excess storm reserve escrow withdrawals related to Hurricane Zeta in October 2020 and prior miscellaneous storms were properly applied to Hurricane Ida storm restoration costs, the application of which reduced the amount to be recovered from Entergy New Orleans customers by $46 million.
Additionally, in February 2022, Entergy New Orleans and the LURC filed with the City Council a securitization application requesting that the City Council review Entergy New Orleans’s storm reserve and increase the storm reserve funding level to $150 million, to be funded through securitization. In August 2022 the City Council’s advisors recommended that the City Council authorize a single securitization bond issuance to fund Entergy New Orleans’s storm recovery reserves to an amount sufficient to: (1) allow recovery of all of Entergy New Orleans’s unrecovered storm recovery costs following Hurricane Ida, subject to City Council review and certification; (2) provide initial funding of storm recovery reserves for future storms to a level of $75 million; and (3) fund the storm recovery bonds’ upfront financing costs. In September 2022, Entergy New Orleans and the City Council’s advisors entered into an agreement in principle, which was approved by the City Council along with a financing order in October 2022, which authorized Entergy New Orleans and the LURC to proceed with a single securitization bond issuance of approximately $206 million (subject to further adjustment and review pursuant to the Final Issuance Advice Letter process set forth in the financing order), with $125 million of that total to be used for interim recovery, subject to City Council review and certification, to be allocated to unrecovered Hurricane Ida storm recovery costs; $75 million of that total to provide for a storm recovery reserve for future storms; and the remainder to fund the recovery of the storm recovery bonds’ upfront financing costs.
In December 2022, Entergy New Orleans and the LURC filed with the City Council the Final Issuance Advice Letter for a securitization bond issuance in the amount of $209.3 million, the final structuring, terms, and pricing of which were approved by the City Council in accordance with the financing order. Also in December 2022 the LCDA issued $209.3 million in bonds pursuant to the Louisiana Electric Utility Storm Recovery Securitization Act, Part V-B of Chapter 9 of Title 45 of the Louisiana Revised Statutes, as supplemented by Act 293 of the Louisiana Regular Session of 2021. The LCDA loaned $201.8 million of bond proceeds, net of certain debt service and issuance costs, to the LURC. The LURC used the proceeds to purchase from Entergy New Orleans the storm recovery property, which is the right to collect storm recovery charges sufficient to pay the storm recovery bonds and associated financing costs, and Entergy New Orleans deposited $200 million in a restricted storm reserve escrow account as a storm damage reserve for Entergy New Orleans and received directly $1.8 million in estimated upfront financing costs. Subsequently, Entergy New Orleans withdrew $125 million from the newly securitized
Entergy Corporation and Subsidiaries
Notes to Financial Statements
storm reserve to cover Hurricane Ida storm recovery costs, subject to a final determination from the City Council regarding the prudency of the storm recovery costs.
Entergy and Entergy New Orleans do not report the bonds issued by the LCDA on their balance sheets because the bonds are the obligation of the LCDA, and there is no recourse against Entergy or Entergy New Orleans in the event of a bond default. To service the bonds, Entergy New Orleans collects a storm recovery charge on behalf of the LURC and remits the collections to the bond indenture trustee. Entergy and Entergy New Orleans do not report the collections as revenue because Entergy New Orleans is merely acting as the billing and collection agent for the LURC.
In August 2023 the City Council advisors issued a report recommending that the City Council find that Entergy New Orleans prudently incurred approximately $164.1 million in storm restoration costs and $7.5 million in carrying charges and that such costs have already been properly recovered by Entergy New Orleans through withdrawals from the storm reserve escrow account. The City Council advisors also recommended that the City Council find that approximately $1.2 million in storm restoration costs had already been recovered through Entergy New Orleans’s base rates and that approximately $0.9 million in unused credits be applied against future storm costs. In August 2023 the City Council hearing officer certified the evidentiary record. In December 2023 the City Council approved a resolution adopting the advisors’ report and recommendations.
Entergy Texas
Hurricane Laura, Hurricane Delta, and Winter Storm Uri
In August 2020 and October 2020, Hurricane Laura and Hurricane Delta caused extensive damage to Entergy Texas’s service area. In February 2021, Winter Storm Uri also caused damage to Entergy Texas’s service area. The storms resulted in widespread power outages, significant damage primarily to distribution and transmission infrastructure, and the loss of sales during the power outages. In April 2021, Entergy Texas filed an application with the PUCT requesting a determination that approximately $250 million of system restoration costs associated with Hurricane Laura, Hurricane Delta, and Winter Storm Uri, including approximately $200 million in capital costs and approximately $50 million in non-capital costs, were reasonable and necessary to enable Entergy Texas to restore electric service to its customers and Entergy Texas’s electric utility infrastructure. The filing also included the projected balance of approximately $13 million of a regulatory asset containing previously approved system restoration costs related to Hurricane Harvey. In September 2021 the parties filed an unopposed settlement agreement, pursuant to which Entergy Texas removed from the amount to be securitized approximately $4.3 million that will instead be charged to its storm reserve, $5 million related to no particular issue, of which Entergy Texas would be permitted to seek recovery in a future proceeding, and approximately $300 thousand related to attestation costs. In December 2021 the PUCT issued an order approving the unopposed settlement and determining system restoration costs of $243 million related to Hurricane Laura, Hurricane Delta, and Winter Storm Uri and the $13 million projected remaining balance of the Hurricane Harvey system restoration costs were eligible for securitization. The order also determines that Entergy Texas can recover carrying costs on the system restoration costs related to Hurricane Laura, Hurricane Delta, and Winter Storm Uri.
In July 2021, Entergy Texas filed with the PUCT an application for a financing order to approve the securitization of the system restoration costs that are the subject of the April 2021 application. In November 2021 the parties filed an unopposed settlement agreement supporting the issuance of a financing order consistent with Entergy Texas’s application and with minor adjustments to certain upfront and ongoing costs to be incurred to facilitate the issuance and serving of system restoration bonds. In January 2022 the PUCT issued a financing order consistent with the unopposed settlement. As a result of the financing order, Entergy Texas reclassified $153 million from utility plant to other regulatory assets.
In April 2022, Entergy Texas Restoration Funding II, LLC, a company wholly-owned and consolidated by Entergy Texas, issued $290.85 million of senior secured system restoration bonds (securitization bonds). With the
Entergy Corporation and Subsidiaries
Notes to Financial Statements
proceeds, Entergy Texas Restoration Funding II purchased from Entergy Texas the transition property, which is the right to recover from customers through a system restoration charge amounts sufficient to service the securitization bonds. Entergy Texas began cost recovery through the system restoration charge effective with the first billing cycle of May 2022 and the system restoration charge is expected to remain in place up to 15 years. See Note 5 to the financial statements for a discussion of the April 2022 issuance of the securitization bonds.
NOTE 3. INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Income taxes for Entergy for 2024, 2023, and 2022 consist of the following:
| | | | | | | | | | | | | | | | | |
| | 2024 | | 2023 | | 2022 |
| | (In Thousands) |
| Current: | | | | | |
| Federal | $66,708 | | | $60,639 | | | $32,387 | |
| State | 44,956 | | | 23,014 | | | (3,091) | |
| Total | 111,664 | | | 83,653 | | | 29,296 | |
| Deferred and non-current - net | 281,190 | | | (768,941) | | | (67,520) | |
| Investment tax credits - net | (11,827) | | | (5,247) | | | (754) | |
| Income taxes | $381,027 | | | ($690,535) | | | ($38,978) | |
Income taxes for the Registrant Subsidiaries for 2024, 2023, and 2022 consist of the following:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | (In Thousands) |
| Current: | | | | | | | | | | | | |
| Federal | | ($10,558) | | | ($79,519) | | | $38,680 | | | ($8,022) | | | $8,281 | | | ($5,527) | |
| State | | (2,275) | | | 1,709 | | | 2,407 | | | 5,331 | | | 5,468 | | | (396) | |
| Total | | (12,833) | | | (77,810) | | | 41,087 | | | (2,691) | | | 13,749 | | | (5,923) | |
| Deferred and non-current - net | | 88,637 | | | 307,835 | | | 39,608 | | | 6,381 | | | 52,702 | | | 39,409 | |
| Investment tax credits - net | | (1,230) | | | (4,616) | | | (380) | | | (848) | | | (767) | | | (3,983) | |
| Income taxes | | $74,574 | | | $225,409 | | | $80,315 | | | $2,842 | | | $65,684 | | | $29,503 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | (In Thousands) |
| Current: | | | | | | | | | | | | |
| Federal | | $33,100 | | | ($142,253) | | | $20,328 | | | ($99,343) | | | $2,851 | | | $337 | |
| State | | (4,201) | | | (6,397) | | | 4,142 | | | (5,854) | | | 3,719 | | | (1,570) | |
| Total | | 28,899 | | | (148,650) | | | 24,470 | | | (105,197) | | | 6,570 | | | (1,233) | |
| Deferred and non-current - net | | (126,878) | | | (52,451) | | | 30,690 | | | (84,744) | | | 57,066 | | | 31,005 | |
| Investment tax credits - net | | (1,231) | | | (4,680) | | | (796) | | | (32) | | | (764) | | | 2,260 | |
| Income taxes | | ($99,210) | | | ($205,781) | | | $54,364 | | | ($189,973) | | | $62,872 | | | $32,032 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2022 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | (In Thousands) |
| Current: | | | | | | | | | | | | |
| Federal | | $8,015 | | | ($79,079) | | | $9,242 | | | $1,074 | | | $37,471 | | | ($11,720) | |
| State | | (1,066) | | | (1,773) | | | (6,486) | | | 6,221 | | | 2,260 | | | 581 | |
| Total | | 6,949 | | | (80,852) | | | 2,756 | | | 7,295 | | | 39,731 | | | (11,139) | |
| Deferred and non-current - net | | 74,802 | | | (77,223) | | | 48,443 | | | 16,814 | | | 11,520 | | | (83,369) | |
| Investment tax credits - net | | (855) | | | (4,778) | | | 3,665 | | | 168 | | | (630) | | | 1,680 | |
| Income taxes | | $80,896 | | | ($162,853) | | | $54,864 | | | $24,277 | | | $50,621 | | | ($92,828) | |
Total income taxes for Entergy differ from the amounts computed by applying the statutory income tax rate to income before income taxes. The reasons for the differences for the years 2024, 2023, and 2022 are:
| | | | | | | | | | | | | | | | | |
| | 2024 | | 2023 | | 2022 |
| | (In Thousands) |
| Net income attributable to Entergy Corporation | $1,055,590 | | $2,356,536 | | $1,103,166 |
| Preferred dividend requirements of subsidiaries and noncontrolling interests | 5,594 | | 5,774 | | (6,028) |
| Consolidated net income | 1,061,184 | | 2,362,310 | | 1,097,138 |
| Income taxes | 381,027 | | (690,535) | | (38,978) |
| Income before income taxes | $1,442,211 | | $1,671,775 | | $1,058,160 |
| | | | | |
| Income taxes computed at statutory rate (21%) | $302,864 | | $351,073 | | $222,214 |
| Increases (reductions) in tax resulting from: | | | | | |
| State income taxes net of federal income tax effect | 81,377 | | 70,144 | | 61,368 |
| Regulatory differences - utility plant items | (30,288) | | (27,901) | | (32,143) |
| Equity component of AFUDC | (27,343) | | (20,172) | | (14,156) |
| Amortization of investment tax credits | (8,808) | | (7,978) | | (7,740) |
| Flow-through / permanent differences | 33 | | (1,374) | | 1,011 |
| Amortization of deficient/(excess) ADIT (a) | 19,169 | | 9,102 | | (34,899) |
| IRS audit resolution (b) | — | | (842,769) | | — |
| Reversal of regulatory liability (c) | — | | (105,649) | | — |
| Entergy Louisiana securitization (d) | — | | (129,034) | | (282,620) |
| System Energy sale-leaseback order (e) | — | | — | | 12,662 |
| State audit resolution (f) | (9,057) | | — | | — |
| State rate change (g) | 28,636 | | — | | — |
| Provision for uncertain tax positions | 21,487 | | 18,884 | | 34,423 |
| Valuation allowance | (780) | | (8,697) | | (2,754) |
| Other - net | 3,737 | | 3,836 | | 3,656 |
| Total income taxes as reported | $381,027 | | ($690,535) | | ($38,978) |
| Effective Income Tax Rate | 26.4 | % | | (41.3 | %) | | (3.7 | %) |
(a)See “Other Tax Matters - Tax Cuts and Jobs Act” below for discussion of the amortization of excess accumulated deferred income taxes (ADIT) in 2024, 2023, and 2022 and the tax legislation enactment in 2017.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
(b)See “Income Tax Audits - 2016-2018 IRS Audit” below for discussion of the resolution of the 2016-2018 IRS audit in 2023.
(c)See Note 2 to the financial statements for discussion of Entergy Louisiana’s reversal of a regulatory liability, primarily associated with the Hurricane Isaac securitization, recognized in 2017 as a result of the Tax Cuts and Jobs Act.
(d)See “Other Tax Matters – Act 293 Securitizations” below for discussion of the Entergy Louisiana May 2022 and March 2023 storm cost securitizations.
(e)See Note 2 to the financial statements for discussion of the December 2022 FERC order related to the Grand Gulf sale-leaseback renewal complaint.
(f)See “Income Tax Audits - State Income Tax Audits” below for discussion of the resolution of the 2014-2018 Arkansas Department of Finance and Administration examination in 2024.
(g)See “Other Tax Matters - Arkansas and Louisiana Corporate Income Tax Rate Changes” below for details.
Total income taxes for the Registrant Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before taxes. The reasons for the differences for the years 2024, 2023, and 2022 are:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | (In Thousands) |
| Net income | | $319,466 | | $890,771 | | $245,407 | | $15,847 | | $293,622 | | $103,500 |
| Income taxes | | 74,574 | | 225,409 | | 80,315 | | 2,842 | | 65,684 | | 29,503 |
| Income before income taxes | | $394,040 | | $1,116,180 | | $325,722 | | $18,689 | | $359,306 | | $133,003 |
| | | | | | | | | | | | |
| Income taxes computed at statutory rate (21%) | | $82,748 | | $234,398 | | $68,402 | | $3,925 | | $75,454 | | $27,931 |
| Increases (reductions) in tax resulting from: | | | | | | | | | | | | |
| State income taxes net of federal income tax effect | | 13,940 | | 50,760 | | 13,210 | | 1,248 | | 5,164 | | 4,936 |
| Regulatory differences - utility plant items | | (9,885) | | (9,988) | | (3,572) | | (830) | | (4,537) | | (1,475) |
| Equity component of AFUDC | | (6,032) | | (7,513) | | (1,910) | | (445) | | (10,045) | | (1,398) |
| Amortization of investment tax credits | | (1,201) | | (4,563) | | (267) | | (839) | | (748) | | (1,155) |
| Flow-through / permanent differences | | 214 | | (3,244) | | 2,987 | | (338) | | (760) | | (538) |
| | | | | | | | | | | | |
| Amortization of excess ADIT (a) | | 10,193 | | 9,305 | | — | | (332) | | 2 | | — |
| State audit resolution (f) | | (18,276) | | — | | — | | — | | — | | — |
| | | | | | | | | | | | |
| State rate change (g) | | — | | 16,307 | | — | | 242 | | — | | — |
| Non-taxable dividend income | | — | | (64,982) | | — | | — | | — | | — |
| Provision for uncertain tax positions | | 1,800 | | 3,400 | | 1,100 | | | | 777 | | 1,000 |
| Other - net | | 1,073 | | 1,529 | | 365 | | 211 | | 377 | | 202 |
| Total income taxes as reported | | $74,574 | | $225,409 | | $80,315 | | $2,842 | | $65,684 | | $29,503 |
| Effective Income Tax Rate | | 18.9% | | 20.2% | | 24.7% | | 15.2% | | 18.3% | | 22.2% |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | (In Thousands) |
| Net income | | $396,850 | | $1,273,370 | | $181,969 | | $228,938 | | $291,273 | | $108,772 |
| Income taxes | | (99,210) | | (205,781) | | 54,364 | | (189,973) | | 62,872 | | 32,032 |
| Income before income taxes | | $297,640 | | $1,067,589 | | $236,333 | | $38,965 | | $354,145 | | $140,804 |
| | | | | | | | | | | | |
| Income taxes computed at statutory rate (21%) | | $62,504 | | $224,194 | | $49,630 | | $8,183 | | $74,370 | | $29,569 |
| Increases (reductions) in tax resulting from: | | | | | | | | | | | | |
| State income taxes net of federal income tax effect | | 13,291 | | 51,899 | | 11,133 | | 1,907 | | 2,574 | | 5,798 |
| Regulatory differences - utility plant items | | (8,812) | | (5,535) | | (5,290) | | (1,353) | | (6,394) | | (517) |
| Equity component of AFUDC | | (4,093) | | (6,754) | | (1,796) | | (309) | | (5,920) | | (1,301) |
| Amortization of investment tax credits | | (1,201) | | (4,625) | | (223) | | (25) | | (748) | | (1,155) |
| Flow-through / permanent differences | | 1,105 | | 126 | | 3,534 | | (1,913) | | 1,493 | | (191) |
| Amortization of excess ADIT (a) | | (6,095) | | 14,032 | | — | | 1,147 | | 17 | | — |
| IRS audit resolution (b) | | (159,588) | | (179,111) | | (3,291) | | (198,424) | | (3,112) | | (1,575) |
| Reversal of regulatory liability (c) | | — | | (105,649) | | — | | — | | — | | — |
| Entergy Louisiana securitization (d) | | — | | (133,443) | | — | | — | | — | | — |
| Non-taxable dividend income | | — | | (62,116) | | — | | — | | — | | — |
| Provision for uncertain tax positions | | 2,600 | | (400) | | 300 | | 600 | | 211 | | 1,200 |
| | | | | | | | | | | | |
| Other - net | | 1,079 | | 1,601 | | 367 | | 214 | | 381 | | 204 |
| Total income taxes as reported | | ($99,210) | | ($205,781) | | $54,364 | | ($189,973) | | $62,872 | | $32,032 |
| Effective Income Tax Rate | | (33.3%) | | (19.3%) | | 23.0% | | (487.5%) | | 17.8% | | 22.7% |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2022 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | (In Thousands) |
| Net income | | $292,887 | | $855,870 | | $176,267 | | $64,101 | | $303,327 | | ($276,593) |
| Income taxes | | 80,896 | | (162,853) | | 54,864 | | 24,277 | | 50,621 | | (92,828) |
| Income before income taxes | | $373,783 | | $693,017 | | $231,131 | | $88,378 | | $353,948 | | ($369,421) |
| | | | | | | | | | | | |
| Income taxes computed at statutory rate (21%) | | $78,494 | | $145,534 | | $48,538 | | $18,559 | | $74,329 | | ($77,578) |
| Increases (reductions) in tax resulting from: | | | | | | | | | | | | |
| State income taxes net of federal income tax effect | | 17,981 | | 44,244 | | 9,659 | | 6,733 | | 2,175 | | (16,727) |
| Regulatory differences - utility plant items | | (12,466) | | (6,347) | | (7,726) | | (1,908) | | (3,010) | | (686) |
| Equity component of AFUDC | | (3,437) | | (5,513) | | (1,286) | | (174) | | (2,841) | | (905) |
| Amortization of investment tax credits | | (1,201) | | (4,720) | | (223) | | 175 | | (614) | | (1,155) |
| Flow-through / permanent differences | | 106 | | 3,467 | | 4,837 | | 230 | | 765 | | (641) |
| Amortization of excess ADIT (a) | | — | | (13,164) | | — | | (752) | | (20,983) | | — |
| | | | | | | | | | | | |
| Entergy Louisiana securitization (d) | | — | | (289,609) | | — | | — | | — | | — |
| System Energy sale-leaseback order (e) | | — | | — | | — | | — | | — | | 12,662 |
| Non-taxable dividend income | | — | | (38,735) | | — | | — | | — | | — |
| Provision for uncertain tax positions | | 1,600 | | 400 | | 700 | | 1,200 | | 420 | | (8,000) |
| Valuation allowance | | (1,258) | | — | | — | | — | | — | | — |
| Other - net | | 1,077 | | 1,590 | | 365 | | 214 | | 380 | | 202 |
| Total income taxes as reported | | $80,896 | | ($162,853) | | $54,864 | | $24,277 | | $50,621 | | ($92,828) |
| Effective Income Tax Rate | | 21.6% | | (23.5%) | | 23.7% | | 27.5% | | 14.3% | | 25.1% |
(a)See “Other Tax Matters - Tax Cuts and Jobs Act” below for discussion of the amortization of excess ADIT in 2024, 2023, 2022 and the tax legislation enactment in 2017.
(b)See “Income Tax Audits - 2016-2018 IRS Audit” below for discussion of the resolution of the 2016-2018 IRS audit in 2023.
(c)See Note 2 to the financial statements for discussion of Entergy Louisiana’s reversal of a regulatory liability, primarily associated with the Hurricane Isaac securitization, recognized in 2017 as a result of the Tax Cuts and Jobs Act.
(d)See “Other Tax Matters - Act 293 Securitizations” below for discussion of the Entergy Louisiana May 2022 and March 2023 storm cost securitizations.
(e)See Note 2 to the financial statements for discussion of the December 2022 FERC order related to the Grand Gulf sale-leaseback renewal complaint.
(f)See “Income Tax Audits - State Income Tax Audits” below for discussion of the resolution of the 2014-2018 Arkansas Department of Finance and Administration examination in 2024.
(g)See “Other Tax Matters - Arkansas and Louisiana Corporate Income Tax Rate Changes” below for details.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2024 and 2023 are as follows:
| | | | | | | | | | | |
| | 2024 | | 2023 |
| | (In Thousands) |
| Deferred tax liabilities: | | | |
| Plant basis differences - net | ($6,451,189) | | | ($6,192,156) | |
| Regulatory assets | (1,003,045) | | | (989,405) | |
| Nuclear decommissioning trusts/receivables | (563,423) | | | (467,267) | |
| Pension, net regulatory asset | (303,007) | | | (363,829) | |
| Combined unitary state taxes | (3,600) | | | (8,783) | |
| Power purchase agreements | (89,614) | | | (75,612) | |
| Accumulated storm damage provision | — | | | (2,474) | |
| Deferred fuel | (23,305) | | | (69,436) | |
| Other | (206,648) | | | (251,107) | |
| Total | (8,643,831) | | | (8,420,069) | |
| Deferred tax assets: | | | |
| Regulatory liabilities | 1,394,937 | | | 1,247,530 | |
| Nuclear and other decommissioning liabilities | 164,685 | | | 147,011 | |
| Pension and other post-employment benefits | 22,646 | | | 116,222 | |
| Compensation | 79,580 | | | 81,226 | |
| Accumulated deferred investment tax credit | 52,709 | | | 55,928 | |
| Provision for allowances and contingencies | 141,769 | | | 149,479 | |
| Unbilled/deferred revenues | (9,960) | | | 2,418 | |
| Net operating loss carryforwards | 2,672,993 | | | 2,857,908 | |
| Capital losses and miscellaneous tax credits | 111,325 | | | 107,009 | |
| Valuation allowance | (338,508) | | | (372,119) | |
| Other | 212,563 | | | 220,055 | |
| Total | 4,504,739 | | | 4,612,667 | |
| Non-current accrued taxes (including unrecognized tax benefits) | (309,669) | | | (422,213) | |
| Accumulated deferred income taxes and taxes accrued | ($4,448,761) | | | ($4,229,615) | |
Entergy’s estimated tax attributes carryovers and their expiration dates as of December 31, 2024 are as follows:
| | | | | | | | | | | | | | |
| Carryover Description | | Carryover Amount | | Year(s) of expiration |
| Federal net operating losses before 1/1/2018 | | $4.4 billion | | 2025-2037 |
| Federal net operating losses - 1/1/2018 forward | | $13.9 billion | | N/A |
| State net operating losses | | $4.3 billion | | 2028-2042 |
| State net operating losses with no expiration | | $8.8 billion | | N/A |
| Other federal and state carryforwards | | $134.5 million | | 2025-2028 |
| Miscellaneous federal and state credits | | $138.8 million | | 2025-2044 |
As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers, tax credit carryovers, and other tax attributes generated and reflected on income tax returns. Entergy evaluates the available positive and negative evidence to estimate whether sufficient future taxable income of the appropriate character will be generated to realize the benefits of existing deferred tax assets. When the evaluation
Entergy Corporation and Subsidiaries
Notes to Financial Statements
indicates that Entergy will not be able to realize the existing benefits, a valuation allowance is recorded to reduce deferred tax assets to the realizable amount.
Because it is more likely than not that the benefits from certain state net operating losses and other deferred tax assets will not be utilized, valuation allowances totaling $339 million as of December 31, 2024 and $372 million as of December 31, 2023 have been provided on the deferred tax assets related to federal and state jurisdictions in which Entergy does not currently expect to be able to utilize certain separate company tax return attributes, preventing realization of such deferred tax assets. Certain accelerated tax deductions which generated taxable losses in various taxing jurisdictions, and which have a limited term carryover period, have resulted in the impairment of the realizability of such carryovers and are reflected in the valuation allowance disclosed above.
Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2024 and 2023 are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | (In Thousands) |
| Deferred tax liabilities: | | | | | | | | | | | | |
| Plant basis differences - net | | ($1,530,196) | | | ($2,729,299) | | | ($849,623) | | | ($272,182) | | | ($727,242) | | | ($466,361) | |
| Regulatory assets | | (219,773) | | | (497,177) | | | (37,374) | | | (72,389) | | | (100,959) | | | (75,606) | |
| Nuclear decommissioning trusts/receivables | | (185,725) | | | (202,364) | | | — | | | — | | | — | | | (175,341) | |
| Pension, net regulatory asset | | (101,887) | | | (84,732) | | | (26,064) | | | (9,687) | | | (16,569) | | | — | |
| Power purchase agreements | | 11,993 | | | (97,846) | | | 1,140 | | | (12,385) | | | (5,148) | | | — | |
| | | | | | | | | | | | |
| Deferred fuel | | — | | | (4,785) | | | (17,234) | | | (1,247) | | | — | | | (78) | |
| Other | | (24,430) | | | (106,590) | | | (5,231) | | | (5,133) | | | (4,512) | | | (13,572) | |
| Total | | (2,050,018) | | | (3,722,793) | | | (934,386) | | | (373,023) | | | (854,430) | | | (730,958) | |
| Deferred tax assets: | | | | | | | | | | | | |
| Regulatory liabilities | | 310,621 | | | 678,086 | | | 53,046 | | | 89,385 | | | 37,325 | | | 229,065 | |
| Nuclear and other decommissioning liabilities | | 127,933 | | | 18,649 | | | — | | | (407) | | | 97 | | | 17,956 | |
| Pension and other post-employment benefits | | (29,923) | | | 39,379 | | | (8,989) | | | (19,443) | | | (23,403) | | | (24,642) | |
| Compensation | | 4,851 | | | 7,119 | | | 3,277 | | | 1,394 | | | 2,596 | | | 515 | |
| Accumulated deferred investment tax credit | | 6,360 | | | 26,549 | | | 3,355 | | | 4,205 | | | 1,515 | | | 10,724 | |
| Provision for allowances and contingencies | | 31,686 | | | 59,448 | | | 11,361 | | | 23,998 | | | 4,358 | | | 225 | |
| Unbilled/deferred revenues | | 3,546 | | | (24,017) | | | 1,274 | | | 715 | | | 7,925 | | | — | |
| Net operating loss carryforwards | | 126,255 | | | 336,128 | | | 305 | | | 30,740 | | | 50 | | | 69,611 | |
| Capital losses and miscellaneous tax credits | | 14,489 | | | 17,029 | | | 8,206 | | | 16,220 | | | 1,273 | | | 10,788 | |
| Other | | 11,608 | | | 54,207 | | | 1,096 | | | 1,692 | | | 1,189 | | | — | |
| Total | | 607,426 | | | 1,212,577 | | | 72,931 | | | 148,499 | | | 32,925 | | | 314,242 | |
| Non-current accrued taxes (including unrecognized tax benefits) | | (46,577) | | | 32,262 | | | (8,661) | | | 22,983 | | | (47,344) | | | (35,114) | |
| Accumulated deferred income taxes and taxes accrued | | ($1,489,169) | | | ($2,477,954) | | | ($870,116) | | | ($201,541) | | | ($868,849) | | | ($451,830) | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | (In Thousands) |
| Deferred tax liabilities: | | | | | | | | | | | | |
| Plant basis differences - net | | ($1,421,272) | | | ($2,639,079) | | | ($810,120) | | | ($272,187) | | | ($671,072) | | | ($450,559) | |
| Regulatory assets | | (241,427) | | | (500,395) | | | (41,519) | | | (23,618) | | | (104,562) | | | (76,522) | |
| Nuclear decommissioning trusts/receivables | | (154,106) | | | (173,402) | | | — | | | — | | | — | | | (139,858) | |
| Pension, net regulatory asset | | (96,853) | | | (82,305) | | | (24,342) | | | (9,216) | | | (17,522) | | | (18,895) | |
| Power purchase agreements | | 15,993 | | | (112,292) | | | 1,140 | | | (12,516) | | | (4,551) | | | — | |
| Accumulated storm damage provision | | — | | | — | | | — | | | — | | | (1,387) | | | — | |
| Deferred fuel | | — | | | (17,065) | | | (21,137) | | | (1,563) | | | (29,194) | | | (37) | |
| Other | | (21,187) | | | (126,952) | | | (6,844) | | | (4,270) | | | (3,301) | | | (9,051) | |
| Total | | (1,918,852) | | | (3,651,490) | | | (902,822) | | | (323,370) | | | (831,589) | | | (694,922) | |
| Deferred tax assets: | | | | | | | | | | | | |
| Regulatory liabilities | | 296,278 | | | 575,459 | | | 54,586 | | | 42,921 | | | 41,137 | | | 240,310 | |
| Nuclear and other decommissioning liabilities | | 118,301 | | | 9,055 | | | — | | | — | | | 97 | | | 19,259 | |
| Pension and other post-employment benefits | | (28,868) | | | 46,837 | | | (10,064) | | | (19,354) | | | (21,977) | | | (2,641) | |
| Compensation | | 4,054 | | | 6,078 | | | 3,649 | | | 1,268 | | | 2,181 | | | 406 | |
| Accumulated deferred investment tax credit | | 6,761 | | | 27,902 | | | 3,446 | | | 4,431 | | | 1,672 | | | 11,717 | |
| Provision for allowances and contingencies | | 23,956 | | | 70,297 | | | 10,072 | | | 25,846 | | | 8,659 | | | 225 | |
| Unbilled/deferred revenues | | 5,962 | | | (20,375) | | | 6,194 | | | 1,045 | | | 8,365 | | | — | |
| Net operating loss carryforwards | | 94,321 | | | 459,553 | | | 8,375 | | | 26,227 | | | 61 | | | 35,089 | |
| Capital losses and miscellaneous tax credits | | 7,137 | | | 13,073 | | | 7,613 | | | 15,684 | | | 1,655 | | | 13,211 | |
| Other | | 17,072 | | | 52,438 | | | 1,556 | | | (235) | | | 1,740 | | | — | |
| Total | | 544,974 | | | 1,240,317 | | | 85,427 | | | 97,833 | | | 43,590 | | | 317,576 | |
| Non-current accrued taxes (including unrecognized tax benefits) | | (63,175) | | | 19,731 | | | (4,349) | | | 29,922 | | | (26,906) | | | (28,398) | |
| Accumulated deferred income taxes and taxes accrued | | ($1,437,053) | | | ($2,391,442) | | | ($821,744) | | | ($195,615) | | | ($814,905) | | | ($405,744) | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The Registrant Subsidiaries’ estimated tax attributes carryovers and their expiration dates as of December 31, 2024 are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | | | | | | | | | | |
| Federal net operating losses before 1/1/2018 | | $— million | | $812.8 million | | $— million | | $82.6 million | | $— million | | $— million |
| Year(s) of expiration | | N/A | | 2035-2037 | | N/A | | 2037 | | N/A | | N/A |
| | | | | | | | | | | | |
| Federal net operating losses - 1/1/2018 forward | | $576 million | | $2.6 billion | | $— million | | $26.4 million | | $1.5 billion | | $264.7 million |
| Year(s) of expiration | | N/A | | N/A | | N/A | | N/A | | N/A | | N/A |
| | | | | | | | | | | | |
| State net operating losses | | $597.4 million | | $5.8 billion | | $7.1 million | | $336.6 million | | $1 million | | $370.1 million |
| Year(s) of expiration | | 2028-2032 | | N/A | | 2039-2042 | | N/A | | 2028 | | 2040-2044 |
| | | | | | | | | | | | |
| Misc. federal credits | | $12.9 million | | $21 million | | $4.9 million | | $16.7 million | | $0.8 million | | $5.7 million |
| Year(s) of expiration | | 2038-2044 | | 2035-2044 | | 2038-2044 | | 2037-2044 | | 2039-2044 | | 2029-2044 |
| | | | | | | | | | | | |
| State credits | | $— million | | $1.1 million | | $8.3 million | | $— million | | $1.3 million | | $17 million |
| Year(s) of expiration | | N/A | | N/A | | 2025-2028 | | N/A | | 2027-2033 | | 2025-2028 |
Unrecognized tax benefits
Accounting standards establish a “more-likely-than-not” recognition threshold that must be met before a tax benefit can be recognized in the financial statements. If a tax deduction is taken on a tax return but does not meet the more-likely-than-not recognition threshold, an increase in income tax liability, above what is payable on the tax return, is required to be recorded. A reconciliation of Entergy’s beginning and ending amount of unrecognized tax benefits is as follows:
| | | | | | | | | | | | | | | | | |
| | 2024 | | 2023 | | 2022 |
| | (In Thousands) |
| Gross balance at January 1 | $2,439,910 | | | $6,393,599 | | | $5,759,968 | |
| Additions based on tax positions related to the current year | 12,731 | | | 332,884 | | | 792,134 | |
| Additions for tax positions of prior years | 21,149 | | | 194,894 | | | 37,259 | |
| Reductions for tax positions of prior years (a) | (85,715) | | | (1,300,381) | | | (195,762) | |
| Settlements (a) | (33,208) | | | (3,181,086) | | | — | |
| | | | | |
| Gross balance at December 31 | 2,354,867 | | | 2,439,910 | | | 6,393,599 | |
| Offsets to gross unrecognized tax benefits: | | | | | |
| Loss and tax credit carryovers | (2,079,778) | | | (2,160,484) | | | (5,566,212) | |
| Cash paid to taxing authorities | (27,000) | | | — | | | (82,000) | |
| Unrecognized tax benefits net of unused tax attributes and payments (b) | $248,089 | | | $279,426 | | | $745,387 | |
(a)Amounts in 2023 are primarily related to the resolution of the 2016-2018 IRS audit as discussed in “Income Tax Audits - 2016-2018 IRS Audit” below. Amounts in 2024 are primarily related to the resolution of 2014-2018 Arkansas tax examination as discussed in “Income Tax Audits - State Income Tax Audits” below.
(b)Potential tax liability above what is payable on tax returns.
The balances of unrecognized tax benefits include $1,900 million, $1,899 million, and $3,254 million as of December 31, 2024, 2023, and 2022, respectively, which, if recognized, would lower the effective income tax
Entergy Corporation and Subsidiaries
Notes to Financial Statements
rates. Because of the effect of deferred tax accounting, the remaining balances of unrecognized tax benefits of $455 million, $541 million, and $3,140 million as of December 31, 2024, 2023, and 2022, respectively, if disallowed, would not affect the annual effective income tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.
Entergy accrues interest expense, if any, related to unrecognized tax benefits in income tax expense. Entergy’s December 31, 2024, 2023, and 2022 accrued balance for the possible payment of interest is approximately $32 million, $39 million, and $50 million, respectively. Interest (net-of-tax) of ($7) million, ($11) million, and $8 million was recorded in 2024, 2023, and 2022, respectively.
A reconciliation of the Registrant Subsidiaries’ beginning and ending amount of unrecognized tax benefits for 2024, 2023, and 2022 is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | (In Thousands) |
| Gross balance at January 1, 2024 | | $69,197 | | | $864,043 | | | $5,653 | | | $19,331 | | | $415,205 | | | $14,301 | |
| Additions based on tax positions related to the current year (a) | | 2,732 | | | 1,921 | | | 237 | | | 163 | | | 378 | | | 833 | |
| Additions for tax positions of prior years | | 25,784 | | | 10,357 | | | 536 | | | 153 | | | 560 | | | 1,281 | |
| Reductions for tax positions of prior years | | (52,300) | | | (9,205) | | | (437) | | | (139) | | | (31,810) | | | — | |
| | | | | | | | | | | | |
| Gross balance at December 31, 2024 | | 45,413 | | | 867,116 | | | 5,989 | | | 19,508 | | | 384,333 | | | 16,415 | |
| Offsets to gross unrecognized tax benefits: | | | | | | | | | | | | |
| Loss and tax credit carryovers | | (30,333) | | | (753,101) | | | (4,997) | | | (11,639) | | | (314,446) | | | (16,415) | |
| Unrecognized tax benefits net of unused tax attributes | | $15,080 | | | $114,015 | | | $992 | | | $7,869 | | | $69,887 | | | $— | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | (In Thousands) |
| Gross balance at January 1, 2023 | | $1,452,819 | | | $1,350,836 | | | $547,548 | | | $638,726 | | | $389,366 | | | $23,702 | |
| Additions based on tax positions related to the current year (a) | | 2,249 | | | 332,320 | | | 209 | | | 78 | | | 196 | | | 752 | |
| Additions for tax positions of prior years | | — | | | — | | | — | | | — | | | 94,793 | | | — | |
| Reductions for tax positions of prior years (b) | | (148,558) | | | (458,072) | | | (16,853) | | | (191,336) | | | (67,156) | | | (9,532) | |
| Settlements (b) | | (1,237,313) | | | (361,041) | | | (525,251) | | | (428,137) | | | (1,994) | | | (621) | |
| Gross balance at December 31, 2023 | | 69,197 | | | 864,043 | | | 5,653 | | | 19,331 | | | 415,205 | | | 14,301 | |
| Offsets to gross unrecognized tax benefits: | | | | | | | | | | | | |
| Loss and tax credit carryovers | | (34,683) | | | (735,612) | | | (3,778) | | | (11,721) | | | (381,561) | | | (14,301) | |
| Unrecognized tax benefits net of unused tax attributes | | $34,514 | | | $128,431 | | | $1,875 | | | $7,610 | | | $33,644 | | | $— | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2022 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | (In Thousands) |
| Gross balance at January 1, 2022 | | $1,408,494 | | | $604,628 | | | $549,569 | | | $639,497 | | | $552,295 | | | $23,356 | |
| Additions based on tax positions related to the current year (a) | | 40,502 | | | 750,320 | | | 185 | | | 72 | | | 173 | | | 690 | |
| Additions for tax positions of prior years | | 6,233 | | | 10,262 | | | 1,122 | | | 393 | | | 801 | | | 761 | |
| Reductions for tax positions of prior years | | (2,410) | | | (14,374) | | | (3,328) | | | (1,236) | | | (163,903) | | | (1,105) | |
| Gross balance at December 31, 2022 | | 1,452,819 | | | 1,350,836 | | | 547,548 | | | 638,726 | | | 389,366 | | | 23,702 | |
| Offsets to gross unrecognized tax benefits: | | | | | | | | | | | | |
| Loss and tax credit carryovers | | (1,277,414) | | | (1,328,916) | | | (504,940) | | | (455,928) | | | (377,054) | | | (23,702) | |
| Unrecognized tax benefits net of unused tax attributes | | $175,405 | | | $21,920 | | | $42,608 | | | $182,798 | | | $12,312 | | | $— | |
(a)The primary additions for Entergy Louisiana in 2022 and 2023 are related to the Entergy Louisiana securitizations as discussed in “Other Tax Matters - Act 293 Securitizations” below.
(b)Amounts in 2023 are primarily related to the resolution of the 2016-2018 IRS audit as discussed in “Income Tax Audits - 2016-2018 IRS Audit” below.
The Registrant Subsidiaries’ balances of unrecognized tax benefits included amounts which, if recognized, would have reduced income tax expense as follows:
| | | | | | | | | | | | | | | | | |
| December 31, |
| | 2024 | | 2023 | | 2022 |
| | (In Millions) |
| Entergy Arkansas | $32.6 | | | $57.2 | | | $377.9 | |
| Entergy Louisiana | $868.2 | | | $862.5 | | | $720.8 | |
| Entergy Mississippi | $1.3 | | | $1.0 | | | $151.2 | |
| Entergy New Orleans | $18.3 | | | $18.2 | | | $310.7 | |
| Entergy Texas | $50.3 | | | $2.9 | | | $3.3 | |
| System Energy | $4.0 | | | $3.1 | | | $2.5 | |
Accrued balances for the possible payment of interest related to unrecognized tax benefits for the Registrant Subsidiaries are as follows:
| | | | | | | | | | | | | | | | | |
| December 31, |
| | 2024 | | 2023 | | 2022 |
| | (In Millions) |
| Entergy Arkansas | $8.4 | | | $7.8 | | | $4.3 | |
| Entergy Louisiana | $5.1 | | | $1.5 | | | $4.1 | |
| Entergy Mississippi | $3.2 | | | $2.1 | | | $3.1 | |
| Entergy New Orleans | $0.6 | | | $0.6 | | | $6.4 | |
| Entergy Texas | $0.5 | | | $— | | | $1.1 | |
| System Energy | $2.9 | | | $1.9 | | | $1.9 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The Registrant Subsidiaries record interest and penalties related to unrecognized tax benefits in income tax expense. No penalties were recorded in 2024, 2023, and 2022. Interest (net-of-tax) was recorded as follows:
| | | | | | | | | | | | | | | | | |
| 2024 | | 2023 | | 2022 |
| (In Millions) |
| Entergy Arkansas | $0.6 | | | $3.5 | | | $1.6 | |
| Entergy Louisiana | $3.6 | | | ($2.6) | | | $0.4 | |
| Entergy Mississippi | $1.1 | | | ($1.0) | | | $0.7 | |
| Entergy New Orleans | $— | | | ($5.8) | | | $1.2 | |
| Entergy Texas | $0.5 | | | ($1.1) | | | $— | |
| System Energy | $1.0 | | | $— | | | ($10.2) | |
Income Tax Audits
Entergy and its subsidiaries file U.S. federal and various state income tax returns. IRS examinations are complete for years before 2019. All state taxing authorities’ examinations are complete for years before 2016. Entergy regularly defends its positions and works with the IRS to resolve audits. The resolution of audit issues could result in significant changes to the amounts of unrecognized tax benefits in the next twelve months.
2016-2018 IRS Audit
The IRS completed its examination of the 2016 through 2018 tax years and issued a Revenue Agent Report (RAR) for each federal filer under audit in November 2023. Entergy agreed to all adjustments contained in the RARs. Entergy and the Registrant Subsidiaries recorded all the material effects resulting from the RARs in the fourth quarter of 2023.
Utility Restructurings
In 2017, Entergy New Orleans undertook an internal restructuring, and in 2018, Entergy Arkansas and Entergy Mississippi also participated in internal restructurings under which these three Utility operating companies joined Entergy Louisiana as wholly-owned subsidiaries of Entergy Utility Holding Company, LLC. The change in ownership required Entergy to recognize Entergy Arkansas’s nuclear decommissioning liabilities for income tax purposes, which resulted in recognition of a gain for income tax purposes and a corresponding increase in the tax basis of assets, in accordance with the Internal Revenue Code and Treasury Regulations. Entergy determined that there was uncertainty regarding the treatment of certain aspects of the restructurings and recorded provisions for uncertain tax positions which are now considered to be effectively settled in accordance with accounting standards. The reversal of such provisions for uncertain tax positions results in a reduction of income tax expense of $156 million for Entergy Arkansas, $1 million for Entergy Mississippi, and $6 million for Entergy New Orleans.
The IRS also required Entergy New Orleans to reverse a tax gain associated with the 2017 restructuring that had been previously recognized, allowing Entergy New Orleans to reduce its tax expense by $39 million.
After the restructuring, Entergy Arkansas adopted a new method of accounting for income tax purposes in which its nuclear decommissioning costs are treated as production costs of electricity includable in cost of goods sold, which resulted in a $1.8 billion reduction in taxable income on its 2018 tax return that was treated as an unrecognized tax benefit. In conjunction with the audit, Entergy agreed with the IRS adjustments concerning the nuclear decommissioning tax position allowing Entergy Arkansas to include $102 million of its decommissioning liability in cost of goods sold.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Mark-to-Market Method of Accounting
In 2016, Entergy Louisiana elected mark-to-market income tax treatment for various wholesale electric power purchase and sale agreements, including Entergy Louisiana’s contract to purchase electricity from the Vidalia hydroelectric facility and from System Energy under the Unit Power Sales Agreement as well as other intercompany power purchase agreements. The election resulted in a $2 billion deductible temporary difference. The IRS allowed the mark-to-market tax method of accounting associated with the Vidalia contract and various other third-party and intercompany wholesale electric power purchase and sale agreements. The IRS disallowed the net deductions associated with the Unit Power Sales Agreement, which did not have an effect on net tax expense. The net allowance resulted in a reversal of a provision for uncertain tax positions of $132 million and a corresponding reduction of income tax expense.
In 2017, Entergy New Orleans also elected mark-to-market income tax treatment for the Unit Power Sales Agreement and various intercompany wholesale electric contracts which resulted in a $1 billion deductible temporary difference. The IRS allowed the mark-to-market tax method of accounting associated with various intercompany and third-party wholesale electric contracts. The IRS disallowed the net deductions associated with the Unit Power Sales Agreement, which did not have an effect on net tax expense. The net allowance resulted in a reversal of a provision for uncertain tax positions of $139 million and a corresponding reduction of income tax expense.
In 2018, Entergy Arkansas and Entergy Mississippi each accrued approximately $2 billion in deductible temporary differences related to mark-to-market tax accounting for the Unit Power Sales Agreement and various wholesale electric contracts. The IRS allowed the mark-to-market tax method of accounting associated with various intercompany and third-party wholesale electric contracts. The IRS disallowed the net deductions associated with the Unit Power Sales Agreement, which did not have an effect on net tax expense. The effective settlement of the mark-to-market tax position for Entergy Arkansas resulted in the accrual of an increase to tax expense of $40 million, which was offset by approximately $5 million of miscellaneous excess ADIT recognized as a result of the 2016-2018 IRS audit resolution. The net increase to tax expense is deferred as a regulatory asset, as discussed within the “Regulatory and Other Matters” section below.
Restructuring of Entergy’s Non-Utility Operations Business
During the 2016 to 2018 audit period, the ownership of certain of Entergy’s non-utility operations business nuclear power plants (previously reported as part of Entergy Wholesale Commodities) was restructured. Such restructuring transactions required Entergy to recognize the plants’ nuclear decommissioning liabilities for income tax purposes. The accrual of the nuclear decommissioning liabilities also required Entergy to recognize a gain for income tax purposes, a significant portion of which resulted in an increase in the tax basis of the assets. Because certain aspects of the restructuring transactions involved uncertainty, Entergy recorded a provision for uncertain tax positions. The IRS did not propose adjustments to the tax treatment of the restructuring transactions resulting in a net decrease to income tax expense of $288 million from the reversal of the provision for uncertain tax positions in fourth quarter 2023.
Reduction of Net Operating Loss Carryovers
The IRS audit reduced Entergy’s net operating loss carryover by $8 billion. A portion of Entergy’s audit adjustments were not offset by losses which resulted in a tax liability of $79 million, which was fully offset by prior deposits made by Entergy. Entergy received an assessment of interest in excess of prior deposits of $13 million in December 2023, and such interest was paid in January 2024.
Net operating loss carryovers were reduced by $4 billion for Entergy Arkansas, $1 billion for Entergy Louisiana, $2 billion for Entergy Mississippi, $1 billion for Entergy New Orleans, and $40 million for System
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Energy. The IRS audit adjustments were also factored into the settle-up required under Entergy’s intercompany income tax allocation agreement, and such amounts were settled in the fourth quarter of 2023.
Regulatory and Other Matters
In accordance with prior regulatory agreements associated with the Entergy Louisiana and Entergy Gulf States Louisiana business combination and Entergy New Orleans restructuring and general rate-making principles, Entergy Louisiana and Entergy New Orleans, respectively, recorded a regulatory liability and an associated regulatory charge of $38 million and $60 million ($28 million and $44 million net-of-tax), in December 2023.
Additionally, in December 2023, a regulatory asset for income tax associated with deficient ADIT of $35 million, $2 million, and $3 million, was recorded for Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi, respectively. See Note 2 to the financial statements for discussion of Entergy Arkansas’s regulatory activity related to the Tax Cuts and Jobs Act and discussion of the settlement of Entergy Arkansas’s 2023 formula rate plan.
As noted above, Entergy accrues interest expense related to unrecognized tax benefits in income tax expense. As a result of the IRS audit resolution, Entergy reversed approximately $24 million of interest related to the allowance of previously unrecognized tax benefits in December 2023.
Reversal of net deferred credits associated with the accounting for income taxes upon the resolution of the IRS audit resulted in a reduction/(increase) in income tax expense in December 2023 of $9 million, $42 million, ($2) million, $2 million, $2 million, and $1 million for Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy, respectively.
In April 2024, Entergy New Orleans and the City Council entered into a settlement in principle whereby Entergy New Orleans agreed to share with customers $138 million of income tax benefits from the resolution of the 2016–2018 IRS audit. Based on this settlement in principle, in first quarter 2024 Entergy New Orleans increased the associated regulatory liability from $60 million to $138 million and recorded a corresponding $78 million regulatory charge ($57 million net-of-tax). The settlement in principle requires that the regulatory liability be amortized over 25 years beginning January 2025 with the unamortized balance included in rate base and the amortization treated as a reduction to Entergy New Orleans’s retail revenue requirement. In May 2024 the City Council approved the settlement.
In September 2024 the LPSC unanimously approved a jointly filed global stipulated settlement agreement between Entergy Louisiana and the LPSC staff whereby Entergy Louisiana agreed to $184 million of customer rate credits to be given over two years, including customer sharing of income tax benefits resulting from the 2016-2018 IRS audit. See Note 2 to the financial statements for further discussion of Entergy Louisiana agreement in principle and the subsequently filed global stipulated settlement agreement.
Included in the effect of the IRS audit on the results of operations was the measurement of deferred tax assets and liabilities influenced by the 2017 enactment of the Tax Cuts and Jobs Act income tax rate change discussed below. With the conclusion of the audit, there are no remaining federal unrecognized tax benefits affected by the rate differential which could impact income tax expense and the regulatory liability for income taxes in future periods.
State Income Tax Audits
As a result of income tax audit adjustments proposed by the Arkansas Department of Finance and Administration, an Entergy subsidiary in the non-utility operations business recorded a provision in third quarter 2022 for uncertain tax positions of approximately $21 million, which includes interest expense. In the third quarter 2024, Entergy and the Arkansas Department of Finance and Administration resolved the terms of the Arkansas
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Department of Finance and Administration’s outstanding tax assessments related to the examination of the 2014 through 2018 tax years. The agreement resulted in a payment of tax of approximately $8 million by Entergy. As a result of the income tax audit adjustments and the reversal of a provision for uncertain tax positions, including amounts previously recorded in the third quarter 2022, Entergy Arkansas recorded a net reduction in income tax expense of approximately $18 million, which was offset by approximately $9 million of income tax expense recorded by other Entergy subsidiaries, resulting in a net reduction in income tax expense for Entergy of $9 million.
Other Tax Matters
Tax Cuts and Jobs Act (TCJA)
The most significant effect of the TCJA for Entergy and the Registrant Subsidiaries was the change in the federal corporate income tax rate from 35% to 21%, effective January 1, 2018. Entergy had regulatory liability balances of $1.2 billion and $1.0 billion as of December 31, 2024 and December 31, 2023, respectively. These liabilities were primarily associated with the re-measurement of deferred tax assets and liabilities due to the income tax rate change, subsequent amortization of excess ADIT, and payments to customers since the enactment of the TCJA. In addition to the protected and unprotected excess ADIT amounts, the net regulatory liability for income taxes includes other regulatory assets and liabilities for income taxes mainly related to AFUDC, as described in Note 1 to the financial statements.
Entergy’s regulatory liability for income taxes includes a gross-up at the applicable tax rate to account for the effect of excess ADIT on the ratemaking formula. The regulatory liability for income taxes reflects (1) the reduction of the net deferred tax liability resulting in excess ADIT, and (2) the tax gross-up of excess ADIT. The Registrant Subsidiaries’ December 31, 2024 and December 31, 2023 balance sheets reflect net regulatory liabilities for income taxes as follows:
| | | | | | | | | | | |
| 2024 | | 2023 |
| (In Millions) |
| Entergy Arkansas | $418 | | | $392 | |
| Entergy Louisiana | $355 | | | $194 | |
| Entergy Mississippi | $181 | | | $189 | |
| Entergy New Orleans | $15 | | | $36 | |
| Entergy Texas | $94 | | | $115 | |
| System Energy | $105 | | | $107 | |
Excess ADIT is generally classified into two categories: (1) the portion that is subject to the normalization requirements of the TCJA, referred to as “protected”, and (2) the portion that is not subject to such normalization provisions, referred to as “unprotected”. See Note 2 to the financial statements for discussion of Entergy Louisiana’s $106 million reversal of a regulatory liability, primarily associated with the Hurricane Isaac securitization, recognized in 2017 as a result of the TCJA, recorded in fourth quarter 2023.
The majority of the remaining unamortized Excess ADIT as of December 31, 2024 is classified as protected. The TCJA mandates the normalization method of accounting for income taxes for excess ADIT associated with public utility property. The TCJA specifies the use of the average rate assumption method (ARAM) to determine of the timing of the return of excess ADIT associated with such property. Under ARAM, the excess ADIT is reduced over the remaining life of the asset. Remaining asset lives vary for each Registrant Subsidiary, but the average life of public utility property is typically 30 years or longer. Entergy will amortize the protected portion of the excess ADIT in compliance with the normalization requirements.
During the second quarter 2018, the Registrant Subsidiaries began returning unprotected excess accumulated deferred income taxes, associated with the effects of the TCJA, to their customers through rate riders
Entergy Corporation and Subsidiaries
Notes to Financial Statements
and other mechanisms approved by their respective regulatory authorities. Return of the unprotected excess accumulated deferred income taxes results in a reduction in the regulatory liability for income taxes and a corresponding reduction in income tax expense. This manner of regulatory accounting affects the effective tax rate for the period as compared to the statutory tax rate. The return of unprotected excess accumulated deferred income taxes was substantially completed by Entergy and the Registrant Subsidiaries during 2022.
Inflation Reduction Act of 2022
The Inflation Reduction Act of 2022, signed into law on August 16, 2022, significantly expanded federal tax incentives for clean energy production, including the extension of production tax credits to solar projects and certain qualified nuclear power facilities. Additionally, the Inflation Reduction Act of 2022 enacted a 1% excise tax on the buyback of public company stock and a new corporate alternative minimum tax. Entergy Arkansas has accrued approximately $5 million of solar production tax credits associated with the Walnut Bend Solar facility, the Driver Solar facility, and the West Memphis Solar facility in 2024. As the value of such credits is expected to be provided to customers, a regulatory liability has been recorded for all credits recognized in 2024.
Entergy Arkansas, Entergy Louisiana, and System Energy have the potential to generate zero-emission nuclear power production tax credits for electricity generated by their respective nuclear power facilities. Based on guidance provided by the U.S. Treasury and the IRS, the nuclear production tax credits will be calculated by multiplying the kWh of qualifying electricity by $0.003, with the value of the credits decreasing ratably, or phasing out, once the annual gross receipts from the sale of nuclear power exceed a certain threshold. If certain prevailing wage requirements are satisfied, the calculation of the credit, as described in the preceding sentence, is multiplied by a factor of five. Additional guidance is needed from the U.S. Treasury and/or the IRS to determine how the value of these credits will be calculated for power generated from nuclear facilities of rate-regulated utilities. Due to the uncertainty of value, if any, of credits Entergy Arkansas, Entergy Louisiana, or System Energy may receive, such credits have not been recognized for the nuclear power produced in 2024. Depending on the specifics of the expected additional guidance from the U.S. Treasury and/or the IRS, Entergy Arkansas, Entergy Louisiana, or System Energy may not recognize any production tax credits for their nuclear facilities, or they could recognize a significant amount each year, beginning for 2024. If the IRS does not issue any technical guidance before the due date of Entergy’s 2024 tax return, Entergy Arkansas, Entergy Louisiana, and System Energy will be required to reassess the determination of the availability of such credits based on any other additional information or regulatory requests. If credits are recognized in future periods, the value of such credits is expected to be provided to customers. As such, recognition of nuclear production tax credits is not expected to have a material effect on the results of operations of Entergy, Entergy Arkansas, Entergy Louisiana, or System Energy.
Tax Accounting Methods
Certain Entergy subsidiaries have elected to apply the mark-to-market method of accounting for income tax return purposes to wholesale power purchase agreements as appropriate under the Internal Revenue Code and U.S. Treasury Regulations. The mark-to-market tax gain or loss computed each year is based on an estimated fair market valuation which includes analyses of market prices and conditions.
In 2020, Entergy Texas elected mark-to-market income tax treatment for wholesale electric power purchase and sale agreements which resulted in a $2.5 billion deductible temporary difference.
Arkansas and Louisiana Corporate Income Tax Rate Changes
Since 2019, the State of Arkansas has enacted corporate income tax law changes that have phased in rate reductions from the former rate of 6.5% to the currently enacted rate of 4.3%. As a result of the rate reductions, Entergy Arkansas has recorded regulatory liabilities for income taxes of approximately $29 million, $26 million, and $15 million in 2024, 2023, and 2022, respectively, and a total of $32 million for years prior to 2022. The
Entergy Corporation and Subsidiaries
Notes to Financial Statements
regulatory liabilities include a tax gross-up related to the treatment of income taxes in the retail and wholesale ratemaking formulas and have been or are scheduled to be included in future rate mechanisms.
In November 2024, during the Louisiana Third Special Legislative Session of 2024, the Louisiana legislature enacted comprehensive tax reform measures that impact corporate income taxes through a reduction in rates to a flat 5.5% (from the current highest marginal rate of 7.5%), effective January 1, 2025. Accordingly, deferred tax assets and liabilities were adjusted, with associated regulatory assets and liabilities for income taxes, to reflect the new applicable state rate. As a result of the rate reduction, Entergy Louisiana and Entergy New Orleans recorded regulatory liabilities for income taxes of approximately $179 million and $9 million, respectively. The regulatory liabilities include a tax gross-up related to the treatment of income taxes in the retail and wholesale ratemaking formulas and are expected to be included in future rate mechanisms. In fourth quarter 2024, as a result of the net reduction in certain deferred tax assets and liabilities, Entergy Louisiana and Entergy New Orleans recorded an increase of income tax expense of approximately $16.3 million and $0.2 million, respectively, with an additional $12.1 million increase of income tax expense recorded by other Entergy subsidiaries.
Act 293 Securitizations
As described in Note 2 to the financial statements, Entergy Louisiana has implemented two separate securitization transactions authorized under Act 293 of the Louisiana Legislature’s Regular Session of 2021. The first transaction occurred in May of 2022 and the second occurred in March of 2023. Act 293 provides that the LURC contribute the net bond proceeds to a LURC-sponsored trust. Over the 15-year term of the Act 293 bonds, the respective storm trusts will make distributions to Entergy Louisiana, a beneficiary of the storm trusts, that will not be taxable to Entergy Louisiana. Additionally, Entergy Louisiana will not include the receipt of the system restoration charges in taxable income because the right to receive the system restoration charges has been granted directly to the LURC, and Entergy Louisiana only acts as an agent to collect those charges on behalf of the LURC.
Accordingly, the securitizations provided for a tax accounting permanent difference resulting in net reductions of income tax expense for Entergy Louisiana of approximately $133 million in March 2023 and $290 million in May 2022, both after taking into account a provision for uncertain tax positions. Entergy’s recognition of reduced income tax expense was offset by other tax changes resulting in a net reduction of income tax expense for Entergy of approximately $129 million in March 2023 and $283 million in May 2022, both after taking into account a provision for uncertain tax positions.
In recognition of its obligations described in LPSC ancillary orders issued as part of the securitization regulatory proceedings, Entergy Louisiana recorded regulatory liabilities of $103 million ($76 million net-of-tax) in first quarter 2023 and $224 million ($165 million net-of-tax) in second quarter 2022 to reflect its obligation to provide credits to its customers. See Note 2 to the financial statements for further discussion of the Entergy Louisiana March 2023 and May 2022 storm cost securitizations.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
NOTE 4. REVOLVING CREDIT FACILITIES, LINES OF CREDIT, AND SHORT-TERM BORROWINGS (Entergy Corporation, Entergy Arkansas, 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 billion and expires in June 2029. The facility includes fronting commitments for the issuance of letters of credit against $20 million of the total borrowing capacity of the credit facility. The commitment fee is currently 0.225% of the undrawn commitment amount. Commitment fees and interest rates on loans under the credit facility can fluctuate depending on the senior unsecured debt ratings of Entergy Corporation. The estimated interest rate for the year ended December 31, 2024 that would have been applied to outstanding borrowings under the facility was 5.96%. The following is a summary of the amounts outstanding and capacity available under the credit facility as of December 31, 2024:
| | | | | | | | | | | | | | | | | | | | |
| Capacity | | Borrowings | | Letters of Credit | | Capacity Available |
| (In Millions) |
| $3,000 | | $— | | $3 | | $2,997 |
Entergy Corporation’s credit facility includes a covenant requiring Entergy to maintain a consolidated debt ratio, as defined, 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 Registrant Subsidiaries (except Entergy New Orleans and System Energy) defaults on other indebtedness or is in bankruptcy or insolvency proceedings, an acceleration of the Entergy Corporation credit facility’s maturity date may occur.
Entergy Corporation has a commercial paper program with a Board-approved program limit of $2 billion. As of December 31, 2024, Entergy Corporation had $927.3 million of commercial paper outstanding. The weighted-average interest rate for the year ended December 31, 2024 was 5.52%.
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas each had credit facilities available as of December 31, 2024 as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Company | | Expiration Date | | Amount of Facility | | Interest Rate (a) | | Amount Drawn
as of
December 31, 2024 | | Letters of Credit Outstanding as of December 31, 2024 |
| Entergy Arkansas | | April 2026 | | $25 million (b) | | 6.31% | | — | | — |
| Entergy Arkansas | | June 2029 | | $300 million (c) | | 5.58% | | — | | — |
| Entergy Louisiana | | June 2029 | | $400 million (c) | | 5.71% | | — | | — |
| Entergy Mississippi | | June 2029 | | $300 million (c) | | 5.58% | | — | | — |
| Entergy New Orleans | | June 2027 | | $25 million (c) | | 6.08% | | — | | — |
| Entergy Texas | | June 2029 | | $300 million (c) | | 5.71% | | — | | $1.1 million |
(a)The interest rate is the estimated interest rate as of December 31, 2024 that would have been applied to outstanding borrowings under the facility.
(b)Borrowings under this Entergy Arkansas credit facility may be secured by a security interest in its accounts receivable at Entergy Arkansas’s option.
(c)The credit facility includes fronting commitments for the issuance of letters of credit against a portion of the borrowing capacity of the facility as follows: $5 million for Entergy Arkansas; $15 million for Entergy Louisiana; $5 million for Entergy Mississippi; $10 million for Entergy New Orleans; and $25 million for Entergy Texas.
The commitment fees on the credit facilities range from 0.075% to 0.375% of the undrawn commitment amount for Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy Texas, and of the entire facility amount for
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy New Orleans. Each of the credit facilities requires the Registrant Subsidiary borrower to maintain a debt ratio, as defined, of 65% or less of its total capitalization. Each Registrant Subsidiary is in compliance with this covenant.
In addition, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas each has an uncommitted standby letter of credit facility as a means to post collateral to support its obligations to MISO and for other purposes. The following is a summary of the uncommitted standby letter of credit facilities as of December 31, 2024:
| | | | | | | | | | | | | | | | | | | | |
| Company | | Amount of Uncommitted Facility | | Letter of Credit Fee | | Letters of Credit Issued as of
December 31, 2024
(a) (b) |
| Entergy Arkansas | | $25 million | | 0.78% | | $18.1 million |
| Entergy Louisiana | | $125 million | | 0.78% | | $46.2 million |
| Entergy Mississippi | | $65 million | | 0.78% | | $33.1 million |
| Entergy New Orleans | | $1 million | | 1.625% | | $0.5 million |
| Entergy Texas | | $150 million | | 1.250% | | $93.4 million |
(a)As of December 31, 2024, letters of credit posted with MISO covered financial transmission rights exposure of $0.5 million for Entergy Arkansas, $0.1 million for Entergy Louisiana, $0.8 million for Entergy Mississippi, $0.1 million for Entergy New Orleans, and $0.3 million for Entergy Texas. See Note 15 to the financial statements for discussion of financial transmission rights.
(b)As of December 31, 2024, the letters of credit issued for Entergy Mississippi include $31.8 million in MISO letters of credit and $1.3 million in non-MISO letters of credit outstanding under this facility.
The short-term borrowings of the Registrant Subsidiaries are limited to amounts authorized by the FERC. Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy have FERC-authorized short-term borrowing limits effective through January 2027. In addition to borrowings from commercial banks, these companies may also borrow from the Entergy system money pool and from other internal short-term borrowing arrangements. The money pool is an intercompany cash management program that makes possible intercompany borrowing and lending arrangements, and the money pool and the other internal borrowing arrangements are designed to reduce the Registrant Subsidiaries’ dependence on external short-term borrowings. Borrowings from internal and external short-term 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 December 31, 2024 (aggregating both internal and external short-term borrowings) for the Registrant Subsidiaries:
| | | | | | | | | | | |
| | Authorized | | Borrowings |
| | (In Millions) |
| Entergy Arkansas | $250 | | $15 |
| Entergy Louisiana | $450 | | $— |
| Entergy Mississippi | $200 | | $— |
| Entergy New Orleans | $150 | | $— |
| Entergy Texas | $200 | | $— |
| System Energy | $200 | | $— |
Vermont Yankee Credit Facility (Entergy Corporation)
In January 2019, Entergy Nuclear Vermont Yankee was transferred to NorthStar and its credit facility was assumed by Entergy Assets Management Operations, LLC (formerly Vermont Yankee Asset Retirement, LLC), Entergy Nuclear Vermont Yankee’s parent company that remains an Entergy subsidiary after the transfer. In
Entergy Corporation and Subsidiaries
Notes to Financial Statements
December 2024, Entergy repaid the total $139 million of cash borrowings outstanding under the facility, and the facility was subsequently terminated.
Variable Interest Entities (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, and System Energy)
See Note 17 to the financial statements for a discussion of the consolidation of the nuclear fuel company variable interest entities (VIEs). To finance the acquisition and ownership of nuclear fuel, the nuclear fuel company VIEs have credit facilities and three of the four VIEs also issue commercial paper, details of which follow as of December 31, 2024:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Company | | Expiration Date | | Amount of Facility | | Weighted-Average Interest Rate on Borrowings (a) | | Amount Outstanding as of December 31, 2024 |
| | | (Dollars in Millions) |
| Entergy Arkansas VIE | | June 2027 | | $80 | | 6.28% | | $22.5 |
| Entergy Louisiana River Bend VIE | | June 2027 | | $105 | | 6.33% | | $18.7 |
| Entergy Louisiana Waterford VIE | | June 2027 | | $105 | | 6.32% | | $18.9 |
| System Energy VIE | | June 2027 | | $120 | | 6.27% | | $72.7 |
(a)Includes letter of credit fees and bank fronting fees on commercial paper issuances by the nuclear fuel company VIEs for Entergy Arkansas, Entergy Louisiana, and System Energy. The nuclear fuel company VIE for Entergy Louisiana River Bend does not issue commercial paper, but borrows directly on its bank credit facility.
The commitment fees on the credit facilities are 0.100% of the undrawn commitment amount for the Entergy Arkansas, Entergy Louisiana, and System Energy VIEs. Each credit facility requires the respective lessee of nuclear fuel (Entergy Arkansas, Entergy Louisiana, or Entergy Corporation as guarantor for System Energy) to maintain a consolidated debt ratio, as defined, of 70% or less of its total capitalization. Each lessee is in compliance with this covenant.
The nuclear fuel company VIEs had notes payable that were included in debt on the respective balance sheets as of December 31, 2024 as follows:
| | | | | | | | | | | | | | |
| Company | | Description | | Amount |
| Entergy Arkansas VIE | | 1.84% Series N due July 2026 | | $90 million |
| Entergy Arkansas VIE | | 5.54% Series O due May 2029 | | $70 million |
| Entergy Louisiana River Bend VIE | | 2.51% Series V due June 2027 | | $70 million |
| Entergy Louisiana Waterford VIE | | 5.94% Series J due September 2026 | | $70 million |
| System Energy VIE | | 2.05% Series K due September 2027 | | $90 million |
In accordance with regulatory treatment, interest on the nuclear fuel company VIEs’ credit facilities, commercial paper, and long-term notes payable is reported in fuel expense.
As of December 31, 2024, Entergy Arkansas, Entergy Louisiana, and System Energy each has obtained financing authorization from the FERC that extends through January 2027 for issuances by its nuclear fuel company VIEs.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
NOTE 5. LONG - TERM DEBT (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Long-term debt for Entergy as of December 31, 2024 and 2023 consisted of:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Type of Debt and Maturity | | Weighted-Average Interest Rate December 31, 2024 | | Interest Rate Ranges at December 31, | | Outstanding at
December 31, |
| 2024 | | 2023 | | 2024 | | 2023 |
| | | | | | | | | (In Thousands) |
| Mortgage Bonds | | | | | | | | | | |
| 2024-2028 | | 3.54% | | 1.50% - 6.00% | | 0.95% - 6.00% | | $4,268,000 | | | $6,143,000 | |
| 2029-2033 | | 3.62% | | 1.60% - 6.41% | | 1.60% - 5.30% | | 4,250,000 | | | 4,150,000 | |
| 2034-2044 | | 4.66% | | 3.10% - 6.54% | | 3.10% - 5.00% | | 3,457,000 | | | 1,507,000 | |
| 2045-2066 | | 4.48% | | 2.65% - 5.85% | | 2.65% - 5.80% | | 9,685,000 | | | 7,935,000 | |
| Governmental Bonds (a) | | | | | | | | | | |
| 2024-2044 | | 2.43% | | 2.0% - 2.5% | | 2.0% - 2.5% | | 282,375 | | | 282,375 | |
| Securitization Bonds | | | | | | | | | | |
| 2024-2036 | | 3.64% | | 3.051% - 3.697% | | 2.67% - 3.697% | | 242,424 | | | 267,003 | |
| Variable Interest Entities Notes Payable (Note 4) | | | | | | | | | | |
| 2024-2029 | | 3.67% | | 1.84% - 5.94% | | 1.84% - 5.94% | | 390,000 | | | 320,000 | |
| Entergy Corporation Senior Notes | | | | | | | | | | |
| due September 2025 | | n/a | | 0.9% | | 0.9% | | 800,000 | | | 800,000 | |
| due September 2026 | | n/a | | 2.95% | | 2.95% | | 750,000 | | | 750,000 | |
| due June 2028 | | n/a | | 1.9% | | 1.9% | | 650,000 | | | 650,000 | |
| due June 2030 | | n/a | | 2.80% | | 2.80% | | 600,000 | | | 600,000 | |
| due June 2031 | | n/a | | 2.40% | | 2.40% | | 650,000 | | | 650,000 | |
| due June 2050 | | n/a | | 3.75% | | 3.75% | | 600,000 | | | 600,000 | |
| Entergy Corporation Junior Subordinated Debentures due December 2054 (b) | | n/a | | 7.125% | | — | | 1,200,000 | | | — | |
| Entergy New Orleans Unsecured Term Loan due June 2024 | | n/a | | — | | 6.25% | | — | | | 85,000 | |
| Vermont Yankee Credit Facility (Note 4) | | n/a | | — | | 6.61% | | — | | | 139,000 | |
| Entergy Arkansas VIE Credit Facility (Note 4) | | n/a | | 6.28% | | 6.10% | | 22,500 | | | 70,200 | |
| Entergy Louisiana River Bend VIE Credit Facility (Note 4) | | n/a | | 6.33% | | 6.17% | | 18,700 | | | 46,600 | |
| Entergy Louisiana Waterford VIE Credit Facility (Note 4) | | n/a | | 6.32% | | 6.07% | | 18,900 | | | 29,500 | |
| System Energy VIE Credit Facility (Note 4) | | n/a | | 6.27% | | 5.91% | | 72,700 | | | 21,500 | |
| Long-term DOE Obligation (c) | | — | | — | | — | | 216,016 | | | 205,151 | |
| Grand Gulf Sale-Leaseback Obligation | | n/a | | — | | — | | 34,203 | | | 34,260 | |
| Unamortized Premium and Discount - Net | | | | | | | | (17,575) | | | (11,638) | |
| Unamortized Debt Issuance Costs | | | | | | | | (204,010) | | | (171,475) | |
| Other | | | | | | | | 5,362 | | | 5,420 | |
| Total Long-Term Debt | | | | | | | | 27,991,595 | | | 25,107,896 | |
| Less Amount Due Within One Year | | | | | | | | 1,378,090 | | | 2,099,057 | |
| Long-Term Debt Excluding Amount Due Within One Year | | | | | | | | $26,613,505 | | | $23,008,839 | |
| Fair Value of Long-Term Debt | | | | | | | | $25,181,802 | | | $22,489,174 | |
(a)Consists of pollution control revenue bonds and environmental revenue bonds, some of which are secured by collateral mortgage bonds.
(b)Entergy Corporation will pay interest at an annual rate of 7.125% through November 2029. Commencing on December 1, 2029, the annual rate will equal the five-year treasury rate as of the most recent reset interest determination date plus 2.67%, which interest resets will occur on each five-year anniversary of December 1 after December 1, 2029.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
(c)Pursuant to the Nuclear Waste Policy Act of 1982, Entergy’s nuclear owner/licensee subsidiaries have contracts with the DOE for spent nuclear fuel disposal service. The contracts include a one-time fee for generation prior to April 7, 1983. Entergy Arkansas is the only Entergy company that generated electric power with nuclear fuel prior to that date and includes the one-time fee, plus accrued interest, in long-term debt.
The annual long-term debt maturities (excluding lease obligations and long-term DOE obligations) for debt outstanding as of December 31, 2024, for the next five years are as follows:
| | | | | |
| | Amount |
| | (In Thousands) |
| 2025 | $1,379,140 | |
| 2026 | $2,375,720 | |
| 2027 | $1,043,520 | |
| 2028 | $2,177,293 | |
| 2029 | $405,720 | |
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy have obtained long-term financing authorizations from the FERC that extend through January 2027. Entergy New Orleans has obtained long-term financing authorization from the City Council that extends through December 2025. Entergy Arkansas has also obtained first mortgage bond/secured financing authorization from the APSC that extends through December 2025.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Long-term debt for the Registrant Subsidiaries as of December 31, 2024 and 2023 consisted of:
| | | | | | | | | | | | | | |
| | | 2024 | | 2023 |
| | | (In Thousands) |
| Entergy Arkansas | | | | |
| Mortgage Bonds: | | | | |
| 3.70% Series due June 2024 | | $— | | | $375,000 | |
| 3.5% Series due April 2026 | | 600,000 | | | 600,000 | |
| 4.00% Series due June 2028 | | 350,000 | | | 350,000 | |
| 5.15% Series due January 2033 | | 425,000 | | | 425,000 | |
| 5.30% Series due September 2033 | | 300,000 | | | 300,000 | |
| 5.45% Series due June 2034 | | 400,000 | | | — | |
| 4.95% Series due December 2044 | | 250,000 | | | 250,000 | |
| 4.20% Series due April 2049 | | 550,000 | | | 550,000 | |
| 2.65% Series due June 2051 | | 675,000 | | | 675,000 | |
| 3.35% Series due June 2052 | | 400,000 | | | 400,000 | |
| 5.75% Series due June 2054 | | 400,000 | | | — | |
| 4.875% Series due September 2066 | | 410,000 | | | 410,000 | |
| Total mortgage bonds | | 4,760,000 | | | 4,335,000 | |
| Variable Interest Entity Notes Payable and Credit Facility (Note 4): | | | | |
| 1.84% Series N due July 2026 | | 90,000 | | | 90,000 | |
| 5.54% Series O due May 2029 | | 70,000 | | | — | |
| Credit Facility due June 2027, weighted-average rate 6.28% | | 22,500 | | | 70,200 | |
| Total variable interest entity notes payable and credit facility | | 182,500 | | | 160,200 | |
| Other: | | | | |
| Long-term DOE Obligation (b) | | 216,016 | | | 205,151 | |
| Unamortized Premium and Discount – Net | | 3,620 | | | 7,508 | |
| Unamortized Debt Issuance Costs | | (41,552) | | | (36,711) | |
| Other | | 1,910 | | | 1,932 | |
| Total Long-Term Debt | | 5,122,494 | | | 4,673,080 | |
| Less Amount Due Within One Year | | — | | | 375,000 | |
| Long-Term Debt Excluding Amount Due Within One Year | | $5,122,494 | | | $4,298,080 | |
| Fair Value of Long-Term Debt | | $4,546,643 | | | $4,166,941 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| | | | | | | | | | | | | | |
| | | 2024 | | 2023 |
| | | (In Thousands) |
| Entergy Louisiana | | | | |
| Mortgage Bonds: | | | | |
| 0.95% Series due October 2024 | | $— | | | $1,000,000 | |
| 5.40% Series due November 2024 | | — | | | 400,000 | |
| 3.78% Series due April 2025 | | 110,000 | | | 110,000 | |
| 3.78% Series due April 2025 | | 190,000 | | | 190,000 | |
| 4.44% Series due January 2026 | | 250,000 | | | 250,000 | |
| 2.40% Series due October 2026 | | 400,000 | | | 400,000 | |
| 3.12% Series due September 2027 | | 450,000 | | | 450,000 | |
| 3.25% Series due April 2028 | | 425,000 | | | 425,000 | |
| 1.60% Series due December 2030 | | 300,000 | | | 300,000 | |
| 3.05% Series due June 2031 | | 325,000 | | | 325,000 | |
| 2.35% Series due June 2032 | | 500,000 | | | 500,000 | |
| 4.00% Series due March 2033 | | 750,000 | | | 750,000 | |
| 5.35% Series due March 2034 | | 500,000 | | | — | |
| 5.15% Series due September 2034 | | 700,000 | | | — | |
| 3.10% Series due June 2041 | | 500,000 | | | 500,000 | |
| 5% Series due July 2044 | | 170,000 | | | 170,000 | |
| 4.95% Series due January 2045 | | 450,000 | | | 450,000 | |
| 4.20% Series due September 2048 | | 900,000 | | | 900,000 | |
| 4.20% Series due April 2050 | | 525,000 | | | 525,000 | |
| 2.90% Series due March 2051 | | 650,000 | | | 650,000 | |
| 4.75% Series due September 2052 | | 500,000 | | | 500,000 | |
| 5.70% Series due March 2054 | | 700,000 | | | — | |
| 4.875% Series due September 2066 | | 270,000 | | | 270,000 | |
| Total mortgage bonds | | 9,565,000 | | | 9,065,000 | |
| Governmental Bonds (a): | | | | |
| 2.00% Series due June 2030, Louisiana Local Government Environmental Facilities and Community Development Authority (c) | | 16,200 | | | 16,200 | |
| 2.50% Series due April 2036, Louisiana Local Government Environmental Facilities and Community Development Authority (c) | | 182,480 | | | 182,480 | |
| Total governmental bonds | | 198,680 | | | 198,680 | |
| Variable Interest Entity Notes Payable and Credit Facilities (Note 4): | | | | |
| 5.94% Series J due September 2026 | | 70,000 | | | 70,000 | |
| 2.51% Series V due June 2027 | | 70,000 | | | 70,000 | |
| Credit Facility due June 2027, weighted-average rate 6.33% | | 18,700 | | | 46,600 | |
| Credit Facility due June 2027, weighted-average rate 6.32% | | 18,900 | | | 29,500 | |
| Total variable interest entity notes payable and credit facilities | | 177,600 | | | 216,100 | |
| Other: | | | | |
| Unamortized Premium and Discount - Net | | (9,820) | | | (6,478) | |
| Unamortized Debt Issuance Costs | | (68,459) | | | (56,101) | |
| Other | | 3,452 | | | 3,488 | |
| Total Long-Term Debt | | 9,866,453 | | | 9,420,689 | |
| Less Amount Due Within One Year | | 300,000 | | | 1,400,000 | |
| Long-Term Debt Excluding Amount Due Within One Year | | $9,566,453 | | | $8,020,689 | |
| Fair Value of Long-Term Debt | | $8,751,266 | | | $8,414,512 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| | | | | | | | | | | | | | |
| | | 2024 | | 2023 |
| | | (In Thousands) |
| Entergy Mississippi | | | | |
| Mortgage Bonds: | | | | |
| 3.75% Series due July 2024 | | $— | | | $100,000 | |
| 3.25% Series due December 2027 | | 150,000 | | | 150,000 | |
| 2.85% Series due June 2028 | | 375,000 | | | 375,000 | |
| 5.0% Series due September 2033 | | 300,000 | | | 300,000 | |
| 2.55% Series due December 2033 | | 200,000 | | | 200,000 | |
| 4.52% Series due December 2038 | | 55,000 | | | 55,000 | |
| 3.85% Series due June 2049 | | 435,000 | | | 435,000 | |
| 3.50% Series due June 2051 | | 370,000 | | | 370,000 | |
| 5.85% Series due June 2054 | | 300,000 | | | — | |
| 4.90% Series due October 2066 | | 260,000 | | | 260,000 | |
| Total mortgage bonds | | 2,445,000 | | | 2,245,000 | |
| Other: | | | | |
| Unamortized Premium and Discount – Net | | 5,283 | | | 5,546 | |
| Unamortized Debt Issuance Costs | | (23,210) | | | (21,036) | |
| Total Long-Term Debt | | 2,427,073 | | | 2,229,510 | |
| Less Amount Due Within One Year | | — | | | 100,000 | |
| Long-Term Debt Excluding Amount Due Within One Year | | $2,427,073 | | | $2,129,510 | |
| Fair Value of Long-Term Debt | | $2,116,246 | | | $1,969,334 | |
| | | | | | | | | | | | | | |
| | | 2024 | | 2023 |
| | | (In Thousands) |
| Entergy New Orleans | | | | |
| Mortgage Bonds: | | | | |
| 3.00% Series due March 2025 | | $78,000 | | | $78,000 | |
| 4% Series due June 2026 | | 85,000 | | | 85,000 | |
| 6.25% Series due June 2029 | | 35,000 | | | — | |
| 6.41% Series due June 2031 | | 65,000 | | | — | |
| 4.19% Series due November 2031 | | 90,000 | | | 90,000 | |
| 4.51% Series due September 2033 | | 60,000 | | | 60,000 | |
| 6.54% Series due June 2034 | | 50,000 | | | — | |
| 4.51% Series due November 2036 | | 70,000 | | | 70,000 | |
| 3.75% Series due March 2040 | | 62,000 | | | 62,000 | |
| 5.0% Series due December 2052 | | 30,000 | | | 30,000 | |
| 5.50% Series due April 2066 | | 110,000 | | | 110,000 | |
| Total mortgage bonds | | 735,000 | | | 585,000 | |
| Securitization Bonds: | | | | |
| 2.67% Series Senior Secured due June 2027 | | — | | | 6,245 | |
| Total securitization bonds | | — | | | 6,245 | |
| Other: | | | | |
| 6.25% Unsecured Term Loan due June 2024 | | — | | | 85,000 | |
| Payable to associated company due November 2035 | | 7,004 | | | 8,279 | |
| Unamortized Premium and Discount – Net | | — | | | (6) | |
| Unamortized Debt Issuance Costs | | (6,537) | | | (7,068) | |
| Total Long-Term Debt | | 735,467 | | | 677,450 | |
| Less Amount Due Within One Year | | 79,140 | | | 86,275 | |
| Long-Term Debt Excluding Amount Due Within One Year | | $656,327 | | | $591,175 | |
| Fair Value of Long-Term Debt | | $697,466 | | | $602,716 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| | | | | | | | | | | | | | |
| | | 2024 | | 2023 |
| | | (In Thousands) |
| Entergy Texas | | | | |
| Mortgage Bonds: | | | | |
| 1.50% Series due September 2026 | | $130,000 | | | $130,000 | |
| 3.45% Series due December 2027 | | 150,000 | | | 150,000 | |
| 4.0% Series due March 2029 | | 300,000 | | | 300,000 | |
| 1.75% Series due March 2031 | | 600,000 | | | 600,000 | |
| 4.50% Series due March 2039 | | 400,000 | | | 400,000 | |
| 5.15% Series due June 2045 | | 250,000 | | | 250,000 | |
| 3.55% Series due September 2049 | | 475,000 | | | 475,000 | |
| 5.00% Series due September 2052 | | 325,000 | | | 325,000 | |
| 5.80% Series due September 2053 | | 350,000 | | | 350,000 | |
| 5.55% Series due September 2054 | | 350,000 | | | — | |
| Total mortgage bonds | | 3,330,000 | | | 2,980,000 | |
| Securitization Bonds: | | | | |
| 3.051% Series Senior Secured, Series A Tranche A-1 due December 2028 | | 51,574 | | | 69,908 | |
| 3.697% Series Senior Secured, Series A Tranche A-2 due December 2036 | | 190,850 | | | 190,850 | |
| Total securitization bonds | | 242,424 | | | 260,758 | |
| Other: | | | | |
| Unamortized Premium and Discount - Net | | 7,624 | | | 10,199 | |
| Unamortized Debt Issuance Costs | | (27,605) | | | (25,865) | |
| Total Long-Term Debt | | 3,552,443 | | | 3,225,092 | |
| Less Amount Due Within One Year | | — | | | — | |
| Long-Term Debt Excluding Amount Due Within One Year | | $3,552,443 | | | $3,225,092 | |
| Fair Value of Long-Term Debt | | $3,176,230 | | | $2,936,130 | |
| | | | | | | | | | | | | | |
| | | 2024 | | 2023 |
| | | (In Thousands) |
| System Energy | | | | |
| Mortgage Bonds: | | | | |
| 2.14% Series due December 2025 | | $200,000 | | | $200,000 | |
| 6.00% Series due April 2028 | | 325,000 | | | 325,000 | |
| 5.30% Series due December 2034 | | 300,000 | | | — | |
| Total mortgage bonds | | 825,000 | | | 525,000 | |
| Governmental Bonds (a): | | | | |
| 2.375% Series due June 2044, Mississippi Business Finance Corp. (c) | | 83,695 | | | 83,695 | |
| Total governmental bonds | | 83,695 | | | 83,695 | |
| Variable Interest Entity Notes Payable and Credit Facility (Note 4): | | | | |
| 2.05% Series K due September 2027 | | 90,000 | | | 90,000 | |
| Credit Facility due June 2027, weighted-average rate 6.27% | | 72,700 | | | 21,500 | |
| Total variable interest entity notes payable and credit facility | | 162,700 | | | 111,500 | |
| Other: | | | | |
| Grand Gulf Sale-Leaseback Obligation | | 34,203 | | | 34,260 | |
| Unamortized Premium and Discount – Net | | (8,698) | | | (10,451) | |
| Unamortized Debt Issuance Costs | | (7,164) | | | (5,545) | |
| Total Long-Term Debt | | 1,089,736 | | | 738,459 | |
| Less Amount Due Within One Year | | 200,090 | | | 57 | |
| Long-Term Debt Excluding Amount Due Within One Year | | $889,646 | | | $738,402 | |
| Fair Value of Long-Term Debt | | $1,063,946 | | | $696,168 | |
(a)Consists of pollution control revenue bonds.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
(b)Pursuant to the Nuclear Waste Policy Act of 1982, Entergy’s nuclear owner/licensee subsidiaries have contracts with the DOE for spent nuclear fuel disposal service. The contracts include a one-time fee for generation prior to April 7, 1983. Entergy Arkansas is the only Entergy company that generated electric power with nuclear fuel prior to that date and includes the one-time fee, plus accrued interest, in long-term debt.
(c)The debt is secured by a series of collateral mortgage bonds.
The annual long-term debt maturities (excluding lease obligations and long-term DOE obligations) for debt outstanding as of December 31, 2024, for the next five years are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| (In Thousands) |
| 2025 | $— | | | $300,000 | | | $— | | | $79,140 | | | $— | | | $200,000 | |
| 2026 | $690,000 | | | $720,000 | | | $— | | | $85,720 | | | $130,000 | | | $— | |
| 2027 | $22,500 | | | $557,600 | | | $150,000 | | | $720 | | | $150,000 | | | $162,700 | |
| 2028 | $350,000 | | | $425,000 | | | $375,000 | | | $719 | | | $51,574 | | | $325,000 | |
| 2029 | $70,000 | | | $— | | | $— | | | $35,720 | | | $300,000 | | | $— | |
Entergy Louisiana Debt Issuance
In January 2025, Entergy Louisiana issued $750 million of 5.80% Series mortgage bonds due March 2055. Entergy Louisiana expects to use the proceeds, together with other funds, to repay on or prior to maturity its $190 million of 3.78% Series mortgage bonds due April 2025, to repay on or prior to maturity its $110 million of 3.78% Series mortgage bonds due April 2025, for capital expenditures, and for general corporate purposes.
Securitization Bonds
Entergy New Orleans Securitization Bonds - Hurricane Isaac
In May 2015 the City Council issued a financing order authorizing the issuance of securitization bonds to recover Entergy New Orleans’s Hurricane Isaac storm restoration costs of $31.8 million, including carrying costs, the costs of funding and replenishing the storm recovery reserve in the amount of $63.9 million, and approximately $3 million of up-front financing costs associated with the securitization. In July 2015, Entergy New Orleans Storm Recovery Funding I, L.L.C., a company wholly owned and consolidated by Entergy New Orleans, issued $98.7 million of storm cost recovery bonds. The bonds have a coupon of 2.67%. Although the principal amount was not due until June 2027, Entergy New Orleans Storm Recovery Funding made a principal payment on the bonds in the amount of $6.2 million in 2024, after which the bonds were fully repaid.
Entergy Texas Securitization Bonds - Hurricane Ike and Hurricane Gustav
In September 2009 the PUCT authorized the issuance of securitization bonds to recover $566.4 million of Entergy Texas’s Hurricane Ike and Hurricane Gustav restoration costs, plus carrying costs and transaction costs, offset by insurance proceeds. In November 2009, Entergy Texas Restoration Funding, LLC (Entergy Texas Restoration Funding), a company wholly-owned and consolidated by Entergy Texas, issued $545.9 million of senior secured transition bonds (securitization bonds). Although the principal amount was not due until November 2023, Entergy Texas Restoration Funding made principal payments on the bonds in the amount of $54.3 million in 2022, after which the bonds were fully repaid.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy Texas Securitization Bonds - Hurricane Laura, Hurricane Delta, and Winter Storm Uri
In January 2022 the PUCT authorized the issuance of securitization bonds to recover $242.9 million of Entergy Texas’s Hurricane Laura, Hurricane Delta, and Winter Storm Uri restoration costs, plus carrying costs, plus approximately $13.3 million relating to a system restoration regulatory asset related to Hurricane Harvey, plus up-front qualified costs. In April 2022, Entergy Texas Restoration Funding II, LLC, a company wholly-owned and consolidated by Entergy Texas, issued $290.85 million of senior secured system restoration bonds (securitization bonds), as follows:
| | | | | |
| Amount |
| (In Thousands) |
| Senior Secured System Restoration Bonds: | |
| Tranche A-1 (3.051%) due December 2028 | $100,000 | |
| Tranche A-2 (3.697%) due December 2036 | 190,850 | |
| Total senior secured system restoration bonds | $290,850 | |
Although the principal amount of each tranche is not due until the dates given above, Entergy Texas Restoration Funding II expects to make principal payments on the securitization bonds over the next three years in the amounts of $18.8 million for 2025, $19.4 million for 2026, and $13.4 million for 2027 for Tranche A-1, after which Tranche A-1 will be fully repaid. Entergy Texas Restoration Funding II expects to begin principal payments for Tranche A-2 in 2027 with payments of $6.6 million in 2027, $20.5 million in 2028, and $21.2 million in 2029.
With the proceeds, Entergy Texas Restoration Funding II purchased from Entergy Texas the transition property, which is the right to recover from customers through a system restoration charge amounts sufficient to service the securitization bonds. Entergy Texas expects to use the proceeds to reduce its outstanding debt. The creditors of Entergy Texas do not have recourse to the assets or revenues of Entergy Texas Restoration Funding II, including the transition property, and the creditors of Entergy Texas Restoration Funding II do not have recourse to the assets or revenues of Entergy Texas. Entergy Texas has no payment obligations to Entergy Texas Restoration Funding II except to remit system restoration charge collections.
Grand Gulf Sale-Leaseback Transactions
In 1988, in two separate but substantially identical transactions, System Energy sold and leased back undivided ownership interests in Grand Gulf for the aggregate sum of $500 million. The initial term of the leases expired in July 2015. System Energy renewed the leases in December 2013 for fair market value with renewal terms expiring in July 2036. At the end of the new lease renewal terms, System Energy has the option to repurchase the leased interests in Grand Gulf or renew the leases at fair market value. In the event that System Energy does not renew or purchase the interests, System Energy would surrender such interests and their associated entitlement of Grand Gulf’s capacity and energy.
System Energy is required to report the sale-leaseback as a financing transaction in its financial statements. As such, it has recognized debt for the lease obligation and retained the portion of the plant subject to the sale-leaseback on its balance sheet. For financial reporting purposes, System Energy has recognized interest expense on the debt balance and depreciation on the applicable plant balance. The lease payments are recognized as principal and interest payments on the debt balance.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
As of December 31, 2024, System Energy, in connection with the Grand Gulf sale and leaseback transactions, had future minimum lease payments that are recorded as long-term debt, as follows, which reflects the effect of the December 2013 renewal:
| | | | | |
| | Amount |
| | (In Thousands) |
| 2025 | $17,188 | |
| 2026 | 17,188 | |
| 2027 | 17,188 | |
| 2028 | 17,188 | |
| 2029 | 17,188 | |
| Years thereafter | 120,312 | |
| Total | 206,252 | |
| Less: Amount representing interest | 172,049 | |
| Present value of net minimum lease payments | $34,203 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
NOTE 6. PREFERRED EQUITY AND NONCONTROLLING INTERESTS (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy Texas)
The number of shares and units authorized and outstanding and dollar value of preferred stock, preferred membership interests, and noncontrolling interests for Entergy Corporation subsidiaries as of December 31, 2024 and 2023 are presented below.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Shares/Units
Authorized | | Shares/Units
Outstanding | | | | |
| | | 2024 | | 2023 | | 2024 | | 2023 | | 2024 | | 2023 |
| | | | | | | | (Dollars in Thousands) |
| Preferred stock or preferred membership interests without sinking fund presented between liabilities and equity: | | | | | | | | | | | | |
| Entergy Utility Holding Company, LLC, 7.5% Series (a) | | 110,000 | | | 110,000 | | | 110,000 | | | 110,000 | | | $107,425 | | | $107,425 | |
| Entergy Utility Holding Company, LLC, 6.25% Series (b) | | 15,000 | | | 15,000 | | | 15,000 | | | 15,000 | | | 14,366 | | | 14,366 | |
| Entergy Utility Holding Company, LLC, 6.75% Series (c) | | 75,000 | | | 75,000 | | | 75,000 | | | 75,000 | | | 73,370 | | | 73,370 | |
| Entergy Finance Holding, Inc. 8.75% (d) | | 250,000 | | | 250,000 | | | 250,000 | | | 250,000 | | | 24,249 | | | 24,249 | |
| Total preferred stock or preferred membership interests without sinking fund presented between liabilities and equity | | 450,000 | | | 450,000 | | | 450,000 | | | 450,000 | | | 219,410 | | | 219,410 | |
| | | | | | | | | | | | |
| Preferred stock without sinking fund and noncontrolling interests presented as equity: | | | | | | | | | | | | |
| Entergy Texas, 5.375% Series | | 1,400,000 | | | 1,400,000 | | | 1,400,000 | | | 1,400,000 | | | 35,000 | | | 35,000 | |
| Entergy Texas, 5.10% Series (e) | | 150,000 | | | 150,000 | | | — | | | — | | | — | | | — | |
| Entergy Arkansas Noncontrolling Interest | | — | | | — | | | — | | | — | | | 15,168 | | | 21,599 | |
| Entergy Louisiana Noncontrolling Interests | | — | | | — | | | — | | | — | | | 42,706 | | | 45,107 | |
| Entergy Mississippi Noncontrolling Interest | | — | | | — | | | — | | | — | | | 8,202 | | | 18,753 | |
| Total preferred stock without sinking fund and noncontrolling interests presented as equity | | 1,550,000 | | | 1,550,000 | | | 1,400,000 | | | 1,400,000 | | | 101,076 | | | 120,459 | |
| | | | | | | | | | | | |
| Total subsidiaries’ preferred stock or preferred membership interests without sinking fund and noncontrolling interests | | 2,000,000 | | | 2,000,000 | | | 1,850,000 | | | 1,850,000 | | | $320,486 | | | $339,869 | |
(a)In October 2015, Entergy Utility Holding Company, LLC issued 110,000 units of $1,000 liquidation value 7.5% Series A Preferred Membership Interests, all of which are outstanding as of December 31, 2024. The distributions are cumulative and payable quarterly. These units are redeemable on or after January 1, 2036, at Entergy Utility Holding Company, LLC’s option, at the fixed redemption price of $1,000 per unit. Dollar amount outstanding is net of $2,575 thousand of preferred stock issuance costs.
(b)In November 2017, Entergy Utility Holding Company, LLC issued 15,000 units of $1,000 liquidation value 6.25% Series B Preferred Membership Interests, all of which are outstanding as of December 31, 2024. The distributions are cumulative and payable quarterly. These units are redeemable on or after February 28, 2038, at Entergy Utility Holding Company, LLC’s option, at the fixed redemption price of $1,000 per unit. Dollar amount outstanding is net of $634 thousand of preferred stock issuance costs.
(c)In November 2018, Entergy Utility Holding Company, LLC issued 75,000 units of $1,000 liquidation value 6.75% Series C Preferred Membership Interests, all of which are outstanding as of December 31, 2024. The distributions are cumulative and payable quarterly. These units are redeemable on or after February 28,
Entergy Corporation and Subsidiaries
Notes to Financial Statements
2039, at Entergy Utility Holding Company, LLC’s option, at the fixed redemption price of $1,000 per unit. Dollar amount outstanding is net of $1,630 thousand of preferred stock issuance costs.
(d)In December 2013, Entergy Finance Holding, Inc. issued 250,000 shares of $100 par value 8.75% Series Preferred Stock, all of which are outstanding as of December 31, 2024. The dividends are cumulative and payable quarterly. The preferred stock is redeemable on or after December 16, 2023, at Entergy Finance Holding, Inc.’s option, at the fixed redemption price of $100 per share. Dollar amount outstanding is net of $751 thousand of preferred stock issuance costs.
(e)Currently, all shares are held by Entergy Corporation.
The number of shares authorized and outstanding and dollar value of preferred stock for Entergy Texas as of December 31, 2024 and 2023 are presented below.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Shares
Authorized
and Outstanding | | | | Call Price per
Share as of
December 31, |
| | | 2024 | | 2023 | | 2024 | | 2023 | | 2024 |
| Entergy Texas Preferred Stock | | | | | | (Dollars in Thousands) | | |
| Without sinking fund: | | | | | | | | | | |
| Cumulative, $25 par value: | | | | | | | | | | |
| 5.375% Series (a) | | 1,400,000 | | | 1,400,000 | | | $35,000 | | | $35,000 | | | $— | |
| 5.10% Series (b) | | 150,000 | | | 150,000 | | | 3,750 | | | 3,750 | | | $25.50 | |
| Total without sinking fund | | 1,550,000 | | | 1,550,000 | | | $38,750 | | | $38,750 | | | |
(a)In September 2019, Entergy Texas issued $35 million of 5.375% Series A Preferred Stock, a total of 1,400,000 shares with a liquidation value of $25 per share, all of which are outstanding as of December 31, 2024. The dividends are cumulative and payable quarterly. The preferred stock is redeemable on or after October 15, 2024 at Entergy Texas’s option, at a fixed redemption price of $25 per share.
(b)In November 2021, Entergy Texas issued $3.75 million of 5.10% Series B Preferred Stock, a total of 150,000 shares with a liquidation value of $25 per share, all of which are outstanding and held by Entergy Corporation as of December 31, 2024. The dividends are cumulative and payable quarterly. The preferred stock is redeemable at Entergy Texas’s option at a fixed redemption price of $25.50 per share prior to November 1, 2026 and at a fixed redemption price of $25 per share on or after November 1, 2026.
Dividends and distributions paid on all of Entergy Corporation’s subsidiaries’ preferred stock and membership interests series may be eligible for the dividends received deduction.
The dollar value of noncontrolling interest for Entergy Arkansas as of December 31, 2024 and 2023 is presented below.
| | | | | | | | | | | |
| 2024 | | 2023 |
| (In Thousands) |
| Entergy Arkansas Noncontrolling Interest | | | |
| AR Searcy Partnership, LLC (a) | $15,168 | | | $21,599 | |
| Total Noncontrolling Interest | $15,168 | | | $21,599 | |
(a)AR Searcy Partnership, LLC is a tax equity partnership between Entergy Arkansas and a tax equity investor which was formed to acquire and own the Searcy Solar facility. Entergy Arkansas, as the managing member, consolidates AR Searcy Partnership, LLC and the tax equity investor’s interest is presented as noncontrolling interest in the consolidated financial statements for Entergy Arkansas and Entergy. Entergy Arkansas uses the HLBV method of accounting for income or loss allocation to the tax equity investor’s
Entergy Corporation and Subsidiaries
Notes to Financial Statements
noncontrolling interest. See Note 1 to the financial statements for further discussion on the presentation of the tax equity investor’s noncontrolling interest and the HLBV method of accounting.
The dollar value of noncontrolling interests for Entergy Louisiana as of December 31, 2024 and 2023 are presented below.
| | | | | | | | | | | |
| 2024 | | 2023 |
| (In Thousands) |
| Entergy Louisiana Noncontrolling Interests | | | |
| Restoration Law Trust I (a) | $28,826 | | | $30,488 | |
| Restoration Law Trust II (b) | 13,880 | | | 14,619 | |
| Total Noncontrolling Interests | $42,706 | | | $45,107 | |
(a)Restoration Law Trust I (the storm trust I) was established in 2022 as part of the Act 293 securitization of Entergy Louisiana’s Hurricane Laura, Hurricane Delta, Hurricane Zeta, and Winter Storm Uri restoration costs, as well as to establish a storm reserve to fund a portion of Hurricane Ida storm restoration costs. The storm trust I holds preferred membership interests issued by Entergy Finance Company, and Entergy Finance Company is required to make annual distributions (dividends) on the preferred membership interests. These annual dividends paid on the Entergy Finance Company preferred membership interests are distributed 1% to the LURC and 99% to Entergy Louisiana. Entergy Louisiana, as the primary beneficiary, consolidates the storm trust I and the LURC’s 1% beneficial interest is presented as noncontrolling interest in the consolidated financial statements for Entergy Louisiana and Entergy. See Note 2 to the financial statements for a discussion of the Entergy Louisiana May 2022 storm cost securitization.
(b)Restoration Law Trust II (the storm trust II) was established in 2023 as part of the Act 293 securitization of Entergy Louisiana’s remaining Hurricane Ida storm restoration costs. The storm trust II holds preferred membership interests issued by Entergy Finance Company, and Entergy Finance Company is required to make annual distributions (dividends) on the preferred membership interests. These annual dividends paid on the Entergy Finance Company preferred membership interests are distributed 1% to the LURC and 99% to Entergy Louisiana. Entergy Louisiana, as the primary beneficiary, consolidates the storm trust II and the LURC’s 1% beneficial interest is presented as noncontrolling interest in the consolidated financial statements for Entergy Louisiana and Entergy. See Note 2 to the financial statements for a discussion of the Entergy Louisiana March 2023 storm cost securitization.
The dollar value of noncontrolling interest for Entergy Mississippi as of December 31, 2024 and 2023 is presented below.
| | | | | | | | | | | |
| 2024 | | 2023 |
| (In Thousands) |
| Entergy Mississippi Noncontrolling Interest | | | |
| MS Sunflower Partnership, LLC (a) | $8,202 | | | $18,753 | |
| Total Noncontrolling Interest | $8,202 | | | $18,753 | |
(a)MS Sunflower Partnership, LLC is a tax equity partnership between Entergy Mississippi and a tax equity investor which was formed to acquire and own the Sunflower Solar facility. Entergy Mississippi, as the managing member, consolidates MS Sunflower Partnership, LLC and the tax equity investor’s interest is presented as noncontrolling interest in the consolidated financial statements for Entergy Mississippi and Entergy. Entergy Mississippi uses the HLBV method of accounting for income or loss allocation to the tax equity investor’s noncontrolling interest. See Note 1 to the financial statements for further discussion on the presentation of the tax equity investor’s noncontrolling interest and the HLBV method of accounting.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Presentation of Preferred Stock without Sinking Fund
Accounting standards regarding noncontrolling interests and the classification and measurement of redeemable securities require the classification of preferred securities between liabilities and shareholders’ equity on the balance sheet if the holders of those securities have protective rights that allow them to gain control of the board of directors in certain circumstances. These rights would have the effect of giving the holders the ability to potentially redeem their securities, even if the likelihood of occurrence of these circumstances is considered remote. The outstanding preferred stock of Entergy Texas has protective rights with respect to unpaid dividends but provides for the election of board members that would not constitute a majority of the board, and the preferred stock of Entergy Texas is therefore classified as a component of equity.
The outstanding preferred securities of Entergy Utility Holding Company, LLC (a Utility subsidiary) and Entergy Finance Holding, Inc. (an Entergy subsidiary in the non-utility operations business), in each case, whose preferred holders have protective rights, are presented between liabilities and equity on Entergy’s consolidated balance sheets. The preferred dividends or distributions paid by all subsidiaries are reflected for all periods presented outside of consolidated net income.
NOTE 7. COMMON EQUITY (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Common Stock
On October 30, 2024, Entergy’s board of directors approved a two-for-one forward stock split of Entergy Corporation common stock (the stock split). On December 12, 2024, Entergy effected the stock split and a proportionate increase in the number of authorized shares of its common stock. Shares began trading on a split-adjusted basis at market open on December 13, 2024. Entergy’s authorized common stock increased from 499 million to 998 million shares. The shares of common stock retain a par value of $0.01 per share. Accordingly, an amount equal to the par value of the increased shares resulting from the stock split was reclassified from capital in excess of par value to common stock. Historical share and share-based data presented herein has been retroactively adjusted to reflect the stock split.
The following table presents Entergy’s basic and diluted earnings per share calculations included on the consolidated income statements:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Years Ended December 31, |
| | 2024 | | 2023 | | 2022 |
| | (Dollars In Thousands, Except Per Share Data; Shares in Millions) |
| | | | $/share | | | | $/share | | | | $/share |
| Consolidated net income | $1,061,184 | | | | | $2,362,310 | | | | | $1,097,138 | | | |
| Less: Preferred dividend requirements of subsidiaries and noncontrolling interests | 5,594 | | | | | 5,774 | | | | | (6,028) | | | |
| Net income attributable to Entergy Corporation | $1,055,590 | | | | | $2,356,536 | | | | | $1,103,166 | | | |
| Basic shares and earnings per average common share | 427.7 | | | $2.47 | | | 423.1 | | | $5.57 | | | 408.9 | | | $2.70 | |
| Average dilutive effect of: | | | | | | | | | | | |
| Stock options | 0.6 | | | — | | | 0.6 | | | (0.01) | | | 1.0 | | | (0.01) | |
| Other equity plans | 1.3 | | | (0.01) | | | 1.1 | | | (0.01) | | | 1.0 | | | (0.01) | |
| Equity forwards | 2.0 | | | (0.01) | | | — | | | — | | | 0.2 | | | — | |
| Diluted shares and earnings per average common share | 431.6 | | | $2.45 | | | 424.8 | | | $5.55 | | | 411.1 | | | $2.68 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Earnings per share dilution resulting from stock options outstanding and other equity plans is determined under the treasury stock method. The calculation of diluted earnings per share excluded 1,857,250 stock options outstanding in 2024, 2,359,923 stock options outstanding in 2023, and 1,862,906 stock options outstanding in 2022 because their effect would have been antidilutive. Until settlement of the forward sale agreements discussed below in “Equity Distribution Program”, earnings per share dilution resulting from the agreements, if any, is determined under the treasury stock method. Share dilution occurs when the average market price of Entergy Corporation’s common stock is higher than the average forward sales price. The calculation of diluted earnings per share excluded 2,373,682 shares in 2024 and 3,525,418 shares in 2023 under forward sale agreements outstanding because their effect would have been antidilutive. There were no forward sale agreements outstanding as of December 31, 2022.
Common stock and treasury stock shares activity for Entergy for 2024, 2023, and 2022 is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2024 | | 2023 | | 2022 |
| | Common
Shares
Issued | |
Treasury Shares | | Common
Shares
Issued | | Treasury Shares | | Common
Shares
Issued | | Treasury Shares |
| Beginning Balance, January 1 | 561,950,696 | | | 136,253,556 | | | 559,307,858 | | | 136,954,858 | | | 543,931,020 | | | 138,624,652 | |
| Issuances: | | | | | | | | | | | |
| Equity Distribution Program | — | | | — | | | 2,642,838 | | | — | | | 15,376,838 | | | — | |
| Employee Stock-Based Compensation Plans | — | | | (3,855,200) | | | — | | | (673,242) | | | — | | | (1,636,732) | |
| Directors’ Plan | — | | | (28,076) | | | — | | | (28,060) | | | — | | | (33,062) | |
| Ending Balance, December 31 | 561,950,696 | | | 132,370,280 | | | 561,950,696 | | | 136,253,556 | | | 559,307,858 | | | 136,954,858 | |
Entergy Corporation reissues treasury shares to meet the requirements of the Stock Plan for Outside Directors (Directors’ Plan), the three equity plans of Entergy Corporation and Subsidiaries, and certain other stock benefit plans. The Directors’ Plan awards to non-employee directors a portion of their compensation in the form of a fixed dollar value of shares of Entergy Corporation common stock.
In October 2010 the Board granted authority for a $500 million share repurchase program. As of December 31, 2024, $350 million of authority remains under the $500 million share repurchase program.
Dividends declared per common share were $2.30 in 2024, $2.17 in 2023, and $2.05 in 2022.
Equity Distribution Program
In January 2021, Entergy Corporation entered into an equity distribution sales agreement with several counterparties establishing an at the market equity distribution program, pursuant to which Entergy Corporation may offer and sell from time to time shares of its common stock. The sales agreement provides that, in addition to the issuance and sale of shares of Entergy Corporation common stock, Entergy Corporation may enter into forward sale agreements for the sale of its common stock. In May 2024, Entergy Corporation entered into an amendment to the equity distribution sales agreement for its at the market equity distribution program wherein it increased by an additional $1 billion the aggregate gross sales price authorized under the at the market equity distribution program and added additional agents, forward purchasers, and forward sellers. The aggregate number of shares of common stock sold under this sales agreement and under any forward sale agreement may not exceed an aggregate gross sales price of $3 billion. As of December 31, 2024, an aggregate gross sales price of approximately $2.6 billion has been sold under the at the market equity distribution program.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
During the years ended December 31, 2024, 2023, and 2022, there were no shares of common stock issued under the at the market equity distribution program.
There were no settlements of forward sale agreements for the year ended December 31, 2024. During the years ended December 31, 2023 and 2022, Entergy Corporation physically settled its obligations under the following forward sale agreements:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Effective Date of Forward Sale Agreements | | Shares of Common Stock Issued | | Gross Sales Price | | Forward Sellers Fees | | Forward Sale Price per Share | | Cash Proceeds at Settlement |
| | | | | (Dollars In Thousands, Except Per Share Data) |
| Forward sale agreements settled in November 2022: | | | | |
| June 2021 | | 833,706 | | | $45,000 | | $450 | | | | |
| August 2021 | | 3,385,110 | | | $190,074 | | $1,901 | | | | |
| September 2021 | | 501,486 | | | $25,419 | | $254 | | | | |
| March 2022 | | 3,076,020 | | | $167,997 | | $1,680 | | | | |
| June 2022 | | 4,248,172 | | | $250,899 | | $2,509 | | | | |
| September 2022 | | 3,332,344 | | | $194,231 | | $1,942 | | | | |
| Total | | 15,376,838 | | | | | | | $56.25 | | $853,257 |
| | | | | | | | | | | |
| Forward sale agreements settled in November 2023: | | | | |
| June 2023 | | 205,990 | | | $10,524 | | $105 | | | | |
| June 2023 | | 730,614 | | | $37,375 | | $374 | | | | |
| Total | | 936,604 | | | | | | | $50.69 | | $47,786 |
| | | | | | | | | | | |
| Forward sale agreements settled in December 2023: | | | | |
| November 2023 | | 1,706,234 | | | $84,000 | | $840 | | | | |
| Total | | 1,706,234 | | | | | | | $48.74 | | $83,312 |
Entergy Corporation incurred an aggregate amount of approximately $0.7 million of general issuance costs associated with the November 2022 settlement and approximately $0.4 million of general issuance costs associated with the November 2023 and December 2023 settlements. Entergy Corporation used the net proceeds for general corporate purposes, which included repayment of commercial paper, outstanding loans under Entergy Corporation’s revolving credit facility, and other debt.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The following forward sale agreements entered into by Entergy Corporation remain outstanding as of December 31, 2024:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Effective Date | | Shares of Common Stock per Forward Sale Agreements | | Maturity Date | | Forward Sale Price per Share (a) | | Gross Sales Price | | Forward Sellers Fees |
| | | | | | (Dollars In Thousands, Except Per Share Data) |
| December 2023 | | 5,506,492 | | | May 2025 | | $50.56 | | $280,459 | | $2,805 |
| March 2024 | | 569,844 | | | May 2025 | | $50.91 | | $29,318 | | $293 |
| March 2024 | | 2,320,830 | | | May 2025 | | $50.73 | | $119,153 | | $1,192 |
| May 2024 | | 2,556,832 | | | July 2025 | | $55.38 | | $142,387 | | $1,424 |
| May 2024 | | 2,466,470 | | | July 2025 | | $54.05 | | $134,396 | | $1,344 |
| June 2024 | | 2,140,006 | | | July 2025 | | $52.94 | | $114,540 | | $1,145 |
| August 2024 | | 2,225,832 | | | October 2025 | | $57.67 | | $130,393 | | $1,304 |
| August 2024 | | 3,466,772 | | | October 2025 | | $58.84 | | $205,454 | | $2,055 |
| September 2024 | | 3,069,070 | | | October 2025 | | $60.14 | | $186,266 | | $1,863 |
| September 2024 | | 888,756 | | | October 2025 | | $64.22 | | $57,702 | | $577 |
(a)Forward prices were updated with the counterparties as of December 13, 2024 in response to the stock split which was deemed an adjustment event.
No amounts are recorded on Entergy’s balance sheet with respect to the equity offerings until settlements of the equity forward sale agreements occur.
The forward sale agreements require Entergy Corporation to, at its election prior to the maturity date, either (i) physically settle the transactions by issuing the total shares of common stock per the respective forward sale agreement to the forward counterparties in exchange for net proceeds at the then-applicable forward sale price specified by the respective agreement (initial forward sale price) or (ii) net settle the transactions in whole or in part through the delivery or receipt of cash or shares. Each forward sale price is subject to adjustment on a daily basis based on a floating interest rate factor and will decrease by other fixed amounts specified in the respective agreement. In connection with the forward sale agreements, the forward seller, or its affiliates, borrowed from third parties and sold shares of Entergy Corporation’s common stock (gross sales price). In connection with the sale of these shares, Entergy Corporation paid the forward seller fees and these fees have not been deducted from the gross sales prices. Entergy Corporation did not receive any proceeds from such sales of borrowed shares.
Retained Earnings and Dividends
Entergy Corporation received dividend payments and distributions from subsidiaries totaling $484 million in 2024, $189 million in 2023, and $301 million in 2022.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Comprehensive Income
Accumulated other comprehensive income (loss) is included in the equity section of the balance sheets of Entergy and Entergy Louisiana. The following table presents changes in accumulated other comprehensive income (loss) for Entergy for the years ended December 31, 2024 and 2023:
| | | | | | | | | | | | | | |
| | | Pension and Other Postretirement Plan Changes |
| | 2024 | | 2023 |
| | (In Thousands) |
| Beginning balance, January 1, | | ($162,460) | | | ($191,754) | |
| | | | |
| Other comprehensive income (loss) before reclassifications | | (31,676) | | | 36,404 | |
| Amounts reclassified from accumulated other comprehensive income (loss) | | 236,905 | | | (7,110) | |
| Net other comprehensive income for the period | | 205,229 | | | 29,294 | |
| | | | |
| Ending balance, December 31, | | $42,769 | | | ($162,460) | |
The following table presents changes in accumulated other comprehensive income for Entergy Louisiana for the years ended December 31, 2024 and 2023:
| | | | | | | | | | | | | | |
| | Pension and Other Postretirement Plan Changes |
| | 2024 | | 2023 |
| | (In Thousands) |
| Beginning balance, January 1, | | $54,798 | | | $55,370 | |
| | | | |
| Other comprehensive income before reclassifications | | 6,953 | | | 5,603 | |
| Amounts reclassified from accumulated other comprehensive income | | (8,093) | | | (6,175) | |
| Net other comprehensive loss for the period | | (1,140) | | | (572) | |
| | | | |
| Ending balance, December 31, | | $53,658 | | | $54,798 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Total reclassifications out of accumulated other comprehensive income (loss) (AOCI) for Entergy for the years ended December 31, 2024 and 2023 are as follows:
| | | | | | | | | | | | | | | | | | | | |
| | Amounts reclassified from AOCI | | Income Statement Location |
| | 2024 | | 2023 | | |
| | (In Thousands) | | |
| Pension and other postretirement plan changes | | | | | | |
| Amortization of prior service credit | | $13,896 | | | $13,586 | | | (a) |
| Amortization of net gain | | 7,327 | | | 6,590 | | | (a) |
| Settlement loss | | (319,978) | | | (10,848) | | | (a) |
| Total amortization and settlement loss | | (298,755) | | | 9,328 | | | |
| Income taxes | | 61,850 | | | (2,218) | | | Income taxes |
| Total amortization and settlement loss (net of tax) | | ($236,905) | | | $7,110 | | | |
| | | | | | |
| Total reclassifications for the period (net of tax) | | ($236,905) | | | $7,110 | | | |
(a)These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension and other postretirement cost. See Note 11 to the financial statements for additional details.
Total reclassifications out of accumulated other comprehensive income (AOCI) for Entergy Louisiana for the years ended December 31, 2024 and 2023 are as follows:
| | | | | | | | | | | | | | | | | | | | |
| | Amounts reclassified from AOCI | | Income Statement Location |
| | 2024 | | 2023 | | |
| | (In Thousands) | | |
| Pension and other postretirement plan changes | | | | | | |
| Amortization of prior service credit | | $4,544 | | | $3,804 | | | (a) |
| Amortization of net gain | | 6,533 | | | 6,263 | | | (a) |
| Settlement loss | | (2) | | | (1,617) | | | (a) |
| Total amortization and settlement loss | | 11,075 | | | 8,450 | | | |
| Income taxes | | (2,982) | | | (2,275) | | | Income taxes |
| Total amortization and settlement loss (net of tax) | | 8,093 | | | 6,175 | | | |
| | | | | | |
| Total reclassifications for the period (net of tax) | | $8,093 | | | $6,175 | | | |
(a)These accumulated other comprehensive income components are included in the computation of net periodic pension and other postretirement cost. See Note 11 to the financial statements for additional details.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
NOTE 8. COMMITMENTS AND CONTINGENCIES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Entergy and the Registrant Subsidiaries are involved in a number of legal, regulatory, and tax proceedings before various courts, regulatory authorities, and governmental agencies in the ordinary course of business. While management is unable to predict with certainty the outcome of such proceedings, management does not believe that the ultimate resolution of these matters will have a material adverse effect on Entergy’s results of operations, cash flows, or financial condition. Entergy discusses regulatory proceedings in Note 2 to the financial statements and discusses tax proceedings in Note 3 to the financial statements.
Vidalia Purchased Power Agreement
Entergy Louisiana has an agreement extending through the year 2031 to purchase energy generated by a hydroelectric facility known as the Vidalia project. Entergy Louisiana made payments under the contract of approximately $116.8 million in 2024, $100.4 million in 2023, and $117.2 million in 2022. If the maximum percentage (94%) of the energy is made available to Entergy Louisiana, current production projections would require estimated payments of approximately $121.7 million in 2025 and a total of $730.3 million for the years 2026 through 2031. Entergy Louisiana currently recovers the costs of the purchased energy through its fuel adjustment clause.
In an LPSC-approved settlement related to tax benefits from the tax treatment of the Vidalia contract, Entergy Louisiana agreed to credit rates by $11 million each year for up to 10 years, beginning in October 2002. In October 2011 the LPSC approved a settlement under which Entergy Louisiana agreed to provide credits to customers by crediting billings an additional $20.235 million per year for 15 years beginning January 2012. Entergy Louisiana recorded a regulatory charge and a corresponding regulatory liability to reflect this obligation. The settlement agreement allowed for an adjustment to the credits if, among other things, there was a change in the applicable federal or state income tax rate. As a result of the enactment of the Tax Cuts and Jobs Act, in December 2017, and the lowering of the federal corporate income tax rate from 35% to 21%, the Vidalia purchased power regulatory liability was reduced by $30.5 million, with a corresponding increase to Other regulatory credits on the income statement. See Note 3 to the financial statements for discussion of the effects of the Tax Cuts and Jobs Act and discussion of the resolution of the 2016-2018 IRS audit, which included the tax treatment of the Vidalia contract.
ANO Damage, Outage, and NRC Reviews
In March 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 total cost of assessment, restoration of off-site power, site restoration, debris removal, and replacement of damaged property and equipment was approximately $95 million. Entergy Arkansas pursued its options for recovering damages that resulted from the stator drop, including its insurance coverage and legal action. Entergy Arkansas collected $50 million in 2014 from Nuclear Electric Insurance Limited (NEIL), a mutual insurance company that provides property damage coverage to the members’ nuclear generating plants. Entergy Arkansas also collected a total of $21 million in 2018 as a result of stator-related settlements.
In addition, Entergy Arkansas incurred replacement power costs for ANO 2 power during its outage and incurred incremental replacement power costs for ANO 1 power because the outage extended beyond the originally-planned duration of the refueling outage. In February 2014 the APSC authorized Entergy Arkansas to retain $65.9 million in its deferred fuel balance with recovery to be reviewed in a later period after more information regarding various claims associated with the ANO stator incident was available.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
In March 2015, after several NRC inspections and regulatory conferences, arising from the stator incident, the NRC placed ANO into the “multiple/repetitive degraded cornerstone column,” or Column 4, of the NRC’s Reactor Oversight Process Action Matrix. Entergy Arkansas incurred incremental costs of approximately $53 million in 2015 to prepare for the NRC inspections that began in early 2016 in order to address the issues required to move ANO back to “licensee response” or Column 1 of the NRC’s Reactor Oversight Process Action Matrix. Excluding remediation and response costs that resulted from the additional NRC inspection activities, Entergy Arkansas incurred approximately $44 million in 2016 and $7 million in 2017 in support of NRC inspection activities and to implement Entergy Arkansas’s performance improvement initiatives developed in 2015. In June 2018 the NRC moved ANO 1 and 2 into the “licensee response column,” or Column 1, of the NRC’s Reactor Oversight Process Action Matrix.
In October 2023, Entergy Arkansas made a commitment to the APSC to make a filing to forgo its opportunity to seek recovery of the identified costs resulting from the ANO stator incident, specifically all incremental fuel and purchased energy expense, capital and incremental non-fuel operations and maintenance costs, and costs of any judgment that may be rendered against Entergy Arkansas in civil litigation that is not covered by insurance. As a result, in third quarter 2023, Entergy Arkansas recorded write-offs of its regulatory asset for deferred fuel of $68.9 million, which includes interest, and the undepreciated balance of $9.5 million in capital costs related to the ANO stator incident. Consistent with its October 2023 commitment, Entergy Arkansas filed a motion to forgo recovery in November 2023, and the motion was approved by the APSC in December 2023.
Spent Nuclear Fuel Litigation
Under the Nuclear Waste Policy Act of 1982, the DOE is required, for a specified fee, to construct storage facilities for, and to dispose of, all spent nuclear fuel and other high-level radioactive waste generated by domestic nuclear power reactors. Entergy’s nuclear owner/licensee subsidiaries have been charged fees for the estimated future disposal costs of spent nuclear fuel in accordance with the Nuclear Waste Policy Act of 1982. The affected Entergy companies entered into contracts with the DOE, whereby the DOE is to furnish disposal services at a cost of one mill per net kWh generated and sold after April 7, 1983, plus a one-time fee for generation prior to that date. Entergy considers all costs incurred for the disposal of spent nuclear fuel, except accrued interest, to be proper components of nuclear fuel expense. Provisions to recover such costs have been or will be made in applications to regulatory authorities for the Utility plants. Following the defunding of the Yucca Mountain spent fuel repository program, the National Association of Regulatory Utility Commissioners and others sued the government seeking cessation of collection of the one mill per net kWh generated and sold after April 7, 1983 fee. In November 2013 the D.C. Circuit ordered the DOE to submit a proposal to Congress to reset the fee to zero until the DOE complies with the Nuclear Waste Policy Act or Congress enacts an alternative waste disposal plan. In January 2014 the DOE submitted the proposal to Congress under protest, and also filed a petition for rehearing with the D.C. Circuit. The petition for rehearing was denied. The zero spent fuel fee went into effect prospectively in May 2014.
Because the DOE has not begun accepting spent fuel, it is in non-compliance with the Nuclear Waste Policy Act of 1982 and is in partial breach of its spent fuel disposal contracts. As a result of the DOE’s failure to begin disposal of spent nuclear fuel in 1998 pursuant to the Nuclear Waste Policy Act of 1982 and the spent fuel disposal contracts, Entergy’s nuclear owner/licensee subsidiaries have incurred and will continue to incur damages. Beginning in November 2003 these subsidiaries have pursued litigation to recover the damages caused by the DOE’s delay in performance. Following are details of final judgments recorded by Entergy in 2022, 2023, and 2024 related to Entergy’s nuclear owner/licensee subsidiaries’ litigation with the DOE.
In October 2021 the U.S. Court of Federal Claims issued a final judgment in the amount of $83 million in favor of Entergy Nuclear Indian Point 2, LLC and Entergy Nuclear Indian Point 3, LLC against the DOE in the Indian Point 2 third round and Indian Point 3 second round combined damages case. Entergy received payment from the U.S. Treasury in January 2022. The effect in 2021 of recording the judgment was a reduction to asset write-offs, impairments, and related charges (credits). The damages awarded included $32 million related to costs
Entergy Corporation and Subsidiaries
Notes to Financial Statements
previously recorded as plant, $47 million related to costs previously recorded as other operation and maintenance expenses, and $4 million related to costs previously recorded as taxes other than income taxes.
In March 2023 the DOE submitted an offer of judgment to resolve claims in the fourth round ANO damages case. The $41 million offer was accepted by Entergy Arkansas, and the U.S. Court of Federal Claims issued a judgment in that amount in favor of Entergy Arkansas and against the DOE. Entergy Arkansas received payment from the U.S. Treasury in April 2023. The effects of recording the judgment were reductions to plant, nuclear fuel expense, other operation and maintenance expenses, materials and supplies, and taxes other than income taxes. The ANO damages awarded included $18 million related to costs previously recorded as plant, $10 million related to costs previously recorded as other operation and maintenance expenses, $8 million related to costs previously recorded as nuclear fuel expense, $3 million related to costs previously recorded as materials and supplies, and $2 million related to costs previously recorded as taxes other than income taxes.
In July 2023 the DOE submitted an offer of judgment to resolve claims in the Indian Point 2 fourth round and Indian Point 3 third round combined damages case. The $59 million offer was accepted by Entergy and Holtec International, as the current owner. The U.S. Court of Federal Claims issued a final judgment in that amount in favor of Holtec Indian Point 2, LLC and Holtec Indian Point 3, LLC (previously Entergy Nuclear Indian Point 2, LLC and Entergy Nuclear Indian Point 3, LLC) and against the DOE. Holtec received payment from the U.S. Treasury in July 2023. Consistent with certain terms agreed upon in connection with the sale of Indian Point Energy Center in May 2021, Holtec transferred $40 million to Entergy for its pro-rata share of the litigation proceeds in August 2023. The remainder of the judgment was retained by Holtec. The effect of recording Entergy’s pro-rata share of the judgment was a reduction to asset write-offs, impairments, and related charges (credits). Entergy’s pro-rata share of the damages awarded included $18 million related to costs previously recorded as spending on the asset retirement obligation, $15 million related to costs previously recorded as other operation and maintenance expenses, $6 million related to costs previously recorded as plant, and $1 million related to costs previously recorded as taxes other than income taxes.
In August 2024 the U.S. Court of Federal Claims issued a final judgment in the amount of $177 million in favor of Northstar Vermont Yankee, LLC (previously Entergy Nuclear Vermont Yankee) and against the DOE in the final round Vermont Yankee damages case. Northstar, as the current owner, received payment from the U.S. Treasury in November 2024 and subsequently transferred $127 million of the litigation proceeds to Entergy per the terms of the agreement for the disposition of Vermont Yankee, which included $107 million for independent spent fuel storage installation expansion, and related to a long-term note receivable issued to Entergy at the time of the disposition of Vermont Yankee, and $20 million for costs related to independent spent fuel storage installation operations, both as required by the disposition documents. Northstar retained $10 million of the litigation proceeds, and the remaining $40 million of the total litigation proceeds was placed by Northstar into an escrow account and is expected to be transferred to Entergy upon the satisfaction of certain agreed upon conditions. The effect of recording Entergy’s share of the judgment was a reduction of $82 million in principle and $25 million in accrued interest on the long-term note receivable and a reduction to asset write-offs, impairments, and related charges (credits) of $20 million related to costs previously recorded as spending on the asset retirement obligation.
In October 2024 the U.S. Court of Federal Claims issued a final judgment in the amount of $7 million in favor of Holtec Palisades, LLC (previously Entergy Nuclear Palisades) and against the DOE in the final round Palisades damages case. Payment to Holtec, as the current owner, from the U.S. Treasury is expected in first quarter 2025, at which time Holtec is expected to transfer the $7 million judgment to Entergy. The effect of recording the judgment was a reduction to asset write-offs, impairments, and related charges (credits).
Management cannot predict the timing or amount of any potential recoveries on other claims filed by Entergy subsidiaries and cannot predict the timing of any eventual receipt from the DOE of the U.S. Court of Federal Claims damage awards.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Nuclear Insurance
Third Party Liability Insurance
The Price-Anderson Act requires that reactor licensees purchase insurance and participate in a secondary insurance pool that provides insurance coverage for the public in the event of a nuclear power plant accident. The costs of this insurance are borne by the nuclear power industry. Congress amended and renewed the Price-Anderson Act in 2024 for a term through 2065. The Price-Anderson Act requires nuclear power plants to show evidence of financial protection in the event of a nuclear accident. This protection must consist of two layers of coverage:
1.The primary level is insurance underwritten by American Nuclear Insurers (ANI) and provides public liability insurance coverage of $500 million for each operating reactor. If this amount is not sufficient to cover claims arising from an accident, the second level, Secondary Financial Protection, applies.
2.Secondary Financial Protection: Currently, 95 nuclear reactors participate in the Secondary Financial Protection program, which provides approximately $15.8 billion in secondary layer insurance coverage to compensate the public in the event of a nuclear power reactor accident. The Price-Anderson Act provides that all potential liability for a nuclear accident is limited to the amounts of insurance coverage available under the primary and secondary layers.
Within the Secondary Financial Protection program, each nuclear reactor has a contingent obligation to pay a retrospective premium, equal to its proportionate share of the loss in excess of the primary level, regardless of proximity to the incident or fault, up to a maximum of approximately $165.9 million per reactor per incident (Entergy’s maximum total contingent obligation per incident is $829.6 million). This retrospective premium is assessable at approximately $24.7 million per year per incident per nuclear power reactor.
3.Total insurance coverage available is approximately $16.3 billion, among the primary ANI coverage and the Secondary Financial Protection program, to respond to a nuclear power plant accident that causes third-party damages (e.g., off-site property and environmental damage, off-site bodily injury, and on-site third-party bodily injury (i.e., contractors)). These coverages also respond to an accident caused by terrorism.
Entergy Arkansas and Entergy Louisiana each have two licensed reactors. System Energy has one licensed reactor (10% of Grand Gulf is owned by a non-affiliated company (Cooperative Energy) that would share on a pro-rata basis in any retrospective premium assessment to System Energy under the Price-Anderson Act).
Property Insurance
Entergy’s nuclear owner/licensee subsidiaries are members of NEIL, a mutual insurance company that provides property damage coverage, including decontamination and reactor stabilization, to the members’ nuclear generating plants. The property damage insurance limits procured by Entergy for its nuclear plants are in compliance with the financial protection requirements of the NRC. These coverage limits, deductibles, and weekly indemnity periods are subject to change based on results of NEIL loss control inspections.
The nuclear plants’ (ANO 1 and 2, Grand Gulf, River Bend, and Waterford 3) property damage insurance limits are $1.06 billion per occurrence at each plant. The property deductible is $20 million per site at the nuclear plants, except for earth movement, flood, and windstorm. Property damage from earth movement is excluded from the first $500 million in coverage for all nuclear plants. Property damage from flood is excluded from the first $500 million in coverage at ANO 1 and 2 and Grand Gulf. Property damage from flood for Waterford 3 and River Bend includes a deductible of $10 million plus an additional 10% of the amount of the loss in excess of $10 million, up to a maximum deductible of $50 million. Property damage from a windstorm for all of the nuclear plants
Entergy Corporation and Subsidiaries
Notes to Financial Statements
includes a deductible of $10 million plus an additional 10% of the amount of the loss in excess of $10 million, up to a total maximum deductible of $50 million.
In addition, Waterford 3 and Entergy’s portion of Grand Gulf are also covered under NEIL’s Accidental Outage Coverage program. Accidental outage coverage provides indemnification for the actual cost incurred in the event of an unplanned outage resulting from property damage covered under the NEIL Primary Property Insurance policy, subject to a deductible period. The indemnification is based on market power prices at the time of the loss, actual costs incurred during the outage, and the respective limits of each nuclear plant. After the deductible period has passed, weekly indemnities for an unplanned nuclear or non-nuclear outage, covered under NEIL’s Accidental Outage Coverage program, would be paid according to the amounts listed below:
•100% of the weekly indemnity for each week for the initial payment period of 52 weeks for nuclear and non-nuclear loss; then
•80% of the weekly indemnity for each week for the final payment period of 110 weeks for nuclear loss only; or
•60% of the weekly indemnity for each week for the final payment period of 52 weeks for non-nuclear loss only.
Under the property damage and accidental outage insurance programs, all NEIL insured plants could be subject to assessments should losses exceed the accumulated funds available from NEIL. The assessments are subject to change based on results of NEIL underwriting. The current maximum amounts of such possible assessments per occurrence are as follows:
| | | | | |
| | Assessments |
| | (In Millions) |
| Entergy Arkansas | $20.0 |
| Entergy Louisiana | $37.6 |
| Entergy Mississippi | $0.1 |
| Entergy New Orleans | $0.1 |
| Entergy Texas | N/A |
| System Energy | $14.4 |
NRC regulations provide that the proceeds of this insurance must be used, first, to render the reactor safe and stable, and second, to complete decontamination operations. Only after proceeds are dedicated for such use and regulatory approval is secured would any remaining proceeds be made available for the benefit of plant owners or their creditors.
In the event that one or more acts of terrorism causes property damage from a nuclear event under one or more or all nuclear insurance policies issued by NEIL (including, but not limited to, those described above) within 12 months from the date the first property damage occurs, the maximum recovery under all such nuclear insurance policies shall be an aggregate not exceeding $3.24 billion plus the additional amounts recovered for such losses from reinsurance, indemnity, and any other sources applicable to such losses.
Non-Nuclear Property Insurance
Entergy’s non-nuclear property insurance program provides coverage on a system-wide basis for Entergy’s non-nuclear assets. The insurance program provides coverage for property damage up to $400 million per occurrence in excess of a $20 million self-insured retention except for property damage caused by the following: earthquake shock, flood, and named windstorm, including associated storm surge. For earthquake shock and flood, the insurance program provides coverage up to $400 million on an annual aggregate basis in excess of a $40 million self-insured retention. For named windstorm and associated storm surge, the insurance program provides coverage
Entergy Corporation and Subsidiaries
Notes to Financial Statements
up to $125 million on an annual aggregate basis in excess of a $40 million self-insured retention. The coverage provided by the insurance program for the Entergy New Orleans gas distribution system is limited to $50 million per occurrence and is subject to the same annual aggregate limits and retentions listed above for earthquake shock, flood, and named windstorm, including associated storm surge.
Covered property generally includes power plants, substations, facilities, inventories, and gas distribution-related properties. Excluded property generally includes transmission and distribution lines, poles, and towers. For substations valued at $5 million or less, coverage for named windstorm and associated storm surge is excluded. This coverage is in place for Entergy Corporation, the Registrant Subsidiaries, and certain other Entergy subsidiaries. Entergy also purchases $400 million in terrorism insurance coverage for its conventional property.
Employment and Labor-related Proceedings
The Registrant Subsidiaries and other Entergy subsidiaries and related entities are responding to various lawsuits in both state and federal courts and to other labor-related proceedings filed by current and former employees, recognized bargaining representatives, and certain third parties. Generally, the amount of damages being sought is not specified in these proceedings. These actions may 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, age, and disability discrimination; disputes arising under collective bargaining agreements; unfair labor practice proceedings and other administrative proceedings before the National Labor Relations Board or concerning the National Labor Relations Act; claims of retaliation; claims of harassment and hostile work environment; and claims for or regarding benefits under various Entergy Corporation-sponsored employee benefit plans. Entergy and the Registrant Subsidiaries and related entities are responding to these lawsuits and proceedings and deny liability to the claimants. Management believes that loss exposure has been and will continue to be handled so that the ultimate resolution of these matters will not be material, in the aggregate, to the financial position, results of operation, or cash flows of Entergy or the Registrant Subsidiaries.
Asbestos Litigation (Entergy Arkansas, Entergy Louisiana, Entergy New Orleans, and Entergy Texas)
Numerous lawsuits have been filed in state courts against primarily Entergy Louisiana and Entergy Texas by individuals alleging exposure to asbestos while working at Entergy facilities between 1955 and 1980. Entergy is being sued as a premises owner. Many other defendants are named in these lawsuits as well. Currently, there are approximately 185 lawsuits involving approximately 330 claimants. Management believes that adequate provisions have been established to cover any exposure. Additionally, negotiations continue with insurers to recover reimbursements. Management believes that loss exposure has been and will continue to be handled so that the ultimate resolution of these matters will not be material, in the aggregate, to the financial position, results of operation, or cash flows of the Utility operating companies.
Grand Gulf-Related Agreements
Unit Power Sales Agreement (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)
System Energy sells all of its share of capacity and energy from Grand Gulf to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans in accordance with specified percentages (Entergy Arkansas - 36%, Entergy Louisiana - 14%, Entergy Mississippi - 33%, and Entergy New Orleans - 17%) as ordered by the FERC under the Unit Power Sales Agreement. Charges under this agreement are paid in consideration for the purchasing companies’ respective entitlement to receive capacity and energy and are payable irrespective of the quantity of energy delivered. Grand Gulf’s operating license currently extends through 2044. Monthly obligations are based on actual capacity and energy costs. The average monthly payments for 2024 under the agreement were approximately $16.8 million for Entergy Arkansas, $7.0 million for Entergy Louisiana, $16.4 million for Entergy
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Mississippi, and $8.4 million for Entergy New Orleans. See Note 2 to the financial statements for discussion of proceedings regarding the Unit Power Sales Agreement.
In August 2024 the LPSC approved a settlement with Entergy Louisiana to globally resolve all of the LPSC’s actual and potential claims in multiple docketed proceedings pending before the FERC and with System Energy’s past implementation of the Unit Power Sales Agreement. The settlement was approved by the FERC in November 2024. The terms of the settlement included an agreement that Entergy Louisiana would divest to Entergy Mississippi its 14% share of capacity and energy from Grand Gulf under the Unit Power Sales Agreement and its 2.43% share of capacity and energy from Entergy Arkansas under the MSS-4 replacement tariff. This divestiture is being effectuated initially through Entergy Mississippi’s purchases from Entergy Louisiana pursuant to a PPA governed by the MSS-4 replacement tariff. As discussed in Note 2 to the financial statements, in September 2024, Entergy Mississippi filed a notice of intent with the MPSC that related to and sought approval of the divestiture. The MSS-4 replacement PPA to effectuate this divestiture was approved by the FERC in November 2024. The MPSC approved the MSS-4 replacement PPA, effective as of January 1, 2025. Under the divestiture, Entergy Mississippi also assumes any and all of Entergy Louisiana’s rights and obligations under the Availability Agreement and will hold Entergy Louisiana harmless with respect thereto, as of January 1, 2025. See Note 2 to the financial statements for discussion of the System Energy settlement with the LPSC.
Availability Agreement (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans are individually obligated to make payments or subordinated advances to System Energy in accordance with stated percentages (Entergy Arkansas - 17.1%, Entergy Louisiana - 26.9%, Entergy Mississippi - 31.3%, and Entergy New Orleans - 24.7%) in amounts that, when added to amounts received under the Unit Power Sales Agreement or otherwise, are adequate to cover all of System Energy’s operating expenses as defined, including expenses incurred in connection with a permanent shutdown of Grand Gulf. System Energy has assigned its rights to payments and advances to certain creditors as security for certain of its debt obligations. Since commercial operation of Grand Gulf began, payments under the Unit Power Sales Agreement to System Energy have exceeded the amounts payable under the Availability Agreement and, therefore, no payments under the Availability Agreement have ever been required. However, if Entergy Arkansas or Entergy Mississippi fails to make its Unit Power Sales Agreement payments, and System Energy is unable to obtain funds from other sources, Entergy Louisiana and Entergy New Orleans could become subject to claims or demands by System Energy or certain of its creditors for payments or advances under the Availability Agreement (or the assignments thereof) equal to the difference between their required Unit Power Sales Agreement payments and their required Availability Agreement payments because their allocated shares under the Availability Agreement exceed their allocated shares under the Unit Power Sales Agreement. Under the Entergy Louisiana divestiture described in “Unit Power Sales Agreement” above, Entergy Mississippi assumed any and all of Entergy Louisiana’s rights and obligations under the Availability Agreement and will hold Entergy Louisiana harmless with respect thereto, effective as of January 1, 2025.
Reallocation Agreement (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)
System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans entered into the Reallocation Agreement relating to the sale of capacity and energy from Grand Gulf and the related costs, in which Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans agreed to assume all of Entergy Arkansas’s responsibilities and obligations with respect to Grand Gulf under the Availability Agreement. The FERC’s decision allocating a portion of Grand Gulf capacity and energy to Entergy Arkansas supersedes the Reallocation Agreement as it relates to Grand Gulf. Effective December 2024, the parties terminated the Reallocation Agreement.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
NOTE 9. ASSET RETIREMENT OBLIGATIONS (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Accounting standards require companies to record liabilities for all legal obligations associated with the retirement of long-lived assets that result from the normal operation of the assets. For Entergy, substantially all of its asset retirement obligations consist of its liability for decommissioning its nuclear power plants. The remainder of removal costs included in the decommissioning and asset retirement costs line item on the balance sheets is associated with non-nuclear power plants.
These liabilities are recorded at their fair values (which are the present values of the estimated future cash outflows) in the period in which they are incurred, with an accompanying addition to the recorded cost of the long-lived asset. The asset retirement obligation is accreted each year through a charge to expense, to reflect the time value of money for this present value obligation. The accretion will continue through the completion of the asset retirement activity. The amounts added to the carrying amounts of the long-lived assets will be depreciated over the useful lives of the assets. The application of accounting standards related to asset retirement obligations is earnings neutral to the rate-regulated business of the Registrant Subsidiaries.
In accordance with ratemaking treatment and as required by regulatory accounting standards, the depreciation provisions for the Registrant Subsidiaries include a component for removal costs that are not asset retirement obligations under accounting standards. In accordance with regulatory accounting principles, the Registrant Subsidiaries have recorded regulatory assets in the following amounts to reflect their estimates of the difference between estimated incurred removal costs and estimated removal costs expected to be recovered in rates:
| | | | | | | | | | | |
| | December 31, |
| | 2024 | | 2023 |
| | (In Millions) |
| Entergy Arkansas | $337.9 | | $319.7 |
| Entergy Louisiana | $323.2 | | $262.3 |
| Entergy Mississippi | $184.8 | | $188.0 |
| Entergy New Orleans | $62.5 | | $61.1 |
| Entergy Texas | $102.3 | | $77.5 |
| System Energy | $96.9 | | $102.1 |
As of December 31, 2024, the regulatory asset for removal costs for the Utility operating companies includes amounts related to storm restoration costs. See Note 2 to the financial statements for further discussion of storm restoration costs and requested recovery.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The cumulative decommissioning and retirement cost liabilities and expenses recorded in 2024 and 2023 for Entergy and the Registrant Subsidiaries were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Entergy | | Entergy
Arkansas | | Entergy
Louisiana | | Entergy
Mississippi | | Entergy
New
Orleans | | Entergy
Texas | | System Energy |
| | (In Millions) |
| Liabilities as of December 31, 2022 | $4,271.5 | | | $1,472.7 | | | $1,736.8 | | | $7.8 | | | $— | | | $11.1 | | | $1,042.5 | |
| Accretion | 219.4 | | | 87.4 | | | 88.6 | | | 0.4 | | | 0.5 | | | 0.6 | | | 41.7 | |
| Change in cash flow estimate | 14.9 | | | — | | | 10.8 | | | — | | | 4.1 | | | — | | | — | |
| Liabilities as of December 31, 2023 | 4,505.8 | | | 1,560.1 | | | 1,836.2 | | | 8.2 | | | 4.6 | | | 11.7 | | | 1,084.2 | |
| Liabilities incurred (a) | 41.1 | | | 17.7 | | | 19.4 | | | 4.0 | | | — | | | — | | | — | |
| Accretion | 233.8 | | | 93.6 | | | 94.4 | | | 1.1 | | | 0.3 | | | 0.8 | | | 43.5 | |
| Change in cash flow estimate | (67.3) | | | 20.2 | | | (107.1) | | | 11.8 | | | — | | | 5.2 | | | — | |
| Liabilities as of December 31, 2024 | $4,713.4 | | | $1,691.6 | | | $1,842.9 | | | $25.1 | | | $4.9 | | | $17.7 | | | $1,127.7 | |
(a)See “Other” below for additional discussion regarding the asset retirement obligations established at Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi.
Nuclear Plant Decommissioning
Entergy periodically reviews and updates estimated decommissioning costs. The actual decommissioning costs may vary from the estimates because of the timing of plant decommissioning, regulatory requirements, changes in technology, and increased costs of labor, materials, and equipment.
In first quarter 2024, Entergy Arkansas recorded a revision to its estimated decommissioning cost liabilities for ANO 1 and 2 as a result of a revised decommissioning cost study. The revised estimates resulted in a $14.4 million decrease in its decommissioning cost liabilities, along with corresponding decreases in the related asset retirement cost assets that will be depreciated over the remaining useful lives of the units.
In fourth quarter 2024, Entergy Louisiana recorded a revision to its estimated decommissioning cost liability for Waterford 3 as a result of a revised decommissioning cost study. The revised estimate resulted in a $121.5 million decrease in its decommissioning cost liability, along with a corresponding decrease in the related asset retirement cost asset that will be depreciated over the remaining useful life of the unit.
In third quarter 2023, Entergy Louisiana recorded a revision to its estimated decommissioning cost liability for River Bend as a result of a revised decommissioning cost study. The revised estimate resulted in a $10.8 million increase in its decommissioning cost liability, along with a corresponding increase in the related asset retirement cost asset that will be depreciated over the remaining useful life of the unit.
NRC Filings Regarding Trust Funding Levels
Plant owners are required to provide the NRC with a biennial report (annually for units that have shut down or will shut down within five years), based on values as of December 31, addressing the owners’ ability to meet the NRC minimum funding levels. Depending on the value of the trust funds, plant owners may be required to take steps, such as providing financial guarantees through letters of credit or parent company guarantees or making additional contributions to the trusts, to ensure that the trusts are adequately funded and that NRC minimum funding requirements are met.
As nuclear plants individually approach and begin decommissioning, filings will be submitted to the NRC for planned shutdown activities. These filings with the NRC also determine whether financial assurance may be required in addition to the nuclear decommissioning trust fund.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Coal Combustion Residuals
In April 2015 the EPA published the final coal combustion residuals (CCR) rule regulating CCRs destined for disposal in landfills or surface impoundments as non-hazardous wastes regulated under Resource Conservation and Recovery Act Subtitle D. The final regulations create new compliance requirements including modified storage, new notification and reporting practices, product disposal considerations, and CCR unit closure criteria, but excluded CCRs that are beneficially reused in certain processes. Entergy believes that on-site disposal options will be available at its facilities, to the extent needed.
In second quarter 2024, revisions were recorded to the estimated decommissioning cost liabilities for White Bluff and Independence as a result of the EPA rule that was finalized in May 2024 establishing management standards for legacy CCR surface impoundments (i.e., inactive surface impoundments at inactive power plants) and establishing a new class of units referred to as CCR management units (CCRMUs) (i.e., non-containerized CCR located at a regulated CCR facility). Entergy does not have any legacy impoundments; however, the definition of CCR management units includes on-site areas where CCR was beneficially used. This is contrary to the previous CCR rule which exempted beneficial uses that met certain criteria. Under this expanded rule, all facilities must identify and delineate any CCRMU greater than one ton and submit a facility evaluation report by February 2026. Any potential requirements for corrective action or operational changes under the various CCR rules continue to be assessed. Given the complexity and recency of the EPA guidance, Entergy is still evaluating the level of work that will ultimately be required to comply with the rule. Based on initial estimates of multiple possible remediation scenarios, Entergy Arkansas and Entergy Mississippi recorded increases of $31.2 million and $9.1 million, respectively, in their decommissioning cost liabilities, along with corresponding increases in the related asset retirement cost assets that will be depreciated over the remaining useful lives of the units. Entergy will continue to update the asset retirement obligation as the requirements of the revised CCR rule are clarified.
Other
In 2024, Entergy Mississippi recorded an asset retirement obligation to reflect decommissioning costs related to an obligation under the Sunflower Solar facility’s land lease agreements to remove the electrical system and return the land to its normal condition. This estimate resulted in the establishment of a $4.0 million decommissioning cost liability, along with the establishment of a related asset retirement cost asset that will be depreciated over the remaining initial lease term. See Note 14 to the financial statements for discussion of Entergy Mississippi’s purchase of the Sunflower Solar facility.
In 2024, Entergy Arkansas recorded asset retirement obligations to reflect decommissioning costs related to obligations to remove the electrical systems and return the land to its normal condition under the respective land lease agreements for the Walnut Bend Solar facility and the Driver Solar facility. These estimates resulted in the establishment of a decommissioning cost liability of $4.5 million for the Walnut Bend Solar facility and of $13.2 million for the Driver Solar facility, along with the establishment of related asset retirement cost assets that will be depreciated over the remaining initial lease terms, respectively. See Note 14 to the financial statements for discussion of Entergy Arkansas’s purchase of the Walnut Bend Solar facility and the Driver Solar facility.
Prior to August 2024, Entergy Louisiana was a partner in the Nelson Industrial Steam Company (NISCO) partnership which owned two petroleum coke generating units. In April 2023 these generating units suspended operations in the MISO market, and the parties to the NISCO partnership began working to wind up the NISCO partnership, which would ultimately result in ownership of the generating units transferring to Entergy Louisiana. In November 2023 the FERC issued an order providing Section 203 of the Federal Power Act approval for any subsequent transfer of the facilities to Entergy Louisiana. In August 2024, Entergy Louisiana and its partners in the NISCO partnership entered into an agreement related to the wind up of the partnership, which resulted in the receipt of $21.3 million in cash by Entergy Louisiana and the transfer of ownership of the non-operating facilities to
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy Louisiana. As a result of the agreement and resulting transfer of ownership, Entergy Louisiana also recognized an asset retirement obligation of $19.4 million associated with the ash landfill area in 2024.
NOTE 10. LEASES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
As of December 31, 2024 and 2023, Entergy and the Registrant Subsidiaries held operating and finance leases for fleet vehicles used in operations, real estate, and aircraft. Excluded are power purchase agreements not meeting the definition of a lease, nuclear fuel leases, and the Grand Gulf sale-leaseback which were determined not to be leases under the accounting standards.
Leases have remaining terms of one year to 56 years. Real estate leases generally include at least one five-year renewal option; however, renewal is not typically considered reasonably certain unless Entergy or a Registrant Subsidiary makes significant leasehold improvements or other modifications that would hinder its ability to easily move. In certain of the lease agreements for fleet vehicles used in operations, Entergy and the Registrant Subsidiaries provide residual value guarantees to the lessor. Due to the nature of the agreements and Entergy’s continuing relationship with the lessor, however, Entergy and the Registrant Subsidiaries expect to renegotiate or refinance the leases prior to conclusion of the lease. As such, Entergy and the Registrant Subsidiaries do not believe it is probable that they will be required to pay anything pertaining to the residual value guarantee, and the lease liabilities and right-of-use assets are measured accordingly.
Entergy incurred the following total lease costs for the years ended December 31, 2024 and 2023:
| | | | | | | | | | | | | | | | |
| | 2024 | | 2023 | | |
| | (In Thousands) | | |
| Operating lease cost | | $76,494 | | | $68,136 | | | |
| Finance lease cost: | | | | | | |
| Amortization of right-of-use assets | | $18,063 | | | $15,193 | | | |
| Interest on lease liabilities | | $4,664 | | | $3,639 | | | |
Of the lease costs disclosed above, Entergy had $3.1 million and $5.0 million in short-term leases costs for the years ended December 31, 2024 and 2023, respectively.
The Registrant Subsidiaries incurred the following lease costs for the year ended December 31, 2024:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy
New Orleans | | Entergy Texas | | |
| (In Thousands) |
| Operating lease cost | $19,382 | | | $19,770 | | | $9,482 | | | $2,234 | | | $7,977 | | | |
| Finance lease cost: | | | | | | | | | | | |
| Amortization of right-of-use assets | $4,675 | | | $5,755 | | | $2,604 | | | $1,240 | | | $2,104 | | | |
| Interest on lease liabilities | $990 | | | $1,068 | | | $1,116 | | | $264 | | | $399 | | | |
Of the lease costs disclosed above, Entergy Arkansas had $1.1 million, Entergy Louisiana had $1.1 million, Entergy Mississippi had $0.5 million, Entergy New Orleans had $0.1 million, and Entergy Texas had $0.3 million in short-term lease costs for the year ended December 31, 2024.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The Registrant Subsidiaries incurred the following lease costs for the year ended December 31, 2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy
New Orleans | | Entergy Texas | | |
| (In Thousands) |
| Operating lease cost | $17,065 | | | $16,906 | | | $7,837 | | | $1,912 | | | $7,290 | | | |
| Finance lease cost: | | | | | | | | | | | |
| Amortization of right-of-use assets | $3,633 | | | $4,835 | | | $2,227 | | | $1,025 | | | $1,786 | | | |
| Interest on lease liabilities | $545 | | | $729 | | | $973 | | | $150 | | | $284 | | | |
Of the lease costs disclosed above, Entergy Arkansas had $1.7 million, Entergy Louisiana had $1.6 million, Entergy Mississippi had $1.1 million, Entergy New Orleans had $0.1 million, and Entergy Texas had $0.4 million in short-term lease costs for the year ended December 31, 2023.
The lease costs for the years ended December 31, 2024 and 2023 disclosed above materially approximate the cash flows used by the Registrant Subsidiaries for leases with all costs included within operating activities on the respective Statements of Cash Flows, except for the finance lease costs which are included in financing activities.
Entergy has elected to account for short-term leases in accordance with policy options provided by accounting guidance; therefore, there are no related lease liabilities or right-of-use assets for the costs recognized above by Entergy or by its Registrant Subsidiaries in the table below.
Included within Property, Plant, and Equipment on Entergy’s consolidated balance sheets at December 31, 2024 and 2023 are $277 million and $207 million related to operating leases, respectively, and $110 million and $84 million related to finance leases, respectively. These lease amounts include $1 million related to operating leases and $4 million related to finance leases classified as held for sale in “Non-current assets held for sale” on Entergy’s consolidated balance sheet as of December 31, 2024. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
Included within Utility Plant on the Registrant Subsidiaries’ respective balance sheets at December 31, 2024 and 2023 are the following amounts:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas |
| (In Thousands) |
2024 (a) | | | | | | | | | |
| Operating leases | $64,960 | | | $65,909 | | | $32,399 | | | $7,971 | | | $27,524 | |
| Finance leases | $36,105 | | | $26,159 | | | $22,641 | | | $6,451 | | | $10,822 | |
| | | | | | | | | |
| 2023 | | | | | | | | | |
| Operating leases | $61,718 | | | $54,047 | | | $25,470 | | | $6,119 | | | $21,321 | |
| Finance leases | $17,622 | | | $21,438 | | | $22,661 | | | $4,779 | | | $8,714 | |
(a)Includes $0.4 million of operating leases and $1.4 million of finance leases for Entergy Louisiana and $0.4 million of operating leases and $3.0 million of finance leases for Entergy New Orleans classified as held for sale in “Non-current assets held for sale” on their respective consolidated balance sheet as of December 31, 2024. See Note 14 to the financial statements for further discussion of the planned sale of the
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
The following lease-related liabilities are recorded within the respective Other lines on Entergy’s consolidated balance sheets at December 31, 2024 and 2023:
| | | | | | | | | | | | | | |
| | 2024 | | 2023 |
| | (In Thousands) |
| Current liabilities (a): | | | | |
| Operating leases | | $65,907 | | | $60,789 | |
| Finance leases | | $18,253 | | | $16,671 | |
| Non-current liabilities (b): | | | | |
| Operating leases | | $211,290 | | | $146,627 | |
| Finance leases | | $96,536 | | | $72,215 | |
(a)Includes $0.3 million of operating leases and $1 million of finance leases classified as held for sale and included within other current liabilities on Entergy’s consolidated balance sheet as of December 31, 2024. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
(b)Includes $1 million of operating leases and $3 million of finance leases classified as held for sale and included within other non-current liabilities on Entergy’s consolidated balance sheet as of December 31, 2024. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
The following lease-related liabilities are recorded within the respective Other lines on the Registrant Subsidiaries’ respective balance sheets at December 31, 2024:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas |
| (In Thousands) |
| Current liabilities (a): | | | | | | | | | |
| Operating leases | $17,159 | | | $17,016 | | | $8,116 | | | $1,885 | | | $7,387 | |
| Finance leases | $3,734 | | | $5,620 | | | $3,228 | | | $1,218 | | | $2,185 | |
| Non-current liabilities (b): | | | | | | | | | |
| Operating leases | $47,799 | | | $48,896 | | | $24,294 | | | $5,995 | | | $20,142 | |
| Finance leases | $32,584 | | | $20,539 | | | $20,271 | | | $5,233 | | | $8,637 | |
(a)Includes $0.2 million operating leases and $0.4 million of finance leases for Entergy Louisiana and $0.1 million of operating leases and $0.7 million of finance leases for Entergy New Orleans classified as held for sale and included within other current liabilities on their respective consolidated balance sheet as of December 31, 2024. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
(b)Includes $0.2 million of operating leases and $1.0 million of finance leases for Entergy Louisiana and $0.3 million of operating leases and $2.3 million of finance leases for Entergy New Orleans classified as held for sale and included within other non-current liabilities on their respective consolidated balance sheet as of December 31, 2024. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The following lease-related liabilities are recorded within the respective Other lines on the Registrant Subsidiaries’ respective balance sheets at December 31, 2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas |
| (In Thousands) |
| Current liabilities: | | | | | | | | | |
| Operating leases | $15,514 | | | $14,771 | | | $6,754 | | | $1,681 | | | $6,023 | |
| Finance leases | $3,743 | | | $4,870 | | | $3,059 | | | $991 | | | $1,865 | |
| Non-current liabilities: | | | | | | | | |
| Operating leases | $46,211 | | | $39,282 | | | $18,722 | | | $4,377 | | | $15,304 | |
| Finance leases | $13,879 | | | $16,568 | | | $19,602 | | | $3,788 | | | $6,849 | |
The following information contains the weighted-average remaining lease term in years and the weighted-average discount rate for the operating and finance leases of Entergy at December 31, 2024 and 2023:
| | | | | | | | | | | | | | |
| | 2024 | | 2023 |
| Weighted-average remaining lease terms: | | | | |
| Operating leases | | 5.54 | | 4.46 |
| Finance leases | | 9.81 | | 8.61 |
| Weighted-average discount rate: | | | | |
| Operating leases | | 4.34 | % | | 4.10 | % |
| Finance leases | | 4.75 | % | | 4.64 | % |
The following information contains the weighted-average remaining lease term in years and the weighted-average discount rate for the operating and finance leases of the Registrant Subsidiaries at December 31, 2024:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas |
| Weighted-average remaining lease terms: | | | | | | | | | |
| Operating leases | 4.39 | | 4.64 | | 5.25 | | 6.08 | | 4.59 |
| Finance leases | 11.32 | | 5.60 | | 17.58 | | 5.91 | | 5.74 |
| Weighted-average discount rate: | | | | | | | | | |
| Operating leases | 4.38 | % | | 4.38 | % | | 4.52 | % | | 4.40 | % | | 4.55 | % |
| Finance leases | 4.38 | % | | 4.28 | % | | 5.18 | % | | 4.19 | % | | 4.19 | % |
The following information contains the weighted-average remaining lease term in years and the weighted-average discount rate for the operating and finance leases of the Registrant Subsidiaries at December 31, 2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas |
| Weighted-average remaining lease terms: | | | | | | | | | |
| Operating leases | 4.62 | | 4.60 | | 5.34 | | 6.38 | | 4.44 |
| Finance leases | 5.57 | | 5.40 | | 17.82 | | 5.73 | | 5.49 |
| Weighted-average discount rate: | | | | | | | | | |
| Operating leases | 4.04 | % | | 4.01 | % | | 4.08 | % | | 4.02 | % | | 4.43 | % |
| Finance leases | 3.77 | % | | 3.85 | % | | 5.08 | % | | 3.69 | % | | 3.76 | % |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Maturity of the lease liabilities for Entergy as of December 31, 2024 are as follows:
| | | | | | | | | | | | | | |
| | Operating Leases | | Finance Leases |
| | (In Thousands) |
| 2025 | | $77,097 | | | $23,860 | |
| 2026 | | 68,793 | | | 22,129 | |
| 2027 | | 58,349 | | | 19,676 | |
| 2028 | | 40,111 | | | 16,993 | |
| 2029 | | 24,807 | | | 13,008 | |
| Years thereafter | | 48,439 | | | 55,018 | |
| Minimum lease payments | | 317,596 | | | 150,684 | |
| Less: amount representing interest | | 40,399 | | | 35,895 | |
| Present value of net minimum lease payments | | $277,197 | | | $114,789 | |
Maturity of the lease liabilities for the Registrant Subsidiaries as of December 31, 2024 are as follows:
Operating Leases
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas |
| | (In Thousands) |
| 2025 | | $19,625 | | | $20,093 | | | $9,764 | | | $2,194 | | | $8,679 | |
| 2026 | | 17,923 | | | 17,733 | | | 8,540 | | | 1,859 | | | 7,577 | |
| 2027 | | 15,301 | | | 15,425 | | | 7,744 | | | 1,539 | | | 5,903 | |
| 2028 | | 9,588 | | | 11,561 | | | 5,952 | | | 1,265 | | | 4,546 | |
| 2029 | | 4,915 | | | 6,328 | | | 3,212 | | | 862 | | | 2,891 | |
| Years thereafter | | 4,543 | | | 4,473 | | | 3,126 | | | 1,395 | | | 1,908 | |
| Minimum lease payments | | 71,895 | | | 75,613 | | | 38,338 | | | 9,114 | | | 31,504 | |
| Less: amount representing interest | | 6,937 | | | 9,701 | | | 5,928 | | | 1,234 | | | 3,975 | |
| Present value of net minimum lease payments | | $64,958 | | | $65,912 | | | $32,410 | | | $7,880 | | | $27,529 | |
Finance Leases
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas |
| | (In Thousands) |
| 2025 | | $6,455 | | | $6,723 | | | $3,640 | | | $1,469 | | | $2,628 | |
| 2026 | | 6,084 | | | 5,974 | | | 3,331 | | | 1,399 | | | 2,421 | |
| 2027 | | 5,444 | | | 5,084 | | | 2,877 | | | 1,263 | | | 2,096 | |
| 2028 | | 4,606 | | | 4,183 | | | 2,444 | | | 1,057 | | | 1,808 | |
| 2029 | | 3,793 | | | 3,303 | | | 2,001 | | | 864 | | | 1,356 | |
| Years thereafter | | 23,226 | | | 4,516 | | | 24,082 | | | 1,252 | | | 1,936 | |
| Minimum lease payments | | 49,608 | | | 29,783 | | | 38,375 | | | 7,304 | | | 12,245 | |
| Less: amount representing interest | | 13,290 | | | 3,624 | | | 14,876 | | | 853 | | | 1,423 | |
| Present value of net minimum lease payments | | $36,318 | | | $26,159 | | | $23,499 | | | $6,451 | | | $10,822 | |
In allocating consideration in lease contracts to the lease and non-lease components, Entergy and the Registrant Subsidiaries have made the accounting policy election to combine lease and non-lease components
Entergy Corporation and Subsidiaries
Notes to Financial Statements
related to fleet vehicles used in operations and to allocate the contract consideration to both lease and non-lease components for real estate leases.
NOTE 11. RETIREMENT, OTHER POSTRETIREMENT BENEFITS, AND DEFINED CONTRIBUTION PLANS (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Qualified Pension Plans
Entergy has defined benefit qualified pension plans, including the Entergy Corporation Retirement Plan for Non-Bargaining Employees (Non-Bargaining Plan I), the Entergy Corporation Retirement Plan for Bargaining Employees (Bargaining Plan I), the Entergy Corporation Retirement Plan II for Non-Bargaining Employees (Non-Bargaining Plan II), the Entergy Corporation Retirement Plan II for Bargaining Employees (Bargaining Plan II), the Entergy Corporation Retirement Plan III (Plan III), the Entergy Corporation Retirement Plan IV for Bargaining Employees, Entergy Corporation Retirement Plan VI for Non-Bargaining Employees (Non-Bargaining Plan VI), and the Entergy Corporation Cash Balance Plan for Bargaining Employees (Bargaining Cash Balance Plan). The Entergy Corporation Cash Balance Plan for Non-Bargaining Employees (Non-Bargaining Cash Balance Plan) was merged with and into Non-Bargaining Plan I effective January 1, 2022. Effective January 1, 2024, Non-Bargaining Plan I was amended to spin-off predominately inactive participants into a new qualified pension plan, Non-Bargaining Plan VI. Effective January 1, 2025, Bargaining Plan I was amended to spin-off predominately inactive participants into a new qualified pension plan, Entergy Corporation Plan VI for Bargaining Employees (Bargaining Plan VI). The Bargaining Cash Balance Plan was merged with and into Bargaining Plan I also effective January 1, 2025.
The Registrant Subsidiaries participate in these plans: Non-Bargaining Plan I, Bargaining Plan I, Plan III, Non-Bargaining Plan VI, and Bargaining Cash Balance Plan.
Non-bargaining and bargaining employees whose most recent date of hire was prior to June 30, 2014 (or such later date provided for in their applicable collective bargaining agreement) participate in a noncontributory final average pay formula that provides pension benefits based on the employee’s credited service and compensation during employment. Non-bargaining and bargaining employees whose most recent date of hire is after June 30, 2014 and before January 1, 2021 (or such later date provided for in their applicable collective bargaining agreement) do not participate in a final average pay formula, but instead participate in a cash balance formula. Effective January 1, 2021, the Non-Bargaining Cash Balance Plan and Bargaining Cash Balance Plan were amended to close participation in each plan to those employees whose most recent hire date is after December 31, 2020 (or such later date provided for in their applicable collective bargaining agreement). Employees hired after this date instead may be eligible to participate in and receive a discretionary employer contribution under an Entergy sponsored tax-qualified defined contribution plan that includes a 401(k) feature.
The assets of the defined benefit qualified pension plans are held in a master trust established by Entergy. Each pension plan has an undivided beneficial interest in each of the investment accounts in the master trust that is maintained by a trustee. Use of the master trust permits the commingling of the trust assets of the pension plans of Entergy Corporation and its Registrant Subsidiaries for investment and administrative purposes. Although assets in the master trust are commingled, the trustee maintains supporting records for the purpose of allocating the trust level equity in net earnings (loss) and the administrative expenses of the investment accounts in the trust to the various participating pension plans in the trust. The fair value of the trust’s assets is determined by the trustee and certain investment managers. The trustee calculates a daily earnings factor, including realized and unrealized gains or losses, collected and accrued income, and administrative expenses, and allocates earnings to each plan in the master trust on a pro rata basis.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Within each pension plan, the record of each Registrant Subsidiary’s beneficial interest in the plan assets is maintained by the plan’s actuary and is updated quarterly. Assets for each Registrant Subsidiary are increased for investment net income and contributions and are decreased for benefit payments. A plan’s investment net income/loss (i.e., interest and dividends, realized and unrealized gains and losses and expenses) is allocated to the Registrant Subsidiaries participating in that plan based on the value of assets for each Registrant Subsidiary at the beginning of the quarter adjusted for contributions and benefit payments made during the quarter.
Entergy Corporation and its subsidiaries fund pension plans in an amount not less than the minimum required contribution under the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code of 1986, as amended. The assets of the plans include common and preferred stocks, fixed-income securities, interest in a money market fund, and insurance contracts. The Registrant Subsidiaries’ pension costs are recovered from customers as a component of cost of service in each of their respective jurisdictions.
Components of Qualified Net Pension Cost and Other Amounts Recognized as a Regulatory Asset and/or Accumulated Other Comprehensive Income (AOCI)
Entergy Corporation and its subsidiaries’ total 2024, 2023, and 2022 qualified pension costs and amounts recognized as a regulatory asset and/or other comprehensive income, including amounts capitalized, included the following components:
| | | | | | | | | | | | | | | | | |
| | 2024 | | 2023 | | 2022 |
| | (In Thousands) |
| Net periodic pension cost: | | | | | |
| Service cost - benefits earned during the period | $93,468 | | | $101,182 | | | $138,085 | |
| Interest cost on projected benefit obligation | 249,757 | | | 298,281 | | | 235,805 | |
| Expected return on assets | (338,619) | | | (388,030) | | | (402,504) | |
| | | | | |
| Recognized net loss | 58,590 | | | 81,919 | | | 188,683 | |
| Settlement charges | 328,277 | | | 160,387 | | | 230,389 | |
| Net pension cost | $391,473 | | | $253,739 | | | $390,458 | |
| Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax) | | | | | |
| Arising this period: | | | | | |
| Net (gain) loss | ($101,445) | | | ($213,636) | | | $6,113 | |
| Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year: | | | | | |
| Amortization of net loss | (58,590) | | | (81,919) | | | (188,683) | |
| Settlement charges | (328,277) | | | (160,387) | | | (230,389) | |
| Total | ($488,312) | | | ($455,942) | | | ($412,959) | |
| Total recognized as net periodic pension cost, regulatory asset, and/or AOCI (before tax) | ($96,839) | | | ($202,203) | | | ($22,501) | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The Registrant Subsidiaries’ total 2024, 2023, and 2022 qualified pension costs and amounts recognized as a regulatory asset and/or other comprehensive income, including amounts capitalized, for their current and former employees included the following components:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | (In Thousands) |
| Net periodic pension cost: | | | | | | | | | | | | |
| Service cost - benefits earned during the period | | $16,398 | | | $22,204 | | | $5,135 | | | $1,760 | | | $3,846 | | | $5,525 | |
| Interest cost on projected benefit obligation | | 52,870 | | | 55,843 | | | 14,084 | | | 6,276 | | | 11,324 | | | 13,525 | |
| Expected return on assets | | (72,620) | | | (77,786) | | | (20,451) | | | (8,814) | | | (16,308) | | | (18,485) | |
| Recognized net loss | | 22,983 | | | 10,407 | | | 4,562 | | | 1,881 | | | 1,574 | | | 4,638 | |
| Settlement charges | | — | | | — | | | — | | | — | | | — | | | 615 | |
| Net pension cost | | $19,631 | | | $10,668 | | | $3,330 | | | $1,103 | | | $436 | | | $5,818 | |
| Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax) | | | | | | | | | | | | |
| Arising this period: | | | | | | | | | | | | |
| Net gain | | ($49,352) | | | ($55,010) | | | ($10,857) | | | ($8,990) | | | ($6,190) | | | ($9,812) | |
| Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year: | | | | | | | | | | | | |
| Amortization of net loss | | (22,983) | | | (10,407) | | | (4,562) | | | (1,881) | | | (1,574) | | | (4,638) | |
| Settlement charges | | — | | | — | | | — | | | — | | | — | | | (615) | |
| Total | | ($72,335) | | | ($65,417) | | | ($15,419) | | | ($10,871) | | | ($7,764) | | | ($15,065) | |
| Total recognized as net periodic pension cost, regulatory asset, and/or AOCI (before tax) | | ($52,704) | | | ($54,749) | | | ($12,089) | | | ($9,768) | | | ($7,328) | | | ($9,247) | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | (In Thousands) |
| Net periodic pension cost: | | | | | | | | | | | | |
| Service cost - benefits earned during the period | | $18,461 | | | $24,716 | | | $5,775 | | | $1,955 | | | $4,328 | | | $5,749 | |
| Interest cost on projected benefit obligation | | 56,026 | | | 60,346 | | | 15,402 | | | 6,747 | | | 12,726 | | | 13,852 | |
| Expected return on assets | | (70,574) | | | (75,757) | | | (19,423) | | | (8,798) | | | (16,641) | | | (17,585) | |
| Recognized net loss | | 19,400 | | | 19,797 | | | 5,719 | | | 1,694 | | | 4,075 | | | 4,236 | |
| Settlement charges | | 26,137 | | | 40,437 | | | 12,242 | | | 2,080 | | | 11,230 | | | 6,375 | |
| Net pension cost | | $49,450 | | | $69,539 | | | $19,715 | | | $3,678 | | | $15,718 | | | $12,627 | |
| Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax) | | | | | | | | | | | | |
| Arising this period: | | | | | | | | | | | | |
| Net gain | | ($30,674) | | | ($71,016) | | | ($20,220) | | | ($3,183) | | | ($16,759) | | | ($3,268) | |
| Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year: | | | | | | | | | | | | |
| Amortization of net loss | | (19,400) | | | (19,797) | | | (5,719) | | | (1,694) | | | (4,075) | | | (4,236) | |
| Settlement charges | | (26,137) | | | (40,437) | | | (12,242) | | | (2,080) | | | (11,230) | | | (6,375) | |
| Total | | ($76,211) | | | ($131,250) | | | ($38,181) | | | ($6,957) | | | ($32,064) | | | ($13,879) | |
| Total recognized as net periodic pension cost, regulatory asset, and/or AOCI (before tax) | | ($26,761) | | | ($61,711) | | | ($18,466) | | | ($3,279) | | | ($16,346) | | | ($1,252) | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2022 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | (In Thousands) |
| Net periodic pension cost: | | | | | | | | | | | | |
| Service cost - benefits earned during the period | | $25,210 | | | $33,520 | | | $8,043 | | | $2,745 | | | $5,999 | | | $7,746 | |
| Interest cost on projected benefit obligation | | 45,378 | | | 49,330 | | | 12,979 | | | 5,491 | | | 10,729 | | | 11,286 | |
| Expected return on assets | | (75,820) | | | (82,478) | | | (20,168) | | | (9,920) | | | (18,317) | | | (18,173) | |
| Recognized net loss | | 43,597 | | | 41,711 | | | 12,594 | | | 4,787 | | | 9,013 | | | 10,938 | |
| Settlement charges | | 36,409 | | | 58,550 | | | 15,786 | | | 6,676 | | | 22,411 | | | 9,905 | |
| Net pension cost | | $74,774 | | | $100,633 | | | $29,234 | | | $9,779 | | | $29,835 | | | $21,702 | |
| Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax) | | | | | | | | | | | | |
| Arising this period: | | | | | | | | | | | | |
| Net (gain) loss | | $28,365 | | | ($15,604) | | | ($4,743) | | | $525 | | | $13,363 | | | ($7,063) | |
| Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year: | | | | | | | | | | | | |
| Amortization of net loss | | (43,597) | | | (41,711) | | | (12,594) | | | (4,787) | | | (9,013) | | | (10,938) | |
| Settlement charges | | (36,409) | | | (58,550) | | | (15,786) | | | (6,676) | | | (22,411) | | | (9,905) | |
| Total | | ($51,641) | | | ($115,865) | | | ($33,123) | | | ($10,938) | | | ($18,061) | | | ($27,906) | |
| Total recognized as net periodic pension cost, regulatory asset, and/or AOCI (before tax) | | $23,133 | | | ($15,232) | | | ($3,889) | | | ($1,159) | | | $11,774 | | | ($6,204) | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Qualified Pension Obligations, Plan Assets, Funded Status, and Amounts Recognized in the Balance Sheet
Qualified pension obligations, plan assets, funded status, and amounts recognized in the Consolidated Balance Sheets for Entergy Corporation and its Subsidiaries as of December 31, 2024 and 2023 are as follows:
| | | | | | | | | | | |
| | 2024 | | 2023 |
| | (In Thousands) |
| Change in Projected Benefit Obligation (PBO) | | | |
| Balance at January 1 | $5,915,404 | | | $6,166,106 | |
| Service cost | 93,468 | | | 101,182 | |
| Interest cost | 249,757 | | | 298,281 | |
| Actuarial (gain) loss | (156,248) | | | 123,237 | |
| Benefits paid (including settlement lump sum benefit payments of ($1,205,195) in 2024 and ($410,110) in 2023) | (1,581,690) | | | (773,402) | |
| Balance at December 31 | $4,520,691 | | | $5,915,404 | |
| Change in Plan Assets | | | |
| Fair value of assets at January 1 | $5,460,601 | | | $5,242,098 | |
| Actual return on plan assets | 283,816 | | | 724,903 | |
| Employer contributions | 270,005 | | | 267,002 | |
| Benefits paid (including settlement lump sum benefit payments of ($1,205,195) in 2024 and ($410,110) in 2023) | (1,581,690) | | | (773,402) | |
| Fair value of assets at December 31 | $4,432,732 | | | $5,460,601 | |
| Funded status | ($87,959) | | | ($454,803) | |
| Amount recognized in the balance sheet (funded status) | | | |
| Non-current assets | $70,671 | | | $— | |
| Non-current liabilities (a) | (158,630) | | | (454,803) | |
| Total funded status | ($87,959) | | | ($454,803) | |
| Amount recognized as a regulatory asset | | | |
| Net loss (b) | $1,217,402 | | | $1,447,978 | |
| Amount recognized as AOCI (before tax) | | | |
| Net loss | $89,531 | | | $347,268 | |
(a)Includes ($4.0) million at Entergy as of December 31, 2024 of non-current liabilities related to the natural gas distribution businesses classified as held for sale and included in other non-current liabilities on the consolidated balance sheet. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
(b)Includes $13.9 million at Entergy as of December 31, 2024 of regulatory assets related to the natural gas distribution businesses classified as held for sale and included in “Non-current assets held for sale” on the consolidated balance sheet. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Qualified pension obligations, plan assets, funded status, and amounts recognized in the Balance Sheets for the Registrant Subsidiaries as of December 31, 2024 and 2023 are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | (In Thousands) |
| Change in Projected Benefit Obligation (PBO) | | | | | | | | | | | | |
| Balance at January 1 | | $1,117,585 | | | $1,173,283 | | | $295,942 | | | $133,950 | | | $239,984 | | | $286,558 | |
| Service cost | | 16,398 | | | 22,204 | | | 5,135 | | | 1,760 | | | 3,846 | | | 5,525 | |
| Interest cost | | 52,870 | | | 55,843 | | | 14,084 | | | 6,276 | | | 11,324 | | | 13,525 | |
| Actuarial gain | | (48,020) | | | (46,895) | | | (10,071) | | | (6,098) | | | (6,102) | | | (8,908) | |
| Benefits paid (a) | | (77,770) | | | (81,411) | | | (22,019) | | | (8,755) | | | (19,110) | | | (21,583) | |
| Balance at December 31 | | $1,061,063 | | | $1,123,024 | | | $283,071 | | | $127,133 | | | $229,942 | | | $275,117 | |
| Change in Plan Assets | | | | | | | | | | | | |
| Fair value of assets at January 1 | | $991,894 | | | $1,058,711 | | | $280,260 | | | $117,923 | | | $222,496 | | | $255,443 | |
| Actual return on plan assets | | 73,952 | | | 85,900 | | | 21,237 | | | 11,706 | | | 16,395 | | | 19,389 | |
| Employer contributions | | 55,112 | | | 48,401 | | | 14,980 | | | 4,931 | | | 8,272 | | | 16,650 | |
| Benefits paid (a) | | (77,770) | | | (81,411) | | | (22,019) | | | (8,755) | | | (19,110) | | | (21,583) | |
| Fair value of assets at December 31 | | $1,043,188 | | | $1,111,601 | | | $294,458 | | | $125,805 | | | $228,053 | | | $269,899 | |
| Funded status | | ($17,875) | | | ($11,423) | | | $11,387 | | | ($1,328) | | | ($1,889) | | | ($5,218) | |
| Amounts recognized in the balance sheet (funded status) | | | | | | | | | | | | |
| Non-current assets | | $29,521 | | | $10,010 | | | $19,666 | | | $3,299 | | | $6,064 | | | $3,135 | |
| Non-current liabilities (b) | | (47,396) | | | (21,433) | | | (8,279) | | | (4,627) | | | (7,953) | | | (8,353) | |
| Total funded status | | ($17,875) | | | ($11,423) | | | $11,387 | | | ($1,328) | | | ($1,889) | | | ($5,218) | |
| Amounts recognized as regulatory asset | | | | | | | | | | | | |
| Net loss (c) | | $412,777 | | | $256,316 | | | $86,790 | | | $34,039 | | | $55,902 | | | $96,932 | |
| Amounts recognized as AOCI (before tax) | | | | | | | | | | | | |
| Net loss | | $— | | | $10,680 | | | $— | | | $— | | | $— | | | $— | |
(a)Including settlement lump sum benefit payments of ($2.1) million at System Energy.
(b)Includes ($2.0) million at Entergy Louisiana and ($1.2) million at Entergy New Orleans as of December 31, 2024 of non-current liabilities related to the respective natural gas distribution businesses classified as held for sale and included in other non-current liabilities on the respective consolidated balance sheets. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
(c)Includes $4.5 million at Entergy Louisiana and $6.7 million at Entergy New Orleans as of December 31, 2024 of regulatory assets related to the respective natural gas distribution businesses classified as held for sale and included in “Non-current assets held for sale” on the respective consolidated balance sheets. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | (In Thousands) |
| Change in Projected Benefit Obligation (PBO) | | | | | | | | | | | | |
| Balance at January 1 | | $1,168,098 | | | $1,256,422 | | | $320,994 | | | $140,436 | | | $265,565 | | | $288,302 | |
| Service cost | | 18,461 | | | 24,716 | | | 5,775 | | | 1,955 | | | 4,328 | | | 5,749 | |
| Interest cost | | 56,026 | | | 60,346 | | | 15,402 | | | 6,747 | | | 12,726 | | | 13,852 | |
| Actuarial (gain) loss | | 39,643 | | | 1,925 | | | (328) | | | 4,590 | | | (1,416) | | | 14,522 | |
| Benefits paid (a) | | (164,643) | | | (170,126) | | | (45,901) | | | (19,778) | | | (41,219) | | | (35,867) | |
| Balance at December 31 | | $1,117,585 | | | $1,173,283 | | | $295,942 | | | $133,950 | | | $239,984 | | | $286,558 | |
| Change in Plan Assets | | | | | | | | | | | | |
| Fair value of assets at January 1 | | $961,178 | | | $1,035,574 | | | $265,736 | | | $119,710 | | | $226,417 | | | $240,392 | |
| Actual return on plan assets | | 140,891 | | | 148,698 | | | 39,315 | | | 16,571 | | | 31,984 | | | 35,375 | |
| Employer contributions | | 54,468 | | | 44,565 | | | 21,110 | | | 1,420 | | | 5,314 | | | 15,543 | |
| Benefits paid (a) | | (164,643) | | | (170,126) | | | (45,901) | | | (19,778) | | | (41,219) | | | (35,867) | |
| Fair value of assets at December 31 | | $991,894 | | | $1,058,711 | | | $280,260 | | | $117,923 | | | $222,496 | | | $255,443 | |
| Funded status | | ($125,691) | | | ($114,572) | | | ($15,682) | | | ($16,027) | | | ($17,488) | | | ($31,115) | |
| Amounts recognized in the balance sheet (funded status) | | | | | | | | | | | | |
| Non-current liabilities | | ($125,691) | | | ($114,572) | | | ($15,682) | | | ($16,027) | | | ($17,488) | | | ($31,115) | |
| Amounts recognized as regulatory asset | | | | | | | | | | | | |
| Net loss | | $485,113 | | | $319,116 | | | $102,208 | | | $44,911 | | | $63,665 | | | $111,996 | |
| Amounts recognized as AOCI (before tax) | | | | | | | | | | | | |
| Net loss | | $— | | | $13,296 | | | $— | | | $— | | | $— | | | $— | |
(a)Including settlement lump sum benefit payments of ($68.7) million at Entergy Arkansas, ($103.1) million at Entergy Louisiana, ($31.4) million at Entergy Mississippi, ($5.3) million at Entergy New Orleans, ($29.4) million at Entergy Texas, and ($16.7) million at System Energy.
The qualified pension plans incurred net actuarial gains during 2024 primarily due to liability gains due to a rise in bond yields that resulted in increases to the discount rates used to develop the benefit obligations; partially offset by asset losses resulting from an actual return on assets lower than the expected return on assets in some plans. The qualified pension plans incurred net actuarial gains during 2023 primarily due to asset gains resulting from an actual return on assets much higher than the expected return on assets, offset by liability losses due to a decline in bond yields that resulted in decreases to the discount rates used to develop the benefit obligations.
The accumulated benefit obligation for Entergy’s qualified pension plans was $4.1 billion and $5.6 billion at December 31, 2024 and 2023, respectively.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Information for Entergy’s qualified pension plans with an accumulated benefit obligation in excess of plan assets as of December 31, 2024 and 2023 was as follows:
| | | | | | | | | | | |
| | 2024 | | 2023 |
| | (In Thousands) |
| Accumulated benefit obligation | $912,174 | | | $2,508,990 | |
| Fair value of plan assets | $864,795 | | | $2,300,937 | |
Information for Entergy’s qualified pension plans with a projected benefit obligation in excess of plan assets as of December 31, 2024 and 2023 was as follows:
| | | | | | | | | | | |
| | 2024 | | 2023 |
| | (In Thousands) |
| Projected benefit obligation | $2,701,323 | | | $4,385,472 | |
| Fair value of plan assets | $2,542,693 | | | $3,898,434 | |
The qualified pension accumulated benefit obligation for each of the Registrant Subsidiaries for their current and former employees as of December 31, 2024 and 2023 was as follows:
| | | | | | | | | | | |
| | 2024 | | 2023 |
| | (In Thousands) |
| Entergy Arkansas | $980,559 | | | $1,048,901 | |
| Entergy Louisiana | $1,024,433 | | | $1,085,318 | |
| Entergy Mississippi | $257,759 | | | $273,338 | |
| Entergy New Orleans | $118,620 | | | $125,878 | |
| Entergy Texas | $212,935 | | | $225,379 | |
| System Energy | $252,397 | | | $267,432 | |
Information for each of the Registrant Subsidiaries qualified pension plans with an accumulated benefit obligation in excess of plan assets as of December 31, 2024 and 2023 was as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy Texas | | System Energy |
| | | (In Thousands) |
| Accumulated benefit obligation | | $304,518 | | | $123,735 | | | $105,285 | | | $58,082 | | | $44,286 | |
| Fair value of plan assets | | $297,161 | | | $115,446 | | | $103,380 | | | $55,953 | | | $40,146 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | (In Thousands) |
| Accumulated benefit obligation | | $612,788 | | | $658,373 | | | $202,182 | | | $125,878 | | | $70,680 | | | $127,606 | |
| Fair value of plan assets | | $554,362 | | | $607,471 | | | $196,500 | | | $117,922 | | | $61,495 | | | $109,266 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Information for each of the Registrant Subsidiaries qualified pension plans with a projected benefit obligation in excess of plan assets as of December 31, 2024 and 2023 was as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | (In Thousands) |
| Projected benefit obligation | | $1,009,496 | | | $580,451 | | | $111,659 | | | $108,354 | | | $128,652 | | | $247,186 | |
| Fair value of plan assets | | $962,101 | | | $559,017 | | | $103,380 | | | $103,727 | | | $120,700 | | | $238,833 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | (In Thousands) |
| Projected benefit obligation | | $1,117,586 | | | $1,173,284 | | | $213,098 | | | $133,949 | | | $146,511 | | | $286,558 | |
| Fair value of plan assets | | $991,894 | | | $1,058,711 | | | $196,500 | | | $117,922 | | | $128,991 | | | $255,443 | |
Other Postretirement Benefits
Entergy also currently offers retiree medical, dental, vision, and life insurance benefits (other postretirement benefits) for eligible retired employees. Employees who commenced employment before July 1, 2014 and who satisfy certain eligibility requirements (including retiring from Entergy after a certain age and/or years of service with Entergy and immediately commencing their Entergy pension benefit), may become eligible for other postretirement benefits.
In March 2020, Entergy announced changes to its other postretirement benefits. Effective January 1, 2021, certain retired, former non-bargaining employees age 65 and older who are eligible for Entergy-sponsored retiree welfare benefits, and their eligible spouses who are age 65 and older (collectively, Medicare-eligible participants), are eligible to participate in an Entergy-sponsored retiree health plan, and are no longer eligible for retiree coverage under the Entergy Corporation Companies’ Benefits Plus Medical, Dental and Vision Plans. Under the Entergy-sponsored retiree health plan, Medicare-eligible participants are eligible to participate in a health reimbursement arrangement which they may use towards the purchase of various types of qualified insurance offered through a Medicare exchange provider and for other qualified medical expenses. The changes affecting active bargaining unit employees were negotiated with the unions prior to implementation, where necessary, and to the extent required by law.
Effective January 1, 1993, Entergy adopted an accounting standard requiring a change from a cash method to an accrual method of accounting for postretirement benefits other than pensions. Entergy Arkansas, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy have received regulatory approval to recover accrued other postretirement benefits costs through rates. The LPSC ordered Entergy Louisiana to continue the use of the pay-as-you-go method for ratemaking purposes for postretirement benefits other than pensions. However, the LPSC retains the flexibility to examine individual companies’ accounting for other postretirement benefits to determine if special exceptions to this order are warranted. Pursuant to regulatory directives, Entergy Arkansas, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy contribute the other postretirement benefits costs collected in rates into external trusts. System Energy is funding, on behalf of Entergy Operations, other postretirement benefits associated with employees who work or worked at Grand Gulf.
Trust assets contributed by participating Registrant Subsidiaries are in master trusts, established by Entergy Corporation and maintained by a trustee. Each plan has an undivided beneficial interest in each of the investment accounts in its respective master trust that is maintained by a trustee. Each participating Registrant Subsidiary holds a beneficial interest in the plans’ investment accounts. The assets in the master trusts are commingled for investment and administrative purposes. Although assets are commingled, supporting records are maintained for
Entergy Corporation and Subsidiaries
Notes to Financial Statements
the purpose of allocating the beneficial interest in net earnings/(losses) and the administrative expenses of the investment accounts to the various participating plans and participating Registrant Subsidiaries. Beneficial interest in an investment account’s net income/(loss) is comprised of interest and dividends, realized and unrealized gains and losses, and expenses. Beneficial interest from these investments is allocated to the plans and participating Registrant Subsidiary based on their portion of net assets in the pooled accounts.
Components of Net Other Postretirement Benefits Cost and Other Amounts Recognized as a Regulatory Asset and/or AOCI
Entergy Corporation’s and its subsidiaries’ total 2024, 2023, and 2022 other postretirement benefits income, including amounts capitalized and amounts recognized as a regulatory asset and/or other comprehensive income, included the following components:
| | | | | | | | | | | | | | | | | |
| | 2024 | | 2023 | | 2022 |
| | (In Thousands) |
| Other postretirement costs: | | | | | |
| Service cost - benefits earned during the period | $12,503 | | | $14,654 | | | $24,734 | |
| Interest cost on accumulated postretirement benefits obligation (APBO) | 39,408 | | | 42,272 | | | 27,306 | |
| Expected return on assets | (42,277) | | | (36,732) | | | (43,420) | |
| Amortization of prior service credit | (22,880) | | | (22,558) | | | (25,550) | |
| Recognized net (gain) loss | (11,045) | | | (11,446) | | | 4,333 | |
| Net other postretirement benefits income | ($24,291) | | | ($13,810) | | | ($12,597) | |
| Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax) | | | | | |
| Arising this period: | | | | | |
| Prior service credit for the period | $— | | | ($4,434) | | | ($858) | |
| Net gain | (73,123) | | | (44,441) | | | (131,524) | |
| Amounts reclassified from regulatory asset and/or AOCI to net periodic benefit cost in the current year: | | | | | |
| Amortization of prior service credit | 22,880 | | | 22,558 | | | 25,550 | |
| Amortization of net gain (loss) | 11,045 | | | 11,446 | | | (4,333) | |
| Total | ($39,198) | | | ($14,871) | | | ($111,165) | |
| Total recognized as net periodic other postretirement benefits income, regulatory asset, and/or AOCI (before tax) | ($63,489) | | | ($28,681) | | | ($123,762) | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Total 2024, 2023, and 2022 other postretirement benefits (income) costs of the Registrant Subsidiaries, including amounts capitalized and deferred, for their current and former employees included the following components:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | (In Thousands) |
| Other postretirement costs: | | | | | | | | | | | | |
| Service cost - benefits earned during the period | | $2,569 | | | $2,800 | | | $736 | | | $205 | | | $670 | | | $699 | |
| Interest cost on APBO | | 7,331 | | | 7,995 | | | 1,945 | | | 1,012 | | | 2,411 | | | 1,593 | |
| Expected return on assets | | (17,535) | | | — | | | (5,486) | | | (5,915) | | | (10,156) | | | (2,912) | |
| Amortization of prior service cost (credit) | | 2,097 | | | (4,544) | | | (955) | | | (916) | | | (4,371) | | | (293) | |
| Recognized net (gain) loss | | — | | | (6,952) | | | 61 | | | 74 | | | 591 | | | — | |
| Net other postretirement benefits income | | ($5,538) | | | ($701) | | | ($3,699) | | | ($5,540) | | | ($10,855) | | | ($913) | |
| Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax) | | | | | | | | | | | | |
| Arising this period: | | | | | | | | | | | | |
| | | | | | | | | | | | |
| Net gain | | ($20,074) | | | ($7,273) | | | ($3,915) | | | ($2,217) | | | ($4,683) | | | ($3,476) | |
| Amounts reclassified from regulatory asset and/or AOCI to net periodic benefit cost in the current year: | | | | | | | | | | | | |
| Amortization of prior service credit (cost) | | (2,097) | | | 4,544 | | | 955 | | | 916 | | | 4,371 | | | 293 | |
| Amortization of net gain (loss) | | — | | | 6,952 | | | (61) | | | (74) | | | (591) | | | — | |
| Total | | ($22,171) | | | $4,223 | | | ($3,021) | | | ($1,375) | | | ($903) | | | ($3,183) | |
| Total recognized as net periodic other postretirement benefits income, regulatory asset, and/or AOCI (before tax) | | ($27,709) | | | $3,522 | | | ($6,720) | | | ($6,915) | | | ($11,758) | | | ($4,096) | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | (In Thousands) |
| Other postretirement costs: | | | | | | | | | | | | |
| Service cost - benefits earned during the period | | $2,965 | | | $3,379 | | | $878 | | | $235 | | | $809 | | | $754 | |
| Interest cost on APBO | | 8,002 | | | 8,931 | | | 2,170 | | | 1,160 | | | 2,597 | | | 1,726 | |
| Expected return on assets | | (15,113) | | | — | | | (4,716) | | | (5,263) | | | (8,776) | | | (2,535) | |
| Amortization of prior service cost (credit) | | 2,096 | | | (3,804) | | | (955) | | | (916) | | | (4,371) | | | (293) | |
| Recognized net (gain) loss | | 171 | | | (7,057) | | | 85 | | | 466 | | | 914 | | | — | |
| Net other postretirement benefits (income) cost | | ($1,879) | | | $1,449 | | | ($2,538) | | | ($4,318) | | | ($8,827) | | | ($348) | |
| Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax) | | | | | | | | | | | | |
| Arising this period: | | | | | | | | | | | | |
| Prior service credit for the period | | $— | | | ($4,434) | | | $— | | | $— | | | $— | | | $— | |
| Net gain | | (23,033) | | | (458) | | | (6,883) | | | (7,606) | | | (8,790) | | | (3,942) | |
| Amounts reclassified from regulatory asset and/or AOCI to net periodic benefit cost in the current year: | | | | | | | | | | | | |
| Amortization of prior service credit (cost) | | (2,096) | | | 3,804 | | | 955 | | | 916 | | | 4,371 | | | 293 | |
| Amortization of net gain (loss) | | (171) | | | 7,057 | | | (85) | | | (466) | | | (914) | | | — | |
| Total | | ($25,300) | | | $5,969 | | | ($6,013) | | | ($7,156) | | | ($5,333) | | | ($3,649) | |
| Total recognized as net periodic other postretirement (income) cost, regulatory asset, and/or AOCI (before tax) | | ($27,179) | | | $7,418 | | | ($8,551) | | | ($11,474) | | | ($14,160) | | | ($3,997) | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2022 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | (In Thousands) |
| Other postretirement costs: | | | | | | | | | | | | |
| Service cost - benefits earned during the period | | $4,457 | | | $5,633 | | | $1,354 | | | $397 | | | $1,322 | | | $1,239 | |
| Interest cost on APBO | | 5,050 | | | 5,770 | | | 1,401 | | | 694 | | | 1,596 | | | 1,116 | |
| Expected return on assets | | (17,930) | | | — | | | (5,575) | | | (5,997) | | | (10,273) | | | (3,162) | |
| Amortization of prior service cost (credit) | | 1,885 | | | (4,630) | | | (1,772) | | | (916) | | | (4,371) | | | (319) | |
| Recognized net (gain) loss | | 873 | | | (744) | | | 222 | | | (898) | | | 648 | | | 121 | |
| Net other postretirement benefits (income) cost | | ($5,665) | | | $6,029 | | | ($4,370) | | | ($6,720) | | | ($11,078) | | | ($1,005) | |
| Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax) | | | | | | | | | | | | |
| Arising this period: | | | | | | | | | | | | |
| Prior service cost (credit) for the period | | $273 | | | $323 | | | ($1,300) | | | $— | | | $— | | | $141 | |
| Net (gain) loss | | 12,894 | | | (65,501) | | | 6,629 | | | 17,334 | | | 22,323 | | | 1,208 | |
| Amounts reclassified from regulatory asset and/or AOCI to net periodic benefit cost in the current year: | | | | | | | | | | | | |
| Amortization of prior service credit (cost) | | (1,885) | | | 4,630 | | | 1,772 | | | 916 | | | 4,371 | | | 319 | |
| Amortization of net gain (loss) | | (873) | | | 744 | | | (222) | | | 898 | | | (648) | | | (121) | |
| Total | | $10,409 | | | ($59,804) | | | $6,879 | | | $19,148 | | | $26,046 | | | $1,547 | |
| Total recognized as net periodic other postretirement (income) cost, regulatory asset, and/or AOCI (before tax) | | $4,744 | | | ($53,775) | | | $2,509 | | | $12,428 | | | $14,968 | | | $542 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Other Postretirement Benefits Obligations, Plan Assets, Funded Status, and Amounts Not Yet Recognized and Recognized in the Balance Sheet
Other postretirement benefits obligations, plan assets, funded status, and amounts not yet recognized and recognized in the Consolidated Balance Sheets of Entergy Corporation and its Subsidiaries as of December 31, 2024 and 2023 are as follows:
| | | | | | | | | | | |
| | 2024 | | 2023 |
| | (In Thousands) |
| Change in APBO | | | |
| Balance at January 1 | $837,644 | | | $865,854 | |
| Service cost | 12,503 | | | 14,654 | |
| Interest cost | 39,408 | | | 42,272 | |
| Plan amendments | — | | | (4,434) | |
| Plan participant contributions | 21,473 | | | 18,669 | |
| Actuarial gain | (66,320) | | | (4,303) | |
| Benefits paid | (90,492) | | | (95,348) | |
| Medicare Part D subsidy received | 466 | | | 280 | |
| Balance at December 31 | $754,682 | | | $837,644 | |
| Change in Plan Assets | | | |
| Fair value of assets at January 1 | $673,141 | | | $623,824 | |
| Actual return on plan assets | 49,080 | | | 76,870 | |
| Employer contributions | 45,400 | | | 49,126 | |
| Plan participant contributions | 21,473 | | | 18,669 | |
| Benefits paid | (90,492) | | | (95,348) | |
| Fair value of assets at December 31 | $698,602 | | | $673,141 | |
| Funded status | ($56,080) | | | ($164,503) | |
| Amounts recognized in the balance sheet | | | |
| Current liabilities | ($42,530) | | | ($45,706) | |
| Non-current liabilities (a) | (13,550) | | | (118,797) | |
| Total funded status | ($56,080) | | | ($164,503) | |
Amounts recognized as a regulatory asset (b) | | | |
| Prior service credit | ($12,729) | | | ($21,465) | |
| Net gain | (78,520) | | | (33,617) | |
| | ($91,249) | | | ($55,082) | |
| Amounts recognized as AOCI (before tax) | | | |
| Prior service credit | ($20,755) | | | ($34,899) | |
| Net gain | (133,253) | | | (116,078) | |
| | ($154,008) | | | ($150,977) | |
(a)Includes $14.7 million at Entergy as of December 31, 2024 of non-current assets related to the natural gas distribution businesses classified as held for sale and included in “Non-current assets held for sale” on the consolidated balance sheet. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
(b)Includes ($1.9) million at Entergy as of December 31, 2024 of regulatory assets related to the natural gas distribution businesses classified as held for sale and included in “Non-current assets held for sale” on the consolidated balance sheet. See Note 14 to the financial statements for further discussion of the planned
Entergy Corporation and Subsidiaries
Notes to Financial Statements
sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
Other postretirement benefits obligations, plan assets, funded status, and amounts not yet recognized and recognized in the Balance Sheets of the Registrant Subsidiaries as of December 31, 2024 and 2023 are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | (In Thousands) |
| Change in APBO | | | | | | | | | | | | |
| Balance at January 1 | | $155,987 | | | $170,139 | | | $41,344 | | | $21,685 | | | $51,617 | | | $33,778 | |
| Service cost | | 2,569 | | | 2,800 | | | 736 | | | 205 | | | 670 | | | 699 | |
| Interest cost | | 7,331 | | | 7,995 | | | 1,945 | | | 1,012 | | | 2,411 | | | 1,593 | |
| | | | | | | | | | | | |
| Plan participant contributions | | 4,200 | | | 5,867 | | | 696 | | | 519 | | | 681 | | | 1,297 | |
| Actuarial gain | | (17,007) | | | (7,273) | | | (3,008) | | | (1,063) | | | (3,763) | | | (2,897) | |
| Benefits paid | | (14,917) | | | (22,774) | | | (3,584) | | | (2,658) | | | (6,021) | | | (3,934) | |
| Medicare Part D subsidy received | | 49 | | | 77 | | | 14 | | | 1 | | | 14 | | | 17 | |
| Balance at December 31 | | $138,212 | | | $156,831 | | | $38,143 | | | $19,701 | | | $45,609 | | | $30,553 | |
| Change in Plan Assets | | | | | | | | | | | | |
| Fair value of assets at January 1 | | $274,814 | | | $— | | | $85,662 | | | $100,536 | | | $161,318 | | | $45,402 | |
| Actual return on plan assets | | 20,602 | | | — | | | 6,393 | | | 7,069 | | | 11,076 | | | 3,491 | |
| Employer contributions | | (604) | | | 16,907 | | | (23) | | | 134 | | | 690 | | | 741 | |
| Plan participant contributions | | 4,200 | | | 5,867 | | | 696 | | | 519 | | | 681 | | | 1,297 | |
| Benefits paid | | (14,917) | | | (22,774) | | | (3,584) | | | (2,658) | | | (6,021) | | | (3,934) | |
| Fair value of assets at December 31 | | $284,095 | | | $— | | | $89,144 | | | $105,600 | | | $167,744 | | | $46,997 | |
| Funded status | | $145,883 | | | ($156,831) | | | $51,001 | | | $85,899 | | | $122,135 | | | $16,444 | |
| Amounts recognized in the balance sheet | | | | | | | | | | | | |
| Non-current assets (a) | | $145,883 | | | $— | | | $51,001 | | | $85,899 | | | $122,135 | | | $16,444 | |
| Current liabilities | | — | | | (14,377) | | | — | | | — | | | — | | | — | |
| Non-current liabilities (b) | | — | | | (142,454) | | | — | | | — | | | — | | | — | |
| Total funded status | | $145,883 | | | ($156,831) | | | $51,001 | | | $85,899 | | | $122,135 | | | $16,444 | |
Amounts recognized in regulatory asset (c) | | | | | | | | | | | | |
| Prior service cost (credit) | | $2,886 | | | $— | | | ($1,727) | | | ($1,066) | | | ($7,419) | | | ($203) | |
| Net loss (gain) | | (38,054) | | | — | | | (8,791) | | | (8,134) | | | 9,268 | | | (3,364) | |
| | | ($35,168) | | | $— | | | ($10,518) | | | ($9,200) | | | $1,849 | | | ($3,567) | |
| Amounts recognized in AOCI (before tax) | | | | | | | | | | | | |
| Prior service credit | | $— | | | ($8,101) | | | $— | | | $— | | | $— | | | $— | |
| Net gain | | — | | | (76,030) | | | — | | | — | | | — | | | — | |
| | | $— | | | ($84,131) | | | $— | | | $— | | | $— | | | $— | |
(a)Includes $19.5 million of non-current assets at Entergy New Orleans as of December 31, 2024 related to the natural gas distribution business classified as held for sale and included in “Non-current assets held for sale” on the consolidated balance sheet. See Note 14 to the financial statements for further discussion of the
Entergy Corporation and Subsidiaries
Notes to Financial Statements
planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
(b)Includes ($2.5) million of non-current liabilities at Entergy Louisiana as of December 31, 2024 related to the natural gas distribution business classified as held for sale and included in other non-current liabilities on the consolidated balance sheet. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
(c)Includes ($1.9) million at Entergy New Orleans as of December 31, 2024 of regulatory assets related to the natural gas distribution business classified as held for sale and included in “Non-current assets held for sale” on the consolidated balance sheet. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | (In Thousands) |
| Change in APBO | | | | | | | | | | | | |
| Balance at January 1 | | $164,018 | | | $183,126 | | | $44,365 | | | $23,971 | | | $53,482 | | | $35,274 | |
| Service cost | | 2,965 | | | 3,379 | | | 878 | | | 235 | | | 809 | | | 754 | |
| Interest cost | | 8,002 | | | 8,931 | | | 2,170 | | | 1,160 | | | 2,597 | | | 1,726 | |
| Plan amendments | | — | | | (4,434) | | | — | | | — | | | — | | | — | |
| Plan participant contributions | | 3,131 | | | 4,317 | | | 1,386 | | | 374 | | | 680 | | | 994 | |
| Actuarial (gain) loss | | (6,403) | | | (458) | | | (1,650) | | | (1,676) | | | 337 | | | (1,075) | |
| Benefits paid | | (15,759) | | | (24,768) | | | (5,815) | | | (2,384) | | | (6,299) | | | (3,908) | |
| Medicare Part D subsidy received | | 33 | | | 46 | | | 10 | | | 5 | | | 11 | | | 13 | |
| Balance at December 31 | | $155,987 | | | $170,139 | | | $41,344 | | | $21,685 | | | $51,617 | | | $33,778 | |
| Change in Plan Assets | | | | | | | | | | | | |
| Fair value of assets at January 1 | | $255,117 | | | $— | | | $79,496 | | | $91,140 | | | $148,799 | | | $42,434 | |
| Actual return on plan assets | | 31,743 | | | — | | | 9,949 | | | 11,193 | | | 17,903 | | | 5,402 | |
| Employer contributions | | 582 | | | 20,451 | | | 646 | | | 213 | | | 235 | | | 480 | |
| Plan participant contributions | | 3,131 | | | 4,317 | | | 1,386 | | | 374 | | | 680 | | | 994 | |
| Benefits paid | | (15,759) | | | (24,768) | | | (5,815) | | | (2,384) | | | (6,299) | | | (3,908) | |
| Fair value of assets at December 31 | | $274,814 | | | $— | | | $85,662 | | | $100,536 | | | $161,318 | | | $45,402 | |
| Funded status | | $118,827 | | | ($170,139) | | | $44,318 | | | $78,851 | | | $109,701 | | | $11,624 | |
| Amounts recognized in the balance sheet | | | | | | | | | | | | |
| Current liabilities | | $— | | | ($15,049) | | | $— | | | $— | | | $— | | | $— | |
| Non-current liabilities | | 118,827 | | | (155,090) | | | 44,318 | | | 78,851 | | | 109,701 | | | 11,624 | |
| Total funded status | | $118,827 | | | ($170,139) | | | $44,318 | | | $78,851 | | | $109,701 | | | $11,624 | |
| Amounts recognized in regulatory asset | | | | | | | | | | | | |
| Prior service cost (credit) | | $4,983 | | | $— | | | ($2,682) | | | ($1,982) | | | ($11,790) | | | ($496) | |
| Net loss (gain) | | (17,980) | | | — | | | (4,815) | | | (5,843) | | | 14,542 | | | 112 | |
| | | ($12,997) | | | $— | | | ($7,497) | | | ($7,825) | | | $2,752 | | | ($384) | |
| Amounts recognized in AOCI (before tax) | | | | | | | | | | | | |
| Prior service credit | | $— | | | ($12,645) | | | $— | | | $— | | | $— | | | $— | |
| Net gain | | — | | | (75,709) | | | — | | | — | | | — | | | — | |
| | | $— | | | ($88,354) | | | $— | | | $— | | | $— | | | $— | |
The other postretirement plans incurred net actuarial gains during 2024 primarily due to liability gains due to a rise in bond yields that resulted in increases to the discount rates used to develop the benefit obligations and an actual return on assets higher than the expected return on assets. The other postretirement plans incurred net actuarial gains during 2023 primarily due to updated demographic assumptions and census data coupled with an actual return on assets much higher than the expected return on assets, partially offset by liability losses due to a decline in bond yields that resulted in decreases to the discount rates used to develop the benefit obligations.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Non-Qualified Pension Plans
Entergy also sponsors non-qualified, non-contributory defined benefit pension plans that provide benefits to certain key employees. Entergy recognized net periodic pension cost related to these plans of $12.2 million in 2024, $43.8 million in 2023, and $30.9 million in 2022. In 2024, 2023, and 2022, Entergy recognized $1.5 million, $27.9 million, and $12.2 million, respectively, in settlement charges related to the payment of lump sum benefits out of the plan that is included in the non-qualified pension plan cost above.
The projected benefit obligation was $94.1 million as of December 31, 2024 of which $22.3 million was a current liability and $71.8 million was a non-current liability. The projected benefit obligation was $88.6 million as of December 31, 2023 of which $13.8 million was a current liability and $74.8 million was a non-current liability. The accumulated benefit obligation was $81.2 million and $77.9 million as of December 31, 2024 and 2023, respectively. The unamortized prior service cost and net loss are recognized in regulatory assets ($29.8 million at December 31, 2024 and $29.7 million at December 31, 2023) and accumulated other comprehensive income before taxes ($4.7 million at December 31, 2024 and $3.9 million at December 31, 2023).
A Rabbi Trust was established for the benefit of certain participants in Entergy’s non-qualified, non-contributory defined benefit pension plans. The Rabbi Trust assets were invested in money-market funds which were recorded at fair value with all gains and losses recognized immediately in income. All of the investments were classified as Level 1 investments for purposes of Fair Value Measurements. At December 31, 2022, the fair value of the assets held in the Rabbi Trust was $35 million. In August 2023 the Rabbi Trust assets were used to pay benefits due under the non-qualified pension plans.
The following Registrant Subsidiaries participate in Entergy’s non-qualified, non-contributory defined benefit pension plans that provide benefits to certain key employees. The net periodic pension cost for their current and former employees for the non-qualified plans for 2024, 2023, and 2022, was as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas |
| | (In Thousands) |
| 2024 | $269 | | | $256 | | | $326 | | | $122 | | | $248 | |
| 2023 | $637 | | | $99 | | | $808 | | | $132 | | | $253 | |
| 2022 | $282 | | | $102 | | | $321 | | | $114 | | | $1,320 | |
Included in the 2024 net periodic pension cost above are settlement charges of $55 thousand for Entergy Louisiana related to the lump sum benefits paid out of the plan. Included in the 2023 net periodic pension cost above are settlement charges of $379 thousand and $453 thousand for Entergy Arkansas and Entergy Mississippi, respectively, related to the lump sum benefits paid out of the plan. Included in the 2022 net periodic pension cost above are settlement charges of $1 thousand, $2 thousand, and $1 million for Entergy Louisiana, Entergy Mississippi, and Entergy Texas, respectively, related to the lump sum benefits paid out of the plan.
The projected benefit obligation for their current and former employees for the non-qualified plans as of December 31, 2024 and 2023 was as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas |
| | (In Thousands) |
| 2024 | $1,721 | | | $1,405 | | | $3,566 | | | $1,143 | | | $2,734 | |
| 2023 | $2,313 | | | $2,574 | | | $3,369 | | | $1,034 | | | $3,762 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The accumulated benefit obligation for their current and former employees for the non-qualified plans as of December 31, 2024 and 2023 was as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas |
| | (In Thousands) |
| 2024 | $1,468 | | | $1,197 | | | $3,322 | | | $939 | | | $2,710 | |
| 2023 | $1,935 | | | $2,494 | | | $3,187 | | | $814 | | | $3,701 | |
The following amounts were recorded on the balance sheet as of December 31, 2024 and 2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas |
| | | (In Thousands) |
| Current liabilities | | ($524) | | | ($190) | | | ($419) | | | ($104) | | | ($386) | |
| Non-current liabilities | | (1,197) | | | (1,215) | | | (3,147) | | | (1,039) | | | (2,348) | |
| Total funded status | | ($1,721) | | | ($1,405) | | | ($3,566) | | | ($1,143) | | | ($2,734) | |
| Regulatory asset (liability) | | $119 | | | $493 | | | $1,292 | | | $9 | | | ($3,429) | |
| Accumulated other comprehensive income (before taxes) | | $— | | | $21 | | | $— | | | $— | | | $— | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas |
| | | (In Thousands) |
| Current liabilities | | ($276) | | | ($308) | | | ($474) | | | ($106) | | | ($448) | |
| Non-current liabilities | | (2,037) | | | (2,266) | | | (2,895) | | | (928) | | | (3,314) | |
| Total funded status | | ($2,313) | | | ($2,574) | | | ($3,369) | | | ($1,034) | | | ($3,762) | |
| Regulatory asset (liability) | | $857 | | | $1,604 | | | $1,303 | | | $5 | | | ($2,526) | |
| Accumulated other comprehensive income (before taxes) | | $— | | | $67 | | | $— | | | $— | | | $— | |
The non-qualified pension plans incurred an actuarial loss during 2024 primarily as a result of liability losses due to differences in recent retirement and lump sum experience relative to actuarial assumptions, as well as salary increases in excess of expectations. The non-qualified pension plans incurred a small actuarial loss during 2023 primarily as a result of liability losses due to differences in recent retirement and lump sum experience relative to actuarial assumptions.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Reclassification out of Accumulated Other Comprehensive Income (Loss)
Entergy and Entergy Louisiana reclassified the following costs out of accumulated other comprehensive income (loss) (before taxes and including amounts capitalized) as of December 31, 2024:
| | | | | | | | | | | | | | | | | | | | | | | |
| | Qualified Pension Costs | | Other Postretirement Costs | | Non-Qualified Pension Costs | | Total |
| | (In Thousands) |
| Entergy | | | | | | | |
| Amortization of prior service credit (cost) | $— | | | $14,055 | | | ($159) | | | $13,896 | |
| Amortization of gain (loss) | (2,820) | | | 10,459 | | | (312) | | | 7,327 | |
| Settlement loss | (319,920) | | | — | | | (58) | | | (319,978) | |
| ($322,740) | | | $24,514 | | | ($529) | | | ($298,755) | |
| Entergy Louisiana | | | | | | | |
| Amortization of prior service credit | $— | | | $4,544 | | | $— | | | $4,544 | |
| Amortization of gain (loss) | (416) | | | 6,952 | | | (3) | | | 6,533 | |
| Settlement loss | — | | | — | | | (2) | | | (2) | |
| ($416) | | | $11,496 | | | ($5) | | | $11,075 | |
Entergy and Entergy Louisiana reclassified the following costs out of accumulated other comprehensive income (loss) (before taxes and including amounts capitalized) as of December 31, 2023:
| | | | | | | | | | | | | | | | | | | | | | | |
| | Qualified Pension Costs | | Other Postretirement Costs | | Non-Qualified Pension Costs | | Total |
| | (In Thousands) |
| Entergy | | | | | | | |
| Amortization of prior service credit (cost) | $— | | | $14,038 | | | ($452) | | | $13,586 | |
| Amortization of gain (loss) | (4,407) | | | 11,590 | | | (593) | | | 6,590 | |
| Settlement loss | (7,844) | | | — | | | (3,004) | | | (10,848) | |
| ($12,251) | | | $25,628 | | | ($4,049) | | | $9,328 | |
| Entergy Louisiana | | | | | | | |
| Amortization of prior service credit | $— | | | $3,804 | | | $— | | | $3,804 | |
| Amortization of gain (loss) | (792) | | | 7,057 | | | (2) | | | 6,263 | |
| Settlement loss | (1,617) | | | — | | | — | | | (1,617) | |
| ($2,409) | | | $10,861 | | | ($2) | | | $8,450 | |
Accounting for Pension and Other Postretirement Benefits
Accounting standards require an employer to recognize in its balance sheet the funded status of its benefit plans. This is measured as the difference between plan assets at fair value and the benefit obligation. Entergy uses a December 31 measurement date for its pension and other postretirement plans. Employers are to record previously unrecognized gains and losses, prior service costs, and any remaining transition asset or obligation (that resulted from adopting prior pension and other postretirement benefits accounting standards) as comprehensive income and/or as a regulatory asset reflective of the recovery mechanism for pension and other postretirement benefits costs in the Registrant Subsidiaries’ respective regulatory jurisdictions. For the portion of Entergy Louisiana that is not regulated, the unrecognized prior service cost, gains and losses, and transition asset/obligation for its pension and other postretirement benefits obligations are recorded as other comprehensive income. Entergy Louisiana recovers other postretirement benefits costs on a pay-as-you-go basis and records the unrecognized prior
Entergy Corporation and Subsidiaries
Notes to Financial Statements
service cost, gains and losses, and transition obligation for its other postretirement benefits obligation as other comprehensive income. Accounting standards also require that changes in the funded status be recorded as other comprehensive income and/or a regulatory asset in the period in which the changes occur.
With regard to pension and other postretirement costs, Entergy calculates the expected return on pension and other postretirement benefits plan assets by multiplying the long-term expected rate of return on assets by the market-related value (MRV) of plan assets. Entergy determines the MRV of its pension plan assets, except for the long duration fixed income assets, by calculating a value that uses a 20-quarter phase-in of the difference between actual and expected returns. For the long duration fixed income assets in the pension trust and for its other postretirement benefits plan assets Entergy uses fair value as the MRV.
In accordance with accounting standards, the other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations and are presented by Entergy in miscellaneous - net in other income.
Qualified Pension Settlement Costs
In May 2024, Entergy Corporation entered into a commitment agreement by and between Entergy Corporation, Newport Trust Company, LLC, as independent fiduciary of Entergy Corporation Retirement Plan II for Non-Bargaining Employees, Entergy Corporation Retirement Plan II for Bargaining Employees, Entergy Corporation Retirement Plan III, and Entergy Corporation Retirement Plan IV for Bargaining Employees (the Pension Plans), and the Metropolitan Life Insurance Company (MetLife), under which the Pension Plans purchased a nonparticipating single premium group annuity contract from MetLife to settle approximately $1.2 billion of benefit liabilities of the Pension Plans.
The group annuity contract primarily covers a population that includes approximately 3,400 non-utility business retirees, joint annuitants, beneficiaries, and alternate payees who commenced benefit payments from the Pension Plans on or before March 1, 2024 (Transferred Participants). MetLife irrevocably guarantees and assumes the sole obligation to make future monthly pension benefit payments to the Transferred Participants as provided under its group annuity contract, with direct payments that began September 1, 2024. The aggregate amount of each Transferred Participant’s payment under the group annuity contract will be equal to the amount of each individual’s payment under the Pension Plans.
The purchase of the group annuity contract was funded directly by assets of the Pension Plans. The transferred pension liability required no additional funding prior to transfer, as the liability was fully funded. As a result of the transaction, Entergy recognized a one-time non-cash pension settlement charge of $328 million in 2024, of which $8 million was recorded at Utility, as described below, and $320 million was recorded at Parent & Other. The $320 million settlement charge at Parent & Other is reflected in Miscellaneous - net in Other income (deductions) on the consolidated income statements.
Year-to-date lump sum benefit payments from Non-Bargaining Plan I, Bargaining Plan I, Non-Bargaining Plan II, and Bargaining Plan II exceeded the sum of the Plans’ service and interest cost, resulting in settlement costs during 2023 and 2022. Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy participate in one or both of Non-Bargaining Plan I and Bargaining Plan I and incurred settlement costs. In accordance with accounting standards, settlement accounting requires immediate recognition of the portion of previously unrecognized losses associated with the settled portion of the plan’s pension liability. Similar to other pension costs, the settlement costs were included with employee labor costs and charged to expense and capital in the same manner that labor costs were charged. Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans each received regulatory approval to defer the expense portion of settlement costs, with future amortization of the deferred settlement expense over the period in which the expense otherwise would be recorded had the immediate recognition not occurred.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy Mississippi Other Postretirement Benefits
Pursuant to an order from the MPSC, Entergy Mississippi was directed to cease including other postretirement benefit credits in other operation and maintenance expense or allocating to capital expenditures for ratemaking purposes effective January 1, 2024. The credits are being deferred as a regulatory liability. In addition, beginning in July 2024, Entergy Mississippi is recovering the December 31, 2023 other postretirement benefit asset in rate base over five years and accruing a regulatory liability. At December 31, 2024, the balance in these regulatory liability accounts was approximately $7.4 million.
Entergy New Orleans Other Postretirement Benefits
Pursuant to an order from the City Council, Entergy New Orleans received approval to exclude other postretirement benefit expense credits from the formula rate plan evaluation filing. To comply with the order, Entergy New Orleans began recording the other postretirement benefit expense credits to a regulatory liability account in September 2024. At December 31, 2024, the balance in this regulatory liability account was approximately $1 million.
Entergy Texas Reserve
In September 2020, Entergy Texas elected to establish a reserve, in accordance with PUCT regulations, to track the surplus or deficit in the annual amount of actuarially determined pension and other postretirement benefits chargeable to Entergy Texas’s expense. The reserve amounts recorded are evaluated in each rate case filed by Entergy Texas and an amortization period is determined at that time. At December 31, 2024, the balance in this reserve was approximately $15 million.
Qualified Pension and Other Postretirement Plans’ Assets
The Plan Administrator’s trust asset investment strategy is to invest the assets in a manner whereby long-term earnings on the assets (plus cash contributions) provide adequate funding for retiree benefit payments. The mix of assets is based on an optimization study that identifies asset allocation targets in order to achieve the maximum return for an acceptable level of risk, while minimizing the expected contributions and pension and postretirement expense.
In the optimization studies, the Plan Administrator formulates assumptions about characteristics, such as expected asset class investment returns, volatility (risk), and correlation coefficients among the various asset classes. The future market assumptions used in the optimization study are determined by examining historical market characteristics of the various asset classes and making adjustments to reflect future conditions expected to prevail over the study period.
The target asset allocation for pension adjusts dynamically based on the funded status of each plan within the trust. The current targets are shown below. The expectation is that the allocation to fixed income securities will increase as the pension plans’ funded status increases. The following ranges were established to produce an acceptable, economically efficient plan to manage around the targets.
For postretirement assets the target and range asset allocations (as shown below) reflect recommendations made in the latest optimization study. The target asset allocations for postretirement assets adjust dynamically based on the funded status of each sub-account within each trust. The current weighted-average targets shown below represent the aggregate of all targets for all sub-accounts within all trusts.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy’s qualified pension and postretirement weighted-average asset allocations by asset category at December 31, 2024 and 2023 and the target asset allocation and ranges for 2024 are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pension Asset Allocation | | Target | | Range | | Actual 2024 | | Actual 2023 |
| Domestic Equity Securities | | 22% | | 18% | to | 26% | | 23% | | 33% |
| International Equity Securities | | 13% | | 10% | to | 16% | | 13% | | 18% |
| Intermediate Fixed Income Securities | | 4% | | 3% | to | 5% | | 5% | | 9% |
| Long Duration Fixed Income Securities | | 61% | | 57% | to | 65% | | 59% | | 40% |
| Other | | —% | | —% | to | 10% | | —% | | —% |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Postretirement Asset Allocation | | Non-Taxable and Taxable |
| | | Target | | Range | | Actual 2024 | | Actual 2023 |
| Domestic Equity Securities | | 14% | | 9% | to | 19% | | 16% | | 28% |
| International Equity Securities | | 10% | | 5% | to | 15% | | 9% | | 17% |
| Fixed Income Securities | | 76% | | 71% | to | 81% | | 75% | | 55% |
| Other | | —% | | —% | to | 5% | | —% | | —% |
In determining its expected long-term rate of return on plan assets used in the calculation of benefit plan costs, Entergy reviews past performance, current and expected future asset allocations, and capital market assumptions of its investment consultant and some investment managers.
The expected long-term rate of return for the qualified pension plans’ assets is based primarily on the geometric average of the historical annual performance of a representative portfolio weighted by the target asset allocation defined in the table above, along with other indications of expected return on assets. The time period reflected is a long-dated period spanning several decades.
The expected long-term rate of return for the non-taxable postretirement trust assets is determined using the same methodology described above for pension assets, but the aggregate asset allocation specific to the non-taxable postretirement assets is used.
For the taxable postretirement trust assets, the investment allocation includes tax-exempt fixed income securities. This asset allocation, in combination with the same methodology employed to determine the expected return for other postretirement assets (as described above), and with a modification to reflect applicable taxes, is used to produce the expected long-term rate of return for taxable postretirement trust assets.
Concentrations of Credit Risk
Entergy’s investment guidelines mandate the avoidance of risk concentrations. Types of concentrations specified to be avoided include, but are not limited to, investment concentrations in a single entity, type of industry, foreign country, geographic area, and individual security issuance. As of December 31, 2024, all investment managers and assets were materially in compliance with the approved investment guidelines, therefore there were no significant concentrations (defined as greater than 10 percent of plan assets) of credit risk in Entergy’s pension and other postretirement benefits plan assets.
Fair Value Measurements
Accounting standards provide the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The three levels of the fair value hierarchy are described below:
•Level 1 - Level 1 inputs are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan 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 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 an independent party that uses 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 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.
If an asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.
•Level 3 - Level 3 refers to securities valued based on significant unobservable inputs.
Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following tables set forth by level within the fair value hierarchy, measured at fair value on a recurring basis at December 31, 2024, and December 31, 2023, a summary of the investments held in the master trusts for Entergy’s qualified pension and other postretirement plans in which the Registrant Subsidiaries participate.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Qualified Defined Benefit Pension Plan Trusts
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | Level 1 | | Level 2 | | Level 3 | | Total |
| | | (In Thousands) |
| Equity securities: | | | | | | | | |
| Corporate stocks: | | | | | | | | |
| Preferred | | $932 | | (b) | $— | | | $— | | | $932 | |
| Common | | 403,146 | | (b) | — | | | — | | | 403,146 | |
| Common collective trusts (c) | | | | | | | | 1,206,983 | |
| Fixed income securities: | | | | | | | | |
| U.S. Government securities | | — | | | 1,145,994 | | (a) | — | | | 1,145,994 | |
| Corporate debt instruments | | — | | | 307,666 | | (a) | — | | | 307,666 | |
| Registered investment companies (e) | | 30,293 | | (d) | 2,735 | | (d) | — | | | 1,512,994 | |
| Other | | — | | | 44,691 | | (f) | — | | | 44,691 | |
| Other: | | | | | | | | |
| Insurance company general account (unallocated contracts) | | — | | | 5,918 | | (g) | — | | | 5,918 | |
| Total investments | | $434,371 | | | $1,507,004 | | | $— | | | $4,628,324 | |
| Cash | | | | | | | | 2,026 | |
| Other pending transactions | | | | | | | | (133,550) | |
| Less: Other postretirement assets included in total investments | | | | | | | | (64,068) | |
| Total fair value of qualified pension assets | | | | | | | | $4,432,732 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | Level 1 | | Level 2 | | Level 3 | | Total |
| | | (In Thousands) |
| Equity securities: | | | | | | | | |
| Corporate stocks: | | | | | | | | |
| Preferred | | $10,827 | | (b) | $— | | | $— | | | $10,827 | |
| Common | | 715,452 | | (b) | — | | | — | | | 715,452 | |
| Common collective trusts (c) | | | | | | | | 2,066,247 | |
| Fixed income securities: | | | | | | | | |
| U.S. Government securities | | — | | | 1,085,231 | | (a) | — | | | 1,085,231 | |
| Corporate debt instruments | | — | | | 924,904 | | (a) | — | | | 924,904 | |
| Registered investment companies (e) | | 34,364 | | (d) | 2,718 | | (d) | — | | | 657,691 | |
| Other | | 774 | | | 78,883 | | (f) | — | | | 79,657 | |
| Other: | | | | | | | | |
| Insurance company general account (unallocated contracts) | | — | | | 5,899 | | (g) | — | | | 5,899 | |
| Total investments | | $761,417 | | | $2,097,635 | | | $— | | | $5,545,908 | |
| Cash | | | | | | | | 1,488 | |
| Other pending transactions | | | | | | | | (22,404) | |
| Less: Other postretirement assets included in total investments | | | | | | | | (64,391) | |
| Total fair value of qualified pension assets | | | | | | | | $5,460,601 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Other Postretirement Trusts
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | Level 1 | | Level 2 | | Level 3 | | Total |
| | | (In Thousands) |
| Equity securities: | | | | | | | | |
| Common collective trust (c) | | | | | | | | $161,726 | |
| Fixed income securities: | | | | | | | | |
| U.S. Government securities | | $107,547 | | (b) | $112,780 | | (a) | $— | | | 220,327 | |
| Corporate debt instruments | | — | | | 166,208 | | (a) | — | | | 166,208 | |
| Registered investment companies | | 2,295 | | (d) | — | | | — | | | 2,295 | |
| Other | | — | | | 80,561 | | (f) | — | | | 80,561 | |
| Total investments | | $109,842 | | | $359,549 | | | $— | | | $631,117 | |
| Other pending transactions | | | | | | | | 3,417 | |
| Plus: Other postretirement assets included in the investments of the qualified pension trust | | | | | | | | 64,068 | |
| Total fair value of other postretirement assets | | | | | | | | $698,602 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | Level 1 | | Level 2 | | Level 3 | | Total |
| | | (In Thousands) |
| Equity securities: | | | | | | | | |
| Common collective trust (c) | | | | | | | | $276,560 | |
| Fixed income securities: | | | | | | | | |
| U.S. Government securities | | $80,219 | | (b) | $84,521 | | (a) | $— | | | 164,740 | |
| Corporate debt instruments | | — | | | 106,523 | | (a) | — | | | 106,523 | |
| Registered investment companies | | 548 | | (d) | — | | | — | | | 548 | |
| Other | | — | | | 57,511 | | (f) | — | | | 57,511 | |
| Total investments | | $80,767 | | | $248,555 | | | $— | | | $605,882 | |
| Other pending transactions | | | | | | | | 2,868 | |
| Plus: Other postretirement assets included in the investments of the qualified pension trust | | | | | | | | 64,391 | |
| Total fair value of other postretirement assets | | | | | | | | $673,141 | |
(a)Certain fixed income debt securities (corporate, government, and securitized) are stated at fair value as determined by broker quotes.
(b)Common stocks, preferred stocks, and certain fixed income debt securities (government) are stated at fair value determined by quoted market prices.
(c)The common collective trusts hold investments in accordance with stated objectives. The investment strategy of the trusts is to capture the growth potential of equity markets by replicating the performance of a specified index. The issuer of these funds allows daily trading at the net asset value and trades settle at a later date, with no other trading restrictions. Net asset value per share of common collective trusts estimate fair value. Common collective trusts are not publicly quoted and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table, but are included in the total.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
(d)Registered investment companies are money market mutual funds with a stable net asset value of one dollar per share. Registered investment companies may hold investments in domestic and international bond markets or domestic equities valued at the daily closing price as reported by the fund. These funds are required to publish their daily net asset value and to transact at that price. The money market mutual funds held by the trusts are deemed to be actively traded. Certain registered investment companies are recorded at contract value, which approximates fair value.
(e)Certain of these registered investment companies are not publicly quoted and are valued by the fund administrators using net asset value as a practical expedient. The issuer of these funds allows daily trading at the net asset value and trades settle at a later date, with no other trading restrictions. Accordingly, these funds are not assigned a level in the fair value table, but are included in the total.
(f)The other remaining assets are U.S. municipal and foreign government bonds stated at fair value as determined by broker quotes.
(g)The unallocated insurance contract investments are recorded at contract value, which approximates fair value. The contract value represents contributions made under the contract, plus interest, less funds used to pay benefits and contract expenses, and less distributions to the master trust.
Estimated Future Benefit Payments
Based upon the assumptions used to measure Entergy’s qualified pension and other postretirement benefits obligations at December 31, 2024, and including pension and other postretirement benefits attributable to estimated future employee service, Entergy expects that benefits to be paid over the next ten years for Entergy Corporation and its subsidiaries will be as follows:
| | | | | | | | | | | | | | | | | |
| | Estimated Future Benefits Payments |
| | Qualified Pension | | Non-Qualified Pension | | Other Postretirement |
| | (In Thousands) |
| Year(s) | | | | | |
| 2025 | $396,881 | | | $22,324 | | | $68,754 | |
| 2026 | $373,969 | | | $7,975 | | | $65,668 | |
| 2027 | $374,332 | | | $14,666 | | | $63,067 | |
| 2028 | $374,818 | | | $8,905 | | | $60,746 | |
| 2029 | $372,728 | | | $7,532 | | | $58,225 | |
| 2030 - 2034 | $1,852,026 | | | $36,035 | | | $279,644 | |
Based upon the same assumptions, Entergy expects that benefits to be paid over the next ten years for the Registrant Subsidiaries for their current and former employees will be as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Estimated Future Qualified Pension Benefits Payments | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | (In Thousands) |
| Year(s) | | | | | | | | | | | | |
| 2025 | | $92,997 | | | $99,646 | | | $26,600 | | | $10,879 | | | $22,865 | | | $24,910 | |
| 2026 | | $91,164 | | | $94,614 | | | $25,540 | | | $11,107 | | | $22,419 | | | $22,420 | |
| 2027 | | $91,175 | | | $93,456 | | | $25,272 | | | $10,658 | | | $21,251 | | | $23,235 | |
| 2028 | | $89,535 | | | $95,546 | | | $24,923 | | | $10,775 | | | $20,135 | | | $22,540 | |
| 2029 | | $88,244 | | | $93,857 | | | $25,038 | | | $10,242 | | | $20,474 | | | $22,790 | |
| 2030 - 2034 | | $437,940 | | | $458,211 | | | $118,197 | | | $50,337 | | | $93,989 | | | $112,086 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Estimated Future Non-Qualified Pension Benefits Payments | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas |
| | | (In Thousands) |
| Year(s) | | | | | | | | | | |
| 2025 | | $524 | | | $190 | | | $419 | | | $104 | | | $386 | |
| 2026 | | $103 | | | $173 | | | $309 | | | $84 | | | $360 | |
| 2027 | | $94 | | | $159 | | | $764 | | | $263 | | | $335 | |
| 2028 | | $175 | | | $146 | | | $578 | | | $210 | | | $310 | |
| 2029 | | $143 | | | $141 | | | $436 | | | $167 | | | $284 | |
| 2030 - 2034 | | $634 | | | $552 | | | $1,582 | | | $609 | | | $1,081 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Estimated Future Other Postretirement Benefits Payments | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | | (In Thousands) |
| Year(s) | | | | | | | | | | | | |
| 2025 | | $12,198 | | | $14,377 | | | $3,329 | | | $2,082 | | | $4,542 | | | $2,645 | |
| 2026 | | $11,754 | | | $13,757 | | | $3,218 | | | $1,941 | | | $4,168 | | | $2,434 | |
| 2027 | | $11,280 | | | $13,172 | | | $3,109 | | | $1,789 | | | $3,989 | | | $2,339 | |
| 2028 | | $11,012 | | | $12,531 | | | $3,110 | | | $1,655 | | | $3,787 | | | $2,288 | |
| 2029 | | $10,896 | | | $12,089 | | | $3,014 | | | $1,575 | | | $3,627 | | | $2,278 | |
| 2030 - 2034 | | $53,047 | | | $57,646 | | | $14,486 | | | $7,164 | | | $17,113 | | | $11,340 | |
Contributions
Entergy currently expects to contribute approximately $240 million to its qualified pension plans and approximately $42.8 million to its other postretirement plans in 2025. The Registrant Subsidiaries currently expect to contribute the following approximate amounts to their qualified pension and other postretirement plans for their current and former employees in 2025:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | (In Thousands) |
| Pension Contributions | $35,544 | | | $41,253 | | | $8,064 | | | $5,016 | | | $7,725 | | | $15,668 | |
| Other Postretirement Contributions | $529 | | | $14,377 | | | $178 | | | $205 | | | $156 | | | $34 | |
The 2025 required pension contributions will be known with more certainty when the January 1, 2025 valuations are completed, which is expected by April 1, 2025.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Actuarial Assumptions
The significant actuarial assumptions used in determining the pension PBO and the other postretirement benefits APBO as of December 31, 2024 and 2023 were as follows:
| | | | | | | | | | | |
| | 2024 | | 2023 |
| Weighted-average discount rate: | | | |
| Qualified pension | 5.67% - 5.89% Blended 5.75% | | 5.02% - 5.10% Blended 5.06% |
| Other postretirement | 5.66% | | 5.01% |
| Non-qualified pension | 5.23% | | 4.68% |
| Weighted-average rate of increase in future compensation levels | 3.98% - 4.45% | | 3.98% - 4.40% |
| Interest crediting rate | 4.80% | | 4.00% |
| Assumed health care trend rate: | | | |
| Pre-65 | 8.15% | | 6.95% |
| Post-65 | 10.13% | | 7.88% |
| Ultimate health care cost trend rate | 4.75% | | 4.75% |
| Year ultimate health care cost trend rate is reached and beyond: | | | |
| Pre-65 | 2035 | | 2032 |
| Post-65 | 2035 | | 2032 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The significant actuarial assumptions used in determining the net periodic pension and other postretirement benefits costs for 2024, 2023, and 2022 were as follows:
| | | | | | | | | | | | | | | | | |
| | 2024 | | 2023 | | 2022 |
| Weighted-average discount rate: | | | | | |
| Qualified pension: | | | | | |
| Service cost | 5.08% | | 5.26% | | 3.07% |
| Interest cost | 4.97% | | 5.16% | | 2.49% |
| Other postretirement: | | | | | |
| Service cost | 4.82% | | 5.00% | | 3.20% |
| Interest cost | 4.91% | | 5.09% | | 2.31% |
| Non-qualified pension: | | | | | |
| Service cost | 5.01% | | 5.31% | | 4.94% |
| Interest cost | 4.86% | | 5.30% | | 5.03% |
| Weighted-average rate of increase in future compensation levels | 3.98% - 4.40% | | 3.98% - 4.40% | | 3.98% - 4.40% |
| Expected long-term rate of return on plan assets: | | | | | |
| Pension assets | 6.00% - 7.25% Blended 6.75% | | 7.00% | | 6.75% |
| Other postretirement non-taxable assets | 6.50% - 7.25% | | 6.00% - 7.00% | | 5.75% - 6.75% |
| Other postretirement taxable assets | 5.25% | | 5.25% | | 4.75% |
| Assumed health care trend rate: | | | | | |
| Pre-65 | 6.95% | | 6.65% | | 5.65% |
| Post-65 | 7.88% | | 7.50% | | 5.90% |
| Ultimate health care cost trend rate | 4.75% | | 4.75% | | 4.75% |
| Year ultimate health care cost trend rate is reached and beyond: | | | | | |
| Pre-65 | 2032 | | 2032 | | 2032 |
| Post-65 | 2032 | | 2032 | | 2032 |
With respect to the mortality assumptions, Entergy used the Pri-2012 Employee and Healthy Annuitant Table, projected generationally using Scale MP-2021 with Aon’s Endemic Adjustment, in determining its December 31, 2024 and 2023 pension plans’ PBOs and the Pri.H 2012 (headcount weighted) Employee and Healthy Annuitant Table, projected generationally using Scale MP-2021 with Aon’s Endemic Adjustment, in determining its December 31, 2024 and 2023 other postretirement benefits APBO.
Defined Contribution Plans
Entergy sponsors the Savings Plan of Entergy Corporation and Subsidiaries (System Savings Plan). The System Savings Plan is a defined contribution plan covering eligible employees of Entergy and certain of its subsidiaries. The participating Entergy subsidiary makes matching contributions to the System Savings Plan for all eligible participating employees in an amount equal to either 70% or 100% of the participants’ basic contributions, up to 6% of their eligible earnings per pay period. The matching contribution is allocated to investments as directed by the employee.
Entergy also sponsors the Savings Plan of Entergy Corporation and Subsidiaries VI (Savings Plan VI) (established in April 2007) and the Savings Plan of Entergy Corporation and Subsidiaries VII (Savings Plan VII) (established in April 2007) to which matching contributions are also made. The plans are defined contribution plans that cover eligible employees, as defined by each plan, of Entergy and certain of its subsidiaries. Effective
Entergy Corporation and Subsidiaries
Notes to Financial Statements
December 31, 2023, employees participating in Savings Plan VI and Savings Plan VII were transferred into the System Savings Plan when Savings Plan VI and Savings Plan VII merged into the System Savings Plan.
Entergy also sponsors the Savings Plan of Entergy Corporation and Subsidiaries VIII (established January 2021) and the Savings Plan of Entergy Corporation and Subsidiaries IX (established January 2021) to which company contributions are made. The participating Entergy subsidiary makes matching contributions to these defined contribution plans for all eligible participating employees in an amount equal to 100% of the participants’ basic contributions, up to 5% of their eligible earnings per pay period. Eligible participants may also receive a discretionary annual company contribution up to 4% of the participant’s eligible earnings (subject to vesting).
Entergy’s subsidiaries’ contributions to defined contribution plans collectively were $72.3 million in 2024, $65.1 million in 2023, and $62.1 million in 2022. The majority of the contributions were to the System Savings Plan.
The Registrant Subsidiaries’ 2024, 2023, and 2022 contributions to defined contribution plans for their employees were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas |
| | | (In Thousands) |
| 2024 | | $6,822 | | | $8,784 | | | $4,048 | | | $1,584 | | | $3,907 | |
| 2023 | | $5,866 | | | $7,757 | | | $3,534 | | | $1,383 | | | $3,380 | |
| 2022 | | $5,124 | | | $7,138 | | | $3,194 | | | $1,223 | | | $2,938 | |
NOTE 12. STOCK-BASED COMPENSATION (Entergy Corporation)
Entergy grants stock options, restricted stock, performance units, and restricted stock units to key employees of the Entergy subsidiaries under its equity plans which are shareholder-approved stock-based compensation plans. The cost of the stock-based compensation is charged to income over the vesting period. Awards under Entergy’s plans generally vest over three years. Entergy accounts for forfeitures of stock-based compensation when they occur. Entergy recognizes all income tax effects related to share-based payments through the income statement. Historical share and share-based data presented herein for share-based compensation has been retroactively adjusted to reflect the two-for-one forward stock split of Entergy Corporation common stock effective December 12, 2024. See Note 7 to the financial statements for discussion of the stock split.
Effective May 3, 2019, Entergy’s shareholders approved the 2019 Omnibus Incentive Plan (2019 Plan). The maximum number of common shares that can be issued from the 2019 Plan for stock-based awards is 24,400,000 all of which are available for incentive stock option grants. The 2019 Plan applies to awards granted on or after May 3, 2019 and awards expire ten years from the date of grant. As of December 31, 2024, there were 13,966,025 authorized shares remaining for stock-based awards.
Stock Options
Stock options are granted at exercise prices that equal the closing market price of Entergy Corporation common stock on the date of grant. Generally, stock options granted will become exercisable in equal amounts on each of the first three anniversaries of the date of grant. Unless they are forfeited previously under the terms of the grant, options expire 10 years after the date of the grant if they are not exercised.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The following table includes financial information for stock options for each of the years presented:
| | | | | | | | | | | | | | | | | |
| | 2024 | | 2023 | | 2022 |
| | (In Millions) |
| Compensation expense included in Entergy’s consolidated net income | $4.0 | | $4.1 | | $4.2 |
| Tax benefit recognized in Entergy’s consolidated net income | $1.0 | | $1.1 | | $1.1 |
Compensation cost capitalized as part of fixed assets and materials and supplies | $1.9 | | $1.9 | | $1.7 |
Entergy determines the fair value of the stock option grants by considering factors such as lack of marketability, stock retention requirements, and regulatory restrictions on exercisability in accordance with accounting standards. The stock option weighted-average assumptions used in determining the fair values are as follows:
| | | | | | | | | | | | | | | | | |
| | 2024 | | 2023 | | 2022 |
| Stock price volatility | 25.24% | | 24.89% | | 24.27% |
| Expected term in years | 6.88 | | 6.89 | | 6.92 |
| Risk-free interest rate | 4.03% | | 3.51% | | 1.77% |
| Dividend yield | 4.30% | | 4.00% | | 4.00% |
| Dividend payment per share | $2.30 | | $2.17 | | $2.05 |
Stock price volatility is calculated based upon the daily public stock price volatility of Entergy Corporation common stock over a period equal to the expected term of the award. The expected term of the options is based upon historical option exercises and the weighted-average life of options when exercised and the estimated weighted-average life of all vested but unexercised options. In 2008, Entergy implemented stock ownership guidelines for its senior executive officers. These guidelines require an executive officer to own shares of Entergy Corporation common stock equal to a specified multiple of his or her salary. Until an executive officer achieves this ownership position the executive officer is required to retain 75% of the net-of-tax net profit upon exercise of the option to be held in Entergy Corporation common stock. The reduction in fair value of the stock options due to this restriction is based upon an estimate of the call option value of the reinvested gain discounted to present value over the applicable reinvestment period.
A summary of stock option activity for the year ended December 31, 2024 and changes during the year are presented below:
| | | | | | | | | | | | | | | | | | | | | | | |
| | Number of Options | | Weighted-
Average
Exercise
Price | | Aggregate Intrinsic Value | | Weighted-
Average
Contractual Life |
| (Dollars In Thousands, Except Per Share Data) |
| Options outstanding as of January 1, 2024 | 5,797,416 | | | $48.83 | | | | |
| Options granted | 704,398 | | | $49.54 | | | | |
| Options exercised | (3,114,546) | | | $43.83 | | | | |
| Options forfeited/expired | (160,812) | | | $57.69 | | | | |
| Options outstanding as of December 31, 2024 | 3,226,456 | | | $53.38 | | $72,410 | | 6.62 |
| Options exercisable as of December 31, 2024 | 1,935,970 | | | $54.38 | | $41,515 | | 5.44 |
| Weighted-average grant-date fair value of options granted during 2024 | $9.31 | | | | | | |
The weighted-average grant-date fair value of options granted during the year was $10.04 for 2023 and $8.13 for 2022. The total intrinsic value of stock options exercised was $56 million during 2024, $2 million during 2023, and $20 million during 2022. The intrinsic value, which has no effect on net income, of the outstanding stock options
Entergy Corporation and Subsidiaries
Notes to Financial Statements
exercised is calculated by the positive difference between the weighted-average exercise price of the stock options granted and Entergy Corporation’s common stock price as of December 31, 2024. Entergy recognizes compensation cost over the vesting period of the options based on their grant-date fair value. The total fair value of options that vested was approximately $6 million during 2024, $6 million during 2023, and $5 million during 2022. Cash received from option exercises was $136 million for the year ended December 31, 2024. The tax benefits realized from options exercised was $13.9 million for the year ended December 31, 2024.
The following table summarizes information about stock options outstanding as of December 31, 2024:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Options Outstanding | | Options Exercisable |
| Range of Exercise Price | | As of December 31, 2024 | | Weighted-Average Remaining Contractual Life-Yrs. | | Weighted-Average Exercise Price | | Number Exercisable as of December 31, 2024 | | Weighted-Average Exercise Price |
| $31.00 | - | $39.99 | | 248,134 | | | 2.66 | | $37.48 | | 248,134 | | | $37.48 |
| $40.00 | - | $49.99 | | 1,145,520 | | | 7.49 | | $48.28 | | 467,062 | | | $46.46 |
| $50.00 | - | $59.99 | | 1,158,822 | | | 7.51 | | $54.55 | | 546,794 | | | $54.65 |
| $60.00 | - | $65.86 | | 673,980 | | | 5.08 | | $65.86 | | 673,980 | | | $65.86 |
| $63.17 | - | $131.72 | | 3,226,456 | | | 6.62 | | $53.38 | | 1,935,970 | | | $54.38 |
Stock-based compensation cost related to non-vested stock options outstanding as of December 31, 2024 not yet recognized is approximately $6 million and is expected to be recognized over a weighted-average period of 1.7 years.
Restricted Stock Awards
Entergy grants restricted stock awards earned under its stock benefit plans in the form of stock units. One-third of the restricted stock awards and accrued dividends will vest upon each anniversary of the grant date and are expensed ratably over the three-year vesting period. Shares of restricted stock have the same dividend and voting rights as other common stock and are considered issued and outstanding shares of Entergy upon vesting. Restricted stock awards are valued at the closing price of Entergy Corporation’s common stock on the grant date.
The following table includes information about the restricted stock awards outstanding as of December 31, 2024:
| | | | | | | | | | | |
| | Shares | | Weighted-Average Grant Date Fair Value Per Share |
| Outstanding shares at January 1, 2024 | 1,253,547 | | | $53.64 |
| Granted | 874,190 | | | $49.68 |
| Vested | (605,320) | | | $52.60 |
| Forfeited | (75,166) | | | $52.47 |
| Outstanding shares at December 31, 2024 | 1,447,251 | | | $51.74 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The following table includes financial information for restricted stock for each of the years presented:
| | | | | | | | | | | | | | | | | |
| | 2024 | | 2023 | | 2022 |
| | (In Millions) |
| Compensation expense included in Entergy’s consolidated net income | $24.4 | | $22.2 | | $23.2 |
| Tax benefit recognized in Entergy’s consolidated net income | $6.2 | | $5.7 | | $5.9 |
Compensation cost capitalized as part of fixed assets and materials and supplies | $11.3 | | $9.7 | | $9.2 |
The total fair value of the restricted stock awards granted was $43 million, $41 million, and $39 million for the years ended December 31, 2024, 2023, and 2022, respectively.
The total fair value of the restricted stock awards vested was $32 million, $33 million, and $34 million for the years ended December 31, 2024, 2023, and 2022, respectively.
Long-Term Performance Unit Program
Entergy grants long-term incentive awards earned under its stock benefit plans in the form of performance units, which represents the value of, and are settled with, one share of Entergy Corporation common stock at the end of the three-year performance period, plus dividends accrued during the performance period on the number of performance units earned. The Long-Term Performance Unit Program specifies a minimum, target, and maximum achievement level, the achievement of which will determine the number of performance units that may be earned. Entergy measures performance by assessing Entergy’s total shareholder return relative to the total shareholder return of the companies in the Philadelphia Utility Index. To emphasize the importance of environmental stewardship, specifically of carbon-free generation and resilience, an environmental achievement measure was selected as one of the performance measures for the 2024-2026 performance period. For the 2024-2026 performance period, performance will be measured based eighty percent on relative total shareholder return and twenty percent on the environmental achievement measure. The total shareholder return portion is valued based on various factors, primarily market conditions; and the environmental achievement measure portion is valued based on the closing price of Entergy Corporation’s common stock on the grant date. Performance units 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, and compensation cost for the portion of the award based on the selected credit measure will be adjusted based on the number of units that ultimately vest.
The following table includes information about the long-term performance units outstanding at the target level as of December 31, 2024:
| | | | | | | | | | | |
| | Shares | | Weighted-Average Grant Date Fair Value Per Share |
| Outstanding shares at January 1, 2024 | 962,002 | | | $60.56 |
| Granted | 404,760 | | | $59.03 |
| Vested | (432,804) | | | $53.88 |
| Forfeited | (47,356) | | | $63.99 |
| Outstanding shares at December 31, 2024 | 886,602 | | | $62.94 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The following table includes financial information for the long-term performance units for each of the years presented:
| | | | | | | | | | | | | | | | | |
| | 2024 | | 2023 | | 2022 |
| | (In Millions) |
| Compensation expense included in Entergy’s consolidated net income | $12.0 | | $11.1 | | | $16.0 | |
| Tax benefit recognized in Entergy’s consolidated net income | $3.1 | | $2.8 | | | $4.1 | |
Compensation cost capitalized as part of fixed assets and materials and supplies | $5.7 | | $5.2 | | | $6.7 | |
The total fair value of the long-term performance units granted was $24 million, $20 million, and $35 million for the years ended December 31, 2024, 2023, and 2022, respectively.
In January 2024, Entergy issued 432,804 shares of Entergy Corporation common stock at a share price of $49.43 for awards earned and dividends accrued under the 2021-2023 Long-Term Performance Unit Program. In January 2023, Entergy issued 76,300 shares of Entergy Corporation common stock at a share price of $53.80 for awards earned and dividends accrued under the 2020-2022 Long-Term Performance Unit Program. In January 2022, Entergy issued 448,668 shares of Entergy Corporation common stock at a share price of $55.18 for awards earned and dividends accrued under the 2019-2021 Long-Term Performance Unit Program.
Restricted Stock Unit Awards
Entergy grants restricted stock unit awards earned under its stock benefit plans in the form of stock units that are subject to time-based restrictions. The restricted stock units may be settled in shares of Entergy Corporation common stock or the cash value of shares of Entergy Corporation common stock at the time of vesting. The costs of restricted stock unit awards are charged to income over the restricted period, which varies from grant to grant. The average vesting period for restricted stock unit awards granted is 39 months. As of December 31, 2024, there were 230,058 unvested restricted stock units that are expected to vest over an average period of 44 months.
The following table includes information about the restricted stock unit awards outstanding as of December 31, 2024:
| | | | | | | | | | | |
| | Shares | | Weighted-Average Grant Date Fair Value Per Share |
| Outstanding shares at January 1, 2024 | 279,000 | | | $52.55 |
| Granted | 55,174 | | | $66.26 |
| Vested | (87,192) | | | $51.70 |
| Forfeited | (16,924) | | | $44.90 |
| Outstanding shares at December 31, 2024 | 230,058 | | | $56.73 |
The following table includes financial information for restricted stock unit awards for each of the years presented:
| | | | | | | | | | | | | | | | | |
| | 2024 | | 2023 | | 2022 |
| | (In Millions) |
| Compensation expense included in Entergy’s consolidated net income | $2.5 | | $2.8 | | $2.0 |
| Tax benefit recognized in Entergy’s consolidated net income | $0.6 | | $0.7 | | $0.5 |
Compensation cost capitalized as part of fixed assets and materials and supplies | $1.2 | | $1.2 | | $0.8 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The total fair value of the restricted stock unit awards granted was $4 million, $2 million, and $8 million for the years ended December 31, 2024, 2023, and 2022, respectively.
The total fair value of the restricted stock unit awards vested was $5 million, $1 million, and $3 million for the years ended December 31, 2024, 2023, and 2022, respectively.
NOTE 13. BUSINESS SEGMENT INFORMATION (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Entergy has a single reportable segment, Utility, which includes the generation, transmission, distribution, and sale of electric power in portions of Arkansas, Mississippi, Texas, and Louisiana, including the City of New Orleans; and operation of a small natural gas distribution business in portions of Louisiana. Revenue for the Utility segment is primarily derived from retail electric sales. The accounting policies of the Utility segment are the same as those described in Note 1 to the financial statements. The Utility segment reflects management’s primary basis of organization with a predominant focus on its utility operations in the Gulf South. Entergy’s chief operating decision maker is its chief executive officer. The chief operating decision maker uses Utility net income in the annual planning process and to monitor budget versus actual results on a monthly basis in assessing financial performance and in determining how to allocate resources. Parent & Other includes the parent company, Entergy Corporation, and other business activity, including Entergy’s non-utility operations business, which is an operating segment that does not meet the quantitative thresholds for determining reportable segments. Entergy’s non-utility operations business owns interests in non-nuclear power plants that sell the electric power produced by those plants to wholesale customers and also provides decommissioning services to nuclear power plants owned by non-affiliated entities in the United States.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The following table includes operating revenues and significant expense categories regularly provided to the chief operating decision maker for the Utility segment, a reconciliation of Utility operating revenues to Entergy’s consolidated operating revenues, and a reconciliation of Utility net income to consolidated net income and net income attributable to Entergy Corporation for each of the years presented:
| | | | | | | | | | | | | | | | | | | | |
| | 2024 | | 2023 | | 2022 |
| | (In Thousands) |
| Utility operating revenues | | $11,805,802 | | | $12,022,944 | | | $13,420,804 | |
| | | | | | |
| Reconciliation of revenues: | | | | | | |
| Other revenues (a) | | 73,914 | | | 124,509 | | | 343,461 | |
| Elimination of intersegment revenues | | (63) | | | (41) | | | (28) | |
| Consolidated operating revenues | | 11,879,653 | | | 12,147,412 | | | 13,764,237 | |
| | | | | | |
| Less Utility expenses and other items: | | | | | | |
| Fuel, fuel-related expenses, and gas purchased for resale | | 2,214,471 | | | 2,755,793 | | | 3,634,394 | |
| Purchased power | | 806,646 | | | 904,184 | | | 1,478,121 | |
| Other operation and maintenance expenses | | 2,851,165 | | | 2,838,057 | | | 2,899,759 | |
| Other regulatory charges (credits) - net | | (6,133) | | | (138,469) | | | 669,403 | |
| Other Utility items (b) | | 4,109,352 | | | 3,152,475 | | | 3,340,547 | |
| Utility net income | | 1,830,301 | | | 2,510,904 | | | 1,398,580 | |
| | | | | | |
| Reconciliation of net income: | | | | | | |
| Non-cash pension settlement charge (c) | | (319,675) | | | — | | | — | |
| IRS audit resolution (d) | | — | | | 275,403 | | | — | |
| Gain on sale of Palisades (e) | | — | | | — | | | 165,626 | |
| Income taxes on reconciling items noted above | | 66,515 | | | — | | | (36,102) | |
| Other loss | | (203,097) | | | (125,018) | | | (244,949) | |
| Elimination of intersegment loss | | (312,860) | | | (298,979) | | | (186,017) | |
| Consolidated net income | | 1,061,184 | | | 2,362,310 | | | 1,097,138 | |
| Preferred dividend requirements of subsidiaries and noncontrolling interests (f) | | 5,594 | | | 5,774 | | | (6,028) | |
| Net income attributable to Entergy Corporation | | $1,055,590 | | | $2,356,536 | | | $1,103,166 | |
(a)See Note 19 to the financial statements for discussion of other revenues.
(b)Other Utility items includes nuclear refueling outage expenses, asset write-offs, decommissioning expenses, taxes other than income taxes, depreciation and amortization expenses, other income, interest expense, and income tax expense.
(c)See Note 11 to the financial statements for discussion of the one-time non-cash pension settlement charge of $328 million, of which $8 million was recorded at Utility and $320 million was recorded at Parent & Other, resulting from a group annuity contract purchased in 2024 to settle certain pension liabilities.
(d)See Note 3 to the financial statements for discussion of the resolution of the 2016-2018 IRS audit, which included a $568 million reduction, recorded at Utility, and a $275 million reduction, recorded at Parent & Other, in income tax expense in 2023.
(e)See Note 14 to the financial statements for discussion of the $166 million gain, recorded at Parent & Other, resulting from the sale of the Palisades plant in June 2022.
(f)Preferred dividend requirements of subsidiaries and noncontrolling interests is substantially derived from the Utility segment. See Note 6 to the financial statements for discussion of preferred stock and noncontrolling interests.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The following tables present segment financial information for Entergy’s single reportable segment, Utility, and a reconciliation to the corresponding consolidated amounts for Entergy Corporation.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | Utility | | Parent & Other | | Eliminations | | Consolidated |
| | | (In Thousands) |
| Asset write-offs, impairments, and related charges (credits) | | $131,775 | | | ($24,641) | | | $— | | | $107,134 | |
| Depreciation, amortization, and decommissioning | | $2,226,681 | | | $6,567 | | | $— | | | $2,233,248 | |
| Interest and investment income | | $592,257 | | | $21,621 | | | ($315,013) | | | $298,865 | |
| Interest expense | | $899,655 | | | $253,317 | | | ($2,152) | | | $1,150,820 | |
| Income taxes | | $515,665 | | | ($134,638) | | | $— | | | $381,027 | |
| Total assets | | $68,951,564 | | | $721,459 | | | ($4,882,991) | | | $64,790,032 | |
| Total expenditures for additions to long-lived assets | | $5,967,739 | | | $1,971 | | | $— | | | $5,969,710 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | Utility | | Parent & Other | | Eliminations | | Consolidated |
| | | (In Thousands) |
| Asset write-offs, impairments, and related charges (credits) | | $79,962 | | | ($37,283) | | | $— | | | $42,679 | |
| Depreciation, amortization, and decommissioning | | $2,045,254 | | | $6,423 | | | $— | | | $2,051,677 | |
| Interest and investment income | | $443,751 | | | $18,660 | | | ($299,685) | | | $162,726 | |
| Interest expense | | $816,643 | | | $190,468 | | | ($705) | | | $1,006,406 | |
| Income taxes | | ($374,847) | | | ($315,688) | | | $— | | | ($690,535) | |
| Total assets | | $63,887,038 | | | $836,598 | | | ($5,020,240) | | | $59,703,396 | |
| Total expenditures for additions to long-lived assets | | $4,745,918 | | | $801 | | | $— | | | $4,746,719 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2022 | | Utility | | Parent & Other | | Eliminations | | Consolidated |
| | | (In Thousands) |
| Depreciation, amortization, and decommissioning | | $1,941,653 | | | $43,446 | | | $— | | | $1,985,099 | |
| Interest and investment income (loss) | | $145,968 | | | ($35,293) | | | ($186,256) | | | ($75,581) | |
| Interest expense | | $750,175 | | | $162,300 | | | ($238) | | | $912,237 | |
| Income taxes | | ($34,263) | | | ($4,715) | | | $— | | | ($38,978) | |
| Total assets | | $61,399,243 | | | $884,442 | | | ($3,688,494) | | | $58,595,191 | |
| Total expenditures for additions to long-lived assets | | $5,382,243 | | | $13,884 | | | $— | | | $5,396,127 | |
Eliminations are primarily intersegment activity. All of Entergy’s goodwill is related to the Utility segment.
Registrant Subsidiaries
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas each has one operating and reportable segment, an integrated utility business which includes the generation, transmission, and distribution of electric power; and operation of a small natural gas distribution business at each of Entergy Louisiana and Entergy New Orleans. Revenue for each integrated utility business is primarily derived from retail electric sales. System Energy has one operating and reportable segment, which is an electricity generation business. System Energy’s only source of revenue is the sale of electric power and capacity generated from its 90% interest in the Grand Gulf nuclear plant to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Orleans. Each of the Registrant Subsidiaries’ operations are 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. The chief operating decision maker for the Registrant Subsidiaries is the respective president and chief executive officer for the Utility operating companies and the president for System Energy. Each chief operating decision maker assesses financial performance on an entity-wide basis and decides how to allocate resources based on net income that also is reported on the income statement for each of the Registrant Subsidiaries as net income. Net income is used in the annual planning process and to monitor budget versus actual results on a monthly basis and each Registrant Subsidiary’s earned return on common equity in assessing financial performance. Each chief operating decision maker is only provided with the consolidated financial results for the respective Registrant Subsidiary. All segment financial information for the Registrant Subsidiaries is as reported on the respective financial statements for each of the Registrant Subsidiaries.
Geographic Areas
Entergy and the Registrant Subsidiaries derive substantially all revenue from inside of the United States and all long-lived assets are located within the United States.
Major Customers
Neither Entergy nor the Registrant Subsidiaries have an individual customer representing more than 10% of its respective revenues for the years ended December 31, 2024, 2023, and 2022.
Exit from the Merchant Power Business
Entergy completed its multi-year strategy to exit the merchant nuclear power business in 2022. The Fitzpatrick plant was sold to Exelon in March 2017. The Vermont Yankee plant was transferred to NorthStar in January 2019. The Pilgrim plant was sold to Holtec International in August 2019. The Indian Point 2 and Indian Point 3 plants were sold to Holtec International in May 2021. The Palisades plant was sold to Holtec International in June 2022. The decisions to shut down these plants and the related transactions resulted in asset impairments; employee retention and severance expenses and other benefits-related costs; and contracted economic development contributions.
As of December 31, 2021, Entergy had a restructuring cost accrual of $37 million relating to employee retention and severance expenses and other benefits-related costs related to its exit from the merchant power business. During the year ended December 31, 2022, Entergy accrued an additional $3 million in restructuring costs and made severance and retention payments of $40 million, after which the restructuring cost accrual was zero. The employee retention and severance expenses and other benefits-related costs are included in "Other operation and maintenance" in Entergy’s consolidated income statements.
NOTE 14. ACQUISITIONS, HELD FOR SALE, AND DISPOSITIONS (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans)
Acquisitions
Walnut Bend Solar
In June 2020, Entergy Arkansas signed a build-own-transfer agreement for the purchase of an approximately 100 MW to-be-constructed solar photovoltaic energy facility, Walnut Bend Solar facility, to be sited on approximately 1,000 acres in Lee County, Arkansas. Acquisition of the Walnut Bend Solar facility was initially approved by the APSC in July 2021. The agreement was amended by the parties in February 2023, and the revised agreement was approved by the APSC in July 2023. In February 2024, Entergy Arkansas made an initial payment
Entergy Corporation and Subsidiaries
Notes to Financial Statements
of approximately $170 million to acquire the facility. Substantial completion was achieved and commercial operation commenced in September 2024, at which time Entergy Arkansas made a substantial completion payment of approximately $16 million for acquisition of the facility.
West Memphis Solar
In September 2020, Entergy Arkansas signed a build-own-transfer agreement for the purchase of an approximately 180 MW to-be-constructed solar photovoltaic energy facility, West Memphis Solar facility, to be sited on approximately 1,500 acres in Crittenden County, Arkansas. Acquisition of the West Memphis Solar facility was initially approved by the APSC in October 2021. In March 2022 the counterparty to the build-own-transfer agreement notified Entergy Arkansas that it was seeking changes to certain terms of the agreement, including both cost and schedule. Entergy Arkansas filed a supplemental application with the APSC in January 2023 for a change in the transmission route and updates to the cost and schedule, which was approved by the APSC in March 2023. In August 2024, Entergy Arkansas made an initial payment of approximately $48 million to acquire the facility. Substantial completion was achieved in November 2024, at which time Entergy Arkansas made a substantial completion payment of approximately $192 million for acquisition of the facility. Commercial operation commenced in December 2024.
Driver Solar
In August 2022, Entergy Arkansas signed a build-own-transfer agreement for the purchase of an approximately 250 MW to-be-constructed solar photovoltaic energy facility, Driver Solar facility, to be sited near Osceola, Arkansas. Acquisition of the Driver Solar facility was approved by the APSC in August 2022. In August 2024, Entergy Arkansas made an initial payment of approximately $308 million to acquire the facility. Substantial completion was achieved in November 2024, at which time Entergy Arkansas made a substantial completion payment of approximately $85 million for acquisition of the facility. Commercial operation commenced in December 2024.
Sunflower Solar
In November 2018, Entergy Mississippi entered into an agreement for the purchase of an approximately 100 MW solar photovoltaic facility to be sited on approximately 1,000 acres in Sunflower County, Mississippi. The project, Sunflower Solar facility, was being built by Sunflower County Solar Project, LLC, an indirect subsidiary of Recurrent Energy, LLC. In December 2018, Entergy Mississippi filed a joint petition with Sunflower County Solar Project with the MPSC for Sunflower County Solar Project to construct and for Entergy Mississippi to acquire and thereafter own, operate, improve, and maintain the solar facility. In March 2020, Entergy Mississippi filed supplemental testimony addressing questions and observations raised in August 2019 by consultants retained by the Mississippi Public Utilities Staff and proposing an alternative structure for the transaction that would reduce its cost. In April 2020 the MPSC issued an order approving certification of the Sunflower Solar facility, subject to certain conditions, including: (i) that Entergy Mississippi pursue a tax equity partnership structure through which the partnership would acquire and own the facility under the build-own-transfer agreement and (ii) that if Entergy Mississippi does not consummate the partnership structure under the terms of the order, there will be a cap of $136 million on the level of recoverable costs. In April 2022, Entergy Mississippi confirmed mechanical completion of the Sunflower Solar facility. Pursuant to the MPSC’s April 2020 order, MS Sunflower Partnership, LLC was formed for the tax equity partnership with Entergy Mississippi as its managing member. In May 2022 both Entergy Mississippi and the tax equity investor made capital contributions to the tax equity partnership that were then used to make an initial payment of $105 million for acquisition of the facility. Substantial completion of the Sunflower Solar facility was accepted by Entergy Mississippi in September 2022. Commercial operation at the Sunflower Solar facility commenced in September 2022. In April 2023 both Entergy Mississippi and the tax equity investor made additional capital contributions to the tax equity partnership that were then used to make the substantial completion payment of $30 million for acquisition of the facility. The final payment of $5 million for
Entergy Corporation and Subsidiaries
Notes to Financial Statements
acquisition of the facility was made in October 2023. See Note 1 to the financial statements for further discussion of the HLBV method of accounting used to account for the investment in MS Sunflower Partnership, LLC.
Held for Sale
Natural Gas Distribution Businesses
On October 28, 2023, Entergy New Orleans and Entergy Louisiana each entered into separate purchase and sale agreements with respect to the sale of their respective regulated natural gas local distribution company businesses to two separate affiliates of Bernhard Capital Partners Management LP. Under the purchase and sale agreements, Entergy New Orleans has agreed to sell its regulated natural gas local distribution company business serving customers in the Parish of Orleans, Louisiana, and Entergy Louisiana has agreed to sell its regulated natural gas local distribution company business serving customers in the Parish of East Baton Rouge, Louisiana. The Entergy Louisiana and Entergy New Orleans natural gas distribution businesses are reflected in Entergy’s Utility reportable segment and in the respective single reportable segment for each of Entergy Louisiana and Entergy New Orleans.
The base purchase price to be paid by the buyer of the Entergy New Orleans gas business is $285.5 million, and the base purchase price to be paid by the buyer of the Entergy Louisiana gas business is $198 million, in each case subject to certain adjustments at the closing of the transactions. Each purchase and sale agreement contains customary representations, warranties, and covenants related to the applicable business and the respective transactions. Entergy New Orleans and Entergy Louisiana have each agreed to operate the respective gas businesses in the ordinary course of business and subject to certain operating covenants during the period between the date of the purchase and sale agreements and the completion of the transactions.
The transactions will proceed in two phases: (1) an “Initial Phase” prior to regulatory approvals in connection with both transactions; and (2) a “Second Phase” following regulatory approvals in connection with both transactions to the extent that certain conditions are satisfied or, where permissible, waived for both transactions.
Required regulatory approvals include the approval of the City Council for the sale of the Entergy New Orleans gas business and the approval of the LPSC and the Metropolitan Council for the City of Baton Rouge and Parish of East Baton Rouge for the sale of the Entergy Louisiana gas business. Additionally, while approval of the transactions is generally not required from the FERC, the parties sought and obtained a waiver of the FERC’s capacity release rules, as applicable.
In December 2023, Entergy New Orleans and Entergy Louisiana and the respective buyers filed their joint applications with the City Council and the LPSC, respectively, seeking approval for the proposed transactions. The applications requested a decision by June 2024.
In February 2024 the City Council adopted a procedural schedule, and in September 2024 the hearing officer certified the record of the proceeding. In December 2024 the City Council found the proposed transaction in the public interest and approved it, subject to certain conditions. The key conditions include:
•Entergy New Orleans will not seek recovery of certain assets allocated to its gas business that will not transfer to the buyer through the sale. These assets had a net book value as of December 31, 2024 of approximately $19 million.
•Entergy New Orleans will be limited to recovering $19 million of transaction and cooperation costs associated with the sale of the gas business.
•Entergy New Orleans will share with customers 50% of the net proceeds from the transaction. Net proceeds from the transaction will be determined by the sales price, less the sum of: (1) the net book value of the assets sold and liabilities assumed by the buyer, (2) the net book value of the assets of the gas business that will not be included in the sale and for which Entergy New Orleans will not seek to recover from customers,
Entergy Corporation and Subsidiaries
Notes to Financial Statements
and (3) the transaction and cooperation costs associated with the sale, limited to $19 million. Entergy New Orleans will recognize a regulatory liability for such sharing with customers, and will amortize it into customer rates ratably over three years.
In July 2024 the LPSC staff issued a report recommending LPSC approval of the application of Delta Capital Gas Company, LLC (a Bernhard Capital Partners Management LP affiliate, formerly Delta States Utilities LA, LLC) and Entergy Louisiana and the transaction described therein as being in the public interest and proposing certain conditions. In August 2024 the LPSC issued an order accepting the LPSC staff’s report and recommendation.
The purchase and sale agreements may be terminated by any party if the Second Phase does not start within 15 months of October 28, 2023, or within 18 months if the only remaining conditions to starting the Second Phase are obtaining the regulatory approvals. The consummation of each of the transactions is subject to satisfaction of certain customary closing conditions, including the receipt of the regulatory approvals, clearance under the Hart-Scott Rodino Act, and the concurrent closing of the other transaction. Clearance under the Hart-Scott Rodino Act was obtained in 2024. Under the purchase and sale agreements, the closing of the transactions is not required to occur earlier than the later of six months following the initiation of the Second Phase and July 28, 2025, and the purchase and sale agreements may be terminated by either party in the event the closing has not occurred prior to October 28, 2025. Neither transaction is subject to a financing condition for the applicable buyer.
The purchase and sale agreements are subject to customary termination provisions. If the purchase and sale agreements are terminated in certain circumstances, each seller may be liable to the applicable buyer for a portion of the buyer’s transition costs incurred in connection with transitioning the applicable business. Entergy New Orleans’s and Entergy Louisiana’s aggregate liability for such transaction costs shall not exceed $7.5 million if termination occurs during the Initial Phase or $12.5 million if termination occurs during the Second Phase, with responsibility allocated between the sellers pro rata based on the relative purchase price. If the purchase and sale agreements are terminated in certain circumstances, each buyer may be liable to the corresponding seller for a reverse termination fee, equal to 7% of the applicable base purchase price if termination occurs during the Initial Phase, or 10% of the applicable base purchase price if the termination occurs in the Second Phase.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
As of December 31, 2024, the Entergy Louisiana and Entergy New Orleans natural gas distribution businesses met the criteria to be classified as held for sale. Neither Entergy Louisiana nor Entergy New Orleans recognized write downs of the natural gas distribution business assets as a result of their classification as held for sale as of December 31, 2024, as neither sale is expected to result in a loss. The assets and liabilities of the Entergy Louisiana and Entergy New Orleans natural gas distribution businesses classified as held for sale on Entergy’s, Entergy Louisiana’s, and Entergy New Orleans’s consolidated balance sheets as of December 31, 2024 included the following amounts:
| | | | | | | | | | | | | | | | | | | | |
| | Entergy | | Entergy Louisiana | | Entergy New Orleans |
| | (In Thousands) |
| Deferred fuel | | $5,608 | | | $727 | | | $4,881 | |
| Fuel inventory - at average cost | | 4,493 | | | 702 | | | 3,791 |
| Materials and supplies | | 5,451 | | 1,045 | | 4,406 |
| Prepayments and other | | 22 | | | — | | | 22 |
| Total current assets held for sale | | $15,574 | | | $2,474 | | | $13,100 | |
| Property, plant, and equipment - natural gas | | $679,502 | | | $303,193 | | | $376,309 | |
| Construction work in progress | | 2,959 | | | 1,085 | | | 1,874 | |
| Less - accumulated depreciation and amortization | | (276,388) | | | (139,556) | | | (136,832) | |
| Other regulatory assets | | 35,381 | | | 8,947 | | | 23,682 | |
| Goodwill (a) | | 6,474 | | | — | | | — | |
| Pension and other postretirement assets | | 14,663 | | | — | | | 19,499 | |
| Other | | 206 | | | — | | | 206 | |
| Total non-current assets held for sale | | $462,797 | | | $173,669 | | | $284,738 | |
| Accounts payable | | $702 | | | $702 | | | $— | |
| Customer deposits | | 6,214 | | | 1,984 | | | 4,230 | |
| Taxes accrued | | 13 | | | 13 | | | — | |
| Other | | 1,401 | | | 589 | | | 812 | |
Total current liabilities held for sale (b) | | $8,330 | | | $3,288 | | | $5,042 | |
| Regulatory liability for income taxes - net | | $31,575 | | | $4,981 | | | $26,594 | |
| Other regulatory liabilities | | 1,611 | | | 1,214 | | | 397 | |
| Pension and other postretirement liabilities | | 3,976 | | | 4,525 | | | 1,197 | |
| Other | | 3,844 | | | 1,194 | | | 2,650 | |
Total non-current liabilities held for sale (c) | | $41,006 | | | $11,914 | | | $30,838 | |
(a) Goodwill is allocated to the natural gas distribution business based on its relative fair value compared to the retained portion of the reporting unit.
(b) Included within other current liabilities on the respective consolidated balance sheets.
(c) Included within other non-current liabilities on the respective consolidated balance sheets.
Entergy Louisiana and Entergy New Orleans will continue to recognize depreciation on the natural gas distribution businesses assets since they will continue to receive revenues through utility customer rates until the closing of the transaction, and because the final purchase price for the natural gas distribution businesses will be adjusted by an amount equal to that depreciation, among other adjustments.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The pre-tax income for the Entergy Louisiana and Entergy New Orleans natural gas distribution businesses, excluding interest and corporate allocations, included in Entergy’s, Entergy Louisiana’s, and Entergy New Orleans’s consolidated income statements for the years ended December 31, 2024, 2023, and 2022 is as follows:
| | | | | | | | | | | | | | | | | | | | |
| | 2024 | | 2023 | | 2022 |
| | (In Thousands) |
| Entergy | | | | | | |
| Income before income taxes | | $48,223 | | | $38,162 | | | $39,076 | |
| Entergy Louisiana | | | | | | |
| Income before income taxes | | $20,965 | | | $17,375 | | | $15,080 | |
| Entergy New Orleans | | | | | | |
| Income before income taxes | | $27,258 | | | $20,787 | | | $23,996 | |
Dispositions
Palisades
In July 2018, Entergy entered into a purchase and sale agreement with Holtec International to sell to a Holtec subsidiary 100% of the equity interests in the subsidiary that owns Palisades and the Big Rock Point Site. In December 2020, Entergy and Holtec submitted a license transfer application to the NRC requesting approval to transfer the Palisades and Big Rock Point licenses from Entergy to Holtec. The NRC issued an order approving the application in December 2021. Palisades was shut down in May 2022 and defueled in June 2022. The Palisades transaction closed in June 2022 for a purchase price of $1,000 (subject to adjustment for net liabilities and other amounts). The sale included the transfer of the Palisades nuclear decommissioning trust and the asset retirement obligation for spent fuel management and plant decommissioning. The transaction resulted in a gain of $166 million ($130 million net-of-tax) in the second quarter 2022. The disposition-date fair value of the nuclear decommissioning trust fund was approximately $552 million, and the disposition-date fair value of the asset retirement obligation was approximately $708 million. The transaction also included property, plant, and equipment with a net book value of zero and materials and supplies.
NOTE 15. RISK MANAGEMENT AND FAIR VALUES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Market Risk
In the normal course of business, Entergy is exposed to a number of market 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 commodity or instrument. All financial and commodity-related instruments, including derivatives, are subject to market risk including commodity price risk, equity price, and interest rate risk. Entergy uses derivatives primarily to mitigate commodity price risk associated with the price of fuel.
The Utility has limited exposure to the effects of market risk because it operates primarily under cost-based rate regulation. To the extent approved by their retail regulators, the Utility operating companies use commodity and financial instruments to hedge the exposure to price volatility inherent in their purchased power, fuel, and gas purchased for resale costs, that are recovered from customers.
Derivatives
Entergy designates a significant portion of its derivative instruments as normal purchase/normal sale transactions due to their physical settlement provisions, including power purchase and sales agreements, fuel
Entergy Corporation and Subsidiaries
Notes to Financial Statements
purchase agreements, and capacity contracts. Certain derivative instruments do not qualify for designation as normal purchase/normal sale transactions due to their financial settlement provisions. See further discussion below regarding the accounting for these derivative instruments.
Entergy manages fuel price volatility for its Louisiana jurisdictions (Entergy Louisiana and Entergy New Orleans) and Entergy Mississippi through the purchase of natural gas swaps and options that financially settle against either the average Henry Hub Gas Daily prices or the NYMEX Henry Hub. These swaps and options are marked-to-market through fuel expense with offsetting regulatory assets or liabilities. All benefits or costs of the program are recorded in fuel costs. The notional volumes of these swaps are based on a portion of projected annual exposure to gas price volatility for electric generation at Entergy Louisiana and Entergy Mississippi and projected winter purchases for gas distribution at Entergy New Orleans. The maximum length of time over which Entergy has executed natural gas swaps and options as of December 31, 2024 is 10 months for Entergy Mississippi. The total volume of natural gas swaps and options outstanding as of December 31, 2024 is 9,603,850 MMBtu for Entergy and Entergy Mississippi. As of December 31, 2024, Entergy Louisiana and Entergy New Orleans had no outstanding natural gas swaps or options. Credit support for these natural gas swaps and options is covered by master agreements that do not require Entergy to provide collateral based on mark-to-market value, but do carry adequate assurance language that may lead to requests for collateral.
During the second quarter 2024, Entergy participated in the annual financial transmission rights auction process for the MISO planning year of June 1, 2024 through May 31, 2025. Financial transmission rights are derivative instruments that represent economic hedges of future congestion charges that will be incurred in serving Entergy’s customer load. They are not designated as hedging instruments. Entergy initially records financial transmission rights at their estimated fair value and subsequently adjusts the carrying value to their estimated fair value at the end of each accounting period prior to settlement. Unrealized gains or losses on financial transmission rights held by the non-utility operations are included in operating revenues. The Utility operating companies recognize regulatory liabilities or assets for unrealized gains or losses on financial transmission rights. The total volume of financial transmission rights outstanding as of December 31, 2024 is 59,318 GWh for Entergy, including 13,991 GWh for Entergy Arkansas, 24,896 GWh for Entergy Louisiana, 9,297 GWh for Entergy Mississippi, 2,460 GWh for Entergy New Orleans, and 8,579 GWh for Entergy Texas. Credit support for financial transmission rights held by the Utility operating companies is covered by cash and/or letters of credit issued by each Utility operating company as required by MISO. Credit support for financial transmission rights held by Entergy’s non-utility operations business is covered by cash. No cash or letters of credit were required to be posted for financial transmission rights exposure for the non-utility operations business as of December 31, 2024 and 2023. Letters of credit posted with MISO covered the financial transmission rights exposure for Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas as of December 31, 2024 and for Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy Texas as of December 31, 2023.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The fair values of Entergy’s derivative instruments not designated as hedging instruments on the consolidated balance sheets as of December 31, 2024 and 2023 are shown in the table below. Certain investments, including those not designated as hedging instruments, are subject to master netting agreements and are presented in the balance sheet on a net basis in accordance with accounting guidance for derivatives and hedging.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Instrument | | Balance Sheet Location | | Gross Fair Value (a) | | Offsetting Position (b) | | Net Fair Value (c) (d) |
| | | | (In Millions) |
| 2024 | | | | | | | | |
| Assets: | | | | | | | | |
| Natural gas swaps and options | | Prepayments and other | | $2 | | $— | | $2 |
| | | | | | | | |
| Financial transmission rights | | Prepayments and other | | $21 | | ($1) | | $20 |
| | | | | | | | |
| Liabilities: | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Financial transmission rights | | Other current liabilities | | ($—) | | $1 | | $1 |
| | | | | | | | |
| 2023 | | | | | | | | |
| Assets: | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Financial transmission rights | | Prepayments and other | | $21 | | $— | | $21 |
| | | | | | | | | |
| Liabilities: | | | | | | | | |
| Natural gas swaps and options | | Other current liabilities | | $11 | | $— | | $11 |
| | | | | | | | |
(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 Corporation and Subsidiaries’ Consolidated Balance Sheets
(d)Excludes letters of credit posted with MISO to cover financial transmission rights exposure in the amount of $2 million as of December 31, 2024 and December 31, 2023
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The effects of Entergy’s derivative instruments not designated as hedging instruments on the consolidated income statements for the years ended December 31, 2024, 2023, and 2022 are as follows:
| | | | | | | | | | | | | | |
| Instrument | | Income Statement location | | Amount of gain (loss) recorded in the income statement |
| | | | | (In Millions) |
| 2024 | | | | |
| Natural gas swaps and options | | Fuel, fuel-related expenses, and gas purchased for resale | (a) | ($8) |
| Financial transmission rights | | Purchased power expense | (b) | $164 |
| | | | | |
| 2023 | | | | |
| Natural gas swaps and options | | Fuel, fuel-related expenses, and gas purchased for resale | (a) | ($54) |
| Financial transmission rights | | Purchased power expense | (b) | $124 |
| | | | | |
| 2022 | | | | |
| Natural gas swaps and options | | Fuel, fuel-related expenses, and gas purchased for resale | (a) | $74 |
| Financial transmission rights | | Purchased power expense | (b) | $176 |
(a)Due to regulatory treatment, the natural gas swaps and options 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 and options are settled are recovered or refunded through fuel cost recovery mechanisms.
(b)Due to regulatory treatment, the changes in the estimated fair value of financial transmission rights for the Utility operating companies are recorded through purchased power expense and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as purchased power expense when the financial transmission rights for the Utility operating companies are settled are recovered or refunded through fuel cost recovery mechanisms.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The fair values of derivative instruments not designated as hedging instruments on the Registrant Subsidiaries’ balance sheets as of December 31, 2024 and 2023 are shown in the tables below. Certain investments, including those not designated as hedging instruments, are subject to master netting agreements and are presented in the balance sheet on a net basis in accordance with accounting guidance for derivatives and hedging.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Instrument | | Balance Sheet Location | | Gross Fair Value (a) | | Offsetting Position (b) | | Net Fair Value (c) (d) | | Registrant |
| | | | | (In Millions) | | |
| 2024 | | | | | | | | | | |
| Assets: | | | | | | | | | | |
| | | | | | | | | | |
| Natural gas swaps | | Prepayments and other | | $1.6 | | $— | | $1.6 | | Entergy Mississippi |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Financial transmission rights | | Prepayments and other | | $8.6 | | ($0.1) | | $8.5 | | Entergy Arkansas |
| Financial transmission rights | | Prepayments and other | | $8.7 | | ($0.1) | | $8.6 | | Entergy Louisiana |
| | | | | | | | | | |
| Financial transmission rights | | Prepayments and other | | $1.3 | | $— | | $1.3 | | Entergy New Orleans |
| Financial transmission rights | | Prepayments and other | | $2.0 | | ($0.1) | | $1.9 | | Entergy Texas |
| | | | | | | | | | |
| Liabilities: | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Financial transmission rights | | Other current liabilities | | ($0.4) | | $0.9 | | $0.5 | | Entergy Mississippi |
| | | | | | | | | | |
| 2023 | | | | | | | | | | |
| Assets: | | | | | | | | | | |
| Financial transmission rights | | Prepayments and other | | $6.0 | | $— | | $6.0 | | Entergy Arkansas |
| Financial transmission rights | | Prepayments and other | | $9.8 | | $— | | $9.8 | | Entergy Louisiana |
| Financial transmission rights | | Prepayments and other | | $1.4 | | $— | | $1.4 | | Entergy Mississippi |
| Financial transmission rights | | Prepayments and other | | $1.1 | | $— | | $1.1 | | Entergy New Orleans |
| Financial transmission rights | | Prepayments and other | | $2.7 | | ($0.3) | | $2.4 | | Entergy Texas |
| | | | | | | | | | |
| Liabilities: | | | | | | | | | | |
| Natural gas swaps and options | | Other current liabilities | | $0.4 | | $— | | $0.4 | | Entergy Louisiana |
| Natural gas swaps | | Other current liabilities | | $10.1 | | $— | | $10.1 | | Entergy Mississippi |
| Natural gas swaps | | Other current liabilities | | $0.6 | | $— | | $0.6 | | Entergy New Orleans |
(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 Registrant Subsidiaries’ balance sheets
(d)Excludes letters of credit posted with MISO to cover financial transmission rights exposure in the amount of $0.5 million for Entergy Arkansas, $0.1 million for Entergy Louisiana, $0.8 million for Entergy Mississippi, $0.1 million for Entergy New Orleans, and $0.3 million for Entergy Texas as of December 31, 2024 and in the amount of $1.2 million for Entergy Arkansas, $0.5 million for Entergy Louisiana, $0.3 million for Entergy Mississippi, and $0.1 million for Entergy Texas as of December 31, 2023
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The effects of derivative instruments not designated as hedging instruments on the Registrant Subsidiaries’ income statements for the years ended December 31, 2024, 2023, and 2022 are as follows:
| | | | | | | | | | | | | | | | | | | | |
| Instrument | | Income Statement Location | | Amount of gain (loss) recorded in the income statement | | Registrant |
| | | | | (In Millions) | | |
| 2024 | | | | | | |
| | | | | | |
| Natural gas swaps | | Fuel, fuel-related expenses, and gas purchased for resale | (a) | $7.0 | | Entergy Mississippi |
| Natural gas swaps | | Fuel, fuel-related expenses, and gas purchased for resale | (a) | $0.5 | | Entergy New Orleans |
| | | | | | |
| Financial transmission rights | | Purchased power expense | (b) | $59.8 | | Entergy Arkansas |
| Financial transmission rights | | Purchased power expense | (b) | $71.7 | | Entergy Louisiana |
| Financial transmission rights | | Purchased power expense | (b) | $7.5 | | Entergy Mississippi |
| Financial transmission rights | | Purchased power expense | (b) | $6.9 | | Entergy New Orleans |
| Financial transmission rights | | Purchased power expense | (b) | $17.8 | | Entergy Texas |
| | | | | | |
| 2023 | | | | | | |
| Natural gas swaps and options | | Fuel, fuel-related expenses, and gas purchased for resale | (a) | ($8.4) | | Entergy Louisiana |
| Natural gas swaps | | Fuel, fuel-related expenses, and gas purchased for resale | (a) | ($42.9) | | Entergy Mississippi |
| Natural gas swaps | | Fuel, fuel-related expenses, and gas purchased for resale | (a) | ($3.0) | | Entergy New Orleans |
| | | | | | |
| Financial transmission rights | | Purchased power expense | (b) | $25.8 | | Entergy Arkansas |
| Financial transmission rights | | Purchased power expense | (b) | $60.4 | | Entergy Louisiana |
| Financial transmission rights | | Purchased power expense | (b) | $13.7 | | Entergy Mississippi |
| Financial transmission rights | | Purchased power expense | (b) | $6.4 | | Entergy New Orleans |
| Financial transmission rights | | Purchased power expense | (b) | $17.3 | | Entergy Texas |
| | | | | | |
| 2022 | | | | | | |
| Natural gas swaps and options | | Fuel, fuel-related expenses, and gas purchased for resale | (a) | $21.4 | | Entergy Louisiana |
| Natural gas swaps | | Fuel, fuel-related expenses, and gas purchased for resale | (a) | $53.6 | | Entergy Mississippi |
| Natural gas swaps | | Fuel, fuel-related expenses, and gas purchased for resale | (a) | ($1.2) | | Entergy New Orleans |
| | | | | | |
| Financial transmission rights | | Purchased power expense | (b) | $106.5 | | Entergy Arkansas |
| Financial transmission rights | | Purchased power expense | (b) | $48.5 | | Entergy Louisiana |
| Financial transmission rights | | Purchased power expense | (b) | $10.4 | | Entergy Mississippi |
| Financial transmission rights | | Purchased power expense | (b) | $3.7 | | Entergy New Orleans |
| Financial transmission rights | | Purchased power expense | (b) | $6.3 | | Entergy Texas |
(a)Due to regulatory treatment, the natural gas swaps and options 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 and options are settled are recovered or refunded through fuel cost recovery mechanisms.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
(b)Due to regulatory treatment, the changes in the estimated fair value of financial transmission rights for the Utility operating companies are recorded through purchased power expense and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as purchased power expense when the financial transmission rights for the Utility operating companies are settled are recovered or refunded through fuel cost recovery mechanisms.
Fair Values
The estimated fair values of Entergy’s financial instruments and derivatives are determined using historical prices, 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 are reflected in future rates and therefore do not affect net income. 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.
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 swaps traded on exchanges with active markets. Cash equivalents includes all unrestricted highly liquid debt instruments with an original or remaining maturity of three months or less at the date of purchase.
•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.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Level 2 consists primarily of individually-owned debt instruments and gas swaps and options valued using observable inputs.
•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 financial transmission rights.
The values of financial transmission rights are based on unobservable inputs, including estimates of congestion costs in MISO between applicable generation and load pricing nodes based on the 50th percentile of historical prices. They are classified as Level 3 assets and liabilities. The valuations of these assets and liabilities are performed by the Office of Corporate Risk Oversight. The values are calculated internally and verified against the data published by MISO. Entergy’s Accounting group reviews these valuations for reasonableness, with the assistance of others within the organization with knowledge of the various inputs and assumptions used in the valuation. The Office of Corporate Risk Oversight reports to the Vice President and Treasurer. The Accounting group reports to the Chief Accounting Officer.
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 December 31, 2024 and December 31, 2023. The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect placement within the fair value hierarchy levels.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | Level 1 | | Level 2 | | Level 3 | | Total |
| | (In Millions) |
| Assets: | | | | | | | | |
| Temporary cash investments | | $811 | | | $— | | | $— | | | $811 | |
| Decommissioning trust funds (a): | | | | | | | | |
| Equity securities | | 30 | | | — | | | — | | | 30 | |
| Debt securities | | 848 | | | 1,199 | | | — | | | 2,047 | |
| Common trusts (b) | | | | | | | | 3,486 | |
| | | | | | | | |
| Securitization recovery trust account | | 4 | | | — | | | — | | | 4 | |
| Storm reserve escrow accounts | | 340 | | | — | | | — | | | 340 | |
| Natural gas swaps and options | | 2 | | | — | | | — | | | 2 | |
| Financial transmission rights | | — | | | — | | | 20 | | | 20 | |
| | $2,035 | | | $1,199 | | | $20 | | | $6,740 | |
| Liabilities: | | | | | | | | |
| Financial transmission rights | | $— | | | $— | | | $1 | | | $1 | |
| | | | | | | | |
| | | | | | | | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | Level 1 | | Level 2 | | Level 3 | | Total |
| | (In Millions) |
| Assets: | | | | | | | | |
| Temporary cash investments | | $61 | | | $— | | | $— | | | $61 | |
| Decommissioning trust funds (a): | | | | | | | | |
| Equity securities | | 24 | | | — | | | — | | | 24 | |
| Debt securities | | 611 | | | 1,159 | | | — | | | 1,770 | |
| Common trusts (b) | | | | | | | | 3,070 | |
| Securitization recovery trust account | | 8 | | | — | | | — | | | 8 | |
| Storm reserve escrow accounts | | 323 | | | — | | | — | | | 323 | |
| | | | | | | | |
| Financial transmission rights | | — | | | — | | | 21 | | | 21 | |
| | $1,027 | | | $1,159 | | | $21 | | | $5,277 | |
| Liabilities: | | | | | | | | |
| Natural gas swaps and options | | $11 | | | $— | | | $— | | | $11 | |
| | | | | | | | |
(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 16 to the financial statements for additional information on the investment portfolios.
(b)Common trust funds are not publicly quoted and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table. The fund administrator of these investments allows daily trading at the net asset value and trades settle at a later date.
The following table sets forth a reconciliation of changes in the net assets for the fair value of financial transmission rights classified as Level 3 in the fair value hierarchy for the years ended December 31, 2024, 2023, and 2022:
| | | | | | | | | | | | | | | | | |
| | 2024 | | 2023 | | 2022 |
| | (In Millions) |
| Balance as of January 1, | $21 | | | $19 | | | $4 | |
| Issuances of financial transmission rights | 53 | | 42 | | 16 |
| Gains included as a regulatory liability/asset | 110 | | | 84 | | | 175 | |
| Settlements | (164) | | | (124) | | | (176) | |
| Balance as of December 31, | $20 | | | $21 | | | $19 | |
The fair values of the Level 3 financial transmission rights are based on unobservable inputs calculated internally and verified against historical pricing data published by MISO.
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) |
| | | | | | | | |
| | | | | | | | |
The following tables set forth, by level within the fair value hierarchy, the Registrant Subsidiaries’ assets and liabilities that are accounted for at fair value on a recurring basis as of December 31, 2024 and December 31,
Entergy Corporation and Subsidiaries
Notes to Financial Statements
2023. The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect placement within the fair value hierarchy levels.
Entergy Arkansas
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | Level 1 | | Level 2 | | Level 3 | | Total |
| | (In Millions) |
| Assets: | | | | | | | | |
| Temporary cash investments | | $3.4 | | | $— | | | $— | | | $3.4 | |
| Decommissioning trust funds (a): | | | | | | | | |
| Equity securities | | 12.9 | | | — | | | — | | | 12.9 | |
| Debt securities | | 259.9 | | | 319.1 | | | — | | | 579.0 | |
| Common trusts (b) | | | | | | | | 1,012.5 | |
| Financial transmission rights | | — | | | — | | | 8.5 | | | 8.5 | |
| | $276.2 | | | $319.1 | | | $8.5 | | | $1,616.3 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | Level 1 | | Level 2 | | Level 3 | | Total |
| | (In Millions) |
| Assets: | | | | | | | | |
| Temporary cash investments | | $3.1 | | | $— | | | $— | | | $3.1 | |
| Decommissioning trust funds (a): | | | | | | | | |
| Equity securities | | 6.4 | | | — | | | — | | | 6.4 | |
| Debt securities | | 129.9 | | | 367.0 | | | — | | | 496.9 | |
| Common trusts (b) | | | | | | | | 910.7 | |
| Financial transmission rights | | — | | | — | | | 6.0 | | | 6.0 | |
| | $139.4 | | | $367.0 | | | $6.0 | | | $1,423.1 | |
Entergy Louisiana
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | Level 1 | | Level 2 | | Level 3 | | Total |
| | (In Millions) |
| Assets: | | | | | | | | |
| Temporary cash investments | | $326.8 | | | $— | | | $— | | | $326.8 | |
| Decommissioning trust funds (a): | | | | | | | | |
| Equity securities | | 14.5 | | | — | | | — | | | 14.5 | |
| Debt securities | | 326.0 | | | 582.1 | | | — | | | 908.1 | |
| Common trusts (b) | | | | | | | | 1,506.5 | |
| Storm reserve escrow account | | 256.7 | | | — | | | — | | | 256.7 | |
| | | | | | | | |
| Financial transmission rights | | — | | | — | | | 8.6 | | | 8.6 | |
| | $924.0 | | | $582.1 | | | $8.6 | | | $3,021.2 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | Level 1 | | Level 2 | | Level 3 | | Total |
| | (In Millions) |
| Assets: | | | | | | | | |
| Temporary cash investments | | $0.5 | | | $— | | | $— | | | $0.5 | |
| Decommissioning trust funds (a): | | | | | | | | |
| Equity securities | | 14.6 | | | — | | | — | | | 14.6 | |
| Debt securities | | 271.7 | | | 516.4 | | | — | | | 788.1 | |
| Common trusts (b) | | | | | | | | 1,304.7 | |
| Storm reserve escrow account | | 243.8 | | | — | | | — | | | 243.8 | |
| | | | | | | | |
| Financial transmission rights | | — | | | — | | | 9.8 | | | 9.8 | |
| | $530.6 | | | $516.4 | | | $9.8 | | | $2,361.5 | |
| | | | | | | | |
| Liabilities: | | | | | | | | |
| Natural gas swaps and options | | $0.4 | | | $— | | | $— | | | $0.4 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Entergy Mississippi
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | Level 1 | | Level 2 | | Level 3 | | Total |
| | (In Millions) |
| Assets: | | | | | | | | |
| Temporary cash investments | | $155.5 | | | $— | | | $— | | | $155.5 | |
| | | | | | | | |
| Natural gas swaps | | 1.6 | | | — | | | — | | | 1.6 | |
| | | | | | | | |
| | $157.1 | | | $— | | | $— | | | $157.1 | |
| | | | | | | | |
| Liabilities: | | | | | | | | |
| | | | | | | | |
| Financial transmission rights | | $— | | | $— | | | $0.5 | | | $0.5 | |
| | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | Level 1 | | Level 2 | | Level 3 | | Total |
| | (In Millions) |
| Assets: | | | | | | | | |
| Temporary cash investments | | $6.6 | | | $— | | | $— | | | $6.6 | |
| Storm reserve escrow account | | 0.7 | | | — | | | — | | | 0.7 | |
| | | | | | | | |
| Financial transmission rights | | — | | | — | | | 1.4 | | | 1.4 | |
| | $7.3 | | | $— | | | $1.4 | | | $8.7 | |
| | | | | | | | |
| Liabilities: | | | | | | | | |
| Natural gas swaps | | $10.1 | | | $— | | | $— | | | $10.1 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy New Orleans
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | Level 1 | | Level 2 | | Level 3 | | Total |
| | (In Millions) |
| Assets: | | | | | | | | |
| Temporary cash investments | | $31.4 | | | $— | | | $— | | | $31.4 | |
| Securitization recovery trust account | | 1.6 | | | — | | | — | | | 1.6 | |
| Storm reserve escrow account | | 83.7 | | | — | | | — | | | 83.7 | |
| Financial transmission rights | | — | | | — | | | 1.3 | | | 1.3 | |
| | $116.7 | | | $— | | | $1.3 | | | $118.0 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | Level 1 | | Level 2 | | Level 3 | | Total |
| | (In Millions) |
| Assets: | | | | | | | | |
| | | | | | | | |
| Securitization recovery trust account | | $2.4 | | | $— | | | $— | | | $2.4 | |
| Storm reserve escrow account | | 78.7 | | | — | | | — | | | 78.7 | |
| Financial transmission rights | | — | | | — | | | 1.1 | | | 1.1 | |
| | $81.1 | | | $— | | | $1.1 | | | $82.2 | |
| | | | | | | | |
| Liabilities: | | | | | | | | |
| Natural gas swaps | | $0.6 | | | $— | | | $— | | | $0.6 | |
Entergy Texas
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | Level 1 | | Level 2 | | Level 3 | | Total |
| | (In Millions) |
Assets: | | | | | | | | |
| Temporary cash investments | | $184.7 | | | $— | | | $— | | | $184.7 | |
| Securitization recovery trust account | | 2.7 | | | — | | | — | | | 2.7 | |
| Financial transmission rights | | — | | | — | | | 1.9 | | | 1.9 | |
| | $187.4 | | | $— | | | $1.9 | | | $189.3 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | Level 1 | | Level 2 | | Level 3 | | Total |
| | (In Millions) |
Assets: | | | | | | | | |
| Temporary cash investments | | $20.5 | | | $— | | | $— | | | $20.5 | |
| Securitization recovery trust account | | 5.2 | | | — | | | — | | | 5.2 | |
| Financial transmission rights | | — | | | — | | | 2.4 | | | 2.4 | |
| | $25.7 | | | $— | | | $2.4 | | | $28.1 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
System Energy
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | Level 1 | | Level 2 | | Level 3 | | Total |
| | (In Millions) |
| Assets: | | | | | | | | |
| Temporary cash investments | | $28.5 | | | $— | | | $— | | | $28.5 | |
| Decommissioning trust funds (a): | | | | | | | | |
| Equity securities | | 2.4 | | | — | | | — | | | 2.4 | |
| Debt securities | | 262.4 | | | 297.4 | | | — | | | 559.8 | |
| Common trusts (b) | | | | | | | | 966.9 | |
| | $293.3 | | | $297.4 | | | $— | | | $1,557.6 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | Level 1 | | Level 2 | | Level 3 | | Total |
| | (In Millions) |
| Assets: | | | | | | | | |
| | | | | | | | |
| Decommissioning trust funds (a): | | | | | | | | |
| Equity securities | | $2.7 | | | $— | | | $— | | | $2.7 | |
| Debt securities | | 209.5 | | | 275.7 | | | — | | | 485.2 | |
| Common trusts (b) | | | | | | | | 854.4 | |
| | $212.2 | | | $275.7 | | | $— | | | $1,342.3 | |
(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 16 to the financial statements for additional information on the investment portfolios.
(b)Common trust funds are not publicly quoted and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table. The fund administrator of these investments allows daily trading at the net asset value and trades settle at a later date.
The following table sets forth a reconciliation of changes in the net assets (liabilities) for the fair value of financial transmission rights classified as Level 3 in the fair value hierarchy for the year ended December 31, 2024.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas |
| | (In Millions) |
| Balance as of January 1, 2024 | $6.0 | | | $9.8 | | | $1.4 | | | $1.1 | | | $2.4 | |
| Issuances of financial transmission rights | 17.6 | | | 21.6 | | | 3.9 | | | 2.8 | | | 7.3 | |
| Gains included as a regulatory liability/asset | 44.7 | | | 48.9 | | | 1.7 | | | 4.3 | | | 10.0 | |
| Settlements | (59.8) | | | (71.7) | | | (7.5) | | | (6.9) | | | (17.8) | |
| Balance as of December 31, 2024 | $8.5 | | | $8.6 | | | ($0.5) | | | $1.3 | | | $1.9 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The following table sets forth a reconciliation of changes in the net assets for the fair value of financial transmission rights classified as Level 3 in the fair value hierarchy for the year ended December 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas |
| | (In Millions) |
| Balance as of January 1, 2023 | $10.3 | | | $7.3 | | | $0.6 | | | $0.8 | | | $0.1 | |
| Issuances of financial transmission rights | 20.6 | | | 18.1 | | | 1.3 | | | 1.4 | | | 0.2 | |
| Gains included as a regulatory liability/asset | 0.9 | | | 44.8 | | | 13.2 | | | 5.3 | | | 19.4 | |
| Settlements | (25.8) | | | (60.4) | | | (13.7) | | | (6.4) | | | (17.3) | |
| Balance as of December 31, 2023 | $6.0 | | | $9.8 | | | $1.4 | | | $1.1 | | | $2.4 | |
NOTE 16. DECOMMISSIONING TRUST FUNDS (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, and System Energy)
The NRC requires certain of the Utility operating companies and System Energy to maintain nuclear decommissioning trusts to fund the costs of decommissioning ANO 1 and 2, River Bend, Waterford 3, and Grand Gulf. Entergy’s nuclear decommissioning trust funds invest in equity securities, fixed-rate debt 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, for unrealized gains/(losses) on investment securities, the Registrant Subsidiaries record an offsetting amount in other regulatory liabilities/assets. For the 30% interest in River Bend formerly owned by Cajun, Entergy Louisiana records an offsetting amount in other long-term liabilities on the consolidated balance sheets of Entergy and Entergy Louisiana for the unrealized trust earnings not currently expected to be needed to decommission the plant. Decommissioning trust funds for the nuclear plants previously owned by Entergy’s non-utility operations, all of which have been sold as of June 2022, did not meet the criteria for regulatory accounting treatment. Accordingly, unrealized gains/(losses) recorded on the equity securities in the trust funds for these plants were recognized in earnings with no offsetting regulatory liability/asset amount. Unrealized gains/(losses) recorded on the available-for-sale debt securities in the trust funds were recognized in the accumulated other comprehensive income component of shareholders’ equity. Generally, Entergy records gains and losses on its debt and equity securities using the specific identification method to determine the cost basis of its securities.
As discussed in Note 14 to the financial statements, in June 2022, Entergy completed the sale of Palisades to Holtec. As part of the transaction, Entergy transferred the Palisades decommissioning trust fund to Holtec. The disposition-date fair value of the decommissioning trust fund was approximately $552 million.
The unrealized gains/(losses) recognized during the year ended December 31, 2024 on equity securities still held as of December 31, 2024 were $616 million. 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 equity securities are held in funds that are designed to approximate or somewhat exceed the return of the Wilshire 4500 Index. The debt securities are generally held in individual government and credit issuances.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The available-for-sale debt securities held as of December 31, 2024 and 2023 are summarized as follows:
| | | | | | | | | | | | | | |
| | 2024 | | 2023 |
| | (In Millions) |
| Fair value | | $2,047 | | | $1,770 | |
| Unrealized gains | | $7 | | | $19 | |
| Unrealized losses | | $80 | | | $134 | |
As of December 31, 2024 and 2023, there were no deferred taxes on unrealized gains/(losses). The amortized cost of available-for-sale debt securities was $2,121 million as of December 31, 2024 and $1,885 million as of December 31, 2023. As of December 31, 2024, available-for-sale debt securities had an average coupon rate of approximately 4.04%, an average duration of approximately 6.35 years, and an average maturity of approximately 11.05 years.
The fair value and gross unrealized losses of available-for-sale debt securities, summarized by length of time that the securities had been in a continuous loss position, were as follows as of December 31, 2024 and 2023:
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2024 | | December 31, 2023 |
| Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses |
| | (In Millions) |
| Less than 12 months | $1,102 | | | $24 | | | $134 | | | $6 | |
| More than 12 months | 510 | | | 56 | | | 999 | | | 128 | |
| Total | $1,612 | | | $80 | | | $1,133 | | | $134 | |
The fair value of available-for-sale debt securities, summarized by contractual maturities, as of December 31, 2024 and 2023 are as follows:
| | | | | | | | | | | |
| | 2024 | | 2023 |
| | (In Millions) |
| Less than 1 year | $36 | | | $82 | |
| 1 year - 5 years | 574 | | | 517 | |
| 5 years - 10 years | 629 | | | 504 | |
| 10 years - 15 years | 166 | | | 121 | |
| 15 years - 20 years | 218 | | | 179 | |
| 20 years+ | 424 | | | 367 | |
| Total | $2,047 | | | $1,770 | |
The following table summarizes proceeds from the dispositions of available-for-sale debt securities and the related gains and losses from the sales for the years ended December 31, 2024, 2023, and 2022:
| | | | | | | | | | | | | | | | | | | | |
| | | 2024 | | 2023 | | 2022 |
| | | (In Millions) |
| Proceeds from disposition of securities | | $1,258 | | | $661 | | | $889 | |
| Realized gains | | $5 | | | $1 | | | $2 | |
| Realized losses | | $89 | | | $37 | | | $46 | |
During the years ended December 31, 2024 and 2023, gross gains and gross losses related to available-for-sale debt securities were reclassified out of other regulatory liabilities/assets into earnings. During the year ended
Entergy Corporation and Subsidiaries
Notes to Financial Statements
December 31, 2022, gross gains and gross losses related to available-for-sale debt securities were reclassified out of other comprehensive income or other regulatory liabilities/assets into earnings.
Entergy Arkansas
Entergy Arkansas holds equity securities and available-for-sale debt securities in nuclear decommissioning trust accounts. The available-for-sale debt securities held as of December 31, 2024 and 2023 are summarized as follows:
| | | | | | | | | | | | | | |
| | 2024 | | 2023 |
| | (In Millions) |
| Fair value | | $579.0 | | | $496.9 | |
| Unrealized gains | | $1.2 | | | $2.4 | |
| Unrealized losses | | $25.8 | | | $53.6 | |
The amortized cost of available-for-sale debt securities was $603.5 million as of December 31, 2024 and $548.1 million as of December 31, 2023. As of December 31, 2024, the available-for-sale debt securities had an average coupon rate of approximately 3.72%, an average duration of approximately 6.31 years, and an average maturity of approximately 8.66 years.
The unrealized gains/(losses) recognized during the year ended December 31, 2024 on equity securities still held as of December 31, 2024 were $177 million. 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 equity securities are held in funds that are designed to approximate or somewhat exceed the return of the Wilshire 4500 Index. The debt securities are generally held in individual government and credit issuances.
The fair value and gross unrealized losses of available-for-sale debt securities, summarized by length of time that the securities had been in a continuous loss position, were as follows as of December 31, 2024 and 2023:
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2024 | | December 31, 2023 |
| Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses |
| (In Millions) |
| Less than 12 months | $282.8 | | | $8.2 | | | $22.5 | | | $0.4 | |
| More than 12 months | 195.0 | | | 17.6 | | | 403.4 | | | 53.2 | |
| Total | $477.8 | | | $25.8 | | | $425.9 | | | $53.6 | |
The fair value of available-for-sale debt securities, summarized by contractual maturities, as of December 31, 2024 and 2023 are as follows:
| | | | | | | | | | | |
| | 2024 | | 2023 |
| | (In Millions) |
| Less than 1 year | $31.7 | | | $45.3 | |
| 1 year - 5 years | 142.5 | | | 132.2 | |
| 5 years - 10 years | 231.0 | | | 205.7 | |
| 10 years - 15 years | 62.2 | | | 39.9 | |
| 15 years - 20 years | 62.8 | | | 49.6 | |
| 20 years+ | 48.8 | | | 24.2 | |
| Total | $579.0 | | | $496.9 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The following table summarizes proceeds from the dispositions of available-for-sale debt securities and the related gains and losses from the sales for the years ended December 31, 2024, 2023, and 2022:
| | | | | | | | | | | | | | | | | | | | |
| | | 2024 | | 2023 | | 2022 |
| | | (In Millions) |
| Proceeds from disposition of securities | | $210.6 | | | $28.5 | | | $42.1 | |
| Realized gains | | $0.1 | | | $0.1 | | | $0.1 | |
| Realized losses | | $35.8 | | | $2.0 | | | $2.6 | |
During the years ended December 31, 2024, 2023, and 2022, gross gains and gross losses related to available-for-sale debt securities were reclassified out of other regulatory liabilities/assets into earnings.
Entergy Louisiana
Entergy Louisiana holds equity securities and available-for-sale debt securities in nuclear decommissioning trust accounts. The available-for-sale debt securities held as of December 31, 2024 and 2023 are summarized as follows:
| | | | | | | | | | | | | | |
| | 2024 | | 2023 |
| | (In Millions) |
| Fair value | | $908.1 | | | $788.1 | |
| Unrealized gains | | $3.6 | | | $11.7 | |
| Unrealized losses | | $26.9 | | | $37.4 | |
The amortized cost of available-for-sale debt securities was $931.5 million as of December 31, 2024 and $813.9 million as of December 31, 2023. As of December 31, 2024, the available-for-sale debt securities had an average coupon rate of approximately 4.32%, an average duration of approximately 6.50 years, and an average maturity of approximately 12.97 years.
The unrealized gains/(losses) recognized during the year ended December 31, 2024 on equity securities still held as of December 31, 2024 were $277.8 million. 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 equity securities are held in funds that are designed to approximate or somewhat exceed the return of the Wilshire 4500 Index. The debt securities are generally held in individual government and credit issuances.
The fair value and gross unrealized losses of available-for-sale debt securities, summarized by length of time that the securities had been in a continuous loss position, were as follows as of December 31, 2024 and 2023:
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2024 | | December 31, 2023 |
| Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses |
| (In Millions) |
| Less than 12 months | $543.8 | | | $8.8 | | | $69.8 | | | $0.9 | |
| More than 12 months | 178.4 | | | 18.1 | | | 356.1 | | | 36.5 | |
| Total | $722.2 | | | $26.9 | | | $425.9 | | | $37.4 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The fair value of available-for-sale debt securities, summarized by contractual maturities, as of December 31, 2024 and 2023 are as follows:
| | | | | | | | | | | |
| | 2024 | | 2023 |
| | (In Millions) |
| Less than 1 year | $4.4 | | | $31.4 | |
| 1 year - 5 years | 188.2 | | | 181.6 | |
| 5 years - 10 years | 259.4 | | | 170.0 | |
| 10 years - 15 years | 80.9 | | | 70.2 | |
| 15 years - 20 years | 106.1 | | | 90.2 | |
| 20 years+ | 269.1 | | | 244.7 | |
| Total | $908.1 | | | $788.1 | |
The following table summarizes proceeds from the dispositions of available-for-sale debt securities and the related gains and losses from the sales for the years ended December 31, 2024, 2023, and 2022:
| | | | | | | | | | | | | | | | | | | | |
| | | 2024 | | 2023 | | 2022 |
| | | (In Millions) |
| Proceeds from disposition of securities | | $547.8 | | | $318.6 | | | $362.2 | |
| Realized gains | | $1.3 | | | $0.5 | | | $1.3 | |
| Realized losses | | $25.8 | | | $20.9 | | | $23.0 | |
During the years ended December 31, 2024, 2023, and 2022, gross gains and gross losses related to available-for-sale debt securities were reclassified out of other regulatory liabilities/assets into earnings.
System Energy
System Energy holds equity securities and available-for-sale debt securities in nuclear decommissioning trust accounts. The available-for-sale debt securities held as of December 31, 2024 and 2023 are summarized as follows:
| | | | | | | | | | | | | | |
| | 2024 | | 2023 |
| | (In Millions) |
| Fair value | | $559.8 | | | $485.2 | |
| Unrealized gains | | $1.9 | | | $4.5 | |
| Unrealized losses | | $27.6 | | | $42.5 | |
The amortized cost of available-for-sale debt securities was $585.5 million as of December 31, 2024 and $523.2 million as of December 31, 2023. As of December 31, 2024, the available-for-sale debt securities had an average coupon rate of approximately 3.94%, an average duration of approximately 6.13 years, and an average maturity of approximately 10.44 years.
The unrealized gains/(losses) recognized during the year ended December 31, 2024 on equity securities still held as of December 31, 2024 were $161.1 million. 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 equity securities are held in funds that are designed to approximate or somewhat exceed the return of the Wilshire 4500 Index. The debt securities are generally held in individual government and credit issuances.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The fair value and gross unrealized losses of available-for-sale debt securities, summarized by length of time that the securities had been in a continuous loss position, were as follows as of December 31, 2024 and 2023:
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2024 | | December 31, 2023 |
| Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses |
| (In Millions) |
| Less than 12 months | $275.6 | | | $6.8 | | | $42.1 | | | $4.5 | |
| More than 12 months | 136.8 | | | 20.8 | | | 239.1 | | | 38.0 | |
| Total | $412.4 | | | $27.6 | | | $281.2 | | | $42.5 | |
The fair value of available-for-sale debt securities, summarized by contractual maturities, as of December 31, 2024 and 2023 are as follows:
| | | | | | | | | | | |
| | 2024 | | 2023 |
| | (In Millions) |
| Less than 1 year | $0.2 | | | $5.3 | |
| 1 year - 5 years | 243.7 | | | 203.4 | |
| 5 years - 10 years | 138.9 | | | 128.6 | |
| 10 years - 15 years | 22.7 | | | 10.7 | |
| 15 years - 20 years | 49.4 | | | 38.8 | |
| 20 years+ | 104.9 | | | 98.4 | |
| Total | $559.8 | | | $485.2 | |
The following table summarizes proceeds from the dispositions of available-for-sale debt securities and the related gains and losses from the sales for the years ended December 31, 2024, 2023, and 2022:
| | | | | | | | | | | | | | | | | | | | |
| | | 2024 | | 2023 | | 2022 |
| | | (In Millions) |
| Proceeds from disposition of securities | | $500.1 | | | $314.3 | | | $209.4 | |
| Realized gains | | $3.1 | | | $0.6 | | | $0.2 | |
| Realized losses | | $28.0 | | | $14.2 | | | $10.7 | |
During the years ended December 31, 2024, 2023, and 2022, gross gains and gross losses related to available-for-sale debt securities were reclassified out of other regulatory liabilities/assets into earnings.
NOTE 17. VARIABLE INTEREST ENTITIES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Under applicable authoritative accounting guidance, a variable interest entity (VIE) is an entity that conducts a business or holds property that possesses any of the following characteristics: an insufficient amount of equity at risk to finance its activities, equity owners who do not have the power to direct the significant activities of the entity (or have voting rights that are disproportionate to their ownership interest), or where equity holders do not receive expected losses or returns. An entity may have an interest in a VIE through ownership or other contractual rights or obligations, and is required to consolidate a VIE if it is the VIE’s primary beneficiary. The primary beneficiary of a VIE is the entity that has the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance and has the obligation to absorb losses or has the right to residual returns that would potentially be significant to the entity.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy Arkansas, Entergy Louisiana, and System Energy consolidate the respective companies from which they lease nuclear fuel, usually in a sale and leaseback transaction. This is because Entergy directs the nuclear fuel companies with respect to nuclear fuel purchases, assists the nuclear fuel companies in obtaining financing, and, if financing cannot be arranged, the lessee (Entergy Arkansas, Entergy Louisiana, or System Energy) is required to pay advance rent (Entergy Arkansas VIE, Entergy Louisiana Waterford VIE, and System Energy VIE) or special payments (Entergy Louisiana River Bend VIE) to allow the nuclear fuel company (the VIE) to meet its obligations. During the term of the arrangements, none of the Entergy operating companies have been required to provide financial support apart from their scheduled lease payments. See Note 4 to the financial statements for details of the nuclear fuel companies’ credit facilities and commercial paper borrowings and long-term debt that are reported by Entergy, Entergy Arkansas, Entergy Louisiana, and System Energy. These amounts also represent Entergy’s and the respective Registrant Subsidiary’s maximum exposure to losses associated with their respective interests in the nuclear fuel companies.
Entergy Texas Restoration Funding, LLC and Entergy Texas Restoration Funding II, LLC, companies wholly-owned and consolidated by Entergy Texas, are VIEs and Entergy Texas is the primary beneficiary. In November 2009, Entergy Texas Restoration Funding issued senior secured transition bonds (securitization bonds) to finance Entergy Texas’s Hurricane Ike and Hurricane Gustav restoration costs. Although the principal amount was not due until November 2023, Entergy Texas Restoration Funding made principal payments on the bonds in 2022, after which the bonds were fully repaid. In April 2022, Entergy Texas Restoration Funding II issued senior secured system restoration bonds (securitization bonds) to finance Entergy Texas’s Hurricane Laura, Hurricane Delta, and Winter Storm Uri restoration costs. With the proceeds, the VIEs purchased from Entergy Texas the transition property, which is the right to recover from customers through a system restoration charge amounts sufficient to service the securitization bonds. The transition property is reflected as a regulatory asset on the consolidated Entergy Texas balance sheet. The creditors of Entergy Texas do not have recourse to the assets or revenues of the VIEs, including the transition property, and the creditors of the VIEs do not have recourse to the assets or revenues of Entergy Texas. Entergy Texas has no payment obligations to the VIEs except to remit system restoration charge collections. See Note 5 to the financial statements for additional details regarding the securitization bonds.
Entergy New Orleans Storm Recovery Funding I, L.L.C., a company wholly-owned and consolidated by Entergy New Orleans, is a VIE and Entergy New Orleans is the primary beneficiary. In July 2015, Entergy New Orleans Storm Recovery Funding issued storm cost recovery bonds to recover Entergy New Orleans’s Hurricane Isaac storm restoration costs, including carrying costs, the costs of funding and replenishing the storm recovery reserve, and up-front financing costs associated with the securitization. With the proceeds, Entergy New Orleans Storm Recovery Funding purchased from Entergy New Orleans the storm recovery property, which is the right to recover from customers through a storm recovery charge amounts sufficient to service the securitization bonds. Although the principal amount was not due until June 2027, Entergy New Orleans Storm Recovery Funding made a principal payment on the bonds in 2024, after which the bonds were fully repaid. See Note 5 to the financial statements for additional details regarding the securitization bonds.
Restoration Law Trust I (the storm trust I), a trust consolidated by Entergy Louisiana, is a VIE and Entergy Louisiana is the primary beneficiary. The storm trust I was established as part of the May 2022 Act 293 securitization of Entergy Louisiana’s Hurricane Laura, Hurricane Delta, Hurricane Zeta, and Winter Storm Uri restoration costs, as well as to establish a storm reserve to fund a portion of Hurricane Ida storm restoration costs. Entergy Louisiana is the primary beneficiary of the storm trust I because it was created to facilitate the financing of Entergy Louisiana’s storm restoration costs and Entergy Louisiana is entitled to receive a majority of the proceeds received by the storm trust I. As of December 31, 2024 and 2023, the primary asset held by the storm trust I was $2.9 billion and $3.0 billion, respectively, of outstanding Entergy Finance Company preferred membership interests, which is reflected as an investment in affiliate preferred membership interests on the consolidated balance sheets of Entergy Louisiana. The storm trust I’s investment in affiliate preferred membership interests was purchased with the net bond proceeds of the securitization bonds issued by the LCDA. After the securitization bonds were issued, the LCDA loaned the net bond proceeds to the LURC, and pursuant to Act 293, the LURC contributed the net bond proceeds to the storm trust I. The holders of the securitization bonds do not have recourse to the assets or revenues
Entergy Corporation and Subsidiaries
Notes to Financial Statements
of the trust or to any Entergy affiliate and the bonds are not reflected in the consolidated balance sheets of Entergy or Entergy Louisiana. The LURC’s 1% beneficial interest in the storm trust I is recorded as noncontrolling interest on the consolidated balance sheets of Entergy and Entergy Louisiana, with balances of $28.8 million and $30.5 million as of December 31, 2024 and 2023, respectively. See Note 2 to the financial statements for additional discussion of the securitization bonds and the preferred membership interests.
Restoration Law Trust II (the storm trust II), a trust consolidated by Entergy Louisiana, is a VIE and Entergy Louisiana is the primary beneficiary. The storm trust II was established as part of the March 2023 Act 293 securitization of Entergy Louisiana’s Hurricane Ida restoration costs, less Hurricane Ida amounts previously financed in May 2022 in a prior securitization transaction. Entergy Louisiana is the primary beneficiary of the storm trust II because it was created to facilitate the financing of Entergy Louisiana’s storm restoration costs and Entergy Louisiana is entitled to receive a majority of the proceeds received by the storm trust II. As of December 31, 2024 and 2023, the primary asset held by the storm trust II was $1.4 billion and $1.5 billion, respectively, of outstanding Entergy Finance Company preferred membership interests, which is reflected as an investment in affiliate preferred membership interests on the consolidated balance sheets of Entergy Louisiana. The storm trust II’s investment in affiliate preferred membership interests was purchased with the net bond proceeds of the securitization bonds issued by the LCDA. After the securitization bonds were issued, the LCDA loaned the net bond proceeds to the LURC, and pursuant to Act 293, the LURC contributed the net bond proceeds to the storm trust II. The holders of the securitization bonds do not have recourse to the assets or revenues of the storm trust II or to any Entergy affiliate and the bonds are not reflected in the consolidated balance sheets of Entergy or Entergy Louisiana. The LURC’s 1% beneficial interest in the storm trust II is recorded as noncontrolling interest on the consolidated balance sheets of Entergy and Entergy Louisiana, with balances of $13.9 million and $14.6 million as of December 31, 2024 and 2023, respectively. See Note 2 to the financial statements for additional discussion of the securitization bonds and the preferred membership interests.
System Energy is considered to hold a variable interest in the lessor from which it leases an undivided interest in the Grand Gulf nuclear plant. System Energy is the lessee under this arrangement, which is described in more detail in Note 5 to the financial statements. System Energy made payments under this arrangement, including interest, of $17.2 million in 2024, 2023, and 2022. The lessor is a bank acting in the capacity of owner trustee for the benefit of equity investors in the transaction pursuant to trust agreement entered solely for the purpose of facilitating the lease transaction. It is possible that System Energy may be considered as the primary beneficiary of the lessor, but it is unable to apply the authoritative accounting guidance with respect to this VIE because the lessor is not required to, and could not, provide the necessary financial information to consolidate the lessor. Because System Energy accounts for this leasing arrangement as a capital financing, however, System Energy believes that consolidating the lessor would not materially affect the financial statements. In the event of default under a lease, remedies available to the lessor include payment by the lessee of the fair value of the undivided interest in the plant, payment of the present value of the basic rent payments, or payment of a predetermined casualty value. System Energy believes, however, that the obligations recorded on the balance sheet materially represent its potential exposure to loss.
AR Searcy Partnership, LLC, is a tax equity partnership that qualifies as a VIE, which Entergy Arkansas is required to consolidate as it is the primary beneficiary. AR Searcy Partnership, LLC, was formed to acquire and own the Searcy Solar facility. The entity is a VIE because the holders of the membership interests, as a group, lack the characteristics of a controlling financial interest, including substantive kick out rights. Entergy Arkansas is the primary beneficiary of the partnership because, as the managing member, it has the right to direct the operations and receive a majority of the operating income of the partnership. See Note 1 to the financial statements for discussion of the presentation of the third party tax equity partner’s noncontrolling interest and the HLBV method of accounting used to account for Entergy Arkansas’s investment in AR Searcy Partnership, LLC. As of December 31, 2024, AR Searcy Partnership, LLC recorded assets equal to $129.7 million, primarily consisting of property, plant, and equipment, and the carrying value of Entergy Arkansas’s ownership interest in the partnership was approximately $113.2 million. As of December 31, 2023, AR Searcy Partnership, LLC recorded assets equal to $134 million, primarily consisting of property, plant, and equipment, and the carrying value of Entergy Arkansas’s
Entergy Corporation and Subsidiaries
Notes to Financial Statements
ownership interest in the partnership was approximately $111.2 million. The tax equity investor’s ownership interest is recorded as noncontrolling interest.
MS Sunflower Partnership, LLC, is a tax equity partnership that qualifies as a VIE, which Entergy Mississippi is required to consolidate as it is the primary beneficiary. See Note 14 to the financial statements for additional discussion on the establishment of MS Sunflower Partnership, LLC and the acquisition of the Sunflower Solar facility. The entity is a VIE because the holders of the membership interests, as a group, lack the characteristics of a controlling financial interest, including substantive kick out rights. Entergy Mississippi is the primary beneficiary of the partnership because, as the managing member, it has the right to direct the operations and receive a majority of the operating income of the partnership. See Note 1 to the financial statements for discussion of the presentation of the third party tax equity partner’s noncontrolling interest and the HLBV method of accounting used to account for Entergy Mississippi’s investment in MS Sunflower Partnership, LLC. As of December 31, 2024, MS Sunflower Partnership, LLC recorded assets equal to $157.8 million, primarily consisting of property, plant, and equipment, and the carrying value of Entergy Mississippi’s ownership interest in the partnership was approximately $132.7 million. As of December 31, 2023, MS Sunflower Partnership, LLC recorded assets equal to $163.2 million, primarily consisting of property, plant, and equipment, and the carrying value of Entergy Mississippi’s ownership interest in the partnership was approximately $128.4 million. The tax equity investor’s ownership interest is recorded as noncontrolling interest.
Entergy has also reviewed various lease arrangements, power purchase agreements, including agreements for renewable power, and other agreements that represent variable interests in other legal entities which have been determined to be VIEs. In these cases, Entergy has determined that it is not the primary beneficiary of the related VIE because it does not have the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance, or it does not have the obligation to absorb losses or the right to residual returns that would potentially be significant to the entity, or both.
NOTE 18. TRANSACTIONS WITH AFFILIATES (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Each Registrant Subsidiary purchases electricity from or sells electricity to the other Registrant Subsidiaries, or both, under rate schedules filed with the FERC. The Registrant Subsidiaries receive management, technical, advisory, operating, and administrative services from Entergy Services; and receive management, technical, and operating services from Entergy Operations. These transactions are on an “at cost” basis.
As described in Note 19 to the financial statements, all of System Energy’s operating revenues consist of billings to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans.
As described in Note 4 to the financial statements, the Registrant Subsidiaries participate in the Entergy system money pool and earn interest income from the money pool. As described in Note 2 to the financial statements, Entergy Louisiana received preferred membership interest distributions from Entergy Holdings Company through May 2022, at which point Entergy Holdings Company was dissolved. As a result of storm securitizations at Entergy Louisiana in 2022 and 2023, the Entergy Louisiana storm trust I purchased preferred membership interests issued by Entergy Finance Company in May 2022 and the Entergy Louisiana storm trust II purchased preferred membership interests issued by Entergy Finance Company in March 2023. The Entergy Louisiana storm trust I and storm trust II receive annual dividends on their respective preferred membership interests.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The tables below contain the various affiliate transactions of the Utility operating companies, System Energy, and other Entergy affiliates.
Intercompany Revenues
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | (In Millions) |
| 2024 | $111.8 | | | $312.8 | | | $1.0 | | | $— | | | $— | | | $583.3 | |
| 2023 | $125.2 | | | $317.6 | | | $1.0 | | | $— | | | $0.7 | | | $588.4 | |
| 2022 | $127.5 | | | $354.0 | | | $1.0 | | | $— | | | $18.9 | | | $658.8 | |
Intercompany Operating Expenses
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | (In Millions) |
| 2024 | $540.6 | | | $649.3 | | | $339.6 | | | $293.9 | | | $319.4 | | | $166.6 | |
| 2023 | $585.8 | | | $719.8 | | | $345.2 | | | $302.5 | | | $316.8 | | | $179.0 | |
| 2022 | $617.4 | | | $770.2 | | | $356.1 | | | $341.7 | | | $321.4 | | | $215.0 | |
Intercompany Interest and Investment Income
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy |
| | (In Millions) |
| 2024 | $2.2 | | | $315.4 | | | $0.4 | | | $0.2 | | | $2.7 | | | $0.8 | |
| 2023 | $0.7 | | | $303.2 | | | $0.2 | | | $1.0 | | | $1.8 | | | $0.6 | |
| 2022 | $0.1 | | | $186.1 | | | $0.1 | | | $0.1 | | | $0.3 | | | $0.3 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
NOTE 19. REVENUE (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Revenues from electric service and the sale of natural gas are recognized when services are transferred to the customer in an amount equal to what Entergy has the right to bill the customer because this amount represents the value of services provided to customers. Entergy’s total revenues for the years ended December 31, 2024, 2023, and 2022 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| | 2024 | | 2023 | | 2022 | | | |
| | (In Thousands) | | | |
| Utility: | | | | | | | | | |
| Residential | | $4,509,553 | | | $4,552,804 | | | $4,640,039 | | | | |
| Commercial | | 2,952,398 | | | 2,997,888 | | | 3,087,675 | | | | |
| Industrial | | 3,197,835 | | | 3,170,090 | | | 3,716,058 | | | | |
| Governmental | | 268,222 | | | 270,640 | | | 286,605 | | | | |
| Total billed retail | | 10,928,008 | | | 10,991,422 | | | 11,730,377 | | | | |
| | | | | | | | | |
| Sales for resale (a) | | 278,700 | | | 366,348 | | | 858,743 | | | | |
| Other electric revenues (b) | | 360,949 | | | 352,056 | | | 481,256 | | | | |
| Revenues from contracts with customers | | 11,567,657 | | | 11,709,826 | | | 13,070,376 | | | | |
| Other Utility revenues (c) | | 60,075 | | | 132,628 | | | 116,469 | | | | |
| Electric revenues | | 11,627,732 | | | 11,842,454 | | | 13,186,845 | | | | |
| | | | | | | | | |
| Natural gas revenues | | 178,070 | | | 180,490 | | | 233,920 | | | | |
| | | | | | | | | |
| Other revenues (d) | | 73,851 | | | 124,468 | | | 343,472 | | | | |
| | | | | | | | | |
| Total operating revenues | | $11,879,653 | | | $12,147,412 | | | $13,764,237 | | | | |
The Utility operating companies’ total revenues for the year ended December 31, 2024 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | Entergy
Arkansas | | Entergy
Louisiana | | Entergy
Mississippi | | Entergy
New
Orleans | | Entergy
Texas |
| | (In Thousands) |
| Residential | | $999,641 | | | $1,554,400 | | | $724,601 | | | $308,757 | | | $922,154 | |
| Commercial | | 571,574 | | | 1,100,309 | | | 577,484 | | | 229,648 | | | 473,383 | |
| Industrial | | 632,144 | | | 1,781,615 | | | 195,194 | | | 29,821 | | | 559,061 | |
| Governmental | | 18,622 | | | 85,537 | | | 56,420 | | | 79,060 | | | 28,583 | |
| Total billed retail | | 2,221,981 | | | 4,521,861 | | | 1,553,699 | | | 647,286 | | | 1,983,181 | |
| Sales for resale (a) | | 169,409 | | | 335,375 | | | 128,781 | | | 48,042 | | | 17,174 | |
| Other electric revenues (b) | | 53,492 | | | 187,097 | | | 72,237 | | | 6,782 | | | 46,710 | |
| Revenues from contracts with customers | | 2,444,882 | | | 5,044,333 | | | 1,754,717 | | | 702,110 | | | 2,047,065 | |
| Other revenues (c) | | 15,299 | | | 23,825 | | | 9,876 | | | 6,244 | | | 3,085 | |
| Electric revenues | | 2,460,181 | | | 5,068,158 | | | 1,764,593 | | | 708,354 | | | 2,050,150 | |
| Natural gas revenues | | — | | | 75,860 | | | — | | | 102,210 | | | — | |
| Total operating revenues | | $2,460,181 | | | $5,144,018 | | | $1,764,593 | | | $810,564 | | | $2,050,150 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The Utility operating companies’ total revenues for the year ended December 31, 2023 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | Entergy
Arkansas | | Entergy
Louisiana | | Entergy
Mississippi | | Entergy
New
Orleans | | Entergy
Texas |
| | (In Thousands) |
| Residential | | $996,760 | | | $1,576,129 | | | $748,428 | | | $317,188 | | | $914,299 | |
| Commercial | | 584,304 | | | 1,104,509 | | | 604,343 | | | 235,193 | | | 469,539 | |
| Industrial | | 635,472 | | | 1,720,298 | | | 217,916 | | | 31,831 | | | 564,573 | |
| Governmental | | 20,409 | | | 83,736 | | | 60,477 | | | 77,152 | | | 28,866 | |
| Total billed retail | | 2,236,945 | | | 4,484,672 | | | 1,631,164 | | | 661,364 | | | 1,977,277 | |
| Sales for resale (a) | | 269,648 | | | 357,900 | | | 104,058 | | | 63,360 | | | 10,497 | |
| Other electric revenues (b) | | 121,425 | | | 151,252 | | | 49,752 | | | (992) | | | 35,988 | |
| Revenues from contracts with customers | | 2,628,018 | | | 4,993,824 | | | 1,784,974 | | | 723,732 | | | 2,023,762 | |
| Other revenues (c) | | 18,378 | | | 79,415 | | | 17,559 | | | 14,242 | | | 4,824 | |
| Electric revenues | | 2,646,396 | | | 5,073,239 | | | 1,802,533 | | | 737,974 | | | 2,028,586 | |
| Natural gas revenues | | — | | | 74,531 | | | — | | | 105,959 | | | — | |
| Total operating revenues | | $2,646,396 | | | $5,147,770 | | | $1,802,533 | | | $843,933 | | | $2,028,586 | |
The Utility operating companies’ total revenues for the year ended December 31, 2022 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2022 | | Entergy
Arkansas | | Entergy
Louisiana | | Entergy
Mississippi | | Entergy
New
Orleans | | Entergy
Texas |
| | (In Thousands) |
| Residential | | $946,719 | | | $1,775,552 | | | $651,455 | | | $335,471 | | | $930,842 | |
| Commercial | | 530,512 | | | 1,274,665 | | | 508,996 | | | 256,963 | | | 516,539 | |
| Industrial | | 559,147 | | | 2,275,978 | | | 182,270 | | | 36,970 | | | 661,693 | |
| Governmental | | 20,186 | | | 94,910 | | | 52,861 | | | 87,514 | | | 31,134 | |
| Total billed retail | | 2,056,564 | | | 5,421,105 | | | 1,395,582 | | | 716,918 | | | 2,140,208 | |
| Sales for resale (a) | | 443,685 | | | 555,640 | | | 167,867 | | | 120,851 | | | 66,782 | |
| Other electric revenues (b) | | 159,178 | | | 204,878 | | | 51,554 | | | 13,637 | | | 57,379 | |
| Revenues from contracts with customers | | 2,659,427 | | | 6,181,623 | | | 1,615,003 | | | 851,406 | | | 2,264,369 | |
| Other revenues (c) | | 13,767 | | | 65,310 | | | 9,231 | | | 3,842 | | | 24,536 | |
| Electric revenues | | 2,673,194 | | | 6,246,933 | | | 1,624,234 | | | 855,248 | | | 2,288,905 | |
| Natural gas revenues | | — | | | 91,835 | | | — | | | 142,085 | | | — | |
| Total operating revenues | | $2,673,194 | | | $6,338,768 | | | $1,624,234 | | | $997,333 | | | $2,288,905 | |
(a)Sales for resale includes day-ahead sales of energy in a market administered by an ISO. These sales represent financially binding commitments for the sale of physical energy the next day. These sales are adjusted to actual power generated and delivered in the real time market. Given the short duration of these transactions, Entergy does not consider them to be derivatives subject to fair value adjustments and includes them as part of customer revenues.
(b)Other electric revenues consist primarily of transmission and ancillary services provided to participants of an ISO-administered market, unbilled revenue, and certain customer credits as directed by regulators.
(c)Other Utility revenues include the equity component of carrying costs related to securitization, occasional sales of inventory, alternative revenue programs, provisions for revenue subject to refund, and late fees.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
(d)Other revenues include the sale of electric power and capacity to wholesale customers, day-ahead sales of energy in a market administered by an ISO, operation and management services fees, and amortization of a below-market power purchase agreement.
Electric Revenues
Entergy’s primary source of revenue is from retail electric sales sold under tariff rates approved by regulators in its various jurisdictions. Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas generate, transmit, and distribute electric power primarily to retail customers in Arkansas, Louisiana, Mississippi, and Texas. Entergy’s Utility operating companies provide power to customers on demand throughout the month, measured by a meter located at the customer’s property. Approved rates vary by customer class due to differing requirements of the customers and market factors involved in fulfilling those requirements. Entergy issues monthly bills to customers at rates approved by regulators for power and related services provided during the previous billing cycle.
To the extent that deliveries have occurred, but a bill has not been issued, Entergy’s Utility operating companies record an estimate for energy delivered since the latest billings. The Utility operating companies calculate the estimate based upon several factors including actual metered customer usage, billings through the last billing cycle in a month, actual generation in the month, historical line loss factors, and market prices of power in the respective jurisdiction. The inputs are revised as needed to approximate actual usage and cost. Each month, estimated unbilled amounts are recorded as unbilled revenue and accounts receivable, and the prior month’s estimate is reversed. Price and volume differences resulting from factors such as weather affect the calculation of unbilled revenues from one period to the other.
Entergy may record revenue based on rates that are subject to refund. Such revenues are reduced by estimated refund amounts when Entergy believes refunds are probable based on the status of rate proceedings as of the date financial statements are prepared. Because these refunds will be made through a reduction in future rates, and not as a reduction in bills previously issued, they are presented as other revenues in the table above.
System Energy’s only source of revenue is the sale of electric power and capacity generated from its 90% interest in the Grand Gulf nuclear plant to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. System Energy issues monthly bills to its affiliated customers equal to its actual operating costs plus a return on common equity approved by the FERC. Effective January 1, 2025, Entergy Louisiana has divested all of its 14% share of capacity and energy from Grand Gulf and all of the capacity and energy from Grand Gulf that it purchases from Entergy Arkansas (approximately 2.43%) to Entergy Mississippi. This divestiture is being effectuated initially under a designated PPA between Entergy Louisiana and Entergy Mississippi, which was accepted by the FERC in November 2024. The MPSC approved the MSS-4 replacement PPA, effective as of January 1, 2025. See Note 8 to the financial statements for further discussion of System Energy and the Unit Power Sales Agreement.
Entergy’s Utility operating companies also sell excess power not needed for their own customers, primarily through transactions with MISO, a regional transmission organization that maintains functional control over the combined transmission systems of its members and manages one of the largest energy markets in the U.S. In the MISO market, Entergy offers its generation and bids its load into the market. MISO settles these offers and bids based on locational marginal prices. These represent pricing for energy at a given location based on a market clearing price that takes into account physical limitations on the transmission system, generation, and demand throughout the MISO region. MISO evaluates each market participant’s energy offers and demand bids to economically and reliably dispatch the entire MISO system. Entergy nets purchases and sales within the MISO market and reports in operating revenues when in a net selling position and in operating expenses when in a net purchasing position.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Natural Gas
Entergy Louisiana and Entergy New Orleans also distribute natural gas to retail customers in and around Baton Rouge, Louisiana, and New Orleans, Louisiana, respectively. Gas transferred to customers is measured by a meter at the customer’s property. Entergy issues monthly invoices to customers at rates approved by regulators for the volume of gas transferred to date. See “Held for Sale - Natural Gas Distribution Businesses” in Note 14 to the financial statements for discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses.
Other Revenues
Entergy’s revenues from its non-utility operations include the sale of electric power and capacity to wholesale customers, day-ahead sales of energy in a market administered by an ISO, operation and management services fees, and amortization of a below-market PPA.
Practical Expedients and Exceptions
Entergy has elected not to disclose the value of unsatisfied performance obligations for contracts with an original expected term of one year or less, or for revenue recognized in an amount equal to what Entergy has the right to bill the customer for services performed.
Most of Entergy’s contracts, except in a few cases where there are defined minimums or stated terms, are on demand. This results in customer bills that vary each month based on an approved tariff and usage. Entergy imposes monthly or annual minimum requirements on some customers primarily as credit and cost recovery guarantees and not as pricing for unsatisfied performance obligations. These minimums typically expire after the initial term or when specified costs have been recovered. The minimum amounts are part of each month’s bill and recognized as revenue accordingly. Some Entergy subsidiaries in the non-utility operations business have services contracts that have fixed components and terms longer than one year. The total fixed consideration related to these unsatisfied performance obligations, however, is not material to Entergy revenues.
Recovery of Fuel Costs
Entergy’s Utility operating companies’ rate schedules include either fuel adjustment clauses or fixed fuel factors, which allow either current recovery in billings to customers or deferral of fuel costs until the costs are billed to customers. Where the fuel component of revenues is based on a pre-determined fuel cost (fixed fuel factor), the fuel factor remains in effect until changed as part of a general rate case, fuel reconciliation, or fixed fuel factor filing. System Energy’s operating revenues are intended to recover from Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans operating expenses and capital costs attributable to Grand Gulf. The capital costs are based on System Energy’s common equity funds allocable to its net investment in Grand Gulf, plus System Energy’s effective interest cost for its debt allocable to its investment in Grand Gulf.
Taxes Imposed on Revenue-Producing Transactions
Governmental authorities assess taxes that are both imposed on and concurrent with a specific revenue-producing transaction between a seller and a customer, including, but not limited to, sales, use, value added, and some excise taxes. Entergy presents these taxes on a net basis, excluding them from revenues.
Allowance for Doubtful Accounts
The allowance for doubtful accounts reflects Entergy’s best estimate of expected losses on its accounts receivable balances. Due to the essential nature of utility services, Entergy has historically experienced a low rate
Entergy Corporation and Subsidiaries
Notes to Financial Statements
of default on its accounts receivables. The following table sets forth a reconciliation of changes in the allowance for doubtful accounts for the years ended December 31, 2024 and 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Entergy | | Entergy
Arkansas | | Entergy
Louisiana | | Entergy
Mississippi | | Entergy
New
Orleans | | Entergy
Texas |
| | (In Millions) |
| Balance as of December 31, 2022 | $30.9 | | | $6.5 | | | $7.6 | | | $2.5 | | | $11.9 | | | $2.4 | |
| Provisions | 38.7 | | | 9.4 | | | 13.9 | | | 7.3 | | | 3.4 | | | 4.7 | |
| Write-offs | (83.1) | | | (20.6) | | | (31.3) | | | (10.4) | | | (10.7) | | | (10.1) | |
| Recoveries | 39.4 | | | 11.9 | | | 15.9 | | | 3.9 | | | 3.2 | | | 4.5 | |
| Balance as of December 31, 2023 | $25.9 | | | $7.2 | | | $6.1 | | | $3.3 | | | $7.8 | | | $1.5 | |
| Provisions | 32.0 | | | 7.0 | | | 10.0 | | | 4.8 | | | 4.6 | | | 5.6 | |
| Write-offs | (71.2) | | | (17.5) | | | (23.3) | | | (11.5) | | | (10.4) | | | (8.5) | |
| Recoveries | 31.2 | | | 8.0 | | | 10.2 | | | 5.6 | | | 4.7 | | | 2.7 | |
| Balance as of December 31, 2024 | $17.9 | | | $4.7 | | | $3.0 | | | $2.2 | | | $6.7 | | | $1.3 | |
The allowance is calculated as the historical rate of customer write-offs multiplied by the current accounts receivable balance, taking into account the length of time the receivable balances have been outstanding. The rate of customer write-offs has historically experienced minimal variation, although general economic conditions can affect the rate of customer write-offs. Management monitors the current condition of individual customer accounts to manage collections and ensure bad debt expense is recorded in a timely manner.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
Item 1. Business
RISK FACTORS SUMMARY
Entergy’s business is subject to numerous risks and uncertainties that could affect its ability to successfully implement its business strategy and affect its financial results. Carefully consider all of the information in this report and, in particular, the following principal risks and all of the other specific factors described in Part I, Item 1A of this report, “Risk Factors,” before deciding whether to invest in Entergy or the Registrant Subsidiaries.
Utility Regulatory Risks
•The terms and conditions of service, including electric and gas rates, of the Registrant Subsidiaries are determined through regulatory approval proceedings that can be lengthy and subject to appeal, potentially resulting in lengthy litigation, and uncertainty as to ultimate results.
•Entergy’s business could experience adverse effects related to changes to state or federal legislation or regulation, including increased tariffs, as well as changes to governmental policies and programs, including tax credits, loans, grants, guarantees, and other subsidies, or experience risks associated with participation in the MISO markets and allocation of transmission upgrade costs.
•The Utility operating companies recover fuel, purchased power, and associated costs through rate mechanisms that are subject to risks of delay or disallowance in regulatory proceedings.
•A delay or failure in recovering amounts for storm restoration costs incurred as a result of severe weather could have material effects on Entergy and its Utility operating companies affected by severe weather.
•Weather, economic conditions, technological developments, and other factors may have a material impact on electricity and gas usage and otherwise materially affect the Utility operating companies’ results of operations.
Nuclear Operating, Shutdown, and Regulatory Risks
•The results of operations, financial condition, and liquidity of Entergy Arkansas, Entergy Louisiana, and System Energy could be materially affected by the following:
◦inability to consistently operate their nuclear power plants at high capacity factors;
◦refueling outages that last materially longer than anticipated or unplanned outages;
◦risks related to the purchase of uranium fuel (and its conversion, enrichment, and fabrication);
◦the risk that the NRC will change or modify its regulations, suspend or revoke their licenses, or increase oversight of their nuclear plants;
◦risks and costs related to operating and maintaining their nuclear power plants;
◦the costs associated with the storage of the spent nuclear fuel, as well as the costs of and their ability to fully decommission their nuclear power plants;
◦the potential requirement to pay substantial retrospective premiums and/or assessments imposed under the Price-Anderson Act and/or by Nuclear Electric Insurance Limited (NEIL) in the event of a nuclear incident, and losses not covered by insurance;
◦the risk that the decommissioning trust fund assets may not be adequate to meet decommissioning obligations if market performance and other changes decrease the value of assets in the decommissioning trusts and/or actual decommissioning costs are higher than estimated; and
◦new or existing safety concerns regarding operating nuclear power plants and nuclear fuel.
Business Risks
•Entergy and the Registrant Subsidiaries depend on access to the capital markets and, at times, may face potential liquidity constraints. Disruptions in the capital and credit markets or a downgrade in Entergy’s or its Registrant Subsidiaries’ credit ratings could, among other things, adversely affect their ability to meet liquidity needs, or to access capital to operate and grow their businesses, and the cost of capital.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
•The reputation of Entergy or its Registrant Subsidiaries may be materially adversely affected by negative publicity or the inability to meet their stated goals or commitments, among other potential causes.
•Changes in tax legislation and taxation as well as the inherent difficulty in quantifying potential tax effects of business decisions could negatively impact Entergy’s and the Registrant Subsidiaries’ results of operations, financial condition, and liquidity.
•Entergy and its subsidiaries’ ability to successfully execute on their business strategies, including their ability to execute on their growth strategies and to complete strategic transactions, is subject to significant risks, and, as a result, they may be unable to achieve some or all of the anticipated results of such strategies.
•The success of certain Utility operating companies’ investments in new generation and transmission assets to support large-scale data centers depends on a limited number of customers, the continued demand for electricity to power data centers and the successful completion of the associated generation and transmission projects. Any reduction in the demand for electricity to power data centers or delays or unexpected costs associated with such projects may harm the growth prospects, future operating results and financial condition of Entergy and these Utility operating companies.
•Entergy may not be able to attract, retain, and manage an appropriately staffed and qualified workforce, which could negatively affect Entergy or its subsidiaries’ results of operations.
•Entergy and its subsidiaries, including the Utility operating companies and System Energy, may incur substantial costs (i) to fulfill their obligations related to environmental and other matters or (ii) related to reliability standards.
•Entergy could be negatively affected by the effects of climate change, including physical risks, such as increased frequency and intensity of hurricanes, availability of water, droughts, and other severe weather and wildfires, and transition risks, such as environmental and regulatory obligations intended to combat the effects of climate change, including by compelling greenhouse gas emission reductions or reporting, or increasing clean or renewable energy requirements, or placing a price on greenhouse gas emissions.
•Market performance, interest rate changes, and other changes may decrease the value of employee benefit plan assets, which then could require additional funding of such benefit plans and result in increased benefit plan costs.
•The litigation environment in the states in which the Registrant Subsidiaries operate poses a significant risk to those businesses.
•Terrorist attacks and sabotage, physical attacks, cyber attacks, system failures, data breaches or other disruptions of Entergy’s and its subsidiaries’ or their suppliers’ physical infrastructure or technology systems may adversely affect Entergy’s business and results of operations.
•Entergy and the Registrant Subsidiaries are subject to risks associated with their ability to obtain adequate insurance at acceptable costs.
•Significant increases in commodity prices, other materials and supplies, and operation and maintenance expenses may adversely affect Entergy’s results of operations, financial condition, and liquidity.
•The effect of higher purchased gas cost charges to customers taking gas service may adversely affect Entergy New Orleans’s results of operations and liquidity.
•System Energy owns and, through an affiliate, operates a single nuclear generating facility, and it is dependent on sales to affiliated companies for all of its revenues. Certain contractual arrangements relating to System Energy, the affiliated companies, and these revenues are the subject of ongoing and potential future litigation and regulatory proceedings.
•As a holding company, Entergy Corporation depends on cash distributions from its subsidiaries to meet its debt service and other financial obligations and to pay dividends on its common stock, and has provided, and may continue to provide, capital contributions or debt financing to its subsidiaries, which would reduce the funds available to meet its other financial obligations.
•The hazardous activities associated with power generation and delivery could adversely impact our results of operations and financial condition.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
ENTERGY’S BUSINESS
Entergy is an integrated energy company engaged primarily in electric power production and retail distribution operations. Entergy owns and operates power plants with approximately 25,000 MW of electric generating capacity. Entergy delivers electricity to approximately 3 million Utility customers in Arkansas, Louisiana, Mississippi, and Texas. Entergy had annual revenues of $11.9 billion in 2024 and had approximately 12,000 employees as of December 31, 2024.
Entergy operates primarily through a single reportable segment, Utility. The Utility segment includes the generation, transmission, distribution, and sale of electric power in portions of Arkansas, Mississippi, Texas, and Louisiana, including the City of New Orleans; and operation of a small natural gas distribution business in portions of Louisiana. See “Held for Sale - Natural Gas Distribution Businesses” in Note 14 to the financial statements for discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses. Entergy completed its multi-year strategy to exit the merchant nuclear power business in 2022. See Note 13 to the financial statements for discussion of and financial information regarding Entergy’s business segments.
Strategy
Entergy’s strategy is to operate and grow its utility business through a customer-centric approach designed to understand and meet customer needs, creating value for all of its key stakeholders, including customers, communities, employees, and owners. As part of its strategy, Entergy invests significant capital to support customer growth and its customers’ growing demands for greater reliability, resilience, and clean energy, while remaining focused on affordability. Entergy manages risks by ensuring its Utility investments are customer-driven, the result of robust analysis, supported by broad stakeholder outreach and progressive regulatory constructs, and executed with disciplined project management. Further, Entergy continues to integrate key sustainability elements, including social responsibility and good governance, into every decision it makes.
Utility
The Utility segment includes five retail electric utility subsidiaries: Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas. These companies generate, transmit, distribute, and sell electric power to retail and wholesale customers in Arkansas, Louisiana, Mississippi, and Texas. Entergy Louisiana and Entergy New Orleans also provide natural gas utility services to customers in and around Baton Rouge, Louisiana, and New Orleans, Louisiana, respectively. See “Held for Sale - Natural Gas Distribution Businesses” in Note 14 to the financial statements for discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses. Also included in the Utility is System Energy, a wholly-owned subsidiary of Entergy Corporation that owns or leases 90 percent of Grand Gulf. System Energy sells its power and capacity from Grand Gulf at wholesale to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. Effective January 1, 2025, Entergy Louisiana divested all of its 14% share of capacity and energy from Grand Gulf and all of the capacity and energy from Grand Gulf that it purchases from Entergy Arkansas (approximately 2.43%) to Entergy Mississippi. This divestiture is being effectuated initially under a designated PPA between Entergy Louisiana and Entergy Mississippi, effective as of January 1, 2025. The five retail utility subsidiaries are each regulated by the FERC and by state utility commissions, or, in the case of Entergy New Orleans, the City Council. System Energy is regulated by the FERC because all of its transactions are at wholesale. The Utility has a diverse power generation portfolio, including increasingly carbon-free energy sources, which is consistent with Entergy’s strong support for the environment.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
Customers
As of December 31, 2024, the Utility operating companies provided retail electric and gas service to customers in Arkansas, Louisiana, Mississippi, and Texas, as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Electric Customers | | Gas Customers |
| | Area Served | | (In Thousands) | | (%) | | (In Thousands) | | (%) |
| Entergy Arkansas | Portions of Arkansas | | 735 | | | 24 | | | | | |
| Entergy Louisiana | Portions of Louisiana | | 1,110 | | | 37 | | | 96 | | | 47 | |
| Entergy Mississippi | Portions of Mississippi | | 459 | | | 15 | | | | | |
| Entergy New Orleans | City of New Orleans | | 209 | | | 7 | | | 108 | | | 53 | |
| Entergy Texas | Portions of Texas | | 524 | | | 17 | | | | | |
| Total | | | 3,037 | | | 100 | | | 204 | | | 100 | |
Electric and Natural Gas Energy Sales
Electric Energy Sales
The total electric energy sales of the Utility operating companies are subject to seasonal fluctuations, with the peak sales period normally occurring during the third quarter of each year. On August 6, 2024, Entergy reached a 2024 peak demand of 22,697 MWh, compared to the 2023 peak of 23,319 MWh recorded on August 23, 2023. Selected electric energy sales data for 2024 is shown in the table below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas | | System Energy | | Entergy (a) |
| | (GWh) |
| Sales to retail customers | 23,605 | | | 60,703 | | | 12,744 | | | 5,597 | | | 21,202 | | | — | | | 123,851 | |
| Sales for resale: | | | | | | | | | | | | | |
| Affiliates | 2,039 | | | 5,808 | | | — | | | — | | | — | | | 9,586 | | | — | |
| Others | 4,058 | | | 1,574 | | | 5,568 | | | 2,123 | | | 687 | | | — | | | 14,010 | |
| Total | 29,702 | | | 68,085 | | | 18,312 | | | 7,720 | | | 21,889 | | | 9,586 | | | 137,861 | |
| Average use per residential customer (kWh) | 12,549 | | | 14,602 | | | 14,167 | | | 12,457 | | | 14,276 | | | — | | | 13,844 | |
(a)Includes the effect of intercompany eliminations.
The following table illustrates the Utility operating companies’ 2024 combined electric sales volume as a percentage of total electric sales volume, and 2024 combined electric revenues as a percentage of total 2024 electric revenue, each by customer class.
| | | | | | | | | | | | | | |
| Customer Class | | % of Sales Volume | | % of Revenue |
| Residential | | 26.1 | | 38.8 |
| Commercial | | 20.5 | | 25.4 |
| Industrial (a) | | 41.4 | | 27.5 |
| Governmental | | 1.8 | | 2.3 |
| Wholesale/Other | | 10.2 | | 6.0 |
(a)Major industrial customers are primarily in the petroleum refining and chemical industries.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
Natural Gas Energy Sales
Entergy New Orleans and Entergy Louisiana provide both electric power and natural gas to retail customers. Entergy New Orleans and Entergy Louisiana sold 8,872,535 Mcf and 6,816,140 Mcf, respectively, of natural gas to retail customers in 2024. In 2024, 99% of Entergy Louisiana’s operating revenue was derived from the electric utility business and only 1% from the natural gas distribution business. For Entergy New Orleans, 87% of operating revenue was derived from the electric utility business and 13% from the natural gas distribution business in 2024.
Following is data concerning Entergy New Orleans’s 2024 retail operating revenue sources:
| | | | | | | | | | | | | | |
| Customer Class | | % of Electric Operating Revenue | | % of Natural Gas Operating Revenue |
| Residential | | 48 | | 56 |
| Commercial | | 35 | | 26 |
| Industrial | | 5 | | 5 |
| Governmental/Municipal | | 12 | | 13 |
Retail Rate Regulation
General (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, System Energy)
Each Utility operating company regularly participates in retail rate proceedings. The status of material retail rate proceedings is described in Note 2 to the financial statements. Certain aspects of the Utility operating companies and System Energy’s retail rate mechanisms are discussed below.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Rate base (in billions) | | Current authorized return on common equity | | Weighted-average cost of capital (after-tax) | | Equity ratio | | Regulatory construct |
| Entergy Arkansas | | $11.3 (a) | | 9.15% - 10.15% | | 5.58% | | 37.9% (b) | | - forward test year formula rate plan - riders: fuel and purchased power, MISO, capacity, Grand Gulf, energy efficiency |
| Entergy Louisiana (electric) | | $16.4 (c) | | 9.3% - 10.1% | | 6.81% | | 50.81% | | - formula rate plan through 2023 test year
- riders: fuel, capacity, MISO, transmission, distribution, resilience plan |
| Entergy Louisiana (gas) | | $0.16 (d) | | 9.3% - 10.3% | | 7.08% | | 54.35% | | - gas rate stabilization plan - rider: gas infrastructure |
| Entergy Mississippi | | $4.5 (e) | | 9.91% - 11.92% | | 7.52% | | 49.67% | | - formula rate plan with forward-looking features - riders: fuel, Grand Gulf, MISO, unit power cost, storm damage mitigation and restoration, ad valorem tax adjustment, grid modernization, restructuring credit, power management |
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Rate base (in billions) | | Current authorized return on common equity | | Weighted-average cost of capital (after-tax) | | Equity ratio | | Regulatory construct |
| Entergy New Orleans (electric) | | $1.3 (f) | | 8.85% - 9.85% | | 7.28% | | 55% (g) | | - formula rate plan with forward-looking features - riders: fuel and purchased power, MISO, energy efficiency, environmental, capacity costs |
| Entergy New Orleans (gas) | | $0.2 (f) | | 8.85% - 9.85% | | 7.28% | | 55% (g) | | - formula rate plan with forward-looking features - rider: purchased gas |
| Entergy Texas | | $4.4 (h) | | 9.57% | | 6.61% | | 51.2% | | - historical test year rate case and interim rate base riders (distribution, transmission, and generation cost recovery riders) - riders: fuel, capacity, cost recovery riders (distribution, transmission, and generation), rate case expenses, and advanced metering infrastructure surcharge, among others |
| System Energy | | $1.83 (i) | | 9.65% | | 7.41% | | 52.0% | | - monthly cost of service |
(a)Based on 2025 test year.
(b)Based on $2.0 billion in accumulated deferred income taxes at a 0% cost rate included in the weighted-average cost of capital calculation.
(c)Based on December 31, 2023 test year and excludes approximately $100 million of transmission plant investment included in the transmission recovery mechanism and approximately $300 million of distribution plant investment included in the distribution recovery mechanism, as well as approximately $400 million of net accumulated deferred tax liability items included in the tax adjustment mechanism.
(d)Based on September 30, 2023 test year.
(e)Based on 2024 forward test year.
(f)Based on December 31, 2023 test year and known and measurables through December 31, 2024.
(g)In October 2023 the City Council approved a three-year extension of Entergy New Orleans’s formula rate plan, modified to reflect a 55% equity ratio for rate setting purposes.
(h)Based on December 31, 2021 test year and excludes $0.5 billion in cost recovery riders.
(i)Based on calculation as of December 31, 2024 for Entergy Arkansas, Entergy Louisiana, and Entergy New Orleans. Effective July 2022, Entergy Mississippi’s bills from System Energy reflect a rate base reduction for the advance collection of sale-leaseback rental costs, resulting in a calculation of $1.82 billion as of December 31, 2024. See Note 2 to the financial statements for discussion of the System Energy settlement agreements.
Entergy Arkansas
Formula Rate Plan
Between base rate cases, Entergy Arkansas is able to adjust base rates annually, subject to certain caps, through formula rate plans that utilize a forward test year. Entergy Arkansas is subject to a maximum rate change of 4% of the filing year total retail revenue. In addition, Entergy Arkansas is subject to a true-up of projection to actuals netted with future projection. In response to Entergy Arkansas’s application for a general change in rates in
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
2015, the APSC approved the formula rate plan tariff proposed by Entergy Arkansas including its use of a projected year test period and an initial five-year term. The initial five-year term expired in 2021. As granted by Arkansas law, Entergy Arkansas obtained APSC approval of the extension of the formula rate plan tariff for an additional five-year term, through 2026. As part of the settlement of the 2023 formula rate plan proceeding, Entergy Arkansas agreed to file its next base rate case no later than February 2026. As part of Entergy Arkansas’s base rate case in 2026, Entergy Arkansas may include a request for continued regulation under a formula rate review mechanism.
Fuel and Purchased Power Cost Recovery
Entergy Arkansas’s rate schedules include an energy cost recovery rider to recover fuel and purchased power costs in monthly bills. The rider utilizes prior calendar year energy costs and projected energy sales for the twelve-month period commencing on April 1 of each year to develop an energy cost rate, which is redetermined annually and includes a true-up adjustment reflecting the over-recovery or under-recovery, including carrying charges, of the energy cost for the prior calendar year. The energy cost recovery rider tariff also allows an interim rate request depending upon the level of over- or under-recovery of fuel and purchased energy costs. In December 2007 the APSC issued an order stating that Entergy Arkansas’s energy cost recovery rider will remain in effect, and any future termination of the rider would be subject to eighteen months advance notice by the APSC, which would occur following notice and hearing.
Production Cost Allocation Rider
Entergy Arkansas has in place an APSC-approved production cost allocation rider for recovery from customers of the retail portion of the costs allocated to Entergy Arkansas as a result of System Agreement proceedings.
Other
In June 2022 the APSC approved Entergy Arkansas’s compliance tariff filing for a proposed green tariff designed to help participating customers meet their renewable and sustainability goals and to enhance economic development efforts in Arkansas. The APSC has approved offerings of 280 MW of solar capacity to be made available under this tariff.
In June 2023 the APSC approved Entergy Arkansas’s Go ZERO tariff, which provides participating industrial and commercial customers the opportunity to choose from a number of clean energy options to help them achieve their sustainability goals. The APSC has approved offerings of 240 MW to be made available under this tariff.
Entergy Louisiana
Formula Rate Plan
Entergy Louisiana historically sets electric base rates annually through a formula rate plan using a historic test year. The form of the formula rate plan, on a combined basis, was approved in connection with the business combination of Entergy Louisiana and Entergy Gulf States Louisiana and largely followed the formula rate plans that were approved by the LPSC in connection with the full electric base rate cases filed by those companies in February 2013. In 2021 the LPSC approved a settlement extending the formula rate plan for test years 2020, 2021, and 2022. Certain modifications were made in that extension, including a decrease to the allowed return on equity, narrowing of the earnings “dead band” around the mid-point allowed return on equity, elimination of sharing above and below the earnings “dead band,” and the addition of a distribution cost recovery mechanism. The formula rate plan continues to include exceptions from the rate cap and sharing requirements for certain large capital investment projects, including acquisition or construction of generating facilities and purchase power agreements approved by the LPSC, certain transmission investments, and certain distribution investments, among other items. In August
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
2024 the LPSC approved a settlement further extending the formula rate plan for test years 2023, 2024, and 2025. Certain modifications were made in that extension, including expansion of the tax adjustment mechanism (formerly the tax reform adjustment mechanism), a more streamlined and defined process for resolving formula rate plan test years, a narrowed “earnings” dead band, removal of certain legacy provisions that pre-dated the business combination, and the addition of a dedicated cost recovery mechanism for renewable resources.
Fuel and Purchased Power Cost Recovery
Entergy Louisiana’s rate schedules include a fuel adjustment clause designed to recover the cost of fuel and purchased power costs. The fuel adjustment clause contains a surcharge or credit for deferred fuel expense and related carrying charges arising from the monthly reconciliation of actual fuel costs incurred with fuel cost revenues billed to customers, including carrying charges. See Note 2 to the financial statements for a discussion of proceedings related to audits of Entergy Louisiana’s fuel adjustment clause filings.
To help stabilize electricity costs, Entergy Louisiana received approval from the LPSC to hedge its exposure to natural gas price volatility through the use of financial instruments. Entergy Louisiana historically hedged approximately one-third of the projected exposure to natural gas price changes for the gas used to serve its native electric load for all months of the year. The hedge quantity was reviewed on an annual basis. In November 2018, Entergy Louisiana received approval from the LPSC to suspend these seasonal hedging programs and implement financial hedges with terms up to five years for a portion of its natural gas exposure. In May 2024, following the conclusion of its five-year hedging program, Entergy Louisiana filed an application with the LPSC for a permanent hedging program. The permanent gas hedging program would also utilize financial hedges for a portion of Entergy Louisiana’s non-industrial natural gas exposure. In February 2025, Entergy Louisiana filed a motion to suspend the procedural schedule, with a status conference requested for May 2025.
Entergy Louisiana’s gas rates include a purchased gas adjustment clause based on estimated gas costs for the billing month adjusted by a surcharge or credit that arises from an annual reconciliation of fuel costs incurred with fuel cost revenues billed to customers, including carrying charges.
Retail Rates - Gas
In accordance with the settlement of Entergy Gulf States Louisiana’s gas rate stabilization plan for the test year ended September 30, 2012, in August 2014, Entergy Gulf States Louisiana submitted for consideration a proposal for implementation of an infrastructure rider to recover expenditures associated with strategic plant investment and relocation projects mandated by local governments. After review by the LPSC staff and inclusion of certain customer safeguards required by the LPSC staff, in December 2014, Entergy Gulf States Louisiana and the LPSC staff submitted a joint settlement for implementation of an accelerated gas pipe replacement program providing for the replacement of approximately 100 miles of pipe over the next ten years, as well as relocation of certain existing pipe resulting from local government-related infrastructure projects, and for a rider to recover the investment associated with these projects. The rider allows for recovery of approximately $65 million over ten years. The rider recovery will be adjusted on a quarterly basis to include actual investment incurred for the prior quarter and is subject to the following conditions, among others: a ten-year term; application of any earnings in excess of the upper end of the earnings band as an offset to the revenue requirement of the infrastructure rider; adherence to a specified spending plan, within plus or minus 20% annually; annual filings comparing actual versus planned rider spending with actual spending and explanation of variances exceeding 10%; and an annual true-up. The joint settlement was approved by the LPSC in January 2015. Implementation of the infrastructure rider commenced with bills rendered on and after the first billing cycle of April 2015. In April 2022, Entergy Louisiana submitted for consideration a proposal to extend the infrastructure rider to address replacement of an additional 187 miles of pipe. In December 2022, Entergy Louisiana and the LPSC staff submitted an uncontested settlement that extends the rider for an additional ten years beginning after the end of the current term of the rider in 2025. The extension is subject to the same customer safeguards and conditions as the original term of the rider. The extension
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
allows for recovery of approximately $95 million over ten years. In February 2023 the uncontested settlement was approved by the LPSC.
Storm Cost Recovery
See Note 2 to the financial statements for a discussion of Entergy Louisiana’s filings to recover storm-related costs.
LPSC Customer-Centered Options Rulemaking
In December 2019, an LPSC commissioner issued an unopposed directive to the LPSC staff to research customer-centered options for all customer classes, as well as other regulatory environments and recommend a plan for how to ensure customers are the focus. Since 2020, the LPSC staff has issued several requests for information on proposed scope and information related to retail open access, and interested parties filed responses to the requests.
In June 2024 the LPSC staff issued its Final Phase 1 Report setting forth a recommendation on sleeved PPAs, including many features similar to utility green tariffs previously approved by the LPSC, and adopting numerous limits and safeguards that had been proposed in comments by LPSC-jurisdictional utilities. The Final Phase 1 Report also addressed various new reporting requirements for all LPSC-jurisdictional utilities, including reliability metrics, customer counts, customers receiving federal Low-Income Home Energy Assistance Program aid, utility authorized and earned returns on equity, and other items. The report also recommended that the LPSC adopt requirements that, with each rate filing, a utility report certain information regarding bill impacts and similar matters. In June 2024 the LPSC voted unanimously to approve the LPSC staff’s Final Phase 1 Report and proposal, and an order was issued in August 2024.
In December 2024 the LPSC staff issued its Phase 2 Report, addressing enhanced combined heat and power options, energy displacement sleeved PPAs, and other matters. The LPSC staff also issued various data requests to be answered by all jurisdictional utilities. The LPSC staff has indicated that the Phase 3 Report, which will address partial or full retail open access and other issues that were deferred from the Phase 2 Report, is expected to be completed by the third quarter 2025. In January 2025, Entergy Louisiana filed a motion asking the LPSC to provide renewed guidance as to whether the inquiry in this proceeding into the remaining issues in the Phase 3 Report is appropriate and consistent with the LPSC’s current policy objectives, or whether the docket has achieved its purpose and may be closed. The LPSC is expected to consider the motion at its March 2025 meeting.
Other
In March 2016 the LPSC opened two dockets to examine, on a generic basis, issues that it identified in connection with its review of Cleco Corporation’s acquisition by third party investors. The first docket is captioned “In re: Investigation of double leveraging issues for all LPSC-jurisdictional utilities,” and the second is captioned “In re: Investigation of tax structure issues for all LPSC-jurisdictional utilities.” In April 2016 the LPSC clarified that the concerns giving rise to the two dockets arose as a result of its review of the structure of the Cleco-Macquarie transaction and that the specific intent of the directives is to seek more information regarding intra-corporate debt financing of a utility’s capital structure as well as the use of investment tax credits to mitigate the tax obligation at the parent level of a consolidated entity. No schedule has been set for either docket, and limited discovery has occurred.
In September 2019 the LPSC issued an order modifying its rule regarding net metering installations. Among other things, the rule provides for 2-channel billing for net metering with excess energy put to the grid being compensated at the utility’s avoided cost. However, the rule does provide that net meter installations in place as of December 31, 2019 will be subject to 1:1 net metering with excess energy put to the grid being compensated at the
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
full retail rate for a period of 15 years (through December 31, 2034), after which those installations will be subject to 2-channel billing. The rule also eliminates the existing limit on the cumulative number of net meter installations.
Entergy Mississippi
Formula Rate Plan
Since the conclusion in 2015 of Entergy Mississippi’s most recent base rate case, Entergy Mississippi has set electric base rates annually through a formula rate plan. Between base rate cases, Entergy Mississippi is able to adjust base rates annually, subject to certain caps, through formula rate plans that utilize forward-looking features. In addition, Entergy Mississippi is subject to an annual “look-back” evaluation. Entergy Mississippi is allowed a maximum rate increase of 4% of each test year’s retail revenue. Any increase above 4% requires a base rate case. If Entergy Mississippi’s formula rate plan were terminated without replacement, it would revert to the more traditional rate case environment or seek approval of a new formula rate plan.
In August 2012 the MPSC opened inquiries to review whether the then-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 was still appropriate or could be improved to better serve the public interest. The intent of this inquiry and review was 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 proceeding. In March 2013 the Mississippi Public Utilities 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 that time. In June 2014 the MPSC expanded the scope of the August 2012 inquiry to study the merits of adopting a uniform formula rate plan that could be applied, where possible in whole or in part, to both Entergy Mississippi and Mississippi Power Company in order to achieve greater consistency in the plans. The MPSC directed the Mississippi Public Utilities Staff to investigate and review Entergy Mississippi’s formula rate plan rider schedule and Mississippi Power Company’s Performance Evaluation Plan by considering the merits and deficiencies and possibilities for improvement of each and then to propose a uniform formula rate plan that, where possible, could be applicable to both companies. No procedural schedule has been set. In October 2014 the Mississippi Public Utilities Staff conducted a public technical conference to discuss performance benchmarking and its potential application to the electric utilities’ formula rate plans. The docket remains open.
In December 2019 the MPSC approved Entergy Mississippi’s proposed revisions to its formula rate plan to provide for a mechanism in the formula rate plan, the interim capacity rate adjustment mechanism, to recover the non-fuel related costs of additional owned capacity acquired by Entergy Mississippi as well as to allow similar cost recovery treatment for other capacity acquisitions that are approved by the MPSC. The MPSC must approve recovery through the interim capacity rate adjustment for each new resource. In addition, the MPSC approved revisions to the formula rate plan which allows Entergy Mississippi to begin billing rate adjustments effective April 1 of the filing year on a temporary basis subject to refund or credit to customers, subject to final MPSC order. The MPSC also authorized Entergy Mississippi to remove vegetation management costs from the formula rate plan and recover these costs through the establishment of a vegetation management rider, which was superseded in June 2024 with the approval of the storm damage mitigation and restoration rider. See Note 2 to the financial statements for a discussion of proceedings regarding recovery of Entergy Mississippi’s storm-related costs.
In November 2020 the MPSC approved Entergy Mississippi’s revisions to its formula rate plan providing for the realignment of energy efficiency costs to its formula rate plan, the deferral of energy efficiency expenditures into a regulatory asset, and the elimination of its energy efficiency cost recovery rider effective with the January 2022 billing cycle.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
In June 2023 the MPSC approved Entergy Mississippi’s revisions to its formula rate plan to realign the recovery of certain long-term service agreement and conductor handling costs to the annual power management and grid modernization riders effective January 2023.
In May 2024 the MPSC approved Entergy Mississippi’s revisions to its formula rate plan to comply with state legislation passed in January 2024 allowing Entergy Mississippi to make interim rate adjustments to recover the non-fuel related annual ownership cost of certain facilities that directly or indirectly provide service to customers who own certain data processing center projects as specified in the legislation.
Fuel and Purchased Power Cost Recovery
Entergy Mississippi’s rate schedules include energy cost recovery riders to recover fuel and purchased power costs. The energy cost rate for each calendar year is redetermined annually and includes a true-up adjustment reflecting the over-recovery or under-recovery of the energy costs as of the 12-month period ended September 30. Entergy Mississippi’s fuel cost recoveries are subject to annual audits conducted pursuant to the authority of the MPSC. The energy cost recovery riders allow interim rate adjustments depending on the level of over- or under-recovery of fuel and purchased energy costs.
To help stabilize electricity costs, Entergy Mississippi received approval from the MPSC to hedge its exposure to natural gas price volatility through the use of financial instruments. Entergy Mississippi hedges approximately one-third of the projected exposure to natural gas price changes for the gas used to serve its native electric load for all months of the year. The hedge quantity is reviewed on an annual basis.
Storm Cost Recovery
See Note 2 to the financial statements for a discussion of proceedings regarding recovery of Entergy Mississippi’s storm-related costs.
Other
In October 2022 the MPSC adopted the Distributed Generation Rule. The Distributed Generation Rule maintains the 3% net metering participation cap. The Distributed Generation Rule grandfathers a 2.5 cents per kWh distributed generation benefits adder for 25 years and expands eligibility for the 2 cents per kWh low-income benefits adder to households up to 225% of the federal poverty level and grandfathers that adder for 25 years. The Distributed Generation Rule also directs utilities to make rate filings implementing up-front incentives for distributed generating systems and demand response battery systems, and to establish a public K-12 solar for schools program. In August 2023 the MPSC approved Entergy Mississippi’s proposed solar for schools rate schedule under the Distributed Generation Rule.
In December 2022 the MPSC approved Entergy Mississippi’s RenewABLE Community Option (Schedule RCO), an offering for qualifying non-residential customers to subscribe to renewable resource capacity to satisfy their environmental, sustainability, and governance goals. Registration for the Schedule RCO launched in May 2023.
Entergy New Orleans
Formula Rate Plan
As part of its determination of rates in the base rate case filed by Entergy New Orleans in 2018, in November 2019, the City Council issued a resolution resolving the rate case, with rates to become effective retroactive to August 2019. The resolution allows Entergy New Orleans to implement a three-year formula rate plan, beginning with the 2019 test year as adjusted for forward-looking known and measurable changes, with the
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
filing for the first test year to be made in 2020. In October 2020 the City Council approved an agreement in principle filed by Entergy New Orleans that results in Entergy New Orleans forgoing its 2020 formula rate plan filing and shifting the three-year formula rate plan to filings in 2021, 2022, and 2023. In September 2023, Entergy New Orleans filed a motion seeking City Council approval of a three-year extension of Entergy New Orleans’s electric and gas formula rate plans, for filings in 2024, 2025, and 2026. In October 2023 the City Council granted Entergy New Orleans’s request for an extension, subject to minor modifications.
Fuel and Purchased Power Cost Recovery
Entergy New Orleans’s electric rate schedules include a fuel adjustment tariff designed to reflect no more than targeted fuel and purchased power costs, adjusted by a surcharge or credit for deferred fuel expense arising from the monthly reconciliation of actual fuel and purchased power costs incurred with fuel cost revenues billed to customers, including carrying charges.
Entergy New Orleans’s gas rate schedules include a purchased gas adjustment to reflect estimated gas costs for the billing month, adjusted by a surcharge or credit similar to that included in the electric fuel adjustment clause, including carrying charges.
To help stabilize gas costs, Entergy New Orleans seeks approval annually from the City Council to continue implementation of its natural gas hedging program consistent with the City Council’s stated policy objectives. The program uses financial instruments to hedge exposure to volatility in the wholesale price of natural gas purchased to serve Entergy New Orleans gas customers. Entergy New Orleans hedges up to 25% of actual gas sales made during the winter months.
Storm Cost Recovery
In January 2025, Entergy New Orleans filed an application with the City Council requesting the establishment of a standard procedural timeline for consideration of future applications by Entergy New Orleans that seek securitization financing of storm restoration costs, including replenishment of storm recovery reserves, in furtherance of the goals of promoting efficiency of restoration and helping mitigate customer exposure to carrying costs following expenditures for future storm restoration. To support this objective, Entergy New Orleans proposed a procedural schedule that would allow for the issuance of a financing order no later than four months or 120 days from the date that Entergy New Orleans files any future applications seeking securitization financing of storm restoration costs, including storm recovery reserves, with the City Council. Entergy New Orleans also requested that the City Council approve an amendment to the storm recovery reserve escrow agreement to increase flexibility in the timing of certain disbursements of escrow funds to prepare for anticipated storms.
See Note 2 to the financial statements for a discussion of Entergy New Orleans’s filings to recover storm-related costs.
Entergy Texas
Base Rates
The base rates of Entergy Texas are established largely in traditional base rate case proceedings. Between base rate proceedings, Entergy Texas has available rate riders to recover the revenue requirements associated with certain incremental costs. Entergy Texas is required to file full base rate case proceedings every four years and within eighteen months of utilizing its generation cost recovery rider for investments above $200 million.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
Fuel and Purchased Power Cost Recovery
Entergy Texas’s rate schedules include a fixed fuel factor to recover fuel and purchased power costs, including interest, that are not included in base rates. Historically, semi-annual revisions of the fixed fuel factor have been made in March and September based on the market price of natural gas and changes in fuel mix. The amounts collected under Entergy Texas’s fixed fuel factor and any interim surcharge or refund are subject to fuel reconciliation proceedings before the PUCT. In the course of this reconciliation, the PUCT determines whether eligible fuel and fuel-related expenses and revenues are necessary and reasonable and makes a prudence finding for each of the fuel-related contracts entered into during the reconciliation period. In 2023 the Texas legislature modified the Texas Utilities Code to provide that material over- and under-recovered fuel balances are to be refunded or surcharged through interim fuel adjustments and that fuel reconciliations must be filed at least once every two years. Entergy Texas expects the PUCT to undertake a rulemaking to effectuate the new legislation in 2025.
At the PUCT’s April 2013 open meeting, the PUCT Commissioners discussed their view that a purchased power capacity rider was good public policy. The PUCT issued an order in May 2013 adopting the rule allowing for a purchased power capacity rider, subject to an offsetting adjustment for load growth. The rule, as adopted, also includes a process for obtaining pre-approval by the PUCT of purchased power agreements to be recovered through a purchased power capacity rider. No Texas utility, including Entergy Texas, has exercised the option to recover capacity costs under the rider mechanism, but Entergy Texas will continue to evaluate the benefits of utilizing the rider to recover future capacity costs. In 2023, the Texas legislature modified the Texas Utilities Code to permit a utility to seek pre-approval from the PUCT for a purchased power agreement of three years or more if such approval is a precondition to the effectiveness of such agreements, regardless of whether the utility intends to recover costs associated with the purchased power agreement through a purchased power capacity rider.
Transmission, Distribution, and Generation Cost Recovery
As discussed above, Entergy Texas has available rate riders to recover the revenue requirements associated with certain incremental costs. These riders include a transmission cost recovery factor rider mechanism for the recovery of transmission-related capital investments, a distribution cost recovery factor rider mechanism for the recovery of distribution-related capital investment, and a generation cost recovery rider mechanism for the recovery of generation-related capital investments.
In June 2009 a law was enacted in Texas containing provisions that allow Entergy Texas to take advantage of a cost recovery mechanism that permits annual filings for the recovery of reasonable and necessary expenditures for transmission infrastructure improvement and changes in wholesale transmission charges. This mechanism was previously available to other non-ERCOT Texas utility companies, but not to Entergy Texas.
In September 2011 the PUCT adopted a proposed rule implementing a distribution cost recovery factor to recover capital and capital-related costs related to distribution infrastructure. The distribution cost recovery factor permitted utilities once per year to implement an increase or decrease in rates above or below amounts reflected in base rates to reflect distribution-related depreciation expense, federal income tax and other taxes, and return on investment. In 2023, the Texas Legislature modified the Texas Utilities Code to permit utilities to update their distribution cost recovery factors up to twice per year and to require the PUCT to issue an order on such update applications within 60 days, with a 15-day extension permitted for good cause.
In September 2019 the PUCT initiated a rulemaking to promulgate a generation cost recovery rider rule, implementing legislation passed in the 2019 Texas legislative session intended to allow electric utilities to recover generation investments between base rate proceedings. The PUCT approved the final rule in July 2020.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
Storm Cost Recovery
See Note 2 to the financial statements for a discussion of Entergy Texas’s filings to recover storm-related costs.
Other
In January 2022, Entergy Texas filed an application requesting approval to implement two voluntary renewable option tariffs, Rider Small Volume Renewable Option (Rider SVRO) and Rider Large Volume Renewable Option (Rider LVRO). Both tariffs are voluntary offerings that give customers the ability to match some or all of their monthly electricity usage with renewable energy credits that are purchased by Entergy Texas and retired on the customer’s behalf. Voluntary participation in either Rider SVRO or Rider LVRO and the charges assessed under the respective tariff would be in addition to the charges paid by customers under their otherwise applicable rate schedules and riders. In April 2022, Entergy Texas filed on behalf of the parties an unopposed settlement agreement supporting approval of Entergy Texas’s proposed voluntary renewable option tariffs. As part of the settlement agreement, Entergy Texas agreed to revise the cost allocation between the rate tiers of Rider SVRO and committed to collaborating with and considering the input of customers to develop an asset-backed green tariff program. The PUCT approved the settlement agreement in August 2022.
As part of its rate case application filed with the PUCT in July 2022, Entergy Texas requested approval of Schedule Green Future Option (Schedule GFO), an asset-backed green tariff that would allow Entergy Texas’s customers to voluntarily subscribe to a portion of the underlying solar facility’s capacity in exchange for energy credits. In August 2023 the PUCT approved an unopposed settlement in the proceeding that included approval of Schedule GFO.
Electric Industry Restructuring
In June 2009 a law was enacted in Texas that required Entergy Texas to cease all activities relating to Entergy Texas’s transition to competition. The law allows Entergy Texas to remain a part of the SERC Reliability Corporation (SERC) Region, although it does not prevent Entergy Texas from joining another power region. The law provides that proceedings to certify a power region that Entergy Texas belongs to as a qualified power region can be initiated by the PUCT, or on motion by another party, when the conditions supporting such a proceeding exist. Under the law, the PUCT may not approve a transition to competition plan for Entergy Texas until the expiration of four years from the PUCT’s certification of a qualified power region for Entergy Texas.
The law further amended already existing law that had required Entergy Texas to propose for PUCT approval a tariff to allow eligible customers the ability to contract for competitive generation. The amending language in the law provides, among other things, that: (1) the tariff shall not be implemented in a manner that harms the sustainability or competitiveness of manufacturers who choose not to participate in the tariff; (2) Entergy Texas shall “purchase competitive generation service, selected by the customer, and provide the generation at retail to the customer;” and (3) Entergy Texas shall provide and price transmission service and ancillary services under that tariff at a rate that is unbundled from its cost of service. The law directs that the PUCT may not issue an order on the tariff that is contrary to an applicable decision, rule, or policy statement of a federal regulatory agency having jurisdiction. The PUCT determined that unrecovered costs that may be recovered through the rider consist only of those costs necessary to implement and administer the competitive generation program and do not include lost revenues or embedded generation costs. The amount of customer load that may be included in the competitive generation service program is limited to 115 MW.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
System Energy
Cost of Service
The rates of System Energy are established by the FERC, and the costs allowed to be charged pursuant to these rates are, in turn, passed through to the participating Utility operating companies through the Unit Power Sales Agreement, which has monthly billings that reflect the current operating costs of, and investment in, Grand Gulf. Retail regulators and other parties may seek to initiate proceedings at FERC to investigate the prudence of costs included in the rates charged under the Unit Power Sales Agreement and examine, among other things, the reasonableness or prudence of the operation and maintenance practices, level of expenditures, allowed rates of return and rate base, and previously incurred capital expenditures, to the extent that claims concerning such issues have not been released by a party to one of the System Energy settlement agreements. Beginning in 2021, System Energy implemented annual billing protocols to provide retail regulators with information regarding rates billed under the Unit Power Sales Agreement. See Note 2 to the financial statements for discussion of the System Energy settlement agreements.
Franchises
Entergy Arkansas holds exclusive franchises to provide electric service in approximately 308 incorporated cities and towns in Arkansas. These franchises generally are unlimited in duration and continue unless the municipalities purchase the utility property. In Arkansas, franchises are considered to be contracts and, therefore, are governed pursuant to the terms of the franchise agreement and applicable statutes.
Entergy Louisiana holds non-exclusive franchises to provide electric service in approximately 175 incorporated municipalities and in the unincorporated areas of approximately 59 parishes of Louisiana. Entergy Louisiana holds non-exclusive franchises to provide natural gas service to customers in the City of Baton Rouge and in East Baton Rouge Parish. Municipal franchise agreement terms range from 25 to 60 years while parish franchise terms range from 25 to 99 years.
Entergy Mississippi has received from the MPSC certificates of public convenience and necessity to provide electric service to areas within 45 counties, including a number of municipalities, in western Mississippi. Under Mississippi statutory law, such certificates are exclusive. Entergy Mississippi may continue to serve in such municipalities upon payment of a statutory franchise fee, regardless of whether an original municipal franchise is still in existence.
Entergy New Orleans provides electric and gas service in the City of New Orleans pursuant to indeterminate permits set forth in city ordinances. These ordinances contain a continuing option for the City of New Orleans to purchase Entergy New Orleans’s electric and gas utility properties.
Entergy Texas holds a certificate of convenience and necessity from the PUCT to provide electric service to areas within approximately 27 counties in eastern Texas and holds non-exclusive franchises to provide electric service in approximately 70 incorporated municipalities. Entergy Texas typically obtains 25-year franchise agreements as existing agreements expire. Entergy Texas’s electric franchises expire over the period 2025-2058.
The business of System Energy is limited to wholesale power sales. It has no distribution franchises.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
Property and Other Generation Resources
Owned Generating Stations
The total capability of the generating stations owned and leased by the Utility operating companies and System Energy as of December 31, 2024 is indicated below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Owned and Leased Capability MW(a) |
| Company | | Total | | CT / CCGT (b) | | Legacy Gas/Oil | | Nuclear (c) | | Coal | | Hydro (c) | | Solar (c) |
| Entergy Arkansas | | 5,559 | | | 1,547 | | | 522 | | | 1,821 | | | 967 | | | 72 | | | 630 | |
| Entergy Louisiana | | 10,809 | | | 5,629 | | | 2,789 | | | 2,052 | | | 339 | | | — | | | — | |
| Entergy Mississippi | | 2,964 | | | 1,739 | | | 707 | | | — | | | 416 | | | — | | | 102 | |
| Entergy New Orleans | | 662 | | | 635 | | | — | | | — | | | — | | | — | | | 27 | |
| Entergy Texas | | 3,234 | | | 990 | | | 1,994 | | | — | | | 250 | | | — | | | — | |
| System Energy | | 1,251 | | | — | | | — | | | 1,251 | | | — | | | — | | | — | |
| Total | | 24,479 | | | 10,540 | | | 6,012 | | | 5,124 | | | 1,972 | | | 72 | | | 759 | |
(a)“Owned and Leased Capability” is the dependable summer load carrying capability as demonstrated under actual operating conditions based on the primary fuel (assuming no curtailments) that each station was designed to utilize.
(b)Represents Simple Cycle Combustion Turbine units and Combined Cycle Gas Turbine units.
(c)The percentage of nuclear and renewable energy includes energy procured or produced for the benefit of certain customers through special tariffs, contracts, or renewable program subscriptions, and those customers retain the exclusive claims to all associated environmental attributes, renewable energy credits, and other relevant clean energy certifications.
Summer peak load for the Utility has averaged 21,998 MW over the previous decade.
The Utility operating companies’ load and capacity projections are reviewed periodically to assess the need and timing for additional generating capacity and interconnections. These reviews consider existing and projected demand, the availability and price of power, the location of new load, the economy, Entergy’s clean energy and other public policy goals, environmental regulations, and the age and condition of Entergy’s existing infrastructure.
The Utility operating companies’ long-term resource strategy (Portfolio Transformation Strategy) calls for the bulk of capacity needs to be met through long-term resources, whether owned or contracted. Over the past decade, the Portfolio Transformation Strategy has resulted in the addition of about 8,702 MW of new long-term resources and the deactivation of about 4,242 MW of legacy generation. As MISO market participants, the Utility operating companies also participate in MISO’s Day Ahead and Real Time Energy and Ancillary Services markets to economically dispatch generation and purchase energy to serve customers reliably and at the lowest reasonable cost.
Other Generation Resources
RFP Procurements
The Utility operating companies from time-to-time issue requests for proposals (RFP) to procure supply-side resources from sources other than the spot market to meet the unique regional needs of the Utility operating companies. The RFPs issued by the Utility operating companies have sought resources needed to meet near-term MISO reliability requirements as well as long-term requirements through a broad range of wholesale power
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
products, including long-term contractual products and asset acquisitions. The RFP process has resulted in selections or acquisitions, including, among other things:
•In November 2018, Entergy Mississippi signed an agreement for the purchase of an approximately 100 MW to-be-constructed solar photovoltaic energy facility, Sunflower Solar facility, located in Sunflower County, Mississippi. Entergy Mississippi received regulatory approval from the MPSC in April 2020, and closed on the acquisition, through use of a tax equity partnership, in May 2022. The Sunflower Solar facility commenced commercial operation in September 2022;
•In March 2019, Entergy Arkansas signed an agreement for the purchase of an approximately 100 MW to-be-constructed solar photovoltaic energy facility, Searcy Solar facility, located in White County near Searcy, Arkansas. Entergy Arkansas received regulatory approval from the APSC in April 2020, and closed on the acquisition, through use of a tax equity partnership, in December 2021. The Searcy Solar facility commenced commercial operation in January 2022;
•In June 2020, Entergy Arkansas signed an agreement for the purchase of an approximately 100 MW to-be-constructed solar photovoltaic energy facility, Walnut Bend Solar facility, located in Lee County, Arkansas. In July 2021 the APSC issued an order approving the acquisition of the Walnut Bend Solar facility. In February 2024, Entergy Arkansas acquired the facility. The Walnut Bend Solar facility commenced commercial operation in September 2024;
•In September 2020, Entergy Arkansas signed an agreement for the purchase of an approximately 180 MW to-be-constructed solar photovoltaic energy facility, West Memphis Solar facility, located in Crittenden County, Arkansas. In October 2021 the APSC issued an order approving the acquisition of the West Memphis Solar facility. In August 2024, Entergy Arkansas acquired the facility. The West Memphis Solar facility commenced commercial operation in December 2024;
•In December 2020, Entergy Texas selected the 1,158 MW self-build alternative, Orange County Advanced Power Station, out of the 2020 Entergy Texas combined-cycle, gas turbine RFP. Regulatory approval was received in November 2022 and construction has commenced. The facility is expected to be in service by mid-2026;
•In November 2021, Entergy Louisiana signed an agreement for the purchase of an approximately 150 MW to-be-constructed solar photovoltaic energy facility, St. Jacques facility, to be sited in St. James Parish near Vacherie, Louisiana. In September 2022 the LPSC issued an order approving the St. Jacques facility; however, following the LPSC approval, the St. James Parish council issued a moratorium on new land use permits for solar facilities. In November 2023, St. James Parish lifted the moratorium and adopted an ordinance modifying the parish’s land use plan to establish solar as an approved land use and defining corresponding solar regulations. In June 2024 the St. James Parish council denied the project developer’s solar energy facility farm permit application and following this denial, the project developer and one of the project’s ground lessors filed separate lawsuits seeking to overturn the council’s decision. Entergy Louisiana is currently monitoring the status of the aforementioned lawsuits and also considering alternate paths forward;
•In August 2022, Entergy Arkansas signed an agreement for the purchase of an approximately 250 MW to-be-constructed solar photovoltaic energy facility, Driver Solar facility, located near Osceola, Arkansas. Also in August 2022, Entergy Arkansas received regulatory approval from the APSC for the Driver Solar facility. In August 2024, Entergy Arkansas acquired the facility. The Driver Solar facility commenced commercial operation in December 2024;
•Entergy Louisiana began construction on the 49 MW Sterlington solar project in December 2024, located in Sterlington, Louisiana. The facility is expected to achieve commercial operation in January 2026;
•Entergy Mississippi will begin construction on the Delta Solar facility, an 80 MW solar facility to be located in Bolivar County, Mississippi, in April 2026. The facility is expected to achieve commercial operation by the end of 2027; and
•Entergy Mississippi will begin construction on the Penton Solar facility, a 190 MW solar facility in December 2025. The facility is expected to achieve commercial operation by early 2028.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
The RFP process has also resulted in the selection, or confirmation of the economic merits of, long-term purchased power agreements (PPAs), including, among others:
•River Bend’s 30% life-of-unit PPA between Entergy Louisiana and Entergy New Orleans for 100 MW related to Entergy Louisiana’s unregulated portion of the River Bend nuclear station, which portion was formerly owned by Cajun;
•Entergy Arkansas’s wholesale base load capacity life-of-unit PPAs executed in 2003 totaling approximately 220 MW between Entergy Arkansas and Entergy Louisiana (110 MW) and between Entergy Arkansas and Entergy New Orleans (110 MW) related to the sale of a portion of Entergy Arkansas’s coal and nuclear base load resources (which had not been included in Entergy Arkansas’s retail rates);
•In September 2012, Entergy Gulf States Louisiana and Rain CII Carbon LLC executed a 20-year agreement for 28 MW, with the potential to purchase an additional 9 MW when available, from a petroleum coke calcining facility in Sulphur, Louisiana. The facility began commercial operation in May 2013. Entergy Louisiana, as successor in interest to Entergy Gulf States Louisiana, now holds the agreement with the facility;
•In March 2013, Entergy Gulf States Louisiana and Agrilectric Power Partners, LP executed a 20-year agreement for 8.5 MW from a refurbished rice hull-fueled electric generation facility located in Lake Charles, Louisiana. Entergy Louisiana, as successor in interest to Entergy Gulf States Louisiana, now holds the agreement with Agrilectric;
•Entergy Mississippi’s cost-based purchase, beginning in January 2013, of 90 MW from Entergy Arkansas’s share of Grand Gulf (only 60 MW of this PPA came through the RFP process). Cost recovery for the 90 MW was approved by the MPSC in January 2013;
•In April 2015, Entergy Arkansas and Stuttgart Solar, LLC executed a 20-year agreement for 81 MW from a solar photovoltaic electric generation facility located near Stuttgart, Arkansas. The APSC approved the project and deliveries pursuant to that agreement commenced in June 2018;
•In November 2016, Entergy Louisiana and LS Power executed a 10-year agreement for 485 MW from the Carville Energy Center located in St. Gabriel, Louisiana. In November 2019, LS Power sold and transferred the Carville Energy Center and facility to Argo Infrastructure Partners, which included the power purchase agreement. The PPA delivery term began in June 2022;
•In November 2016, Entergy Louisiana and Occidental Chemical Corporation executed a 10-year agreement for 500 MW from the Taft Cogeneration facility located in Hahnville, Louisiana. The transaction received regulatory approval and began in June 2018;
•In June 2017, Entergy Arkansas and Chicot Solar, LLC executed a 20-year agreement for 100 MW from a to-be-constructed solar photovoltaic electric generating facility located in Chicot County, Arkansas. The transaction received regulatory approval and the PPA began in November 2020;
•In February 2018, Entergy Louisiana and LA3 West Baton Rouge, LLC (Capital Region Solar project) executed a 20-year agreement for 50 MW from a to-be-constructed solar photovoltaic electric generating facility located in West Baton Rouge Parish, Louisiana. The transaction received regulatory approval in February 2019 and the PPA began in October 2020;
•In July 2018, Entergy New Orleans and St. James Solar, LLC executed a 20-year agreement for 20 MW from a to-be-constructed solar photovoltaic electric generating facility located in St. James Parish, Louisiana. The transaction received regulatory approval in July 2019 and the PPA began in February 2023 after the facility reached commercial operation in March 2023;
•In August 2018, Entergy Louisiana and South Alexander Development I, LLC executed a 5-year agreement for 5 MW from a solar photovoltaic electric generating facility located in Livingston Parish, Louisiana. The PPA began in December 2020 and received regulatory approval in January 2021;
•In February 2019, Entergy New Orleans and Iris Solar, LLC executed a 20-year agreement for 50 MW from a to-be-constructed solar photovoltaic electric generating facility located in Washington Parish, Louisiana. The transaction received regulatory approval in July 2019 and achieved commercial operation in November 2022;
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
•In August 2020, Entergy Texas and Umbriel Solar, LLC executed a 20-year agreement for 150 MW from a to-be-constructed solar photovoltaic electric generating facility located in Polk County, Texas. The facility achieved commercial operation in November 2023;
•In June 2021, Entergy Louisiana and Sunlight Road Solar, LLC executed a 20-year agreement for 50 MW from a to-be-constructed solar photovoltaic electric generating facility located in Washington Parish, Louisiana. The facility achieved commercial operation in November 2024 and the PPA delivery term began in December 2024;
•In June 2021, Entergy Louisiana and Vacherie Solar Energy Center, LLC executed a 20-year PPA for 150 MW from a to-be-constructed solar photovoltaic electric generating facility located in St. James Parish, Louisiana. In September 2022 the LPSC voted to issue an order approving the Vacherie facility; however, following the LPSC approval, the St. James Parish council issued a moratorium on new land use permits for solar facilities. In November 2023, St. James Parish lifted the moratorium and adopted an ordinance modifying the parish’s land use plan to establish solar as an approved land use and defining corresponding solar regulations. In June 2024 the St. James Parish council denied the project developer’s solar energy facility farm permit application and following this denial, the project developer and one of the project’s ground lessors filed separate lawsuits seeking to overturn the council’s decision. Entergy Louisiana is currently monitoring the status of the aforementioned lawsuits and also considering alternate paths forward;
•In December 2022, Entergy Mississippi and Hinds Solar, LLC executed a 20-year PPA for approximately 150 MW from a to-be-constructed solar photovoltaic energy facility located in Hinds County, Mississippi. In August 2023 the MPSC approved the PPA;
•In October 2022, Entergy Mississippi and Wildwood Solar, LLC executed a 20-year PPA for approximately 100 MW from a to-be-constructed solar photovoltaic energy facility located in Tallahatchie County, Mississippi. In August 2023 the MPSC approved the PPA, and the facility is expected to reach commercial operation in 2026;
•In October 2022, Entergy Mississippi and Greer Solar, LLC executed a 20-year PPA for approximately 170 MW from a to-be-constructed solar photovoltaic energy facility located in Washington County, Mississippi. In August 2023 the MPSC approved the PPA, and the facility is expected to reach commercial operation as early as December 2026;
•In October 2022, Entergy Arkansas and Flat Fork Solar, LLC executed a 20-year PPA for approximately 200 MW from a to-be-constructed solar photovoltaic energy facility located in St. Francis County, Arkansas. In September 2023 the APSC approved the PPA, and the facility is expected to reach commercial operation as early as September 2025;
•In October 2022, Entergy Arkansas and Forgeview Solar, LLC executed a 15-year PPA for approximately 200 MW from a to-be-constructed solar photovoltaic energy facility located in Mississippi County, Arkansas. In September 2023 the APSC approved the PPA, and the facility is expected to reach commercial operation as early as November 2025;
•In January 2023, Entergy Louisiana and Coastal Prairie Solar, LLC executed a 20-year PPA for approximately 175 MW from a to-be-constructed solar photovoltaic energy facility located in Iberville Parish, Louisiana. In January 2024 the LPSC approved the PPA, and the facility is expected to reach commercial operation as early as December 2027; and
•In October 2023, Entergy Louisiana and Mondu Solar, LLC executed a 20-year PPA for approximately 100 MW from a to-be-constructed solar photovoltaic energy facility located in Point Coupee Parish, Louisiana. In September 2024 the LPSC approved the PPA, and the facility is expected to reach commercial operation as early as June 2026.
In July 2021, Entergy Services, on behalf of Entergy Texas, issued an RFP for solar generation resources. Entergy Texas selected a combination of PPA and owned resources in March 2022. The PPA negotiations were terminated after failure to reach agreement on terms. In July 2024, Entergy Texas filed an application with the PUCT seeking regulatory approval for the owned resource, the 141 MW Votaw Solar facility. Subject to receipt of required regulatory approval and other conditions, the Votaw Solar facility is expected to be in service by mid-2028.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
In April 2022, Entergy Services, on behalf of Entergy Arkansas, issued an RFP for solar photovoltaic and wind resources. Entergy Arkansas selected a combination of PPA and build-own-transfer resources in February 2023. One PPA project was terminated after failure to reach agreement on terms, and negotiation of definitive agreements for the remaining resources are in progress.
In October 2022, Entergy Services, on behalf of Entergy Texas, issued an RFP for solar photovoltaic and wind resources. Entergy Texas selected a combination of PPA, build-own-transfer, and owned resources in July 2023. The PPA and build-own-transfer negotiations were terminated after failure to reach agreement on terms. In July 2024, Entergy Texas filed an application with the PUCT seeking regulatory approval for the owned resource, the 170 MW Segno Solar facility. Subject to receipt of required regulatory approval and other conditions, the Segno Solar facility is expected to be in service by early 2027.
In April 2024, Entergy Services, on behalf of Entergy Louisiana, issued an RFP for capacity and energy from existing generation resources. Entergy Louisiana selected a PPA resource in December 2024, and negotiation of a definitive agreement is in progress.
In August 2024, Entergy Services, on behalf of Entergy Louisiana, issued the 3 GW Alternative Market-based Mechanism Process Solar RFP which solicits up to 3,000 MW of solar photovoltaic resources across four procurement windows. The RFP is expected to continue through 2026 with selections expected throughout the process at the conclusion of each procurement window, as applicable.
In November 2024, Entergy Services, on behalf of Entergy Louisiana, issued a Combined Cycle Combustion Turbine capacity and energy resources RFP which solicits up to 2,000 MW of generation. The RFP is expected to continue through 2025 with selections expected in third quarter 2025.
Other Procurements From Third Parties
The Utility operating companies have also made resource acquisitions outside of the RFP process and have also entered various limited- and long-term contracts in recent years as a result of bilateral negotiations, including among others:
•In March 2016, Entergy Arkansas (Power Block 2), Entergy Louisiana (Power Blocks 3 and 4), and Entergy New Orleans (Power Block 1) completed their respective acquisitions of the 1,980 MW (summer rating), natural gas-fired, combined-cycle gas turbine Union Power Station power blocks, each rated at 495 MW (summer rating). The facility is located near El Dorado, Arkansas and has been in operation since July 2003;
•In October 2019, Entergy Mississippi acquired the Choctaw Generating Station, an 810 MW combined-cycle, natural gas-fired power plant. The facility is located in Choctaw County and has been in operation since July 2003;
•In November 2020, Entergy Louisiana acquired the Washington Parish Energy Center, a 361 MW natural gas-fired peaking power plant. The facility is located approximately 60 miles north of New Orleans on a site Entergy Louisiana purchased from Calpine in 2019. Calpine began construction on the plant in early 2019 and Entergy Louisiana purchased the plant upon completion in November 2020;
•In June 2021, Entergy Texas acquired the Hardin County Peaking Facility, an existing 147 MW simple-cycle gas-fired peaking power plant in Kountze, Texas, previously owned by East Texas Electric Cooperative. The facility has been in operation since January 2010;
•In November 2021, Entergy Louisiana and Elizabeth Solar, LLC executed a 20-year PPA for approximately 125 MW from a to-be-constructed solar photovoltaic energy facility located in Allen Parish, Louisiana. In September 2022 the LPSC voted to approve this project and in September 2023, Entergy Louisiana reported to the LPSC that it had entered into amended agreements related to the Elizabeth Solar facility. The facility achieved commercial operation in December 2024;
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
•In February 2024, Entergy Louisiana and Magnolia Power executed a 10-year Capacity Credit Purchase Agreement (CCPA) for 290 MW of MISO Zone 9, Zonal Resource Credits (ZRC) associated with the Magnolia Power Generating Station. In December 2024 the LPSC approved the CCPA, with the delivery term set to commence on the first day of the 2025-2026 MISO planning year; and
•In May 2024, Entergy Mississippi and Cooperative Energy executed a one-year ZRC Purchase and Sale Agreement for a minimum of 300 MW of MISO Zone 10, ZRCs during the 2025-2026 MISO planning year. This agreement was followed by a similar agreement between the parties in November 2024 for a minimum of 350 MW of MISO Zone 10, ZRCs to be transferred over the 2026-2027, 2027-2028, and 2028-2029 planning years.
Power Through Programs
In February 2019, Entergy Mississippi proposed a new technologies pilot to the MPSC, which was approved in December 2019. The pilot, previously referred to as the Power Through program, further modernized the energy grid and met customers’ evolving expectations by offering utility-owned, natural gas-fired backup generators to customers. Following conclusion of the three-year pilot, in October 2023, Entergy Mississippi proposed full-scale implementation of commercial scale, natural gas-fired resilient distributed generation, to be installed in front of the meter at commercial and industrial customer premises. The full-scale offering was approved by the MPSC in December 2023 along with an associated rate schedule, the Resiliency as a Service Rider Schedule. Entergy Mississippi can dispatch the units at times of peak demand, which can mitigate the typically higher energy and capacity costs borne by all customers during times of peak energy usage.
In December 2020, Entergy Texas filed an application with the PUCT to amend its certificate of convenience and necessity to own and operate up to 75 MW of natural gas-fired distributed generation to be installed at commercial and industrial customer premises. Under this proposal, Entergy Texas would own and operate a fleet of generators ranging from 100 kW to 10 MW that would supply a portion of Entergy Texas’s long-term resource needs and enhance the resiliency of Entergy Texas’s electric grid. This fleet of generators would also be available to customers during outages to supply backup electric service as part of a program known as “Power Through.” In its 2021 session, the Texas legislature modified the Texas Utilities Code to exempt generators under 10 megawatts from the requirement to obtain a certificate of convenience and necessity. In addition, the PUCT announced an intent to conduct a broad rulemaking related to distributed generation and recommended that utilities with pending applications addressing distributed generation withdraw them. Accordingly, Entergy Texas withdrew its application for a certificate of convenience and necessity and associated tariff from the PUCT without prejudice to refiling. Entergy Texas continues to deploy certain customer-sited distributed generators under an existing PUCT-approved tariff. In August 2022, Entergy Texas filed an application for PUCT approval of voluntary Rate Schedule Utility Owned Distributed Generation through which it would charge host customers for back-up service from customer-sited Power Through generators. Based on the exemption enacted by the Texas legislature in 2021, Entergy Texas’s application was not required to, and did not, seek an amendment to its certificate of convenience and necessity in order to continue deploying Power Through generators. In October 2022 two intervenors filed requests for a hearing on Entergy Texas’s application. In October 2022 the PUCT staff filed a request that the proceeding be referred to the State Office of Administrative Hearings. In January 2023 the PUCT announced an intent to develop certain broadly applicable reliability metrics against which to measure distributed generation resources and directed Entergy Texas to withdraw its application. However, the PUCT did allow Entergy Texas to continue its pilot program for Power Through generators. Entergy Texas withdrew its application. In its 2023 session, the Texas legislature modified the Texas Utilities Code to confirm Entergy Texas’s ability to provide back-up generation service using customer-sited utility-owned distributed generation and directing the PUCT to approve rates for such service upon application by Entergy Texas. In February 2024, Entergy Texas resubmitted its application for PUCT approval of voluntary Rate Schedule Utility Owned Distributed Generation. Texas cities, the Office of Public Utility Counsel, Texas Industrial Energy Consumers, and Wal-Mart, Inc. have intervened as parties. In July 2024 the proceeding was referred to the State Office of Administrative Hearings and a procedural schedule was established. In November 2024, Entergy Texas filed an unopposed settlement agreement consistent with its as-filed request and a motion to admit evidence and remand the proceeding to the PUCT. Also in
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
November 2024, the ALJ with the State Office of Administrative Hearings granted the motion and remanded the proceeding to the PUCT. In December 2024 the PUCT’s Office of Policy and Docket Management filed a proposed order for the PUCT’s consideration that would adopt the unopposed settlement. A PUCT decision is expected in the first quarter of 2025.
In August 2021, Entergy Arkansas filed with the APSC an application seeking authority for a “Power Through” offering to deploy natural gas-fired distributed generation. The application was supported by a number of letters of interest from Entergy Arkansas customers. In May 2023 the APSC issued an order approving the Power Through offering with some modifications. In December 2023 the APSC approved a streamlined approval process for the individual Power Through generators. In July 2024, Entergy Arkansas filed tariff revisions to comply with the APSC’s order. In November 2024 the APSC approved Entergy Arkansas’s compliance tariff.
In July 2021, Entergy Louisiana filed with the LPSC an application for authority to deploy natural gas-fired distributed generation. The application was supported by a number of letters of interest from Entergy Louisiana customers. In June 2022 the parties reached an uncontested settlement which, among other things, recommended approval of 120 MW of natural gas fired distributed generation and an additional 30 MW of solar and battery distributed generation, for a total distributed generation program of 150 MW. Pursuant to the terms of the settlement agreement, Entergy Louisiana may seek to expand the distributed generation program following the earlier of two years after issuance of an order approving the settlement or the installation of 60 MW of distributed generation pursuant to this program. The settlement was approved by the LPSC in November 2022.
Provision of Service to Large-Scale Data Center Customers
Subject to pending regulatory approvals, certain Utility operating companies are planning to make significant infrastructure investments in new solar projects, natural gas power plants, and other transmission and generation assets to power new large-scale data centers. These infrastructure investments are being made primarily in connection with electric service agreements with a small number of new customers to provide power for new data centers being constructed to support artificial intelligence and other technology capabilities.
In January 2024, Amazon Web Services announced its plan to invest in two data centers located in Madison County, Mississippi. In March 2024, Entergy Mississippi executed a large customer supply and service agreement to serve the two data centers. In February 2025, Entergy Mississippi entered into a new large customer supply and service agreement with a customer. See the “Liquidity and Capital Resources – Uses of Capital – Additional Generation and Transmission Resources” section of Management’s Financial Discussion and Analysis for Entergy Mississippi for additional discussion of the agreements and the investments proposed in connection with service to these facilities.
In October 2024, Entergy Louisiana filed an application with the LPSC requesting approval of certain generation and transmission assets proposed in connection with service to a new large-scale data center being developed by a subsidiary of Meta Platforms, Inc. in north Louisiana. See the “Liquidity and Capital Resources – Uses of Capital – Additional Generation and Transmission Resources” section of Management’s Financial Discussion and Analysis for Entergy Louisiana for additional discussion of this filing and the investments proposed in connection with new service to this data center facility.
In addition, some of the Utility operating companies are engaged in discussions with other prospective customers concerning potential service to other data center projects. Because of the significant demand and energy needs associated with these facilities, which generally require power at levels near their maximum level of demand for sustained periods throughout the day and throughout the year, extending service to these facilities often requires investment in incremental generation and transmission facilities, with a resulting risk of stranded costs if expected demand does not materialize, although this risk can potentially be mitigated through appropriate commercial terms subject to negotiations with the customer. Often it is therefore necessary and appropriate for the Utility operating companies, in the electric service agreements negotiated with these customers, to include terms that provide for the
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
prospective customer to contribute significant funds toward the cost of these incremental investments and that include other terms and safeguards to balance reasonably the interests of existing customers with the interests of the prospective customer. Such safeguards take many forms but may include minimum payment obligations, lengthy contract durations, customer advances for construction, and credit and collateral requirements, among other terms. Extending service to large data center customers also may carry significant potential benefits to the Utility operating companies’ existing customer base as well as significant economic development benefits for the states and communities in which the new data centers are sited. These benefits include the potential for substantial contributions to the Utility operating companies’ fixed costs, which may have the effect of reducing electricity rates for all customers, as well as creating new jobs, tax revenues to local governments, indirect economic benefits, and similar benefits. Investments in significant new generation and transmission assets, such as those necessary to serve proposed large-scale data center customers, are often subject to the requirement of receiving applicable regulatory approvals from the APSC, the LPSC, the MPSC, the City Council, or the PUCT, depending on applicable regulatory rules and laws and the circumstances of the proposed investments.
Large-scale data center customers often have sustainability goals and commitments that require the sourcing of power for these facilities from renewable or emissions-free resources, such as solar, wind, or nuclear resources, or installation of carbon capture or other technologies to reduce emissions. Many of these data center customers are willing to contribute a significant portion of the cost of these facilities in order to access these sustainable or emissions-free resources, which arrangements have the potential to lower the costs of such resources as reflected in the rates of the Utility operating companies to the benefit of their other customers. This interest of prospective large-scale data center customers in sustainable and clean generating resources coincides with the Entergy’s own sustainability commitments and informs the Utility operating companies’ strategies and resource planning solutions to serve these prospective customers’ needs. There can be no assurance that prospective large-scale data center customers will continue to prioritize sustainability or clean generating resources, which may affect the Utility operating companies’ strategies in the future.
Interconnections
The Utility operating companies’ generating units are interconnected to the electric system which operates at various voltages up to 500 kV. These generating units consist of steam-turbine generators fueled by natural gas, coal, and pressurized and boiling water nuclear reactors; combustion-turbine generators, combined-cycle combustion turbine generators and reciprocating internal combustion engine generators that are fueled by natural gas; and inverter-based resources interconnecting both solar photovoltaic systems and energy storage devices that participate in the MISO wholesale electric market. Additionally, some of the Utility operating companies also offer customer services and products that include load-modifying and demand response resources that are interconnected to both the distribution and transmission systems and that also participate in the wholesale market. Entergy’s Utility operating companies are MISO market participants and the companies’ transmission systems are interconnected with those of many neighboring utilities. MISO is an essential link in the safe, cost-effective delivery of electric power across all or parts of 15 U.S. states and the Canadian province of Manitoba. In addition, the Utility operating companies are members of the SERC Reliability Corporation (SERC), the Regional Entity with delegated authority from the North American Electric Reliability Corporation (NERC) for the purpose of proposing and enforcing Bulk Electric System reliability standards within 16 central and southeastern states.
Gas Property
As of December 31, 2024, Entergy New Orleans distributed and transported natural gas for distribution within New Orleans, Louisiana, through approximately 2,600 miles of gas pipeline. As of December 31, 2024, the gas properties of Entergy Louisiana, which are located in and around Baton Rouge, Louisiana, were not material to Entergy Louisiana’s financial position. See “Held for Sale - Natural Gas Distribution Businesses” in Note 14 to the financial statements for discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
Title
The Utility operating companies’ generating stations are generally located on properties owned in fee simple. Most of the substations and transmission and distribution lines are constructed on private property or public rights-of-way pursuant to easements, servitudes, or appropriate franchises. Some substation properties are owned in fee simple. The Utility operating companies generally have the right of eminent domain, whereby they may perfect title to, or secure easements or servitudes on, private property for their utility operations.
Substantially all of the physical properties and assets owned by Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy are subject to the liens of mortgages securing bonds issued by those companies. The Lewis Creek generating station of Entergy Texas was acquired by merger with a subsidiary of Entergy Texas and is currently not subject to the lien of the Entergy Texas indenture.
Fuel Supply
The average fuel cost per kWh for the Utility operating companies and System Energy for the years 2022-2024 were:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year | | Natural Gas | | Nuclear | | Coal | | Renewables (a) | | Purchased Power | | MISO Purchases (b) |
| 2024 | | (Cents Per kWh) |
| Entergy Arkansas | | 2.02 | | | 0.57 | | | 3.04 | | | 1.67 | | | 10.21 | | | 0.37 | |
| Entergy Louisiana | | 2.30 | | | 0.73 | | | 3.34 | | | 11.48 | | | 3.70 | | | 2.32 | |
| Entergy Mississippi | | 1.86 | | | — | | | 2.60 | | | 0.11 | | | 2.36 | | | 2.89 | |
| Entergy New Orleans (c) | | 2.26 | | | — | | | — | | | 3.60 | | | — | | | 2.75 | |
| Entergy Texas | | 2.04 | | | — | | | 3.33 | | | 3.53 | | | 6.80 | | | 2.80 | |
| System Energy | | — | | | 0.65 | | | — | | | — | | | — | | | — | |
| Utility | | 2.14 | | | 0.65 | | | 3.00 | | | 5.85 | | | 3.73 | | | 2.38 | |
| | | | | | | | | | | | |
| 2023 | | | | | | | | | | | | |
| Entergy Arkansas | | 1.98 | | | 0.50 | | | 3.09 | | | 1.98 | | | 11.57 | | | 0.77 | |
| Entergy Louisiana | | 2.34 | | | 0.60 | | | 3.22 | | | 10.38 | | | 3.76 | | | 2.50 | |
| Entergy Mississippi | | 2.21 | | | — | | | 2.82 | | | 0.03 | | | 5.86 | | | 1.84 | |
| Entergy New Orleans (c) | | 2.05 | | | — | | | — | | | 3.24 | | | — | | | 2.33 | |
| Entergy Texas | | 2.29 | | | — | | | 3.17 | | | 2.25 | | | 5.64 | | | 3.18 | |
| System Energy | | — | | | 0.68 | | | — | | | — | | | — | | | — | |
| Utility | | 2.25 | | | 0.58 | | | 3.06 | | | 6.14 | | | 4.03 | | | 2.61 | |
| | | | | | | | | | | | |
| 2022 | | | | | | | | | | | | |
| Entergy Arkansas | | 4.98 | | | 0.52 | | | 2.93 | | | 2.11 | | | 10.90 | | | (2.65) | |
| Entergy Louisiana | | 5.50 | | | 0.57 | | | 2.84 | | | 10.70 | | | 6.95 | | | 6.45 | |
| Entergy Mississippi | | 4.38 | | | — | | | 2.85 | | | 0.04 | | | 6.53 | | | 6.68 | |
| Entergy New Orleans (c) | | 5.10 | | | — | | | — | | | (5.16) | | | — | | | 7.21 | |
| Entergy Texas | | 5.77 | | | — | | | 2.83 | | | 6.26 | | | 5.61 | | | 6.68 | |
| System Energy | | — | | | 0.65 | | | — | | | — | | | — | | | — | |
| Utility | | 5.27 | | | 0.57 | | | 2.89 | | | 7.00 | | | 6.54 | | | 5.95 | |
(a)Includes average fuel costs from both owned and purchased power resources.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
(b)Includes activity from financial transmission rights. See Note 15 to the financial statements for discussion of financial transmission rights.
(c)Entergy New Orleans’s renewables include liquidated damage payments of $0.5 million in 2024, $0.1 million in 2023, and $2.9 million in 2022 due to the delay of in-service dates related to purchased power agreements.
Actual 2024 and projected 2025 sources of generation for the Utility operating companies and System Energy, including certain power purchases from affiliates under life of unit power purchase agreements, including the Unit Power Sales Agreement, are:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 |
| | CT / CCGT (b) | | Legacy Gas | | Nuclear (c) | | Coal | | Renewables (c) (d) | | Purchased Power (e) | | MISO Purchases (f) |
| Entergy Arkansas | 29 | % | | 1 | % | | 56 | % | | 6 | % | | 4 | % | | — | % | | 4 | % |
| Entergy Louisiana | 45 | % | | 10 | % | | 20 | % | | 1 | % | | 2 | % | | 8 | % | | 14 | % |
| Entergy Mississippi | 65 | % | | 2 | % | | 20 | % | | 7 | % | | 1 | % | | — | % | | 5 | % |
| Entergy New Orleans | 46 | % | | 2 | % | | 41 | % | | 1 | % | | 2 | % | | 1 | % | | 7 | % |
| Entergy Texas | 32 | % | | 28 | % | | 11 | % | | 3 | % | | 2 | % | | — | % | | 24 | % |
| System Energy (a) | — | % | | — | % | | 100 | % | | — | % | | — | % | | — | % | | — | % |
| Utility | 42 | % | | 10 | % | | 27 | % | | 3 | % | | 2 | % | | 4 | % | | 12 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2025 |
| | CT / CCGT (b) | | Legacy Gas | | Nuclear (c) | | Coal | | Renewables (c) (d) | | Purchased Power (e) | | MISO Purchases (f) |
| Entergy Arkansas | 28 | % | | — | % | | 59 | % | | 5 | % | | 8 | % | | — | % | | — | % |
| Entergy Louisiana | 52 | % | | 4 | % | | 23 | % | | 2 | % | | 3 | % | | 16 | % | | — | % |
| Entergy Mississippi | 60 | % | | — | % | | 30 | % | | 9 | % | | 1 | % | | — | % | | — | % |
| Entergy New Orleans | 51 | % | | 1 | % | | 43 | % | | 1 | % | | 3 | % | | 1 | % | | — | % |
| Entergy Texas | 46 | % | | 32 | % | | 14 | % | | 6 | % | | 2 | % | | — | % | | — | % |
| System Energy (a) | — | % | | — | % | | 100 | % | | — | % | | — | % | | — | % | | — | % |
| Utility | 47 | % | | 6 | % | | 32 | % | | 4 | % | | 4 | % | | 7 | % | | — | % |
(a)Capacity and energy from System Energy’s interest in Grand Gulf is allocated as follows under the Unit Power Sales Agreement: Entergy Arkansas - 36%; Entergy Louisiana - 14%; Entergy Mississippi - 33%; and Entergy New Orleans - 17%. Pursuant to purchased power agreements, Entergy Arkansas is selling a portion of its owned capacity and energy from Grand Gulf to Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. Effective January 1, 2025, Entergy Louisiana has divested all of its 14% share of capacity and energy from Grand Gulf and all of the capacity and energy from Grand Gulf that it purchases from Entergy Arkansas (approximately 2.43%) to Entergy Mississippi. This divestiture is being effectuated initially under a designated PPA between Entergy Louisiana and Entergy Mississippi, effective as of January 1, 2025. See Note 8 to the financial statements for discussion of Entergy Louisiana’s divestiture from the Unit Power Sales Agreement.
(b)Represents natural gas sourced for Simple Cycle Combustion Turbine units and Combined Cycle Gas Turbine units.
(c)The percentage of nuclear and renewable energy includes energy procured or produced for the benefit of certain customers through special tariffs, contracts, or renewable program subscriptions, and those customers retain the exclusive claims to all associated environmental attributes, renewable energy credits, and other relevant clean energy certifications.
(d)Includes generation from both owned and purchased power resources.
(e)Excludes MISO purchases and renewables purchased through purchased power agreements.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
(f)In December 2013, Entergy integrated its transmission system into the MISO RTO. Entergy offers all of its generation into the MISO energy market on a day-ahead and real-time basis and bids for power in the MISO energy market to serve the demand of its customers, with MISO making dispatch decisions. The MISO purchases metric provided for 2024 is not projected for 2025.
Some of the Utility’s gas-fired plants are also capable of using fuel oil, if necessary. Although based on current economics the Utility does not expect fuel oil use in 2025, it is possible that various operational events including weather or pipeline maintenance may require the use of fuel oil.
Natural Gas
The Utility operating companies have long-term and short-term firm and interruptible gas contracts for both supply and transportation. Over 70% of the Utility operating companies’ power plants maintain some level of long-term firm transportation. Long-term, short-term, and spot-market purchases satisfy gas requirements. Entergy Texas owns a gas storage facility and Entergy Louisiana has a firm storage service agreement that provide reliable and flexible natural gas service to certain generating stations.
Many factors, including wellhead deliverability, storage, pipeline capacity, and demand requirements of end users, influence the availability and price of natural gas supplies for power plants. Demand is primarily tied to weather conditions as well as to the prices and availability of other energy sources. Pursuant to federal and state regulations, gas supplies to power plants may be interrupted during periods of shortage. To the extent natural gas supplies are disrupted or natural gas prices significantly increase, the Utility operating companies may in some instances use alternate fuels, such as oil when available, or rely to a larger extent on coal, nuclear generation, and purchased power.
Coal
Entergy Arkansas has committed to seven one- to three-year contracts that will supply at least 85% of the total coal supply needs in 2025. These contracts are staggered in term so that not all contracts have to be renewed the same year. If needed, additional Powder River Basin (PRB) coal will be purchased through contracts with a term of less than one year to provide the remaining supply needs. Based on the high cost of alternate sources, modes of transportation, and infrastructure improvements necessary for its delivery, no alternative coal consumption is expected at Entergy Arkansas during 2025. Coal will be transported to Arkansas via an existing Union Pacific transportation agreement that is expected to provide all of Entergy Arkansas’s rail transportation requirements for 2025.
Entergy Louisiana has committed to three two- to three-year contracts that will supply at least 90% of Nelson Unit 6 coal needs in 2025. If needed, additional PRB coal will be purchased through contracts with a term of less than one year to provide the remaining supply needs. For the same reasons as the Entergy Arkansas plants, no alternative coal consumption is expected at Nelson Unit 6 during 2025. Coal will be transported to Nelson via an existing transportation agreement that is expected to provide all of Entergy Louisiana’s rail transportation requirements for 2025.
For the year ended December 31, 2024, coal transportation delivery rates to Entergy Arkansas- and Entergy Louisiana-operated coal-fired units were able to fully meet supply needs and obligations, and delivery rates in 2025 are expected to continue to be consistent with 2024 delivery rates in meeting supply needs and obligations. Both Entergy Arkansas and Entergy Louisiana control a sufficient number of railcars to satisfy the rail transportation requirement.
The operator of Big Cajun 2 - Unit 3, Louisiana Generating, LLC, has advised Entergy Louisiana and Entergy Texas that it has adequate rail car and barge capacity to meet the volumes of PRB coal requested for 2025.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
Entergy Louisiana’s and Entergy Texas’s coal nomination requests to Big Cajun 2 - Unit 3 are made on an annual basis.
Nuclear Fuel
The nuclear fuel cycle consists of the following:
•mining and milling of uranium ore to produce a concentrate;
•conversion of the concentrate to uranium hexafluoride gas;
•enrichment of the uranium hexafluoride gas;
•fabrication of nuclear fuel assemblies for use in fueling nuclear reactors; and
•disposal of spent fuel.
The Registrant Subsidiaries that own nuclear plants, Entergy Arkansas, Entergy Louisiana, and System Energy, are responsible through a shared regulated uranium pool for contracts to acquire nuclear material to be used in fueling Entergy’s Utility nuclear units. These companies own the materials and services in this shared regulated uranium pool on a pro rata fractional basis determined by the nuclear generation capability of each company. Any liabilities for obligations of the pooled contracts are on a several but not joint basis. The shared regulated uranium pool maintains inventories of nuclear materials during the various stages of processing. The Registrant Subsidiaries purchase enriched uranium hexafluoride for their nuclear plant reload requirements at the average inventory cost from the shared regulated uranium pool. Entergy Operations, Inc. contracts separately for the fabrication of nuclear fuel as agent on behalf of each of the Registrant Subsidiaries that owns a nuclear plant. All contracts for the disposal of spent nuclear fuel are between the DOE and the owner of a nuclear power plant.
Based upon currently planned fuel cycles, the Utility nuclear units have a diversified portfolio of contracts and inventory that provides substantially adequate nuclear fuel materials and conversion and enrichment services at what Entergy believes are reasonably predictable or fixed prices through 2027. Entergy’s ability to purchase nuclear fuel at reasonably predictable prices, however, depends upon the performance reliability of uranium miners, including their ability to work through supply disruptions caused by global events, such as the COVID-19 pandemic, or national events, such as political disruption, or trade-related governmental actions, such as tariffs and other measures. There are a number of possible supply alternatives that may be accessed to mitigate any supplier performance failure, including potentially drawing upon Entergy’s inventory intended for later generation periods depending upon its risk management strategy at that time, although the pricing of any alternate uranium supply from the market will be dependent upon the market for uranium supply at that time. In addition, some nuclear fuel contracts are on a non-fixed price basis subject to prevailing prices at the time of delivery.
Entergy’s ability to assure nuclear fuel supply also depends upon the performance reliability of conversion, enrichment, and fabrication services providers. There are fewer of these providers than for uranium. For conversion and enrichment services, like uranium, Entergy diversifies its supply by supplier and country and may take special measures as needed to ensure supply of enriched uranium for the reliable fabrication of nuclear fuel. For fabrication services, each plant is dependent upon the effective performance of the fabricator of that plant’s nuclear fuel, therefore, Entergy provides additional monitoring, inspection, and oversight for the fabrication process to assure reliability and quality.
The effects of market price changes may be reduced and deferred by risk management strategies, such as negotiation of floor and ceiling amounts for long-term contracts, buying for inventory or entering into forward physical contracts at fixed prices when Entergy believes it is appropriate and useful. Entergy buys uranium and conversion and enrichment services from a diversified mix of sellers located in a diversified mix of countries, and from time to time purchases from nearly all qualified reliable major market participants worldwide that sell into the United States.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
Entergy Arkansas, Entergy Louisiana, and System Energy each have made arrangements to lease nuclear fuel and related equipment and services. The lessors, which are consolidated in the financial statements of Entergy and the applicable Registrant Subsidiary, finance the acquisition and ownership of nuclear fuel through credit agreements and the issuance of notes. These credit facilities are subject to periodic renewal, and the notes are issued periodically, typically for terms between three and seven years.
Natural Gas Purchased for Resale
Entergy New Orleans has several suppliers of natural gas. Its system is interconnected with one interstate and three intrastate pipelines. Entergy New Orleans has a “no-notice” service gas purchase contract with Symmetry Energy Solutions which ensures Entergy New Orleans gas delivery at specific delivery points and at any volume within the minimum and maximum set forth in the contract amounts. The Symmetry Energy Solutions gas supply is transported to Entergy New Orleans pursuant to a transportation service agreement with Gulf South Pipeline Co. This service is subject to FERC-approved rates. Entergy New Orleans also makes interruptible spot market purchases.
Entergy Louisiana has been purchasing natural gas for resale since April 2024 under a firm contract with Symmetry Energy Solutions. Entergy Louisiana’s prior contract with Sequent Energy Management L.P. was not renewed and ended in March 2024. The gas is delivered through a combination of intrastate and interstate pipelines.
As a result of the implementation of FERC-mandated interstate pipeline restructuring in 1993, curtailments of interstate gas supply could occur if Entergy Louisiana’s or Entergy New Orleans’s suppliers failed to perform their obligations to deliver gas under their supply agreements. Gulf South Pipeline Co. could curtail transportation capacity only in the event of pipeline system constraints.
Federal Regulation of the Utility
State or local regulatory authorities, as described above, regulate the retail rates of the Utility operating companies. The FERC regulates wholesale sales of electricity rates and interstate transmission of electricity, including System Energy’s sales of capacity and energy from Grand Gulf to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans pursuant to the Unit Power Sales Agreement. See Note 2 to the financial statements for further discussion of federal regulation proceedings.
Transmission and MISO Markets
In December 2013 the Utility operating companies integrated into the MISO RTO. Although becoming a member of MISO did not affect the ownership by the Utility operating companies of their transmission facilities or the responsibility for maintaining those facilities, MISO maintains functional control over the combined transmission systems of its members and administers wholesale energy and ancillary services markets for market participants in the MISO region, including the Utility operating companies. MISO also exercises functional control of transmission planning and congestion management and provides schedules and pricing for the commitment and dispatch of generation that is offered into MISO’s markets, as well as pricing for load that bids into the markets. The Utility operating companies sell capacity, energy, and ancillary services on a bilateral basis to certain wholesale customers and offer available electricity production of their owned and controlled generating facilities into the MISO resource adequacy construct (the annual Planning Resource Auction), as well as the MISO day-ahead and real-time energy markets pursuant to the MISO tariff and market rules. The resource adequacy construct provided under the MISO tariff confers certain rights and imposes certain obligations upon load-serving entities, including the Utility operating companies, that are served from the transmission systems subject to MISO’s functional control, including the transmission facilities of the Utility operating companies. The MISO tariff is subject to change and has recently undergone significant changes, including changes to its overall capacity accreditation methodology. MISO is now pursuing a larger scale reassessment of its overall accreditation practices, including accreditation of renewable resources.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
MISO administers a process governed by the MISO tariff and subject to the FERC regulation that governs the interconnection of new generation resources to the transmission system under MISO’s functional control. This process generally involves parties that wish to interconnect new generation resources submitting to MISO requests to do so, which are then studied and analyzed by MISO, with the participation of its member transmission owners, to determine if the interconnection of such generators requires new transmission facilities to ensure the continued reliable operations of the grid. Under MISO’s current tariff, these requests are studied and considered in clusters, generally in the order in which they are received – a system of priority known as the MISO interconnection queue.
Each Utility operating company has its own transmission pricing zone and a formula rate template (included as Attachment O to the MISO tariff) used to establish transmission rates within MISO. The terms and conditions of the MISO tariff, including provisions related to the design and implementation of wholesale markets and the allocation of transmission upgrade costs, are subject to regulation by the FERC.
In addition, orders from each of the Utility operating companies’ respective retail regulators generally require that the Utility operating companies make periodic filings, or generally allow the retail regulator to direct the making of such filings, setting forth the results of analysis of the costs and benefits realized from MISO membership as well as the projected costs and benefits of continued membership in MISO and/or requesting approval of their continued membership in MISO.
System Energy and Related Agreements
System Energy recovers costs related to its interest in Grand Gulf through rates charged to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans for capacity and energy under the Unit Power Sales Agreement (described below). In 1998 the FERC approved requests by Entergy Arkansas and Entergy Mississippi to accelerate a portion of their Grand Gulf purchased power obligations. Entergy Arkansas’s and Entergy Mississippi’s acceleration of Grand Gulf purchased power obligations ceased effective July 2001 and July 2003, respectively, as approved by the FERC. See Note 2 to the financial statements for discussion of proceedings at the FERC related to System Energy.
Unit Power Sales Agreement
The Unit Power Sales Agreement allocates capacity, energy, and the related costs from System Energy’s ownership and leasehold interests in Grand Gulf to Entergy Arkansas (36%), Entergy Louisiana (14%), Entergy Mississippi (33%), and Entergy New Orleans (17%). Effective January 1, 2025, Entergy Louisiana is divesting all of its rights, entitlements, and interests in such capacity and energy to Entergy Mississippi. See Note 8 to the financial statements for discussion of Entergy Louisiana’s divestiture from the Unit Power Sales Agreement. Each of these companies is obligated to make payments to System Energy for its entitlement of capacity and energy on a full cost-of-service basis regardless of the quantity of energy delivered. Payments under the Unit Power Sales Agreement are System Energy’s only source of operating revenue. The financial condition of System Energy depends upon the continued commercial operation of Grand Gulf and the receipt of such payments. Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans generally recover payments made under the Unit Power Sales Agreement through rates charged to their customers; however, as discussed further below, for the majority of 2025 and until it is removed from the Unit Power Sales Agreement, Entergy Louisiana will recover its payments made under the Unit Power Sales Agreement from Entergy Mississippi under a designated PPA in connection with Entergy Louisiana’s divesting to Entergy Mississippi its 14% share of capacity and energy from Grand Gulf under the Unit Power Sales Agreement and its 2.43% share of capacity and energy from Entergy Arkansas under the MSS-4 replacement tariff.
In the case of Entergy Arkansas and Entergy Louisiana, payments are also recovered through sales of electricity from their respective retained shares of Grand Gulf. Under a settlement agreement entered into with the APSC in 1985 and amended in 1988, Entergy Arkansas retains 22% of its 36% share of Grand Gulf-related costs
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
and recovers the remaining 78% of its share in retail rates. In the event that Entergy Arkansas is not able to sell its retained share to third parties, it may sell such energy to its retail customers at a price equal to its avoided cost, which is currently less than Entergy Arkansas’s cost from its retained share. Entergy Arkansas has life-of-resources purchased power agreements with Entergy Louisiana and Entergy New Orleans that sell a portion of the output of Entergy Arkansas’s retained share of Grand Gulf to those companies. The remainder of Entergy Arkansas’s retained share is sold to Entergy Mississippi through a separate life-of-resource purchase power agreement with Entergy Mississippi. Entergy Arkansas also has a life-of-resources purchased power agreement with Entergy Mississippi to sell a portion of the output of Entergy Arkansas’s non-retained share of Grand Gulf. Entergy Mississippi was granted cost recovery for those purchases by the MPSC through its annual unit power cost rate mechanism.
In a series of LPSC orders, court decisions, and agreements from late 1985 to mid-1988, Entergy Louisiana was granted cost recovery with respect to costs associated with Entergy Louisiana’s share of capacity and energy from Grand Gulf, subject to certain terms and conditions. Prior to the divestiture of Grand Gulf energy and capacity to Entergy Mississippi, Entergy Louisiana retained and did not recover from retail ratepayers 18% of its 14% share of the costs of Grand Gulf capacity and energy and recovers the remaining 82% of its share in rates. Entergy Louisiana was also allowed to recover through the fuel adjustment clause at 4.6 cents per kWh for the energy related to its retained portion of these costs. Alternatively, Entergy Louisiana was permitted to sell such energy to non-affiliated parties at prices above the fuel adjustment clause amount, subject to the LPSC’s approval.
Effective January 1, 2025, Entergy Louisiana has divested all of its 14% share of capacity and energy from Grand Gulf and all of the capacity and energy from Grand Gulf that it purchases from Entergy Arkansas (approximately 2.43%) to Entergy Mississippi. This divestiture is being effectuated initially under a designated PPA between Entergy Louisiana and Entergy Mississippi, which was accepted by the FERC in November 2024. The MPSC approved the MSS-4 replacement PPA, effective as of January 1, 2025. In 2025, System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans expect to file an amendment to the UPSA that will modify the purchasers’ entitlements to capacity and energy from System Energy’s share of Grand Gulf to reflect Entergy Louisiana’s divestiture, and when that amendment becomes effective, the designated PPA between Entergy Louisiana and Entergy Mississippi will terminate and Entergy Louisiana will cease to be a System Energy customer. The effectiveness of that amendment to the Unit Power Sales Agreement will be subject to the review and acceptance of the FERC.
Availability Agreement
The Availability Agreement among System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans was entered into in 1974 in connection with the original financing by System Energy of Grand Gulf. The Availability Agreement provides that System Energy make available to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans all capacity and energy available from System Energy’s share of Grand Gulf.
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans also agreed severally to pay System Energy monthly for the right to receive capacity and energy from Grand Gulf in amounts that (when added to any amounts received by System Energy under the Unit Power Sales Agreement) would at least equal System Energy’s total operating expenses for Grand Gulf (including depreciation at a specified rate and expenses incurred in a permanent shutdown of Grand Gulf) and interest charges.
The allocation percentages under the Availability Agreement are fixed as follows: Entergy Arkansas - 17.1%; Entergy Louisiana - 26.9%; Entergy Mississippi - 31.3%; and Entergy New Orleans - 24.7%. The allocation percentages under the Availability Agreement would remain in effect and would govern payments made under such agreement in the event of a shortfall of operating expense funds available to System Energy from other sources, including payments under the Unit Power Sales Agreement.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
System Energy has assigned its rights to payments and advances from Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans under the Availability Agreement as security for all of its outstanding series of first mortgage bonds, as well as for its outstanding term loan and the pollution control revenue refunding bonds issued on its behalf. In these assignments, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans further agreed that, in the event they were prohibited by governmental action from making payments under the Availability Agreement (for example, if the FERC reduced or disallowed such payments as constituting excessive rates), they would then make subordinated advances to System Energy in the same amounts and at the same times as the prohibited payments. System Energy would not be allowed to repay these subordinated advances so long as it remained in default under the related indebtedness or in other similar circumstances.
Each of the assignment agreements relating to the Availability Agreement provides that Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans will make payments directly to System Energy. However, if there is an event of default, those payments must be made directly to the holders of indebtedness that are the beneficiaries of such assignment agreements. The payments must be made pro rata according to the amount of the respective obligations secured.
The obligations of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans to make payments under the Availability Agreement are subject to the receipt and continued effectiveness of all necessary regulatory approvals. Sales of capacity and energy under the Availability Agreement would require that the Availability Agreement be submitted to the FERC for approval with respect to the terms of such sale. No such filing with the FERC has been made because sales of capacity and energy from Grand Gulf are being made pursuant to the Unit Power Sales Agreement. If, for any reason, sales of capacity and energy are made in the future pursuant to the Availability Agreement, the jurisdictional portions of the Availability Agreement would be submitted to the FERC for approval.
Since commercial operation of Grand Gulf began, payments under the Unit Power Sales Agreement to System Energy have exceeded the amounts payable under the Availability Agreement and, therefore, no payments under the Availability Agreement to System Energy have ever been required. However, if Entergy Arkansas or Entergy Mississippi fails to make its Unit Power Sales Agreement payments, and System Energy is unable to obtain funds from other sources, Entergy Louisiana and Entergy New Orleans could become subject to claims or demands by System Energy or certain of its creditors for payments or advances under the Availability Agreement (or the assignments thereof) equal to the difference between their required Unit Power Sales Agreement payments and their required Availability Agreement payments because their allocated shares under the Availability Agreement exceed their allocated shares under the Unit Power Sales Agreement.
The Availability Agreement may be terminated, amended, or modified by mutual agreement of the parties thereto, without further consent of any assignees or other creditors. Effective January 1, 2025, Entergy Mississippi entered into a Reimbursement Agreement with Entergy Louisiana, under which it agreed to assume Entergy Louisiana’s rights and obligations under and to hold Entergy Louisiana harmless with respect to the Availability Agreement. That Reimbursement Agreement is intended to be in effect until the Unit Power Sales Agreement is modified to reflect Entergy Mississippi’s increased entitlements to System Energy’s share of Grand Gulf energy and capacity, following Entergy Louisiana’s divestiture of its combined 16.43% share of the Unit Power Sales Agreement and purchased power agreement entitlements to energy and capacity to Entergy Mississippi. When the Unit Power Sales Agreement modifications become effective, System Energy also anticipates implementing an Availability Agreement that reflects the Unit Power Sales Agreement entitlements of Entergy Arkansas, Entergy Louisiana, and Entergy New Orleans.
In December 2024, System Energy, Entergy Louisiana, Entergy Arkansas, Entergy Mississippi, and Entergy New Orleans agreed to terminate the Reallocation Agreement. See Note 8 to the financial statements for further discussion of the reallocation agreement.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
Service Companies
Entergy Services, a limited liability company wholly-owned by Entergy Corporation, provides management, administrative, accounting, legal, engineering, and other services primarily to the Utility operating companies, as well as to Entergy’s non-utility operations business. Entergy Operations is also wholly-owned by Entergy Corporation and provides nuclear management, operations, and maintenance services under contract for ANO, River Bend, Waterford 3, and Grand Gulf, subject to the owner oversight of Entergy Arkansas, Entergy Louisiana, and System Energy, respectively. Entergy Services and Entergy Operations provide their services to the Utility operating companies and System Energy on an “at cost” basis, pursuant to cost allocation methodologies for these service agreements that were approved by the FERC.
Jurisdictional Separation of Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and Entergy Texas
Effective December 31, 2007, Entergy Gulf States, Inc. completed a jurisdictional separation into two vertically integrated utility companies, one operating under the sole retail jurisdiction of the PUCT, Entergy Texas, and the other operating under the sole retail jurisdiction of the LPSC, Entergy Gulf States Louisiana. Entergy Texas owns all Entergy Gulf States, Inc. distribution and transmission assets located in Texas, the gas-fired generating plants located in Texas, undivided 42.5% ownership shares of Entergy Gulf States, Inc.’s 70% ownership interest in Nelson Unit 6 and 42% ownership interest in Big Cajun 2, Unit 3, which are coal-fired generating plants located in Louisiana, and other assets and contract rights to the extent related to utility operations in Texas. Entergy Louisiana, as successor in interest to Entergy Gulf States Louisiana, owns all of the remaining assets that were owned by Entergy Gulf States, Inc. On a book value basis, approximately 58.1% of the Entergy Gulf States, Inc. assets were allocated to Entergy Gulf States Louisiana and approximately 41.9% were allocated to Entergy Texas.
Entergy Texas purchases from Entergy Louisiana pursuant to a life-of-unit purchased power agreement a 42.5% share of capacity and energy from the 70% of River Bend subject to retail regulation. Entergy Texas was allocated a share of River Bend’s nuclear and environmental liabilities that is identical to the share of the plant’s output purchased by Entergy Texas under the purchased power agreement. In connection with the termination of the System Agreement effective August 31, 2016, the purchased power agreements that were put in place for certain legacy units at the time of the jurisdictional separation were also terminated at that time.
Entergy Louisiana and Entergy Gulf States Louisiana Business Combination
On October 1, 2015, the businesses formerly conducted by Entergy Louisiana (Old Entergy Louisiana) and Entergy Gulf States Louisiana (Old Entergy Gulf States Louisiana) were combined into a single public utility. In order to effect the business combination, under the Texas Business Organizations Code (TXBOC), Old Entergy Louisiana allocated substantially all of its assets to a new subsidiary, Entergy Louisiana Power, LLC, a Texas limited liability company (New Entergy Louisiana), and New Entergy Louisiana assumed the liabilities of Old Entergy Louisiana, in a transaction regarded as a merger under the TXBOC. Under the TXBOC, Old Entergy Gulf States Louisiana allocated substantially all of its assets to a new subsidiary (New Entergy Gulf States Louisiana) and New Entergy Gulf States Louisiana assumed the liabilities of Old Entergy Gulf States Louisiana, in a transaction regarded as a merger under the TXBOC. New Entergy Gulf States Louisiana then merged into New Entergy Louisiana with New Entergy Louisiana surviving the merger. Thereupon, Old Entergy Louisiana changed its name from “Entergy Louisiana, LLC” to “EL Investment Company, LLC” and New Entergy Louisiana changed its name from “Entergy Louisiana Power, LLC” to “Entergy Louisiana, LLC” (Entergy Louisiana). With the completion of the business combination, Entergy Louisiana holds substantially all of the assets, and has assumed the liabilities, of Old Entergy Louisiana and Old Entergy Gulf States Louisiana.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
Other Business Activities
Entergy’s non-utility operations business includes the ownership of interests in non-nuclear power plants that sell the electric power produced by those plants to wholesale customers. Entergy’s non-utility operations business also provides decommissioning-related services to nuclear power plants owned by non-affiliated entities.
Property
Entergy’s non-utility operations business owns interests in the following non-nuclear power plants:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Plant | | Location | | Ownership | | Net Owned Capacity (a) | | Type |
| Independence Unit 2; 842 MW | | Newark, AR | | 14% | | 121 MW(b) | | Coal |
| Nelson Unit 6; 550 MW | | Westlake, LA | | 11% | | 60 MW(b) | | Coal |
(a)“Net Owned Capacity” refers to the nameplate rating on the generating unit.
(b)The owned MW capacity is the portion of the plant capacity owned by Entergy’s non-utility operations business. For a complete listing of Entergy’s jointly-owned generating stations, refer to “Jointly-Owned Generating Stations” in Note 1 to the financial statements.
All generation owned by Entergy’s non-utility operations business falls under the authority of MISO. Customers for the sale of both energy and capacity from its owned generation and contracted power purchases include retail power providers, utilities, electric power co-operatives, power trading organizations, and other power generation companies. The majority of the non-utility operations businesses’ owned generation and contracted power purchases are sold under a cost-based contract.
TLG Services, a subsidiary in Entergy’s non-utility operations business, offers decommissioning, engineering, and related services to nuclear power plant owners.
Regulation of Entergy’s Business
Federal Power Act
The Federal Power Act provides the FERC the authority to regulate:
•the transmission and wholesale sale of electric energy in interstate commerce;
•the reliability of the high voltage interstate transmission system through reliability standards;
•sale or acquisition of certain assets;
•securities issuances;
•the licensing of certain hydroelectric projects;
•certain other activities, including accounting policies and practices of electric and gas utilities; and
•changes in control of FERC jurisdictional entities or rate schedules.
The Federal Power Act gives the FERC jurisdiction over the rates charged by System Energy for Grand Gulf capacity and energy provided to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. The FERC also has jurisdiction over the rates charged by Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas to unaffiliated wholesale customers. In addition, the FERC also regulates wholesale power sales between the Utility operating companies. Moreover, the FERC regulates the MISO RTO, an independent entity that maintains functional control over the combined transmission systems of its members and administers wholesale energy, capacity, and ancillary services markets for market participants in the MISO region, including the Utility operating companies. FERC regulation of the MISO RTO includes regulation of the design and implementation of the wholesale markets administered by the MISO RTO, as well as the rates, terms,
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
and conditions of open access transmission service over the member systems and the allocation of costs associated with transmission upgrades.
Entergy Arkansas holds a FERC license that expires in 2053 for two hydroelectric projects totaling 65 MW of capacity.
State Regulation
Utility
Entergy Arkansas is subject to regulation by the APSC as to the following:
•utility service;
•utility service areas;
•retail rates and charges, including depreciation rates;
•fuel cost recovery, including audits of the energy cost recovery rider;
•terms and conditions of service;
•service standards;
•the acquisition, sale, or lease of any public utility plant or property constituting an operating unit or system;
•certificates of convenience and necessity and certificates of environmental compatibility and public need, as applicable, for generating and transmission facilities;
•avoided cost payments to non-exempt Qualifying Facilities;
•net energy metering;
•integrated resource planning;
•utility mergers and acquisitions and other changes of control; and
•the issuance and sale of certain securities.
Additionally, Entergy Arkansas serves a limited number of retail customers in Tennessee. Pursuant to legislation enacted in Tennessee, Entergy Arkansas is subject to complaints before the Tennessee Regulatory Authority only if it fails to treat its retail customers in Tennessee in the same manner as its retail customers in Arkansas. Additionally, Entergy Arkansas maintains limited facilities in Missouri but does not provide retail electric service to customers in Missouri. Although Entergy Arkansas obtained a certificate with respect to its Missouri facilities, Entergy Arkansas is not subject to retail ratemaking jurisdiction in Missouri.
Entergy Louisiana’s electric and gas business is subject to regulation by the LPSC as to the following:
•utility service;
•retail rates and charges, including depreciation rates;
•fuel cost recovery, including audits of the fuel adjustment clause, environmental adjustment charge, and purchased gas adjustment charge;
•terms and conditions of service;
•service standards;
•certification of certain transmission projects;
•certification of capacity acquisitions, both for owned capacity and for purchase power contracts that exceed either 5 MW or one year in term;
•procurement process to acquire capacity at or above 50 MW;
•audits of the energy efficiency rider;
•avoided cost payment to non-exempt Qualifying Facilities;
•integrated resource planning;
•net energy metering; and
•utility mergers and acquisitions and other changes of control.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
Entergy Mississippi is subject to regulation by the MPSC as to the following:
•utility service;
•utility service areas;
•retail rates and charges, including depreciation rates;
•fuel cost recovery, including audits of the energy cost recovery mechanism;
•terms and conditions of service;
•service standards;
•certification of generating facilities, certain transmission projects, and certain distribution projects with construction costs greater than $10 million;
•avoided cost payments to non-exempt Qualifying Facilities;
•integrated resource planning;
•net energy metering; and
•utility mergers, acquisitions, and other changes of control.
Entergy Mississippi is also subject to regulation by the APSC as to the certificate of environmental compatibility and public need for the Independence Station, which is located in Arkansas.
Entergy New Orleans is subject to regulation by the City Council as to the following:
•utility service;
•retail rates and charges, including depreciation rates;
•fuel cost recovery, including audits of the fuel adjustment charge and purchased gas adjustment charge;
•terms and conditions of service;
•service standards;
•audit of the environmental adjustment charge;
•certification of the construction or extension of any new plant, equipment, property, or facility that comprises more than 2% of the utility’s rate base;
•integrated resource planning;
•net energy metering;
•avoided cost payments to non-exempt Qualifying Facilities;
•issuance and sale of certain securities; and
•utility mergers and acquisitions and other changes of control.
To the extent authorized by governing legislation, Entergy Texas is subject to the original jurisdiction of the municipal authorities of a number of incorporated cities in Texas with appellate jurisdiction over such matters residing in the PUCT. Entergy Texas is also subject to regulation by the PUCT as to the following:
•retail rates and charges, including depreciation rates, and terms and conditions of service in unincorporated areas of its service territory, and in municipalities that have ceded jurisdiction to the PUCT;
•fuel recovery, including reconciliations (audits) of the fuel adjustment charges;
•service standards;
•certification of certain transmission and generation projects;
•utility service areas, including extensions into new areas;
•avoided cost payments to non-exempt Qualifying Facilities;
•net energy metering; and
•utility mergers, sales/acquisitions/leases of plants over $10 million, sales of greater than 50% voting stock of utilities, and transfers of controlling interest in or operation of utilities.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
Regulation of the Nuclear Power Industry
Atomic Energy Act of 1954 and Energy Reorganization Act of 1974
Under the Atomic Energy Act of 1954 and the Energy Reorganization Act of 1974, the operation of nuclear plants is heavily regulated by the NRC, which has broad power to impose licensing and safety-related requirements. The NRC has broad authority to impose civil penalties or shut down a unit, or both, depending upon its assessment of the severity of the situation, until compliance is achieved. Entergy Arkansas, Entergy Louisiana, and System Energy, as owners of all or portions of ANO, River Bend and Waterford 3, and Grand Gulf, respectively, and Entergy Operations, as the licensee and operator of these units, are subject to the jurisdiction of the NRC.
Nuclear Waste Policy Act of 1982
Spent Nuclear Fuel
Under the Nuclear Waste Policy Act of 1982, the DOE is required, for a specified fee, to construct storage facilities for, and to dispose of, all spent nuclear fuel and other high-level radioactive waste generated by domestic nuclear power reactors. Entergy’s nuclear owner/licensee subsidiaries have been charged fees for the estimated future disposal costs of spent nuclear fuel in accordance with the Nuclear Waste Policy Act of 1982. The affected Entergy companies entered into contracts with the DOE, whereby the DOE is to furnish disposal services at a cost of one mill per net kWh generated and sold after April 7, 1983, plus a one-time fee for generation prior to that date. Entergy Arkansas is the only one of the Utility operating companies that generated electric power with nuclear fuel prior to that date and has a recorded liability as of December 31, 2024 of $216 million for the one-time fee. The fees payable to the DOE may be adjusted in the future to assure full recovery. Entergy considers all costs incurred for the disposal of spent nuclear fuel, except accrued interest, to be proper components of nuclear fuel expense. Provisions to recover such costs have been or will be made in applications to regulatory authorities for the Utility plants. Entergy’s total spent fuel fees to date, including the one-time fee liability of Entergy Arkansas, have surpassed $1.7 billion (exclusive of amounts relating to Entergy plants that were paid or are owed by prior owners of those plants).
The permanent spent fuel repository in the U.S. has been legislated to be Yucca Mountain, Nevada. The DOE is required by law to proceed with the licensing of the Yucca Mountain repository (the DOE filed the license application in June 2008) and, after the license is granted by the NRC, proceed with the repository construction and commencement of receipt of spent fuel. Because the DOE has not begun accepting spent fuel, it is in non-compliance with the Nuclear Waste Policy Act of 1982 and is in partial breach of its spent fuel disposal contracts. The DOE continues to delay meeting its obligation. Specific steps were taken to discontinue the Yucca Mountain project, including a motion to the NRC to withdraw the license application with prejudice and the establishment of a commission to develop recommendations for alternative spent fuel storage solutions. In August 2013 the U.S. Court of Appeals for the D.C. Circuit ordered the NRC to continue with the Yucca Mountain license review, but only to the extent of funds previously appropriated by Congress for that purpose and not yet used. Although the NRC completed the safety evaluation report for the license review in 2015, the previously appropriated funds are not sufficient to complete the review, including required hearings. The government has taken no effective action to date related to the recommendations of the appointed spent fuel study commission. Accordingly, large uncertainty remains regarding the time frame under which the DOE will begin to accept spent fuel from Entergy’s facilities for storage or disposal. As a result, continuing future expenditures will be required to increase spent fuel storage capacity at Entergy’s nuclear sites.
Following the defunding of the Yucca Mountain spent fuel repository program, the National Association of Regulatory Utility Commissioners and others sued the government seeking cessation of collection of the one mill per net kWh generated and sold after April 7, 1983 fee. In November 2013 the D.C. Circuit ordered the DOE to submit a proposal to Congress to reset the fee to zero until the DOE complies with the Nuclear Waste Policy Act or
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
Congress enacts an alternative waste disposal plan. In January 2014 the DOE submitted the proposal to Congress under protest, and also filed a petition for rehearing with the D.C. Circuit. The petition for rehearing was denied. The zero spent fuel fee went into effect prospectively in May 2014.
As a result of the DOE’s failure to begin disposal of spent nuclear fuel in 1998 pursuant to the Nuclear Waste Policy Act of 1982 and the spent fuel disposal contracts, Entergy’s nuclear owner/licensee subsidiaries have incurred and will continue to incur damages. These subsidiaries have been, and continue to be, involved in litigation to recover the damages caused by the DOE’s delay in performance. See Note 8 to the financial statements for discussion of final judgments recorded by Entergy in 2022, 2023, and 2024 related to Entergy’s nuclear owner/licensee subsidiaries’ litigation with the DOE. Through 2024, Entergy’s subsidiaries have won and collected on judgments against the government totaling approximately $1.2 billion.
Pending DOE acceptance and disposal of spent nuclear fuel, the owners of nuclear plants are providing their own spent fuel storage. Storage capability additions using dry casks began operations at ANO in 1996, at River Bend in 2005, at Grand Gulf in 2006, and at Waterford 3 in 2011. These facilities will be expanded as needed.
Nuclear Plant Decommissioning
Entergy Arkansas, Entergy Louisiana, and System Energy are entitled to recover from customers through electric rates the estimated decommissioning costs for ANO, Waterford 3, and Grand Gulf, respectively. In addition, Entergy Louisiana and Entergy Texas are entitled to recover from customers through electric rates the estimated decommissioning costs for the portion of River Bend subject to retail rate regulation. The collections are deposited in trust funds that can only be used in accordance with NRC and other applicable regulatory requirements. Entergy periodically reviews and updates the estimated decommissioning costs to reflect inflation and changes in regulatory requirements and technology, and then makes applications to the regulatory authorities to reflect, in rates, the changes in projected decommissioning costs.
In December 2018 the APSC ordered collections in rates for decommissioning ANO 2 and found that ANO 1’s decommissioning was adequately funded without additional collections. In November 2021, Entergy Arkansas filed a revised decommissioning cost recovery tariff for ANO indicating that both ANO 1 and 2 decommissioning trusts were adequately funded without further collections, and in December 2021 the APSC ordered zero collections for ANO 1 and 2 decommissioning. In November 2022, Entergy Arkansas filed a revised decommissioning cost recovery tariff for ANO indicating that ANO 1’s decommissioning trust was adequately funded, but that ANO 2’s fund had a projected shortage as a result of a decline in decommissioning trust fund investment values over the past year. The filing proposed a reinstatement of decommissioning cost recovery for ANO 2. In December 2022 the APSC ordered reinstatement of decommissioning collections for ANO 2 in accordance with the request in the November 2022 filing. In November 2023, Entergy Arkansas filed a further revised decommissioning cost recovery tariff for ANO indicating that ANO 1’s decommissioning trust continued to be adequately funded, but that ANO 2’s fund continued to require collections higher than those in effect. In December 2023 the APSC approved the proposed higher decommissioning collections for ANO 2. In October 2024, Entergy Arkansas filed a revised cost recovery tariff indicating the decommissioning trusts for both ANO 1 and 2 were adequately funded and proposing suspension of decommissioning collections for both ANO 1 and 2. In December 2024 the APSC approved suspension of decommissioning collections for both ANO 1 and 2.
In July 2010 the LPSC approved increased decommissioning collections for Waterford 3 and the Louisiana regulated share of River Bend to address previously identified funding shortfalls. This LPSC decision contemplated that the level of decommissioning collections could be revisited should the NRC grant license extensions for both Waterford 3 and River Bend. In July 2021, Entergy Louisiana made a filing with the LPSC to adjust Waterford 3 and River Bend decommissioning collections based on the latest site-specific decommissioning cost estimates for those plants. The filing sought to increase Waterford 3 decommissioning collections and decrease River Bend decommissioning collections. In August 2023, Entergy Louisiana made another filing with the LPSC requesting to maintain the same total decommissioning funding collections as currently in effect for both Waterford 3 and River
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
Bend combined, but also requesting to reallocate that same amount of funding by increasing the contributions for Waterford 3 and reducing the contributions for River Bend. In August 2024 the LPSC approved a stipulation settling the case involving Waterford 3 and River Bend decommissioning. The stipulation, among other things, increased Waterford 3 decommissioning collections and decreased River Bend decommissioning collections, as requested.
In December 2010 the PUCT approved increased decommissioning collections for the Texas share of River Bend to address previously identified funding shortfalls. In December 2018 the PUCT approved a settlement that eliminated River Bend decommissioning collections for the Texas jurisdictional share of the plant based on a determination by Entergy Texas that the existing decommissioning fund was adequate following license renewal. In July 2022, Entergy Texas filed a base rate case that proposed continuation of the cessation of River Bend decommissioning collections. In May 2023, Entergy Texas filed on behalf of the parties to the base rate case an unopposed settlement, which included an agreement to maintain Entergy Texas’s decommissioning funding for River Bend at a revenue requirement of $0. In August 2023 the PUCT issued an order accepting the unopposed settlement, including the proposed decommissioning funding settlement terms.
In December 2016 the NRC issued a 20-year operating license renewal for Grand Gulf. In a 2017 filing at the FERC, System Energy stated that with the renewed operating license, Grand Gulf’s decommissioning trust was sufficiently funded, and proposed, among other things, to cease decommissioning collections for Grand Gulf effective October 1, 2017. The FERC accepted a settlement including the proposed decommissioning revenue requirement by letter order in August 2018.
Entergy currently believes its decommissioning funding will be sufficient for its nuclear plants subject to retail rate regulation, although decommissioning cost inflation and trust fund performance will ultimately determine the adequacy of the funding amounts.
Plant owners are required to provide the NRC with a biennial report (annually for units that have shut down or will shut down within five years), based on values as of December 31, addressing the owners’ ability to meet the NRC minimum funding levels. Depending on the value of the trust funds, plant owners may be required to take steps, such as providing financial guarantees through letters of credit or parent company guarantees or making additional contributions to the trusts, to ensure that the trusts are adequately funded and that NRC minimum funding requirements are met. In March 2023 filings with the NRC were made reporting on decommissioning funding for all of Entergy’s subsidiaries’ nuclear plants. Those reports showed that decommissioning funding for each of the nuclear plants met the NRC’s financial assurance requirements.
Additional information with respect to Entergy’s decommissioning costs and decommissioning trust funds is found in Note 9 and Note 16 to the financial statements.
Price-Anderson Act
The Price-Anderson Act requires that reactor licensees purchase and maintain the maximum amount of nuclear liability insurance available and participate in an industry assessment program called Secondary Financial Protection in order to protect the public in the event of a nuclear power plant accident. The costs of this insurance are borne by the nuclear power industry. Congress passed legislation in 2024 extending the Price-Anderson Act for a term through 2065. The Price-Anderson Act limits the contingent liability for a single nuclear incident to a maximum assessment of approximately $165.9 million per reactor (with 95 nuclear industry reactors currently participating). In the case of a nuclear event in which Entergy Arkansas, Entergy Louisiana, or System Energy is liable, protection is afforded through a combination of insurance and the Secondary Financial Protection program. In addition to this, insurance for property damage, costs of replacement power, and other risks relating to nuclear generating units is also purchased. The Price-Anderson Act and insurance applicable to the nuclear programs of Entergy are discussed in more detail in Note 8 to the financial statements.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
NRC Reactor Oversight Process
The NRC’s Reactor Oversight Process is a program to collect information about plant performance, assess the information for its safety significance, and provide for appropriate licensee and NRC response. The NRC evaluates plant performance by analyzing two distinct inputs: inspection findings resulting from the NRC’s inspection program and performance indicators reported by the licensee. The evaluations result in the placement of each plant in one of the NRC’s Reactor Oversight Process Action Matrix columns: “licensee response column,” or Column 1, “regulatory response column,” or Column 2, “degraded cornerstone column,” or Column 3, “multiple/repetitive degraded cornerstone column,” or Column 4, and “unacceptable performance,” or Column 5. Plants in Column 1 are subject to normal NRC inspection activities. Plants in Column 2, Column 3, or Column 4 are subject to progressively increasing levels of inspection by the NRC with, in general, progressively increasing levels of associated costs. Continued plant operation is not permitted for plants in Column 5. All of the nuclear generating plants owned and operated by Entergy’s Utility business are currently in Column 1.
Environmental Regulation
Entergy’s facilities and operations are subject to regulation by various governmental authorities having jurisdiction over air quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental matters. Management believes that Entergy’s businesses are in substantial compliance with environmental regulations currently applicable to its facilities and operations, with reference to possible exceptions noted below. Because environmental regulations are subject to change, future compliance requirements and costs cannot be precisely estimated. Except to the extent discussed below, at this time compliance with federal, state, and local provisions regulating the discharge of materials into the environment, or otherwise protecting the environment, is incorporated into the routine cost structure of Entergy’s businesses and is not expected to have a material effect on their competitive position, results of operations, cash flows, or financial position.
Clean Air Act and Subsequent Amendments
The Clean Air Act and its amendments establish several programs that currently or in the future may affect Entergy’s fossil-fueled generation facilities and, to a lesser extent, certain operations at nuclear and other facilities. Individual states also operate similar independent state programs or delegated federal programs that may include requirements more stringent than federal regulatory requirements. These programs include:
•new source review and preconstruction permits for new sources of criteria air pollutants, greenhouse gases, and significant modifications to existing facilities;
•acid rain program for control of sulfur dioxide (SO2) and nitrogen oxides (NOx);
•nonattainment area programs for control of criteria air pollutants, which could include fee assessments for air pollutant emission sources under Section 185 of the Clean Air Act if attainment is not reached in a timely manner;
•hazardous air pollutant emissions reduction programs;
•interstate air transport;
•operating permit programs and enforcement of these and other Clean Air Act programs;
•regional haze programs; and
•new and existing source standards for greenhouse gas and other air emissions.
National Ambient Air Quality Standards
The Clean Air Act requires the EPA to set National Ambient Air Quality Standards (NAAQS) for ozone, carbon monoxide, lead, nitrogen dioxide, particulate matter, and sulfur dioxide and requires periodic review of those standards. When an area fails to meet an ambient standard, it is considered to be in nonattainment and is classified as “marginal,” “moderate,” “serious,” or “severe.” When an area fails to meet the ambient air standard, the EPA
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
requires state regulatory authorities to prepare state implementation plans meant to cause progress toward bringing the area into attainment with applicable standards.
Ozone Nonattainment
Entergy Texas operates two fossil-fueled generating facilities (Lewis Creek and Montgomery County Power Station) in a geographic area that is not in attainment with the applicable NAAQS for ozone. The ozone nonattainment area that affects Entergy Texas is the Houston-Galveston-Brazoria area. Both Lewis Creek and the Montgomery County Power Station hold all necessary permits for operation and comply with applicable air quality program regulations. Measures enacted to return the area to ozone attainment could make these program regulations more stringent. Entergy will continue to work with state environmental agencies on appropriate methods for assessing attainment and nonattainment with the ozone NAAQS.
Revised Fine Particulate (PM2.5) NAAQS
In March 2024 the EPA issued a final rule which revised the primary annual NAAQS for fine particulate matter, also known as PM2.5, from 12 ug/m3 to 9 ug/m3. This new standard was effective May 2024 and initial attainment/nonattainment designations for areas with available information are due within two years, by May 2026. For any areas designated as nonattainment for this revised standard, State Implementation Plans (SIPs) to address nonattainment requirements will be due within 18 months of the effective date of any initial nonattainment designations. Within the areas in which the Utility operating companies operate, regulatory agency air monitor data from 2021-2023 for Pulaski County and Union County, Arkansas, West Baton Rouge Parish, Louisiana, Harris County, Texas and Hinds County, Mississippi reflect annual average PM2.5 concentrations in excess of this new standard and monitors for several other areas reflect concentrations between 8-9 ug/m3. Initial attainment and nonattainment designations will be based on data from 2022-2024. Entergy will continue to work with state environmental agencies on appropriate methods for assessing attainment and nonattainment with this revised fine particulate NAAQS.
Hazardous Air Pollutants
The EPA released the final Mercury and Air Toxics Standard (MATS) rule in December 2011, which had a compliance date, with a widely granted one-year extension, of April 2016. The required controls have been installed and are operational at all affected Entergy units. In May 2024 the EPA issued a final rule revising portions of the MATS rule, including a reduction to the emission limit for filterable particulate matter. The revised standard will become effective July 2027 and could require additional capital investment and/or additional other operation and maintenance costs at Entergy’s coal-fired generating units. An additional one-year extension is possible for the installation of controls, if necessary. Entergy is currently evaluating its coal units to determine whether additional controls are necessary to comply with this new lower limit.
Good Neighbor Plan/Cross-State Air Pollution Rule
In March 2005 the EPA finalized the Clean Air Interstate Rule (CAIR), which was intended to reduce SO2 and NOx emissions from electric generation plants in order to improve air quality in twenty-nine eastern states. The rule required a combination of capital investment to install pollution control equipment and increased operating costs through the purchase of emission allowances. Entergy began implementation in 2007, including installation of controls at several facilities and the development of an emission allowance procurement strategy. Based on several court challenges, CAIR and its subsequent versions, now known as the Cross-State Air Pollution Rule (CSAPR), have been remanded to and modified by the EPA on multiple occasions.
In June 2023 the EPA published its final Federal Implementation Plan (FIP), known as the Good Neighbor Plan, to address interstate transport for the 2015 ozone NAAQS which would increase the stringency of the CSAPR program in all four of the states where the Utility operating companies operate. The FIP would significantly reduce
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
ozone season NOx emission allowance budgets and allocations for electric generating units. Prior to issuance of the FIP, in February 2023 the EPA issued related SIP disapprovals for many states, including the four states in which the Utility operating companies operate, and these SIP disapprovals are the subject of many legal challenges, including a petition for review filed by Entergy Louisiana challenging the disapproval of Louisiana’s SIP. Stays of the SIP disapprovals have been granted in all four states in which the Utility operating companies operate, and the FIP will not go into effect while the stays are in place. Decisions on the merits regarding the respective SIP disapprovals are expected in 2025. The FIP is also subject to numerous legal challenges in various federal circuit courts of appeals, and in June 2024 the U.S. Supreme Court issued an order, in challenges filed in the D.C. Circuit, staying enforcement of the FIP pending the D.C. Circuit’s review of the rule. Entergy is monitoring this litigation and assessing its compliance options in the event that the FIP becomes effective.
Regional Haze
In June 2005 the EPA issued its final Clean Air Visibility Rule (CAVR) regulations that potentially could result in a requirement to install SO2 and NOx pollution control technology as Best Available Retrofit Control Technology to continue operating certain of Entergy’s fossil generation units. The rule leaves certain CAVR determinations to the states. This rule establishes a series of 10-year planning periods, with states required to develop SIPs for each planning period, with each SIP including such air pollution control measures as may be necessary to achieve the ultimate goal of the CAVR by the year 2064. The various states are currently in the process of developing SIPs to implement the second planning period of the CAVR, which addresses the 2018-2028 planning period.
The second planning period (2018-2028) for the regional haze program requires states to examine sources for impacts on visibility and to prepare SIPs by July 31, 2021 to ensure reasonable progress is being made to attain visibility improvements. Entergy received information collection requests from the Arkansas and Louisiana Departments of Environmental Quality requesting an evaluation of technical and economic feasibility of various NOx and SO2 control technologies for Independence, Nelson 6, NISCO, and Ninemile. Responses to the information collection requests were submitted to the respective state agencies. Louisiana issued its draft SIP which did not propose any additional air emissions controls for the affected Entergy units in Louisiana. Some public commenters, however, believe additional air controls are cost-effective. In August 2024, Louisiana issued a revised SIP proposal for public comment. The revised proposed SIP would not require any additional pollution control installations on any Entergy-owned units in Louisiana. Comments on the revised SIP were due in September 2024 and the Louisiana Department of Environmental Quality (LDEQ) is currently reviewing comments received on the revised proposal. The agency, like many other state agencies, did not meet the July 31, 2021 deadline to submit a SIP to the EPA for review.
Similar to the LDEQ, the Arkansas Department of Energy and Environment, Division of Environmental Quality (ADEQ) did not meet the July 31, 2021 SIP submission deadline, but subsequently submitted a final SIP to the EPA for review. The ADEQ reviewed Entergy’s Independence plant but determined that additional air emission controls would not be cost-effective considering the facility’s commitment to cease coal-fired combustion by December 31, 2030.
The Texas Commission on Environmental Quality has completed its second-planning period SIP and submitted it to the EPA for review. There were no Entergy sources selected for additional emission controls. In June 2024, the EPA entered into a consent decree that sets deadlines for the EPA to take final action on 34 states’ SIP submittals. This includes Arkansas and Texas, which are due August 2026 and May 2025, respectively.
The Mississippi Department of Environmental Quality also did not meet the July 31, 2021 SIP submission deadline. In June 2023 Mississippi issued its proposed SIP for public notice and comment but did not propose additional pollution controls for Entergy sources.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
In August 2022 the EPA issued findings of failure to submit regional haze SIPs to 15 states, including Louisiana and Mississippi. These findings were effective September 2022, which started the two-year period for the EPA to either approve a SIP submitted by the state or issue a final federal plan. That two-year period expired in September 2024, but EPA has not yet proposed a FIP for Louisiana or Mississippi.
Greenhouse Gas Emissions
In May 2024 the EPA finalized rules regulating greenhouse gas emissions from new combustion turbine electric generating units (EGUs) under Section 111(b) of the Clean Air Act and from certain existing coal- and gas-fired EGUs under Section 111(d) of the Clean Air Act.
For new gas combustion turbine EGUs, the final rule includes three subcategories of emission standards based on the unit’s annual capacity factor. Applicable emission standards for each subcategory are: a heat-input based CO2 emission standard for low load (<20% annual capacity factor) EGUs; an output-based CO2 efficiency standard for intermediate load (>20% but <40% annual capacity factor) EGUs; and, for base load (>40% annual capacity factor) EGUs, a Phase 1 output-based CO2 efficiency standard followed by a more stringent Phase 2 CO2 standard which will apply beginning January 1, 2032. The Phase 2 standard was established based on an EPA determination that carbon capture and sequestration represents the best system of emission reduction for new base load combustion turbine EGUs. The final rule allows for a possible one-year extension to the compliance date for the Phase 2 standard in circumstances where a source faces a delay in installation of controls due to factors outside of the control of the EGU owner/operator.
For existing generating units, the final rule includes emission guidelines issued under Section 111(d) of the Clean Air Act and allows states two years to develop a plan to implement the new emission guidelines with respect to subject emission units within their state. The final emission guidelines require reductions in CO2 emissions from existing coal-fired generating units which plan to operate beyond January 1, 2032 and exempts coal-fired units which plan to permanently cease operations prior to this date. Due to Entergy’s commitment to cease burning coal by the end of 2030, Entergy’s coal-fired generating units are expected to be exempt from this aspect of the final rule. The emission guidelines also include CO2 efficiency standards for existing gas-fired steam EGUs. These emission standards will apply beginning January 1, 2030. Entergy’s existing gas-fired steam generating units are expected to meet these CO2 emission standards. The EPA did not finalize emission guidelines for existing gas turbine EGUs and has announced plans to conduct a subsequent rulemaking for such units. Numerous lawsuits were filed in the D.C. Circuit challenging the final rule, and oral argument was held in December 2024. Entergy continues to monitor the status of the litigation.
Entergy continues to support national legislation that would most efficiently reduce economy-wide greenhouse gas emissions and increase planning certainty for electric utilities. By virtue of its proportionally large investment in low-emitting generation technologies, Entergy has a low overall carbon dioxide emission “intensity,” or rate of carbon dioxide emitted per megawatt-hour of electricity generated. In anticipation of the imposition of carbon dioxide emission limits on the electric industry, Entergy initiated actions designed to reduce its exposure to potential new governmental requirements related to carbon dioxide emissions. These voluntary actions included a formal program to stabilize owned power plant carbon dioxide emissions at 2000 levels through 2005, and Entergy succeeded in reducing emissions below 2000 levels. In 2006, Entergy started including emissions from controllable power purchases in addition to its ownership share of generation and established a second formal voluntary program to stabilize power plant carbon dioxide emissions and emissions from controllable power purchases, cumulatively over the period, at 20% below 2000 levels through 2010. In 2011, Entergy extended this commitment through 2020, which it ultimately outperformed by approximately 8% both cumulatively and on an annual basis. In 2019, in connection with a climate scenario analysis following the recommendations of the Task Force on Climate-related Financial Disclosures describing climate-related governance, strategy, risk management, and metrics and targets, Entergy announced a 2030 carbon dioxide emission rate goal focused on a 50% reduction from Entergy’s base year - 2000.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
In September 2020, Entergy announced a commitment to achieve net-zero greenhouse gas emissions by 2050 inclusive of all businesses, all applicable gases, and all emission scopes. In 2022, Entergy enhanced its commitment to include an interim goal of 50% carbon-free energy generating capacity by 2030 and expanded its interim emission rate goal to include all purchased power. Due to stronger than initially expected sales growth, likely necessitating the development of new generation capacity that is not carbon-free, Entergy expects that achievement of the 50% carbon-free energy generating capacity goal will be delayed for a period beyond 2030 that has not yet been determined. In addition, while current planning assumptions indicate the 2030 emission rate goal remains achievable, its achievement could also be challenged as a result of the forecasted and future sales growth. See “Risk Factors” in Part I, Item 1A for discussion of the risks associated with achieving these climate goals. Entergy’s comprehensive, third party verified greenhouse gas inventory and progress against its voluntary goals are published on its website.
Potential Legislative, Regulatory, and Judicial Developments
In addition to the specific instances described above, there are a number of legislative and regulatory initiatives that are or have recently been under consideration at the federal, state, and local level. Because of the nature of Entergy’s business, the imposition of any of these initiatives could affect Entergy’s operations. Entergy continues to monitor these initiatives and activities in order to analyze their potential operational and cost implications. These initiatives have included:
•reconsideration and revision of ambient air quality standards downward which could lead to additional areas of nonattainment;
•designation by the EPA and state environmental agencies of areas that are not in attainment with national ambient air quality standards;
•introduction of bills in Congress and development of regulations by the EPA proposing further limits on SO2, mercury, carbon dioxide, and other air emissions. New legislation or regulations applicable to stationary sources could take the form of market-based cap-and-trade programs, direct requirements for the installation of air emission controls onto air emission sources, or other or combined regulatory programs;
•efforts in Congress or at the EPA to establish a federal carbon dioxide emission tax, control structure, or unit performance standards;
•revisions to the estimates of the Social Cost of Carbon and its use for regulatory impact analysis of federal laws and regulations;
•implementation of the regional cap and trade programs to limit carbon dioxide and other greenhouse gases;
•efforts on the local, state, and federal level to codify renewable portfolio standards, clean energy standards, or a similar mechanism requiring utilities to produce or purchase a certain percentage of their power from defined renewable energy sources or energy sources with lower emissions;
•efforts to develop more stringent state water quality standards, effluent limitations for Entergy’s industry sector, stormwater runoff control regulations, and cooling water intake structure requirements;
•efforts to restrict the previously-approved continued use of oil-filled equipment containing certain levels of polychlorinated biphenyls (PCBs) and increased regulation of per- and polyfluorinated substances or other chemicals;
•efforts by certain external groups to encourage reporting and disclosure of environmental, social, and governance risk;
•the listing of additional species as threatened or endangered, the protection of critical habitat for these species, and developments in the legal protection of eagles and migratory birds;
•the regulation of the management, disposal, and beneficial reuse of coal combustion residuals; and
•the regulation of the management and disposal and recycling of equipment associated with renewable and clean energy sources such as used solar panels, wind turbine blades, hydrogen usage, or battery storage.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
The Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (CERCLA), authorizes the EPA to mandate clean-up by, or to collect reimbursement of clean-up costs from, owners or operators of sites at which hazardous substances may be or have been released. Certain private parties also may use CERCLA to recover response costs. Parties that transported hazardous substances to these sites or arranged for the disposal of the substances are also deemed liable by CERCLA. CERCLA has been interpreted to impose strict, joint, and several liability on responsible parties. Many states have adopted programs similar to CERCLA. Entergy subsidiaries have sent waste materials to various disposal sites over the years, and releases have occurred at Entergy facilities including nuclear facilities that have been sold to decommissioning companies. In addition, environmental laws now regulate certain of Entergy’s operating procedures and maintenance practices that historically were not subject to regulation. Some disposal sites used by Entergy subsidiaries have been the subject of governmental action under CERCLA or similar state programs, resulting in site clean-up activities. Entergy subsidiaries have participated to various degrees in accordance with their respective potential liabilities in such site clean-ups and have developed experience with clean-up costs. The affected Entergy subsidiaries have established provisions for the liabilities for such environmental clean-up and restoration activities. Details of potentially material CERCLA and similar state program liabilities are discussed in the “Other Environmental Matters” section below.
Coal Combustion Residuals
In April 2015 the EPA published the final coal combustion residuals (CCR) rule (2015 CCR Rule) regulating CCRs destined for disposal in landfills or surface impoundments as non-hazardous wastes regulated under Resource Conservation and Recovery Act Subtitle D. The final regulations created new compliance requirements including modified storage, new notification and reporting practices, product disposal considerations, and CCR unit closure criteria but excluded CCRs that are beneficially reused in certain processes. Entergy believes that on-site disposal options will be available at its facilities, to the extent needed.
Pursuant to the 2015 CCR Rule, Entergy operates groundwater monitoring systems surrounding its CCR landfills located at White Bluff, Independence, and Nelson. Monitoring to date has detected concentrations of certain listed constituents in the area but has not indicated that these constituents originated at the active landfill cells. Reporting and detection monitoring will continue as the rule requires. In late-2017, Entergy determined that certain in-ground wastewater treatment system recycle ponds at its White Bluff and Independence facilities required management under the 2015 CCR Rule. Consequently, in order to move away from using the recycle ponds, White Bluff and Independence each installed a new permanent bottom ash handling system. As of November 2020, both sites are operating the new system and no longer are sending waste to the recycle ponds. Each site commenced closure of its two recycle ponds (four ponds total) prior to the April 11, 2021 deadline for unlined recycle ponds and the ponds were certified closed in October 2023.
In May 2024 the EPA finalized a rule (2024 CCR Rule) establishing management standards for legacy CCR surface impoundments (i.e., inactive surface impoundments at inactive power plants) and establishing a new class of units referred to as CCR management units (CCRMUs) (i.e., non-containerized CCR located at a regulated CCR facility). CCR utilized in roadbeds and embankments is excluded from the CCRMU definition. Entergy does not have any legacy impoundments; however, the definition of CCR management units includes on-site areas where CCR was beneficially used. This is contrary to the 2015 CCR Rule which exempted beneficial uses that met certain criteria. Under this expanded rule, all facilities must identify and delineate any CCRMU greater than one ton and submit a facility evaluation report by February 2026. Any potential requirements for corrective action or operational changes under the 2015 CCR Rule and the 2024 CCR Rule continue to be assessed. Notably, ongoing litigation has resulted in the EPA’s continuing review of the rules. Consequently, the nature and cost of additional corrective action requirements may depend, in part, on the outcome of the litigation and further EPA review. Given the complexity and recency of the EPA guidance, Entergy is still evaluating the level of work that will ultimately be required to comply with the 2024 CCR Rule. Based on initial estimates of multiple possible remediation scenarios, Entergy recorded in 2024 a $42 million increase in its decommissioning cost liabilities for White Bluff and
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
Independence, along with corresponding increases in the related asset retirement cost assets that will be depreciated over the remaining useful lives of the unit. Entergy will continue to update the asset retirement obligation as the requirements of the 2024 CCR Rule are clarified. As of December 31, 2024, Entergy has recorded asset retirement obligations related to CCR management of $73 million. Additionally, all three sites (White Bluff, Independence, and Nelson) are preparing to implement measures to meet the new and updated Effluent Limitation Guidelines discussed below.
Clean Water Act
The 1972 amendments to the Federal Water Pollution Control Act (known as the Clean Water Act) provide the statutory basis for the National Pollutant Discharge Elimination System permit program, section 402, and the basic structure for regulating the discharge of pollutants from point sources to waters of the United States. The Clean Water Act requires virtually all discharges of pollutants to waters of the United States to be permitted. Section 316(b) of the Clean Water Act regulates cooling water intake structures, section 401 of the Clean Water Act requires a water quality certification from the state in support of certain federal actions and approvals, and section 404 of the Clean Water Act regulates the dredge and fill of waters of the United States, including jurisdictional wetlands.
Federal Jurisdiction of Waters of the United States
In June 2020 the EPA’s revised definition of waters of the United States in the Navigable Waters Protection Rule (NWPR) became effective, narrowing the scope of Clean Water Act jurisdiction, as compared to a 2015 definition which had been stayed by several federal courts. In August 2021 a federal district court vacated and remanded the NWPR for further consideration. The EPA and the U.S. Army Corps of Engineers (Corps) subsequently issued a statement that the agencies would revert to pre-2015 regulations pending a new rulemaking. In December 2022 the EPA and the Corps released a final definition of waters of the United States (the 2022 Rule) that replaces the NWPR with a definition that is consistent with the pre-2015 regulatory regime as interpreted by several United States Supreme Court decisions. The 2022 Rule was subject to multiple legal challenges and was enjoined from implementation or enforcement throughout Entergy’s utility service territory. In May 2023 the U.S. Supreme Court issued a decision limiting the scope of federal jurisdiction over wetlands, and in September 2023 the EPA and the Corps issued a final rule incorporating the Supreme Court decision. Most notably, the exclusion for waste treatment systems is retained.
Effluent Limitation Guidelines
The 2015 Steam Electric Effluent Limitations Guidelines required, among other things, that there be no discharge of bottom ash transport water. In 2020 the EPA finalized the Reconsideration Rule, allowing limited discharges of bottom ash transport water up to 10% of system volume, under certain defined circumstances including significant (10-year, 24-hour) rain events. The 2020 rule also created a subcategory for units that permanently cease coal combustion by December 31, 2028. Entergy’s White Bluff facility filed a notice of planned participation for this subcategory in October 2021. In May 2024 the EPA finalized a supplemental rule that retains the “retirement by 2028” subcategory, creates a new “retirement by 2034” subcategory, otherwise reinstates the zero-discharge requirement for bottom ash transport water, and imposes new requirements for leachate after the facility ceases to burn coal. Thus, units which permanently cease combustion of coal by December 31, 2028 or December 31, 2034 are exempt from the zero-discharge requirement. However, for units in the 2034 subcategory, the 10% discharge allowance must be incorporated into the facility’s discharge permit. To be covered by this exemption, both Independence and Nelson Unit 6 will need to file Notices of Planned Participation in the 2034 subcategory by December 31, 2025. To help ensure facilities cease combustion of coal by the required subcategory 2028 and 2034 dates, zero discharge of bottom ash transport water is required after April 30, 2029 and April 30, 2035, respectively. Entergy continues to evaluate the compliance pathways and obligations of this rule.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
Other Environmental Matters
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy Texas
The EPA notified Entergy that the EPA believes Entergy is a PRP concerning PCB contamination at the F.J. Doyle Salvage facility in Leonard, Texas. The facility operated as a scrap salvage business during the 1970s to the 1990s. In May 2018 the EPA investigated the site surface and sub-surface soils, and in November 2018 the EPA conducted a removal action, including disposal of PCB contaminated soils. Entergy responded to the EPA’s information requests in May and July 2019. In November 2020 the EPA sent Entergy and other PRPs a demand letter seeking reimbursement for response costs totaling $4 million expended at the site. Liability and PRP allocation of response costs are yet to be determined. In December 2020, Entergy responded to the demand letter, without admitting liability or waiving any rights, indicating that it would engage in good faith negotiations with the EPA with respect to the demand. An initial meeting between the EPA and the PRPs took place in June 2021. Negotiations between the PRPs and the EPA are ongoing.
Litigation
Entergy and its subsidiaries use legal and appropriate means to contest litigation threatened or filed against them, but the states in which Entergy and the Registrant Subsidiaries operate have proven to be unusually litigious environments. Judges and juries in these states have demonstrated a willingness to grant large verdicts, including punitive damages, to plaintiffs in personal injury, property damage, and business tort cases. The litigation environment in these states poses a significant business risk to Entergy.
Asbestos Litigation (Entergy Arkansas, Entergy Louisiana, Entergy New Orleans, and Entergy Texas)
See Note 8 to the financial statements for a discussion of this litigation.
Employment and Labor-related Proceedings (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
See Note 8 to the financial statements for a discussion of these proceedings.
Human Capital
Employees
Employees are an integral part of Entergy’s commitment to serving customers. As of December 31, 2024, Entergy subsidiaries employed 12,267 people.
| | | | | |
| Entergy Arkansas | 1,314 | |
| Entergy Louisiana | 1,669 | |
| Entergy Mississippi | 770 | |
| Entergy New Orleans | 302 | |
| Entergy Texas | 741 | |
| System Energy | — | |
| Entergy Operations | 3,211 | |
| Entergy Services | 4,245 | |
| Entergy Nuclear Operations | 13 | |
| Other subsidiaries | 2 | |
| Total Entergy | 12,267 | |
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
There are 3,105 employees represented by the International Brotherhood of Electrical Workers, the United Government Security Officers of America, and the International Union, Security, Police, and Fire Professionals of America.
Below is the breakdown of Entergy’s employees by gender and race/ethnicity:
| | | | | | | | | | | |
| Gender (%) (a) | 2024 | | 2023 |
| Female | 23.0 | | 23.0 |
| Male | 77.0 | | 77.0 |
| | | | | | | | | | | |
| Race/Ethnicity (%) (a) | 2024 | | 2023 |
| White | 73.2 | | 73.1 |
| Black/African American | 18.4 | | 18.2 |
| Hispanic/Latino | 3.3 | | 3.2 |
| Asian | 2.5 | | 2.4 |
| Other | 2.6 | | 3.1 |
(a)Based on employees who self-identify.
Entergy’s Approach to Human Resources
Entergy’s people and culture enable its success; that is why acquiring, retaining, and developing talent are important components of Entergy’s human resources strategy. Entergy focuses on an approach that includes, among other things, governance and oversight; safety; organizational health, including diversity, inclusion, and belonging; and talent management.
Governance and Oversight
Ensuring that workplace processes support the desired culture and strategy begins with the Board of Directors and the Office of the Chief Executive. The Talent and Compensation Committee is responsible for overseeing and monitoring the effectiveness of Entergy’s human capital strategies and initiatives, including those pertaining to talent management, diversity, inclusion and belonging, organizational health, retention, safety, and executive compensation and performance, and receives briefings on these and other topics. The Talent and Compensation Committee establishes and regularly reviews priorities, strategies, and performance on these topics.
Other committees of the Board oversee other key aspects of Entergy’s culture. For example, the Audit Committee reviews reports on enterprise risks, ethics, and compliance training and performance, as well as regular reports on calls made to Entergy’s ethics line and related investigations. To maximize the sharing of information and facilitate the participation of all Board members in these discussions, the Board schedules its regular committee meetings in a manner such that all directors can attend.
The Office of the Chief Executive, which includes Entergy’s Chief Human Resources Officer, ensures annual business plans are designed to support Entergy’s talent objectives, reviews workforce-related metrics, and regularly discusses the development, succession planning, and performance of their direct reports and other company officers.
Safety
Entergy’s safety objective is: Everyone Safe. All Day. Every Day. In 2024, Entergy set a record for its total recordable incident rate, reaching a new low of 0.41 combined employee and contractor results. This was a
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
significant improvement on the company’s performance of 0.48 in 2023 and 0.51 in 2022. The recordable incident rate equals the number of recordable incidents per 100 full-time equivalents. Recordable incidents include fatalities, lost-time accidents, restricted-duty accidents, and medical attentions. Despite an active storm season in 2024, Entergy was able to manage restoration during the two named storms in Entergy’s service territory with only a single contractor heat related injury. The results of 2024 unfortunately included an increase in significant injuries and fatalities, including four contractor fatalities after almost 900 days without experiencing a single employee or contractor fatality. In response to the increase in significant injuries and fatalities, Entergy has enhanced its focused training, leadership efforts, and field presence for employees and contractors to further the objective of zero fatalities, which the company had been able to achieve in 2022 and 2023.
Organizational Health
Entergy believes that organizational health fosters an engaged and productive culture that positions Entergy to deliver sustainable value to its stakeholders. Entergy measures its progress in this area through an organizational health survey coordinated by an external third party. Since initially administering the survey in 2014, Entergy improved from an initial score of 49 (fourth quartile) to a score in 2022 of 61 (third quartile), in 2023 of 62 (third quartile), and in 2024 of 65 (third quartile). Improvement in behavioral expectations, which Entergy believes are the leading indicators of outcome improvements, suggests that Entergy is continuing to move in a positive direction.
Entergy believes that creating a culture of diversity, inclusion, and belonging drives engagement for all employees. Entergy is committed to developing and retaining a top-performing workforce with a wide variety of backgrounds, experiences, and perspectives. Entergy’s human resources department focuses on, among other things, talent management, workforce development, talent attraction/pipeline development, retention, organizational health, and diversity, inclusion, and belonging. Among other strategies, Entergy partners with colleges and vocational-technical schools to develop a more viable pipeline of future talent, while also expanding efforts to increase employee engagement and cultivate an inclusive culture with high performance. Entergy has several employee resource groups, open to all employees, offers leadership development programs to support all employees, and facilitates skills training from the executive leadership ranks down to the frontline. Through these efforts, Entergy aspires to create greater understanding and accountability regarding the behaviors and outcomes that are indicative of a premier utility.
Talent Management
Entergy’s focus on talent management is organized in three areas: developing and attracting a highly qualified workforce with a broad range of backgrounds, skill sets, and experiences, equipping its leaders to develop the organization, and building premier utility capability through employee performance management and succession programs. Entergy believes that developing a workforce with a wide variety of backgrounds, experiences, and perspectives equipped with the skills needed, today and in the future, will give it a long-term competitive advantage. The focus of Entergy’s leadership development programs is to equip managers with the skills needed to effectively develop their teams and improve the leader-employee relationship. Entergy’s talent development infrastructure, which includes a combination of business function-specific and enterprise-wide learning and development programs, is designed to ensure Entergy has qualified employees with the skills, experiences, and behaviors needed to perform today and prepare for the future. Entergy strives to achieve its strategic priorities by aligning and enhancing team and individual performance with business objectives, effectively deploying talent through succession planning, and managing workforce transitions.
Availability of SEC filings and other information on Entergy’s website
Entergy electronically files reports with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, and amendments to such filings. The SEC maintains an internet website that contains reports, proxy and information statements, and other information regarding
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
registrants that file electronically with the SEC at https://www.sec.gov. Copies of the reports that Entergy files with the SEC can be obtained at the SEC’s website.
Entergy uses its website, https://www.entergy.com, as a routine channel for distribution of important information, including news releases, analyst presentations, and financial information. Filings made with the SEC are posted and available without charge on Entergy’s website as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. These filings include annual and quarterly reports on Forms 10-K and 10-Q and current reports on Form 8-K (including related filings in XBRL format), proxy statements, and any amendments to such filings. All such postings and filings are available on Entergy’s Investor Relations website free of charge. Entergy is providing the address to its internet website solely for the information of investors and does not intend the address to be an active link. Notwithstanding this reference or any references to the website in this report, the contents of the website are not incorporated into this report.
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
Item 1A. Risk Factors
See “RISK FACTORS SUMMARY” in Part I, Item 1 for a summary of Entergy’s and the Registrant Subsidiaries’ risk factors.
Investors should review carefully the following risk factors and the other information in this Form 10-K. The risks that Entergy faces are not limited to those in this section. There may be additional risks and uncertainties (either currently unknown or not currently believed to be material) that could adversely affect Entergy’s business, financial condition, results of operations, and liquidity. See “FORWARD-LOOKING INFORMATION.”
Utility Regulatory Risks
(Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
The terms and conditions of service, including electric and gas rates, of the Utility operating companies and System Energy are determined through regulatory approval proceedings that can be lengthy and subject to appeal, potentially resulting in delays in effecting rate changes, lengthy litigation, the risk of disallowance of recovery of certain costs, and uncertainty as to ultimate results.
The Utility operating companies are regulated on a cost-of-service and rate of return basis and are subject to statutes and regulatory commission rules and procedures. The rates that the Utility operating companies and System Energy charge reflect their capital expenditures, operations and maintenance costs, allowed rates of return, financing costs, and related costs of service. These rates significantly influence the financial condition, results of operations, and liquidity of Entergy and each of the Utility operating companies and System Energy. These rates are determined in regulatory proceedings and are subject to periodic regulatory review and adjustment, including adjustment upon the initiative of a regulator or, in some cases, affected stakeholders. Regulators in a future rate proceeding may alter the timing or amount of certain costs for which recovery is allowed or modify the current authorized rate of return. Rate refunds may also be required, subject to applicable law.
In addition, regulators have initiated and may initiate additional proceedings to investigate the prudence of costs in the Utility operating companies’ and System Energy’s base rates and examine, among other things, the reasonableness or prudence of the companies’ operation and maintenance practices, level of expenditures (including storm costs and costs associated with capital projects), allowed rates of return and rate base, proposed resource acquisitions, and previously incurred capital expenditures that the operating companies seek to place in rates. The regulators may disallow costs subject to their jurisdiction found not to have been prudently incurred or found not to have been incurred in compliance with applicable tariffs, creating some risk to the ultimate recovery of those costs. Regulatory proceedings relating to rates and other matters typically involve multiple parties seeking to limit or reduce rates. Traditional base rate proceedings, as opposed to formula rate plans, generally have long timelines, are primarily based on historical costs, and may or may not be limited in scope or duration by statute. The length of these base rate proceedings can cause the Utility operating companies and System Energy to experience regulatory lag in recovering costs through rates, such that the Utility operating companies may not fully recover all costs during the rate effective period and may, therefore, earn less than their allowed returns. Decisions are typically subject to appeal, potentially leading to additional uncertainty associated with rate case proceedings. For a discussion of such appeals and related litigation for both the Utility operating companies and System Energy, see Note 2 to the financial statements.
The Utility operating companies have large customer and stakeholder bases and, as a result, could be the subject of public criticism or adverse publicity focused on issues including, but not limited to, efforts to obtain land and secure permits for infrastructure, efforts to execute on and/or obtain regulatory approvals for generation, transmission, carbon capture and storage, or other facilities, the operation and maintenance of their assets and
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
infrastructure, including with respect to climate or environmental matters, their preparedness for major storms or other extreme weather events (including accelerated resilience plans and projects, as well as executing same and/or seeking and obtaining regulatory approvals for such plans and projects) and/or the time it takes to restore service after such events, the quality of their customer service, including timely and accurate billing practices and ability to resolve customer complaints, and the reasonableness of the cost of their service. Criticism or adverse publicity of this nature could, among other things, result in project delays or cancellations or render legislatures and other governing bodies, public service commissions and other regulatory authorities, and government officials less likely to view the applicable operating company in a favorable light and potentially negatively affect legislative or regulatory processes or outcomes, including but not limited to failure to obtain requested approvals on infrastructure investments, as well as lead to increased regulatory oversight or more stringent legislative or regulatory requirements or other legislation or regulatory actions that adversely affect the Utility operating companies.
The Utility operating companies and System Energy, and the energy industry as a whole, have experienced a period of rising costs and investments. An upward trend in spending, especially with respect to infrastructure investments (including those that have already been approved by a regulator), is likely to continue in the foreseeable future and could result in more frequent rate cases and requests for, and the continuation of, cost recovery mechanisms, all of which could result in adverse cost recovery determinations and/or face resistance from customers and other stakeholders especially in a rising cost environment, whether due to inflation, increased tariffs or changes to governmental policies and programs, including tax incentives or tax credits, grants, guarantees, and other subsidies, or high fuel prices or otherwise, and/or in periods of economic decline or hardship. Significant increases in costs could increase financing needs and otherwise adversely affect Entergy, the Utility operating companies, and System Energy’s business, financial position, results of operation, or cash flows. For information regarding rate case proceedings and formula rate plans applicable to the Utility operating companies, see Note 2 to the financial statements.
Changes to state or federal legislation or regulation affecting electric generation, electric and natural gas transmission, distribution, and related activities could adversely affect Entergy and the Utility operating companies’ financial position, results of operations, or cash flows and their utility businesses.
If legislative and regulatory structures evolve in a manner that erodes the Utility operating companies’ exclusive rights to serve their regulated customers, such as through “retail open access” or otherwise, they could lose customers and sales and their results of operations, financial position, or cash flows could be materially affected. Additionally, technological advances in energy efficiency and distributed energy resources are reducing the costs of these technologies and, together with current state and federal subsidies, the increasing penetration of these technologies could result in reduced sales by the Utility operating companies. Such loss of sales, due to the methodology used to determine cost of service rates or otherwise, could put upward pressure on rates, possibly resulting in adverse regulatory actions to mitigate such effects on rates. Further, the failure of regulatory structures to evolve to accommodate the changing needs and desires of customers with respect to the sourcing and use of electricity also could diminish sales by the operating companies. Entergy and the Utility operating companies cannot predict if or when they may be subject to changes in legislation, regulation, or governmental policy, or the extent and timing of reductions of the cost of distributed energy resources, nor can they predict the impact of these changes on their results of operations, financial position, or cash flows.
The Utility operating companies recover fuel, purchased power, and associated costs through rate mechanisms that are subject to risks of delay or disallowance in regulatory proceedings, and sudden or prolonged increases in fuel and purchased power costs could lead to increased customer arrearages or bad debt expenses.
The Utility operating companies recover their fuel, purchased power, and associated costs from their customers through rate mechanisms subject to periodic regulatory review and adjustment. Because regulatory review can result in the disallowance of incurred costs found not to have been prudently incurred or not reflected in rates as permitted by approved rate schedules and accounting rules, including the cost of replacement power
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
purchased when generators experience outages or when planned outages are extended, with the possibility of refunds to ratepayers, there exists some risk to the ultimate recovery of those costs, particularly when there are substantial or sudden increases in such costs, including due to inflation or increased tariffs or as a result of changes to governmental policies and programs, including tax incentives or tax credits, loans, grants, guarantees, and other subsidies. Regulators also may initiate proceedings to investigate the continued usage or the adequacy and operation of the fuel and purchased power recovery clauses of the Utility operating companies and, therefore, there can be no assurance that existing recovery mechanisms will remain unchanged or in effect at all.
The Utility operating companies’ cash flows can be negatively affected by the time delays between when gas, power, or other commodities are purchased and the ultimate recovery from customers of the costs in rates. On occasion, when the level of incurred costs for fuel and purchased power rises dramatically, some of the Utility operating companies may agree to defer recovery of a portion of that period’s fuel and purchased power costs for recovery at a later date, which could increase the near-term working capital and borrowing requirements of those companies. The Utility operating companies also may experience, and in some instances have experienced, an increase in customer bill arrearages and bad debt expenses due to, among other reasons, increases in fuel and purchased power costs, especially in a rising cost environment, whether due to inflation or increased tariffs and/or in periods of economic decline or hardship. For a description of fuel and purchased power recovery mechanisms and information regarding the regulatory proceedings for fuel and purchased power cost recovery, see Note 2 to the financial statements.
The Utility operating companies are subject to economic risks associated with participation in the MISO markets and the allocation of transmission upgrade costs. The operation of the Utility operating companies’ transmission system pursuant to the MISO RTO tariff and their participation in the MISO RTO’s wholesale markets may be adversely affected by regulatory or market design changes, as well as liability under, or any future inability to comply with, existing or future regulations or requirements.
The Utility operating companies are subject to economic risks associated with participation in the MISO markets and resource adequacy construct. MISO tariff rules and system conditions, including transmission congestion, could affect the Utility operating companies’ ability to sell capacity, energy, and/or ancillary services in certain regions and/or the economic value of such sales, or increase the cost of serving the Utility operating companies’ respective loads. MISO market rules may change or be interpreted in ways that cause additional cost and risk, including compliance risk. Additionally, each Utility operating company’s continued participation in MISO may be affected by the outcomes of proceedings at their respective retail regulators regarding the realized and expected costs and benefits associated with such Utility operating company’s ongoing participation in MISO.
The Utility operating companies participate in the MISO regional transmission planning process and are subject to risks associated with planning decisions that MISO makes in the exercise of control over the planning of the Utility operating companies’ transmission assets that are under MISO’s functional control. The Utility operating companies pay transmission rates that reflect the cost of transmission projects that the Utility operating companies do not own and are subject to the same increased costs due to factors described herein as potentially impacting other capital projects, which could increase cash or financing needs. Further, FERC policies and regulation addressing cost responsibility for transmission projects, including transmission projects to interconnect new generation facilities, may give rise to cash and financing-related risks as well as result in upward pressure on the retail rates of the Utility operating companies, which, in turn, may result in adverse actions by the Utility operating companies’ retail regulators. In addition to the cash and financing-related risks arising from the potential additional cost allocation to the Utility operating companies from transmission projects of others or changes in FERC policies or regulation related to cost responsibility for transmission projects, there is a risk that the Utility operating companies’ business and financial position could be harmed as a result of lost investment opportunities and other effects that flow from an increased number of competitive projects being approved and constructed that are interconnected with their transmission systems.
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
Further, the terms and conditions of the MISO tariff, including provisions related to the design and implementation of wholesale markets, the allocation of transmission upgrade costs, the MISO-wide allowed base rate of return on equity, and any required MISO-related charges and credits are subject to regulation by the FERC. The operation of the Utility operating companies’ transmission system pursuant to the MISO tariff and their participation in the MISO wholesale markets, and the resulting costs, may be adversely affected by regulatory or market design changes, as well as liability under, or any future inability to comply with, existing or future regulations or requirements.
The MISO tariff provisions governing the rights and obligations associated with the resource adequacy construct provided under the MISO tariff are subject to change and have recently undergone significant changes, some of which are the subject of pending litigation and/or appeals. Due to their magnitude and, with respect to the changes already made, the speed with which they have been implemented, these changes carry risk, including compliance risk, and may result in material additional costs being passed through to the Utility operating companies’ customers in retail rates, including but not limited to additional capacity costs incurred in the annual MISO Planning Resource Auction, and these risks may be exacerbated by significant new load additions whether by the Utility operating companies or by other MISO load-serving entities. Also, by virtue of the Utility operating companies’ participation in MISO and the design and terms of the MISO resource adequacy construct, other load-serving entities served by the Utility operating companies’ transmission assets, which are under MISO’s functional control, may be able to circumvent reasonable resource planning obligations and avoid, in whole or in part, the full cost of procuring the resources reasonably needed to reliably supply their respective loads. As a result, there are a variety of risks to the Utility operating companies and their customers, including the risk of bearing additional costs for resources needed to ensure reliable service, the risk of reduced reliability and the enhanced risk of outages and lost sales which, because of the methodology for establishing cost of service rates, presents the risk of upward pressure on the Utility operating companies’ rates, and these risks may be exacerbated by significant new load additions whether by the Utility operating companies or by other MISO load-serving entities.
In addition, a large volume of parties and individual generation resources are presently seeking to interconnect to the transmission system MISO administers and over which MISO exercises functional control. Due to the resources and time required to study and evaluate these numerous interconnection requests, including the effects of speculative requests and requests that are withdrawn at late stages of the process, the current MISO interconnection queue to review new requests is subject to significant delays or periods in which MISO does not accept new interconnection requests. These delays present risks to the Utility operating companies and their ability to develop and procure new generation resources to serve their respective loads, and these risks may be exacerbated by significant new load additions.
For additional information on MISO regulation and the Utility operating companies’ membership in MISO, see “Federal Regulation of the Utility – Transmission and MISO Markets” section of Part I, Item 1.
(Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas)
A delay or failure in recovering amounts for storm restoration costs incurred as a result of severe weather, the impact on customer bills of permitted storm cost recovery, or the inability to securitize future storm restoration costs could have material effects on Entergy and its Utility operating companies.
Entergy’s and its Utility operating companies’ results of operations, liquidity, and financial condition can be materially affected by the destructive effects of severe weather. Severe weather can also result in significant outages for the customers of the Utility operating companies and, therefore, reduced revenues for the Utility operating companies during the period of the outages. A delay or failure in recovering amounts for storm restoration costs incurred, inability to securitize future storm restoration costs, or loss of revenues as a result of severe weather could have a material effect on Entergy and those Utility operating companies affected by severe weather, including lower credit ratings and, thus, higher costs for future debt issuances, as well as limitations on the
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
ability to fund other investments to address customer needs, which limitations could have an adverse impact on the Utility operating companies’ financial results and/or customers and impede economic development opportunities that would benefit the Utility operating companies and their customers and communities. The inability to recover losses either excluded by insurance or in excess of the insurance limits that can be secured economically also could have a material effect on Entergy and its Utility operating companies. In addition, the recovery of major storm restoration costs from customers could effectively limit our ability to make planned capital or other investments due to the impact of such storm cost recovery on customer bills, especially in a rising cost environment due to factors described herein as potentially impacting other capital projects, and impede the ability to support economic development opportunities in the areas served by the Utility operating companies.
Weather, economic conditions, technological developments, and other factors may have a material impact on electricity and gas sales and otherwise materially affect the Utility operating companies’ results of operations and system reliability.
Temperatures above normal levels in the summer tend to increase electric cooling demand and revenues, and temperatures below normal levels in the winter tend to increase electric and gas heating demand and revenues. As a corollary, mild temperatures in either season tend to decrease energy usage and resulting revenues. Higher consumption levels coupled with seasonal pricing differentials typically cause the Utility operating companies to report higher revenues in the third quarter of the fiscal year than in the other quarters. Changing weather patterns and extreme weather conditions, including hurricanes or tropical storms, droughts, wildfires, flooding events, or ice storms, the frequency or intensity of which may be exacerbated by climate change, may stress the Utility operating companies’ generation facilities and transmission and distribution systems, resulting in increased maintenance and capital costs (and potential increased financing needs), limits on their ability to meet peak customer demand, increased regulatory oversight, criticism or adverse publicity, and reduced customer satisfaction. These extreme conditions could have a material effect on the Utility operating companies’ financial condition, results of operations, and liquidity.
Entergy’s electricity sales volumes are affected by a number of factors including weather and economic conditions, trends in energy efficiency, new technologies, and self-generation alternatives, including the willingness and ability of large industrial customers to develop co-generation facilities that greatly reduce their grid demand. In addition, changes to regulatory policies, such as those that allow customers to directly access the market to procure wholesale energy or those that incentivize development and utilization of new, developing, or alternative sources of generation, could, and in some instances, have already reduced sales, and other non-traditional procurements, such as virtual purchase power agreements or “behind the meter” generation solutions, could, and in some instances have already limited growth opportunities or reduced sales at the Utility operating companies. Some of these factors are inherently cyclical or temporary in nature, such as the weather or economic conditions, and typically do not have a long-lasting effect on Entergy’s operating results. Others, such as the organic turnover of appliances and lighting and their replacement with more efficient ones and adoption of newer technologies, including smart thermostats, new building codes, distributed energy resources, energy storage, demand side management, and rooftop solar, are having a more permanent effect by reducing sales growth rates from historical norms. As a result of these emerging efficiencies and technologies, the Utility operating companies may lose customers or experience lower average use per customer in the residential and commercial classes, and continuing advances have the potential to further limit sales or sales growth in the future.
The Utility operating companies also may face competition from other companies offering products and services to Entergy’s customers. Advances in technology and changes in laws or regulations offer alternative methods of producing and/or consuming energy, some potentially at a reduced cost. The Utility operating companies’ future success will depend, in part, on our ability to anticipate and successfully adapt to technological developments and to offer services that meet customer demand. Failure to keep pace or manage the related costs of such changes or additional technology investments may limit customer growth and have an adverse effect on the Utility operating companies’ operations or could make the Utility operating companies less competitive and
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
negatively impact Entergy’s and the Utility operating companies’ financial condition, results of operations, and cash flows.
Electricity sales to industrial customers, in particular, benefit from steady economic growth and favorable commodity markets; however, industrial sales are or may be sensitive to changes in laws, regulations, trade-related governmental actions, including tariffs and other measures, or conditions in the markets in which its customers operate. Negative changes in any of these or other factors, particularly sustained economic downturns or sluggishness, have the potential to result in slower sales growth or sales declines and increased bad debt expense, which could materially affect Entergy’s and the Utility operating companies’ results of operations, financial condition, and liquidity.
The Utility operating companies also may not realize anticipated or expected growth in industrial sales, such as from large data center customers or electrification opportunities to help such customers achieve their environmental sustainability goals. This could occur because of changes in customers’ goals or business priorities, changes in environmental policies and priorities of federal, state, and local officials and other stakeholders, competition from other companies, or decisions by such customers to seek to achieve such objectives or goals through methods not offered by Entergy.
Nuclear Operating, Shutdown, and Regulatory Risks
(Entergy Corporation, Entergy Arkansas, Entergy Louisiana, and System Energy)
Certain of the Utility operating companies and System Energy are expected to consistently operate their nuclear power plants at high capacity factors in order to be successful, and lower capacity factors could materially affect Entergy’s and their results of operations, financial condition, and liquidity.
Nuclear capacity factors significantly affect the results of operations of certain Utility operating companies and System Energy. Nuclear plant operations involve substantial fixed operating costs. Consequently, there is pressure on plant owners to operate nuclear power plants at higher capacity factors, though such operations always must be consistent with safety, reliability, and nuclear regulatory requirements. For the Utility operating companies that own nuclear plants, lower nuclear plant capacity factors can increase production costs by requiring the affected companies to generate additional energy, sometimes at higher costs, from their owned or contractually controlled facilities or purchase additional energy in the spot or forward markets in order to satisfy their supply needs.
Certain of the Utility operating companies and System Energy periodically shut down their nuclear power plants to replenish fuel. Plant maintenance and upgrades are often scheduled during such refueling outages. If refueling outages last longer than anticipated or if unplanned outages arise, Entergy’s and their results of operations, financial condition, and liquidity could be materially affected.
Outages at nuclear power plants to replenish fuel require the plant to be “turned off.” Refueling outages generally are planned to occur once every 18 to 24 months. Plant maintenance and upgrades are often scheduled during such planned outages, which may extend the planned outage duration beyond that required for only refueling activities. When refueling outages last longer than anticipated or a plant experiences unplanned outages, capacity factors decrease, and maintenance costs may increase.
Certain of the Utility operating companies and System Energy face risks related to the purchase of uranium fuel (and its conversion, enrichment, and fabrication). These risks could materially affect Entergy’s and their results of operations, financial condition, and liquidity.
Based upon currently planned fuel cycles, Entergy’s nuclear units have a diversified portfolio of contracts and inventory that provides substantially adequate nuclear fuel materials and conversion and enrichment services at what Entergy believes are reasonably predictable prices through the end of 2027. Entergy’s ability to purchase
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
nuclear fuel at reasonably predictable prices, however, depends upon the performance reliability of uranium miners. While there are a number of possible alternate suppliers that may be accessed to mitigate any supplier performance failure, the pricing of any such alternate uranium supply from the market will be dependent upon the market for uranium supply at that time. Entergy buys uranium from a diversified mix of sellers located in a diversified mix of countries, and from time to time purchases from nearly all qualified reliable major market participants worldwide that sell into the U.S. Market prices for nuclear fuel have been extremely volatile from time to time in the past and may be subject to increased volatility due to the imposition of tariffs, domestic purchase requirements, supply chain disruptions, limitations or bans on importation of uranium or uranium products from foreign countries, evolving geopolitical conditions such as the wars between Russia and Ukraine and Israel and Hamas, the Nigerien coup, or shifting trade arrangements or sanctions between countries. Although Entergy’s nuclear fuel contract portfolio provides a degree of hedging against market risks for several years, costs for nuclear fuel in the future cannot be predicted with certainty due to inherent market uncertainties, as well as uncertainties arising from the factors described in the immediately preceding sentence, and price changes could materially affect the liquidity, financial condition, and results of operations of certain of the Utility operating companies and System Energy.
Entergy’s ability to assure uninterrupted nuclear fuel supply also depends upon the performance and reliability of conversion, enrichment, and fabrication services providers. These service providers are fewer in number than uranium suppliers. For conversion and enrichment services, Entergy diversifies its supply by supplier and country and may take special measures to ensure a reliable supply of enriched uranium for fabrication into nuclear fuel. For fabrication services, each plant is dependent upon the performance of the fabricator of that plant’s nuclear fuel; therefore, Entergy relies upon additional monitoring, inspection, and oversight of the fabrication process to assure reliability and quality of its nuclear fuel. Certain of the suppliers and service providers are located in or dependent upon foreign countries, such as Russia, and international sanctions, bans, retaliatory actions, or tariffs impacting trade with such countries could further restrict the ability of such suppliers or service providers to continue to supply fuel or provide such services at acceptable prices or at all. While such suppliers have performed as expected to date, the future inability of suppliers to perform such obligations could materially affect the liquidity, financial condition, and results of operations of certain of the Utility operating companies and System Energy.
Certain of the Utility operating companies and System Energy face the risk that the NRC will change or modify its regulations, suspend or revoke their licenses, or increase oversight of their nuclear plants, which could materially affect Entergy’s and their results of operations, financial condition, and liquidity.
Under the Atomic Energy Act and Energy Reorganization Act, the NRC regulates the operation of nuclear power plants. The NRC may modify, suspend, or revoke licenses, shut down a nuclear facility and impose civil penalties for failure to comply with the Atomic Energy Act, related regulations, or the terms of the licenses for nuclear facilities. Interested parties may also intervene in pending proceedings, which could result in prolonged proceedings. A change in the Atomic Energy Act, other applicable statutes, or the applicable regulations or licenses, or the NRC’s interpretation thereof, may require a substantial increase in capital expenditures or may result in increased operating or decommissioning costs and could materially affect the results of operations, liquidity, or financial condition of Entergy, certain of the Utility operating companies, or System Energy. A change in the classification of a plant owned by one of these companies under the NRC’s Reactor Oversight Process, which is the NRC’s program to collect information about plant performance, assess the information for its safety significance, and provide for appropriate licensee and NRC response, also could cause the owner of the plant to incur material additional costs as a result of the increased oversight activity and potential response costs associated with the change in classification. For additional information concerning the current classification of the plants owned by Entergy Arkansas, Entergy Louisiana, and System Energy, see “Regulation of Entergy’s Business - Regulation of the Nuclear Power Industry - NRC Reactor Oversight Process” in Part I, Item 1.
Events at nuclear plants owned by one of these companies, as well as those owned by others, may lead to a change in laws or regulations or the terms of the applicable licenses, or the NRC’s interpretation thereof, or may cause the NRC to increase oversight activity or initiate actions to modify, suspend, or revoke licenses, shut down a nuclear facility, or impose civil penalties. As a result, if an incident were to occur at any nuclear generating unit,
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
whether an Entergy nuclear generating unit or not, it could materially affect the financial condition, results of operations, and liquidity of Entergy, certain of the Utility operating companies, or System Energy.
Certain of the Utility operating companies and System Energy are exposed to risks and costs related to operating and maintaining their nuclear power plants, and their failure to maintain operational efficiency at their nuclear power plants could result in a plant shutdown or operation at less than full capacity and could materially affect Entergy’s and their results of operations, financial condition, and liquidity.
The nuclear generating units owned by certain of the Utility operating companies and System Energy began commercial operations in the 1970s-1980s. Older equipment may require more capital expenditures to keep each of these nuclear power plants operating safely and efficiently. This equipment is also likely to require periodic upgrading and improvement. Any unexpected failure, including failure associated with breakdowns, forced outages, or any unanticipated capital expenditures, could result in increased costs, some of which costs may not be fully recoverable by these Utility operating companies and System Energy in regulatory proceedings should there be a determination of imprudence. Operations at any of the nuclear generating units owned and operated by Entergy’s subsidiaries could degrade to the point where the affected unit needs to be shut down or operated at less than full capacity. If this were to happen, identifying and correcting the causes may require significant time and expense. A decision may be made to close a unit rather than incur the expense of restarting it or returning the unit to full capacity. For these Utility operating companies and System Energy, this could result in certain costs being stranded and potentially not fully recoverable in regulatory proceedings. In addition, the operation and maintenance of Entergy’s nuclear facilities require the commitment of substantial human resources that can result in increased costs.
Moreover, Entergy is becoming more dependent on fewer suppliers for key parts of Entergy’s nuclear power plants that may need to be replaced or refurbished, and in some cases, parts are no longer available and have to be reverse-engineered for replacement. In addition, certain major parts have long lead-times to manufacture if an unplanned replacement is needed. This dependence on a reduced number of suppliers and long lead-times on certain major parts for unplanned replacements could result in delays in obtaining qualified replacement parts and, therefore, greater expense for certain of the Utility operating companies and System Energy.
The costs associated with the storage of the spent nuclear fuel of certain of the Utility operating companies and System Energy, as well as the costs of and their ability to fully decommission their nuclear power plants, could be significantly affected by the timing of the opening of a spent nuclear fuel disposal facility, as well as interim storage and transportation requirements.
Certain of the Utility operating companies and System Energy incur costs for the on-site storage of spent nuclear fuel. The approval of a license for a national repository for the disposal of spent nuclear fuel, such as the one proposed for Yucca Mountain, Nevada, or any interim storage facility, and the timing of such facility opening, will significantly affect the costs associated with on-site storage of spent nuclear fuel. For example, while the DOE is required by law to proceed with the licensing of the Yucca Mountain repository and, after the license is granted by the NRC, to construct the repository and commence the receipt of spent fuel, the NRC licensing of the Yucca Mountain repository is effectively at a standstill. These actions are prolonging the time before spent fuel is removed from Entergy’s plant sites. Because the DOE has not accomplished its objectives, it is in non-compliance with the Nuclear Waste Policy Act of 1982 and is in partial breach of its spent fuel disposal contracts, and Entergy has sued the DOE for such breaches, and has won and collected on judgments against the government totaling approximately $1.2 billion through 2024, and continues to be involved in litigation to recover damages. Furthermore, Entergy is uncertain as to when the DOE will commence acceptance of spent fuel from its facilities for storage or disposal. As a result, continuing future expenditures will be required to increase spent fuel storage capacity at the companies’ nuclear sites and maintenance costs on existing storage facilities, including aging management of fuel storage casks, may increase. The costs of on-site storage are also affected by regulatory requirements for such storage. In addition, the availability of a repository or other off-site storage facility for spent nuclear fuel may affect the ability to fully decommission the nuclear units and the costs relating to decommissioning. For further information regarding spent fuel storage, see the “Critical Accounting Estimates – Nuclear Decommissioning Costs – Spent
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
Fuel Disposal” section of Management’s Financial Discussion and Analysis for Entergy, Entergy Arkansas, Entergy Louisiana, and System Energy and Note 8 to the financial statements.
Certain of the Utility operating companies and System Energy may be required to pay substantial retrospective premiums imposed under the Price-Anderson Act and/or by Nuclear Electric Insurance Limited (NEIL) in the event of a nuclear incident, and losses not covered by insurance could have a material effect on Entergy’s and their results of operations, financial condition, or liquidity.
Accidents and other unforeseen problems at nuclear power plants have occurred both in the United States and elsewhere. As required by the Price-Anderson Act, the Utility operating companies and System Energy carry the maximum available amount of primary nuclear off-site liability insurance with American Nuclear Insurers, which is $500 million for each operating site. Claims for any nuclear incident exceeding that amount are covered under Secondary Financial Protection. The Price-Anderson Act limits each reactor owner’s public liability (off-site) for a single nuclear incident to the payment of retrospective premiums into a secondary insurance pool, which is referred to as Secondary Financial Protection, up to approximately $165.9 million per reactor. With 95 reactors currently participating, this translates to a total public liability cap of approximately $15.8 billion per incident. The limit is subject to change to account for the effects of inflation, a change in the primary limit of insurance coverage, and changes in the number of licensed reactors. As a result, in the event of a nuclear incident that causes damages (off-site) in excess of the primary insurance coverage, each owner of a nuclear plant reactor, including Entergy’s Utility operating companies and System Energy, regardless of fault or proximity to the incident, will be required to pay a retrospective premium, equal to its proportionate share of the loss in excess of the primary insurance level, up to a maximum of approximately $165.9 million per reactor per incident (Entergy’s maximum total contingent obligation per incident is approximately $830 million). The retrospective premium payment is currently limited to approximately $25 million per year per incident per reactor until the aggregate public liability for each licensee is paid up to the $165.9 million cap.
NEIL is a utility industry mutual insurance company, owned by its members, including the Utility operating companies and System Energy. NEIL provides onsite property and decontamination coverage. All member plants could be subject to an annual assessment (retrospective premium of up to 10 times current annual premium for all policies) should the NEIL surplus (reserve) be significantly depleted due to insured losses. The current maximum annual assessment amounts total approximately $72.2 million per occurrence for the Utility nuclear plants. The retrospective premium assessments are subject to change based on results of NEIL underwriting.
As mentioned above, as an owner of nuclear power plants, Entergy participates in industry self-insurance programs and could be liable to fund claims should a plant owned by a different company experience a major event. Any resulting liability from a nuclear accident may exceed the applicable primary insurance coverage and require contribution of additional funds through the industry-wide program that could significantly affect the results of operations, financial condition, or liquidity of Entergy, certain of the Utility operating companies, or System Energy.
The decommissioning trust fund assets for the nuclear power plants owned by certain of the Utility operating companies and System Energy may not be adequate to meet decommissioning obligations if market performance and other changes decrease the value of assets in the decommissioning trusts, if one or more of Entergy’s nuclear power plants is retired earlier than the anticipated shutdown date, if the plants cost more to decommission than estimated, or if current regulatory requirements change, which then could require significant additional funding.
Owners of nuclear generating plants have an obligation to decommission those plants. Certain of the Utility operating companies and System Energy maintain decommissioning trust funds for this purpose. Certain of the Utility operating companies and System Energy collect funds from their customers, which are deposited into the trusts covering the units operated for or on behalf of those companies. Those rate collections, as adjusted from time to time by rate regulators, are generally based upon operating license lives and trust fund balances as well as
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
estimated trust fund earnings and decommissioning costs. Assets in these trust funds are subject to market fluctuations, will yield uncertain returns that may fall below projected return rates, and may result in losses resulting from the recognition of impairments of the value of certain securities held in these trust funds.
Under NRC regulations, nuclear plant owners are permitted to project the NRC-required decommissioning amount, based on an NRC formula or a site-specific estimate, and the amount that will be available in each nuclear power plant’s decommissioning trusts combined with any other decommissioning financial assurances in place. The projections are made based on the operating license expiration date and the mid-point of the subsequent decommissioning process, or the anticipated actual completion of decommissioning if a site-specific estimate is used. If the projected amount of each individual plant’s decommissioning trusts exceeds the NRC-required decommissioning amount, then its NRC license termination decommissioning obligations are considered to be funded in accordance with NRC regulations. If the projected costs do not sufficiently reflect the actual costs required to decommission these nuclear power plants, or if funding is otherwise inadequate, or if the formula, formula inputs, or site-specific estimate is changed to require increased funding, additional resources or commitments would be required. Furthermore, depending upon the level of funding available in the trust funds, the NRC may not permit the trust funds to be used to pay for related costs such as the management of spent nuclear fuel that are not included in the NRC’s formula. The NRC may also require a plan for the provision of separate funding for spent fuel management costs.
Further, federal or state regulatory changes, including mandated increases in decommissioning funding or changes in the methods or standards for decommissioning operations, may also increase the funding requirements of, or accelerate the timing for funding of, the obligations related to the decommissioning of the nuclear generating plant owned by certain of the Utility operating companies or System Energy or may restrict the decommissioning-related costs that can be paid from the decommissioning trusts. Such changes also could result in the need for additional contributions to decommissioning trusts, or the posting of parent guarantees, letters of credit, or other surety mechanisms. As a result, under any of these circumstances, the results of operations, liquidity, and financial condition of Entergy, certain of the Utility operating companies, or System Energy could be materially affected.
An early plant shutdown (either generally or relative to current expectations), poor investment results, or higher than anticipated decommissioning costs (including as a result of changing regulatory requirements) could cause trust fund assets to be insufficient to meet the decommissioning obligations, with the result that certain of the Utility operating companies or System Energy may be required to provide significant additional funds or credit support to satisfy regulatory requirements for decommissioning, which, with respect to these Utility operating companies or System Energy, may not be recoverable from customers in a timely fashion or at all.
For further information regarding nuclear decommissioning costs, see the “Critical Accounting Estimates - Nuclear Decommissioning Costs” section of Management’s Financial Discussion and Analysis for Entergy, Entergy Arkansas, Entergy Louisiana, and System Energy, and Notes 9 and 16 to the financial statements.
New or existing safety concerns regarding operating nuclear power plants and nuclear fuel could lead to restrictions upon the operation and decommissioning of Entergy’s nuclear power plants.
New and existing concerns are being expressed in public forums about the safety of nuclear generating units and nuclear fuel. These concerns have led to, and may continue to lead to, various proposals to federal regulators and governing bodies in some localities where Entergy’s subsidiaries own nuclear generating units for legislative and regulatory changes that might lead to the shutdown of nuclear units, additional requirements or restrictions related to spent nuclear fuel on-site storage and eventual disposal, or other adverse effects on owning, operating, and decommissioning nuclear generating units. Entergy vigorously responds to these concerns and proposals. If any of the existing proposals, or any proposals that may arise in the future with respect to legislative and regulatory changes, become effective, they could have a material effect on Entergy’s results of operations and financial condition.
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
Business Risks
(Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Entergy and its Registrant Subsidiaries depend on access to the capital markets and, at times, may face potential liquidity constraints, which could make it more difficult to handle future contingencies such as natural disasters or substantial increases in gas and fuel prices. Disruptions in the capital and credit markets may adversely affect Entergy’s and its subsidiaries’ ability to meet liquidity needs, or to access capital to operate and grow their businesses, and the cost of capital.
Entergy’s business is capital intensive and dependent upon its ability to access capital at reasonable rates and other terms. At times there are also spikes in the price for natural gas and other commodities that increase the liquidity requirements of the Utility operating companies. In addition, Entergy’s and the Registrant Subsidiaries’ liquidity needs could significantly increase in the event of a hurricane or other weather-related or unforeseen disaster similar to that experienced in Entergy’s service area with Hurricane Katrina and Hurricane Rita in 2005, Hurricane Gustav and Hurricane Ike in 2008, Hurricane Isaac in 2012, Hurricane Laura, Hurricane Delta, and Hurricane Zeta in 2020, and Winter Storm Uri and Hurricane Ida in 2021. The occurrence of one or more contingencies, including an adverse decision or a delay in regulatory recovery of fuel or purchased power costs or storm restoration costs, an acceleration of payments or decreased credit lines, less cash flow from operations than expected, changes in regulation, governmental policy (including tax and trade policy, such as increased tariffs) or governmental programs (including tax incentives or tax credits, loans, grants, guarantees, and other subsidies), or other unknown or unforeseen events, could cause the financing needs of Entergy and its subsidiaries to increase. In addition, accessing the debt capital markets more frequently in these situations may result in an increase in leverage. Material leverage increases could negatively affect the credit ratings of Entergy, the Utility operating companies, and System Energy, which in turn could negatively affect access to the capital markets.
The inability to raise capital on favorable terms, particularly during times of high interest rates and inflation, and uncertainty or reduced liquidity in the capital markets, could negatively affect Entergy and its subsidiaries’ ability to maintain and to expand their businesses. Access to capital markets could be restricted and/or borrowing costs could be increased due to certain sources of debt and equity capital being unwilling to invest in offerings to fund fossil fuel projects or companies that are impacted by extreme weather events or other catastrophes, that rely on fossil fuels, or that are impacted by risks related to climate change, or such sources of capital de-emphasizing their interest in investing in clean or renewable energy projects. Additionally, shifts in governmental policy surrounding tax incentives or tax credits, loans, grants, guarantees, and other subsidies may increase borrowing costs. Factors beyond Entergy’s control may create uncertainty that could increase its cost of capital or impair its ability to access the capital markets, including the ability to draw on its bank credit facilities. These factors include depressed economic conditions, a recession, increasing interest rates, inflation, sanctions, trade restrictions, political instability, war, terrorism, and extreme volatility in the debt, equity, or credit markets. Entergy and its subsidiaries are unable to predict the degree of success they will have in renewing or replacing their credit facilities as they come up for renewal. Moreover, the size, terms, and covenants of any new credit facilities may not be comparable to, and may be more restrictive than, existing facilities. If Entergy and its subsidiaries are unable to access the credit and capital markets on terms that are reasonable, they may have to delay raising capital, issue shorter-term securities, and/or bear an unfavorable cost of capital, which, in turn, could impact their ability to grow their businesses, decrease earnings, significantly reduce financial flexibility, and/or limit Entergy Corporation’s ability to sustain its current common stock dividend level.
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
A downgrade in Entergy’s or its Registrant Subsidiaries’ credit ratings could negatively affect Entergy’s and its Registrant Subsidiaries’ ability to access capital or the cost of such capital and/or could require Entergy or its subsidiaries to post collateral, accelerate certain payments, or repay certain indebtedness.
There are a number of factors that rating agencies evaluate to arrive at credit ratings for each of Entergy and the Registrant Subsidiaries, including each Registrant Subsidiary’s regulatory framework, ability to recover costs and earn returns, storm or climate risk exposure, diversification, and financial strength and liquidity. If one or more rating agencies downgrade Entergy’s or any of the Registrant Subsidiaries’ ratings, particularly below investment grade, borrowing costs would increase, the potential pool of investors and funding sources would likely decrease, and cash or letter of credit collateral demands may be triggered by the terms of a number of commodity contracts, leases, and other agreements.
Most of Entergy’s and its subsidiaries’ suppliers and counterparties require sufficient creditworthiness to enter into transactions. If Entergy’s or the Registrant Subsidiaries’ ratings decline, particularly below investment grade, or if certain counterparties believe Entergy or the Utility operating companies are losing creditworthiness and demand adequate assurance under fuel, gas, and purchased power contracts, the counterparties may require posting of collateral in cash or letters of credit, prepayment for fuel, gas or purchased power or accelerated payment, or counterparties may decline business with Entergy or its subsidiaries.
Entergy’s and the Utility operating companies’ business, results of operations, and financial condition could be adversely affected by events beyond their control, such as public health crises, natural disasters, wildfires, geopolitical tensions, or other catastrophic events.
Entergy and the Utility operating companies could be adversely affected by various events beyond their control, including, without limitation, public health crises, natural disasters, wildfires, geopolitical tensions and other political instability, or other catastrophic events. Any of the foregoing, whether occurring locally, nationally, or globally, and the resulting effects thereof could lead to disruption of the general economy, impacts on the customers of the Utility operating companies, and disruption of the operations of Entergy’s subsidiaries, due to, among other things:
•supply chain, vendor, and contractor disruptions or other impacts, including those relative to any trade or tariff issues, as well as any shortages or delays in the availability of key components, parts, and supplies such as electronic components, steel, aluminum, and solar panels;
•delays in completion of capital or other construction projects, maintenance, and other operations activities, including prolonged or delayed refueling and maintenance outages;
•adverse impacts on liquidity and cash flows, including through declining sales, reduced revenues, delays in receipts of customer payments, or increased bad debt expense;
•delays in regulatory proceedings;
•regulatory outcomes that require the Utility operating companies to postpone planned investments and otherwise reduce costs due to, for example, the impact of a public health crises or such other catastrophic events on their customers;
•workforce availability challenges, including, for example, from infections, health, or safety issues resulting from a public health crisis;
•increased storm recovery costs;
•increased cybersecurity risks as a result of many employees telecommuting and working partially remotely or geopolitical risks;
•volatility in the credit or capital markets (and any related increased cost of capital or any inability to access the capital markets or draw on available credit facilities on favorable terms), which could in turn, cause a decrease in the value of its defined benefit pension and welfare benefit plan trusts or decommissioning trust funds;
•litigation;
•adverse impacts on Entergy’s credit metrics or ratings;
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
•governmental mandates in response to any such event; or
•other adverse impacts on their ability to execute on business strategies and initiatives.
To the extent any of these events occur, the business, results of operations, and financial condition of Entergy and the Utility operating companies could be adversely affected.
The reputation of Entergy or its Registrant Subsidiaries may be materially adversely affected by negative publicity or the inability to meet its stated goals or commitments, among other potential causes.
As with any company, Entergy’s and its Registrant Subsidiaries’ reputations are an important element of their ability to effectively conduct their businesses. Entergy’s and its Registrant Subsidiaries’ reputations could be harmed by a variety of factors, including: failure of a generating asset or supporting infrastructure; failure to restore power after a hurricane or other severe weather event or catastrophe in a manner perceived as timely by regulators or customers; the incurrence of storm restoration costs perceived as excessive by regulators or customers; failure to effectively manage land and other natural resources; failure to obtain land and secure permits for infrastructure investments; failure to execute on and/or obtain regulatory approvals for generation, transmission, or other facilities; real or perceived violations of environmental regulations, including those related to climate change; real or perceived issues surrounding the safety or environmental concerns regarding carbon capture and storage; real or perceived issues with Entergy’s safety culture; challenges or negative reaction to Entergy’s diversity, inclusion, and belonging efforts, or work culture and environment; challenges or negative reaction to Entergy’s climate goals; inability to meet their climate goals, including as a result of increased sales growth, or to achieve their human capital strategies, or failure to demonstrate meaningful progress toward such goals or strategies; deterioration in relations with bargaining employees and labor unions representing them; inability to effectively prepare for major storms and other weather events, including accelerated resilience planning and projects and challenges in execution thereof, including obtaining necessary regulatory approvals for scope and timing of such plans and projects; inability to keep their electricity rates stable; inability to provide quality customer service, including timely and accurate billing; involvement in a class-action or other high-profile lawsuit; significant delays in, or termination of, construction projects, including as a result of or in connection with changes in regulation or governmental policy (such as tax and trade policy, including increased tariffs and supply chain challenges) or governmental programs (such as tax incentives or tax credits, loans, grants, guarantees, and other subsidies); occurrence of or responses to cyber attacks, data breaches or physical- or cyber- security vulnerabilities; acts or omissions of Entergy management or acts or omissions of a contractor or other third party working with or for Entergy or its Registrant Subsidiaries, which actually or perceivably reflect negatively on Entergy or its Registrant Subsidiaries; measures taken to offset reductions in demand or to supply rising demand; a significant dispute with one of Entergy’s or its Registrant Subsidiaries’ customers or other stakeholders; or negative political and public sentiment resulting in a significant amount of adverse press coverage and other adverse statements affecting Entergy or its Registrant Subsidiaries.
Addressing any adverse publicity or regulatory scrutiny is time consuming and expensive and, regardless of the factual basis for the assertions being made (or lack thereof), can have a negative impact on the reputations of Entergy or its Registrant Subsidiaries, on the morale and performance of their employees, and on their relationships with their respective regulators, customers, investors, and commercial counterparties. Adverse publicity or regulatory scrutiny may also have a negative impact on Entergy or its Registrant Subsidiaries’ ability to take timely advantage of various business or market opportunities.
Deterioration in Entergy’s or its Registrant Subsidiaries’ reputations may harm Entergy’s or its Registrant Subsidiaries’ relationships with their customers, regulators, and other stakeholders, may increase their cost of doing business, may interfere with their ability to attract and retain a qualified, inclusive, and diverse workforce with a wide variety of backgrounds, experiences, and perspectives, may impact Entergy’s or its Registrant Subsidiaries’ ability to raise debt capital, and may potentially lead to the enactment of new laws and regulations, or the modification of existing laws and regulations, that negatively affect the way Entergy or its Registrant Subsidiaries conduct their business, or may have a material adverse effect on their financial condition and results of operations.
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
Recent U.S. tax legislation may materially adversely affect Entergy’s financial condition, results of operations, and cash flows.
The Tax Cuts and Jobs Act of 2017 significantly changed the U.S. Internal Revenue Code, including taxation of U.S. corporations, by, among other things, reducing the federal corporate income tax rate, limiting interest deductions, and altering the expensing of capital expenditures. The Inflation Reduction Act of 2022 further significantly changed the U.S. Internal Revenue Code by, among other things, enacting a new corporate alternative minimum tax and expanding federal tax credits for clean energy production. The interpretive guidance issued by the IRS and state tax authorities may be inconsistent with Entergy’s own interpretation and the legislation could be subject to amendments, which could lessen or increase certain impacts of the legislation. Further, changes in tax legislation or guidance, or uncertainties regarding the repeal, continuation, or interpretation of such tax legislation or guidance, could impact interpretation of and negotiations around certain contractual arrangements with counterparties, which could result in unfavorable changes to such arrangements or delays. In addition, the retail regulatory treatment of the expanded tax credits and corporate alternative minimum tax included in the Inflation Reduction Act of 2022, or any other changes to or repeal of such tax credits, could materially impact Entergy’s future cash flows, and this legislation and pending interpretive guidance could result in unintended consequences not yet identified that could have a material adverse impact on Entergy’s financial results and future cash flows.
Based on current IRS guidance and current internal forecasts, Entergy and the Registrant Subsidiaries may become subject to the corporate alternative minimum tax included in the Inflation Reduction Act of 2022 beginning in the next two to four years.
The tax rate decrease included in the Tax Cuts and Jobs Act required Entergy to record a regulatory liability for income taxes payable to customers. Such regulatory liability for income taxes is described in Note 3 to the financial statements.
See Note 3 to the financial statements for discussion of the effects of the Tax Cuts and Jobs Act on 2024, 2023, and 2022 results of operations and financial condition, the provisions of the Tax Cuts and Jobs Act, and Note 2 to the financial statements for discussion of the regulatory proceedings that have considered the effects of the Tax Cuts and Jobs Act. For further discussion of the effects of the Inflation Reduction Act of 2022, see the “Income Tax Legislation and Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis and Note 3 to the financial statements.
Changes in taxation as well as the inherent difficulty in quantifying potential tax effects of business decisions could negatively impact Entergy’s and the Registrant Subsidiaries’ results of operations, financial condition, and liquidity.
Entergy and its subsidiaries make judgments regarding the potential tax effects of various transactions and results of operations to estimate their obligations to taxing authorities, which judgment may prove to be incorrect or may be disputed by regulators or taxing authorities. These tax obligations include income, franchise, real estate, sales and use, and employment-related taxes. These judgments include provisions for potential adverse outcomes regarding tax positions that have been taken. Entergy and its subsidiaries also estimate their ability to utilize tax benefits, including those in the form of carryforwards for which the benefits have already been reflected in the financial statements. Changes in federal, state, or local tax laws or interpretive guidance relating thereto, adverse tax audit results or adverse tax rulings on positions taken by Entergy and its subsidiaries could negatively affect Entergy’s and the Registrant Subsidiaries’ results of operations, financial condition, and liquidity. The intended and unintended consequences of recently enacted legislation could have a material adverse impact on Entergy’s financial results and future cash flows. For further information regarding Entergy’s income taxes, see the “Income Tax Legislation and Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis and Note 3 to the financial statements.
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
Entergy and its subsidiaries’ ability to successfully execute on their business strategies, including their ability to execute on their growth strategies and to complete strategic transactions, is subject to significant risks, and, as a result, they may be unable to achieve some or all of the anticipated results of such strategies.
Entergy and its subsidiaries’ future prospects and results of operations significantly depend on their ability to successfully implement their business strategies, including executing on their growth strategy and achieving Entergy’s climate goals and commitments, which are subject to business, regulatory, economic, shareholder activism and other risks and uncertainties, many of which are beyond their control. As a result, Entergy and its subsidiaries may be unable to fully achieve the anticipated results of such strategies.
Entergy and its subsidiaries anticipate a high level of load growth in their industrial and large commercial customer segments, including from large data centers owned by a small number of large customers. Entergy and its subsidiaries may be unsuccessful in capturing such opportunities or the opportunities to serve these new large customers may not materialize to the degree currently expected. Entergy and its subsidiaries also may not have access to the capital needed to finance the incremental growth on terms and conditions satisfactory to Entergy or its subsidiaries and consistent with the maintenance of satisfactory credit ratings. Entergy and its subsidiaries may fail to execute within currently expected time frames or within currently expected costs, due to a number of factors, including failure to obtain, or any delay in obtaining, regulatory approval, shortages of qualified labor, supply chain constraints, other cost pressures, or inadequate project management and execution. Entergy and its subsidiaries may not be able to adequately protect contractually against the risks inherent in relying on such rapid growth within a small number of large customers concentrated in a single industry. These customers may represent a high percentage of total sales, revenues, and cash flow with respect to the applicable Utility operating company and thereby create business and credit concentration risks which Entergy and its subsidiaries may not be able to fully mitigate.
Additionally, Entergy and its subsidiaries have pursued and may continue to pursue strategic transactions including merger, acquisition, divestiture, joint venture, restructuring, or other strategic transactions. For example, each of Entergy Louisiana and Entergy New Orleans have entered into purchase and sale agreements to sell their respective regulated natural gas local distribution company businesses to a third-party. Also, a significant portion of Entergy’s utility business plan over the next several years includes the construction and/or purchase of several natural gas plants and solar facilities. These or other transactions and plans are or may become subject to regulatory approval and other material conditions or contingencies, including increased costs or delays resulting from supply chain disruptions, import tariffs, and other issues. The failure to complete these transactions or plans or any future strategic transaction successfully or on a timely basis could have an adverse effect on Entergy’s or its subsidiaries’ financial condition or results of operations and the market’s perception of Entergy’s ability to execute its strategy. Further, these transactions, and any completed or future strategic transactions, involve substantial risks, including the following:
•acquired businesses or assets may not produce revenues, earnings, or cash flow at anticipated levels;
•acquired businesses or assets could have environmental, permitting, or other problems for which contractual protections prove inadequate;
•Entergy and/or its subsidiaries may assume liabilities that were not disclosed to them, that exceed their estimates, or for which their rights to indemnification from the seller are limited;
•Entergy may experience issues integrating businesses into its internal controls over financial reporting;
•the acquisition or disposition of a business could divert management’s attention from other business concerns;
•Entergy and/or its subsidiaries may be unable to obtain the necessary regulatory or governmental approvals to close a transaction, such approvals may be granted subject to terms that are unacceptable, or Entergy or its subsidiaries otherwise may be unable to achieve anticipated regulatory treatment of any such transaction or acquired business or assets;
•shifting governmental policies may impact government support for capital projects, including tax incentives or tax credits, grants, guarantees, or other subsidies; and
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
•Entergy or its subsidiaries otherwise may be unable to achieve the full strategic and financial benefits that they anticipate from the transaction, or such benefits may be delayed or may not occur at all.
Entergy and its subsidiaries may not be successful in managing these or any other significant risks that they may encounter in acquiring or divesting a business, or engaging in other strategic transactions, which could have a material effect on their business, financial condition, or results of operations.
The success of certain Utility operating companies’ investments in new generation and transmission assets to support large-scale data centers depends on a limited number of customers, the continued demand for electricity to power data centers, and the successful completion of the associated generation and transmission projects. Any reduction in the demand for electricity to power data centers or delays or unexpected costs associated with such projects may harm the growth prospects, future operating results, and financial condition of Entergy and these Utility operating companies.
Subject to pending regulatory approvals, certain Utility operating companies are planning to make significant infrastructure investments in new solar projects, natural gas power plants, and other transmission and generation assets to power new large-scale data centers. These infrastructure investments are being made primarily in connection with electric service agreements with a small number of customer representing significant new load to provide power for new data centers being constructed to support artificial intelligence and other technology capabilities. The Utility operating companies continue to explore similar opportunities and may engage in additional similar transactions in the future.
This concentration of business with a small number of customers in an industry based on emerging technologies, including artificial intelligence and machine learning, presents several risks for these Utility operating companies. These technologies and their related business applications have developed rapidly in recent years and continue to develop. Entergy cannot predict the rate at which or the extent to which these emerging technologies will be broadly adopted and successful as business models. Changes in industry practice or advances in these technologies could reduce the demand for electricity to power data centers. Additionally, these customers may experience business downturn, which may cause the loss of these customers or may weaken their financial condition. Similarly, customers may reduce their investment in these new technologies or abandon them entirely.
Any of these situations may result in the early termination or non-renewal of these customers’ electric service agreements or renewal on terms less favorable to the Utility operating company. Our electric service agreements with these customers include provisions for early termination payments in certain circumstances, but they do not fully protect against these risks. In the event a customer does not renew its electric service agreement, the Utility operating companies are also subject to the risk that they may not be able to enter into services agreements with new customers or that the terms of any new agreements may be less favorable to the Utility operating companies. While the assets constructed to serve these customers may otherwise be useful in the Utility operating companies’ business, there is a risk that the Utility operating companies may not be able to fully recover their investment in or a return on those assets, either through retail or wholesale rates. The small number of such customers and scale of the investment required to support those customers exacerbates this risk.
The success of these Utility operating companies’ investments in new generation and transmission assets to support large-scale data centers depends on the successful completion of large capital projects to provide electricity to these data centers. As discussed elsewhere in this report, the ability to complete large capital projects is dependent upon several factors, including, among others, the ability to obtain financing of such projects on satisfactory terms and conditions, secure regulatory permits, secure sufficient land for the siting of solar panels and power generation facilities, obtain and maintain MISO interconnection queue positions and otherwise obtain necessary interconnection or transmission service in MISO, and hire qualified labor, as well as levels of public support or opposition to these projects, and suppliers’ and contractors’ performance and ability to fulfill their obligations under contracts. Successful completion of these projects may be further influenced by changes in law or regulation, such as environmental compliance requirements or MISO tariff rules and processes, direct and indirect
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
trade and tariff issues, including those associated with imported solar panels, as well as supply chain delays or disruptions, workforce challenges, and other events beyond the control of these Utility operating companies. The occurrence of any of these events may materially affect the schedule, cost, and performance of these projects. If these projects are significantly delayed or become subject to cost overruns or cancellation, Entergy and the Utility operating companies could incur additional costs and termination payments or face increased risk of potential write-offs of their investments in these projects or incur other costs or risks, including MISO market risks or charges. For additional information concerning these Utility operating companies’ investments in new generation to support large-scale data centers, see “Utility - Property and Other Generation Resources - Provision of Service to Large-Scale Data Center Customers” in Part I, Item 1.
The business, results of operations and financial condition of Entergy and these Utility operating companies could be materially adversely affected as a result of any or all of these factors.
The completion of capital projects, including the construction of power generation facilities, and other capital improvements, involve substantial risks. Should such efforts be unsuccessful, the financial condition, results of operations, or liquidity of Entergy and the Utility operating companies could be materially affected.
Entergy’s and the Utility operating companies’ ability to complete capital projects, including the construction of power generation facilities, or make other capital improvements, such as transmission and distribution infrastructure replacements or upgrades, in a timely and cost-effective manner and within budget is contingent upon many variables and subject to substantial risks. These variables include, but are not limited to, project management expertise, escalating costs for materials, labor, and environmental compliance, reliance on suppliers for timely and satisfactory performance, delays and cost increases, and supply chains and material constraints, including those that may result from major storm events, both within and outside of Entergy’s service area. Certain events may occur that may materially affect the schedule, cost, and performance of these projects. These events may relate to the actual siting and construction process, such as facing public opposition; delays in obtaining permits; challenges in securing sufficient land for the siting of solar panels, power generation facilities, and large transmission projects; shortages in materials and qualified labor; suppliers and contractors not performing as expected or required under their contracts and/or experiencing financial problems that inhibit their ability to fulfill their obligations under contracts; supply chain delays or disruptions; and changes in the scope and timing of projects. Various economic and financial factors may include poor quality initial cost estimates from contractors; the inability to raise capital on favorable terms; changes in commodity prices affecting revenue, fuel costs, or materials costs; and downward changes in the economy. Regulatory and legal issues include items such as changes in law or regulation, including environmental compliance requirements; and further direct and indirect trade and tariff issues, including those associated with imported solar panels or other goods or products required to complete major capital projects. Additionally, other events beyond the control of the Utility operating companies may occur that may materially affect the schedule, cost, and performance of these projects.
If these projects or other capital improvements are significantly delayed or become subject to cost overruns or cancellation, Entergy and the Utility operating companies could incur additional costs and termination payments or face increased risk of potential write-off of the investment in the project. In addition, the Utility operating companies could be exposed to higher costs and market volatility, which could affect cash flow and cost recovery, should their respective regulators decline to approve the construction of the project or new generation needed to meet the reliability needs of customers at the lowest reasonable cost.
For further information regarding capital expenditure plans and other uses of capital in connection with capital projects, including the potential construction and/or purchase of additional generation supply sources within the Utility operating companies’ service areas, see the “Capital Expenditure Plans and Other Uses of Capital” section of Management’s Financial Discussion and Analysis for Entergy and each of the Registrant Subsidiaries.
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
Failure to attract, retain and manage an appropriately qualified workforce could negatively affect Entergy or its subsidiaries’ results of operations.
Entergy relies on a large and changing workforce, including employees, contractors, and temporary staffing. Certain factors, such as an aging workforce, mismatching of skill sets for current and future needs, failing to appropriately anticipate future workforce needs, workforce impacts from public health concerns, challenges competing with other employers offering fully remote or more flexible work options, rising salary and other labor costs, unavailability of contract resources, and labor disputes and work disruptions may lead to operating challenges and increased costs. The challenges include inability to attract or retain talent, lack of resources, loss of knowledge base, and the time required for skill development. Costs, including costs for contractors to replace employees, productivity costs, and safety costs, may increase. Failure to hire and adequately train replacement employees, or the future availability and cost of contract labor, may adversely affect the ability to manage and operate the business, especially considering the specialized workforce needs associated with nuclear generation facilities and new skills required to develop and operate a modernized, technology-enabled, and lower carbon power grid. If Entergy and its subsidiaries are unable to successfully attract, retain, and manage an appropriately qualified workforce and/or retain sufficient skilled contract labor resources to supplement the workforce, their results of operations, financial position, and cash flows could be negatively affected.
Entergy and its subsidiaries, including the Utility operating companies and System Energy, may incur substantial costs to fulfill their obligations related to environmental and other matters.
The businesses in which Entergy’s subsidiaries, including the Utility operating companies and System Energy, operate are subject to extensive existing environmental regulation by local, state, and federal authorities. These laws and regulations affect the manner in which the Utility operating companies and System Energy conduct their operations and make capital expenditures. These laws and regulations also affect how Entergy’s subsidiaries, including the Utility operating companies and System Energy, manage air emissions, discharges to water, wetlands impacts, solid and hazardous waste storage and disposal, cooling and service water intake, the protection of threatened and endangered species, certain migratory birds and eagles, hazardous materials transportation, and similar matters. Federal, state, and local authorities continually revise these laws and regulations, and the laws and regulations are subject to judicial interpretation and to the implementing agencies’ permitting and enforcement decisions. Developing and implementing plans for facility compliance with these requirements can lead to capital, personnel, and operation and maintenance expenditures. Violations of these requirements can subject the Utility operating companies and System Energy to enforcement actions, capital expenditures to bring existing facilities into compliance, additional operating costs or operating restrictions to achieve compliance, remediation and clean-up costs, civil penalties, and exposure to third parties’ claims for alleged health or property damages or for violations of applicable permits or standards. In addition, Entergy and its subsidiaries, including the Utility operating companies and System Energy, are subject to potential liability under these laws for the costs of remediation of environmental contamination of property now or formerly owned or operated by the Utility operating companies and System Energy and of property potentially contaminated by hazardous substances they generate. The Utility operating companies currently are involved in proceedings relating to sites where hazardous substances have been released and may be subject to additional proceedings in the future. Entergy’s subsidiaries, including the Utility operating companies and System Energy, have incurred and expect to incur significant costs related to environmental compliance.
Emissions of nitrogen and sulfur oxides, mercury, particulates, greenhouse gases, and other regulated emissions from generating plants potentially are subject to increased regulation, controls, and mitigation expenses. In addition, existing environmental regulations and programs promulgated by the EPA often are challenged legally, or are revised or withdrawn by the EPA, sometimes resulting in large-scale changes to anticipated regulatory regimes and the resulting need to shift course, both operationally and economically, depending on the nature of the changes. Risks relating to global climate change, initiatives to regulate, or otherwise compel reductions of greenhouse gas emissions, and water availability issues are discussed below.
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
Entergy and its subsidiaries may not be able to obtain or maintain all required environmental regulatory approvals. If there is a delay in obtaining any required environmental regulatory approvals, or if Entergy and its subsidiaries fail to obtain, maintain, or comply with any such approval, the operation of its facilities could be stopped or become subject to additional costs. For further information regarding environmental regulation and environmental matters, including Entergy’s response to climate change, see the “Regulation of Entergy’s Business – Environmental Regulation” section of Part I, Item 1.
Environmental and regulatory obligations intended to combat the effects of climate change, including by compelling greenhouse gas emission reductions or reporting, increasing clean or renewable energy requirements, or placing a price on greenhouse gas emissions, or the achievement of voluntary climate commitments could materially affect the financial condition, results of operations, and liquidity of Entergy and Entergy’s subsidiaries, including the Utility operating companies and System Energy.
In an effort to address climate change concerns, some federal, state, and local authorities have been calling for additional laws and regulations aimed at known or suspected causes of climate change. For example, the EPA, various environmental interest groups, and other organizations have focused considerable attention on CO2 emissions from power generation facilities and their potential role in climate change. The EPA has promulgated regulations controlling greenhouse gas emissions from certain vehicles, and has proposed regulations for new, existing, and significantly modified stationary sources of emissions, including electric generating units. Such regulations continue to evolve. Various states and regions of the U.S. have taken action to establish greenhouse gas limitations and trading programs. In Louisiana, the former Office of the Governor announced in 2020 the creation of a Climate Initiatives Task Force and issued an executive order that established a path to net-zero emissions by 2050, while in 2021, the City Council of New Orleans passed a renewable and clean portfolio standard that sets a goal of net-zero emissions by 2040 and absolute zero emissions by 2050. The impact that continued changes in the governmental response to climate change risk and any judicial interpretation thereof will have on existing and pending environmental laws and regulations related to greenhouse gas emissions currently is unclear.
Developing and implementing plans for compliance with greenhouse gas emissions reduction or reporting or clean/renewable energy requirements, or for achieving voluntary climate commitments can lead to additional capital, personnel, and operation and maintenance expenditures and could significantly affect the economic position of existing facilities and proposed projects. The operations of low or non-emitting generating units (such as nuclear units and solar facilities) at lower than expected capacity factors could require increased generation from higher emitting units, thus increasing Entergy’s greenhouse gas emission rate. Similarly, increased load growth and the natural gas generation required to meet that increased demand could result in an increase in Entergy’s absolute greenhouse gas emissions. Moreover, long-term planning to meet environmental requirements can be negatively impacted and costs may increase to the extent laws and regulations change prior to full implementation. These requirements could, in turn, lead to changes in the planning or operations of balancing authorities or organized markets in areas where Entergy’s subsidiaries, including the Utility operating companies or System Energy, do business. Violations of such requirements may subject the Utility operating companies to enforcement actions, capital expenditures to bring existing facilities into compliance, additional operating costs or operating restrictions to achieve compliance, civil penalties, and exposure to third parties’ claims for alleged health or property damages or for violations of applicable permits or standards. Further, real or perceived violations of environmental regulations, including those related to climate change, or inability to meet Entergy’s voluntary climate commitments, could negatively impact Entergy’s reputation or inhibit Entergy’s ability to pursue its decarbonization objectives. To the extent Entergy believes any of these costs are recoverable in rates, however, additional material rate increases for customers could be resisted by Entergy’s regulators and, in extreme cases, Entergy’s regulators might attempt to deny or defer timely recovery of these costs.
Future changes in regulation or policies governing the reporting or emission of, or government programs relating to, CO2 and other greenhouse gases or mix of generation sources could (i) result in significant additional costs to Entergy’s Utility operating companies, their suppliers, or customers; (ii) make some of Entergy’s electric generating units uneconomical to maintain or operate; (iii) result in the early retirement of generation facilities and
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
stranded costs if Entergy’s Utility operating companies are unable to fully recover the costs and investment in generation; (iv) increase the difficulty that Entergy and its Utility operating companies have with obtaining or maintaining required environmental regulatory approvals; and (v) cause the financing needs of Entergy and its subsidiaries to increase should such changes result in a repeal or limitation on government tax credits, loans, grants, guarantees, or other subsidies incentivizing the development or utilization of alternative sources of generation , each of which could materially affect the financial condition, results of operations, and liquidity of Entergy and its subsidiaries. In addition, lawsuits have occurred or are reasonably expected against emitters of greenhouse gases alleging that these companies are liable for personal injuries and property damage caused by climate change. These lawsuits may seek injunctive relief, monetary compensation, and punitive damages.
In March 2019, Entergy voluntarily set a climate goal to achieve a 50 percent reduction in its carbon emission rate from the year 2000 by 2030. In September 2020, Entergy voluntarily committed to achieving net zero carbon emissions by 2050. In November 2022, Entergy voluntarily set a climate goal to achieve 50 percent carbon-free energy capacity by 2030. Due to stronger than initially expected sales growth, likely necessitating the development of new generation capacity that is not carbon-free, Entergy expects that achievement of the 50% carbon-free energy generating capacity goal will be delayed for a period beyond 2030 that has not yet been determined. In addition, achievement of the 2030 emission rate goal could also be challenged as a result of the forecasted and future sales growth. Further risks to achieving the 2030 and 2050 goals include, among other things, the ability to execute on renewable resource plans, regulatory approvals, customer demand for carbon-free energy that exceeds Entergy’s or its Utility operating companies’ ability to add lower carbon or carbon-free capacity, load growth, potential tariffs, carbon policy and regulation at the federal or state level, including mandates related to reliability standards, and supply chain costs and constraints. Technology research and development, innovation, and advancements in carbon-free generation are also critical to Entergy’s ability to achieve its 2050 commitment. Entergy cannot predict the ultimate impact of achieving these objectives, or the various implementation aspects, on its system reliability, or its results of operations, financial condition, or liquidity.
The physical effects of climate change could materially affect the financial condition, results of operations, and liquidity of Entergy and its subsidiaries.
Potential physical risks from climate change include an increase in sea level, wind and storm surge damages, more frequent or intense hurricanes and wildfires, wetland and barrier island erosion, flooding and changes in weather conditions (such as increases in precipitation, drought, or changes in average temperatures), and potential increased impacts of extreme weather conditions or storms. Entergy’s subsidiaries own assets in, and serve, communities that are at risk from sea level rise, changes in weather conditions, storms, floods, and loss of the protection offered by coastal wetlands. A significant portion of the nation’s oil and gas infrastructure is located in these areas and susceptible to storm damage that could be aggravated by the physical impacts of climate change, which could give rise to fuel supply interruptions and price spikes. Entergy and its subsidiaries also face the risk that climate change could impact the availability and quality of water supplies necessary for operations.
Due in part to the recent increase in frequency and intensity of major storm activity along the Gulf Coast, Entergy has and continues to pursue and execute on plans to accelerate investments that would enhance the resilience of the electric systems of the Utility operating companies to enable them to better withstand major storms or other significant events, to mitigate the cost of restoration of the electric system after major storms or other significant events, to enable more rapid restoration of electricity after major storm or other significant adverse events, and to deliver electricity to critical customers more immediately after such events. These plans are generally subject to approval by the Utility operating companies’ retail regulators and may not be approved in full or at all. Certain accelerated resilience plans of the Utility operating companies have received regulatory approval for a limited scope and duration, generally at levels less than those proposed to the regulators. The Utility operating companies may not be able to successfully execute such plans and projects in the time and manner planned and there are risks regarding the ability to demonstrate the efficacy of the accelerated resilience investments in mitigating storm impacts, as well as in seeking and obtaining regulatory approval for additional accelerated resilience plans and projects that may be necessary. The need for this investment and these expenditures could give
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
rise to execution, liquidity, capital or other financing-related risks as well as result in upward pressure on the retail rates of the Utility operating companies, which, particularly when combined with upward pressure resulting from the recovery of the costs of recent and future storms, may result in adverse actions by the Utility operating companies’ retail regulators or effectively limit the ability to make other planned capital or other investments.
Additionally, prolonged drought conditions and shifting weather patterns resulting from climate change as well as, among other things, buildup of dry vegetation in areas severely impacted by drought may increase the risk of severe wildfire events within the Utility operating companies’ service areas. Catastrophic wildfires occurring in the Utility operating companies’ service areas could give rise to large damage claims against Entergy or its subsidiaries for fire-related losses alleged to be the result of utility practices and/or the failure of electric and other utility equipment and could also cause Entergy or its subsidiaries to suffer reputational harm or face a more challenging operating, political and regulatory environment.
These and other physical changes could result in, among other things, changes in customer demand, increased costs associated with repairing and maintaining generation facilities and transmission and distribution systems resulting in increased maintenance and capital costs (and potential increased financing needs), limits on the Entergy system’s ability to meet peak customer demand, more frequent and longer lasting outages, increased regulatory oversight, criticism or adverse publicity, and lower customer satisfaction. Also, to the extent that climate change adversely impacts the economic health of a region or results in energy conservation or demand side management programs, it may adversely impact customer demand and revenues. Such physical or operational risks could have a material effect on Entergy’s and its subsidiaries’ financial condition, results of operations, and liquidity.
A decline in the continued and future availability and quality of water for cooling, process, and sanitary uses could materially affect the financial condition, results of operations, and liquidity of Entergy and its subsidiaries.
Water is a vital natural resource that is also critical to Entergy and its subsidiaries. Entergy’s and its subsidiaries’ facilities use water for cooling, boiler make-up, sanitary uses, potable supply, and many other uses. Entergy’s Utility operating companies also own and/or operate hydroelectric facilities. Accordingly, water availability and quality are critical to Entergy’s and its subsidiaries’ business operations. Impacts to water availability or quality could negatively impact both operations and revenues.
Entergy and its subsidiaries secure water through various mechanisms (ground water wells, surface waters intakes, municipal supply, etc.) and operate under the provisions and conditions set forth by the provider and/or regulatory authorities. Entergy and its subsidiaries also obtain and operate in substantial compliance with water discharge permits issued under various provisions of the Clean Water Act and/or state water pollution control provisions. Regulations and authorizations for both water intake and use and for waste discharge can become more stringent in times of water shortages, low flows in rivers, low lake levels, low groundwater aquifer volumes, and similar conditions. The increased use of water by industry, agriculture, and the population at large, population growth, saltwater intrusion, and the potential impacts of climate change on the availability of water resources may cause water use restrictions that affect Entergy and its subsidiaries.
The Utility operating companies, System Energy, and Entergy’s non-utility operations may incur substantial costs related to reliability standards.
Entergy’s business is subject to extensive and mandatory reliability standards. Such standards, which are established by the NERC, the SERC, and other regional enforcement entities, are approved by the FERC and frequently are reviewed, amended, and supplemented. Failure to comply with such standards could result in the imposition of fines or civil penalties, and potential exposure to third party claims for alleged violations of such standards. The standards, as well as the laws and regulations that govern them, are subject to judicial interpretation and to the enforcement discretion vested in the implementing agencies. In addition to exposure to civil penalties
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
and fines, the Utility operating companies have incurred and expect to incur significant costs related to compliance with new and existing reliability standards, including costs associated with the Utility operating companies’ transmission system and generation assets. In addition, the retail regulators of the Utility operating companies possess the jurisdiction, and in some cases have exercised such jurisdiction, to impose standards governing the reliable operation of the Utility operating companies’ distribution systems, including penalties if these standards are not met. The changes to the reliability standards applicable to the electric power industry are ongoing, and Entergy cannot predict the ultimate effect that the reliability standards will have on its Utility and Entergy’s non-utility operations.
Entergy and its subsidiaries may not be adequately hedged against changes in commodity prices, which could materially affect Entergy’s and its subsidiaries’ results of operations, financial condition, and liquidity.
To manage near-term and medium-term financial exposure related to commodity price fluctuations, Entergy and its subsidiaries, including the Utility operating companies, may enter into contracts to hedge portions of their purchase and sale commitments, fuel requirements, and inventories of natural gas, uranium and its conversion and enrichment, coal, refined products, and other commodities, within established risk management guidelines. As part of this strategy, Entergy and its subsidiaries may utilize fixed- and variable-price forward physical purchase and sales contracts, futures, financial swaps, and option contracts traded in the over-the-counter markets or on exchanges. However, Entergy and its subsidiaries normally cover only a portion of the exposure of their assets and positions to market price volatility, and the coverage will vary over time. In addition, Entergy also elects to leave certain volumes during certain years unhedged. To the extent Entergy and its subsidiaries have unhedged positions, fluctuating commodity prices can materially affect Entergy’s and its subsidiaries’ results of operations and financial position.
Although Entergy and its subsidiaries devote a considerable effort to these risk management strategies, they cannot eliminate all the risks associated with these activities. As a result of these and other factors, Entergy and its subsidiaries cannot predict with precision the impact that risk management decisions may have on their business, results of operations, or financial position.
The Utility operating companies and Entergy’s non-utility business are exposed to the risk that counterparties may not meet their obligations, which may materially affect the Utility operating companies and Entergy’s non-utility business.
The risk management practices of the Utility operating companies and Entergy's non-utility business are exposed to the risk that counterparties that owe Entergy and its subsidiaries performance of certain obligations, money, energy, or other commodities will not perform their obligations. If counterparties to these arrangements, such as counterparties to large customer electric service agreements or hedging arrangements, fail to perform, Entergy or its subsidiaries may seek to enforce its contractual protections, but may be unsuccessful, such as in recovering proceeds adequate to cover the related obligations, which could materially affect the applicable Utility operating company or Entergy’s non-utility business, despite any contractual protections.
Market performance and other changes may decrease the value of benefit plan assets, which then could require additional funding and result in increased benefit plan costs.
The performance of the capital markets affects the values of the assets held in trust under Entergy’s pension and postretirement benefits plans. A decline in the market value of the assets may increase the funding requirements relating to Entergy’s benefit plan liabilities and also result in higher benefit costs. As the value of the assets decreases, the “expected return on assets” component of benefit costs decreases, resulting in higher benefits costs. Additionally, asset losses are incorporated into benefit costs over time, thus increasing benefits costs. Volatility in the capital markets has affected the market value of these assets, which has affected and may affect Entergy’s planned levels of contributions in the future. Additionally, changes in interest rates affect the liabilities under Entergy’s pension and postretirement benefits plans; as interest rates decrease, the liabilities
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
increase, potentially requiring additional funding and recognition of higher liability carrying costs. The funding requirements of the obligations related to the pension benefit plans can also increase as a result of changes in, among other factors, retirement rates, life expectancy assumptions, or federal regulations. For further information regarding Entergy’s pension and other postretirement benefits plans, refer to the “Critical Accounting Estimates – Qualified Pension and Other Postretirement Benefits” section of Management’s Financial Discussion and Analysis for Entergy and each of its Registrant Subsidiaries and Note 11 to the financial statements.
The litigation environment in the states in which the Registrant Subsidiaries operate poses a significant risk to those businesses.
Entergy and its subsidiaries and related entities are involved in the ordinary course of business in a number of lawsuits involving employment, commercial, asbestos, hazardous material and customer matters, and injuries and damages issues, among other matters. The states in which Entergy and the Registrant Subsidiaries operate have proven to be unusually litigious environments. Judges and juries in these states have demonstrated a willingness to grant large verdicts, including punitive damages, to plaintiffs in personal injury, property damage, and business tort cases. Entergy and its subsidiaries use legal and appropriate means to contest litigation threatened or filed against them, but the litigation environment in these states poses a significant business risk.
Terrorist attacks and sabotage, physical attacks, cyber attacks, system failures, data breaches or other disruptions of Entergy’s and its subsidiaries’ or their suppliers’ infrastructure or technology systems, including disruptions affecting other third parties ultimately connected to Entergy and its subsidiaries or their suppliers through the transmission grid, may adversely affect Entergy’s business and results of operations.
As an operator of critical infrastructure, Entergy and its subsidiaries face a heightened risk of physical attacks or acts or threats of terrorism, cyber attacks, including ransomware and phishing attacks, business email compromises, viruses, malicious code, and data breaches, whether as a direct or indirect act against one of Entergy’s generation, transmission or distribution facilities, operations centers, infrastructure, or information technology systems used to manage, monitor, and transport power to customers and perform day-to-day business functions as well as against the systems of critical suppliers and contractors or other third parties interconnected through the grid. Like many businesses and operators of critical infrastructure, Entergy and its subsidiaries and their third-party suppliers have in the past and, will in the future, continue to be subject to cyber attacks, cybersecurity threats and attempts to compromise and penetrate the information technology systems of Entergy and its subsidiaries and disrupt their operations.
Entergy and its subsidiaries operate in a business that requires evolving and advanced information technology systems that include sophisticated data collection, processing systems, software, network infrastructure, and other technologies that are becoming more complex and may be subject to mandatory and prescriptive reliability and security standards. The functionality of Entergy’s technology systems depends on its own and its suppliers’ and their contractors’ technology. Suppliers’ and their contractors’ technology systems to which Entergy is connected directly or indirectly support a variety of business processes and activities to store sensitive data, including (i) intellectual property, (ii) proprietary business information, (iii) personally identifiable information of customers, employees, and others, and (iv) data with respect to invoicing and the collection of payments, accounting, procurement, and supply-chain activities. Any significant failure, misconfiguration, or malfunction of such information technology systems could result in loss of or inappropriate access to data or disruptions of operations.
There have been attacks and threats of attacks on energy infrastructure by cyber actors, including those associated with foreign governments. Further, attacks may become more frequent in the future as technology becomes more prevalent and sophisticated in energy infrastructure. An attack could affect Entergy’s or its subsidiaries’ ability to operate, including its ability to operate the information technology systems and network infrastructure on which it relies to conduct business.
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
Given the fraught geopolitical landscape and rapid technological advancements of existing and emerging threats, including threats fueled by artificial intelligence, Entergy’s technology systems remain inherently vulnerable despite implementations and enhancements of the multiple layers of security and controls. In addition, the prevalent use of smartphones, tablets, and other wireless devices, as well as ongoing remote or hybrid work-from-home arrangement for a significant portion of Entergy’s employees and those of its contractors and vendors may also heighten these risks. If Entergy’s or its subsidiaries’ technology systems, or those of critical suppliers or contractors or other third parties interconnected through the grid or otherwise, were compromised and unable to detect or recover in a timely fashion to a normal state of operations, Entergy or its subsidiaries could be unable to perform critical business functions that are essential to the company’s well-being and could result in a loss of or inappropriate access to its confidential, sensitive, and proprietary information, including personal information of its customers, employees, suppliers, and others in Entergy’s care. We cannot anticipate, detect, or implement fully preventive measures against all cybersecurity threats.
Any such attacks, failures, or data breaches could have a material effect on Entergy’s and the Registrant Subsidiaries’ business, financial condition, results of operations or reputation. Although Entergy and the Registrant Subsidiaries purchase insurance for cyber attacks and data breaches, such insurance prices have increased substantially, and coverage may not be adequate to cover all losses that might arise in connection with these incidents. Such incidents may also expose Entergy to an increased risk of litigation (and associated damages and fines). For information on our cybersecurity risk management, strategy, and governance, see “Item 1C. Cybersecurity” in Part I, Item 1C.
Entergy and the Registrant Subsidiaries are subject to risks associated with their ability to obtain adequate insurance at acceptable costs.
The global economic cost to insurers resulting from cyber attacks, natural disasters, wildfires, and other catastrophic events, in addition to an increased focus on climate issues, has had and may continue to have disruptive effects on insurance markets. The availability of insurance capacity may decrease, and the insurance policies that Entergy or the Registrant Subsidiaries are able to obtain may have higher deductibles, higher premiums, and more restrictive terms and conditions. Further, the insurance policies of Entergy or the Registrant Subsidiaries may not cover all of their potential exposures or actual amounts of losses incurred.
Significant increases in commodity prices, the prices of other materials and supplies, and operation and maintenance expenses may adversely affect Entergy's results of operations, financial condition, and liquidity.
Entergy and its subsidiaries have observed and expect continued inflationary pressures related to commodity prices, other materials and supplies, and operation and maintenance expenses, including in the areas of labor, health care, and pension costs. The contracts for the construction of certain of the Utility operating companies’ generation facilities also have included, and in the future may include, price adjustment provisions that, subject to certain limitations, may enable the contractor to increase the contract price to reflect increases in certain costs of constructing the facility. These inflationary pressures could impact the ability of Entergy and its subsidiaries to control costs and/or make substantial investments in their businesses, including their ability to recover costs and investments, and to earn their allowed return on equity within frameworks established by their regulators while maintaining affordability of their services for their customers, in addition to having unpredictable effects on Entergy’s customers. Increases in commodity prices, the prices of other materials and supplies, and operation and maintenance expenses, including increasing labor costs and costs and funding requirements associated with Entergy's defined benefit retirement plans, health care plans, and other employee benefits, could increase their financing needs and otherwise adversely affect their results of operations, financial condition, and liquidity.
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
(Entergy New Orleans)
The effect of higher purchased gas cost charges to customers taking gas service may adversely affect Entergy New Orleans’s results of operations and liquidity.
Gas rates charged to retail gas customers are comprised primarily of purchased gas cost charges, which provide no return or profit to Entergy New Orleans, and distribution charges, which provide a return or profit to the utility. Distribution charges recover fixed costs on a volumetric basis and, thus, are affected by the amount of gas sold to customers. When purchased gas cost charges increase due to higher gas procurement costs, customer usage may decrease, especially in weaker economic times, resulting in lower distribution charges for Entergy New Orleans, which, given its relatively smaller size, could adversely affect results of operations. Purchased gas cost charges, which comprise most of a customer’s bill and may be adjusted monthly, represent gas commodity costs that Entergy New Orleans recovers from its customers. Entergy New Orleans’s cash flows can be affected by differences between the time when gas is purchased and the time when ultimate recovery from customers occurs.
(Entergy Corporation and System Energy)
System Energy owns and, through an affiliate, operates a single nuclear generating facility, and it is dependent on sales to affiliated companies for all of its revenues. Certain contractual arrangements relating to System Energy, the affiliated companies, and these revenues are the subject of ongoing litigation and may be subject to future such litigation and regulatory proceedings.
System Energy’s operating revenues are derived from the allocation of the capacity, energy, and related costs associated with its 90% ownership/leasehold interest in Grand Gulf. Charges under the Unit Power Sales Agreement are paid by the Utility operating companies (other than Entergy Texas) as consideration for their respective entitlements to receive capacity and energy. The useful economic life of Grand Gulf is finite and is limited by the terms of its operating license, which currently expires in November 2044. System Energy’s financial condition depends both on the receipt of payments from the Utility operating companies (other than Entergy Texas) under the Unit Power Sales Agreement and on the continued commercial operation of Grand Gulf. The Unit Power Sales Agreement has in the past been the subject of significant litigation, including claims for refunds and rate adjustments, and is currently the subject of a litigation proceeding at the FERC with respect to System Energy’s inclusion of pre-paid and accrued pension costs in rates. Entergy cannot predict with certainty the outcome of this proceeding or any future proceedings that may arise with respect to the Unit Power Sales Agreement.
See Note 2 to the financial statements for further discussion of the litigation proceedings that have been settled at the FERC. System Energy agreed to implement certain protocols for providing retail regulators with information regarding rates billed under the Unit Power Sales Agreement.
For information regarding the Unit Power Sales Agreement and certain other agreements relating to certain Entergy System companies’ support of System Energy, see Note 8 to the financial statements and the “Utility - System Energy and Related Agreements” section of Part I, Item 1.
(Entergy Corporation)
Entergy’s non-utility operations are subject to substantial governmental regulation and may be adversely affected by legislative, regulatory, or market design changes, as well as liability under, or any future inability to comply with, existing or future regulations or requirements.
Entergy’s non-utility operations, including wholesale sales of electricity, are subject to regulation under federal, state, and local laws. Compliance with the requirements under these various regulatory regimes may cause Entergy’s non-utility operations to incur significant additional costs, and failure to comply with such requirements could result in the imposition of liens, fines, and/or civil or criminal liability. If Entergy’s non-utility operations
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
were deemed to violate market behavior rules, the FERC can impose potential penalties of up to $1.544 million per day for each violation by any such entity of market-based rate rules and regulations.
Entergy’s non-utility operations are also affected by legislative and regulatory changes, as well as by changes to market design, market rules, tariffs, cost allocations, and bidding rules imposed by the existing Independent System Operator. The Independent System Operator that oversees the relevant wholesale power market has imposed, and in the future may continue to impose, mitigation, including price limitations, offer caps and other mechanisms, to address some of the volatility and the potential exercise of market power in that market. These types of price limitations and other regulatory mechanisms may have an adverse effect on the profitability of Entergy’s non-utility operations’ generation facilities that sell energy and capacity into the wholesale power markets.
The regulatory environment applicable to the electric power industry is subject to changes as a result of restructuring initiatives at both the state and federal levels. Entergy cannot predict the future design of the wholesale power markets or the ultimate effect that the changing regulatory environment will have on Entergy’s non-utility operations.
As a holding company, Entergy Corporation depends on cash distributions from its subsidiaries to meet its debt service and other financial obligations and to pay dividends on its common stock, and has provided, and may continue to provide, capital contributions or debt financing to its subsidiaries, which would reduce the funds available to meet its other financial obligations.
Entergy Corporation is a holding company with no material revenue generating operations of its own or material assets other than the stock of its subsidiaries. Accordingly, all of its operations are conducted by its subsidiaries. Entergy Corporation has provided, and may continue to provide, capital contributions or debt financing to its subsidiaries, which would reduce the funds available to meet its financial obligations, including making interest and principal payments on outstanding indebtedness, and to pay dividends on Entergy’s common stock. Entergy Corporation’s ability to satisfy its financial obligations, including the payment of interest and principal on its outstanding debt, and to pay dividends on its common stock depends on the payment to it of dividends or distributions by its subsidiaries. The subsidiaries of Entergy Corporation are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any dividends or make distributions to Entergy Corporation. The ability of such subsidiaries to make payments of dividends or distributions to Entergy Corporation depends on their results of operations and cash flows and other items affecting retained earnings, and on any applicable legal, regulatory, or contractual limitations on subsidiaries’ ability to pay such dividends or distributions. Prior to providing funds to Entergy Corporation, such subsidiaries have financial and regulatory obligations that must be satisfied, including among others, debt service and, in the case of Entergy Utility Holding Company, LLC and Entergy Texas, dividends and distributions on preferred securities. Any distributions from the Registrant Subsidiaries other than Entergy Texas and System Energy are paid directly to Entergy Utility Holding Company, LLC and are therefore subject to prior payment of distributions on its preferred securities.
The hazardous activities associated with power generation could adversely impact our results of operations and financial condition.
Power generation involves hazardous activities, including acquiring, transporting and unloading fuel, operating large pieces of rotating equipment and delivering electricity to transmission and distribution systems. In addition to natural risks, such as earthquakes, floods, lightning, hurricanes and wind, hazards, such as fire, explosion, collapse, and machinery failure, are inherent risks in our operations which may occur as a result of inadequate internal processes, technological flaws, human error, or actions of third parties or other external events. The control and management of these risks depend upon adequate development and training of personnel and on operational procedures, preventative maintenance plans, and specific programs supported by quality control systems, which may not prevent the occurrence and impact of these risks.
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
The hazards described above, along with other safety hazards associated with our operations, can cause significant personal injury or loss of life, severe damage to and destruction of property, plant and equipment, contamination of, or damage to, the environment and suspension of operations. The occurrence of any one of these events may result in our being named as a defendant in lawsuits asserting claims for substantial damages, environmental cleanup costs, personal injury, and fines and/or penalties and may adversely affect our reputation.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Risk Management and Strategy
Entergy and the Registrant Subsidiaries maintain a security-risk-management system with defined roles, duties, governance, and accountability. Under this physical- and cyber-risk model, Entergy and the Registrant Subsidiaries streamline security into a centralized program. The Chief Security Officer (CSO) is responsible for establishing the security and reliability risk strategy, setting policies, monitoring controls and compliance, providing support activities, and reporting on the security program. The Chief Information Security Officer (CISO) is responsible for establishing the cybersecurity strategy and implementing physical and cyber security systems for the security program. The Chief Information Officer (CIO) is responsible for ensuring that Entergy’s information technology infrastructure is secure and reliable. The Chief Ethics & Compliance Officer works with the CSO to address requirements of external security-related regulations, and where applicable, incorporate them into business policies. Management is responsible for identifying and managing risk directly through execution of the security program and compliance with security policies. Entergy and the Registrant Subsidiaries’ risk management model addresses compliance with certain regulatory constructs, such as the NERC Reliability Standards, the NRC Code of Federal Regulations, the Payment Card Industry Data Security Standard, and the Health Insurance Portability and Accountability Act, among other regulations. Entergy and the Registrant Subsidiaries’ risk management model continuously evolves to improve and implement protections, controls, and monitoring to mitigate risks to their part of North America’s electric grid, to protect sensitive information, and to maintain secure business operations. Entergy and the Registrant Subsidiaries manage cybersecurity threats as an enterprise risk with close coordination and information sharing with its federal, state, and local partners. Entergy and the Registrant Subsidiaries also engage with local, state, and federal law enforcement agencies on initiatives to share threat information and participate in a wide range of industry collaborations and classified briefings on cybersecurity developments and evolving risks.
Entergy and the Registrant Subsidiaries maintain access-management controls, including a layered multi-factor authentication process for network and system access, and a defense-in-depth security ecosystem that includes advanced threat detection from independent third parties and federal agencies, security logging and monitoring, and independent third-party penetration and vulnerability assessments. Relevant employees and contractors must complete cybersecurity trainings periodically to heighten security and threat awareness, promote best practices, and meet regulatory requirements. Additional multi-layered prevention and detection processes and technologies to mitigate and minimize the effects of cybersecurity risks include email security, continuous monitoring, vulnerability scanning, anti-virus and anti-malware software, backups and recovery strategy, network segregation, third-party security, and information protection.
Entergy and the Registrant Subsidiaries have incorporated certain cyber-specific response protocols and procedures into their Entergy Incident Management System framework for responding to emergency incidents. This includes the Entergy Incident Response Team Plan, which outlines Entergy’s procedures, steps, and responsibilities for preparing for, detecting, containing, and recovering from an incident. The plan details the roles and responsibilities of Entergy’s officers who would be engaged in such a response to an emergency incident,
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
including key questions to be addressed, critical decision points, and sources of key information to support decision-making. Senior management and the Emergency Incident Response Team periodically review and drill on the plan.
As cybersecurity risks continue to evolve with multiple threat vectors, Entergy and the Registrant Subsidiaries maintain a comprehensive security strategy to keep current with the changing threats. To inform this effort, Entergy and the Registrant Subsidiaries utilize the National Institute of Standards and Technology Cybersecurity Framework, which consists of standards, guidelines, and best practices to manage cybersecurity risk across the enterprise. A risk-based approach is used to direct security initiatives to the most significant risks and provide the most value in terms of risk reduction and protection. Entergy and the Registrant Subsidiaries use a vendor risk management program to assess and monitor security risks that arise from certain third-party vendors. In addition, Entergy and the Registrant Subsidiaries utilize technology and threat-intelligence services to assess and continuously monitor the cybersecurity risk of key vendors, as identified through the vendor risk management program.
While Entergy and the Registrant Subsidiaries have experienced cybersecurity incidents, except as otherwise summarized above or discussed elsewhere in this report, the risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected them including their business strategy, results of operations, or financial condition. See “Item 1A. Risk Factors” in Part I, Item 1A for a detailed description of the risks related to cybersecurity.
Corporate Governance
The Board of Directors is responsible for oversight of the identification, management, and mitigation of enterprise-wide risk, including cybersecurity risk. The Audit Committee has the primary responsibility for overseeing risk management, including oversight of cybersecurity risk management practices and performance. The Audit Committee generally receives reports at each regular quarterly meeting provided by the CSO, the CISO, the CIO, and the General Auditor on the cybersecurity management program. The reports focus on the programs and protocols in place to mitigate cybersecurity risks, led by the CSO. Among other things, the reports may include: recent cyber risk and cybersecurity developments; industry engagement activities; legislative and regulatory developments; cyber-risk governance and oversight; selected cyber risk metrics and activities; cyber risk incident response plans and strategies; cybersecurity drills and exercises; assessments by third party experts and Internal Audit; and major projects and initiatives.
While the Board of Directors and Audit Committee oversee cybersecurity risk management, Entergy’s management is responsible for managing cybersecurity risk. Entergy and the Registrant Subsidiaries’ security-risk-management system, as discussed above, is comprised of a three lines of defense model to enhance risk management efforts and define roles in the security program. The first line of defense, comprised of business units performing operational functions, including the CISO and CIO, is responsible for identification and management of security and reliability risks directly through design, implementation, and execution of control activities. The second line of defense, comprised of the CSO and Chief Security Office, performs and supports security and reliability risk management and governs and oversees the execution of security and reliability controls by the first line of defense. Ownership of specific security operations may migrate from a business unit in the first line of defense to the second line of defense, as determined to be appropriate by the Chief Security Office. The third line of defense, which includes Internal Audit, independent third parties, and certain regulatory constructs, such as the NERC Reliability Standards and the NRC Cyber Rule, provides assurance of selective actions taken by the first and second lines of defense to senior management and the Board of Directors.
Entergy’s CSO is responsible for overseeing physical, cyber, and reliability risk, including governance, compliance, and threat intelligence. The CSO’s background includes serving as the Global Lead Business Information Security Officer for a multinational pharmaceutical and biotechnology company, Vice President of Cybersecurity Solutions for an international consulting firm, and an operations manager for a multinational technology company. The CSO is also a former intelligence officer in the U.S. Marine Corps, with experience in
Part I Item 1A, 1B, and 1C
Entergy Corporation, Utility operating companies, and System Energy
the Fleet Marine Force, Joint Staff J-2/Defense Intelligence Agency, and Headquarters Marine Corps Command, Control, Communications, and Computers (C4I). The CSO participated in numerous exercises and crisis operations during his time in the military. The CSO is a member of the Information Systems Audit and Control Association and a certified Information Privacy Manager from the International Association of Privacy Professionals. The CSO also completed the Harvard Kennedy School Executive Education Program in Cybersecurity and the FBI Domestic Security Executive Academy.
Entergy’s CISO is responsible for enterprise strategic and operational cybersecurity, physical security systems, and regulatory compliance. The CISO oversees investments in tools, resources, and processes that allow for the continuous improvement and maturity of Entergy’s cybersecurity posture. The CISO has expertise spanning more than 25 years in the realm of information technology, information security, and cyber/physical security management. The CISO’s background includes serving as the Vice President and Chief Information Security Officer for an electric utility with responsibility for enterprise cybersecurity covering corporate, electric, nuclear, and gas operations. Additionally, the CISO served as the Chief Security Officer for the Electric Reliability Council of Texas with overall responsibility for its cybersecurity, physical security, and emergency management programs. Her previous experience includes multiple technical, managerial, and strategic roles within industries ranging from energy, telecommunication, software development, and cybersecurity consulting. The CISO is a Certified Information Systems Security Professional, Certified Information Security Manager, and Certified in Risk and Information Systems Control.
Entergy’s CIO is responsible for ensuring that the organization’s information technology systems, infrastructure, and applications are designed, implemented, and maintained to provide secure and reliable performance in support of Entergy’s business objectives. The CIO establishes and enforces IT policies, procedures, and controls to mitigate information technology policies, procedures, and controls to mitigate information technology-related risks and provides guidance and support to the business units in the effective use of information technology resources and the management of information technology-related risks. By fulfilling these responsibilities across the three lines of defense model, the CIO plays a critical role in ensuring that Entergy’s information technology-related risks are effectively identified, managed, and mitigated, thereby supporting Entergy’s overall risk management and governance framework. The CIO’s background includes serving in senior leadership roles, including CIO for multiple global manufacturing companies, serving on the board of directors for a telecommunications company, and consulting leadership positions providing services for numerous large, global organizations.
In the event of a suspected or actual cybersecurity incident, the Security Incident Response Team (SIRT), which includes the CISO, has primary responsibility for initial identification and evaluation of potential business impacts and escalation of the incident’s severity classification using pre-established criteria with a specified communication matrix and escalation thresholds. The Security Incident Commander, which role is served by rotating leaders in the CISO organization, provides tactical leadership and oversight management at the cross-functional level for the incident. The SIRT remains engaged throughout the incident response lifecycle, including detection and analysis, containment, eradication and recovery, and post-incident remediation, and coordinates with the impacted business functions, if warranted. Once a cyber incident is confirmed, the SIRT is responsible for maintaining situational awareness and continuous monitoring of the need for escalation or de-escalation of the incident’s severity classification. As certain escalation thresholds are exceeded, additional levels of management notification are required by the SIRT, including notification of and recurring communication with Entergy’s Incident Response Team, which includes the Chief Executive Officer, the Chief Operating Officer, the CSO, other executive management, and members of the affected business functions. Depending upon the facts, analysis, materiality, and anticipated or current impacts, the Chief Executive Officer and the General Counsel will determine the timing and cadence for communication of the cyber incident with the Board of Directors or Audit Committee.
ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS
Results of Operations
2024 Compared to 2023
Net Income
Net income decreased $77.4 million primarily due to a $159.6 million reduction in income tax expense in 2023 as a result of the resolution of the 2016-2018 IRS audit and a $131.8 million ($99.1 million net-of-tax) charge to reflect the write-off of a previously recorded regulatory asset as a result of an adverse decision in the opportunity sales proceeding in March 2024. The decrease was partially offset by write-offs of $78.4 million ($58.8 million net-of-tax) in third quarter 2023 as a result of Entergy Arkansas’s approved motion to forgo recovery of identified costs resulting from the 2013 ANO stator incident, higher retail electric price, higher volume/weather, and higher other income. See Note 3 to the financial statements for further discussion of the resolution of the 2016-2018 IRS audit. See Note 2 to the financial statements for discussion of the opportunity sales proceeding. See Note 8 to the financial statements for further discussion of the ANO stator incident and the approved motion to forgo recovery.
Operating Revenues
Following is an analysis of the change in operating revenues comparing 2024 to 2023:
| | | | | |
| Amount |
| (In Millions) |
| 2023 operating revenues | $2,646.4 | |
| Fuel, rider, and other revenues that do not significantly affect net income | (202.1) | |
| Retail one-time bill credit | (92.3) | |
| Volume/weather | 37.8 | |
| Retail electric price | 70.4 | |
| 2024 operating revenues | $2,460.2 | |
Entergy Arkansas’s results include revenues from rate mechanisms designed to recover fuel, purchased power, and other costs such that the revenues and expenses associated with these items generally offset and do not affect net income. “Fuel, rider, and other revenues that do not significantly affect net income” includes the revenue variance associated with these items.
The retail one-time bill credit represents the disbursement of settlement proceeds in the form of a one-time bill credit provided to Entergy Arkansas’s retail customers during the August 2024 billing cycle through the Grand Gulf credit rider as a result of the System Energy settlement with the APSC. There is no effect on net income because Entergy Arkansas previously recorded a regulatory liability for the effects of the System Energy settlement with the APSC. See Note 2 to the financial statements for discussion of the System Energy settlement with the APSC and discussion of the Grand Gulf credit rider.
The volume/weather variance is primarily due to an increase in residential and industrial usage. The increase in residential usage is primarily due to an increase in customers. The increase in industrial usage is primarily due to an increase in demand from large industrial customers, primarily new customers in the technology industry, and an increase in demand from small industrial customers.
Entergy Arkansas, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
The retail electric price variance is primarily due to an increase in formula rate plan rates effective January 2024. See Note 2 to the financial statements for discussion of the 2023 formula rate plan filing.
Total electric energy sales for Entergy Arkansas for the years ended December 31, 2024 and 2023 are as follows:
| | | | | | | | | | | | | | | | | |
| 2024 | | 2023 | | % Change |
| (GWh) | | |
| Residential | 7,658 | | | 7,610 | | | 1 | |
| Commercial | 5,583 | | | 5,584 | | | — | |
| Industrial | 10,179 | | | 9,095 | | | 12 | |
| Governmental | 185 | | | 192 | | | (4) | |
| Total retail | 23,605 | | | 22,481 | | | 5 | |
| Sales for resale: | | | | | |
| Associated companies | 2,039 | | | 2,218 | | | (8) | |
| Non-associated companies | 4,058 | | | 5,777 | | | (30) | |
| Total | 29,702 | | | 30,476 | | | (3) | |
See Note 19 to the financial statements for additional discussion of Entergy Arkansas’s operating revenues.
Other Income Statement Variances
Other operation and maintenance expenses increased primarily due to:
•an increase of $11.2 million in energy efficiency expenses primarily due to the timing of recovery from customers;
•the effects of recording a final judgment in first quarter 2023 to resolve claims in the ANO damages case against the DOE related to spent nuclear fuel storage costs. The damages awarded included the reimbursement of approximately $10.3 million of spent nuclear fuel storage costs previously recorded as other operation and maintenance expenses. See Note 8 to the financial statements for discussion of the spent nuclear fuel litigation; and
•an increase of $7.2 million in compensation and benefits costs primarily due to higher healthcare claims activity, including lower prescription drug rebates in 2024 as compared to 2023, and higher incentive-based accruals in 2024 as compared to 2023.
The increase was partially offset by:
•a decrease of $11.3 million in nuclear generation expenses primarily due to lower nuclear labor costs;
•a decrease of $8.8 million in power delivery expenses primarily due to lower vegetation maintenance costs; and
•a decrease of $4.4 million in non-nuclear generation expenses primarily due to a lower scope of work during plant outages performed in 2024 as compared to 2023.
Asset write-offs includes:
•a $131.8 million charge to reflect the write-off of a previously recorded regulatory asset as a result of an adverse decision in the opportunity sales proceeding in March 2024. See Note 2 to the financial statements for discussion of the opportunity sales proceeding; and
•the effects of Entergy Arkansas forgoing recovery of identified costs resulting from the 2013 ANO stator incident. In third quarter 2023, Entergy Arkansas recorded write-offs of its regulatory asset for deferred
Entergy Arkansas, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
fuel of $68.9 million and the undepreciated balance of $9.5 million in capital costs related to the ANO stator incident. See Note 8 to the financial statements for further discussion of the ANO stator incident and the approved motion to forgo recovery.
Depreciation and amortization expenses increased primarily due to additions to plant in service, including the Walnut Bend Solar facility, which was placed in service in September 2024.
Other regulatory charges (credits) - net includes:
•the reversal in third quarter 2024 of a $92.3 million regulatory liability recognized for the obligation to return to customers the refund from the System Energy settlement with the APSC. The reversal of the regulatory liability offsets a reduction in gross revenues from the retail one-time bill credits provided to customers in the August 2024 billing cycle through the Grand Gulf credit rider. See Note 2 to the financial statements for discussion of the System Energy settlement with the APSC and discussion of the Grand Gulf credit rider; and
•a regulatory credit of $15.5 million, recorded in fourth quarter 2024, to reflect the amount of the 2023 historical year netting adjustment included in the 2024 formula rate plan filing that it expects to collect from its customers during the 2025 rate effective period. See Note 2 to the financial statements for discussion of the 2024 formula rate plan filing.
In addition, Entergy Arkansas records a regulatory charge or credit for the difference between asset retirement obligation-related expenses and nuclear decommissioning trust earnings plus asset retirement obligation-related costs collected in revenue.
Other income increased primarily due to:
•changes in decommissioning trust fund activity, including portfolio rebalancing of decommissioning trust funds in first quarter 2024;
•higher interest earned on money pool investments;
•a decrease of $12.9 million in non-service pension costs primarily as a result of pension settlement charges recorded in 2023 and a reduction in 2024 in the amortization of deferred pension losses as a result of an amendment to a qualified pension plan spinning-off predominantly inactive participants into a new qualified plan, extending the amortization period for deferred losses. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” below and Note 11 to the financial statements for further discussion of pension and other postretirement benefits costs; and
•an increase in the allowance for equity funds used during construction due to higher construction work in progress in 2024, including the Driver Solar facility and the Walnut Bend Solar facility projects.
Interest expense increased primarily due to the issuances of $400 million of 5.75% Series mortgage bonds and $400 million of 5.45% Series mortgage bonds, each in May 2024, and the issuance of $300 million of 5.30% Series mortgage bonds in August 2023. The increase was partially offset by:
•the repayment of $375 million of 3.70% Series mortgage bonds in June 2024;
•the repayment of $250 million of 3.05% Series mortgage bonds in June 2023; and
•an increase in the allowance for borrowed funds used during construction due to higher construction work in progress in 2024, including the Driver Solar facility and the Walnut Bend Solar facility projects.
The effective income tax rates were 18.9% for 2024 and (33.3%) for 2023. See Note 3 to the financial statements for a reconciliation of the federal statutory rate of 21% to the effective income tax rates and for additional discussion regarding income taxes.
Entergy Arkansas, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
2023 Compared to 2022
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Results of Operations” in Item 7 of Entergy Arkansas’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of results of operations for 2023 compared to 2022.
Income Tax Legislation and Regulation
See the “Income Tax Legislation and Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of income tax legislation and regulation.
Liquidity and Capital Resources
Cash Flow
Cash flows for the years ended December 31, 2024, 2023, and 2022 were as follows:
| | | | | | | | | | | | | | | | | | |
| | 2024 | | 2023 | | 2022 | |
| | (In Thousands) |
| Cash and cash equivalents at beginning of period | $3,632 | | | $5,278 | | | $12,915 | | |
| | | | | | |
| Net cash provided by (used in): | | | | | | |
| Operating activities | 978,680 | | | 941,021 | | | 699,732 | | |
| Investing activities | (1,732,630) | | | (1,032,952) | | | (852,794) | | |
| Financing activities | 755,065 | | | 90,285 | | | 145,425 | | |
| Net increase (decrease) in cash and cash equivalents | 1,115 | | | (1,646) | | | (7,637) | | |
| | | | | | |
| Cash and cash equivalents at end of period | $4,747 | | | $3,632 | | | $5,278 | | |
2024 Compared to 2023
Operating Activities
Net cash flow provided by operating activities increased $37.7 million in 2024 primarily due to:
•lower fuel and purchased power payments;
•the timing of payments to vendors;
•a decrease of $34.1 million in storm spending in 2024 as compared to 2023;
•higher collections from customers; and
•the receipt of $92.7 million in settlement proceeds in 2024 as a result of the System Energy settlement with the APSC, which was subsequently refunded to retail customers in third quarter 2024 with one-time bill credits through the Grand Gulf credit rider. See Note 2 to the financial statements for discussion of the System Energy settlement with the APSC and discussion of the Grand Gulf credit rider.
The increase was partially offset by:
•the timing of recovery of fuel and purchased power costs. See Note 2 to the financial statements for a discussion of fuel and purchased power cost recovery;
•an increase of $43.5 million in interest paid;
•the refund of $41.7 million received from System Energy in January 2023 related to the sale-leaseback renewal costs and depreciation litigation as calculated in System Energy’s January 2023 compliance report
Entergy Arkansas, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
filed with the FERC. The refund was subsequently applied to the under-recovered deferred fuel balance. See Note 2 to the financial statements for further discussion of the refund and the related proceedings;
•$23.2 million in proceeds received from the DOE in April 2023 resulting from litigation regarding spent nuclear fuel storage costs that were previously expensed. See Note 8 to the financial statements for discussion of the spent nuclear fuel litigation; and
•an increase of $8.1 million in spending on nuclear refueling outages in 2024 as compared to 2023.
Investing Activities
Net cash flow used in investing activities increased $699.7 million in 2024 primarily due to:
•the initial and substantial completion payments totaling approximately $392.8 million in 2024 for the purchase of the Driver Solar facility;
•the initial and substantial completion payments totaling approximately $240.4 million in 2024 for the purchase of the West Memphis Solar facility;
•the initial and substantial completion payments totaling approximately $185.5 million in 2024 for the purchase of the Walnut Bend Solar facility;
•an increase of $18.7 million in nuclear construction expenditures primarily due to increased spending on various nuclear projects in 2024;
•$17.9 million in proceeds received from the DOE in April 2023 resulting from litigation regarding spent nuclear fuel storage costs that were previously recorded as construction expenditures. See Note 8 to the financial statements for discussion of the spent nuclear fuel litigation; and
•an increase in cash used of $13.7 million as a result of fluctuations in nuclear fuel activity due to variations from year to year in the timing and pricing of fuel reload requirements, materials and services deliveries, and the timing of cash payments during the nuclear fuel cycle.
The increase was partially offset by a decrease of $156.1 million in distribution construction expenditures and a decrease of $15.6 million in transmission construction expenditures, both primarily due to lower capital expenditures for storm restoration in 2024. See Note 14 to the financial statements for discussion of the Driver Solar facility, the West Memphis Solar facility, and the Walnut Bend Solar facility purchases.
Financing Activities
Net cash flow provided by financing activities increased $664.8 million in 2024 primarily due to:
•the issuances of $400 million of 5.45% Series mortgage bonds and $400 million of 5.75% Series mortgage bonds, each in May 2024;
•capital contributions of approximately $695 million received from Entergy Corporation in 2024 to partially finance the acquisitions of the Walnut Bend Solar facility, the West Memphis Solar facility, and the Driver Solar facility;
•the repayment, at maturity, of $250 million of 3.05% Series mortgage bonds in June 2023;
•a decrease of $107 million in common equity distributions paid in 2024 in order to maintain Entergy Arkansas’s capital structure;
•the issuance of $70 million of 5.54% Series O notes by the Entergy Arkansas nuclear fuel company variable interest entity in March 2024;
•the repayment, at maturity, of $40 million of 3.17% Series M notes by the Entergy Arkansas nuclear fuel company variable interest entity in December 2023; and
•an increase of $18.4 million in advance payments from customers for construction for transmission, distribution, and generator interconnection agreements.
Entergy Arkansas, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
The increase was partially offset by:
•the issuance of $425 million of 5.15% Series mortgage bonds in January 2023;
•the repayment, at maturity, of $375 million of 3.70% Series mortgage bonds in June 2024;
•the issuance of $300 million of 5.30% Series mortgage bonds in August 2023;
•net repayments of $47.7 million in 2024 as compared to net long-term borrowings of $70.2 million in 2023 on the nuclear fuel company variable interest entity’s credit facility; and
•money pool activity.
Decreases in Entergy Arkansas’s payable to the money pool are a use of cash flow, and Entergy Arkansas’s payable to the money pool decreased $130.2 million in 2024 compared to decreasing by $35.4 million in 2023. The money pool is an intercompany cash management program that makes possible intercompany borrowing and lending arrangements, and the money pool and other borrowing arrangements are designed to reduce the Registrant Subsidiaries’ dependence on external short-term borrowings.
See Note 5 to the financial statements for further details of long-term debt.
2023 Compared to 2022
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Cash Flow” in Item 7 of Entergy Arkansas’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of operating, investing, and financing cash flow activities for 2023 compared to 2022.
Capital Structure
Entergy Arkansas’s debt to capital ratio is shown in the following table. The decrease in the debt to capital ratio for Entergy Arkansas is primarily due to capital contributions of $695 million received from Entergy Corporation in 2024, partially offset by the net issuance of long-term debt in 2024.
| | | | | | | | | | | |
| | December 31,
2024 | | December 31,
2023 |
| Debt to capital | 53.6 | % | | 55.5 | % |
| Effect of subtracting cash | — | % | | — | % |
| Net debt to net capital (non-GAAP) | 53.6 | % | | 55.5 | % |
Net debt consists of debt less cash and cash equivalents. Debt consists of short-term borrowings, finance lease obligations, and long-term debt, including the currently maturing portion. Capital consists of debt and equity. Net capital consists of capital less cash and cash equivalents. Entergy Arkansas uses the debt to capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Arkansas’s financial condition. The net debt to net capital ratio is a non-GAAP measure. Entergy Arkansas also 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 Arkansas’s financial condition because net debt indicates Entergy Arkansas’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.
Entergy Arkansas seeks to optimize its capital structure in accordance with its regulatory requirements and to control its cost of capital while also maintaining equity capitalization at a level consistent with investment-grade debt ratings. To the extent that operating cash flows are in excess of planned investments, cash may be used to reduce outstanding debt or may be paid as a distribution, to the extent funds are legally available to do so, or both, in appropriate amounts to maintain the capital structure. To the extent that operating cash flows are insufficient to support planned investments, Entergy Arkansas may issue incremental debt or reduce distributions, or both, to
Entergy Arkansas, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
maintain its capital structure. In addition, in certain infrequent circumstances, such as financing of large transactions that would materially alter the capital structure if financed entirely with debt and reduced distributions, Entergy Arkansas may receive equity contributions to maintain its capital structure.
Uses of Capital
Entergy Arkansas requires capital resources for:
•construction and other capital investments;
•debt maturities or retirements;
•working capital purposes, including the financing of fuel and purchased power costs; and
•distribution and interest payments.
Following are the amounts of Entergy Arkansas’s planned construction and other capital investments.
| | | | | | | | | | | | | | | | | |
| | 2025 | | 2026 | | 2027 |
| | (In Millions) |
| Planned construction and capital investment: | | | | | |
| Generation | $355 | | | $260 | | | $250 | |
| Transmission | 80 | | | 70 | | | 95 | |
| Distribution | 360 | | | 290 | | | 310 | |
| Utility Support | 80 | | | 70 | | | 65 | |
| Total | $875 | | | $690 | | | $720 | |
In addition to routine capital spending to maintain operations, the planned capital investment estimate for Entergy Arkansas includes investments in generation projects to modernize, decarbonize, expand, and diversify Entergy Arkansas’s portfolio; investments in ANO 1 and 2; distribution and Utility support spending to improve reliability, resilience, and customer experience; transmission spending to improve reliability and resilience while also supporting renewables expansion; and other investments. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements, governmental actions, including trade-related governmental actions, such as tariffs and other measures, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital, including any changes to governmental programs, such as loans, grants, guarantees, and other subsidies. Entergy Arkansas is not able to predict the effect of potential changes in regulation and law, changes to governmental programs, such as loans, grants, guarantees, and other subsidies, and trade-related governmental actions, such as tariffs and other measures, on its current and planned capital projects.
Following are the amounts of Entergy Arkansas’s existing debt and lease obligations (includes estimated interest payments).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2025 | | 2026 | | 2027 | | 2028-2029 | | After 2029 |
| | (In Millions) |
| Long-term debt (a) | $211 | | | $885 | | | $210 | | | $770 | | | $6,858 | |
| Operating leases (b) | $20 | | | $18 | | | $15 | | | $14 | | | $5 | |
| Finance leases (b) | $6 | | | $6 | | | $5 | | | $9 | | | $24 | |
(a)Long-term debt is discussed in Note 5 to the financial statements.
(b)Lease obligations are discussed in Note 10 to the financial statements.
Entergy Arkansas, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
Other Obligations
Entergy Arkansas currently expects to contribute approximately $35.5 million to its qualified pension plans and approximately $529 thousand to its other postretirement plans in 2025, although the 2025 required pension contributions will be known with more certainty when the January 1, 2025, valuations are completed, which is expected by April 1, 2025. See “Critical Accounting Estimates – Qualified Pension and Other Postretirement Benefits” below and Note 11 to the financial statements for a discussion of qualified pension and other postretirement benefits funding.
Entergy Arkansas has $15.1 million of unrecognized tax benefits net of unused tax attributes plus interest for which the timing of payments beyond 12 months cannot be reasonably estimated due to uncertainties in the timing of effective settlement of tax positions. See Note 3 to the financial statements for additional information regarding unrecognized tax benefits.
In addition, Entergy Arkansas enters into fuel and purchased power agreements that contain minimum purchase obligations. Entergy Arkansas has rate mechanisms in place to recover fuel, purchased power, and associated costs incurred under these purchase obligations. See Note 8 to the financial statements for discussion of Entergy Arkansas’s obligations under the Unit Power Sales Agreement.
As a wholly-owned subsidiary of Entergy Utility Holding Company, LLC, Entergy Arkansas pays distributions from its earnings at a percentage determined monthly.
Lake Catherine Unit 5
In November 2024, Entergy Arkansas filed an application with the APSC seeking a certificate of environmental compatibility and public need for the construction and operation of Lake Catherine Unit 5, a 446 MW hydrogen-capable simple-cycle natural gas combustion turbine facility to be located at the existing Lake Catherine facility site in Hot Spring County, Arkansas. In December 2024 other parties, including the APSC general staff, filed testimony opposing the resource, although the APSC general staff recognized the capacity need for the resource. Entergy Arkansas filed testimony in January 2025 further supporting its application, and in February 2025 the opposing parties filed responsive rebuttal testimony continuing to dispute the estimated costs and to dispute that Entergy Arkansas performed a market solicitation sufficient to demonstrate that this resource is the most reasonable option for customers. Also in February 2025, Entergy Arkansas filed surrebuttal testimony responding to the opposing parties’ testimony. A hearing, if necessary, is scheduled for early March 2025, with an APSC decision requested by the end of March 2025. Subject to receipt of required regulatory approval and other conditions, the facility is expected to be in service by the end of 2028.
Sources of Capital
Entergy Arkansas’s sources to meet its capital requirements include:
•internally generated funds;
•cash on hand;
•the Entergy system money pool;
•debt or preferred membership interest issuances, including debt issuances to refund or retire currently outstanding or maturing indebtedness;
•capital contributions; and
•bank financing under new or existing facilities.
Circumstances such as weather patterns, fuel and purchased power price fluctuations, and unanticipated expenses, including unscheduled plant outages and storms, could affect the timing and level of internally generated funds in the future. In addition to the financings necessary to meet capital requirements and contractual obligations,
Entergy Arkansas, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
Entergy Arkansas expects to continue, when economically feasible, to retire higher-cost debt and replace it with lower-cost debt if market conditions permit.
All debt and common and preferred membership interest issuances by Entergy Arkansas require prior regulatory approval. Debt issuances are also subject to requirements set forth in Entergy Arkansas’s bond indenture and other agreements. Entergy Arkansas has sufficient capacity under these tests to meet its foreseeable capital needs for the next twelve months and beyond.
Entergy Arkansas’s payables to the money pool were as follows as of December 31 for each of the following years.
| | | | | | | | | | | | | | | | | | | | |
| 2024 | | 2023 | | 2022 | | 2021 |
| (In Thousands) |
| ($15,190) | | ($145,385) | | ($180,795) | | ($139,904) |
See Note 4 to the financial statements for a description of the money pool.
Entergy Arkansas has a credit facility in the amount of $300 million scheduled to expire in June 2029. Entergy Arkansas also has a $25 million credit facility scheduled to expire in April 2026. The $300 million credit facility includes fronting commitments for the issuance of letters of credit against $5 million of the borrowing capacity of the facility. As of December 31, 2024, there were no cash borrowings and no letters of credit outstanding under the credit facilities. In addition, Entergy Arkansas is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO. As of December 31, 2024, there were $18.1 million in letters of credit outstanding under Entergy Arkansas’s uncommitted letter of credit facility. See Note 4 to the financial statements for further discussion of the credit facilities.
The Entergy Arkansas nuclear fuel company variable interest entity has a credit facility in the amount of $80 million scheduled to expire in June 2027. As of December 31, 2024, there were $22.5 million in loans outstanding under the credit facility for the Entergy Arkansas nuclear fuel company variable interest entity. See Note 4 to the financial statements for further discussion of the nuclear fuel company variable interest entity credit facility.
Entergy Arkansas obtained authorization from the FERC through January 2027 for short-term borrowings not to exceed an aggregate amount of $250 million at any time outstanding and borrowings by its nuclear fuel company variable interest entity. See Note 4 to the financial statements for further discussion of Entergy Arkansas’s short-term borrowing limits. The long-term securities issuances of Entergy Arkansas are limited to amounts authorized by the FERC. The APSC has concurrent jurisdiction over Entergy Arkansas’s first mortgage bond/secured issuances. Entergy Arkansas has obtained long-term financing authorization from the FERC that extends through January 2027. Entergy Arkansas has obtained first mortgage bond/secured financing authorization from the APSC that extends through December 2025.
Entergy Arkansas, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
State and Local Rate Regulation and Fuel-Cost Recovery
The rates that Entergy Arkansas charges for its services significantly influence its financial position, results of operations, and liquidity. Entergy Arkansas is regulated, and the rates charged to its customers are determined in regulatory proceedings. A governmental agency, the APSC, is primarily responsible for approval of the rates charged to customers.
Retail Rates
2022 Formula Rate Plan Filing
In July 2022, Entergy Arkansas filed with the APSC its 2022 formula rate plan filing to set its formula rate for the 2023 calendar year. The filing contained an evaluation of Entergy Arkansas’s earnings for the projected year 2023 and a netting adjustment for the historical year 2021. The filing showed that Entergy Arkansas’s earned rate of return on common equity for the 2023 projected year was 7.40% resulting in a revenue deficiency of $104.8 million. The earned rate of return on common equity for the 2021 historical year was 8.38% resulting in a $15.2 million netting adjustment. The total proposed revenue change for the 2023 projected year and 2021 historical year netting adjustment was $119.9 million. By operation of the formula rate plan, Entergy Arkansas’s recovery of the revenue requirement is subject to a four percent annual revenue constraint. Because Entergy Arkansas’s revenue requirement in this filing exceeded the constraint, the resulting increase was limited to $79.3 million. In October 2022 other parties filed their testimony recommending various adjustments to Entergy Arkansas’s overall proposed revenue deficiency, and Entergy Arkansas filed a response including an update to actual revenues through August 2022, which raised the constraint to $79.8 million. In November 2022, Entergy Arkansas filed with the APSC a settlement agreement reached with other parties resolving all issues in the proceeding. As a result of the settlement agreement, the total revenue change was $102.8 million, including a $87.7 million increase for the 2023 projected year and a $15.2 million netting adjustment. Because Entergy Arkansas’s revenue requirement exceeded the constraint, the resulting increase was limited to $79.8 million. In December 2022 the APSC approved the settlement agreement as being in the public interest and approved Entergy Arkansas’s compliance tariff effective with the first billing cycle of January 2023.
2023 Formula Rate Plan Filing
In July 2023, Entergy Arkansas filed with the APSC its 2023 formula rate plan filing to set its formula rate for the 2024 calendar year. The filing contained an evaluation of Entergy Arkansas’s earnings for the projected year 2024 and a netting adjustment for the historical year 2022. The filing showed that Entergy Arkansas’s earned rate of return on common equity for the 2024 projected year was 8.11% resulting in a revenue deficiency of $80.5 million. The earned rate of return on common equity for the 2022 historical year was 7.29% resulting in a $49.8 million netting adjustment. The total proposed revenue change for the 2024 projected year and 2022 historical year netting adjustment was $130.3 million. By operation of the formula rate plan, Entergy Arkansas’s recovery of the revenue requirement is subject to a four percent annual revenue constraint. Because Entergy Arkansas’s revenue requirement in this filing exceeded the constraint, the resulting increase was limited to $88.6 million. The APSC general staff and intervenors filed their errors and objections in October 2023, proposing certain adjustments, including the APSC general staff’s update to annual filing year revenues which lowers the constraint to $87.7 million. Entergy Arkansas filed its rebuttal in October 2023. In October 2023, Entergy Arkansas filed with the APSC a settlement agreement reached with other parties resolving all issues in the proceeding, none of which affected Entergy Arkansas’s requested recovery up to the constraint of $87.7 million. The settlement agreement provided for amortization of the approximately $39 million regulatory asset for costs associated with the COVID-19 pandemic over a 10-year period as well as recovery of $34.9 million related to the resolution of the 2016 and 2017 IRS audits from previous tax positions that are no longer uncertain, partially offset by $24.7 million in excess accumulated deferred income taxes from reductions in state income tax rates, each before consideration of their respective tax gross-up. See Note 3 to the financial statements for further discussion of the resolution of the 2016-2018 IRS audit and the State of Arkansas corporate income tax rate changes. In December
Entergy Arkansas, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
2023 the APSC approved the settlement agreement as being in the public interest and approved Entergy Arkansas’s compliance tariff effective with the first billing cycle of January 2024.
2024 Formula Rate Plan Filing
In July 2024, Entergy Arkansas filed with the APSC its 2024 formula rate plan filing to set its formula rate for the 2025 calendar year. The filing contained an evaluation of Entergy Arkansas’s earnings for the 2025 projected year and a netting adjustment for the 2023 historical year. The filing showed that Entergy Arkansas’s earned rate of return on common equity for the 2025 projected year was 8.43% resulting in a revenue deficiency of $69.5 million. The earned rate of return on common equity for the 2023 historical year was 7.48% resulting in a $33.1 million netting adjustment. The total proposed revenue change for the 2025 projected year and 2023 historical year netting adjustment is $102.6 million. By operation of the formula rate plan, Entergy Arkansas’s recovery of the revenue requirement is subject to a four percent annual revenue constraint. Because Entergy Arkansas’s revenue requirement in this filing exceeded the constraint, the resulting increase was limited to $82.6 million. The APSC general staff and intervenors filed their errors and objections in October 2024, proposing certain adjustments, including the APSC general staff’s update to annual filing year revenues that increases the constraint to $83.5 million. Entergy Arkansas filed its rebuttal in October 2024, and later in October 2024 the parties submitted a joint issues list and stipulations setting forth the disputed issues and the noncontested issues. In December 2024 the APSC approved the parties’ stipulations without modification, approved Entergy Arkansas’s adjustment with respect to storm costs, directed Entergy Arkansas to adjust its projected year distribution reliability capital closings, and deferred the recoverability of Entergy Arkansas’s opportunity sales legal fees until the next general rate case. Also in December 2024 the APSC approved Entergy Arkansas’s compliance tariff effective with the first billing cycle of January 2025. As a result of the proceeding, the total revenue change was $82.7 million, including a $63.7 million increase for the 2025 projected year and a $31.4 million netting adjustment for the 2023 historical year. In fourth quarter 2024, Entergy Arkansas recorded a regulatory asset of $15.5 million to reflect the amount of the 2023 historical year netting adjustment that it expects to collect from its customers during the 2025 rate effective period. Pursuant to the terms of the parties’ stipulations, Entergy Arkansas made a filing with the APSC in January 2025 to refund customers $30.1 million in excess accumulated deferred income taxes resulting from the reduction in the State of Arkansas’s income tax rate from 4.8% to 4.3% in 2024. Entergy Arkansas will make this refund over a 24-month period effective with the first billing cycle of February 2025.
Grand Gulf Credit Rider
In June 2024, Entergy Arkansas filed with the APSC a tariff to provide retail customers a credit resulting from the terms of the settlement agreement between Entergy Arkansas, System Energy, additional named Entergy parties, and the APSC pertaining to System Energy’s billings for wholesale sales of energy and capacity from the Grand Gulf nuclear plant. See “Complaints Against System Energy - System Energy Settlement with the APSC” in Note 2 to the financial statements for discussion of the settlement. In July 2024 the APSC approved the tariff, under which Entergy Arkansas will refund to retail customers a total of $100.6 million. To date, Entergy Arkansas has refunded $92.3 million of the total through one-time bill credits during the August 2024 billing cycle and is finalizing plans for the refund of the remaining regulatory liability balance.
Energy Cost Recovery Rider
Entergy Arkansas’s retail rates include an energy cost recovery rider to recover fuel and purchased energy costs in monthly customer bills. The rider utilizes the prior calendar-year energy costs and projected energy sales for the twelve-month period commencing on April 1 of each year to develop an energy cost rate, which is redetermined annually and includes a true-up adjustment reflecting the over- or under-recovery, including carrying charges, of the energy costs for the prior calendar year. The energy cost recovery rider tariff also allows an interim rate request depending upon the level of over- or under-recovery of fuel and purchased energy costs.
Entergy Arkansas, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
In January 2014, Entergy Arkansas filed a motion with the APSC relating to its upcoming energy cost rate redetermination filing that was made in March 2014. In that motion, Entergy Arkansas requested that the APSC authorize Entergy Arkansas to exclude from the redetermination of its 2014 energy cost rate $65.9 million of incremental fuel and replacement energy costs incurred in 2013 as a result of the ANO stator incident. Entergy Arkansas requested that the APSC authorize Entergy Arkansas to retain that amount in its deferred fuel balance, with recovery to be reviewed in a later period after more information was available regarding various claims associated with the ANO stator incident. In February 2014 the APSC approved Entergy Arkansas’s request to retain that amount in its deferred fuel balance. In July 2017, Entergy Arkansas filed for a change in rates pursuant to its formula rate plan rider. In that proceeding, the APSC approved a settlement agreement agreed upon by the parties, including a provision that requires Entergy Arkansas to initiate a regulatory proceeding for the purpose of recovering funds currently withheld from rates and related to the stator incident, including the $65.9 million of deferred fuel and purchased energy costs and costs related to the incremental oversight previously noted, subject to certain timelines and conditions set forth in the settlement agreement. In October 2023, Entergy Arkansas made a commitment to the APSC to make a filing to forgo its opportunity to seek recovery of the incremental fuel and purchased energy expense, among other identified costs, resulting from the ANO stator incident. As a result, in third quarter 2023, Entergy Arkansas recorded a write-off of its regulatory asset for deferred fuel of $68.9 million, which includes interest, related to the ANO stator incident. Consistent with its October 2023 commitment, Entergy Arkansas filed a motion to forgo recovery in November 2023, and the motion was approved by the APSC in December 2023. See the “ANO Damage, Outage, and NRC Reviews” section in Note 8 to the financial statements for further discussion of the ANO stator incident and the approved motion to forgo recovery.
In March 2017, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which reflected an increase in the rate from $0.01164 per kWh to $0.01547 per kWh. The APSC staff filed testimony in March 2017 recommending that the redetermined rate be implemented with the first billing cycle of April 2017 under the normal operation of the tariff. Accordingly, the redetermined rate went into effect on March 31, 2017 pursuant to the tariff. In July 2017 the Arkansas Attorney General requested additional information to support certain of the costs included in Entergy Arkansas’s 2017 energy cost rate redetermination.
In March 2018, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which reflected an increase in the rate from $0.01547 per kWh to $0.01882 per kWh. The Arkansas Attorney General filed a response to Entergy Arkansas’s annual redetermination filing requesting that the APSC suspend the proposed tariff to investigate the amount of the redetermination or, alternatively, to allow recovery subject to refund. Among the reasons the Attorney General cited for suspension were questions pertaining to how Entergy Arkansas forecasted sales and potential implications of the Tax Cuts and Jobs Act. Entergy Arkansas replied to the Attorney General’s filing and stated that, to the extent there are questions pertaining to its load forecasting or the operation of the energy cost recovery rider, those issues exceed the scope of the instant rate redetermination. Entergy Arkansas also stated that potential effects of the Tax Cuts and Jobs Act are appropriately considered in the APSC’s separate proceeding regarding potential implications of the tax law. The APSC general staff filed a reply to the Attorney General’s filing and agreed that Entergy Arkansas’s filing complied with the terms of the energy cost recovery rider. The redetermined rate became effective with the first billing cycle of April 2018. Subsequently in April 2018 the APSC issued an order declining to suspend Entergy Arkansas’s energy cost recovery rider rate and declining to require further investigation at that time of the issues suggested by the Attorney General in the proceeding. Following a period of discovery, the Attorney General filed a supplemental response in October 2018 raising new issues with Entergy Arkansas’s March 2018 rate redetermination and asserting that $45.7 million of the increase should be collected subject to refund pending further investigation. Entergy Arkansas filed to dismiss the Attorney General’s supplemental response, the APSC general staff filed a motion to strike the Attorney General’s filing, and the Attorney General filed a supplemental response disputing Entergy Arkansas and the APSC staff’s filing. Applicable APSC rules and processes authorize its general staff to initiate periodic audits of Entergy Arkansas’s energy cost recovery rider. In late-2018 the APSC general staff notified Entergy Arkansas it initiated an audit of the 2017 fuel costs. The time in which the audit will be complete is uncertain at this time.
Entergy Arkansas, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
In March 2022, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which reflected an increase in the rate from $0.00959 per kWh to $0.01785 per kWh. The primary reason for the rate increase was a large under-recovered balance as a result of higher natural gas prices in 2021, particularly in the fourth quarter 2021. At the request of the APSC general staff, Entergy Arkansas deferred its request for recovery of $32 million from the under-recovery related to the February 2021 winter storms until the 2023 energy cost rate redetermination, unless a request for an interim adjustment to the energy cost recovery rider is necessary. This resulted in a redetermined rate of $0.016390 per kWh, which became effective with the first billing cycle in April 2022 through the normal operation of the tariff. In February 2023 the APSC issued orders initiating proceedings with the utilities under its jurisdiction to address the prudence of costs incurred and appropriate cost allocation of the February 2021 winter storms. With respect to any prudence review of Entergy Arkansas fuel costs, as part of the APSC’s draft report issued in its February 2021 winter storms investigation docket, the APSC included findings that the load shedding plans of the investor-owned utilities and some cooperatives were appropriate and comprehensive, and, further, that Entergy Arkansas’s emergency plan was comprehensive and had a multilayered approach supported by a system-wide response plan, which is considered an industry standard. In September 2023 the APSC issued an order in Entergy Arkansas's company-specific proceeding and found that Entergy Arkansas’s practices during the winter storms were prudent.
In March 2023, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which reflected an increase in the rate from $0.01639 per kWh to $0.01883 per kWh. The primary reason for the rate increase is a large under-recovered balance as a result of higher natural gas prices in 2022 and a $32 million deferral related to the February 2021 winter storms consistent with the APSC general staff’s request in 2022. The under-recovered balance included in the filing was partially offset by the proceeds of the $41.7 million refund that System Energy made to Entergy Arkansas in January 2023 related to the sale-leaseback renewal costs and depreciation litigation as calculated in System Energy’s January 2023 compliance report filed with the FERC. See “Complaints Against System Energy - Grand Gulf Sale-leaseback Renewal Complaint and Uncertain Tax Position Rate Base Issue” in Note 2 to the financial statements for discussion of the compliance report filed by System Energy with the FERC in January 2023. The redetermined rate of $0.01883 per kWh became effective with the first billing cycle in April 2023 through the normal operation of the tariff.
In March 2024, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which reflected a decrease in the rate from $0.01883 per kWh to $0.00882 per kWh. Due to a change in law in the State of Arkansas, the annual redetermination included $9 million, recorded as a credit to fuel expense in first quarter 2024, for recovery attributed to net metering costs in 2023. The primary reason for the rate decrease is a large over-recovered balance as a result of lower natural gas prices in 2023. To mitigate the effect of projected increases in natural gas prices in 2024, Entergy Arkansas adjusted the over-recovered balance included in the March 2024 annual redetermination filing by $43.7 million. This adjustment is expected to reduce the rate change that will be reflected in the 2025 energy cost rate redetermination. The redetermined rate of $0.00882 per kWh became effective with the first billing cycle in April 2024 through the normal operation of the tariff.
Opportunity Sales Proceeding
In June 2009 the LPSC filed a complaint requesting that the FERC determine that certain of Entergy Arkansas’s sales of electric energy to third parties: (a) violated the provisions of the System Agreement that allocated the energy generated by Entergy System resources; (b) imprudently denied the Entergy System and its ultimate consumers the benefits of low-cost Entergy System generating capacity; and (c) violated the provision of the System Agreement that prohibited sales to third parties by individual companies absent an offer of a right-of-first-refusal to other Utility operating companies. The LPSC’s complaint challenged sales made beginning in 2002 and requested refunds. In July 2009 the Utility operating companies filed a response to the complaint arguing among other things that the System Agreement contemplates that the Utility operating companies may make sales to third parties for their own account, subject to the requirement that those sales be included in the load (or load shape) for the applicable Utility operating company. The FERC subsequently ordered a hearing in the proceeding.
Entergy Arkansas, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
After a hearing, the ALJ issued an initial decision in December 2010. The ALJ found that the System Agreement allowed for Entergy Arkansas to make the sales to third parties but concluded that the sales should be accounted for in the same manner as joint account sales. The ALJ concluded that “shareholders” should make refunds of the damages to the Utility operating companies, along with interest. Entergy disagreed with several aspects of the ALJ’s initial decision and in January 2011 filed with the FERC exceptions to the decision.
The FERC issued a decision in June 2012 and held that, while the System Agreement is ambiguous, it does provide authority for individual Utility operating companies to make opportunity sales for their own account and Entergy Arkansas made and priced these sales in good faith. The FERC found, however, that the System Agreement does not provide authority for an individual Utility operating company to allocate the energy associated with such opportunity sales as part of its load but provides a different allocation authority. The FERC further found that the after-the-fact accounting methodology used to allocate the energy used to supply the sales was inconsistent with the System Agreement. The FERC in its decision established further hearing procedures to quantify the effect of repricing the opportunity sales in accordance with the FERC’s June 2012 decision. The hearing was held in May 2013 and the ALJ issued an initial decision in August 2013. The LPSC, the APSC, the City Council, and FERC staff filed briefs on exceptions and/or briefs opposing exceptions. Entergy filed a brief on exceptions requesting that the FERC reverse the initial decision and a brief opposing certain exceptions taken by the LPSC and FERC staff.
In April 2016 the FERC issued orders addressing requests for rehearing filed in July 2012 and the ALJ’s August 2013 initial decision. The first order denied Entergy’s request for rehearing and affirmed the FERC’s earlier rulings that Entergy’s original methodology for allocating energy costs to the opportunity sales was incorrect and, as a result, Entergy Arkansas must make payments to the other Utility operating companies to put them in the same position that they would have been in absent the incorrect allocation. The FERC clarified that interest should be included with the payments. The second order affirmed in part, and reversed in part, the rulings in the ALJ’s August 2013 initial decision regarding the methodology that should be used to calculate the payments Entergy Arkansas is to make to the other Utility operating companies. The FERC affirmed the ALJ’s ruling that a full re-run of intra-system bills should be performed but required that methodology be modified so that the sales have the same priority for purposes of energy allocation as joint account sales. The FERC reversed the ALJ’s decision that any payments by Entergy Arkansas should be reduced by 20%. The FERC also reversed the ALJ’s decision that adjustments to other System Agreement service schedules and excess bandwidth payments should not be taken into account when calculating the payments to be made by Entergy Arkansas. The FERC held that such adjustments and excess bandwidth payments should be taken into account but ordered further proceedings before an ALJ to address whether a cap on any reduction due to bandwidth payments was necessary and to implement the other adjustments to the calculation methodology.
In May 2016, Entergy Services filed a request for rehearing of the FERC’s April 2016 order arguing that payments made by Entergy Arkansas should be reduced as a result of the timing of the LPSC’s approval of certain contracts. Entergy Services also filed a request for clarification and/or rehearing of the FERC’s April 2016 order addressing the ALJ’s August 2013 initial decision. The APSC and the LPSC also filed requests for rehearing of the FERC’s April 2016 order. In September 2017 the FERC issued an order denying the request for rehearing on the issue of whether any payments by Entergy Arkansas to the other Utility operating companies should be reduced due to the timing of the LPSC’s approval of Entergy Arkansas’s wholesale baseload contract with Entergy Louisiana. In November 2017 the FERC issued an order denying all of the remaining requests for rehearing of the April 2016 order. In November 2017, Entergy Services filed a petition for review in the D.C. Circuit of the FERC’s orders in the first two phases of the opportunity sales case. In December 2017 the D.C. Circuit granted Entergy Services’ request to hold the appeal in abeyance pending final resolution of the related proceeding before the FERC. In January 2018 the APSC and the LPSC filed separate petitions for review in the D.C. Circuit, and the D.C. Circuit consolidated the appeals with Entergy Services’ appeal.
Entergy Arkansas, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
The hearing required by the FERC’s April 2016 order was held in May 2017. In July 2017 the ALJ issued an initial decision addressing whether a cap on any reduction due to bandwidth payments was necessary and whether to implement the other adjustments to the calculation methodology. In August 2017 the Utility operating companies, the LPSC, the APSC, and FERC staff filed individual briefs on exceptions challenging various aspects of the initial decision. In September 2017 the Utility operating companies, the LPSC, the APSC, the MPSC, the City Council, and FERC staff filed separate briefs opposing exceptions taken by various parties.
Based on testimony previously submitted in the case and its assessment of the April 2016 FERC orders, in the first quarter 2016, Entergy Arkansas recorded a liability of $87 million, which included interest, for its estimated increased costs and payment to the other Utility operating companies, and a deferred fuel regulatory asset of $75 million. Following its assessment of the course of the proceedings, including the FERC’s denial of rehearing in November 2017 described above, in the fourth quarter 2017, Entergy Arkansas recorded an additional liability of $35 million and a regulatory asset of $31 million.
In October 2018 the FERC issued an order addressing the ALJ’s July 2017 initial decision. The FERC reversed the ALJ’s decision to cap the reduction in Entergy Arkansas’s payment to account for the increased bandwidth payments that Entergy Arkansas made to the other operating companies. The FERC also reversed the ALJ’s decision that Grand Gulf sales from January through September 2000 should be included in the calculation of Entergy Arkansas’s payment. The FERC affirmed on other grounds the ALJ’s rejection of the LPSC’s claim that certain joint account sales should be accounted for as part of the calculation of Entergy Arkansas’s payment. In November 2018 the LPSC requested rehearing of the FERC’s October 2018 decision. In December 2019 the FERC denied the LPSC’s request for rehearing. In January 2020 the LPSC appealed the December 2019 decision to the D.C. Circuit.
In December 2018, Entergy made a compliance filing in response to the FERC’s October 2018 order. The compliance filing provided a final calculation of Entergy Arkansas’s payments to the other Utility operating companies, including interest. No protests were filed in response to the December 2018 compliance filing. Refunds and interest in the following amounts were paid by Entergy Arkansas to the other operating companies in December 2018:
| | | | | | | | | | | |
| | Total refunds including interest |
| Payment/(Receipt) |
| | (In Millions) |
| Principal | Interest | Total |
| Entergy Arkansas | $68 | $67 | $135 |
| Entergy Louisiana | ($30) | ($29) | ($59) |
| Entergy Mississippi | ($18) | ($18) | ($36) |
| Entergy New Orleans | ($3) | ($4) | ($7) |
| Entergy Texas | ($17) | ($16) | ($33) |
Entergy Arkansas previously recognized a regulatory asset with a balance of $116 million as of December 31, 2018 for a portion of the payments due as a result of this proceeding.
As described above, the FERC’s opportunity sales orders were appealed to the D.C. Circuit. In February 2020 all of the appeals were consolidated and in April 2020 the D.C. Circuit established a briefing schedule. Briefing was completed in September 2020 and oral argument was heard in December 2020. In July 2021 the D.C. Circuit issued a decision denying all of the petitions for review filed in response to the FERC’s opportunity sales orders.
In February 2019 the LPSC filed a new complaint relating to two issues that were raised in the opportunity sales proceeding, but that, in its October 2018 order, the FERC held were outside the scope of the proceeding. In
Entergy Arkansas, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
March 2019, Entergy Services filed an answer and motion to dismiss the new complaint. In November 2019 the FERC issued an order denying the LPSC’s complaint. The order concluded that the settlement agreement approved by the FERC in December 2015 terminating the System Agreement barred the LPSC’s new complaint. In December 2019 the LPSC requested rehearing of the FERC’s November 2019 order, and in July 2020 the FERC issued an order dismissing the LPSC’s request for rehearing. In September 2020 the LPSC appealed to the D.C. Circuit the FERC’s orders dismissing the new opportunity sales complaint. In November 2020 the D.C. Circuit issued an order establishing that briefing will occur in January 2021 through April 2021. Oral argument was held in September 2021. In December 2021 the D.C. Circuit denied the LPSC’s Petition for Review of the new opportunity sales complaint. The opportunity sales cases are complete at FERC and at the D.C. Circuit and no additional refund amounts are owed by Entergy Arkansas.
In May 2019, Entergy Arkansas filed an application and supporting testimony with the APSC requesting approval of a special rider tariff to recover the costs of these payments from its retail customers over a 24-month period. The application requested that the APSC approve the rider to take effect within 30 days or, if suspended by the APSC as allowed by commission rule, approve the rider to take effect in the first billing cycle of the first month occurring 30 days after issuance of the APSC’s order approving the rider. In June 2019 the APSC suspended Entergy Arkansas’s tariff and granted Entergy Arkansas’s motion asking the APSC to establish the proceeding as the single designated proceeding in which interested parties may assert claims related to the appropriate retail rate treatment of the FERC’s October 2018 order and related FERC orders in the opportunity sales proceeding. In January 2020 the APSC adopted a procedural schedule with a hearing in April 2020. In January 2020 the Attorney General and Arkansas Electric Energy Consumers, Inc. filed a joint motion seeking to dismiss Entergy Arkansas’s application alleging that the APSC, in a prior proceeding, ruled on the issues addressed in the application and determined that Entergy Arkansas’s requested relief violates the filed rate doctrine and the prohibition against retroactive ratemaking. Entergy Arkansas responded to the joint motion in February 2020 rebutting these arguments, including demonstrating that the claims in this proceeding differ substantially from those the APSC addressed previously and that the payment resulting from a FERC tariff violation for which Entergy Arkansas seeks retail cost recovery in this proceeding differs materially from the refunds resulting from a FERC tariff amendment that the APSC previously rejected on filed rate doctrine and the retroactive ratemaking grounds. In addition, in January 2020 the Attorney General and Arkansas Electric Energy Consumers, Inc. filed testimony opposing the recovery by Entergy Arkansas of the opportunity sales payment but also claiming that certain components of the payment should be segregated and refunded to customers. In March 2020, Entergy Arkansas filed rebuttal testimony.
In July 2020 the APSC issued a decision finding that Entergy Arkansas’s application is not in the public interest. The order also directed Entergy Arkansas to refund to its retail customers within 30 days of the order the FERC-determined over-collection of $13.7 million, plus interest, associated with a recalculated bandwidth remedy. In addition to these primary findings, the order also denied the Attorney General’s request for Entergy Arkansas to prepare a compliance filing detailing all of the retail impacts from the opportunity sales and denied a request by the Arkansas Electric Energy Consumers to recalculate all costs using the revised responsibility ratio. Entergy Arkansas filed a motion for temporary stay of the 30-day requirement to allow Entergy Arkansas a reasonable opportunity to seek rehearing of the APSC order, but in July 2020 the APSC denied Entergy Arkansas’s request for a stay and directed Entergy Arkansas to refund to its retail customers the component of the total FERC-determined opportunity sales payment that was associated with increased bandwidth remedy payments of $13.7 million, plus interest. The refunds were issued in the August 2020 billing cycle. While the APSC denied Entergy Arkansas’s stay request, Entergy Arkansas believes its actions were prudent and, therefore, the costs, including the $13.7 million, plus interest, are recoverable. In July 2020, Entergy Arkansas requested rehearing of the APSC order, which rehearing was denied by the APSC in August 2020. In September 2020, Entergy Arkansas filed a complaint in the U.S. District Court for the Eastern District of Arkansas challenging the APSC’s order denying Entergy Arkansas’s request to recover the costs of these payments. In October 2020 the APSC filed a motion to dismiss Entergy Arkansas’s complaint, to which Entergy Arkansas responded. Also in December 2020, Entergy Arkansas and the APSC held a pre-trial conference, and filed a report with the court in January 2021. The court held a hearing in February 2021 regarding issues addressed in the pre-trial conference report, and in June 2021 the
Entergy Arkansas, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
court stayed all discovery until it rules on pending motions, after which the court will issue an amended schedule if necessary. In March 2022 the court denied the APSC’s motion to dismiss, and, in April 2022, issued a scheduling order including a trial date in February 2023. In June 2022, Entergy Arkansas filed a motion asserting that it is entitled to summary judgment because Entergy Arkansas’s position that the APSC’s order is pre-empted by the filed rate doctrine and violates the Dormant Commerce Clause is premised on facts that are not subject to genuine dispute. In July 2022, Arkansas Electric Energy Consumers, Inc., an industrial customer association, filed a motion to intervene and to hold Entergy Arkansas’s motion for summary judgment in abeyance pending a ruling on the motion to intervene. Entergy Arkansas filed a consolidated opposition to both motions. In August 2022 the APSC filed a motion for summary judgment arguing that there is no genuine issue as to any material fact and the APSC is entitled to judgment as a matter of law. In September 2022, Entergy Arkansas filed an opposition to the motion. In October 2022 the APSC filed a motion asking the court to hold further proceedings in abeyance pending a decision on the motions for summary judgment filed by Entergy Arkansas and the APSC. Also in October 2022, Entergy Arkansas filed an opposition to the motion, and the APSC filed a reply in support of its motion for summary judgment. In January 2023 the judge assigned to the case, on her own motion, identified facts that may present a conflict and recused herself; a new judge was assigned to the case, but he also recused due to a conflict. The case again was reassigned to a new judge. In January 2023 the court denied all pending motions (including those described above) except for a motion by the APSC to exclude certain testimony and further ruled that the matter would proceed to trial. In January 2023, Arkansas Electric Energy Consumers, Inc. filed a notice of appeal of the court’s order denying its motion to intervene to the United States Court of Appeals for the Eighth Circuit and a motion with the district court to stay the proceedings pending the appeal, which was denied. In February 2023, Arkansas Electric Energy Consumers, Inc. filed a motion with the United States Court of Appeals for the Eighth Circuit to stay the proceedings pending the appeal, which also was denied. The trial was held in February 2023. Following the trial, Entergy Arkansas filed a motion with the United States Court of Appeals for the Eighth Circuit to expedite the appeal filed by Arkansas Electric Energy Consumers, Inc. The United States Court of Appeals for the Eighth Circuit granted Entergy Arkansas’s request, and oral arguments were held in June 2023. In August 2023 the United States Court of Appeals for the Eighth Circuit affirmed the order of the court denying Arkansas Electric Energy Consumers, Inc.’s motion to intervene.
In March 2024 the U.S. District Court for the Eastern District of Arkansas issued a judgment in favor of the APSC and against Entergy Arkansas. In March 2024 Entergy Arkansas filed a notice of appeal and a motion to expedite oral arguments with the United States Court of Appeals for the Eighth Circuit and the court granted the motion to expedite. Briefing to the United States Court of Appeals for the Eighth Circuit concluded in July 2024 and oral arguments concluded in September 2024. As a result of the adverse decision by the U.S. District Court for the Eastern District of Arkansas, Entergy Arkansas concluded that it could no longer support the recognition of its $131.8 million regulatory asset reflecting the previously-expected recovery of a portion of the costs at issue in the opportunity sales proceeding and recorded a $131.8 million ($99.1 million net-of-tax) charge to earnings in first quarter 2024. In December 2024 the United States Court of Appeals for the Eighth Circuit affirmed the decision of the U.S. District Court for the Eastern District of Arkansas, and Entergy Arkansas filed a petition for rehearing en banc. In January 2025 the United States Court of Appeals for the Eighth Circuit denied Entergy Arkansas’s petition. Entergy Arkansas is evaluating a petition for certiorari with the United States Supreme Court.
Net Metering Legislation
After the passage of an Arkansas net metering law that was enacted effective July 2019, the APSC approved numerous applications allowing Entergy Arkansas customers to enter into purchase power agreements with third parties and to utilize these purchase power agreements to offset power usage by Entergy Arkansas, despite the lack of proximity between the purchase power agreement and the end-use customer. The APSC also allowed the aggregation of accounts by net metering customers. These decisions by the APSC created subsidies in favor of eligible net metering customers to the detriment of non-participating customers. The level of this subsidy grew as additional net metering applications were approved by the APSC. The size and number of customers eligible under the 2019 law present a risk of loss of load and shifting of costs to customers.
Entergy Arkansas, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
Another Arkansas law was enacted effective March 2023 that revised the billing arrangements for net metering facilities in order to reduce the cost shift to non-net metering customers. The new law also imposes a new limit of 5 MW for future net metering facilities, allows utilities to recover net metering credits in the same manner as fuel, and grandfathers certain net metering facilities that are online or in process to be online by September 2024. As of October 2024, new net metering facilities are subject to two-channel billing. Because of the new law, in May 2023, the APSC closed its prior cost-shifting proceeding and grandfathering rulemaking relating to the prior net metering rate structure. Under the new law, the APSC had to approve revisions to utilities’ net metering tariffs to conform to the new law no later than December 2023. The APSC opened a new rulemaking in April 2023 to consider implementation of the new law and tariffs. In October 2023 the APSC issued new net metering rules to conform to the new law, and utilities, including Entergy Arkansas, filed revised net metering tariffs to comply with the new rules on October 16, 2023. Entergy Arkansas’s revised net metering tariff was approved by the APSC in December 2023.
Federal Regulation
See the “Rate, Cost-recovery, and Other Regulation – Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis and Note 2 to the financial statements for a discussion of federal regulation.
Nuclear Matters
Entergy Arkansas owns and, through an affiliate, operates the ANO 1 and 2 nuclear generating plants and is, therefore, subject to the risks related to such ownership and operation. These include risks related to: the use, storage, and handling and disposal of high-level and low-level radioactive materials; the substantial financial requirements, both for capital investments and operational needs, including the financial requirements to address emerging issues related to equipment reliability, to position Entergy Arkansas’s nuclear fleet to meet its operational goals; the performance and capacity factors of these nuclear plants; regulatory requirements and potential future regulatory changes, including changes affecting the regulations governing nuclear plant ownership, operations, license amendments, and decommissioning; the availability of interim or permanent sites for the disposal of spent nuclear fuel and nuclear waste, including the fees charged for such disposal; the sufficiency of nuclear decommissioning trust fund assets and earnings to complete decommissioning of each site when required; and limitations on the amounts of insurance recoveries for losses in connection with nuclear plant operations and catastrophic events such as a nuclear accident. In the event of an unanticipated early shutdown of either ANO 1 or 2, Entergy Arkansas may be required to file with the APSC a rate mechanism to provide additional funds or credit support to satisfy regulatory requirements for decommissioning. ANO 1’s operating license expires in 2034 and ANO 2’s operating license expires in 2038.
Environmental Risks
Entergy Arkansas’s facilities and operations are subject to regulation by various governmental authorities having jurisdiction over air quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental matters. Management believes that Entergy Arkansas is in substantial compliance with environmental regulations currently applicable to its facilities and operations, with reference to possible exceptions noted in “Regulation of Entergy’s Business - Environmental Regulation” in Part I, Item 1. Because environmental regulations are subject to change, future compliance costs cannot be precisely estimated.
Critical Accounting Estimates
The preparation of Entergy Arkansas’s financial statements in conformity with GAAP requires management to apply appropriate accounting policies and to make estimates and judgments that can have a significant effect on reported financial position, results of operations, and cash flows. Management has identified the following accounting estimates as critical because they are based on assumptions and measurements that involve a high degree
Entergy Arkansas, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
of uncertainty, and the potential for future changes in these assumptions and measurements could produce estimates that would have a material effect on the presentation of Entergy Arkansas’s financial position, results of operations, or cash flows.
Nuclear Decommissioning Costs
See “Nuclear Decommissioning Costs” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the estimates inherent in accounting for nuclear decommissioning costs.
Utility Regulatory Accounting
See “Utility Regulatory Accounting” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of accounting for the effects of rate regulation.
Taxation and Uncertain Tax Positions
See “Taxation and Uncertain Tax Positions” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion.
Qualified Pension and Other Postretirement Benefits
Entergy Arkansas’s qualified pension and other postretirement reported costs, as described in Note 11 to the financial statements, are affected by numerous factors including the provisions of the plans, changing employee demographics, and various actuarial calculations, assumptions, and accounting mechanisms. See “Qualified Pension and Other Postretirement Benefits” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion. Because of the complexity of these calculations, the long-term nature of these obligations, and the importance of the assumptions utilized, Entergy’s estimate of these costs is a critical accounting estimate.
Cost Sensitivity
The following chart reflects the sensitivity of qualified pension cost and qualified projected benefit obligation to changes in certain actuarial assumptions (dollars in thousands).
| | | | | | | | | | | | | | | | | | | | |
| Actuarial Assumption | | Change in Assumption | | Impact on 2025 Qualified Pension Cost | | Impact on 2024 Qualified Projected Benefit Obligation |
| | | | | Increase/(Decrease) | | |
| Discount rate | | (0.25%) | | $684 | | $23,229 |
| Rate of return on plan assets | | (0.25%) | | $2,591 | | $— |
| Rate of increase in compensation | | 0.25% | | $957 | | $4,945 |
Entergy Arkansas, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
The following chart reflects the sensitivity of postretirement benefits cost and accumulated postretirement benefit obligation to changes in certain actuarial assumptions (dollars in thousands).
| | | | | | | | | | | | | | | | | | | | |
| Actuarial Assumption | | Change in Assumption | | Impact on 2025 Postretirement Benefits Cost | | Impact on 2024 Accumulated Postretirement Benefit Obligation |
| | | | | Increase/(Decrease) | | |
| Discount rate | | (0.25%) | | $140 | | $3,257 |
| Health care cost trend | | 0.25% | | $393 | | $2,080 |
Each fluctuation above assumes that the other components of the calculation are held constant.
Costs and Employer Contributions
Total qualified pension cost for Entergy Arkansas in 2024 was $19.6 million. Entergy Arkansas anticipates 2025 qualified pension cost to be $21.4 million. Entergy Arkansas contributed $55.1 million to its qualified pension plans in 2024 and estimates pension contributions will be approximately $35.5 million in 2025, although the 2025 required pension contributions will be known with more certainty when the January 1, 2025 valuations are completed, which is expected by April 1, 2025.
Total postretirement health care and life insurance benefit income for Entergy Arkansas in 2024 was $5.5 million. Entergy Arkansas expects 2025 postretirement health care and life insurance benefit income of approximately $6.8 million. In 2024, Entergy Arkansas’ contributions to its other postretirement plans, specifically contributions to the external trusts plus claims payments, were offset by trust claims reimbursements, resulting in a net reimbursement of $604 thousand. Entergy Arkansas estimates that 2025 contributions will be approximately $529 thousand.
Other Contingencies
See “Other Contingencies” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of the estimates associated with environmental, litigation, and other risks.
New Accounting Pronouncements
See the “New Accounting Pronouncements” section of Note 1 to the financial statements for a discussion of new accounting pronouncements.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the member and Board of Directors of
Entergy Arkansas, LLC and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Entergy Arkansas, LLC and Subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of income, cash flows and changes in equity (pages 340 through 344 and applicable items in pages 47 through 239), for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Rate and Regulatory Matters — Entergy Arkansas, LLC and Subsidiaries — Refer to Note 2 to the financial statements
Critical Audit Matter Description
The Company is subject to rate regulation by the Arkansas Public Service Commission (the “APSC”), which has jurisdiction with respect to the rates of electric companies in Arkansas, and to wholesale rate regulation by the Federal Energy Regulatory Commission (“FERC”). Management has determined it meets the requirements under accounting principles generally accepted in the United States of America to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation. Accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures.
The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Because the APSC and the FERC set the rates the Company is allowed to charge customers based on allowable costs, including a reasonable return on equity, the Company applies accounting standards that require the financial statements to reflect the effects of rate regulation, including the recording of regulatory assets and liabilities. The Company assesses whether the regulatory assets and regulatory liabilities continue to meet the criteria for probable future recovery or settlement at each balance sheet date and when regulatory events occur. This assessment includes consideration of recent rate orders, historical regulatory treatment for similar costs, and factors such as changes in applicable regulatory and political environments. While the Company has indicated it expects to recover costs from customers through regulated rates, there is a risk that the APSC and the FERC will not approve: (1) full recovery of the costs of providing utility service, or (2) full recovery of amounts invested in the utility business and a reasonable return on that investment.
We identified the impact of rate regulation as a critical audit matter due to the judgments made by management to support its assertions about impacted account balances and disclosures and the high degree of subjectivity involved in assessing the impact of future regulatory orders on the financial statements. Management judgments include assessing the likelihood of recovery in future rates of incurred costs and refunds to customers. Auditing management’s judgments regarding the outcome of future decisions by the APSC and the FERC, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities involved specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities and auditor judgment to evaluate management estimates and the subjectivity of audit evidence.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the uncertainty of future decisions by the APSC and the FERC, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities included the following, among others:
•We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We also tested the effectiveness of management’s controls over the initial recognition of amounts as regulatory assets or liabilities and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates.
•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.
•We read relevant regulatory orders issued by the APSC and the FERC for the Company to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the APSC’s and the FERC’s treatment of similar costs under similar circumstances. We evaluated external information and compared to management’s recorded regulatory asset and liability balances for completeness.
•For regulatory matters in process, we inspected the Company’s filings with the APSC and the FERC and orders issued, and considered the filings with the APSC and the FERC by intervenors that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.
•We obtained an analysis from management and support from internal and external legal counsel, as appropriate, regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery or refund or a future reduction in rates.
•We obtained representation from management regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities to assess management’s assertion that amounts are probable of recovery, refund, or a future reduction in rates.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 18, 2025
We have served as the Company’s auditor since 2001.
| | | | | | | | | | | | | | | | | | | | |
| ENTERGY ARKANSAS, LLC AND SUBSIDIARIES |
| CONSOLIDATED INCOME STATEMENTS |
| | |
| | | For the Years Ended December 31, |
| | | 2024 | | 2023 | | 2022 |
| | | (In Thousands) |
| | | | | | |
| OPERATING REVENUES | | | | | | |
| Electric | | $2,460,181 | | | $2,646,396 | | | $2,673,194 | |
| | | | | | |
| OPERATING EXPENSES | | | | | | |
| Operation and Maintenance: | | | | | | |
| Fuel, fuel-related expenses, and gas purchased for resale | | 274,282 | | | 514,885 | | | 640,344 | |
| Purchased power | | 239,281 | | | 257,890 | | | 201,726 | |
| Nuclear refueling outage expenses | | 51,840 | | | 59,973 | | | 53,438 | |
| Other operation and maintenance | | 742,573 | | | 737,649 | | | 754,293 | |
| Asset write-offs | | 131,775 | | | 78,434 | | | — | |
| Decommissioning | | 93,582 | | | 87,321 | | | 82,326 | |
| Taxes other than income taxes | | 141,225 | | | 141,502 | | | 136,565 | |
| Depreciation and amortization | | 422,767 | | | 400,944 | | | 386,272 | |
| Other regulatory charges (credits) - net | | (152,834) | | | (87,409) | | | (89,418) | |
| TOTAL | | 1,944,491 | | | 2,191,189 | | | 2,165,546 | |
| | | | | | |
| OPERATING INCOME | | 515,690 | | | 455,207 | | | 507,648 | |
| | | | | | |
| OTHER INCOME | | | | | | |
| Allowance for equity funds used during construction | | 29,569 | | | 20,587 | | | 17,787 | |
| Interest and investment income | | 70,628 | | | 25,024 | | | 19,554 | |
| Miscellaneous - net | | (17,995) | | | (23,216) | | | (27,348) | |
| TOTAL | | 82,202 | | | 22,395 | | | 9,993 | |
| | | | | | |
| INTEREST EXPENSE | | | | | | |
| Interest expense | | 218,281 | | | 188,232 | | | 150,928 | |
| Allowance for borrowed funds used during construction | | (14,429) | | | (8,270) | | | (7,070) | |
| TOTAL | | 203,852 | | | 179,962 | | | 143,858 | |
| | | | | | |
| INCOME BEFORE INCOME TAXES | | 394,040 | | | 297,640 | | | 373,783 | |
| | | | | | |
| Income taxes | | 74,574 | | | (99,210) | | | 80,896 | |
| | | | | | |
| NET INCOME | | 319,466 | | | 396,850 | | | 292,887 | |
| | | | | | |
| Net loss attributable to noncontrolling interest | | (5,300) | | | (5,231) | | | (4,358) | |
| | | | | | |
| EARNINGS APPLICABLE TO MEMBER'S EQUITY | | $324,766 | | | $402,081 | | | $297,245 | |
| | | | | | |
| See Notes to Financial Statements. | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| ENTERGY ARKANSAS, LLC AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| | |
| | | For the Years Ended December 31, |
| | | 2024 | | 2023 | | 2022 |
| | | (In Thousands) |
| | | | | | |
| OPERATING ACTIVITIES | | | | | | |
| Net income | | $319,466 | | | $396,850 | | | $292,887 | |
| Adjustments to reconcile net income to net cash flow provided by operating activities: | | | | | | |
| Depreciation, amortization, and decommissioning, including nuclear fuel amortization | | 588,599 | | | 556,780 | | | 532,291 | |
| Deferred income taxes, investment tax credits, and non-current taxes accrued | | 81,911 | | | (102,070) | | | 78,958 | |
| Asset write-offs | | 131,775 | | | 78,434 | | | — | |
| Changes in assets and liabilities: | | | | | | |
| Receivables | | 114,936 | | | (84,428) | | | (73,579) | |
| Fuel inventory | | 7,558 | | | (6,351) | | | (252) | |
| Accounts payable | | (10,425) | | | (69,947) | | | 64,944 | |
| Taxes accrued | | (11,936) | | | 4,625 | | | 10,936 | |
| Interest accrued | | 3,007 | | | 16,554 | | | 1,708 | |
| Deferred fuel costs | | (43,124) | | | 228,021 | | | (31,009) | |
| Other working capital accounts | | (29,148) | | | (29,690) | | | (29,789) | |
| Provisions for estimated losses | | 17,520 | | | (21,039) | | | 2,914 | |
| Regulatory assets | | 185,251 | | | (6,197) | | | (120,603) | |
| Other regulatory liabilities | | 97,049 | | | 240,762 | | | (264,054) | |
| Pension and other postretirement funded status | | (135,464) | | | (109,077) | | | (67,783) | |
| Other assets and liabilities | | (338,295) | | | (152,206) | | | 302,163 | |
| Net cash flow provided by operating activities | | 978,680 | | | 941,021 | | | 699,732 | |
| INVESTING ACTIVITIES | | | | | | |
| Construction expenditures | | (812,329) | | | (946,244) | | | (785,168) | |
| Allowance for equity funds used during construction | | 29,569 | | | 20,587 | | | 17,787 | |
| Payment for purchase of plant | | (819,014) | | | — | | | (1,044) | |
| Nuclear fuel purchases | | (151,604) | | | (137,616) | | | (98,635) | |
| Proceeds from sale of nuclear fuel | | 33,213 | | | 32,937 | | | 37,198 | |
| Proceeds from nuclear decommissioning trust fund sales | | 718,415 | | | 117,123 | | | 248,191 | |
| Investment in nuclear decommissioning trust funds | | (730,910) | | | (139,280) | | | (269,497) | |
| | | | | | |
| Litigation proceeds for reimbursement of spent nuclear fuel storage costs | | — | | | 17,933 | | | — | |
| Decrease (increase) in other investments | | 30 | | | 1,608 | | | (1,626) | |
| Net cash flow used in investing activities | | (1,732,630) | | | (1,032,952) | | | (852,794) | |
| FINANCING ACTIVITIES | | | | | | |
| Proceeds from the issuance of long-term debt | | 1,154,129 | | | 1,093,253 | | | 232,731 | |
| Retirement of long-term debt | | (717,121) | | | (597,720) | | | (28,521) | |
| Capital contributions from parent | | 695,000 | | | — | | | — | |
| | | | | | |
| Changes in money pool payable - net | | (130,195) | | | (35,410) | | | 40,891 | |
| Common equity distributions paid | | (310,000) | | | (417,000) | | | (86,000) | |
| Other | | 63,252 | | | 47,162 | | | (13,676) | |
| Net cash flow provided by financing activities | | 755,065 | | | 90,285 | | | 145,425 | |
| Net increase (decrease) in cash and cash equivalents | | 1,115 | | | (1,646) | | | (7,637) | |
| Cash and cash equivalents at beginning of period | | 3,632 | | | 5,278 | | | 12,915 | |
| Cash and cash equivalents at end of period | | $4,747 | | | $3,632 | | | $5,278 | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | | | |
| Cash paid (received) during the period for: | | | | | | |
| Interest - net of amount capitalized | | $212,691 | | | $169,173 | | | $147,060 | |
| Income taxes | | $9,484 | | | $2,705 | | | ($2,753) | |
| Noncash investing activities: | | | | | | |
| Accrued construction expenditures | | $37,495 | | | $36,264 | | | $93,189 | |
| | | | | | |
| See Notes to Financial Statements. | | | | | | |
| | | | | | | | | | | | | | |
| ENTERGY ARKANSAS, LLC AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| ASSETS |
| | |
| | | December 31, |
| | | 2024 | | 2023 |
| | | (In Thousands) |
| | | | |
| CURRENT ASSETS | | | | |
| Cash and cash equivalents: | | | | |
| Cash | | $1,306 | | | $520 | |
| Temporary cash investments | | 3,441 | | | 3,112 | |
| Total cash and cash equivalents | | 4,747 | | | 3,632 | |
| Accounts receivable: | | | | |
| Customer | | 139,234 | | | 157,520 | |
| Allowance for doubtful accounts | | (4,672) | | | (7,182) | |
| Associated companies | | 35,412 | | | 124,672 | |
| Other | | 70,927 | | | 89,532 | |
| Accrued unbilled revenues | | 125,824 | | | 117,119 | |
| Total accounts receivable | | 366,725 | | | 481,661 | |
| | | | |
| Fuel inventory - at average cost | | 49,937 | | | 57,495 | |
| Materials and supplies | | 384,238 | | | 358,302 | |
| Deferred nuclear refueling outage costs | | 48,879 | | | 35,463 | |
| Prepayments and other | | 41,404 | | | 40,866 | |
| TOTAL | | 895,930 | | | 977,419 | |
| | | | |
| OTHER PROPERTY AND INVESTMENTS | | | | |
| Decommissioning trust funds | | 1,604,428 | | | 1,414,009 | |
| Other | | 797 | | | 801 | |
| TOTAL | | 1,605,225 | | | 1,414,810 | |
| | | | |
| UTILITY PLANT | | | | |
| Electric | | 16,371,182 | | | 14,821,814 | |
| Construction work in progress | | 320,447 | | | 340,601 | |
| Nuclear fuel | | 257,533 | | | 213,722 | |
| TOTAL UTILITY PLANT | | 16,949,162 | | | 15,376,137 | |
| Less - accumulated depreciation and amortization | | 6,275,150 | | | 6,002,203 | |
| UTILITY PLANT - NET | | 10,674,012 | | | 9,373,934 | |
| | | | |
| DEFERRED DEBITS AND OTHER ASSETS | | | | |
| Regulatory assets: | | | | |
| Other regulatory assets | | 1,700,110 | | | 1,885,361 | |
| | | | |
| Other | | 198,706 | | | 21,334 | |
| TOTAL | | 1,898,816 | | | 1,906,695 | |
| | | | |
| TOTAL ASSETS | | $15,073,983 | | | $13,672,858 | |
| | | | |
| See Notes to Financial Statements. | | | | |
| | | | | | | | | | | | | | |
| ENTERGY ARKANSAS, LLC AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| LIABILITIES AND EQUITY |
| | |
| | | December 31, |
| | | 2024 | | 2023 |
| | | (In Thousands) |
| | | | |
| CURRENT LIABILITIES | | | | |
| Currently maturing long-term debt | | $— | | | $375,000 | |
| Accounts payable: | | | | |
| Associated companies | | 85,137 | | | 225,344 | |
| Other | | 210,040 | | | 215,502 | |
| Customer deposits | | 129,267 | | | 113,186 | |
| Taxes accrued | | 93,215 | | | 105,151 | |
| Interest accrued | | 38,377 | | | 35,370 | |
| Deferred fuel costs | | 45,158 | | | 88,282 | |
| Other | | 55,313 | | | 55,683 | |
| TOTAL | | 656,507 | | | 1,213,518 | |
| | | | |
| NON-CURRENT LIABILITIES | | | | |
| Accumulated deferred income taxes and taxes accrued | | 1,489,169 | | | 1,437,053 | |
| Accumulated deferred investment tax credits | | 26,069 | | | 27,270 | |
| Regulatory liability for income taxes - net | | 417,561 | | | 392,496 | |
| Other regulatory liabilities | | 831,165 | | | 759,181 | |
| Decommissioning | | 1,691,583 | | | 1,560,057 | |
| Accumulated provisions | | 76,479 | | | 58,959 | |
| | | | |
| Long-term debt | | 5,122,494 | | | 4,298,080 | |
| Other | | 298,951 | | | 165,574 | |
| TOTAL | | 9,953,471 | | | 8,698,670 | |
| | | | |
| Commitments and Contingencies | | | | |
| | | | |
| EQUITY | | | | |
| Member's equity | | 4,448,837 | | | 3,739,071 | |
| Noncontrolling interest | | 15,168 | | | 21,599 | |
| TOTAL | | 4,464,005 | | | 3,760,670 | |
| | | | |
| TOTAL LIABILITIES AND EQUITY | | $15,073,983 | | | $13,672,858 | |
| | | | |
| See Notes to Financial Statements. | | | | |
| | | | | | | | | | | | | | | | | |
| ENTERGY ARKANSAS, LLC AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY |
| For the Years Ended December 31, 2024, 2023, and 2022 |
| | | | | |
| | Noncontrolling Interest | | Member's Equity | | Total |
| | (In Thousands) |
| | | | | |
| Balance at December 31, 2021 | $33,110 | | | $3,542,745 | | | $3,575,855 | |
| Net income (loss) | (4,358) | | | 297,245 | | | 292,887 | |
| Common equity distributions | — | | | (86,000) | | | (86,000) | |
| Distributions to noncontrolling interest | (927) | | | — | | | (927) | |
| | | | | |
| Balance at December 31, 2022 | $27,825 | | | $3,753,990 | | | $3,781,815 | |
| Net income (loss) | (5,231) | | | 402,081 | | | 396,850 | |
| Common equity distributions | — | | | (417,000) | | | (417,000) | |
| Distributions to noncontrolling interest | (995) | | | — | | | (995) | |
| Balance at December 31, 2023 | $21,599 | | | $3,739,071 | | | $3,760,670 | |
| Net income (loss) | (5,300) | | | 324,766 | | | 319,466 | |
| Capital contributions from parent | — | | | 695,000 | | | 695,000 | |
| Common equity distributions | — | | | (310,000) | | | (310,000) | |
| Distributions to noncontrolling interest | (1,131) | | | — | | | (1,131) | |
| Balance at December 31, 2024 | $15,168 | | | $4,448,837 | | | $4,464,005 | |
| | | | | |
| See Notes to Financial Statements. | | | | | |
ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS
Results of Operations
2024 Compared to 2023
Net Income
Net income decreased $382.6 million primarily due to:
•expenses of $151.5 million ($110.7 million net-of-tax), recorded in second quarter 2024, primarily consisting of regulatory charges to reflect the effects of an agreement in principle between Entergy Louisiana and the LPSC staff and the intervenors in July 2024 to renew Entergy Louisiana’s formula rate plan and resolve a number of other retail dockets and matters, including all formula rate plan test years prior to 2023. See Note 2 to the financial statements for discussion of the agreement in principle and the subsequently filed global stipulated settlement agreement;
•a $179.1 million reduction in income tax expense in 2023 as a result of the resolution of the 2016-2018 IRS audit, partially offset by a $38 million regulatory charge ($27.8 million net-of-tax) to reflect credits expected to be provided to customers as a result of the resolution of the 2016-2018 IRS audit. See Note 3 to the financial statements for further discussion of the resolution of the 2016-2018 IRS audit;
•the reversal of a $105.6 million regulatory liability, primarily associated with the Hurricane Isaac securitization, recognized in 2017 as a result of the Tax Cuts and Jobs Act, recorded in fourth quarter 2023, as part of the settlement of Entergy Louisiana’s test year 2017 formula rate plan filing. See Note 3 to the financial statements for discussion of the Tax Cuts and Jobs Act;
•the net effects of Entergy Louisiana’s storm cost securitization in March 2023, including a $133.4 million reduction in income tax expense, partially offset by a $103.4 million ($76.4 million net-of-tax) regulatory charge to reflect Entergy Louisiana’s obligation to provide credits to its customers as described in an LPSC ancillary order issued as part of the securitization regulatory proceeding. See Note 2 to the financial statements for discussion of the March 2023 storm cost securitization;
•higher depreciation and amortization expenses; and
•higher interest expense.
The decrease was partially offset by higher other income, higher retail electric price, and higher volume/weather.
Operating Revenues
Following is an analysis of the change in operating revenues comparing 2024 to 2023:
| | | | | |
| | Amount |
| | (In Millions) |
| 2023 operating revenues | $5,147.8 | |
| Fuel, rider, and other revenues that do not significantly affect net income | (80.2) | |
| Storm restoration carrying costs | (30.6) | |
| Volume/weather | 52.0 | |
| Retail electric price | 55.0 | |
| 2024 operating revenues | $5,144.0 | |
Entergy Louisiana, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
Entergy Louisiana’s results include revenues from rate mechanisms designed to recover fuel, purchased power, and other costs such that the revenues and expenses associated with these items generally offset and do not affect net income. “Fuel, rider, and other revenues that do not significantly affect net income” includes the revenue variance associated with these items.
Storm restoration carrying costs represent the equity component of storm restoration carrying costs recognized as part of the securitization of Hurricane Ida restoration costs in March 2023. See Note 2 to the financial statements for discussion of the March 2023 storm cost securitization.
The volume/weather variance is primarily due to an increase in industrial usage driven by an increase in demand from large industrial customers, primarily in the petroleum refining and chlor-alkali industries. In addition, there was an increase in commercial usage and an increase in weather-adjusted residential usage, partially offset by the effect of less favorable weather on residential sales. The increase in weather-adjusted residential usage is the result of higher fixed charges, partially offset by lower volumetric rates, applied to lower usage.
The retail electric price variance is primarily due to increases in formula rate plan revenues, including increases in the distribution and transmission recovery mechanisms, effective September 2023 and September 2024. See Note 2 to the financial statements for discussion of the formula rate plan proceedings.
Total electric energy sales for Entergy Louisiana for the years ended December 31, 2024 and 2023 are as follows:
| | | | | | | | | | | | | | | | | |
| 2024 | | 2023 | | % Change |
| (GWh) | | |
| Residential | 14,000 | | | 14,207 | | | (1) | |
| Commercial | 11,108 | | | 11,074 | | | — | |
| Industrial | 34,759 | | | 31,599 | | | 10 | |
| Governmental | 836 | | | 801 | | | 4 | |
| Total retail | 60,703 | | | 57,681 | | | 5 | |
| Sales for resale: | | | | | |
| Associated companies | 5,808 | | | 4,406 | | | 32 | |
| Non-associated companies | 1,574 | | | 1,534 | | | 3 | |
| Total | 68,085 | | | 63,621 | | | 7 | |
See Note 19 to the financial statements for additional discussion of Entergy Louisiana’s operating revenues.
Other Income Statement Variances
Other operation and maintenance expenses remained relatively unchanged primarily due to the following activity:
•an increase of $13.6 million in compensation and benefits costs primarily due to higher healthcare claims activity, including lower prescription drug rebates in 2024 as compared to 2023, and higher incentive-based accruals in 2024 as compared to 2023;
•an increase of $7.9 million in transmission costs allocated by MISO. See Note 2 to the financial statements for discussion of the recovery of these costs;
•an increase of $7 million in loss provisions;
•an increase of $4.4 million in energy efficiency expenses primarily due to higher energy efficiency costs;
•a decrease of $4.5 million in customer service center support costs primarily due to lower contract costs;
Entergy Louisiana, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
•a decrease of $5.6 million in information technology costs primarily due to enhancements made in 2023 to certain information technology systems; and
•a decrease of $13.8 million in power delivery expenses primarily due to lower vegetation maintenance costs.
Depreciation and amortization expenses increased primarily due to additions to plant in service and an increase in nuclear depreciation rates effective September 2024 in accordance with the global stipulated settlement agreement approved by the LPSC in August 2024. See Note 2 to the financial statements for discussion of the global stipulated settlement agreement.
Other regulatory charges (credits) - net includes:
•regulatory charges of $150.2 million, recorded in second quarter 2024, to reflect the effects of an agreement in principle between Entergy Louisiana and the LPSC staff and the intervenors in July 2024 to renew Entergy Louisiana’s formula rate plan and resolve a number of other retail dockets and matters, including all formula rate plan test years prior to 2023. See Note 2 to the financial statements for discussion of the agreement in principle and the subsequently filed global stipulated settlement agreement;
•a regulatory charge of $103.4 million, recorded in first quarter 2023, to reflect Entergy Louisiana’s obligation to provide credits to its customers as described in an LPSC ancillary order issued in the Hurricane Ida securitization regulatory proceeding. See Note 2 to the financial statements for discussion of the March 2023 storm cost securitization; and
•a regulatory charge of $38 million, recorded in fourth quarter 2023, to reflect credits expected to be provided to customers as a result of the resolution of the 2016-2018 IRS audit. See Note 3 to the financial statements for further discussion of the resolution of the 2016-2018 IRS audit.
In addition, Entergy Louisiana records a regulatory charge or credit for the difference between asset retirement obligation-related expenses and nuclear decommissioning trust earnings plus asset retirement obligation-related costs collected in revenue.
Other income increased primarily due to:
•changes in decommissioning trust fund activity, including portfolio rebalancing of decommissioning trust funds in 2024;
•a decrease of $27.4 million in non-service pension costs primarily as a result of pension settlement charges recorded in 2023 and a reduction in 2024 in the amortization of deferred pension losses as a result of an amendment to a qualified pension plan spinning-off predominantly inactive participants into a new qualified plan, extending the amortization period for deferred losses. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” below and Note 11 to the financial statements for further discussion of pension and other postretirement benefits costs;
•a $14.6 million charge, recorded in first quarter 2023, for the LURC’s 1% beneficial interest in the storm trust II established as part of the March 2023 storm cost securitization; and
•an increase of $13.9 million in affiliated dividend income from affiliated preferred membership interests related to storm cost securitizations.
See Note 2 to the financial statements for discussion of the storm cost securitizations.
Entergy Louisiana, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
Interest expense increased primarily due to the issuances of $700 million of 5.70% Series mortgage bonds and $500 million of 5.35% Series mortgage bonds, each in March 2024, and the issuance of $700 million of 5.15% Series mortgage bonds in August 2024. The increase was partially offset by:
•the repayment of $400 million of 5.40% Series mortgage bonds in April 2024;
•the repayment of $300 million of 5.59% Series mortgage bonds in December 2023; and
•the repayment of $325 million of 4.05% Series mortgage bonds in August 2023.
The effective income tax rates were 20.2% for 2024 and (19.3%) for 2023. See Note 3 to the financial statements for a reconciliation of the federal statutory rate of 21% to the effective income tax rates and for additional discussion regarding income taxes.
2023 Compared to 2022
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Results of Operations” in Item 7 of Entergy Louisiana’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of results of operations for 2023 compared to 2022.
Income Tax Legislation and Regulation
See the “Income Tax Legislation and Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of income tax legislation and regulation.
Sale of Natural Gas Distribution Business
See the “Held for Sale - Natural Gas Distribution Businesses” section in Note 14 to the financial statements for discussion of the planned sale of the Entergy Louisiana natural gas distribution business.
Liquidity and Capital Resources
Cash Flow
Cash flows for the years ended December 31, 2024, 2023, and 2022 were as follows:
| | | | | | | | | | | | | | | | | |
| | 2024 | | 2023 | | 2022 |
| | (In Thousands) |
| Cash and cash equivalents at beginning of period | $2,772 | | | $56,613 | | | $18,573 | |
| | | | | |
| Net cash provided by (used in): | | | | | |
| Operating activities | 2,247,563 | | | 2,032,120 | | | 1,177,508 | |
| Investing activities | (1,512,147) | | | (3,039,456) | | | (4,707,711) | |
| Financing activities | (411,086) | | | 953,495 | | | 3,568,243 | |
| Net increase (decrease) in cash and cash equivalents | 324,330 | | | (53,841) | | | 38,040 | |
| | | | | |
| Cash and cash equivalents at end of period | $327,102 | | | $2,772 | | | $56,613 | |
Entergy Louisiana, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
2024 Compared to 2023
Operating Activities
Net cash flow provided by operating activities increased $215.4 million in 2024 primarily due to:
•the receipt of a $151.7 million advance payment in 2024 from a customer related to a generation agreement;
•the timing of payments to vendors;
•the receipt of $80.2 million in settlement proceeds in December 2024 as a result of the System Energy settlement with the LPSC. See Note 2 to the financial statements for discussion of the System Energy settlement agreement with the LPSC;
•a decrease of $44.6 million in spending on nuclear refueling outages in 2024 as compared to 2023;
•$21.3 million received in third quarter 2024 related to the wind up of the NISCO partnership. See Note 9 to the financial statements for a discussion of the NISCO partnership; and
•a decrease of $10 million in interest paid.
The increase was partially offset by:
•income tax payments of $16.9 million in 2024 compared to income tax refunds of $141.1 million in 2023. Entergy Louisiana made income tax payments in 2024 and received income tax refunds in 2023, each in accordance with an intercompany income tax allocation agreement;
•lower collections from customers;
•the timing of recovery of fuel and purchased power costs. See Note 2 to the financial statements for a discussion of fuel and purchased power cost recovery;
•the refund of $27.8 million received from System Energy in January 2023 related to the sale-leaseback renewal costs and depreciation litigation as calculated in System Energy’s January 2023 compliance report filed with the FERC. See Note 2 to the financial statements for further discussion of the refund and the related proceedings; and
•an increase of $19.5 million in storm spending primarily due to Hurricane Francine restoration efforts in 2024.
Investing Activities
Net cash flow used in investing activities decreased $1,527.3 million in 2024 primarily due to:
•the purchase in 2023 of $1,457.7 million by the storm trust II of preferred membership interests issued by an Entergy affiliate. See Note 2 to the financial statements for a discussion of the March 2023 storm cost securitization and the storm trust II’s investment in preferred membership interests;
•a decrease in cash used of $69.8 million as a result of fluctuations in nuclear fuel activity due to variations from year to year in the timing and pricing of fuel reload requirements, materials and services deliveries, and the timing of cash payments during the nuclear fuel cycle;
•a decrease of $187.2 million in nuclear construction expenditures primarily due to decreased spending on various nuclear projects in 2024;
•an increase of $114.2 million in redemptions of the preferred membership interests held by the storm trusts in 2024 as compared to 2023, as part of periodic redemptions that are expected to occur, subject to certain conditions, for the preferred membership interests that were issued in connection with the storm cost securitizations. See Note 2 to the financial statements for a discussion of the storm cost securitizations;
•a decrease of $18.9 million in information technology capital expenditures primarily due to decreased spending on various technology projects in 2024; and
•a decrease of $18.8 million in capital expenditures for distributed generation under Entergy Louisiana’s distributed generation program.
Entergy Louisiana, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
The decrease was partially offset by:
•an increase of $176.8 million in distribution construction expenditures primarily due to increased investment in the resilience of the distribution system and higher capital expenditures for storm restoration in 2024. The increase in storm restoration expenditures is primarily due to Hurricane Francine restoration efforts in 2024;
•an increase of $62.8 million in non-nuclear generation construction expenditures primarily due to higher spending on new generation resources in north Louisiana and the Sterlington solar project;
•payments to storm reserve escrow accounts of $12.9 million in 2024 as compared to net receipts from storm reserve escrow accounts of $49.6 million in 2023; and
•money pool activity.
Increases in Entergy Louisiana’s receivables from the money pool are a use of cash flow, and Entergy Louisiana’s receivable from the money pool increased $32.7 million in 2024. The money pool is an intercompany cash management program that makes possible intercompany borrowing and lending arrangements, and the money pool and other borrowing arrangements are designed to reduce the Registrant Subsidiaries’ dependence on external short-term borrowings.
Financing Activities
Entergy Louisiana’s financing activities used $411.1 million of cash in 2024 as compared to providing $953.5 million of cash in 2023 primarily due to the following activity:
•proceeds from securitization of $1.5 billion received by the storm trust II in 2023;
•a capital contribution of approximately $1.5 billion in 2023 received indirectly from Entergy Corporation related to the March 2023 storm cost securitization;
•the repayment, prior to maturity, of $1 billion of 0.95% Series mortgage bonds in August 2024;
•the repayment, prior to maturity, of $400 million of 5.40% Series mortgage bonds in April 2024;
•an increase of $198.4 million in common equity distributions paid in 2024 in order to maintain Entergy Louisiana’s capital structure;
•money pool activity;
•the issuance of $70 million of 5.94% Series J notes by the Entergy Louisiana Waterford variable interest entity in September 2023;
•an increase of $110.8 million in advance payments from customers for construction related to transmission, distribution, and generator interconnection agreements;
•the repayment, prior to maturity, of $300 million of 5.59% Series mortgage bonds in December 2023;
•the repayment, at maturity, of $325 million of 4.05% Series mortgage bonds in September 2023;
•the issuances of $500 million of 5.35% Series mortgage bonds and $700 million of 5.70% Series mortgage bonds in March 2024;
•the repayment, at maturity, of $665 million of 0.62% Series mortgage bonds in November 2023; and
•the issuance of $700 million of 5.15% Series mortgage bonds in August 2024.
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 $156.2 million in 2024 compared to decreasing by $69.9 million in 2023.
See Note 5 to the financial statements for details of long-term debt. See Note 2 to the financial statements for discussion of the March 2023 storm cost securitization.
Entergy Louisiana, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
2023 Compared to 2022
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Cash Flow” in Item 7 of Entergy Louisiana’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of operating, investing, and financing cash flow activities for 2023 compared to 2022.
Capital Structure
Entergy Louisiana’s debt to capital ratio is shown in the following table. The increase in the debt to capital ratio for Entergy Louisiana is primarily due to the net issuance of long-term debt in 2024.
| | | | | | | | | | | |
| | December 31,
2024 | | December 31,
2023 |
| Debt to capital | 46.0 | % | | 44.9 | % |
| | | |
| | | |
| Effect of subtracting cash | (0.8 | %) | | 0.0 | % |
| Net debt to net capital (non-GAAP) | 45.2 | % | | 44.9 | % |
Net debt consists of debt less cash and cash equivalents. Debt consists of short-term borrowings, finance lease obligations, and long-term debt, including the currently maturing portion. Capital consists of debt and equity. Net capital consists of capital less cash and cash equivalents. Entergy Louisiana uses the debt to capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Louisiana’s financial condition. The net debt to net capital ratio is a non-GAAP measure. Entergy Louisiana also 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 Louisiana’s financial condition because net debt indicates Entergy Louisiana’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.
Entergy Louisiana seeks to optimize its capital structure in accordance with its regulatory requirements and to control its cost of capital while also maintaining equity capitalization at a level consistent with investment-grade debt ratings. To the extent that operating cash flows are in excess of planned investments, cash may be used to reduce outstanding debt or may be paid as a distribution, to the extent funds are legally available to do so, or both, in appropriate amounts to maintain the capital structure. To the extent that operating cash flows are insufficient to support planned investments, Entergy Louisiana may issue incremental debt or reduce distributions, or both, to maintain its capital structure. In addition, in certain infrequent circumstances, such as financing of large transactions that would materially alter the capital structure if financed entirely with debt and reduced distributions, Entergy Louisiana may receive equity contributions to maintain its capital structure.
Uses of Capital
Entergy Louisiana requires capital resources for:
•construction and other capital investments;
•debt maturities or retirements;
•working capital purposes, including the financing of fuel and purchased power costs; and
•distribution and interest payments.
Entergy Louisiana, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
Following are the amounts of Entergy Louisiana’s planned construction and other capital investments.
| | | | | | | | | | | | | | | | | |
| | 2025 | | 2026 | | 2027 |
| | (In Millions) |
| Planned construction and capital investment: | | | | | |
| Generation | $1,635 | | | $1,975 | | | $2,570 | |
| Transmission | 945 | | | 1,435 | | | 1,270 | |
| Distribution | 1,140 | | | 1,100 | | | 685 | |
| Utility Support | 110 | | | 105 | | | 210 | |
| Total | $3,830 | | | $4,615 | | | $4,735 | |
In addition to routine capital spending to maintain operations, the planned capital investment estimate for Entergy Louisiana includes investments in generation projects to modernize, decarbonize, expand, and diversify Entergy Louisiana’s portfolio, as well as to support customer growth, including St. Jacques Facility, Sterlington facility, Bayou Power Station, and new generation resources in north Louisiana; investments in River Bend and Waterford 3; distribution and Utility support spending to improve reliability, resilience, and customer experience; transmission spending to improve reliability and resilience while also supporting renewables expansion and customer growth; and other investments. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements, governmental actions, including trade-related governmental actions, such as tariffs and other measures, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital, including any changes to governmental programs, such as loans, grants, guarantees, and other subsidies. Entergy Louisiana is not able to predict the effect of potential changes in regulation and law, changes to governmental programs, such as loans, grants, guarantees, and other subsidies, and trade-related governmental actions, such as tariffs and other measures, on its current and planned capital projects.
Following are the amounts of Entergy Louisiana’s existing debt and lease obligations (includes estimated interest payments).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2025 | | 2026 | | 2027 | | 2028-2029 | | After 2029 |
| | (In Millions) |
| Long-term debt (a) | $686 | | | $1,088 | | | $909 | | | $1,081 | | | $12,568 | |
| Operating leases (b) | $20 | | | $18 | | | $15 | | | $18 | | | $4 | |
| Finance leases (b) | $7 | | | $6 | | | $5 | | | $7 | | | $5 | |
| | | | | | | | | |
(a)Long-term debt is discussed in Note 5 to the financial statements.
(b)Lease obligations are discussed in Note 10 to the financial statements.
Other Obligations
Entergy Louisiana currently expects to contribute approximately $41.3 million to its qualified pension plans and approximately $14.4 million to its other postretirement plans in 2025, although the 2025 required pension contributions will be known with more certainty when the January 1, 2025, valuations are completed, which is expected by April 1, 2025. See “Critical Accounting Estimates - Qualified Pension and Other Postretirement Benefits” below and Note 11 to the financial statements for a discussion of qualified pension and other postretirement benefits funding.
Entergy Louisiana has $114 million of unrecognized tax benefits net of unused tax attributes plus interest for which the timing of payments beyond 12 months cannot be reasonably estimated due to uncertainties in the timing of effective settlement of tax positions. See Note 3 to the financial statements for additional information regarding unrecognized tax benefits.
Entergy Louisiana, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
In addition, Entergy Louisiana enters into fuel and purchased power agreements that contain minimum purchase obligations. Entergy Louisiana has rate mechanisms in place to recover fuel, purchased power, and associated costs incurred under these purchase obligations. See Note 8 to the financial statements for discussion of Entergy Louisiana’s obligations under and divestiture from the Unit Power Sales Agreement and its obligations under the Vidalia purchased power agreement.
As a wholly-owned subsidiary of Entergy Utility Holding Company, LLC, Entergy Louisiana pays distributions from its earnings at a percentage determined monthly.
2021 Solar Certification and the Geaux Green Option
In November 2021, Entergy Louisiana filed an application with the LPSC seeking certification of and approval for the addition of four new solar photovoltaic resources with a combined nameplate capacity of 475 megawatts (the 2021 Solar Portfolio) and the implementation of a new green tariff, the Geaux Green Option (Rider GGO). The 2021 Solar Portfolio consists of four resources that are expected to provide $242 million in net benefits to Entergy Louisiana’s customers. These resources, all of which would be constructed in Louisiana, include (i) the Vacherie Facility, a 150 megawatt resource in St. James Parish; (ii) the Sunlight Road Facility, a 50 megawatt resource in Washington Parish; (iii) the St. Jacques Facility, a 150 megawatt resource in St. James Parish; and (iv) the Elizabeth Facility, a 125 megawatt resource in Allen Parish. The St. Jacques Facility would be acquired through a build-own-transfer agreement; the remaining resources involve power purchase agreements. The Sunlight Road Facility and the Elizabeth Facility each achieved commercial operation in 2024, and the Vacherie Facility and the St. Jacques Facility originally had estimated in service dates in 2025, but are now expected to be no sooner than 2027. The filing proposed to recover the costs of the power purchase agreements through the fuel adjustment clause and the formula rate plan and the acquisition costs through the formula rate plan.
The proposed Rider GGO is a voluntary rate schedule that will enhance Entergy Louisiana’s ability to help customers meet their sustainability goals by allowing customers to align some or all of their electricity requirements with renewable energy from the resources. Because subscription fees from Rider GGO participants are expected to help offset the cost of the resources, the design of Rider GGO also preserves the benefits of the 2021 Solar Portfolio for non-participants by providing them with the reliability and capacity benefits of locally-sited solar generation at a discounted price.
In March 2022 direct testimony from Walmart, the Louisiana Energy Users Group (LEUG), and the LPSC staff was filed. Each party recommended that the LPSC approve the resources proposed in Entergy Louisiana’s application, and the LPSC staff witness indicated that the process through which Entergy Louisiana solicited or obtained the proposals for the resources complied with applicable LPSC orders. The LPSC staff and LEUG’s witnesses made recommendations to modify the proposed Rider GGO and Entergy Louisiana’s proposed rate relief. In April 2022 the LPSC staff and LEUG filed cross-answering testimony concerning each other’s proposed modifications to Rider GGO and the proposed rate recovery. Entergy Louisiana filed rebuttal testimony in June 2022. In August 2022 the parties reached a settlement certifying the 2021 Solar Portfolio and approving implementation of Rider GGO. In September 2022 the LPSC approved the settlement. Following the LPSC approval, the St. James Parish council issued a moratorium on new land use permits for solar facilities until the later of March 2023 or the completion of an environmental and economic impact study. In November 2023, St. James Parish lifted the moratorium and adopted an ordinance modifying the parish’s land use plan to establish solar as an approved land use and defining corresponding solar regulations. In March 2024 the project developer submitted a solar energy facility farm permit application to the St. James Parish planning commission to request approval for the Vacherie and St. Jacques Facilities. In June 2024 the St. James Parish council denied the application and following this denial, the project developer and one of the project’s ground lessors filed separate lawsuits seeking to overturn the council’s decision. Entergy Louisiana is currently monitoring the status of the aforementioned lawsuits and also considering alternate paths forward.
Entergy Louisiana, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
2022 Solar Portfolio and Expansion of the Geaux Green Option
In February 2023, Entergy Louisiana filed an application with the LPSC seeking certification of the Iberville/Coastal Prairie facility, which will provide 175 MW of capacity through a PPA with a third party, and the Sterlington facility, a 49 MW self-build project located near the deactivated Sterlington power plant (the 2022 Solar Portfolio). Entergy Louisiana is seeking to include these resources within the portfolio supporting the Rider GGO rate schedule to help fulfill customer interest in access to renewable energy. Entergy Louisiana has requested the costs of these facilities, as offset by Rider GGO revenues, be deemed eligible for recovery in accordance with the terms of the formula rate plan and fuel adjustment clause rate mechanisms that exist at the time the facilities are placed into service. In January 2024, the parties filed an uncontested stipulated settlement agreement on the key issues in the case, which stated that the 2022 Solar Portfolio should be constructed, found that Entergy Louisiana’s proposed cost recovery mechanisms were appropriate, and confirmed the resources’ eligibility for inclusion in Rider GGO. The settlement was approved by the LPSC in January 2024. The Sterlington facility is expected to achieve commercial operation in January 2026.
Alternative RFP and Certification
In 2023, Entergy Louisiana made a filing to seek approval from the LPSC for an alternative to the requests for proposals (RFP) process that would enable the acquisition of up to 3 GW of solar resources on a faster timeline than the current RFP and certification process allows. The initial phase of the filing established the need for the acquisition of additional resources and the need for an alternative to the RFP process. The second phase of the filing contained the details of the proposal for the alternative competitive procurement process and the information necessary to support certification. In addition to the acquisition of up to 3 GW of solar resources, the filing also sought approval of a new renewable energy credits-based tariff, the Geaux ZERO rider. In June 2024 the LPSC issued an order approving the application. In August 2024, Entergy Louisiana issued the first RFP pursuant to this order in solicitation of solar resources that meet the requirements of the LPSC’s order. For the first RFP, the initial selection of proposals has been completed, and negotiations are in progress.
Bayou Power Station
In March 2024, Entergy Louisiana filed an application with the LPSC seeking certification that the public convenience and necessity would be served by the construction of the Bayou Power Station, a 112 MW aggregated capacity floating natural gas power station with black-start capability in Leeville, Louisiana and an associated microgrid that would serve nearby areas, including Port Fourchon, Golden Meadow, Leeville, and Grand Isle. In its application, Entergy Louisiana noted that the estimated cost of the Bayou Power Station was $411 million, including estimated costs of transmission interconnection and other related costs. In October 2024, Entergy Louisiana filed a motion to suspend the procedural schedule in this proceeding in order to evaluate certain recent developments related to the project including potential changes to the estimated cost of the project. Entergy Louisiana will determine next steps for the project after fully evaluating these developments. Subject to timely approval by the LPSC and receipt of other permits and approvals, commercial operation is expected to occur by the end of 2028.
Additional Generation and Transmission Resources
In October 2024, Entergy Louisiana filed an application with the LPSC seeking approval of a variety of generation and transmission resources proposed in connection with establishing service to a new data center to be developed by a subsidiary of Meta Platforms, Inc. in north Louisiana, for which an electric service agreement has been executed. The filing requests LPSC certification of three new combined cycle combustion turbine generation resources totaling 2,262 MW, each of which will be enabled for future carbon capture and storage, a new 500 kV transmission line, and 500 kV substation upgrades. The application also requests approval to implement a corporate sustainability rider applicable to the new customer. The corporate sustainability rider contemplates the new customer contributing to the costs of the planned future addition of 1,500 MW of new solar and energy storage
Entergy Louisiana, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
resources, agreements involving carbon capture and storage at Entergy Louisiana’s existing Lake Charles Power Station, and potential future wind and nuclear resources. The combined cost of the first two new combined cycle combustion turbine generation resources is estimated to be approximately $2,387 million, and these units are expected to achieve commercial operation in 2028. The third new generation resource is currently expected to have an estimated cost similar to the first two new generation resources and is expected to achieve commercial operation in 2029. The cost of the new 500 kV transmission line is estimated to be $546 million. Entergy Louisiana anticipates funding the incremental cost to serve the customer through direct financial contributions from the customer and the revenues it expects to earn under the electric service agreement. The electric service agreement also contains provisions for termination payments that will help ensure that there is no harm to Entergy Louisiana and its customers in the event of early termination. A directive was issued at the LPSC’s November 2024 meeting for the matter to be decided by October 2025. Consistent with this directive, a procedural schedule was adopted setting the matter for hearing in July 2025. In February 2025 intervenors filed a motion asking the LPSC to deny Entergy Louisiana’s requested exemption from the LPSC’s order addressing competitive solicitation procedures and further asking the LPSC to dismiss the application.
In February 2025, Entergy Louisiana filed supplemental testimony with the LPSC stating that the third combined cycle combustion turbine resource presented in the October 2024 application would be sited at Entergy Louisiana’s Waterford site in Killona, Louisiana, alongside existing Entergy Louisiana generation resources. The testimony also notes that Entergy Louisiana is negotiating with the customer to increase the load associated with the customer’s project in north Louisiana and that the additional load can be served without additional generation capacity beyond what was presented in the October 2024 application, but that additional transmission facilities, which will be funded directly by the customer, are needed to serve this additional load.
Transmission Projects
In March 2024, Entergy Louisiana filed an application seeking an exemption determination, or alternatively, a certificate of public convenience and necessity, for a transmission project that includes a new 500 kV/230 kV Commodore substation and an approximately 60-mile 230 kV line connecting the new Commodore substation to the Waterford substation. The project, which was approved by MISO in the 2023 MISO Transmission Expansion Plan, also includes certain common elements with, and right-of-way acquisition for, a future transmission project in the same area consisting of 500 kV elements. The estimated cost of the project is $498.8 million. In February 2025, Entergy Louisiana and the LPSC staff jointly filed, for consideration by the LPSC, an uncontested stipulated settlement agreement resolving all issues in the proceeding. In the motion requesting approval of the uncontested stipulated settlement agreement, the parties requested a settlement hearing in March 2025.
In December 2024, Entergy Louisiana filed an application seeking a certificate of public convenience and necessity for a 500 kV transmission project that includes the construction of a new 84-mile Commodore to Churchill 500 kV transmission line, the expansion of the Waterford 500 kV substation, the construction of a new Churchill 500 kV substation and improvements to the Churchill 230 kV substation, and the conversion of the existing 230 kV Waterford to Churchill transmission line to 500 kV, forming a 500 kV loop into the Downstream of Gypsy load pocket. The project, which was approved by MISO in the 2023 MISO Transmission Expansion Plan, shares common elements with a future transmission project in the same area consisting of 230 kV elements. The estimated cost of the project is $954.7 million.
Resilience and Grid Hardening
In December 2022, Entergy Louisiana filed an application with the LPSC seeking a public interest finding regarding Phase I of Entergy Louisiana’s Future Ready resilience plan and approval of a rider mechanism to recover the program’s costs. Phase I in the December 2022 application reflected the first five years of a ten-year resilience plan and included investment of approximately $5 billion, including hardening investment, transmission dead-end structures, enhanced vegetation management, and telecommunications improvement. In April 2024 the LPSC approved a framework which includes an initial five-year resilience plan providing for an investment of
Entergy Louisiana, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
approximately $1.9 billion with cost recovery via a forward-looking rider with semi-annual true-ups. The plan is subject to specified reporting requirements and includes a performance review of the hardened assets. The LPSC order approving the framework does not include any restrictions on Entergy Louisiana’s ability to file applications for approval of additional investments in resilience.
The LPSC had previously opened a formal rulemaking proceeding in December 2021 to investigate efforts to improve resilience of electric utility infrastructure. In April 2023 the LPSC staff issued a draft rule in the rulemaking proceeding related to a requirement to file a grid resilience plan. The procedural schedule entered in the rulemaking proceeding contemplated adoption of a final rule in October 2023, but this did not occur, and a new date has not been set. The LPSC also has pending rulemakings addressing issues related to pole viability and grid maintenance practices. In December 2023, in those rulemakings, the LPSC staff issued a report and recommendation proposing to impose significant new reporting and compliance obligations related to jurisdictional utilities’ distribution and transmission operations, including new obligations related to grid hardening plans, pole inspections, pole replacement, vegetation management, storm restoration plans, new reliability metrics, software for handling customer complaints and complaint resolution, required use of drone technology, and new penalties and incentives for reliability performance and for compliance with the new obligations. In February 2024, Entergy Louisiana and other parties filed comments on the LPSC staff’s report.
Sources of Capital
Entergy Louisiana’s sources to meet its capital requirements include:
•internally generated funds;
•cash on hand;
•the Entergy system money pool;
•storm reserve escrow accounts;
•debt or preferred membership interest issuances, including debt issuances to refund or retire currently outstanding or maturing indebtedness;
•capital contributions; and
•bank financing under new or existing facilities.
Circumstances such as weather patterns, fuel and purchased power price fluctuations, and unanticipated expenses, including unscheduled plant outages and storms, could affect the timing and level of internally generated funds in the future. In addition to the financings necessary to meet capital requirements and contractual obligations, Entergy Louisiana expects to continue, when economically feasible, to retire higher-cost debt and replace it with lower-cost debt if market conditions permit.
All debt and common and preferred membership interest issuances by Entergy Louisiana require prior regulatory approval. Debt issuances are also subject to requirements set forth in its bond indentures and other agreements. Entergy Louisiana has sufficient capacity under these tests to meet its foreseeable capital needs for the next twelve months and beyond.
Entergy Louisiana’s receivables from or (payables to) the money pool were as follows as of December 31 for each of the following years.
| | | | | | | | | | | | | | | | | | | | |
| 2024 | | 2023 | | 2022 | | 2021 |
| (In Thousands) |
| $32,668 | | ($156,166) | | ($226,114) | | $14,539 |
See Note 4 to the financial statements for a description of the money pool.
Entergy Louisiana, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
Entergy Louisiana has a credit facility in the amount of $400 million scheduled to expire in June 2029. The credit facility includes fronting commitments for the issuance of letters of credit against $15 million of the borrowing capacity of the facility. As of December 31, 2024, there were no cash borrowings and no letters of credit outstanding under the credit facility. In addition, Entergy Louisiana is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO. As of December 31, 2024, $46.2 million in letters of credit were outstanding under Entergy Louisiana’s uncommitted letter of credit facility. See Note 4 to the financial statements for additional discussion of the credit facilities.
The Entergy Louisiana nuclear fuel company variable interest entities have two separate credit facilities, each in the amount of $105 million and scheduled to expire in June 2027. As of December 31, 2024, $18.7 million in loans were outstanding under the credit facility for the Entergy Louisiana River Bend nuclear fuel company variable interest entity. As of December 31, 2024, $18.9 million in loans were outstanding under the Entergy Louisiana Waterford nuclear fuel company variable interest entity credit facility. See Note 4 to the financial statements for additional discussion of the nuclear fuel company variable interest entity credit facilities.
Entergy Louisiana obtained authorizations from the FERC through January 2027 for the following:
•short-term borrowings not to exceed an aggregate amount of $450 million at any time outstanding;
•long-term borrowings and security issuances; and
•borrowings by its nuclear fuel company variable interest entities.
See Note 4 to the financial statements for further discussion of Entergy Louisiana’s short-term borrowing limits.
Hurricane Francine
In September 2024, Hurricane Francine caused damage to the areas served by Entergy Louisiana and Entergy New Orleans. The storm resulted in widespread power outages, primarily due to damage to distribution infrastructure as a result of strong winds and heavy rain, and the loss of sales during the power outages. See Note 2 to the financial statements for discussion of the December 2024 storm cost recovery filing related to Hurricane Francine.
State and Local Rate Regulation and Fuel-Cost Recovery
The rates that Entergy Louisiana charges for its services significantly influence its financial position, results of operations, and liquidity. Entergy Louisiana is regulated, and the rates charged to its customers are determined in regulatory proceedings. A governmental agency, the LPSC, is primarily responsible for approval of the rates charged to customers.
Retail Rates - Electric
Filings with the LPSC
2020 Formula Rate Plan Filing
In June 2021, Entergy Louisiana filed its formula rate plan evaluation report for its 2020 calendar year operations. The 2020 test year evaluation report produced an earned return on common equity of 8.45%, with a base formula rate plan revenue increase of $63 million. Certain reductions in formula rate plan revenue driven by lower sales volumes, reductions in capacity cost and net MISO cost, and higher credits resulting from the Tax Cuts and Jobs Act offset the base formula rate plan revenue increase, leading to a net increase in formula rate plan revenue of $50.7 million. The report also included multiple new adjustments to account for, among other things, the calculation of distribution recovery mechanism revenues. The effects of the changes to total formula rate plan revenue were different for each legacy company, primarily due to differences in the legacy companies’ capacity cost
Entergy Louisiana, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
changes, including the effect of true-ups. Legacy Entergy Louisiana formula rate plan revenues increased by $27 million and legacy Entergy Gulf States Louisiana formula rate plan revenues increased by $23.7 million. Subject to LPSC review, the resulting changes became effective for bills rendered during the first billing cycle of September 2021, subject to refund. Discovery commenced in the proceeding. In August 2021, Entergy Louisiana submitted an update to its evaluation report to account for various changes. Relative to the June 2021 filing, the total formula rate plan revenue increased by $14.2 million to an updated total of $64.9 million. Legacy Entergy Louisiana formula rate plan revenues increased by $32.8 million and legacy Entergy Gulf States Louisiana formula rate plan revenues increased by $32.1 million. The results of the 2020 test year evaluation report bandwidth calculation were unchanged as there was no change in the earned return on common equity of 8.45%. In September 2021 the LPSC staff filed a letter with a general statement of objections/reservations because it had not completed its review and indicated it would update the letter once its review was complete.
In November 2023 the LPSC approved a global settlement which resolved all outstanding issues related to the 2017, 2018, and 2019 formula rate plan filings and resolved certain issues with respect to the 2020 and 2021 formula rate plan filings. See “Formula Rate Plan Global Settlement” below for further discussion of the settlement. In September 2024 the LPSC issued an order approving a settlement that resolved, with prejudice, all other issues identified by the staff in the matter and closed the docket. See “2023 Entergy Louisiana Rate Case and Formula Rate Plan Extension Request” below for further discussion.
2021 Formula Rate Plan Filing
In May 2022, Entergy Louisiana filed its formula rate plan evaluation report for its 2021 calendar year operations. The 2021 test year evaluation report produced an earned return on common equity of 8.33%, with a base formula rate plan revenue increase of $65.3 million. Other increases in formula rate plan revenue driven by reductions in Tax Cut and Jobs Act credits and additions to transmission and distribution plant in service reflected through the transmission recovery mechanism and distribution recovery mechanism are partly offset by an increase in net MISO revenues, leading to a net increase in formula rate plan revenue of $152.9 million. The effects of the changes to total formula rate plan revenue are different for each legacy company, primarily due to differences in the legacy companies’ capacity cost changes, including the effect of true-ups. Legacy Entergy Louisiana formula rate plan revenues increased by $86 million and legacy Entergy Gulf States Louisiana formula rate plan revenues increased by $66.9 million. In August 2022 the LPSC staff filed a list of objections/reservations, including outstanding issues from the test years 2017-2020 formula rate plan filings, utilizing the extraordinary cost mechanism to address one-time changes such as state tax rate changes, and failing to include an adjustment for revenues not received as a result of Hurricane Ida. Subject to LPSC review, the resulting changes to formula rate plan revenues became effective for bills rendered during the first billing cycle of September 2022, subject to refund.
In November 2023 the LPSC approved a global settlement which resolved all outstanding issues related to the 2017, 2018, and 2019 formula rate plan filings and resolved certain issues with respect to the 2020 and 2021 formula rate plan filings. See “Formula Rate Plan Global Settlement” below for further discussion of the settlement. In September 2024 the LPSC issued an order approving a settlement that resolved, with prejudice, all other issues identified by the staff in the matter and closed the docket. See “2023 Entergy Louisiana Rate Case and Formula Rate Plan Extension Request” below for further discussion.
2022 Formula Rate Plan Filing
In May 2023, Entergy Louisiana filed its formula rate plan evaluation report for its 2022 calendar year operations. The 2022 test year evaluation report produced an earned return on common equity of 8.33%, requiring an approximately $70.7 million increase to base rider revenue. Due to a cap for the 2021 and 2022 test years, however, base rider formula rate plan revenues were only increased by approximately $4.9 million, resulting in a revenue deficiency of approximately $65.9 million and providing for prospective return on common equity opportunity of approximately 8.38%. Other changes in formula rate plan revenue driven by increases in capacity costs, primarily legacy capacity costs, additions eligible for recovery through the transmission recovery mechanism
Entergy Louisiana, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
and distribution recovery mechanism, and higher sales during the test period were offset by reductions in net MISO costs as well as credits for FERC-ordered refunds. Also included in the 2022 test year distribution recovery mechanism revenue requirement was a $6 million credit relating to the distribution recovery mechanism performance accountability standards and requirements. In total, the net increase in formula rate plan revenues, including base formula rate plan revenues inside the formula rate plan bandwidth and subject to the cap, as well as other formula rate plan revenues outside of the bandwidth, was $85.2 million. In August 2023 the LPSC staff filed a list of objections/reservations, including outstanding issues from the test years 2017-2021 formula rate plan filings, the calculation of certain refunds from System Energy, and certain calculations relating to the tax reform adjustment mechanism. Subject to LPSC review, the resulting net increase in formula rate plan revenues of $85.2 million became effective for bills rendered during the first billing cycle of September 2023, subject to refund. In September 2024 the LPSC issued an order approving a settlement that resolved, with prejudice, all other issues identified by the staff in the matter and closed the docket. See “2023 Entergy Louisiana Rate Case and Formula Rate Plan Extension Request” below for further discussion.
2023 Entergy Louisiana Rate Case and Formula Rate Plan Extension Request
In August 2023, Entergy Louisiana filed an application for approval of a regulatory blueprint necessary for it to strengthen the electric grid for the State of Louisiana, which contained a dual-path request to update rates through either: (1) extension of Entergy Louisiana’s current formula rate plan (with certain modifications) for three years (the Rate Mitigation Proposal), which is Entergy Louisiana’s recommended path; or (2) implementation of rates resulting from a cost-of-service study (the Rate Case path). The application complied with Entergy Louisiana’s previous formula rate plan extension order requiring that for Entergy Louisiana to obtain another extension of its formula rate plan that included a rate reset, Entergy Louisiana would need to submit a full cost-of-service rate case. Entergy Louisiana’s filing supported the need to extend Entergy Louisiana’s formula rate plan with credit supportive mechanisms needed to facilitate investment in the distribution, transmission, and generation functions.
In July 2024, Entergy Louisiana reached an agreement in principle with the LPSC staff and the intervenors in the proceeding and filed with the LPSC a joint motion to suspend the procedural schedule to allow for all parties to finalize a stipulated settlement agreement.
In August 2024, Entergy Louisiana and the LPSC staff jointly filed a global stipulated settlement agreement for consideration by the LPSC with key terms as follows:
•continuation of the formula rate plan for 2024-2026 (test years 2023-2025);
•a base formula rate plan revenue increase of $120 million for test year 2023, effective for rates beginning September 2024;
•a $140 million cumulative cap on base formula rate plan revenue increases, if needed, for test years 2024 and 2025, excluding outside the bandwidth items;
•$184 million of customer rate credits to be given over two years, including increasing customer sharing of income tax benefits resulting from the 2016-2018 IRS audit, to resolve any remaining disputed issues stemming from formula rate plan test years prior to test year 2023, including but not limited to the investigation into Entergy Services costs billed to Entergy Louisiana. As discussed in Note 3 to the financial statements, a $38 million regulatory liability was recorded in 2023 in connection with the 2016-2018 IRS audit;
•$75.5 million of customer rate credits, as provided for in the System Energy global settlement, to be credited over three years subject to and conditioned upon FERC approval of the System Energy global settlement, which was approved in November 2024. See “Complaints Against System Energy – System Energy Settlement with the LPSC” in Note 2 to the financial statements for further details of the System Energy global settlement;
Entergy Louisiana, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
•$5.8 million of customer rate credits provided for in the Entergy Louisiana formula rate plan global settlement agreement approved by the LPSC in November 2023 credited over one year. See “Formula Rate Plan Global Settlement” below for further discussion of the settlement;
•an increase in the allowed midpoint return on common equity from 9.5% to 9.7%, with a bandwidth of 40 basis points above and below the midpoint, for the extended term of the formula rate plan, except that for test year 2023 in which the authorized return on common equity shall have no bearing on the change in base formula rate plan revenue described above and, for test year 2024, any earnings above the authorized return on common equity shall be returned to customers through a credit;
•an increase in nuclear depreciation rates by $15 million in each of the 2023, 2024, and 2025 test years outside of the formula rate plan bandwidth calculation; and
•for the transmission recovery mechanism and the distribution recovery mechanism, no change to the existing floors, but the caps for both would be $350 million for test year 2023, $375 million for test year 2024, and $400 million for test year 2025. Transmission projects filed with the LPSC will be exempt from the transmission recovery mechanism cap.
The global stipulated settlement agreement was unanimously approved by the LPSC in August 2024 and an order was issued by the LPSC in September 2024 reflecting the approval of the settlement.
Based on the July 2024 agreement in principle, in second quarter 2024 Entergy Louisiana recorded expenses of $151 million ($112 million net-of-tax) primarily consisting of regulatory charges to reflect the effects of the agreement in principle.
Formula Rate Plan Global Settlement
In October 2023 the LPSC staff and Entergy Louisiana reached a global settlement which resolved all outstanding issues related to the 2017, 2018, and 2019 formula rate plan filings and resolved certain issues with respect to the 2020 and 2021 formula rate plan filings. The settlement was approved by the LPSC in November 2023. The settlement resulted in a one-time cost of service credit to customers of $5.8 million, allowed Entergy Louisiana to retain approximately $6.2 million of securitization over-collection as recovery of a regulatory asset associated with late fees related to the 2016 Baton Rouge flood, and resulted in Entergy Louisiana recording the reversal of a $105.6 million regulatory liability, primarily associated with the Hurricane Isaac securitization, recognized in 2017 as a result of the Tax Cuts and Jobs Act. See Note 3 to the financial statements for further discussion of the reversal of the regulatory liability.
2023 Formula Rate Plan Filing
In August 2024, pursuant to the global stipulated settlement agreement, Entergy Louisiana filed its formula rate plan evaluation report for its 2023 calendar year operations. Consistent with the global stipulated settlement agreement, the filing reflected a 9.7% allowed return on common equity with a bandwidth of 40 basis points above and below the midpoint. For the 2023 test year, however, the bandwidth provisions of the formula rate plan were temporarily suspended and, pursuant to the terms of the global stipulated settlement agreement, Entergy Louisiana implemented the September 2024 formula rate plan rate adjustments effective with the first billing cycle of September 2024. Those adjustments included a $120 million increase in base rider formula rate plan revenue and a $101.8 million one-time incremental net decrease consistent with the terms of the global stipulated settlement. The formula rate plan rate adjustments reflected in the evaluation report also include a redetermination of the transmission recovery mechanism, the distribution recovery mechanism, the additional capacity mechanism, the tax adjustment mechanism, the MISO cost recovery mechanism, and other one-time adjustments. In January 2025, Entergy Louisiana and the LPSC filed a joint report indicating that no disputed issues remained in the proceeding and requesting that the LPSC issue an order accepting Entergy Louisiana’s evaluation report and, ultimately, resolving this matter. Entergy Louisiana expects a decision on the joint report in first quarter 2025.
Entergy Louisiana, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
Investigation of Costs Billed by Entergy Services
In November 2018 the LPSC issued a notice of proceeding initiating an investigation into costs incurred by Entergy Services that are included in the retail rates of Entergy Louisiana. As stated in the notice of proceeding, the LPSC observed an increase in capital construction-related costs incurred by Entergy Services. Discovery was issued and included efforts to seek highly detailed information on a broad range of matters unrelated to the scope of the audit. In September 2024 the LPSC issued an order approving a settlement that resolved, with prejudice, all other issues identified by the staff in the matter and closed the docket. See “2023 Entergy Louisiana Rate Case and Formula Rate Plan Extension Request” above for further discussion.
Fuel and purchased power cost recovery
Entergy Louisiana recovers electric fuel and purchased power costs for the billing month based upon the level of such costs incurred two months prior to the billing month. Entergy Louisiana’s purchased gas adjustments include estimates for the billing month adjusted by a surcharge or credit that arises from an annual reconciliation of fuel costs incurred with fuel cost revenues billed to customers, including carrying charges.
To mitigate high electric bills, primarily driven by high summer usage and elevated gas prices, Entergy Louisiana deferred approximately $225 million of fuel expense incurred in April, May, June, July, August, and September 2022 (as reflected on June, July, August, September, October, and November 2022 bills). These deferrals were included in the over/under calculation of the fuel adjustment clause, which is intended to recover the full amount of the costs included on a rolling twelve-month basis.
In March 2020 the LPSC staff provided notice of an audit of Entergy Louisiana’s fuel adjustment clause filings. The audit includes a review of the reasonableness of charges flowed through Entergy Louisiana’s fuel adjustment clause for the period from 2016 through 2019. The LPSC staff issued its audit report in September 2021, and although certain internal record keeping recommendations were made, the LPSC staff did not recommend any disallowances. The next step is for the LPSC to review the report, but there is not a deadline for the review.
In January 2023 the LPSC staff provided notice of an audit of Entergy Louisiana’s purchased gas adjustment clause filings. The audit includes a review of the reasonableness of charges flowed through Entergy Louisiana’s purchased gas adjustment clause for the period from 2021 through 2022. Discovery is ongoing, and no audit report has been filed.
In January 2023 the LPSC staff provided notice of an audit of Entergy Louisiana’s fuel adjustment clause filings. The audit includes a review of the reasonableness of charges flowed through Entergy Louisiana’s fuel adjustment clause for the period from 2020 through 2022. Discovery is ongoing, and no audit report has been filed.
COVID-19 Orders
In April 2020 the LPSC issued an order authorizing utilities to record as a regulatory asset expenses incurred from the suspension of disconnections and collection of late fees imposed by LPSC orders associated with the COVID-19 pandemic. In April 2023, Entergy Louisiana filed an application proposing to utilize approximately $1.6 billion in certain low interest debt to generate earnings to apply toward the reduction of the COVID-19 regulatory asset, as well as to conduct additional outside right-of-way vegetation management activities and fund the minor storm reserve account. In that filing, Entergy Louisiana proposed to delay repayment of certain shorter-term first mortgage bonds that were issued to finance storm restoration costs until the costs could be securitized, and to invest the funds that otherwise would be used to repay those bonds in the money pool to take advantage of the spread between prevailing interest rates on investments in the money pool and the interest rates on the bonds. The LPSC approved Entergy Louisiana’s requested relief in June 2023. In November 2024, Entergy Louisiana submitted a filing to the LPSC requesting that the LPSC review Entergy Louisiana’s computation of the COVID-19 regulatory asset as well as Entergy Louisiana’s proposal to offset the regulatory asset against the interest earned on
Entergy Louisiana, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
the short-term debt funds, resulting in no increased costs to customers. At the time of the filing, Entergy Louisiana had a regulatory asset of $47.8 million for costs associated with the COVID-19 pandemic. As of December 31, 2024, Entergy Louisiana had a regulatory liability of $48.9 million for the deferred earnings related to the approximately $1.6 billion in low interest debt, which had been fully repaid by August 2024. In granting Entergy Louisiana’s requested relief in June 2023, the LPSC ordered that any amount of earnings exceeding the amount of the COVID-19 regulatory asset be transferred to Entergy Louisiana’s storm reserve escrow account.
Industrial and Commercial Customers
Entergy Louisiana’s large industrial and commercial customers continually explore ways to reduce their energy costs. In particular, cogeneration is an option available to a portion of Entergy Louisiana’s industrial customer base. Entergy Louisiana responds by working with industrial and commercial customers and negotiating electric service contracts to provide competitive rates that match specific customer needs and load profiles. Entergy Louisiana actively participates in economic development, customer retention, and reclamation activities to increase industrial and commercial demand, from both new and existing customers.
Federal Regulation
See the “Rate, Cost-recovery, and Other Regulation – Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis and Note 2 to the financial statements for a discussion of federal regulation.
Nuclear Matters
Entergy Louisiana owns and, through an affiliate, operates the River Bend and Waterford 3 nuclear generating plants and is, therefore, subject to the risks related to such ownership and operation. These include risks related to: the use, storage, and handling and disposal of high-level and low-level radioactive materials; the substantial financial requirements, both for capital investments and operational needs, including the financial requirements to address emerging issues related to equipment reliability, to position Entergy Louisiana’s nuclear fleet to meet its operational goals; the performance and capacity factors of these nuclear plants; regulatory requirements and potential future regulatory changes, including changes affecting the regulations governing nuclear plant ownership, operations, license amendments, and decommissioning; the availability of interim or permanent sites for the disposal of spent nuclear fuel and nuclear waste, including the fees charged for such disposal; the sufficiency of nuclear decommissioning trust fund assets and earnings to complete decommissioning of each site when required; and limitations on the amounts of insurance recoveries for losses in connection with nuclear plant operations and catastrophic events such as a nuclear accident. In the event of an unanticipated early shutdown of River Bend or Waterford 3, Entergy Louisiana may be required to provide additional funds or credit support to satisfy regulatory requirements for decommissioning. Waterford 3’s operating license expires in 2044 and River Bend’s operating license expires in 2045.
Environmental Risks
Entergy Louisiana’s facilities and operations are subject to regulation by various governmental authorities having jurisdiction over air quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental matters. Management believes that Entergy Louisiana is in substantial compliance with environmental regulations currently applicable to its facilities and operations, with reference to possible exceptions noted in “Regulation of Entergy’s Business - Environmental Regulation” in Part I, Item 1. Because environmental regulations are subject to change, future compliance costs cannot be precisely estimated.
Entergy Louisiana, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
Critical Accounting Estimates
The preparation of Entergy Louisiana’s financial statements in conformity with GAAP requires management to apply appropriate accounting policies and to make estimates and judgments that can have a significant effect on reported financial position, results of operations, and cash flows. Management has identified the following accounting estimates as critical because they are based on assumptions and measurements that involve a high degree of uncertainty, and the potential for future changes in these assumptions and measurements could produce estimates that would have a material effect on the presentation of Entergy Louisiana’s financial position, results of operations, or cash flows.
Nuclear Decommissioning Costs
See “Nuclear Decommissioning Costs” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the estimates inherent in accounting for nuclear decommissioning costs.
Utility Regulatory Accounting
See “Utility Regulatory Accounting” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of accounting for the effects of rate regulation.
Taxation and Uncertain Tax Positions
See “Taxation and Uncertain Tax Positions” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion.
Qualified Pension and Other Postretirement Benefits
Entergy Louisiana’s qualified pension and other postretirement reported costs, as described in Note 11 to the financial statements, are affected by numerous factors including the provisions of the plans, changing employee demographics, and various actuarial calculations, assumptions, and accounting mechanisms. See “Qualified Pension and Other Postretirement Benefits” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion. Because of the complexity of these calculations, the long-term nature of these obligations, and the importance of the assumptions utilized, Entergy’s estimate of these costs is a critical accounting estimate.
Cost Sensitivity
The following chart reflects the sensitivity of qualified pension cost and qualified projected benefit obligation to changes in certain actuarial assumptions (dollars in thousands).
| | | | | | | | | | | | | | | | | | | | |
| Actuarial Assumption | | Change in Assumption | | Impact on 2025 Qualified Pension Cost | | Impact on 2024 Qualified Projected Benefit Obligation |
| | | | | Increase/(Decrease) | | |
| Discount rate | | (0.25%) | | $960 | | $25,042 |
| Rate of return on plan assets | | (0.25%) | | $2,759 | | $— |
| Rate of increase in compensation | | 0.25% | | $1,193 | | $6,054 |
Entergy Louisiana, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
The following chart reflects the sensitivity of postretirement benefits cost and accumulated postretirement benefit obligation to changes in certain actuarial assumptions (dollars in thousands).
| | | | | | | | | | | | | | | | | | | | |
| Actuarial Assumption | | Change in Assumption | | Impact on 2025 Postretirement Benefits Cost | | Impact on 2024 Accumulated Postretirement Benefit Obligation |
| | | | | Increase/(Decrease) | | |
| Discount rate | | (0.25%) | | $284 | | $3,760 |
| Health care cost trend | | 0.25% | | $487 | | $2,455 |
Each fluctuation above assumes that the other components of the calculation are held constant.
Costs and Employer Contributions
Total qualified pension cost for Entergy Louisiana in 2024 was $10.7 million. Entergy Louisiana anticipates 2025 qualified pension cost to be $14.1 million. Entergy Louisiana contributed $48.4 million to its qualified pension plans in 2024 and estimates pension contributions will be approximately $41.3 million in 2025, although the 2025 required pension contributions will be known with more certainty when the January 1, 2025 valuations are completed, which is expected by April 1, 2025.
Total postretirement health care and life insurance benefit income for Entergy Louisiana in 2024 was $701 thousand. Entergy Louisiana expects 2025 postretirement health care and life insurance benefit income of approximately $1.1 million. Entergy Louisiana contributed $16.9 million to its other postretirement plans in 2024 and estimates that 2025 contributions will be approximately $14.4 million.
Other Contingencies
See “Other Contingencies” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of the estimates associated with environmental, litigation, and other risks.
New Accounting Pronouncements
See the “New Accounting Pronouncements” section of Note 1 to the financial statements for a discussion of new accounting pronouncements.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the member and Board of Directors of
Entergy Louisiana, LLC and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Entergy Louisiana, LLC and Subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, cash flows, and changes in equity (pages 367 through 372 and applicable items in pages 47 through 239), for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Rate and Regulatory Matters — Entergy Louisiana, LLC and Subsidiaries — Refer to Note 2 to the financial statements
Critical Audit Matter Description
The Company is subject to rate regulation by the Louisiana Public Service Commission (the “LPSC”), which has jurisdiction with respect to the rates of electric companies in Louisiana, and to wholesale rate regulation by the Federal Energy Regulatory Commission (“FERC”). Management has determined it meets the requirements under accounting principles generally accepted in the United States of America to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation. Accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures.
The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Because the LPSC and the FERC set the rates the Company is allowed to charge customers based on allowable costs, including a reasonable return on equity, the Company applies accounting standards that require the financial statements to reflect the effects of rate regulation, including the recording of regulatory assets and liabilities. The Company assesses whether the regulatory assets and regulatory liabilities continue to meet the criteria for probable future recovery or settlement at each balance sheet date and when regulatory events occur. This assessment includes consideration of recent rate orders, historical regulatory treatment for similar costs, and factors such as changes in applicable regulatory and political environments. While the Company has indicated it expects to recover costs from customers through regulated rates, there is a risk that the LPSC and the FERC will not approve: (1) full recovery of the costs of providing utility service, or (2) full recovery of amounts invested in the utility business and a reasonable return on that investment.
We identified the impact of rate regulation as a critical audit matter due to the judgments made by management to support its assertions about impacted account balances and disclosures and the high degree of subjectivity involved in assessing the impact of future regulatory orders on the financial statements. Management judgments include assessing the likelihood of recovery in future rates of incurred costs, and refunds to customers. Auditing management’s judgments regarding the outcome of future decisions by the LPSC and the FERC, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities involved specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities and auditor judgment to evaluate management estimates and the subjectivity of audit evidence.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the uncertainty of future decisions by the LPSC and the FERC, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities included the following, among others:
•We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We also tested the effectiveness of management’s controls over the initial recognition of regulatory assets or liabilities and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates.
•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.
•We read relevant regulatory orders issued by the LPSC and the FERC for the Company to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the LPSC’s and the FERC’s treatment of similar costs under similar circumstances. We evaluated external information and compared to management’s recorded regulatory asset and liability balances for completeness.
•For regulatory matters in process, we inspected the Company’s filings with the LPSC and the FERC and orders issued, and considered the filings with the LPSC and the FERC by intervenors that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.
•We obtained an analysis from management and support from internal and external legal counsel, as appropriate, regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities not yet addressed in a regulatory order, to assess management’s assertion that amounts are probable of recovery or refund or a future reduction in rates.
•We obtained representation from management regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities to assess management’s assertion that amounts are probable of recovery, refund, or a future reduction in rates.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 18, 2025
We have served as the Company’s auditor since 2001.
| | | | | | | | | | | | | | | | | | | | |
| ENTERGY LOUISIANA, LLC AND SUBSIDIARIES |
| CONSOLIDATED INCOME STATEMENTS |
| | |
| | | For the Years Ended December 31, |
| | | 2024 | | 2023 | | 2022 |
| | | (In Thousands) |
| | | | | | |
| OPERATING REVENUES | | | | | | |
| Electric | | $5,068,158 | | | $5,073,239 | | | $6,246,933 | |
| Natural gas | | 75,860 | | | 74,531 | | | 91,835 | |
| TOTAL | | 5,144,018 | | | 5,147,770 | | | 6,338,768 | |
| | | | | | |
| OPERATING EXPENSES | | | | | | |
| Operation and Maintenance: | | | | | | |
| Fuel, fuel-related expenses, and gas purchased for resale | | 1,026,343 | | | 1,080,485 | | | 2,002,456 | |
| Purchased power | | 670,874 | | | 654,721 | | | 1,076,715 | |
| Nuclear refueling outage expenses | | 76,020 | | | 63,429 | | | 59,698 | |
| Other operation and maintenance | | 1,097,283 | | | 1,097,233 | | | 1,139,605 | |
| Decommissioning | | 80,663 | | | 75,962 | | | 72,122 | |
| Taxes other than income taxes | | 248,472 | | | 245,191 | | | 241,908 | |
| Depreciation and amortization | | 770,904 | | | 726,389 | | | 695,204 | |
| Other regulatory charges (credits) - net | | 41,525 | | | 41,209 | | | 148,871 | |
| TOTAL | | 4,012,084 | | | 3,984,619 | | | 5,436,579 | |
| | | | | | |
| OPERATING INCOME | | 1,131,934 | | | 1,163,151 | | | 902,189 | |
| | | | | | |
| OTHER INCOME | | | | | | |
| Allowance for equity funds used during construction | | 36,782 | | | 32,160 | | | 26,252 | |
| Interest and investment income (loss) | | 146,494 | | | 90,316 | | | (69,144) | |
| Interest and investment income - affiliated | | 315,433 | | | 303,233 | | | 185,826 | |
| Miscellaneous - net | | (123,280) | | | (160,972) | | | 9,824 | |
| TOTAL | | 375,429 | | | 264,737 | | | 152,758 | |
| | | | | | |
| INTEREST EXPENSE | | | | | | |
| Interest expense | | 403,473 | | | 375,295 | | | 373,480 | |
| Allowance for borrowed funds used during construction | | (12,290) | | | (14,996) | | | (11,550) | |
| TOTAL | | 391,183 | | | 360,299 | | | 361,930 | |
| | | | | | |
| INCOME BEFORE INCOME TAXES | | 1,116,180 | | | 1,067,589 | | | 693,017 | |
| | | | | | |
| Income taxes | | 225,409 | | | (205,781) | | | (162,853) | |
| | | | | | |
| NET INCOME | | 890,771 | | | 1,273,370 | | | 855,870 | |
| | | | | | |
| Net income attributable to noncontrolling interests | | 3,126 | | | 2,988 | | | 1,366 | |
| | | | | | |
| EARNINGS APPLICABLE TO MEMBER'S EQUITY | | $887,645 | | | $1,270,382 | | | $854,504 | |
| | | | | | |
| See Notes to Financial Statements. | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| ENTERGY LOUISIANA, LLC AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
| | |
| | | For the Years Ended December 31, |
| | | 2024 | | 2023 | | 2022 |
| | | (In Thousands) |
| | | | | | |
| Net Income | | $890,771 | | | $1,273,370 | | | $855,870 | |
| | | | | | |
| Other comprehensive income (loss) | | | | | | |
| Pension and other postretirement plan changes | | | | | | |
| (net of tax expense (benefit) of ($421), ($211), and $17,351) | | (1,140) | | | (572) | | | 47,092 | |
| Other comprehensive income (loss) | | (1,140) | | | (572) | | | 47,092 | |
| | | | | | |
| Comprehensive Income | | 889,631 | | | 1,272,798 | | | 902,962 | |
| Net income attributable to noncontrolling interests | | 3,126 | | | 2,988 | | | 1,366 | |
| Comprehensive Income Applicable to Member's Equity | | $886,505 | | | $1,269,810 | | | $901,596 | |
| | | | | | |
| See Notes to Financial Statements. | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| ENTERGY LOUISIANA, LLC AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| | |
| | | For the Years Ended December 31, |
| | | 2024 | | 2023 | | 2022 |
| | | (In Thousands) |
| OPERATING ACTIVITIES | | | | | | |
| Net income | | $890,771 | | | $1,273,370 | | | $855,870 | |
| Adjustments to reconcile net income to net cash flow provided by operating activities: | | | | | | |
| Depreciation, amortization, and decommissioning, including nuclear fuel amortization | | 937,246 | | | 864,225 | | | 852,521 | |
| Deferred income taxes, investment tax credits, and non-current taxes accrued | | 259,474 | | | (99,812) | | | (70,379) | |
| Changes in working capital: | | | | | | |
| Receivables | | 4,248 | | | 55,140 | | | (53,434) | |
| Fuel inventory | | 7,601 | | | (15,959) | | | 1,099 | |
| Accounts payable | | (6,123) | | | (100,321) | | | (207,949) | |
| Taxes accrued | | (37,448) | | | 30,459 | | | (28,244) | |
| Interest accrued | | 28,530 | | | (9,680) | | | 8,284 | |
| Deferred fuel costs | | 29,494 | | | 134,383 | | | (113,809) | |
| Other working capital accounts | | 84,692 | | | (129,173) | | | (103,571) | |
| Changes in provisions for estimated losses | | 15,754 | | | (52,445) | | | 291,824 | |
| Changes in other regulatory assets | | 1,937 | | | 407,327 | | | 720,487 | |
| Changes in other regulatory liabilities | | 452,731 | | | 225,645 | | | (4,783) | |
| Effect of securitization on regulatory asset | | — | | | (491,150) | | | (1,190,338) | |
| Changes in pension and other postretirement funded status | | (117,627) | | | (117,886) | | | (139,067) | |
| Other | | (303,717) | | | 57,997 | | | 358,997 | |
| Net cash flow provided by operating activities | | 2,247,563 | | | 2,032,120 | | | 1,177,508 | |
| INVESTING ACTIVITIES | | | | | | |
| Construction expenditures | | (1,633,669) | | | (1,624,181) | | | (2,568,113) | |
| Allowance for equity funds used during construction | | 36,782 | | | 32,160 | | | 26,252 | |
| Nuclear fuel purchases | | (125,315) | | | (162,079) | | | (122,020) | |
| Proceeds from sale of nuclear fuel | | 63,297 | | | 30,214 | | | 37,648 | |
| Payments to storm reserve escrow account | | (12,899) | | | (14,449) | | | (1,293,633) | |
| Receipts from storm reserve escrow account | | — | | | 64,036 | | | 1,000,228 | |
| Purchase of preferred membership interests of affiliate | | — | | | (1,457,676) | | | (3,163,572) | |
| Redemption of preferred membership interests of affiliate | | 239,249 | | | 125,002 | | | 1,390,587 | |
| Proceeds from nuclear decommissioning trust fund sales | | 1,185,491 | | | 575,596 | | | 633,100 | |
| Investment in nuclear decommissioning trust funds | | (1,242,466) | | | (633,029) | | | (667,947) | |
| Changes in money pool receivable - net | | (32,668) | | | — | | | 14,539 | |
| Proceeds from sale of assets | | 2,109 | | | — | | | 5,000 | |
| Insurance proceeds received for property damages | | 7,907 | | | 19,493 | | | — | |
| Litigation proceeds from settlement agreement | | — | | | — | | | 5,695 | |
| Decrease (increase) in other investments | | 35 | | | 5,457 | | | (5,475) | |
| Net cash flow used in investing activities | | (1,512,147) | | | (3,039,456) | | | (4,707,711) | |
| FINANCING ACTIVITIES | | | | | | |
| Proceeds from the issuance of long-term debt | | 2,743,965 | | | 1,410,893 | | | 2,942,771 | |
| Retirement of long-term debt | | (2,305,336) | | | (2,699,235) | | | (3,167,832) | |
| Proceeds received by storm trusts related to securitization | | — | | | 1,457,676 | | | 3,163,572 | |
| Capital contributions from parent | | — | | | 1,457,676 | | | 1,000,000 | |
| Changes in money pool payable - net | | (156,166) | | | (69,948) | | | 226,114 | |
| Common equity distributions paid | | (859,100) | | | (660,750) | | | (624,000) | |
| Other | | 165,551 | | | 57,183 | | | 27,618 | |
| Net cash flow provided by (used in) financing activities | | (411,086) | | | 953,495 | | | 3,568,243 | |
| Net increase (decrease) in cash and cash equivalents | | 324,330 | | | (53,841) | | | 38,040 | |
| Cash and cash equivalents at beginning of period | | 2,772 | | | 56,613 | | | 18,573 | |
| Cash and cash equivalents at end of period | | $327,102 | | | $2,772 | | | $56,613 | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | | | |
| Cash paid (received) during the period for: | | | | | | |
| Interest - net of amount capitalized | | $366,384 | | | $376,353 | | | $353,697 | |
| Income taxes | | $16,882 | | | ($141,143) | | | ($82,463) | |
| Non-cash investing activities: | | | | | | |
| Accrued construction expenditures | | $124,077 | | | $105,859 | | | $156,654 | |
| | | | | | |
| See Notes to Financial Statements. | | | | | | |
| | | | | | | | | | | | | | |
| ENTERGY LOUISIANA, LLC AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| ASSETS |
| | |
| | | December 31, |
| | | 2024 | | 2023 |
| | | (In Thousands) |
| | | | |
| CURRENT ASSETS | | | | |
| Cash and cash equivalents: | | | | |
| Cash | | $327 | | | $2,255 | |
| Temporary cash investments | | 326,775 | | | 517 | |
| Total cash and cash equivalents | | 327,102 | | | 2,772 | |
| Accounts receivable: | | | | |
| Customer | | 294,089 | | | 264,776 | |
| Allowance for doubtful accounts | | (3,036) | | | (6,156) | |
| Associated companies | | 103,055 | | | 82,292 | |
| Other | | 39,056 | | | 74,685 | |
| Accrued unbilled revenues | | 213,026 | | | 202,173 | |
| Total accounts receivable | | 646,190 | | | 617,770 | |
| Deferred fuel costs | | — | | | 24,800 | |
| Fuel inventory - at average cost | | 49,515 | | | 57,818 | |
| Materials and supplies | | 782,459 | | | 652,180 | |
| Deferred nuclear refueling outage costs | | 31,121 | | | 96,047 | |
| | | | |
| Current assets held for sale | | 2,474 | | | — | |
| Prepayments and other | | 84,236 | | | 71,613 | |
| TOTAL | | 1,923,097 | | | 1,523,000 | |
| | | | |
| OTHER PROPERTY AND INVESTMENTS | | | | |
| Investment in affiliate preferred membership interests | | 4,256,997 | | | 4,496,245 | |
| Decommissioning trust funds | | 2,429,088 | | | 2,107,384 | |
| Non-utility property - at cost (less accumulated depreciation) | | 410,611 | | | 404,043 | |
| Storm reserve escrow account | | 256,718 | | | 243,819 | |
| Other | | 9,749 | | | 9,367 | |
| TOTAL | | 7,363,163 | | | 7,260,858 | |
| | | | |
| UTILITY PLANT | | | | |
| Electric | | 28,736,547 | | | 27,800,467 | |
| Natural gas | | 33,775 | | | 315,658 | |
| Construction work in progress | | 761,090 | | | 592,803 | |
| Nuclear fuel | | 288,084 | | | 333,472 | |
| TOTAL UTILITY PLANT | | 29,819,496 | | | 29,042,400 | |
| Less - accumulated depreciation and amortization | | 10,794,817 | | | 10,570,707 | |
| UTILITY PLANT - NET | | 19,024,679 | | | 18,471,693 | |
| | | | |
| DEFERRED DEBITS AND OTHER ASSETS | | | | |
| Regulatory assets: | | | | |
| Other regulatory assets | | 1,637,967 | | | 1,648,852 | |
| Deferred fuel costs | | 168,122 | | | 168,122 | |
| Non-current assets held for sale | | 173,669 | | | — | |
| Other | | 57,853 | | | 36,945 | |
| TOTAL | | 2,037,611 | | | 1,853,919 | |
| | | | |
| TOTAL ASSETS | | $30,348,550 | | | $29,109,470 | |
| | | | |
| See Notes to Financial Statements. | | | | |
| | | | | | | | | | | | | | |
| ENTERGY LOUISIANA, LLC AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| LIABILITIES AND EQUITY |
| | |
| | | December 31, |
| | | 2024 | | 2023 |
| | | (In Thousands) |
| | | | |
| CURRENT LIABILITIES | | | | |
| Currently maturing long-term debt | | $300,000 | | | $1,400,000 | |
| Accounts payable: | | | | |
| Associated companies | | 108,688 | | | 283,016 | |
| Other | | 533,087 | | | 467,414 | |
| Customer deposits | | 169,544 | | | 167,905 | |
| Taxes accrued | | 29,002 | | | 66,463 | |
| Interest accrued | | 120,186 | | | 91,656 | |
| Deferred fuel costs | | 5,421 | | | — | |
| Customer advances | | 151,662 | | | — | |
| Other | | 96,426 | | | 87,468 | |
| TOTAL | | 1,514,016 | | | 2,563,922 | |
| | | | |
| NON-CURRENT LIABILITIES | | | | |
| Accumulated deferred income taxes and taxes accrued | | 2,477,954 | | | 2,391,442 | |
| Accumulated deferred investment tax credits | | 88,679 | | | 93,242 | |
| Regulatory liability for income taxes - net | | 355,432 | | | 193,754 | |
| Other regulatory liabilities | | 1,692,547 | | | 1,407,689 | |
| Decommissioning | | 1,842,855 | | | 1,836,240 | |
| Accumulated provisions | | 279,623 | | | 263,869 | |
| Pension and other postretirement liabilities | | 160,577 | | | 271,928 | |
| Long-term debt | | 9,566,453 | | | 8,020,689 | |
| Customer advances for construction | | 291,842 | | | 115,102 | |
| Other | | 479,178 | | | 378,074 | |
| TOTAL | | 17,235,140 | | | 14,972,029 | |
| | | | |
| Commitments and Contingencies | | | | |
| | | | |
| EQUITY | | | | |
Member’s equity | | 11,503,030 | | | 11,473,614 | |
| Accumulated other comprehensive income | | 53,658 | | | 54,798 | |
| Noncontrolling interests | | 42,706 | | | 45,107 | |
| TOTAL | | 11,599,394 | | | 11,573,519 | |
| | | | |
| TOTAL LIABILITIES AND EQUITY | | $30,348,550 | | | $29,109,470 | |
| | | | |
| See Notes to Financial Statements. | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| ENTERGY LOUISIANA, LLC AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY |
| For the Years Ended December 31, 2024, 2023, and 2022 |
| | | | | |
| | Noncontrolling Interests | | Member’s Equity | | Accumulated Other Comprehensive Income | | Total |
| | (In Thousands) |
| | | | | | | |
| Balance at December 31, 2021 | $— | | | $8,172,294 | | | $8,278 | | | $8,180,572 | |
| Net income | 1,366 | | | 854,504 | | | — | | | 855,870 | |
| Other comprehensive income | — | | | — | | | 47,092 | | | 47,092 | |
| Beneficial interest in storm trust | 31,636 | | | — | | | — | | | 31,636 | |
| Non-cash contribution from parent | — | | | 3,597 | | | — | | | 3,597 | |
| Capital contribution from parent | — | | | 1,000,000 | | | — | | | 1,000,000 | |
| Common equity distributions | — | | | (624,000) | | | — | | | (624,000) | |
| Distribution to LURC | (1,267) | | | — | | | — | | | (1,267) | |
| Other | — | | | (52) | | | — | | | (52) | |
| Balance at December 31, 2022 | $31,735 | | | $9,406,343 | | | $55,370 | | | $9,493,448 | |
| Net income | 2,988 | | | 1,270,382 | | | — | | | 1,273,370 | |
| Other comprehensive loss | — | | | — | | | (572) | | | (572) | |
| Beneficial interest in storm trust | 14,577 | | | — | | | — | | | 14,577 | |
| Capital contribution from parent | — | | | 1,457,676 | | | — | | | 1,457,676 | |
| Common equity distributions | — | | | (660,750) | | | — | | | (660,750) | |
| Distribution to LURC | (4,193) | | | — | | | — | | | (4,193) | |
| Other | — | | | (37) | | | — | | | (37) | |
| Balance at December 31, 2023 | $45,107 | | | $11,473,614 | | | $54,798 | | | $11,573,519 | |
| Net income | 3,126 | | | 887,645 | | | — | | | 890,771 | |
| Other comprehensive loss | — | | | — | | | (1,140) | | | (1,140) | |
| Non-cash contribution from parent | — | | | 976 | | | — | | | 976 | |
| Common equity distributions | — | | | (859,100) | | | — | | | (859,100) | |
| Distributions to LURC | (5,527) | | | — | | | — | | | (5,527) | |
| Other | — | | | (105) | | | — | | | (105) | |
| Balance at December 31, 2024 | $42,706 | | | $11,503,030 | | | $53,658 | | | $11,599,394 | |
| | | | | | | |
| See Notes to Financial Statements. | | | | | | | |
ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES
MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS
Results of Operations
2024 Compared to 2023
Net Income
Net income increased $63.4 million primarily due to higher retail electric price, partially offset by higher taxes other than income taxes and higher interest expense.
Operating Revenues
Following is an analysis of the change in operating revenues comparing 2024 to 2023:
| | | | | |
| Amount |
| (In Millions) |
| 2023 operating revenues | $1,802.5 | |
| Fuel, rider, and other revenues that do not significantly affect net income | (108.7) | |
| Volume/weather | 0.2 | |
| Retail electric price | 70.6 | |
| 2024 operating revenues | $1,764.6 | |
Entergy Mississippi’s results include revenues from rate mechanisms designed to recover fuel, purchased power, and other costs such that the revenues and expenses associated with these items generally offset and do not affect net income. “Fuel, rider, and other revenues that do not significantly affect net income” includes the revenue variance associated with these items.
The volume/weather variance is insignificant and primarily due to an increase in residential and commercial usage. This increase is the result of higher fixed charges, partially offset by lower volumetric rates, applied to lower usage. The increase was substantially offset by a decrease in industrial usage primarily due to a decrease in demand from large industrial customers, primarily in the primary metals and transportation industries.
The retail electric price variance is primarily due to increases in formula rate plan rates effective April 2024 and July 2024, including the implementation of the interim facilities rate adjustment effective over six months beginning in July 2024. See Note 2 to the financial statements herein for discussion of the formula rate plan filings.
Entergy Mississippi, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
Total electric energy sales for Entergy Mississippi for the years ended December 31, 2024 and 2023 are as follows:
| | | | | | | | | | | | | | | | | |
| 2024 | | 2023 | | % Change |
| (GWh) | | |
| Residential | 5,443 | | | 5,460 | | | — | |
| Commercial | 4,587 | | | 4,640 | | | (1) | |
| Industrial | 2,317 | | | 2,347 | | | (1) | |
| Governmental | 397 | | | 407 | | | (2) | |
| Total retail | 12,744 | | | 12,854 | | | (1) | |
| Sales for resale: | | | | | |
| Non-associated companies | 5,568 | | | 4,598 | | | 21 | |
| Total | 18,312 | | | 17,452 | | | 5 | |
See Note 19 to the financial statements for additional discussion of Entergy Mississippi’s operating revenues.
Other Income Statement Variances
Other operation and maintenance expenses decreased primarily due to a decrease of $12.9 million in power delivery expenses primarily due to lower vegetation maintenance costs and a decrease of $7.5 million in non-nuclear generation expenses primarily due to a lower scope of work during plant outages performed in 2024 as compared to 2023. The decrease was partially offset by:
•an increase of $6.4 million in compensation and benefits costs primarily due to higher healthcare claims activity, including lower prescription drug rebates in 2024 as compared to 2023 and higher incentive-based accruals in 2024 as compared to 2023;
•an increase of $4.1 million in storm damage provisions. See Note 2 to the financial statements for discussion of Entergy Mississippi’s storm damage mitigation and restoration rider; and
•an increase of $3.1 million in energy efficiency expenses primarily due to the timing of recovery from customers.
Taxes other than income taxes increased primarily due to increases in ad valorem taxes resulting from higher assessments.
Depreciation and amortization expenses increased primarily due to additions to plant in service.
Other regulatory charges (credits) - net includes regulatory credits of $7.3 million, recorded in second quarter 2024, to reflect the effects of the joint stipulation reached in the 2024 formula rate plan filing proceeding. See Note 2 to the financial statements for discussion of the 2024 formula rate plan filing.
Other income increased primarily due to a decrease of $4.5 million in non-service pension costs primarily as a result of pension settlement charges recorded in 2023 and a reduction in 2024 in the amortization of deferred pension losses as a result of an amendment to a qualified pension plan spinning-off predominantly inactive participants into a new qualified plan, extending the amortization period for deferred losses. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” below and Note 11 to the financial statements for further discussion of pension and other postretirement benefits costs.
Interest expense increased primarily due to the issuance of $300 million of 5.85% Series mortgage bonds in May 2024 and higher carrying costs related to the deferred fuel balance, partially offset by the repayment of a $150
Entergy Mississippi, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
million unsecured term loan, of which $50 million was repaid in May 2023 and $100 million was repaid in December 2023.
The effective income tax rates were 24.7% for 2024 and 23.0% for 2023. See Note 3 to the financial statements for a reconciliation of the federal statutory rate of 21% to the effective income tax rates and for additional discussion regarding income taxes.
2023 Compared to 2022
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Results of Operations” in Item 7 of Entergy Mississippi’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of results of operations for 2023 compared to 2022.
Income Tax Legislation and Regulation
See the “Income Tax Legislation and Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of income tax legislation and regulation.
Liquidity and Capital Resources
Cash Flow
Cash flows for the years ended December 31, 2024, 2023, and 2022 were as follows:
| | | | | | | | | | | | | | | | | |
| | 2024 | | 2023 | | 2022 |
| | (In Thousands) |
| Cash and cash equivalents at beginning of period | $6,630 | | | $16,979 | | | $47,627 | |
| | | | | |
| Net cash provided by (used in): | | | | | |
| Operating activities | 699,455 | | | 559,391 | | | 405,649 | |
| Investing activities | (705,219) | | | (527,978) | | | (620,740) | |
| Financing activities | 154,827 | | | (41,762) | | | 184,443 | |
| Net increase (decrease) in cash and cash equivalents | 149,063 | | | (10,349) | | | (30,648) | |
| | | | | |
| Cash and cash equivalents at end of period | $155,693 | | | $6,630 | | | $16,979 | |
2024 Compared to 2023
Operating Activities
Net cash flow provided by operating activities increased $140.1 million in 2024 primarily due to:
•lower fuel and purchased power costs;
•income tax refunds of $14.2 million in 2024 as compared to income tax payments of $50.9 million in 2023. Entergy Mississippi received income tax refunds in 2024 and made income tax payments in 2023, each in accordance with an intercompany income tax allocation agreement;
•a decrease of $13 million in storm spending in 2024 as compared to 2023; and
•a decrease of $6.1 million in pension contributions in 2024. See “Critical Accounting Estimates – Qualified Pension and Other Postretirement Benefits” below and Note 11 to the financial statements for a discussion of qualified pension and other postretirement benefits funding.
Entergy Mississippi, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
The increase was partially offset by:
•the timing of recovery of fuel and purchased power costs. See Note 2 to the financial statements for a discussion of fuel and purchased power cost recovery;
•the timing of payments to vendors;
•lower collections from customers; and
•an increase of $15.5 million in interest paid.
Investing Activities
Net cash flow used in investing activities increased $177.2 million in 2024 primarily due to:
•an increase of $123.1 million in non-nuclear generation construction expenditures primarily due to higher spending on the Delta Blues Advanced Power Station project;
•an increase of $78.5 million in transmission construction expenditures primarily due to higher capital expenditures as a result of increased development in Entergy Mississippi’s service area;
•money pool activity; and
•a decrease of $33.8 million in receipts from the storm reserve escrow account, which was closed in July 2024. See Note 2 to the financial statements for discussion of Entergy Mississippi’s storm escrow account activity.
The increase was partially offset by:
•a decrease of $46.3 million in distribution construction expenditures primarily due to lower capital expenditures for storm restoration in 2024;
•the substantial completion and final payments totaling approximately $35.1 million in 2023 for the purchase of the Sunflower Solar facility by a consolidated tax equity partnership. See Note 14 to the financial statements for discussion of the Sunflower Solar facility purchase; and
•a decrease of $11 million in facilities construction expenditures primarily due to the construction of a new transmission office in 2023.
Increases in Entergy Mississippi’s receivable from the money pool are a use of cash flow, and Entergy Mississippi’s receivable from the money pool increased $15.2 million in 2024 compared to decreasing by $26.9 million in 2023. The money pool is an intercompany cash management program that makes possible intercompany borrowing and lending arrangements, and the money pool and other borrowing arrangements are designed to reduce the Registrant Subsidiaries’ dependence on external short-term borrowings.
Financing Activities
Entergy Mississippi’s financing activities provided $154.8 million of cash in 2024 compared to using $41.8 million of cash in 2023 primarily due to the following activity:
•the repayment, prior to maturity, of $250 million of 3.10% Series mortgage bonds in June 2023;
•the repayment of a $150 million unsecured term loan in 2023;
•an increase of $75.4 million in advance payments from customers for construction related to transmission, distribution, and generator interconnection agreements;
•a capital contribution of $25.7 million received in April 2023 from the noncontrolling tax equity investor in MS Sunflower Partnership, LLC and used by the partnership for payments in the acquisition of the Sunflower Solar facility. See Note 14 to the financial statements for discussion of the Sunflower Solar facility purchase;
Entergy Mississippi, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
•the repayment, prior to maturity, of $100 million of 3.75% Series mortgage bonds in June 2024; and
•money pool activity.
Decreases in Entergy Mississippi’s payable to the money pool are a use of cash flow, and Entergy Mississippi’s payable to the money pool decreased $73.8 million in 2024 compared to increasing by $73.8 million in 2023.
See Note 5 to the financial statements for details on long-term debt.
2023 Compared to 2022
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Cash Flow” in Item 7 of Entergy Mississippi’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of operating, investing, and financing cash flow activities for 2023 compared to 2022.
Capital Structure
Entergy Mississippi’s debt to capital ratio is shown in the following table.
| | | | | | | | | | | |
| | December 31,
2024 | | December 31,
2023 |
| Debt to capital | 50.4 | % | | 50.5 | % |
| Effect of subtracting cash | (1.6 | %) | | (0.1 | %) |
| Net debt to net capital (non-GAAP) | 48.8 | % | | 50.4 | % |
Net debt consists of debt less cash and cash equivalents. Debt consists of short-term borrowings, finance lease obligations, and long-term debt, including the currently maturing portion. Capital consists of debt and equity. Net capital consists of capital less cash and cash equivalents. Entergy Mississippi uses the debt to 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. The net debt to net capital ratio is a non-GAAP measure. 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 because net debt indicates Entergy Mississippi’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.
Entergy Mississippi seeks to optimize its capital structure in accordance with its regulatory requirements and to control its cost of capital while also maintaining equity capitalization at a level consistent with investment-grade debt ratings. To the extent that operating cash flows are in excess of planned investments, cash may be used to reduce outstanding debt or may be paid as a distribution, to the extent funds are legally available to do so, or both, in appropriate amounts to maintain the capital structure. To the extent that operating cash flows are insufficient to support planned investments, Entergy Mississippi may issue incremental debt or reduce distributions, or both, to maintain its capital structure. In addition, in certain infrequent circumstances, such as financing of large transactions that would materially alter the capital structure if financed entirely with debt and reduced distributions, Entergy Mississippi may receive equity contributions to maintain its capital structure.
Uses of Capital
Entergy Mississippi requires capital resources for:
•construction and other capital investments;
•debt maturities or retirements;
Entergy Mississippi, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
•working capital purposes, including the financing of fuel and purchased power costs; and
•distributions and interest payments.
Following are the amounts of Entergy Mississippi’s planned construction and other capital investments.
| | | | | | | | | | | | | | | | | |
| | 2025 | | 2026 | | 2027 |
| | (In Millions) |
| Planned construction and capital investment: | | | | | |
| Generation | $1,135 | | | $1,605 | | | $895 | |
| Transmission | 195 | | | 200 | | | 110 | |
| Distribution | 270 | | | 360 | | | 405 | |
| Utility Support | 55 | | | 40 | | | 55 | |
| Total | $1,655 | | | $2,205 | | | $1,465 | |
In addition to routine capital spending to maintain operations, the planned capital investment estimate for Entergy Mississippi includes investments in generation projects to modernize, decarbonize, expand, and diversify Entergy Mississippi’s portfolio, as well as to support customer growth, including Delta Blues Advanced Power Station, Delta Solar, and Penton Solar; distribution and Utility support spending to improve reliability, resilience, and customer experience; transmission spending to improve reliability and resilience while also supporting renewables expansion and customer growth; and other investments. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements, governmental actions, including trade-related governmental actions, such as tariffs and other measures, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital, including any changes to governmental programs, such as loans, grants, guarantees, and other subsidies. Entergy Mississippi is not able to predict the effect of potential changes in regulation and law, changes to governmental programs, such as loans, grants, guarantees, and other subsidies, and trade-related governmental actions, such as tariffs and other measures, on its current and planned capital projects.
Following are the amounts of Entergy Mississippi’s existing debt and lease obligations (includes estimated interest payments).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2025 | | 2026 | | 2027 | | 2028-2029 | | After 2029 |
| | |
| Long-term debt (a) | $98 | | | $98 | | | $248 | | | $545 | | | $3,516 | |
| Operating leases (b) | $10 | | | $9 | | | $8 | | | $9 | | | $3 | |
| Finance leases (b) | $4 | | | $3 | | | $3 | | | $4 | | | $24 | |
(a)Long-term debt is discussed in Note 5 to the financial statements.
(b)Lease obligations are discussed in Note 10 to the financial statements.
Other Obligations
Entergy Mississippi currently expects to contribute approximately $8.1 million to its qualified pension plans and approximately $178 thousand to its other postretirement plans in 2025, although the 2025 required pension contributions will be known with more certainty when the January 1, 2025, valuations are completed, which is expected by April 1, 2025. See “Critical Accounting Estimates – Qualified Pension and Other Postretirement Benefits” below and Note 11 to the financial statements for a discussion of qualified pension and other postretirement benefits funding.
Entergy Mississippi, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
Entergy Mississippi has $1.0 million of unrecognized tax benefits net of unused tax attributes plus interest for which the timing of payments beyond 12 months cannot be reasonably estimated due to uncertainties in the timing of effective settlement of tax positions. See Note 3 to the financial statements for additional information regarding unrecognized tax benefits.
In addition, Entergy Mississippi enters into fuel and purchased power agreements that contain minimum purchase obligations. Entergy Mississippi has rate mechanisms in place to recover fuel, purchased power, and associated costs incurred under these purchase obligations. See Note 8 to the financial statements for discussion of Entergy Mississippi’s obligations under the Unit Power Sales Agreement.
As a wholly-owned subsidiary of Entergy Utility Holding Company, LLC, Entergy Mississippi pays distributions from its earnings at a percentage determined monthly.
Additional Generation and Transmission Resources
In January 2024, Amazon Web Services announced its plan to invest in two data centers located in Madison County, Mississippi. In March 2024, Entergy Mississippi executed a large customer supply and service agreement to serve the two data centers. Entergy Mississippi will need generation and transmission resources to reliably serve all Entergy Mississippi customers, including the data centers. The large customer supply and service agreement also contains provisions which cover Entergy Mississippi’s incremental investment costs in the event of early termination. In May 2024 the MPSC approved Entergy Mississippi’s revisions to its formula rate plan to comply with state legislation passed in January 2024 allowing Entergy Mississippi to make interim rate adjustments, including the collection of a return on construction-work-in-process on a cash basis, to recover the non-fuel related annual ownership cost of certain facilities that directly or indirectly provide service to customers who own certain data processing center projects as specified in the legislation. Entergy Mississippi anticipates recovering the incremental cost to serve the customer through the revenues it expects to collect under the large customer supply and service agreement.
In February 2025, Entergy Mississippi entered into a new large customer supply and service agreement with a customer. The planned capital investment estimates for 2025-2027, shown above, include amounts related to the generation and transmission resources needed to reliably serve all Entergy Mississippi customers.
Delta Blues Advanced Power Station
In September 2024, Entergy Mississippi announced plans to construct, own, and operate the Delta Blues Advanced Power Station, a 754 MW combined-cycle combustion turbine facility, to be located in Washington County, Mississippi. The facility will primarily be powered by natural gas, and it will also be enabled for future carbon capture and storage and for hydrogen co-firing optionality. The Delta Blues Advanced Power Station will cost an estimated $1.2 billion. State legislation passed in January 2024 provides for the pre-certification of construction for certain types of facilities that directly or indirectly provide electric service to customers who own certain data processing center projects as specified in the legislation. Construction of the Delta Blues Advanced Power Station qualifies under this legislation for pre-certification. As enabled by this legislation, Entergy Mississippi began recovery of certain costs of construction of the Delta Blues Advanced Power Station through the interim facilities rate adjustments provision of its formula rate plan rider, which rates became effective in July 2024. Non-fuel revenue collected from the data center customer will be included in the formula rate plan to offset the facility’s revenue requirement. Construction is in progress and the facility is expected to be in service by the end of 2028.
Delta Solar
In December 2024 the Bolivar County Board of Supervisors approved Entergy Mississippi’s plans to construct, own, and operate the Delta Solar facility, an 80 MW solar facility to be located in Bolivar County,
Entergy Mississippi, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
Mississippi. The Delta Solar facility will cost an estimated $157.2 million, inclusive of estimated transmission interconnection costs. Construction of the Delta Solar facility qualifies for pre-certification under the State legislation providing for the pre-certification of construction of certain types of facilities that directly or indirectly provide electric service to customers who own certain data processing center projects as specified in the legislation. The Delta Solar facility is expected to be in service by the end of 2027.
Penton Solar
Entergy Mississippi plans to construct, own, and operate the Penton Solar facility, a 190 MW solar facility. The Penton Solar facility will cost an estimated $327.2 million, inclusive of estimated transmission interconnection and upgrade costs. Construction of the Penton Solar facility qualifies for pre-certification under the State legislation providing for the pre-certification of construction of certain types of facilities that directly or indirectly provide electric service to customers who own certain data processing center projects as specified in the legislation. The Penton Solar facility is expected to be in service by early 2028.
Sources of Capital
Entergy Mississippi’s sources to meet its capital requirements include:
•internally generated funds;
•cash on hand;
•the Entergy system money pool;
•debt or preferred membership interest issuances, including debt issuances to refund or retire currently outstanding or maturing indebtedness;
•capital contributions; and
•bank financing under new or existing facilities.
Circumstances such as weather patterns, fuel and purchased power price fluctuations, and unanticipated expenses, including unscheduled plant outages and storms, could affect the timing and level of internally generated funds in the future. In addition to the financings necessary to meet capital requirements and contractual obligations, Entergy Mississippi expects to continue, when economically feasible, to retire higher-cost debt and replace it with lower-cost debt if market conditions permit.
All debt and preferred membership interest issuances by Entergy Mississippi require prior regulatory approval. Debt issuances are also subject to requirements set forth in its bond indenture and other agreements. Entergy Mississippi has sufficient capacity under these tests to meet its foreseeable capital needs for the next twelve months and beyond.
Entergy Mississippi’s receivables from or (payables to) the money pool were as follows as of December 31 for each of the following years.
| | | | | | | | | | | | | | | | | | | | |
| 2024 | | 2023 | | 2022 | | 2021 |
| (In Thousands) |
| $15,218 | | ($73,769) | | $26,879 | | $40,456 |
See Note 4 to the financial statements for a description of the money pool.
Entergy Mississippi has a credit facility in the amount of $300 million scheduled to expire in June 2029. The credit facility includes fronting commitments for the issuance of letters of credit against $5 million of the borrowing capacity of the facility. As of December 31, 2024, there were no cash borrowings and no letters of credit outstanding under the credit facility. In addition, Entergy Mississippi is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO and for other purposes. As of December 31,
Entergy Mississippi, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
2024, $31.8 million in MISO letters of credit and $1.3 million in non-MISO letters of credit were outstanding under this facility. See Note 4 to the financial statements for additional discussion of the credit facilities.
Entergy Mississippi obtained authorization from the FERC through January 2027 for short-term borrowings, not to exceed an aggregate amount of $200 million at any time outstanding, and long-term borrowings and security issuances. See Note 4 to the financial statements for further discussion of Entergy Mississippi’s short-term borrowing limits.
State and Local Rate Regulation and Fuel-Cost Recovery
The rates that Entergy Mississippi charges for its services significantly influence its financial position, results of operations, and liquidity. Entergy Mississippi is regulated, and the rates charged to its customers are determined in regulatory proceedings. A governmental agency, the MPSC, is primarily responsible for approval of the rates charged to customers.
Filings with the MPSC
Retail Rates
2022 Formula Rate Plan Filing
In March 2022, Entergy Mississippi submitted its formula rate plan 2022 test year filing and 2021 look-back filing showing Entergy Mississippi’s earned return for the historical 2021 calendar year to be below the formula rate plan bandwidth and projected earned return for the 2022 calendar year to be below the formula rate plan bandwidth. The 2022 test year filing showed a $69 million rate increase was necessary to reset Entergy Mississippi’s earned return on common equity to the specified point of adjustment of 6.70% return on rate base, within the formula rate plan bandwidth. The change in formula rate plan revenues, however, was capped at 4% of retail revenues, which equated to a revenue change of $48.6 million. The 2021 look-back filing compared actual 2021 results to the approved benchmark return on rate base and reflected the need for a $34.5 million interim increase in formula rate plan revenues. In fourth quarter 2021, Entergy Mississippi recorded a regulatory asset of $19 million to reflect the then-current estimate in connection with the look-back feature of the formula rate plan. In accordance with the provisions of the formula rate plan, Entergy Mississippi implemented a $24.3 million interim rate increase, reflecting a cap equal to 2% of 2021 retail revenues, effective in April 2022. With the implementation of the interim formula rate plan rates, Entergy Mississippi began recovery of the bad debt expense deferral resulting from the COVID-19 pandemic over a three-year period.
In June 2022, Entergy Mississippi and the Mississippi Public Utilities Staff entered into a joint stipulation that confirmed the 2022 test year filing that resulted in a total rate increase of $48.6 million. Pursuant to the joint stipulation, Entergy Mississippi’s 2021 look-back filing reflected an earned return on rate base of 5.99% in calendar year 2021, which was below the look-back bandwidth, resulting in a $34.3 million increase in the formula rate plan revenues on an interim basis through June 2023. In July 2022 the MPSC approved the joint stipulation with rates effective in August 2022. In July 2022, Entergy Mississippi recorded regulatory credits of $22.6 million to reflect the effects of the joint stipulation.
In July 2022 the MPSC directed Entergy Mississippi to flow $14.1 million of the power management rider over-recovery balance to customers beginning in August 2022 through December 2022 to mitigate the bill impact of the increase in formula rate plan revenues.
2023 Formula Rate Plan Filing
In March 2023, Entergy Mississippi submitted its formula rate plan 2023 test year filing and 2022 look-back filing showing Entergy Mississippi’s earned return on rate base for the historical 2022 calendar year to be
Entergy Mississippi, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
below the formula rate plan bandwidth and projected earned return for the 2023 calendar year to be below the formula rate plan bandwidth. The 2023 test year filing showed a $39.8 million rate increase was necessary to reset Entergy Mississippi’s earned return on rate base to the specified point of adjustment of 6.67%, within the formula rate plan bandwidth. The 2022 look-back filing compared actual 2022 results to the approved benchmark return on rate base and reflected the need for a $19.8 million temporary increase in formula rate plan revenues, including the refund of a $1.3 million over-recovery resulting from the demand-side management costs true-up for 2022. In fourth quarter 2022, Entergy Mississippi recorded a regulatory asset of $18.2 million in connection with the look-back feature of the formula rate plan to reflect that the 2022 estimated earned return was below the formula rate plan bandwidth. In accordance with the provisions of the formula rate plan, Entergy Mississippi implemented a $27.9 million interim rate increase, reflecting a cap equal to 2% of 2022 retail revenues, effective in April 2023.
In May 2023, Entergy Mississippi and the Mississippi Public Utilities Staff entered into a joint stipulation that confirmed a 2023 test year filing resulting in a total revenue increase of $26.5 million for 2023. Pursuant to the joint stipulation, Entergy Mississippi’s 2022 look-back filing reflected an earned return on rate base of 6.10% in calendar year 2022, which was below the look-back bandwidth, resulting in a $19.0 million increase in the formula rate plan revenues on an interim basis through June 2024. Entergy Mississippi recorded a regulatory credit of $0.8 million in June 2023 to reflect the increase in the look-back regulatory asset. In addition, certain long-term service agreement and conductor handling costs were authorized for realignment from the formula rate plan to the annual power management and grid modernization riders effective January 2023, resulting in regulatory credits recorded in June 2023 of $4.1 million and $4.3 million, respectively. Also, the amortization of Entergy Mississippi’s COVID-19 bad debt expense deferral was suspended for calendar year 2023, but resumed in July 2024. In June 2023 the MPSC approved the joint stipulation with rates effective in July 2023.
2024 Formula Rate Plan Filing
In March 2024, Entergy Mississippi submitted its formula rate plan 2024 test year filing and 2023 look-back filing showing Entergy Mississippi’s earned return on rate base for the historical 2023 calendar year to be within the formula rate plan bandwidth and projected earned return for the 2024 calendar year to be below the formula rate plan bandwidth. The 2024 test year filing showed a $63.4 million rate increase was necessary to reset Entergy Mississippi’s earned return on rate base to the specified point of adjustment of 7.10%, within the formula rate plan bandwidth. The 2023 look-back filing compared actual 2023 results to the approved benchmark return on rate base and reflected no change in formula rate plan revenues. In accordance with the provisions of the formula rate plan, Entergy Mississippi implemented a $32.6 million interim rate increase, reflecting a cap equal to 2% of 2023 retail revenues, effective April 2024.
In December 2014 the MPSC ordered Entergy Mississippi to file an updated depreciation study at least once every four years. Pursuant to this order and Entergy Mississippi’s filing cycle, Entergy Mississippi would have filed an updated depreciation report with its formula rate plan filing in 2023. However, in July 2022 the MPSC directed Entergy Mississippi to file its next depreciation study in connection with its 2024 formula rate plan filing notwithstanding the MPSC’s prior order. Accordingly, Entergy Mississippi filed a depreciation study in February 2024. The study showed a need for an increase in annual depreciation expense of $55.2 million. The calculated increase in annual depreciation expense was excluded from Entergy Mississippi’s 2024 formula rate plan revenue increase request because the MPSC had not yet approved the proposed depreciation rates.
In June 2024, Entergy Mississippi and the Mississippi Public Utilities Staff entered into a joint stipulation that confirmed the 2024 test year filing, with the exception of immaterial adjustments to certain operation and maintenance expenses. After performance adjustments, the formula rate plan reflected an earned return on rate base of 6.08% for calendar year 2024, which resulted in a total revenue increase of $64.6 million for 2024. The joint stipulation also recommended approval of a revised customer charge of $31.82 per month for residential customers and $53.10 per month for general service customers. Pursuant to the stipulation, Entergy Mississippi’s 2023 look-back filing reflected an earned return on rate base of 6.81%, resulting in an increase of $0.3 million in the formula rate plan revenues for 2023. Finally, the stipulation recommended approval of Entergy Mississippi’s proposed
Entergy Mississippi, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
depreciation rates with those rates to be implemented upon request and approval at a later date. In June 2024 the MPSC approved the joint stipulation with rates effective in July 2024. The approval also included a reduction to the energy cost factor, resulting in a net bill decrease for a typical residential customer using 1,000 kWh per month. Also in June 2024, Entergy Mississippi recorded regulatory credits of $7.3 million to reflect the difference between interim rates placed in effect in April 2024 and the rates reflected in the joint stipulation.
In May 2024, Entergy Mississippi received approval from the MPSC for formula rate plan revisions that were necessary for Entergy Mississippi to comply with state legislation passed in January 2024. The legislation allows Entergy Mississippi to make interim rate adjustments to recover the non-fuel related annual ownership cost of certain facilities that directly or indirectly provide service to customers who own certain data processing center projects as specified in the legislation. Entergy Mississippi filed the first of its annual interim facilities rate adjustment reports in May 2024 to recover approximately $8.7 million of these costs over a six-month period with rates effective beginning in July 2024. Entergy Mississippi filed its second annual interim facilities rate adjustment report in December 2024 to recover approximately $46.7 million of these costs over a 12-month period with rates effective beginning in January 2025.
Grand Gulf Capacity Filing
In September 2024, Entergy Mississippi filed a notice of intent with the MPSC to implement revisions to its unit power cost recovery rider that would allow Entergy Mississippi to recover the first year of costs associated with the transfer of Entergy Louisiana’s entitlements to Grand Gulf capacity and energy, which consists of Entergy Louisiana’s interest in and purchases of Grand Gulf capacity and energy under the revised rider schedule, effective by January 1, 2025. This notice filing related to the divestiture of Entergy Louisiana’s 14% share of Grand Gulf capacity and energy under the Unit Power Sales Agreement and 2.43% share of capacity and energy from Entergy Arkansas under the MSS-4 replacement tariff. This divestiture is being effectuated initially through Entergy Mississippi’s purchases from Entergy Louisiana pursuant to a PPA governed by the MSS-4 replacement tariff, a tariff governing the sales of energy and capacity among the Utility operating companies as described in the System Energy global settlement with the LPSC and Entergy Louisiana. The MSS-4 replacement PPA to effectuate this divestiture was approved by the FERC in November 2024. In February 2025 the MPSC approved Entergy Mississippi’s notice of intent, finding that it was just and reasonable for Entergy Mississippi to obtain Entergy Louisiana’s entitlements to Grand Gulf capacity and energy and that Entergy Mississippi should be allowed to recover the costs associated with the transfer of such entitlements to Grand Gulf capacity and energy, as described above. The MPSC approved the MSS-4 replacement PPA, effective as of January 1, 2025. See “Complaints Against System Energy - System Energy Settlement with the LPSC” in Note 2 to the financial statements for further details of the System Energy global settlement with the LPSC and Note 8 to the financial statements for discussion of the Unit Power Sales Agreement.
Fuel and purchased power cost recovery
Entergy Mississippi’s rate schedules include an energy cost recovery rider and a power management rider, both of which are adjusted annually to reflect accumulated over- or under-recoveries. Entergy Mississippi recovers fuel and purchased energy costs through its energy cost recovery rider and recovers costs associated with natural gas hedging and capacity payments through its power management rider. Entergy Mississippi’s fuel cost recoveries are subject to annual audits conducted pursuant to the authority of the MPSC.
In November 2021, Entergy Mississippi filed its annual redetermination of the annual factor to be applied under the energy cost recovery rider. The calculation of the annual factor included an under-recovery of approximately $80.6 million as of September 30, 2021. In December 2021, at the request of the MPSC, Entergy Mississippi submitted a proposal to mitigate the impact of rising fuel costs on customer bills during 2022. Entergy Mississippi proposed that the deferred fuel balance as of December 31, 2021, which was $121.9 million, be amortized over three years and that the MPSC authorize Entergy Mississippi to apply its weighted-average cost of capital as the carrying cost for the unamortized fuel balance. In January 2022 the MPSC approved the amortization
Entergy Mississippi, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
of $100 million of the deferred fuel balance over two years and authorized Entergy Mississippi to apply its weighted-average cost of capital as the carrying cost for the unamortized fuel balance. The MPSC approved the proposed energy cost factor effective for February 2022 bills.
See “Complaints Against System Energy - System Energy Settlement with the MPSC” in Note 2 to the financial statements for discussion of the settlement agreement filed with the FERC in June 2022. The settlement, which was approved by the FERC in November 2022, provided for a refund of $235 million from System Energy to Entergy Mississippi. In July 2022 the MPSC directed the disbursement of settlement proceeds, ordering Entergy Mississippi to provide a one-time $80 bill credit to each of its approximately 460,000 retail customers to be effective during the September 2022 billing cycle and to apply the remaining proceeds to Entergy Mississippi’s under-recovered deferred fuel balance. In accordance with the MPSC’s directive, Entergy Mississippi provided approximately $36.7 million in customer bill credits as a result of the settlement. In November 2022, Entergy Mississippi applied the remaining settlement proceeds in the amount of approximately $198.3 million to Entergy Mississippi’s under-recovered deferred fuel balance.
Entergy Mississippi had a deferred fuel balance of approximately $291.7 million under the energy cost recovery rider as of July 31, 2022, along with an over-recovery balance of $51.1 million under the power management rider. Without further action, Entergy Mississippi anticipated a year-end deferred fuel balance of approximately $200 million after application of a portion of the System Energy settlement proceeds, as discussed above. In September 2022, Entergy Mississippi filed for interim adjustments under both the energy cost recovery rider and the power management rider. Entergy Mississippi proposed five monthly incremental adjustments to the net energy cost factor designed to collect the under-recovered fuel balance as of July 31, 2022 and to reflect the recovery of a higher natural gas price. Entergy Mississippi also proposed five monthly incremental adjustments to the power management adjustment factor designed to flow through to customers the over-recovered power management rider balance as of July 31, 2022. In October 2022 the MPSC approved modified interim adjustments to Entergy Mississippi’s energy cost recovery rider and power management rider. The MPSC approved dividing the energy cost recovery rider interim adjustment into two components that would allow Entergy Mississippi to (1) recover a natural gas fuel rate that is better aligned with current prices; and (2) recover the estimated under-recovered deferred fuel balance as of September 30, 2022 over a period of 20 months. The MPSC approved six monthly incremental adjustments to the net energy cost factor designed to reflect the recovery of a higher natural gas price. The MPSC also approved six monthly incremental adjustments to the power management adjustment factor designed to flow through to customers the over-recovered power management rider balance. In accordance with the order of the MPSC, Entergy Mississippi did not file an annual redetermination of the energy cost recovery rider or the power management rider in November 2022.
In June 2023 the MPSC approved the joint stipulation agreement between Entergy Mississippi and the Mississippi Public Utilities Staff for Entergy Mississippi’s 2023 formula rate plan filing. The stipulation directed Entergy Mississippi to make a compliance filing to revise its power management cost adjustment factor, to revise its grid modernization cost adjustment factor, and to include a revision to reduce the net energy cost factor to a level necessary to reflect an average natural gas price of $4.50 per MMBtu. The MPSC approved the compliance filing in June 2023, effective for July 2023 bills. See “Retail Rate Proceedings - Filings with the MPSC (Entergy Mississippi) - Retail Rates - 2023 Formula Rate Plan Filing” in Note 2 to the financial statements for further discussion of the 2023 formula rate plan filing and the joint stipulation agreement.
In November 2023 Entergy Mississippi filed its annual redeterminations of the energy cost factor and the power management cost adjustment factor. The calculation of the annual factor for the energy cost recovery rider included a projected over-recovery balance of approximately $142 million at the end of January 2024. The calculation of the annual factor for the power management rider included a projected under-recovery of $47 million at the end of January 2024. In January 2024 the MPSC approved the proposed energy cost factor and the proposed power management cost factor effective for February 2024 bills.
Entergy Mississippi, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
In June 2024 the MPSC approved the joint stipulation agreement between Entergy Mississippi and the Mississippi Public Utilities Staff for Entergy Mississippi’s 2024 formula rate plan filing. The 2024 formula rate plan filing included the conclusion of the modified interim adjustments to Entergy Mississippi’s energy cost recovery rider and power management rider, which were approved in October 2022 and allowed Entergy Mississippi to recover certain under-collected fuel balances, effective for July 2024 bills.. The stipulation provided for Entergy Mississippi to reduce its net energy cost factor. See “Retail Rate Proceedings - Filings with the MPSC (Entergy Mississippi) - Retail Rates - 2024 Formula Rate Plan Filing” in Note 2 to the financial statements for further discussion of the 2024 formula rate plan filing and the joint stipulation agreement.
In November 2024, Entergy Mississippi filed its annual redeterminations of the energy cost factor and the power management cost adjustment factor. The calculation of the annual factor for the energy cost recovery rider included a projected over-recovery balance of approximately $144.6 million as of September 2024. The calculation of the annual factor for the power management rider included a projected under-recovery of $60.1 million as of September 2024. In January 2025 the MPSC approved a revised energy cost factor, effective for February 2025 bills, that did not reflect the fuel savings associated with Entergy Mississippi’s incremental increase in its share of capacity and energy in connection with Entergy Mississippi’s assumption of Entergy Louisiana’s entitlements to Grand Gulf capacity and energy, which was subject to the MPSC’s review at such time. In February 2025 the MPSC approved Entergy Mississippi’s notice of intent for Entergy Mississippi’s assumption of Entergy Louisiana’s entitlements to Grand Gulf capacity and energy, with associated fuel savings to be reflected in Entergy Mississippi’s energy cost recovery rider, effective for March 2025 bills. Additionally, in February 2025 the MPSC approved the proposed power management cost adjustment factor, effective for March 2025 bills.
Storm Cost Recovery Filings with Retail Regulators
Prior to June 2024, Entergy Mississippi had approval from the MPSC to collect a storm damage provision of $1.75 million per month. If Entergy Mississippi’s accumulated storm damage provision balance exceeded $15 million, the collection of the storm damage provision ceased until such time that the accumulated storm damage provision became less than $10 million. Entergy Mississippi’s storm damage provision balance had been less than $10 million since May 2019, and Entergy Mississippi had been billing the monthly storm damage provision since July 2019.
In December 2023, Entergy Mississippi filed a Notice of Storm Escrow Disbursement and Request for Interim Relief notifying the MPSC that Entergy Mississippi had requested disbursement of approximately $34.5 million of storm escrow funds from its restricted storm escrow account. The filing also requested authorization from the MPSC, on a temporary basis, that the $34.5 million of storm escrow funds be credited to Entergy Mississippi’s storm damage provision, pending the MPSC’s review of Entergy Mississippi’s storm-related costs, and that Entergy Mississippi continue to bill its monthly storm damage provision without suspension in the event the storm damage provision balance exceeded $15 million, in anticipation of a subsequent filing by Entergy Mississippi in this proceeding. The storm damage provision exceeded $15 million upon receipt of the storm escrow funds. Because the MPSC had not entered an order on Entergy Mississippi’s filing on the requested relief to continue billing this provision, Entergy Mississippi suspended billing the monthly storm damage provision effective with February 2024 bills.
In March 2024, Entergy Mississippi made a combined dual filing which included a notice of intent to make routine change in rates and schedules and a motion for determination relating to the above-described notice of storm escrow disbursement. The notice of intent proposed a new storm damage mitigation and restoration rider to supersede both the then-current storm damage rate schedule and the vegetation management rider schedule, in which the collection of both expenses would be combined. The proposal requested that the MPSC authorize Entergy Mississippi to collect approximately $5.2 million per month for vegetation management and a storm damage provision. Furthermore, if Entergy Mississippi’s accumulated vegetation management and storm damage provision balance were to exceed $70 million, collection under the storm damage mitigation and restoration rider
Entergy Mississippi, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
would cease until such time that the accumulated vegetation management and storm damage provision would become less than $60 million.
The Mississippi Public Utilities Staff reviewed the storm-related costs submitted by Entergy Mississippi and found them prudent. In June 2024 the MPSC considered and unanimously granted the relief sought by Entergy Mississippi, including authorization to credit any remaining funds in the storm escrow account to Entergy Mississippi’s storm damage provision and to close the storm escrow account and approving the new storm damage mitigation and restoration rider. Entergy Mississippi’s storm escrow account was liquidated in July 2024, and the new combined storm damage mitigation and restoration rider became effective with the July 2024 billing cycle. Additionally, Entergy Mississippi made a compliance filing to cease billing under the existing vegetation management rider schedule as of the same billing cycle.
Federal Regulation
See the “Rate, Cost-recovery, and Other Regulation – Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis and Note 2 to the financial statements for a discussion of federal regulation.
Nuclear Matters
See the “Nuclear Matters” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of nuclear matters.
Environmental Risks
Entergy Mississippi’s facilities and operations are subject to regulation by various governmental authorities having jurisdiction over air quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental matters. Management believes that Entergy Mississippi is in substantial compliance with environmental regulations currently applicable to its facilities and operations, with reference to possible exceptions noted in “Regulation of Entergy’s Business - Environmental Regulation” in Part I, Item 1. Because environmental regulations are subject to change, future compliance costs cannot be precisely estimated.
Critical Accounting Estimates
The preparation of Entergy Mississippi’s financial statements in conformity with GAAP requires management to apply appropriate accounting policies and to make estimates and judgments that can have a significant effect on reported financial position, results of operations, and cash flows. Management has identified the following accounting estimates as critical because they are based on assumptions and measurements that involve a high degree of uncertainty, and the potential for future changes in these assumptions and measurements could produce estimates that would have a material effect on the presentation of Entergy Mississippi’s financial position, results of operations, or cash flows.
Utility Regulatory Accounting
See “Utility Regulatory Accounting” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of accounting for the effects of rate regulation.
Taxation and Uncertain Tax Positions
See “Taxation and Uncertain Tax Positions” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion.
Entergy Mississippi, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
Qualified Pension and Other Postretirement Benefits
Entergy Mississippi’s qualified pension and other postretirement reported costs, as described in Note 11 to the financial statements, are affected by numerous factors including the provisions of the plans, changing employee demographics, and various actuarial calculations, assumptions, and accounting mechanisms. See “Qualified Pension and Other Postretirement Benefits” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion. Because of the complexity of these calculations, the long-term nature of these obligations, and the importance of the assumptions utilized, Entergy’s estimate of these costs is a critical accounting estimate.
Cost Sensitivity
The following chart reflects the sensitivity of qualified pension cost and qualified projected benefit obligation to changes in certain actuarial assumptions (dollars in thousands).
| | | | | | | | | | | | | | | | | | | | |
| Actuarial Assumption | | Change in Assumption | | Impact on 2025 Qualified Pension Cost | | Impact on 2024 Qualified Projected Benefit Obligation |
| | | | | Increase/(Decrease) | | |
| Discount rate | | (0.25%) | | $178 | | $5,973 |
| Rate of return on plan assets | | (0.25%) | | $726 | | $— |
| Rate of increase in compensation | | 0.25% | | $249 | | $1,397 |
The following chart reflects the sensitivity of postretirement benefits cost and accumulated postretirement benefit obligation to changes in certain actuarial assumptions (dollars in thousands).
| | | | | | | | | | | | | | | | | | | | |
| Actuarial Assumption | | Change in Assumption | | Impact on 2025 Postretirement Benefits Cost | | Impact on 2024 Accumulated Postretirement Benefit Obligation |
| | | | | Increase/(Decrease) | | |
| Discount rate | | (0.25%) | | $77 | | $912 |
| Health care cost trend | | 0.25% | | $112 | | $594 |
Each fluctuation above assumes that the other components of the calculation are held constant.
Costs and Employer Contributions
Total qualified pension cost for Entergy Mississippi in 2024 was $3.3 million. Entergy Mississippi anticipates 2025 qualified pension cost to be $3.5 million. Entergy Mississippi contributed $15 million to its qualified pension plans in 2024 and estimates 2025 pension contributions will be approximately $8.1 million, although the 2025 required pension contributions will be known with more certainty when the January 1, 2025 valuations are completed, which is expected by April 1, 2025.
Total postretirement health care and life insurance benefit income for Entergy Mississippi in 2024 was $3.7 million. Entergy Mississippi expects 2025 postretirement health care and life insurance benefit income of approximately $3.9 million. In 2024, Entergy Mississippi’s contributions to its other postretirement plans, specifically its contributions to the external trusts plus claims payments, were offset by trust claims reimbursements, resulting in a net reimbursement of $23 thousand. Entergy Mississippi estimates that 2025 contributions will be approximately $178 thousand.
Entergy Mississippi, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
Other Contingencies
See “Other Contingencies” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of the estimates associated with environmental, litigation, and other risks.
New Accounting Pronouncements
See the “New Accounting Pronouncements” section of Note 1 to the financial statements for a discussion of new accounting pronouncements.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the member and Board of Directors of
Entergy Mississippi, LLC and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Entergy Mississippi, LLC and Subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of income, cash flows and changes in equity (pages 391 through 396 and applicable items in pages 47 through 239), for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Rate and Regulatory Matters — Entergy Mississippi, LLC and Subsidiaries — Refer to Note 2 to the financial statements
Critical Audit Matter Description
The Company is subject to rate regulation by the Mississippi Public Service Commission (the “MPSC”), which has jurisdiction with respect to the rates of electric companies in Mississippi, and to wholesale rate regulation by the Federal Energy Regulatory Commission (“FERC”). Management has determined it meets the requirements under accounting principles generally accepted in the United States of America to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation. Accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures.
The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Because the MPSC and the FERC set the rates the Company is allowed to charge customers based on allowable costs, including a reasonable return on equity, the Company applies accounting standards that require the financial statements to reflect the effects of rate regulation, including the recording of regulatory assets and liabilities. The Company assesses whether the regulatory assets and regulatory liabilities continue to meet the criteria for probable future recovery or settlement at each balance sheet date and when regulatory events occur. This assessment includes consideration of recent rate orders, historical regulatory treatment for similar costs, and factors such as changes in applicable regulatory and political environments. While the Company has indicated it expects to recover costs from customers through regulated rates, there is a risk that the MPSC and the FERC will not approve: (1) full recovery of the costs of providing utility service, or (2) full recovery of amounts invested in the utility business and a reasonable return on that investment.
We identified the impact of rate regulation as a critical audit matter due to the judgments made by management to support its assertions about impacted account balances and disclosures and the high degree of subjectivity involved in assessing the impact of future regulatory orders on the financial statements. Management judgments include assessing the likelihood of recovery in future rates of incurred costs and refunds to customers. Auditing management’s judgments regarding the outcome of future decisions by the MPSC and the FERC, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities involved specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities and auditor judgment to evaluate management estimates and the subjectivity of audit evidence.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the uncertainty of future decisions by the MPSC and the FERC, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities included the following, among others:
•We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We also tested the effectiveness of management’s controls over the initial recognition of amounts as regulatory assets or liabilities and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates.
•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.
•We read relevant regulatory orders issued by the MPSC and the FERC for the Company to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the MPSC’s and FERC’s treatment of similar costs under similar circumstances. We evaluated external information and compared to management’s recorded regulatory asset and liability balances for completeness.
•For regulatory matters in process, we inspected the Company’s filings with the MPSC and the FERC and orders issued, and considered the filings with the MPSC and the FERC by intervenors that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.
•We obtained an analysis from management and support from internal and external legal counsel, as appropriate, regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery or refund or a future reduction in rates.
•We obtained representation from management regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities to assess management’s assertion that amounts are probable of recovery, refund, or a future reduction in rates.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 18, 2025
We have served as the Company’s auditor since 2001.
| | | | | | | | | | | | | | | | | | | | |
| ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES |
| CONSOLIDATED INCOME STATEMENTS |
| | |
| | | For the Years Ended December 31, |
| | | 2024 | | 2023 | | 2022 |
| | | (In Thousands) |
| | | | | | |
| OPERATING REVENUES | | | | | | |
| Electric | | $1,764,593 | | | $1,802,533 | | | $1,624,234 | |
| | | | | | |
| OPERATING EXPENSES | | | | | | |
| Operation and Maintenance: | | | | | | |
| Fuel, fuel-related expenses, and gas purchased for resale | | 270,015 | | | 563,296 | | | 252,760 | |
| Purchased power | | 273,580 | | | 281,761 | | | 322,674 | |
| Other operation and maintenance | | 315,651 | | | 320,192 | | | 314,902 | |
| Taxes other than income taxes | | 166,195 | | | 150,921 | | | 137,541 | |
| Depreciation and amortization | | 270,483 | | | 262,624 | | | 246,063 | |
| Other regulatory charges (credits) - net | | 36,723 | | | (111,376) | | | 38,017 | |
| TOTAL | | 1,332,647 | | | 1,467,418 | | | 1,311,957 | |
| | | | | | |
| OPERATING INCOME | | 431,946 | | | 335,115 | | | 312,277 | |
| | | | | | |
| OTHER INCOME (DEDUCTIONS) | | | | | | |
| Allowance for equity funds used during construction | | 9,095 | | | 8,552 | | | 6,125 | |
| Interest and investment income | | 3,249 | | | 2,275 | | | 508 | |
| Miscellaneous - net | | (11,157) | | | (13,231) | | | (3,619) | |
| TOTAL | | 1,187 | | | (2,404) | | | 3,014 | |
| | | | | | |
| INTEREST EXPENSE | | | | | | |
| Interest expense | | 110,931 | | | 99,857 | | | 86,960 | |
| Allowance for borrowed funds used during construction | | (3,520) | | | (3,479) | | | (2,800) | |
| TOTAL | | 107,411 | | | 96,378 | | | 84,160 | |
| | | | | | |
| INCOME BEFORE INCOME TAXES | | 325,722 | | | 236,333 | | | 231,131 | |
| | | | | | |
| Income taxes | | 80,315 | | | 54,364 | | | 54,864 | |
| | | | | | |
| NET INCOME | | 245,407 | | | 181,969 | | | 176,267 | |
| | | | | | |
| Net loss attributable to noncontrolling interest | | (10,551) | | | (10,302) | | | (21,355) | |
| | | | | | |
| EARNINGS APPLICABLE TO MEMBER'S EQUITY | | $255,958 | | | $192,271 | | | $197,622 | |
| | | | | | |
| See Notes to Financial Statements. | | | | | | |
(Page left blank intentionally)
| | | | | | | | | | | | | | | | | | | | |
| ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| | |
| | | For the Years Ended December 31, |
| | | 2024 | | 2023 | | 2022 |
| | | (In Thousands) |
| | | | | | |
| OPERATING ACTIVITIES | | | | | | |
| Net income | | $245,407 | | | $181,969 | | | $176,267 | |
| Adjustments to reconcile net income to net cash flow provided by operating activities: | | | | | | |
| Depreciation and amortization | | 270,483 | | | 262,624 | | | 246,063 | |
| Deferred income taxes, investment tax credits, and non-current taxes accrued | | 43,245 | | | 28,990 | | | 54,850 | |
| Changes in assets and liabilities: | | | | | | |
| Receivables | | 7,221 | | | 3,627 | | | (65,843) | |
| Fuel inventory | | 1,233 | | | (648) | | | (5,237) | |
| Accounts payable | | 60,450 | | | (41,101) | | | 49,101 | |
| Taxes accrued | | 63,890 | | | (9,771) | | | 18,632 | |
| Interest accrued | | (870) | | | 3,329 | | | 925 | |
| Deferred fuel costs | | (4,329) | | | 273,856 | | | (21,333) | |
| Other working capital accounts | | (32,138) | | | (23,813) | | | 2,632 | |
| Provisions for estimated losses | | 7,719 | | | 1,972 | | | (519) | |
| Other regulatory assets | | 53,229 | | | (59,616) | | | (57,028) | |
| Other regulatory liabilities | | 17,985 | | | (59,513) | | | 20,165 | |
| Pension and other postretirement funded status | | (33,506) | | | (49,223) | | | (35,299) | |
| Other assets and liabilities | | (564) | | | 46,709 | | | 22,273 | |
| Net cash flow provided by operating activities | | 699,455 | | | 559,391 | | | 405,649 | |
| INVESTING ACTIVITIES | | | | | | |
| Construction expenditures | | (699,690) | | | (562,118) | | | (534,020) | |
| Allowance for equity funds used during construction | | 9,095 | | | 8,552 | | | 6,125 | |
| Payment for purchase of plant | | — | | | (35,094) | | | (105,149) | |
| Proceeds from sale of assets | | 818 | | | — | | | — | |
| Changes in money pool receivable - net | | (15,218) | | | 26,879 | | | 13,577 | |
| Receipts from storm reserve escrow account | | 736 | | | 34,493 | | | — | |
| Increase in other investments | | (960) | | | (690) | | | (1,273) | |
| Net cash flow used in investing activities | | (705,219) | | | (527,978) | | | (620,740) | |
| FINANCING ACTIVITIES | | | | | | |
| Proceeds from the issuance of long-term debt | | 395,881 | | | 396,833 | | | 249,266 | |
| Retirement of long-term debt | | (200,000) | | | (500,000) | | | (100,000) | |
| Capital contributions from noncontrolling interest | | — | | | 25,708 | | | 24,702 | |
| Changes in money pool payable - net | | (73,769) | | | 73,769 | | | — | |
| Common equity distributions paid | | (44,633) | | | (40,000) | | | — | |
| Other | | 77,348 | | | 1,928 | | | 10,475 | |
| Net cash flow provided by (used in) financing activities | | 154,827 | | | (41,762) | | | 184,443 | |
| Net increase (decrease) in cash and cash equivalents | | 149,063 | | | (10,349) | | | (30,648) | |
| Cash and cash equivalents at beginning of period | | 6,630 | | | 16,979 | | | 47,627 | |
| Cash and cash equivalents at end of period | | $155,693 | | | $6,630 | | | $16,979 | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | | | |
| Cash paid (received) during the period for: | | | | | | |
| Interest - net of amount capitalized | | $109,444 | | | $93,961 | | | $83,291 | |
| Income taxes | | ($14,170) | | | $50,869 | | | ($5,396) | |
| Noncash investing activities: | | | | | | |
| Accrued construction expenditures | | $141,227 | | | $16,342 | | | $59,474 | |
| | | | | | |
| See Notes to Financial Statements. | | | | | | |
| | | | | | | | | | | | | | |
| ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| ASSETS |
| | |
| | | December 31, |
| | | 2024 | | 2023 |
| | | (In Thousands) |
| | | | |
| CURRENT ASSETS | | | | |
| Cash and cash equivalents: | | | | |
| Cash | | $184 | | | $30 | |
| Temporary cash investments | | 155,509 | | | 6,600 | |
| Total cash and cash equivalents | | 155,693 | | | 6,630 | |
| Accounts receivable: | | | | |
| Customer | | 97,609 | | | 121,389 | |
| Allowance for doubtful accounts | | (2,172) | | | (3,312) | |
| Associated companies | | 23,909 | | | 4,997 | |
| Other | | 25,148 | | | 17,697 | |
| Accrued unbilled revenues | | 75,740 | | | 71,465 | |
| Total accounts receivable | | 220,234 | | | 212,236 | |
| | | | |
| Fuel inventory - at average cost | | 14,963 | | | 16,196 | |
| Materials and supplies | | 113,256 | | | 95,526 | |
| Prepayments and other | | 19,764 | | | 12,740 | |
| TOTAL | | 523,910 | | | 343,328 | |
| | | | |
| OTHER PROPERTY AND INVESTMENTS | | | | |
| Non-utility property - at cost (less accumulated depreciation) | | 4,482 | | | 4,497 | |
| Storm reserve escrow account | | — | | | 656 | |
| Other | | 880 | | | — | |
| TOTAL | | 5,362 | | | 5,153 | |
| | | | |
| UTILITY PLANT | | | | |
| Electric | | 7,860,409 | | | 7,455,145 | |
| Construction work in progress | | 487,273 | | | 139,635 | |
| TOTAL UTILITY PLANT | | 8,347,682 | | | 7,594,780 | |
| Less - accumulated depreciation and amortization | | 2,511,091 | | | 2,346,327 | |
| UTILITY PLANT - NET | | 5,836,591 | | | 5,248,453 | |
| | | | |
| DEFERRED DEBITS AND OTHER ASSETS | | | | |
| Regulatory assets: | | | | |
| Other regulatory assets | | 525,847 | | | 579,076 | |
| Other | | 97,260 | | | 51,996 | |
| TOTAL | | 623,107 | | | 631,072 | |
| | | | |
| TOTAL ASSETS | | $6,988,970 | | | $6,228,006 | |
| | | | |
| See Notes to Financial Statements. | | | | |
| | | | | | | | | | | | | | |
| ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| LIABILITIES AND EQUITY |
| | |
| | | December 31, |
| | | 2024 | | 2023 |
| | | (In Thousands) |
| | | | |
| CURRENT LIABILITIES | | | | |
| Currently maturing long-term debt | | $— | | | $100,000 | |
| Accounts payable: | | | | |
| Associated companies | | 58,087 | | | 133,571 | |
| Other | | 283,755 | | | 92,659 | |
| Customer deposits | | 94,009 | | | 92,637 | |
| Taxes accrued | | 179,024 | | | 115,134 | |
| Interest accrued | | 20,667 | | | 21,537 | |
| Deferred fuel costs | | 126,316 | | | 130,645 | |
| Other | | 20,720 | | | 26,463 | |
| TOTAL | | 782,578 | | | 712,646 | |
| | | | |
| NON-CURRENT LIABILITIES | | | | |
| Accumulated deferred income taxes and taxes accrued | | 870,116 | | | 821,744 | |
| Accumulated deferred investment tax credits | | 13,446 | | | 13,811 | |
| Regulatory liability for income taxes - net | | 180,851 | | | 188,714 | |
| Other regulatory liabilities | | 59,544 | | | 33,696 | |
| Asset retirement cost liabilities | | 25,110 | | | 8,229 | |
| Accumulated provisions | | 47,200 | | | 39,481 | |
| | | | |
| Long-term debt | | 2,427,073 | | | 2,129,510 | |
| Customer advances for construction | | 112,618 | | | 32,659 | |
| Other | | 61,446 | | | 39,302 | |
| TOTAL | | 3,797,404 | | | 3,307,146 | |
| | | | |
| Commitments and Contingencies | | | | |
| | | | |
| EQUITY | | | | |
| Member's equity | | 2,400,786 | | | 2,189,461 | |
| Noncontrolling interest | | 8,202 | | | 18,753 | |
| TOTAL | | 2,408,988 | | | 2,208,214 | |
| | | | |
| TOTAL LIABILITIES AND EQUITY | | $6,988,970 | | | $6,228,006 | |
| | | | |
| See Notes to Financial Statements. | | | | |
| | | | | | | | | | | | | | | | | |
| ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY |
| For the Years Ended December 31, 2024, 2023, and 2022 |
| | | | | |
| | Noncontrolling Interest | | Member's Equity | | Total |
| | (In Thousands) |
| | | | | |
| Balance at December 31, 2021 | $— | | | $1,839,568 | | | $1,839,568 | |
| Net income (loss) | (21,355) | | | 197,622 | | | 176,267 | |
| Capital contributions from noncontrolling interest | 24,702 | | | — | | | 24,702 | |
| Balance at December 31, 2022 | $3,347 | | | $2,037,190 | | | $2,040,537 | |
| Net income (loss) | (10,302) | | | 192,271 | | | 181,969 | |
| Common equity distributions | — | | | (40,000) | | | (40,000) | |
| Capital contributions from noncontrolling interest | 25,708 | | | — | | | 25,708 | |
| Balance at December 31, 2023 | $18,753 | | | $2,189,461 | | | $2,208,214 | |
| Net income (loss) | (10,551) | | | 255,958 | | | 245,407 | |
| Common equity distributions | — | | | (44,633) | | | (44,633) | |
| Balance at December 31, 2024 | $8,202 | | | $2,400,786 | | | $2,408,988 | |
| | | | | |
| See Notes to Financial Statements. | | | | | |
ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES
MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS
Results of Operations
2024 Compared to 2023
Net Income
Net income decreased $213.1 million primarily due to a $198.4 million reduction in income tax expense in 2023 as a result of the resolution of the 2016-2018 IRS audit, partially offset by a $60 million regulatory charge ($43.8 million net-of-tax) to reflect credits expected to be provided to customers as a result of the resolution of the 2016-2018 IRS audit, and a $78.5 million ($57.4 million net-of-tax) regulatory charge, recorded in first quarter 2024, primarily to reflect a settlement in principle between Entergy New Orleans and the City Council in April 2024 for additional sharing with customers of income tax benefits from the resolution of the 2016-2018 IRS audit. Also contributing to the decrease were higher interest expense, higher depreciation and amortization expenses, and higher other operation and maintenance expenses. See Note 3 to the financial statements for discussion of the April 2024 settlement in principle and discussion of the resolution of the 2016-2018 IRS audit.
Operating Revenues
Following is an analysis of the change in operating revenues comparing 2024 to 2023:
| | | | | |
| | Amount |
| | (In Millions) |
| 2023 operating revenues | $843.9 | |
| Fuel, rider, and other revenues that do not significantly affect net income | (28.3) | |
| Volume/weather | (5.5) | |
| Storm restoration carrying costs | (5.2) | |
| Retail electric price | 5.7 | |
| |
| 2024 operating revenues | $810.6 | |
Entergy New Orleans’s results include revenues from rate mechanisms designed to recover fuel, purchased power, and other costs such that the revenues and expenses associated with these items generally offset and do not affect net income. “Fuel, rider, and other revenues that do not significantly affect net income” includes the revenue variance associated with these items.
The volume/weather variance is primarily due to a decrease in industrial and commercial usage. The decrease in industrial usage is primarily due to a decrease in demand from large industrial customers, primarily in the industrial gases industry.
Storm restoration carrying costs represent the equity component of storm restoration carrying costs, recorded in fourth quarter 2023, recognized as part of the City Council’s approval of the Hurricane Ida storm cost certification report in December 2023. See Note 2 to the financial statements for further discussion of the storm cost certification.
The retail electric price variance is primarily due to increases in formula rate plan rates effective September 2023 and September 2024, each in accordance with the terms of the 2023 and 2024 formula rate plan filings. See Note 2 to the financial statements for further discussion of the formula rate plan filings.
Entergy New Orleans, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
Total electric energy sales for Entergy New Orleans for the years ended December 31, 2024 and 2023 are as follows:
| | | | | | | | | | | | | | | | | |
| 2024 | | 2023 | | % Change |
| (GWh) | |
| Residential | 2,341 | | | 2,364 | | | (1) | |
| Commercial | 2,094 | | | 2,126 | | | (2) | |
| Industrial | 369 | | | 423 | | | (13) | |
| Governmental | 793 | | | 783 | | | 1 | |
| Total retail | 5,597 | | | 5,696 | | | (2) | |
| Sales for resale: | | | | | |
| Non-associated companies | 2,123 | | | 2,818 | | | (25) | |
| Total | 7,720 | | | 8,514 | | | (9) | |
See Note 19 to the financial statements for additional discussion of Entergy New Orleans’s operating revenues.
Other Income Statement Variances
Other operation and maintenance expenses increased primarily due to:
•an increase of $4.1 million in bad debt expense;
•an increase of $2.6 million in compensation and benefits costs primarily due to higher healthcare claims activity, including lower prescription drug rebates in 2024 as compared to 2023; and
•an increase of $2.5 million in energy efficiency expenses primarily due to higher energy efficiency costs and the timing of recovery from customers.
The increase was partially offset by a decrease of $5.3 million in power delivery expenses primarily due to a lower scope of work performed in 2024 as compared to 2023.
Taxes other than income taxes decreased primarily due to a decrease in local franchise taxes as a result of lower retail revenues in 2024 as compared to 2023.
Depreciation and amortization expenses increased primarily due to additions to plant in service.
Other regulatory charges (credits) - net includes a regulatory charge of $78.5 million, recorded in first quarter 2024, primarily to reflect a settlement in principle between Entergy New Orleans and the City Council in April 2024 for additional sharing with customers of income tax benefits from the resolution of the 2016-2018 IRS audit and a regulatory charge of $60 million, recorded in fourth quarter 2023, to reflect credits expected to be provided to customers as a result of the resolution of the 2016-2018 IRS audit. See Note 3 to the financial statements for discussion of the April 2024 settlement in principle and discussion of the resolution of the 2016-2018 IRS audit.
Interest expense increased primarily due to the issuances of $65 million of 6.41% Series mortgage bonds, $50 million of 6.54% Series mortgage bonds, and $35 million of 6.25% Series mortgage bonds, each in May 2024. The increase was partially offset by the repayment of $100 million of 3.90% Series mortgage bonds in July 2023 and the repayment of an $85 million unsecured term loan in June 2024.
The effective income tax rates were 15.2% for 2024 and (487.5%) for 2023. See Note 3 to the financial statements for a reconciliation of the federal statutory rate of 21% to the effective income tax rates and for additional discussion regarding income taxes.
Entergy New Orleans, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
2023 Compared to 2022
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Results of Operations” in Item 7 of Entergy New Orleans’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of results of operations for 2023 compared to 2022.
Income Tax Legislation and Regulation
See the “Income Tax Legislation and Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of income tax legislation and regulation.
Sale of Natural Gas Distribution Business
See the “Held for Sale - Natural Gas Distribution Businesses” section in Note 14 to the financial statements for discussion of the planned sale of the Entergy New Orleans natural gas distribution business.
Liquidity and Capital Resources
Cash Flow
Cash flows for the years ended December 31, 2024, 2023, and 2022 were as follows:
| | | | | | | | | | | | | | | | | |
| | 2024 | | 2023 | | 2022 |
| | (In Thousands) |
| Cash and cash equivalents at beginning of period | $26 | | | $4,464 | | | $42,862 | |
| | | | | |
| Net cash provided by (used in): | | | | | |
| Operating activities | 286,729 | | | 202,956 | | | 363,763 | |
| Investing activities | (163,481) | | | (18,802) | | | (403,790) | |
| Financing activities | (91,497) | | | (188,592) | | | 1,629 | |
| Net increase (decrease) in cash and cash equivalents | 31,751 | | | (4,438) | | | (38,398) | |
| | | | | |
| Cash and cash equivalents at end of period | $31,777 | | | $26 | | | $4,464 | |
2024 Compared to 2023
Operating Activities
Net cash flow provided by operating activities increased $83.8 million in 2024 primarily due to:
•the receipt of $98.1 million in settlement proceeds in 2024 as a result of the System Energy settlement with the City Council. See Note 2 to the financial statements for discussion of the System Energy settlement agreement with the City Council;
•lower fuel payments in 2024 as compared to 2023;
•the timing of payments to vendors; and
•income tax refunds of $17.9 million in 2024 compared to income tax payments of $14.1 million in 2023. Entergy New Orleans received income tax refunds in 2024 primarily in accordance with an intercompany income tax allocation agreement. Entergy New Orleans made net income tax payments in 2023 primarily related to the resolution of the 2016-2018 IRS audit and estimated federal and state income taxes.
Entergy New Orleans, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
The increase was partially offset by the refund of $34 million received from System Energy in January 2023 related to the sale-leaseback renewal costs and depreciation litigation as calculated in System Energy’s January 2023 compliance report filed with the FERC and lower collections from customers. See Note 2 to the financial statements for discussion of the January 2023 refund received from System Energy and the related proceedings and Note 3 to the financial statements for further discussion of the resolution of the 2016-2018 IRS audit.
Investing Activities
Net cash flow used in investing activities increased $144.7 million in 2024 primarily due to money pool activity, partially offset by a decrease of $16.6 million in transmission construction expenditures primarily due to higher spending in 2023 related to Entergy New Orleans’s construction of the New Orleans Sewerage and Water Board Sullivan substation.
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 $3.1 million in 2024 compared to decreasing by $147.3 million in 2023. The money pool is an intercompany cash management program that makes possible intercompany borrowing and lending arrangements, and the money pool and other borrowing arrangements are designed to reduce the Registrant Subsidiaries’ dependence on external short-term borrowings.
Financing Activities
Net cash flow used in financing activities decreased $97.1 million in 2024 primarily due to the issuances of $65 million of 6.41% Series mortgage bonds, $50 million of 6.54% Series mortgage bonds, and $35 million of 6.25% Series mortgage bonds, each in May 2024, and the repayment, at maturity, of $100 million of 3.90% Series mortgage bonds in July 2023. The decrease was partially offset by:
•the repayment, at maturity, of an $85 million unsecured term loan in June 2024 as compared to additional borrowings of $15 million on the unsecured term loan in May 2023;
•money pool activity; and
•a $15 million advance received in 2023 related to Entergy New Orleans’s construction of the New Orleans Sewerage and Water Board Sullivan substation.
Decreases in Entergy New Orleans’s payable to the money pool are a use of cash flow, and Entergy New Orleans’s payable to the money pool decreased $21.7 million in 2024 compared to increasing by $21.7 million in 2023.
See Note 5 to the financial statements for details on long-term debt.
2023 Compared to 2022
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Cash Flow” in Item 7 of Entergy New Orleans’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of operating, investing, and financing cash flow activities for 2023 compared to 2022.
Entergy New Orleans, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
Capital Structure
Entergy New Orleans’s debt to capital ratio is shown in the following table. The increase in the debt to capital ratio for Entergy New Orleans is primarily due to common equity distributions of $125 million in 2024 and the net issuance of long-term debt in 2024.
| | | | | | | | | | | |
| December 31,
2024 | | December 31,
2023 |
| Debt to capital | 51.5 | % | | 45.8 | % |
| Effect of excluding securitization bonds | — | % | | (0.2 | %) |
| Debt to capital, excluding securitization bonds (non-GAAP) (a) | 51.5 | % | | 45.6 | % |
| Effect of subtracting cash | (1.1 | %) | | — | % |
| Net debt to net capital, excluding securitization bonds (non-GAAP) (a) | 50.4 | % | | 45.6 | % |
(a)Calculation excludes the securitization bonds, which are non-recourse to Entergy New Orleans.
Net debt consists of debt less cash and cash equivalents. Debt consists of short-term borrowings, finance lease obligations, long-term debt, including the currently maturing portion, and the long-term payable due to an associated company. Capital consists of debt and equity. Net capital consists of capital less cash and cash equivalents. The debt to capital ratio excluding securitization bonds and net debt to net capital ratio excluding securitization bonds are non-GAAP measures. Entergy New Orleans uses the debt to capital ratios excluding securitization bonds in analyzing its financial condition and believes they provide useful information to its investors and creditors in evaluating Entergy New Orleans’s financial condition because the securitization bonds are non-recourse to Entergy New Orleans, as more fully described in Note 5 to the financial statements. Entergy New Orleans also uses the net debt to net capital ratio excluding securitization bonds in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy New Orleans’s financial condition because net debt indicates Entergy New Orleans’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.
Entergy New Orleans seeks to optimize its capital structure in accordance with its regulatory requirements and to control its cost of capital while also maintaining equity capitalization at a level consistent with investment-grade debt ratings. To the extent that operating cash flows are in excess of planned investments, cash may be used to reduce outstanding debt or may be paid as a distribution, to the extent funds are legally available to do so, or both, in appropriate amounts to maintain the capital structure. To the extent that operating cash flows are insufficient to support planned investments, Entergy New Orleans may issue incremental debt or reduce distributions, or both, to maintain its capital structure. In addition, in certain infrequent circumstances, such as financing of large transactions that would materially alter the capital structure if financed entirely with debt and reduced distributions, Entergy New Orleans may receive equity contributions to maintain its capital structure.
Uses of Capital
Entergy New Orleans requires capital resources for:
•construction and other capital investments;
•working capital purposes, including the financing of fuel and purchased power costs;
•debt maturities or retirements; and
•distribution and interest payments.
Entergy New Orleans, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
Following are the amounts of Entergy New Orleans’s planned construction and other capital investments.
| | | | | | | | | | | | | | | | | |
| | 2025 | | 2026 | | 2027 |
| | (In Millions) |
| Planned construction and capital investment: | | | | | |
| Generation | $30 | | | $15 | | | $10 | |
| Transmission | 20 | | | 5 | | | 30 | |
| Distribution | 125 | | | 190 | | | 110 | |
| Utility Support | 20 | | | 20 | | | 15 | |
| Total | $195 | | | $230 | | | $165 | |
In addition to routine capital spending to maintain operations, the planned capital investment estimate for Entergy New Orleans includes distribution and Utility support spending to deliver reliability, resilience, and customer experience; transmission spending to improve reliability and resilience; and other investments. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements, governmental actions, including trade-related governmental actions, such as tariffs and other measures, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital, including any changes to governmental programs, such as loans, grants, guarantees, and other subsidies. Entergy New Orleans is not able to predict the effect of potential changes in regulation and law, changes to governmental programs, such as loans, grants, guarantees, and other subsidies, and trade-related governmental actions, such as tariffs and other measures, on its current and planned capital projects.
Following are the amounts of Entergy New Orleans’s existing debt and lease obligations (includes estimated interest payments).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2025 | | 2026 | | 2027 | | 2028-2029 | | After 2029 |
| | (In Millions) |
| Long-term debt (a) | $111 | | | $116 | | | $29 | | | $92 | | | $873 | |
| Operating leases (b) | $2 | | | $2 | | | $2 | | | $2 | | | $1 | |
| Finance leases (b) | $1 | | | $1 | | | $1 | | | $3 | | | $1 | |
(a)Long-term debt is discussed in Note 5 to the financial statements.
(b)Lease obligations are discussed in Note 10 to the financial statements.
Other Obligations
Entergy New Orleans currently expects to contribute approximately $5 million to its qualified pension plans and approximately $205 thousand to its other postretirement plans in 2025, although the 2025 required pension contributions will be known with more certainty when the January 1, 2025, valuations are completed, which is expected by April 1, 2025. See “Critical Accounting Estimates - Qualified Pension and Other Postretirement Benefits” below and Note 11 to the financial statements for a discussion of qualified pension and other postretirement benefits funding.
Entergy New Orleans has $7.9 million of unrecognized tax benefits net of unused tax attributes plus interest for which the timing of payments beyond 12 months cannot be reasonably estimated due to uncertainties in the timing of effective settlement of tax positions. See Note 3 to the financial statements for additional information regarding unrecognized tax benefits.
In addition, Entergy New Orleans enters into fuel and purchased power agreements that contain minimum purchase obligations. Entergy New Orleans has rate mechanisms in place to recover fuel, purchased power, and
Entergy New Orleans, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
associated costs incurred under these purchase obligations. See Note 8 to the financial statements for discussion of Entergy New Orleans’s obligations under the Unit Power Sales Agreement.
As a wholly-owned subsidiary of Entergy Utility Holding Company, LLC, Entergy New Orleans pays distributions from its earnings at a percentage determined monthly.
Resilience and Grid Hardening
In October 2021 the City Council passed a resolution and order establishing a docket and procedural schedule with respect to system resiliency and storm hardening. In July 2022, Entergy New Orleans filed with the City Council a response identifying a preliminary plan for storm hardening and resiliency projects, including microgrids, to be implemented over ten years at an approximate cost of $1.5 billion. In February 2023 the City Council approved a revised procedural schedule requiring Entergy New Orleans to make a filing in April 2023 containing a narrowed list of proposed hardening projects. In April 2023, Entergy New Orleans filed the required application and supporting testimony seeking City Council approval of the first phase (five years and $559 million) of a ten-year infrastructure hardening plan totaling approximately $1 billion. Entergy New Orleans also sought, among other relief, City Council approval of a resilience and storm hardening cost recovery rider to recover from customers the costs of the infrastructure hardening plan. In February 2024 the City Council approved a resolution authorizing Entergy New Orleans to implement a resilience project to be partially funded by $55 million of matching funding through the DOE’s Grid Resilience and Innovation Partnerships program. The resolution also required Entergy New Orleans to submit, no later than July 2024, a revised resilience plan consisting of projects over a three-year period. In March 2024, Entergy New Orleans filed with the City Council for approval the requested three-year resilience plan, which includes $168 million in hardening projects. The three-year resilience plan was to be in addition to the previously authorized resilience project to be partially funded by the DOE’s Grid Resilience and Innovation Partnerships program. In October 2024 the City Council approved a resolution authorizing a two-year resilience plan totaling $100 million and approved the requested resilience and storm hardening cost recovery rider. In December 2024, Entergy New Orleans notified the City Council of the subset of hardening projects from the revised three-year resilience plan to be included in the two-year resilience plan. Entergy New Orleans implemented the approved resilience and storm hardening cost recovery rider effective with the first billing cycle of January 2025.
Sources of Capital
Entergy New Orleans’s sources to meet its capital requirements include:
•internally generated funds;
•cash on hand;
•the Entergy system money pool;
•storm reserve escrow accounts;
•debt and preferred membership interest issuances, including debt issuances to refund or retire currently outstanding or maturing indebtedness;
•capital contributions; and
•bank financing under new or existing facilities.
Circumstances such as weather patterns, fuel and purchased power price fluctuations, and unanticipated expenses, including unscheduled plant outages and storms, could affect the timing and level of internally generated funds in the future. In addition to the financings necessary to meet capital requirements and contractual obligations, Entergy New Orleans expects to continue, when economically feasible, to retire higher-cost debt and replace it with lower-cost debt if market conditions permit.
All debt and common and preferred membership interest issuances by Entergy New Orleans require prior regulatory approval. Debt issuances are also subject to requirements set forth in its bond indenture and other
Entergy New Orleans, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
agreements. Entergy New Orleans has sufficient capacity under these tests to meet its foreseeable capital needs for the next twelve months and beyond.
Entergy New Orleans’s receivables from or (payables to) the money pool were as follows as of December 31 for each of the following years.
| | | | | | | | | | | | | | | | | | | | |
| 2024 | | 2023 | | 2022 | | 2021 |
| (In Thousands) |
| $3,146 | | ($21,651) | | $147,254 | | $36,410 |
See Note 4 to the financial statements for a description of the money pool.
Entergy New Orleans has a credit facility in the amount of $25 million scheduled to expire in June 2027. The credit facility includes fronting commitments for the issuance of letters of credit against $10 million of the borrowing capacity of the facility. As of December 31, 2024, there were no cash borrowings and no letters of credit outstanding under the credit facility. In addition, Entergy New Orleans is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO. As of December 31, 2024, a $0.5 million letter of credit was outstanding under Entergy New Orleans’s uncommitted letter of credit facility. See Note 4 to the financial statements for additional discussion of the credit facilities.
Entergy New Orleans obtained authorization from the FERC through January 2027 for short-term borrowings not to exceed an aggregate amount of $150 million at any time outstanding and long-term borrowings and securities issuances. See Note 4 to the financial statements for further discussion of Entergy New Orleans’s short-term borrowing limits. The long-term securities issuances of Entergy New Orleans are limited to amounts authorized not only by the FERC, but also by the City Council, and the current City Council authorization extends through December 2025.
Hurricane Francine
In September 2024, Hurricane Francine caused damage to the areas served by Entergy New Orleans. The storm resulted in widespread power outages, primarily due to damage to distribution infrastructure as a result of strong winds and heavy rain, and the loss of sales during the power outages. In December 2024, in accordance with the terms of its storm recovery reserve escrow agreement, Entergy New Orleans transmitted to the City Council a notice of intent to withdraw up to $20 million in estimated storm costs resulting from Hurricane Francine from its storm recovery reserve escrow account, subject to the City Council’s certification of those costs. In January 2025, the City Council authorized the withdrawal and in February 2025, Entergy New Orleans withdrew $10.3 million from its storm recovery reserve escrow account.
State and Local Rate Regulation
The rates that Entergy New Orleans charges for its services significantly influence its financial position, results of operations, and liquidity. Entergy New Orleans is regulated, and the rates charged to its customers are determined in regulatory proceedings. A governmental agency, the City Council, is primarily responsible for approval of the rates charged to customers.
Retail Rates
2022 Formula Rate Plan Filing
In April 2022, Entergy New Orleans submitted to the City Council its formula rate plan 2021 test year filing. The 2021 test year evaluation report, subsequently updated in a July 2022 filing, produced an earned return on equity of 6.88% compared to the authorized return on equity of 9.35%. Entergy New Orleans sought approval of
Entergy New Orleans, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
a $42.1 million rate increase based on the formula set by the City Council in the 2018 rate case. The formula resulted in an increase in authorized electric revenues of $34.1 million and an increase in authorized gas revenues of $3.3 million. Entergy New Orleans also sought to commence collecting $4.7 million in electric revenues that were previously approved by the City Council for collection through the formula rate plan. In July 2022 the City Council’s advisors issued a report seeking a reduction to Entergy New Orleans’s proposed increase of approximately $17.1 million in total for electric and gas revenues. Effective with the first billing cycle of September 2022, Entergy New Orleans implemented rates reflecting an amount agreed upon by Entergy New Orleans and the City Council including adjustments filed in the City Council’s advisors’ report, per the approved process for formula rate plan implementation. The total formula rate plan increase implemented was $24.7 million, which includes an increase of $18.2 million in electric revenues, $4.7 million in previously approved electric revenues, and an increase of $1.8 million in gas revenues. Additionally, credits of $13.9 million funded by certain regulatory liabilities currently held by Entergy New Orleans for customers were issued over an eight-month period beginning September 2022.
2023 Formula Rate Plan Filing
In April 2023, Entergy New Orleans submitted to the City Council its formula rate plan 2022 test year filing. The 2022 test year evaluation report produced an electric earned return on equity of 7.34% and a gas earned return on equity of 3.52% compared to the authorized return on equity for each of 9.35%. Entergy New Orleans sought approval of a $25.6 million rate increase based on the formula set by the City Council in the 2018 rate case. The formula would result in an increase in authorized electric revenues of $17.4 million and an increase in authorized gas revenues of $8.2 million. Entergy New Orleans also sought to commence collecting $3.4 million in electric revenues that were previously approved by the City Council for collection through the formula rate plan. In July 2023, Entergy New Orleans filed a report to decrease its requested formula rate plan revenues by approximately $0.5 million to account for minor errors discovered after the filing. The City Council advisors issued a report seeking a reduction in the requested formula rate plan revenues of approximately $8.3 million, combined for electric and gas, due to alleged errors. The City Council advisors proposed additional rate mitigation in the amount of $12 million through offsets to the formula rate plan rate increase by certain regulatory liabilities. In September 2023 the City Council approved an agreement to settle the 2023 formula rate plan filing. Effective with the first billing cycle of September 2023, Entergy New Orleans implemented rates reflecting an amount agreed upon by Entergy New Orleans and the City Council, per the approved process for formula rate plan implementation. The agreement provides for a total increase in electric revenues of $10.5 million and a total increase in gas revenues of $6.9 million. The agreement also provides for a minor storm accrual of $0.5 million per year and the distribution of $8.9 million of currently held customer credits to implement the City Council advisors’ mitigation recommendations.
Request for Extension and Modification of Formula Rate Plan
In September 2023, Entergy New Orleans filed a motion seeking City Council approval of a three-year extension of Entergy New Orleans’s electric and gas formula rate plans. In October 2023 the City Council granted Entergy New Orleans’s request for an extension, subject to minor modifications which included a 55% equity ratio for rate setting purposes.
2024 Formula Rate Plan Filing
In April 2024, Entergy New Orleans submitted to the City Council its formula rate plan 2023 test year filing. Without the requested rate change in 2024, the 2023 test year evaluation report produced an electric earned return on equity of 8.66% and a gas earned return on equity of 5.87% compared to the authorized return on equity for each of 9.35%. Entergy New Orleans sought approval of a $12.6 million rate increase based on the formula set by the City Council in the 2018 rate case and approved again by the City Council in 2023. The formula would result in an increase in authorized electric revenues of $7.0 million and an increase in authorized gas revenues of $5.6 million. Following City Council review, the City Council’s advisors issued a report in July 2024 seeking a
Entergy New Orleans, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
reduction in Entergy New Orleans’s requested formula rate plan revenues in an aggregate amount of approximately $1.6 million for electric and gas together due to alleged errors. Effective with the first billing cycle of September 2024, Entergy New Orleans implemented rates reflecting an amount agreed upon by Entergy New Orleans and the City Council, per the approved process for formula rate plan implementation. The total formula rate plan increase implemented was $11.2 million, which includes an increase of $5.8 million in electric revenues and an increase of $5.4 million in gas revenues.
Fuel and purchased power cost recovery
Entergy New Orleans’s electric rate schedules include a fuel adjustment tariff designed to reflect no more than targeted fuel and purchased power costs, adjusted by a surcharge or credit for deferred fuel expense arising from the monthly reconciliation of actual fuel and purchased power costs incurred with fuel cost revenues billed to customers, including carrying charges.
Entergy New Orleans’s gas rate schedules include a purchased gas adjustment to reflect estimated gas costs for the billing month, adjusted by a surcharge or credit similar to that included in the electric fuel adjustment clause, including carrying charges.
Renewable Portfolio Standard Rulemaking
In March 2019 the City Council initiated a rulemaking proceeding to consider whether to establish a renewable portfolio standard. The four components of the Renewable and Clean Portfolio Standard that the City Council expressed a desire to implement were: (1) a mandatory requirement that Entergy New Orleans achieve 100% net zero carbon emissions by 2040; (2) reliance on renewable energy credits purchased without the associated energy for compliance with the standard being phased out over the ten-year period from 2040 to 2050; (3) no carbon-emitting resources in the portfolio of resources Entergy New Orleans uses to serve New Orleans by 2050; and (4) a mechanism to limit costs in any one plan year to no more than one percent of plan year total utility retail sales revenues. The City Council adopted the Utility Committee resolution in April 2020. The City Council approved the rule in May 2021, establishing the Renewable and Clean Portfolio Standard.
In March 2022 the City Council approved Entergy New Orleans’s initial compliance plan and established an alternative compliance payment value of $8.45 per MWh, which Entergy New Orleans will pay if it is unable to comply with the Renewable and Clean Portfolio Standard for the 2022 compliance year. Such compliance payments are paid into a clean energy fund established by the City Council. The City Council also approved the electric vehicle credit calculation methodology for use in the compliance demonstration report for 2022, to be filed prior to May 1, 2023. Entergy New Orleans’s proposal to create a 5% contingency reserve was considered reasonable for the initial compliance plan.
In August 2022, Entergy New Orleans submitted its compliance plan covering compliance years 2023-2025. After receiving comments from intervenors and Entergy New Orleans, in December 2022 the City Council adopted a resolution that (a) approved Entergy New Orleans's proposal to purchase unbundled renewable energy credits, as needed; (b) denied Entergy New Orleans’s request to treat the Sewerage and Water Board’s 230 kV Sullivan substation electrification as a “qualified measure;” (c) approved the alternative compliance payment for years 2023-2025 at $8.45 per MWh; and (d) approved the Tier 3 credit calculations for electric vehicle charging infrastructure but denied the request to approve a Tier 3 credit for the Sewerage and Water Board substation electrification project at this time while the substation is not yet in service.
In May 2023, Entergy New Orleans submitted its compliance demonstration report to the City Council for the 2022 compliance year, which describes and demonstrates Entergy New Orleans’s compliance with the Renewable and Clean Portfolio Standard in 2022 and satisfies certain informational requirements. Entergy New Orleans requested, among other things, that the City Council determine that Entergy New Orleans achieved the target under the portfolio standard for 2022 and remains within the customer protection cost cap, and that the City
Entergy New Orleans, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
Council approve a proposal to recover costs associated with 2022 compliance. In April 2024 the City Council approved a resolution finding Entergy New Orleans was in compliance with the 2022 requirements and that Entergy New Orleans did not exceed the customer protection cost cap, as well as approving Entergy New Orleans’s proposal to recover costs.
Income Tax Audits
As discussed in Note 3 to the financial statements, in November 2023 the IRS completed its examination of the 2016 through 2018 tax years and issued a Revenue Agent Report for each federal filer under audit. Based on prior regulatory agreements and general rate-making principles, in fourth quarter 2023 Entergy New Orleans recorded a regulatory liability and associated regulatory charge of $60 million ($44 million net-of-tax). In April 2024, Entergy New Orleans and the City Council entered into a settlement in principle whereby Entergy New Orleans agreed to share with customers $138 million of income tax benefits from the resolution of the 2016–2018 IRS audit. Based on this settlement in principle, in first quarter 2024, Entergy New Orleans increased the associated regulatory liability from $60 million to $138 million and recorded a corresponding $78 million regulatory charge ($57 million net-of-tax). The settlement in principle requires that the regulatory liability be amortized over 25 years beginning in January 2025 with the unamortized balance included in rate base and the amortization treated as a reduction to Entergy New Orleans’s retail revenue requirement. In May 2024 the City Council approved the settlement.
Federal Regulation
See the “Rate, Cost-recovery, and Other Regulation – Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis and Note 2 to the financial statements for a discussion of federal regulation.
Nuclear Matters
See the “Nuclear Matters” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of nuclear matters.
Environmental Risks
Entergy New Orleans’s facilities and operations are subject to regulation by various governmental authorities having jurisdiction over air quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental matters. Management believes that Entergy New Orleans is in substantial compliance with environmental regulations currently applicable to its facilities and operations, with reference to possible exceptions noted in “Regulation of Entergy’s Business - Environmental Regulation” in Part I, Item 1. Because environmental regulations are subject to change, future compliance costs cannot be precisely estimated.
Critical Accounting Estimates
The preparation of Entergy New Orleans’s financial statements in conformity with GAAP requires management to apply appropriate accounting policies and to make estimates and judgments that can have a significant effect on reported financial position, results of operations, and cash flows. Management has identified the following accounting estimates as critical because they are based on assumptions and measurements that involve a high degree of uncertainty, and the potential for future changes in these assumptions and measurements could produce estimates that would have a material effect on the presentation of Entergy New Orleans’s financial position, results of operations, or cash flows.
Entergy New Orleans, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
Utility Regulatory Accounting
See “Utility Regulatory Accounting” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of accounting for the effects of rate regulation.
Taxation and Uncertain Tax Positions
See “Taxation and Uncertain Tax Positions” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion.
Qualified Pension and Other Postretirement Benefits
Entergy New Orleans’s qualified pension and other postretirement reported costs, as described in Note 11 to the financial statements, are affected by numerous factors including the provisions of the plans, changing employee demographics, and various actuarial calculations, assumptions, and accounting mechanisms. See “Qualified Pension and Other Postretirement Benefits” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion. Because of the complexity of these calculations, the long-term nature of these obligations, and the importance of the assumptions utilized, Entergy’s estimate of these costs is a critical accounting estimate.
Cost Sensitivity
The following chart reflects the sensitivity of qualified pension cost and qualified projected benefit obligation to changes in certain actuarial assumptions (dollars in thousands).
| | | | | | | | | | | | | | | | | | | | |
| Actuarial Assumption | | Change in Assumption | | Impact on 2025 Qualified Pension Cost | | Impact on 2024 Qualified Projected Benefit Obligation |
| | | | | Increase/(Decrease) | | |
| Discount rate | | (0.25%) | | $101 | | $2,787 |
| Rate of return on plan assets | | (0.25%) | | $313 | | $— |
| Rate of increase in compensation | | 0.25% | | $140 | | $601 |
The following chart reflects the sensitivity of postretirement benefits cost and accumulated postretirement benefit obligation to changes in certain actuarial assumptions (dollars in thousands).
| | | | | | | | | | | | | | | | | | | | |
| Actuarial Assumption | | Change in Assumption | | Impact on 2025 Postretirement Benefits Cost | | Impact on 2024 Accumulated Postretirement Benefit Obligation |
| | | | | Increase/(Decrease) | | |
| Discount rate | | (0.25%) | | $30 | | $430 |
| Health care cost trend | | 0.25% | | $43 | | $236 |
Each fluctuation above assumes that the other components of the calculation are held constant.
Costs and Employer Contributions
Total qualified pension cost for Entergy New Orleans in 2024 was $1.1 million. Entergy New Orleans anticipates 2025 qualified pension cost to be $1.2 million. Entergy New Orleans contributed $4.9 million to its qualified pension plans in 2024 and estimates 2025 pension contributions will be approximately $5 million,
Entergy New Orleans, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
although the 2025 required pension contributions will be known with more certainty when the January 1, 2025 valuations are completed, which is expected by April 1, 2025.
Total postretirement health care and life insurance benefit income for Entergy New Orleans in 2024 was $5.5 million. Entergy New Orleans expects 2025 postretirement health care and life insurance benefit income of approximately $5.6 million. Entergy New Orleans contributed $134 thousand to its other postretirement plans in 2024 and estimates 2025 contributions will be approximately $205 thousand.
Other Contingencies
See “Other Contingencies” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of the estimates associated with environmental, litigation, and other risks.
New Accounting Pronouncements
See the “New Accounting Pronouncements” section of Note 1 to the financial statements for a discussion of new accounting pronouncements.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the member and Board of Directors of
Entergy New Orleans, LLC and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Entergy New Orleans, LLC and Subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of income, cash flows, and changes in member’s equity (pages 412 through 416 and applicable items in pages 47 through 239), for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Rate and Regulatory Matters — Entergy New Orleans, LLC and Subsidiaries — Refer to Note 2 to the financial statements
Critical Audit Matter Description
The Company is subject to rate regulation by the Council of the City of New Orleans, Louisiana (the “City Council”), which has jurisdiction with respect to the rates of electric companies in the City of New Orleans, Louisiana, and to wholesale rate regulation by the Federal Energy Regulatory Commission (“FERC”). Management has determined it meets the requirements under accounting principles generally accepted in the United States of America to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation. Accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures.
The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Because the City Council and the FERC set the rates the Company is allowed to charge customers based on allowable costs, including a reasonable return on equity, the Company applies accounting standards that require the financial statements to reflect the effects of rate regulation, including the recording of regulatory assets and liabilities. The Company assesses whether the regulatory assets and regulatory liabilities continue to meet the criteria for probable future recovery or settlement at each balance sheet date and when regulatory events occur. This assessment includes consideration of recent rate orders, historical regulatory treatment for similar costs, and factors such as changes in applicable regulatory and political environments. While the Company has indicated it expects to recover costs from customers through regulated rates, there is a risk that the City Council and the FERC will not approve: (1) full recovery of the costs of providing utility service, or (2) full recovery of amounts invested in the utility business and a reasonable return on that investment.
We identified the impact of rate regulation as a critical audit matter due to the judgments made by management to support its assertions about impacted account balances and disclosures and the high degree of subjectivity involved in assessing the impact of future regulatory orders on the financial statements. Management judgments include assessing the likelihood of recovery in future rates of incurred costs and refunds to customers. Auditing management’s judgments regarding the outcome of future decisions by the City Council and the FERC, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities involved specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities and auditor judgment to evaluate management estimates and the subjectivity of audit evidence.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the uncertainty of future decisions by the City Council and the FERC, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities included the following, among others:
•We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We also tested the effectiveness of management’s controls over the initial recognition of amounts as regulatory assets or liabilities and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates.
•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.
•We read relevant regulatory orders issued by the City Council and the FERC for the Company to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the City Council’s and the FERC’s treatment of similar costs under similar circumstances. We evaluated external information and compared to management’s recorded regulatory asset and liability balances for completeness.
•For regulatory matters in process, we inspected the Company’s filings with the City Council and the FERC and orders issued, and considered the filings with the City Council and the FERC by intervenors that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.
•We obtained an analysis from management and support from internal and external legal counsel, as appropriate, regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery or refund or a future reduction in rates.
•We obtained representation from management regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities to assess management’s assertion that amounts are probable of recovery, refund, or a future reduction in rates.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 18, 2025
We have served as the Company’s auditor since 2001.
| | | | | | | | | | | | | | | | | | | | |
| ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES |
| CONSOLIDATED INCOME STATEMENTS |
| | |
| | | For the Years Ended December 31, |
| | | 2024 | | 2023 | | 2022 |
| | | (In Thousands) |
| | | | | | |
| OPERATING REVENUES | | | | | | |
| Electric | | $708,354 | | | $737,974 | | | $855,248 | |
| Natural gas | | 102,210 | | | 105,959 | | | 142,085 | |
| TOTAL | | 810,564 | | | 843,933 | | | 997,333 | |
| | | | | | |
| OPERATING EXPENSES | | | | | | |
| Operation and Maintenance: | | | | | | |
| Fuel, fuel-related expenses, and gas purchased for resale | | 99,055 | | | 122,400 | | | 244,994 | |
| Purchased power | | 252,863 | | | 268,478 | | | 314,283 | |
| Other operation and maintenance | | 172,101 | | | 167,719 | | | 156,653 | |
| Taxes other than income taxes | | 60,476 | | | 62,979 | | | 63,743 | |
| Depreciation and amortization | | 84,937 | | | 81,282 | | | 76,938 | |
| Other regulatory charges (credits) - net | | 85,136 | | | 69,211 | | | 19,596 | |
| TOTAL | | 754,568 | | | 772,069 | | | 876,207 | |
| | | | | | |
| OPERATING INCOME | | 55,996 | | | 71,864 | | | 121,126 | |
| | | | | | |
| OTHER INCOME | | | | | | |
| Allowance for equity funds used during construction | | 2,118 | | | 1,470 | | | 829 | |
| Interest and investment income | | 2,144 | | | 7,154 | | | 742 | |
| Miscellaneous - net | | (115) | | | (4,119) | | | (21) | |
| TOTAL | | 4,147 | | | 4,505 | | | 1,550 | |
| | | | | | |
| INTEREST EXPENSE | | | | | | |
| Interest expense | | 42,337 | | | 38,118 | | | 34,829 | |
| Allowance for borrowed funds used during construction | | (883) | | | (714) | | | (531) | |
| TOTAL | | 41,454 | | | 37,404 | | | 34,298 | |
| | | | | | |
| INCOME BEFORE INCOME TAXES | | 18,689 | | | 38,965 | | | 88,378 | |
| | | | | | |
| Income taxes | | 2,842 | | | (189,973) | | | 24,277 | |
| | | | | | |
| NET INCOME | | $15,847 | | | $228,938 | | | $64,101 | |
| | | | | | |
| See Notes to Financial Statements. | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| | |
| | | For the Years Ended December 31, |
| | | 2024 | | 2023 | | 2022 |
| | | (In Thousands) |
| | | | | | |
| OPERATING ACTIVITIES | | | | | | |
| Net income | | $15,847 | | | $228,938 | | | $64,101 | |
| Adjustments to reconcile net income to net cash flow provided by operating activities: | | | | | | |
| Depreciation and amortization | | 84,937 | | | 81,282 | | | 76,938 | |
| Deferred income taxes, investment tax credits, and non-current taxes accrued | | 12,271 | | | (191,326) | | | 18,685 | |
| Changes in assets and liabilities: | | | | | | |
| Receivables | | (6,955) | | | 29,944 | | | 6,128 | |
| Fuel inventory | | (813) | | | 2,574 | | | (2,927) | |
| Accounts payable | | (4,864) | | | (11,924) | | | 21 | |
| Prepaid taxes and taxes accrued | | 10,360 | | | (11,882) | | | 5,923 | |
| Interest accrued | | 137 | | | 454 | | | 89 | |
| Deferred fuel costs | | 2,247 | | | 4,005 | | | (17,760) | |
| Other working capital accounts | | 192 | | | (9,184) | | | (790) | |
| Provisions for estimated losses | | 2,169 | | | 1,076 | | | 80,719 | |
| Other regulatory assets | | 25,424 | | | 19,745 | | | 46,505 | |
| Other regulatory liabilities | | 175,808 | | | 66,022 | | | (8,639) | |
| Effect of securitization on regulatory asset | | — | | | — | | | 95,920 | |
| Pension and other postretirement funded status | | (21,638) | | | (16,371) | | | 9,769 | |
| Other assets and liabilities | | (8,393) | | | 9,603 | | | (10,919) | |
| Net cash flow provided by operating activities | | 286,729 | | | 202,956 | | | 363,763 | |
| INVESTING ACTIVITIES | | | | | | |
| Construction expenditures | | (158,257) | | | (164,279) | | | (217,864) | |
| Allowance for equity funds used during construction | | 2,118 | | | 1,470 | | | 829 | |
| Changes in money pool receivable - net | | (3,146) | | | 147,254 | | | (110,844) | |
| Payments to storm reserve escrow account | | (5,011) | | | (3,731) | | | (200,000) | |
| Receipts from storm reserve escrow account | | — | | | — | | | 125,000 | |
| Changes in securitization account | | 815 | | | (191) | | | (236) | |
| Decrease (increase) in other investments | | — | | | 675 | | | (675) | |
| Net cash flow used in investing activities | | (163,481) | | | (18,802) | | | (403,790) | |
| FINANCING ACTIVITIES | | | | | | |
| Proceeds from the issuance of long-term debt | | 148,913 | | | 14,610 | | | — | |
| Retirement of long-term debt | | (91,245) | | | (112,525) | | | (12,207) | |
| Repayment of long-term payable due to associated company | | (1,275) | | | (1,306) | | | (1,326) | |
| Contributions from customer for construction | | — | | | 15,000 | | | 15,000 | |
| Changes in money pool payable - net | | (21,651) | | | 21,651 | | | — | |
| Common equity distributions paid | | (125,000) | | | (125,000) | | | — | |
| Other | | (1,239) | | | (1,022) | | | 162 | |
| Net cash flow provided by (used in) financing activities | | (91,497) | | | (188,592) | | | 1,629 | |
| Net increase (decrease) in cash and cash equivalents | | 31,751 | | | (4,438) | | | (38,398) | |
| Cash and cash equivalents at beginning of period | | 26 | | | 4,464 | | | 42,862 | |
| Cash and cash equivalents at end of period | | $31,777 | | | $26 | | | $4,464 | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | | | |
| Cash paid (received) during the period for: | | | | | | |
| Interest - net of amount capitalized | | $40,312 | | | $36,263 | | | $33,343 | |
| Income taxes | | ($17,903) | | | $14,120 | | | $499 | |
| Noncash investing activities: | | | | | | |
| Accrued construction expenditures | | $2,865 | | | $7,068 | | | $11,152 | |
| | | | | | |
| See Notes to Financial Statements. | | | | | | |
| | | | | | | | | | | | | | |
| ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| ASSETS |
| | |
| | | December 31, |
| | | 2024 | | 2023 |
| | | (In Thousands) |
| | | | |
| CURRENT ASSETS | | | | |
| Cash and cash equivalents: | | | | |
| Cash | | $374 | | | $26 | |
| Temporary cash investments | | 31,403 | | | — | |
| Total cash and cash equivalents | | 31,777 | | | 26 | |
| Securitization recovery trust account | | 1,611 | | | 2,426 | |
| Accounts receivable: | | | | |
| Customer | | 65,731 | | | 67,258 | |
| Allowance for doubtful accounts | | (6,735) | | | (7,770) | |
| Associated companies | | 5,844 | | | 1,657 | |
| Other | | 9,467 | | | 5,270 | |
| Accrued unbilled revenues | | 33,296 | | | 31,087 | |
| Total accounts receivable | | 107,603 | | | 97,502 | |
| Deferred fuel costs | | — | | | 6,148 | |
| Fuel inventory - at average cost | | 320 | | | 3,298 | |
| Materials and supplies | | 25,516 | | | 30,019 | |
| Prepaid taxes | | — | | | 1,574 | |
| Current assets held for sale | | 13,100 | | | — | |
| Prepayments and other | | 12,128 | | | 11,482 | |
| TOTAL | | 192,055 | | | 152,475 | |
| | | | |
| OTHER PROPERTY AND INVESTMENTS | | | | |
| | | | |
| Storm reserve escrow account | | 83,742 | | | 78,731 | |
| Other | | 832 | | | 832 | |
| TOTAL | | 84,574 | | | 79,563 | |
| | | | |
| UTILITY PLANT | | | | |
| Electric | | 2,160,165 | | | 2,046,928 | |
| Natural gas | | 43,279 | | | 401,846 | |
| Construction work in progress | | 18,269 | | | 25,424 | |
| TOTAL UTILITY PLANT | | 2,221,713 | | | 2,474,198 | |
| Less - accumulated depreciation and amortization | | 768,305 | | | 858,672 | |
| UTILITY PLANT - NET | | 1,453,408 | | | 1,615,526 | |
| | | | |
| DEFERRED DEBITS AND OTHER ASSETS | | | | |
| Regulatory assets: | | | | |
| Other regulatory assets (includes securitization property of $— as of December 31, 2024 and $506 as of December 31, 2023) | | 133,261 | | | 182,367 | |
| Deferred fuel costs | | 4,080 | | | 4,080 | |
| Non-current assets held for sale | | 284,738 | | | — | |
| Other | | 71,037 | | | 63,964 | |
| TOTAL | | 493,116 | | | 250,411 | |
| | | | |
| TOTAL ASSETS | | $2,223,153 | | | $2,097,975 | |
| | | | |
| See Notes to Financial Statements. | | | | |
| | | | | | | | | | | | | | |
| ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| LIABILITIES AND EQUITY |
| | | | |
| | | December 31, |
| | | 2024 | | 2023 |
| | | (In Thousands) |
| | | | |
| CURRENT LIABILITIES | | | | |
| Currently maturing long-term debt | | $78,000 | | | $85,000 | |
| Payable due to associated company | | 1,140 | | | 1,275 | |
| Accounts payable: | | | | |
| Associated companies | | 45,479 | | | 76,736 | |
| Other | | 43,750 | | | 39,813 | |
| Customer deposits | | 28,834 | | | 32,420 | |
| Taxes accrued | | 8,786 | | | — | |
| Interest accrued | | 8,671 | | | 8,534 | |
| Deferred fuel costs | | 980 | | | — | |
| Other | | 14,427 | | | 8,953 | |
| TOTAL | | 230,067 | | | 252,731 | |
| | | | |
| NON-CURRENT LIABILITIES | | | | |
| Accumulated deferred income taxes and taxes accrued | | 201,541 | | | 195,615 | |
| Accumulated deferred investment tax credits | | 15,617 | | | 16,457 | |
| Regulatory liability for income taxes - net | | 15,000 | | | 36,061 | |
| Other regulatory liabilities | | 260,312 | | | 90,434 | |
| Accumulated provisions | | 90,293 | | | 88,124 | |
| Long-term debt (includes securitization bonds of $— as of December 31, 2024 and $5,415 as of December 31, 2023) | | 650,463 | | | 584,171 | |
| Long-term payable due to associated company | | 5,864 | | | 7,004 | |
| Other | | 56,395 | | | 20,624 | |
| TOTAL | | 1,295,485 | | | 1,038,490 | |
| | | | |
| Commitments and Contingencies | | | | |
| | | | |
| EQUITY | | | | |
| Member's equity | | 697,601 | | | 806,754 | |
| TOTAL | | 697,601 | | | 806,754 | |
| | | | |
| TOTAL LIABILITIES AND EQUITY | | $2,223,153 | | | $2,097,975 | |
| | | | |
| See Notes to Financial Statements. | | | | |
| | | | | | | | |
| ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CHANGES IN MEMBER'S EQUITY |
| For the Years Ended December 31, 2024, 2023, and 2022 |
| | |
| | | Member’s Equity |
| | | (In Thousands) |
| | |
| Balance at December 31, 2021 | | $638,715 | |
| Net income | | 64,101 | |
| Balance at December 31, 2022 | | $702,816 | |
| Net income | | 228,938 | |
| Common equity distributions | | (125,000) | |
| Balance at December 31, 2023 | | $806,754 | |
| Net income | | 15,847 | |
| Common equity distributions | | (125,000) | |
| Balance at December 31, 2024 | | $697,601 | |
| | |
| See Notes to Financial Statements. | | |
ENTERGY TEXAS, INC. AND SUBSIDIARIES
MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS
Results of Operations
2024 Compared to 2023
Net Income
Net income increased $2.3 million primarily due to higher other income and higher retail electric price, partially offset by higher depreciation and amortization expenses and higher other operation and maintenance expenses.
Operating Revenues
Following is an analysis of the change in operating revenues comparing 2024 to 2023:
| | | | | |
| | Amount |
| | (In Millions) |
| 2023 operating revenues | $2,028.6 | |
| Fuel, rider, and other revenues that do not significantly affect net income | 3.4 | |
| Retail electric price | 15.4 | |
| Volume/weather | 2.8 | |
| 2024 operating revenues | $2,050.2 | |
Entergy Texas’s results include revenues from rate mechanisms designed to recover fuel, purchased power, and other costs such that the revenues and expenses associated with these items generally offset and do not affect net income. “Fuel, rider, and other revenues that do not significantly affect net income” includes the revenue variance associated with these items.
The retail electric price variance is primarily due to an increase in base rates effective June 2023 and the implementation of the distribution cost recovery factor rider effective with the first billing cycle in October 2024, partially offset by the implementation of the generation cost recovery relate-back rider for the Hardin County Peaking Facility effective over three months beginning in May 2023. See Note 2 to the financial statements for discussion of the 2022 base rate case, the distribution cost recovery factor rider, and the generation cost recovery rider filings.
The volume/weather variance is primarily due to an increase in commercial usage and an increase in weather-adjusted residential usage, partially offset by the effect of less favorable weather on residential sales. The increases in commercial usage and in weather-adjusted residential usage were primarily due to an increase in customers.
Entergy Texas, Inc. and Subsidiaries
Management’s Financial Discussion and Analysis
Total electric energy sales for Entergy Texas for the years ended December 31, 2024 and 2023 are as follows:
| | | | | | | | | | | | | | | | | |
| 2024 | | 2023 | | % Change |
| (GWh) | | |
| Residential | 6,597 | | | 6,731 | | | (2) | |
| Commercial | 4,879 | | | 4,797 | | | 2 | |
| Industrial | 9,457 | | | 9,343 | | | 1 | |
| Governmental | 269 | | | 275 | | | (2) | |
| Total retail | 21,202 | | | 21,146 | | | — | |
| Sales for resale: | | | | | |
| Non-associated companies | 687 | | | 462 | | | 49 | |
| Total | 21,889 | | | 21,608 | | | 1 | |
See Note 19 to the financial statements for additional discussion of Entergy Texas’s operating revenues.
Other Income Statement Variances
Other operation and maintenance expenses increased primarily due to:
•an increase of $8.7 million in compensation and benefits costs primarily due to higher healthcare claims activity, including lower prescription drug rebates in 2024 as compared to 2023;
•a gain of $6.9 million on the partial sale of a service center in April 2023 as part of an eminent domain proceeding;
•an increase of $3.9 million in bad debt expense;
•an increase of $3.2 million in storm damage provisions;
•an increase of $2.6 million in transmission costs allocated by MISO; and
•several individually insignificant items.
The increase was partially offset by a decrease of $13.3 million in power delivery expenses primarily due to lower vegetation maintenance costs.
Depreciation and amortization expenses increased primarily due to the recognition of $27.6 million in depreciation expense in 2024 for the 2022 base rate case relate back period, effective over six months beginning January 2024. The recognition of depreciation expense for the relate back period was effective over the same period as collections from the relate back surcharge rider and results in no effect on net income. Also contributing to the increase were additions to plant in service. See Note 2 to the financial statements for discussion of the 2022 base rate case.
Other regulatory charges (credits) - net includes the reversal in third quarter 2023 of $21.9 million of regulatory liabilities to reflect the recognition of certain receipts by Entergy Texas under affiliated PPAs that have been resolved. See Note 2 to the financial statements for discussion of the 2022 base rate case.
Other income increased primarily due to an increase in the allowance for equity funds used during construction due to higher construction work in progress in 2024, including the Orange County Advanced Power Station project.
Interest expense increased primarily due to the issuance of $350 million of 5.80% Series mortgage bonds in August 2023 and the issuance of $350 million of 5.55% Series mortgage bonds in August 2024, partially offset by
Entergy Texas, Inc. and Subsidiaries
Management’s Financial Discussion and Analysis
an increase in the allowance for borrowed funds used during construction due to higher construction work in progress in 2024, including the Orange County Advanced Power Station project.
The effective income tax rates were 18.3% for 2024 and 17.8% for 2023. See Note 3 to the financial statements for a reconciliation of the federal statutory rate of 21% to the effective income tax rates and for additional discussion regarding income taxes.
2023 Compared to 2022
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Results of Operations” in Item 7 of Entergy Texas’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of results of operations for 2023 compared to 2022.
Income Tax Legislation and Regulation
See the “Income Tax Legislation and Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of income tax legislation and regulation.
Liquidity and Capital Resources
Cash Flow
Cash flows for the years ended December 31, 2024, 2023, and 2022 were as follows:
| | | | | | | | | | | | | | | | | |
| | 2024 | | 2023 | | 2022 |
| | (In Thousands) |
| Cash and cash equivalents at beginning of period | $21,986 | | | $3,497 | | | $28 | |
| | | | | |
| Net cash provided by (used in): | | | | | |
| Operating activities | 823,649 | | | 641,691 | | | 409,427 | |
| Investing activities | (928,418) | | | (1,125,948) | | | (764,069) | |
| Financing activities | 267,780 | | | 502,746 | | | 358,111 | |
| Net increase in cash and cash equivalents | 163,011 | | | 18,489 | | | 3,469 | |
| | | | | |
| Cash and cash equivalents at end of period | $184,997 | | | $21,986 | | | $3,497 | |
2024 Compared to 2023
Operating Activities
Net cash flow provided by operating activities increased $182 million in 2024 primarily due to lower fuel and purchased power costs and the timing of recovery of fuel and purchased power costs. See Note 2 to the financial statements for a discussion of fuel and purchased power cost recovery. The increase was partially offset by:
•the timing of payments to vendors;
•an increase of $22.6 million in interest paid; and
•an increase of $14.5 million in storm spending primarily due to Hurricane Beryl restoration efforts in 2024.
Entergy Texas, Inc. and Subsidiaries
Management’s Financial Discussion and Analysis
Investing Activities
Net cash flow used in investing activities decreased $197.5 million in 2024 primarily due to money pool activity and cash collateral of $7 million posted in 2023, and subsequently returned to Entergy Texas in 2024, to support Entergy Texas’s obligations to MISO. The decrease was partially offset by:
•an increase of $148.8 million in transmission construction expenditures primarily due to higher capital expenditures as a result of increased development in Entergy Texas’s service area and increased spending on various transmission projects in 2024;
•an increase of $108.2 million in distribution construction expenditures primarily due to higher capital expenditures for storm restoration in 2024 and higher capital expenditures as a result of increased development in Entergy Texas’s service area. The increase in storm restoration expenditures is primarily due to Hurricane Beryl restoration efforts in 2024;
•an increase of $92.4 million in non-nuclear generation construction expenditures primarily due to higher spending on the Legend Power Station project; and
•the partial sale of a service center in April 2023 for $11 million as part of an eminent domain proceeding.
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 $299.4 million in 2024 compared to increasing by $218.4 million in 2023. The money pool is an intercompany cash management program that makes possible intercompany borrowing and lending arrangements, and the money pool and other borrowing arrangements are designed to reduce the Registrant Subsidiaries’ dependence on external short-term borrowings.
Financing Activities
Net cash flow provided by financing activities decreased $235 million in 2024 primarily due to:
•a capital contribution of $150 million received from Entergy Corporation in 2023 in order to maintain Entergy Texas’s capital structure and in anticipation of various capital expenditures;
•the payment of $69 million of common stock dividends in 2024. No common stock dividends were paid in 2023 in order to maintain Entergy Texas’s capital structure; and
•a decrease of $13.2 million in advance payments from customers for construction related to transmission, distribution, and generator interconnection agreements.
2023 Compared to 2022
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Cash Flow” in Item 7 of Entergy Texas’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of operating, investing, and financing cash flow activities for 2023 compared to 2022.
Entergy Texas, Inc. and Subsidiaries
Management’s Financial Discussion and Analysis
Capital Structure
Entergy Texas’s debt to capital ratio is shown in the following table.
| | | | | | | | | | | |
| | December 31,
2024 | | December 31,
2023 |
| Debt to capital | 51.6 | % | | 50.9 | % |
| Effect of excluding securitization bonds | (1.7 | %) | | (2.1 | %) |
| Debt to capital, excluding securitization bonds (non-GAAP) (a) | 49.9 | % | | 48.8 | % |
| Effect of subtracting cash | (1.5 | %) | | (0.2 | %) |
| Net debt to net capital, excluding securitization bonds (non-GAAP) (a) | 48.4 | % | | 48.6 | % |
(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 finance lease obligations and long-term debt, including the currently maturing portion. Capital consists of debt and equity. Net capital consists of capital less cash and cash equivalents. The debt to capital ratio excluding securitization bonds and net debt to net capital ratio excluding securitization bonds are non-GAAP measures. Entergy Texas uses the debt to capital ratios excluding securitization bonds in analyzing its financial condition and believes they provide useful information to its investors and creditors in evaluating Entergy Texas’s financial condition because the securitization bonds are non-recourse to Entergy Texas, as more fully described in Note 5 to the financial statements. Entergy Texas also uses the net debt to net capital ratio excluding securitization bonds in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Texas’s financial condition because net debt indicates Entergy Texas’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.
Entergy Texas seeks to optimize its capital structure in accordance with its regulatory requirements and to control its cost of capital while also maintaining equity capitalization at a level consistent with investment-grade debt ratings. To the extent that operating cash flows are in excess of planned investments, cash may be used to reduce outstanding debt or may be paid as a dividend, to the extent funds are legally available to do so, or both, in appropriate amounts to maintain the capital structure. To the extent that operating cash flows are insufficient to support planned investments, Entergy Texas may issue incremental debt or reduce dividends, or both, to maintain its capital structure. In addition, Entergy Texas may receive equity contributions to maintain its capital structure for certain circumstances such as financing of large transactions that would materially alter the capital structure if financed entirely with debt and reduced dividends.
Uses of Capital
Entergy Texas requires capital resources for:
•construction and other capital investments;
•debt maturities or retirements;
•working capital purposes, including the financing of fuel and purchased power costs; and
•dividend and interest payments.
Entergy Texas, Inc. and Subsidiaries
Management’s Financial Discussion and Analysis
Following are the amounts of Entergy Texas’s planned construction and other capital investments.
| | | | | | | | | | | | | | | | | |
| | 2025 | | 2026 | | 2027 |
| | (In Millions) |
| Planned construction and capital investment: | | | | | |
| Generation | $835 | | | $850 | | | $350 | |
| Transmission | 310 | | | 410 | | | 830 | |
| Distribution | 450 | | | 395 | | | 325 | |
| Utility Support | 45 | | | 55 | | | 30 | |
| Total | $1,640 | | | $1,710 | | | $1,535 | |
In addition to routine capital spending to maintain operations, the planned capital investment estimate for Entergy Texas includes investments in generation projects to modernize, decarbonize, expand, and diversify Entergy Texas’s portfolio, including Orange County Advanced Power Station, Lone Star Power Station, Segno Solar, and Votaw Solar; distribution and Utility support spending to improve reliability, resilience, and customer experience; transmission spending to improve reliability and resilience while also supporting renewables expansion and customer growth; and other investments. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements, governmental actions, including trade-related governmental actions, such as tariffs and other measures, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital, including any changes to governmental programs, such as loans, grants, guarantees, and other subsidies. Entergy Texas is not able to predict the effect of potential changes in regulation and law, changes to governmental programs, such as loans, grants, guarantees, and other subsidies, and trade-related governmental actions, such as tariffs and other measures, on its current and planned capital projects.
Following are the amounts of Entergy Texas’s existing debt and lease obligations (includes estimated interest payments).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2025 | | 2026 | | 2027 | | 2028-2029 | | After 2029 |
| | (In Millions) |
| Long-term debt (a) | $160 | | | $289 | | | $308 | | | $595 | | | $4,944 | |
| Operating leases (b) | $9 | | | $8 | | | $6 | | | $7 | | | $2 | |
| Finance leases (b) | $3 | | | $2 | | | $2 | | | $3 | | | $2 | |
(a)Long-term debt is discussed in Note 5 to the financial statements.
(b)Lease obligations are discussed in Note 10 to the financial statements.
Other Obligations
Entergy Texas currently expects to contribute approximately $7.7 million to its qualified pension plans and approximately $156 thousand to its other postretirement plans in 2025, although the 2025 required pension contributions will be known with more certainty when the January 1, 2025, valuations are completed, which is expected by April 1, 2025. See “Critical Accounting Estimates - Qualified Pension and Other Postretirement Benefits” below and Note 11 to the financial statements for a discussion of qualified pension and other postretirement benefits funding.
Entergy Texas has $69.9 million of unrecognized tax benefits net of unused tax attributes plus interest and payments for which the timing of payments beyond 12 months cannot be reasonably estimated due to uncertainties in the timing of effective settlement of tax positions. See Note 3 to the financial statements for additional information regarding unrecognized tax benefits.
Entergy Texas, Inc. and Subsidiaries
Management’s Financial Discussion and Analysis
In addition, Entergy Texas enters into fuel and purchased power agreements that contain minimum purchase obligations. Entergy Texas has rate mechanisms in place to recover fuel, purchased power, and associated costs incurred under these purchase obligations.
As a subsidiary, Entergy Texas dividends its earnings to Entergy Corporation at a percentage determined monthly.
Orange County Advanced Power Station
In September 2021, Entergy Texas filed an application seeking PUCT approval to amend Entergy Texas’s certificate of convenience and necessity to construct, own, and operate the Orange County Advanced Power Station, a new 1,215 MW combined-cycle combustion turbine facility to be located in Bridge City, Texas at an initially-estimated expected total cost of $1.2 billion inclusive of the estimated costs of the generation facilities, transmission upgrades, contingency, an allowance for funds used during construction, and necessary regulatory expenses, among others. The project includes combustion turbine technology with dual fuel capability, able to co-fire up to 30% hydrogen by volume upon commercial operation and upgradable to support 100% hydrogen operations in the future. In December 2021 the PUCT referred the proceeding to the State Office of Administrative Hearings. In March 2022 certain intervenors filed testimony opposing the hydrogen co-firing component of the proposed project and others filed testimony opposing the project outright. Also in March 2022 the PUCT staff filed testimony opposing the hydrogen co-firing component of the proposed project, but otherwise taking no specific position on the merits of the project. The PUCT staff also proposed that the PUCT establish a maximum amount that Entergy Texas may recover in rates attributable to the project. In April 2022, Entergy Texas filed rebuttal testimony addressing and rebutting these various arguments. The hearing on the merits was held in June 2022, and post-hearing briefs were submitted in July 2022. In September 2022 the ALJs with the State Office of Administrative Hearings issued a proposal for decision recommending the PUCT approve Entergy Texas’s application for certification of Orange County Advanced Power Station subject to certain conditions, including a cap on cost recovery at $1.37 billion, the exclusion of investment associated with co-firing hydrogen, weatherization requirements, and customer receipt of any contractual benefits associated with the facility’s guaranteed heat rate. In October 2022 the parties in the proceeding filed exceptions and replies to exceptions to the proposal for decision. Also in October 2022, Entergy Texas filed with the PUCT information regarding a new fixed pricing option for an estimated project cost of approximately $1.55 billion associated with Entergy Texas’s issuance of limited notice to proceed by mid-November 2022. In November 2022 the PUCT issued a final order approving the requested amendment to Entergy Texas’s certificate of convenience and necessity to construct, own, and operate the Orange County Advanced Power Station without the investment associated with hydrogen co-firing capability, without a cap on cost recovery, and subject to certain conditions, including weatherization requirements and customer receipt of any contractual benefits associated with the facility’s guaranteed heat rate.
In December 2022, Texas Industrial Energy Consumers and Sierra Club filed motions for rehearing of the PUCT’s final order alleging the PUCT erred in granting the certification of the Orange County Advanced Power Station, in not imposing a cost cap, in including certain findings related to the reasonableness of Entergy Texas’s request for proposals from which the Orange County Advanced Power Station was selected, and in other regards. Also in December 2022, Entergy Texas filed a response to the motions for rehearing refuting the points raised therein. In January 2023 the PUCT issued letters noting that it voted to consider Texas Industrial Energy Consumers’ motion for rehearing at its upcoming January 2023 open meeting and voted not to consider Sierra Club’s motion for rehearing at an open meeting. At the January 2023 open meeting, the PUCT voted to grant Texas Industrial Energy Consumers’ motion for rehearing for the limited purpose of issuing an order on rehearing that excludes three findings related to Entergy Texas’s request for proposals. The order on rehearing does not change the PUCT’s certification of the Orange County Advanced Power Station or the conditions placed thereon in the PUCT’s November 2022 final order. Construction is in progress, and subject to receipt of required permits, the facility is expected to be in service by mid-2026.
Entergy Texas, Inc. and Subsidiaries
Management’s Financial Discussion and Analysis
Legend Power Station and Lone Star Power Station
In June 2024, Entergy Texas filed an application seeking PUCT approval to amend Entergy Texas’s certificate of convenience and necessity to construct, own, and operate the Legend Power Station, a 754 MW combined-cycle combustion turbine facility, which will be enabled for future carbon capture and storage and for hydrogen co-firing optionality, to be located in Jefferson County, Texas, and the Lone Star Power Station, a 453 MW simple-cycle combustion turbine facility, which will be enabled with hydrogen co-firing optionality, to be located in Liberty County, Texas. In its application, Entergy Texas noted that the Legend Power Station was expected to cost an estimated $1.46 billion and the Lone Star Power Station was expected to cost an estimated $735.3 million, in each case inclusive of the estimated costs of the generation facilities, interconnection costs, transmission network upgrades, and an allowance for funds used during construction. As described in the application, Entergy Texas is considering alternative financing approaches for the Legend Power Station and plans to pursue the financing option that is in the best interest of its customers. In July 2024 the PUCT referred the proceeding to the State Office of Administrative Hearings and, also in July 2024, the ALJ with the State Office of Administrative Hearings adopted a procedural schedule, with a hearing on the merits scheduled to begin in October 2024. In September 2024, Entergy Texas filed, and the ALJ with the State Office of Administrative Hearings granted, a motion to extend the procedural schedule in this proceeding in order to address certain developments relating to the cost and scope of the Legend Power Station and the Lone Star Power Station. In December 2024, Entergy Texas filed supplemental testimony and exhibits addressing the cost and scope developments associated with the Legend Power Station and the Lone Star Power Station in further support of its application. The cost and scope developments include cost estimate increases of $139 million for Legend Power Station and $63.7 million for Lone Star Power Station and the consideration of an alternate site for Lone Star Power Station, which would reduce the estimated cost increase of the Lone Star Power Station to $36.2 million. Also in December 2024, the ALJ with the State Office of Administrative Hearings adopted a procedural schedule with a hearing on the merits to be held in April 2025. A PUCT decision is expected in July 2025. Subject to receipt of required regulatory approval and other conditions, both facilities are expected to be in service by mid-2028.
Segno Solar and Votaw Solar
In July 2024, Entergy Texas filed an application seeking PUCT approval to amend Entergy Texas’s certificate of convenience and necessity to construct, own, and operate the Segno Solar facility, a 170 MW solar facility to be located in Polk County, Texas, and the Votaw Solar facility, a 141 MW solar facility to be located in Hardin County, Texas. The Segno Solar facility will cost an estimated $351.6 million, and the Votaw Solar facility will cost an estimated $303.8 million, in each case inclusive of estimated transmission interconnection and upgrade costs. In September 2024 the PUCT referred the proceeding to the State Office of Administrative Hearings. In December 2024 the ALJs with the State Office of Administrative Hearings adopted a revised agreed procedural schedule, with a hearing on the merits to be held in March 2025. In January 2025 certain intervenors and the PUCT staff filed testimony opposing Entergy Texas’s application. The opposing testimony argues that the proposed generation additions will have a net cost to customers, and it also challenges the design and effectiveness of the voluntary renewable energy tariff. In addition, the opposing testimony recommends that the PUCT impose conditions on any approval of Entergy Texas’s application. The conditions that certain intervenors and the PUCT staff propose include guarantees related to customer net benefits, resource production, independent investigation of any material cost overruns, and the addition of a mandatory sleeving tariff. Entergy Texas plans to file rebuttal testimony in February 2025. A PUCT decision is expected in third quarter 2025. Subject to receipt of required regulatory approval and other conditions, the Segno Solar facility is expected to be in service by early 2027, and the Votaw Solar facility is expected to be in service by mid-2028.
Resilience and Grid Hardening
In June 2024, Entergy Texas filed an application with the PUCT requesting approval of Phase I of its Texas Future Ready Resiliency Plan, a cost-effective set of measures to begin accelerating the resiliency of Entergy Texas’s transmission and distribution system. Phase I is comprised of projects totaling approximately $335.1
Entergy Texas, Inc. and Subsidiaries
Management’s Financial Discussion and Analysis
million, including approximately $137 million of projects to be funded by Entergy Texas and approximately $198 million of projects contingent upon Entergy Texas’s receipt of grant funds in that amount from the Texas Energy Fund. The projects in Phase I include distribution and transmission hardening and modernization projects and targeted vegetation management projects to mitigate the risk of wildfire. These projects are expected to be implemented within approximately three years of PUCT approval. In October 2024, Entergy Texas filed an unopposed settlement that would resolve all issues in the proceeding and the PUCT staff filed testimony in support of the unopposed settlement. In January 2025 the PUCT unanimously approved Phase I of Entergy Texas’s Texas Future Ready Resiliency Plan, including the approximately $137 million of projects to be funded by Entergy Texas and application of performance metrics consistent with the unopposed settlement. The PUCT clarified that, while not part of Entergy Texas’s Phase I plan, Entergy Texas is permitted to pursue the remaining $198 million of identified projects and Texas Energy Fund grant funding for those projects. In February 2025 the PUCT issued an order adopting a new rule establishing the procedures for application to the grant fund and Entergy Texas intends to pursue an application.
Hurricane Beryl
In July 2024, Hurricane Beryl caused extensive damage to Entergy Texas’s service area. The storm resulted in widespread power outages, as a result of extensive debris and damage to distribution and transmission infrastructure, and the loss of sales during the power outages. Total restoration costs for the repair and/or replacement of Entergy Texas’s electric facilities damaged by Hurricane Beryl are currently estimated to be approximately $85 million. Based on the historic treatment of such costs in Entergy Texas’s service area, management believes that recovery of restoration costs is probable. There are well established mechanisms and precedent for addressing these catastrophic events and providing for recovery of prudently incurred storm costs in accordance with applicable regulatory and legal principles. Entergy Texas expects to recover the majority of the restoration costs associated with Hurricane Beryl through its transmission and distribution cost recovery factor riders.
Sources of Capital
Entergy Texas’s sources to meet its capital requirements include:
•internally generated funds;
•cash on hand;
•the Entergy system money pool;
•debt or preferred stock issuances, including debt issuances to refund or retire currently outstanding or maturing indebtedness;
•capital contributions; and
•bank financing under new or existing facilities.
Circumstances such as weather patterns, fuel and purchased power price fluctuations, and unanticipated expenses, including unscheduled plant outages and storms, could affect the timing and level of internally generated funds in the future. In addition to the financings necessary to meet capital requirements and contractual obligations, Entergy Texas expects to continue, when economically feasible, to retire higher-cost debt and replace it with lower-cost debt if market conditions permit.
All debt and common and preferred stock issuances by Entergy Texas require prior regulatory approval. Debt issuances are also subject to requirements set forth in its bond indenture and other agreements. Entergy Texas has sufficient capacity under these tests to meet its foreseeable capital needs for the next twelve months and beyond.
Entergy Texas, Inc. and Subsidiaries
Management’s Financial Discussion and Analysis
Entergy Texas’s receivables from or (payables to) the money pool were as follows as of December 31 for each of the following years.
| | | | | | | | | | | | | | | | | | | | |
| 2024 | | 2023 | | 2022 | | 2021 |
| (In Thousands) |
| $18,504 | | $317,882 | | $99,468 | | ($79,594) |
See Note 4 to the financial statements for a description of the money pool.
Entergy Texas has a credit facility in the amount of $300 million scheduled to expire in June 2029. The credit facility includes fronting commitments for the issuance of letters of credit against $25 million of the borrowing capacity of the facility. As of December 31, 2024, there were no cash borrowings and $1.1 million in letters of credit outstanding under the credit facility. In addition, Entergy Texas is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO. As of December 31, 2024, $93.4 million in letters of credit were outstanding under Entergy Texas’s uncommitted letter of credit facility. See Note 4 to the financial statements for additional discussion of the credit facilities.
Entergy Texas obtained authorizations from the FERC through January 2027 for short-term borrowings, not to exceed an aggregate amount of $200 million at any time outstanding, and long-term borrowings and security issuances. See Note 4 to the financial statements for further discussion of Entergy Texas’s short-term borrowing limits.
State and Local Rate Regulation and Fuel-Cost Recovery
The rates that Entergy Texas charges for its services significantly influence its financial position, results of operations, and liquidity. Entergy Texas is regulated, and the rates charged to its customers are determined in regulatory proceedings. A governmental agency, the PUCT, is primarily responsible for approval of the rates charged to customers.
Filings with the PUCT and Texas Cities
Retail Rates
2022 Base Rate Case
In July 2022, Entergy Texas filed a base rate case with the PUCT seeking a net increase in base rates of approximately $131.4 million. The base rate case was based on a 12-month test year ending December 31, 2021. Key drivers of the requested increase were changes in depreciation rates as the result of a depreciation study and an increase in the return on equity. In addition, Entergy Texas included capital additions placed into service for the period of January 1, 2018 through December 31, 2021, including those additions reflected in the then-effective distribution and transmission cost recovery factor riders and the generation cost recovery rider, all of which were reset to zero in June 2023 as a result of this proceeding. In July 2022 the PUCT referred the proceeding to the State Office of Administrative Hearings. In October 2022 intervenors filed direct testimony challenging and supporting various aspects of Entergy Texas’s rate case application. The key issues addressed included the appropriate return on equity, generation plant deactivations, depreciation rates, and proposed tariffs related to electric vehicles. In November 2022 the PUCT staff filed direct testimony addressing a similar set of issues and recommending a reduction of $50.7 million to Entergy Texas’s overall cost of service associated with the requested net increase in base rates of approximately $131.4 million. Entergy Texas filed rebuttal testimony in November 2022.
In May 2023, Entergy Texas filed on behalf of the parties an unopposed settlement resolving all issues in the proceeding, except for issues related to electric vehicle charging infrastructure which were eventually severed to a separate proceeding and resolved in October 2024, and Entergy Texas filed an agreed motion for interim rates,
Entergy Texas, Inc. and Subsidiaries
Management’s Financial Discussion and Analysis
subject to refund or surcharge to the extent that the interim rates differ from the final approved rates. The unopposed settlement reflected a net base rate increase to be effective and relate back to December 2022 of $54 million, exclusive of, and incremental to, the costs being realigned from the distribution and transmission cost recovery factor riders and the generation cost recovery rider and $4.8 million of rate case expenses to be recovered through a rider over a period of 36 months. The net base rate increase of $54 million includes updated depreciation rates and a total annual revenue requirement of $14.5 million for the accrual of a self-insured storm reserve and the recovery of the regulatory assets for the pension and postretirement benefits expense deferral, costs associated with the COVID-19 pandemic, and retired non-advanced metering system electric meters. In May 2023 the ALJ with the State Office of Administrative Hearings granted the motion for interim rates, which became effective in June 2023. Additionally, the ALJ remanded the proceeding to the PUCT to consider the settlement. In August 2023 the PUCT issued an order approving the unopposed settlement. Concurrently, Entergy Texas recorded the reversal of $21.9 million of regulatory liabilities to reflect the recognition of certain receipts by Entergy Texas under affiliated PPAs that have been resolved.
Following the PUCT’s approval of the unopposed settlement in August 2023, Entergy Texas recorded a regulatory liability of $10.3 million, which reflected the net effects of higher depreciation and amortizations for the relate back period, partially offset by the relate back of base rate revenues that would have been collected had the approved rates been in effect for the period from December 2022 through June 2023, the date the new base rates were implemented on an interim basis. In October 2023, Entergy Texas filed a relate back surcharge rider to collect over six months beginning in January 2024 an additional approximately $24.6 million, which was the revenue requirement associated with the relate back of rates from December 2022 through June 2023, including carrying costs, as authorized by the PUCT’s August 2023 order. In November 2023, Entergy Texas filed an amended relate back surcharge rider to collect approximately $24.1 million based on a revised carrying cost rate. The amended relate back surcharge rider was approved by the PUCT in December 2023. The higher depreciation and amortizations for the relate back period were also recognized over the six months beginning in January 2024, resulting in no effect on net income from the collection of the relate back surcharge rider.
Distribution Cost Recovery Factor (DCRF) Rider
In June 2024, Entergy Texas filed with the PUCT a request to set a new DCRF rider. The new rider was designed to collect from Entergy Texas’s retail customers approximately $40.3 million annually based on its capital invested in distribution between January 1, 2022 and March 31, 2024. In September 2024 the PUCT approved the DCRF rider, consistent with Entergy Texas’s as-filed request, and rates became effective with the first billing cycle in October 2024.
In September 2024, Entergy Texas filed with the PUCT a request to amend its DCRF rider. The amended rider was designed to collect from Entergy Texas’s retail customers approximately $48.9 million annually, or $8.6 million in incremental annual revenues beyond Entergy Texas’s then-effective DCRF rider based on its capital invested in distribution between April 1, 2024 and June 30, 2024. In December 2024, Entergy Texas filed an errata to revise its DCRF application for minor corrections, which decreased the requested annual revenue requirement to $48.5 million. The amended request represented an incremental increase of $8.2 million in annual revenues beyond Entergy Texas’s then-effective DCRF rider. Also in December 2024 the PUCT approved the DCRF rider, consistent with Entergy Texas’s filed errata, and rates became effective on December 20, 2024.
Transmission Cost Recovery Factor (TCRF) Rider
In December 2018, Entergy Texas filed with the PUCT a request to set a new TCRF rider. The new TCRF rider was designed to collect approximately $2.7 million annually from Entergy Texas’s retail customers based on its capital invested in transmission between January 1, 2018 and September 30, 2018. In April 2019 parties filed testimony proposing a load growth adjustment, which would fully offset Entergy Texas’s proposed TCRF revenue requirement. In July 2019 the PUCT granted Entergy Texas’s application as filed to begin recovery of the requested $2.7 million annual revenue requirement, rejecting opposing parties’ proposed adjustment; however, the PUCT
Entergy Texas, Inc. and Subsidiaries
Management’s Financial Discussion and Analysis
found that the question of prudence of the actual investment costs should be determined in Entergy Texas’s next rate case similar to the procedure used for the costs recovered through the DCRF rider. In October 2019 the PUCT issued an order on a motion for rehearing, clarifying and affirming its prior order granting Entergy Texas’s application as filed. Also in October 2019 a second motion for rehearing was filed, and Entergy Texas filed a response in opposition to the motion. The second motion for rehearing was overruled by operation of law. In December 2019, Texas Industrial Energy Consumers filed an appeal to the PUCT order in district court alleging that the PUCT erred in declining to apply a load growth adjustment.
In October 2021, Entergy Texas filed with the PUCT a request to amend its TCRF rider. The amended rider was designed to collect from Entergy Texas’s retail customers approximately $66.1 million annually, or $15.1 million in incremental annual revenues beyond Entergy Texas’s then-effective TCRF rider based on its capital invested in transmission between September 1, 2020 and July 31, 2021 and changes in approved transmission charges. In January 2022 the PUCT referred the proceeding to the State Office of Administrative Hearings. In February 2022 the parties filed an unopposed settlement recommending that Entergy Texas be allowed to collect its full requested TCRF revenue requirement with interim rates effective March 2022. In February 2022 the ALJ granted the motion for interim rates, admitted evidence, and remanded the case to the PUCT for consideration of a final order at a future open meeting. In June 2022 the PUCT issued an order approving the settlement.
In October 2024, Entergy Texas filed with the PUCT a request to amend its TCRF rider, which was previously reset to zero in June 2023 as a result of the 2022 base rate case. The proposed rider is designed to collect from Entergy Texas’s retail customers approximately $9.7 million annually based on its capital invested in transmission between January 1, 2022 and June 30, 2024 and changes in other transmission charges. In December 2024 the PUCT staff filed a recommendation that the PUCT approve Entergy Texas’s as-filed application. In February 2025 the PUCT staff issued a proposed order that, if approved by the PUCT, would approve Entergy Texas’s TCRF rider as filed.
Generation Cost Recovery Rider
In October 2020, Entergy Texas filed an application to establish a generation cost recovery rider to begin recovering a return of and on its generation capital investment in the Montgomery County Power Station. Entergy Texas filed an unopposed settlement agreement in December 2020, and the PUCT approved the generation cost recovery rider settlement rates on an interim basis in January 2021. In March 2021, Entergy Texas filed to update its generation cost recovery rider, and an unopposed settlement agreement filed by Entergy Texas on behalf of the parties in October 2021 was approved by the PUCT in January 2022. In February 2022, Entergy Texas filed a relate-back rider to collect over five months an additional approximately $5 million, which was the difference between the interim revenue requirement approved in January 2021 and the revenue requirement approved in January 2022 reflecting Entergy Texas’s full generation capital investment and ownership in Montgomery County Power Station on January 1, 2021, plus carrying costs from January 2021 through January 2022 when the updated revenue requirement took effect. The PUCT approved the relate-back rider consistent with Entergy Texas’s as-filed request, and rates became effective over a five-month period, in August 2022.
In December 2020, Entergy Texas also filed an application to amend its generation cost recovery rider to reflect its acquisition of the Hardin County Peaking Facility, which closed in June 2021. Because Hardin was to be acquired in the future, the initial generation cost recovery rider rates proposed in the application represented no change from the generation cost recovery rider rates established in Entergy Texas’s previous generation cost recovery rider proceeding. In July 2021 the PUCT issued an order approving the application. In August 2021, Entergy Texas filed an update application to recover its actual investment in the acquisition of the Hardin County Peaking Facility, and in January 2022, Entergy Texas filed an update to its application to align the requested revenue requirement with the terms of the generation cost recovery rider settlement approved by the PUCT in January 2022. In April 2022, Entergy Texas filed on behalf of the parties a unanimous settlement agreement that would adjust its generation cost recovery rider to recover an annual revenue requirement of approximately $92.8 million, which was $4.5 million in incremental annual revenue above the revenue requirement approved in
Entergy Texas, Inc. and Subsidiaries
Management’s Financial Discussion and Analysis
January 2022 described above and related to Entergy Texas’s investment in the Montgomery County Power Station. The PUCT approved the settlement agreement and rates became effective in August 2022. In September 2022, Entergy Texas filed a relate-back rider designed to collect over three months an additional approximately $5.7 million, which is the revenue requirement, plus carrying costs, associated with Entergy Texas’s acquisition of Hardin County Peaking Facility from June 2021 through August 2022 when the updated revenue requirement took effect. In April 2023 the PUCT approved Entergy Texas’s as-filed request with rates effective over three months beginning in May 2023.
Fuel and purchased power cost recovery
Entergy Texas’s rate schedules include a fixed fuel factor to recover fuel and purchased power costs, including interest, not recovered in base rates. Historically, semi-annual revisions of the fixed fuel factor have been made in March and September based on the market price of natural gas and changes in fuel mix. The amounts collected under Entergy Texas’s fixed fuel factor and any interim surcharge or refund are subject to fuel reconciliation proceedings before the PUCT. In 2023 the Texas legislature modified the Texas Utilities Code to provide that material over- and under-recovered fuel balances are to be refunded or surcharged through interim fuel adjustments and that fuel reconciliations must be filed at least once every two years. Entergy Texas expects the PUCT to undertake a rulemaking to effectuate the new legislation in 2025.
In May 2022, Entergy Texas filed an application with the PUCT to implement an interim fuel surcharge to collect the cumulative under-recovery of approximately $51.7 million, including interest, of fuel and purchased power costs incurred from May 1, 2020 through December 31, 2021. The under-recovery balance was primarily attributable to the impacts of Winter Storm Uri, including historically high natural gas prices, partially offset by settlements received by Entergy Texas from MISO related to Hurricane Laura. Entergy Texas proposed that the interim fuel surcharge be assessed over a period of six months beginning with the first billing cycle after the PUCT issues a final order, but no later than the first billing cycle of September 2022. Also in May 2022, the PUCT referred the proceeding to the State Office of Administrative Hearings. In July 2022, Entergy Texas filed on behalf of the parties an unopposed settlement resolving all issues in the proceeding. In addition, Entergy Texas filed on behalf of the parties a motion to admit evidence, to approve interim rates as requested in the initial application, and to remand the proceeding to the PUCT to consider the unopposed settlement. In August 2022 the ALJ with the State Office of Administrative Hearings issued an order granting Entergy Texas’s motion, approving interim rates effective with the first billing cycle of September 2022, and remanding the case to the PUCT for final approval. The interim fuel surcharge was approved by the PUCT in January 2023.
In September 2022, Entergy Texas filed an application with the PUCT to reconcile its fuel and purchased power costs for the period from April 2019 through March 2022. During the reconciliation period, Entergy Texas incurred approximately $1.7 billion in eligible fuel and purchased power expenses, net of certain revenues credited to such expenses and other adjustments. As of the end of the reconciliation period, Entergy Texas’s cumulative under-recovery balance was approximately $103.1 million, including interest, which Entergy Texas requested authority to carry over as the beginning balance for the subsequent reconciliation period beginning April 2022, pending future surcharges or refunds as approved by the PUCT. In November 2022 the PUCT referred the proceeding to the State Office of Administrative Hearings. In July 2023, Entergy Texas filed an unopposed settlement, supporting testimony, and an agreed motion to admit evidence and remand the proceeding to the PUCT. Pursuant to the unopposed settlement, Entergy Texas would receive no disallowance of fuel costs incurred over the three-year reconciliation period and retain $9.3 million in margins from off-system sales made during the reconciliation period, resulting in a cumulative under-recovery balance of approximately $99.7 million, including interest, as of the end of the reconciliation period. In July 2023 the ALJ with the State Office of Administrative Hearings granted the motion to admit evidence and remanded the proceeding to the PUCT for consideration of the unopposed settlement. The PUCT approved the settlement in September 2023.
In September 2024, Entergy Texas filed an application with the PUCT to reconcile its fuel and purchased power costs for the period from April 2022 through March 2024. During the reconciliation period, Entergy Texas
Entergy Texas, Inc. and Subsidiaries
Management’s Financial Discussion and Analysis
incurred approximately $1.6 billion in eligible fuel and purchased power expenses to generate and purchase electricity to serve its customers, net of certain revenues credited to such expenses and other adjustments. Entergy Texas’s cumulative under-recovery balance for the reconciliation period was approximately $30 million, including interest, which Entergy Texas requested authority to carry over as part of the cumulative fuel balance for the subsequent reconciliation period beginning April 2024. In November 2024 the PUCT referred the proceeding to the State Office of Administrative Hearings. In December 2024 the ALJs with the State Office of Administrative Hearings adopted a procedural schedule, with a hearing on the merits scheduled for May 2025. A PUCT decision is expected in third quarter 2025.
In December 2024, Entergy Texas filed an application with the PUCT to implement an interim fuel refund of $45.5 million, including interest. Entergy Texas proposed that the interim fuel refund be implemented over a three-month period beginning with the first billing cycle in February 2025 for residential and other small customers and through a one-time credit, or surcharge depending on historical usage for the respective customer, for certain transmission voltage level and seasonal agricultural customers in February 2025. Also in December 2024 the PUCT referred the proceeding to the State Office of Administrative Hearings. In January 2025 the ALJ with the State Office of Administrative Hearings issued an order approving the interim fuel refund consistent with Entergy Texas’s application and, because no hearing was requested in the proceeding, dismissing the case from the State Office of Administrative Hearings and the PUCT.
Federal Regulation
See the “Rate, Cost-recovery, and Other Regulation – Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis and Note 2 to the financial statements for a discussion of federal regulation.
Nuclear Matters
See the “Nuclear Matters” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of nuclear matters.
Industrial and Commercial Customers
Entergy Texas’s large industrial and commercial customers continually explore ways to reduce their energy costs. In particular, cogeneration is an option available to a portion of Entergy Texas’s industrial customer base. Entergy Texas responds by working with industrial and commercial customers and negotiating electric service contracts to provide, under existing rate schedules, competitive rates that match specific customer needs and load profiles. Entergy Texas actively participates in economic development, customer retention, and reclamation activities to increase industrial and commercial demand, from both new and existing customers.
Environmental Risks
Entergy Texas’s facilities and operations are subject to regulation by various governmental authorities having jurisdiction over air quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental matters. Management believes that Entergy Texas is in substantial compliance with environmental regulations currently applicable to its facilities and operations, with reference to possible exceptions noted in “Regulation of Entergy’s Business - Environmental Regulation” in Part I, Item 1. Because environmental regulations are subject to change, future compliance costs cannot be precisely estimated.
Critical Accounting Estimates
The preparation of Entergy Texas’s financial statements in conformity with GAAP requires management to apply appropriate accounting policies and to make estimates and judgments that can have a significant effect on
Entergy Texas, Inc. and Subsidiaries
Management’s Financial Discussion and Analysis
reported financial position, results of operations, and cash flows. Management has identified the following accounting estimates as critical because they are based on assumptions and measurements that involve a high degree of uncertainty, and the potential for future changes in these assumptions and measurements could produce estimates that would have a material effect on the presentation of Entergy Texas’s financial position, results of operations, or cash flows.
Utility Regulatory Accounting
See “Utility Regulatory Accounting” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of accounting for the effects of rate regulation.
Taxation and Uncertain Tax Positions
See “Taxation and Uncertain Tax Positions” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion.
Qualified Pension and Other Postretirement Benefits
Entergy Texas’s qualified pension and other postretirement reported costs, as described in Note 11 to the financial statements, are affected by numerous factors including the provisions of the plans, changing employee demographics, and various actuarial calculations, assumptions, and accounting mechanisms. See “Qualified Pension and Other Postretirement Benefits” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion. Because of the complexity of these calculations, the long-term nature of these obligations, and the importance of the assumptions utilized, Entergy’s estimate of these costs is a critical accounting estimate.
Cost Sensitivity
The following chart reflects the sensitivity of qualified pension cost and qualified projected benefit obligation to changes in certain actuarial assumptions (dollars in thousands).
| | | | | | | | | | | | | | | | | | | | |
| Actuarial Assumption | | Change in Assumption | | Impact on 2025 Qualified Pension Cost | | Impact on 2024 Qualified Projected Benefit Obligation |
| | | | | Increase/(Decrease) | | |
| Discount rate | | (0.25%) | | $145 | | $4,710 |
| Rate of return on plan assets | | (0.25%) | | $570 | | $— |
| Rate of increase in compensation | | 0.25% | | $202 | | $865 |
The following chart reflects the sensitivity of postretirement benefits cost and accumulated postretirement benefit obligation changes in certain actuarial assumptions (dollars in thousands).
| | | | | | | | | | | | | | | | | | | | |
| Actuarial Assumption | | Change in Assumption | | Impact on 2025 Postretirement Benefits Cost | | Impact on 2024 Accumulated Postretirement Benefit Obligation |
| | | | | Increase/(Decrease) | | |
| Discount rate | | (0.25%) | | $16 | | $1,029 |
| Health care cost trend | | 0.25% | | $50 | | $611 |
Each fluctuation above assumes that the other components of the calculation are held constant.
Entergy Texas, Inc. and Subsidiaries
Management’s Financial Discussion and Analysis
Costs and Employer Contributions
Total qualified pension cost for Entergy Texas in 2024 was $436 thousand. Entergy Texas anticipates 2025 qualified pension cost to be $2.3 million. Entergy Texas contributed $8.3 million to its qualified pension plans in 2024 and estimates 2025 pension contributions will be approximately $7.7 million, although the 2025 required pension contributions will be known with more certainty when the January 1, 2025 valuations are completed, which is expected by April 1, 2025.
Total postretirement health care and life insurance benefit income for Entergy Texas in 2024 was $10.9 million. Entergy Texas expects 2025 postretirement health care and life insurance benefit income to approximate $10.6 million. Entergy Texas contributed $690 thousand to its other postretirement plans in 2024 and estimates 2025 contributions will be approximately $156 thousand.
Other Contingencies
See “Other Contingencies” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of the estimates associated with environmental, litigation, and other risks.
New Accounting Pronouncements
See the “New Accounting Pronouncements” section of Note 1 to the financial statements for a discussion of new accounting pronouncements.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and Board of Directors of
Entergy Texas, Inc. and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Entergy Texas, Inc. and Subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of income, cash flows, and changes in equity (pages 435 through 440 and applicable items in pages 47 through 239), for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Rate and Regulatory Matters — Entergy Texas, Inc. and Subsidiaries — Refer to Note 2 to the financial statements
Critical Audit Matter Description
The Company is subject to rate regulation by the Public Utility Commission of Texas (the “PUCT”), which has jurisdiction with respect to the rates of electric companies in Texas, and to wholesale rate regulation by the Federal Energy Regulatory Commission (“FERC”). Management has determined it meets the requirements under accounting principles generally accepted in the United States of America to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation. Accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures.
The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Because the PUCT and the FERC set the rates the Company is allowed to charge customers based on allowable costs, including a reasonable return on equity, the Company applies accounting standards that require the financial statements to reflect the effects of rate regulation, including the recording of regulatory assets and liabilities. The Company assesses whether the regulatory assets and regulatory liabilities continue to meet the criteria for probable future recovery or settlement at each balance sheet date and when regulatory events occur. This assessment includes consideration of recent rate orders, historical regulatory treatment for similar costs, and factors such as changes in applicable regulatory and political environments. While the Company has indicated it expects to recover costs from customers through regulated rates, there is a risk that the PUCT and the FERC will not approve: (1) full recovery of the costs of providing utility service, or (2) full recovery of amounts invested in the utility business and a reasonable return on that investment.
We identified the impact of rate regulation as a critical audit matter due to the judgments made by management to support its assertions about impacted account balances and disclosures and the high degree of subjectivity involved in assessing the impact of future regulatory orders on the financial statements. Management judgments include assessing the likelihood of recovery in future rates of incurred costs and refunds to customers. Auditing management’s judgments regarding the outcome of future decisions by the PUCT and the FERC, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities involved specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities and auditor judgment to evaluate management estimates and the subjectivity of audit evidence.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the uncertainty of future decisions by the PUCT and the FERC, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities included the following, among others:
•We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We also tested the effectiveness of management’s controls over the initial recognition of amounts as regulatory assets or liabilities and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates.
•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.
•We read relevant regulatory orders issued by the PUCT and the FERC for the Company to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the PUCT’s and the FERC’s treatment of similar costs under similar circumstances. We evaluated external information and compared to management’s recorded regulatory asset and liability balances for completeness.
•For regulatory matters in process, we inspected the Company’s filings with the PUCT and the FERC and orders issued, and considered the filings with the PUCT and the FERC by intervenors that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.
•We obtained an analysis from management and support from internal and external legal counsel, as appropriate, regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery or refund or a future reduction in rates.
•We obtained representation from management regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities to assess management’s assertion that amounts are probable of recovery, refund, or a future reduction in rates.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 18, 2025
We have served as the Company’s auditor since 2001.
| | | | | | | | | | | | | | | | | | | | |
| ENTERGY TEXAS, INC. AND SUBSIDIARIES |
| CONSOLIDATED INCOME STATEMENTS |
| | |
| | | For the Years Ended December 31, |
| | | 2024 | | 2023 | | 2022 |
| | | (In Thousands) |
| | | | | | |
| OPERATING REVENUES | | | | | | |
| Electric | | $2,050,150 | | | $2,028,586 | | | $2,288,905 | |
| | | | | | |
| OPERATING EXPENSES | | | | | | |
| Operation and Maintenance: | | | | | | |
| Fuel, fuel-related expenses, and gas purchased for resale | | 482,486 | | | 403,111 | | | 443,765 | |
| Purchased power | | 373,036 | | | 468,511 | | | 717,501 | |
| Other operation and maintenance | | 340,956 | | | 323,797 | | | 312,340 | |
| Taxes other than income taxes | | 101,993 | | | 117,852 | | | 101,673 | |
| Depreciation and amortization | | 338,890 | | | 278,311 | | | 230,692 | |
| Other regulatory charges (credits) - net | | (13,884) | | | 7,324 | | | 49,175 | |
| TOTAL | | 1,623,477 | | | 1,598,906 | | | 1,855,146 | |
| | | | | | |
| OPERATING INCOME | | 426,673 | | | 429,680 | | | 433,759 | |
| | | | | | |
| OTHER INCOME | | | | | | |
| Allowance for equity funds used during construction | | 47,833 | | | 28,193 | | | 13,527 | |
| Interest and investment income | | 15,107 | | | 11,116 | | | 4,141 | |
| Miscellaneous - net | | (11,113) | | | (10,411) | | | (6,572) | |
| TOTAL | | 51,827 | | | 28,898 | | | 11,096 | |
| | | | | | |
| INTEREST EXPENSE | | | | | | |
| Interest expense | | 137,820 | | | 114,978 | | | 95,454 | |
| Allowance for borrowed funds used during construction | | (18,626) | | | (10,545) | | | (4,547) | |
| TOTAL | | 119,194 | | | 104,433 | | | 90,907 | |
| | | | | | |
| INCOME BEFORE INCOME TAXES | | 359,306 | | | 354,145 | | | 353,948 | |
| | | | | | |
| Income taxes | | 65,684 | | | 62,872 | | | 50,621 | |
| | | | | | |
| NET INCOME | | 293,622 | | | 291,273 | | | 303,327 | |
| | | | | | |
| Preferred dividend requirements | | 2,072 | | | 2,072 | | | 2,072 | |
| | | | | | |
| EARNINGS APPLICABLE TO COMMON STOCK | | $291,550 | | | $289,201 | | | $301,255 | |
| | | | | | |
| See Notes to Financial Statements. | | | | | | |
(Page left blank intentionally)
| | | | | | | | | | | | | | | | | | | | |
| ENTERGY TEXAS, INC. AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| | |
| | | For the Years Ended December 31, |
| | | 2024 | | 2023 | | 2022 |
| | | (In Thousands) |
| | | | | | |
| OPERATING ACTIVITIES | | | | | | |
| Net income | | $293,622 | | | $291,273 | | | $303,327 | |
| Adjustments to reconcile net income to net cash flow provided by operating activities: | | | | | | |
| Depreciation and amortization | | 338,890 | | | 278,311 | | | 230,692 | |
| Deferred income taxes, investment tax credits, and non-current taxes accrued | | 35,631 | | | 53,507 | | | 41,648 | |
| Changes in assets and liabilities: | | | | | | |
| Receivables | | (13,201) | | | 24,249 | | | (35,131) | |
| Fuel inventory | | 4,877 | | | (24,097) | | | 15,962 | |
| Accounts payable | | 41,216 | | | (22,046) | | | 48,199 | |
| Taxes accrued | | (2,413) | | | (14,146) | | | 44,015 | |
| Interest accrued | | 7,418 | | | 7,357 | | | 4,926 | |
| Deferred fuel costs | | 198,290 | | | 119,096 | | | (209,835) | |
| Other working capital accounts | | (38,672) | | | (36,097) | | | (19,574) | |
| Provisions for estimated losses | | 505 | | | 1,887 | | | (649) | |
| Other regulatory assets | | 46,898 | | | (17,924) | | | (157,349) | |
| Other regulatory liabilities | | (45,301) | | | (20,122) | | | (30,499) | |
| Effect of securitization on regulatory asset | | — | | | — | | | 153,383 | |
| Pension and other postretirement funded status | | (29,062) | | | (36,131) | | | 20,656 | |
| Other assets and liabilities | | (15,049) | | | 36,574 | | | (344) | |
| Net cash flow provided by operating activities | | 823,649 | | | 641,691 | | | 409,427 | |
| INVESTING ACTIVITIES | | | | | | |
| Construction expenditures | | (1,287,518) | | | (946,543) | | | (696,879) | |
| Allowance for equity funds used during construction | | 47,833 | | | 28,193 | | | 13,527 | |
| Proceeds from sale of assets | | 2,396 | | | 11,000 | | | — | |
| | | | | | |
| Litigation proceeds from settlement agreement | | — | | | — | | | 4,134 | |
| Changes in money pool receivable - net | | 299,378 | | | (218,414) | | | (99,468) | |
| Changes in securitization account | | 2,493 | | | 5,684 | | | 15,750 | |
| Decrease (increase) in other investments | | 7,000 | | | (5,868) | | | (1,133) | |
| Net cash flow used in investing activities | | (928,418) | | | (1,125,948) | | | (764,069) | |
| FINANCING ACTIVITIES | | | | | | |
| Proceeds from the issuance of long-term debt | | 343,124 | | | 344,895 | | | 606,168 | |
| Retirement of long-term debt | | (18,334) | | | (17,835) | | | (66,514) | |
| Capital contribution from parent | | — | | | 150,000 | | | — | |
| Change in money pool payable - net | | — | | | — | | | (79,594) | |
| Dividends paid: | | | | | | |
| Common stock | | (69,000) | | | — | | | (105,000) | |
| Preferred stock | | (2,072) | | | (2,072) | | | (2,060) | |
| Other | | 14,062 | | | 27,758 | | | 5,111 | |
| Net cash flow provided by financing activities | | 267,780 | | | 502,746 | | | 358,111 | |
| Net increase in cash and cash equivalents | | 163,011 | | | 18,489 | | | 3,469 | |
| Cash and cash equivalents at beginning of period | | 21,986 | | | 3,497 | | | 28 | |
| Cash and cash equivalents at end of period | | $184,997 | | | $21,986 | | | $3,497 | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | | | |
| Cash paid during the period for: | | | | | | |
| Interest - net of amount capitalized | | $127,342 | | | $104,766 | | | $87,682 | |
| Income taxes | | $34,077 | | | $28,969 | | | $1,864 | |
| Noncash investing activities: | | | | | | |
| Accrued construction expenditures | | $279,480 | | | $257,467 | | | $68,893 | |
| | | | | | |
| See Notes to Financial Statements. | | | | | | |
| | | | | | | | | | | | | | |
| ENTERGY TEXAS, INC. AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| ASSETS |
| | |
| | | December 31, |
| | | 2024 | | 2023 |
| | | (In Thousands) |
| | | | |
| CURRENT ASSETS | | | | |
| Cash and cash equivalents: | | | | |
| Cash | | $291 | | | $1,497 | |
| Temporary cash investments | | 184,706 | | | 20,489 | |
| Total cash and cash equivalents | | 184,997 | | | 21,986 | |
| Securitization recovery trust account | | 2,703 | | | 5,195 | |
| Accounts receivable: | | | | |
| Customer | | 84,842 | | | 88,468 | |
| Allowance for doubtful accounts | | (1,304) | | | (1,484) | |
| Associated companies | | 26,564 | | | 329,941 | |
| Other | | 43,773 | | | 24,416 | |
| Accrued unbilled revenues | | 74,060 | | | 72,771 | |
| Total accounts receivable | | 227,935 | | | 514,112 | |
| Deferred fuel costs | | — | | | 139,019 | |
| Fuel inventory - at average cost | | 45,970 | | | 50,847 | |
| Materials and supplies | | 157,241 | | | 123,020 | |
| Prepayments and other | | 34,803 | | | 35,232 | |
| TOTAL | | 653,649 | | | 889,411 | |
| | | | |
| OTHER PROPERTY AND INVESTMENTS | | | | |
| Investments in affiliates - at equity | | 107 | | | 214 | |
| Other | | 15,878 | | | 15,444 | |
| TOTAL | | 15,985 | | | 15,658 | |
| | | | |
| UTILITY PLANT | | | | |
| Electric | | 8,628,625 | | | 7,931,340 | |
| Construction work in progress | | 1,513,170 | | | 857,707 | |
| TOTAL UTILITY PLANT | | 10,141,795 | | | 8,789,047 | |
| Less - accumulated depreciation and amortization | | 2,548,961 | | | 2,363,919 | |
| UTILITY PLANT - NET | | 7,592,834 | | | 6,425,128 | |
| | | | |
| DEFERRED DEBITS AND OTHER ASSETS | | | | |
| Regulatory assets: | | | | |
| Other regulatory assets (includes securitization property of $234,112 as of December 31, 2024 and $250,324 as of December 31, 2023) | | 549,708 | | | 596,606 | |
| Other | | 157,904 | | | 129,769 | |
| TOTAL | | 707,612 | | | 726,375 | |
| | | | |
| TOTAL ASSETS | | $8,970,080 | | | $8,056,572 | |
| | | | |
| See Notes to Financial Statements. | | | | |
| | | | | | | | | | | | | | |
| ENTERGY TEXAS, INC. AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| LIABILITIES AND EQUITY |
| | |
| | | December 31, |
| | | 2024 | | 2023 |
| | | (In Thousands) |
| | | | |
| CURRENT LIABILITIES | | | | |
| | | | |
| Accounts payable: | | | | |
| Associated companies | | $65,335 | | | $74,423 | |
| Other | | 361,404 | | | 195,703 | |
| Customer deposits | | 40,782 | | | 39,999 | |
| Taxes accrued | | 76,474 | | | 78,887 | |
| Interest accrued | | 38,703 | | | 31,285 | |
| Deferred fuel costs | | 59,271 | | | — | |
| Other | | 20,836 | | | 16,237 | |
| TOTAL | | 662,805 | | | 436,534 | |
| | | | |
| NON-CURRENT LIABILITIES | | | | |
| Accumulated deferred income taxes and taxes accrued | | 868,849 | | | 814,905 | |
| Accumulated deferred investment tax credits | | 7,215 | | | 7,963 | |
| Regulatory liability for income taxes - net | | 93,766 | | | 114,759 | |
| Other regulatory liabilities | | 18,705 | | | 43,013 | |
| Asset retirement cost liabilities | | 17,688 | | | 11,743 | |
| Accumulated provisions | | 9,985 | | | 9,480 | |
| Long-term debt (includes securitization bonds of $239,622 as of December 31, 2024 and $257,592 as of December 31, 2023) | | 3,552,443 | | | 3,225,092 | |
| Other | | 397,412 | | | 274,421 | |
| TOTAL | | 4,966,063 | | | 4,501,376 | |
| | | | |
| Commitments and Contingencies | | | | |
| | | | |
| EQUITY | | | | |
| Common stock, no par value, authorized 200,000,000 shares; issued and outstanding 46,525,000 shares in 2024 and 2023 | | 49,452 | | | 49,452 | |
| Paid-in capital | | 1,200,125 | | | 1,200,125 | |
| Retained earnings | | 2,052,885 | | | 1,830,335 | |
| Total common shareholder's equity | | 3,302,462 | | | 3,079,912 | |
| Preferred stock without sinking fund | | 38,750 | | | 38,750 | |
| TOTAL | | 3,341,212 | | | 3,118,662 | |
| | | | |
| TOTAL LIABILITIES AND EQUITY | | $8,970,080 | | | $8,056,572 | |
| | | | |
| See Notes to Financial Statements. | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ENTERGY TEXAS, INC. AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY |
| For the Years Ended December 31, 2024, 2023, and 2022 |
| | | | | |
| | | | Common Equity | | |
| | Preferred Stock | | Common Stock | | Paid-in Capital | | Retained Earnings | | Total |
| | | | (In Thousands) |
| | | | | | | | | |
| Balance at December 31, 2021 | $38,750 | | | $49,452 | | | $1,050,125 | | | $1,344,879 | | | $2,483,206 | |
| Net income | — | | | — | | | — | | | 303,327 | | | 303,327 | |
| | | | | | | | | |
| Common stock dividends | — | | | — | | | — | | | (105,000) | | | (105,000) | |
| Preferred stock dividends | — | | | — | | | — | | | (2,072) | | | (2,072) | |
| Balance at December 31, 2022 | $38,750 | | | $49,452 | | | $1,050,125 | | | $1,541,134 | | | $2,679,461 | |
| Net income | — | | | — | | | — | | | 291,273 | | | 291,273 | |
| Capital contribution from parent | — | | | — | | | 150,000 | | | — | | | 150,000 | |
| | | | | | | | | |
| Preferred stock dividends | — | | | — | | | — | | | (2,072) | | | (2,072) | |
| Balance at December 31, 2023 | $38,750 | | | $49,452 | | | $1,200,125 | | | $1,830,335 | | | $3,118,662 | |
| Net income | — | | | — | | | — | | | 293,622 | | | 293,622 | |
| | | | | | | | | |
| Common stock dividends | — | | | — | | | — | | | (69,000) | | | (69,000) | |
| Preferred stock dividends | — | | | — | | | — | | | (2,072) | | | (2,072) | |
| Balance at December 31, 2024 | $38,750 | | | $49,452 | | | $1,200,125 | | | $2,052,885 | | | $3,341,212 | |
| | | | | | | | | |
| See Notes to Financial Statements. | | | | | | | | | |
SYSTEM ENERGY RESOURCES, INC.
MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS
System Energy’s principal asset 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. As discussed in “Complaints Against System Energy” below, System Energy and the Unit Power Sales Agreement have been the subject of several litigation proceedings at the FERC. Settlements that resolve all significant aspects of these complaints have been reached with the MPSC, the APSC, the City Council, and the LPSC, and these settlements have been approved by the FERC.
Results of Operations
2024 Compared to 2023
Net Income
Net income decreased $5.3 million primarily due to the lower authorized rate of return on equity and capital structure limitations reflected in monthly bills issued to Entergy Arkansas effective with the November 2023 service month per the settlement agreement with the APSC, the lower authorized rate of return on equity and capital structure limitations reflected in monthly bills issued to Entergy New Orleans effective with the June 2024 service month per the settlement agreement with the City Council, and the lower authorized rate of return on equity and capital structure limitations reflected in monthly bills issued to Entergy Louisiana effective with the September 2024 service month per the settlement agreement with the LPSC. The decrease was partially offset by an increase in operating revenues resulting from changes in rate base. See Note 2 to the financial statements for discussion of the settlements with the APSC, the City Council, and the LPSC.
Income Taxes
The effective income tax rates were 22.2% for 2024 and 22.7% for 2023. See Note 3 to the financial statements for a reconciliation of the federal statutory rate of 21% to the effective income tax rates and for additional discussion regarding income taxes.
2023 Compared to 2022
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Results of Operations” in Item 7 of System Energy’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of results of operations for 2023 compared to 2022.
Income Tax Legislation and Regulation
See the “Income Tax Legislation and Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of income tax legislation and regulation.
System Energy Resources, Inc.
Management’s Financial Discussion and Analysis
Liquidity and Capital Resources
Cash Flow
Cash flows for the years ended December 31, 2024, 2023, and 2022 were as follows:
| | | | | | | | | | | | | | | | | |
| | 2024 | | 2023 | | 2022 |
| | (In Thousands) |
| Cash and cash equivalents at beginning of period | $60 | | | $2,940 | | | $89,201 | |
| | | | | |
| Net cash provided by (used in): | | | | | |
| Operating activities | 31,505 | | | 273,572 | | | 7,280 | |
| Investing activities | (317,935) | | | (75,806) | | | (264,184) | |
| Financing activities | 315,278 | | | (200,646) | | | 170,643 | |
| Net increase (decrease) in cash and cash equivalents | 28,848 | | | (2,880) | | | (86,261) | |
| | | | | |
| Cash and cash equivalents at end of period | $28,908 | | | $60 | | | $2,940 | |
2024 Compared to 2023
Operating Activities
Net cash flow provided by operating activities decreased $242.1 million in 2024 primarily due to:
•the refund of $98.1 million made in 2024 to Entergy New Orleans as a result of the settlement with the City Council. See Note 2 to the financial statements for discussion of the settlement with the City Council;
•the refund of $92.7 million made in 2024 to Entergy Arkansas as a result of the settlement with the APSC. See Note 2 to the financial statements for discussion of the settlement with the APSC;
•the refund of $80.2 million made in 2024 to Entergy Louisiana as a result of the settlement with the LPSC. See Note 2 to the financial statements for discussion of the settlement with the LPSC;
•$40.5 million in recoupment payments received from Entergy Louisiana and Entergy New Orleans in October 2023 related to the sale-leaseback renewal costs and depreciation litigation as calculated in System Energy’s October 2023 compliance filing with the FERC. See Note 2 to the financial statements for further discussion of the Grand Gulf sale-leaseback renewal complaint;
•an increase of $20.7 million in spending on nuclear refueling outage costs in 2024 as compared to 2023;
•income tax payments of $0.6 million in 2024 as compared to income tax refunds of $19.8 million in 2023. System Energy made income tax payments in 2024 and received income tax refunds in 2023, each in accordance with an intercompany income tax allocation agreement; and
•the timing of collections of receivables.
The decrease was partially offset by:
•aggregate refunds of $103.5 million made in January 2023 related to the sale-leaseback renewal costs and depreciation litigation as calculated in System Energy’s January 2023 compliance report filed with the FERC. See Note 2 to the financial statements for further discussion of the refunds and the related proceedings;
•refunds of $41.8 million included in September 2023 service month bills under the Unit Power Sales Agreement to reflect the revenue requirement effects of Grand Gulf’s updated depreciation rates as approved by the FERC in August 2023. See Note 2 to the financial statements for discussion of the Unit Power Sales Agreement depreciation amendment proceeding; and
System Energy Resources, Inc.
Management’s Financial Discussion and Analysis
•refunds of $19.3 million included in May 2023 service month bills under the Unit Power Sales Agreement to reflect the effects of the partial settlement agreement approved by the FERC in April 2023. See Note 2 to the financial statements for discussion of the Unit Power Sales Agreement complaint.
Investing Activities
Net cash flow used in investing activities increased by $242.1 million in 2024 primarily due to:
•money pool activity;
•an increase of $94.6 million as a result of fluctuations in nuclear fuel activity due to variations from year to year in the timing and pricing of fuel reload requirements, materials and services deliveries, and the timing of cash payments during the nuclear fuel cycle; and
•an increase of $61 million in nuclear construction expenditures primarily due to higher spending in 2024 on Grand Gulf outage projects and upgrades.
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 $2.9 million in 2024 compared to decreasing by $95 million in 2023. The money pool is an intercompany cash management program that makes possible intercompany borrowing and lending arrangements, and the money pool and other borrowing arrangements are designed to reduce the Registrant Subsidiaries’ dependence on external short-term borrowings.
Financing Activities
System Energy’s financing activities provided $315.3 million of cash in 2024 compared to using $200.6 million of cash in 2023 primarily due to the following activity:
•the issuance of $300 million of 5.30% Series mortgage bonds in December 2024;
•the repayment, at maturity, of $250 million of 4.10% Series mortgage bonds in April 2023;
•net long-term borrowings of $51.2 million in 2024 compared to net repayments of $51.1 million in 2023 on the nuclear fuel company variable interest entity’s credit facility;
•a capital contribution of $150 million received from Entergy Corporation in January 2024 in order to maintain System Energy’s capital structure;
•the repayment, prior to maturity, in March 2023 of a $50 million term loan due in November 2023;
•money pool activity; and
•the issuance of $325 million of 6.00% Series mortgage bonds in March 2023.
Decreases in System Energy’s payable to the money pool are a use of cash flow, and System Energy’s payable to the money pool decreased $12.2 million in 2024 compared to increasing by $12.2 million in 2023.
See Note 5 to the financial statements for additional details of long-term debt.
2023 Compared to 2022
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Cash Flow” in Item 7 of System Energy’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of operating, investing, and financing cash flow activities for 2023 compared to 2022.
System Energy Resources, Inc.
Management’s Financial Discussion and Analysis
Capital Structure
System Energy’s debt to capital ratio is shown in the following table. The increase in the debt to capital ratio for System Energy is primarily due to the net issuance of long-term debt in 2024.
| | | | | | | | | | | |
| | December 31,
2024 | | December 31,
2023 |
| Debt to capital | 52.9 | % | | 45.4 | % |
| Effect of subtracting cash | (0.7 | %) | | — | % |
| Net debt to net capital (non-GAAP) | 52.2 | % | | 45.4 | % |
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 debt to 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. The net debt to net capital ratio is a non-GAAP measure. 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 because net debt indicates System Energy’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.
System Energy seeks to optimize its capital structure in accordance with its regulatory requirements and to control its cost of capital while also maintaining equity capitalization at a level consistent with investment-grade debt ratings. To the extent that operating cash flows are in excess of planned investments, cash may be used to reduce outstanding debt or may be paid as a dividend or a capital distribution, to the extent funds are legally available to do so, or a combination of the three, in appropriate amounts to maintain the capital structure. To the extent that operating cash flows are insufficient to support planned investments and other uses of cash such as the payment of expenses in the ordinary course, System Energy may issue incremental debt or reduce dividends, or both, to maintain its capital structure. In addition, System Energy may receive equity contributions to maintain its capital structure for certain circumstances that would materially alter the capital structure if financed entirely with debt and reduced dividends.
Uses of Capital
System Energy requires capital resources for:
•construction and other capital investments;
•debt maturities or retirements;
•working capital purposes, including the financing of fuel costs and tax payments; and
•dividend, distribution, and interest payments.
Following are the amounts of System Energy’s planned construction and other capital investments.
| | | | | | | | | | | | | | | | | |
| | 2025 | | 2026 | | 2027 |
| | (In Millions) |
| Planned construction and capital investment: | | | | | |
| Generation | $115 | | | $140 | | | $110 | |
| Utility Support | 25 | | | 5 | | | 5 | |
| Total | $140 | | | $145 | | | $115 | |
In addition to routine spending to maintain operations, the planned capital investment estimate includes amounts associated with Grand Gulf investments and initiatives. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and
System Energy Resources, Inc.
Management’s Financial Discussion and Analysis
requirements, governmental actions, including trade-related governmental actions, such as tariffs and other measures, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital, including any changes to governmental programs, such as loans, grants, guarantees, and other subsidies. System Energy is not able to predict the effect of potential changes in regulation and law, changes to governmental programs, such as loans, grants, guarantees, and other subsidies, and trade-related governmental actions, such as tariffs and other measures, on its current and planned capital projects.
Following are the amounts of System Energy’s existing debt obligations (includes estimated interest payments).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2025 | | 2026 | | 2027 | | 2028-2029 | | After 2029 |
| | (In Millions) |
| Long-term debt (a) | $269 | | | $65 | | | $224 | | | $407 | | | $611 | |
(a)Long-term debt is discussed in Note 5 to the financial statements.
Other Obligations
System Energy currently expects to contribute approximately $15.7 million to its qualified pension plans and approximately $34 thousand to its other postretirement plans in 2025, although the 2025 required pension contributions will be known with more certainty when the January 1, 2025, valuations are completed, which is expected by April 1, 2025. See “Critical Accounting Estimates – Qualified Pension and Other Postretirement Benefits” below and Note 11 to the financial statements for a discussion of qualified pension and other postretirement benefits funding.
System Energy has no unrecognized tax benefits and interest net of unused tax attributes and payments for which the timing of payments beyond 12 months cannot be reasonably estimated due to uncertainties in the timing of effective settlement of tax positions. See Note 3 to the financial statements for additional information regarding unrecognized tax benefits.
In addition, System Energy enters into nuclear fuel purchase agreements that contain minimum purchase obligations. As discussed in Note 8 to the financial statements, System Energy recovers these costs through charges under the Unit Power Sales Agreement.
As a wholly-owned subsidiary, System Energy dividends its earnings to Entergy Corporation at a percentage determined monthly.
Sources of Capital
System Energy’s sources to meet its capital requirements include:
•internally generated funds;
•cash on hand;
•the Entergy system money pool;
•debt issuances, including debt issuances to refund or retire currently outstanding or maturing indebtedness;
•equity contributions; and
•bank financing under new or existing facilities.
Circumstances such fuel and purchased power price fluctuations and unanticipated expenses, including unscheduled plant outages, could affect the timing and level of internally generated funds in the future. In addition to the financings necessary to meet capital requirements and contractual obligations, System Energy expects to
System Energy Resources, Inc.
Management’s Financial Discussion and Analysis
continue, when economically feasible, to retire higher-cost debt and replace it with lower-cost debt if market conditions permit.
All debt issuances by System Energy require prior regulatory approval. Debt issuances are also subject to requirements set forth in its bond indenture and other agreements. System Energy has sufficient capacity under these tests to meet its foreseeable capital needs for the next twelve months and beyond.
System Energy’s receivables from or (payables to) the money pool were as follows as of December 31 for each of the following years.
| | | | | | | | | | | | | | | | | | | | |
| 2024 | | 2023 | | 2022 | | 2021 |
| (In Thousands) |
| $2,851 | | ($12,246) | | $94,981 | | $75,745 |
See Note 4 to the financial statements for a description of the money pool.
The System Energy nuclear fuel company variable interest entity has a credit facility in the amount of $120 million scheduled to expire in June 2027. As of December 31, 2024, $72.7 million in loans were outstanding under the System Energy nuclear fuel company variable interest entity credit facility. See Note 4 to the financial statements for additional discussion of the variable interest entity credit facility.
System Energy obtained authorizations from the FERC through January 2027 for the following:
•short-term borrowings not to exceed an aggregate amount of $200 million at any time outstanding;
•long-term borrowings and security issuances not to exceed an aggregate amount of $1.4 billion at any time outstanding; and
•borrowings by its nuclear fuel company variable interest entity.
See Note 4 to the financial statements for further discussion of System Energy’s short-term borrowing limits.
Federal Regulation
See the “Rate, Cost-recovery, and Other Regulation – Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis and Note 2 to the financial statements for a discussion of federal regulation.
Complaints Against System Energy
System Energy’s operating revenues are derived from the allocation of the capacity, energy, and related costs associated with its 90% ownership/leasehold interest in Grand Gulf. System Energy sells its Grand Gulf capacity and energy to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans pursuant to the Unit Power Sales Agreement. System Energy and the Unit Power Sales Agreement have been the subject of several litigation proceedings at the FERC, including challenges with respect to System Energy’s authorized return on equity and capital structure, renewal of its sale-leaseback arrangement, treatment of uncertain tax positions, a broader investigation of rates under the Unit Power Sales Agreement, and two prudence complaints, one challenging the extended power uprate completed at Grand Gulf in 2012 and the operation and management of Grand Gulf, particularly in the 2016-2020 time period, and the second challenging the operation and management of Grand Gulf in the 2021-2022 time period. Settlements that resolve all significant aspects of these complaints have been reached with the MPSC, the APSC, the City Council, and the LPSC, and these settlements have been approved by the FERC. See “Complaints Against System Energy” in Note 2 to the financial statements for discussion of these complaint proceedings and settlements.
System Energy Resources, Inc.
Management’s Financial Discussion and Analysis
Unit Power Sales Agreement
System Energy Formula Rate Annual Protocols Formal Challenge Concerning 2020 Calendar Year Bills
System Energy’s Unit Power Sales Agreement includes formula rate protocols that provide for the disclosure of cost inputs, an opportunity for informal discovery procedures, and a challenge process. In February 2022, pursuant to the protocols procedures, the LPSC, the APSC, the MPSC, the City Council, and the Mississippi Public Utilities Staff filed with the FERC a formal challenge to System Energy’s implementation of the formula rate during calendar year 2020. This formal challenge was ultimately settled as a result of System Energy’s global settlements with the MPSC, the APSC, the City Council, and the LPSC. See “Complaints Against System Energy” in Note 2 to the financial statements for further discussion of the System Energy settlements with the MPSC, the APSC, the City Council, and the LPSC.
System Energy Formula Rate Annual Protocols Formal Challenge Concerning 2021 Calendar Year Bills
In March 2023, pursuant to the protocols procedures discussed above, the LPSC, the APSC, and the City Council filed with the FERC a formal challenge to System Energy’s implementation of the formula rate during calendar year 2021. This formal challenge was ultimately settled as a result of System Energy’s global settlements with the MPSC, the APSC, the City Council, and the LPSC. See “Complaints Against System Energy” in Note 2 to the financial statements for further discussion of the System Energy settlements with the MPSC, the APSC, the City Council, and the LPSC.
System Energy Formula Rate Annual Protocols Formal Challenge Concerning 2022 Calendar Year Bills
In February 2024, pursuant to the protocols procedures, the LPSC and the City Council filed with the FERC a formal challenge to System Energy’s implementation of the formula rate during calendar year 2022. This formal challenge was ultimately settled as a result of System Energy’s global settlements with the MPSC, the APSC, the City Council, and the LPSC. See “Complaints Against System Energy” in Note 2 to the financial statements for further discussion of the System Energy settlements with the MPSC, the APSC, the City Council, and the LPSC.
Depreciation Amendment Proceeding
In December 2021, System Energy submitted to the FERC proposed amendments to the Unit Power Sales Agreement to adopt updated rates for use in calculating Grand Gulf plant depreciation and amortization expenses. The proposed amendments would result in higher charges to the Utility operating companies that buy capacity and energy from System Energy under the Unit Power Sales Agreement. In February 2022 the FERC accepted System Energy’s proposed increased depreciation rates with an effective date of March 1, 2022, subject to refund pending the outcome of the settlement and/or hearing procedures. In June 2023 System Energy filed with the FERC an unopposed offer of settlement that it had negotiated with intervenors to the proceeding. In August 2023 the FERC approved the settlement, which resolves the proceeding. In third quarter 2023, System Energy recorded a reduction in depreciation expense of $41 million representing the cumulative difference in depreciation expense resulting from the depreciation rates used from March 2022 through June 2023 and the depreciation rates included in the settlement filing approved by the FERC. In October 2023, System Energy filed a refund report with the FERC. The refund provided for in the refund report was included in the September 2023 service month bills under the Unit Power Sales Agreement. No comments or protests to the refund report were filed.
Pension Costs Amendment Proceeding
In October 2021, System Energy submitted to the FERC proposed amendments to the Unit Power Sales Agreement to include in rate base the prepaid and accrued pension costs associated with System Energy’s qualified pension plans. Based on data ending in 2020, the increased annual revenue requirement associated with the filing is approximately $8.9 million. In March 2022 the FERC accepted System Energy’s proposed amendments with an
System Energy Resources, Inc.
Management’s Financial Discussion and Analysis
effective date of December 1, 2021, subject to refund pending the outcome of the settlement and/or hearing procedures. In August 2023 the FERC chief ALJ terminated settlement procedures and designated a presiding ALJ to oversee hearing procedures. Testimony was filed by the parties from October 2023 through April 2024, and the hearing concluded in June 2024.
In September 2024 the presiding ALJ issued an initial decision recommending that the FERC approve inclusion of a line item in rate base for prepaid and accrued pension costs; however, the presiding ALJ did not agree with System Energy’s proposed methodology to calculate the value of the prepaid and accrued pension cost input. Instead, the presiding ALJ recommended limiting System Energy’s recovery to the prepaid and accrued pension costs that were incurred beginning in 2015 and later.
System Energy disputes the presiding ALJ's determination concerning the methodology used to calculate the prepaid and accrued pension input, and System Energy filed exceptions to these rulings in October 2024. In October 2024, the LPSC, the APSC, and the FERC trial staff filed separate briefs on exceptions; these parties generally argue that the presiding ALJ should have rejected System Energy’s filing entirely, rather than limit System Energy’s recovery of the prepaid and accrued pension costs. Later in October 2024, System Energy, the LPSC, the APSC, and the FERC trial staff filed separate briefs opposing exceptions.
If the ALJ’s determination is affirmed by the FERC, System Energy estimates refunds, including interest through December 31, 2024, of approximately $16 million to $21 million would be owed. The ALJ's initial decision is not binding on the FERC and is an interim step in the hearing process. No refunds will be owed in connection with this proceeding and no changes to System Energy’s pension cost recovery methodology will be implemented unless and until the FERC requires them in a final order. This proceeding is not covered by the global settlements described above.
Nuclear Matters
System Energy owns and, through an affiliate, operates the Grand Gulf nuclear generating plant and is, therefore, subject to the risks related to such ownership and operation. These include risks related to: the use, storage, and handling and disposal of high-level and low-level radioactive materials; the substantial financial requirements, both for capital investments and operational needs, including the financial requirements to address emerging issues related to equipment reliability, to position Grand Gulf to meet its operational goals; the performance and capacity factors of Grand Gulf; regulatory requirements and potential future regulatory changes, including changes affecting the regulations governing nuclear plant ownership, operations, license amendments, and decommissioning; the availability of interim or permanent sites for the disposal of spent nuclear fuel and nuclear waste, including the fees charged for such disposal; the sufficiency of nuclear decommissioning trust fund assets and earnings to complete decommissioning of the site when required; and limitations on the amounts of insurance recoveries for losses in connection with nuclear plant operations and catastrophic events such as a nuclear accident. In the event of an unanticipated early shutdown of Grand Gulf, System Energy may be required to provide additional funds or credit support to satisfy regulatory requirements for decommissioning. Grand Gulf’s operating license expires in 2044.
Environmental Risks
System Energy’s facilities and operations are subject to regulation by various governmental authorities having jurisdiction over air quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental matters. Management believes that System Energy is in substantial compliance with environmental regulations currently applicable to its facilities and operations, with reference to possible exceptions noted in “Regulation of Entergy’s Business - Environmental Regulation” in Part I, Item 1. Because environmental regulations are subject to change, future compliance costs cannot be precisely estimated.
System Energy Resources, Inc.
Management’s Financial Discussion and Analysis
Critical Accounting Estimates
The preparation of System Energy’s financial statements in conformity with GAAP requires management to apply appropriate accounting policies and to make estimates and judgments that can have a significant effect on reported financial position, results of operations, and cash flows. Management has identified the following accounting estimates as critical because they are based on assumptions and measurements that involve a high degree of uncertainty, and the potential for future changes in these assumptions and measurements could produce estimates that would have a material effect on the presentation of System Energy’s financial position, results of operations, or cash flows.
Nuclear Decommissioning Costs
See “Nuclear Decommissioning Costs” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the estimates inherent in accounting for nuclear decommissioning costs.
Utility Regulatory Accounting
See “Utility Regulatory Accounting” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of accounting for the effects of rate regulation.
Taxation and Uncertain Tax Positions
See “Taxation and Uncertain Tax Positions” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion.
Qualified Pension and Other Postretirement Benefits
System Energy’s qualified pension and other postretirement reported costs, as described in Note 11 to the financial statements, are affected by numerous factors including the provisions of the plans, changing employee demographics, and various actuarial calculations, assumptions, and accounting mechanisms. See “Qualified Pension and Other Postretirement Benefits” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion. Because of the complexity of these calculations, the long-term nature of these obligations, and the importance of the assumptions utilized, Entergy’s estimate of these costs is a critical accounting estimate.
Cost Sensitivity
The following chart reflects the sensitivity of qualified pension cost and qualified projected benefit obligation to changes in certain actuarial assumptions (dollars in thousands).
| | | | | | | | | | | | | | | | | | | | |
| Actuarial Assumption | | Change in Assumption | | Impact on 2025 Qualified Pension Cost | | Impact on 2024 Qualified Projected Benefit Obligation |
| | | | | Increase/(Decrease) | | |
| Discount rate | | (0.25%) | | $216 | | $6,204 |
| Rate of return on plan assets | | (0.25%) | | $671 | | $— |
| Rate of increase in compensation | | 0.25% | | $264 | | $1,306 |
System Energy Resources, Inc.
Management’s Financial Discussion and Analysis
The following chart reflects the sensitivity of postretirement benefits cost and accumulated postretirement benefit obligation to changes in certain actuarial assumptions (dollars in thousands).
| | | | | | | | | | | | | | | | | | | | |
| Actuarial Assumption | | Change in Assumption | | Impact on 2025 Postretirement Benefits Cost | | Impact on 2024 Accumulated Postretirement Benefit Obligation |
| | | | | Increase/(Decrease) | | |
| Discount rate | | (0.25%) | | $27 | | $773 |
| Health care cost trend | | 0.25% | | $52 | | $550 |
Each fluctuation above assumes that the other components of the calculation are held constant.
Costs and Employer Contributions
Total qualified pension cost for System Energy in 2024 was $5.8 million, including $615 thousand in settlement costs. System Energy anticipates 2025 qualified pension cost to be $6 million. System Energy contributed $16.7 million to its qualified pension plans in 2024 and estimates 2025 pension contributions will be approximately $15.7 million, although the 2025 required pension contributions will be known with more certainty when the January 1, 2025 valuations are completed, which is expected by April 1, 2025.
Total postretirement health care and life insurance benefit income for System Energy in 2024 was $913 thousand. System Energy expects 2025 postretirement health care and life insurance benefit income to approximate $855 thousand. System Energy contributed $741 thousand to its other postretirement plans in 2024 and expects 2025 contributions to approximate $34 thousand.
Other Contingencies
See “Other Contingencies” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of the estimates associated with environmental, litigation, and other risks.
New Accounting Pronouncements
See the “New Accounting Pronouncements” section of Note 1 to the financial statements for a discussion of new accounting pronouncements.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and Board of Directors of
System Energy Resources, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of System Energy Resources, Inc. (the “Company”) as of December 31, 2024 and 2023, the related statements of operations, cash flows, and changes in common equity (pages 453 through 458 and applicable items in pages 47 through 239), for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that is material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.
Rate and Regulatory Matters — System Energy Resources, Inc. — Refer to Note 2 to the financial statements
Critical Audit Matter Description
The Company is subject to wholesale rate regulation by the Federal Energy Regulatory Commission (“FERC”). Management has determined it meets the requirements under accounting principles generally accepted in the United States of America to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation. Accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures.
The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Because the FERC sets the rates the Company is allowed to charge customers based on allowable costs, including a reasonable
return on equity, the Company applies accounting standards that require the financial statements to reflect the effects of rate regulation, including the recording of regulatory assets and liabilities. The Company assesses whether the regulatory assets and regulatory liabilities continue to meet the criteria for probable future recovery or settlement at each balance sheet date and when regulatory events occur. This assessment includes consideration of recent rate orders, historical regulatory treatment for similar costs, and factors such as changes in applicable regulatory and political environments. While the Company has indicated it expects to recover costs from customers through regulated rates, there is a risk that the FERC will not approve: (1) full recovery of the costs of providing utility service, or (2) full recovery of amounts invested in the utility business and a reasonable return on that investment.
We identified the impact of rate regulation as a critical audit matter due to the judgments made by management to support its assertions about impacted account balances and disclosures and the high degree of subjectivity involved in assessing the impact of future regulatory orders on the financial statements. Management judgments include assessing the (1) likelihood of recovery in future rates of incurred costs and the (2) likelihood of refunds to customers. Auditing management’s judgments regarding the outcome of future decisions by the FERC, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities involved specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities and auditor judgment to evaluate management estimates and the subjectivity of audit evidence.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the uncertainty of future decisions by the FERC, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities included the following, among others:
•We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We also tested the effectiveness of management’s controls over the initial recognition of amounts as regulatory assets or liabilities and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates.
•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.
•We read relevant regulatory orders issued by the FERC for the Company to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the FERC’s treatment of similar costs under similar circumstances. We evaluated external information and compared to management’s recorded regulatory asset and liability balances for completeness.
•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the FERC, initial Administrative Law Judge decisions and FERC orders issued, and settlement offers and agreements with the FERC for any evidence that might contradict management’s assertions.
•We obtained an analysis from management and support from internal and external legal counsel, as appropriate, regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery or refund or a future reduction in rates.
•We obtained representation from management regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities to assess management’s assertion that amounts are probable of recovery, refund, or a future reduction in rates.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 18, 2025
We have served as the Company’s auditor since 2001.
| | | | | | | | | | | | | | | | | | | | |
| SYSTEM ENERGY RESOURCES, INC. |
| STATEMENTS OF OPERATIONS |
| | |
| | | For the Years Ended December 31, |
| | | 2024 | | 2023 | | 2022 |
| | | (In Thousands) |
| | | | | | |
| OPERATING REVENUES | | | | | | |
| Electric | | $585,049 | | | $586,603 | | | $658,812 | |
| | | | | | |
| OPERATING EXPENSES | | | | | | |
| Operation and Maintenance: | | | | | | |
| Fuel, fuel-related expenses, and gas purchased for resale | | 62,433 | | | 71,762 | | | 50,216 | |
| Nuclear refueling outage expenses | | 19,158 | | | 26,745 | | | 24,482 | |
| Other operation and maintenance | | 192,300 | | | 207,765 | | | 226,557 | |
| Decommissioning | | 43,478 | | | 41,773 | | | 40,235 | |
| Taxes other than income taxes | | 27,260 | | | 29,224 | | | 29,428 | |
| Depreciation and amortization | | 121,386 | | | 90,858 | | | 111,889 | |
| Other regulatory charges (credits) - net | | (2,799) | | | (57,429) | | | 503,162 | |
| TOTAL | | 463,216 | | | 410,698 | | | 985,969 | |
| | | | | | |
| OPERATING INCOME (LOSS) | | 121,833 | | | 175,905 | | | (327,157) | |
| | | | | | |
| OTHER INCOME (DEDUCTIONS) | | | | | | |
| Allowance for equity funds used during construction | | 7,647 | | | 7,531 | | | 8,312 | |
| Interest and investment income | | 47,953 | | | 13,131 | | | 5,096 | |
| Miscellaneous - net | | 672 | | | (9,101) | | | (19,616) | |
| TOTAL | | 56,272 | | | 11,561 | | | (6,208) | |
| | | | | | |
| INTEREST EXPENSE | | | | | | |
| Interest expense | | 48,121 | | | 48,416 | | | 37,381 | |
| Allowance for borrowed funds used during construction | | (3,019) | | | (1,754) | | | (1,325) | |
| TOTAL | | 45,102 | | | 46,662 | | | 36,056 | |
| | | | | | |
| INCOME (LOSS) BEFORE INCOME TAXES | | 133,003 | | | 140,804 | | | (369,421) | |
| | | | | | |
| Income taxes | | 29,503 | | | 32,032 | | | (92,828) | |
| | | | | | |
| NET INCOME (LOSS) | | $103,500 | | | $108,772 | | | ($276,593) | |
| | | | | | |
| See Notes to Financial Statements. | | | | | | |
(Page left blank intentionally)
| | | | | | | | | | | | | | | | | | | | |
| SYSTEM ENERGY RESOURCES, INC. |
| STATEMENTS OF CASH FLOWS |
| | |
| | | For the Years Ended December 31, |
| | | 2024 | | 2023 | | 2022 |
| | | (In Thousands) |
| | | | | | |
| OPERATING ACTIVITIES | | | | | | |
| Net income (loss) | | $103,500 | | | $108,772 | | | ($276,593) | |
| Adjustments to reconcile net income (loss) to net cash flow provided by operating activities: | | | | | | |
| Depreciation, amortization, and decommissioning, including nuclear fuel amortization | | 217,250 | | | 195,045 | | | 194,411 | |
| Deferred income taxes, investment tax credits, and non-current taxes accrued | | 41,142 | | | 32,982 | | | (85,720) | |
| Changes in assets and liabilities: | | | | | | |
| Receivables | | 10,697 | | | 8,359 | | | (19,530) | |
| Accounts payable | | (89,911) | | | 78,655 | | | (11,948) | |
| Taxes accrued | | (11,549) | | | 19,804 | | | (25,321) | |
| Interest accrued | | 388 | | | 1,363 | | | (123) | |
| Other working capital accounts | | (15,353) | | | 20,749 | | | (38,764) | |
| Other regulatory assets | | 19,866 | | | (31,239) | | | (19,575) | |
| Other regulatory liabilities | | (37,713) | | | 11,009 | | | 21,252 | |
| Pension and other postretirement funded status | | (30,717) | | | (21,259) | | | (35,354) | |
| Other assets and liabilities | | (176,095) | | | (150,668) | | | 304,545 | |
| Net cash flow provided by operating activities | | 31,505 | | | 273,572 | | | 7,280 | |
| INVESTING ACTIVITIES | | | | | | |
| Construction expenditures | | (174,257) | | | (121,075) | | | (164,797) | |
| Allowance for equity funds used during construction | | 7,647 | | | 7,531 | | | 8,312 | |
| Nuclear fuel purchases | | (145,567) | | | (80,663) | | | (96,659) | |
| Proceeds from sale of nuclear fuel | | 16,531 | | | 46,242 | | | 18,855 | |
| Decrease (increase) in other investments | | 23 | | | (3) | | | 300 | |
| Proceeds from nuclear decommissioning trust fund sales | | 901,239 | | | 390,004 | | | 346,504 | |
| Investment in nuclear decommissioning trust funds | | (920,700) | | | (412,823) | | | (357,463) | |
| Changes in money pool receivable - net | | (2,851) | | | 94,981 | | | (19,236) | |
| Net cash flow used in investing activities | | (317,935) | | | (75,806) | | | (264,184) | |
| FINANCING ACTIVITIES | | | | | | |
| Proceeds from the issuance of long-term debt | | 1,325,581 | | | 715,545 | | | 1,022,472 | |
| Retirement of long-term debt | | (978,057) | | | (758,437) | | | (986,829) | |
| Capital contribution from parent | | 150,000 | | | — | | | 135,000 | |
| Changes in money pool payable - net | | (12,246) | | | 12,246 | | | — | |
| Common stock dividends and distributions paid | | (170,000) | | | (170,000) | | | — | |
| Net cash flow provided by (used in) financing activities | | 315,278 | | | (200,646) | | | 170,643 | |
| Net increase (decrease) in cash and cash equivalents | | 28,848 | | | (2,880) | | | (86,261) | |
| Cash and cash equivalents at beginning of period | | 60 | | | 2,940 | | | 89,201 | |
| Cash and cash equivalents at end of period | | $28,908 | | | $60 | | | $2,940 | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | | | |
| Cash paid (received) during the period for: | | | | | | |
| Interest - net of amount capitalized | | $57,599 | | | $45,196 | | | $39,848 | |
| Income taxes | | $624 | | | ($19,810) | | | $18,413 | |
| Noncash investing activities: | | | | | | |
| Accrued construction expenditures | | $6,290 | | | $25,301 | | | $28,960 | |
| | | | | | |
| See Notes to Financial Statements. | | | | | | |
| | | | | | | | | | | | | | |
| SYSTEM ENERGY RESOURCES, INC. |
| BALANCE SHEETS |
| ASSETS |
| | |
| | | December 31, |
| | | 2024 | | 2023 |
| | | (In Thousands) |
| | | | |
| CURRENT ASSETS | | | | |
| Cash and cash equivalents: | | | | |
| Cash | | $448 | | | $60 | |
| Temporary cash investments | | 28,460 | | | — | |
| Total cash and cash equivalents | | 28,908 | | | 60 | |
| Accounts receivable: | | | | |
| Associated companies | | 48,134 | | | 54,544 | |
| Other | | 5,425 | | | 6,861 | |
| Total accounts receivable | | 53,559 | | | 61,405 | |
| Materials and supplies | | 163,814 | | | 155,565 | |
| Deferred nuclear refueling outage costs | | 19,884 | | | 8,603 | |
| | | | |
| Prepayments and other | | 5,768 | | | 3,373 | |
| TOTAL | | 271,933 | | | 229,006 | |
| | | | |
| OTHER PROPERTY AND INVESTMENTS | | | | |
| Decommissioning trust funds | | 1,529,059 | | | 1,342,317 | |
| TOTAL | | 1,529,059 | | | 1,342,317 | |
| | | | |
| UTILITY PLANT | | | | |
| Electric | | 5,668,253 | | | 5,495,728 | |
| Construction work in progress | | 85,127 | | | 130,866 | |
| Nuclear fuel | | 220,044 | | | 160,655 | |
| TOTAL UTILITY PLANT | | 5,973,424 | | | 5,787,249 | |
| Less - accumulated depreciation and amortization | | 3,578,709 | | | 3,493,299 | |
| UTILITY PLANT - NET | | 2,394,715 | | | 2,293,950 | |
| | | | |
| DEFERRED DEBITS AND OTHER ASSETS | | | | |
| Regulatory assets: | | | | |
| Other regulatory assets | | 426,494 | | | 446,360 | |
| | | | |
| Other | | 20,273 | | | 730 | |
| TOTAL | | 446,767 | | | 447,090 | |
| | | | |
| TOTAL ASSETS | | $4,642,474 | | | $4,312,363 | |
| | | | |
| See Notes to Financial Statements. | | | | |
| | | | | | | | | | | | | | |
| SYSTEM ENERGY RESOURCES, INC. |
| BALANCE SHEETS |
| LIABILITIES AND EQUITY |
| | |
| | | December 31, |
| | | 2024 | | 2023 |
| | | (In Thousands) |
| | | | |
| CURRENT LIABILITIES | | | | |
| Currently maturing long-term debt | | $200,090 | | | $57 | |
| Accounts payable: | | | | |
| Associated companies | | 18,477 | | | 118,523 | |
| Other | | 45,017 | | | 73,580 | |
| Taxes accrued | | 15,852 | | | 27,401 | |
| Interest accrued | | 13,342 | | | 12,954 | |
| Other | | 4,473 | | | 4,354 | |
| TOTAL | | 297,251 | | | 236,869 | |
| | | | |
| NON-CURRENT LIABILITIES | | | | |
| Accumulated deferred income taxes and taxes accrued | | 451,830 | | | 405,744 | |
| Accumulated deferred investment tax credits | | 42,984 | | | 46,960 | |
| Regulatory liability for income taxes - net | | 105,467 | | | 107,458 | |
| Other regulatory liabilities | | 747,190 | | | 782,912 | |
| Decommissioning | | 1,127,712 | | | 1,084,234 | |
| Pension and other postretirement liabilities | | 8,353 | | | 19,491 | |
| Long-term debt | | 889,646 | | | 738,402 | |
| Other | | 2 | | | 1,754 | |
| TOTAL | | 3,373,184 | | | 3,186,955 | |
| | | | |
| Commitments and Contingencies | | | | |
| | | | |
| COMMON EQUITY | | | | |
| Common stock, no par value, authorized 1,000,000 shares; issued and outstanding 789,350 shares in 2024 and 2023 | | 958,944 | | | 916,850 | |
| Retained earnings (accumulated deficit) | | 13,095 | | | (28,311) | |
| TOTAL | | 972,039 | | | 888,539 | |
| | | | |
| TOTAL LIABILITIES AND EQUITY | | $4,642,474 | | | $4,312,363 | |
| | | | |
| See Notes to Financial Statements. | | | | |
| | | | | | | | | | | | | | | | | |
| SYSTEM ENERGY RESOURCES, INC. |
| STATEMENTS OF CHANGES IN COMMON EQUITY |
| For the Years Ended December 31, 2024, 2023, and 2022 |
| | | |
| | Common Stock | | Retained Earnings (Accumulated Deficit) | | Total |
| | (In Thousands) |
| | | | | |
| Balance at December 31, 2021 | $951,850 | | | $139,510 | | | $1,091,360 | |
| Net loss | — | | | (276,593) | | | (276,593) | |
| Capital contributions from parent | 135,000 | | | — | | | 135,000 | |
| Balance at December 31, 2022 | $1,086,850 | | | ($137,083) | | | $949,767 | |
| Net income | — | | | 108,772 | | | 108,772 | |
| Common stock dividends and distributions | (170,000) | | | — | | | (170,000) | |
| Balance at December 31, 2023 | $916,850 | | | ($28,311) | | | $888,539 | |
| Net income | — | | | 103,500 | | | 103,500 | |
| Capital contributions from parent | 150,000 | | | — | | | 150,000 | |
| Common stock dividends and distributions | (107,906) | | | (62,094) | | | (170,000) | |
| Balance at December 31, 2024 | $958,944 | | | $13,095 | | | $972,039 | |
| | | | | |
| See Notes to Financial Statements. | | | | | |
Item 2. Properties
Information regarding the registrant’s properties is included in Part I, Item 1. - Entergy’s Business under the sections titled “Utility - Property and Other Generation Resources” and “Other Business Activities - Property” in this report.
Item 3. Legal Proceedings
Details of the registrant’s material environmental regulation and proceedings and other regulatory proceedings and litigation that are pending or those terminated in the fourth quarter of 2024 are discussed in Part I, Item 1. - Entergy’s Business under the sections titled “Retail Rate Regulation,” “Environmental Regulation,” and “Litigation.”
Item 4. Mine Safety Disclosures
Not applicable.
INFORMATION ABOUT EXECUTIVE OFFICERS OF ENTERGY CORPORATION
Executive Officers
| | | | | | | | | | | | | | | | | | | | |
| Name | | Age | | Position | | Period |
| Andrew S. Marsh (a) | | 53 | | Chief Executive Officer of Entergy Corporation | | 2022-Present |
| | | | Chair of the Board of Entergy Corporation | | 2023-Present |
| | | | Executive Vice President and Chief Financial Officer of Entergy Corporation | | 2013-2022 |
| | | | | Director of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy | | 2013-2022 |
| | | | Executive Vice President and Chief Financial Officer of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy | | 2014-2022 |
| | | | | | |
| Kimberly A. Fontan (a) | | 51 | | Executive Vice President and Chief Financial Officer of Entergy Corporation | | 2022-Present |
| | | | President and Chair of the Board of System Energy | | 2024-Present |
| | | | Director of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy Texas, and System Energy | | 2022-Present |
| | | | Executive Vice President and Chief Financial Officer of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy | | 2022-Present |
| | | | Senior Vice President and Chief Accounting Officer of Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy | | 2019-2022 |
| | | | | | |
| Marcus V. Brown (a) | | 63 | | Executive Vice President and General Counsel of Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy | | 2013-Present |
| | | | | | | | | | | | | | | | | | | | |
| Name | | Age | | Position | | Period |
| Jason Chapman (a) | | 54 | | Senior Vice President, Chief Technology and Business Services Officer of Entergy Corporation | | 2023-Present |
| | | | Acting Senior Vice President, Corporate Business Services of Entergy Services | | 2023 |
| | | | Vice President, Enterprise Shared Services of Entergy Services | | 2019-2023 |
| | | | | | |
| Kathryn A. Collins (a) | | 61 | | Senior Vice President and Chief Human Resources Officer of Entergy Corporation | | 2020-Present |
| | | | Chief Human Resources Officer, Arcosa, Inc. | | 2018-2020 |
| | | | | | |
| Kimberly Cook-Nelson (a) | | 52 | | Executive Vice President and Chief Nuclear Officer of Entergy Corporation, Entergy Arkansas, Entergy Louisiana, and System Energy | | 2022-Present |
| | | | Director of System Energy | | 2022-Present |
| | | | Chief Operating Officer, Nuclear Operations of Entergy Services | | 2021-2022 |
| | | | Vice President, System Planning of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas | | 2019-2021 |
| | | | | | |
| John O. Hudson, III | | 54 | | Chief External Affairs Officer, Entergy Corporation | | 2024-Present |
| | | | Senior Vice President, Federal Policy, Regulatory and Government Affairs, Entergy Services LLC | | 2022-2024 |
| | | | President, Entergy Charitable Foundation | | 2022-Present |
| | | | President and Chief Executive Officer, Nicor Gas | | 2020-2022 |
| | | | Executive Vice President, External Affairs and Customer Operations, Southern Company Gas | | 2018-2020 |
| | | | | | |
| Anastasia Minor | | 55 | | Chief Transformation Officer of Entergy Services | | 2023-Present |
| | | | Senior Vice President, Strategy and Financial Planning of Entergy Services | | 2022-2023 |
| | | | Vice President, Financial Business Partners of Entergy Services | | 2017-2022 |
| | | | | | |
| Peter S. Norgeot, Jr. (a) | | 59 | | Executive Vice President and Chief Operating Officer of Entergy Corporation | | 2022-Present |
| | | | Director of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas | | 2022-Present |
| | | | Senior Vice President, Operations and Development of Entergy Corporation | | 2022 |
| | | | Senior Vice President, Sustainable Planning, Development and Operations of Entergy Corporation | | 2021-2022 |
| | | | Senior Vice President, Transformation of Entergy Corporation | | 2018-2021 |
| | | | | | |
| Reginald T. Jackson (a) | | 58 | | Senior Vice President and Chief Accounting Officer of Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy | | 2022-Present |
| | | | Vice President, Internal Audit and General Auditor of Entergy Services | | 2020-2022 |
| | | | Director, Real Estate and Security of Entergy Services | | 2014-2020 |
(a)In addition, this officer is an executive officer and/or director of various other wholly owned subsidiaries of Entergy Corporation and its operating companies.
Each officer of Entergy Corporation is elected yearly by the Board of Directors. Each officer’s age and title are provided as of December 31, 2024.
PART II
Item 5. Market for Registrants’ Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
Entergy Corporation
The shares of Entergy Corporation’s common stock are listed on the New York Stock and Chicago Stock Exchanges under the ticker symbol ETR. As of January 31, 2025, there were 18,974 stockholders of record of Entergy Corporation. See “Dividends and Stock Repurchases” in the “Capital Expenditure Plans and Other Uses of Capital” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis and Note 7 to the financial statements for details of Entergy Corporation’s payment of dividends.
Issuer Purchases of Equity Securities (1)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 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 (2) |
| | | | | | | | | | |
| 10/01/2024 - 10/31/2024 | | — | | | $— | | | — | | | $350,052,918 | |
| 11/01/2024 - 11/30/2024 | | — | | | $— | | | — | | | $350,052,918 | |
| 12/01/2024 - 12/31/2024 | | — | | | $— | | | — | | | $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. In addition to this authority, the Board has authorized share repurchase programs to enable opportunistic purchases in response to market conditions. In October 2010 the Board granted authority for a $500 million share repurchase program. 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 2024, Entergy withheld 203,920 shares of its common stock at $49.66 per share, 105,036 shares of its common stock at $49.43 per share, 3,462 shares of its common stock at $51.97 per share, 632 shares of its common stock at $51.32 per share, 464 shares of its common stock at $51.39 per share, 82 shares of its common stock at $50.08 per share, and 12 shares of its common stock at $52.34 per share to pay income taxes due upon vesting of restricted stock granted and payout of performance units as part of its long-term incentive program.
(1)All share and per share amounts reflect the two-for-one forward stock split effective December 12, 2024. See Note 7 to the financial statements for discussion of the stock split. See Note 12 to the financial statements for additional discussion of the stock-based compensation plans.
(2)Maximum amount of shares that may yet be repurchased relates only to the $500 million share repurchase program plan and 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.
Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy
There is no market for the common equity of the Registrant Subsidiaries.
Item 6. Reserved
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Refer to “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS” of each of Entergy Corporation and Subsidiaries, Entergy Arkansas, LLC and Subsidiaries, Entergy Louisiana, LLC and Subsidiaries, Entergy Mississippi, LLC and Subsidiaries, Entergy New Orleans, LLC and Subsidiaries, Entergy Texas, Inc. and Subsidiaries, and System Energy Resources, Inc.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Refer to “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS OF ENTERGY CORPORATION AND SUBSIDIARIES - Market and Credit Risk Sensitive Instruments.”
Item 8. Financial Statements and Supplementary Data
Refer to “TABLE OF CONTENTS - Entergy Corporation and Subsidiaries, Entergy Arkansas, LLC and Subsidiaries, Entergy Louisiana, LLC and Subsidiaries, Entergy Mississippi, LLC and Subsidiaries, Entergy New Orleans, LLC and Subsidiaries, Entergy Texas, Inc. and Subsidiaries, and System Energy Resources, Inc.”
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
No event that would be described in response to this item has occurred with respect to Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, or System Energy.
Item 9A. Controls and Procedures
Disclosure Controls and Procedures
As of December 31, 2024, evaluations were performed under the supervision and with the participation of Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy (each individually a “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.
Internal Control over Financial Reporting (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
The managements of Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy (each individually a “Registrant” and collectively the “Registrants”) are responsible for establishing and maintaining adequate internal control over financial reporting for the Registrants. Each Registrant’s internal control system is designed to provide reasonable assurance regarding the preparation and fair presentation of each Registrant’s financial statements presented in accordance with generally accepted accounting principles.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Each Registrant’s management assessed the effectiveness of each Registrant’s internal control over financial reporting as of December 31, 2024. In making this assessment, each Registrant’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework. The 2013 COSO Framework was utilized for management’s assessment.
Based on each management’s assessment and the criteria set forth by the 2013 COSO Framework, each Registrant’s management believes that each Registrant maintained effective internal control over financial reporting as of December 31, 2024.
The report of Deloitte & Touche LLP, Entergy Corporation’s independent registered public accounting firm, regarding Entergy Corporation’s internal control over financial reporting is included herein. The report of Deloitte & Touche LLP is not applicable to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy because these Registrants are non-accelerated filers.
Changes in Internal Control over Financial Reporting
Under the supervision and with the participation of each Registrant’s management, including its respective PEO and PFO, each Registrant evaluated changes in internal control over financial reporting that occurred during the quarter ended December 31, 2024 and found no change that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.
Attestation Report of Registered Public Accounting Firm
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and Board of Directors of
Entergy Corporation and Subsidiaries
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Entergy Corporation and Subsidiaries (the “Corporation”) as of December 31, 2024, based on criteria established in Internal Control —Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2024 of the Corporation and our report dated February 18, 2025 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Item 9A, Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Corporation’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 18, 2025
Item 9B. Other Information
U.S. Securities and Exchange Commission Investigation
The Staff of the Division of Enforcement of the U.S. Securities and Exchange Commission conducted an investigation regarding Entergy’s processes and controls relating to its accounting for materials and supplies inventory. In December 2024, Entergy reached a settlement with the SEC to resolve the previously disclosed SEC investigation into Entergy’s internal controls and books and records concerning potential surplus materials and supplies inventory. Under the settlement terms, in which Entergy neither admitted nor denied the SEC’s allegations, Entergy consented to the entry of an injunction, paid a $12 million civil penalty, which was accrued in 2024 and paid in January 2025, and agreed to engage a consultant to conduct an assessment and make recommendations concerning Entergy’s internal controls related to the accounting for surplus materials and supplies.
Rule 10b5-1 Trading Arrangements
During the three months ended December 31, 2024, the following directors or officers of Entergy or the Registrant Subsidiaries adopted, modified, or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K, relating to shares of Entergy Corporation common stock:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name and Title | | Action | | Date of Action | | Type of Trading Arrangement
(a) | | Aggregate Number of Shares to be Purchased or Sold | | Expiration Date
(b) |
| Philip R. May, Jr., Chairman of the Board, President, and Chief Executive Officer of Entergy Louisiana, LLC | | Adopted | | 11/19/2024 | | Rule 10b5-1 trading arrangement | | Up to 35,184 shares to be sold (c) | | 12/15/2025 |
(a)Each trading arrangement marked as a Rule 10b5-1 trading arrangement is intended to satisfy the affirmative defense of Rule 10b5-1(c).
(b)Except as indicated by footnote, each trading arrangement permitted or permits transactions through and including the earlier to occur of (a) the completion of all purchases or sales or (b) the expiration date listed in the table. Each trading arrangement marked as a “Rule 10b5-1 Plan” only permitted or only permits transactions upon expiration of the applicable mandatory cooling-off period under Rule 10b5-1(c), as amended.
(c)This trading arrangement provides for the sale of up to 23,184 shares upon the exercise of outstanding options and for the sale of up to 12,000 shares of Entergy Corporation common stock owned outright. Mr. May’s trading arrangement was adopted prior to the two-for-one forward stock split of Entergy Corporation common stock effective December 12, 2024. The number of shares and limit prices established in Mr. May’s trading arrangement were adjusted accordingly as a result of the stock split and the number of shares reported in the table above reflects the stock split adjustment. See Note 7 to the financial statements for discussion of the stock split.
Other than those disclosed above, no director or officer of Entergy or any of the Registrant Subsidiaries adopted, modified, or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” during the three months ended December 31, 2024.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
Item 10. Directors, Executive Officers, and Corporate Governance of the Registrants (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas)
Information required by this item concerning directors of Entergy Corporation is set forth under the heading “Proposal 1 – Election of Directors” contained in the Proxy Statement of Entergy Corporation, to be filed in connection with its Annual Meeting of Stockholders to be held May 2, 2025 (the “2025 Entergy Proxy Statement”), and is incorporated herein by reference.
All officers and directors listed below held the specified positions with their respective companies as of the date of filing this report, unless otherwise noted.
| | | | | | | | | | | | | | | | | | | | |
| Name | | Age | | Position | | Period |
| Entergy Arkansas, LLC |
| Directors | | | | | | |
| Laura R. Landreaux | | 51 | | President and Chief Executive Officer of Entergy Arkansas | | 2018-Present |
| | | | Director of Entergy Arkansas | | 2018-Present |
| | | | | | |
| Kimberly A. Fontan | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| Peter S. Norgeot, Jr. | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| | | | | | |
| Officers | | | | | | |
| Marcus V. Brown | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| Kimberly Cook-Nelson | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| Kimberly A. Fontan |
| | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| Reginald T. Jackson | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| Laura R. Landreaux |
| | | See information under the Entergy Arkansas Directors Section above. | | |
| Andrew S. Marsh |
| | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| | | | | | | | | | | | | | | | | | | | |
| ENTERGY LOUISIANA, LLC |
| Directors | | | | | | |
| Phillip R. May, Jr. | | 62 | | President and Chief Executive Officer of Entergy Louisiana | | 2013-Present |
| | | | | Director of Entergy Louisiana | | 2013-Present |
| | | | | | |
| Kimberly A. Fontan | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| Peter S. Norgeot, Jr. | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| | | | | | |
| Officers | | | | | | |
| Marcus V. Brown | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| Kimberly Cook-Nelson | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| Kimberly A. Fontan | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| Reginald T. Jackson | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| Andrew S. Marsh | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| Phillip R. May, Jr. | | | | See information under the Entergy Louisiana Directors Section above. | | |
| | | | | | | | | | | | | | | | | | | | |
| ENTERGY MISSISSIPPI, LLC |
| Directors | | | | | | |
| Haley R. Fisackerly | | 59 | | President and Chief Executive Officer of Entergy Mississippi | | 2008-Present |
| | | | | Director of Entergy Mississippi | | 2008-Present |
| | | | | | |
| Kimberly A. Fontan | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| Peter S. Norgeot, Jr. | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| | | | | | |
| Officers | | | | | | |
| Marcus V. Brown | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| Haley R. Fisackerly | | | | See information under the Entergy Mississippi Directors Section above. | | |
| Kimberly A. Fontan | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| Reginald T. Jackson | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| Andrew S. Marsh | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| | | | | | | | | | | | | | | | | | | | |
| ENTERGY NEW ORLEANS, LLC |
| Directors | | | | | | |
| Deanna D. Rodriguez | | 60 | | President and Chief Executive Officer of Entergy New Orleans | | 2021-Present |
| | | | Director of Entergy New Orleans | | 2021-Present |
| | | | Vice President, Regulatory and Public Affairs of Entergy Texas | | 2014-2021 |
| | | | | | |
| | | | | | |
| Kimberly A. Fontan | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| Peter S. Norgeot, Jr. | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| | | | | | |
| Officers | | | | | | |
| Marcus V. Brown | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| Kimberly A. Fontan | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| Reginald T. Jackson | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| Andrew S. Marsh | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| Deanna D. Rodriguez | | | | See information under the Entergy New Orleans Directors Section above. | | |
| | | | | | | | | | | | | | | | | | | | |
| ENTERGY TEXAS, INC. |
| Directors | | | | | | |
| Eliecer Viamontes | | 42 | | President and Chief Executive Officer of Entergy Texas | | 2021-Present |
| | | | | Director of Entergy Texas | | 2021-Present |
| | | | Vice President, Utility Distribution Operations of Entergy Services | | 2020-2021 |
| | | | Senior Director of Labor Relations and Corporate Safety, Florida Power and Light Corporation | | 2018-2020 |
| | | | | | |
| Kimberly A. Fontan | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| Peter S. Norgeot, Jr. | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| | | | | | |
| Officers | | | | | | |
| Marcus V. Brown | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| Kimberly A. Fontan | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| Reginald T. Jackson | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| Andrew S. Marsh | | | | See information under the Information about Executive Officers of Entergy Corporation in Part I. | | |
| Eliecer Viamontes | | | | See information under the Entergy Texas Directors Section above. | | |
The directors and officers of Entergy Texas are elected annually to serve by the unanimous consent of its sole common stockholder. The directors and officers of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi,
and Entergy New Orleans are elected annually to serve by the unanimous consent of the sole common membership owner, Entergy Utility Holding Company, LLC. Entergy Corporation’s directors are elected annually at the annual meeting of shareholders. Entergy Corporation’s officers are elected annually at a meeting of its Board of Directors, which immediately follows the annual meeting of shareholders. The age of each officer and director for whom information is presented above is as of December 31, 2024.
Directors, Director Nomination Process and Audit Committee
The information required under Item 10 concerning directors and nominees for election as directors of Entergy Corporation at the annual meeting of shareholders (Item 401 of Regulation S-K), the director nomination process (Item 407(c)(3) of Regulation S-K), the audit committee (Item 407(d)(4) and (d)(5) of Regulation S-K), and the compliance with the reporting requirements of Section 16 (“Section 16”) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (Item 405 of Regulation S-K) is incorporated herein by reference to information to be contained in the 2025 Entergy Proxy Statement to be filed with the SEC pursuant to Regulation 14A under the Exchange Act.
Code of Ethics
Entergy Corporation’s Code of Business Conduct and Ethics (Code of Business Conduct) is the code of ethics that applies to Entergy’s Chief Executive Officer and other senior financial officers, including those of the Registrant Subsidiaries. The Code of Business Conduct is filed as Exhibit 14 to this report and is available on Entergy Corporation’s website at www.entergy.com. The Code of Business Conduct will be made available, without charge, in print to any shareholder who requests such document from Entergy Corporation’s Corporate Secretary at Entergy Corporation, 639 Loyola Avenue, New Orleans, Louisiana 70113.
If any substantive amendments to the Code of Business Conduct are made or any waivers are granted, including any implicit waiver, from a provision of the Code of Business Conduct, for any director or executive officer of Entergy Corporation, Entergy will disclose the nature of such amendment or waiver on Entergy’s website, www.entergy.com. Entergy is providing the address to its internet site solely for the information of investors and does not intend the address to be an active link. Notwithstanding this reference or any references to the website in this report, the contents of the website are not incorporated into this report.
Insider Trading Policies and Procedures
Entergy Corporation and each of the Registrant Subsidiaries has adopted an insider trading policy which is reasonably designed to promote compliance with applicable insider trading laws, rules and regulations and which governs the purchase, sale, and/or other dispositions of Entergy Corporation’s and the Registrant Subsidiaries’ securities, by any directors, officers and employees of Entergy Corporation and its subsidiaries, including the Registrant Subsidiaries, and by Entergy Corporation and the Registrant Subsidiaries themselves as well as the applicable rules and regulations of the New York Stock Exchange. A copy of the insider trading policy that has been adopted by Entergy Corporation and each of the Registrant Subsidiaries is filed as Exhibit 19 to this report.
Item 11. Executive Compensation
ENTERGY CORPORATION
Information concerning compensation earned by the directors and officers of Entergy Corporation is set forth in the 2025 Entergy Proxy Statement, to be filed in connection with the Annual Meeting of Shareholders to be held May 2, 2025, under the headings “Compensation Discussion and Analysis,” “Annual Compensation Programs Risk Assessment,” “Compensation Tables,” “Pay Ratio Disclosure,” and “2024 Non-Employee Director Compensation,” all of which information is incorporated herein by reference. In this section, Entergy Corporation is also referred to as “Entergy” or the “Company.”
ENTERGY ARKANSAS, ENTERGY LOUISIANA, ENTERGY MISSISSIPPI, ENTERGY NEW ORLEANS, AND ENTERGY TEXAS
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (“CD&A”) describes the executive compensation policies, programs, philosophy, and decisions regarding the Named Executive Officers (“NEOs”) for 2024. It also explains how and why the Talent and Compensation Committee of Entergy Corporation’s Board of Directors arrived at the compensation decisions involving the NEOs in 2024 who were:
| | | | | |
Name(1) | Title |
| |
| Marcus V. Brown | Executive Vice President and General Counsel |
| Haley R. Fisackerly | President and Chief Executive Officer, Entergy Mississippi |
| Kimberly A. Fontan | Executive Vice President and Chief Financial Officer, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas |
| Laura R. Landreaux | President and Chief Executive Officer, Entergy Arkansas |
| Andrew S. Marsh | Chair of the Board and Chief Executive Officer |
| Phillip R. May, Jr. | President and Chief Executive Officer, Entergy Louisiana |
| Peter S. Norgeot, Jr. | Executive Vice President and Chief Operating Officer, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas |
| Deanna D. Rodriguez | President and Chief Executive Officer, Entergy New Orleans |
| Eliecer Viamontes | President and Chief Executive Officer, Entergy Texas |
| Roderick K. West | Former Group President, Utility Operations, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas |
(1)Messrs. Brown, Marsh, and Norgeot and Ms. Fontan hold the positions referenced above as executive officers of Entergy Corporation. Mr. West held the position referenced above as an executive officer of Entergy Corporation until November 1, 2024 when he transitioned to a senior strategic advisory role effective November 1, 2024 in connection with his retirement from the Company on January 31, 2025. No additional compensation was paid in 2024 to any of these officers for their service as NEOs of the Utility operating companies.
On December 12, 2024, Entergy effected a two-for-one forward stock split of Entergy Corporation common stock and a proportionate increase in the number of authorized shares of its common stock (“Stock Split”). Shares began trading on a Stock Split-adjusted basis at market open on December 13, 2024. All share and per share information throughout this CD&A has been retroactively adjusted to reflect the Stock Split.
All of Entergy Arkansas’s, Entergy Louisiana’s, Entergy Mississippi’s, Entergy New Orleans’s, and Entergy Texas’s directors are employees of Entergy or its subsidiaries and do not receive any additional compensation for their services as director.
Entergy Corporation’s Compensation Principles and Philosophy
Entergy Corporation’s executive compensation programs are based on a philosophy of pay for performance aimed at achieving the Company’s strategy and business objectives. Entergy Corporation believes its executive compensation programs advance the interests of all of its stakeholders, as they are thoughtfully designed to:
•Motivate and reward the achievement of results that are deemed by the Talent and Compensation Committee to be consistent with the overall goals and strategic direction that the Board has approved for the Company.
•Attract and retain a highly experienced, diverse, and successful management team.
•Create sustainable value for the benefit of all of Entergy Corporation’s stakeholders, including its customers, employees, communities, and owners.
•Align the interests of Entergy Corporation’s executives with the Company’s long-term business strategy by tying equity-based awards to performance metrics designed to focus Entergy Corporation’s executives on driving continuous improvement in operational and financial results to the benefit of all stakeholders, including Entergy Corporation’s customers, employees, communities, and owners.
Compensation Best Practices
The Talent and Compensation Committee reviews Entergy’s executive compensation programs on an ongoing basis to evaluate whether they support the Company’s executive compensation principles and philosophy and are aligned with the interests of our stakeholders. The Company’s executive compensation practices include the following, each of which the Talent and Compensation Committee believes reinforces our executive compensation principles and philosophy:
| | | | | | | | |
| Practice | Description |
| Pay for Performance | The executive compensation programs are designed to yield pay outcomes that the Company believes are highly correlated with performance and support long-term value creation. |
| Annual and Long-Term Incentive Measures Drive Desired Employee Behaviors | Performance measures for the annual and long-term incentive programs are designed to incentivize employee behaviors that serve the Company’s key stakeholders. |
| Double Trigger Change-in-Control | The Company requires both a change-in-control and an involuntary termination without cause or voluntary termination with good reason for cash severance payments and immediate vesting of unvested equity awards. |
| Long-Term Incentives Paid in Stock | All long-term incentive awards are settled in shares of Entergy common stock. |
| Stock Ownership Guidelines | The Company requires executive officers to own a significant amount of Entergy Corporation common stock. |
| Cap on Incentive Awards for OCE Members | The maximum payout for members of the Office of the Chief Executive (“OCE”), which members include all of the NEOs, is capped at 200% of the target opportunity for the annual incentive and long-term Performance Unit Program (“PUP”) awards. |
| Rigorous Goals | The Company sets financial goals based on externally disclosed annual and multi-year guidance and outlooks and non-financial goals based on a rigorous internal review. |
| | | | | | | | |
| Practice | Description |
| Clawback Policies Beyond Dodd-Frank Requirements | Entergy’s officers (as defined under Section 16), including the NEOs, are subject to a recoupment policy that complies with and, in certain respects, goes beyond, the requirements of the SEC rules and NYSE Listing Standards for the recovery of any erroneously awarded performance-based incentive compensation. Additionally, all executive officers of Entergy and its subsidiaries, including the NEOs, are subject to a discretionary recoupment policy that allows for recovery of incentive compensation, including time-based awards, from an officer who engages in certain detrimental conduct. See section of this CD&A discussing “Recoupment of Compensation (Clawback Provisions)” for additional information about these policies. |
| No Hedging of Company Stock | Directors, executive officers, and employees of Entergy and its subsidiaries may not directly or indirectly engage in transactions intended to hedge or offset the market value of the Company’s common stock owned by them. |
| No Pledging of Company Stock | Directors and executive officers of Entergy and its subsidiaries may not directly or indirectly pledge Entergy common stock as collateral for any obligation. |
| No Excessive Perquisites | Executive officers receive limited ongoing perquisites that make up a small portion of total compensation. |
| No Tax Gross-Ups | The Company does not provide tax gross-ups to the members of the OCE other than certain relocation benefits. |
| No Dividends on Unearned Performance Awards | The Company does not pay dividends on unearned PUP awards. |
| No Repricing or Exchange of Underwater Stock Options | The Company’s equity incentive plan does not permit repricing or the exchange of underwater stock options without the approval of its shareholders. |
| No Employment Agreements | The Company does not have employment contracts with its executive officers. |
| Independent Compensation Consultant | The Talent and Compensation Committee retains an independent compensation consultant to advise on the executive compensation programs and practices. |
| Annual Say-on-Pay | The Company values the input of its shareholders on the executive compensation programs and holds annual say-on-pay votes. |
| Annual Compensation Risk Assessment | A risk assessment of the compensation programs is performed on an annual basis to ensure that the programs and policies do not incentivize unnecessary or excessive risk-taking behavior. |
2024 Incentive Program Changes
Based in part on shareholder feedback and consistent with our compensation principles and philosophy discussed earlier in this CD&A, the Talent and Compensation Committee refined Entergy's 2024 incentive compensation programs by:
•Moving the Adjusted FFO/Debt Ratio measure from the PUP to the annual incentive program, weighted at 10%, and moving the Environmental Stewardship measure from the annual incentive program to the PUP, beginning with the 2024–2026 performance period (“2024–2026 PUP”), weighted at 20%. The Environmental Stewardship measure introduced into the 2024–2026 PUP is based purely on quantitative components related to climate resilience and carbon-free generation, subject to a modifier for progress on carbon capture and storage (“CCS”) objectives;
•Removing the tax adjustment from the calculation of the ETR Adjusted EPS results in the annual incentive program;
•Adjusting the design of the Safety measure in the annual incentive program to incorporate Total Recordable Incident Rate (“TRIR”) as a component equally weighted with the existing Serious Injury and Fatality (“SIF”) component; and
•Adjusting the design of the Customer net promoter score (“NPS”) measure in the annual incentive program to incorporate large commercial and industrial (“C&I”) customer feedback, equally weighted with the residential and business customer feedback components.
As a result of the above refinements, the frameworks for our 2024 incentive compensation programs comprised the following measures:
| | | | | | | | | | | | | | |
| Annual Incentive Program | | 2024–2026 PUP |
| Measure | Weighting | | Measure | Weighting |
| ETR Adjusted EPS | 60% | | Relative Total Shareholder Return (“TSR”) | 80% |
| Adjusted FFO/Debt Ratio | 10% | | Environmental Stewardship Climate Resilience Carbon-Free Generation*
| 20% |
Safety SIF Count TRIR | 10% | |
Customer NPS Residential Business Large C&I | 10% | | * subject to carbon capture modifier |
| Diversity, Inclusion, & Belonging (“DIB”) | 10% | | | |
Under the 2024 incentive compensation program frameworks described above, the performance assessments for 90% of the overall annual incentive program funding and for 100% of the 2024–2026 PUP funding are purely quantitative.
What Entergy Corporation Pays and Why
How Entergy Corporation Makes Compensation Decisions
Role of the Talent and Compensation Committee
The Talent and Compensation Committee, which is composed solely of independent directors, determines the compensation for each member of the OCE and oversees the design and administration of Entergy’s executive compensation programs. Each year, the Talent and Compensation Committee reviews and considers a comprehensive assessment and analysis of the executive compensation programs, including the elements of each OCE member’s compensation, with input from the committee’s independent compensation consultant. When establishing the compensation programs for the NEOs, the Talent and Compensation Committee also considers input and recommendations from management, including Entergy’s Chief Executive Officer and Entergy’s Chief Human Resources Officer, who attend the Talent and Compensation Committee meetings as appropriate. The Talent and Compensation Committee regularly conducts executive sessions without management present.
Role of the Independent Compensation Consultant
In 2024, the Talent and Compensation Committee continued to retain Pay Governance, LLC (“Pay Governance”) as its independent compensation consultant. Pay Governance attends all Talent and Compensation Committee meetings and provides advice, including reviewing and commenting on market compensation data used to establish the compensation of the executive officers and Entergy Corporation’s directors, the terms and performance goals applicable to incentive program awards, the process for certifying achievement of the incentive goals, and analysis with respect to specific projects and information regarding trends and competitive practices. Pay Governance also meets with the Talent and Compensation Committee members without management present. The
committee annually conducts an independence assessment of its advisors including the compensation consultant, consistent with applicable NYSE listing standards and SEC rules.
Competitive Positioning
Market Data for Compensation Comparison
Annually, the Talent and Compensation Committee reviews:
•published and private compensation survey data analyzed and provided by Pay Governance;
•both utility and general industry data to help determine total direct compensation (base salary, annual, and long-term incentive) for non-industry specific roles; and
•data from utility companies to help determine total direct compensation for management roles that are utility-specific.
The Talent and Compensation Committee uses this survey data to develop compensation opportunities that are designed to deliver total direct compensation within a targeted range of approximately the 50th percentile of the surveyed companies in the aggregate. In general, compensation levels for an executive officer who is new to a position tend to be closer to the 25th percentile of surveyed companies, while seasoned executive officers whose experience and skill set are viewed as critical to retain may be positioned at or above the market median.
Compensation Peer Group
Although the survey data described above is the primary data used in benchmarking compensation, the Talent and Compensation Committee used compensation information from the companies included in the Philadelphia Utility Index to evaluate the overall reasonableness of the Company’s executive compensation programs and to determine Relative TSR performance levels for the 2022–2024 PUP. The Talent and Compensation Committee identified the Philadelphia Utility Index as the appropriate industry peer group for determining Relative TSR performance levels because the companies included in this index, in the aggregate, are viewed as comparable to the Company in terms of business and scale.
The Talent and Compensation Committee approved the 2024 compensation model and framework based on compensation information from the companies included in the Philadelphia Utility Index as of December 31, 2023, which were (in addition to Entergy):
| | | | | | | | | | | | |
| AES Corporation | Consolidated Edison Inc. | Edison International | Pinnacle West Capital Corporation |
| Ameren Corporation | Constellation Energy Corporation | Eversource Energy | Public Service Enterprise Group, Inc. |
| American Electric Power Co. Inc. | Dominion Energy | Exelon Corporation | Southern Company |
| American Water Works Company, Inc. | DTE Energy Company | FirstEnergy Corporation | WEC Energy, Inc. |
| CenterPoint Energy Inc. | Duke Energy Corporation | NextEra Energy, Inc. | Xcel Energy, Inc. |
2024 Compensation Structure and Incentive Metrics
In 2024, the executive compensation programs consisted of base salary and annual and long-term incentives as outlined in the table below:
| | | | | | | | | | | | | | |
| Compensation Element | Form | Objective | Metrics/Performance Period |
| Base Salary | Cash | Provides a base level of competitive cash compensation for executive talent. | Adjustments consider individual performance |
| Annual Incentive Program Awards | Cash | Motivates and rewards executives for performance on both key financial and non-financial measures during the year; incentivizes behaviors that serve the Company’s four stakeholders - customers, employees, communities, and owners. | •ETR Adjusted EPS |
•Adjusted FFO/Debt Ratio |
•Safety |
•Customer NPS |
•DIB |
| Measured over a one-year performance period |
2024–2026 PUP Awards | Equity | Provides market competitive compensation designed to retain skills and knowledge while increasing our executives’ ownership in the Company to further enhance their focus on driving continuous improvement in operational results to the benefit of all stakeholders. Designed to focus our executives on driving utility growth, building long-term shareholder value, making progress toward quantitative environmental goals aligning with desired customer outcomes for clean energy, reliable operations, and reduced storm restoration costs and delivering positive outcomes from capital investments relating to both the energy transition and environmental risks. | •Relative TSR |
•Environmental Stewardship |
Measured over a three-year performance period |
| Stock Options | Equity | Enhances management’s focus on driving continuous improvement in operational results to the benefit of all stakeholders. Designed to align interests of management with long-term shareholder value as demonstrated by increases in our share price, provide market competitive compensation, retain talent, and increase management’s ownership in the Company. | Share price appreciation with three-year pro rata vesting |
| Restricted Stock | Equity | Enhances management’s focus on driving continuous improvement in operational results to the benefit of all stakeholders. Designed to provide market competitive compensation, retain talent, and increase management’s ownership in the Company. | Service-based with three-year pro rata vesting |
2024 Compensation Decisions
Base Salary
The salary for each NEO is based on the outcome of an annual merit review, results of the annual market assessment of NEO compensation as provided by Pay Governance, the need to retain an experienced team, job promotion, individual performance, scope of responsibility, leadership skills, and behaviors, current compensation, and internal equity. The Talent and Compensation Committee considers changes in the base salaries of the NEOs at least annually, and in 2024, all of the NEOs received increases in their base salaries ranging from approximately 3.5% to 13.6%, which were effective April 1, 2024, and were based on the factors above. In the case of Messrs. Marsh and Norgeot and Ms. Fontan, their increases were made to transition below-market base salary levels toward the market median in recognition of their performance since assuming their respective roles in 2022.
The following table sets forth the 2023 and 2024 annual base salaries, after adjusting for the annual merit increases, for the NEOs.
| | | | | | | | | | | | | | |
| Named Executive Officer | | 2023 Base Salary | | 2024 Base Salary |
| Marcus V. Brown | | $761,302 | | $791,754 |
| Haley R. Fisackerly | | $438,206 | | $458,019 |
| Kimberly A. Fontan | | $625,000 | | $706,250 |
| Laura R. Landreaux | | $411,351 | | $430,983 |
| Andrew S. Marsh | | $1,100,000 | | $1,250,000 |
| Phillip R. May, Jr. | | $454,593 | | $472,863 |
| Peter S. Norgeot, Jr. | | $598,000 | | $669,760 |
| Deanna D. Rodriguez | | $362,274 | | $375,924 |
Eliecer Viamontes(1) | | $365,385 | | $380,070 |
| Roderick K. West | | $807,491 | | $835,753 |
(1) Following the annual merit increases, Mr. Viamontes received an off-cycle salary increase of approximately 10%, which brought his base salary to $418,077, effective September 29, 2024. This off-cycle adjustment to Mr. Viamontes’ salary was made to transition his below-market base salary level toward the market median.
Annual Incentive Compensation
The NEOs are eligible for annual incentive awards pursuant to the executive annual incentive program established under our 2019 Omnibus Incentive Plan (“2019 OIP”). The maximum funding available for the program is determined by a payout factor referred to as the Entergy Achievement Multiplier (“EAM”). Each year, after a review of the Company’s strategic plan, the Talent and Compensation Committee engages in a rigorous process to determine the performance measures and the minimum, target, and maximum performance goals for each measure that will be used to determine the EAM. The Talent and Compensation Committee also annually establishes target opportunities for each NEO who is a member of the OCE. For other NEOs, target opportunities are based on their management level within the Entergy organization. Executive management levels at Entergy Corporation range from management level 1 through management level 4. Accordingly, incentive award opportunities differ from one another based on either management level or the external market data developed by Pay Governance. The target opportunities for Mr. Marsh and Ms. Fontan were increased as compared to 2023 from 120% to 130% and from 75% to 85%, respectively, to align more closely with the market median due to their increased tenure in their roles and performance in their roles since their promotions to those roles in 2022. Effective November 1, 2024, Messrs. Fisackerly, May, and Viamontes and Mses. Landreaux and Rodriguez became members of the OCE. The 2024 target award opportunities for each of Messrs. Fisackerly, May, and Viamontes and Mses. Landreaux and Rodriguez were determined prior to the date they became members of the OCE and therefore, were based on their respective management level. The 2024 target award opportunities for each of the remaining NEOs,
including Messrs. Fisackerly, May, and Viamontes and Mses. Landreaux and Rodriguez, remained at the same level as those established for 2023.
Each January, after the end of the fiscal year, the Finance and Talent and Compensation Committees jointly review the Company’s results, and the Talent and Compensation Committee determines the EAM based on the level of achievement of each of the performance measure goals established. The Talent and Compensation Committee retains discretion to modify the EAM based on its assessment of the degree of management’s success in achieving the Company’s strategic objectives during the year, taking into account the business and operating environment.
Individual executive officer annual incentive awards are determined based on the Talent and Compensation Committee’s consideration of each executive officer’s role in executing the Company’s strategies and delivering the financial and operational performance achieved, but also the individual’s accountability for any challenges and achievements the Company experienced during the year.
2024 Annual Incentive Program Performance Measures and Methodology
The measures that the Talent and Compensation Committee approved to determine the EAM for 2024 were: ETR Adjusted EPS, Adjusted FFO/Debt Ratio, Safety, Customer NPS, and DIB, with ETR Adjusted EPS being the most heavily weighted at 60% and the remaining measures each weighted at 10%.
Minimum, target, and maximum performance goals were established for each of the measures, with no payout for results less than the designated minimum, a 25% payout opportunity for results at the minimum, a 100% payout opportunity for results at target, and a 200% payout opportunity for results equal to or exceeding the maximum. Payout opportunities for results between the minimum and target, and target and maximum performance achievement levels, respectively, were determined by straight line interpolation, with the EAM result being determined formulaically by the weighted average of the payouts determined for each of the performance measures.
Quantitative Performance Measures
All the performance measures used to determine the EAM except the DIB performance measure are purely quantitative measures. Following are summary descriptions of each of the quantitative performance measures, including the rationale for their selection and targets set for 2024:
| | | | | | | | |
| Measure | Rationale | Goal |
ETR Adjusted EPS Non-GAAP measure, which is the earnings measure by which we provide external guidance, adjusted to eliminate the effect of: (i) major storms, including the impact on total debt of pending securitizations; (ii) resolutions during the year of certain unresolved regulatory litigation matters; (iii) unrealized gains or losses on equity securities; (iv) income tax law changes; and (v) any adjustments to contributions to pension investments or trusts related to post-retirement benefits that are elective and deviate from original plan assumptions (collectively, the “Pre-Determined Exclusions”)
|
•Based on an objective financial measure that we and our investors consider to be important in evaluating our financial performance •Based on the same measure we use for internal and external financial reporting •Provides both discipline and transparency |
•Target performance was set to equal management’s expectation for the Company’s Adjusted EPS as reflected in its financial plan, or $3.60 per share ($7.20 per share pre-Stock Split) •Minimum performance: $3.51 per share ($7.02 per share pre-Stock Split) •Maximum performance: $3.69 per share ($7.38 per share pre-Stock Split) |
| | | | | | | | |
| Measure | Rationale | Goal |
Adjusted FFO/Debt Ratio Non-GAAP measure, which is the ratio of: (i) adjusted funds from operations calculated as consolidated operating cash flow adjusted for allowance for funds used during construction, working capital and the effects of securitization revenue and expense, and the Pre-Determined Exclusions (as defined earlier and also discussed later in this CD&A) to (ii) total consolidated debt, excluding current and pending securitization debt, in each case calculated to reflect rating agency treatment of interest and principal on the Company’s junior subordinated debentures |
•Helps emphasize the importance of managing capital and operations and maintenance (O&M) spending, which directly impacts this metric •Key measure evaluated by credit rating agencies •Management of cash flows enables the Company to strengthen its balance sheet, which reduces borrowing costs and supports affordability for customers |
•Target performance was set to equal to the prior year results, or 14.4%, which was believed to be a reasonable stretch goal because it exceeded the projected Adjusted FFO/Debt Ratio forecast as reflected in the Company's financial plan •Minimum performance: 14.0% •Maximum performance: 14.9% |
Safety Quantitative measure based 50% on the Company's SIF count as defined by the Edison Electric Institute (EEI) and 50% on the Company's TRIR, with results of both sub-metrics being equally weighted •SIF count is the number of Entergy employee and contractor serious injuries and fatalities over a one-year period, with employee and contractor targets and results are combined to arrive at reported results and one fatality automatically setting the sub-metric result to zero •TRIR is based on Occupational Safety and Health Administration (OSHA) reporting guidelines and measures the number of work-related injuries and illnesses per 100 full-time employees over a one-year period |
•Supports our goal of maintaining a safe and incident-free workplace for all of our employees and contractors •TRIR was incorporated as a sub-metric in 2024 because: ◦It is a target that can be impacted by everyone since not all employees are exposed to high energies that lead to SIF events ◦Improvements in TRIR are associated with improvements in enterprise safety culture, which should contribute to a reduction in SIF events |
SIF count •Target performance was set at a level representing top quartile performance among electric utilities for 2024, as reported by the EEI, or 5 •Minimum performance: 7 •Maximum performance: 3 •No payout if any fatalities TRIR •Target performance was set at 0.45, which represented significant improvement from 2023's result of 0.49 •Minimum performance: 0.55 •Maximum performance: 0.40 |
|
|
|
|
| | | | | | | | |
| Measure | Rationale | Goal |
Customer NPS Quantitative measure based on a benchmark blind survey process for residential and business customers and a custom survey for large C&I customers, with the final result determined based on a composite of relative quartile ranking for residential and business customers and a numerical score for large C&I customers, equally weighted •The blind survey of residential and business customers asks how likely they are to recommend Entergy, on a scale of 0 to 10 •The NPS is the percentage of promoters (scores 9-10) less the percentage of detractors (scores of 6 or less) •A custom survey is used to determine large C&I NPS because a satisfactory benchmark survey is not available |
•Incentivizes actions that drive positive customer outcomes (as measured through customer feedback), including impacts on reliability improvements, responsiveness, price/ affordability and brand/ reputation •Signals overall health and loyalty of our customer relationship |
Residential and Business NPS •Target performance goals were set at levels believed to represent reasonably achievable incremental progress on the path to 1st Quartile Customer NPS •Targets were set based on the year-end ranking in a benchmark survey of utility net promoter scores, for which the Company ranked in the 3rd Quartile in each sub-metric for 2023 ◦Maximum performance was set at a rank equating to 2nd Quartile, and minimum performance was set at the median rank between the 2023 performance and the 2024 target performance, thereby requiring meaningful progress to achieve a minimum payout and achievement of 2nd Quartile results for the maximum payout Residential ▪Target performance: 49 ▪Minimum performance: 52 ▪Maximum performance: 47 Business ▪Target performance: 37 ▪Minimum performance: 39 ▪Maximum performance: 32 Large C&I NPS •Target performance was set at a two point improvement from the 2023 score, the minimum performance was set at the 2023 score, and the maximum performance was set at an improvement of four points to the 2023 score ◦Target performance: 45 ◦Minimum performance: 43 ◦Maximum performance: 47 |
|
|
|
|
Qualitative Performance Measure: Diversity, Inclusion and Belonging
The DIB measure is an overall qualitative assessment of diversity, culture and commerce outcomes using key DIB performance indicators, such as inclusive climate survey scores, diverse supplier managed spend, progress on DIB initiatives, and responsiveness to emergent issues.
The DIB measure was used in the annual incentive program because:
•It reinforces our commitment to offer a work environment that is welcoming to all and allows us to attract and retain superb talent allowing us to execute on strategy.
•It rewards progress toward developing and retaining a workforce with a variety of backgrounds, experiences and perspectives that reflects the rich diversity of the communities we serve, while maintaining our commitment to hiring the most qualified candidates.
•It drives an engaged workforce, customer-centric service and solutions, enhancement of owner value, and community partnerships.
2024 Annual Incentive Program Target Performance Goal Considerations
In determining the targets for 2024, the Talent and Compensation Committee reviewed anticipated drivers and risks to the Company’s expectations for ETR Adjusted EPS and Adjusted FFO/Debt Ratio for 2024 as set forth in the Company’s financial plan, as well as factors driving the strong financial performance achieved in 2023. The Talent and Compensation Committee noted that the proposed targets for ETR Adjusted EPS reflected year-to-year growth in the core earnings measure underlying the annual incentive program target consistent with Entergy’s stated objective at the beginning of the year of steady, predictable growth in ETR Adjusted EPS at a compound annual rate of 6%-8%. The Talent and Compensation Committee also considered the potential impact of a wide range of identified risks and opportunities and confirmed that the annual incentive program targets for each of the performance measures reflected a reasonable balancing of such risks and opportunities and an appropriate degree of challenge. The goals were designed to be achievable, but also to require the strong coordinated performance of the management team.
2024 Annual Incentive Program Performance Assessment
In January 2025, the Finance and Talent and Compensation Committees jointly reviewed the Company’s financial and operational results and assessed management’s performance against the performance measures and goals described above in order to determine the EAM. The following table summarizes the annual incentive program performance goals and results for 2024:
| | | | | | | | | | | | | | | | | | | | |
| Performance Measure | Performance Goals and Results |
| Weighting | Minimum | Target | Maximum | 2024 Results | Level of Achievement |
ETR Adjusted EPS ($)(1) | 60% | 3.51 | 3.60 | 3.69 | 3.65 | 156% |
Adjusted FFO/Debt Ratio(2) | 10% | 14.0% | 14.4% | 14.9% | 15.0% | 200% |
Safety(3) | 10% | SIF: 7 TRIR: 0.55 | SIF: 5 TRIR: 0.45 | SIF: 3 TRIR: 0.40 | SIF: 18 TRIR: 0.41 | 90% |
Customer NPS(4) | 10% | Residential: 52 Business: 39 Large C&I: 43 | Residential: 49 Business: 37 Large C&I: 45 | Residential: 47 Business: 32 Large C&I: 47 | Residential: 34 Business: 26 Large C&I: 49 | 200% |
| DIB | 10% | Qualitative assessment | 89% |
Calculated EAM(5) | 100% | 25% | 100% | 200% | | 151% |
Adjusted EAM(6) | | | | | | 142% |
(1)ETR Adjusted EPS is a non-GAAP measure. The goals and results set forth in the table above for ETR Adjusted EPS are presented on Stock Split adjusted basis; the pre-Stock Split target goal approved by the Talent and Compensation Committee in January 2024 for ETR Adjusted EPS was $7.20, with pre-Stock Split minimum and maximum goals set at $7.02 and $7.38, respectively. See "What Energy Corporation Pays and Why - 2024 Compensation Decisions - 2024 Annual Incentive Program Performance Measures and Methodology " for information regarding this non-GAAP financial measure.
(2)The Adjusted FFO/Debt Ratio, a non-GAAP measure, is the ratio of: (i) adjusted funds from operations calculated as consolidated operating cash flow adjusted for allowance for funds used during construction, working capital (including deferred fuel), the effects of securitization revenue and expense, and the Pre-Determined Exclusions (defined later in this CD&A) to (ii) total consolidated debt, excluding current and pending securitization debt, in each case calculated to reflect rating agency treatment of interest and principal on Entergy’s junior subordinated debentures. The Talent and Compensation Committee decided to calculate the Adjusted FFO/Debt Ratio in a manner consistent with the rating agency treatment of such debt, as updated in early 2024, in order to ensure that management’s incentives remained aligned with the goal of optimizing Entergy’s capital structure while maintaining its credit rating.
(3)For 2024, the Safety measure calculation was based on the Company's TRIR and the Company's SIF count as defined by the EEI, with results of both sub-metrics being equally weighted.
(4)For 2024, the Customer NPS measure was calculated based on equally weighted categories of residential, business and large C&I customer NPS scores.
(5)Reflects the EAM as a percentage of target and as calculated in accordance with the annual incentive program prior to the Talent and Compensation's discretionary adjustment.
(6)As discussed below, the Talent and Compensation Committee exercised its discretion to adjust the EAM downward to 142%, equating to a level of achievement on Safety of zero, due to the Company's poor performance on serious injuries and fatalities, including four contractor fatalities during the year.
In assessing the DIB measure, the committees performed a qualitative assessment of management’s performance in the areas of diversity, culture and commerce, informed by certain key performance indicators and quantitative measures, and assessed progress on DIB strategies and initiatives identified at the beginning of the
performance period as important to achieving the Company’s strategic objectives. Some of the 2024 actions taken and recognitions considered as part of the assessment of performance on the DIB measure included:
•Recognized within: Forbes Best Employers for Diversity List 2024, Newsweek America’s Greatest Workplaces for Diversity, USBE&IT Magazine Top Supporters of HBCU Schools;
•Received: Times-Picayune Top Workplaces Award (New Orleans), Houston Chronicle Top Workplace Award (Texas), Global Energy Transition Board Hero of the Community Award (Texas);
•Leadership Employee Resource Group recognized with 2024 Diversity Impact Spotlight Award;
•Seventh consecutive year receiving the U.S. Department of Labor Platinum Vets Medallion Award for veteran talent pipeline development, recruitment, and retention;
•Launched four new employee resource groups, which are open to all employees–ASPIRE (Black), VIDA (Hispanic), SHINE (Asian), and ABLE (Differently abled)–to further promote workplace inclusion;
•Sustained the Company's overall inclusion score of 78 (2nd Quartile) in the annual Inclusive Climate Survey; and
•Continued movement on workforce development programs to help promote a diverse pipeline.
In assessing 2024 performance, the Finance and Talent and Compensation Committees reviewed management’s performance under each of the performance measures referenced above in relation to the targets set at the beginning of the year, including primary drivers explaining how the results achieved compared to the targets set for each measure.
The foregoing performance resulted in a calculated EAM of 151%. However, the Talent and Compensation Committee exercised its discretion to reduce the EAM to 142%, due to the Company’s poor performance on serious injuries and fatalities, including four contractor fatalities during the year. This adjustment equated to resetting the level of achievement for the Safety metric to zero. The Talent and Compensation Committee concluded that despite the Company’s improved TRIR performance, such an adjustment was warranted by its SIF count performance at a level well below the minimum level of performance.
In addition to the foregoing financial and non-financial results, the Talent and Compensation Committee considered each NEO's degree of success in achieving various strategic, operational and regulatory objectives and in overcoming certain challenges that arose in the business during the course of the year. To determine the individual NEO annual incentive program awards, the Talent and Compensation Committee considered individual performance in executing on the Company’s strategies and delivering the strong financial performance and operational successes achieved in 2024, as well as the executive’s success in achieving individual goals within the executive’s scope of responsibilities. The committee also considered certain challenges the Company experienced during the year and each officer’s accountabilities and accomplishments in addressing those challenges. With these considerations in mind, the Talent and Compensation Committee approved the following annual incentive payouts to each of the NEOs, ranging from 112% to 159% of target.
| | | | | | | | | | | | | | | | | |
| Named Executive Officer | Year-End Base Salary | Target as Percentage of Year-End Base Salary | 2024 Target Award | Payout as Percentage of Target | 2024 Annual Incentive Award |
| Marcus V. Brown | $791,754 | 80% | $633,403 | 146% | $924,768 |
| Haley R. Fisackerly | $458,019 | 55% | $251,910 | 159% | $400,537 |
| Kimberly A. Fontan | $706,250 | 85% | $600,313 | 146% | $876,457 |
| Laura R. Landreaux | $430,983 | 55% | $237,041 | 140% | $331,857 |
| Andrew S. Marsh | $1,250,000 | 130% | $1,625,000 | 142% | $2,307,500 |
| Phillip R. May, Jr. | $472,863 | 60% | $283,718 | 159% | $451,112 |
| Peter S. Norgeot, Jr. | $669,760 | 75% | $502,320 | 112% | $562,598 |
| Deanna D. Rodriguez | $375,924 | 50% | $187,962 | 140% | $263,147 |
| Eliecer Viamontes | $418,077 | 55% | $229,942 | 140% | $321,919 |
| Roderick K. West | $835,753 | 80% | $668,602 | 146% | $976,159 |
Long-Term Incentive Compensation
Long-term incentive compensation delivered in shares of Entergy common stock represents the largest portion of executive officer compensation. The Company believes the combination of long-term incentives it employs provides a compelling performance-based compensation opportunity, is effective at retaining a strong senior management team, and aligns the interests of the executive officers with the interests of Entergy’s customers and shareholders by enhancing executive officers’ focus on the Company’s long-term goals.
For each NEO, a dollar value is established to determine that NEO’s long-term incentive awards. The target award value for each NEO is determined based on market median compensation data for the officer’s role, adjusted to reflect internal equity and individual performance, including each NEO’s degree of success in achieving various strategic, operational, and regulatory objectives and in overcoming certain challenges that arose in the business during the course of the year.
2024 Long-Term Compensation Incentive Compensation Mix
In January 2024 the Talent and Compensation Committee approved the 2024 long-term incentive award target amounts for each NEO. This amount for each NEO was then converted into the number of performance units, stock options, and shares of restricted stock granted to each NEO based on an allocation of 60% performance units, 20% stock options, and 20% restricted stock.
| | | | | | | | | | | | | | |
| NEO | Long-Term Incentive Grant Date Value(1) (As of January 25, 2024) | 2024-2026 Target Performance Units | Stock Options | Shares of Restricted Stock |
| Marcus V. Brown | $1,493,209 | 14,848 | 33,062 | 6,018 |
| Haley R. Fisackerly | $475,721 | 4,730 | 10,532 | 1,918 |
| Kimberly A. Fontan | $1,861,138 | 18,506 | 41,206 | 7,502 |
| Laura R. Landreaux | $609,407 | 6,060 | 13,492 | 2,456 |
| Andrew S. Marsh | $7,190,823 | 71,502 | 159,218 | 28,982 |
| Phillip R. May, Jr. | $574,332 | 5,710 | 12,716 | 2,316 |
| Peter S. Norgeot, Jr. | $1,529,283 | 15,206 | 33,862 | 6,164 |
| Deanna D. Rodriguez | $304,960 | 3,032 | 6,750 | 1,230 |
| Eliecer Viamontes | $382,561 | 3,804 | 8,470 | 1,542 |
Roderick K. West(2) | $1,603,709 | 15,946 | 35,510 | 6,464 |
(1) Due to fluctuations in stock price, grant date value may differ from the value on date the long-term incentive award target dollar values are established for each NEO.
(2) The shares of restricted stock noted in the table above for Mr. West were forfeited upon his retirement from the Company on January 31, 2025. The stock options noted in the table above for Mr. West will continue to vest following his retirement, in accordance with the original vesting schedule and will expire five years after his retirement date. With respect to the target PUP performance units noted in the table above, Mr. West will be eligible for a pro-rated award based on actual performance and full months of service during the performance period. See "Potential Payments Upon Termination or Change in Control" for additional information on the treatment of Mr. West's outstanding equity awards in connection with his retirement from Entergy.
All the performance units, shares of restricted stock and stock options granted to the NEOs in 2024 were granted pursuant to the 2019 OIP. The 2019 OIP requires a “double trigger,” meaning both a change in control of Entergy and an involuntary job loss without cause or a resignation by the NEO for good reason within 24 months following the change in control, for the acceleration of these awards upon a change in control.
Performance Units
The NEOs are issued performance unit awards under the PUP with payout opportunities established by the Talent and Compensation Committee at the beginning of each three-year performance period. The PUP specifies minimum, target, and maximum performance goals, the achievement of which determines the number of performance units that may be earned by each participant.
2024–2026 PUP Performance Measures and Goals
For the 2024–2026 PUP, the Talent and Compensation Committee placed the Adjusted FFO/Debt Ratio measure used in the PUP for the 2021–2023, 2022–2024 and 2023–2025 performance periods with an Environmental Stewardship measure (weighted 20%) to better align with the Company's multi-year approach to decarbonization and also based on shareholder feedback to incorporate an environmental performance measure into
the PUP. The Talent and Compensation Committee continued to use Relative TSR in the 2024–2026 PUP, which retained its weighting of 80%.
Relative TSR
The Talent and Compensation Committee chose Relative TSR as a PUP performance measure because it reflects the Company’s creation of shareholder value relative to other electric utilities included in the Philadelphia Utility Index over the performance period. By measuring performance in relation to an industry benchmark, this measure is intended to isolate, and reward management for, the creation of shareholder value that is not driven by events that affect the industry as a whole.
Minimum, target and maximum performance goals are determined by reference to the ranking of Entergy’s TSR in relation to the TSR of the companies in the Philadelphia Utility Index. The Talent and Compensation Committee identified the Philadelphia Utility Index as the appropriate industry peer group for determining Relative TSR because the companies included in this index, in the aggregate, are viewed as comparable to the Company in terms of business and scale.
Environmental Stewardship
The Environmental Stewardship measure consists of two components designed to capture the key dimensions of Entergy's response to climate change:
•A Climate Resilience component, sub-weighted at 60%, which is focused on reduction in storm restoration costs attributable to completed infrastructure improvement investments.
•A Carbon-Free Generation component, sub-weighted at 40%, which is focused on generation of electricity from carbon emission-free sources as compared to the Company's projection for the 2024–2026 performance period.
A Carbon Capture Modifier applies to the Carbon-Free Generation component in the range of -9% to +9% based on the Talent and Compensation Committee's assessment of achievement (or lack of achievement) of specific CCS objectives.
The Environmental Stewardship measure was incorporated as a performance measure in the 2024–2026 PUP because:
•It measures progress towards quantitative goals that align with desired customer and owner outcomes for clean energy, reliable operation and reduced storm restoration costs.
•It aligns with interests of regulators to see positive outcomes from capital investments in managing both transition and physical risk.
In January 2024, the Talent and Compensation Committee established the following goals for the 2024–2026 PUP performance measures:
| | | | | | | | |
Performance Measures(1) | PUP
Measure Weight | Goals(2) |
| Relative TSR | 80% | Minimum (25%) - Bottom of 3rd Quartile Target (100%) - Median Percentile Maximum (200%) - 1st Quartile |
| Environmental Stewardship | 20% | Climate Resilience (60%)(3) 2024: Minimum – 0%; Target – 2%; Maximum – 7% 2025: Minimum – 2%; Target – 3%; Maximum – 8% 2026: Minimum – 4%; Target – 9%; Maximum – 14%
Carbon-Free Generation (40%)(4) Minimum – 128,320 TWh Target – 133,900 TWh Maximum – 139,479 TWh |
(1)Payouts for performance between achievement levels are calculated using straight-line interpolation, between minimum and target and between target and maximum, with no payouts for performance below the minimum achievement level with respect to the applicable performance measure, and payouts capped at the maximum achievement level with respect to the applicable performance measure.
(2)There is no payout if the Relative TSR falls within the lowest quartile of the peer companies in the Philadelphia Utility Index and if both Climate Resilience and Carbon-Free Generation are below the minimum achievement levels.
(3)The achievement levels established for the Climate Resilience sub-metric are based on annual restoration cost reduction impacts of projects scheduled to be completed with funding under the financial plan based on a model approved by the Talent and Compensation Committee in January 2024.
(4)The goals for the Carbon-Free Generation sub-metric are based on cumulative TWhs generated over the three year period. The result of the Carbon-Free Generation sub-metric is subject to a carbon capture modifier in the range of -9% to +9% of the Carbon-Free Generation component based on the Talent and Compensation Committee's assessment of progress toward specific CCS objectives.
2022–2024 PUP Performance Measures, Goals and Payouts
In December 2021, the Talent and Compensation Committee chose Relative TSR and Adjusted FFO/Debt Ratio as the performance measures for the 2022–2024 PUP, with Relative TSR weighted 80% and Adjusted FFO/Debt Ratio weighted 20%. In January 2022, the Talent and Compensation Committee established the following minimum, target and maximum performance goals for the 2022–2024 PUP performance measures:
| | | | | | | | |
Performance Measures(1) | PUP
Measure Weight | Goals(2) |
| Relative TSR | 80% | Minimum (25%) - Bottom of 3rd Quartile
Target (100%) - Median Percentile
Maximum (200%) - 1st Quartile |
Adjusted FFO/Debt Ratio(3) | 20% | Minimum (25%) – 14.0%
Target (100%) – 15.0%
Maximum (200%) – 16.5% |
(1)Payouts for performance between achievement levels are calculated using straight-line interpolation. There is no payout for performance below the minimum achievement level and payouts are capped at 200% for performance at or above the maximum achievement level.
(2)There is no payout if the Relative TSR falls within the lowest quartile of the peer companies in the Philadelphia Utility Index and the FFO/Debt Ratio is below the minimum achievement level.
(3)The Adjusted FFO/Debt Ratio, a non-GAAP financial measure, is the ratio of: (i) adjusted funds from operations calculated as consolidated operating cash flow adjusted for allowance for funds used during construction, working capital, excluding deferred fuel and the effects of securitization revenue and expense, and the Pre-Determined Exclusions (as defined this CD&A) to (ii) total consolidated debt, excluding current and pending securitization debt, in each case calculated to reflect rating agency treatment of interest and principal on the Company’s junior subordinated debentures. The Adjusted FFO/Debt Ratio is evaluated on an annual basis against the target set for each year, which, for the 2022–2024 performance period, was 15.0%. The annual results are then averaged to determine the Adjusted FFO/Debt Ratio overall result, which is then further adjusted by ±10 basis points for a favorable or unfavorable change in the Company's corporate credit outlook and ± 20 basis points for an upgrade or downgrade in the corporate credit rating for the Company, with a maximum adjustment of ±20 basis points. The Talent and Compensation Committee decided to calculate the Adjusted FFO/Debt Ratio in a manner consistent with the rating agency treatment of such debt, as updated in early 2024, in order to ensure that management’s incentives remained aligned with the goal of optimizing the Company's capital structure while maintaining its credit rating.
In January 2025, the Talent and Compensation Committee reviewed the Company’s Relative TSR and Adjusted FFO/Debt Ratio for the 2022–2024 PUP in order to determine the vesting level of the 2022–2024 PUP. The Talent and Compensation Committee compared the Company’s TSR against the TSR of the companies that were included in the Philadelphia Utility Index as of the last day of the year preceding the beginning of the three-year performance period, which were (in addition to Entergy):
| | | | | |
•AES Corporation | •Eversource Energy |
•Ameren Corporation | •Exelon Corporation |
•American Electric Power Co. Inc. | •FirstEnergy Corporation |
•American Water Works Company, Inc. | •NextEra Energy, Inc. |
•CenterPoint Energy Inc. | •Pinnacle West Capital Corporation |
•Consolidated Edison Inc. | •Public Service Enterprise Group, Inc. |
•Dominion Energy | •Southern Company |
•DTE Energy Company | •WEC Energy Group, Inc. |
•Duke Energy Corporation | •Xcel Energy, Inc. |
•Edison International | |
As recommended by the Finance Committee, the Talent and Compensation Committee concluded that Entergy Corporation’s Relative TSR for the 2022– 2024 PUP was in the 1st Quartile, resulting in an achievement level of 200% of target, and that the Adjusted FFO/Debt Ratio was 13.8% for 2022, 17.2% for 2023 and 15.6% for 2024, plus an upward adjustment of 10% due to the Company's improved credit outlook in 2024, resulting in an achievement level of 124% of target. These results yielded an overall payout of 185% of target for the NEOs.
| | | | | | | | | | | | | | |
| Named Executive Officer | 2022 - 2024 Target Performance Units | Number of Shares Issued(1) | Value of Shares Actually Issued(2) | Grant Date Fair Value(3) |
| Marcus V. Brown | 12,954 | 26,041 | $2,135,102 | $862,153 |
Haley R. Fisackerly(4) | 3,020 | 6,069 | $497,597 | $200,996 |
Kimberly A. Fontan(4) | 10,604 | 21,063 | $1,726,955 | $705,749 |
Laura R. Landreaux(4) | 3,538 | 7,097 | $581,883 | $235,472 |
Andrew S. Marsh(4) | 46,236 | 91,954 | $7,539,308 | $3,077,237 |
| Phillip R. May, Jr. | 5,742 | 11,543 | $946,411 | $382,159 |
Peter S. Norgeot, Jr.(4) | 12,186 | 24,319 | $1,993,915 | $811,039 |
Deanna D. Rodriguez(4) | 2,508 | 5,035 | $412,820 | $166,920 |
Eliecer Viamontes(4) | 3,154 | 6,324 | $518,505 | $209,914 |
| Roderick K. West | 19,050 | 38,296 | $3,139,889 | $1,267,873 |
(1)Includes accrued dividend equivalents.
(2)Value determined based on the closing price of Entergy Corporation common stock on January 17, 2025 ($81.99), the date the Talent and Compensation Committee certified the 2022–2024 PUP results.
(3)Represents the aggregate grant date fair value calculated in accordance with applicable accounting rules.
(4)Mses. Fontan, Landreaux, and Rodriguez and Messrs. Fisackerly, Norgeot, Marsh, and Viamontes each experienced a change in officer status in 2022, and accordingly, their target award opportunity was increased for all open PUP performance periods, including for the 2022–2024 PUP. Additionally, their promotions resulted in certain prorations with respect to the calculation of the dividend equivalents.
Pre-Determined Exclusions
The exclusions for the 2024 annual incentive program EAM and for the 2022–2024 PUP included effects of: (i) major storms, including the impact on total debt of pending securitizations; (ii) resolutions during the year of certain unresolved regulatory litigation matters; (iii) income tax law changes; and (iv) any adjustments to contributions to pension investments or trusts related to post-retirement benefits that are elective and deviate from original plan assumptions.
The Talent and Compensation Committee also considered, both at the time it chose ETR Adjusted EPS and the Adjusted FFO/Debt Ratio as the 2024 EAM performance measures and at the time it chose the Adjusted FFO/Debt Ratio as a performance measure in the 2022–2024 PUP and also at the time when it was establishing the targets for these measures, the appropriateness of excluding the effect of each of the specific Pre-Determined Exclusions it had identified. It viewed the exclusion of major storms as appropriate because although the Company includes estimates for minor storm costs in its financial plan, it does not include estimates for a major storm event, such as a hurricane, given management’s inability to control or predict acts of nature. The Talent and Compensation Committee considered the exclusion of the effects of any unanticipated changes in federal income tax law to be appropriate because of the inability of management to impact those results. It approved the exclusion of elective adjustments to Company contributions to pension and post-retirement benefit plan trusts because such elective adjustments are not viewed as reflective of the underlying performance of the business. The Talent and Compensation Committee approved the exclusion for the impact of certain unresolved legacy regulatory litigation primarily because of management’s inability to influence the related outcomes.
Stock Options and Restricted Stock
The Company grants stock options and shares of restricted stock as part of its long-term incentive award mix because it aligns the interests of the executive officers with long-term shareholder value, provides competitive compensation, and increases the executives’ ownership in Entergy’s common stock. Generally, stock options are granted annually on a pre-established schedule with a maximum term of ten years and vest one-third on each of the first three anniversaries of the date of grant. The date of grant for annual equity awards is the date of the Talent and Compensation Committee meeting at which they are approved, which is regularly scheduled each year in late January or the first week of February. The Talent and Compensation Committee does not take material nonpublic information into account when determining the timing and terms of option awards nor does it time the disclosure of material nonpublic information to affect the value of executive compensation. The exercise price for each option granted in January 2024 was $49.54 ($99.08 pre-Stock Split), which was based on the closing price of Entergy’s stock on the date of grant. Shares of restricted stock vest one-third on each of the first three anniversaries of the date of grant, are paid dividends which are reinvested in shares of Entergy stock, and have full voting rights. The dividend reinvestment shares are subject to the same vesting conditions as the underlying shares of restricted stock.
Health, Welfare, Retirement and other Benefit Elements
The NEOs are eligible to participate in or receive the following benefits:
| | | | | |
| Plan Type | Description |
| Retirement Plans | Entergy Corporation-sponsored:
Entergy Retirement Plan - a tax-qualified final average pay defined benefit pension plan that covers a broad group of employees hired before July 1, 2014. As used in this CD&A, “Entergy Retirement Plan” refers to the final average pay defined benefit pension plan benefit provided to eligible employees pursuant to the Entergy Corporation Retirement Plan for Non-Bargaining Employees. Cash Balance Plan - a tax-qualified cash balance defined benefit pension plan that covers a broad group of employees hired on or after July 1, 2014 and before January 1, 2021. Effective January 1, 2022, the Cash Balance Plan was merged with and into the Entergy Retirement Plan, while maintaining the same cash balance pension benefit formula. As used in this CD&A, “Cash Balance Plan” refers to the cash balance defined benefit pension plan benefit provided to eligible employees. Pension Equalization Plan (PEP) - a non-qualified pension restoration plan for certain highly compensated non-bargaining employees who participate in the Entergy Retirement Plan. Cash Balance Equalization Plan (CBEP) - a non-qualified restoration plan for a certain highly compensated non-bargaining employees who participate in the Cash Balance Plan. System Executive Retirement Plan (SERP) - a legacy non-qualified supplemental retirement plan for a select group of individuals who became executive officers before July 1, 2014.
See “2024 Pension Benefits” for additional information regarding the operation of and NEO participation in the plans described above. |
| Savings Plan | Entergy Corporation-sponsored 401(k) Savings Plan that covers a broad group of employees and provides for an employer matching contribution. |
| Health & Welfare Benefits | Medical, dental and vision coverage, health care and dependent care reimbursement plans, life and accidental death and dismemberment insurance, business travel accident insurance, and basic long-term disability insurance.
Eligibility, coverage levels, potential employee contributions, and other plan design features are the same for the NEOs as for the broad employee population. |
| | | | | |
| Plan Type | Description |
| 2024 Perquisites | Corporate aircraft usage and annual mandatory physical exams. Members of the OCE do not receive tax gross ups on any benefits, except for relocation benefits.
For additional information regarding perquisites, including additional limited perquisites that were received by certain of the NEOs during 2024 prior to becoming members of the OCE, see the “All Other Compensation” column in the 2024 Summary Compensation Table. |
| Deferred Compensation | The NEOs are eligible to defer up to 100% of their base salary and annual incentive awards into the Entergy Corporation sponsored Executive Deferred Compensation Plan. |
| Executive Disability Plan | This plan pays eligible individuals a supplemental long-term disability (LTD) benefit if they are disabled and receiving LTD benefits from the broad-based LTD Plan. The benefit payable under this plan is equal to 65% of the difference between their annual base salary and the annual base salary that produces the maximum disability payment under our broad-based LTD plan, which is $15,000. |
Entergy Corporation provides these benefits to the NEOs as part of its effort to provide a competitive executive compensation program and because it believes that these benefits are important retention and recruitment tools since many of the companies with which it competes for executive talent provide similar arrangements to their senior executive officers.
Severance and Retention Arrangements
The Talent and Compensation Committee believes that retention and transitional compensation arrangements are an important part of overall compensation as they help to secure the continued employment and dedication of the NEOs, notwithstanding any concern that they might have at the time of a change in control regarding their own continued employment. In addition, the Talent and Compensation Committee believes that these arrangements are important as recruitment and retention devices, as many of the companies with which Entergy Corporation competes for executive talent have similar arrangements in place for their senior employees.
To achieve these objectives, Entergy Corporation has established a System Executive Continuity Plan (“Continuity Plan”) under which each of our NEOs is entitled to receive “change in control” payments and benefits if such officer’s employment is involuntarily terminated without cause or if the officer resigns for good reason, in each case, in connection with a change in control of the Company. Entergy strives to ensure that the benefits and payment levels under the Continuity Plan are consistent with market practices. Entergy’s executive officers, including the NEOs, are not entitled to any tax gross up payments on any severance benefits received under this plan. For more information regarding our severance arrangements, see “Potential Payments Upon Termination or Change in Control.”
Risk Mitigation and Other Pay Practices
Policy for Recoupment of Compensation (Clawback Provisions)
On October 27, 2023, the Board adopted an amended and restated policy regarding the recoupment of certain compensation (the "Clawback Policy"), with an effective date of October 2, 2023. Any incentive compensation award granted or paid on or after this effective date is subject to the terms of the Clawback Policy, while awards granted or paid prior to the effective date of the Clawback Policy are subject to the Entergy Corporation Policy Regarding Recoupment of Certain Compensation in effect prior to its amendment and restatement. The board of directors of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas also adopted the Clawback Policy, effective October 2, 2023.
Under the Clawback Policy, which goes beyond the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), Entergy will seek reimbursement of certain compensation from current or former executive officers subject to Section 16, including all of the NEOs, where:
•Entergy is required to restate its financial statements due to noncompliance with any financial reporting requirement under securities laws; or
•there is a material miscalculation of a performance measure related to incentive compensation, regardless of whether Entergy’s financial statements are restated.
In addition, Entergy may seek reimbursement of certain compensation from current or former executive officers subject to Section 16, including all of the NEOs, if the Board determines that such executive officer engaged in fraud that resulted in either a restatement of Entergy’s financial statements or a material miscalculation of a performance measure relative to incentive compensation.
The Clawback Policy applies to incentive compensation, including cash or equity-based bonus or incentive or profit-sharing awards paid in respect of the three-year period prior to the year in which Entergy is required to prepare such restatement or in respect of the three-year period preceding the material miscalculation. The amount required to be reimbursed is equal to the excess of the gross incentive payment actually paid over the gross payment that would have been paid if the original payment had been determined based on the restated financial results or correct calculation. Entergy may enforce all or part of any executive officer’s repayment obligation under the policy by reducing any amounts that may be owed from time-to-time by Entergy or any of its subsidiaries to such individual, whether as wages, severance, vacation pay or in the form of any other benefit or for any other reason. In addition, Entergy will seek to recover any compensation received by its Chief Executive Officer and Chief Financial Officer that is required to be reimbursed under the Sarbanes-Oxley Act of 2002 following a material restatement of our financial statements.
In addition to the above-described Clawback Policy, in January 2024, the Entergy Board adopted an additional discretionary recoupment policy applicable to all officers of Entergy System companies, including the NEOs, that allows recoupment of incentive compensation from an officer who engages in certain detrimental conduct, including (i) commission of a felony or other crime that affects the officer’s ability to perform their duties, (ii) fraud in contravention of the officer’s duties to the enterprise, (iii) unauthorized disclosure of confidential or proprietary information of an Entergy System company or material violation of a material written Entergy System company policy or material agreement between the officer and an Entergy System company in either case that results in, or could have resulted in, termination for cause as defined in the 2019 OIP or that results in significant financial or operational loss, or significant reputational harm to Entergy; and (iv) other conduct that the officer knew or should have known could result in termination for Cause as defined in the 2019 OIP (regardless whether it does) and that results in significant financial or operational loss or significant reputational harm to Entergy. The discretionary recoupment policy for detrimental conduct applies to all incentive compensation, including time-based awards, and allows for the claw back of compensation received after the detrimental conduct and within the three-year period preceding the detrimental conduct, provided the recoupment efforts are commenced within five years after the detrimental conduct and before a change in control. The additional discretionary recoupment policy applies to detrimental conduct committed on or after January 26, 2024, the effective date of the policy.
Stock Ownership Guidelines and Share Retention Requirements
Entergy Corporation requires its NEOs to own Entergy stock to further align their interests with Entergy’s shareholders’ interests. Stock ownership levels are achieved through ownership of any Entergy shares held by the officer, including shares held in the 401(k) plan, restricted stock, dividends earned on restricted shares during the period of restriction, and restricted stock units. Performance units held under the PUP, stock options, whether vested or unvested, do not count toward achievement of stock ownership levels. Annually, the Talent and Compensation Committee monitors the executive officers’ compliance with these guidelines with all of the NEOs being in compliance with the applicable ownership guidelines at the time of the most recent annual review. The ownership guidelines are as follows:
| | | | | |
| Role | Value of Common Stock to be Owned |
| Chief Executive Officer | 6 x base salary |
| Executive Vice Presidents | 3 x base salary |
| Senior Vice Presidents | 2 x base salary |
| Vice Presidents | 1 x base salary |
Further, to facilitate compliance with the guidelines, until an executive officer satisfies the stock ownership guidelines, the officer must retain:
•all net after-tax shares paid out under the PUP;
•all net after-tax shares of our restricted stock and all net after-tax shares received upon the vesting of restricted stock units; and
•at least 75% of the after-tax net shares received upon the exercise of Entergy Corporation stock options.
Trading Controls
Executive officers, including the NEOs, are subject to the Company's insider trading policy (included as Exhibit 19 to this Annual Report on Form 10-K) and thus are required to receive permission from the Company’s General Counsel or his designee prior to entering into any transaction involving Company securities, including gifts, other than an exercise of employee stock options that is not funded through a sale in the market. Trading is generally permitted only during specified open trading windows beginning shortly after the release of earnings. Employees who are subject to trading restrictions, including the NEOs, may enter into trading plans under Rule 10b5-1 of the Exchange Act, but these trading plans or any amendment to an existing plan may be entered into only during an open trading window and must be approved by the Company.
No Pledging/Hedging
Entergy Corporation also prohibits directors and executive officers, including the NEOs, from pledging any Entergy Corporation securities or entering into margin accounts involving Entergy Corporation securities. Entergy Corporation prohibits these transactions because of the potential that sales of Entergy Corporation securities could occur outside trading periods and without the required approval of the General Counsel. In addition, Entergy Corporation prohibits directors and executive officers, including the NEOs, from engaging in any hedging transactions with respect to Entergy securities.
Compensation Consultant Independence
Annually, the Talent and Compensation Committee reviews the relationship with its compensation consultant to determine whether any conflicts of interest exist that would prevent the consultant from independently advising the Talent and Compensation Committee. When assessing the independence of Pay Governance, its current compensation consultant, in 2024, the committee considered the following factors, among others:
•Pay Governance has policies in place to prevent conflicts of interest;
•No member of Pay Governance’s consulting team serving the committee has a business relationship with any member of the committee or any of Entergy Corporation’s executive officers;
•Neither Pay Governance nor any of its principals own any shares of Entergy Corporation’s common stock; and
•The amount of fees paid to Pay Governance is less than 1% of Pay Governance’s total consulting income.
Based on these factors, the Talent and Compensation Committee concluded that Pay Governance is independent in accordance with SEC and NYSE rules and that no conflicts of interest exist that would prevent Pay Governance from independently advising the committee.
In addition, Pay Governance has agreed that it will not accept any engagement with management without prior approval from the Talent and Compensation Committee, and Entergy Corporation’s Board has adopted a policy that prohibits a compensation consultant from providing other services to it if the aggregate amount for those services would exceed $120,000 in any year. During 2024, Pay Governance did not provide any services to Entergy Corporation other than the services it performed on behalf of the Talent and Compensation and Corporate Governance Committees, and it worked with Entergy Corporation’s management only as directed by those committees.
TALENT AND COMPENSATION COMMITTEE REPORT
The Talent and Compensation Committee Report included in the 2025 Entergy Proxy Statement is incorporated by reference, but will not be deemed to be “filed” in this Annual Report on Form 10-K. None of the Registrant Subsidiaries has a compensation committee or other board committee performing equivalent functions. The board of directors of each of the Registrant Subsidiaries is comprised of individuals who are officers or employees of Entergy Corporation or one of the Registrant Subsidiaries. These boards do not make determinations regarding the compensation paid to executive officers of the Registrant Subsidiaries.
EXECUTIVE COMPENSATION TABLES
2024 Summary Compensation Table
The following table summarizes the total compensation paid or earned by each of the NEOs for the fiscal year ended December 31, 2024, and to the extent required by SEC executive compensation disclosure rules, the fiscal years ended December 31, 2023 and 2022. For information on the principal positions held by each of the NEOs, see Item 10, “Directors, Executive Officers, and Corporate Governance of the Registrants.”
The compensation set forth in the table represents the aggregate compensation paid by all Entergy System companies. For additional information regarding the material terms of the awards reported in the following table, including a general description of the formula or criteria to be applied in determining the amounts payable, see “Compensation Discussion and Analysis.”
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (a) | (b) | (c) | | (e) | (f) | (g) | (h) | (i) | (j) | (k) |
| Name and Principal Position (1) | Year | Salary (2) | | Stock Awards (3) | Option Awards (4) | Non-Equity Incentive Plan Compen- sation (5) | Change in Pension Value and Non-qualified Deferred Compen- sation Earnings (6) | All Other Compen- sation (7) | Total | Total Without Change in Pension Value (8) |
| Marcus V. Brown | 2024 | $783,555 | | | $1,185,567 | | $307,642 | | $924,768 | | $455,800 | | $67,092 | | $3,724,424 | | $3,268,624 | |
| Executive Vice | 2023 | $753,419 | | | $1,226,636 | | $290,192 | | $950,104 | | $731,700 | | $77,328 | | $4,029,379 | | $3,297,679 | |
| President and | 2022 | $726,363 | | | $1,144,238 | | $273,358 | | $761,302 | | $976,700 | | $93,793 | | $3,975,754 | | $2,999,054 | |
| General Counsel - | | | | | | | | | | |
| Entergy Corp. | | | | | | | | | | |
| | | | | | | | | | |
| Haley R. Fisackerly | 2024 | $452,266 | | | $377,721 | | $98,000 | | $400,537 | | $319,800 | | $50,558 | | $1,698,882 | | $1,379,082 | |
| CEO - Entergy | 2023 | $431,421 | | | $453,653 | | $107,294 | | $325,368 | | $247,800 | | $47,415 | | $1,612,951 | | $1,365,151 | |
| Mississippi | 2022 | $410,557 | | | $752,209 | | $62,595 | | $319,427 | | $— | | $46,281 | | $1,591,069 | | $1,591,069 | |
| | | | | | | | | | |
| Kimberly A. Fontan | 2024 | $684,375 | | | $1,477,716 | | $383,422 | | $876,457 | | $433,100 | | $34,937 | | $3,890,007 | | $3,456,907 | |
| Executive Vice | 2023 | $625,000 | | | $1,165,112 | | $275,621 | | $646,875 | | $409,600 | | $31,860 | | $3,154,068 | | $2,744,468 | |
| President and CFO - | 2022 | $404,809 | | | $1,034,293 | | $80,519 | | $379,688 | | $— | | $29,720 | | $1,929,029 | | $1,929,029 | |
| Entergy Corp., | | | | | | | | | | |
| Entergy Arkansas, | | | | | | | | | | |
| Entergy Louisiana, | | | | | | | | | | |
| Entergy Mississippi, | | | | | | | | | | |
| Entergy New | | | | | | | | | | |
| Orleans, and | | | | | | | | | | |
| Entergy Texas | | | | | | | | | | |
| | | | | | | | | | |
| Laura R. Landreaux | 2024 | $425,320 | | | $483,864 | | $125,543 | | $331,857 | | $89,900 | | $23,491 | | $1,479,975 | | $1,390,075 | |
| CEO - Entergy | 2023 | $406,405 | | | $377,082 | | $89,191 | | $305,428 | | $175,600 | | $23,719 | | $1,377,425 | | $1,201,825 | |
| Arkansas | 2022 | $390,161 | | | $341,381 | | $62,595 | | $271,015 | | $— | | $25,313 | | $1,090,465 | | $1,090,465 | |
| | | | | | | | | | |
| Andrew S. Marsh | 2024 | $1,209,615 | | | $5,709,300 | | $1,481,523 | | $2,307,500 | | $2,043,600 | | $94,837 | | $12,846,375 | | $10,802,775 | |
| Chair of the | 2023 | $1,100,000 | | | $5,159,370 | | $1,220,557 | | $1,821,600 | | $982,400 | | $89,281 | | $10,373,208 | | $9,390,808 | |
| Board and CEO - | 2022 | $781,560 | | | $4,598,890 | | $414,050 | | $960,700 | | $— | | $106,560 | | $6,861,760 | | $6,861,760 | |
| Entergy Corp. | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (a) | (b) | (c) | | (e) | (f) | (g) | (h) | (i) | (j) | (k) |
| Name and Principal Position (1) | Year | Salary (2) | | Stock Awards (3) | Option Awards (4) | Non-Equity Incentive Plan Compen- sation (5) | Change in Pension Value and Non-qualified Deferred Compen- sation Earnings (6) | All Other Compen- sation (7) | Total | Total Without Change in Pension Value (8) |
| Phillip R. May, Jr. | 2024 | $467,944 | | | $456,010 | | $118,322 | | $451,112 | | $146,500 | | $36,357 | | $1,676,245 | | $1,529,745 | |
| CEO - Entergy | 2023 | $449,491 | | | $459,481 | | $108,679 | | $340,945 | | $114,400 | | $36,586 | | $1,509,582 | | $1,395,182 | |
| Louisiana | 2022 | $430,676 | | | $957,246 | | $121,176 | | $326,732 | | $— | | $39,225 | | $1,875,055 | | $1,875,055 | |
| | | | | | | | | | |
| Peter S. Norgeot, Jr. | 2024 | $650,440 | | | $1,214,197 | | $315,086 | | $562,598 | | $127,900 | | $52,852 | | $2,923,073 | | $2,795,173 | |
| Executive Vice | | | | | | | | | | |
| President and Chief | | | | | | | | | | |
| Operating Officer | | | | | | | | | | |
| | | | | | | | | | |
| Deanna D. Rodriguez | 2024 | $372,249 | | | $242,151 | | $62,809 | | $263,147 | | $197,300 | | $26,228 | | $1,163,884 | | $966,584 | |
| CEO - Entergy | 2023 | $358,208 | | | $270,525 | | $63,983 | | $226,421 | | $270,200 | | $23,671 | | $1,213,008 | | $942,808 | |
| New Orleans | 2022 | $342,565 | | | $260,189 | | $48,328 | | $217,320 | | $— | | $27,087 | | $895,489 | | $895,489 | |
| | | | | | | | | | |
| Eliecer Viamontes | 2024 | $384,887 | | | $303,748 | | $78,813 | | $321,919 | | $34,200 | | $33,055 | | $1,156,622 | | $1,122,422 | |
| CEO - Entergy | 2023 | $361,284 | | | $333,024 | | $78,755 | | $251,202 | | $28,700 | | $25,846 | | $1,078,811 | | $1,050,111 | |
| Texas | 2022 | $347,459 | | | $296,861 | | $53,528 | | $240,731 | | $11,800 | | $168,309 | | $1,118,688 | | $1,106,888 | |
| | | | | | | | | | |
| Roderick K. West | 2024 | $828,144 | | | $1,273,288 | | $330,421 | | $976,160 | | $212,500 | | $119,140 | | $3,739,653 | | $3,527,153 | |
| Former Group | 2023 | $799,130 | | | $1,547,047 | | $365,976 | | $775,192 | | $204,800 | | $112,338 | | $3,804,483 | | $3,599,683 | |
| President Utility | 2022 | $770,432 | | | $3,682,723 | | $402,025 | | $776,434 | | $— | | $101,107 | | $5,732,721 | | $5,732,721 | |
| Operations - Entergy | | | | | | | | | | |
| Corp. | | | | | | | | | | |
(1)No compensation information is provided for Mr. Norgeot for 2023 and 2022, as he was not included as a NEO in the Annual Report on Form 10-K for the years ended December 31, 2023 and December 31, 2022.
(2)The amounts in column (c) represent the actual base salary paid to the NEOs in the applicable year. The 2024 changes in base salaries noted in the CD&A were effective in April 2024. Mr. Viamontes’ off-cycle base salary adjustment noted in the CD&A was effective in September 2024.
(3)The amounts in column (e) represent the aggregate grant date fair value of restricted stock and performance units granted under the 2019 OIP, each calculated in accordance with FASB ASC Topic 718, without taking into account estimated forfeitures. The grant date fair value of the restricted stock, restricted stock units, and the portion of the performance units with vesting based on the Adjusted FFO/Debt Ratio (within the 2022–2024 PUP and 2023–2025 PUP) and the Environmental Stewardship measure (used within the 2024–2026 PUP) is determined using the closing price of Entergy Corporation common stock on the date of grant. The grant date fair value of the portion of the performance units attributable to Relative TSR was measured using a Monte Carlo simulation valuation model. The simulation model applies a risk-free interest rate and an expected volatility assumption. The risk-free interest rate is assumed to equal the yield on a three-year treasury bond on the grant date. Volatility is based on historical volatility for the 36-month period preceding the grant date. The performance units in the table are also valued based on the probable outcome of the applicable performance condition at the time of grant. The maximum value of shares that would be received if the highest achievement level is attained with respect to both the Relative TSR and Environmental Stewardship measures, for performance units granted in 2024 are as follows: Mr. Brown, $1,471,140; Mr. Fisackerly, $468,648; Ms. Fontan, $1,833,574; Ms. Landreaux, $600,425; Mr. Marsh, $7,084,418; Mr. May, $565,747; Mr. Norgeot, $1,506,610; Ms. Rodriguez, $300,411; Mr. Viamontes, $376,900; and Mr. West, $1,579,930.
(4)The amounts in column (f) represent the aggregate grant date fair value of stock options granted under the 2019 OIP calculated in accordance with FASB ASC Topic 718. For a discussion of the relevant assumptions used in valuing these awards, see Note 12 to the financial statements.
(5)The amounts in column (g) represent annual incentive award cash payments made pursuant to the annual incentive program established under the 2019 OIP.
(6)The amounts in column (h) include the annual actuarial change in the present value of these NEOs’ benefits under all pension plans established by Entergy Corporation using interest rate and mortality rate assumptions consistent with those used in Entergy Corporation’s financial statements. None of the increases for any of the NEOs are attributable to above-market or preferential earnings on non-qualified deferred compensation and includes any amounts which the NEOs may not currently be entitled to receive because such amounts are not vested. See “2024 Pension Benefits.”
(7)The amounts in column (i) for 2024 include (a) matching contributions by Entergy Corporation under the Savings Plan to each of the NEOs; (b) dividends and dividend equivalents paid on restricted stock and performance units when vested; (c) life insurance premiums; (d) tax reimbursements on club dues; and (e) perquisites and other compensation as described further below. The 2024 amounts are listed in the following table:
| | | | | | | | | | | | | | | | | | | | |
| Named Executive Officer | Company Matching Contribution – Savings Plan | Dividends Paid on Restricted Stock and PUP Awards | Life Insurance Premium | Tax Reimbursement | Perquisites and Other Compensation | Total |
| Marcus V. Brown | $14,490 | | $37,692 | | $11,484 | | $— | | $3,426 | | $67,092 | |
| Haley R. Fisackerly | $14,490 | | $8,120 | | $7,482 | | $5,375 | | $15,091 | | $50,558 | |
| Kimberly A. Fontan | $14,490 | | $13,971 | | $1,757 | | $— | | $4,719 | | $34,937 | |
| Laura R. Landreaux | $— | | $7,710 | | $2,215 | | $4,086 | | $9,480 | | $23,491 | |
| Andrew S. Marsh | $14,490 | | $69,947 | | $5,372 | | $— | | $5,028 | | $94,837 | |
| Phillip R. May, Jr. | $14,490 | | $11,131 | | $10,736 | | $— | | $— | | $36,357 | |
| Peter S. Norgeot, Jr. | $20,700 | | $23,492 | | $7,482 | | $— | | $1,178 | | $52,852 | |
| Deanna D. Rodriguez | $14,490 | | $9,182 | | $2,556 | | $— | | $— | | $26,228 | |
| Eliecer Viamontes | $20,700 | | $7,834 | | $864 | | $— | | $3,657 | | $33,055 | |
| Roderick K. West | $14,490 | | $47,974 | | $7,038 | | $— | | $49,638 | | $119,140 | |
(8)The Total Without Change in Pension Value represents total compensation, as determined under applicable SEC rules, minus the change in pension value reported in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column for the applicable year. The amounts reported in the Total Without Change in Pension Value column may differ substantially from the amounts reported in the Total column required under SEC rules and are not a substitute for total compensation. The change in pension value is subject to many external variables, such as interest rates, assumptions about life expectancy, and changes in the discount rate determined at each year end, which are functions of economic factors and actuarial calculations that are not related to Entergy’s performance and are outside of the control of the Talent and Compensation Committee.
Perquisites and Other Compensation
The amounts set forth in column (i) also include perquisites and other personal benefits that Entergy provides to its NEOs as part of providing a competitive executive compensation program and for employee retention. The following perquisites were provided to the NEOs in 2024.
| | | | | | | | | | | | | | |
| Named Executive Officer | Personal Use of Corporate Aircraft | Club Dues | Executive Physical Exams | Relocation |
| Marcus V. Brown | | | X | |
| Haley R. Fisackerly | | X | X | |
| Kimberly A. Fontan | | | X | |
| Laura R. Landreaux | | X | | |
| Andrew S. Marsh | | | X | |
| Phillip R. May, Jr. | | | | |
| Peter S. Norgeot, Jr. | | | X | X |
| Deanna D. Rodriguez | | | | |
| Eliecer Viamontes | | | X | |
| Roderick K. West | X | | X | |
For security and business reasons, Entergy Corporation’s Chief Executive Officer is permitted to use its corporate aircraft for personal use at the expense of Entergy Corporation. The other NEOs may use the corporate aircraft for personal travel subject to the approval of Entergy Corporation’s Chief Executive Officer. The NEOs also may occasionally use the corporate aircraft for the evacuation of themselves and immediate family in advance of anticipated major storms for business continuity purposes. Entergy Corporation believes that its officers’ ability to use its plane for limited personal use saves time and helps to ensure their safety and security while traveling, thereby benefiting the Company. Annually, the Talent and Compensation Committee reviews the level of personal use of the corporate aircraft by each of the executive officers.
The amounts included in column (i) of the 2024 Summary Compensation Table for the personal use of corporate aircraft, reflect the incremental cost to Entergy Corporation for use of the corporate aircraft, determined on the basis of the variable operational costs of each flight, including fuel, maintenance, flight crew travel expense, catering, communications, and fees, including flight planning, ground handling, and landing permits. The aggregate incremental aircraft usage cost associated with Mr. West’s personal use of the corporate aircraft was $45,822 for fiscal year 2024. In addition, Entergy Corporation offers its executives comprehensive annual physical exams at Entergy Corporation’s expense. In addition, executive officers may have the occasional personal use of tickets to athletic and cultural events when such tickets are not being used for business purposes, for which there is no incremental cost to the Company. Aside from Mr. West’s personal use of the corporate aircraft, none of the perquisites referenced above exceeded $25,000 for any of the NEOs.
2024 Grants of Plan-Based Awards
The following table summarizes award grants during 2024 to the NEOs. All share and per share information in this table has been adjusted to reflect the Stock Split.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) | | Estimated Future Payouts under Equity Incentive Plan Awards (2) | | | | | | | | |
| (a) | | (b) | | (c) | (d) | (e) | | (f) | (g) | (h) | | (i) | | (j) | | (k) | | (l) |
| Name | | Grant Date | | Thresh- old | Target | Maximum | | Thresh- old | Target | Maximum | | All Other Stock Awards: Number of Shares of Stock or Units | | All Other Option Awards: Number of Securities Under-lying Options | | Exercise or Base Price of Option Awards | | Grant Date Fair Value of Stock and Option Awards |
| | | | ($) | ($) | ($) | | (#) | (#) | (#) | | (#) (3) | | (#) (4) | | ($/Sh) | | ($) (5) |
| Marcus V. | | 1/25/24 | | $- | $633,403 | $1,266,806 | | | | | | | | | | | | |
| Brown | | 1/25/24 | | | | | | 3,712 | | 14,848 | | 29,696 | | | | | | | | | $887,435 |
| | 1/25/24 | | | | | | | | | | 6,018 | | | | | | | $298,132 |
| | 1/25/24 | | | | | | | | | | | | 33,062 | | | $49.54 | | $307,642 |
| | | | | | | | | | | | | | | | | | |
| Haley R. | | 1/25/24 | | $- | $251,910 | $503,820 | | | | | | | | | | | | |
| Fisackerly | | 1/25/24 | | | | | | 1,183 | | 4,730 | | 9,460 | | | | | | | | | $282,703 |
| | | 1/25/24 | | | | | | | | | | 1,918 | | | | | | | $95,018 |
| | | 1/25/24 | | | | | | | | | | | | 10,532 | | | $49.54 | | $98,000 |
| | | | | | | | | | | | | | | | | | |
| Kimberly A. | | 1/25/24 | | $- | $600,313 | $1,200,625 | | | | | | | | | | | | |
| Fontan | | 1/25/24 | | | | | | 4,627 | | 18,506 | | 37,012 | | | | | | | | | $1,106,067 |
| | 1/25/24 | | | | | | | | | | 7,502 | | | | | | | $371,649 |
| | 1/25/24 | | | | | | | | | | | | 41,206 | | | $49.54 | | $383,422 |
| | | | | | | | | | | | | | | | | | |
| Laura R. | | 1/25/24 | | $- | $237,041 | $474,082 | | | | | | | | | | | | |
| Landreaux | | 1/25/24 | | | | | | 1,515 | | 6,060 | | 12,120 | | | | | | | | | $362,194 |
| | 1/25/24 | | | | | | | | | | 2,456 | | | | | | | $121,670 |
| | 1/25/24 | | | | | | | | | | | | 13,492 | | | $49.54 | | $125,543 |
| | | | | | | | | | | | | | | | | | |
| Andrew S. | | 1/25/24 | | $- | $1,625,000 | $3,250,000 | | | | | | | | | | | | |
| Marsh | | 1/25/24 | | | | | | 17,876 | | 71,502 | | 143,004 | | | | | | | | | $4,273,532 |
| | 1/25/24 | | | | | | | | | | 28,982 | | | | | | | $1,435,768 |
| | 1/25/24 | | | | | | | | | | | | 159,218 | | | $49.54 | | $1,481,523 |
| | | | | | | | | | | | | | | | | | |
| Phillip R. | | 1/25/24 | | $- | $283,718 | $567,436 | | | | | | | | | | | | |
| May, Jr. | | 1/25/24 | | | | | | 1,428 | | 5,710 | | 11,420 | | | | | | | | | $341,275 |
| | 1/25/24 | | | | | | | | | | 2,316 | | | | | | | $114,735 |
| | 1/25/24 | | | | | | | | | | | | 12,716 | | | $49.54 | | $118,322 |
| | | | | | | | | | | | | | | | | | |
| Peter S. | | 1/25/24 | | $- | $502,320 | $1,004,640 | | | | | | | | | | | | |
| Norgeot, Jr. | | 1/25/24 | | | | | | 3,802 | | 15,206 | | 30,412 | | | | | | | | | $908,832 |
| | 1/25/24 | | | | | | | | | | 6,164 | | | | | | | $305,365 |
| | 1/25/24 | | | | | | | | | | | | 33,862 | | | $49.54 | | $315,086 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) | | Estimated Future Payouts under Equity Incentive Plan Awards (2) | | | | | | | | |
| (a) | | (b) | | (c) | (d) | (e) | | (f) | (g) | (h) | | (i) | | (j) | | (k) | | (l) |
| Name | | Grant Date | | Thresh- old | Target | Maximum | | Thresh- old | Target | Maximum | | All Other Stock Awards: Number of Shares of Stock or Units | | All Other Option Awards: Number of Securities Under-lying Options | | Exercise or Base Price of Option Awards | | Grant Date Fair Value of Stock and Option Awards |
| | | | ($) | ($) | ($) | | (#) | (#) | (#) | | (#) (3) | | (#) (4) | | ($/Sh) | | ($) (5) |
| Deanna D. | | 1/25/24 | | $- | $187,962 | $375,924 | | | | | | | | | | | | |
| Rodriguez | | 1/25/24 | | | | | | 758 | | 3,032 | | 6,064 | | | | | | | | | $181,217 |
| | 1/25/24 | | | | | | | | | | 1,230 | | | | | | | $60,934 |
| | 1/25/24 | | | | | | | | | | | | 6,750 | | | $49.54 | | $62,809 |
| | | | | | | | | | | | | | | | | | |
| Eliecer | | 1/25/24 | | $- | $229,942 | | $459,884 | | | | | | | | | | | | | |
| Viamontes | | 1/25/24 | | | | | | 951 | | 3,804 | | 7,608 | | | | | | | | | $227,357 |
| | 1/25/24 | | | | | | | | | | 1,542 | | | | | | | $76,391 |
| | 1/25/24 | | | | | | | | | | | | 8,470 | | | $49.54 | | $78,813 |
| | | | | | | | | | | | | | | | | | |
| Roderick K. | | 1/25/24 | | $- | $668,602 | $1,337,205 | | | | | | | | | | | | |
West(6) | | 1/25/24 | | | | | | 3,987 | | 15,946 | | 31,892 | | | | | | | | | $935,061 |
| | 1/25/24 | | | | | | | | | | 6,464 | | | | | | | $320,227 |
| | 1/25/24 | | | | | | | | | | | | 35,510 | | | $49.54 | | $330,421 |
(1)The amounts in columns (c), (d), and (e) represent minimum, target, and maximum payment levels under the annual incentive program. The actual amounts awarded are reported in column (g) of the 2024 Summary Compensation Table.
(2)The amounts in columns (f), (g), and (h) represent the minimum, target, and maximum payment levels under the 2024–2026 PUP. Performance units granted under the 2024–2026 PUP pursuant to the 2019 OIP will vest on December 31, 2026 based on two performance measures—Relative TSR, weighted 80%, and Environmental Stewardship, weighted 20%, as described under “What We Pay and Why – Long-Term Incentive Compensation – 2024 Long-Term Incentive Compensation Mix – Performance Units” in the CD&A. Subject to the achievement of performance targets, each unit will be converted into one share of Entergy Corporation’s common stock on the last day of the performance period for the 2024-2026 long-term PUP cycle (December 31, 2026). Accrued dividends on the shares earned will also be paid in Entergy Corporation common stock.
(3)The amounts in column (i) represent shares of restricted stock granted under the 2019 OIP. Shares of restricted stock vest one-third on each of the first, second and third anniversaries of the grant date, have voting rights, and accrue dividends during the vesting period.
(4)The amounts in column (j) represent options to purchase shares of Entergy Corporation’s common stock granted under the 2019 OIP. The options vest one-third on each of the first, second and third anniversaries of the grant date and have a ten-year term from the date of grant.
(5)The amounts in column (l) are valued based on the aggregate grant date fair value of the award calculated in accordance with FASB ASC Topic 718 and, in the case of the performance units, are based on the probable outcome of the applicable performance conditions. See footnotes 4 and 5 to the 2024 Summary Compensation Table for a discussion of the relevant assumptions used in calculating the grant date fair value.
(6)The shares of restricted stock noted in the table above for Mr. West were forfeited upon his retirement from the Company on January 31, 2025. The stock options noted in the table above for Mr. West will continue to vest following his retirement, in accordance with the original vesting schedule and expire five years from
his retirement date. Mr. West will be eligible for a pro-rated PUP award based on actual performance and full months of service during the performance period. See "Potential Payments Upon Termination or Change in Control" for additional information on the treatment of Mr. West's outstanding equity awards in connection with his retirement from the Company.
2024 Outstanding Equity Awards at Fiscal Year-End
The following table summarizes, for each NEO, their outstanding unexercised options, outstanding restricted stock that has not vested, and equity incentive plan awards outstanding as of December 31, 2024. All share and per share information in this table has been adjusted to reflect the Stock Split.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) |
| Name | | Number of
Securities
Underlying
Unexercised
Options
Exercisable | | Number of
Securities
Underlying
Unexercised
Options
Unexercisable | | Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexer-
cised
Unearned
Options | | Option
Exercise
Price | | Option
Expiration
Date | | Number
of Shares
or Units
of Stock
That
Have
Not
Vested | | Market
Value of
Shares or
Units of
Stock
That Have
Not
Vested | | Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested | | Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested |
| | (#) | | (#) | | (#) | | ($) | | | | (#) | | ($) | | (#) | | ($) |
| Marcus V. | | — | | | 33,062 | | 1 | | | $49.54 | | | 1/25/2034 | | | | | | | | |
| Brown | | 9,638 | | | 19,280 | | 2 | | | $54.24 | | | 1/26/2033 | | | | | | | | |
| | 22,428 | | | 11,216 | | 3 | | | $54.80 | | | 1/27/2032 | | | | | | | | |
| | 14,604 | | | — | | | | | $47.94 | | | 1/28/2031 | | | | | | | | |
| | 57,148 | | | — | | | | | $65.86 | | | 1/30/2030 | | | | | | 29,696 | | 4 | $2,251,551 | |
| | | | | | | | | | | | | | | | 29,380 | | 5 | $2,227,592 | |
| | | | | | | | | | | | 6,252 | | 6 | $474,027 | | | | | |
| | | | | | | | | | | | 3,998 | | 7 | $303,128 | | | | | |
| | | | | | | | | | | | 1,930 | | 8 | $146,333 | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Haley R. | | — | | | 10,532 | | 1 | | | $49.54 | | 1/25/2034 | | | | | | | | |
| Fisackerly | | 3,564 | | | 7,128 | | 2 | | | $54.24 | | 1/26/2033 | | | | | | | | |
| | 5,136 | | | 2,568 | | 3 | | | $54.80 | | 1/27/2032 | | | | | | | | |
| | 8,202 | | | — | | | | | $47.94 | | 1/28/2031 | | | | | | | | |
| | 8,600 | | | — | | | | | $65.86 | | 1/30/2030 | | | | | | | | |
| | | | | | | | | | | | | | | | 9,460 | | 4 | $717,257 | |
| | | | | | | | | | | | | | | | 10,864 | | 5 | $823,708 | |
| | | | | | | | | | | | 1,992 | | 6 | $151,033 | | | | | |
| | | | | | | | | | | | 1,480 | | 7 | $112,214 | | | | | |
| | | | | | | | | | | | 443 | | 8 | $33,588 | | | | | |
| | | | | | | | | | | | 8,106 | | 9 | $614,597 | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) |
| Name | | Number of
Securities
Underlying
Unexercised
Options
Exercisable | | Number of
Securities
Underlying
Unexercised
Options
Unexercisable | | Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexer-
cised
Unearned
Options | | Option
Exercise
Price | | Option
Expiration
Date | | Number
of Shares
or Units
of Stock
That
Have
Not
Vested | | Market
Value of
Shares or
Units of
Stock
That Have
Not
Vested | | Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested | | Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested |
| | (#) | | (#) | | (#) | | ($) | | | | (#) | | ($) | | (#) | | ($) |
| Kimberly A. | | — | | | 41,206 | | 1 | | | $49.54 | | | 1/25/2034 | | | | | | | | |
| Fontan | | 9,154 | | | 18,312 | | 2 | | | $54.24 | | | 1/26/2033 | | | | | | | | |
| | 6,606 | | | 3,304 | | 3 | | | $54.80 | | | 1/27/2032 | | | | | | | | |
| | 10,890 | | | — | | | | | $47.94 | | | 1/28/2031 | | | | | | | | |
| | 12,800 | | | — | | | | | $65.86 | | | 1/30/2030 | | | | | | | | |
| | 12,000 | | | — | | | | | $44.60 | | | 1/31/2029 | | | | | | | | |
| | 5,000 | | | — | | | | | $39.04 | | | 1/25/2028 | | | | | | | | |
| | | | | | | | | | | | | | | | 37,012 | | 4 | $2,806,250 | |
| | | | | | | | | | | | | | | | 27,908 | | 5 | $2,115,985 | |
| | | | | | | | | | | | 7,794 | | 6 | $590,941 | | | | | |
| | | | | | | | | | | | 3,796 | 7 | $287,813 | | | | | |
| | | | | | | | | | | | 569 | 8 | $43,142 | | | | | |
| | | | | | | | | | | | | | | | | | |
| Laura R. | | — | | | 13,492 | | 1 | | | $49.54 | | 1/25/2034 | | | | | | | | |
| Landreaux | | 2,962 | | | 5,926 | | 2 | | | $54.24 | | 1/26/2033 | | | | | | | | |
| | 5,136 | | | 2,568 | | 3 | | | $54.80 | | 1/27/2032 | | | | | | | | |
| | 7,746 | | | — | | | | | $47.94 | | 1/28/2031 | | | | | | | | |
| | 8,600 | | | — | | | | | $65.86 | | 1/30/2030 | | | | | | | | |
| | 10,200 | | | — | | | | | $44.60 | | 1/31/2029 | | | | | | | | |
| | | | | | | | | | | | | | | | 12,120 | | 4 | $918,938 | |
| | | | | | | | | | | | | | | | 9,032 | | 5 | $684,806 | |
| | | | | | | | | | | | 2,551 | | 6 | $193,417 | | | | | |
| | | | | | | | | | | | 1,228 | 7 | $93,107 | | | | | |
| | | | | | | | | | | | 443 | 8 | $33,588 | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) |
| Name | | Number of
Securities
Underlying
Unexercised
Options
Exercisable | | Number of
Securities
Underlying
Unexercised
Options
Unexercisable | | Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexer-
cised
Unearned
Options | | Option
Exercise
Price | | Option
Expiration
Date | | Number
of Shares
or Units
of Stock
That
Have
Not
Vested | | Market
Value of
Shares or
Units of
Stock
That Have
Not
Vested | | Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested | | Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested |
| | (#) | | (#) | | (#) | | ($) | | | | (#) | | ($) | | (#) | | ($) |
| Andrew S. | | — | | | 159,218 | | 1 | | | $49.54 | | | 1/25/2034 | | | | | | | | |
| Marsh | | 40,542 | | | 81,088 | | 2 | | | $54.24 | | | 1/26/2033 | | | | | | | | |
| | 33,972 | | | 16,988 | | 3 | | | $54.80 | | | 1/27/2032 | | | | | | | | |
| | 58,392 | | | — | | | | | $47.94 | | | 1/28/2031 | | | | | | | | |
| | 72,158 | | | — | | | | | $65.86 | | | 1/30/2030 | | | | | | | | |
| | 90,364 | | | — | | | | | $44.60 | | | 1/31/2029 | | | | | | | | |
| | 98,000 | | | — | | | | | $39.04 | | | 1/25/2028 | | | | | | | | |
| | 88,000 | | | — | | | | | $35.27 | | | 1/26/2027 | | | | | | | | |
| | | | | | | | | | | | | | | | 143,004 | | 4 | $10,842,563 | |
| | | | | | | | | | | | | | | | 123,580 | | 5 | $9,369,836 | |
| | | | | | | | | | | | 30,112 | | 6 | $2,283,092 | | | | | |
| | | | | | | | | | | | 16,810 | | 7 | $1,274,534 | | | | | |
| | | | | | | | | | | | 2,924 | | 8 | $221,698 | | | | | |
| | | | | | | | | | | | | | | | | | |
| Phillip R. | | — | | | 12,716 | | 1 | | | $49.54 | | 1/25/2034 | | | | | | | | |
| May, Jr. | | 3,610 | | | 7,220 | | 2 | | | $54.24 | | 1/26/2033 | | | | | | | | |
| | 9,942 | | | 4,972 | | 3 | | | $54.80 | | 1/27/2032 | | | | | | | | |
| | 10,784 | | | — | | | | | $47.94 | | 1/28/2031 | | | | | | | | |
| | 14,600 | | | — | | | | | $65.86 | | 1/30/2030 | | | | | | | | |
| | 12,400 | | | — | | | | | $44.60 | | 1/31/2029 | | | | | | | | |
| | | | | | | | | | | | | | | | 11,420 | | 4 | $865,864 | |
| | | | | | | | | | | | | | | | 11,004 | | 5 | $834,323 | |
| | | | | | | | | | | | 2,406 | | 6 | $182,423 | | | | | |
| | | | | | | | | | | | 1,497 | | 7 | $113,503 | | | | | |
| | | | | | | | | | | | 857 | | 8 | $64,978 | | | | | |
| | | | | | | | | | | | 8,106 | | 9 | $614,597 | | | | | |
| | | | | | | | | | | | | | | | | | |
| Peter S. | | — | | | 33,862 | | 1 | | | $49.54 | | 1/25/2034 | | | | | | | | |
| Norgeot, Jr. | | 9,514 | | | 19,030 | | 2 | | | $54.24 | | 1/26/2033 | | | | | | | | |
| | 12,890 | | | 6,446 | | 3 | | | $54.80 | | 1/27/2032 | | | | | | | | |
| | 7,924 | | | — | | | | | $47.94 | | 1/28/2031 | | | | | | | | |
| | 25,172 | | | — | | | | | $65.86 | | 1/30/2030 | | | | | | | | |
| | | | | | | | | | | | | | | | 30,412 | | 4 | $2,305,838 | |
| | | | | | | | | | | | | | | | 29,004 | | 5 | $2,199,083 | |
| | | | | | | | | | | | 6,404 | | 6 | $485,551 | | | | | |
| | | | | | | | | | | | 3,946 | 7 | $299,186 | | | | | |
| | | | | | | | | | | | 1,109 | 8 | $84,084 | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) |
| Name | | Number of
Securities
Underlying
Unexercised
Options
Exercisable | | Number of
Securities
Underlying
Unexercised
Options
Unexercisable | | Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexer-
cised
Unearned
Options | | Option
Exercise
Price | | Option
Expiration
Date | | Number
of Shares
or Units
of Stock
That
Have
Not
Vested | | Market
Value of
Shares or
Units of
Stock
That Have
Not
Vested | | Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested | | Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested |
| | (#) | | (#) | | (#) | | ($) | | | | (#) | | ($) | | (#) | | ($) |
| Deanna D. | | — | | | 6,750 | | 1 | | | $49.54 | | 1/25/2034 | | | | | | | | |
| Rodriguez | | — | | | 4,252 | | 2 | | | $54.24 | | 1/26/2033 | | | | | | | | |
| | — | | | 1,984 | | 3 | | | $54.80 | | 1/27/2032 | | | | | | | | |
| | | | | | | | | | | | | | | | 6,064 | | 4 | $459,772 | |
| | | | | | | | | | | | | | | | 6,480 | | 5 | $491,314 | |
| | | | | | | | | | | | 1,277 | | 6 | $96,822 | | | | | |
| | | | | | | | | | | | 881 | 7 | $66,797 | | | | | |
| | | | | | | | | | | | 341 | 8 | $25,855 | | | | | |
| | | | | | | | | | | | | | | | | | |
| Eliecer | | — | | | 8,470 | | 1 | | | $49.54 | | 1/25/2034 | | | | | | | | |
| Viamontes | | 2,616 | | | 5,232 | | 2 | | | $54.24 | | 1/26/2033 | | | | | | | | |
| | 4,392 | | | 2,196 | | 3 | | | $54.80 | | 1/27/2032 | | | | | | | | |
| | | | | | | | | | | | | | | | 7,608 | 4 | $576,839 | |
| | | | | | | | | | | | | | | | 7,976 | 5 | $604,740 | |
| | | | | | | | | | | | 1,602 | | 6 | $121,464 | | | | | |
| | | | | | | | | | | | 1,085 | | 7 | $82,265 | | | | | |
| | | | | | | | | | | | 377 | 8 | $28,584 | | | | | |
| | | | | | | | | | | | | | | | | | |
| Roderick K. | | — | | | 35,510 | | 1 | | | $49.54 | | | 1/25/2034 | | | | | | | | |
West 11 | | 12,156 | | | 24,314 | | 2 | | | $54.24 | | | 1/26/2033 | | | | | | | | |
| | 32,986 | | | 16,494 | | 3 | | | $54.80 | | | 1/27/2032 | | | | | | | | |
| | 53,504 | | | — | | | | | $47.94 | | | 1/28/2031 | | | | | | | | |
| | 63,410 | | | — | | | | | $65.86 | | | 1/30/2030 | | | | | | | | |
| | 51,128 | | | — | | | | | $44.60 | | | 1/31/2029 | | | | | | | | |
| | 28,334 | | | — | | | | | $39.04 | | | 1/25/2028 | | | | | | | | |
| | | | | | | | | | | | | | | | 31,892 | | 4 | $2,418,051 | |
| | | | | | | | | | | | | | | | 37,056 | | 5 | $2,809,586 | |
| | | | | | | | | | | | 6,716 | | 6 | $509,207 | | | | | |
| | | | | | | | | | | | 5,040 | | 7 | $382,133 | | | | | |
| | | | | | | | | | | | 2,839 | | 8 | $215,253 | | | | | |
| | | | | | | | | | | | 24,016 | 10 | $1,820,893 | | | | | |
(1)Consists of options granted under the 2019 OIP; 1/3 of the options vested on January 25, 2025 and 1/3 of the remaining options will vest on each of January 25, 2026 and January 25, 2027.
(2)Consists of options granted under the 2019 OIP; 1/2 of the options vested on January 26, 2025 and the remaining options will vest on January 26, 2026.
(3)Consists of options granted under the 2019 OIP that vested on January 27, 2025.
(4)Consists of 2024–2026 PUP performance units granted under the 2019 OIP that will vest on December 31, 2026 based on two performance measures- Entergy Corporation’s Relative TSR performance and Environmental Stewardship with Relative TSR weighted eighty percent and Environmental Stewardship weighted twenty percent, as described under “What Entergy Corporation Pays and Why - Long-Term Incentive Compensation - 2024 Long-Term Incentive Compensation Mix - Performance Units” in the CD&A.
(5)Consists of 2023–2025 PUP performance units granted under the 2019 OIP that will vest on December 31, 2025 based on two performance measures - Entergy Corporation’s Relative TSR performance and Adjusted FFO/Debt Ratio with Relative TSR weighted eighty percent and Adjusted FFO/Debt Ratio weighted twenty percent.
(6)Consists of shares of restricted stock granted under the 2019 OIP; 1/3 of the shares of restricted stock vested on January 25, 2025 and 1/2 of the remaining shares will vest on each of January 25, 2026 and January 25, 2027.
(7)Consists of shares of restricted stock granted under the 2019 OIP; 1/2 of the shares of restricted stock vested on January 26, 2025 and the remaining shares of restricted stock will vest on January 26, 2026.
(8)Consists of shares of restricted stock granted under the 2019 OIP that vested on January 27, 2025.
(9)Consists of restricted stock units granted under the 2019 OIP which will vest on October 1, 2025.
(10)Consists of restricted stock units granted under the 2019 OIP which were scheduled to vest in two equal installments on each of June 1, 2025, and June 1, 2026, but which were forfeited upon Mr. West’s retirement from the Company on January 31, 2025.
(11)All shares of restricted stock reported for Mr. West in the table above which were unvested at the time of his retirement from the Company on January 31, 2025 were forfeited. The stock options noted in the table above for Mr. West will continue to vest following his retirement, in accordance with the original vesting schedule and expire five years after his retirement date. With respect to the PUP performance units noted in the table above, Mr. West will be eligible for a pro-rated award based on actual performance and full months of service during the performance period. See "Potential Payments Upon Termination or Change in Control" for additional information on the treatment of Mr. West's outstanding equity awards in connection with his retirement from the Company.
2024 Option Exercises and Stock Vested
The following table provides information concerning each exercise of stock options and each vesting of stock during 2024 for the NEOs. All share and per share information in this table has been adjusted to reflect the Stock Split.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Options Awards | | Stock Awards |
| (a) | | (b) | | (c) | | (d) | | (e) |
| Name | | Number of Shares Acquired on Exercise | | Value Realized on Exercise | | Number of Shares Acquired on Vesting | | Value Realized on Vesting (1) |
| | (#) | | ($) | | (#) | | ($) |
| Marcus V. Brown | | — | | | $— | | | 60,535 | | | $3,964,799 | |
| | | | | | | | |
| Haley R. Fisackerly | | 8,268 | | | $247,392 | | | 7,631 | | | $575,223 | |
| | | | | | | | |
| Kimberly A. Fontan | | — | | | $— | | | 24,003 | | | $1,873,014 | |
| | | | | | | | |
| Laura R. Landreaux | | — | | | $— | | | 8,518 | | | $652,494 | |
| | | | | | | | |
| Andrew S. Marsh | | 138,000 | | | $3,243,158 | | | 105,900 | | | $8,231,875 | |
| | | | | | | | |
| Phillip R. May, Jr. | | — | | | $— | | | 13,647 | | | $1,050,900 | |
| | | | | | | | |
| Peter S. Norgeot, Jr. | | 68,990 | | | $1,207,091 | | | 28,520 | | | $2,202,601 | |
| | | | | | | | |
| Deanna D. Rodriguez | | 6,088 | | | $117,714 | | | 6,714 | | | $496,257 | |
| | | | | | | | |
| Eliecer Viamontes | | 8,664 | | | $104,531 | | | 7,661 | | | $584,936 | |
| | | | | | | | |
| Roderick K. West | | — | | | $— | | | 58,248 | | | $4,183,770 | |
(1)Represents the value of performance units which vested under the 2022–2024 PUP (payable solely in shares based on the closing stock price of Entergy Corporation on the date of vesting) under the PUP and the vesting of restricted stock and restricted stock units, if applicable, in 2024.
2024 Pension Benefits
The following table shows the present value as of December 31, 2024, of accumulated benefits payable to each of the NEOs, including the number of years of service credited to each NEO, under the retirement plans sponsored by Entergy Corporation, determined using interest rate and mortality rate assumptions set forth in Note 11 to the financial statements. The amount of the SERP benefit provided in this table is the present value of the SERP benefit due at age 65 discounted using the interest rates that we used for financial reporting for the non-qualified pension liability at December 31, 2024, with the exception of Mr. Brown as discussed in the footnotes accompanying the table. Additional information regarding these retirement plans follows this table.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Plan Name | | Number of Years Credited Service | | Present Value of Accumulated Benefit | | Payments During 2024 |
Marcus V. Brown(1)(2) | | System Executive Retirement Plan | | 29.74 | | | $10,484,000 | | | $— | |
| | Entergy Retirement Plan | | 29.74 | | | $1,446,000 | | | $— | |
| | | | | | | | |
Haley R. Fisackerly(1) | | System Executive Retirement Plan | | 29.08 | | | $2,692,700 | | | $— | |
| | | Entergy Retirement Plan | | 29.08 | | | $1,187,200 | | | $— | |
| | | | | | | | |
| Kimberly A. Fontan | | Pension Equalization Plan | | 28.56 | | | $1,468,200 | | | $— | |
| | Entergy Retirement Plan | | 28.56 | | | $793,300 | | | $— | |
| | | | | | | | |
| Laura R. Landreaux | | Pension Equalization Plan | | 17.48 | | | $511,100 | | | $— | |
| | Entergy Retirement Plan | | 17.48 | | | $477,100 | | | $— | |
| | | | | | | | |
| Andrew S. Marsh | | System Executive Retirement Plan | | 26.37 | | | $8,236,900 | | | $— | |
| | Entergy Retirement Plan | | 26.37 | | | $748,200 | | | $— | |
| | | | | | | | |
Phillip R. May, Jr. (1)(3) | | System Executive Retirement Plan | | 38.56 | | | $3,092,000 | | | $— | |
| | Entergy Retirement Plan | | 38.56 | | | $1,800,500 | | | $— | |
| | | | | | | | |
| Peter S. Norgeot, Jr. | | Cash Balance Equalization Plan | | 10.37 | | $368,500 | | | $— | |
| | Cash Balance Plan | | 10.37 | | $219,200 | | | $— | |
| | | | | | | | |
Deanna D. Rodriguez(1) | | Pension Equalization Plan | | 30.19 | | | $896,300 | | | $— | |
| | Entergy Retirement Plan | | 30.19 | | | $1,321,700 | | | $— | |
| | | | | | | | |
| Eliecer Viamontes | | Cash Balance Equalization Plan | | 4.95 | | | $44,700 | | | $— | |
| | Cash Balance Plan | | 4.95 | | | $64,400 | | | $— | |
| | | | | | | | |
Roderick K. West(1) | | System Executive Retirement Plan | | 25.75 | | | $5,991,600 | | | $— | |
| | | Entergy Retirement Plan | | 25.75 | | | $871,200 | | | $— | |
(1)As of December 31, 2024, Mr. Brown, Mr. Fisackerly, Mr. May, Ms. Rodriguez, and Mr. West were retirement eligible.
(2)In 2022, the Company entered into an agreement with Mr. Brown and amended the PEP and the SERP, pursuant to which agreement and amendments if certain contingencies are met, the benefit payable to Mr. Brown (or to his surviving spouse) under the SERP when he separates from employment with the Company is fixed and will be determined as if such separation from employment occurred as of November 30, 2022 (including the use of final average monthly compensation, service and actuarial assumptions applicable to separations as of such date). If Mr. Brown separates from service and the contingencies are not met, then Mr. Brown (or his surviving spouse) will receive the lesser of the previously described benefit amount
under the SERP or the benefit that would have been payable to Mr. Brown under the SERP or the PEP, without regard to the above-described amendments to the SERP and PEP.
(3)Service under the SERP is granted from the date of hire. Service under the qualified Entergy Retirement Plan is granted from the later of the date of hire or the plan participation date. The SERP amounts reflected in the table for Mr. May is calculated based on 30 years of service pursuant to the terms of the SERP.
The tables below contain summaries of the pension benefit plans sponsored by Entergy that the NEOs participated in during 2024. Benefits for the NEOs who participate in these plans are determined using the same formulas as for other eligible employees.
Qualified Retirement Benefits
All of our NEOs, except Messrs. Norgeot and Viamontes participate in the Entergy Retirement Plan, a tax-qualified final average pay defined benefit pension plan sponsored by Entergy. Messrs. Norgeot and Viamontes participate in the Cash Balance Plan, which is a tax-qualified cash balance defined benefit pension plan Entergy sponsors for employees hired after June 30, 2014 and before January 1, 2021. Summaries of these plans are provided below. Benefits for the NEOs are determined using the same formulas as for other eligible employees:
| | | | | | | | | | | |
| Entergy Retirement Plan | Cash Balance Plan(1) |
| Eligible Named Executive Officers | Marcus V. Brown Haley R. Fisackerly Andrew S. Marsh Laura R. Landreaux | Phillip R. May, Jr.
Kimberly A. Fontan
Deanna D. Rodriguez
Roderick K. West | Peter S. Norgeot, Jr. Eliecer Viamontes |
| Eligibility | Non-bargaining employees hired before July 1, 2014 | Non-bargaining employees hired on or after July 1, 2014 and before January 1, 2021. |
| Vesting | A participant becomes vested in the Entergy Retirement Plan upon attainment of at least 5 years of vesting service or upon attainment of age 65 while actively employed by an Entergy system company. | A participant becomes vested in the Cash Balance Plan upon attainment of at least 3 years of vesting service or upon attainment of age 65 while actively employed by an Entergy system company. |
| Form of Payment Upon Retirement | Benefits are payable as an annuity. For employees who separate from service on or after January 1, 2018, a single lump sum distribution may be elected by the participant if eligibility criteria are met. | Benefits are payable as an annuity or single lump sum distribution. |
| | | | | | | | | | | |
| Entergy Retirement Plan | Cash Balance Plan(1) |
| Retirement Benefit Formula | Benefits are calculated as a single life annuity payable at age 65 and generally are equal to 1.5% of a participant’s Final Average Monthly Earnings (“FAME”) multiplied by years of service (not to exceed 40).
Earnings for the purpose of calculating FAME generally includes the employee’s base salary and eligible annual incentive awards subject to limitations imposed by the Internal Revenue Code of 1986, as amended (“Code”), and excludes all other bonuses. Executive annual incentive awards are not eligible for inclusion in earnings under this plan.
FAME is calculated using the employee’s average monthly earnings for the 60 consecutive months in which the employee’s earnings were highest during the 120 month period immediately preceding the employee’s retirement and includes up to 5 eligible annual incentive awards paid during the 60 month period, except that executive annual incentive awards are not included in the FAME calculation. | The normal retirement benefit at age 65 is determined by converting the sum of an employee’s annual pay credits and his or her annual interest credits into an actuarially equivalent annuity.
Pay credits ranging from 4-8% of an employee’s eligible earnings are allocated annually to a notional account for the employee based on an employee’s age and years of service. Earnings for purposes of calculating an employee’s pay credit include the employee’s base salary and annual incentive awards, subject to Code limitations, and exclude all other bonuses. Executive annual incentive program awards are eligible for inclusion in earnings under this plan.
Interest credits are calculated based upon the annual rate of interest on 30-year U.S. Treasury securities, as specified by the Internal Revenue Service, for the month of August preceding the first day of the applicable calendar year subject to a minimum rate of 2.6% and a maximum rate of 9%. |
Benefit Timing(2) | Normal retirement age under the plan is 65.
A reduced terminated vested benefit may be commenced as early as age 55. The amount of this benefit is determined by reducing the normal retirement benefit by 7% per year for the first 5 years commencement precedes age 65 and 6% per year for each additional year commencement precedes age 65.
A subsidized early retirement benefit may be commenced by employees who are at least age 55 with 10 years of service at the time they separate from service. The amount of this benefit is determined by reducing the normal retirement benefit by 2% per year for each year that early retirement precedes age 65. | Normal retirement age under the plan is 65.
A vested cash balance benefit may be commenced as early as the first day of the month following separation from service. The amount of the benefit is determined in the same manner as the normal retirement benefit described above in the “Retirement Benefit Formula” section. |
(1)Effective January 1, 2022, the Entergy Corporation Cash Balance Plan for Non-Bargaining Employees merged into and became Appendix J of the Entergy Corporation Retirement Plan for Non-Bargaining Employees, but retained its eligibility, benefit formula, and all benefits, rights, and features.
(2)As of December 31, 2024, Messrs. Brown, Fisackerly, May, and West and Ms. Rodriguez were eligible for early retirement under the Entergy Retirement Plan.
Non-qualified Retirement Benefits
The NEOs are eligible to participate in certain non-qualified retirement benefit plans that provide retirement income in addition to the benefit provided under the qualified retirement plans, including the PEP, the CBEP, and the SERP. Upon separation from the Company, those NEOs who participate in both the PEP and the SERP will be paid only the greater of the benefit under the PEP or the SERP. Each of the SERP, PEP, and CBEP is an unfunded non-qualified defined benefit pension plan that provides benefits to key management employees. In general, upon
disability, participants in the PEP and the SERP remain eligible for continued service credits until the earliest of recovery, separation from service due to disability, or retirement eligibility. Generally, spouses of participants who die before commencement of benefits may be eligible for a portion of the participant’s accrued benefit under these plans.
| | | | | | | | | | | | | | | | | |
| Pension Equalization Plan | Cash Balance Equalization Plan | System Executive Retirement Plan |
| Eligible Named Executive Officers | Marcus V. Brown Haley R. Fisackerly Laura R. Landreaux Andrew S. Marsh Philip R. May, Jr. Kimberly A. Fontan Deanna D. Rodriguez Roderick K. West | Peter S. Norgeot, Jr. Eliecer Viamontes | Marcus V. Brown Haley R. Fisackerly Andrew S. Marsh Philip R. May, Jr. Roderick K. West
|
Eligibility(1) | Management or highly compensated employees who participate in the Entergy Retirement Plan | Management or highly compensated employees who participate in the Cash Balance Plan | Certain individuals who became executive officers before July 1, 2014 |
| Form of Payment Upon Retirement | Single lump sum distribution | Single lump sum distribution | Single lump sum distribution |
| Retirement Benefit Formula | Benefits generally are equal to the actuarial present value of the difference between (1) the amount that would have been payable as an annuity under the Entergy Retirement Plan, including executive annual incentive program awards as eligible earnings and without applying the limitations of the Code on pension benefits and earnings that may be considered in calculating tax-qualified pension benefits, and (2) the amount actually payable as an annuity under the Entergy Retirement Plan. Executive annual incentive awards are taken into account as eligible earnings under this plan. | Benefits generally are equal to the difference between the amount that would have been payable as a lump sum under the Cash Balance Plan, but for the Code limitations on pension benefits and earnings that may be considered in calculating tax-qualified cash balance plan benefits, and the amount actually payable as a lump sum under the Cash Balance Plan. | Benefits generally are equal to the actuarial present value of a specified percentage, based on the participant’s years of service and management level of the participant’s “Final Average Monthly Compensation” (which is generally 1/36th of the sum of the participant’s base salary and annual incentive plan award for the three highest years during the last 10 years preceding separation from service), after first being reduced by the value of the participant’s Entergy Retirement Plan benefit. |
| | | | | | | | | | | | | | | | | |
| Pension Equalization Plan | Cash Balance Equalization Plan | System Executive Retirement Plan |
Benefit timing(2) | Payable at age 65
Benefits payable prior to age 65 are subject to the same reduced terminated vested or early retirement reduction factors as benefits payable under the Entergy Retirement Plan as described above.
An employee with supplemental credited service who terminates employment prior to age 65 must receive prior written consent of the Entergy employer in order to receive the portion of their benefit attributable to their supplemental credited service agreement.
Payable upon separation from service subject to six month delay if the participant is a "specified employee" under Code Section 409A. | Payable upon separation from service subject to six month delay required under the Code Section 409A. | Payable at age 65
Prior to age 65, vesting is conditioned on the prior written consent of the officer’s Entergy employer.
Benefits payable prior to age 65 are subject to the same reduced terminated vested or subsidized early retirement reduction factors as benefits payable under the Entergy Retirement Plan as described above.
Payable upon separation from service subject to six month delay if the participant is a "specified employee" under Code Section 409A. |
(1)The SERP was closed to new executive officers effective July 1, 2014. Effective July 1, 2014, no new grants of supplemental service may be provided to participants in the PEP. Participants in Entergy Corporation’s Cash Balance Plan are not eligible to participate in the PEP and instead may be eligible to participate in the CBEP.
(2)Benefits accrued under the SERP, PEP, and CBEP, if any, will become fully vested if a participant is involuntarily terminated without cause or terminates his or her employment for good reason in connection with a change in control with payment generally made in a lump-sum payment as soon as reasonably practicable following the first day of the month after the termination of employment, unless delayed six months under Code Section 409A.
2024 Non-Qualified Deferred Compensation
As of December 31, 2024, Mr. May had a deferred account balance under a frozen Defined Contribution Restoration Plan. The amount is deemed invested, as chosen by Mr. May, in certain T. Rowe Price investment funds that are also available to participants under the Savings Plan. Mr. May has elected to receive the deferred account balance after he retires. The Defined Contribution Restoration Plan, until it was frozen in 2005, credited eligible employees’ deferral accounts with employer contributions to the extent contributions under the qualified savings plan in which the employee participated were subject to limitations imposed by the Code.
Defined Contribution Restoration Plan | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Executive Contributions in 2024 | | Registrant Contributions in 2024 | | Aggregate Earnings in 2024(1) | | Aggregate Withdrawals/Distributions | | Aggregate Balance at December 31, 2024 |
| (a) | | (b) | | (c) | | (d) | | (e) | | (f) |
| Phillip R. May, Jr. | | $— | | | $— | | | $1,406 | | | $— | | | $5,029 | |
(1)Amounts in this column are not included in the Summary Compensation Table.
2024 Potential Payments Upon Termination or Change in Control
Entergy has plans and other arrangements that provide compensation to a NEO if his or her employment terminates under specified conditions, including following a change in control of Entergy.
Change in Control
Entergy does not have any plans or agreements that provide for payments or benefits to any of our NEOs solely upon a Change in Control (as defined below). Under the Continuity Plan, executive officers, including each of the continuing NEOs are eligible to receive the cash severance payment and welfare plan benefits described below if their employment is terminated by their Entergy System employer other than for Cause (as defined below) or if they terminate their employment for Good Reason during a period beginning with a potential change in control and ending 24 months following the effective date of a Change in Control (a “Qualifying Termination”). A participant will not be eligible for benefits under the Continuity Plan if such participant: accepts employment with Entergy or any of its subsidiaries; elects to receive the benefits of another severance or separation program; removes, copies, or fails to return any property belonging to Entergy Corporation or any of its subsidiaries or violates the non-compete provision of the Continuity Plan (which generally runs for two years but extends to three years if permissible under applicable law). The Continuity Plan does not include any provisions for the waiver of a breach of any of these restrictive covenants.
In addition, under the 2019 OIP or an applicable equity award agreement issued under the 2019 OIP, upon a Qualifying Termination, our executive officers, including the continuing NEOs, are eligible for the payments and benefits described in the table below under “Performance Units” and “Equity Awards.” Further, in the event of a Qualifying Termination, our executive officers, including the continuing NEOs, are eligible for the benefits described in the table below for “Retirement Benefits” under the terms of the SERP, PEP, and/or CBEP, as applicable.
In the event of a Qualifying Termination, the executive officers, including the continuing NEOs would receive lump sum severance payments and welfare benefits described below. In the event of a Qualifying Termination, all of the NEOs would receive the treatment described below for their retirement benefits and their outstanding performance units and equity awards:
| | | | | |
| Compensation Element | Payment and/or Benefit |
Severance(1) | A lump sum severance payment equal to a multiple of the sum of: (a) the participant’s annual base salary as in effect at any time within one year prior to the commencement of a change in control period or, if higher, immediately prior to a circumstance constituting good reason, plus (b) the participant’s annual incentive award, calculated using the average annual target opportunity derived under the annual incentive program for the two calendar years immediately preceding the calendar year in which termination occurs. |
| Performance Units | For outstanding performance units, participants would receive a number of shares of Entergy common stock equal to the greater of (1) the target number of performance units subject to the performance unit agreement or (2) the number of units that would vest under the performance unit agreement calculated based on Company performance through the participant’s termination date, in either case pro-rated based on the portion of the performance period that occurs through the termination date. |
| Equity Awards | All unvested stock options and restricted stock units will vest immediately, and restrictions will lift on restricted shares, upon a Qualifying Termination pursuant to the terms of Entergy’s equity plans. |
| Retirement Benefits | Benefits already accrued under the SERP, PEP, and CBEP, if any, will become fully vested. |
| Welfare Benefits | Participants who are not retirement-eligible would be eligible to receive Entergy-subsidized COBRA benefits for a period of 18 months. |
(1) Cash severance payments are capped at 2.99 times the sum of (a) an executive’s annual base salary in effect at any time within one year before commencement of the change in control period, or, if higher, immediately prior to a circumstance constituting Good Reason under the Continuity Plan in effect at any time within one year before commencement of the change in control period or, if higher, immediately prior to a circumstance constituting Good Reason under the Continuity Plan, plus (b) the higher of the executive’s actual annual incentive payment under the annual incentive program for the year immediately preceding the calendar year in which termination occurs or the average of the executive’s target annual incentive award for the two calendar years preceding the year in which termination occurs. Any cash severance payments to be paid under the Continuity Plan in excess of this cap will be forfeited by the participant.
To protect shareholders and Entergy Corporation’s business model, executives are required to comply with non-compete provisions (which generally run for two years but extend to three years if permissible under applicable law) and confidentiality provisions. If an executive discloses non-public data or information concerning Entergy Corporation or any of its subsidiaries or violates his or her non-compete provision, he or she will be required to repay any benefits previously received under the Continuity Plan.
For purposes of the Continuity Plan, the following events are generally defined as:
•Change in Control: (a) the purchase of 30% or more of either Entergy Corporation’s common stock or the combined voting power of Entergy Corporation’s voting securities; (b) the merger or consolidation of Entergy Corporation (unless its Board members constitute at least a majority of the board members of the surviving entity); (c) the liquidation, dissolution, or sale of all or substantially all of Entergy Corporation’s assets; or (d) a change in the composition of Entergy Corporation’s Board such that, during any two-year period, the individuals serving at the beginning of the period no longer constitute a majority of Entergy Corporation’s Board at the end of the period.
•Potential Change in Control: (a) Entergy Corporation or an affiliate enters into an agreement, the consummation of which would constitute a Change in Control; (b) the Entergy Corporation Board adopts resolutions determining that, for purposes of the Continuity Plan, a potential Change in Control has occurred; (c) a System Company or other person or entity publicly announces an intention to take actions that would constitute a Change in Control; or (d) any person or entity becomes the beneficial owner (directly or indirectly) of Entergy Corporation’s outstanding shares of common stock constituting 20% or more of the voting power or value of the Entergy Corporation’s outstanding common stock.
•Cause: The participant’s (a) willful and continuous failure to perform substantially his or her duties after written demand for performance; (b) engagement in conduct that is materially injurious to Entergy Corporation or any of its subsidiaries; (c) conviction or guilty or nolo contendere plea to a felony or other crime that materially and adversely affects the participant’s ability to perform his or her duties or Entergy Corporation’s reputation; (d) material violation of any agreement with Entergy Corporation or any of its subsidiaries; or (e) disclosure of any of Entergy Corporation’s confidential information without authorization.
•Good Reason: The participant’s (a) nature or status of duties and responsibilities is substantially altered or reduced; (b) salary is reduced by 5% or more; (c) primary work location is relocated outside the continental United States; (d) compensation plans are discontinued without an equitable replacement; (e) benefits or number of vacation days are substantially reduced; or (f) employment is terminated by an Entergy employer for reasons other than in accordance with the Continuity Plan.
Other Termination Events
For termination events, other than in connection with a Change in Control, the executive officers, including the continuing NEOs, generally will receive the benefits set forth below:
| | | | | | | | | | | | | | | | | |
| Termination Event | Compensation Element |
| Severance | Annual Incentive | Stock Options | Restricted Stock(2) | Performance Units |
| Voluntary Resignation (Not Retirement) | None | Forfeited(1) | Unvested options are forfeited. Vested options expire on the earlier of (i) 90 days from the last day of active employment and (ii) the option’s normal expiration date. | Forfeited | Forfeited(3) |
| Termination for Cause | None | Forfeited | Forfeited | Forfeited | Forfeited |
| Retirement | None | Pro-rated based on number of days employed during the performance period | Unvested stock options continue to vest following retirement, in accordance with the original vesting schedule and expire the earlier of (i) five years from the retirement date and (ii) the option’s normal expiration date. | Forfeited | Officers with a minimum of 12 months of participation are eligible for a pro-rated award based on actual performance and full months of service during the performance period |
| Death/Disability | None | Pro-rated based on number of days employed during the performance period
| Unvested stock options vest on the termination date and expire on the earlier of (i) five years from the termination date and (ii) the option’s normal expiration date | Fully Vest | Officers are eligible for pro-rated award based on actual performance and full months of service during the performance period |
(1)If an officer resigns after the completion of an annual incentive program performance period, but before the payment date of the annual incentive payment, he or she may receive, at Entergy’s discretion, an annual incentive payment.
(2)This column refers solely to restricted stock awards. Certain officers are occasionally granted restricted stock units for retention purposes, to offset forfeited compensation from a previous employer or for other limited purposes. The treatment of restricted stock units depends on the terms of the individual restricted stock unit agreement, which terms can vary. The standard off-cycle restricted stock unit agreement approved by the Talent and Compensation Committee provides that the units are forfeited if employment is terminated for any reason before the vesting date, except in the case of a termination other than for cause or voluntary termination for Good Reason during a Change in Control period. However, individual restricted stock unit agreements may provide for accelerated vesting in certain events, such as death or disability. Messrs. Fisackerly and May each have outstanding restricted stock units, the treatment of which upon various events of termination is disclosed in connection with the table below. Mr. West had outstanding restricted stock units as of December 31, 2024, which were forfeited when he retired from the Company on January 31, 2025.
(3)If an officer resigns after the completion of a PUP performance period, he or she will receive a payout under the PUP based on actual performance during the performance period.
Aggregate Termination Payments
The tables below reflect the amount of compensation each of the NEOs would have received if his or her employment had been terminated as of December 31, 2024 under the various scenarios described above. For purposes of these tables, a stock price of $75.82 was used, which was the closing market price of Entergy Corporation stock on December 31, 2024, the last trading day of the year. All share and per share information in this table has been adjusted to reflect the Stock Split.
| | | | | | | | | | | | | | | | | | | | | | | |
Benefits and Payments Upon Termination | Voluntary Resignation | For Cause | Termination for Good Reason or Not for Cause | Retirement | Disability | Death | Termination Related to a Change in Control |
Marcus V. Brown(1) | | | | | | | |
| Severance Payment | $— | | $— | | $— | | $— | | $— | | $— | | $4,275,471 | |
Performance Units(3) | $— | | $— | | $— | | $1,117,890 | | $1,117,890 | | $1,117,890 | | $1,117,890 | |
Stock Options(4) | $— | | $— | | $— | | $— | | $1,520,691 | | $1,520,691 | | $1,520,691 | |
| Restricted Stock | $— | | $— | | $— | | $— | | $923,622 | | $923,622 | | $923,622 | |
Welfare Benefits(5) | $— | | $— | | $— | | $— | | $— | | $— | | $— | |
| | | | | | | |
Haley R. Fisackerly(1) | | | | | | | |
| Severance Payment | $— | | $— | | $— | | $— | | $— | | $— | | $1,419,859 | |
Performance Units(3) | $— | | $— | | $— | | $394,188 | | $394,188 | | $394,188 | | $394,188 | |
Stock Options(4) | $— | | $— | | $— | | $— | | $484,582 | | $484,582 | | $484,582 | |
| Restricted Stock | $— | | $— | | $— | | $— | | $296,952 | | $296,952 | | $296,952 | |
Welfare Benefits(5) | $— | | $— | | $— | | $— | | $— | | $— | | $— | |
Unvested Restricted Stock Units(7) | $— | | $— | | $— | | $— | | $— | | $— | | $614,597 | |
| | | | | | | |
Kimberly A. Fontan(2) | | | | | | | |
| Severance Payment | $— | | $— | | $— | | $— | | $— | | $— | | $3,707,813 | |
Performance Units(3) | $— | | $— | | $— | | $— | | $1,173,087 | | $1,173,087 | | $1,173,087 | |
| Stock Options | $— | | $— | | $— | | $— | | $1,547,517 | | $1,547,517 | | $1,547,517 | |
| Restricted Stock | $— | | $— | | $— | | $— | | $922,011 | | $922,011 | | $922,011 | |
Welfare Benefits(6) | $— | | $— | | $— | | $— | | $— | | $— | | $32,661 | |
| | | | | | | |
Laura R. Landreaux(2) | | | | | | | |
| Severance Payment | $— | | $— | | $— | | $— | | $— | | $— | | $1,336,047 | |
Performance Units(3) | $— | | $— | | $— | | $— | | $381,450 | | $381,450 | | $381,450 | |
| Stock Options | $— | | $— | | $— | | $— | | $536,432 | | $536,432 | | $536,432 | |
| Restricted Stock | $— | | $— | | $— | | $— | | $320,240 | | $320,240 | | $320,240 | |
Welfare Benefits(6) | $— | | $— | | $— | | $— | | $— | | $— | | $32,661 | |
| | | | | | | |
Andrew S. Marsh(2) | | | | | | | |
| Severance Payment | $— | | $— | | $— | | $— | | $— | | $— | | $8,250,000 | |
Performance Units(3) | $— | | $— | | $— | | $— | | $4,930,423 | | $4,930,423 | | $4,930,423 | |
| Stock Options | $— | | $— | | $— | | $— | | $6,291,216 | | $6,291,216 | | $6,291,216 | |
| Restricted Stock | $— | | $— | | $— | | $— | | $3,779,466 | | $3,779,466 | | $3,779,466 | |
Welfare Benefits(6) | $— | | $— | | $— | | $— | | $— | | $— | | $32,661 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Benefits and Payments Upon Termination | Voluntary Resignation | For Cause | Termination for Good Reason or Not for Cause | Retirement | Disability | Death | Termination Related to a Change in Control |
Phillip R. May, Jr.(1) | | | | | | | |
| Severance Payment | $— | | $— | | $— | | $— | | $— | | $— | | $1,513,162 | |
Performance Units(3) | $— | | $— | | $— | | $422,469 | | $422,469 | | $422,469 | | $422,469 | |
Stock Options(4) | $— | | $— | | $— | | $— | | $594,495 | | $594,495 | | $594,495 | |
| Restricted Stock | $— | | $— | | $— | | $— | | $361,010 | | $361,010 | | $361,010 | |
Welfare Benefits(5) | $— | | $— | | $— | | $— | | $— | | $— | | $— | |
Unvested Restricted Stock Units(8) | $— | | $— | | $— | | $— | | $— | | $— | | $614,597 | |
| | | | | | | |
Peter S. Norgeot(1) | | | | | | | |
| Severance Payment | $— | | $— | | $— | | $— | | $— | | $— | | $3,516,240 | |
Performance Units(3) | $— | | $— | | $— | | $1,117,360 | | $1,117,360 | | $1,117,360 | | $1,117,360 | |
Stock Options(4) | $— | | $— | | $— | | $— | | $1,436,055 | | $1,436,055 | | $1,436,055 | |
| Restricted Stock | $— | | $— | | $— | | $— | | $868,907 | | $868,907 | | $868,907 | |
Welfare Benefits(6) | $— | | $— | | $— | | $— | | $— | | $— | | $24,354 | |
| | | | | | | |
Deanna D. Rodriguez(1) | | | | | | | |
| Severance Payment | $— | | $— | | $— | | $— | | $— | | $— | | $1,127,771 | |
Performance Units(3) | $— | | $— | | $— | | $240,425 | | $240,425 | | $240,425 | | $240,425 | |
Stock Options(4) | $— | | $— | | $— | | $— | | $310,852 | | $310,852 | | $310,852 | |
| Restricted Stock | $— | | $— | | $— | | $— | | $189,650 | | $189,650 | | $189,650 | |
Welfare Benefits(5) | $— | | $— | | $— | | $— | | $— | | $— | | $— | |
| | | | | | | |
Eliecer Viamontes(2) | | | | | | | |
| Severance Payment | $— | | $— | | $— | | $— | | $— | | $— | | $1,296,039 | |
Performance Units(3) | $— | | $— | | $— | | $— | | $297,745 | | $297,745 | | $297,745 | |
| Stock Options | $— | | $— | | $— | | $— | | $381,659 | | $381,659 | | $381,659 | |
| Restricted Stock | $— | | $— | | $— | | $— | | $232,429 | | $232,429 | | $232,429 | |
Welfare Benefits(6) | $— | | $— | | $— | | $— | | $— | | $— | | $32,661 | |
| | | | | | | |
Roderick K. West(1) | | | | | | | |
| Severance Payment | $— | | $— | | $— | | $— | | $— | | $— | | $4,513,068 | |
Performance Units(3) | $— | | $— | | $— | | $1,339,588 | | $1,339,588 | | $1,339,588 | | $1,339,588 | |
Stock Options(4) | $— | | $— | | $— | | $— | | $1,804,603 | | $1,804,603 | | $1,804,603 | |
| Restricted Stock | $— | | $— | | $— | | $— | | $1,106,680 | | $1,106,680 | | $1,106,680 | |
Welfare Benefits(5) | $— | | $— | | $— | | $— | | $— | | $— | | — | |
Unvested Restricted Stock Units(9) | $— | | $— | | $— | | $— | | $— | | $— | | $1,820,893 | |
(1)As of December 31, 2024, Mr. Brown, Mr. Fisackerly, Mr. May, Mr. Norgeot, Mr. West, and Ms. Rodriguez were retirement eligible and would retire rather than voluntarily resign, and in addition to the payments and benefits in the table, each (except for Mr. Norgeot) also would be entitled to receive their vested pension benefits under the Entergy Retirement Plan and their benefit under the PEP or the SERP, to the extent applicable, the latter of which requires the prior written consent of the officer’s Entergy employer to separate prior to age 65. As previously discussed, Ms. Rodriguez does not participate in the SERP. Mr. Norgeot would also be entitled to receive his vested pension benefit under the Cash Balance Plan and the CBEP. For a description of these benefits, see “2024 Pension Benefits.” Mr. West retired from the Company on January 31, 2025.
(2)See “2024 Pension Benefits” for a description of the pension benefits Ms. Fontan, Ms. Landreaux, Mr. Marsh, and Mr. Viamontes may receive upon the occurrence of certain termination events since they are not yet retirement eligible.
(3)For purposes of the table, in the event of a qualifying termination related to a change in control, each NEO would receive a number of performance units for the 2023–2025 PUP performance period and a number of performance units for the 2024–2026 PUP performance period, calculated as follows:
The greater of (1) the target number of performance units subject to the performance unit agreements or (2) the number of performance units that would vest under the performance unit agreements calculated based on Entergy Corporation’s actual performance through the NEO’s termination date, in either case pro-rated based on the portion of the performance period that occurs through the termination date.
For purposes of the table, the values of the performance unit awards for the open PUP performance periods for each NEO were calculated as follows, based on the assumption that the target number of performance units was the greater number:
Mr. Brown’s:
2023–2025 PUP Performance Period: 9,794 (24/36x14,690) performance units at target, assuming a stock price of $75.82 = $742,581
2024–2026 PUP Performance Period: 4,950 (12/36x14,848) performance units at target, assuming a stock price of $75.82 = $375,309
Total: $1,117,890
Mr. Fisackerly’s:
2023 – 2025 PUP Performance Period: 3,622 (24/36x5,432) performance units at target, assuming a stock price of $75.82 = $274,620
2024 – 2026 PUP Performance Period: 1,577 (12/36x4,730) performance units at target, assuming a stock price of $75.82 = $119,568
Total: $394,188
Ms. Fontan’s:
2023–2025 PUP Performance Period: 9,303 (24/36x13,954) performance units at target, assuming a stock price of $75.82 = $705,353
2024–2026 PUP Performance Period: 6,169 (12/36x18,506) performance units at target, assuming a stock price of $75.82 = $467,734
Total: $1,173,087
Ms. Landreaux’s:
2023 – 2025 PUP Performance Period: 3,011 (24/36x4,516) performance units at target, assuming a stock price of $75.82 = $228,294
2024 – 2026 PUP Performance Period: 2,020 (12/36x6,060) performance units at target, assuming a stock price of $75.82 = $153,156
Total: $381,450
Mr. Marsh’s:
2023–2025 PUP Performance Period: 41,194 (24/36x61,790) performance units at target, assuming a stock price of $75.82 = 3,123,329
2024–2026 PUP Performance Period: 23,834 (12/36x71,502) performance units at target, assuming a stock price of $75.82 = $1,807,094
Total: $4,930,423
Mr. May’s:
2023 – 2025 PUP Performance Period: 3,668 (24/36x5,502) performance units at target, assuming a stock price of $75.82 = $278,108
2024 – 2026 PUP Performance Period: 1,904 (12/36x5,710) performance units at target, assuming a stock price of $75.82 = $144,361
Total: $422,469
Mr. Norgeot’s:
2023–2025 PUP Performance Period: 9,668 (24/36x14,502) performance units at target, assuming a stock price of $75.82 = $733,028
2024–2026 PUP Performance Period: 5,069 (12/36x15,206) performance units at target, assuming a stock price of $75.82 = $384,332
Total: $1,117,360
Ms. Rodriguez’s:
2023 – 2025 PUP Performance Period: 2,160 (24/36x3,240) performance units at target, assuming a stock price of $75.82 = $163,771
2024 – 2026 PUP Performance Period: 1,011 (12/36x3,032) performance units at target, assuming a stock price of $75.82 = $76,654
Total: $240,425
Mr. Viamontes’:
2023 – 2025 PUP Performance Period: 2,659 (24/36x3,988) performance units at target, assuming a stock price of $75.82 = $201,605
2024 – 2026 PUP Performance Period: 1,268 (12/36x3,804) performance units at target, assuming a stock price of $75.82 = $96,140
Total: $297,745
Mr. West’s:
2023–2025 PUP Performance Period: 12,352 (24/36x18,528) performance units at target, assuming a stock price of $75.82 = $936,529
2024–2026 PUP Performance Period: 5,316 (12/36x15,946) performance units at target, assuming a stock price of $75.82 = $403,059
Total: $1,339,588
In the event of retirement, in the case of Mr. Brown, Mr. Fisackerly, Mr. May, Mr. Norgeot, Mr. West, or Ms. Rodriguez each would receive a prorated portion of the applicable achievement level of PUP performance units for each open PUP performance period, based on his or her full months of participation in such PUP performance period, provided he or she has completed a minimum of 12 months of full-time employment in the applicable PUP performance period. For purposes of calculating for the above table the number of performance units Mr. Brown, Mr. Fisackerly, Mr. May, Mr. West, and Ms. Rodriguez would receive in the event of retirement, it is assumed the achievement levels for the 2023–2025 PUP Performance Period and the 2024–2026 PUP performance period are at target. The resulting number of performance units and values are the same as calculated above for a qualifying termination related to a change in control. In connection with his retirement on January 31, 2025, Mr. West will be eligible for a pro-rated award under the 2023–2025 PUP and 2024–2026 PUP based on actual performance and his full months of service during the respective performance period.
In the event of death or disability of any NEO, the NEO or his or her estate would receive a prorated portion of the applicable achievement level of PUP performance units for each open PUP performance period, based on his or her full months of participation in such PUP performance period, with no required minimum amount of full-time employment in the applicable PUP performance period.
(4)As discussed previously, upon retirement, unvested stock options would continue to vest for each of Mr. Brown, Mr. Fisackerly, Mr. May, Mr. Norgeot, Mr. West, and Ms. Rodriguez in accordance with the original vesting schedule and expire the earlier of (i) five years from the retirement date and (ii) the option’s normal expiration date. See “2024 Outstanding Equity Awards at Fiscal Year-End” for information regarding each of these NEOs’ unvested stock options as of December 31, 2024. Assuming a stock price as of December 31, 2024 on the vesting dates of each these NEOs’ unvested stock options, the in-the-money value of their stock options in the event of retirement (including stock options that remain unvested) would be the same as is set forth in the table above within the Death, Disability and Termination Related to a Change in Control columns.
(5)Upon retirement, Mr. Brown, Mr. Fisackerly, Mr. May, Mr. West, and Ms. Rodriguez would be eligible for retiree medical and dental benefits, the same as all other retirees who are eligible for post-retirement benefits.
(6)Pursuant to the Executive Continuity Plan, in the event of a termination related to a Change in Control Ms. Fontan, Ms. Landreaux, Mr. Marsh, Mr. Norgeot and Mr. Viamontes would be eligible to receive Entergy-subsidized COBRA benefits for 18 months.
(7)Mr. Fisackerly’s 8,106 restricted stock units are scheduled to vest 100% on October 1, 2025. In the event of a Change in Control, the unvested restricted stock units will fully vest upon Mr. Fisackerly’s Qualifying Termination during a change in control period. Pursuant to his restricted stock unit agreement, Mr. Fisackerly is subject to certain restrictions on his ability to compete with Entergy and its affiliates during and for 12 months after his employment with Entergy, or to solicit its employees or customers during and for 24 months after his employment with Entergy. In addition, the restricted stock unit agreement limits Mr. Fisackerly’s ability to disparage Entergy and its affiliates. In the event of a breach of these restrictions, other than following certain constructive terminations of his employment, Mr. Fisackerly must repay to Entergy any shares of Entergy stock paid to him in respect of the restricted stock units and any amounts he received upon the sale or transfer of any such shares.
(8)Mr. May’s 8,106 restricted stock units are scheduled to vest 100% on October 1, 2025. In the event of a Change in Control, the unvested restricted stock units will fully vest upon Mr. May’s Qualifying Termination during a change in control period. Pursuant to his restricted stock unit agreement, Mr. May is subject to certain restrictions on his ability to compete with Entergy and its affiliates during and for 12 months after his employment with Entergy, or to solicit its employees or customers during and for 24 months after his employment with Entergy. In addition, the restricted stock unit agreement limits Mr. May’s ability to disparage Entergy and its affiliates. In the event of a breach of these restrictions, other than following certain constructive terminations of his employment, Mr. May must repay to Entergy any shares of Entergy stock paid to him in respect of the restricted stock units and any amounts he received upon the sale or transfer of any such shares.
(9)Mr. West’s 24,016 unvested restricted stock units were scheduled to vest in two equal installments on each of June 1, 2025, and June 1, 2026; however, they were forfeited as a result of his retirement from the Company on January 31, 2025 in accordance with the terms of the applicable grant agreement. In the event of a Change in Control, the unvested restricted stock units would have fully vested upon Mr. West’s Qualifying Termination during the change in control period. Pursuant to his restricted stock unit agreement, Mr. West is subject to certain restrictions on his ability to compete with Entergy and its affiliates during and for 12 months after his employment with Entergy, or to solicit its employees or customers during and for 24 months after his employment with Entergy. In addition, the restricted stock unit agreement limits Mr. West’s ability to disparage Entergy and its affiliates. In the event of a breach of these restrictions, other than following certain constructive terminations of his employment, Mr. West must repay to Entergy any shares of Entergy stock paid to him in respect of the restricted stock units and any amounts he received upon the sale or transfer of any such shares.
Pay Ratio
As required by Section 953(b) of the Dodd-Frank Act, the following disclosure is being provided about the relationship of the annual total compensation of the employees of each of the Utility operating companies to the annual total compensation of their respective Presidents and Chief Executive Officers. The pay ratio estimate for each of the Utility operating companies has been calculated in a manner consistent with Item 402(u) of Regulation S-K.
Identification of Median Employee
For each of the Utility operating companies, October 18, 2024 was selected as the date on which to determine the median employee. This date is different from the date used in the prior year; however, the methodology used to determine the date is consistent with that used in the prior year. Both dates correspond to the first day of the three month period prior to fiscal year-end for which information can be obtained about employees and all subsidiaries have the same number of pay cycles. To identify the median employee from each of the Utility operating companies’ employee population base, all compensation included in Box 5 of Form W-2 was considered with all before-tax deductions added back to this compensation (“Box 5 Compensation”). For purposes of determining the median employee of each Utility operating company, Box 5 Compensation was selected as it is believed to be representative of the compensation received by the employees of each respective Utility operating company and is readily available. The calculation of annual total compensation of the median employee for each Utility operating company is the same calculation used to determine total compensation for purposes of the 2024 Summary Compensation Table with respect to each of the NEOs.
Entergy Arkansas Ratio
For 2024,
•The median of the annual total compensation of all of Entergy Arkansas’s employees, other than Ms. Landreaux, was $141,875.
•Ms. Landreaux’s annual total compensation, as reported in the Total column of the 2024 Summary Compensation Table, was $1,479,975.
•Based on this information, the ratio of the annual total compensation of Mrs. Landreaux to the median of the annual total compensation of all employees is estimated to be 10:1.
Entergy Louisiana Ratio
For 2024,
•The median of the annual total compensation of all of Entergy Louisiana’s employees, other than Mr. May, was $159,265.
•Mr. May’s annual total compensation, as reported in the Total column of the 2024 Summary Compensation Table, was $1,676,245.
•Based on this information, the ratio of the annual total compensation of Mr. May to the median of the annual total compensation of all employees is estimated to be 11:1.
Entergy Mississippi Ratio
For 2024,
•The median of the annual total compensation of all of Entergy Mississippi’s employees, other than Mr. Fisackerly, was $146,332.
•Mr. Fisackerly’s annual total compensation, as reported in the Total column of the 2024 Summary Compensation Table, was $1,698,882.
•Based on this information, the ratio of the annual total compensation of Mr. Fisackerly to the median of the annual total compensation of all employees is estimated to be 12:1.
Entergy New Orleans Ratio
For 2024,
•The median of the annual total compensation of all of Entergy New Orleans’s employees, other than Ms. Rodriguez, was $129,518.
•Ms. Rodriguez’s annual total compensation, as reported in the Total column of the 2024 Summary Compensation Table, was $1,163,884.
•Based on this information, the ratio of the annual total compensation of Ms. Rodriguez to the median of the annual total compensation of all employees is estimated to be 9:1.
Entergy Texas Ratio
For 2024,
•The median of the annual total compensation of all of Entergy Texas’s employees, other than Mr. Viamontes, was $162,544.
•Mr. Viamontes’ annual total compensation, as reported in the Total column of the 2024 Summary Compensation Table, was $1,156,622.
•Based on this information, the ratio of the annual total compensation of Mr. Viamontes to the median of the annual total compensation of all employees is estimated to be 7:1.
Policies and Practices Related to the Timing of Grants of Certain Equity Awards
The Talent and Compensation Committee and senior management monitor the Company’s equity grant practices to evaluate whether such policies comply with governing regulations and are consistent with good corporate practices. When making regular annual equity grants, including stock options, the Talent and Compensation Committee’s practice is to approve them at its meeting in late January or in the first week of February of each year, which is near the beginning of the Company’s fiscal year, as part of the annual compensation review. In addition, the Talent and Compensation Committee may make grants at other times during the year for new hires or for other reasons, including, for example, job promotions or for retention purposes. Because the Talent and Compensation Committee’s regular meeting schedule is generally determined in the prior fiscal year and, as noted above, the Company generally makes annual equity awards to our NEOs at approximately the same time each year, the proximity of any awards to other significant corporate events is coincidental. The Company does not time its equity awards to take advantage of the release of earnings or other major announcements by the Company or market conditions.
During 2024, no stock option grants were made to any of our NEOs during any period beginning four business days before the filing or furnishing of a periodic report or current report and ending one business day after the filing or furnishing of any such report with the SEC.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Entergy Corporation owns 100% of the outstanding common stock of Entergy Texas and indirectly 100% of the outstanding common membership interests of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. The information with respect to (i) the beneficial ownership of Entergy Corporation’s directors and NEOs is included under the heading “Entergy Share Ownership - Directors and Executive Officers;” and (ii) persons known by Entergy Corporation to be beneficial owners of more than 5% of Entergy Corporation’s outstanding common stock is included under the heading “Entergy Share Ownership - Beneficial Owners of More Than Five Percent of Entergy Common Stock” in the 2025 Entergy Proxy Statement, which information is incorporated herein by reference. The registrants know of no contractual arrangements that may, at a subsequent date, result in a change in control of any of the registrants.
The following table sets forth the beneficial ownership of common stock of Entergy Corporation and stock-based units as of January 31, 2025 for the directors and NEOs of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas. Unless otherwise noted, each person had sole voting and investment power over the number of shares of common stock and stock-based units of Entergy Corporation set forth across from his or her name.
| | | | | | | | | | | | | | | | | | | | |
| Name | | Shares (1) | | Options Exercisable Within 60 Days | | Stock Units (2) |
| Entergy Arkansas | | | | | | |
| Marcus V. Brown** | | 51,412 | | | 135,694 | | | — | |
| Kimberly A. Fontan*** | | 44,785 | | | 82,644 | | | — | |
| Laura R. Landreaux*** | | 22,675 | | | 44,670 | | | — | |
| Andrew S. Marsh** | | 348,704 | | | 592,032 | | | — | |
| Peter S. Norgeot, Jr. *** | | 82,320 | | | 82,746 | | | — | |
| All directors and executive officers as a group (7 persons) | | 584,827 | | | 972,416 | | | — | |
| | | | | | |
| Entergy Louisiana | | | | | | |
| Marcus V. Brown** | | 51,412 | | | 135,694 | | | — | |
| Kimberly A. Fontan*** | | 44,785 | | | 82,644 | | | — | |
| Andrew S. Marsh** | | 348,704 | | | 592,032 | | | — | |
| Phillip R. May, Jr.*** | | 54,853 | | | 64,156 | | | 31 | |
| Peter S. Norgeot, Jr. *** | | 82,320 | | | 82,746 | | | — | |
| All directors and executive officers as a group (7 persons) | | 617,005 | | | 991,902 | | | 31 | |
| | | | | | |
| Entergy Mississippi | | | | | | |
| Marcus V. Brown** | | 51,412 | | | 135,694 | | | — | |
| Haley R. Fisackerly*** | | 16,375 | | | 35,144 | | | — | |
| Kimberly A. Fontan*** | | 44,785 | | | 82,644 | | | — | |
| Andrew S. Marsh** | | 348,704 | | | 592,032 | | | — | |
| Peter S. Norgeot, Jr. *** | | 82,320 | | | 82,746 | | | — | |
| All directors and executive officers as a group (6 persons) | | 552,120 | | | 941,730 | | | — | |
| | | | | | |
| Entergy New Orleans | | | | | | |
| Marcus V. Brown** | | 51,412 | | | 135,694 | | | — | |
| Kimberly A. Fontan*** | | 44,785 | | | 82,644 | | | — | |
| Andrew S. Marsh** | | 348,704 | | | 592,032 | | | — | |
| Peter S. Norgeot, Jr. *** | | 82,320 | | | 82,746 | | | — | |
| Deanna D. Rodriguez*** | | 14,406 | | | 6,360 | | | — | |
| All directors and executive officers as a group (6 persons) | | 550,151 | | | 912,946 | | | — | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Name | | Shares (1) | | Options Exercisable Within 60 Days | | Stock Units (2) |
| Entergy Texas | | | | | | |
| Marcus V. Brown** | | 51,412 | | | 135,694 | | | — | |
| Kimberly A. Fontan*** | | 44,785 | | | 82,644 | | | — | |
| Andrew S. Marsh** | | 348,704 | | | 592,032 | | | — | |
| Peter S. Norgeot, Jr. *** | | 82,320 | | | 82,746 | | | — | |
| Eliecer Viamontes*** | | 18,686 | | | 14,642 | | | — | |
| All directors and executive officers as a group (6 persons) | | 554,431 | | | 921,228 | | | — | |
| | | | | |
| * | Director of the respective company |
| ** | NEO of the respective company |
| *** | Director and NEO of the respective company |
(1)The number of shares of Entergy Corporation common stock owned by each individual and by all non-employee directors and executive officers as a group does not exceed one percent of the outstanding shares of Entergy Corporation common stock. This column also includes shares of Entergy Corporation common stock held in the Entergy Savings Plan (401(k)) by Messrs. Brown, Fisackerly, Marsh, May, and Viamontes and Mses. Fontan and Rodriguez. For Mr. Viamontes, this column includes shares of Entergy Corporation common stock held by him indirectly through his spouse.
(2)Represents the balances of phantom units each director or executive holds under the defined contribution restoration plan and the deferral provisions of Entergy Corporation’s equity ownership plans. These units will be paid out in either Entergy Corporation common stock or cash equivalent to the value of one share of Entergy Corporation common stock per unit on the date of payout, including accrued dividends. The deferral period is determined by the individual and is at least two years from the award of the bonus.
Equity Compensation Plan Information
The following table summarizes the equity compensation plan information as of December 31, 2024. Information is included for equity compensation plans approved by the shareholders. There are no shares authorized for issuance under equity compensation plans not approved by the shareholders. On December 12, 2024, Entergy effected a two-for-one forward stock split of Entergy Corporation common stock and a proportionate increase in the number of authorized shares of its common stock (“Stock Split”). Shares began trading on a Stock Split-adjusted basis at market open on December 13, 2024. The amounts reported in the table below have been retroactively adjusted to reflect the Stock Split.
| | | | | | | | | | | | | | | | | | | | |
| Plan Category | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants, and Rights (a) | | Weighted-Average Exercise Price of Outstanding Options, Warrants, and Rights (b)(2) | | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding securities reflected in column (a))
(c) |
Equity compensation plans approved by security holders (1) | | 3,226,456 | | | $53.38 | | 13,966,025 | |
| Equity compensation plans not approved by security holders | | — | | | — | | | — | |
| Total | | 3,226,456 | | | $53.38 | | 13,966,025 | |
(1)Includes the 2011 Equity Ownership Plan, the 2015 EOP, and the 2019 OIP (collectively, the “Plans”). The 2011 Equity Ownership Plan was approved by Entergy Corporation shareholders on May 6, 2011 and only applies to awards granted between May 6, 2011 and May 7, 2015. The 2015 EOP was approved by Entergy Corporation shareholders on May 8, 2015 and only applies to awards granted between May 8, 2015 and May 3, 2019. The Entergy Corporation shareholders approved the 2019 OIP on May 3, 2019 and approved the issuance of 14,600,000 shares of Entergy Corporation common stock from the 2019 OIP for equity-based incentive awards. On May 5, 2023, the Entergy Corporation shareholders approved Amendment No. 1 to the 2019 OIP, which increased the aggregate number of shares available for equity-based incentive awards under the 2019 OIP by 9,800,000 shares of Entergy Corporation common stock, and extended the term of the 2019 OIP by approximately four years to January 27, 2033. The Plans are administered by the Talent and Compensation Committee of the Entergy Corporation Board of Directors (other than with respect to awards granted to non-employee directors, which awards are administered by the entire Board of Directors). Eligibility under the Plans is limited to the non-employee directors and to the officers and employees of an Entergy employer or an affiliate of Entergy Corporation. The Plans provide for the issuance of stock options, restricted stock, equity awards (units whose value is related to the value of shares of the common stock but do not represent actual shares of common stock), performance awards (performance shares or units valued by reference to shares of common stock or performance units valued by reference to financial measures or property other than common stock), restricted stock unit awards, and other stock-based awards.
(2)The weighted-average exercise price reported in this column does not include outstanding performance awards.
Item 13. Certain Relationships and Related Party Transactions and Director Independence
The additional information required by this item will be set forth under Director Independence and Review and Approval of Related Party Transactions in the 2025 Entergy Proxy Statement, to be filed in connection with the Annual Meeting of Shareholders to be held May 2, 2025, which is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Aggregate fees billed to Entergy Corporation (consolidated), Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy for the years ended December 31, 2024 and 2023 by Deloitte & Touche LLP (PCAOB ID No. 34) were as follows:
| | | | | | | | | | | |
| | 2024 | | 2023 |
| Entergy Corporation (consolidated) | | | |
| Audit Fees (a) | $10,675,300 | | | $9,850,000 | |
| Audit-Related Fees (b) | 1,475,000 | | | 2,235,668 | |
| Total Audit and Audit-Related Fees | 12,150,300 | | | 12,085,668 | |
| Tax Fees | — | | | — | |
| All Other Fees (c) | 151,895 | | | 1,895 | |
| Total Fees (d) | $12,302,195 | | | $12,087,563 | |
| Entergy Arkansas | | | |
| Audit Fees (a) | $1,251,629 | | | $1,221,014 | |
| Audit-Related Fees (b) | — | | | — | |
| Total Audit and Audit-Related Fees | 1,251,629 | | | 1,221,014 | |
| Tax Fees | — | | | — | |
| All Other Fees | — | | | — | |
| Total Fees (d) | $1,251,629 | | | $1,221,014 | |
| Entergy Louisiana | | | |
| Audit Fees (a) | $2,487,155 | | | $2,172,029 | |
| Audit-Related Fees (b) | 625,000 | | | 1,209,547 | |
| Total Audit and Audit-Related Fees | 3,112,155 | | | 3,381,576 | |
| Tax Fees | — | | | — | |
| All Other Fees | — | | | — | |
| Total Fees (d) | $3,112,155 | | | $3,381,576 | |
| Entergy Mississippi | | | |
| Audit Fees (a) | $1,251,629 | | | $1,246,014 | |
| Audit-Related Fees (b) | 150,000 | | | — | |
| Total Audit and Audit-Related Fees | 1,401,629 | | | 1,246,014 | |
| Tax Fees | — | | | — | |
| All Other Fees | — | | | — | |
| Total Fees (d) | $1,401,629 | | | $1,246,014 | |
| Entergy New Orleans | | | |
| Audit Fees (a) | $1,042,729 | | | $1,121,014 | |
| Audit-Related Fees (b) | 210,000 | | | 576,121 | |
| Total Audit and Audit-Related Fees | 1,252,729 | | | 1,697,135 | |
| Tax Fees | — | | | — | |
| All Other Fees | — | | | — | |
| Total Fees (d) | $1,252,729 | | | $1,697,135 | |
| | | | | | | | | | | |
| | 2024 | | 2023 |
| Entergy Texas | | | |
| Audit Fees (a) | $1,341,629 | | | $1,296,014 | |
| Audit-Related Fees (b) | — | | | — | |
| Total Audit and Audit-Related Fees | 1,341,629 | | | 1,296,014 | |
| Tax Fees | — | | | — | |
| All Other Fees | — | | | — | |
| Total Fees (d) | $1,341,629 | | | $1,296,014 | |
| System Energy | | | |
| Audit Fees (a) | $1,176,629 | | | $1,136,014 | |
| Audit-Related Fees (b) | — | | | — | |
| Total Audit and Audit-Related Fees | 1,176,629 | | | 1,136,014 | |
| Tax Fees | — | | | — | |
| All Other Fees | — | | | — | |
| Total Fees (d) | $1,176,629 | | | $1,136,014 | |
(a)Audit Fees include fees for the audit of the registrant’s annual financial statements and internal control over financial reporting, reviews of financial statements including in the registrant’s quarterly reports, services that are normally provided in connection with statutory and regulatory filings or engagements, and services associated with securities filings, such as comfort letters and consents.
(b)Audit-Related Fees includes fees for employee benefit plan audits, accounting due diligence services related to the gas business in 2023, agreed upon procedures for storm securitizations in 2023, and other attestation services.
(c)Includes the fees for the SEC climate-related disclosure rules readiness assessment and a training provided in 2024, as well as the license fee for the accounting research tool in 2024 and 2023.
(d)100% of fees in 2024 and 2023 were pre-approved by the Entergy Corporation Audit Committee in accordance with the policy described below.
Entergy Audit Committee Guidelines for Pre-approval of Independent Auditor Services
The Audit Committee has adopted the following guidelines regarding the engagement of Entergy’s independent auditor to perform services for Entergy:
1.The independent auditor will provide the Audit Committee, for approval, an annual engagement letter outlining the scope of services proposed to be performed during the fiscal year, including audit services and other permissible non-audit services (e.g. audit-related services, tax services, and all other services).
2.For other permissible services not included in the engagement letter, Entergy management will submit a description of the proposed service, including a budget estimate, to the Audit Committee for pre-approval. Management and the independent auditor must agree that the requested service is consistent with the SEC’s rules on auditor independence prior to submission to the Audit Committee. The Audit Committee, at its discretion, will pre-approve permissible services and has established the following additional guidelines for permissible non-audit services provided by the independent auditor:
a.Aggregate non-audit service fees are targeted at fifty percent or less of the approved audit service fee.
b.All other services should only be provided by the independent auditor if it is a highly qualified provider of that service or if the Audit Committee pre-approves the independent audit firm to provide the service.
3.The Audit Committee will be informed quarterly as to the status of pre-approved services actually provided by the independent auditor.
4.To ensure prompt handling of unexpected matters, the Audit Committee delegates to the Audit Committee Chair or its designee the authority to approve permissible services and fees. The Audit Committee Chair or designee will report action taken to the Audit Committee at the next scheduled Audit Committee meeting.
5.The Vice President and General Auditor will be responsible for tracking all independent auditor fees and will report quarterly to the Audit Committee.
PART IV
Item 15. Exhibits and Financial Statement Schedules
| | | | | |
| (a)1. | Financial Statements and Independent Auditors’ Reports for Entergy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy are listed in the Table of Contents. |
| |
| (a)2. | Financial Statement Schedules |
| |
| Reports of Independent Registered Public Accounting Firm (see page 554) |
| |
| Financial Statement Schedules are listed in the Index to Financial Statement Schedules (see page S-1) |
| |
| (a)3. | Exhibits |
| |
| Exhibits for Entergy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy are listed in the Exhibit Index (see page 529 and are incorporated by reference herein). Each management contract or compensatory plan or arrangement required to be filed as an exhibit hereto is identified as such by footnote in the Exhibit Index. |
Item 16. Form 10-K Summary (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
None.
EXHIBIT INDEX
The following exhibits indicated by an asterisk preceding the exhibit number are filed herewith. The balance of the exhibits have previously been filed with the SEC as the exhibits and in the file numbers indicated and are incorporated herein by reference. The exhibits marked with a (+) are management contracts or compensatory plans or arrangements required to be filed herewith and required to be identified as such by Item 15 of Form 10-K.
Some of the agreements included or incorporated by reference as exhibits to this Form 10-K contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties were made solely for the benefit of the other parties to the applicable agreement and (i) were not intended to be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; (ii) may have been qualified in such agreement by disclosures that were made to the other party in connection with the negotiation of the applicable agreement; (iii) may apply contract standards of “materiality” that are different from the standard of “materiality” under the applicable securities laws; and (iv) were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement.
Entergy acknowledges that, notwithstanding the inclusion of the foregoing cautionary statements, it is responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this Form 10-K not misleading.
(2) Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
(3) Articles of Incorporation and Bylaws
(4)Instruments Defining Rights of Security Holders, Including Indentures
Entergy Corporation | | | | | |
| (a) 1 -- | See (4)(b) through (4)(g) below for instruments defining the rights of security holders of System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas. |
| | | | | |
| |
| (a) 2 -- | |
| |
| (a) 3 -- | |
| |
| (a) 4 -- | |
| |
| (a) 5 -- | |
| |
| (a) 6 -- | |
| |
| (a) 7 -- | |
| |
| (a) 8 -- | |
| |
| (a) 9 -- | |
| |
| (a) 10 -- | |
| |
| (a) 11 -- | |
| |
| (a) 12 -- | Fourth Amended and Restated Credit Agreement dated as of June 11, 2024, among Entergy Corporation, as Borrower, the banks and other financial institutions listed on the signature pages thereof, as Lenders, Citibank, N.A., as Administrative Agent and LC Issuing Bank, MUFG Bank, Ltd., as LC Issuing Bank, and the other LC Issuing Banks from time to time parties thereto (4.1 to Form 8-K filed June 13, 2024 in 1-11299). |
| |
| *(a) 13 -- | |
| | | | | |
| (b) 2 -- | |
| |
| (b) 3 -- | |
| |
| (b) 4 -- | |
| |
| (b) 5 -- | |
| |
| (b) 6 -- | |
| |
| (b) 7 -- | |
| |
| (b) 8 -- | |
Entergy Arkansas | | | | | |
| (c) 1 -- | Mortgage and Deed of Trust, dated as of October 1, 1944, as amended by the following Supplemental Indentures: (7(d) in 2-5463 (Mortgage); 7(b) in 2-7121 (First); 4(a)-7 in 2-10261 (Seventh); 2(b)-10 in 2-15767 (Tenth); 2(c) in 2-28869 (Sixteenth); 2(c) in 2-35107 (Eighteenth); 2(d) in 2-36646 (Nineteenth); 2(c) in 2-39253 (Twentieth); 4(c)1 to Form 10-K for the year ended December 31, 2017 in 1-10764 (Thirtieth); 4(c)1 to Form 10-K for the year ended December 31, 2017 in 1-10764 (Thirty-first); 4(c)1 to Form 10-K for the year ended December 31, 2017 in 1-10764 (Thirty-ninth); 4(c)1 to Form 10-K for the year ended December 31, 2017 in 1-10764 (Forty-first); 4(d)(2) in 33-54298 (Forty-sixth); C-2 to Form U5S for the year ended December 31,1995 (Fifty-third); 4(c)1 to Form 10-K for the year ended December 31, 2008 in 1-10764 (Sixty-eighth); 4.06 to Form 8-K filed October 8, 2010 in 1-10764 (Sixty-ninth); 4.06 to Form 8-K filed December 13, 2012 in 1-10764 (Seventy-first); 4(e) to Form 8-K filed January 9, 2013 in 1-10764 (Seventy-second); 4.05 to Form 8-K filed December 9, 2014 in 1-10764 (Seventy-seventh); 4.05 to Form 8-K filed January 8, 2016 in 1-10764 (Seventy-eighth); 4.05 to Form 8-K filed August 16, 2016 in 1-10764 (Seventy-ninth); 4(a) to Form 10-Q for the quarter ended September 30, 2018 (Eightieth); 4.1 to Form 8-K12B filed December 3, 2018 in 1-10764 (Eighty-first); 4.39 to Form 8-K filed March 19, 2019 in 1-10764 (Eighty-second); 4.49 to Form 8-K filed September 11, 2020 in 1-10764 (Eighty-third); 4.49 to Form 8-K filed March 30, 2021 in 1-10764 (Eighty-fourth); 4.66 to Form 8-K filed January 6, 2023 in 1-1-764 (Eighty-fifth); 4.66 to Form 8-K filed August 17, 2023 in 1-10764 (Eighty-sixth); and 4.66 to Form 8-K filed May 10, 2024 in 1-10764 (Eighty-seventh)). |
| |
| (c) 2 -- | Fourth Amended and Restated Credit Agreement dated as of June 11, 2024, among Entergy Arkansas, as Borrower, the banks and other financial institutions listed on the signature pages thereof, as Lenders, Citibank, N.A., as Administrative Agent, JPMorgan Chase Bank, N.A., as LC Issuing Bank, and the other LC Issuing Banks from time to time parties thereto (4.2 to Form 8-K filed June 13, 2024 in 1-10764). |
| |
| (c) 3 -- | |
| |
Entergy Louisiana | | | | | |
| (d) 1 -- | Mortgage and Deed of Trust, dated as of April 1, 1944, as amended by the following Supplemental Indentures: (7(d) in 2-5317 (Mortgage); 7(b) in 2-7408 (First); 4(d)1 to Form 10-K for the year ended December 31, 2017 in 1-32718 (Sixth); 2(c) in 2-34659 (Twelfth); 4(d)1 to Form 10-K for the year ended December 31, 2017 in 1-32718 (Thirteenth); 2(b)-2 in 2-38378 (Fourteenth); 4(d)1 to Form 10-K for the year ended December 31, 2017 in 1-32718 (Twenty-first); 4(d)1 to Form 10-K for the year ended December 31, 2017 in 1-32718 (Twenty-fifth); 4(d)1 to Form 10-K for the year ended December 31, 2017 in 1-32718 (Twenty-ninth); 4(d)1 to Form 10-K for the year ended December 31, 2017 in 1-32718 (Forty-second); A-2(a) to Rule 24 Certificate filed April 4, 1996 in 70-8487 (Fifty-first); B-4(i) to Rule 24 Certificate filed January 10, 2006 in 70-10324 (Sixty-third); B-4(ii) to Rule 24 Certificate filed January 10, 2006 in 70-10324 (Sixty-fourth); 4(a) to Form 10-Q for the quarter ended September 30, 2008 in 1-32718 (Sixty-fifth); 4.08 to Form 8-K filed September 24, 2010 in 1-32718 (Sixty-eighth); 4(a) to Form 10-Q for the quarter ended June 30, 2011 in 1-32718 (Seventy-second); 4.08 to Form 8-K filed June 24, 2014 in 1-32718 (Seventy-ninth); 4.08 to Form 8-K filed July 1, 2014 in 1-32718 (Eightieth); 4.08 to Form 8-K filed November 21, 2014 (Eighty-first); 4.1 to Form 8-K12B filed October 1, 2015 (Eighty-second); 4.33 to Form 8-K filed March 24, 2016 in 1-32718 (Eighty-fourth); 4.33 to Form 8-K filed August 17, 2016 in 1-32718 (Eighty-sixth); 4.43 to Form 8-K filed October 4, 2016 in 1-32718 (Eighty-seventh); 4.43 to Form 8-K filed May 23, 2017 in 1-32718 (Eighty-eighth); 4.43 to Form 8‑K filed March 23, 2018 in 1-32718 (Eighty-ninth); 4.43 to Form 8-K filed August 14, 2018 in 1-32718 (Ninetieth); 4.43 to Form 8-K filed March 12, 2019 in 1-32718 (Ninety-first); 4.53 to Form 8-K filed March 6, 2020 in 1-32718 (Ninety-second); 4.53(b) to Form 8-K filed November 13, 2020 in 1-32718 (Ninety-third); 4.53 to Form 8-K filed March 10, 2021 in 1-32718 (Ninety-fifth); 4.70 to Form 8-K filed August 24, 2022 in 1-32718 (Ninety-seventh); 4.70 to Form 8-K filed March 8, 2024 in 1-32718 (Ninety-eighth); 4.70 to Form 8-K filed August 9, 2024 in 1-32718 (Ninety-ninth); and 4.70 to Form 8-K filed January 7, 2025 in 1-32718 (One-hundredth)). |
| |
| (d) 2 -- | Fourth Amended and Restated Credit Agreement dated as of June 11, 2024, among Entergy Louisiana, as Borrower, the banks and other financial institutions listed on the signature pages thereof, as Lenders, Citibank, N.A., as Administrative Agent, Wells Fargo Bank, National Association and BNP Paribas, as LC Issuing Banks, and the other LC Issuing Banks from time to time parties thereto (4.3 to Form 8-K filed June 13, 2024 in 1-32718). |
| |
| (d) 3 -- | |
| |
| (d) 4 -- | |
| |
| (d) 5 -- | |
| |
| (d) 6 -- | |
| |
| (d) 7 -- | |
| |
| (d) 8 -- | |
| | | | | |
| |
| (d) 9 -- | |
| |
| (d) 10 -- | Indenture of Mortgage, dated September 1, 1926, as amended by the following Supplemental Indentures: (7-A-9 in Registration No. 2-6893 (Seventh); 4(d)15 to Form 10-K for the year ended December 31, 2017 in 1-32718 (Eighteenth); 2-A-8 in Registration No. 2-66612 (Thirty-eighth); 4(b) to Form 10-Q for the quarter ended March 31,1999 in 1-27031 (Fifty-eighth); 4.07 to Form 8-K filed July 1, 2014 in 0-20371 (Eighty-first); 4.2 to Form 8-K12B filed October 1, 2015 in 1-32718 (Eighty-second); 4.3 to Form 8-K12B filed October 1, 2015 in 1-32718 (Eighty-third); 4.42 to Form 8-K filed March 24, 2016 in 1-32718 (Eighty-fourth); 4.42 to Form 8-K filed May 19, 2016 in 1-32718 (Eighty-fifth); 4.42 to Form 8-K filed August 17, 2016 in 1-32718 (Eighty-sixth); 4.42 to Form 8-K filed October 4, 2016 in 1-32718 (Eighty-seventh); 4.42 to Form 8-K filed May 23, 2017 in 1-32718 (Eighty-eighth); 4.42 to Form 8-K filed March 23, 2018 in 1-32718 (Eighty-ninth); 4.42 to Form 8-K filed August 14, 2018 in 1-32718 (Ninetieth); 4.42 to Form 8-K filed March 12, 2019 in 1-32718 (Ninety-first); 4.52 to Form 8-K filed March 6, 2020 in 1-32718 (Ninety-second); 4.52(b) to Form 8-K filed November 13, 2020 in 1-32718 (Ninety-third); 4.52 to Form 8-K filed March 10, 2021 in 1-32718 (Ninety-fourth); 4.52 to Form 8-K filed October 1, 2021 in 1-32718 (Ninety-fifth); and 4.69 to Form 8-K filed August 24, 2022 in 1-32718 (Ninety-sixth)). |
| |
| (d) 11 -- | Agreement of Resignation, Appointment and Acceptance, dated as of October 3, 2007, among Entergy Gulf States, Inc., JPMorgan Chase Bank, National Association, as resigning trustee, and The Bank of New York, as successor trustee (4(a) to Form 10-Q for the quarter ended September 30, 2007 in 1-27031). |
| |
| (d) 12 -- | Mortgage and Deed of Trust of Entergy Louisiana, dated as of November 1, 2015, as amended by the following Supplemental Indentures: (4.38 in Registration No. 333-190911-07 (Mortgage); 4.40 to Form 8-K filed March 24, 2016 in 1-32718 (Second); 4(h) to Form 10-Q for the quarter ended March 31, 2016 in 1-32718 (Fourth); 4.40 to Form 8-K filed May 19, 2016 in 1-32718 (Fifth); 4.40 to Form 8-K filed August 17, 2016 in 1-32718 (Sixth); 4.41 to Form 8-K filed October 4, 2016 in 1-32718 (Seventh); 4.41 to Form 8-K filed May 23, 2017 in 1-32718 (Eighth); 4.41 to Form 8-K filed March 23, 2018 in 1-32718 (Ninth); 4.41 to Form 8-K filed August 14, 2018 in 1-32718 (Tenth); 4.41 to Form 8-K filed March 12, 2019 in 1-32718 (Eleventh); 4.51 to Form 8-K filed March 6, 2020 in 1-32718 (Twelfth); 4.51(b) to Form 8-K filed November 13, 2020 in 1-32718 (Thirteenth); 4.51 to Form 8-K filed March 10, 2021 in 1-32718 (Fifteenth); 4(b) to Form 8-K filed April 1, 2021 in 1-32718 (Sixteenth); 4.68 to Form 8-K filed August 24, 2022 in 1-32718 (Eighteenth); 4.68 to Form 8-K filed March 8, 2024 in 1-32718 (Nineteenth); 4.68 to Form 8-K filed August 9, 2024 in 1-32718 (Twentieth); and 4.68 to Form 8-K filed January 7, 2025 in 1-32718 (Twenty-first)). |
| |
| (d) 13 -- | |
| |
| (d) 14 -- | |
| |
| (d) 15 -- | |
| |
| (d) 16 -- | |
| |
| | | | | |
| (d) 17 -- | |
| |
| (d) 18 -- | |
| |
| (d) 19 -- | |
| |
| (d) 20 -- | |
| |
| (d) 21 -- | |
| |
| (d) 22 -- | |
| |
| (d) 23 -- | |
| |
| (d) 24 -- | |
| |
| (d) 25 -- | |
| |
| (d) 26 -- | |
| |
| (d) 27 -- | |
| |
| (d) 28 -- | |
| |
| | | | | |
| (d) 29 -- | |
| |
| *(d) 30 -- | |
| |
| *(d) 31 -- | |
Entergy Mississippi | | | | | |
| (e) 1 -- | Mortgage and Deed of Trust, dated as of February 1, 1988, as amended by the following Supplemental Indentures: (4(e)1 to Form 10-K for the year ended December 31, 2017 in 1-31508 (Mortgage); 4(e)1 to Form 10-K for the year ended December 31, 2017 in 1-31508 (Sixth); A-2(c) to Rule 24 Certificate filed May 14, 1999 in 70-8719 (Thirteenth); 4(b) to Form 10-Q for the quarter ended June 30, 2009 in 1-31508 (Twenty-sixth); 4.38 to Form 8-K filed December 11, 2012 in 1-31508 (Thirtieth); 4.05 to Form 8-K filed March 21, 2014 in 1-31508 (Thirty-first); 4.05 to Form 8-K filed May 13, 2016 in 1-31508 (Thirty-second); 4.16 to Form 8-K filed September 15, 2016 in 1-31508 (Thirty-third); 4.16 to Form 8-K filed November 14, 2017 in 1-31508 (Thirty-fourth); 4.1 to Form 8-K filed November 21, 2018 in 1-31508 (Thirty-fifth); 4.1 to Form 8-K12B filed December 3, 2018 in 1-31508 (Thirty-sixth); 4(a) to Form 8-K filed December 12, 2018 in 1-31508 (Thirty-seventh); 4.46 to Form 8-K filed June 5, 2019 in 1-31508 (Thirty-eighth); 4.56 to Form 8-K filed May 22, 2020 in 1-31508 (Thirty-ninth); 4.56 to Form 8-K filed November 16, 2021 in 1-31508 (Fortieth); 4.73 to Form 8-K filed May 12, 2023 in 1-31508 (Forty-first); and 4.73 to Form 8-K filed May 16, 2024 in 1-31508 (Forty-second)). |
| |
| (e) 2 -- | First Amended and Restated Credit Agreement dated as of June 11, 2024, among Entergy Mississippi, as Borrower, the banks and other financial institutions listed on the signature pages thereof, as Lenders, Citibank, N.A., as Administrative Agent, JPMorgan Chase Bank, N.A., as LC Issuing Bank, and the other LC Issuing Banks from time to time parties thereto (4.4 to Form 8-K filed June 13, 2024 in 1-31508). |
| |
| *(e) 3 -- | |
Entergy New Orleans | | | | | |
| (f) 1 -- | Mortgage and Deed of Trust, dated as of May 1, 1987, as amended by the following Supplemental Indentures: (4(f)1 to Form 10-K for the year ended December 31, 2017 in 1-35747 (Mortgage); 4(f)1 to Form 10-K for the year ended December 31, 2017 in 1-35747 (Third); 4(b) to Form 10-Q for the quarter ended June 30, 1998 in 0-5807 (Seventh); 4.02 to Form 8-K filed November 23, 2010 in 0-5807 (Fifteenth); 4.02 to Form 8-K filed November 29, 2012 in 1-35747 (Sixteenth); 4.02 to Form 8-K filed June 21, 2013 in 1-35747 (Seventeenth); 4(m) to Form 10-Q for the quarter ended March 31, 2016 in 1-35747 (Eighteenth); 4.02 to Form 8-K filed March 22, 2016 in 1-35747 (Nineteenth); 4.02 to Form 8-K filed May 24, 2016 in 1-35747 (Twentieth); 4.1 to Form 8-K12B filed December 1, 2017 in 1-35747 (Twenty-first); 4(a) to Form 8-K filed September 27, 2018 in 1-35747 (Twenty-second); 4(a) to Form 8-K filed March 26, 2020 in 1-35747 (Twenty-third); 4(a) to Form 8-K filed November 19, 2021 in 1-35747 (Twenty-fourth); and 4(a) to Form 10-Q for the quarter ended June 30, 2024 in 1-35747 (Twenty-fifth)). |
| |
| (f) 2 -- | Fourth Amended and Restated Credit Agreement dated as of June 18, 2024, among Entergy New Orleans, as Borrower, the banks and other financial institutions listed on the signature pages thereof, as Lenders, Bank of America, N.A., as Administrative Agent and LC Issuing Bank, and the other LC Issuing Banks from time to time parties thereto (4 to Form 8-K filed June 18, 2024 in 1-35747). |
| |
| *(f) 3 -- | |
Entergy Texas | | | | | |
| (g) 1 -- | |
| |
| (g) 2 -- | |
| |
| (g) 3 -- | |
| |
| (g) 4 -- | |
| |
| (g) 5 -- | |
| |
| (g) 6 -- | |
| |
| (g) 7 -- | |
| |
| (g) 8 -- | |
| |
| (g) 9 -- | Officer’s Certificate No. 20-B-15, dated August 22, 2022, supplemental to Indenture, Deed of Trust and Security Agreement, dated as of October 1, 2008, establishing the terms of Entergy Texas’s First Mortgage Bonds, 5.00% Series due September 15, 2052 (4.74 to Form 8-K filed August 25, 2022 in 1-34360). |
| |
| (g) 10 -- | Officer’s Certificate No. 21-B-16, dated August 8, 2023, supplemental to Indenture, Deed of Trust and Security Agreement, dated as of October 1, 2008, establishing the terms of Entergy Texas’s First Mortgage Bonds, 5.80% Series due September 1, 2053 (4.74 to Form 8-K filed August 11, 2023 in 1-34360). |
| |
| (g) 11 -- | Officer’s Certificate No. 23-B-17, dated August 12, 2024, supplemental to Indenture, Deed of Trust and Security Agreement, dated as of October 1, 2008, establishing the terms of Entergy Texas’s First Mortgage Bonds, 5.55% Series due September 15, 2054 (4.74 to Form 8-K filed August 15, 2024 in 1-34360). |
| |
| (g) 12 -- | Fourth Amended and Restated Credit Agreement dated as of June 11, 2024, among Entergy Texas, as Borrower, the banks and other financial institutions listed on the signature pages thereof, as Lenders, Citibank, N.A., as Administrative Agent, JPMorgan Chase Bank, N.A., BNP Paribas, Mizuho Bank, Ltd. and The Bank of Nova Scotia, as LC Issuing Banks, and the other LC Issuing Banks from time to time parties thereto (4.5 to Form 8-K filed June 13, 2024 in 1-34360). |
| |
| | | | | |
| (g) 13 -- | |
| |
| (g) 14 -- | |
| |
| (g) 15 -- | |
(10) Material Contracts
Entergy Corporation | | | | | |
| +(a) 1-- | |
| |
| +(a) 2 -- | |
| |
| +(a) 3 -- | |
| |
| +(a) 4 -- | |
| |
| +(a) 5 -- | |
| |
| +(a) 6 -- | |
| |
| +(a) 7 -- | |
| |
| +(a) 8 -- | |
| |
| +(a) 9 -- | |
| |
| +(a) 10 -- | |
| |
| +(a) 11 -- | |
| |
| +(a) 12 -- | |
| |
| | | | | |
| +(a) 13 -- | |
| |
| +(a) 14 -- | |
| |
| +(a) 15 -- | |
| |
| +(a) 16 -- | |
| |
| +(a) 17 -- | |
| |
| +(a) 18 -- | |
| |
| +(a) 19 -- | |
| |
| +(a) 20 -- | |
| |
| +(a) 21 -- | |
| |
| +(a) 22 -- | |
| |
| +(a) 23 -- | |
| |
| +(a) 24 -- | |
| |
| +(a) 25-- | |
| |
| +(a) 26 -- | |
| |
| +(a) 27 -- | |
| |
| +(a) 28 -- | |
| |
| +(a) 29 -- | |
| |
| | | | | |
| +(a) 30 -- | |
| |
| +(a) 31 -- | |
| |
| +(a) 32 -- | |
| |
| *+(a) 33 -- | |
| |
| +(a) 34 -- | |
| |
| +(a) 35 -- | |
| |
| +(a) 36 -- | |
| |
| +(a) 37 -- | |
| |
| +(a) 38 -- | |
| |
| +(a) 39 -- | |
| |
| +(a) 40 -- | |
| |
| +(a) 41 -- | |
| |
| +(a) 42 -- | |
| |
| +(a) 43 -- | |
| |
| +(a) 44 -- | |
| |
| +(a) 45 -- | |
| |
| +(a) 46 -- | |
| |
| +(a) 47 -- | |
| |
| | | | | |
| +(a) 48 -- | |
| |
| +(a) 49 -- | |
| |
| +(a) 50 -- | |
| |
| +(a) 51 -- | |
| |
| +(a) 52 -- | |
| |
| +(a) 53 -- | |
| |
| +(a) 54 -- | |
| |
| +(a) 55 -- | |
| |
| +(a) 56 -- | |
| |
| +(a) 57 -- | |
| |
| +(a) 58 -- | |
| |
| +(a) 59 -- | |
| |
| +(a) 60 -- | |
| |
| +(a) 61 -- | |
| |
| +(a) 62 -- | |
| |
| +(a) 63 -- | |
| |
| +(a) 64 -- | |
| |
| +(a) 65 -- | |
| |
| | | | | |
| +(a) 66 -- | |
| |
| +(a) 67 -- | |
| |
| +(a) 68 -- | |
| |
| +(a) 69 -- | |
| |
| '+(a) 70 -- | |
| |
| '+(a) 71 -- | |
| |
| '+(a) 72 -- | |
| |
| '+(a) 73 -- | |
System Energy | | | | | |
| (b) 1 -- | |
| |
| (b) 2 -- | |
| |
| (b) 3 -- | |
| |
| (b) 4 -- | |
| |
| (b) 5 -- | |
| |
| (b) 6 -- | Thirty-eighth Assignment of Availability Agreement, Consent and Agreement, dated as of December 9, 2020, among System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and The Bank of New York Mellon, as successor trustee (4.60 to Form 8-K filed December 9, 2020 in 1-09067). |
| |
| (b) 7 -- | Thirty-ninth Assignment of Availability Agreement, Consent and Agreement, dated as of June 15, 2021, among System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, The Bank of New York Mellon, as Mortgage Trustee and The Bank of New York Mellon, as Indenture Trustee (4(b) to Form 8-K filed June 15, 2021 in 1-09067). |
| |
| (b) 8 -- | Forty-first Assignment of Availability Agreement, Consent and Agreement, dated as of March 14, 2023, among System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and The Bank of New York Mellon, as successor trustee (4.77 to Form 8-K filed March 14, 2023 in 1-09067). |
| |
| | | | | |
| (b) 9 -- | Forty-second Assignment of Availability Agreement, Consent and Agreement, dated as of December 6, 2024, among System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and The Bank of New York Mellon, as successor trustee (4.77 to Form 8-K filed December 6, 2024 in 1-09067). |
| |
| (b) 10 -- | |
| |
| (b) 11 -- | |
| |
| (b) 12 -- | |
| |
| (b) 13 -- | |
| |
| (b) 14 -- | |
| |
| (b) 15 -- | |
Entergy New Orleans
(14) Code of Ethics
(23) Consents of Experts and Counsel
(31) Rule 13a-14(a)/15d-14(a) Certifications
| | | | | |
| *(d) | |
| |
| *(e) | |
| |
| *(f) | |
| |
| *(g) | |
| |
| *(h) | |
| |
| *(i) | |
| |
| *(j) | |
| |
| *(k) | |
| |
| *(l) | |
| |
| *(m) | |
| |
| |
(32) Section 1350 Certifications | | | | | |
| **(a) | |
| |
| **(b) | |
| |
| **(c) | |
| |
| **(d) | |
| |
| **(e) | |
| |
| **(f) | |
| |
| **(g) | |
| |
| **(h) | |
| |
| **(i) | |
| |
| **(j) | |
| |
| **(k) | |
| |
| **(l) | |
| |
| **(m) | |
| |
| |
(101) Interactive Data File | | | | | |
| *INS - | Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| |
| *SCH - | Inline XBRL Schema Document. |
| |
| *CAL - | Inline XBRL Calculation Linkbase Document. |
| |
| *DEF - | Inline XBRL Definition Linkbase Document. |
| |
| *LAB - | Inline XBRL Label Linkbase Document. |
| |
| *PRE - | Inline XBRL Presentation Linkbase Document. |
*(104) Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibits 101)
_________________ | | | | | | | | |
| * | Filed herewith. |
| ** | Furnished, not filed, herewith. |
| + | Management contracts or compensatory plans or arrangements. |
ENTERGY CORPORATION
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
| | | | | |
| ENTERGY CORPORATION |
| |
| By /s/ Reginald T. Jackson |
| Reginald T. Jackson |
| Senior Vice President and Chief Accounting Officer |
| |
| Date: February 18, 2025 |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
| | | | | | | | |
| Signature | Title | Date |
| | | |
/s/ Reginald T. Jackson Reginald T. Jackson
| Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer) | February 18, 2025 |
Andrew S. Marsh (Chair of the Board, Chief Executive Officer and Director; Principal Executive Officer); Kimberly A. Fontan (Executive Vice President and Chief Financial Officer; Principal Financial Officer); Gina F. Adams, John H. Black, John R. Burbank, Kirkland H. Donald, Brian W. Ellis, Philip L. Frederickson, M. Elise Hyland, Stuart L. Levenick, and Karen A. Puckett (Directors).
| | | | | |
By: /s/ Reginald T. Jackson | February 18, 2025 |
| (Reginald T. Jackson, Attorney-in-fact) | |
ENTERGY ARKANSAS, LLC
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
| | | | | |
| ENTERGY ARKANSAS, LLC |
| |
| By /s/ Reginald T. Jackson |
| Reginald T. Jackson |
| Senior Vice President and Chief Accounting Officer |
| |
| Date: February 18, 2025 |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
| | | | | | | | |
| Signature | Title | Date |
| | | |
/s/ Reginald T. Jackson Reginald T. Jackson
| Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer) | February 18, 2025 |
Laura R. Landreaux (Chair of the Board, President, Chief Executive Officer, and Director; Principal Executive Officer); Kimberly A. Fontan (Executive Vice President, Chief Financial Officer, and Director; Principal Financial Officer); and Peter S. Norgeot, Jr. (Director).
| | | | | |
By: /s/ Reginald T. Jackson | February 18, 2025 |
| (Reginald T. Jackson, Attorney-in-fact) | |
ENTERGY LOUISIANA, LLC
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
| | | | | |
| ENTERGY LOUISIANA, LLC |
| |
| By /s/ Reginald T. Jackson |
| Reginald T. Jackson |
| Senior Vice President and Chief Accounting Officer |
| |
| Date: February 18, 2025 |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
| | | | | | | | |
| Signature | Title | Date |
| | | |
/s/ Reginald T. Jackson Reginald T. Jackson
| Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer) | February 18, 2025 |
Phillip R. May, Jr. (Chairman of the Board, President, Chief Executive Officer, and Director; Principal Executive Officer); Kimberly A. Fontan (Executive Vice President, Chief Financial Officer, and Director; Principal Financial Officer); and Peter S. Norgeot, Jr. (Director).
| | | | | |
By: /s/ Reginald T. Jackson | February 18, 2025 |
| (Reginald T. Jackson, Attorney-in-fact) | |
ENTERGY MISSISSIPPI, LLC
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
| | | | | |
| ENTERGY MISSISSIPPI, LLC |
| |
| By /s/ Reginald T. Jackson |
| Reginald T. Jackson |
| Senior Vice President and Chief Accounting Officer |
| |
| Date: February 18, 2025 |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
| | | | | | | | |
| Signature | Title | Date |
| | | |
/s/ Reginald T. Jackson Reginald T. Jackson
| Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer) | February 18, 2025 |
Haley R. Fisackerly (Chairman of the Board, President, Chief Executive Officer, and Director; Principal Executive Officer); Kimberly A. Fontan (Executive Vice President, Chief Financial Officer, and Director; Principal Financial Officer); and Peter S. Norgeot, Jr. (Director).
| | | | | |
By: /s/ Reginald T. Jackson | February 18, 2025 |
| (Reginald T. Jackson, Attorney-in-fact) | |
ENTERGY NEW ORLEANS, LLC
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
| | | | | |
| ENTERGY NEW ORLEANS, LLC |
| |
| By /s/ Reginald T. Jackson |
| Reginald T. Jackson |
| Senior Vice President and Chief Accounting Officer |
| |
| Date: February 18, 2025 |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
| | | | | | | | |
| Signature | Title | Date |
| | | |
/s/ Reginald T. Jackson Reginald T. Jackson
| Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer) | February 18, 2025 |
Deanna D. Rodriguez (Chair of the Board, President, Chief Executive Officer, and Director; Principal Executive Officer); Kimberly A. Fontan (Executive Vice President, Chief Financial Officer, and Director; Principal Financial Officer); and Peter S. Norgeot, Jr. (Director).
| | | | | |
By: /s/ Reginald T. Jackson | February 18, 2025 |
| (Reginald T. Jackson, Attorney-in-fact) | |
ENTERGY TEXAS, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
| | | | | |
| ENTERGY TEXAS, INC. |
| |
| By /s/ Reginald T. Jackson |
| Reginald T. Jackson |
| Senior Vice President and Chief Accounting Officer |
| |
| Date: February 18, 2025 |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
| | | | | | | | |
| Signature | Title | Date |
| | | |
/s/ Reginald T. Jackson Reginald T. Jackson
| Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer) | February 18, 2025 |
Eliecer Viamontes (Chairman of the Board, President, Chief Executive Officer, and Director; Principal Executive Officer); Kimberly A. Fontan (Executive Vice President, Chief Financial Officer, and Director; Principal Financial Officer); and Peter S. Norgeot, Jr. (Director).
| | | | | |
By: /s/ Reginald T. Jackson | February 18, 2025 |
| (Reginald T. Jackson, Attorney-in-fact) | |
SYSTEM ENERGY RESOURCES, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
| | | | | |
| SYSTEM ENERGY RESOURCES, INC. |
| |
| By /s/ Reginald T. Jackson |
| Reginald T. Jackson |
| Senior Vice President and Chief Accounting Officer |
| |
| Date: February 18, 2025 |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
| | | | | | | | |
| Signature | Title | Date |
| | | |
/s/ Reginald T. Jackson Reginald T. Jackson
| Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer) | February 18, 2025 |
Kimberly A. Fontan (Chair of the Board, President, Chief Financial Officer, and Director; Principal Executive Officer and Principal Financial Officer); Kimberly Cook-Nelson and Barrett E. Green (Directors).
| | | | | |
By: /s/ Reginald T. Jackson | February 18, 2025 |
| (Reginald T. Jackson, Attorney-in-fact) | |
EXHIBIT 23(a)
CONSENTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333-266624 on Form S-3 and in Registration Statements Nos. 333-174148, 333-204546, 333-231800, 333-251819 and 333-275398 on Form S-8 of our reports dated February 18, 2025, relating to the financial statements and financial statement schedule of Entergy Corporation and Subsidiaries, and the effectiveness of Entergy Corporation and Subsidiaries’ internal control over financial reporting, appearing in this Annual Report on Form 10-K of Entergy Corporation for the year ended December 31, 2024.
We consent to the incorporation by reference in Registration Statement No. 333-266624-05 on Form S-3 of our reports dated February 18, 2025, relating to the financial statements and financial statement schedule of Entergy Arkansas, LLC and Subsidiaries appearing in this Annual Report on Form 10-K of Entergy Arkansas, LLC for the year ended December 31, 2024.
We consent to the incorporation by reference in Registration Statement No. 333-266624-04 on Form S-3 of our reports dated February 18, 2025, relating to the financial statements and financial statement schedule of Entergy Louisiana, LLC and Subsidiaries appearing in this Annual Report on Form 10-K of Entergy Louisiana, LLC for the year ended December 31, 2024.
We consent to the incorporation by reference in Registration Statement No. 333-266624-03 on Form S-3 of our reports dated February 18, 2025, relating to the financial statements and financial statement schedule of Entergy Mississippi, LLC and Subsidiaries appearing in this Annual Report on Form 10-K of Entergy Mississippi, LLC for the year ended December 31, 2024.
We consent to the incorporation by reference in Registration Statement No. 333-266624-02 on Form S-3 of our reports dated February 18, 2025, relating to the financial statements and financial statement schedule of Entergy Texas, Inc. and Subsidiaries appearing in this Annual Report on Form 10-K of Entergy Texas, Inc. for the year ended December 31, 2024.
We consent to the incorporation by reference in Registration Statement No. 333-266624-01 on Form S-3 of our report dated February 18, 2025, relating to the financial statements of System Energy Resources, Inc. appearing in this Annual Report on Form 10-K of System Energy Resources, Inc. for the year ended December 31, 2024.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 18, 2025
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and Board of Directors of
Entergy Corporation and Subsidiaries
Opinion on the Financial Statement Schedule
We have audited the consolidated financial statements of Entergy Corporation and Subsidiaries (the “Corporation”) as of December 31, 2024 and 2023, and for each of the three years in the period ended December 31, 2024, and the Corporation’s internal control over financial reporting as of December 31, 2024, and have issued our reports thereon dated February 18, 2025. Our audits also included the consolidated financial statement schedule of the Corporation listed in Item 15. This consolidated financial statement schedule is the responsibility of the Corporation’s management. Our responsibility is to express an opinion on the Corporation’s consolidated financial statement schedule based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 18, 2025
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and Board of Directors of
Entergy Texas, Inc. and Subsidiaries
To the member and Board of Directors of
Entergy Arkansas, LLC and Subsidiaries
Entergy Louisiana, LLC and Subsidiaries
Entergy Mississippi, LLC and Subsidiaries
Entergy New Orleans, LLC and Subsidiaries
Opinion on the Financial Statement Schedules
We have audited the consolidated financial statements of Entergy Arkansas, LLC and Subsidiaries, Entergy Louisiana, LLC and Subsidiaries, Entergy Mississippi, LLC and Subsidiaries, Entergy New Orleans, LLC and Subsidiaries, and Entergy Texas, Inc. and Subsidiaries (collectively the “Companies”) as of December 31, 2024 and 2023, and for each of the three years in the period ended December 31, 2024, and have issued our reports thereon dated February 18, 2025. Our audits also included the financial statement schedules of the respective Companies listed in Item 15. These financial statement schedules are the responsibility of the respective Companies’ management. Our responsibility is to express an opinion on the Companies’ financial statement schedules based on our audits. In our opinion, such financial statement schedules, when considered in relation to the financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 18, 2025
(Page left blank intentionally)
INDEX TO FINANCIAL STATEMENT SCHEDULES
| | | | | | | | |
| Schedule | | Page |
| | | |
| II | Valuation and Qualifying Accounts 2024, 2023, and 2022: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Schedules other than those listed above are omitted because they are not required, not applicable, or the required information is shown in the financial statements or notes thereto.
Columns have been omitted from schedules filed because the information is not applicable.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| ENTERGY CORPORATION AND SUBSIDIARIES |
| SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS |
| For the Years Ended December 31, 2024, 2023, and 2022 |
| (In Thousands) |
| Column A | | Column B | | Column C | | Column D | | Column E |
| | | | | Additions | | Other Changes | | |
| Description | | Balance at Beginning of Period | | Charged to Income
(1) | | Deductions (2) | | Balance at End of Period |
| Allowance for doubtful accounts | | | | | | | | |
| 2024 | | $25,905 | | | $31,894 | | | $39,880 | | | $17,919 | |
| 2023 | | $30,856 | | | $38,508 | | | $43,459 | | | $25,905 | |
| 2022 | | $68,608 | | | $40,307 | | | $78,059 | | | $30,856 | |
| Notes: | | | | | | | | |
| (1) A portion of the charges to income are deferred as a regulatory asset. |
| (2) Deductions represent write-offs of accounts receivable balances and are reduced by recoveries of amounts previously written off. |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| ENTERGY ARKANSAS, LLC AND SUBSIDIARIES |
| SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS |
| For the Years Ended December 31, 2024, 2023, and 2022 |
| (In Thousands) |
| Column A | | Column B | | Column C | | Column D | | Column E |
| | | | | Additions | | Other Changes | | |
| Description | | Balance at Beginning of Period | | Charged to Income
(1) | | Deductions (2) | | Balance at End of Period |
| Allowance for doubtful accounts | | | | | | | | |
| 2024 | | $7,182 | | | $6,997 | | | $9,507 | | | $4,672 | |
| 2023 | | $6,528 | | | $9,428 | | | $8,774 | | | $7,182 | |
| 2022 | | $13,072 | | | $14,947 | | | $21,491 | | | $6,528 | |
| Notes: | | | | | | | | |
| (1) A portion of the charges to income are deferred as a regulatory asset. |
| (2) Deductions represent write-offs of accounts receivable balances and are reduced by recoveries of amounts previously written off. |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| ENTERGY LOUISIANA, LLC AND SUBSIDIARIES |
| SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS |
| For the Years Ended December 31, 2024, 2023, and 2022 |
| (In Thousands) |
| Column A | | Column B | | Column C | | Column D | | Column E |
| | | | | Additions | | Other Changes | | |
| Description | | Balance at Beginning of Period | | Charged to Income
(1) | | Deductions (2) | | Balance at End of Period |
| Allowance for doubtful accounts | | | | | | | | |
| 2024 | | $6,156 | | | $10,017 | | | $13,137 | | | $3,036 | |
| 2023 | | $7,595 | | | $13,876 | | | $15,315 | | | $6,156 | |
| 2022 | | $29,231 | | | $10,574 | | | $32,210 | | | $7,595 | |
| Notes: | | | | | | | | |
| (1) A portion of the charges to income are deferred as a regulatory asset. |
| (2) Deductions represent write-offs of accounts receivable balances and are reduced by recoveries of amounts previously written off. |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES |
| SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS |
| For the Years Ended December 31, 2024, 2023, and 2022 |
| (In Thousands) |
| Column A | | Column B | | Column C | | Column D | | Column E |
| | | | | Additions | | Other Changes | | |
| Description | | Balance at Beginning of Period | | Charged to Income
(1) | | Deductions (2) | | Balance at End of Period |
| Allowance for doubtful accounts | | | | | | | | |
| 2024 | | $3,312 | | | $4,750 | | | $5,890 | | | $2,172 | |
| 2023 | | $2,472 | | | $7,275 | | | $6,435 | | | $3,312 | |
| 2022 | | $7,209 | | | $3,052 | | | $7,789 | | | $2,472 | |
| Notes: | | | | | | | | |
| (1) A portion of the charges to income are deferred as a regulatory asset. |
| (2) Deductions represent write-offs of accounts receivable balances and are reduced by recoveries of amounts previously written off. |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES |
| SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS |
| For the Years Ended December 31, 2024, 2023, and 2022 |
| (In Thousands) |
| Column A | | Column B | | Column C | | Column D | | Column E |
| | | | | Additions | | Other Changes | | |
| Description | | Balance at Beginning of Period | | Charged to Income
(1) | | Deductions (2) | | Balance at End of Period |
| Allowance for doubtful accounts | | | | | | | | |
| 2024 | | $7,770 | | | $4,565 | | | $5,600 | | | $6,735 | |
| 2023 | | $11,909 | | | $3,350 | | | $7,489 | | | $7,770 | |
| 2022 | | $13,282 | | | $7,691 | | | $9,064 | | | $11,909 | |
| Notes: | | | | | | | | |
| (1) A portion of the charges to income are deferred as a regulatory asset. |
| (2) Deductions represent write-offs of accounts receivable balances and are reduced by recoveries of amounts previously written off. |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| ENTERGY TEXAS, INC. AND SUBSIDIARIES |
| SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS |
| For the Years Ended December 31, 2024, 2023, and 2022 |
| (In Thousands) |
| Column A | | Column B | | Column C | | Column D | | Column E |
| | | | | Additions | | Other Changes | | |
| Description | | Balance at Beginning of Period | | Charged to Income
(1) | | Deductions (2) | | Balance at End of Period |
| Allowance for doubtful accounts | | | | | | | | |
| 2024 | | $1,484 | | | $5,567 | | | $5,747 | | | $1,304 | |
| 2023 | | $2,352 | | | $4,579 | | | $5,447 | | | $1,484 | |
| 2022 | | $5,814 | | | $4,042 | | | $7,504 | | | $2,352 | |
| Notes: | | | | | | | | |
| (1) A portion of the charges to income are deferred as a regulatory asset. |
| (2) Deductions represent write-offs of accounts receivable balances and are reduced by recoveries of amounts previously written off. |
