The fair value and gross unrealized losses of available-for-sale equity and debt securities, summarized by investment type and length of time that the securities have been in a continuous loss position, are as follows as of September 30, 2017:84
|
| | | | | | | | | | | | | | | |
| Equity Securities | | Debt Securities |
| Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses |
| (In Millions) |
Less than 12 months |
| $— |
| |
| $— |
| |
| $127.3 |
| |
| $1.1 |
|
More than 12 months | — |
| | — |
| | 51.5 |
| | 1.7 |
|
Total |
| $— |
| |
| $— |
| |
| $178.8 |
| |
| $2.8 |
|
The fair value and gross unrealized losses of available-for-sale equity and debt securities, summarized by investment type and length of time that the securities have been in a continuous loss position, are as follows as of December 31, 2016:
|
| | | | | | | | | | | | | | | |
| Equity Securities | | Debt Securities |
| Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses |
| (In Millions) |
Less than 12 months |
| $— |
| |
| $— |
| |
| $198.8 |
| |
| $4.8 |
|
More than 12 months | — |
| | — |
| | 4.8 |
| | 0.2 |
|
Total |
| $— |
| |
| $— |
| |
| $203.6 |
| |
| $5.0 |
|
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 June 30, 2023 and December 31, 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | June 30, 2023 | | December 31, 2022 |
| | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses |
| | (In Millions) |
Less than 12 months | | $312.5 | | | $9.5 | | | $409.9 | | | $24.6 | |
More than 12 months | | 302.5 | | | 44.6 | | | 207.5 | | | 42.9 | |
Total | | $615.0 | | | $54.1 | | | $617.4 | | | $67.5 | |
The fair value of available-for-sale debt securities, summarized by contractual maturities, as of SeptemberJune 30, 20172023 and December 31, 2016 are2022 were as follows:
| | | | | | | | | | | |
| 2023 | | 2022 |
| (In Millions) |
Less than 1 year | $45.6 | | | $33.6 | |
1 year - 5 years | 153.3 | | | 159.1 | |
5 years - 10 years | 170.0 | | | 161.7 | |
10 years - 15 years | 68.9 | | | 67.1 | |
15 years - 20 years | 77.2 | | | 83.3 | |
20 years+ | 238.4 | | | 220.3 | |
Total | $753.4 | | | $725.1 | |
|
| | | | | | | |
| 2017 | | 2016 |
| (In Millions) |
less than 1 year |
| $27.7 |
| |
| $31.4 |
|
1 year - 5 years | 113.2 |
| | 99.1 |
|
5 years - 10 years | 117.1 |
| | 122.8 |
|
10 years - 15 years | 50.7 |
| | 41.4 |
|
15 years - 20 years | 43.4 |
| | 30.9 |
|
20 years+ | 126.7 |
| | 99.2 |
|
Total |
| $478.8 |
| |
| $424.8 |
|
During the three months ended SeptemberJune 30, 20172023 and 2016,2022, proceeds from the dispositions of available-for-sale securities amounted to $50.5$65.2 million and $54.7$120.3 million, respectively. During the three months ended SeptemberJune 30, 2017 and 2016,2023, there were gross gains of $2.9$0.1 million and $0.4 million, respectively, and gross losses of $0.1$4 million reclassified out of other regulatory liabilities/assets into earnings. During the three months ended June 30, 2022, there were gross gains of $0.2 million, and $0.1gross losses of $6.7 million respectively, were reclassified out of other regulatory liabilities/assets into earnings.
During the ninesix months ended SeptemberJune 30, 20172023 and 2016,2022, proceeds from the dispositions of available-for-sale debt securities amounted to $176.1$132.6 million and $178.2$240.9 million, respectively. During the ninesix months ended SeptemberJune 30, 2017 and 2016,2023, there were gross gains of $7.9$0.5 million and $3 million, respectively, and gross losses of $0.4$9 million reclassified out of other regulatory liabilities/assets into earnings. During the six months ended June 30, 2022, there were gross gains of $1.1 million, and $0.2gross losses of $12.2 million respectively, were reclassified out of other regulatory liabilities/assets into earnings.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
System Energy
System Energy holds debt and equity securities classified asand available-for-sale debt securities in nuclear decommissioning trust accounts. The available-for-sale securities held as of SeptemberJune 30, 20172023 and December 31, 20162022 are summarized as follows:
| | | | | | | | | | | | | | | | | | | | |
| | Fair Value | | Total Unrealized Gains | | Total Unrealized Losses |
| | (In Millions) |
2023 | | | | | | |
Debt Securities | | $469.1 | | | $0.8 | | | $55.1 | |
| | | | | | |
2022 | | | | | | |
Debt Securities | | $459.7 | | | $0.7 | | | $63.7 | |
|
| | | | | | | | | | | | |
| | Fair Value | | Total Unrealized Gains | | Total Unrealized Losses |
| | (In Millions) |
2017 | | | | | | |
Equity Securities | |
| $541.0 |
| |
| $276.2 |
| |
| $— |
|
Debt Securities | | 329.6 |
| | 3.7 |
| | 1.9 |
|
Total | |
| $870.6 |
| |
| $279.9 |
| |
| $1.9 |
|
| | | | | | |
2016 | | | | | | |
Equity Securities | |
| $473.9 |
| |
| $221.9 |
| |
| $0.1 |
|
Debt Securities | | 306.6 |
| | 2.0 |
| | 4.5 |
|
Total | |
| $780.5 |
| |
| $223.9 |
| |
| $4.6 |
|
The amortized cost of available-for-sale debt securities was $327.8$523.4 million as of SeptemberJune 30, 20172023 and $309.1$522.7 million as of December 31, 2016.2022. As of SeptemberJune 30, 2017,2023, the available-for-sale debt securities havehad an average coupon rate of approximately 2.44%2.97%, an average duration of approximately 6.376.56 years, and an average maturity of approximately 8.8810.58 years.
The unrealized gains/(losses) recognized during the three and six months ended June 30, 2023 on equity securities still held as of June 30, 2023 were $58.4 million and $102.8 million, respectively. The equity securities are generally held in funds that are designed to approximate the return of the Standard & Poor’s 500 Index. A relatively small percentage of the equity securities are held in funds intended to replicate the return of the Wilshire 4500 Index.
The fair value and gross unrealized losses of available-for-sale debt securities, summarized by length of time that the securities had been in a continuous loss position, were as follows as of June 30, 2023 and December 31, 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | June 30, 2023 | | December 31, 2022 |
| | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses |
| (In Millions) |
Less than 12 months | | $195.8 | | | $9.5 | | | $231.9 | | | $19.2 | |
More than 12 months | | 239.4 | | | 45.6 | | | 198.0 | | | 44.5 | |
Total | | $435.2 | | | $55.1 | | | $429.9 | | | $63.7 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The fair value and gross unrealized losses of available-for-sale equity and debt securities, summarized by investment type and length of time that the securities have been in a continuous loss position, are as follows as of September 30, 2017:
|
| | | | | | | | | | | | | | | |
| Equity Securities | | Debt Securities |
| Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses |
| (In Millions) |
Less than 12 months |
| $— |
| |
| $— |
| |
| $135.6 |
| |
| $1.0 |
|
More than 12 months | — |
| | — |
| | 57.5 |
| | 0.9 |
|
Total |
| $— |
| |
| $— |
| |
| $193.1 |
| |
| $1.9 |
|
The fair value and gross unrealized losses of available-for-sale equity and debt securities, summarized by investment type and length of time that the securities have been in a continuous loss position, are as follows as of December 31, 2016:
|
| | | | | | | | | | | | | | | |
| Equity Securities | | Debt Securities |
| Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses |
| (In Millions) |
Less than 12 months |
| $— |
| |
| $— |
| |
| $220.9 |
| |
| $4.4 |
|
More than 12 months | — |
| | 0.1 |
| | 0.8 |
| | 0.1 |
|
Total |
| $— |
| |
| $0.1 |
| |
| $221.7 |
| |
| $4.5 |
|
The fair value of available-for-sale debt securities, summarized by contractual maturities, as of SeptemberJune 30, 20172023 and December 31, 2016 are2022 were as follows:
| | | | | | | | | | | |
| 2023 | | 2022 |
| (In Millions) |
Less than 1 year | $21.0 | | | $6.8 | |
1 year - 5 years | 190.1 | | | 201.7 | |
5 years - 10 years | 115.8 | | | 107.1 | |
10 years - 15 years | 4.8 | | | 11.7 | |
15 years - 20 years | 36.3 | | | 35.0 | |
20 years+ | 101.1 | | | 97.4 | |
Total | $469.1 | | | $459.7 | |
|
| | | | | | | |
| 2017 | | 2016 |
| (In Millions) |
less than 1 year |
| $8.7 |
| |
| $6.6 |
|
1 year - 5 years | 170.7 |
| | 188.2 |
|
5 years - 10 years | 79.1 |
| | 78.5 |
|
10 years - 15 years | 4.4 |
| | 1.3 |
|
15 years - 20 years | 6.5 |
| | 7.8 |
|
20 years+ | 60.2 |
| | 24.2 |
|
Total |
| $329.6 |
| |
| $306.6 |
|
During the three months ended SeptemberJune 30, 20172023 and 2016,2022, proceeds from the dispositions of available-for-sale debt securities amounted to $54.6$69.9 million and $103.5$67.8 million, respectively. During the three months ended SeptemberJune 30, 20172023, there were no gross gains and 2016,$4.1 million in gross losses reclassified out of other regulatory liabilities/assets into earnings. During the three months ended June 30, 2022, there were gross gains of $0.2$0.1 million and $0.7 million, respectively, and gross losses of $0.2$4.6 million and $0.1 million, respectively, were reclassified out of other regulatory liabilities/assets into earnings.
During the ninesix months ended SeptemberJune 30, 20172023 and 2016,2022, proceeds from the dispositions of available-for-sale debt securities amounted to $308.1$111.2 million and $392.9$104 million, respectively. During the ninesix months ended SeptemberJune 30, 20172023, there were no gross gains and 2016,$6.3 million in gross losses reclassified out of other regulatory liabilities/assets into earnings. During the six months ended June 30, 2022, there were gross gains of $0.7$0.2 million and $3.2 million, respectively, and gross losses of $1.5$5.3 million and $0.4 million, respectively, were reclassified out of other regulatory liabilities/assets into earnings.
Allowance for expected credit losses
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Other-than-temporary impairments and unrealized gains andestimates the expected credit losses
Entergy evaluates investment for its available-for-sale securities in the Entergy Wholesale Commodities’ nuclear decommissioning trust funds with unrealized losses at the end of each period to determine whether an other-than-temporary impairment has occurred. The assessment of whether an investment in a debt security has suffered an other-than-temporary impairment is based on whether Entergy has the intent to sell or more likely than not will be required to sell the debt security before recovery of its amortized costs. Further, if Entergy does not expect to recover the entire amortized cost basiscurrent credit rating and remaining life of the debtsecurities. To the extent an individual security an other-than-temporary impairment is considereddetermined to have occurred andbe uncollectible, it is measured by the present value of cash flows expected to be collected less the amortized cost basis (credit loss). Entergy did not have any material other-than-temporary impairments relating to credit losses on debtwritten off against this allowance. Entergy’s available-for-sale securities for the three and nine months ended September 30, 2017 and 2016. The assessment of whether an investmentare held in an equity security has suffered an other-than-temporary impairment is based on a number of factors including, first, whether Entergy has the ability and intent to hold the investment to recover its value, the duration and severity of any losses, and, then, whether it is expected that the investment will recover its value within a reasonable period of time. Entergy’s trusts are managed by third parties who operate in accordance with agreements that define investment guidelines and place restrictions on the purchases and sales of investments. Specifically, available-for-sale securities are subject to credit worthiness restrictions, with requirements for both the average credit rating of the portfolio and minimum credit ratings for individual debt securities. Entergy did not have an allowance for expected credit losses related to available-for-sale securities as of June 30, 2023 and December 31, 2022. Entergy did not record material charges to other incomeany impairments of available-for-sale debt securities for the three and ninesix months endedSeptember June 30, 2017 and 2016, resulting from2023. Entergy did not record any impairments of available-for-sale debt securities for the recognitionthree months ended June 30, 2022. Entergy recorded $1.5 million in impairments of available-for-sale debt securities for the other-than-temporary impairment of certain equity securities held in its decommissioning trust funds.six months ended June 30, 2022.
NOTE 10. INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
See “Income Tax Audits” and “Other Tax Matters” in Note 3 to the financial statements in the Form 10-K for a discussion of income tax audits, the Tax Cuts and Jobs Act, and other income tax matters involving Entergy. The following are updates to that discussion.
As discussed in the Form 10-K, inTax Cuts and Jobs Act
During the second quarter 2016, Entergy made a tax election to treat as a corporation for federal2018, the Registrant Subsidiaries began returning unprotected excess accumulated deferred income tax purposes its subsidiary that owned the FitzPatrick nuclear power plant. The effect of the election was that the plant and associated assets were deemed to be contributed to a new corporation for federal income tax purposes, which created permanent and temporary differences, as discussed in the Form 10-K. One permanent difference, which increased tax expense in 2016 under the applicable accounting standards, was the reduction to the plant’s tax basis to the extent that it exceeded its fair market value. Entergy sold the FitzPatrick plant on March 31, 2017. The removal of the contingencies regarding the sale of the plant and the receipt of NRC approval for the sale allowed Entergy to re-determine the plant’s tax basis, using the closing price as indicative of a higher fair market value for the plant. The re-determined basis resulted in a $44 million income tax benefit in the first quarter 2017.
In the second quarter 2017, Entergy made tax elections to treat as corporations for federal income tax purposes two subsidiaries that each own an Entergy Wholesale Commodities nuclear power plant. This resulted in a constructive contribution of all the assets and liabilitiestaxes, associated with the plants to new subsidiary corporations for federal income tax purposes, and generated both permanent and temporary differences under the income tax accounting standards. The constructive contributions required the Entergy subsidiary that constructively contributed the assets and liabilities to recognize the plants’ nuclear decommissioning liabilities for income tax purposes resulting in permanent differences. The accrualeffects of the nuclear decommissioning liabilities required EntergyTax Cuts and Jobs Act, to recognize a gain for income tax purposes, a portion of which resulted in an increase in tax basis of the assets constructively contributed to the subsidiaries. Recognition of the gain and the increase in tax basis of the assets represents a temporary difference. The permanent differences reduced income tax expense, net of unrecognized tax benefits, by $373 million.
In the first quarter 2017, Entergy implemented ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” Entergy will now prospectively recognize all income tax effects related to share-based payments through the income statement. In the first quarter 2017, stock option expirations, along with other stock compensation activity, resulted in the write-off of $11.5 million of deferred
their customers
Entergy Corporation and Subsidiaries
Notes to Financial Statements
through rate riders and other means 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. There was no return of unprotected excess accumulated deferred income taxes for Entergy or the Registrant Subsidiaries for the three months ended June 30, 2023 or for the six months ended June 30, 2023. For the three months ended June 30, 2022, the return of unprotected excess accumulated deferred income taxes reduced the regulatory liability for income taxes by $16 million for Entergy, including $9 million for Entergy Louisiana and $7 million for Entergy Texas. For the six months ended June 30, 2022, the return of unprotected excess accumulated deferred income taxes reduced the regulatory liability for income taxes by $33 million for Entergy, including $18 million for Entergy Louisiana, $1 million for Entergy New Orleans, and $14 million for Entergy Texas.
tax assets. Entergy’s stock-based compensation plans are discussed
Other Tax Matters
Act 293 Securitization
As described in Note 122 to the financial statements herein, Entergy Louisiana implemented a securitization authorized under Act 293 of the Louisiana Legislature’s Regular Session of 2021 in the Form 10-K.first quarter 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 storm trust II will make distributions to Entergy Louisiana, a beneficiary of the storm trust II, 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 securitization provides for a tax accounting permanent difference resulting in 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 related to 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 share the benefits of the securitization with its customers. See Note 2 to the financial statements herein for discussion of the Entergy Louisiana March 2023 storm cost securitization.
Arkansas Corporate Income Tax Rate Change
In April 2023, Arkansas Act 532 reduced the Arkansas corporate income tax rate from 5.3% to 5.1%. As a result of the rate reduction, Entergy Arkansas accrued a regulatory liability for income taxes of approximately $8 million in the second quarter of 2023 including a gross-up for the treatment of income taxes in Entergy Arkansas’s retail and wholesale ratemaking formulas.
NOTE 11. PROPERTY, PLANT, AND EQUIPMENT (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Construction Expenditures in Accounts Payable
Construction expenditures included in accounts payable at SeptemberJune 30, 2017 are $2192023 were $499 million for Entergy, $28.6$113.2 million for Entergy Arkansas, $95.5$136.1 million for Entergy Louisiana, $7.2$66.8 million for Entergy Mississippi, $0.6
Entergy Corporation and Subsidiaries
Notes to Financial Statements
$8.5 million for Entergy New Orleans, $18.9$104.6 million for Entergy Texas, and $26.9$17.7 million for System Energy. Construction expenditures included in accounts payable at December 31, 2016 are $2532022 were $459 million for Entergy, $40.9$93.2 million for Entergy Arkansas, $114.8$154.3 million for Entergy Louisiana, $11.5$59.5 million for Entergy Mississippi, $2.3$11.2 million for Entergy New Orleans, $9.3$68.9 million for Entergy Texas, and $6.2$29 million for System Energy.
NOTE 12. VARIABLE INTEREST ENTITIES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
See Note 17 to the financial statements in the Form 10-K for a discussion of variable interest entities.entities (VIEs). See Note 4 to the financial statements herein for details of the nuclear fuel companies’ credit facilities, and commercial paper borrowings, and long-term debt.
Entergy Louisiana was considered to hold a variable interest in the lessor from which it leased an undivided interest representing approximately 9.3% of the Waterford 3 nuclear plant. After Entergy Louisiana acquired a beneficial interest in the leased assets in March 2016, however, the lessor was no longer considered a variable interest entity. Entergy Louisiana made payments on its lease, including interest, of $9.2 million through March 2016. See Note 106 to the financial statements in the Form 10-K and Note 3 to the financial statements herein for discussion of noncontrolling interests.
Restoration Law Trust I (the storm trust I), a discussiontrust consolidated by Entergy Louisiana, is a VIE and Entergy Louisiana is the primary beneficiary. As of June 30, 2023 and December 31, 2022, the primary asset held by the storm trust I was $3.1 billion and $3.2 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 LURC’s 1% beneficial interest in the storm trust I is presented as noncontrolling interest on the consolidated balance sheets of Entergy and Entergy Louisiana, with balances of $32.4 million as of June 30, 2023 and $31.7 million as of December 31, 2022.
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 purchaseHurricane 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 Waterford 3 leased assets.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 June 30, 2023, the primary asset held by the storm trust II is the $1.5 billion 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 presented as noncontrolling interest on the consolidated balance sheets of Entergy and Entergy Louisiana, with a balance of $14.9 million as of June 30, 2023. See Note 2 to the financial statements herein 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 representing approximately 11.5% of the Grand Gulf nuclear plant. System Energy is the lessee under this arrangement, which is described in more detail in Note 105 to the financial statements in the Form 10-K. System Energy made payments on its lease,under this arrangement, including interest, of $8.6 million in each of the threesix months ended SeptemberJune 30, 20172023 and $8.6the six months ended June 30, 2022.
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. As of June 30, 2023, AR Searcy Partnership, LLC recorded assets equal to $137.6 million, primarily consisting of property, plant, and equipment, and the carrying value of Entergy Arkansas’s ownership interest in the three months ended September 30, 2016. System Energy made payments on its lease, including interest,partnership was approximately $110.8 million. As of $17.2December 31, 2022, AR Searcy Partnership, LLC recorded assets equal to $138.3 million, in the nine months ended September 30, 2017 and $17.2 million in the nine months ended September 30, 2016.
NOTE 13. ACQUISITIONS AND DISPOSITIONS (Entergy Corporation)
Acquisitions
Palisades Purchase Power Agreement
As discussed in the Form 10-K, Entergy’s purchaseprimarily consisting of the Palisadesproperty, plant, in 2007 included a unit-contingent, 15-year purchased power agreement (PPA) with Consumers Energy for 100% of the plant’s output, excluding any future uprates. Prices under the PPA range from $43.50/MWh in 2007 to $61.50/MWh in 2022, and the average price under the PPA is $51/MWh. For the PPA, which was at below-market prices at the time of the acquisition, Entergy will amortize a liability to revenue over the life of the agreement. The amount that will be amortized each period is based upon the present value, calculated at the date of acquisition, of each year’s difference between revenue under the agreement and revenue based on estimated market prices.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
In December 2016,and equipment, and the carrying value of Entergy announced that it had reached an agreement with Consumers Energy to amend the existing PPA to terminate early, on May 31, 2018, subject to regulatory approvals. Entergy updated the liability amortization calculation to reflect the expected early termination of the PPA. In September 2017, Entergy and Consumers Energy terminated the PPA amendment agreement, and Entergy announced the decision to continue to operate the plant through the end of the PPA. Based on that decision, the amounts to be amortized to revenue for the next five years will be approximately $2 million for the remainder of 2017, $6 million in 2018, $10 million in 2019, $11 million in 2020, and $12 million in 2021.
Dispositions
FitzPatrick
In March 2017 the NRC approved the sale of the FitzPatrick plant, an 838 MW nuclear power plant owned by EntergyArkansas’s ownership interest in the Entergy Wholesale Commodities segment, to Exelon.partnership was approximately $109 million. The transaction closed in March 2017 fortax equity investor’s ownership interest is recorded as noncontrolling interest.
MS Sunflower Partnership, LLC is a purchase price of $110 million, including the $10 million non-refundable signing fee paid in August 2016, in addition to the assumption by Exelon of certain liabilities related to the FitzPatrick plant, resulting in a pre-tax gain on the sale of $16 million. At the transaction close, Exelon paid an additional $8 million for the proration of certain expenses prepaid by Entergy.
As discussed in Note 10 to the financial statements herein,tax equity partnership that qualifies as a resultVIE, which Entergy Mississippi is required to consolidate as it is the primary beneficiary. As of the saleJune 30, 2023, MS Sunflower Partnership, LLC recorded assets equal to $163.5 million, primarily consisting of FitzPatrick on March 31, 2017, Entergy re-determined the plant’s tax basis, resulting in a $44 million income tax benefit in the first quarter 2017.
The assets and liabilities associated with the sale of FitzPatrick to Exelon were classified as held for sale on Entergy Corporation and Subsidiaries’ Consolidated Balance Sheet as of December 31, 2016. The disposition-date fair value of the decommissioning trust fund was $805 million, classified within other deferred debits, and the disposition-date fair value of the asset retirement obligation was $727 million, classified within other non-current liabilities. The transaction also included property, plant, and equipment, with a net bookand the carrying value of zero, materials and supplies, and prepaid assets.
As discussed in Note 14 to the financial statementsEntergy Mississippi’s ownership interest in the Form 10-K,partnership was approximately $126.4 million. As of December 31, 2022, MS Sunflower Partnership, LLC recorded assets equal to $154.5 million, primarily consisting of property, plant, and equipment, and the carrying value of Entergy entered into a reimbursement agreement with Exelon pursuant to which Exelon reimbursed Entergy for specified out-of-pocket costs associated with Entergy’s operation of FitzPatrick. InMississippi’s ownership interest in the first quarter 2017, Entergy billed Exelon for reimbursement of $98 million of other operation and maintenance expenses, $7 million in lost operating revenues, and $3 million in taxes other than income taxes, partially offset by a $10 million defueling credit to Exelon.partnership was approximately $117.2 million. The tax equity investor’s ownership interest is recorded as noncontrolling interest.
NOTE 14. ASSET RETIREMENT OBLIGATIONS13. REVENUE (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Operating Revenues
See Note 919 to the financial statements in the Form 10-K for a discussion of asset retirement obligations. Following are updates to that discussion.revenue recognition. Entergy’s total revenues for the three months ended June 30, 2023 and 2022 were as follows:
| | | | | | | | | | | | | | | | | |
| | 2023 | | 2022 | | | |
| | (In Thousands) | | | |
Utility: | | | | | | | |
Residential | | $951,424 | | | $1,035,063 | | | | |
Commercial | | 692,788 | | | 715,665 | | | | |
Industrial | | 750,177 | | | 878,194 | | | | |
Governmental | | 63,816 | | | 67,101 | | | | |
Total billed retail | | 2,458,205 | | | 2,696,023 | | | | |
| | | | | | | |
Sales for resale (a) | | 68,262 | | | 249,035 | | | | |
Other electric revenues (b) | | 247,331 | | | 302,351 | | | | |
Revenues from contracts with customers | | 2,773,798 | | | 3,247,409 | | | | |
Other Utility revenues (c) | | 11,446 | | | 10,846 | | | | |
Electric revenues | | 2,785,244 | | | 3,258,255 | | | | |
| | | | | | | |
Natural gas revenues | | 33,503 | | | 48,008 | | | | |
| | | | | | | |
Other revenues (d) | | 27,279 | | | 88,933 | | | | |
| | | | | | | |
Total operating revenues | | $2,846,026 | | | $3,395,196 | | | | |
In the second quarter 2017, System Energy recorded a revision to its estimated decommissioning cost liability for Grand Gulf as a result of a revised decommissioning cost study. The revised estimate resulted in a $35.9 million reduction in its decommissioning cost liability, along with a corresponding reduction in the related asset retirement cost asset that will be depreciated over the remaining life of the unit.
In the third quarter 2017, Entergy Wholesale Commodities recorded a revision to its estimated decommissioning cost liability for Palisades. The revised estimate resulted in a $68.7 million reduction in its decommissioning cost liability, along with a corresponding reduction in the plant asset. The reduction in its estimated decommissioning cost liability resulted from the change in expectation regarding the timing of decommissioning cash flows due to the decision to continue to operate the plant until the spring of 2022.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy’s total revenues for the six months ended June 30, 2023 and 2022 were as follows:
| | | | | | | | | | | | | | |
| | 2023 | | 2022 |
| | (In Thousands) |
Utility: | | | | |
Residential | | $1,992,883 | | | $2,021,085 | |
Commercial | | 1,407,089 | | | 1,350,290 | |
Industrial | | 1,613,899 | | | 1,621,828 | |
Governmental | | 131,153 | | | 124,395 | |
Total billed retail | | 5,145,024 | | | 5,117,598 | |
| | | | |
Sales for resale (a) | | 176,209 | | | 377,994 | |
Other electric revenues (b) | | 291,788 | | | 396,231 | |
Revenues from contracts with customers | | 5,613,021 | | | 5,891,823 | |
Other Utility revenues (c) | | 55,633 | | | 22,208 | |
Electric revenues | | 5,668,654 | | | 5,914,031 | |
| | | | |
Natural gas revenues | | 98,084 | | | 120,369 | |
| | | | |
Other revenues (d) | | 60,347 | | | 238,722 | |
| | | | |
Total operating revenues | | $5,827,085 | | | $6,273,122 | |
The Utility operating companies’ total revenues for the three months ended June 30, 2023 and 2022 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2023 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas |
| | (In Thousands) |
Residential | | $204,808 | | | $334,246 | | | $163,001 | | | $68,535 | | | $180,834 | |
Commercial | | 136,591 | | | 253,365 | | | 142,997 | | | 56,095 | | | 103,740 | |
Industrial | | 153,817 | | | 407,045 | | | 54,738 | | | 7,562 | | | 127,015 | |
Governmental | | 4,945 | | | 19,407 | | | 14,971 | | | 17,896 | | | 6,597 | |
Total billed retail | | 500,161 | | | 1,014,063 | | | 375,707 | | | 150,088 | | | 418,186 | |
Sales for resale (a) | | 48,266 | | | 80,248 | | | 26,073 | | | 11,075 | | | 1,986 | |
Other electric revenues (b) | | 65,807 | | | 91,372 | | | 40,966 | | | 5,667 | | | 44,861 | |
Revenues from contracts with customers | | 614,234 | | | 1,185,683 | | | 442,746 | | | 166,830 | | | 465,033 | |
Other revenues (c) | | 2,113 | | | 6,226 | | | 2,384 | | | 1,386 | | | (603) | |
Electric revenues | | 616,347 | | | 1,191,909 | | | 445,130 | | | 168,216 | | | 464,430 | |
| | | | | | | | | | |
Natural gas revenues | | — | | | 13,703 | | | — | | | 19,800 | | | — | |
Total operating revenues | | $616,347 | | | $1,205,612 | | | $445,130 | | | $188,016 | | | $464,430 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2022 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas |
| | (In Thousands) |
Residential | | $199,209 | | | $400,915 | | | $143,705 | | | $80,484 | | | $210,750 | |
Commercial | | 127,230 | | | 290,063 | | | 118,278 | | | 58,801 | | | 121,293 | |
Industrial | | 135,809 | | | 536,229 | | | 43,738 | | | 9,216 | | | 153,202 | |
Governmental | | 5,137 | | | 21,841 | | | 12,611 | | | 20,179 | | | 7,333 | |
Total billed retail | | 467,385 | | | 1,249,048 | | | 318,332 | | | 168,680 | | | 492,578 | |
Sales for resale (a) | | 156,754 | | | 123,231 | | | 43,524 | | | 36,825 | | | 18,133 | |
Other electric revenues (b) | | 70,820 | | | 119,847 | | | 41,325 | | | 17,443 | | | 54,259 | |
Revenues from contracts with customers | | 694,959 | | | 1,492,126 | | | 403,181 | | | 222,948 | | | 564,970 | |
Other revenues (c) | | 1,980 | | | 5,816 | | | 2,278 | | | 1,136 | | | (379) | |
Electric revenues | | 696,939 | | | 1,497,942 | | | 405,459 | | | 224,084 | | | 564,591 | |
| | | | | | | | | | |
Natural gas revenues | | — | | | 17,843 | | | — | | | 30,165 | | | — | |
Total operating revenues | | $696,939 | | | $1,515,785 | | | $405,459 | | | $254,249 | | | $564,591 | |
The Utility operating companies’ total revenues for the six months ended June 30, 2023 and 2022 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2023 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas |
| | (In Thousands) |
Residential | | $444,307 | | | $694,892 | | | $332,390 | | | $132,101 | | | $389,193 | |
Commercial | | 261,927 | | | 531,543 | | | 276,673 | | | 110,164 | | | 226,782 | |
Industrial | | 285,053 | | | 916,949 | | | 106,153 | | | 14,975 | | | 290,769 | |
Governmental | | 9,605 | | | 42,481 | | | 28,854 | | | 35,694 | | | 14,519 | |
Total billed retail | | 1,000,892 | | | 2,185,865 | | | 744,070 | | | 292,934 | | | 921,263 | |
Sales for resale (a) | | 114,283 | | | 163,484 | | | 64,816 | | | 35,985 | | | 4,431 | |
Other electric revenues (b) | | 79,524 | | | 117,939 | | | 43,840 | | | 6,084 | | | 47,085 | |
Revenues from contracts with customers | | 1,194,699 | | | 2,467,288 | | | 852,726 | | | 335,003 | | | 972,779 | |
Other revenues (c) | | 4,397 | | | 44,373 | | | 4,832 | | | 2,908 | | | (843) | |
Electric revenues | | 1,199,096 | | | 2,511,661 | | | 857,558 | | | 337,911 | | | 971,936 | |
| | | | | | | | | | |
Natural gas revenues | | — | | | 39,159 | | | — | | | 58,925 | | | — | |
Total operating revenues | | $1,199,096 | | | $2,550,820 | | | $857,558 | | | $396,836 | | | $971,936 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2022 | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas |
| | (In Thousands) |
Residential | | $426,995 | | | $754,483 | | | $296,643 | | | $139,141 | | | $403,823 | |
Commercial | | 240,469 | | | 547,653 | | | 228,939 | | | 104,373 | | | 228,856 | |
Industrial | | 245,483 | | | 988,182 | | | 82,895 | | | 15,490 | | | 289,778 | |
Governmental | | 9,598 | | | 40,857 | | | 24,612 | | | 35,211 | | | 14,117 | |
Total billed retail | | 922,545 | | | 2,331,175 | | | 633,089 | | | 294,215 | | | 936,574 | |
Sales for resale (a) | | 227,167 | | | 230,932 | | | 65,165 | | | 63,365 | | | 35,778 | |
Other electric revenues (b) | | 101,392 | | | 161,329 | | | 51,662 | | | 18,836 | | | 65,709 | |
Revenues from contracts with customers | | 1,251,104 | | | 2,723,436 | | | 749,916 | | | 376,416 | | | 1,038,061 | |
Other revenues (c) | | 4,791 | | | 11,743 | | | 4,572 | | | 2,314 | | | (988) | |
Electric revenues | | 1,255,895 | | | 2,735,179 | | | 754,488 | | | 378,730 | | | 1,037,073 | |
| | | | | | | | | | |
Natural gas revenues | | — | | | 46,578 | | | — | | | 73,791 | | | — | |
Total operating revenues | | $1,255,895 | | | $2,781,757 | | | $754,488 | | | $452,521 | | | $1,037,073 | |
(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, settlement of financial hedges, occasional sales of inventory, alternative revenue programs, provisions for revenue subject to refund, and late fees.
(d)Other revenues include competitive business sales including 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.
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 of default on its accounts receivables. The following tables set forth a reconciliation of changes in the allowance for doubtful accounts for the six months ended June 30, 2023 and 2022.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 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 | 15.5 | | | 3.2 | | | 7.0 | | | 2.1 | | | 0.7 | | | 2.5 | |
Write-offs | (51.5) | | | (13.2) | | | (21.4) | | | (3.7) | | | (6.5) | | | (6.7) | |
Recoveries | 26.9 | | | 8.7 | | | 11.7 | | | 1.5 | | | 1.5 | | | 3.5 | |
Balance as of June 30, 2023 | $21.8 | | | $5.2 | | | $4.9 | | | $2.4 | | | $7.6 | | | $1.7 | |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Entergy | | Entergy Arkansas | | Entergy Louisiana | | Entergy Mississippi | | Entergy New Orleans | | Entergy Texas |
| (In Millions) |
Balance as of December 31, 2021 | $68.6 | | | $13.1 | | | $29.2 | | | $7.2 | | | $13.3 | | | $5.8 | |
Provisions (a) | 11.0 | | | 8.2 | | | 0.4 | | | 0.2 | | | 0.9 | | | 1.3 | |
Write-offs | (75.5) | | | (21.8) | | | (29.8) | | | (7.4) | | | (10.4) | | | (6.1) | |
Recoveries | 21.5 | | | 6.7 | | | 7.9 | | | 2.2 | | | 3.1 | | | 1.6 | |
Balance as of June 30, 2022 | $25.6 | | | $6.2 | | | $7.7 | | | $2.2 | | | $6.9 | | | $2.6 | |
(a)Provisions include estimated incremental bad debt expenses, and revisions to those estimates, resulting from the COVID-19 pandemic of ($8.9) million for Entergy, $3.9 million for Entergy Arkansas, ($8.5) million for Entergy Louisiana, ($3.0) million for Entergy New Orleans, and ($1.3) million for Entergy Texas that have been deferred as regulatory assets. See Note 2 to the financial statements herein and in the Form 10-K for discussion of the COVID-19 orders issued by retail regulators.
The allowance for currently expected credit losses is calculated as the historical rate of customer write-offs multiplied by the current accounts receivable balance, taking into account the length of time the receivable balances have been outstanding. The rate of customer write-offs has historically experienced minimal variation, although general economic conditions, such as the COVID-19 pandemic or other economic hardships, 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.
________________
In the opinion of the management of Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy, the accompanying unaudited financial statements contain all adjustments (consisting primarily of normal recurring accruals and reclassification of previously reported amounts to conform to current classifications) necessary for a fair statement of the results for the interim periods presented. Entergy’s business is subject to seasonal fluctuations, however, with peak periods occurring typically during the first and third quarters. The results for the interim periods presented should not be used as a basis for estimating results of operations for a full year.
Part I, Item 3. Quantitative and Qualitative Disclosures About Market Risk
See the “Market and Credit Risk Sensitive Instruments” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis.
Part I, Item 4. Controls and Procedures
Disclosure Controls and Procedures
As of SeptemberJune 30, 2017,2023, evaluations were performed under the supervision and with the participation of Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy (individually(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.
Changes in Internal ControlsControl over Financial Reporting
Under the supervision and with the participation of each Registrants’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 SeptemberJune 30, 20172023 and found no change that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.
ENTERGY ARKANSAS, INC.LLC AND SUBSIDIARIES
MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS
Results of Operations
Net Income
ThirdSecond Quarter 20172023 Compared to ThirdSecond Quarter 20162022
Net income increased $3.8 million primarily due to higher retail electric price and lower other operation and maintenance expenses, partially offset by lower volume/weather, higher interest expense, and higher depreciation and amortization expenses.
Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022
Net income decreased $17.5$2.3 million primarily due to lower net revenue,volume/weather, higher nuclear refueling outage expenses, a higher effective income tax rate,interest expense, and higher taxes other than income taxes,depreciation and amortization expenses, partially offset by higher retail electric price, lower other operation and maintenance expenses.
Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016
Net income decreased $17.8 million primarily due to higher nuclear refueling outage expenses, higher depreciation and amortization expenses, a higher effective income tax rate, higher taxes other than income taxes, and lower net revenue, partially offset by higher other income.
Net RevenueOperating Revenues
ThirdSecond Quarter 20172023 Compared to ThirdSecond Quarter 20162022
Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges (credits). Following is an analysis of the change in net revenueoperating revenues comparing the thirdsecond quarter 20172023 to the thirdsecond quarter 2016:
|
| | | | |
| Amount |
| (In Millions) |
2016 net revenue2022 operating revenues | $696.9 | $496.3 |
|
Volume/weatherFuel, rider, and other revenues that do not significantly affect net income | (24.6(90.6) | ) |
Volume/weather | (8.6) | |
Retail electric price | 9.718.6 |
|
Other | 0.4 |
|
2017 net revenue2023 operating revenues | $616.3 | $481.8 |
|
Entergy Arkansas’s results include revenues from rate mechanisms designed to recover fuel, purchased power, and other costs such that the revenues and expenses associated with these items generally offset and do not affect net income. “Fuel, rider, and other revenues that do not significantly affect net income” includes the revenue variance associated with these items.
The volume/weather variance is primarily due to the effect of less favorable weather on residential and commercial sales. The decrease was partially offset by an increase of 168 GWh, or 9%, in industrial usage primarily due to a new customer in the primary metals industry.sales.
The retail electric price variance is primarily due to the implementation ofan increase in formula rate plan rates as approved by the APSC, effective with the first billing cycle of January 2017. The increase was partially offset by a decrease in the energy efficiency rider, as approved by the APSC, effective January 2017.2023. See Note 2 to the financial statements in the Form 10-K for further discussion of the 2022 formula rate plan filing.
Entergy Arkansas, Inc.LLC and Subsidiaries
Management's Financial Discussion and Analysis
Total electric energy sales for Entergy Arkansas for the three months ended June 30, 2023 and 2022 are as follows:
Nine | | | | | | | | | | | | | | | | | |
| 2023 | | 2022 | | % Change |
| (GWh) | | |
Residential | 1,767 | | | 1,820 | | | (3) | |
Commercial | 1,374 | | | 1,383 | | | (1) | |
Industrial | 2,226 | | | 2,135 | | | 4 | |
Governmental | 49 | | | 56 | | | (13) | |
Total retail | 5,416 | | | 5,394 | | | — | |
Sales for resale: | | | | | |
Associated companies | 512 | | | 450 | | | 14 | |
Non-associated companies | 811 | | | 2,010 | | | (60) | |
Total | 6,739 | | | 7,854 | | | (14) | |
See Note 13 to the financial statements herein for additional discussion of Entergy Arkansas’s operating revenues.
Six Months Ended SeptemberJune 30, 20172023 Compared to NineSix Months Ended SeptemberJune 30, 20162022
Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges (credits). Following is an analysis of the change in net revenueoperating revenues comparing the ninesix months ended SeptemberJune 30, 20172023 to the ninesix months ended SeptemberJune 30, 2016:
|
| | | | |
| Amount |
| (In Millions) |
2016 net revenue2022 operating revenues | $1,255.9 | $1,183.7 |
|
Volume/weatherFuel, rider, and other revenues that do not significantly affect net income | (40.0(64.8) | ) |
Asset retirement obligationVolume/weather | (11.1(30.0) | ) |
Opportunity sales | 7.5 |
|
Retail electric price | 34.138.0 |
|
Other | 4.4 |
|
2017 net revenue2023 operating revenues | $1,199.1 | $1,178.6 |
|
Entergy Arkansas’s results include revenues from rate mechanisms designed to recover fuel, purchased power, and other costs such that the revenues and expenses associated with these items generally offset and do not affect net income. “Fuel, rider, and other revenues that do not significantly affect net income” includes the revenue variance associated with these items.
The volume/weather variance is primarily due to the effect of less favorable weather on residential and commercial sales during the billed and unbilled sales periods. The decrease was partially offset by an increase of 520 GWh, or 10%, in industrial usage primarily due to a new customer in the primary metals industry..
The asset retirement obligation affects net revenue because Entergy Arkansas records a regulatory charge or credit for the difference between asset retirement obligation-related expenses and trust earnings plus asset retirement obligation-related costs collected in revenue. The variance is primarily caused by a decrease in regulatory credits because of an increase in decommissioning trust earnings, including portfolio rebalancing for the ANO 1 decommissioning trust fund.
The opportunity sales variance results from the estimated net revenue effect recorded in the first quarter 2016 in connection with the FERC orders issued in April 2016 in the opportunity sales proceeding. See Note 2 to the financial statements herein and in the Form 10-K for further discussion of the opportunity sales proceeding.
The retail electric price variance is primarily due to the implementation ofan increase in formula rate plan rates effective with the first billing cycle of January 2017 and an increase in base rates effective February 24, 2016, each as approved by the APSC. A significant portion of the base rate increase was related to the purchase of Power Block 2 of the Union Power Station in March 2016. The increase was partially offset by decreases in the energy efficiency rider, as approved by the APSC, effective April 2016 and January 2017.2023. See Note 2 to the financial statements in the Form 10-K for further discussion of the rate case and2022 formula rate plan filings. filing.
Entergy Arkansas, LLC and Subsidiaries
Management's Financial Discussion and Analysis
Total electric energy sales for Entergy Arkansas for the six months ended June 30, 2023 and 2022 are as follows:
| | | | | | | | | | | | | | | | | |
| 2023 | | 2022 | | % Change |
| (GWh) | | |
Residential | 3,569 | | | 3,912 | | | (9) | |
Commercial | 2,613 | | | 2,690 | | | (3) | |
Industrial | 4,276 | | | 4,106 | | | 4 | |
Governmental | 95 | | | 111 | | | (14) | |
Total retail | 10,553 | | | 10,819 | | | (2) | |
Sales for resale: | | | | | |
Associated companies | 1,075 | | | 936 | | | 15 | |
Non-associated companies | 2,379 | | | 3,401 | | | (30) | |
Total | 14,007 | | | 15,156 | | | (8) | |
See Note 1413 to the financial statements in the Form 10-Kherein for additional discussion of the Union Power Station purchase.Entergy Arkansas’s operating revenues.
Other Income Statement Variances
ThirdSecond Quarter 20172023 Compared to ThirdSecond Quarter 20162022
Nuclear refueling outage expenses increased primarily due to the amortization of higher costs associated with the most recent outages compared to previous outages.
Other operation and maintenance expenses decreased primarily due to:
•a decrease of $8.8$5.6 million in nuclearcompensation and benefits costs primarily due to lower health and welfare costs as a result of higher prescription drug rebates in 2023 and a decrease in net periodic pension and other postretirement benefits service costs as a result of an increase in the discount rates used to value the benefits liabilities. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K, Note 6 to the financial statements herein, and Note 11 to the financial statements in the Form 10-K for further discussion of pension and other postretirement benefits costs;
•a decrease of $4.6 million in non-nuclear generation expenses primarily due to a lower scope of work, including a lower scope of work performed during plant outages, performed in the third quarter 20172023 as compared to the third quarter 2016,prior year; and
•a decrease of $3.4 million in transmission costs allocated by MISO.
The decrease was partially offset by an increase of $3.4 million in power delivery expenses primarily due to higher nuclear labor costsvegetation maintenance costs.
Taxes other than income taxes increased primarily due to positionincreases in ad valorem taxes resulting from higher assessments and increases in local franchise taxes.
Depreciation and amortization expenses increased primarily due to additions to plant in service.
Other income increased primarily due to changes in decommissioning trust fund activity and an increase in the nuclear fleetallowance for equity funds used during construction due to meet its operational goals.higher construction work in progress in 2023.
Interest expense increased primarily due to the issuance of $425 million of 5.15% Series mortgage bonds in January 2023.
Entergy Arkansas, Inc.LLC and Subsidiaries
Management's Financial Discussion and Analysis
Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS –Nuclear Matters” in the Form 10-K for a discussion of the increased operating costs to position the nuclear fleet to meet its operational goals;
a decrease of $5.2 million in fossil-fueled generationOther operation and maintenance expenses decreased primarily due to lower long-term service agreement costs; andto:
a decrease of $4.2 million in energy efficiency costs, including $4.6 million in credits received in the third quarter 2017 related to incentives recognized as a result of participation in energy efficiency programs, and
•the effects of true upsrecording a final judgment in first quarter 2023 to resolve claims in the energy efficiency filings in September 2017 for fixed costs to be collected from customers.
The decrease was partially offset by:
the effect of recording in July 2016 the final court decision in a lawsuitANO damages case against the DOE related to spent nuclear fuel storage costs. The damages awarded includedinclude the reimbursement of $5.5approximately $10.3 million of spent nuclear fuel storage costs previously recorded as other operation and maintenance expense.expenses. See Note 81 to the financial statements herein for discussion of the spent nuclear fuel litigation;
•a decrease of $10.3 million in compensation and benefits costs primarily due to lower health and welfare costs as a result of higher prescription drug rebates in 2023, a decrease in net periodic pension and other postretirement benefits service costs as a result of an increase in the discount rates used to value the benefits liabilities, and a revision to estimated incentive compensation expense in the first quarter 2023. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K, Note 6 to the financial statements herein, and Note 11 to the financial statements in the Form 10-K for further discussion of Entergy Arkansas’s spent nuclear fuel litigation;pension and other postretirement benefits costs;
•a decrease of $5.8 million in transmission costs allocated by MISO; and
•a decrease of $4.4 million in non-nuclear generation expenses primarily due to a lower scope of work, including during plant outages, performed in 2023 as compared to prior year.
The decrease was partially offset by an increase of $2.1$10 million in transmission and distributionpower delivery expenses primarily due to higher vegetation maintenance costs.
Taxes other than income taxes increasedcosts and higher reliability costs and an increase of $7.8 million in insurance expenses primarily due to an increaselower nuclear insurance refunds received in ad valorem taxes primarily due to higher assessments and higher millage rates.2023.
Depreciation and amortization expenses increased primarily due to additions to plant in service.
Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016
Nuclear refueling outage expenses increased primarily due to the amortization of higher costs associated with the most recent outages compared to previous outages.
Other operation and maintenance expenses decreased primarily due to:
a decrease of $24.9 million in nuclear generation expenses primarily due to a decrease in regulatory compliance costs as compared to the prior year, partially offset by higher nuclear labor costs, including contract labor,to position the nuclear fleet to meet its operational goals. The decrease in regulatory compliance costs is primarily related to additional NRC inspection activities in 2016 as a result of the NRC’s March 2015 decision to move ANO into the “multiple/repetitive degraded cornerstone column” of the NRC’s reactor oversight process action matrix. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - ANO Damage, Outage, and NRC Reviews” in the Form 10-K for a discussion of the ANO stator incident and subsequent NRC reviews. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS –Nuclear Matters” in the Form 10-K for a discussion of the increased operating costs to position the nuclear fleet to meet its operational goals;
a decrease of $7.6 million in fossil-fueled generation expenses primarily due to lower long-term service agreement costs; and
a decrease of $7 million in energy efficiency costs, including $4.6 million in credits received in the third quarter 2017 related to incentives recognized as a result of participation in energy efficiency programs, and the effects of true ups to the energy efficiency filings in September 2017 for fixed costs to be collected from customers.
The decrease was partially offset by:
the deferral in the first quarter 2016 of $7.7 million of previously-incurred costs related to ANO post-Fukushima compliance and $9.9 million of previously-incurred costs related to ANO flood barrier compliance, as approved by the APSC as part of the 2015 rate case settlement. These costs are being amortized over a ten-year period beginning March 2016. See Note 2 to the financial statements in the Form 10-K for further discussion of the rate case settlement;
Entergy Arkansas, Inc. and Subsidiaries
Management's Financial Discussion and Analysis
an increase of $11 million in transmission and distribution expenses primarily due to higher vegetation maintenance costs and higher labor costs, including contract labor;
the effect of recording in July 2016 the final court decision in a lawsuit against the DOE related to spent nuclear fuel storage costs. The damages awarded included the reimbursement of $5.5 million of spent nuclear fuel storage costs previously recorded as other operation and maintenance expense. See Note 8 to the financial statements in the Form 10-K for discussion of Entergy Arkansas’s spent nuclear fuel litigation; and
an increase of $3.2 million in compensation and benefits costs primarily due to a downward revision to estimated incentive compensation expense in the first quarter 2016.
Taxes other than income taxes increased primarily due to an increase in ad valorem taxes primarilythe allowance for equity funds used during construction due to higher assessmentsconstruction work in progress in 2023 and higher millage rates.interest earned on money pool investments.
Depreciation and amortization expensesInterest expense increased primarily due to additions to plantthe issuance of $425 million of 5.15% Series mortgage bonds in service, including Power Block 2 of the Union Power Station purchased in March 2016. See Note 14 to the financial statements in the Form 10-K for discussion of the Union Power Station purchase.January 2023.
Other income increased primarily due to higher realized gains in 2017 as compared to the same period in 2016 on the decommissioning trust fund investments, including portfolio rebalancing for the ANO 1 decommissioning trust fund.
Income Taxes
The effective income tax rate was 39%22.9% for the thirdsecond quarter 2017.2023. The difference in the effective income tax rate for the thirdsecond quarter 20172023 versus the federal statutory rate of 35%21% was primarily due to the accrual for state income taxes.taxes, partially offset by certain book and tax differences related to utility plant items.
The effective income tax rate was 39.4%19.4% for the ninesix months ended SeptemberJune 30, 2017.2023. The difference in the effective income tax rate for the ninesix months ended SeptemberJune 30, 20172023 versus the federal statutory rate of 35%21% was primarily due to the amortization of state accumulated deferred income taxes as a result of tax rate changes and certain book and tax differences related to utility plant items, partially offset by book and tax differences related to the allowanceaccrual for equity funds used during construction.state income taxes.
The effective income tax rate was 36.1%rates were 21.9% for the thirdsecond quarter 2016.2022 and 22.3% for the six months ended June 30, 2022. The differencedifferences in the effective income tax raterates for the thirdsecond quarter 20162022 and the six months ended June 30, 2022 versus the federal statutory rate of 35% was21% were primarily due to the accrual for state income taxes, partially offset by flow-through tax accounting.
The effective income tax rate was 37.4% for the nine months ended September 30, 2016. The difference in the effective income tax rate for the nine months ended September 30, 2016 versus the federal statutory rate of 35% was primarily due to state income taxes and certain book and tax differences related to utility plant items, partially offset by flow-through tax accountingitems.
Entergy Arkansas, LLC and bookSubsidiaries
Management's Financial Discussion and tax differences related to the allowance for equity funds used during construction.Analysis
Income Tax Legislation
ANO Damage, Outage, and NRC Reviews
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS -ANO Damage, Outage, and NRC ReviewsIncome Tax Legislation” in the Form 10-K for a discussion of the ANO stator incident, subsequent NRC reviews,Inflation Reduction Act of 2022. See the “Income Tax Legislation and the deferralRegulation” section of replacement power costs.
Entergy Arkansas, Inc.Corporation and Subsidiaries
Management's Management’s Financial Discussion and Analysis
herein for updates to the discussion of income tax legislation and regulation.
Liquidity and Capital Resources
Cash Flow
Cash flows for the ninesix months ended SeptemberJune 30, 20172023 and 20162022 were as follows:
| | | | | | | | | | | |
| 2023 | | 2022 |
| (In Thousands) |
Cash and cash equivalents at beginning of period | $5,278 | | | $12,915 | |
| | | |
Net cash provided by (used in): | | | |
Operating activities | 407,699 | | | 386,522 | |
Investing activities | (563,854) | | | (376,810) | |
Financing activities | 155,090 | | | 35,642 | |
Net increase (decrease) in cash and cash equivalents | (1,065) | | | 45,354 | |
| | | |
Cash and cash equivalents at end of period | $4,213 | | | $58,269 | |
|
| | | | | | | |
| 2017 | | 2016 |
| (In Thousands) |
Cash and cash equivalents at beginning of period |
| $20,509 |
| |
| $9,135 |
|
| | | |
Cash flow provided by (used in): |
|
| | |
|
Operating activities | 367,551 |
| | 473,800 |
|
Investing activities | (667,841 | ) | | (774,210 | ) |
Financing activities | 280,245 |
| | 294,686 |
|
Net decrease in cash and cash equivalents | (20,045 | ) | | (5,724 | ) |
| | | |
Cash and cash equivalents at end of period |
| $464 |
| |
| $3,411 |
|
Operating Activities
Net cash flow provided by operating activities decreased $106.2increased $21.2 million for the ninesix months ended SeptemberJune 30, 20172023 compared to the ninesix months ended SeptemberJune 30, 20162022 primarily due to:
•higher collections from customers;
•lower fuel costs and the timing of recovery of fuel and purchased power costs. See Note 2 to an increasethe financial statements herein and in the Form 10-K for a discussion of $46.1fuel and purchased power cost recovery;
•the refund of $41.7 millionreceived 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. The refund was subsequently applied to the under-recovered deferred fuel balance. See Note 2 to the financial statements herein and in the Form 10-K for further discussion of these refunds and the related proceedings; and
•$23.2 million in spending onproceeds received from the DOE in April 2023 resulting from litigation regarding spent nuclear refueling outages in 2017,fuel storage costs that were previously expensed. See Note 1 to the financial statements herein for discussion of the spent nuclear fuel litigation.
The increase was partially offset by the timing of payments to vendors and a decrease in net income.
Investing Activities
Net cash flow used in investing activities decreased $106.4 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 primarily due to the purchase of Power Block 2 of the Union Power Station in March 2016 for approximately $237 million and a decrease of $36.9 million in transmission construction expenditures primarily due to a lower scope of work performed in 2017. See Note 14 to the financial statements in the Form 10-K for discussion of the Union Power Station purchase.
The decrease was partially offset by:
$66 million in funds held on deposit for principal and interest payments due October 1, 2017;
an increase in spending of $61.6$26.2 million on nuclear refueling outages in nuclear construction expenditures primarily due to a higher scope of work performed on various nuclear projects in 2017;2023.
an increase of $22.9 million in fossil-fueled generation construction expenditures primarily due to a higher scope of work performed on various projects in 2017;
an increase of $21 million in distribution construction expenditures primarily due to a higher scope of work performed on various projects in 2017; and
an increase of $18.6 million in information technology construction expenditures primarily due to increased spending on substation circuit replacement.
Financing Activities
Net cash flow provided by financing activities decreased $14.4 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 primarily due to:
a $200 million capital contribution received from Entergy Corporation in March 2016 primarily in anticipation of Entergy Arkansas’s purchase of Power Block 2 of the Union Power Station; and
Entergy Arkansas, Inc.LLC and Subsidiaries
Management's Financial Discussion and Analysis
Investing Activities
Net cash flow used in investing activities increased $187 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 primarily due to:
•an increase of $80.9 million in distribution construction expenditures primarily due to higher capital expenditures for storm restoration in 2023 and increased investment in the reliability and infrastructure of Entergy Arkansas’s distribution system;
•an increase of $57.8 million in transmission construction expenditures primarily due to increased investment in the reliability and infrastructure of Entergy Arkansas’s transmission system;
•an increase of $40.2 million as a result of fluctuations in nuclear fuel activity primarily 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 $31 million in nuclear construction expenditures primarily due to increased spending on various nuclear projects in 2023.
The increase was partially offset by $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 plant. See Note 1 to the financial statements herein for discussion of the spent nuclear fuel litigation.
Financing Activities
Net cash flow provided by financing activities increased $119.4 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 primarily due to:
•the issuance of $425 million of 5.15% Series mortgage bonds in January 2023;
•net borrowings of $23.3$97.5 million in 2023 compared to net borrowings of $7.2 million in 2022 on the Entergy Arkansas nuclear fuel company variable interest entityentity’s credit facility in 2017 compared to net borrowings of $35.7 million in 2016.facility; and
•money pool activity.
The decreaseincrease was partially offset by:
•the netrepayment, at maturity, of $250 million of 3.05% Series mortgage bonds in June 2023;
•the issuance of $215.9$200 million of long-term debt4.20% Series mortgage bonds in 2017 as comparedMarch 2022; and
•an increase of $53 million in common equity distributions paid in 2023 in order to the net issuance of $156.1 million of long-term debt in 2016;maintain Entergy Arkansas’s capital structure.
the redemptions of $75 million of 6.45% Series preferred stock and $10 million of 6.08% Series preferred stock in 2016; and
money pool activity.
IncreasesDecreases in Entergy Arkansas’s payable to the money pool are a sourceuse of cash flow, and Entergy Arkansas’s payable to the money pool increased by $43.9decreased $28.5 million in 2017for the six months ended June 30, 2023 compared to decreasing by $3.7$139.9 million in 2016.for the six months ended June 30, 2022. The money pool is an inter-companyintercompany borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings.
See Note 4 to the financial statements herein and Note 5 to the financial statements in the Form 10-K for more details on long-term debt.
Entergy Arkansas, LLC and Subsidiaries
Management's Financial Discussion and Analysis
Capital Structure
Entergy Arkansas’s capitalizationdebt to capital ratio is balanced between equity and debt, as shown in the following table. The increase in the debt to capital ratio for Entergy Arkansas is primarily due to the net issuance of long-term debt in 2023.
| | | | | | | | | | | |
| June 30, 2023 | | December 31, 2022 |
Debt to capital | 53.8 | % | | 52.5 | % |
Effect of subtracting cash | — | % | | — | % |
Net debt to net capital (non-GAAP) | 53.8 | % | | 52.5 | % |
|
| | | | | |
| September 30, 2017 | | December 31, 2016 |
Debt to capital | 55.8 | % | | 55.3 | % |
Effect of excluding the securitization bonds | (0.3 | %) | | (0.4 | %) |
Debt to capital, excluding securitization bonds (a) | 55.5 | % | | 54.9 | % |
Effect of subtracting cash | — | % | | (0.2 | %) |
Net debt to net capital, excluding securitization bonds (a) | 55.5 | % | | 54.7 | % |
| |
(a) | Calculation excludes the securitization bonds, which are non-recourse to Entergy Arkansas. |
Net debt consists of debt less cash and cash equivalents. Debt consists of short-term borrowings, finance lease obligations, and long-term debt, including the currently maturing portion. Capital consists of debt preferred stock without sinking fund, and common equity. Net capital consists of capital less cash and cash equivalents. Entergy Arkansas uses the debt to capital ratios excluding securitization bondsratio in analyzing its financial condition and believes they provideit provides useful information to its investors and creditors in evaluating Entergy Arkansas’s financial condition because the securitization bonds are non-recoursecondition. The net debt to Entergy Arkansas, as more fully described in Note 5 to the financial statements in the Form 10-K.net capital ratio is a non-GAAP measure. Entergy Arkansas also uses the net debt to net capital ratio excluding securitization bonds in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Arkansas’s financial condition because net debt indicates Entergy Arkansas’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.
Uses and Sources of Capital
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources”in the Form 10-K for a discussion of Entergy Arkansas’s uses and sources of capital. Following are updates to the information provided in the Form 10-K.
Entergy Arkansas, Inc. and Subsidiaries
Management's Financial Discussion and Analysis
Entergy Arkansas is developing its capital investment plan for 2018 through 2020 and currently anticipates making $2.1 billion in capital investments during that period. The preliminary estimate includes amounts associated with specific investments such as transmission projects to enhance reliability, reduce congestion, and enable economic growth; distribution spending to enhance reliability and improve service to customers, including initial investment to support advanced metering; resource planning, including potential generation projects; system improvements; investments in ANO 1 and 2; and other investments. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital.
Entergy Arkansas’s payables toreceivables from or (payables to) the money pool were as follows:
| | | | | | | | | | | | | | | | | | | | |
June 30, 2023 | | December 31, 2022 | | June 30, 2022 | | December 31, 2021 |
(In Thousands) |
($152,327) | | ($180,795) | | $6,216 | | ($139,904) |
|
| | | | | | |
September 30, 2017 | | December 31, 2016 | | September 30, 2016 | | December 31, 2015 |
(In Thousands) |
$95,114 | | $51,232 | | $49,073 | | $52,742 |
See Note 4 to the financial statements in the Form 10-K for a description of the money pool.
Entergy Arkansas has a credit facility in the amount of $150 million scheduled to expire in August 2022.June 2028. Entergy Arkansas also has a $20$25 million credit facility scheduled to expire in April 2018.2024. The $150 million credit facility permitsincludes fronting commitments for the issuance of letters of credit against 50%$5 million of the borrowing capacity of the facility. As of SeptemberJune 30, 2017,2023, there were no$75 million in cash borrowings outstanding under the $150 million credit facility 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 SeptemberJune 30, 2017, a $22023, $11.6 million letterin letters of credit waswere outstanding under Entergy Arkansas’s uncommitted letter of credit facility. See Note 4 to the financial statements herein for additionalfurther 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 May 2019.June 2025. As of SeptemberJune 30, 2017, $8.3 million in letters of credit to support a like amount of commercial paper issued and $152023, $22.5 million in loans were outstanding under the credit facility for the Entergy Arkansas nuclear fuel company variable interest entity credit facility.entity. See Note 4 to the financial statements herein for additionalfurther discussion of the nuclear fuel company variable interest entity credit facility.
Entergy Arkansas, LLC and Subsidiaries
Management's Financial Discussion and Analysis
Walnut Bend Solar
As discussed in the Form 10-K, in July 2021, the APSC directed Entergy Arkansas to file a report within 180 days detailing its efforts to obtain a tax equity partnership for the purpose of acquiring the Walnut Bend Solar facility. In January 2022, Entergy Arkansas filed its tax equity partnership status report and will file subsequent reports until a tax equity partnership is obtained or a tax equity partnership is no longer sought. The counter-party notified Entergy Arkansas that it was terminating the project, though it was willing to consider an alternative for the site. Entergy Arkansas disputed the right of termination. Negotiations were conducted, including with respect to cost and schedule and to updates arising as a result of the Inflation Reduction Act of 2022. In April 2023, Entergy Arkansas filed an application for an amended certificate of environmental compatibility and public need with the APSC seeking approval by June 2023 for the updates to the cost and schedule that were previously approved by the APSC. In June 2023, Entergy Arkansas, the APSC general staff, and the Arkansas Attorney General filed a unanimous settlement supporting that the approval of the Walnut Bend Solar facility is in the public interest based on the terms in the settlement, which relate in part to certain treatment for the production tax credits associated with the facility. In July 2023, after requesting further testimony and purporting to modify several terms in the settlement and upon rehearing, the APSC approved the settlement largely on the terms submitted, including a 30-year amortization period for the production tax credits. The project is currently expected to achieve commercial operation in 2024.
West Memphis Solar
As discussed in the Form 10-K, in October 2021 the APSC directed Entergy Arkansas to file a report within 180 days detailing its efforts to obtain a tax equity partnership for the purpose of acquiring the West Memphis Solar facility. In April 2022, Entergy Arkansas filed its tax equity partnership status report and will file subsequent reports until a tax equity partnership is obtained or a tax equity partnership is no longer sought. Closing had been expected to occur in 2023. In March 2022 the counter-party notified Entergy Arkansas that it was seeking changes to certain terms of the build-own-transfer agreement, including both cost and schedule. In January 2023, Entergy Arkansas filed a supplemental application with the APSC seeking approval for a change in the transmission route and updates to the cost and schedule that were previously approved by the APSC. In March 2023 the APSC approved Entergy Arkansas’s supplemental application. The project is currently expected to achieve commercial operation in 2024.
State and Local Rate Regulation and Fuel-Cost Recovery
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS –State and Local Rate Regulation and Fuel-Cost Recovery”in the Form 10-K for a discussion of state and local rate regulation and fuel-cost recovery. The following are updates to that discussion.
Retail Rates
20162023 Formula Rate Plan Filing
As discussed in the Form 10-K, Entergy Arkansas is required to make a supplemental filing supporting the recovery of certain nuclear costs. In April 2017,July 2023, Entergy Arkansas filed a motion consented to by all parties requesting that it be permitted to submitwith the APSC its supplemental filing in conjunction with its 20172023 formula rate plan filing which was subsequently made in July 2017 and is discussed below. In May 2017to set its formula rate for the APSC approved the joint motion and proposal to review2024 calendar year. The filing contained an evaluation of Entergy Arkansas’s supplementalearnings 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 is 8.11% resulting in a concurrent schedule withrevenue deficiency of $80.5 million. The earned rate of return on common equity for the 20172022 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 is $130.3 million. By operation of the formula rate plan, filing. In doing so, however,Entergy Arkansas’s recovery of the APSC noted thatrevenue requirement is subject to a determination of whetherfour percent annual revenue constraint. Because Entergy Arkansas’s revenue requirement in this filing exceeded the supplemental information supporting certain nuclear expenditures will be considered inconstraint, the hearing for the 2017 formula rate plan filing or a separate hearing will be made at a later time. In October 2017, Entergy Arkansas and the partiesresulting increase is limited to the proceeding filed a joint motion to$88.6 million.
Entergy Arkansas, Inc.LLC and Subsidiaries
Management's Financial Discussion and Analysis
approve a unanimous settlement agreement resolving all issues in the docket and providing for recovery of the 2017 and 2018 nuclear costs.
2017 Formula Rate Plan Filing
In July 2017, Entergy Arkansas filed with the APSC its 2017 formula rate plan filing showing Entergy Arkansas’s projected earned return on common equity for the twelve months ended December 31, 2018 test period to be below the formula rate plan bandwidth. The filing projected a $129.7 million revenue requirement increase to achieve Entergy Arkansas’s target earned return on common equity of 9.75%. Entergy Arkansas’s formula rate plan is subject to a four percent annual revenue constraint and the projected annual revenue requirement increase exceeds the four percent, resulting in a proposed increase for the 2017 formula rate plan of $70.9 million. In October 2017, Entergy Arkansas filed with the APSC revised formula rate plan attachments that projected a $126.2 million revenue requirement increase based on acceptance of certain adjustments and recommendations made by the APSC staff and other intervenors. The revised formula rate plan filing included a proposed $71.1 million revenue requirement increase based on a revision to the four percent cap calculation. In October 2017, Entergy Arkansas and the parties to the proceeding filed a joint motion to approve a unanimous settlement agreement resolving all issues in the docket and providing for recovery of the 2017 and 2018 nuclear costs. The settlement agreement does not affect Entergy Arkansas’s proposed $71.1 million revenue requirement increase. If a final order is not issued by December 13, 2017, the proposed formula rate plan adjustment will become effective January 2, 2018, subject to refund.
Advanced Metering Infrastructure (AMI) Filing
As discussed in the Form 10-K, in September 2016, Entergy Arkansas filed an application seeking a finding from the APSC that Entergy Arkansas’s deployment of advanced metering infrastructure is in the public interest. In June 2017 the APSC staff and Arkansas Attorney General filed direct testimony. The APSC staff generally supported Entergy Arkansas’s AMI deployment conditioned on various recommendations. The Arkansas Attorney General’s consultant primarily recommended denial of Entergy Arkansas’s application but alternatively suggested recommendations in the event the APSC approves Entergy Arkansas’s proposal. Entergy Arkansas filed rebuttal testimony in June 2017, substantially accepting the APSC staff’s recommendations. In August 2017, Entergy Arkansas and the parties to the proceeding filed a joint motion to approve a unanimous settlement agreement. Also in August 2017 supplemental testimony was filed and a settlement hearing was held. In October 2017 the APSC issued an order finding that Entergy Arkansas’s AMI deployment is in the public interest and approving the settlement agreement subject to a minor modification. Entergy Arkansas expects to recover the undepreciated balance of its existing meters through a regulatory asset to be amortized over 15 years.
Energy Cost Recovery Rider
In March 2017,2023, 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 $0.01164$0.01639 per kWh to $0.01547$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 2021 February winter storms consistent with APSC staffgeneral 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 testimony in March 2017 recommending thatwith the FERC. The redetermined rate should be implementedof $0.01883 per kWh became effective with the first billing cycle ofin April 2017 under2023 through the normal operation of the tariff. Accordingly, the redetermined rate went into effect on March 31, 2017 pursuantSee Note 2 to the tariff. In July 2017financial statements in the Arkansas Attorney General requested additionalForm 10-K for information to support certain ofon the costs included in Entergy Arkansas’s 2017 energy cost rate redetermination.2021 February winter storm investigation proceeding.
Opportunity Sales ProceedingsProceeding
See Note 2 to the financial statements in the Form 10-K for discussion of the Entergy Arkansas opportunity sales proceeding. As discussed in the Form 10-K, in January 2023, Arkansas Electric Energy Consumers, Inc., an industrial customer association, filed a notice of appeal of the U.S. District Court for the Eastern District of Arkansas’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 District 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 District to expedite the appeal filed by Arkansas Electric Energy Consumers, Inc. The court granted Entergy Arkansas’s request, and oral arguments were held in June 2023. An order from the court is expected in 2023.
Net Metering Legislation
As discussed in the Form 10-K, an Arkansas law was enacted effective July 2019 that, among other things, expands the definition of a “net metering customer” to include two additional types of customers: (1) customers that lease net metering facilities, subject to certain leasing arrangements, and (2) government entities or other entities exempt from state and federal income taxes that enter into a service contract for a net metering facility. The latter provision allows eligible entities, many of whom are small and large general service customers, to purchase renewable energy directly from third party providers and receive bill credits for these purchases. The APSC was given authority under this law to address certain matters, such as cost shifting and the appropriate compensation for net metered energy and initiated proceedings for this purpose. Because of the size and number of customers eligible under this new law, there is a risk of loss of load and the shifting of costs to customers. A hearing was held in December 2019, with utilities, including Entergy Arkansas, cooperatives, the Arkansas Attorney General, and industrial customers advocating the need for establishment of a reasonable rate structure that takes into account impacts to non-net metering customers; an additional hearing was conducted in February 2020 for purposes of public comment only. The APSC issued an order in June 20092020, and in July 2020 several parties, including Entergy Arkansas, filed for rehearing on multiple grounds, including for the LPSCreasons that it imposes an unreasonable rate structure and allows facilities to net meter that do not meet the statutory definition of net metering facilities. After granting the rehearing requests, the APSC issued an order in September 2020 largely upholding its June 2020 order. In October 2020, Entergy Arkansas and several other parties filed an appeal of the APSC’s September 2020 order. In January 2021, Entergy Arkansas, pursuant to an APSC order, filed an updated net metering tariff, which was approved in February 2021. In May 2021, Entergy Arkansas filed a complaint requesting thatmotion to dismiss its pending judicial appeal of the FERC determine that certainAPSC’s September 2020 order on rehearing in the proceeding addressing its net metering rules. In June 2021 the Arkansas Court of Appeals granted the motion and dismissed Entergy Arkansas’s sales of electric energy to third parties: (a) violated the provisionsappeal, although other appeals of the System Agreement that allocatedSeptember 2020 APSC order remained before the energy generated by Entergy System resources, (b) imprudently deniedcourt. In May 2022 the Entergy Systemcourt issued an order affirming the APSC’s decision in part and its ultimate consumersreversing in part. In June 2022 the benefits of low-cost Entergy System generating capacity, and (c) violatedAPSC sought rehearing from the provision of the System Agreement that prohibited sales to third parties by individual companies absent an offer of a right-of-
court with respect
Entergy Arkansas, Inc.LLC and Subsidiaries
Management's Financial Discussion and Analysis
to the court’s ruling on a grid charge, which the court of appeals denied in July 2022. One of the cooperative appellants filed a further appeal to the Arkansas Supreme Court in July 2022, which the court decided not to hear.
first-refusal to other Utility operating companies. The LPSC’s complaint challenges sales made beginning in 2002 and requests refunds.
In April 2016August 2022 the FERCAPSC opened a rulemaking concerning proposed amendments to the net metering rules to address the expiration on December 31, 2022 of the automatic grandfathering of the existing net metering rate structure. Entergy Arkansas and other utility parties filed initial briefs and comments setting forth that the statute imposing the expiration of the automatic grandfathering is not ambiguous and that the APSC does not have the authority to extend the grandfathering period, and the hearing was held in October 2022. In December 2022 the APSC issued orders addressing requestsan order attempting to modify the net metering rules and purporting to allow for rehearingthe potential for grandfathering after December 31, 2022. More than thirty applicants filed individual net metering applications in July 2012 andDecember 2022 seeking to be considered under the APSC’s order, although the APSC issued an ALJ’s August 2013 initial decision. The first order denies Entergy’s request forin January 2023 holding those applications in abeyance. Several parties, including Entergy Arkansas, sought rehearing, and affirms FERC’s earlier rulings that Entergy’s original methodology for allocating energy coststhe Arkansas’s Governor’s executive order limiting new rulemakings calls into question how the APSC’s order to adopt new rules may be effectuated.
Also in September 2022 the opportunity sales was incorrect and, as a result, Entergy Arkansas must make paymentsAPSC opened another proceeding to investigate 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-runissue 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 reducedpotential cost shifting arising as a result of net metering. Investor owned utilities and some cooperatives were required to make and did make filings in October 2022 with supporting documentation as to the timingamount and extent of cost shifting and the manner in which they would design tariffs to recover those costs on behalf of non-net metering customers. Responses to the utility and cooperative filings were filed in January 2023, and utilities filed their further responses in February 2023.
An Arkansas law was enacted effective March 2023 that revises 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. Entergy Arkansas joined other utilities in a motion in April 2023 to close the current APSC docket related to potential cost shifting in light of the LPSC’s approvalnew law, and the APSC also canceled the remaining procedural schedule in this docket in April 2023. Because of certain contracts.the new law, in May 2023, the APSC also closed the grandfathering rulemaking that it opened in August 2022. Under the new law, the APSC must approve revisions to the utilities’ 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.
COVID-19 Orders
See Note 2 to the financial statements in the Form 10-K for discussion of APSC orders issued in light of the COVID-19 pandemic. In its 2023 formula rate plan filing, Entergy Services alsoArkansas proposed to amortize the COVID-19 regulatory asset over a ten-year period. As of June 30, 2023, Entergy Arkansas had a regulatory asset of $39 million for costs associated with the COVID-19 pandemic.
Power Through Program
As discussed in the Form 10-K, 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. In December 2021 the APSC general staff requested briefing, which Entergy Arkansas opposed. In January 2022, Entergy Arkansas filed to support the establishment of a procedural schedule with a hearing in April 2022. Also in January 2022, the APSC granted the general staff’s 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 issuedbriefing but on 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.
Pursuant to the procedural schedule establishedexpedited schedule; briefing concluded in the case, Entergy Services re-ran intra-system bills for the ten-year period 2000-2009 to quantify the effects of the FERC's ruling. In November 2016 the LPSC submitted testimony disputing certain aspects of the calculations, and Entergy Services submitted answering testimony in January 2017. In February 2017 the FERC staff filed testimony and Entergy Services filed responsive testimony. In March 2017 the LPSC filed rebuttal testimony.2022. A paper hearing was held in May 2017. In July 2017 the ALJ issued an initial decision concluding thatAugust and September 2022 with Entergy Arkansas should pay $86 million plus interestresponding to the other Utility operating companies.several written commissioner questions. In August 2017 the Utility operating companies, the LPSC,May 2023 the APSC approved the Power Through offering with some modifications, and FERC staff filed individual briefs on exceptions challenging various aspectsin June 2023, Entergy Arkansas sought rehearing or clarification of the initial decision. In September 2017 the Utility operating companies, the LPSC, the APSC, the MPSC, the City Council,several issues. See “Property and FERC staff filed separate briefs opposing exceptions taken by various parties. The case is pending before the FERC. No payments will be made or received by the Utility operating companies until the FERC issues an order reviewing the initial decision and Entergy submits a subsequent filing to comply with that order.
The effect of the FERC’s decisions thus farOther Generation Resources -Other Generation Resources - Power Through Programs” in Part I, Item 1 in the case would be that Entergy Arkansas will make paymentsForm 10-K for further discussion related to some or all of the other Utility operating companies. Because further proceedings will still occur in the case, the amount and recipients of payments by Entergy Arkansas are unknown at this time. 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 includes interest, for its estimated increased costs and payment to the other Utility operating companies. This estimate is subject to change depending on how the FERC resolves the issues that are still outstanding in the case, including its review of the July 2017 initial decision. Entergy Arkansas’s increased costs will be attributed to Entergy Arkansas’s retail and wholesale businesses, and it is not probable that Entergy Arkansas will recover the wholesale portion. Entergy Arkansas, therefore, recorded a regulatory asset in the first quarter 2016 of approximately $75 million, which represents its estimate of the retail portion of the costs.
program.
Entergy Arkansas, Inc.LLC and Subsidiaries
Management's Financial Discussion and Analysis
Remaining Useful Lives Review
As discussed in the Form 10-K, in response to 2021 legislation, in December 2021 the APSC opened a proceeding to establish a procedure to evaluate life extensions of all utility generation units and in December 2022 opened a separate docket to evaluate life extensions for White Bluff, Independence, and the Lake Catherine plant. In January 2023, Entergy Arkansas and one other party filed for rehearing of the order in the general proceeding, and Entergy Arkansas moved to dismiss the separate docket. In February 2023 the APSC granted rehearing in the general proceeding. A new law passed in April 2023 changed the requirements for the APSC to perform these evaluations, thus eliminating the need for the current APSC proceedings, and the APSC cancelled the procedural schedule in the separate docket. In June 2023 the APSC also closed the general proceeding because of the new law. See “Regulation of Entergy’s Business - Environmental Regulation -National Ambient Air Quality Standards - Regional Haze” in Part I, Item 1 in the Form 10-K for further discussion related to these plants.
Federal Regulation
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS –Federal Regulation”in the Form 10-K for a discussion of federal regulation.
Nuclear Matters
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS -–Nuclear Matters” in the Form 10-K for a discussion of nuclear matters.
Environmental Risks
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS -Environmental Risks” in the Form 10-K for a discussion of environmental risks.
Critical Accounting Estimates
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS -Critical Accounting Estimates” in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy Arkansas’s accounting for nuclear decommissioning costs, utility regulatory accounting, unbilled revenue, impairment of long-lived assets, and trust fund investments, taxation and uncertain tax positions, qualified pension and other postretirement benefits, and other contingencies.
New Accounting Pronouncements
See “New Accounting Pronouncements” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion.
|
| | | | | | | | | | | | | | | | |
ENTERGY ARKANSAS, INC. AND SUBSIDIARIES |
CONSOLIDATED INCOME STATEMENTS |
For the Three and Nine Months Ended September 30, 2017 and 2016 |
(Unaudited) |
| | | | |
| | Three Months Ended | | Nine Months Ended |
| | 2017 | | 2016 | | 2017 | | 2016 |
| | (In Thousands) | | (In Thousands) |
OPERATING REVENUES | | | | | | | | |
Electric | |
| $673,226 |
| |
| $654,599 |
| |
| $1,644,239 |
| |
| $1,624,224 |
|
| | | | | | | | |
OPERATING EXPENSES | | | | | | | | |
Operation and Maintenance: | | | | | | | | |
Fuel, fuel-related expenses, and gas purchased for resale | | 133,254 |
| | 105,147 |
| | 283,354 |
| | 274,106 |
|
Purchased power | | 63,423 |
| | 52,023 |
| | 193,108 |
| | 163,541 |
|
Nuclear refueling outage expenses | | 22,988 |
| | 14,554 |
| | 59,942 |
| | 44,604 |
|
Other operation and maintenance | | 175,013 |
| | 187,294 |
| | 512,691 |
| | 514,109 |
|
Decommissioning | | 14,320 |
| | 13,504 |
| | 42,321 |
| | 39,908 |
|
Taxes other than income taxes | | 29,259 |
| | 24,931 |
| | 78,438 |
| | 70,978 |
|
Depreciation and amortization | | 70,433 |
| | 67,309 |
| | 206,586 |
| | 197,597 |
|
Other regulatory charges (credits) - net | | (5,219 | ) | | 1,177 |
| | (10,797 | ) | | 2,896 |
|
TOTAL | | 503,471 |
| | 465,939 |
| | 1,365,643 |
| | 1,307,739 |
|
| | | | | | | | |
OPERATING INCOME | | 169,755 |
| | 188,660 |
| | 278,596 |
| | 316,485 |
|
| | | | | | | | |
OTHER INCOME | | | | | | | | |
Allowance for equity funds used during construction | | 4,140 |
| | 3,734 |
| | 13,922 |
| | 12,661 |
|
Interest and investment income | | 6,738 |
| | 5,410 |
| | 27,865 |
| | 14,774 |
|
Miscellaneous - net | | 183 |
| | 812 |
| | 19 |
| | (983 | ) |
TOTAL | | 11,061 |
| | 9,956 |
| | 41,806 |
| | 26,452 |
|
| | | | | | | | |
INTEREST EXPENSE | | | | | | | | |
Interest expense | | 31,010 |
| | 28,152 |
| | 86,776 |
| | 88,726 |
|
Allowance for borrowed funds used during construction | | (1,944 | ) | | (2,000 | ) | | (6,458 | ) | | (6,851 | ) |
TOTAL | | 29,066 |
| | 26,152 |
| | 80,318 |
| | 81,875 |
|
| | | | | | | | |
INCOME BEFORE INCOME TAXES | | 151,750 |
| | 172,464 |
| | 240,084 |
| | 261,062 |
|
| | | | | | | | |
Income taxes | | 59,112 |
| | 62,316 |
| | 94,592 |
| | 97,729 |
|
| | | | | | | | |
NET INCOME | | 92,638 |
| | 110,148 |
| | 145,492 |
| | 163,333 |
|
| | | | | | | | |
Preferred dividend requirements | | 357 |
| | 1,476 |
| | 1,071 |
| | 4,913 |
|
| | | | | | | | |
EARNINGS APPLICABLE TO COMMON STOCK | |
| $92,281 |
| |
| $108,672 |
| |
| $144,421 |
| |
| $158,420 |
|
| | | | | | | | |
See Notes to Financial Statements. | | | | | | | | |
|
| | | | | | | | |
ENTERGY ARKANSAS, INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
For the Nine Months Ended September 30, 2017 and 2016 |
(Unaudited) |
| | 2017 | | 2016 |
| | (In Thousands) |
OPERATING ACTIVITIES | | | | |
Net income | |
| $145,492 |
| |
| $163,333 |
|
Adjustments to reconcile net income to net cash flow provided by operating activities: | | | | |
Depreciation, amortization, and decommissioning, including nuclear fuel amortization | | 311,725 |
| | 319,845 |
|
Deferred income taxes, investment tax credits, and non-current taxes accrued | | 78,390 |
| | 163,202 |
|
Changes in assets and liabilities: | | | | |
Receivables | | (45,180 | ) | | (116,584 | ) |
Fuel inventory | | 10,089 |
| | 28,968 |
|
Accounts payable | | (78,396 | ) | | 95,116 |
|
Prepaid taxes and taxes accrued | | 15,367 |
| | (78,879 | ) |
Interest accrued | | 12,436 |
| | 5,909 |
|
Deferred fuel costs | | (53,664 | ) | | (50,687 | ) |
Other working capital accounts | | (6,762 | ) | | 4,259 |
|
Provisions for estimated losses | | 10,094 |
| | 130 |
|
Other regulatory assets | | (4,680 | ) | | (5,680 | ) |
Pension and other postretirement liabilities | | (73,107 | ) | | (77,823 | ) |
Other assets and liabilities | | 45,747 |
| | 22,691 |
|
Net cash flow provided by operating activities | | 367,551 |
| | 473,800 |
|
| | | | |
INVESTING ACTIVITIES | | | | |
Construction expenditures | | (558,985 | ) | | (494,071 | ) |
Allowance for equity funds used during construction | | 14,521 |
| | 13,134 |
|
Payment for purchase of plant | | — |
| | (237,324 | ) |
Nuclear fuel purchases | | (95,289 | ) | | (80,716 | ) |
Proceeds from sale of nuclear fuel | | 51,029 |
| | 40,336 |
|
Proceeds from nuclear decommissioning trust fund sales | | 219,223 |
| | 165,038 |
|
Investment in nuclear decommissioning trust funds | | (228,740 | ) | | (176,981 | ) |
Changes in securitization account | | (3,619 | ) | | (3,524 | ) |
Change in other investments | | (65,981 | ) | | — |
|
Other | | — |
| | (102 | ) |
Net cash flow used in investing activities | | (667,841 | ) | | (774,210 | ) |
| | | | |
FINANCING ACTIVITIES | | | | |
Proceeds from the issuance of long-term debt | | 222,717 |
| | 777,671 |
|
Retirement of long-term debt | | (6,803 | ) | | (621,608 | ) |
Capital contribution from parent
| | — |
| | 200,000 |
|
Redemption of preferred stock | | — |
| | (85,283 | ) |
Changes in short-term borrowings - net | | 23,257 |
| | 35,717 |
|
Changes in money pool payable - net | | 43,882 |
| | (3,669 | ) |
Dividends paid: | | | | |
Preferred stock | | (1,071 | ) | | (6,274 | ) |
Other | | (1,737 | ) | | (1,868 | ) |
Net cash flow provided by financing activities | | 280,245 |
| | 294,686 |
|
| | | | |
Net decrease in cash and cash equivalents | | (20,045 | ) | | (5,724 | ) |
Cash and cash equivalents at beginning of period | | 20,509 |
| | 9,135 |
|
Cash and cash equivalents at end of period | |
| $464 |
| |
| $3,411 |
|
| | | | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | |
|
Cash paid during the period for: | | | | |
Interest - net of amount capitalized | |
| $70,321 |
| |
| $78,500 |
|
Income taxes | |
| $— |
| |
| $7,242 |
|
| | | | |
See Notes to Financial Statements. | | | | |
|
| | | | | | | | |
ENTERGY ARKANSAS, INC. AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
ASSETS |
September 30, 2017 and December 31, 2016 |
(Unaudited) |
| | 2017 | | 2016 |
| | (In Thousands) |
CURRENT ASSETS | | | | |
Cash and cash equivalents: | | | | |
Cash | |
| $127 |
| |
| $20,174 |
|
Temporary cash investments | | 337 |
| | 335 |
|
Total cash and cash equivalents | | 464 |
| | 20,509 |
|
Securitization recovery trust account | | 7,759 |
| | 4,140 |
|
Accounts receivable: | | | | |
Customer | | 140,147 |
| | 102,229 |
|
Allowance for doubtful accounts | | (1,531 | ) | | (1,211 | ) |
Associated companies | | 35,455 |
| | 35,286 |
|
Other | | 52,109 |
| | 58,153 |
|
Accrued unbilled revenues | | 113,650 |
| | 100,193 |
|
Total accounts receivable | | 339,830 |
| | 294,650 |
|
Deferred fuel costs | | 150,206 |
| | 96,690 |
|
Fuel inventory - at average cost | | 22,671 |
| | 32,760 |
|
Materials and supplies - at average cost | | 191,199 |
| | 182,600 |
|
Deferred nuclear refueling outage costs | | 80,769 |
| | 81,313 |
|
Prepayments and other | | 81,322 |
| | 14,293 |
|
TOTAL | | 874,220 |
| | 726,955 |
|
| | | | |
OTHER PROPERTY AND INVESTMENTS | | | | |
Decommissioning trust funds | | 910,369 |
| | 834,735 |
|
Other | | 3,162 |
| | 7,912 |
|
TOTAL | | 913,531 |
| | 842,647 |
|
| | | | |
UTILITY PLANT | | | | |
Electric | | 10,823,675 |
| | 10,488,060 |
|
Property under capital lease | | 598 |
| | 716 |
|
Construction work in progress | | 365,938 |
| | 304,073 |
|
Nuclear fuel | | 236,447 |
| | 307,352 |
|
TOTAL UTILITY PLANT | | 11,426,658 |
| | 11,100,201 |
|
Less - accumulated depreciation and amortization | | 4,721,860 |
| | 4,635,885 |
|
UTILITY PLANT - NET | | 6,704,798 |
| | 6,464,316 |
|
| | | | |
DEFERRED DEBITS AND OTHER ASSETS | | | | |
Regulatory assets: | | | | |
Regulatory asset for income taxes - net | | 67,228 |
| | 62,646 |
|
Other regulatory assets (includes securitization property of $31,448 as of September 30, 2017 and $41,164 as of December 31, 2016) | | 1,428,127 |
| | 1,428,029 |
|
Deferred fuel costs | | 67,046 |
| | 66,898 |
|
Other | | 16,126 |
| | 14,626 |
|
TOTAL | | 1,578,527 |
| | 1,572,199 |
|
| | | | |
TOTAL ASSETS | |
| $10,071,076 |
| |
| $9,606,117 |
|
| | | | |
See Notes to Financial Statements. | | | | |
|
| | | | | | | | |
ENTERGY ARKANSAS, INC. AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
LIABILITIES AND EQUITY |
September 30, 2017 and December 31, 2016 |
(Unaudited) |
| | 2017 | | 2016 |
| | (In Thousands) |
CURRENT LIABILITIES | | | | |
Currently maturing long-term debt | |
| $114,700 |
| |
| $114,700 |
|
Short-term borrowings | | 8,257 |
| | — |
|
Accounts payable: | | | | |
Associated companies | | 237,246 |
| | 239,711 |
|
Other | | 142,160 |
| | 185,153 |
|
Customer deposits | | 97,432 |
| | 97,512 |
|
Taxes accrued | | 22,561 |
| | 7,194 |
|
Interest accrued | | 29,016 |
| | 16,580 |
|
Other | | 34,329 |
| | 36,557 |
|
TOTAL | | 685,701 |
| | 697,407 |
|
| | | | |
NON-CURRENT LIABILITIES | | | | |
Accumulated deferred income taxes and taxes accrued | | 2,265,375 |
| | 2,186,623 |
|
Accumulated deferred investment tax credits | | 34,404 |
| | 35,305 |
|
Other regulatory liabilities | | 349,380 |
| | 305,907 |
|
Decommissioning | | 966,674 |
| | 924,353 |
|
Accumulated provisions | | 28,776 |
| | 18,682 |
|
Pension and other postretirement liabilities | | 351,046 |
| | 424,234 |
|
Long-term debt (includes securitization bonds of $41,578 as of September 30, 2017 and $48,139 as of December 31, 2016) | | 2,948,610 |
| | 2,715,085 |
|
Other | | 12,022 |
| | 13,854 |
|
TOTAL | | 6,956,287 |
| | 6,624,043 |
|
| | | | |
Commitments and Contingencies | | | | |
| | | | |
Preferred stock without sinking fund | | 31,350 |
| | 31,350 |
|
| | | | |
COMMON EQUITY | | | | |
Common stock, $0.01 par value, authorized 325,000,000 shares; issued and outstanding 46,980,196 shares in 2017 and 2016 | | 470 |
| | 470 |
|
Paid-in capital | | 790,243 |
| | 790,243 |
|
Retained earnings | | 1,607,025 |
| | 1,462,604 |
|
TOTAL | | 2,397,738 |
| | 2,253,317 |
|
| | | | |
TOTAL LIABILITIES AND EQUITY | |
| $10,071,076 |
| |
| $9,606,117 |
|
| | | | |
See Notes to Financial Statements. | | | | |
|
| | | | | | | | | | | | | | | | |
ENTERGY ARKANSAS, INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON EQUITY |
For the Nine Months Ended September 30, 2017 and 2016 |
(Unaudited) |
| | | | |
| | Common Equity | | |
| | Common Stock | | Paid-in Capital | | Retained Earnings | | Total |
| | (In Thousands) |
| | | | | | | | |
Balance at December 31, 2015 | |
| $470 |
| |
| $588,493 |
| |
| $1,302,695 |
| |
| $1,891,658 |
|
| | | | | | | | |
Net income | | — |
| | — |
| | 163,333 |
| | 163,333 |
|
Capital contribution from parent | | — |
| | 200,000 |
| | — |
| | 200,000 |
|
Capital stock redemption | | — |
| | 1,750 |
| | (2,034 | ) | | (284 | ) |
Preferred stock dividends | | — |
| | — |
| | (4,913 | ) | | (4,913 | ) |
| | | | | | | | |
Balance at September 30, 2016 | |
| $470 |
| |
| $790,243 |
| |
| $1,459,081 |
| |
| $2,249,794 |
|
| | | | | | | | |
| | | | | | | | |
Balance at December 31, 2016 | |
| $470 |
| |
| $790,243 |
| |
| $1,462,604 |
| |
| $2,253,317 |
|
| | | | | | | | |
Net income | | — |
| | — |
| | 145,492 |
| | 145,492 |
|
Preferred stock dividends | | — |
| | — |
| | (1,071 | ) | | (1,071 | ) |
| | | | | | | | |
Balance at September 30, 2017 | |
| $470 |
| |
| $790,243 |
| |
| $1,607,025 |
| |
| $2,397,738 |
|
| | | | | | | | |
See Notes to Financial Statements. | | | | | | | | |
|
| | | | | | | | | | | | | | | |
ENTERGY ARKANSAS, INC. AND SUBSIDIARIES |
SELECTED OPERATING RESULTS |
For the Three and Nine Months Ended September 30, 2017 and 2016 |
(Unaudited) |
| | | | | | |
| | Three Months Ended | | Increase/ | | |
Description | | 2017 | | 2016 | | (Decrease) | | % |
| | (Dollars In Millions) | | |
Electric Operating Revenues: | | | | | | |
Residential | |
| $254 |
| |
| $275 |
| |
| ($21 | ) | | (8 | ) |
Commercial | | 150 |
| | 151 |
| | (1 | ) | | (1 | ) |
Industrial | | 145 |
| | 137 |
| | 8 |
| | 6 |
|
Governmental | | 6 |
| | 5 |
| | 1 |
| | 20 |
|
Total retail | | 555 |
| | 568 |
| | (13 | ) | | (2 | ) |
Sales for resale: | | | | | | | | |
Associated companies | | 33 |
| | 26 |
| | 7 |
| | 27 |
|
Non-associated companies | | 45 |
| | 30 |
| | 15 |
| | 50 |
|
Other | | 40 |
| | 31 |
| | 9 |
| | 29 |
|
Total | |
| $673 |
| |
| $655 |
| |
| $18 |
| | 3 |
|
| | | | | | | | |
Billed Electric Energy Sales (GWh): | | | | | | | | |
Residential | | 2,236 |
| | 2,485 |
| | (249 | ) | | (10 | ) |
Commercial | | 1,723 |
| | 1,822 |
| | (99 | ) | | (5 | ) |
Industrial | | 2,074 |
| | 1,906 |
| | 168 |
| | 9 |
|
Governmental | | 67 |
| | 68 |
| | (1 | ) | | (1 | ) |
Total retail | | 6,100 |
| | 6,281 |
| | (181 | ) | | (3 | ) |
Sales for resale: | | | | | | | | |
Associated companies | | 483 |
| | 463 |
| | 20 |
| | 4 |
|
Non-associated companies | | 2,026 |
| | 1,632 |
| | 394 |
| | 24 |
|
Total | | 8,609 |
| | 8,376 |
| | 233 |
| | 3 |
|
| | | | | | | | |
| | | | | | | | |
| | Nine Months Ended | | Increase/ | | |
Description | | 2017 | | 2016 | | (Decrease) | | % |
| | (Dollars In Millions) | | |
Electric Operating Revenues: | | | | | | |
Residential | |
| $597 |
| |
| $620 |
| |
| ($23 | ) | | (4 | ) |
Commercial | | 375 |
| | 376 |
| | (1 | ) | | — |
|
Industrial | | 355 |
| | 337 |
| | 18 |
| | 5 |
|
Governmental | | 15 |
| | 13 |
| | 2 |
| | 15 |
|
Total retail | | 1,342 |
| | 1,346 |
| | (4 | ) | | — |
|
Sales for resale: | | | | | | | | |
Associated companies | | 96 |
| | 19 |
| | 77 |
| | 405 |
|
Non-associated companies | | 96 |
| | 105 |
| | (9 | ) | | (9 | ) |
Other | | 110 |
| | 154 |
| | (44 | ) | | (29 | ) |
Total | |
| $1,644 |
| |
| $1,624 |
| |
| $20 |
| | 1 |
|
| | | | | | | | |
Billed Electric Energy Sales (GWh): | | | | | | | | |
Residential | | 5,625 |
| | 5,918 |
| | (293 | ) | | (5 | ) |
Commercial | | 4,410 |
| | 4,512 |
| | (102 | ) | | (2 | ) |
Industrial | | 5,584 |
| | 5,064 |
| | 520 |
| | 10 |
|
Governmental | | 180 |
| | 179 |
| | 1 |
| | 1 |
|
Total retail | | 15,799 |
| | 15,673 |
| | 126 |
| | 1 |
|
Sales for resale: | | | | | | | | |
Associated companies | | 1,316 |
| | 1,427 |
| | (111 | ) | | (8 | ) |
Non-associated companies | | 4,374 |
| | 6,440 |
| | (2,066 | ) | | (32 | ) |
Total | | 21,489 |
| | 23,540 |
| | (2,051 | ) | | (9 | ) |
ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS
Results of Operations
Net Income
Third Quarter 2017 Compared to Third Quarter 2016
Net income decreased $3.2 million primarily due to higher other operation and maintenance expenses and higher taxes other than income taxes, partially offset by higher other income.
Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016
Net income decreased $149.3 million primarily due to the effect of a settlement with the IRS related to the 2010-2011 IRS audit which resulted in a $136.1 million reduction of income tax expense in 2016. See Note 31 to the financial statements in the Form 10-K for additionala discussion of new accounting pronouncements.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
ENTERGY ARKANSAS, LLC AND SUBSIDIARIES |
CONSOLIDATED INCOME STATEMENTS |
For the Three and Six Months Ended June 30, 2023 and 2022 |
(Unaudited) |
| | | | |
| | Three Months Ended | | Six Months Ended |
| | 2023 | | 2022 | | 2023 | | 2022 |
| | (In Thousands) | | (In Thousands) |
OPERATING REVENUES | | | | | | | | |
Electric | | $616,347 | | | $696,939 | | | $1,199,096 | | | $1,255,895 | |
| | | | | | | | |
OPERATING EXPENSES | | | | | | | | |
Operation and Maintenance: | | | | | | | | |
Fuel, fuel-related expenses, and gas purchased for resale | | 102,350 | | | 202,795 | | | 215,859 | | | 289,020 | |
Purchased power | | 57,648 | | | 50,209 | | | 122,399 | | | 107,680 | |
Nuclear refueling outage expenses | | 15,504 | | | 14,210 | | | 30,845 | | | 28,280 | |
Other operation and maintenance | | 178,044 | | | 187,319 | | | 334,863 | | | 344,576 | |
Decommissioning | | 21,667 | | | 20,428 | | | 43,017 | | | 40,557 | |
Taxes other than income taxes | | 34,743 | | | 32,072 | | | 67,094 | | | 65,274 | |
Depreciation and amortization | | 99,707 | | | 96,548 | | | 196,148 | | | 192,158 | |
Other regulatory charges (credits) - net | | (19,185) | | | (21,518) | | | (40,029) | | | (42,060) | |
TOTAL | | 490,478 | | | 582,063 | | | 970,196 | | | 1,025,485 | |
| | | | | | | | |
OPERATING INCOME | | 125,869 | | | 114,876 | | | 228,900 | | | 230,410 | |
| | | | | | | | |
OTHER INCOME | | | | | | | | |
Allowance for equity funds used during construction | | 5,400 | | | 3,920 | | | 10,243 | | | 6,975 | |
Interest and investment income | | 5,727 | | | 2,840 | | | 13,206 | | | 9,160 | |
Miscellaneous - net | | (6,239) | | | (4,892) | | | (8,340) | | | (10,284) | |
TOTAL | | 4,888 | | | 1,868 | | | 15,109 | | | 5,851 | |
| | | | | | | | |
INTEREST EXPENSE | | | | | | | | |
Interest expense | | 46,038 | | | 37,452 | | | 91,405 | | | 73,499 | |
Allowance for borrowed funds used during construction | | (2,169) | | | (1,558) | | | (4,114) | | | (2,772) | |
TOTAL | | 43,869 | | | 35,894 | | | 87,291 | | | 70,727 | |
| | | | | | | | |
INCOME BEFORE INCOME TAXES | | 86,888 | | | 80,850 | | | 156,718 | | | 165,534 | |
| | | | | | | | |
Income taxes | | 19,940 | | | 17,740 | | | 30,374 | | | 36,857 | |
| | | | | | | | |
NET INCOME | | 66,948 | | | 63,110 | | | 126,344 | | | 128,677 | |
| | | | | | | | |
Net loss attributable to noncontrolling interest | | (1,006) | | | (529) | | | (2,635) | | | (1,916) | |
| | | | | | | | |
EARNINGS APPLICABLE TO MEMBER'S EQUITY | | $67,954 | | | $63,639 | | | $128,979 | | | $130,593 | |
| | | | | | | | |
See Notes to Financial Statements. | | | | | | | | |
(Page left blank intentionally)
| | | | | | | | | | | | | | |
ENTERGY ARKANSAS, LLC AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
For the Six Months Ended June 30, 2023 and 2022 |
(Unaudited) |
| | 2023 | | 2022 |
| | (In Thousands) |
OPERATING ACTIVITIES | | | | |
Net income | | $126,344 | | | $128,677 | |
Adjustments to reconcile net income to net cash flow provided by operating activities: | | | | |
Depreciation, amortization, and decommissioning, including nuclear fuel amortization | | 270,098 | | | 268,699 | |
Deferred income taxes, investment tax credits, and non-current taxes accrued | | 33,572 | | | 27,814 | |
Changes in assets and liabilities: | | | | |
Receivables | | 21,444 | | | (95,608) | |
Fuel inventory | | (6,830) | | | 7,316 | |
Accounts payable | | (43,953) | | | 34,321 | |
Taxes accrued | | (4,315) | | | 14,824 | |
Interest accrued | | 10,421 | | | 1,585 | |
Deferred fuel costs | | 123,264 | | | (2,384) | |
Other working capital accounts | | (30,581) | | | 13,458 | |
Provisions for estimated losses | | (26,606) | | | (4,119) | |
Other regulatory assets | | (51,960) | | | (30,484) | |
Other regulatory liabilities | | 97,349 | | | (267,437) | |
| | | | |
Pension and other postretirement liabilities | | (18,948) | | | (31,762) | |
Other assets and liabilities | | (91,600) | | | 321,622 | |
Net cash flow provided by operating activities | | 407,699 | | | 386,522 | |
| | | | |
INVESTING ACTIVITIES | | | | |
Construction expenditures | | (524,723) | | | (351,907) | |
Allowance for equity funds used during construction | | 10,243 | | | 6,975 | |
| | | | |
Nuclear fuel purchases | | (73,912) | | | (53,256) | |
Proceeds from sale of nuclear fuel | | 17,614 | | | 37,198 | |
Proceeds from nuclear decommissioning trust fund sales | | 54,469 | | | 101,428 | |
Investment in nuclear decommissioning trust funds | | (65,584) | | | (111,032) | |
Change in money pool receivable - net | | — | | | (6,216) | |
| | | | |
| | | | |
Litigation proceeds for reimbursement of spent nuclear fuel storage costs | | 17,933 | | | — | |
| | | | |
Other | | 106 | | | — | |
Net cash flow used in investing activities | | (563,854) | | | (376,810) | |
| | | | |
FINANCING ACTIVITIES | | | | |
Proceeds from the issuance of long-term debt | | 661,923 | | | 223,882 | |
| | | | |
Retirement of long-term debt | | (394,810) | | | (7,511) | |
| | | | |
| | | | |
| | | | |
Changes in money pool payable - net | | (28,468) | | | (139,904) | |
| | | | |
Common equity distributions paid | | (89,000) | | | (36,000) | |
| | | | |
Other | | 5,445 | | | (4,825) | |
Net cash flow provided by financing activities | | 155,090 | | | 35,642 | |
| | | | |
Net increase (decrease) in cash and cash equivalents | | (1,065) | | | 45,354 | |
Cash and cash equivalents at beginning of period | | 5,278 | | | 12,915 | |
Cash and cash equivalents at end of period | | $4,213 | | | $58,269 | |
| | | | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | |
Cash paid during the period for: | | | | |
Interest - net of amount capitalized | | $79,716 | | | $70,803 | |
| | | | |
| | | | |
See Notes to Financial Statements. | | | | |
| | | | | | | | | | | | | | |
ENTERGY ARKANSAS, LLC AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
ASSETS |
June 30, 2023 and December 31, 2022 |
(Unaudited) |
| | 2023 | | 2022 |
| | (In Thousands) |
CURRENT ASSETS | | | | |
Cash and cash equivalents: | | | | |
Cash | | $352 | | | $1,911 | |
Temporary cash investments | | 3,861 | | | 3,367 | |
Total cash and cash equivalents | | 4,213 | | | 5,278 | |
| | | | |
Accounts receivable: | | | | |
Customer | | 138,675 | | | 140,513 | |
Allowance for doubtful accounts | | (5,236) | | | (6,528) | |
Associated companies | | 38,081 | | | 45,336 | |
Other | | 69,155 | | | 101,096 | |
Accrued unbilled revenues | | 135,114 | | | 116,816 | |
Total accounts receivable | | 375,789 | | | 397,233 | |
| | | | |
Deferred fuel costs | | 16,475 | | | 139,739 | |
Fuel inventory - at average cost | | 57,974 | | | 51,144 | |
Materials and supplies - at average cost | | 318,400 | | | 288,260 | |
Deferred nuclear refueling outage costs | | 65,057 | | | 56,443 | |
| | | | |
| | | | |
Prepayments and other | | 50,866 | | | 26,576 | |
TOTAL | | 888,774 | | | 964,673 | |
| | | | |
OTHER PROPERTY AND INVESTMENTS | | | | |
Decommissioning trust funds | | 1,326,627 | | | 1,199,860 | |
| | | | |
Other | | 2,306 | | | 2,414 | |
TOTAL | | 1,328,933 | | | 1,202,274 | |
| | | | |
UTILITY PLANT | | | | |
Electric | | 14,475,635 | | | 14,077,844 | |
| | | | |
Construction work in progress | | 476,253 | | | 417,244 | |
Nuclear fuel | | 177,770 | | | 176,174 | |
TOTAL UTILITY PLANT | | 15,129,658 | | | 14,671,262 | |
Less - accumulated depreciation and amortization | | 5,879,574 | | | 5,729,304 | |
UTILITY PLANT - NET | | 9,250,084 | | | 8,941,958 | |
| | | | |
DEFERRED DEBITS AND OTHER ASSETS | | | | |
Regulatory assets: | | | | |
| | | | |
Other regulatory assets | | 1,862,241 | | | 1,810,281 | |
Deferred fuel costs | | 68,883 | | | 68,883 | |
Other | | 23,784 | | | 18,507 | |
TOTAL | | 1,954,908 | | | 1,897,671 | |
| | | | |
TOTAL ASSETS | | $13,422,699 | | | $13,006,576 | |
| | | | |
See Notes to Financial Statements. | | | | |
| | | | | | | | | | | | | | |
ENTERGY ARKANSAS, LLC AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
LIABILITIES AND EQUITY |
June 30, 2023 and December 31, 2022 |
(Unaudited) |
| | 2023 | | 2022 |
| | (In Thousands) |
CURRENT LIABILITIES | | | | |
Currently maturing long-term debt | | $415,000 | | | $290,000 | |
| | | | |
Accounts payable: | | | | |
Associated companies | | 212,328 | | | 276,362 | |
Other | | 307,962 | | | 310,339 | |
Customer deposits | | 106,383 | | | 102,799 | |
Taxes accrued | | 96,211 | | | 100,526 | |
| | | | |
Interest accrued | | 29,237 | | | 18,816 | |
| | | | |
| | | | |
Other | | 64,726 | | | 43,394 | |
TOTAL | | 1,231,847 | | | 1,142,236 | |
| | | | |
NON-CURRENT LIABILITIES | | | | |
Accumulated deferred income taxes and taxes accrued | | 1,539,103 | | | 1,498,234 | |
Accumulated deferred investment tax credits | | 27,871 | | | 28,472 | |
Regulatory liability for income taxes - net | | 424,591 | | | 435,157 | |
Other regulatory liabilities | | 583,673 | | | 475,758 | |
Decommissioning | | 1,515,753 | | | 1,472,736 | |
Accumulated provisions | | 53,392 | | | 79,998 | |
Pension and other postretirement liabilities | | 99,010 | | | 118,020 | |
Long-term debt | | 4,023,803 | | | 3,876,500 | |
Other | | 104,713 | | | 97,650 | |
TOTAL | | 8,371,909 | | | 8,082,525 | |
| | | | |
Commitments and Contingencies | | | | |
| | | | |
| | | | |
| | | | |
EQUITY | | | | |
Member's equity | | 3,793,970 | | | 3,753,990 | |
Noncontrolling interest | | 24,973 | | | 27,825 | |
TOTAL | | 3,818,943 | | | 3,781,815 | |
| | | | |
TOTAL LIABILITIES AND EQUITY | | $13,422,699 | | | $13,006,576 | |
| | | | |
See Notes to Financial Statements. | | | | |
| | | | | | | | | | | | | | | | | |
ENTERGY ARKANSAS, LLC AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY |
For the Six Months Ended June 30, 2023 and 2022 |
(Unaudited) |
| | | | | |
| Noncontrolling Interest | | Member's Equity | | Total |
| (In Thousands) |
| | | | | |
Balance at December 31, 2021 | $33,110 | | | $3,542,745 | | | $3,575,855 | |
| | | | | |
Net income (loss) | (1,387) | | | 66,954 | | | 65,567 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Balance at March 31, 2022 | 31,723 | | | 3,609,699 | | | 3,641,422 | |
| | | | | |
Net income (loss) | (529) | | | 63,639 | | | 63,110 | |
Common equity distributions | — | | | (36,000) | | | (36,000) | |
| | | | | |
| | | | | |
Distributions to noncontrolling interest | (190) | | | — | | | (190) | |
Balance at June 30, 2022 | $31,004 | | | $3,637,338 | | | $3,668,342 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Balance at December 31, 2022 | $27,825 | | | $3,753,990 | | | $3,781,815 | |
| | | | | |
Net income (loss) | (1,629) | | | 61,026 | | | 59,397 | |
| | | | | |
| | | | | |
| | | | | |
Common equity distributions | — | | | (80,000) | | | (80,000) | |
| | | | | |
Distributions to noncontrolling interest | (104) | | | — | | | (104) | |
Balance at March 31, 2023 | 26,092 | | | 3,735,016 | | | 3,761,108 | |
| | | | | |
Net income (loss) | (1,006) | | | 67,954 | | | 66,948 | |
| | | | | |
| | | | | |
| | | | | |
Common equity distributions | — | | | (9,000) | | | (9,000) | |
| | | | | |
Distributions to noncontrolling interest | (113) | | | — | | | (113) | |
Balance at June 30, 2023 | $24,973 | | | $3,793,970 | | | $3,818,943 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
See Notes to Financial Statements. | | | | | |
ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS
Results of Operations
Net Income
Second Quarter 2023 Compared to Second Quarter 2022
Net income decreased $53.4 million primarily due to the net effects of Entergy Louisiana’s storm cost securitization in May 2022, including a $290 million reduction in income tax expense, partially offset by a $224.4 million ($165.4 million net-of-tax) regulatory charge to reflect its obligation to share the benefits of the securitization with customers. The decrease was partially offset by higher other income, higher retail electric price, and lower other operation and maintenance expenses. See Note 2 to the financial statements in the Form 10-K for discussion of the settlement and benefit sharing.May 2022 storm cost securitization.
Net Revenue
Third Quarter 2017Six Months Ended June 30, 2023 Compared to ThirdSix Months Ended June 30, 2022
Net income increased $39.8 million primarily due to 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 share the benefits of the securitization with customers, higher retail electric price, higher other income, and lower other operation and maintenance expenses. The net income increase was partially offset by the net effects of Entergy Louisiana’s storm cost securitization in May 2022, including a $290 million reduction in income tax expense, partially offset by a $224.4 million ($165.4 million net-of-tax) regulatory charge. See Note 2 to the financial statements herein and in the Form 10-K for discussion of the storm cost securitizations.
Operating Revenues
Second Quarter 20162023 Compared to Second Quarter 2022
Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges (credits). Following is an analysis of the change in net revenueoperating revenues comparing the thirdsecond quarter 20172023 to the thirdsecond quarter 2016:
|
| | | | |
| Amount |
| (In Millions) |
2016 net revenue2022 operating revenues | $1,515.8 | $719.8 |
|
Volume/weatherFuel, rider, and other revenues that do not significantly affect net income | (20.6(320.9) | ) |
Storm restoration carrying costs | (37.5) | |
Volume/weather | (7.9) | |
Return of unprotected excess accumulated deferred income taxes to customers | 9.2 | |
Retail electric price | 13.846.9 |
|
Other2023 operating revenues | 4.4$1,205.6 |
|
2017 net revenue |
| $717.4 |
|
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.
Entergy Louisiana, LLC and Subsidiaries
Management's Financial Discussion and Analysis
Storm restoration carrying costs represent the equity component of storm restoration carrying costs, recorded in second quarter 2022, recognized as part of the securitization of Hurricane Laura, Hurricane Delta, Hurricane Zeta, Winter Storm Uri, and Hurricane Ida restoration costs in May 2022. See Note 2 to the financial statements in the Form 10-K for discussion of the May 2022 storm cost securitization.
The volume/weather variance is primarily due to the effect of less favorable weather on residential sales and a decrease in commercial sales.and industrial usage. The decrease was partially offset by an increasedecreased usage from these commercial and industrial customers has a relatively smaller effect on operating revenues because a larger portion of 282 GWh, or 4%, in industrial usage primarily due to an increase in demand for existingthe revenues from those customers as well as expansion projects in the chemicals industry.comes from fixed charges.
The retail electric price variance is primarily duereturn of unprotected excess accumulated deferred income taxes to customers resulted from the timingreturn of recovery of purchased power capacity costsunprotected excess accumulated deferred income taxes through changes in the formula rate plan mechanism.
Entergy Louisiana, LLCthe Tax Cuts and Subsidiaries
Management's Financial Discussion and Analysis
Nine Months Ended September 30, 2017 ComparedJobs Act. In the second quarter 2022, $9.2 million was returned to Nine Months Ended September 30, 2016
Net revenue consistscustomers through reductions in operating revenues. There was no return of unprotected excess accumulated deferred income taxes to customers for the second quarter 2023. There was no effect on net income as the reductions in operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges (credits). Following is an analysis of the changewere offset by reductions in net revenue comparing the nine months ended September 30, 2017income tax expense. See Note 2 to the nine months ended September 30, 2016:financial statements in the Form 10-K for discussion of regulatory activity regarding the Tax Cuts and Jobs Act.
|
| | | |
| Amount |
| (In Millions) |
2016 net revenue |
| $1,891.8 |
|
Retail electric price | 23.1 |
|
Louisiana Act 55 financing savings obligation | 17.2 |
|
Volume/weather | (31.6 | ) |
Other | 1.2 |
|
2017 net revenue |
| $1,901.7 |
|
The retail electric price variance is primarily due to an increase in formula rate plan revenues, implemented withincluding increases in the first billing cycle of March 2016, to collect the estimated first-year revenue requirement related to the purchase of Power Blocks 3distribution and 4 of the Union Power Station in March 2016 and the timing oftransmission recovery of purchased power costs through the formula rate plan mechanism.mechanisms, effective September 2022. See Note 2 to the financial statements herein and in the Form 10-K for further discussion of formula rate plan revenues.
The Louisiana Act 55 financing savings obligation variance results from a regulatory charge recorded in 2016 for tax savings to be shared with customers per an agreement approved by the LPSC. The tax savings resulted from the 2010-2011 IRS audit settlement on the treatment of the Louisiana Act 55 financing of storm costs for Hurricane Gustav and Hurricane Ike. See Note 3 to the financial statements in the Form 10-K for further discussion of the formula rate plan proceeding.
Total electric energy sales for Entergy Louisiana for the three months ended June 30, 2023 and 2022 are as follows:
| | | | | | | | | | | | | | | | | |
| 2023 | | 2022 | | % Change |
| (GWh) | | |
Residential | 3,694 | | | 3,824 | | | (3) | |
Commercial | 2,801 | | | 2,879 | | | (3) | |
Industrial | 8,014 | | | 8,148 | | | (2) | |
Governmental | 206 | | | 208 | | | (1) | |
Total retail | 14,715 | | | 15,059 | | | (2) | |
Sales for resale: | | | | | |
Associated companies | 678 | | | 1,315 | | | (48) | |
Non-associated companies | 464 | | | 467 | | | (1) | |
Total | 15,857 | | | 16,841 | | | (6) | |
See Note 13 to the financial statements herein for additional discussion of Entergy Louisiana’s operating revenues.
Entergy Louisiana, LLC and Subsidiaries
Management's Financial Discussion and Analysis
Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022
Following is an analysis of the settlementchange in operating revenues comparing the six months ended June 30, 2023 to the six months ended June 30, 2022:
| | | | | |
| Amount |
| (In Millions) |
2022 operating revenues | $2,781.8 | |
Fuel, rider, and other revenues that do not significantly affect net income | (300.9) | |
Volume/weather | (29.5) | |
Storm restoration carrying costs | (6.9) | |
Return of unprotected excess accumulated deferred income taxes to customers | 18.4 | |
Retail electric price | 87.9 | |
2023 operating revenues | $2,550.8 | |
Entergy Louisiana’s results include revenues from rate mechanisms designed to recover fuel, purchased power, and benefit sharing.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 the effect of less favorable weather on residential sales.
Storm restoration carrying costs represent the equity component of storm restoration carrying costs, recorded in second quarter 2022, recognized as part of the securitization of Hurricane Laura, Hurricane Delta, Hurricane Zeta, Winter Storm Uri, and commercial sales and decreased usage during the unbilled sales period. This decrease wasHurricane Ida restoration costs in May 2022, partially offset by an increasethe equity component of 610 GWh, or 3%, in industrial usage primarily due to an increase in demand for existing customers, expansion projects in the chemicals industry, and an increase in demand for cogeneration customers, partially offset by an extended seasonal outage for an existing large refinery customer.
Other Income Statement Variances
Third Quarter 2017 Compared to Third Quarter 2016
Other operation and maintenance expenses increased primarily due to an increase of $10.4 million in nuclear generation expenses primarily due to higher nuclear laborstorm restoration carrying costs, including contract labor, to position the nuclear fleet to meet its operational goals and a higher scope of work performed during plant outages in the third quarter 2017 as compared to the third quarter 2016. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS –Nuclear Matters” in the Form 10-K for a discussion of the increased operating costs to position the nuclear fleet to meet its operational goals.
Taxes other than income taxes increased primarily due to increases in ad valorem taxes, local franchise fees, and state franchise taxes. Ad valorem taxes increased primarily due to higher assessments, including the assessment of Arkansas ad valorem taxes on the Union Power Station beginning in 2017. Local franchise fees increased primarily due to higher revenues in the third quarter 2017 as compared to the third quarter 2016. State franchise taxes increased primarily due to a change in the Louisiana franchise tax law which became effective for 2017.
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 the third quarter 2017 as compared to the third quarter 2016, which
Entergy Louisiana, LLC and Subsidiaries
Management's Financial Discussion and Analysis
included the St. Charles Power Station project, and higher realized gains in the third quarter 2017 as compared to the third quarter 2016 on the River Bend and Waterford 3 decommissioning trust fund investments.
Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016
Other operation and maintenance expenses increased primarily due to:
an increase of $12.3 million in nuclear generation expenses primarily due to higher nuclear labor costs, including contract labor, to position the nuclear fleet to meet its operational goals, partially offset by a lower scope of work performed during plant outages in 2017 as compared to the same period in 2016. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS –Nuclear Matters” in the Form 10-K for a discussion of the increased operating costs to position the nuclear fleet to meet its operational goals;
an increase of $4.3 million in compensation and benefits costs primarily due to a downward revision to estimated incentive compensation expenserecorded in first quarter 2016;
an increase of $3.6 million in fossil-fueled generation expenses primarily due to the purchase of Power Blocks 3 and 42023, recognized as part of the Union Power Stationsecuritization of Hurricane Ida restoration costs in March 2016, partially offset by asbestos loss provisions in 2016;
an increase of $3.5 million as a result of the amount of transmission costs allocated by MISO.2023. See Note 2 to the financial statements herein and in the Form 10-K for further information ondiscussion of the recoverystorm cost securitizations.
The return of these costs;
an increase of $3.4 million in other loss provisions; and
an increase of $2.1 million in transmission expenses primarily due to higher labor costs, including contract labor.
Taxes other thanunprotected excess accumulated deferred income taxes increased primarily due to increases in ad valoremcustomers resulted from the return of unprotected excess accumulated deferred income taxes local franchise fees, state franchise taxes, and payroll taxes. Ad valorem taxes increased primarily due to higher assessments, including the assessment of Arkansas ad valorem taxes on the Union Power Station beginning in 2017. Local franchise fees increased primarily due to higher revenues in 2017 as compared to 2016. State franchise taxes increased primarily due to a changethrough changes in the Louisiana franchise tax law which becameformula rate plan effective for 2017.
Depreciation and amortization expenses increased primarily dueMay 2018 in response to additions to plant in service, including Power Blocks 3 and 4the enactment of the Union Power Station purchasedTax Cuts and Jobs Act. In the six months ended June 30, 2022, $18.4 million was returned to customers through reductions in March 2016 andoperating revenues. There was no return of unprotected excess accumulated deferred income taxes to customers for the effects of recordingsix months ended June 30, 2023. There was no effect on net income as the reductions in third quarter 2016 final court decisionsoperating revenues were offset by reductions in the River Bend and Waterford 3 lawsuits against the DOE related to spent nuclear fuel storage costs. The damages awarded include the reimbursement of approximately $6 million of spent nuclear fuel storage costs previously recorded as depreciationincome tax expense. See Note 142 to the financial statements in the Form 10-K for discussion of regulatory activity regarding the Union Power Station purchase.Tax Cuts and Jobs Act.
The retail electric price variance is primarily due to an increase in formula rate plan revenues, including increases in the distribution and transmission recovery mechanisms, effective September 2022. See Note 82 to the financial statements in the Form 10-K for further discussion of the spent nuclear fuel litigation.formula rate plan proceeding.
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 2017 as compared to the same period in 2016, which included the St. Charles Power Station project, and higher realized gains in 2017 as compared to the same period in 2016 on the River Bend decommissioning trust fund investments, including portfolio rebalancing to the 30% interest in River Bend formerly owned by Cajun.
Interest expense decreased primarily due to an increase in the allowance for borrowed funds used during construction due to higher construction work in progress in 2017 as compared to the same period in 2016, which included the St. Charles Power Station project.
Income Taxes
The effective income tax rates were 33.6% for the third quarter 2017 and 32.4% for the nine months ended September 30, 2017. The differences in the effective income tax rates for the third quarter 2017 and the nine months ended September 30, 2017 versus the federal statutory rate of 35% were primarily due to book and tax differences
Entergy Louisiana, LLC and Subsidiaries
Management's Financial Discussion and Analysis
Total electric energy sales for Entergy Louisiana for the six months ended June 30, 2023 and 2022 are as follows:
related | | | | | | | | | | | | | | | | | |
| 2023 | | 2022 | | % Change |
| (GWh) | | |
Residential | 6,378 | | | 6,893 | | | (7) | |
Commercial | 5,248 | | | 5,300 | | | (1) | |
Industrial | 15,845 | | | 15,754 | | | 1 | |
Governmental | 400 | | | 399 | | | — | |
Total retail | 27,871 | | | 28,346 | | | (2) | |
Sales for resale: | | | | | |
Associated companies | 2,355 | | | 2,656 | | | (11) | |
Non-associated companies | 688 | | | 1,323 | | | (48) | |
Total | 30,914 | | | 32,325 | | | (4) | |
See Note 13 to the non-taxablefinancial statements herein for additional discussion of Entergy Louisiana’s operating revenues.
Other Income Statement Variances
Second Quarter 2023 Compared to Second Quarter 2022
Other operation and maintenance expenses decreased primarily due to:
•a decrease of $11.8 million in compensation and benefits costs primarily due to lower health and welfare costs as a result of higher prescription drug rebates in 2023 and a decrease in net periodic pension and other postretirement benefits service costs as a result of an increase in the discount rates used to value the benefits liabilities. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K, Note 6 to the financial statements herein, and Note 11 to the financial statements in the Form 10-K for further discussion of pension and other postretirement benefits costs;
•a decrease of $7.4 million in power delivery expenses primarily due to lower transmission repairs and maintenance costs;
•a decrease of $7.4 million in transmission costs allocated by MISO. See Note 2 to the financial statements in the Form 10-K for further information on the recovery of these costs;
•a decrease of $6.6 million in nuclear generation expenses primarily due to lower nuclear labor costs; and
•a decrease of $4.9 million in non-nuclear generation expenses primarily due to a lower scope of work, including during plant outages, performed in 2023 as compared to 2022.
Depreciation and amortization expenses increased primarily due to additions to plant in service.
Other regulatory charges (credits) - net includes a regulatory charge of $224.4 million, recorded in second quarter 2022, to reflect Entergy Louisiana’s obligation to provide credits to its customers as described in an LPSC ancillary order issued in the Hurricane Laura, Hurricane Delta, Hurricane Zeta, Winter Storm Uri, and Hurricane Ida securitization regulatory proceeding. See Note 2 to the financial statements in the Form 10-K for discussion of the May 2022 storm cost securitization. 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 distributions earned onincreased primarily due to an increase of $38.7 million in affiliated dividend income from affiliated preferred membership interests, and book and tax differences related to storm cost securitizations, and a $31.6 million charge, recorded
Entergy Louisiana, LLC and Subsidiaries
Management's Financial Discussion and Analysis
in second quarter 2022, for the allowanceLURC’s 1% beneficial interest in the storm trust I established as part of the Hurricane Laura, Hurricane Delta, Hurricane Zeta, Winter Storm Uri, and Hurricane Ida May 2022 storm cost securitization. See Note 2 to the financial statements in the Form 10-K for equity fundsdiscussion of the May 2022 storm cost securitization.
Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022
Other operation and maintenance expenses decreased primarily due to:
•a decrease of $18.1 million in compensation and benefits costs primarily due to lower health and welfare costs as a result of higher prescription drug rebates in 2023, a decrease in net periodic pension and other postretirement benefits service costs as a result of an increase in the discount rates used to value the benefits liabilities, and a revision to estimated incentive compensation expense in the first quarter 2023. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K, Note 6 to the financial statements herein, and Note 11 to the financial statements in the Form 10-K for further discussion of pension and other postretirement benefits costs;
•a decrease of $13 million in transmission costs allocated by MISO. See Note 2 to the financial statements in the Form 10-K for further information on the recovery of these costs;
•a decrease of $9.8 million in power delivery expenses primarily due to lower transmission repairs and maintenance costs and the timing of vegetation maintenance;
•a decrease of $8 million in non-nuclear generation expenses primarily due to a lower scope of work, including during construction,plant outages, performed in 2023 as compared to prior year; and
•a decrease of $6.6 million in nuclear generation expenses primarily due to lower nuclear labor costs and lower costs associated with materials and supplies in 2023 as compared to 2022.
The decrease was partially offset by statean increase of $3.2 million in insurance expenses primarily due to lower nuclear insurance refunds received in 2023.
Depreciation and amortization expenses increased primarily due to additions to plant in service.
Other regulatory charges (credits) - net includes:
•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 herein for discussion of the March 2023 storm cost securitization; and
•a regulatory charge of $224.4 million, recorded in second quarter 2022, to reflect Entergy Louisiana’s obligation to provide credits to its customers as described in an LPSC ancillary order issued in the Hurricane Laura, Hurricane Delta, Hurricane Zeta, Winter Storm Uri, and Hurricane Ida securitization regulatory proceeding. See Note 2 to the financial statements in the Form 10-K for discussion of the May 2022 storm cost securitization.
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 taxes.increased primarily due to an increase of $62.2 million in affiliated dividend income from affiliated preferred membership interests, related to storm cost securitizations, and a $31.6 million charge, recorded in second quarter 2022, for the LURC’s 1% beneficial interest in the storm trust I established as part of the Hurricane Laura, Hurricane Delta, Hurricane Zeta, Winter Storm Uri, and Hurricane Ida May 2022 storm cost securitization. The increase was partially offset by 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 Hurricane Ida storm cost
Entergy Louisiana, LLC and Subsidiaries
Management's Financial Discussion and Analysis
securitization. See Note 2 to the financial statements herein and in the Form 10-K for discussion of the storm cost securitizations.
Income Taxes
The effective income tax rate was 34.4%20.7% for the thirdsecond quarter 2016.2023. The difference in the effective income tax rate for the thirdsecond quarter 20162023 versus the federal statutory rate of 35%21% was primarily due to book and tax differences related to the non-taxable income distributions earned on preferred membership interests, partially offset by the accrual for state income taxes.taxes and the amortization of state accumulated deferred income taxes as a result of a tax rate change.
The effective income tax rate was 10.4%(9.1%) for the ninesix months ended SeptemberJune 30, 2016.2023. The difference in the effective income tax rate for the ninesix months ended SeptemberJune 30, 20162023 versus the federal statutory rate of 35%21% was primarily due to the reversal of a portion of the provision for uncertainreduction in income tax positionsexpense as a result of the settlementMarch 2023 securitization of storm costs pursuant to Louisiana Act 55, as supplemented by Act 293 of the 2010-2011 IRS audit in the second quarter 2016Louisiana Legislature’s Regular Session of 2021 and book and tax differences related to the non-taxable income distributions earned on preferred membership interests, partially offset by the accrual for state income taxes.taxes and the amortization of state accumulated deferred income taxes as a result of a tax rate change. See Note 3Notes 2 and 10 to the financial statements in the Form 10-K for additional discussion of the 2010-2011 IRS audit settlement.
Louisiana Tax Legislation
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS –Louisiana Tax Legislation” in the Form 10-Kherein for a discussion of the LouisianaMarch 2023 storm cost securitization under Act 293.
The effective income tax legislation.
Liquidity and Capital Resources
Cash Flow
Cash flowsrate was (3,258.7%) for the nine months ended September 30, 2017 and 2016 were as follows:
|
| | | | | | | |
| 2017 | | 2016 |
| (In Thousands) |
Cash and cash equivalents at beginning of period |
| $213,850 |
| |
| $35,102 |
|
| | | |
Cash flow provided by (used in): | | | |
Operating activities | 927,176 |
| | 877,945 |
|
Investing activities | (1,379,365 | ) | | (1,138,425 | ) |
Financing activities | 293,862 |
| | 320,457 |
|
Net increase (decrease) in cash and cash equivalents | (158,327 | ) | | 59,977 |
|
| | | |
Cash and cash equivalents at end of period |
| $55,523 |
| |
| $95,079 |
|
Operating Activities
Net cash flow provided by operating activities increased $49.2 millionsecond quarter 2022. The difference in the effective income tax rate for the nine months ended September 30, 2017 compared tosecond quarter 2022 versus the nine months ended September 30, 2016federal statutory rate of 21% was primarily due to:
to the reduction in income tax refundsexpense as a result of $116.9 million in 2017 comparedthe securitization of Hurricane Laura, Hurricane Delta, Hurricane Zeta, Winter Storm Uri, and Hurricane Ida storm costs pursuant to incomeLouisiana Act 55, as supplemented by Act 293 of the Louisiana Legislature’s Regular Session of 2021, book and tax payments of $62.7 million in 2016. Entergy Louisiana received income tax refunds in 2017 and made income tax payments in 2016 in accordance with an intercompany income tax allocation agreement. The income tax refunds in 2017 resulted from the utilization of Entergy Louisiana’s net operating losses. The income tax payments in 2016differences related to the 2016 paymentsnon-taxable income distributions earned on preferred membership interests, certain book and tax differences related to utility plant items, the amortization of excess accumulated deferred income taxes, the amortization of investment tax credits, and book and tax differences related to the allowance for equity funds used during construction, partially offset by the accrual for state taxes resulting from the effect of the final settlement of the 2006-2007 IRS auditincome taxes. See Notes 2 and the effect of net operating loss limitations. See Note 3 to the financial statements in the Form 10-K for a discussion of the audit.May 2022 storm cost securitization under Act 293. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects of and regulatory activity regarding the Tax Cuts and Jobs Act.
The effective income tax rate was (144.7%) for the six months ended June 30, 2022. The difference in the effective income tax rate for the six months ended June 30, 2022 versus the federal statutory rate of 21% was primarily due to the reduction in income tax expense as a result of the securitization of Hurricane Laura, Hurricane Delta, Hurricane Zeta, Winter Storm Uri, and Hurricane Ida storm costs pursuant to Louisiana Act 55, as supplemented by Act 293 of the Louisiana Legislature’s Regular Session of 2021, book and tax differences related to the non-taxable income distributions earned on preferred membership interests, certain book and tax differences related to utility plant items, and the amortization of excess accumulated deferred income taxes, partially offset by the accrual for state income taxes. See Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the May 2022 storm cost securitization under Act 293. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects of and regulatory activity regarding the Tax Cuts and Jobs Act.
Income Tax Legislation
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - LouisianaIncome Tax Legislation” in the Form 10-K for a discussion onof the net operating loss limitations;Inflation Reduction Act of 2022. See the “Income Tax Legislation and Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis herein for updates to the discussion of income tax legislation and regulation.
Entergy Louisiana, LLC and Subsidiaries
Management's Financial Discussion and Analysis
Liquidity and Capital Resources
an interest payment
Cash Flow
Cash flows for the six months ended June 30, 2023 and 2022 were as follows:
| | | | | | | | | | | |
| 2023 | | 2022 |
| (In Thousands) |
Cash and cash equivalents at beginning of period | $56,613 | | | $18,573 | |
| | | |
Net cash provided by (used in): | | | |
Operating activities | 928,060 | | | 206,713 | |
Investing activities | (2,658,135) | | | (3,653,859) | |
Financing activities | 2,530,488 | | | 3,494,744 | |
Net increase in cash and cash equivalents | 800,413 | | | 47,598 | |
| | | |
Cash and cash equivalents at end of period | $857,026 | | | $66,171 | |
Operating Activities
Net cash flow provided by operating activities increased $721.3 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 primarily due to:
•the timing of $60payments to vendors;
•a decrease of $210.8 million made in March 2016storm spending primarily due to Hurricane Ida restoration efforts in 2022;
•the refund of $27.8 million received from System Energy in January 2023 related to the purchase of a beneficial interestsale-leaseback renewal costs and depreciation litigation as calculated in System Energy’s January 2023 compliance report filed with the Waterford 3 leased assets.
The increase was partially offset by:
a refund to customers in January 2017 of approximately $71 million as a result of the settlement approved by the LPSC related to the Waterford 3 replacement steam generator project.FERC. See Note 2 to the financial statements herein and in the Form 10-K for further discussion of the settlementthese refunds and refund;related proceedings;
an increase of $64 million in spending on nuclear refueling outages;
a decrease due to•lower fuel costs and the timing of recovery of fuel and purchased power costs; and
proceeds of $25.1 million received in August 2016 from the DOE resulting from litigation regarding spent nuclear fuel storage costs that were previously expensed.costs. See Note 12 to the financial statements hereinin the Form 10-K for a discussion of fuel and purchased power cost recovery; and
•higher collections from customers.
Investing Activities
Net cash flow used in investing activities decreased $995.7 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 primarily due to:
•a decrease in investment in affiliates due to the $3,163.6 million purchase by the storm trust I of preferred membership interests issued by an Entergy affiliate, partially offset by the $1,390.6 million redemption of preferred membership interests. See Note 82 to the financial statements in the Form 10-K for a discussion of the DOE litigation.May 2022 storm cost securitization;
Investing Activities
Net cash flow used in investing activities increased $240.9 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 primarily due to:
an increase•a decrease of $297.1$613.7 million in fossil-fueled generationdistribution construction expenditures primarily due to higher spending on the St. Charles Power Station and Lake Charles Power Station projectslower capital expenditures for storm restoration in 2017;2023;
fluctuations•a decrease of $283.5 million in nuclear fuel activity becausenet payments to storm reserve escrow accounts;
•a decrease of variations from year to year in the timing and pricing of fuel reload requirements in the Utility business, material and service deliveries, and the timing of cash payments during the nuclear fuel cycle;
an increase of $95.3$162 million in transmission construction expenditures primarily due to a higher scopelower capital expenditures for storm restoration in 2023 and decreased spending on various transmission projects in 2023; and
•the $46.6 million redemption, in February 2023, of work performedpreferred membership interests held by the storm trust I, as part of periodic redemptions that are expected to occur, subject to certain conditions, for the preferred membership interests that were issued in 2017 as comparedconnection with the May 2022 storm cost securitization. See Note
Entergy Louisiana, LLC and Subsidiaries
Management's Financial Discussion and Analysis
2 to the same periodfinancial statements in 2016;the Form 10-K for a discussion of the May 2022 storm cost securitization and the storm trust I’s investment in preferred membership interests.
The decrease was partially offset by:
•an increase in investment in affiliates in 2023 due to the $1,457.7 million purchase by the storm trust II of preferred membership interests issued by an Entergy affiliate. See Note 2 to the financial statements herein for a discussion of the March 2023 storm cost securitization and the storm trust II’s investment in preferred membership interests;
•an increase of $60.7$95.2 million in nuclear construction expenditures primarily due to increased spending on various nuclear projects in 2017;2023;
•money pool activity; and
$33.3 million in funds held on deposit for interest payments due October 1, 2017;
•an increase of $25.8$31.7 million as a result of fluctuations in information technology construction expendituresnuclear fuel activity, primarily due to increased spending on advanced metering infrastructure;
an increasevariations from year to year in the timing and pricing of $17.3 million in distribution construction expenditures due to increased spending on digital technology improvements withinfuel reload requirements, materials and services deliveries, and the customer contact centers; and
proceedstiming of $17.3 million received in August 2016 fromcash payments during the DOE resulting from litigation regarding spent nuclear fuel storage costs that were previously capitalized. See Note 1 to the financial statements herein and Note 8 to the financial statements in the Form 10-K for discussion of the DOE litigation.cycle.
The increase was partially offset by the purchase of Power Blocks 3 and 4 of the Union Power Station for an aggregate purchase price of approximately $475 million in March 2016. See Note 14 to the financial statements in the Form 10-K for discussion of the Union Power Station purchase.
Increases in Entergy Louisiana’s receivablereceivables from the money pool are a use of cash flow, and Entergy Louisiana‘sLouisiana’s receivable from the money pool increased by $50.4$275.6 million for the ninesix months ended SeptemberJune 30, 20172023 compared to increasingdecreasing by $3.3$7.2 million for the ninesix months ended SeptemberJune 30, 2016.2022. The money pool is an inter-companyintercompany borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings.
Financing Activities
Net cash flow provided by financing activities decreased $26.6$964.3 million for the ninesix months ended SeptemberJune 30, 20172023 compared to the ninesix months ended SeptemberJune 30, 20162022 primarily due toto:
•proceeds from securitization of $1.5 billion received by the net issuance of $350.5 million of long-term debtstorm trust II in 20172023 compared to proceeds from securitization of $3.2 billion received by the net issuancestorm trust I in 2022;
•money pool activity; and
•an increase of $557.7$35.3 million in 2016.common equity distributions paid in 2023 in order to maintain Entergy Louisiana’s capital structure.
Entergy Louisiana, LLC and Subsidiaries
Management's Financial Discussion and Analysis
The decrease was partially offset by:
•a capital contribution of approximately $1.5 billion in 2023 as compared to a capital contribution of approximately $1 billion in 2022, both received indirectly from Entergy Corporation and related to the March 2023 storm cost securitization and the May 2022 storm cost securitization, respectively;
•the repayment, prior to maturity, in May 2022 of $435 million, a portion of the outstanding principal, of 0.62% Series mortgage bonds due November 2023; and
•a decrease of $123.8$99 million of common equity distributions primarily as a result of higher construction expenditures and higher nuclear fuel purchases in 2017 as compared2023 in net repayments on Entergy Louisiana’s revolving credit facility.
Decreases in Entergy Louisiana’s payable to the same period in 2016;money pool are a use of cash flow, and Entergy Louisiana’s payable to the money pool decreased $226.1 million for the six months ended June 30, 2023.
net borrowings of $36.8 million on the nuclear fuel company variable interest entities’ credit facilities in 2017 compared to net repayments of $18.4 million in 2016.
See Note 4 to the financial statements herein and Note 5 to the financial statements in the Form 10-K for more details on long-term debt. See Note 2 to the financial statements herein and in the Form 10-K for a discussion of the storm cost securitizations.
Entergy Louisiana, LLC and Subsidiaries
Management's Financial Discussion and Analysis
Capital Structure
Entergy Louisiana’s capitalizationdebt to capital ratio is balanced between equity and debt, as shown in the following table. The decrease in the debt to capital ratio for Entergy Louisiana is primarily due to the $1.5 billion capital contribution received indirectly from Entergy Corporation in March 2023.
| | | | | | | | | | | |
| June 30, 2023 | | December 31, 2022 |
Debt to capital | 48.6 | % | | 53.0 | % |
| | | |
| | | |
Effect of subtracting cash | (2.0 | %) | | (0.1 | %) |
Net debt to net capital (non-GAAP) | 46.6 | % | | 52.9 | % |
|
| | | | | |
| September 30, 2017 | | December 31, 2016 |
Debt to capital | 53.5 | % | | 53.4 | % |
Effect of excluding securitization bonds | (0.4 | %) | | (0.5 | %) |
Debt to capital, excluding securitization bonds (a) | 53.1 | % | | 52.9 | % |
Effect of subtracting cash | (0.2 | %) | | (0.9 | %) |
Net debt to net capital, excluding securitization bonds (a) | 52.9 | % | | 52.0 | % |
| |
(a) | Calculation excludes the securitization bonds, which are non-recourse to Entergy Louisiana. |
Net debt consists of debt less cash and cash equivalents. Debt consists of short-term borrowings, finance lease obligations, 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. Entergy Louisiana uses the debt to capital ratios excluding securitization bondsratio in analyzing its financial condition and believes they provideit provides useful information to its investors and creditors in evaluating Entergy Louisiana’s financial condition because the securitization bonds are non-recoursecondition. The net debt to Entergy Louisiana, as more fully described in Note 5 to the financial statements in the Form 10-K.net capital ratio is a non-GAAP measure. Entergy Louisiana 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 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.
Uses and Sources of Capital
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources” in the Form 10-K for a discussion of Entergy Louisiana’s uses and sources of capital. Following are updates to the information provided in the Form 10-K.
Entergy Louisiana is developing its capital investment plan for 2018 through 2020 and currently anticipates making $4.1 billion in capital investments during that period. The preliminary estimate includes amounts associated with specific investments, such as the St. Charles Power Station and the Lake Charles Power Station, discussed below; transmission projects to enhance reliability, reduce congestion, and enable economic growth; distribution spending to enhance reliability and improve service to customers, including initial investment to support advanced metering; resource planning, including potential generation projects; system improvements; investments in River Bend and Waterford 3; and other investments. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital.
Entergy Louisiana, LLC and Subsidiaries
Management's Financial Discussion and Analysis
Entergy Louisiana’s receivables from or (payables to) the money pool were as follows:
| | | | | | | | | | | | | | | | | | | | |
June 30, 2023 | | December 31, 2022 | | June 30, 2022 | | December 31, 2021 |
(In Thousands) |
$275,559 | | ($226,114) | | $7,377 | | $14,539 |
|
| | | | | | |
September 30, 2017 | | December 31, 2016 | | September 30, 2016 | | December 31, 2015 |
(In Thousands) |
$72,899 | | $22,503 | | $9,428 | | $6,154 |
See Note 4 to the financial statements in the Form 10-K for a description of the money pool.
Entergy Louisiana has a credit facility in the amount of $350 million scheduled to expire in August 2022.June 2028. The credit facility permitsincludes fronting commitments for the issuance of letters of credit against 50%$15 million of the borrowing capacity of the facility. As of SeptemberJune 30, 2017,2023, there were no cash borrowings and $9.1 million ofno 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 SeptemberJune 30, 2017, a $38.52023, $20 million letterin letters of credit waswere outstanding under Entergy Louisiana’s uncommitted letter of credit facility. See Note 4 to the financial statements herein for additional discussion of the credit facilities.
The Entergy Louisiana nuclear fuel company variable interest entities have two separate credit facilities, oneeach in the amount of $105 million and one in the amount of $85 million, both scheduled to expire in May 2019.June 2025. As of SeptemberJune 30, 2017, $78.82023, $56.4 million in loans were outstanding under the credit facility for the Entergy Louisiana River Bend nuclear fuel company variable interest entity. As of SeptemberJune 30, 2017, $40.6 million in letters of credit to support a like amount of commercial paper issued and $36.32023, $49.8 million in loans were outstanding under the credit facility for the Entergy Louisiana Waterford nuclear fuel company variable interest entity credit facility.entity. See Note 4 to the financial statements herein for additional discussion of the nuclear fuel company variable interest entity credit facilities.
Lake Charles Power Station
Entergy Louisiana, LLC and Subsidiaries
Management's Financial Discussion and Analysis
Hurricane Laura, Hurricane Delta, Hurricane Zeta, Winter Storm Uri, and Hurricane Ida
As discussed in the Form 10-K, 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 November 2016,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. 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 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 in the Form 10-K, 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. 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 Louisiana Local Government Environmental Facilities and Community Development Authority (LCDA), a political subdivision of the State of Louisiana, to issue the bonds authorized in the LPSC’s financing order.
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 the damaged assets and system restoration costs from the determination of future rates. The securitization was authorized pursuant to the Louisiana
Entergy Louisiana, LLC and Subsidiaries
Management's Financial Discussion and Analysis
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, LLC, a majority-owned indirect subsidiary of Entergy. 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 10 to the financial statements herein, 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 related to 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 share the benefits of the securitization with customers.
As discussed in Note 3 and Note 12 to the financial statements herein, Entergy Louisiana consolidates the storm trust II as a variable interest entity and the LURC’s 1% beneficial interest is shown as noncontrolling interest in 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.
Entergy Louisiana, LLC and Subsidiaries
Management's Financial Discussion and Analysis
System Resilience and Storm Hardening
As discussed in the Form 10-K, in December 2022, Entergy Louisiana filed an application with the LPSC seeking certification that the public convenience and necessity would be served by the construction of the Lake Charles Power Station, a nominal 994 MW combined-cycle generating unit in Westlake, Louisiana, on land adjacent to the existing Nelson plant in Calcasieu Parish. The current estimated cost of the Lake Charles Power Station is $872 million, including estimated costs of transmission interconnection and other related costs. In May 2017 the parties to the proceeding agreed to an uncontested stipulation finding that construction of the Lake Charles Power Station is in the public interest finding regarding Phase I of Entergy Louisiana’s Future Ready resilience plan and authorizing an in-service rate recovery plan. In July 2017 the LPSC issued an order unanimously approving the stipulation. Subject to the timely receipt of other permits and approvals, commercial operation is estimated to occur by mid-2020.
Washington Parish Energy Center
In April 2017, Entergy Louisiana signed a purchase and sale agreement with a subsidiary of Calpine Corporation for the acquisitionapproval of a peaking plant. Calpine will constructrider mechanism to recover the plant, which will consistprogram’s costs. Phase I reflects the first five years of two natural gas-fired combustion turbine units with a total nominal capacity of approximately 360 MW. The plant, named the Washington Parish Energy Center, will be located in Bogalusa, Louisianaten-year resilience plan and subject to permits and approvals, is expected to be completed in 2021. Subject to regulatory approvals, Entergy Louisiana will purchase the plant once it is complete for an estimated totalincludes investment of approximately $261 million,$5 billion, including hardening investment, transmission dead-end structures, enhanced vegetation management, and othertelecommunications improvement. In April 2023 a procedural schedule was established with a hearing scheduled for January 2024.
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 costs. to a requirement to file a grid resilience plan. The procedural schedule entered in the rulemaking proceeding contemplates adoption of a final rule in September 2023.
2022 Solar Portfolio and Expansion of the Geaux Green Option
In May 2017,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. Entergy Louisiana is seeking to include these within the portfolio supporting the Geaux Green Option (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. The Louisiana Energy Users Group and the Alliance for Affordable Energy have intervened, and discovery is underway. A procedural schedule has been established with a hearing scheduled for December 2023 and settlement negotiations are ongoing. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – Liquidity and Capital Resources- Uses of Capital - 2021 Solar Certification and the Geaux Green Option” in the Form 10-K for further discussion of the Rider GGO.
Alternative RFP and Certification
In March 2023, Entergy Louisiana made the first phase of a bifurcated 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, which contains the details of the proposal for the alternative competitive procurement process and the information necessary to support certification, was filed in May 2023. In addition to the acquisition of up to 3 GW of solar resources, the filing also seeks approval of a new renewable energy credits-based tariff. Several parties have intervened, and a procedural schedule was established in May 2023 with a hearing scheduled for March 2024.
Nelson Industrial Steam Company
Entergy Louisiana is a partner in the Nelson Industrial Steam Company (NISCO) partnership which owns two petroleum coke generating units. In April 2018.2023 these generating units suspended operations in the MISO market, and Entergy Louisiana currently is working with the partners to wind up the NISCO partnership, which will ultimately result in ownership of the generating units transferring to Entergy Louisiana. In May 2023, Entergy Louisiana filed an application with the FERC for transaction authorization pursuant to Section 203 of the Federal Power Act. In June 2023 the LPSC filed a notice to intervene in the proceeding. Entergy Louisiana is evaluating the effect of the transaction on its results of operations, cash flows, and financial condition, but at this time does not expect the effect to be material.
Entergy Louisiana, LLC and Subsidiaries
Management's Financial Discussion and Analysis
State and Local Rate Regulation and Fuel-Cost Recovery
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS –State and Local Rate Regulation and Fuel Cost Recovery”in the Form 10-K for a discussion of state and local rate regulation and fuel costfuel-cost recovery. The following are updates to that discussion.
Retail Rates
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 are only being increased by approximately $4.9 million, leaving an ongoing 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, are 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 is 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, is $85.2 million.
COVID-19 Orders
As discussed in the Form 10-K, 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 to apply to 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 and a subsequent filing will be required to permit the LPSC to review the COVID-19 regulatory asset. As of June 30, 2023, Entergy Louisiana had a regulatory asset of $47.8 million for costs associated with the COVID-19 pandemic.
Industrial and Commercial Customers
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS –Industrial and Commercial Customers” in the Form 10-K for a discussion of industrial and commercial customers.
Federal Regulation
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS –Federal Regulation”in the Form 10-K for a discussion of federal regulation.
Entergy Louisiana, LLC and Subsidiaries
Management's Financial Discussion and Analysis
Retail Rates - Electric
2014 Formula Rate Plan Filing
As discussed in the Form 10-K, in September 2015, Entergy Louisiana filed its formula rate plan evaluation report for Entergy Gulf States Louisiana’s and Entergy Louisiana’s 2014 calendar year operations. In June 2017 the LPSC staff and Entergy Louisiana filed an unopposed joint report of proceedings, which was accepted by the LPSC in June 2017, finalizing the results of this proceeding with no changes to rates already implemented.
2015 Formula Rate Plan Filing
As discussed in the Form 10-K, in May 2016, Entergy Louisiana filed its formula rate plan evaluation report for its 2015 calendar year operations. In June 2017 the LPSC staff and Entergy Louisiana filed a joint report of proceedings, which was accepted by the LPSC in June 2017, finalizing the results of the May 2016 evaluation report, interim updates, and corresponding proceedings with no changes to rates already implemented.
In November 2016, Entergy Louisiana filed with the LPSC a request to extend the MISO cost recovery mechanism rider provision of its formula rate plan. In March 2017 the LPSC staff submitted direct testimony generally supportive of a one-year extension of the MISO cost recovery mechanism and the intervenor in the proceeding did not oppose an extension for this period of time. In June 2017 an uncontested joint stipulation authorizing a one-year extension of the MISO cost recovery mechanism rider was filed and the LPSC approved the stipulation in July 2017.
2016 Formula Rate Plan Filing
In May 2017, Entergy Louisiana filed its formula rate plan evaluation report for its 2016 calendar year operations. The evaluation report reflects an earned return on common equity of 9.84%. As such, no adjustment to base formula rate plan revenue is required. The following adjustments, however, are required under the formula rate plan. The 2016 formula rate plan evaluation report shows a decrease in formula rate plan revenue of approximately $16.9 million, comprised of a decrease in legacy Entergy Louisiana formula rate plan revenue of $3.5 million, a decrease in legacy Entergy Gulf States Louisiana formula rate plan revenue of $9.7 million, and a decrease in incremental formula rate plan revenue of $3.7 million. Additionally, the formula rate plan evaluation report calls for a decrease of $40.5 million in the MISO cost recovery revenue requirement from the current level of $46.8 million to $6.3 million. Rates reflecting these adjustments were implemented with the first billing cycle of September 2017, subject to refund, pending the review proceedings. Parties have intervened in the proceedings. No procedural schedule has been established. In September 2017 the LPSC issued its report indicating that no changes to Entergy Louisiana’s original formula rate plan evaluation report are required but reserved for several issues, including Entergy Louisiana’s September 2017 update to its formula rate plan evaluation report.
Formula Rate Plan Extension Request
In August 2017, Entergy Louisiana filed a request with the LPSC seeking to extend its formula rate plan for three years (2017-2019) with limited modifications of its terms. Those modifications include: a one-time resetting of base rates to the midpoint of the band at Entergy Louisiana’s authorized return on equity of 9.95% for the 2017 test year; narrowing of the formula rate plan bandwidth from a total of 160 basis points to 80 basis points; and a forward-looking mechanism that would allow Entergy Louisiana to recover certain transmission-related costs contemporaneously with when those projects begin delivering benefits to customers. Entergy Louisiana has requested that the LPSC consider its request on an expedited basis and render a decision by December 2017, in an effort to maintain Entergy Louisiana’s current cycle for implementing rate adjustments, i.e., September 2018, without the need for filing a full base rate case proceeding.
Entergy Louisiana, LLC and Subsidiaries
Management's Financial Discussion and Analysis
Waterford 3 Replacement Steam Generator Project
See Note 2 to the financial statements in the Form 10-K for discussion of the Waterford 3 replacement steam generator project prudence review proceeding. The refund to customers of approximately $71 million as a result of the settlement approved by the LPSC was made in January 2017. Following a review by the parties, an unopposed joint report of proceedings was filed by the LPSC staff and Entergy Louisiana in May 2017. In May 2017 the LPSC accepted the joint report of proceedings resolving the matter.
Deactivation or Retirement Decisions for Entergy Louisiana Plants
As a term of the LPSC-approved settlement authorizing the purchase of Power Blocks 3 and 4 of the Union Power Station, Entergy Louisiana agreed to make a filing with the LPSC to review its decisions to deactivate Ninemile 3 and Willow Glen 2 and 4 and its decision to retire Little Gypsy 1. In January 2016, Entergy Louisiana made its compliance filing with the LPSC. Entergy Louisiana, LPSC staff, and intervenors participated in a technical conference in March 2016 where Entergy Louisiana presented information on its deactivation/retirement decisions for these four units in addition to information on the current deactivation decisions for the ten-year planning horizon. Parties have requested further proceedings on the prudence of the decision to deactivate Willow Glen 2 and 4. No party contests the prudence of the decision to deactivate Willow Glen 2 and 4 or suggests reactivation of these units; however, issues have been raised related to Entergy Louisiana’s decision to give up its transmission service rights in MISO for Willow Glen 2 and 4 rather than placing the units into suspended status for the three-year term permitted by MISO. An evidentiary hearing was held in August 2017 and post-hearing briefs were submitted in October 2017. A decision is expected in 2018.
Advanced Metering Infrastructure (AMI) Filing
As discussed in the Form 10-K, in November 2016, Entergy Louisiana filed an application seeking a finding from the LPSC that Entergy Louisiana’s deployment of advanced electric and gas metering infrastructure is in the public interest. The parties reached an uncontested stipulation permitting implementation of Entergy Louisiana’s proposed AMI system, with modifications to the proposed customer charge. The stipulation also confirmed that Entergy Louisiana shall continue to include in rate base the remaining book value of the existing electric meters and also to depreciate those assets using current depreciation rates. In July 2017 the LPSC approved the stipulation.
Retail Rates - Gas
2016 Rate Stabilization Plan Filing
In January 2017, Entergy Louisiana filed with the LPSC its gas rate stabilization plan for the test year ended September 30, 2016. The filing of the evaluation report for test year 2016 reflected an earned return on common equity of 6.37%. As part of the original filing, pursuant to the extraordinary cost provision of the rate stabilization plan, Entergy Louisiana sought to recover approximately $1.5 million in deferred operation and maintenance expenses incurred to restore service and repair damage resulting from flooding and widespread rainfall in southeast Louisiana that occurred in August 2016. Entergy Louisiana requested to recover the prudently incurred August 2016 storm restoration costs over ten years, outside of the rate stabilization plan sharing provisions. As a result, Entergy Louisiana’s filing sought an annual increase in revenue of $1.4 million. Following review of the filing, except for the proposed extraordinary cost recovery, the LPSC staff confirmed Entergy Louisiana’s filing was consistent with the principles and requirements of the rate stabilization plan. The extraordinary cost recovery request associated with the 2016 flood-related deferred operation and maintenance expenses incurred for gas operations was removed from the rate stabilization plan pending LPSC consideration in a separate docket. In April 2017 the LPSC approved a joint report of proceedings and Entergy Louisiana submitted a revised evaluation report reflecting a $1.2 million annual increase in revenue with rates implemented with the first billing cycle of May 2017.
Entergy Louisiana, LLC and Subsidiaries
Management's Financial Discussion and Analysis
In connection with the joint report of proceedings accepted by the LPSC, in May 2017, Entergy Louisiana filed an application to initiate a separate proceeding to recover the deferred operation and maintenance expenses of $1.4 million incurred to restore service and repair damage resulting from flooding and widespread rainfall in southeast Louisiana that occurred in August 2016 through the extraordinary cost provision of the gas rate stabilization plan. The LPSC staff submitted its direct testimony in the proceeding recommending recovery of $0.9 million. The procedural schedule includes a hearing in February 2018.
Fuel and purchased power cost recovery
As discussed in the Form 10-K, in June 2016 the LPSC staff provided notice of audits of Entergy Louisiana’s fuel adjustment clause filings and purchased gas adjustment clause filings. The audit included a review of the reasonableness of charges flowed through Entergy Louisiana’s fuel adjustment clause for the period from 2014 through 2015 and charges flowed through Entergy Louisiana’s purchased gas adjustment clause for the period from 2012 through 2015. Discovery commenced in March 2017.
As discussed in the Form 10-K, in April 2010 the LPSC authorized its staff to initiate an audit of Entergy Louisiana’s fuel adjustment clause filings. The audit included a review of the reasonableness of the charges flowed through the fuel adjustment clause by Entergy Louisiana for the period from 2005 through 2009. In December 2016 the LPSC opened a new docket in order to resolve the issue regarding the proper methodology for the recovery of nuclear dry fuel storage costs. In October 2017 the LPSC approved the continued recovery of the nuclear dry fuel storage costs through the fuel adjustment clause, resolving the open issue in the audit.
Industrial and Commercial Customers
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS –Industrial and Commercial Customers” in the Form 10-K for a discussion of industrial and commercial customers.
Federal Regulation
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS –Federal Regulation”in the Form 10-K for a discussion of federal regulation.
Nuclear Matters
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS -Nuclear Matters” in the Form 10-K for a discussion of nuclear matters. The followingFollowing is an update to that discussion.
River Bend’s operating licenseNRC Reactor Oversight Process
As discussed in the Form 10-K, the NRC’s Reactor Oversight Process is a program to collect information about plant performance, assess the information for its safety significance, and provide for appropriate licensee and NRC response. The 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. Waterford 3 is currently due to expire in August 2025.Column 1, and River Bend is currently in Column 2.
In September 2022 the NRC placed Waterford 3 in Column 2 based on an error associated with a radiation monitor calibration. Entergy corrected the issue with the radiation monitor in February 2022 and also corrected a subsequent radiation monitor calibration issue. In May 2017, Entergy Louisiana filed an application2023 the NRC completed a supplemental inspection of Waterford 3 in accordance with its inspection procedures for nuclear plants in Column 2 and Waterford 3 was returned to Column 1.
In July 2023 the NRC placed River Bend in Column 2, effective April 2023, based on failure to inspect wiring associated with the NRC for an extension of River Bend’s operating license to 2045. In October 2017 an intervenor filed with the NRC a petition to intervene and request for a hearing on thehigh pressure core spray system. River Bend license renewal application. As provided by NRC procedure,will remain in Column 2 pending successful completion of a panel of the Atomic Safety and Licensing Board has been designated to determine whether the intervenor’s three proposed contentions, or allegations of errors or omissions in the license renewal application, are admissible and, if so, to rule on any admitted contentions.supplemental inspection.
Environmental Risks
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS -Environmental Risks” in the Form 10-K for a discussion of environmental risks.
Entergy Louisiana, LLC and Subsidiaries
Management's Financial Discussion and Analysis
Critical Accounting Estimates
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS -Critical Accounting Estimates” in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy Louisiana’s accounting for nuclear decommissioning costs, utility regulatory accounting, unbilled revenue, impairment of long-lived assets, and trust fund investments, taxation and uncertain tax positions, qualified pension and other postretirement benefits, and other contingencies.
New Accounting Pronouncements
See “New Accounting Pronouncements” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and AnalysisNote 1 to the financial statements in the Form 10-K for further discussion.
a discussion of new accounting pronouncements.
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| | | | | | | | | | | | | | | | |
ENTERGY LOUISIANA, LLC AND SUBSIDIARIES |
CONSOLIDATED INCOME STATEMENTS |
For the Three and Nine Months Ended September 30, 2017 and 2016 |
(Unaudited) |
| | | | |
| | Three Months Ended | | Nine Months Ended |
| | 2017 | | 2016 | | 2017 | | 2016 |
| | (In Thousands) | | (In Thousands) |
OPERATING REVENUES | | | | | | | | |
Electric | | $1,280,475 |
| |
| $1,240,217 |
| | $3,216,677 |
| |
| $3,166,380 |
|
Natural gas | | 10,019 |
| | 9,235 |
| | 38,034 |
| | 37,251 |
|
TOTAL | | 1,290,494 |
| | 1,249,452 |
| | 3,254,711 |
| | 3,203,631 |
|
| | | | | | | | |
OPERATING EXPENSES | | | | | | | | |
Operation and Maintenance: | | | | | | | | |
Fuel, fuel-related expenses, and gas purchased for resale | | 301,584 |
| | 261,979 |
| | 635,684 |
| | 616,402 |
|
Purchased power | | 273,325 |
| | 261,212 |
| | 795,825 |
| | 677,309 |
|
Nuclear refueling outage expenses | | 13,616 |
| | 12,894 |
| | 38,565 |
| | 38,648 |
|
Other operation and maintenance | | 238,249 |
| | 229,717 |
| | 704,696 |
| | 668,738 |
|
Decommissioning | | 12,444 |
| | 11,812 |
| | 36,850 |
| | 34,978 |
|
Taxes other than income taxes | | 45,059 |
| | 38,129 |
| | 135,418 |
| | 124,857 |
|
Depreciation and amortization | | 117,923 |
| | 114,251 |
| | 349,660 |
| | 336,294 |
|
Other regulatory charges (credits) - net | | (1,795 | ) | | 6,507 |
| | (78,503 | ) | | 18,084 |
|
TOTAL | | 1,000,405 |
| | 936,501 |
| | 2,618,195 |
| | 2,515,310 |
|
| | | | | | | | |
OPERATING INCOME | | 290,089 |
| | 312,951 |
| | 636,516 |
| | 688,321 |
|
| | | | | | | | |
OTHER INCOME | | | | | | | | |
Allowance for equity funds used during construction | | 13,393 |
| | 6,735 |
| | 34,492 |
| | 18,479 |
|
Interest and investment income | | 42,662 |
| | 38,731 |
| | 124,411 |
| | 116,398 |
|
Miscellaneous - net | | (2,957 | ) | | (4,429 | ) | | (8,631 | ) | | (10,044 | ) |
TOTAL | | 53,098 |
| | 41,037 |
| | 150,272 |
| | 124,833 |
|
| | | | | | | | |
INTEREST EXPENSE | | | | | | | | |
Interest expense | | 69,518 |
| | 68,396 |
| | 205,316 |
| | 204,259 |
|
Allowance for borrowed funds used during construction | | (6,713 | ) | | (3,455 | ) | | (17,428 | ) | | (9,735 | ) |
TOTAL | | 62,805 |
| | 64,941 |
| | 187,888 |
| | 194,524 |
|
| | | | | | | | |
INCOME BEFORE INCOME TAXES | | 280,382 |
| | 289,047 |
| | 598,900 |
| | 618,630 |
|
| | | | | | | | |
Income taxes | | 94,098 |
| | 99,541 |
| | 193,759 |
| | 64,193 |
|
| | | | | | | | |
NET INCOME | |
| $186,284 |
| |
| $189,506 |
| |
| $405,141 |
| |
| $554,437 |
|
| | | | | | | | |
See Notes to Financial Statements. | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
ENTERGY LOUISIANA, LLC AND SUBSIDIARIES |
CONSOLIDATED INCOME STATEMENTS |
For the Three and Six Months Ended June 30, 2023 and 2022 |
(Unaudited) |
| | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | | | |
| | | | |
| | | | |
| | 2023 | | 2022 | | 2023 | | 2022 |
| | (In Thousands) | | (In Thousands) |
OPERATING REVENUES | | | | | | | | |
Electric | | $1,191,909 | | | $1,497,942 | | | $2,511,661 | | | $2,735,179 | |
Natural gas | | 13,703 | | | 17,843 | | | 39,159 | | | 46,578 | |
TOTAL | | 1,205,612 | | | 1,515,785 | | | 2,550,820 | | | 2,781,757 | |
| | | | | | | | |
OPERATING EXPENSES | | | | | | | | |
Operation and Maintenance: | | | | | | | | |
Fuel, fuel-related expenses, and gas purchased for resale | | 230,365 | | | 253,505 | | | 605,635 | | | 615,579 | |
Purchased power | | 133,376 | | | 420,549 | | | 328,310 | | | 596,746 | |
Nuclear refueling outage expenses | | 12,588 | | | 10,029 | | | 27,861 | | | 21,976 | |
Other operation and maintenance | | 249,717 | | | 293,746 | | | 496,088 | | | 547,747 | |
Decommissioning | | 18,820 | | | 17,911 | | | 37,406 | | | 35,599 | |
Taxes other than income taxes | | 61,663 | | | 58,566 | | | 125,618 | | | 120,181 | |
Depreciation and amortization | | 181,247 | | | 171,719 | | | 357,342 | | | 340,802 | |
Other regulatory charges (credits) - net | | (24,767) | | | 203,461 | | | 49,229 | | | 182,564 | |
TOTAL | | 863,009 | | | 1,429,486 | | | 2,027,489 | | | 2,461,194 | |
| | | | | | | | |
OPERATING INCOME | | 342,603 | | | 86,299 | | | 523,331 | | | 320,563 | |
| | | | | | | | |
OTHER INCOME | | | | | | | | |
Allowance for equity funds used during construction | | 8,654 | | | 2,859 | | | 17,715 | | | 9,585 | |
Interest and investment income (loss) | | 31,880 | | | (68,382) | | | 60,723 | | | (84,380) | |
Interest and investment income - affiliated | | 81,877 | | | 43,203 | | | 137,303 | | | 75,101 | |
Miscellaneous - net | | (42,583) | | | 36,986 | | | (90,668) | | | 52,503 | |
TOTAL | | 79,828 | | | 14,666 | | | 125,073 | | | 52,809 | |
| | | | | | | | |
INTEREST EXPENSE | | | | | | | | |
Interest expense | | 94,931 | | | 92,755 | | | 192,102 | | | 186,539 | |
Allowance for borrowed funds used during construction | | (4,321) | | | (1,218) | | | (8,714) | | | (4,244) | |
TOTAL | | 90,610 | | | 91,537 | | | 183,388 | | | 182,295 | |
| | | | | | | | |
INCOME BEFORE INCOME TAXES | | 331,821 | | | 9,428 | | | 465,016 | | | 191,077 | |
| | | | | | | | |
Income taxes | | 68,561 | | | (307,231) | | | (42,268) | | | (276,442) | |
| | | | | | | | |
NET INCOME | | 263,260 | | | 316,659 | | | 507,284 | | | 467,519 | |
| | | | | | | | |
Net income attributable to noncontrolling interests | | 819 | | | 258 | | | 1,373 | | | 258 | |
| | | | | | | | |
EARNINGS APPLICABLE TO MEMBER'S EQUITY | | $262,441 | | | $316,401 | | | $505,911 | | | $467,261 | |
| | | | | | | | |
See Notes to Financial Statements. | | | | | | | | |
|
| | | | | | | | | | | | | | | |
ENTERGY LOUISIANA, LLC AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
For the Three and Nine Months Ended September 30, 2017 and 2016 |
(Unaudited) |
| | | |
| Three Months Ended | | Nine Months Ended |
| 2017 | | 2016 | | 2017 | | 2016 |
| (In Thousands) | | (In Thousands) |
| | | | | | | |
Net Income | $186,284 |
| |
| $189,506 |
| | $405,141 |
| |
| $554,437 |
|
Other comprehensive loss | | | | | | | |
Pension and other postretirement liabilities (net of tax benefit of $232, $145, $756, and $404) | (370 | ) | | (232 | ) | | (1,050 | ) | | (725 | ) |
Other comprehensive loss | (370 | ) | | (232 | ) | | (1,050 | ) | | (725 | ) |
Comprehensive Income |
| $185,914 |
| |
| $189,274 |
| |
| $404,091 |
| |
| $553,712 |
|
| | | | | | | |
See Notes to Financial Statements. | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
ENTERGY LOUISIANA, LLC AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
For the Three and Six Months Ended June 30, 2023 and 2022 |
(Unaudited) |
| | | | | | | |
| Three Months Ended | | Six Months Ended |
| | | |
| | | |
| 2023 | | 2022 | | 2023 | | 2022 |
| (In Thousands) | | (In Thousands) |
| | | | | | | |
Net Income | $263,260 | | | $316,659 | | | $507,284 | | | $467,519 | |
| | | | | | | |
Other comprehensive loss | | | | | | | |
Pension and other postretirement liabilities (net of tax benefit of $653, $181, $943, and $407) | (1,773) | | | (491) | | | (2,559) | | | (1,104) | |
Other comprehensive loss | (1,773) | | | (491) | | | (2,559) | | | (1,104) | |
| | | | | | | |
Comprehensive Income | 261,487 | | | 316,168 | | | 504,725 | | | 466,415 | |
Net income attributable to noncontrolling interests | 819 | | | 258 | | | 1,373 | | | 258 | |
Comprehensive Income Applicable to Member’s Equity | $260,668 | | | $315,910 | | | $503,352 | | | $466,157 | |
| | | | | | | |
See Notes to Financial Statements. | | | | | | | |
|
| | | | | | | | |
ENTERGY LOUISIANA, LLC AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
For the Nine Months Ended September 30, 2017 and 2016 |
(Unaudited) |
| | 2017 | | 2016 |
| | (In Thousands) |
OPERATING ACTIVITIES | | | | |
Net income | |
| $405,141 |
| |
| $554,437 |
|
Adjustments to reconcile net income to net cash flow provided by operating activities: | | | | |
Depreciation, amortization, and decommissioning, including nuclear fuel amortization | | 458,963 |
| | 462,007 |
|
Deferred income taxes, investment tax credits, and non-current taxes accrued | | 303,397 |
| | 155,996 |
|
Changes in working capital: | | | | |
Receivables | | (92,610 | ) | | (159,517 | ) |
Fuel inventory | | 7,643 |
| | (1,578 | ) |
Accounts payable | | 31,865 |
| | (18,420 | ) |
Prepaid taxes and taxes accrued | | 97,138 |
| | (55,780 | ) |
Interest accrued | | 9,149 |
| | 7,531 |
|
Deferred fuel costs | | (37,753 | ) | | (6,091 | ) |
Other working capital accounts | | (49,266 | ) | | (2,503 | ) |
Changes in provisions for estimated losses | | (6,331 | ) | | 1,658 |
|
Changes in other regulatory assets | | 60,014 |
| | 73,920 |
|
Changes in other regulatory liabilities | | (72,060 | ) | | 30,847 |
|
Changes in pension and other postretirement liabilities | | (70,489 | ) | | (63,735 | ) |
Other | | (117,625 | ) | | (100,827 | ) |
Net cash flow provided by operating activities | | 927,176 |
| | 877,945 |
|
| | | | |
INVESTING ACTIVITIES | | | | |
Construction expenditures | | (1,177,121 | ) | | (675,248 | ) |
Allowance for equity funds used during construction | | 34,492 |
| | 18,479 |
|
Payment for purchase of plant | | — |
| | (474,670 | ) |
Nuclear fuel purchases | | (159,637 | ) | | (49,219 | ) |
Proceeds from the sale of nuclear fuel | | 28,884 |
| | 64,498 |
|
Receipts from storm reserve escrow account | | 8,836 |
| | — |
|
Payments to storm reserve escrow account | | (1,422 | ) | | (823 | ) |
Changes to securitization account | | (6,538 | ) | | (6,649 | ) |
Proceeds from nuclear decommissioning trust fund sales | | 176,056 |
| | 178,183 |
|
Investment in nuclear decommissioning trust funds | | (204,500 | ) | | (206,976 | ) |
Changes in money pool receivable - net | | (50,396 | ) | | (3,274 | ) |
Insurance proceeds | | 5,305 |
| | — |
|
Litigation proceeds for reimbursement of spent nuclear fuel storage costs | | — |
| | 17,274 |
|
Changes in other investments - net | | (33,324 | ) | | — |
|
Net cash flow used in investing activities | | (1,379,365 | ) | | (1,138,425 | ) |
| | | | |
FINANCING ACTIVITIES | | | | |
Proceeds from the issuance of long-term debt | | 646,850 |
| | 1,389,315 |
|
Retirement of long-term debt | | (296,359 | ) | | (831,632 | ) |
Changes in credit borrowings - net | | 36,762 |
| | (18,385 | ) |
Distributions paid: | | | | |
Common equity | | (91,250 | ) | | (215,000 | ) |
Other | | (2,141 | ) | | (3,841 | ) |
Net cash flow provided by financing activities | | 293,862 |
| | 320,457 |
|
| | | | |
Net increase (decrease) in cash and cash equivalents | | (158,327 | ) | | 59,977 |
|
Cash and cash equivalents at beginning of period | | 213,850 |
| | 35,102 |
|
Cash and cash equivalents at end of period | |
| $55,523 |
| |
| $95,079 |
|
| | | | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | |
Cash paid (received) during the period for: | | | | |
Interest - net of amount capitalized | |
| $189,896 |
| |
| $251,196 |
|
Income taxes | |
| ($116,937 | ) | |
| $62,676 |
|
| | | | |
See Notes to Financial Statements. | | | | |
| | | | | | | | | | | | | | |
ENTERGY LOUISIANA, LLC AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
For the Six Months Ended June 30, 2023 and 2022 |
(Unaudited) |
| | | | |
| | 2023 | | 2022 |
| | (In Thousands) |
OPERATING ACTIVITIES | | | | |
Net income | | $507,284 | | | $467,519 | |
Adjustments to reconcile net income to net cash flow provided by operating activities: | | | | |
Depreciation, amortization, and decommissioning, including nuclear fuel amortization | | 423,535 | | | 414,975 | |
Deferred income taxes, investment tax credits, and non-current taxes accrued | | 185 | | | (198,525) | |
Changes in working capital: | | | | |
Receivables | | 67,807 | | | (114,357) | |
Fuel inventory | | (14,907) | | | (183) | |
Accounts payable | | (147,001) | | | (20,380) | |
Taxes accrued | | 48,015 | | | (1,686) | |
Interest accrued | | (5,396) | | | (3,263) | |
Deferred fuel costs | | 188,801 | | | (367,321) | |
Other working capital accounts | | (213,571) | | | (107,409) | |
Changes in provisions for estimated losses | | 3,909 | | | 294,067 | |
Changes in other regulatory assets | | 448,144 | | | 859,908 | |
Changes in other regulatory liabilities | | 217,746 | | | (40,596) | |
Effect of securitization on regulatory asset | | (491,150) | | | (1,190,338) | |
| | | | |
| | | | |
Changes in pension and other postretirement liabilities | | (12,364) | | | (17,123) | |
Other | | (92,977) | | | 231,425 | |
Net cash flow provided by operating activities | | 928,060 | | | 206,713 | |
INVESTING ACTIVITIES | | | | |
Construction expenditures | | (889,118) | | | (1,565,051) | |
Allowance for equity funds used during construction | | 17,715 | | | 9,585 | |
| | | | |
| | | | |
Nuclear fuel purchases | | (88,403) | | | (77,561) | |
Proceeds from sale of nuclear fuel | | 16,733 | | | 37,634 | |
Receipts from storm reserve escrow account | | — | | | 1,000,217 | |
| | | | |
Payments to storm reserve escrow account | | (6,602) | | | (1,290,282) | |
Purchase of preferred membership interests of affiliate | | (1,457,676) | | | (3,163,572) | |
Redemption of preferred membership interests of affiliate | | 46,643 | | | 1,390,587 | |
| | | | |
Proceeds from nuclear decommissioning trust fund sales | | 229,972 | | | 411,600 | |
Investment in nuclear decommissioning trust funds | | (258,420) | | | (419,873) | |
Changes in money pool receivable - net | | (275,559) | | | 7,162 | |
| | | | |
Litigation proceeds from settlement agreement | | — | | | 5,695 | |
| | | | |
Insurance proceeds received for property damages | | 6,184 | | | — | |
Other | | 396 | | | — | |
Net cash flow used in investing activities | | (2,658,135) | | | (3,653,859) | |
FINANCING ACTIVITIES | | | | |
Proceeds from the issuance of long-term debt | | 833,484 | | | 1,777,192 | |
Retirement of long-term debt | | (851,617) | | | (2,327,116) | |
Proceeds received by storm trust related to securitization | | 1,457,676 | | | 3,163,572 | |
Capital contributions from parent | | 1,457,676 | | | 1,000,000 | |
| | | | |
| | | | |
| | | | |
Change in money pool payable - net | | (226,114) | | | — | |
| | | | |
Common equity distributions paid | | (160,250) | | | (125,000) | |
| | | | |
Other | | 19,633 | | | 6,096 | |
Net cash flow provided by financing activities | | 2,530,488 | | | 3,494,744 | |
| | | | |
Net increase in cash and cash equivalents | | 800,413 | | | 47,598 | |
Cash and cash equivalents at beginning of period | | 56,613 | | | 18,573 | |
Cash and cash equivalents at end of period | | $857,026 | | | $66,171 | |
| | | | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | |
Cash paid (received) during the period for: | | | | |
Interest - net of amount capitalized | | $192,861 | | | $183,686 | |
Income taxes | | ($6,037) | | | $— | |
| | | | |
See Notes to Financial Statements. | | | | |
|
| | | | | | | | |
ENTERGY LOUISIANA, LLC AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
ASSETS |
September 30, 2017 and December 31, 2016 |
(Unaudited) |
| | 2017 | | 2016 |
| | (In Thousands) |
CURRENT ASSETS | | | | |
Cash and cash equivalents: | | | | |
Cash | |
| $10,143 |
| |
| $49,972 |
|
Temporary cash investments | | 45,380 |
| | 163,878 |
|
Total cash and cash equivalents | | 55,523 |
| | 213,850 |
|
Accounts receivable: | | | | |
Customer | | 288,237 |
| | 213,517 |
|
Allowance for doubtful accounts | | (7,677 | ) | | (6,277 | ) |
Associated companies | | 190,048 |
| | 155,794 |
|
Other | | 58,933 |
| | 54,186 |
|
Accrued unbilled revenues | | 174,379 |
| | 159,176 |
|
Total accounts receivable | | 703,920 |
| | 576,396 |
|
Fuel inventory | | 43,095 |
| | 50,738 |
|
Materials and supplies - at average cost | | 297,545 |
| | 294,421 |
|
Deferred nuclear refueling outage costs | | 83,207 |
| | 22,535 |
|
Prepaid taxes | | 12,966 |
| | 110,104 |
|
Prepayments and other | | 85,303 |
| | 41,687 |
|
TOTAL | | 1,281,559 |
| | 1,309,731 |
|
| | | | |
OTHER PROPERTY AND INVESTMENTS | | | | |
Investment in affiliate preferred membership interests | | 1,390,587 |
| | 1,390,587 |
|
Decommissioning trust funds | | 1,260,022 |
| | 1,140,707 |
|
Storm reserve escrow account | | 284,071 |
| | 291,485 |
|
Non-utility property - at cost (less accumulated depreciation) | | 236,802 |
| | 217,494 |
|
Other | | 18,837 |
| | 28,844 |
|
TOTAL | | 3,190,319 |
| | 3,069,117 |
|
| | | | |
UTILITY PLANT | | | | |
Electric | | 19,237,157 |
| | 18,827,532 |
|
Natural gas | | 182,704 |
| | 172,816 |
|
Construction work in progress | | 1,225,066 |
| | 670,201 |
|
Nuclear fuel | | 339,749 |
| | 249,807 |
|
TOTAL UTILITY PLANT | | 20,984,676 |
| | 19,920,356 |
|
Less - accumulated depreciation and amortization | | 8,622,235 |
| | 8,420,596 |
|
UTILITY PLANT - NET | | 12,362,441 |
| | 11,499,760 |
|
| | | | |
DEFERRED DEBITS AND OTHER ASSETS | | | | |
Regulatory assets: | | | | |
Regulatory asset for income taxes - net | | 480,257 |
| | 470,480 |
|
Other regulatory assets (includes securitization property of $76,520 as of September 30, 2017 and $92,951 as of December 31, 2016) | | 1,098,267 |
| | 1,168,058 |
|
Deferred fuel costs | | 168,122 |
| | 168,122 |
|
Other | | 17,374 |
| | 16,003 |
|
TOTAL | | 1,764,020 |
| | 1,822,663 |
|
| | | | |
TOTAL ASSETS | |
| $18,598,339 |
| |
| $17,701,271 |
|
| | | | |
See Notes to Financial Statements. | | | | |
| | | | | | | | | | | | | | |
ENTERGY LOUISIANA, LLC AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
ASSETS |
June 30, 2023 and December 31, 2022 |
(Unaudited) |
| | 2023 | | 2022 |
| | (In Thousands) |
CURRENT ASSETS | | | | |
Cash and cash equivalents: | | | | |
Cash | | $260 | | | $50,318 | |
Temporary cash investments | | 856,766 | | | 6,295 | |
Total cash and cash equivalents | | 857,026 | | | 56,613 | |
| | | | |
Accounts receivable: | | | | |
Customer | | 246,351 | | | 339,291 | |
Allowance for doubtful accounts | | (4,871) | | | (7,595) | |
Associated companies | | 349,096 | | | 88,896 | |
Other | | 51,940 | | | 53,241 | |
Accrued unbilled revenues | | 238,146 | | | 199,077 | |
Total accounts receivable | | 880,662 | | | 672,910 | |
| | | | |
Deferred fuel costs | | — | | | 159,183 | |
Fuel inventory | | 56,766 | | | 41,859 | |
Materials and supplies - at average cost | | 620,627 | | | 555,860 | |
Deferred nuclear refueling outage costs | | 78,449 | | | 53,833 | |
| | | | |
| | | | |
| | | | |
Prepayments and other | | 208,093 | | | 76,646 | |
TOTAL | | 2,701,623 | | | 1,616,904 | |
| | | | |
OTHER PROPERTY AND INVESTMENTS | | | | |
Investment in affiliate preferred membership interests | | 4,574,605 | | | 3,163,572 | |
Decommissioning trust funds | | 1,973,128 | | | 1,779,090 | |
Storm reserve escrow account | | 300,008 | | | 293,406 | |
Non-utility property - at cost (less accumulated depreciation) | | 401,134 | | | 350,723 | |
| | | | |
Other | | 14,270 | | | 19,679 | |
TOTAL | | 7,263,145 | | | 5,606,470 | |
| | | | |
UTILITY PLANT | | | | |
Electric | | 27,191,346 | | | 27,498,136 | |
| | | | |
Natural gas | | 308,598 | | | 301,719 | |
| | | | |
Construction work in progress | | 689,520 | | | 736,969 | |
Nuclear fuel | | 272,045 | | | 212,941 | |
TOTAL UTILITY PLANT | | 28,461,509 | | | 28,749,765 | |
Less - accumulated depreciation and amortization | | 10,261,350 | | | 10,087,942 | |
UTILITY PLANT - NET | | 18,200,159 | | | 18,661,823 | |
| | | | |
DEFERRED DEBITS AND OTHER ASSETS | | | | |
Regulatory assets: | | | | |
| | | | |
Other regulatory assets | | 1,608,035 | | | 2,056,179 | |
Deferred fuel costs | | 168,122 | | | 168,122 | |
Other | | 39,389 | | | 35,057 | |
TOTAL | | 1,815,546 | | | 2,259,358 | |
| | | | |
TOTAL ASSETS | | $29,980,473 | | | $28,144,555 | |
| | | | |
See Notes to Financial Statements. | | | | |
| | ENTERGY LOUISIANA, LLC AND SUBSIDIARIES | ENTERGY LOUISIANA, LLC AND SUBSIDIARIES | ENTERGY LOUISIANA, LLC AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS | CONSOLIDATED BALANCE SHEETS | CONSOLIDATED BALANCE SHEETS |
LIABILITIES AND EQUITY | LIABILITIES AND EQUITY | LIABILITIES AND EQUITY |
September 30, 2017 and December 31, 2016 | |
June 30, 2023 and December 31, 2022 | | June 30, 2023 and December 31, 2022 |
(Unaudited) | (Unaudited) | (Unaudited) |
| | 2017 | | 2016 | | 2023 | | 2022 |
| | (In Thousands) | | (In Thousands) |
CURRENT LIABILITIES | | | | | CURRENT LIABILITIES | |
Currently maturing long-term debt | |
| $675,002 |
| |
| $200,198 |
| Currently maturing long-term debt | | $1,010,000 | | | $1,010,000 | |
Short-term borrowings | | 40,555 |
| | 3,794 |
| |
| Accounts payable: | | | | | Accounts payable: | |
Associated companies | | 85,920 |
| | 82,106 |
| Associated companies | | 90,509 | | | 356,688 | |
Other | | 347,338 |
| | 358,741 |
| Other | | 452,457 | | | 589,355 | |
Customer deposits | | 149,274 |
| | 148,601 |
| Customer deposits | | 165,813 | | | 161,666 | |
Taxes accrued | | Taxes accrued | | 84,019 | | | 36,004 | |
| Interest accrued | | 84,747 |
| | 75,598 |
| Interest accrued | | 95,940 | | | 101,336 | |
Deferred fuel costs | | 10,458 |
| | 48,211 |
| Deferred fuel costs | | 29,618 | | | — | |
| Other | | 88,525 |
| | 80,013 |
| Other | | 99,325 | | | 72,525 | |
TOTAL | | 1,481,819 |
| | 997,262 |
| TOTAL | | 2,027,681 | | | 2,327,574 | |
| | | | | | | | |
NON-CURRENT LIABILITIES | | | | | NON-CURRENT LIABILITIES | |
Accumulated deferred income taxes and taxes accrued | | 2,998,156 |
| | 2,691,118 |
| Accumulated deferred income taxes and taxes accrued | | 2,368,751 | | | 2,374,878 | |
Accumulated deferred investment tax credits | | 123,088 |
| | 126,741 |
| Accumulated deferred investment tax credits | | 95,555 | | | 97,868 | |
Regulatory liability for income taxes - net | | Regulatory liability for income taxes - net | | 328,105 | | | 337,836 | |
| Other regulatory liabilities | | 808,914 |
| | 880,974 |
| Other regulatory liabilities | | 1,265,439 | | | 1,037,962 | |
Decommissioning | | 1,125,732 |
| | 1,082,685 |
| Decommissioning | | 1,780,412 | | | 1,736,801 | |
Accumulated provisions | | 304,441 |
| | 310,772 |
| Accumulated provisions | | 320,223 | | | 316,314 | |
Pension and other postretirement liabilities | | 709,396 |
| | 780,278 |
| Pension and other postretirement liabilities | | 377,536 | | | 389,631 | |
Long-term debt (includes securitization bonds of $89,430 as of September 30, 2017 and $99,217 as of December 31, 2016) | | 5,492,494 |
| | 5,612,593 |
| |
Long-term debt | | Long-term debt | | 9,677,807 | | | 9,688,922 | |
| Other | | 159,711 |
| | 137,039 |
| Other | | 429,271 | | | 343,321 | |
TOTAL | | 11,721,932 |
| | 11,622,200 |
| TOTAL | | 16,643,099 | | | 16,323,533 | |
| | | | | | | | |
Commitments and Contingencies | | | | | Commitments and Contingencies | |
| | | | | |
EQUITY | | | | | EQUITY | |
| Member's equity | | 5,444,080 |
| | 5,130,251 |
| Member's equity | | 11,209,667 | | | 9,406,343 | |
Accumulated other comprehensive loss | | (49,492 | ) | | (48,442 | ) | |
Accumulated other comprehensive income | | Accumulated other comprehensive income | | 52,811 | | | 55,370 | |
Noncontrolling interests | | Noncontrolling interests | | 47,215 | | | 31,735 | |
TOTAL | | 5,394,588 |
| | 5,081,809 |
| TOTAL | | 11,309,693 | | | 9,493,448 | |
| | | | | | | | |
TOTAL LIABILITIES AND EQUITY | |
| $18,598,339 |
| |
| $17,701,271 |
| TOTAL LIABILITIES AND EQUITY | | $29,980,473 | | | $28,144,555 | |
| | | | | | | | |
See Notes to Financial Statements. | | | | | See Notes to Financial Statements. | |
|
| | | | | | | | | | | |
ENTERGY LOUISIANA, LLC AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY |
For the Nine Months Ended September 30, 2017 and 2016 |
(Unaudited) |
| | | |
| Common Equity | | |
| Member’s Equity | | Accumulated Other Comprehensive Loss | | Total |
| (In Thousands) |
| | | | | |
Balance at December 31, 2015 |
| $4,793,724 |
| |
| ($56,412 | ) | |
| $4,737,312 |
|
| | | | | |
Net income | 554,437 |
| | — |
| | 554,437 |
|
Other comprehensive loss | — |
| | (725 | ) | | (725 | ) |
Distributions declared on common equity | (215,000 | ) | | — |
| | (215,000 | ) |
Other | (22 | ) | | — |
| | (22 | ) |
| | | | | |
Balance at September 30, 2016 |
| $5,133,139 |
| |
| ($57,137 | ) | |
| $5,076,002 |
|
| | | | | |
| | | | | |
Balance at December 31, 2016 |
| $5,130,251 |
| |
| ($48,442 | ) | |
| $5,081,809 |
|
| | | | | |
Net income | 405,141 |
| | — |
| | 405,141 |
|
Other comprehensive loss | — |
| | (1,050 | ) | | (1,050 | ) |
Distributions declared on common equity | (91,250 | ) | | — |
| | (91,250 | ) |
Other | (62 | ) | | — |
| | (62 | ) |
| | | | | |
Balance at September 30, 2017 |
| $5,444,080 |
| |
| ($49,492 | ) | |
| $5,394,588 |
|
| | | | | |
See Notes to Financial Statements. | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
ENTERGY LOUISIANA, LLC AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY |
For the Six Months Ended June 30, 2023 and 2022 |
(Unaudited) |
| | | | | | | |
| | | 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 | | | — | | | 150,860 | | | — | | | 150,860 | |
Other comprehensive loss | | | — | | | — | | | (613) | | | (613) | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Distributions declared on common equity | | | — | | | (125,000) | | | — | | | (125,000) | |
| | | | | | | | | |
| | | | | | | | | |
Other | | | — | | | (13) | | | — | | | (13) | |
Balance at March 31, 2022 | | | — | | | 8,198,141 | | | 7,665 | | | 8,205,806 | |
| | | | | | | | | |
Net income | | | 258 | | | 316,401 | | | — | | | 316,659 | |
Other comprehensive loss | | | — | | | — | | | (491) | | | (491) | |
| | | | | | | | | |
| | | | | | | | | |
Contributions from parent | | | — | | | 1,000,000 | | | — | | | 1,000,000 | |
| | | | | | | | | |
| | | | | | | | | |
Beneficial interest in storm trust | | | 31,636 | | | — | | | — | | | 31,636 | |
Other | | | — | | | (13) | | | — | | | (13) | |
Balance at June 30, 2022 | | | $31,894 | | | $9,514,529 | | | $7,174 | | | $9,553,597 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Balance at December 31, 2022 | | | $31,735 | | | $9,406,343 | | | $55,370 | | | $9,493,448 | |
| | | | | | | | | |
Net income | | | 554 | | | 243,470 | | | — | | | 244,024 | |
Other comprehensive loss | | | — | | | — | | | (786) | | | (786) | |
| | | | | | | | | |
Contributions from parent | | | — | | | 1,457,676 | | | — | | | 1,457,676 | |
Common equity distributions | | | — | | | (160,250) | | | — | | | (160,250) | |
| | | | | | | | | |
Beneficial interest in storm trust | | | 14,577 | | | — | | | — | | | 14,577 | |
Distribution to LURC | | | (470) | | | — | | | — | | | (470) | |
Other | | | — | | | (28) | | | — | | | (28) | |
Balance at March 31, 2023 | | | 46,396 | | | 10,947,211 | | | 54,584 | | | 11,048,191 | |
| | | | | | | | | |
Net income | | | 819 | | | 262,441 | | | — | | | 263,260 | |
Other comprehensive loss | | | — | | | — | | | (1,773) | | | (1,773) | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Other | | | — | | | 15 | | | — | | | 15 | |
Balance at June 30, 2023 | | | $47,215 | | | $11,209,667 | | | $52,811 | | | $11,309,693 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
See Notes to Financial Statements. | | | | | | | | | |
|
| | | | | | | | | | | | | | | |
ENTERGY LOUISIANA, LLC AND SUBSIDIARIES |
SELECTED OPERATING RESULTS |
For the Three and Nine Months Ended September 30, 2017 and 2016 |
(Unaudited) |
| | | | | | |
| | Three Months Ended | | Increase/ | | |
Description | | 2017 | | 2016 | | (Decrease) | | % |
| | (Dollars In Millions) | | |
Electric Operating Revenues: | | | | | | | | |
Residential | |
| $411 |
| |
| $413 |
| |
| ($2 | ) | | — |
|
Commercial | | 285 |
| | 273 |
| | 12 |
| | 4 |
|
Industrial | | 428 |
| | 361 |
| | 67 |
| | 19 |
|
Governmental | | 19 |
| | 18 |
| | 1 |
| | 6 |
|
Total retail | | 1,143 |
| | 1,065 |
| | 78 |
| | 7 |
|
Sales for resale: | | | | | | | | |
Associated companies | | 69 |
| | 116 |
| | (47 | ) | | (41 | ) |
Non-associated companies | | 23 |
| | 13 |
| | 10 |
| | 77 |
|
Other | | 45 |
| | 46 |
| | (1 | ) | | (2 | ) |
Total | |
| $1,280 |
| |
| $1,240 |
| |
| $40 |
| | 3 |
|
| | | | | | | | |
Billed Electric Energy Sales (GWh): | | | | | | | | |
Residential | | 4,301 |
| | 4,635 |
| | (334 | ) | | (7 | ) |
Commercial | | 3,228 |
| | 3,363 |
| | (135 | ) | | (4 | ) |
Industrial | | 7,627 |
| | 7,345 |
| | 282 |
| | 4 |
|
Governmental | | 208 |
| | 208 |
| | — |
| | — |
|
Total retail | | 15,364 |
| | 15,551 |
| | (187 | ) | | (1 | ) |
Sales for resale: | | | | | | | | |
Associated companies | | 1,164 |
| | 2,360 |
| | (1,196 | ) | | (51 | ) |
Non-associated companies | | 616 |
| | 335 |
| | 281 |
| | 84 |
|
Total | | 17,144 |
| | 18,246 |
| | (1,102 | ) | | (6 | ) |
| | | | | | | | |
| | | | | | | | |
| | Nine Months Ended | | Increase/ | | |
Description | | 2017 | | 2016 | | (Decrease) | | % |
| | (Dollars In Millions) | | |
Electric Operating Revenues: | | | | | | | | |
Residential | |
| $911 |
| |
| $913 |
| |
| ($2 | ) | | — |
|
Commercial | | 716 |
| | 694 |
| | 22 |
| | 3 |
|
Industrial | | 1,147 |
| | 1,006 |
| | 141 |
| | 14 |
|
Governmental | | 51 |
| | 50 |
| | 1 |
| | 2 |
|
Total retail | | 2,825 |
| | 2,663 |
| | 162 |
| | 6 |
|
Sales for resale: | | | | | | | | |
Associated companies | | 204 |
| | 310 |
| | (106 | ) | | (34 | ) |
Non-associated companies | | 53 |
| | 37 |
| | 16 |
| | 43 |
|
Other | | 135 |
| | 156 |
| | (21 | ) | | (13 | ) |
Total | |
| $3,217 |
| |
| $3,166 |
| |
| $51 |
| | 2 |
|
| | | | | | | | |
Billed Electric Energy Sales (GWh): | | | | | | | | |
Residential | | 10,154 |
| | 10,608 |
| | (454 | ) | | (4 | ) |
Commercial | | 8,497 |
| | 8,622 |
| | (125 | ) | | (1 | ) |
Industrial | | 22,272 |
| | 21,662 |
| | 610 |
| | 3 |
|
Governmental | | 595 |
| | 602 |
| | (7 | ) | | (1 | ) |
Total retail | | 41,518 |
| | 41,494 |
| | 24 |
| | — |
|
Sales for resale: | | | | | | | | |
Associated companies | | 3,399 |
| | 6,104 |
| | (2,705 | ) | | (44 | ) |
Non-associated companies | | 1,280 |
| | 1,321 |
| | (41 | ) | | (3 | ) |
Total | | 46,197 |
| | 48,919 |
| | (2,722 | ) | | (6 | ) |
| | | | | | | | |
ENTERGY MISSISSIPPI, INC.LLC AND SUBSIDIARIES
MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS
Results of Operations
Net IncomeEarnings Applicable to Member’s Equity
ThirdSecond Quarter 20172023 Compared to ThirdSecond Quarter 20162022
Net income remained relatively unchanged, decreasing by $0.1 million, because lower net revenue was substantially offset by lower other operation and maintenance expenses.
Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016
Net income decreased $3.9Earnings increased $12.9 million primarily due to lower net revenuehigher retail electric price and higher depreciation and amortization expenses, partially offset by lower other operation and maintenance expenses, partially offset by lower volume/weather, higher depreciation and loweramortization expenses, and higher interest expense.
Net Revenue
Third Quarter 2017Six Months Ended June 30, 2023 Compared to Third Quarter 2016Six Months Ended June 30, 2022
Net revenue consists of operating revenues net of: 1) fuel, fuel-relatedEarnings increased $5.7 million primarily due to higher retail electric price, partially offset by lower volume/weather, higher depreciation and amortization expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges (credits). higher interest expense.
Operating Revenues
Second Quarter 2023 Compared to Second Quarter 2022
Following is an analysis of the change in net revenueoperating revenues comparing the thirdsecond quarter 20172023 to the thirdsecond quarter 2016:
|
| | | | |
| Amount |
| (In Millions) |
2016 net revenue2022 operating revenues | $405.5 | $214.7 |
|
Volume/weatherFuel, rider, and other revenues that do not significantly affect net income | (9.320.0 | ) |
Retail electric price | (5.027.7 | ) |
OtherVolume/weather | 0.9(8.1) |
|
2017 net revenue |
|
2023 operating revenues | $201.3445.1 |
|
The volume/weatherEntergy 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 is primarily due to the effect of less favorable weather on residential and commercial sales, partially offset by an increase in residential and commercial usage resulting from a 1% increase in the average number of residential and commercial customers.associated with these items.
The retail electric price variance is primarily due to lower storm damage rider revenues due to resetting the storm damage provision to zero beginning with the November 2016 billing cycle. Entergy Mississippi resumed billing the storm damage riderincreases in formula rate plan rates effective with the September 2017 billing cycle. The decrease was partially offset by an increase in the energy efficiency rider. See Note 2 to the financial statements hereinAugust 2022 and in the Form 10-K for further discussion on the storm damage rider.
Entergy Mississippi, Inc.
Management's Financial Discussion and Analysis
Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016
Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory credits. Following is an analysis of the change in net revenue comparing the nine months ended September 30, 2017 to the nine months ended September 30, 2016:
|
| | | |
| Amount |
| (In Millions) |
2016 net revenue |
| $541.2 |
|
Volume/weather | (19.6 | ) |
Retail electric price | 6.6 |
|
Other | 1.4 |
|
2017 net revenue |
| $529.6 |
|
The volume/weather variance is primarily due to the effect of less favorable weather on residential and commercial sales, partially offset by an increase of 40 GWh, or 2%, in industrial usage. The increase in industrial usage is primarily due to expansion projects in the pulp and paper industry, an increase in usage by the mid to small industrial sector, and new customers in the wood products industry, partially offset by a decrease in demand for existing customers.
The retail electric price variance is primarily due to a $19.4 million net annual increase in rates, as approved by the MPSC, effective with the first billing cycle of July 2016 and an increase in the energy efficiency rider. The increase was partially offset by lower storm damage rider revenues due to resetting the storm damage provision to zero beginning with the November 2016 billing cycle. Entergy Mississippi resumed billing the storm damage rider effective with the September 2017 billing cycle.April 2023. See Note 2 to the financial statements herein and in the Form 10-K for further discussion of the formula rate plan filings.
The volume/weather variance is primarily due to the effect of less favorable weather on residential sales.
Entergy Mississippi, LLC and Subsidiaries
Management's Financial Discussion and Analysis
Total electric energy sales for Entergy Mississippi for the storm damage rider.three months ended June 30, 2023 and 2022 are as follows:
| | | | | | | | | | | | | | | | | |
| 2023 | | 2022 | | % Change |
| (GWh) | | |
Residential | 1,323 | | | 1,419 | | | (7) | |
Commercial | 1,105 | | | 1,167 | | | (5) | |
Industrial | 565 | | | 593 | | | (5) | |
Governmental | 99 | | | 106 | | | (7) | |
Total retail | 3,092 | | | 3,285 | | | (6) | |
Sales for resale: | | | | | |
Non-associated companies | 1,209 | | | 677 | | | 79 | |
Total | 4,301 | | | 3,962 | | | 9 | |
See Note 13 to the financial statements herein for additional discussion of Entergy Mississippi’s operating revenues.
Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022
Following is an analysis of the change in operating revenues comparing the six months ended June 30, 2023 to the six months ended June 30, 2022:
| | | | | |
| Amount |
| (In Millions) |
2022 operating revenues | $754.5 | |
Fuel, rider, and other revenues that do not significantly affect net income | 85.6 | |
Retail electric price | 39.8 | |
Volume/weather | (22.3) | |
2023 operating revenues | $857.6 | |
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 retail electric price variance is primarily due to increases in formula rate plan rates effective August 2022 and April 2023. See Note 2 to the financial statements herein and in the Form 10-K for further discussion of the formula rate plan filings.
The volume/weather variance is primarily due to the effect of less favorable weather on residential sales.
Entergy Mississippi, LLC and Subsidiaries
Management's Financial Discussion and Analysis
Total electric energy sales for Entergy Mississippi for the six months ended June 30, 2023 and 2022 are as follows:
| | | | | | | | | | | | | | | | | |
| 2023 | | 2022 | | % Change |
| (GWh) | | |
Residential | 2,412 | | | 2,714 | | | (11) | |
Commercial | 2,120 | | | 2,188 | | | (3) | |
Industrial | 1,132 | | | 1,154 | | | (2) | |
Governmental | 192 | | | 201 | | | (4) | |
Total retail | 5,856 | | | 6,257 | | | (6) | |
Sales for resale: | | | | | |
Non-associated companies | 2,773 | | | 1,212 | | | 129 | |
Total | 8,629 | | | 7,469 | | | 16 | |
See Note 13 to the financial statements herein for additional discussion of Entergy Mississippi’s operating revenues.
Other Income Statement Variances
ThirdSecond Quarter 20172023 Compared to ThirdSecond Quarter 20162022
Other operation and maintenance expenses decreased primarily due to to:
•a decrease of $6.1$2.5 million in fossil-fueled generation expensescompensation and benefits costs primarily due to lower long-termhealth and welfare costs as a result of higher prescription drug rebates in 2023 and a decrease in net periodic pension and other postretirement benefits service agreement costs as a result of an increase in the discount rates used to value the benefits liabilities. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K, Note 6 to the financial statements herein, and Note 11 to the financial statements in the Form 10-K for further discussion of pension and other postretirement benefits costs;
•a decrease of $4.8$1.7 million in storm damage provisions. transmission costs allocated by MISO; and
•a decrease of $1.7 million in non-nuclear generation expenses primarily due to a lower scope of work, including during plant outages, performed in 2023 as compared to 2022 and lower non-nuclear labor costs.
Taxes other than income taxes increased primarily due to increases in ad valorem taxes resulting from higher assessments and increases in local franchise taxes.
Depreciation and amortization expenses increased primarily due to additions to plant in service, including the Sunflower Solar facility, which was placed in service in September 2022.
Other income decreased primarily due to lower interest income from carrying costs related to the deferred fuel balance.
Interest expense increased primarily due to the issuance of $300 million of 5.0% Series mortgage bonds in May 2023 and the $150 million unsecured term loan drawn in June 2022.
Net loss attributable to noncontrolling interest reflects the earnings or losses attributable to the noncontrolling interest partner of the tax equity partnership for the Sunflower Solar facility under HLBV accounting. Entergy Mississippi recorded a regulatory charge of $3.6 million in second quarter 2023 to defer the difference between the losses allocated to the tax equity partner under the HLBV method of accounting and the earnings/losses that would have been allocated to the tax equity partner under its respective ownership percentage in
Entergy Mississippi, LLC and Subsidiaries
Management's Financial Discussion and Analysis
the partnership. See Note 1 to the financial statements in the Form 10-K for discussion of the HLBV method of accounting.
Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022
Other operation and maintenance expenses decreased primarily due to:
•a decrease of $4.4 million in compensation and benefits costs primarily due to lower health and welfare costs as a result of higher prescription drug rebates in 2023, a decrease in net periodic pension and other postretirement benefits service costs as a result of an increase in the discount rates used to value the benefits liabilities, and a revision to estimated incentive compensation expense in the first quarter of 2023. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K, Note 6 to the financial statements herein, and Note 11 to the financial statements in the Form 10-K for further discussion of pension and other postretirement benefits costs; and
•a decrease of $3.5 million in transmission costs allocated by MISO.
The decrease was partially offset by:
•an increase of $1.7 million in power delivery expenses primarily due to higher reliability costs and higher vegetation maintenance costs;
•an increase of $1.6 million in non-nuclear generation expenses primarily due to higher long term service agreement expenses; and
•several individually insignificant items.
Taxes other than income taxes increased primarily due to increases in ad valorem taxes resulting from higher assessments and increases in local franchise taxes.
Depreciation and amortization expenses increased primarily due to additions to plant in service, including the Sunflower Solar facility, which was placed in service in September 2022.
Other income decreased primarily due to lower interest income from carrying costs related to the deferred fuel balance.
Interest expense increased primarily due to the $150 million unsecured term loan drawn in June 2022 and the issuance of $300 million of 5.0% Series mortgage bonds in May 2023.
Net loss attributable to noncontrolling interest reflects the earnings or losses attributable to the noncontrolling interest partner of the tax equity partnership for the Sunflower Solar facility under HLBV accounting. Entergy Mississippi recorded a regulatory charge of $5.1 million for the six months ended June 30, 2023 to defer the difference between the losses allocated to the tax equity partner under the HLBV method of accounting and the earnings/losses that would have been allocated to the tax equity partner under its respective ownership percentage in the partnership. See Note 1 to the financial statements in the Form 10-K for discussion of the HLBV method of accounting.
Income Taxes
The effective income tax rates were 25% for the second quarter 2023 and 24.8% for the six months ended June 30, 2023. The differences in the effective income tax rates for the second quarter 2023 and the six months ended June 30, 2023 versus the federal statutory rate of 21% were primarily due to the accrual for state income taxes, partially offset by certain book and tax differences related to utility plant items.
Entergy Mississippi, LLC and Subsidiaries
Management's Financial Discussion and Analysis
The effective income tax rates were 22% for the second quarter 2022 and 21.3% for the six months ended June 30, 2022. The differences in the effective income tax rates for the second quarter 2022 and the six months ended June 30, 2022 versus the federal statutory rate of 21% were primarily due to the accrual for state income taxes, partially offset by certain book and tax differences related to utility plant items.
Income Tax Legislation
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Income Tax Legislation” in the Form 10-K for a discussion 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 herein for updates to the discussion of income tax legislation and regulation.
Liquidity and Capital Resources
Cash Flow
Cash flows for the six months ended June 30, 2023 and 2022 were as follows:
| | | | | | | | | | | |
| 2023 | | 2022 |
| (In Thousands) |
Cash and cash equivalents at beginning of period | $16,979 | | | $47,627 | |
| | | |
Net cash provided by (used in): | | | |
Operating activities | 173,548 | | | 20,404 | |
Investing activities | (276,717) | | | (295,818) | |
Financing activities | 94,643 | | | 253,895 | |
Net decrease in cash and cash equivalents | (8,526) | | | (21,519) | |
| | | |
Cash and cash equivalents at end of period | $8,453 | | | $26,108 | |
Operating Activities
Net cash flow provided by operating activities increased $153.1 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 primarily due to:
•the timing of recovery of fuel and purchased power costs. See Note 2 to the financial statements herein and in the Form 10-K for a discussion on stormof fuel and purchased power cost recovery.recovery;
•higher collections from customers; and
•the timing of payments to vendors.
The decreaseincrease was partially offset by an increase of $1.6 million in energy efficiency costs.
Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016
Other operation and maintenance expenses decreased primarily due to:
a decrease of $6.6$10.8 million in storm damage provisions. See Note 2 to the financial statements herein andspending in the Form 10-K for a discussion on storm cost recovery; and
a decrease of $3.6 million in fossil-fueled generation expenses primarily due to lower long-term service agreement costs, partially offset by a higher scope of work done in 20172023 as compared to the same period in 2016.
The decrease was partially offset by2022 and an increase of $3.5$9.2 million in energy efficiency costs.interest paid.
Entergy Mississippi, Inc.LLC and Subsidiaries
Management's Financial Discussion and Analysis
Depreciation and amortization expenses increased primarily due to additions to plants in service.
Interest expense decreased primarily due to the refinancing at lower interest rates of certain first mortgage bonds in 2016 and the retirement, at maturity, of $125 million of 3.25% Series first mortgage bonds in June 2016. See Note 5 to the financial statements in the Form 10-K for details of long-term debt.
Income Taxes
The effective income tax rate was 37.8% for the third quarter 2017. The difference in the effective income tax rate for the third quarter 2017 versus the federal statutory rate of 35% was primarily due to state income taxes, partially offset by book and tax differences related to the allowance for equity funds used during construction.
The effective income tax rate was 38.4% for the nine months ended September 30, 2017. The difference in the effective income tax rate for the nine months ended September 30, 2017 versus the federal statutory rate of 35% was primarily due to state income taxes, partially offset by book and tax differences related to the allowance for equity funds used during construction.
The effective income tax rates were 38.6% for the third quarter 2016 and 36.9% for the nine months ended September 30, 2016. The difference in the effective income tax rates for the third quarter 2016 and the nine months ended September 30, 2016 versus the federal statutory rate of 35% were primarily due to state income taxes and certain book and tax differences related to utility plant items.
Liquidity and Capital Resources
Cash Flow
Cash flows for the nine months ended September 30, 2017 and 2016 were as follows:
|
| | | | | | | |
| 2017 | | 2016 |
| (In Thousands) |
Cash and cash equivalents at beginning of period |
| $76,834 |
| |
| $145,605 |
|
| | | |
Cash flow provided by (used in): | | | |
Operating activities | 129,314 |
| | 141,960 |
|
Investing activities | (300,966 | ) | | (244,814 | ) |
Financing activities | 94,867 |
| | 265,513 |
|
Net increase (decrease) in cash and cash equivalents | (76,785 | ) | | 162,659 |
|
| | | |
Cash and cash equivalents at end of period |
| $49 |
| |
| $308,264 |
|
Operating Activities
Net cash flow provided by operating activities decreased $12.6 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 primarily due to the timing of recovery of fuel and purchased power costs in 2017 as compared to the same period in 2016 and the timing of payments to vendors. The decrease was partially offset by income tax refunds of $15.1 million in 2017 compared to income tax payments of $3.9 million in 2016. Entergy Mississippi received state income tax refunds of $15.1 million in 2017 in accordance with an intercompany income tax allocation agreement. The income tax refunds in 2017 resulted from the carryback of net operating losses.
Entergy Mississippi, Inc.
Management's Financial Discussion and Analysis
Investing Activities
Net cash flow used in investing activities increased $56.2decreased $19.1 million for the ninesix months ended SeptemberJune 30, 20172023 compared to the ninesix months ended SeptemberJune 30, 20162022 primarily due to:to the initial payment of approximately $105.1 million in May 2022 as compared to the substantial completion payment of approximately $30.4 million in April 2023 for the purchase of the Sunflower Solar facility by a consolidated tax equity partnership. The decrease was partially offset by:
•an increase of $53.1$36.7 million in transmission construction expenditures primarily due to a higher scope of work performedincreased spending on various transmission projects in 2017 as compared to the same period in 2016;2023;
•an increase of $18.5 million in fossil-fueled generation construction expenditures primarily due to a higher scope of work performed in 2017 as compared to the same period in 2016;
an increase of $13.1 million in storm spending in 2017 as compared to the same period in 2016; and
an increase of $9.1$11.2 million in distribution construction expenditures primarily due to a higher scopeincreased investment in the reliability and infrastructure of non-storm related work performed in 2017 as compared to the same period in 2016.Entergy Mississippi’s distribution system; and
The increase was partially offset by •money pool activity.
Decreases in Entergy Mississippi’s receivable from the money pool are a source of cash flow, and Entergy Mississippi’s receivable from the money pool decreased $10.6$26.9 million for the ninesix months ended SeptemberJune 30, 20172023 compared to increasing $25decreasing by $37.4 million for the ninesix months ended SeptemberJune 30, 2016.2022. The money pool is an inter-companyintercompany borrowing arrangement designed to reduce the UtilityUtility’s subsidiaries’ need for external short-term borrowings.
Financing Activities
Net cash flow provided by financing activities decreased $170.6$159.3 million for the ninesix months ended SeptemberJune 30, 20172023 compared to the ninesix months ended SeptemberJune 30, 20162022 primarily due to:
•the repayment, prior to the net issuancematurity, of $291.6$250 million of long-term debt3.10% Series mortgage bonds in 2016, partially offset by money pool activityJune 2023;
•proceeds received in June 2022 from a $150 million unsecured term loan due December 2023;
•borrowings of $100 million in 2022 on Entergy Mississippi’s credit facility;
•the repayment, prior to maturity, in May 2023, of $50 million of an unsecured term loan due December 2023; and a decrease of $13.5
•$40 million in common stock dividendsequity distributions paid in 20172023 in order to maintain Entergy Mississippi’s capital structure.
The decrease was partially offset by:
•the issuance of $300 million of 5.0% Series mortgage bonds in May 2023;
•capital contributions of $25.7 million received in April 2023 as compared to $9.6 million received in May 2022, both from the same periodnoncontrolling tax equity investor in 2016. The decreaseMS Sunflower Partnership, LLC and used by the partnership for payments in dividends paid was primarily becausethe acquisition of lower operating cash flow and higher capital expenditures, each discussed above.the Sunflower Solar facility. See Note 514 to the financial statements in the Form 10-K for detailsdiscussion of long-term debt.the Sunflower Solar facility purchase; and
•money pool activity.
Increases in Entergy Mississippi’s payable to the money pool are a source of cash flow and Entergy Mississippi’s payable to the money pool increased by $106.2$104.6 million for the ninesix months ended SeptemberJune 30, 2017.2023.
See Note 4 to the financial statements herein and Note 5 to the financial statements in the Form 10-K for more details on long-term debt.
Entergy Mississippi, LLC and Subsidiaries
Management's Financial Discussion and Analysis
Capital Structure
Entergy Mississippi’s capitalizationdebt to capital ratio is balanced between equity and debt, as shown in the following table.
| | | | | | | | | | | |
| June 30, 2023 | | December 31, 2022 |
Debt to capital | 52.7 | % | | 53.4 | % |
Effect of subtracting cash | (0.1 | %) | | (0.2 | %) |
Net debt to net capital (non-GAAP) | 52.6 | % | | 53.2 | % |
|
| | | | | |
| September 30, 2017 | | December 31, 2016 |
Debt to capital | 48.4 | % | | 50.2 | % |
Effect of subtracting cash | — | % | | (1.8 | %) |
Net debt to net capital | 48.4 | % | | 48.4 | % |
Net debt consists of debt less cash and cash equivalents. Debt consists of short-term borrowings, capitalfinance lease obligations, and long-term debt, including the currently maturing portion. Capital consists of debt preferred stock without sinking fund, and common equity. Net capital consists of capital less cash and cash equivalents. Entergy Mississippi uses the 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, Inc.
Management's Financial Discussion and Analysis
Uses and Sources of Capital
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources”in the Form 10-K for a discussion of Entergy Mississippi’s uses and sources of capital. Following are updates to the information provided in the Form 10-K.
Entergy Mississippi is developing its capital investment plan for 2018 through 2020 and currently anticipates making $1.3 billion in capital investments during that period. The preliminary estimate includes amounts associated with specific investments such as transmission projects to enhance reliability, reduce congestion, and enable economic growth; distribution spending to enhance reliability and improve service to customers, including initial investment to support advanced metering; resource planning, including potential generation projects; system improvements; and other investments. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital.
Entergy Mississippi’s receivables from or (payables to) the money pool were as follows:
| | | | | | | | | | | | | | | | | | | | |
June 30, 2023 | | December 31, 2022 | | June 30, 2022 | | December 31, 2021 |
(In Thousands) |
($104,624) | | $26,879 | | $2,984 | | $40,456 |
|
| | | | | | |
September 30, 2017 | | December 31, 2016 | | September 30, 2016 | | December 31, 2015 |
(In Thousands) |
($106,180) | | $10,595 | | $50,916 | | $25,930 |
See Note 4 to the financial statements in the Form 10-K for a description of the money pool.
As of June 30, 2023, Entergy Mississippi has fourhad three separate credit facilities in the aggregate amount of $102.5$95 million, each of which expired in July 2023. As of June 30, 2023, there were no cash borrowings outstanding under these credit facilities. Also, Entergy Mississippi has a credit facility in the amount of $150 million scheduled to expire in May 2018. NoJuly 2025. As of June 30, 2023, there were no cash borrowings were outstanding under the credit facilities as of September 30, 2017.facility. In addition, Entergy Mississippi is a party to an uncommitted letter of credit facility primarily as a means to post collateral to support its obligations to MISO. As of SeptemberJune 30, 2017, a $12.82023, $6.7 million letterin MISO letters of credit wasand $9.2 million in non-MISO letters of credit were outstanding under Entergy Mississippi’s uncommitted letter of creditthis facility. See Note 4 to the financial statements herein for additional discussion of the credit facilities.
Sunflower Solar
As discussed in the Form 10-K, in April 2020 the MPSC issued an order approving certification of the Sunflower Solar facility and its recovery through the interim capacity rate adjustment mechanism, subject to certain conditions. 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. 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
Entergy Mississippi, LLC and Subsidiaries
Management's Financial Discussion and Analysis
then used to make the substantial completion payment of $30.4 million for acquisition of the facility. See Note 14 to the financial statements in the Form 10-K for a discussion of Entergy Mississippi’s investment in the Sunflower Solar facility.
State and Local Rate Regulation and Fuel-Cost Recovery
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS -State and Local Rate Regulation and Fuel-Cost Recovery” in the Form 10-K for a discussion of the formulastate and local rate planregulation and fuel and purchased power costfuel-cost recovery. The following are updates to that discussion.
Retail Rates
2023 Formula Rate Plan Filing
In March 2017,2023, Entergy Mississippi submitted its formula rate plan 20172023 test year filing and 20162022 look-back filing showing Entergy Mississippi’s earned return on rate base for the historical 20162022 calendar year to be below the formula rate plan bandwidth and projected earned return for the 20172023 calendar year to be below the formula rate plan bandwidth. The 2023 test year filing shows a $39.8 million rate increase is 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,bandwidth. The 2022 look-back filing compares actual 2022 results to the approved benchmark return on rate base and reflects 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 in no change2022. In fourth quarter 2022, Entergy Mississippi recorded a regulatory asset of $18.2 million in rates.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 June 2017,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 thata 2023 test year filing resulting in a total revenue increase of $26.5 million for 2023. Pursuant to the joint stipulation, Entergy Mississippi’s earned returns for both the 20162022 look-back filing and 2017 testreflected an earned return on rate base of 6.10% in calendar year were within2022, which is below the respectivelook-back bandwidth, resulting in a $19.0 million increase in the formula rate plan bandwidths.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 deferral was suspended for calendar year 2023 and will resume in 2024. In June 20172023 the MPSC approved the joint stipulation which resultedwith rates effective in no change in rates. July 2023.
Advanced Metering Infrastructure (AMI) FilingFuel and purchased power recovery
As discussed inIn June 2023 the Form 10-K, in November 2016,MPSC approved the joint stipulation agreement between Entergy Mississippi filed an application seeking a finding from the MPSC that Entergy Mississippi’s deployment of advanced metering infrastructure is in the public interest. In May 2017and the Mississippi Public Utilities Staff andfor Entergy Mississippi’s 2023 formula rate plan filing. The stipulation directed Entergy Mississippi entered intoto make a compliance filing to revise its power management cost adjustment factor, to revise its grid modernization cost adjustment factor, and filedto include a joint stipulation supporting Entergy Mississippi’srevision 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 Rates - 2023 Formula Rate Plan Filing” above for further discussion of the 2023 formula rate plan filing and the MPSC issued an order approving the filing without any materialjoint stipulation agreement.
Entergy Mississippi, Inc.LLC and Subsidiaries
Management's Financial Discussion and Analysis
RenewABLE Community Option
changes, finding that
In January 2022, Entergy Mississippi’s deployment of AMI is in the public interestMississippi filed its RenewABLE Community Option (Schedule RCO), an offering for qualifying non-residential customers to subscribe to renewable resource capacity to satisfy their environmental, sustainability, and granting a certificate of public convenience and necessity.governance goals. The MPSC order also confirmed that Entergy Mississippi shall continue to includeapproved Schedule RCO in rate baseDecember 2022. Registration for the remaining book valueSchedule RCO launched in May 2023 and subscriptions as of existing meters that will be retired as partJune 30, 2023 totaled 16 MW of the AMI deployment and also to depreciate those assets using current depreciation rates.40 MW available.
Mississippi Attorney General Complaint
As discussed in the Form 10-K, the Mississippi attorney general filed a complaint in state court in December 2008 against Entergy Corporation, Entergy Mississippi, Entergy Services, and Entergy Power alleging, among other things, violations of Mississippi statutes, fraud, breach of good faith and fair dealing, and requesting an accounting and restitution. The complaint is wide ranging and relates to tariffs and procedures under which Entergy Mississippi purchases power not generated in Mississippi to meet electricity demand. The defendants have denied the allegations. In June 2017 the District Court issued a case management order setting a trial date in November 2018. Discovery is currently in progress.
Storm Cost Recovery
See the Form 10-K for discussion of Entergy Mississippi’s storm damage provision. As of July 31, 2017, the balance in Entergy Mississippi’s accumulated storm damage provision was less than $10 million, therefore Entergy Mississippi resumed billing the monthly storm damage provision effective with September 2017 bills.
Federal Regulation
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS –Federal Regulation”in the Form 10-K for a discussion of federal regulation.
Nuclear Matters
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS -Nuclear Matters” in the Form 10-K for a discussion of nuclear matters.
Environmental Risks
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS –Environmental Risks” in the Form 10-K for a discussion of environmental risks.
Critical Accounting Estimates
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS -Critical Accounting Estimates” in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy Mississippi’s accounting for utility regulatory accounting, unbilled revenue, impairment of long-lived assets, and trust fund investments, taxation and uncertain tax positions, qualified pension and other postretirement benefits, and other contingencies.
New Accounting Pronouncements
See “New Accounting Pronouncements” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and AnalysisNote 1 to the financial statements in the Form 10-K for further discussion.
a discussion of new accounting pronouncements.
|
| | | | | | | | | | | | | | | | |
ENTERGY MISSISSIPPI, INC. |
INCOME STATEMENTS |
For the Three and Nine Months Ended September 30, 2017 and 2016 |
(Unaudited) |
| | | | |
| | Three Months Ended | | Nine Months Ended |
| | 2017 | | 2016 | | 2017 | | 2016 |
| | (In Thousands) | | (In Thousands) |
OPERATING REVENUES | | | | | | | | |
Electric | |
| $349,197 |
| |
| $309,739 |
| |
| $898,852 |
| |
| $820,923 |
|
| | | | | | | | |
OPERATING EXPENSES | | | | | | | | |
Operation and Maintenance: | | | | | | | | |
Fuel, fuel-related expenses, and gas purchased for resale | | 61,681 |
| | 3,444 |
| | 146,869 |
| | 64,790 |
|
Purchased power | | 90,086 |
| | 87,070 |
| | 236,409 |
| | 216,814 |
|
Other operation and maintenance | | 57,491 |
| | 67,155 |
| | 172,199 |
| | 178,809 |
|
Taxes other than income taxes | | 23,568 |
| | 24,837 |
| | 71,518 |
| | 68,821 |
|
Depreciation and amortization | | 36,176 |
| | 34,438 |
| | 106,935 |
| | 101,746 |
|
Other regulatory charges (credits) - net | | (3,840 | ) | | 4,483 |
| | (13,983 | ) | | (1,832 | ) |
TOTAL | | 265,162 |
| | 221,427 |
| | 719,947 |
| | 629,148 |
|
| | | | | | | | |
OPERATING INCOME | | 84,035 |
| | 88,312 |
| | 178,905 |
| | 191,775 |
|
| | | | | | | | |
OTHER INCOME | | | | | | | | |
Allowance for equity funds used during construction | | 2,566 |
| | 1,441 |
| | 6,741 |
| | 4,072 |
|
Interest and investment income | | — |
| | 129 |
| | 33 |
| | 490 |
|
Miscellaneous - net | | (54 | ) | | (849 | ) | | (1,032 | ) | | (2,604 | ) |
TOTAL | | 2,512 |
| | 721 |
| | 5,742 |
| | 1,958 |
|
| | | | | | | | |
INTEREST EXPENSE | | | | | | | | |
Interest expense | | 12,713 |
| | 13,866 |
| | 37,953 |
| | 43,866 |
|
Allowance for borrowed funds used during construction | | (1,048 | ) | | (741 | ) | | (2,681 | ) | | (2,099 | ) |
TOTAL | | 11,665 |
| | 13,125 |
| | 35,272 |
| | 41,767 |
|
| | | | | | | | |
INCOME BEFORE INCOME TAXES | | 74,882 |
| | 75,908 |
| | 149,375 |
| | 151,966 |
|
| | | | | | | | |
Income taxes | | 28,337 |
| | 29,296 |
| | 57,369 |
| | 56,042 |
|
| | | | | | | | |
NET INCOME | | 46,545 |
| | 46,612 |
| | 92,006 |
| | 95,924 |
|
| | | | | | | | |
Preferred dividend requirements and other | | 238 |
| | 707 |
| | 715 |
| | 2,121 |
|
| | | | | | | | |
EARNINGS APPLICABLE TO COMMON STOCK | |
| $46,307 |
| |
| $45,905 |
| |
| $91,291 |
| |
| $93,803 |
|
| | | | | | | | |
See Notes to Financial Statements. | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES |
CONSOLIDATED INCOME STATEMENTS |
For the Three and Six Months Ended June 30, 2023 and 2022 |
(Unaudited) |
| | | | |
| | Three Months Ended | | Six Months Ended |
| | 2023 | | 2022 | | 2023 | | 2022 |
| | (In Thousands) | | (In Thousands) |
OPERATING REVENUES | | | | | | | | |
Electric | | $445,130 | | | $405,459 | | | $857,558 | | | $754,488 | |
| | | | | | | | |
OPERATING EXPENSES | | | | | | | | |
Operation and Maintenance: | | | | | | | | |
Fuel, fuel-related expenses, and gas purchased for resale | | 140,530 | | | 43,671 | | | 301,815 | | | 110,948 | |
Purchased power | | 59,140 | | | 89,346 | | | 122,954 | | | 150,558 | |
Other operation and maintenance | | 68,600 | | | 74,898 | | | 138,418 | | | 140,709 | |
| | | | | | | | |
Taxes other than income taxes | | 35,301 | | | 32,484 | | | 71,035 | | | 65,214 | |
Depreciation and amortization | | 65,346 | | | 60,618 | | | 129,375 | | | 120,702 | |
Other regulatory charges (credits) - net | | (25,947) | | | 23,853 | | | (58,790) | | | 27,760 | |
TOTAL | | 342,970 | | | 324,870 | | | 704,807 | | | 615,891 | |
| | | | | | | | |
OPERATING INCOME | | 102,160 | | | 80,589 | | | 152,751 | | | 138,597 | |
| | | | | | | | |
OTHER INCOME | | | | | | | | |
Allowance for equity funds used during construction | | 2,169 | | | 1,495 | | | 4,053 | | | 2,573 | |
Interest and investment income | | 1,319 | | | 34 | | | 1,783 | | | 98 | |
Miscellaneous - net | | (3,438) | | | 990 | | | (5,521) | | | (164) | |
TOTAL | | 50 | | | 2,519 | | | 315 | | | 2,507 | |
| | | | | | | | |
INTEREST EXPENSE | | | | | | | | |
Interest expense | | 25,433 | | | 21,003 | | | 49,377 | | | 41,437 | |
Allowance for borrowed funds used during construction | | (902) | | | (658) | | | (1,685) | | | (1,123) | |
TOTAL | | 24,531 | | | 20,345 | | | 47,692 | | | 40,314 | |
| | | | | | | | |
INCOME BEFORE INCOME TAXES | | 77,679 | | | 62,763 | | | 105,374 | | | 100,790 | |
| | | | | | | | |
Income taxes | | 19,414 | | | 13,808 | | | 26,169 | | | 21,481 | |
| | | | | | | | |
NET INCOME | | 58,265 | | | 48,955 | | | 79,205 | | | 79,309 | |
| | | | | | | | |
Net loss attributable to noncontrolling interest | | (3,623) | | | — | | | (5,764) | | | — | |
| | | | | | | | |
EARNINGS APPLICABLE TO MEMBER'S EQUITY | | $61,888 | | | $48,955 | | | $84,969 | | | $79,309 | |
| | | | | | | | |
See Notes to Financial Statements. | | | | | | | | |
|
| | | | | | | | |
ENTERGY MISSISSIPPI, INC. |
STATEMENTS OF CASH FLOWS |
For the Nine Months Ended September 30, 2017 and 2016 |
(Unaudited) |
| | 2017 | | 2016 |
| | (In Thousands) |
OPERATING ACTIVITIES | | | | |
Net income | |
| $92,006 |
| |
| $95,924 |
|
Adjustments to reconcile net income to net cash flow provided by operating activities: | | | | |
Depreciation and amortization | | 106,935 |
| | 101,746 |
|
Deferred income taxes, investment tax credits, and non-current taxes accrued | | 65,204 |
| | 43,201 |
|
Changes in assets and liabilities: | | | | |
Receivables | | (31,085 | ) | | (39,253 | ) |
Fuel inventory | | 8,059 |
| | 412 |
|
Accounts payable | | (2,644 | ) | | 25,200 |
|
Taxes accrued | | (5,815 | ) | | (765 | ) |
Interest accrued | | (2,366 | ) | | (2,349 | ) |
Deferred fuel costs | | (27,344 | ) | | (79,671 | ) |
Other working capital accounts | | (279 | ) | | (1,910 | ) |
Provisions for estimated losses | | (10,274 | ) | | 5,221 |
|
Other regulatory assets | | (33,323 | ) | | 18,851 |
|
Pension and other postretirement liabilities | | (18,863 | ) | | (18,871 | ) |
Other assets and liabilities | | (10,897 | ) | | (5,776 | ) |
Net cash flow provided by operating activities | | 129,314 |
| | 141,960 |
|
| | | | |
INVESTING ACTIVITIES | | | | |
Construction expenditures | | (313,910 | ) | | (223,643 | ) |
Allowance for equity funds used during construction | | 6,741 |
| | 4,072 |
|
Changes in money pool receivable - net | | 10,595 |
| | (24,986 | ) |
Change in other investments | | (3,185 | ) | | — |
|
Other | | (1,207 | ) | | (257 | ) |
Net cash flow used in investing activities | | (300,966 | ) | | (244,814 | ) |
| | | | |
FINANCING ACTIVITIES | | | | |
Proceeds from the issuance of long-term debt | | — |
| | 624,034 |
|
Retirement of long-term debt | | — |
| | (332,400 | ) |
Change in money pool payable - net | | 106,180 |
| | — |
|
Dividends paid: | | | | |
Common stock | | (10,500 | ) | | (24,000 | ) |
Preferred stock | | (715 | ) | | (2,121 | ) |
Other | | (98 | ) | | — |
|
Net cash flow provided by financing activities | | 94,867 |
| | 265,513 |
|
| | | | |
Net increase (decrease) in cash and cash equivalents | | (76,785 | ) | | 162,659 |
|
Cash and cash equivalents at beginning of period | | 76,834 |
| | 145,605 |
|
Cash and cash equivalents at end of period | |
| $49 |
| |
| $308,264 |
|
| | | | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | |
Cash paid (received) during the period for: | | | | |
Interest - net of amount capitalized | |
| $38,549 |
| |
| $44,209 |
|
Income taxes | |
| ($15,087 | ) | |
| $3,878 |
|
| | | | |
See Notes to Financial Statements. | | | | |
| | | | | | | | | | | | | | |
ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
For the Six Months Ended June 30, 2023 and 2022 |
(Unaudited) |
| | 2023 | | 2022 |
| | (In Thousands) |
OPERATING ACTIVITIES | | | | |
Net income | | $79,205 | | | $79,309 | |
Adjustments to reconcile net income to net cash flow provided by operating activities: | | | | |
Depreciation and amortization | | 129,375 | | | 120,702 | |
Deferred income taxes, investment tax credits, and non-current taxes accrued | | 26,736 | | | 17,628 | |
Changes in assets and liabilities: | | | | |
Receivables | | (6,155) | | | (38,137) | |
Fuel inventory | | (5,919) | | | (5,352) | |
Accounts payable | | (32,930) | | | 23,252 | |
Taxes accrued | | (45,044) | | | (36,021) | |
Interest accrued | | (724) | | | 498 | |
Deferred fuel costs | | 149,189 | | | (124,752) | |
Other working capital accounts | | (25,035) | | | (36,211) | |
Provisions for estimated losses | | 1,731 | | | (194) | |
Other regulatory assets | | (39,846) | | | 3,332 | |
Other regulatory liabilities | | (55,443) | | | 15,441 | |
Pension and other postretirement liabilities | | (8,261) | | | (8,004) | |
Other assets and liabilities | | 6,669 | | | 8,913 | |
Net cash flow provided by operating activities | | 173,548 | | | 20,404 | |
| | | | |
INVESTING ACTIVITIES | | | | |
Construction expenditures | | (276,530) | | | (230,683) | |
Allowance for equity funds used during construction | | 4,053 | | | 2,573 | |
| | | | |
Changes in money pool receivable - net | | 26,879 | | | 37,472 | |
Payment for purchase of assets | | (30,433) | | | (105,149) | |
| | | | |
Increase in other investments | | (686) | | | (31) | |
Net cash flow used in investing activities | | (276,717) | | | (295,818) | |
| | | | |
FINANCING ACTIVITIES | | | | |
Proceeds from the issuance of long-term debt | | 396,861 | | | 249,746 | |
Retirement of long-term debt | | (400,000) | | | — | |
| | | | |
Capital contributions from noncontrolling interest | | 25,708 | | | 9,595 | |
Change in money pool payable - net | | 104,624 | | | — | |
| | | | |
Common equity distributions paid | | (40,000) | | | — | |
| | | | |
Other | | 7,450 | | | (5,446) | |
Net cash flow provided by financing activities | | 94,643 | | | 253,895 | |
| | | | |
Net decrease in cash and cash equivalents | | (8,526) | | | (21,519) | |
Cash and cash equivalents at beginning of period | | 16,979 | | | 47,627 | |
Cash and cash equivalents at end of period | | $8,453 | | | $26,108 | |
| | | | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | |
Cash paid during the period for: | | | | |
Interest - net of amount capitalized | | $48,771 | | | $39,620 | |
| | | | |
| | | | |
See Notes to Financial Statements. | | | | |
|
| | | | | | | | |
ENTERGY MISSISSIPPI, INC. |
BALANCE SHEETS |
ASSETS |
September 30, 2017 and December 31, 2016 |
(Unaudited) |
| | 2017 | | 2016 |
| | (In Thousands) |
CURRENT ASSETS | | | | |
Cash and cash equivalents: | | | | |
Cash | |
| $42 |
| |
| $16 |
|
Temporary cash investments | | 7 |
| | 76,818 |
|
Total cash and cash equivalents | | 49 |
| | 76,834 |
|
Accounts receivable: | | |
| | |
|
Customer | | 81,898 |
| | 51,218 |
|
Allowance for doubtful accounts | | (669 | ) | | (549 | ) |
Associated companies | | 34,417 |
| | 45,973 |
|
Other | | 8,835 |
| | 12,006 |
|
Accrued unbilled revenues | | 55,983 |
| | 51,327 |
|
Total accounts receivable | | 180,464 |
| | 159,975 |
|
Deferred fuel costs | | 34,301 |
| | 6,957 |
|
Fuel inventory - at average cost | | 42,813 |
| | 50,872 |
|
Materials and supplies - at average cost | | 44,100 |
| | 41,146 |
|
Prepayments and other | | 14,555 |
| | 8,873 |
|
TOTAL | | 316,282 |
| | 344,657 |
|
| | | | |
OTHER PROPERTY AND INVESTMENTS | | |
| | |
|
Non-utility property - at cost (less accumulated depreciation) | | 4,596 |
| | 4,608 |
|
Escrow accounts | | 31,894 |
| | 31,783 |
|
TOTAL | | 36,490 |
| | 36,391 |
|
| | | | |
UTILITY PLANT | | |
| | |
|
Electric | | 4,454,890 |
| | 4,321,214 |
|
Property under capital lease | | 502 |
| | 1,590 |
|
Construction work in progress | | 234,116 |
| | 118,182 |
|
TOTAL UTILITY PLANT | | 4,689,508 |
| | 4,440,986 |
|
Less - accumulated depreciation and amortization | | 1,651,270 |
| | 1,602,711 |
|
UTILITY PLANT - NET | | 3,038,238 |
| | 2,838,275 |
|
| | | | |
DEFERRED DEBITS AND OTHER ASSETS | | |
| | |
|
Regulatory assets: | | |
| | |
|
Regulatory asset for income taxes - net | | 40,367 |
| | 38,284 |
|
Other regulatory assets | | 373,453 |
| | 342,213 |
|
Other | | 3,710 |
| | 2,320 |
|
TOTAL | | 417,530 |
| | 382,817 |
|
| | | | |
TOTAL ASSETS | |
| $3,808,540 |
| |
| $3,602,140 |
|
| | | | |
See Notes to Financial Statements. | | |
| | |
|
| | | | | | | | | | | | | | |
ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
ASSETS |
June 30, 2023 and December 31, 2022 |
(Unaudited) |
| | 2023 | | 2022 |
| | (In Thousands) |
CURRENT ASSETS | | | | |
Cash and cash equivalents: | | | | |
Cash | | $26 | | | $26 | |
Temporary cash investments | | 8,427 | | | 16,953 | |
Total cash and cash equivalents | | 8,453 | | | 16,979 | |
Accounts receivable: | | | | |
Customer | | 112,206 | | | 99,504 | |
Allowance for doubtful accounts | | (2,371) | | | (2,472) | |
Associated companies | | 7,724 | | | 37,673 | |
Other | | 17,369 | | | 34,564 | |
Accrued unbilled revenues | | 87,090 | | | 73,473 | |
Total accounts receivable | | 222,018 | | | 242,742 | |
Deferred fuel costs | | — | | | 143,211 | |
| | | | |
Fuel inventory - at average cost | | 21,467 | | | 15,548 | |
Materials and supplies - at average cost | | 95,976 | | | 84,346 | |
| | | | |
Prepayments and other | | 13,735 | | | 9,603 | |
TOTAL | | 361,649 | | | 512,429 | |
| | | | |
OTHER PROPERTY AND INVESTMENTS | | | | |
Non-utility property - at cost (less accumulated depreciation) | | 4,504 | | | 4,512 | |
Storm reserve escrow account | | 34,304 | | | 33,549 | |
Other | | 841 | | | 910 | |
TOTAL | | 39,649 | | | 38,971 | |
| | | | |
UTILITY PLANT | | | | |
Electric | | 7,288,046 | | | 7,079,849 | |
| | | | |
| | | | |
Construction work in progress | | 236,022 | | | 170,191 | |
TOTAL UTILITY PLANT | | 7,524,068 | | | 7,250,040 | |
Less - accumulated depreciation and amortization | | 2,351,620 | | | 2,264,786 | |
UTILITY PLANT - NET | | 5,172,448 | | | 4,985,254 | |
| | | | |
DEFERRED DEBITS AND OTHER ASSETS | | | | |
Regulatory assets: | | | | |
| | | | |
Other regulatory assets | | 559,306 | | | 519,460 | |
Other | | 26,680 | | | 22,650 | |
TOTAL | | 585,986 | | | 542,110 | |
| | | | |
TOTAL ASSETS | | $6,159,732 | | | $6,078,764 | |
| | | | |
See Notes to Financial Statements. | | | | |
| | ENTERGY MISSISSIPPI, INC. | |
BALANCE SHEETS | |
ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES | | ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS | | CONSOLIDATED BALANCE SHEETS |
LIABILITIES AND EQUITY | LIABILITIES AND EQUITY | LIABILITIES AND EQUITY |
September 30, 2017 and December 31, 2016 | |
June 30, 2023 and December 31, 2022 | | June 30, 2023 and December 31, 2022 |
(Unaudited) | (Unaudited) | (Unaudited) |
| | 2017 | | 2016 | | | 2023 | | 2022 |
| | (In Thousands) | | | (In Thousands) |
CURRENT LIABILITIES | | |
| | |
| CURRENT LIABILITIES | | | | |
Currently maturing long-term debt | | Currently maturing long-term debt | | $100,000 | | | $400,000 | |
| Accounts payable: | | |
| | |
| Accounts payable: | | | | |
Associated companies | |
| $147,147 |
| |
| $43,647 |
| Associated companies | | 153,510 | | | 60,532 | |
Other | | 75,915 |
| | 80,227 |
| Other | | 162,222 | | | 176,162 | |
Customer deposits | | 83,682 |
| | 84,112 |
| Customer deposits | | 90,302 | | | 89,668 | |
Taxes accrued | | 58,225 |
| | 64,040 |
| Taxes accrued | | 79,861 | | | 124,905 | |
| Interest accrued | | 19,287 |
| | 21,653 |
| Interest accrued | | 17,484 | | | 18,208 | |
Deferred fuel costs | | Deferred fuel costs | | 5,978 | | | — | |
| Other | | 13,589 |
| | 9,554 |
| Other | | 29,338 | | | 38,908 | |
TOTAL | | 397,845 |
| | 303,233 |
| TOTAL | | 638,695 | | | 908,383 | |
| | | | | | | | |
NON-CURRENT LIABILITIES | | |
| | |
| NON-CURRENT LIABILITIES | | | | |
Accumulated deferred income taxes and taxes accrued | | 926,123 |
| | 861,331 |
| Accumulated deferred income taxes and taxes accrued | | 810,639 | | | 780,030 | |
Accumulated deferred investment tax credits | | 8,811 |
| | 8,667 |
| Accumulated deferred investment tax credits | | 14,393 | | | 14,591 | |
| Regulatory liability for income taxes - net | | Regulatory liability for income taxes - net | | 196,612 | | | 202,058 | |
| Other regulatory liabilities | | Other regulatory liabilities | | 29,868 | | | 79,865 | |
Asset retirement cost liabilities | | 9,092 |
| | 8,722 |
| Asset retirement cost liabilities | | 8,010 | | | 7,797 | |
Accumulated provisions | | 44,166 |
| | 54,440 |
| Accumulated provisions | | 39,240 | | | 37,509 | |
Pension and other postretirement liabilities | | 90,696 |
| | 109,551 |
| Pension and other postretirement liabilities | | 15,266 | | | 23,742 | |
Long-term debt | | 1,121,606 |
| | 1,120,916 |
| Long-term debt | | 2,228,900 | | | 1,931,096 | |
Other | | 14,238 |
| | 20,108 |
| Other | | 72,659 | | | 53,156 | |
TOTAL | | 2,214,732 |
| | 2,183,735 |
| TOTAL | | 3,415,587 | | | 3,129,844 | |
| | | | | | | | |
Commitments and Contingencies | | |
| | |
| Commitments and Contingencies | | | | |
| | | | | |
Preferred stock without sinking fund | | 20,381 |
| | 20,381 |
| |
| | | | | |
COMMON EQUITY | | |
| | |
| |
Common stock, no par value, authorized 12,000,000 shares; issued and outstanding 8,666,357 shares in 2017 and 2016 | | 199,326 |
| | 199,326 |
| |
Capital stock expense and other | | 167 |
| | 167 |
| |
Retained earnings | | 976,089 |
| | 895,298 |
| |
| EQUITY | | EQUITY | | | | |
Member's equity | | Member's equity | | 2,082,159 | | | 2,037,190 | |
Noncontrolling interest | | Noncontrolling interest | | 23,291 | | | 3,347 | |
TOTAL | | 1,175,582 |
| | 1,094,791 |
| TOTAL | | 2,105,450 | | | 2,040,537 | |
| | | | | | | | |
TOTAL LIABILITIES AND EQUITY | |
| $3,808,540 |
| |
| $3,602,140 |
| TOTAL LIABILITIES AND EQUITY | | $6,159,732 | | | $6,078,764 | |
| | | | | | | | |
See Notes to Financial Statements. | | |
| | |
| See Notes to Financial Statements. | | | | |
|
| | | | | | | | | | | | | | | |
ENTERGY MISSISSIPPI, INC. |
STATEMENTS OF CHANGES IN COMMON EQUITY |
For the Nine Months Ended September 30, 2017 and 2016 |
(Unaudited) |
| | | |
| Common Equity | | |
| Common Stock | | Capital Stock Expense and Other | | Retained Earnings | | Total |
| (In Thousands) |
| | | | | | | |
Balance at December 31, 2015 |
| $199,326 |
| |
| ($690 | ) | |
| $813,414 |
| |
| $1,012,050 |
|
| | | | | | | |
Net income | — |
| | — |
| | 95,924 |
| | 95,924 |
|
Common stock dividends | — |
| | — |
| | (24,000 | ) | | (24,000 | ) |
Preferred stock dividends | — |
| | — |
| | (2,121 | ) | | (2,121 | ) |
| | | | | | | |
Balance at September 30, 2016 |
| $199,326 |
| |
| ($690 | ) | |
| $883,217 |
| |
| $1,081,853 |
|
| | | | | | | |
| | | | | | | |
Balance at December 31, 2016 |
| $199,326 |
| |
| $167 |
| |
| $895,298 |
| |
| $1,094,791 |
|
| | | | | | | |
Net income | — |
| | — |
| | 92,006 |
| | 92,006 |
|
Common stock dividends | — |
| | — |
| | (10,500 | ) | | (10,500 | ) |
Preferred stock dividends | — |
| | — |
| | (715 | ) | | (715 | ) |
| | | | | | | |
Balance at September 30, 2017 |
| $199,326 |
| |
| $167 |
| |
| $976,089 |
| |
| $1,175,582 |
|
| | | | | | | |
See Notes to Financial Statements. | |
| | |
| | |
| | |
|
| | | | | | | | | | | | | | | | | |
ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY |
For the Six Months Ended June 30, 2023 and 2022 |
(Unaudited) |
| | | | | |
| Noncontrolling Interest | | Member's Equity | | Total |
| | | (In Thousands) | | |
| | | | | |
Balance at December 31, 2021 | $— | | | $1,839,568 | | | $1,839,568 | |
| | | | | |
Net income | — | | | 30,355 | | | 30,355 | |
| | | | | |
Balance at March 31, 2022 | — | | | 1,869,923 | | | 1,869,923 | |
| | | | | |
Net income | — | | | 48,955 | | | 48,955 | |
Capital contribution from noncontrolling interest | 9,595 | | | — | | | 9,595 | |
Balance at June 30, 2022 | $9,595 | | | $1,918,878 | | | $1,928,473 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Balance at December 31, 2022 | $3,347 | | | $2,037,190 | | | $2,040,537 | |
| | | | | |
Net income (loss) | (2,141) | | | 23,081 | | | 20,940 | |
Common equity distributions | — | | | (12,500) | | | (12,500) | |
Balance at March 31, 2023 | 1,206 | | | 2,047,771 | | | 2,048,977 | |
| | | | | |
Net income (loss) | (3,623) | | | 61,888 | | | 58,265 | |
| | | | | |
Common equity distributions | — | | | (27,500) | | | (27,500) | |
Capital contribution from noncontrolling interest | 25,708 | | | — | | | 25,708 | |
Balance at June 30, 2023 | $23,291 | | | $2,082,159 | | | $2,105,450 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
See Notes to Financial Statements. | | | | | |
|
| | | | | | | | | | | | | | | |
ENTERGY MISSISSIPPI, INC. |
SELECTED OPERATING RESULTS |
For the Three and Nine Months Ended September 30, 2017 and 2016 |
(Unaudited) |
| | | | | | |
| | Three Months Ended | | Increase/ | | |
Description | | 2017 | | 2016 | | (Decrease) | | % |
| | (Dollars In Millions) | | |
Electric Operating Revenues: | | | | | | | | |
Residential | |
| $158 |
| |
| $141 |
| |
| $17 |
| | 12 |
|
Commercial | | 121 |
| | 102 |
| | 19 |
| | 19 |
|
Industrial | | 41 |
| | 34 |
| | 7 |
| | 21 |
|
Governmental | | 11 |
| | 10 |
| | 1 |
| | 10 |
|
Total retail | | 331 |
| | 287 |
| | 44 |
| | 15 |
|
Sales for resale: | | |
| | |
| | |
| | |
|
Non-associated companies | | 4 |
| | 11 |
| | (7 | ) | | (64 | ) |
Other | | 14 |
| | 12 |
| | 2 |
| | 17 |
|
Total | |
| $349 |
| |
| $310 |
| |
| $39 |
| | 13 |
|
| | |
| | |
| | |
| | |
|
Billed Electric Energy Sales (GWh): | | |
| | |
| | |
| | |
|
Residential | | 1,747 |
| | 1,955 |
| | (208 | ) | | (11 | ) |
Commercial | | 1,407 |
| | 1,477 |
| | (70 | ) | | (5 | ) |
Industrial | | 665 |
| | 693 |
| | (28 | ) | | (4 | ) |
Governmental | | 118 |
| | 128 |
| | (10 | ) | | (8 | ) |
Total retail | | 3,937 |
| | 4,253 |
| | (316 | ) | | (7 | ) |
Sales for resale: | | |
| | |
| | |
| | |
|
Non-associated companies | | 251 |
| | 384 |
| | (133 | ) | | (35 | ) |
Total | | 4,188 |
| | 4,637 |
| | (449 | ) | | (10 | ) |
| | | | | | | | |
| | | | | | | | |
| | Nine Months Ended | | Increase/ | | |
|
Description | | 2017 | | 2016 | | (Decrease) | | % |
| | (Dollars In Millions) | | |
|
Electric Operating Revenues: | | |
| | |
| | |
| | |
|
Residential | |
| $380 |
| |
| $345 |
| |
| $35 |
| | 10 |
|
Commercial | | 314 |
| | 275 |
| | 39 |
| | 14 |
|
Industrial | | 115 |
| | 97 |
| | 18 |
| | 19 |
|
Governmental | | 30 |
| | 29 |
| | 1 |
| | 3 |
|
Total retail | | 839 |
| | 746 |
| | 93 |
| | 12 |
|
Sales for resale: | | |
| | |
| | |
| | |
|
Non-associated companies | | 16 |
| | 21 |
| | (5 | ) | | (24 | ) |
Other | | 44 |
| | 54 |
| | (10 | ) | | (19 | ) |
Total | |
| $899 |
| |
| $821 |
| |
| $78 |
| | 10 |
|
| | |
| | |
| | |
| | |
|
Billed Electric Energy Sales (GWh): | | | | | | | | |
Residential | | 4,072 |
| | 4,325 |
| | (253 | ) | | (6 | ) |
Commercial | | 3,611 |
| | 3,682 |
| | (71 | ) | | (2 | ) |
Industrial | | 1,869 |
| | 1,829 |
| | 40 |
| | 2 |
|
Governmental | | 317 |
| | 328 |
| | (11 | ) | | (3 | ) |
Total retail | | 9,869 |
| | 10,164 |
| | (295 | ) | | (3 | ) |
Sales for resale: | | |
| | |
| | |
| | |
|
Non-associated companies | | 744 |
| | 759 |
| | (15 | ) | | (2 | ) |
Total | | 10,613 |
| | 10,923 |
| | (310 | ) | | (3 | ) |
ENTERGY NEW ORLEANS, INC.LLC AND SUBSIDIARIES
MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS
Results of Operations
Net Income
ThirdSecond Quarter 20172023 Compared to ThirdSecond Quarter 20162022
Net income decreased $5.2$5.7 million primarily due to lower net revenuevolume/weather, partially offset by higher retail electric price and higher taxeslower other than income taxes.operation and maintenance expenses.
NineSix Months Ended SeptemberJune 30, 20172023 Compared to NineSix Months Ended SeptemberJune 30, 20162022
Net income decreased $2.3$10.7 million primarily due to lower net revenuevolume/weather, a higher effective income tax rate, and higher taxes other than income taxes, partially offset by higher retail electric price, lower other operation and maintenance expenses, and a lower effective income tax rate.higher other income.
Net RevenueOperating Revenues
ThirdSecond Quarter 20172023 Compared to ThirdSecond Quarter 20162022
Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges. Following is an analysis of the changeschange in net revenueoperating revenues comparing the thirdsecond quarter 20172023 to the thirdsecond quarter 2016:
|
| | | | |
| Amount |
| (In Millions) |
2016 net revenue2022 operating revenues | $254.2 | $96.0 |
|
Fuel, rider, and other revenues that do not significantly affect net income | (57.8) | |
Volume/weather | (13.6) | |
Retail electric price | (4.85.2 | ) |
Volume/weather2023 operating revenues | (3.3$188.0 | ) |
Other | 0.4 |
|
2017 net revenue |
| $88.3 |
|
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 weather-adjusted residential and commercial usage and the effect of less favorable weather on residential and commercial sales.
The retail electric price variance is primarily due to a decreaserate increase effective September 2022 in accordance with the terms of the 2022 formula rate plan filing. See Note 2 to the financial statements in the Form 10-K for further discussion of the formula rate plan filing.
Entergy New Orleans, LLC and Subsidiaries
Management's Financial Discussion and Analysis
Total electric energy sales for Entergy New Orleans for the three months ended June 30, 2023 and 2022 are as follows:
| | | | | | | | | | | | | | | | | |
| 2023 | | 2022 | | % Change |
| (GWh) | |
Residential | 576 | | | 669 | | | (14) | |
Commercial | 508 | | | 543 | | | (6) | |
Industrial | 97 | | | 116 | | | (16) | |
Governmental | 187 | | | 206 | | | (9) | |
Total retail | 1,368 | | | 1,534 | | | (11) | |
Sales for resale: | | | | | |
Non-associated companies | 551 | | | 605 | | | (9) | |
Total | 1,919 | | | 2,139 | | | (10) | |
See Note 13 to the financial statements herein for additional discussion of Entergy New Orleans’s operating revenues.
Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022
Following is an analysis of the change in operating revenues comparing the six months ended June 30, 2023 to the six months ended June 30, 2022:
| | | | | |
| Amount |
| (In Millions) |
2022 operating revenues | $452.5 | |
Fuel, rider, and other revenues that do not significantly affect net income | (46.6) | |
Volume/weather | (18.3) | |
Retail electric price | 9.2 | |
2023 operating revenues | $396.8 | |
Entergy New Orleans’s results include revenues from rate mechanisms designed to recover fuel, purchased power, and capacity acquisition cost recoveryother 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 creditsthe effect of less favorable weather on residential sales and a decrease in weather-adjusted residential usage.
The retail electric price variance is primarily due to customers as parta rate increase effective September 2022 in accordance with the terms of the 2022 formula rate plan filing. See Note 2 to the financial statements in the Form 10-K for further discussion of the formula rate plan filing.
Entergy New Orleans, internal restructuring agreementLLC and Subsidiaries
Management's Financial Discussion and Analysis
Total electric energy sales for Entergy New Orleans for the six months ended June 30, 2023 and 2022 are as follows:
| | | | | | | | | | | | | | | | | |
| 2023 | | 2022 | | % Change |
| (GWh) | |
Residential | 1,030 | | | 1,207 | | | (15) | |
Commercial | 995 | | | 1,008 | | | (1) | |
Industrial | 196 | | | 210 | | | (7) | |
Governmental | 368 | | | 383 | | | (4) | |
Total retail | 2,589 | | | 2,808 | | | (8) | |
Sales for resale: | | | | | |
Non-associated companies | 1,594 | | | 1,321 | | | 21 | |
Total | 4,183 | | | 4,129 | | | 1 | |
See Note 13 to the financial statements herein for additional discussion of Entergy New Orleans’s operating revenues.
Other Income Statement Variances
Second Quarter 2023 Compared to Second Quarter 2022
Other operation and maintenance expenses decreased primarily due to:
•a decrease of $1.5 million in principle, effective withbad debt expense;
•a decrease of $0.9 million in compensation and benefits costs primarily due to a decrease in net periodic pension and other postretirement benefits service costs as a result of an increase in the first billing cyclediscount rates used to value the benefits liabilities and lower health and welfare costs as a result of higher prescription drug rebates in 2023. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K, Note 6 to the financial statements herein, and Note 11 to the financial statements in the Form 10-K for further discussion of pension and other postretirement benefits costs;
•a decrease of $0.8 million in energy efficiency expenses primarily due to the timing of recovery from customers; and
•several individually insignificant items.
Depreciation and amortization expenses increased primarily due to additions to plant in service.
Other income increased primarily due to higher interest earned on money pool investments, partially offset by higher net periodic pension and other postretirement benefits non-service costs as a result of an increase in the discount rates used to value the benefits liabilities and the amortization of 2022 trust asset losses. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K, Note 6 to the financial statements herein, and Note 11 to the financial statements in the Form 10-K for further discussion of pension and other postretirement benefits costs.
Entergy New Orleans, LLC and Subsidiaries
Management's Financial Discussion and Analysis
Six Months Ended June 2017.30, 2023 Compared to Six Months Ended June 30, 2022
Other operation and maintenance expenses decreased primarily due to:
•a decrease of $2.4 million in bad debt expense;
•a decrease of $1.8 million in compensation and benefits costs primarily due to a decrease in net periodic pension and other postretirement benefits service costs as a result of an increase in the discount rates used to value the benefits liabilities and lower health and welfare costs as a result of higher prescription drug rebates in 2023. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K, Note 6 to the financial statements herein, and Note 11 to the financial statements in the Form 10-K for further discussion of pension and other postretirement benefits costs; and
•a decrease of $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 local franchise taxes and increases in ad valorem taxes resulting from higher assessments.
Depreciation and amortization expenses increased primarily due to additions to plant in service.
Other income increased primarily due to higher interest earned on money pool investments.
Interest expense increased primarily due to interest on the $34 million regulatory liability recorded when Entergy New Orleans received a refund from System Energy in January 2023 related to the sale-leaseback renewal costs and depreciation litigation. See Note 2 to the financial statements herein and in the Form 10-K for further discussion of the credits associated with Entergy New Orleans’s internal restructuring.refund and the related proceedings.
Income Taxes
The volume/weather variance iseffective income tax rates were 29.4% for second quarter 2023 and 30.5% for the six months ended June 30, 2023. The differences in the effective income tax rates for the second quarter and the six months ended June 30, 2023 versus the federal statutory rate of 21% were primarily due to the effectaccrual for state income taxes and the amortization of less favorable weather on residential and commercial sales,state accumulated deferred income taxes as a result of tax rate changes, partially offset by an increase in residentialcertain book and commercial usage resulting from a 1% increasetax differences related to utility plant items.
The effective income tax rate was 27.2% for second quarter 2022. The difference in the average numbereffective income tax rate for second quarter 2022 versus the federal statutory rate of residential21% was primarily due to the accrual for state income taxes, partially offset by certain book and commercial electric customers.tax differences related to utility plant items.
The effective income tax rate was 23.4% for the six months ended June 30, 2022. The difference in the effective income tax rate for the six months ended June 30, 2022 versus the federal statutory rate of 21% was primarily due to the accrual for state income taxes, partially offset by the amortization of excess accumulated deferred income taxes and certain book and tax differences related to utility plant items. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects of and regulatory activity regarding the Tax Cuts and Jobs Act.
Income Tax Legislation
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Income Tax Legislation” in the Form 10-K for a discussion 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 herein for updates to the discussion of income tax legislation and regulation.
Entergy New Orleans, Inc.LLC and Subsidiaries
Management's Financial Discussion and Analysis
Nine Months Ended September
Liquidity and Capital Resources
Cash Flow
Cash flows for the six months ended June 30, 2017 Compared to Nine Months Ended September 30, 20162023 and 2022 were as follows:
| | | | | | | | | | | |
| 2023 | | 2022 |
| (In Thousands) |
Cash and cash equivalents at beginning of period | $4,464 | | | $42,862 | |
| | | |
Net cash provided by (used in): | | | |
Operating activities | 100,950 | | | 55,623 | |
Investing activities | 12,900 | | | (81,900) | |
Financing activities | 23,057 | | | 9,766 | |
Net increase (decrease) in cash and cash equivalents | 136,907 | | | (16,511) | |
| | | |
Cash and cash equivalents at end of period | $141,371 | | | $26,351 | |
Operating Activities
Net revenue consistscash flow provided by operating activities increased $45.3 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 primarily due to:
•the timing of operating revenues net of: 1)payments to vendors;
•the timing of recovery of fuel fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges. Following is an analysis of the changes in net revenue comparing the nine months ended September 30, 2017 to the nine months ended September 30, 2016:
|
| | | |
| Amount |
| (In Millions) |
2016 net revenue |
| $244.4 |
|
Volume/weather | (6.4 | ) |
Retail electric price | (1.7 | ) |
Other | 1.5 |
|
2017 net revenue |
| $237.8 |
|
The volume/weather variance is primarily due to the effect of less favorable weather on residential and commercial sales, partially offset by an increase in residential and commercial usage resulting from a 1% increase in the average number of residential and commercial electric customers.
The retail electric price variance is primarily due to a decrease in the purchased power and capacity acquisition cost recovery rider primarily due to credits to customers as part of the Entergy New Orleans internal restructuring agreement in principle, effective with the first billing cycle of June 2017. The decrease was partially offset by an increase in the purchased power and capacity acquisition cost recovery rider, as approved by the City Council, effective with the first billing cycle of March 2016, primarily related to the purchase of Power Block 1 of the Union Power Station in March 2016. costs. See Note 2 to the financial statements in the Form 10-K for furthera discussion of thefuel and purchased power and capacity acquisition cost recovery rider;
•higher collections from customers;
•the refund of $34 million received from System Energy in January 2023 related to the sale-leaseback renewal costs and seedepreciation litigation as calculated in System Energy’s January 2023 compliance report filed with the FERC. See Note 2 to the financial statements herein and in the Form 10-K for further discussion of the creditsrefund and the related proceedings; and
•a decrease of $16.9 million in storm spending primarily due to Hurricane Ida restoration efforts in 2022.
The increase was partially offset by higher receipts from associated with companies in 2022.
Investing Activities
Entergy New Orleans’s internal restructuring.
Other Income Statement Variances
Third Quarter 2017 Comparedinvesting activities provided $12.9 million of cash for the six months ended June 30, 2023 compared to Third Quarter 2016
Taxes other than income taxes increasedusing $81.9 million of cash for the six months ended June 30, 2022 primarily due to an increasethe following activity:
•money pool activity;
•a decrease of $33.7 million in ad valorem taxes and higher local franchise taxes. Ad valorem taxes increaseddistribution construction expenditures primarily due to higher assessments, includingcapital expenditures for Hurricane Ida storm restoration efforts in 2022, partially offset by increased investment in the assessmentreliability and infrastructure of Arkansas ad valorem taxes on the Union Power Station beginningEntergy New Orleans’s distribution system in 2017. Local franchise taxes increased2023; and
•an increase of $9.9 million in transmission construction expenditures primarily due to higher electric retail revenuesincreased investment in the third quarter 2017 as compared to the third quarter 2016.
Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016
Other operationreliability and maintenance expenses decreased primarily due to:
a decreaseinfrastructure of $2.9 million in fossil-fueled generation expenses primarily due to the deactivation of Michoud Units 2 and 3 effective May 2016 and higher outages costs at Power Block 1 of the Union Power Station in 2016 as compared to the same period in 2017;
a decrease of $2.1 million in loss provisions;
a decrease of $1.1 million due to lower write-offs of uncollectible customer accounts; and
a decrease of $1 million in energy efficiency costs.
The decrease was partially offset by an increase of $3.2 million in distribution expenses primarily due to higher labor costs, including contract labor, and higher vegetation maintenance.
Taxes other than income taxes increased primarily due to higher local franchise taxes and an increase in ad valorem taxes. Local franchise taxes increased primarily due to higher electric retail revenues in 2017 as compared
Entergy New Orleans, Inc. and SubsidiariesOrleans’s transmission system.
Management's Financial Discussion and Analysis
to the same period in 2016. Ad valorem taxes increased primarily due to higher assessments, including the assessment of Arkansas ad valorem taxes on the Union Power Station beginning in 2017.
Income Taxes
The effective income tax rates were 36.6% for the third quarter 2017 and 36.3% for the nine months ended September 30, 2017. The differences in the effective income tax rates for the third quarter 2017 and the nine months ended June 30, 2017 versus the federal statutory rate of 35% were primarily due to state income taxes and certain book and tax differences related to utility plant items, partially offset by flow-through tax accounting.
The effective income tax rate was 36.5% for the third quarter 2016 and 38.9% for the nine months ended September 30, 2016. The differences in the effective income tax rates for the third quarter 2016 and the nine months ended September 30, 2016 versus the federal statutory rate of 35% were primarily due to state income taxes and certain book and tax differences related to utility plant items, partially offset by flow-through tax accounting.
Liquidity and Capital Resources
Cash Flow
Cash flows for the nine months ended September 30, 2017 and 2016 were as follows:
|
| | | | | | | |
| 2017 | | 2016 |
| (In Thousands) |
Cash and cash equivalents at beginning of period |
| $103,068 |
| |
| $88,876 |
|
| | | |
Cash flow provided by (used in): | | | |
Operating activities | 84,240 |
| | 92,823 |
|
Investing activities | (116,704 | ) | | (290,944 | ) |
Financing activities | (41,722 | ) | | 147,134 |
|
Net decrease in cash and cash equivalents | (74,186 | ) | | (50,987 | ) |
| | | |
Cash and cash equivalents at end of period |
| $28,882 |
| |
| $37,889 |
|
Operating Activities
Net cash flow provided by operating activities decreased $8.6 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 primarily due to the timing of payments to vendors and lower net revenue in 2017 as compared to the same period in 2016. The decrease was substantially offset by the timing of recovery of fuel and purchased power costs in 2017 as compared to the same period in 2016 and income tax payments of $8.5 million in 2016. Entergy New Orleans made income tax payments of $8.5 million in 2016 primarily due to state income taxes resulting from the effect of net operating loss limitations enacted by the state of Louisiana.
Investing Activities
Net cash flow used in investing activities decreased $174.2 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 primarily due to the purchase of Power Block 1 of the Union Power Station for approximately $237 million in March 2016, partially offset by money pool activity. See Note 14 to the financial statements in the Form 10-K for discussion of the Union Power Station purchase.
IncreasesDecreases in Entergy New Orleans’s receivable from the money pool are a usesource of cash flow, and Entergy New Orleans’s receivable from the money pool increased $32.1decreased $101.8 million in 2017 compared to decreasing $9.6 million in
for the six months ended June 30, 2023
Entergy New Orleans, Inc.LLC and Subsidiaries
Management's Financial Discussion and Analysis
2016.compared to decreasing by $33.5 million for the six months ended June 30, 2022. The money pool is an inter-companyintercompany borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings.
Financing Activities
Entergy New Orleans’sNet cash flow provided by financing activities used $41.7increased $13.3 million of cash for the ninesix months ended SeptemberJune 30, 20172023 compared to providing $147.1 million of cash for the ninesix months ended SeptemberJune 30, 20162022 primarily due to the following activity:
the issuanceadditional borrowings of $110$15 million of 5.50% Series first mortgage bonds in March 2016;
the issuance of $85 million of 4% Series first mortgage bonds in May 2016. Entergy New Orleans used the proceeds to pay, prior to maturity, its $33.271 million of 5.6% Series first mortgage bonds2023 on an unsecured term loan due September 2024 and to pay, prior to maturity, its $37.772 million of 5.65% Series first mortgage bonds due September 2029;
a $47.8 million capital contribution received from Entergy Corporation in March 2016 in anticipation of Entergy New Orleans’s purchase of Power Block 1 of the Union Power Station.June 2024. See Note 144 to the financial statements in the Form 10-K for discussion of the Union Power Station purchase;herein and
$36.1 million in common stock dividends paid in 2017 as compared to $14 million in common stock dividends paid in 2016. There were no common stock dividends paid in first quarter 2016 in anticipation of the purchase of Power Block 1 of the Union Power Station in March 2016.
See Note 5 to the financial statements in the Form 10-K for more details on long-term debt.
Capital Structure
Entergy New Orleans’s capitalizationdebt to capital ratio is balanced between equity and debt, as shown in the following table.
| | | | | | | | | | | |
| June 30, 2023 | | December 31, 2022 |
Debt to capital | 52.1 | % | | 52.6 | % |
Effect of excluding securitization bonds | (0.4 | %) | | (0.6 | %) |
Debt to capital, excluding securitization bonds (non-GAAP) (a) | 51.7 | % | | 52.0 | % |
Effect of subtracting cash | (5.0 | %) | | (0.1 | %) |
Net debt to net capital, excluding securitization bonds (non-GAAP) (a) | 46.7 | % | | 51.9 | % |
|
| | | | | |
| September 30, 2017 | | December 31, 2016 |
Debt to capital | 49.4 | % | | 50.1 | % |
Effect of excluding securitization bonds | (4.9 | %) | | (5.2 | %) |
Debt to capital, excluding securitization bonds (a) | 44.5 | % | | 44.9 | % |
Effect of subtracting cash | (2.0 | %) | | (8.0 | %) |
Net debt to net capital, excluding securitization bonds (a) | 42.5 | % | | 36.9 | % |
(a)Calculation excludes the securitization bonds, which are non-recourse to Entergy New Orleans.
| |
(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 Entergy Louisiana.an associated company. Capital consists of debt preferred stock without sinking fund, and common 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 in the Form 10-K. 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, Inc. and Subsidiaries
Management's Financial Discussion and Analysis
Uses and Sources of Capital
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources” in the Form 10-K for a discussion of Entergy New Orleans’s uses and sources of capital. Following are updates to the information provided in the Form 10-K.
Entergy New Orleans is developing its capital investment plan for 2018 through 2020 and currently anticipates making $585 million in capital investments during that period. The estimate includes amounts associated with specific investments such as the New Orleans Power Station discussed below; transmission projects to enhance reliability, reduce congestion, and enable economic growth; distribution spending to enhance reliability and improve service to customers, including initial investment to support advanced metering; system improvements; and other investments. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital.
Entergy New Orleans’s receivables from the money pool were as follows:
| | | | | | | | | | | | | | | | | | | | |
June 30, 2023 | | December 31, 2022 | | June 30, 2022 | | December 31, 2021 |
(In Thousands) |
$45,487 | | $147,254 | | $2,937 | | $36,410 |
|
| | | | | | |
September 30, 2017 | | December 31, 2016 | | September 30, 2016 | | December 31, 2015 |
(In Thousands) |
$46,282 | | $14,215 | | $6,172 | | $15,794 |
See Note 4 to the financial statements in the Form 10-K for a description of the money pool.
Entergy New Orleans, LLC and Subsidiaries
Management's Financial Discussion and Analysis
Entergy New Orleans has a credit facility in the amount of $25 million scheduled to expire in November 2018.June 2024. The credit facility permitsincludes fronting commitments for the issuance of letters of credit against $10 million of the borrowing capacity of the facility. As of SeptemberJune 30, 2017,2023, there were no cash borrowings and a $0.8 million letterno letters of credit was 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 SeptemberJune 30, 2017,2023, a $7.1$1 million letter of credit was outstanding under Entergy New Orleans’s uncommitted letter of credit facility. See Note 4 to the financial statements herein for additional discussion of the credit facilities.
New Orleans Power StationSystem Resilience and Storm Hardening
As discussed in the Form 10-K, 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 June 2016,July 2022, Entergy New Orleans filed an application with the City Council seeking a public interest determinationresponse identifying a plan for storm hardening and authorizationresiliency projects, including microgrids, to constructbe implemented over ten years at an approximate cost of $1.5 billion. In February 2023 the New Orleans Power Station,City Council approved a 226 MW advanced combustion turbine in New Orleans, Louisiana, at the site of the existing Michoud generating facility, which was retired effective May 31, 2016. In January 2017 several intervenors filed testimony opposing the construction of the New Orleans Power Station on various grounds. In July 2017,revised procedural schedule requiring Entergy New Orleans submittedto make a supplemental and amending application to the City Council seeking approval to construct either the originallyfiling containing a narrowed list of proposed 226 MW advanced combustion turbine, or alternatively, a 128 MW unit composed of natural gas-fired reciprocating engines and a related cost recovery plan. The application included an updated cost estimate of $232 million for the 226 MW advanced combustion turbine. The cost estimate for the alternative 128 MW unit is $210 million.hardening projects, with final comments on that filing due July 2023. In addition, the application renewed the commitment to pursue up to 100 MW of renewable resources to serve New Orleans. In August 2017 the City Council established a procedural schedule that provided for a hearing in December 2017 with a City Council decision expected in February 2018. In October 2017 several intervenors filed testimony opposing the New Orleans Power Station or, in one case, supporting a slightly smaller configuration of Entergy New Orleans’s alternative proposal. The commercial operation date is dependent on the alternative selected by the City Council and the receipt of other permits and approvals.
April 2023, Entergy New Orleans Inc.filed the required application and Subsidiariessupporting testimony seeking City Council approval of the first phase (five years and approximately $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 rider to recover from customers the costs of the infrastructure hardening plan. In July 2023, Entergy New Orleans filed comments in support of its application.
Management's Financial Discussion and Analysis
State and Local Rate Regulation
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS –State and Local Rate Regulation”in the Form 10-K for a discussion of state and local rate regulation. The following are updates to that discussion.
Retail Rates
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 seeks approval of a $25.6 million rate increase based on the formula set by the City Council in the 2018 rate case. The formula results 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 seeks to commence collecting $3.4 million in electric revenues that were previously approved by the City Council for collection through the formula rate plan. The filing was subject to review by the City Council and other parties over a 75-day review period. 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 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. The parties have until August 9, 2023 to reach an agreement on the final amount of the formula rate plan revenue increase. If no agreement is reached, Entergy New Orleans has the right to implement its requested rate subject to final resolution through a subsequent litigated proceeding. Resulting rates will be effective with the first billing cycle of September 2023 pursuant to the formula rate plan tariff. For any disputed rate adjustments, however, the City Council would set a procedural schedule that would extend the process for City Council approval of disputed rate adjustments.
Entergy New Orleans, LLC and Subsidiaries
Management's Financial Discussion and Analysis
Reliability Investigation
As discussed in the Form 10-K, in February 2017,April 2018 the City Council adopted a resolution directing Entergy New Orleans to demonstrate that it has been prudent in the management and maintenance of the reliability of its distribution system. Entergy New Orleans responded to this resolution in June 2018 and filed a revised reliability plan with the City Council in July 2018. The City Council also approved a resolution that opened a prudence investigation into whether Entergy New Orleans was imprudent for not acting sooner to address outages in New Orleans and whether fines should be imposed. In January 2019, Entergy New Orleans filed a proposed implementation plan fortestimony in response to the Energy Smart program fromprudence investigation asserting that it had been prudent in managing system reliability. In April 2017 through March 2020. As part of2019 the proposal,City Council advisors filed comments and testimony asserting that Entergy New Orleans requesteddid not act prudently in maintaining and improving its distribution system reliability in recent years and recommending that a financial penalty in the range of $1.5 million to $2 million should be assessed. Entergy New Orleans disagreed with the recommendation and submitted rebuttal testimony and rebuttal comments in June 2019. In November 2019 the City Council identifypassed a resolution that penalized Entergy New Orleans $1 million for alleged imprudence in the maintenance of its desired leveldistribution system. In December 2019, Entergy New Orleans filed suit in Louisiana state court seeking judicial review of fundingthe City Council’s resolution. In June 2022 the Orleans Civil District Court issued a written judgment that the penalty be set aside, reversed, and vacated. In August 2022 the Orleans Civil District Court issued written reasons for its judgment and also granted a post-judgment motion to remand for the program during this time period and approve a cost recovery mechanism.City Council to take actions consistent with its judgment. In April 20172023 the City Council approved an implementation plana resolution that established a procedural schedule to allow for the Energy Smart programsubmission of additional evidence regarding the penalty discussed above. In May 2023, Entergy New Orleans filed with the Orleans Civil District Court a petition for judicial review and (or alternatively) declaratory judgment of, together with a request for injunctive relief from, the City Council’s April 2017 through December 2019. The2023 resolution. In June 2023 the City Council directed thatfiled responsive pleadings requesting the $11.8 million balance reportedOrleans Civil District Court dismiss the suit as premature. Entergy New Orleans expects to file its opposition to the responsive pleadings by the applicable deadlines.
Also in August 2022 the City Council approved a resolution establishing a 30-day comment period on proposed minimum reliability standards and an associated penalty mechanism. In September 2022, Entergy New Orleans filed comments to the proposed plan including a request for Energy Smart funds be used to continue fundingan additional round of comments. In February 2023 the programCity Council approved a resolution adopting the proposed reliability standards, including a minimum annual performance level for Entergy New Orleans’s legacy customers and that the Energy Smart Algiers program continue to be funded through the Algiers fuel adjustment clause, until additional customer funding is required for the legacy customers.distribution system, as well as associated penalty mechanisms. In September 2017,April 2023, Entergy New Orleans filed a supplemental plan and proposed several optionsthe compliance filings required by the resolution for an interim cost recovery mechanism necessary to recover program costs during the period between when existing funds directed to Energy Smart programs are depleted (estimated to be June 2018) and when new rates from the anticipated 2018 combined rate case,calendar year 2023. The first year for which will include a cost recovery mechanism for Energy Smart funding, take effect (estimated to be August 2019). Entergy New Orleans requested that the City Council approvemay assess a cost recovery mechanism prior to June 2018.penalty for distribution system reliability performance is calendar year 2024.
Internal RestructuringRenewable Portfolio Standard Rulemaking
As discussed in the Form 10-K, in July 2016,May 2021 the City Council approved the draft rule, as amended, establishing the Renewable and Clean Portfolio Standard. In May 2023, Entergy New Orleans filed an application withsubmitted its compliance demonstration report to the City Council seeking authorization to undertake a restructuring that would resultfor the 2022 compliance year, which describes and demonstrates Entergy New Orleans’s compliance with the Renewable and Clean Portfolio Standard in the transfer of substantially all of the assets2022 and operations ofsatisfies certain informational requirements. Entergy New Orleans to a new entity, which would ultimately be owned by an existing Entergy subsidiary holding company. In May 2017requested, among other things, that the City Council adopted a resolution approvingdetermine that Entergy New Orleans achieved the proposed internal restructuring pursuant to an agreement in principle withtarget under the portfolio standard for 2022 and remains within the customer protection cost cap, and that the City Council advisorsapprove a proposal to recover costs associated with 2022 compliance. In July 2023 intervenors filed comments on the compliance demonstration report, and certain intervenors. Pursuant to the agreement in principle, Entergy New Orleans will credit retail customers $10 million in 2017, $1.4 million in the first quarter of the year after the transaction closes, and $117,500 each month in the second year after the transaction closes until such time as new base rates go into effect as a result of the anticipated 2018 base rate case. Entergy New Orleans began crediting retail customers in June 2017. In June 2017 the FERC approved the transaction and, pursuant to the agreement in principle, Entergy New Orleans will provide additional credits to retail customers of $5 million in each of the years 2018, 2019, and 2020. Entergy New Orleans expects to complete the internal restructuringrespond to those comments in fourth quarter 2017.August 2023.
Advanced Metering Infrastructure (AMI) Filing
As discussed in the Form 10-K, in October 2016, Entergy New Orleans filed an application seeking a finding from the City Council that Entergy New Orleans’s deployment of advanced electric and gas metering infrastructure is in the public interest. In April 2017, Entergy New Orleans received intervenor testimony that was generally supportive of AMI deployment. The City Council’s advisors filed testimony in May 2017 recommending the adoption of AMI subject to certain modifications, including the denial of Entergy New Orleans’s proposed customer charge as a cost recovery mechanism. In June 2017 the procedural schedule was suspended to allow for settlement discussions. A status conference was held in October 2017, and the parties set another status conference for February 2018 with the intent to continue to pursue settlement in the interim.
Federal Regulation
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS –Federal Regulation”in the Form 10-K for a discussion of federal regulation.
Entergy New Orleans, Inc.LLC and Subsidiaries
Management's Financial Discussion and Analysis
Nuclear Matters
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS -Nuclear Matters” in the Form 10-K for further discussion of nuclear matters.
Environmental Risks
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS -Environmental Risks” in the Form 10-K for a discussion of environmental risks.
Critical Accounting Estimates
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS -Critical Accounting Estimates” in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy New Orleans’s accounting for utility regulatory accounting, unbilled revenue, impairment of long-lived assets, and trust fund investments, taxation and uncertain tax positions, qualified pension and other postretirement benefits, and other contingencies.
New Accounting Pronouncements
See “New Accounting Pronouncements” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and AnalysisNote 1 to the financial statements in the Form 10-K for further discussion.
a discussion of new accounting pronouncements.
|
| | | | | | | | | | | | | | | | |
ENTERGY NEW ORLEANS, INC. AND SUBSIDIARIES |
CONSOLIDATED INCOME STATEMENTS |
For the Three and Nine Months Ended September 30, 2017 and 2016 |
(Unaudited) |
| | | | |
| | Three Months Ended | | Nine Months Ended |
| | 2017 | | 2016 | | 2017 | | 2016 |
| | (In Thousands) | | (In Thousands) |
OPERATING REVENUES | | | | | | | | |
Electric | |
| $182,451 |
| |
| $185,775 |
| |
| $482,251 |
| |
| $457,317 |
|
Natural gas | | 16,566 |
| | 15,561 |
| | 61,977 |
| | 58,279 |
|
TOTAL | | 199,017 |
| | 201,336 |
| | 544,228 |
| | 515,596 |
|
| | | | | | | | |
OPERATING EXPENSES | | | | | | | | |
Operation and Maintenance: | | | | | | | | |
Fuel, fuel-related expenses, and gas purchased for resale | | 26,082 |
| | 19,231 |
| | 79,118 |
| | 42,706 |
|
Purchased power | | 79,137 |
| | 82,581 |
| | 220,601 |
| | 221,689 |
|
Other operation and maintenance | | 26,448 |
| | 27,251 |
| | 74,256 |
| | 78,752 |
|
Taxes other than income taxes | | 15,135 |
| | 13,409 |
| | 41,397 |
| | 35,846 |
|
Depreciation and amortization | | 13,286 |
| | 13,047 |
| | 39,356 |
| | 38,719 |
|
Other regulatory charges - net | | 5,514 |
| | 3,538 |
| | 6,717 |
| | 6,812 |
|
TOTAL | | 165,602 |
| | 159,057 |
| | 461,445 |
| | 424,524 |
|
| | | | | | | | |
OPERATING INCOME | | 33,415 |
| | 42,279 |
| | 82,783 |
| | 91,072 |
|
| | | | | | | | |
OTHER INCOME | | | | | | | | |
Allowance for equity funds used during construction | | 654 |
| | 311 |
| | 1,656 |
| | 767 |
|
Interest and investment income | | 222 |
| | 58 |
| | 521 |
| | 157 |
|
Miscellaneous - net | | 39 |
| | (92 | ) | | 177 |
| | (144 | ) |
TOTAL | | 915 |
| | 277 |
| | 2,354 |
| | 780 |
|
| | | | | | | | |
INTEREST EXPENSE | | | | | | | | |
Interest expense | | 5,313 |
| | 5,373 |
| | 16,012 |
| | 15,730 |
|
Allowance for borrowed funds used during construction | | (229 | ) | | (116 | ) | | (580 | ) | | (291 | ) |
TOTAL | | 5,084 |
| | 5,257 |
| | 15,432 |
| | 15,439 |
|
| | | | | | | | |
INCOME BEFORE INCOME TAXES | | 29,246 |
| | 37,299 |
| | 69,705 |
| | 76,413 |
|
| | | | | | | | |
Income taxes | | 10,717 |
| | 13,598 |
| | 25,316 |
| | 29,701 |
|
| | | | | | | | |
NET INCOME | | 18,529 |
| | 23,701 |
| | 44,389 |
| | 46,712 |
|
| | | | | | | | |
Preferred dividend requirements and other | | 241 |
| | 241 |
| | 724 |
| | 724 |
|
| | | | | | | | |
EARNINGS APPLICABLE TO COMMON STOCK | |
| $18,288 |
| |
| $23,460 |
| |
| $43,665 |
| |
| $45,988 |
|
| | | | | | | | |
See Notes to Financial Statements. | | | | | | | | |
(page left blank intentionally)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES |
CONSOLIDATED INCOME STATEMENTS |
For the Three and Six Months Ended June 30, 2023 and 2022 |
(Unaudited) |
| | | | |
| | Three Months Ended | | Six Months Ended |
| | 2023 | | 2022 | | 2023 | | 2022 |
| | (In Thousands) | | (In Thousands) |
OPERATING REVENUES | | | | | | | | |
Electric | | $168,216 | | | $224,084 | | | $337,911 | | | $378,730 | |
Natural gas | | 19,800 | | | 30,165 | | | 58,925 | | | 73,791 | |
TOTAL | | 188,016 | | | 254,249 | | | 396,836 | | | 452,521 | |
| | | | | | | | |
OPERATING EXPENSES | | | | | | | | |
Operation and Maintenance: | | | | | | | | |
Fuel, fuel-related expenses, and gas purchased for resale | | 18,974 | | | 54,815 | | | 70,998 | | | 98,212 | |
Purchased power | | 65,929 | | | 83,088 | | | 132,549 | | | 139,558 | |
Other operation and maintenance | | 38,961 | | | 43,715 | | | 72,188 | | | 77,367 | |
Taxes other than income taxes | | 14,480 | | | 14,444 | | | 30,904 | | | 28,433 | |
Depreciation and amortization | | 20,064 | | | 17,951 | | | 39,639 | | | 37,766 | |
Other regulatory charges (credits) - net | | 2,288 | | | 5,354 | | | 1,187 | | | 9,539 | |
TOTAL | | 160,696 | | | 219,367 | | | 347,465 | | | 390,875 | |
| | | | | | | | |
OPERATING INCOME | | 27,320 | | | 34,882 | | | 49,371 | | | 61,646 | |
| | | | | | | | |
OTHER INCOME | | | | | | | | |
Allowance for equity funds used during construction | | 280 | | | (449) | | | 730 | | | (80) | |
Interest and investment income | | 2,400 | | | 68 | | | 4,451 | | | 92 | |
Miscellaneous - net | | (517) | | | 1,221 | | | (744) | | | 950 | |
TOTAL | | 2,163 | | | 840 | | | 4,437 | | | 962 | |
| | | | | | | | |
INTEREST EXPENSE | | | | | | | | |
Interest expense | | 10,003 | | | 8,698 | | | 19,622 | | | 17,392 | |
Allowance for borrowed funds used during construction | | (136) | | | 159 | | | (355) | | | (40) | |
TOTAL | | 9,867 | | | 8,857 | | | 19,267 | | | 17,352 | |
| | | | | | | | |
INCOME BEFORE INCOME TAXES | | 19,616 | | | 26,865 | | | 34,541 | | | 45,256 | |
| | | | | | | | |
Income taxes | | 5,759 | | | 7,319 | | | 10,542 | | | 10,584 | |
| | | | | | | | |
NET INCOME | | $13,857 | | | $19,546 | | | $23,999 | | | $34,672 | |
| | | | | | | | |
See Notes to Financial Statements. | | | | | | | | |
|
| | | | | | | | |
ENTERGY NEW ORLEANS, INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
For the Nine Months Ended September 30, 2017 and 2016 |
(Unaudited) |
| | 2017 | | 2016 |
| | (In Thousands) |
OPERATING ACTIVITIES | | | | |
Net income | |
| $44,389 |
| |
| $46,712 |
|
Adjustments to reconcile net income to net cash flow provided by operating activities: | | | | |
Depreciation and amortization | | 39,356 |
| | 38,719 |
|
Deferred income taxes, investment tax credits, and non-current taxes accrued | | 30,834 |
| | 132,201 |
|
Changes in assets and liabilities: | | | | |
Receivables | | (17,030 | ) | | (17,409 | ) |
Fuel inventory | | (490 | ) | | (215 | ) |
Accounts payable | | (4,950 | ) | | 7,088 |
|
Prepaid taxes
| | (4,484 | ) | | (87,763 | ) |
Interest accrued | | 546 |
| | 1,172 |
|
Deferred fuel costs | | 4,258 |
| | (16,671 | ) |
Other working capital accounts | | (6,750 | ) | | 735 |
|
Provisions for estimated losses | | (1,702 | ) | | 678 |
|
Other regulatory assets | | 10,093 |
| | 6,837 |
|
Pension and other postretirement liabilities | | (13,793 | ) | | (13,673 | ) |
Other assets and liabilities | | 3,963 |
| | (5,588 | ) |
Net cash flow provided by operating activities | | 84,240 |
| | 92,823 |
|
| | | | |
INVESTING ACTIVITIES | | | | |
Construction expenditures | | (81,143 | ) | | (63,161 | ) |
Allowance for equity funds used during construction | | 1,656 |
| | 767 |
|
Payment for purchase of plant | | — |
| | (237,335 | ) |
Investment in affiliates | | — |
| | (38 | ) |
Changes in money pool receivable - net | | (32,067 | ) | | 9,622 |
|
Receipts from storm reserve escrow account | | — |
| | 3 |
|
Payments to storm reserve escrow account | | (406 | ) | | (300 | ) |
Changes in securitization account | | (2,990 | ) | | (502 | ) |
Change in other investments | | (1,754 | ) | | — |
|
Net cash flow used in investing activities | | (116,704 | ) | | (290,944 | ) |
| | | | |
FINANCING ACTIVITIES | | | | |
Proceeds from the issuance of long-term debt | | — |
| | 190,697 |
|
Retirement of long-term debt | | (5,114 | ) | | (77,094 | ) |
Capital contribution from parent | | — |
| | 47,750 |
|
Dividends paid: | | | | |
Common stock | | (36,100 | ) | | (14,000 | ) |
Preferred stock | | (724 | ) | | (724 | ) |
Other | | 216 |
| | 505 |
|
Net cash flow provided by (used in) financing activities | | (41,722 | ) | | 147,134 |
|
| | | | |
Net decrease in cash and cash equivalents | | (74,186 | ) | | (50,987 | ) |
Cash and cash equivalents at beginning of period | | 103,068 |
| | 88,876 |
|
Cash and cash equivalents at end of period | |
| $28,882 |
| |
| $37,889 |
|
| | | | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | |
Cash paid during the period for: | | | | |
Interest - net of amount capitalized | |
| $14,668 |
| |
| $13,613 |
|
Income taxes | |
| $— |
| |
| $8,500 |
|
| | | | |
See Notes to Financial Statements. | | | | |
| | | | | | | | | | | | | | |
ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
For the Six Months Ended June 30, 2023 and 2022 |
(Unaudited) |
| | 2023 | | 2022 |
| | (In Thousands) |
OPERATING ACTIVITIES | | | | |
Net income | | $23,999 | | | $34,672 | |
Adjustments to reconcile net income to net cash flow provided by operating activities: | | | | |
Depreciation and amortization | | 39,639 | | | 37,766 | |
Deferred income taxes, investment tax credits, and non-current taxes accrued | | 10,247 | | | 16,265 | |
Changes in assets and liabilities: | | | | |
Receivables | | 23,357 | | | 9,240 | |
Fuel inventory | | 3,868 | | | (844) | |
Accounts payable | | (24,536) | | | 3,909 | |
Taxes accrued | | (657) | | | (2,524) | |
Interest accrued | | 194 | | | (361) | |
Deferred fuel costs | | 4,315 | | | (31,599) | |
Other working capital accounts | | (14,016) | | | (9,725) | |
Provisions for estimated losses | | 3,550 | | | 6,319 | |
Other regulatory assets | | 2,930 | | | 24,541 | |
Other regulatory liabilities | | 30,722 | | | (15,456) | |
| | | | |
Pension and other postretirement liabilities | | (2,454) | | | (4,741) | |
Other assets and liabilities | | (208) | | | (11,839) | |
Net cash flow provided by operating activities | | 100,950 | | | 55,623 | |
| | | | |
INVESTING ACTIVITIES | | | | |
Construction expenditures | | (88,480) | | | (115,552) | |
Allowance for equity funds used during construction | | 730 | | | (80) | |
| | | | |
| | | | |
Changes in money pool receivable - net | | 101,767 | | | 33,473 | |
| | | | |
| | | | |
Changes in securitization account | | 555 | | | 259 | |
Increase in other investments | | (1,672) | | | — | |
Net cash flow provided by (used in) investing activities | | 12,900 | | | (81,900) | |
| | | | |
FINANCING ACTIVITIES | | | | |
Proceeds from the issuance of long-term debt | | 14,641 | | | — | |
Retirement of long-term debt | | (6,073) | | | (5,916) | |
| | | | |
| | | | |
| | | | |
| | | | |
Contributions from customer for construction | | 15,000 | | | 15,000 | |
| | | | |
| | | | |
Other | | (511) | | | 682 | |
Net cash flow provided by financing activities | | 23,057 | | | 9,766 | |
| | | | |
Net increase (decrease) in cash and cash equivalents | | 136,907 | | | (16,511) | |
Cash and cash equivalents at beginning of period | | 4,464 | | | 42,862 | |
Cash and cash equivalents at end of period | | $141,371 | | | $26,351 | |
| | | | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | |
Cash paid during the period for: | | | | |
Interest - net of amount capitalized | | $18,719 | | | $17,055 | |
Income taxes | | $2 | | | $— | |
| | | | |
See Notes to Financial Statements. | | | | |
|
| | | | | | | | |
ENTERGY NEW ORLEANS, INC. AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
ASSETS |
September 30, 2017 and December 31, 2016 |
(Unaudited) |
| | 2017 | | 2016 |
| | (In Thousands) |
CURRENT ASSETS | | | | |
Cash and cash equivalents | | | | |
Cash | |
| $518 |
| |
| $28 |
|
Temporary cash investments | | 28,364 |
| | 103,040 |
|
Total cash and cash equivalents | | 28,882 |
| | 103,068 |
|
Securitization recovery trust account
| | 4,728 |
| | 1,738 |
|
Accounts receivable: | | | | |
Customer | | 57,440 |
| | 43,536 |
|
Allowance for doubtful accounts | | (3,140 | ) | | (3,059 | ) |
Associated companies | | 49,213 |
| | 16,811 |
|
Other | | 4,928 |
| | 5,926 |
|
Accrued unbilled revenues | | 22,124 |
| | 18,254 |
|
Total accounts receivable | | 130,565 |
| | 81,468 |
|
Deferred fuel costs | | 560 |
| | 4,818 |
|
Fuel inventory - at average cost | | 2,331 |
| | 1,841 |
|
Materials and supplies - at average cost | | 10,682 |
| | 8,416 |
|
Prepaid taxes | | 8,863 |
| | 4,379 |
|
Prepayments and other | | 15,515 |
| | 6,587 |
|
TOTAL | | 202,126 |
| | 212,315 |
|
| | | | |
OTHER PROPERTY AND INVESTMENTS | | | | |
Non-utility property at cost (less accumulated depreciation) | | 1,016 |
| | 1,016 |
|
Storm reserve escrow account | | 81,843 |
| | 81,437 |
|
Other | | 2,414 |
| | 7,160 |
|
TOTAL | | 85,273 |
| | 89,613 |
|
| | | | |
UTILITY PLANT | | | | |
Electric | | 1,276,279 |
| | 1,258,934 |
|
Natural gas | | 252,608 |
| | 240,408 |
|
Construction work in progress | | 49,885 |
| | 24,975 |
|
TOTAL UTILITY PLANT | | 1,578,772 |
| | 1,524,317 |
|
Less - accumulated depreciation and amortization | | 621,488 |
| | 604,825 |
|
UTILITY PLANT - NET | | 957,284 |
| | 919,492 |
|
| | | | |
DEFERRED DEBITS AND OTHER ASSETS | | | | |
Regulatory assets: | | | | |
Deferred fuel costs | | 4,080 |
| | 4,080 |
|
Other regulatory assets (includes securitization property of $74,586 as of September 30, 2017 and $82,272 as of December 31, 2016) | | 258,013 |
| | 268,106 |
|
Other | | 890 |
| | 963 |
|
TOTAL | | 262,983 |
| | 273,149 |
|
| | | | |
TOTAL ASSETS | |
| $1,507,666 |
| |
| $1,494,569 |
|
| | | | |
See Notes to Financial Statements. | | | | |
| | | | | | | | | | | | | | |
ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
ASSETS |
June 30, 2023 and December 31, 2022 |
(Unaudited) |
| | 2023 | | 2022 |
| | (In Thousands) |
CURRENT ASSETS | | | | |
Cash and cash equivalents: | | | | |
Cash | | $26 | | | $27 | |
Temporary cash investments | | 141,345 | | | 4,437 | |
Total cash and cash equivalents | | 141,371 | | | 4,464 | |
Securitization recovery trust account | | 1,680 | | | 2,235 | |
Accounts receivable: | | | | |
Customer | | 68,524 | | | 93,288 | |
Allowance for doubtful accounts | | (7,653) | | | (11,909) | |
Associated companies | | 47,689 | | | 149,927 | |
Other | | 5,992 | | | 6,110 | |
Accrued unbilled revenues | | 35,024 | | | 37,284 | |
Total accounts receivable | | 149,576 | | | 274,700 | |
Deferred fuel costs | | 5,838 | | | 10,153 | |
Fuel inventory - at average cost | | 2,004 | | | 5,872 | |
Materials and supplies - at average cost | | 26,860 | | | 22,498 | |
| | | | |
Prepayments and other | | 19,067 | | | 6,312 | |
TOTAL | | 346,396 | | | 326,234 | |
| | | | |
OTHER PROPERTY AND INVESTMENTS | | | | |
Non-utility property at cost (less accumulated depreciation) | | 832 | | | 1,050 | |
Storm reserve escrow account | | 76,723 | | | 75,000 | |
Other | | 624 | | | 675 | |
TOTAL | | 78,179 | | | 76,725 | |
| | | | |
UTILITY PLANT | | | | |
Electric | | 1,989,407 | | | 1,934,837 | |
Natural gas | | 396,968 | | | 390,252 | |
Construction work in progress | | 26,582 | | | 39,607 | |
TOTAL UTILITY PLANT | | 2,412,957 | | | 2,364,696 | |
Less - accumulated depreciation and amortization | | 828,664 | | | 808,224 | |
UTILITY PLANT - NET | | 1,584,293 | | | 1,556,472 | |
| | | | |
DEFERRED DEBITS AND OTHER ASSETS | | | | |
Regulatory assets: | | | | |
| | | | |
Deferred fuel costs | | 4,080 | | | 4,080 | |
Other regulatory assets (includes securitization property of $7,952 as of June 30, 2023 and $13,363 as of December 31, 2022) | | 199,182 | | | 202,112 | |
Other | | 51,549 | | | 46,778 | |
TOTAL | | 254,811 | | | 252,970 | |
| | | | |
TOTAL ASSETS | | $2,263,679 | | | $2,212,401 | |
| | | | |
See Notes to Financial Statements. | | | | |
| | ENTERGY NEW ORLEANS, INC. AND SUBSIDIARIES | |
ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES | | ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS | CONSOLIDATED BALANCE SHEETS | CONSOLIDATED BALANCE SHEETS |
LIABILITIES AND EQUITY | LIABILITIES AND EQUITY | LIABILITIES AND EQUITY |
September 30, 2017 and December 31, 2016 | |
June 30, 2023 and December 31, 2022 | | June 30, 2023 and December 31, 2022 |
(Unaudited) | (Unaudited) | (Unaudited) |
| | 2017 | | 2016 | | 2023 | | 2022 |
| | (In Thousands) | | (In Thousands) |
CURRENT LIABILITIES | | | | | CURRENT LIABILITIES | |
Payable due to Entergy Louisiana | |
| $2,104 |
| |
| $2,104 |
| |
Currently maturing long-term debt | | Currently maturing long-term debt | | $185,000 | | | $170,000 | |
Payable due to associated company | | Payable due to associated company | | 1,306 | | | 1,306 | |
Accounts payable: | | | | | Accounts payable: | |
Associated companies | | 42,408 |
| | 39,260 |
| Associated companies | | 43,126 | | | 53,258 | |
Other | | 26,110 |
| | 35,920 |
| Other | | 40,231 | | | 57,291 | |
Customer deposits | | 28,734 |
| | 28,667 |
| Customer deposits | | 32,299 | | | 31,826 | |
Taxes accrued | | Taxes accrued | | 9,651 | | | 10,308 | |
Interest accrued | | 5,989 |
| | 5,443 |
| Interest accrued | | 8,274 | | | 8,080 | |
| Other | | 9,291 |
| | 11,415 |
| Other | | 9,271 | | | 6,560 | |
TOTAL CURRENT LIABILITIES | | 114,636 |
| | 122,809 |
| |
TOTAL | | TOTAL | | 329,158 | | | 338,629 | |
| | | | | | | | |
NON-CURRENT LIABILITIES | | | | | NON-CURRENT LIABILITIES | |
Accumulated deferred income taxes and taxes accrued | | 369,688 |
| | 334,953 |
| Accumulated deferred income taxes and taxes accrued | | 391,231 | | | 385,259 | |
Accumulated deferred investment tax credits | | 528 |
| | 622 |
| Accumulated deferred investment tax credits | | 16,469 | | | 16,481 | |
Regulatory liability for income taxes - net | | 4,133 |
| | 9,074 |
| Regulatory liability for income taxes - net | | 42,162 | | | 39,738 | |
Other regulatory liabilities | | Other regulatory liabilities | | 49,033 | | | 20,735 | |
Asset retirement cost liabilities | | 3,024 |
| | 2,875 |
| Asset retirement cost liabilities | | 4,101 | | | — | |
Accumulated provisions | | 86,811 |
| | 88,513 |
| Accumulated provisions | | 90,598 | | | 87,048 | |
Pension and other postretirement liabilities | | 22,957 |
| | 36,750 |
| |
Long-term debt (includes securitization bonds of $79,844 as of September 30, 2017 and $84,776 as of December 31, 2016) | | 423,783 |
| | 428,467 |
| |
Long-term payable due to Entergy Louisiana | | 18,423 |
| | 18,423 |
| |
Gas system rebuild insurance proceeds | | — |
| | 447 |
| |
| Long-term debt (includes securitization bonds of $11,745 as of June 30, 2023 and $17,697 as of December 31, 2022) | | Long-term debt (includes securitization bonds of $11,745 as of June 30, 2023 and $17,697 as of December 31, 2022) | | 590,225 | | | 596,047 | |
Long-term payable due to associated company | | Long-term payable due to associated company | | 8,279 | | | 8,279 | |
Other | | 9,392 |
| | 4,910 |
| Other | | 15,608 | | | 17,369 | |
TOTAL NON-CURRENT LIABILITIES | | 938,739 |
| | 925,034 |
| |
TOTAL | | TOTAL | | 1,207,706 | | | 1,170,956 | |
| | | | | | | | |
Commitments and Contingencies | | | | | Commitments and Contingencies | |
| | | | | |
Preferred stock without sinking fund | | 19,780 |
| | 19,780 |
| |
| | | | | |
COMMON EQUITY | | | | | |
Common stock, $4 par value, authorized 10,000,000 shares; issued and outstanding 8,435,900 shares in 2017 and 2016 | | 33,744 |
| | 33,744 |
| |
Paid-in capital | | 171,544 |
| | 171,544 |
| |
Retained earnings | | 229,223 |
| | 221,658 |
| |
EQUITY | | EQUITY | |
Member's equity | | Member's equity | | 726,815 | | | 702,816 | |
TOTAL | | 434,511 |
| | 426,946 |
| TOTAL | | 726,815 | | | 702,816 | |
| | | | | | | | |
TOTAL LIABILITIES AND EQUITY | |
| $1,507,666 |
| |
| $1,494,569 |
| TOTAL LIABILITIES AND EQUITY | | $2,263,679 | | | $2,212,401 | |
| | | | | | | | |
See Notes to Financial Statements. | | | | | See Notes to Financial Statements. | |
|
| | | | | | | | | | | | | | | |
ENTERGY NEW ORLEANS, INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON EQUITY |
For the Nine Months Ended September 30, 2017 and 2016 |
(Unaudited) |
| | | |
| Common Equity | | |
| Common Stock | | Paid-in Capital | | Retained Earnings | | Total |
| (In Thousands) |
| | | | | | | |
Balance at December 31, 2015 |
| $33,744 |
| |
| $123,794 |
| |
| $192,494 |
| |
| $350,032 |
|
| | | | | | | |
Net income | — |
| | — |
| | 46,712 |
| | 46,712 |
|
Capital contribution from parent | — |
| | 47,750 |
| | — |
| | 47,750 |
|
Common stock dividends | — |
| | — |
| | (14,000 | ) | | (14,000 | ) |
Preferred stock dividends | — |
| | — |
| | (724 | ) | | (724 | ) |
| | | | | | | |
Balance at September 30, 2016 |
| $33,744 |
| |
| $171,544 |
| |
| $224,482 |
| |
| $429,770 |
|
| | | | | | | |
| | | | | | | |
Balance at December 31, 2016 |
| $33,744 |
| |
| $171,544 |
| |
| $221,658 |
| |
| $426,946 |
|
| | | | | | | |
Net income | — |
| | — |
| | 44,389 |
| | 44,389 |
|
Common stock dividends | — |
| | — |
| | (36,100 | ) | | (36,100 | ) |
Preferred stock dividends | — |
| | — |
| | (724 | ) | | (724 | ) |
| | | | | | | |
Balance at September 30, 2017 |
| $33,744 |
| |
| $171,544 |
| |
| $229,223 |
| |
| $434,511 |
|
| | | | | | | |
See Notes to Financial Statements. | |
| | |
| | |
| | |
|
| | | | | | |
ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES | |
CONSOLIDATED STATEMENTS OF CHANGES IN MEMBER'S EQUITY | |
For the Six Months Ended June 30, 2023 and 2022 |
(Unaudited) | |
| | |
| | |
| Member's Equity | |
| (In Thousands) | |
| | |
Balance at December 31, 2021 | $638,715 | | |
| | |
Net income | 15,126 | | |
| | |
Balance at March 31, 2022 | 653,841 | | |
| | |
Net income | 19,546 | | |
| | |
Balance at June 30, 2022 | $673,387 | | |
| | |
| | |
| | |
| | |
| | |
| | |
Balance at December 31, 2022 | $702,816 | | |
| | |
Net income | 10,142 | | |
| | |
Balance at March 31, 2023 | 712,958 | | |
| | |
Net income | 13,857 | | |
| | |
Balance at June 30, 2023 | $726,815 | | |
| | |
| | |
| | |
| | |
| | |
See Notes to Financial Statements. | | |
|
| | | | | | | | | | | | | | | |
ENTERGY NEW ORLEANS, INC. AND SUBSIDIARIES |
SELECTED OPERATING RESULTS |
For the Three and Nine Months Ended September 30, 2017 and 2016 |
(Unaudited) |
| | | | | | |
| | Three Months Ended | | Increase/ | | |
Description | | 2017 | | 2016 | | (Decrease) | | % |
| | (Dollars In Millions) | | |
Electric Operating Revenues: | | | | | | | | |
Residential | |
| $82 |
| |
| $80 |
| |
| $2 |
| | 3 |
|
Commercial | | 63 |
| | 60 |
| | 3 |
| | 5 |
|
Industrial | | 9 |
| | 9 |
| | — |
| | — |
|
Governmental | | 21 |
| | 20 |
| | 1 |
| | 5 |
|
Total retail | | 175 |
| | 169 |
| | 6 |
| | 4 |
|
Sales for resale: | | |
| | |
| | |
| | |
|
Associated companies | | — |
| | 11 |
| | (11 | ) | | (100 | ) |
Non-associated companies | | 3 |
| | 1 |
| | 2 |
| | 200 |
|
Other | | 4 |
| | 5 |
| | (1 | ) | | (20 | ) |
Total | |
| $182 |
| |
| $186 |
| |
| ($4 | ) | | (2 | ) |
| | | | | | | | |
Billed Electric Energy Sales (GWh): | | |
| | |
| | |
| | |
|
Residential | | 711 |
| | 752 |
| | (41 | ) | | (5 | ) |
Commercial | | 634 |
| | 652 |
| | (18 | ) | | (3 | ) |
Industrial | | 119 |
| | 125 |
| | (6 | ) | | (5 | ) |
Governmental | | 217 |
| | 224 |
| | (7 | ) | | (3 | ) |
Total retail | | 1,681 |
| | 1,753 |
| | (72 | ) | | (4 | ) |
Sales for resale: | | |
| | |
| | |
| | |
|
Associated companies | | — |
| | 272 |
| | (272 | ) | | (100 | ) |
Non-associated companies | | 255 |
| | 28 |
| | 227 |
| | 811 |
|
Total | | 1,936 |
| | 2,053 |
| | (117 | ) | | (6 | ) |
| | | | | | | | |
| | | | | | | | |
| | Nine Months Ended | | Increase/ | | |
|
Description | | 2017 | | 2016 | | (Decrease) | | % |
| | (Dollars In Millions) | | |
|
Electric Operating Revenues: | | | | |
| | |
| | |
|
Residential | |
| $191 |
| |
| $177 |
| |
| $14 |
| | 8 |
|
Commercial | | 173 |
| | 155 |
| | 18 |
| | 12 |
|
Industrial | | 26 |
| | 24 |
| | 2 |
| | 8 |
|
Governmental | | 58 |
| | 52 |
| | 6 |
| | 12 |
|
Total retail | | 448 |
| | 408 |
| | 40 |
| | 10 |
|
Sales for resale: | | |
| | |
| | |
| | |
|
Associated companies | | — |
| | 30 |
| | (30 | ) | | (100 | ) |
Non associated companies | | 21 |
| | 2 |
| | 19 |
| | 950 |
|
Other | | 13 |
| | 17 |
| | (4 | ) | | (24 | ) |
Total | |
| $482 |
| |
| $457 |
| |
| $25 |
| | 5 |
|
| | | | | | | | |
Billed Electric Energy Sales (GWh): | | |
| | |
| | |
| | |
|
Residential | | 1,635 |
| | 1,710 |
| | (75 | ) | | (4 | ) |
Commercial | | 1,690 |
| | 1,700 |
| | (10 | ) | | (1 | ) |
Industrial | | 322 |
| | 333 |
| | (11 | ) | | (3 | ) |
Governmental | | 589 |
| | 592 |
| | (3 | ) | | (1 | ) |
Total retail | | 4,236 |
| | 4,335 |
| | (99 | ) | | (2 | ) |
Sales for resale: | | |
| | |
| | |
| | |
|
Associated companies | | — |
| | 1,070 |
| | (1,070 | ) | | (100 | ) |
Non-associated companies | | 1,270 |
| | 83 |
| | 1,187 |
| | 1,430 |
|
Total | | 5,506 |
| | 5,488 |
| | 18 |
| | — |
|
| | | | | | | | |
| | | | | | | | |
ENTERGY TEXAS, INC. AND SUBSIDIARIES
MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS
Results of Operations
Net Income
ThirdSecond Quarter 20172023 Compared to ThirdSecond Quarter 20162022
Net income decreased $16.5$9 million primarily due to the recognition of the equity component of carrying costs as part of the securitization of the Hurricane Laura, Hurricane Delta, and Winter Storm Uri system restoration costs in April 2022, lower net revenue,volume/weather, and higher taxes other than income taxes. The decrease was partially offset by higher retail electric price and lower other operation and maintenance expenses.
Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022
Net income decreased $17.8 million primarily due to the recognition of the equity component of carrying costs as part of the securitization of the Hurricane Laura, Hurricane Delta, and Winter Storm Uri system restoration costs in April 2022, lower volume/weather, higher taxes other than income taxes, and higher depreciation and amortization expenses.
Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016
Net income decreased $23.2 million primarily due tointerest expense. The decrease was partially offset by higher retail electric price, lower net revenue, higher depreciation and amortization expenses, higher taxes other than income taxes, and higher other operation and maintenance expenses, partially offset by a lower effective income tax rate.and higher other income.
Net RevenueOperating Revenues
ThirdSecond Quarter 20172023 Compared to ThirdSecond Quarter 20162022
Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges. Following is an analysis of the change in net revenueoperating revenues comparing the thirdsecond quarter 20172023 to the thirdsecond quarter 2016:
|
| | | | |
| Amount |
| (In Millions) |
2016 net revenue2022 operating revenues | $564.6 | $203.4 |
|
Volume/weatherFuel, rider, and other revenues that do not significantly affect net income | (10.1(92.4) | ) |
Net wholesale revenueSystem restoration carrying costs | (9.8(21.7) | ) |
Purchased power capacityVolume/weather | (3.7(8.8) | ) |
Transmission revenueReturn of unprotected excess accumulated deferred income taxes to customers | (3.37.2 | ) |
Retail electric price | 6.315.5 |
|
Other2023 operating revenues | (1.3$464.4 | ) |
2017 net revenue |
| $181.5 |
|
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.
System restoration carrying costs represent the equity component of system restoration carrying costs, recorded in second quarter 2022, recognized as part of the securitization of the Hurricane Laura, Hurricane Delta, and Winter Storm Uri system restoration costs in April 2022. See Note 2 to the financial statements in the Form 10-K for a discussion of the securitization.
Entergy Texas, Inc. and Subsidiaries
Management's Financial Discussion and Analysis
The volume/weather variance is primarily due to the effect of less favorable weather on residential and commercial sales andsales.
The return of unprotected excess accumulated deferred income taxes to customers resulted from the effectsreturn of unprotected excess accumulated deferred income taxes through a rider effective October 2018 in response to the enactment of the power outages caused by Hurricane Harvey, partiallyTax Cuts and Jobs Act. In the second quarter 2022, $7.2 million was returned to customers through reductions in operating revenues. There was no return of unprotected excess accumulated deferred income taxes to customers for the second quarter 2023. There was no effect on net income as the reductions in operating revenues were offset by an increasereductions in residential usage resulting from a 1% increaseincome tax expense. See Note 2 to the financial statements in the average numberForm 10-K for discussion of residential customersregulatory activity regarding the Tax Cuts and an increase in industrial usage. The increase in industrial usage is primarily due to an increase in demand for mid to small customers and cogeneration customers.Jobs Act.
The net wholesale revenue variance is primarily due to lower net capacity revenues resulting from the termination of the purchased power agreements between Entergy Louisiana and Entergy Texas in August 2016.
The purchased power capacity variance is primarily due to increased expenses due to capacity cost changes for ongoing purchased power capacity contracts.
Entergy Texas, Inc. and Subsidiaries
Management's Financial Discussion and Analysis
The transmission revenue variance is primarily due to a decrease in the amount of transmission revenues allocated by MISO.
The retail electric price variance is primarily due to an interim increase in the annual base rate, including the realignment of the costs previously being collected through the distribution and transmission cost recovery factor riders and the generation cost recovery rider to base rates, effective June 2023 and the implementation of the transmissiongeneration cost recovery factorrelate-back rider in September 2016 and an increase infor the transmission cost recovery factor rider rate in March 2017, each as approved by the PUCT.Hardin County Peaking Facility effective May 2023. See Note 2 to the financial statements herein and in the Form 10-K for further discussion of the transmission2022 base rate case and the generation cost recovery factor rider filings.
NineTotal electric energy sales for Entergy Texas for the three months ended June 30, 2023 and 2022 are as follows:
| | | | | | | | | | | | | | | | | |
| 2023 | | 2022 | | % Change |
| (GWh) | | |
Residential | 1,667 | | | 1,760 | | | (5) | |
Commercial | 1,181 | | | 1,231 | | | (4) | |
Industrial | 2,399 | | | 2,489 | | | (4) | |
Governmental | 67 | | | 67 | | | — | |
Total retail | 5,314 | | | 5,547 | | | (4) | |
Sales for resale: | | | | | |
Associated companies | — | | | 89 | | | (100) | |
Non-associated companies | 136 | | | 161 | | | (16) | |
Total | 5,450 | | | 5,797 | | | (6) | |
See Note 13 to the financial statements herein for additional discussion of Entergy Texas’s operating revenues.
Entergy Texas, Inc. and Subsidiaries
Management's Financial Discussion and Analysis
Six Months Ended SeptemberJune 30, 20172023 Compared to NineSix Months Ended SeptemberJune 30, 20162022
Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges. Following is an analysis of the change in net revenueoperating revenues comparing the ninesix months ended SeptemberJune 30, 20172023 to the ninesix months ended SeptemberJune 30, 2016:
|
| | | | |
| Amount |
| (In Millions) |
2016 net revenue2022 operating revenues | $1,037.1 | $498.6 |
|
Net wholesale revenueFuel, rider, and other revenues that do not significantly affect net income | (30.7(60.3) | ) |
Purchased power capacitySystem restoration carrying costs | (5.5(21.7) | ) |
Transmission revenueVolume/weather | (4.1(21.4) | ) |
Retail electricReturn of unprotected excess accumulated deferred income taxes to customers | 16.013.7 |
|
OtherRetail electric price | 0.524.5 |
|
2017 net revenue2023 operating revenues | $971.9 | $474.8 |
|
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.
System restoration carrying costs represent the equity component of system restoration carrying costs, recorded in second quarter 2022, recognized as part of the securitization of the Hurricane Laura, Hurricane Delta, and Winter Storm Uri system restoration costs in April 2022. See Note 2 to the financial statements in the Form 10-K for a discussion of the securitization.
The net wholesale revenuevolume/weather variance is primarily due to lower net capacity revenues resultingthe effect of less favorable weather on residential sales.
The return of unprotected excess accumulated deferred income taxes to customers resulted from the terminationreturn of unprotected excess accumulated deferred income taxes through a rider effective October 2018 in response to the enactment of the purchased power agreements between Entergy LouisianaTax Cuts and Entergy TexasJobs Act. In the six months ended June 30, 2022, $13.7 million was returned to customers through reductions in August 2016.
The purchased power capacity variance is primarily dueoperating revenues. There was no return of unprotected excess accumulated deferred income taxes to increased expenses duecustomers for the six months ended June 30, 2023. There was no effect on net income as the reductions in operating revenues were offset by reductions in income tax expense. See Note 2 to capacity cost changes for ongoing purchased power capacity contracts.
The transmission revenue variance is primarily due to a decreasethe financial statements in the amountForm 10-K for discussion of transmission revenues allocated by MISO.regulatory activity regarding the Tax Cuts and Jobs Act.
The retail electric price variance is primarily due to:
•an interim increase in the annual base rate, including the realignment of the costs previously being collected through the distribution and transmission cost recovery factor riders and the generation cost recovery rider to base rates, effective June 2023;
•the implementation of the transmissiongeneration cost recovery factorrelate-back rider in September 2016for the Hardin County Peaking Facility effective May 2023; and
•an increase in the transmission cost recovery factor rider rate ineffective March 2017, each as approved by the PUCT. 2022.
See Note 2 to the financial statements herein and in the Form 10-K for furtherdiscussion of the 2022 base rate case and the generation cost recovery rider filings. See Note 2 to the financial statements in the Form 10-K for discussion of the transmission cost recovery factor rider filings.filing.
Entergy Texas, Inc. and Subsidiaries
Management's Financial Discussion and Analysis
Total electric energy sales for Entergy Texas for the six months ended June 30, 2023 and 2022 are as follows:
| | | | | | | | | | | | | | | | | |
| 2023 | | 2022 | | % Change |
| (GWh) | | |
Residential | 2,914 | | | 3,220 | | | (10) | |
Commercial | 2,241 | | | 2,290 | | | (2) | |
Industrial | 4,592 | | | 4,753 | | | (3) | |
Governmental | 130 | | | 131 | | | (1) | |
Total retail | 9,877 | | | 10,394 | | | (5) | |
Sales for resale: | | | | | |
Associated companies | — | | | 279 | | | (100) | |
Non-associated companies | 239 | | | 305 | | | (22) | |
Total | 10,116 | | | 10,978 | | | (8) | |
See Note 13 to the financial statements herein for additional discussion of Entergy Texas’s operating revenues.
Other Income Statement Variances
ThirdSecond Quarter 20172023 Compared to ThirdSecond Quarter 20162022
Other operation and maintenance expenses decreased primarily due to:
•a gain of $6.9 million on the partial sale of a service center in April 2023 as part of an eminent domain proceeding;
•a decrease of $3 million in transmission costs allocated by MISO; and
•several individually insignificant items.
The decrease was partially offset by an increase of $2.3 million in non-nuclear generation expenses primarily due to higher long-term service agreement expenses.
Taxes other than income taxes increased primarily due to an increaseincreases in ad valorem taxes resulting from higher assessments and a true-up to the sales and use tax accruals recordedincreases in 2016 resulting from an audit settlement.local franchise taxes.
Depreciation and amortization expenses increased primarily due to additions to plant in service.service and an increase in depreciation rates effective with the approval of an interim increase in the annual base rate in June 2023. See Note 2 to the financial statements herein and in the Form 10-K for discussion of the 2022 base rate case filing.
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 2023, including the Orange County Advanced Power Station project.
Interest expense increased primarily due to the issuance of $325 million of 5.00% Series mortgage bonds in August 2022, partially offset by an increase in the allowance for borrowed funds used during construction due to higher construction work in progress in 2023, including the Orange County Advanced Power Station project.
Entergy Texas, Inc. and Subsidiaries
Management's Financial Discussion and Analysis
NineSix Months Ended SeptemberJune 30, 20172023 Compared to NineSix Months Ended SeptemberJune 30, 20162022
Other operation and maintenance expenses increaseddecreased primarily due to:
•a gain of $6.9 million on the partial sale of a service center in April 2023 as part of an increaseeminent domain proceeding;
•a decrease of $2.6$5.2 million in transmission and distributioncosts allocated by MISO;
•a decrease of $2.8 million in power delivery expenses primarily due to higher vegetationa lower scope of work performed in 2023 as compared to prior year and lower transmission repairs and maintenance costs;
an increase•a decrease of $1.8$2.8 million in customer servicecompensation and benefits costs primarily due to lower health and welfare costs as a result of higher write-offsprescription drug rebates in 2023, a decrease in net periodic pension and other postretirement benefits service costs as a result of uncollectible customer accounts;
an increase in the discount rates used to value the benefits liabilities, and a revision to estimated incentive compensation expense in the first quarter 2023. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K, Note 6 to the financial statements herein, and Note 11 to the financial statements in the Form 10-K for further discussion of $1.6pension and other postretirement benefits costs; and
•a decrease of $2.3 million in fossil-fuelednon-nuclear generation expenses primarily due to a higherlower scope of work done during plant outagesperformed in 20172023 as compared to the same period in 2016;prior year.
an increase of $1.2 million as a result of the amount of transmission costs allocated by MISO; and
an increase of $1.1 million in information technology expenses including software maintenance costs and upgrade projects.
The increase was partially offset by a decrease of $4.5 million due to the termination of transmission equalization expenses, as allocated under the System Agreement, as a result of Entergy Texas’s exit from the System Agreement in August 2016.
Taxes other than income taxes increased primarily due to an increaseincreases in ad valorem taxes resulting from higher assessments and a true-up to the sales and use tax accruals recordedincreases in 2016 resulting from an audit settlement.gross receipts taxes.
Depreciation and amortization expenses increased primarily due to additions to plant in service.
Income Taxes
Theservice and an increase in depreciation rates effective income tax rate was 35.9% forwith the third quarter 2017. The differenceapproval of an interim increase in the effectiveannual base rate in June 2023. See Note 2 to the financial statements herein and in the Form 10-K for discussion of the 2022 base rate case filing.
Other income tax rate for the third quarter 2017 versus the federal statutory rate of 35% wasincreased primarily due to certain book and tax differences related to utility plant items, partially offset by book and tax differences related toan increase in the allowance for equity funds used during construction.construction due to higher construction work in progress in 2023, including the Orange County Advanced Power Station project.
Interest expense increased primarily due to the issuance of $325 million of 5.00% Series mortgage bonds in August 2022 and the issuance of $290.85 million of senior secured system restoration bonds in April 2022, partially offset by an increase in the allowance for borrowed funds used during construction due to higher construction work in progress in 2023, including the Orange County Advanced Power Station project.
Income Taxes
The effective income tax rate was 34.6%rates were 19.6% for the ninesecond quarter 2023 and 19.4% for the six months ended SeptemberJune 30, 2017.2023. The differencedifferences in the effective income tax rate rates for the ninesecond quarter 2023 and the six months ended SeptemberJune 30, 20172023 versus the federal statutory rate of 35% was21% were primarily due to book and tax differences related to the allowance for equity funds used during construction and the reversal of a portion of the provision for uncertain tax positions, partially offset by certain book and tax differences related to utility plant items and a write-off of a stock-based compensation deferred tax asset.
The effective income tax rates were 36.2% for the third quarter 2016 and 37.4% for the nine months ended September 30, 2016. The differences in the effective income tax rates for the third quarter 2016 and for the nine months ended September 30, 2016 versus the federal statutory rate of 35% were primarily due to state income taxes and certain book and tax differences related to utility plant items, partially offset by the accrual for state income taxes.
The effective income tax rates were 14.5% for the second quarter 2022 and 12.8% for the six months ended June 30, 2022. The differences in the effective income tax rates for the second quarter 2022 and the six months ended June 30, 2022 versus the federal statutory rate of 21% were primarily due to the amortization of excess accumulated deferred income taxes and certain book and tax differences related to utility plant items. See Note 10 to the allowancefinancial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for equity funds used during construction.a discussion of the effects of and regulatory activity regarding the Tax Cuts and Jobs Act.
Entergy Texas, Inc. and Subsidiaries
Management's Financial Discussion and Analysis
Income Tax Legislation
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Income Tax Legislation” in the Form 10-K for a discussion of the Inflation Reduction Act of 2022. See the “Income Tax Legislation and Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis herein for updates to the discussion of income tax legislation and regulation.
Liquidity and Capital Resources
Cash Flow
Cash flows for the ninesix months ended SeptemberJune 30, 20172023 and 20162022 were as follows:
| | | | | | | | | | | |
| 2023 | | 2022 |
| (In Thousands) |
Cash and cash equivalents at beginning of period | $3,497 | | | $28 | |
| | | |
Net cash provided by (used in): | | | |
Operating activities | 308,266 | | | 171,727 | |
Investing activities | (319,798) | | | (326,373) | |
Financing activities | 10,857 | | | 177,193 | |
Net increase (decrease) in cash and cash equivalents | (675) | | | 22,547 | |
| | | |
Cash and cash equivalents at end of period | $2,822 | | | $22,575 | |
|
| | | | | | | |
| 2017 | | 2016 |
| (In Thousands) |
Cash and cash equivalents at beginning of period |
| $6,181 |
| |
| $2,182 |
|
| | | |
Cash flow provided by (used in): | | | |
Operating activities | 192,954 |
| | 196,698 |
|
Investing activities | (228,582 | ) | | (251,366 | ) |
Financing activities | 30,949 |
| | 53,829 |
|
Net decrease in cash and cash equivalents | (4,679 | ) | | (839 | ) |
| | | |
Cash and cash equivalents at end of period |
| $1,502 |
| |
| $1,343 |
|
Operating Activities
Net cash flow provided by operating activities decreased $3.7increased $136.5 million for the ninesix months ended SeptemberJune 30, 20172023 compared to the ninesix months ended SeptemberJune 30, 20162022 primarily due to decreased net income.
The decrease was partially offset by:
the timing of recovery of fuel and purchased power costs in 2017 as comparedand higher collections from customers. The increase was partially offset by the timing of payments to the same period in 2016;
income tax refundsvendors, an increase of $1.4$29.4 million in 2017 compared toincome taxes paid in 2023 as a result of higher estimated income tax payments in comparison to 2022, and an increase of $3.4 million in 2016 in accordance with an intercompany income tax allocation agreement; and
a decrease of $3.3$12.2 million in interest paid in 2017 as comparedpaid. See Note 2 to the same periodfinancial statements herein and in 2016.the Form 10-K for a discussion of fuel and purchased power cost recovery.
Investing Activities
Net cash flow used in investing activities decreased $22.8$6.6 million for the ninesix months ended SeptemberJune 30, 20172023 compared to the ninesix months ended SeptemberJune 30, 20162022 primarily due to:
•money pool activity;
•cash collateral of $30 million posted in 2022 to support Entergy Texas’s obligations to MISO; and
•the partial sale of a decreaseservice center in April 2023 for $11 million as part of $55.7 million in transmission construction expenditures primarily due to a lower scope of work performed in 2017 as compared to the same period in 2016, partially offset by an increase in baseline work performed in 2017 as compared to the same period in 2016. eminent domain proceeding.
The decrease was partially offset by an increase of $24.3$100.1 million in fossil-fuelednon-nuclear generation construction expenditures primarily due to a higher scope of work performed in 2017 as compared tospending on the same period in 2016Orange County Advanced Power Station project and an increase of $9.4$31.7 million in distributiontransmission construction expenditures primarily due to increased spending on digital technology improvements within the customer contact centers.
Financing Activities
Net cash flow provided by financing activities decreased $22.9 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 primarily due to the issuance of $125 million of 2.55% Series first mortgage bonds in March 2016, partially offset by money pool activity. See Note 4 to the financial statements herein and Note 5 to the financial statementsinvestment in the Form 10-Kreliability and infrastructure of Entergy Texas's transmission system and higher capital expenditures for more details on long-term debt.storm restoration in 2023.
IncreasesDecreases in Entergy Texas’s payable toreceivable from the money pool are a source of cash flow, and Entergy Texas’s payable toreceivable from the money pool increased by $89.3decreased $98.6 million for the ninesix months ended SeptemberJune 30, 20172023 compared to decreasing
Entergy Texas, Inc. and Subsidiaries
Management's Financial Discussion and Analysis
to increasing by $9.7$1.6 million for the ninesix months ended SeptemberJune 30, 2016.2022. The money pool is an inter-companyintercompany borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings.
Financing Activities
Net cash flow provided by financing activities decreased $166.3 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 primarily due to the issuance of $290.85 million of senior secured system restoration bonds in April 2022. The activity was partially offset by money pool activity and an increase of $21.1 million in prepaid deposits related to contributions-in-aid-of-construction for generation interconnection agreements as a result of higher deposits in 2023 as compared to 2022.
Decreases in Entergy Texas’s payable to the money pool are a use of cash flow, and Entergy Texas’s payable to the money pool decreased $79.6 million for the six months ended June 30, 2022.
Capital Structure
Entergy Texas’s capitalizationdebt to capital ratio is balanced between equity and debt, as shown in the following table. The decrease in the debt to capital ratio for Entergy Texas is primarily due to net income in 2023.
| | | | | | | | | | | |
| June 30, 2023 | | December 31, 2022 |
Debt to capital | 50.8 | % | | 52.0 | % |
Effect of excluding securitization bonds | (2.4 | %) | | (2.5 | %) |
Debt to capital, excluding securitization bonds (non-GAAP) (a) | 48.4 | % | | 49.5 | % |
Effect of subtracting cash | (0.1 | %) | | — | % |
Net debt to net capital, excluding securitization bonds (non-GAAP) (a) | 48.3 | % | | 49.5 | % |
(a)Calculation excludes the increase in retained earnings.securitization bonds, which are non-recourse to Entergy Texas.
|
| | | | | |
| September 30, 2017 | | December 31, 2016 |
Debt to capital | 56.0 | % | | 58.5 | % |
Effect of excluding the securitization bonds | (7.4 | %) | | (8.3 | %) |
Debt to capital, excluding securitization bonds (a) | 48.6 | % | | 50.2 | % |
Effect of subtracting cash | — | % | | (0.1 | %) |
Net debt to net capital, excluding securitization bonds (a) | 48.6 | % | | 50.1 | % |
| |
(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 common 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 in the Form 10-K. 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, Inc. and Subsidiaries
Management's Financial Discussion and Analysis
Uses and Sources of Capital
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources” in the Form 10-K for a discussion of Entergy Texas’s uses and sources of capital. Following are updates to information provided in the Form 10-K.
Entergy Texas is developing its capital investment plan for 2018 through 2020 and currently anticipates making $1.9 billion in capital investments during that period. The estimate includes amounts associated with specific investments such as the Montgomery County Power Station discussed below; transmission projects to enhance reliability, reduce congestion, and enable economic growth; distribution spending to enhance reliability and improve service to customers, including initial investment to support advanced metering; system improvements; and other investments. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital.
Entergy Texas’s receivables from or (payables to) the money pool were as follows:
| | | | | | | | | | | | | | | | | | | | |
June 30, 2023 | | December 31, 2022 | | June 30, 2022 | | December 31, 2021 |
(In Thousands) |
$899 | | $99,468 | | $1,643 | | ($79,594) |
|
| | | | | | |
September 30, 2017 | | December 31, 2016 | | September 30, 2016 | | December 31, 2015 |
(In Thousands) |
($89,312) | | $681 | | ($12,399) | | ($22,068) |
See Note 4 to the financial statements in the Form 10-K for a description of the money pool.
Entergy Texas, Inc. and Subsidiaries
Management's Financial Discussion and Analysis
Entergy Texas has a credit facility in the amount of $150 million scheduled to expire in August 2022.June 2028. The credit facility permitsincludes fronting commitments for the issuance of letters of credit against 50%$30 million of the borrowing capacity of the facility. As of SeptemberJune 30, 2017,2023, there were no cash borrowings and $24.4$1.1 million ofin 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 SeptemberJune 30, 2017, a $19.62023, $8.8 million letterin letters of credit waswere outstanding under Entergy Texas’s uncommitted letter of credit facility. See Note 4 to the financial statements herein for additional discussion of the credit facilities.
Montgomery County Power Station
In October 2016, Entergy Texas filed an application with the PUCT seeking certification that the public convenience and necessity would be served by the construction of the Montgomery County Power Station, a nominal 993 MW combined-cycle generating unit in Montgomery County, Texas on land adjacent to the existing Lewis Creek plant. The current estimated cost of the Montgomery County Power Station is $937 million, including estimated costs of transmission interconnection and network upgrades and other related costs. The independent monitor, who oversaw the request for proposal process, filed testimony and a report affirming that the Montgomery County Power Station was selected through an objective and fair request for proposal process that showed no undue preference to any proposal. In June 2017, parties to the proceeding filed an unopposed stipulation and settlement agreement. The stipulation contemplates that Entergy Texas’s level of cost-recovery for generation construction costs for Montgomery County Power Station is capped at $831 million, subject to certain exclusions such as force majeure events. The costs of the transmission interconnection and network upgrades and other related costs included in the total current estimated cost of the Montgomery County Power Station are not subject to the $831 million cap. Also in June 2017, the ALJ issued a proposed order and remanded the proceeding to the PUCT for final decision. In July 2017 the PUCT approved the stipulation. Subject to the timely receipt of other permits and approvals, commercial operation is estimated to occur by mid-2021.
Hurricane Harvey
In August 2017, Hurricane Harvey caused extensive damage to Entergy Texas’s service area. The storm resulted in widespread power outages and significant damage primarily to distribution infrastructure. Total restoration costs for the repair and/or replacement of Entergy Texas’s electric facilities damaged by Hurricane Harvey are currently estimated to be in the range of $75 million to $105 million. Based on current progress, management expects total restoration costs to be towards the lower end of the range. Entergy Texas is considering all reasonable avenues to recover storm-related costs from Hurricane Harvey, including, but not limited to, securitization or other alternative financing and traditional retail recovery on an interim and permanent basis. Storm cost recovery or financing will be subject to review by applicable regulatory authorities.
Entergy Texas has recorded accounts payable for the estimated costs incurred that were necessary to return customers to service. Entergy Texas recorded corresponding regulatory assets of approximately $13.1 million and construction work in progress of approximately $25.9 million. Entergy Texas recorded the regulatory assets in accordance with its accounting policies and based on the historic treatment of such costs in its service area because management believes that recovery through some form of regulatory mechanism is probable. Because Entergy Texas has not gone through the regulatory process regarding these storm costs, there is an element of risk, and Entergy Texas is unable to predict with certainty the degree of success it may have in its recovery initiatives, the amount of restoration costs that it may ultimately recover, or the timing of such recovery.
State and Local Rate Regulation and Fuel-Cost Recovery
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS -State and Local Rate Regulation and Fuel-Cost Recovery” in the Form 10-K for a discussion of state and local rate regulation and fuel-cost recovery. The following are updates to that discussion.
Retail Rates
2022 Base Rate Case
As discussed in the Form 10-K, 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 have been reset to zero as a result of this proceeding.
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, 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 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 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
Entergy Texas, Inc. and Subsidiaries
Management's Financial Discussion and Analysis
Retail Rates
2011 Rate Case
Seeeffective in June 2023. Additionally, the Form 10-KALJ remanded the proceeding, except for discussion ofthe issues related to electric vehicle charging infrastructure, to the PUCT to consider the settlement. In June 2023 the ALJ issued a proposal for decision related to the electric vehicle charging infrastructure issues and which noted recent legislation enacted which permits electric utilities to own and operate such infrastructure. The ALJ’s proposal for decision deferred to the PUCT regarding whether it is appropriate for any vertically integrated electric utility, or Entergy Texas’s 2011 rate case. As discussedTexas specifically, to own electric vehicle charging infrastructure, and in the Form 10-K, several parties, including Entergy Texas, appealed various aspectsevent that the PUCT decided ownership is permissible, the ALJ recommended approval of the PUCT’s orderproposed tariff to the Travis County District Court. In October 2014 the Travis County District Court issued an order upholding the PUCT’s decision except as to the line-loss factor issue referenced in the Form 10-K, which was found in favor of Entergy Texas. In November 2014, Entergy Texascharge host customers for utility-owned and other parties, including the PUCT, appealed the Travis County District Court decision to the Third Court of Appeals. Oral argument before the court panel was held in September 2015. In April 2016 the Third Court of Appeals issued its opinion affirming the District Court’s decisionoperated electric vehicle charging infrastructure sited on all points. Entergy Texascustomer premises and other parties petitioned the Texas Supreme Court to hear its appeal of the Third Court’s ruling. In September 2017 the Texas Supreme Court denied the petitions for review. Entergy Texas filed a motion for rehearing of the Texas Supreme Court’s denial of the petitionproposed tariff to temporarily adjust billing demand charges for review. That motion is pending.
Other Filings
separately metered electric vehicle charging infrastructure, citing cost-shifting concerns. In September 2016, Entergy TexasJuly 2023 the parties filed withexceptions and replies to exceptions to the proposal for decision. At its August 3, 2023 open meeting, the PUCT a requestvoted to amend its transmission cost recovery factor (TCRF) rider. The proposed amended TCRF rider is designed to collect approximately $29.5 million annually from Entergy Texas’s retail customers. This amount includes the approximately $10.5 million annually that Entergy Texas is currently authorized to collect through the TCRF rider. In December 2016, Entergy Texas and the PUCT reachedissue a settlement agreeing to the amended TCRF annual revenue requirement of $29.5 million. The PUCT approved the settlement and issued a final order in March 2017. Entergy Texas implemented the amended TCRF rider beginning with bills covering usage on and after March 20, 2017.
In June 2017, Entergy Texas filed an application to amend its distribution cost recovery factor (DCRF) rider by increasing the total collection from $8.65 million to approximately $19 million. In July 2017, Entergy Texas, the PUCT, and the parties in the proceeding entered into an unopposed stipulation and settlement agreement resulting in an amended DCRF annual revenue requirement of $18.3 million, with the resulting rates effective for usage no later than October 1, 2017. In September 2017 the PUCT issued its final order approving the unopposed stipulationsettlement and settlement agreement. The amended DCRF rider rates became effectiveto consider the issues related to electric vehicle charging infrastructure addressed in the ALJ’s proposal for usage on and after September 1, 2017.decision in a separate future proceeding.
Fuel and purchased power cost recoveryGeneration Cost Recovery Rider
As discussed in the Form 10-K, in July 2016,August 2022 the PUCT approved a unanimous settlement agreement adjusting Entergy Texas’s generation cost recovery rider to recover an annual revenue requirement of approximately $92.8 million related to Entergy Texas’s actual investment in the acquisition of the Hardin County Peaking Facility, and rates became effective. 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.
COVID-19 Orders
As discussed in the Form 10-K, in March 2020 the PUCT authorized electric utilities to record as a regulatory asset expenses resulting from the effects of the COVID-19 pandemic. In future proceedings, the PUCT will consider whether each utility's request for recovery of these regulatory assets is reasonable and necessary, the appropriate period of recovery, and any amount of carrying costs thereon. As part of its 2022 base rate case filing, Entergy Texas requested recovery of its regulatory asset over a three-year period beginning December 2022. The base rate increase of $54 million in the unopposed settlement filed in the base rate case proceeding in May 2023, which is awaiting PUCT approval, includes an annual revenue requirement of $3.4 million related to recovery of the regulatory asset for costs associated with the COVID-19 pandemic. Entergy Texas began recovery of the regulatory asset with the interim increase in the annual base rate effective in June 2023.
Fuel and purchased power recovery
As discussed in the Form 10-K, in September 2022, Entergy Texas filed an application with the PUCT to reconcile its fuel and purchased power costs for the period from April 1, 20132019 through March 31, 2016. In December 2016,2022. During the reconciliation period, Entergy Texas entered into a stipulationincurred approximately $1.7 billion in eligible fuel and settlement agreement resulting in a $6 million disallowance not associated with any particular issue raisedpurchased power expenses, net of certain revenues credited to such expenses and a refundother adjustments. As of the over-recoveryend of the reconciliation period, Entergy Texas’s cumulative under-recovery balance of $21was approximately $103.1 million, including interest, which Entergy Texas requested authority to carry over as of November 30, 2016, to most customersthe beginning balance for the subsequent reconciliation period beginning April 2017 through June 2017. The fuel reconciliation settlement was2022, 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 March 2023 municipal intervenors filed testimony proposing a $5.2 million disallowance for fuel purchased during Winter Storm Uri. The PUCT staff proposed no disallowance. Entergy Texas filed rebuttal testimony in March 2017April 2023. In May 2023, Entergy Texas filed, and the refunds were made.
ALJ with the State Office of Administrative Hearings granted, a joint motion to abate the proceeding to give parties additional time to finalize a settlement and cancelling the hearing on the merits previously scheduled for May 2023. In June 2017,July 2023, Entergy Texas filed an application for a fuel refund of approximately $30.7 million for the months of December 2016 through April 2017. For most customers, the refunds flowed through bills for the months of July 2017 through September 2017. The fuel refund was approved by the PUCT in August 2017.
Advanced Metering Infrastructure (AMI) Filing
In April 2017 the Texas legislature enacted legislation that extends statutory support for AMI deployment to Entergy Texas and directs that if Entergy Texas elects to deploy AMI, it shall do so as rapidly as practicable. In July 2017, Entergy Texas filed an application seeking an order from the PUCT approving Entergy Texas’s deployment of AMI. Entergy Texas proposed to replace existing meters with advanced meters that enable two-way data communication; design and build a secure and reliable network to support such communications; and implement support
unopposed
Entergy Texas, Inc. and Subsidiaries
Management's Financial Discussion and Analysis
systems. AMI is intendedsettlement, supporting testimony, and an agreed motion to serve asadmit evidence and remand the foundation of Entergy Texas’s modernized power grid. The filing identified a number of quantified and unquantified benefits, withproceeding to the PUCT. Pursuant to the unopposed settlement, Entergy Texas showing that its AMI deploymentwould 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. 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. A PUCT decision is expected to produce nominal net operational cost savings to customers of $33 million. Entergy Texas also sought to continue to include in rate base the remaining book value, approximately $41 million at December 31, 2016, of existing meters that will be retired as part of the AMI deployment and also to depreciate those assets using current depreciation rates. Entergy Texas proposed a seven-year depreciable life for the new advanced meters, the three-year deployment of which is expected to begin in 2019. Entergy Texas also proposed a surcharge tariff to recover the reasonable and necessary costs it has and will incur under the deployment plan for the full deployment of advanced meters. Further, Entergy Texas is seeking approval of fees that would be charged to customers who choose to opt out of receiving service through an advanced meter and instead receive electric service with a non-standard meter. Subject to approval by the PUCT, deployment of the communications network is expected to begin in 2018. In October 2017, Entergy Texas and other parties entered into and filed an unopposed stipulation and settlement agreement. PUCT action on the stipulation and settlement agreement remains pending. Entergy Texas expects a decision from the PUCT by December 2017.September 2023.
Federal Regulation
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS –Federal Regulation”in the Form 10-K for a discussion of federal regulation.
Nuclear Matters
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS -Nuclear Matters” in the Form 10-K for discussion of nuclear matters.
Industrial and Commercial Customers
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS –Industrial and Commercial Customers” in the Form 10-K for a discussion of industrial and commercial customers.
Nuclear MattersEnvironmental Risks
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS -Nuclear Matters” in the Form 10-K for discussion of nuclear matters.
Environmental Risks
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS -Environmental Risks” in the Form 10-K for a discussion of environmental risks.
Critical Accounting Estimates
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS -Critical Accounting Estimates” in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy Texas’s accounting for utility regulatory accounting, unbilled revenue, impairment of long-lived assets, and trust fund investments, taxation and uncertain tax positions, qualified pension and other postretirement benefits, and other contingencies.
New Accounting Pronouncements
See “New Accounting Pronouncements” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and AnalysisNote 1 to the financial statements in the Form 10-K for further discussion.
a discussion of new accounting pronouncements.
|
| | | | | | | | | | | | | | | | |
ENTERGY TEXAS, INC. AND SUBSIDIARIES |
CONSOLIDATED INCOME STATEMENTS |
For the Three and Nine Months Ended September 30, 2017 and 2016 |
(Unaudited) |
| | | | |
| | Three Months Ended | | Nine Months Ended |
| | 2017 | | 2016 | | 2017 | | 2016 |
| | (In Thousands) | | (In Thousands) |
OPERATING REVENUES | | | | | | | | |
Electric | |
| $432,909 |
| |
| $442,085 |
| |
| $1,175,324 |
| |
| $1,233,311 |
|
| | | | | | | | |
OPERATING EXPENSES | | | | | | | | |
Operation and Maintenance: | | | | | | | | |
Fuel, fuel-related expenses, and gas purchased for resale | | 60,292 |
| | 21,919 |
| | 164,447 |
| | 185,801 |
|
Purchased power | | 163,532 |
| | 189,213 |
| | 474,241 |
| | 486,696 |
|
Other operation and maintenance | | 51,917 |
| | 50,536 |
| | 162,400 |
| | 157,706 |
|
Taxes other than income taxes | | 20,811 |
| | 17,486 |
| | 59,506 |
| | 54,081 |
|
Depreciation and amortization | | 29,788 |
| | 27,412 |
| | 87,272 |
| | 79,526 |
|
Other regulatory charges - net | | 27,619 |
| | 27,555 |
| | 61,879 |
| | 62,229 |
|
TOTAL | | 353,959 |
| | 334,121 |
| | 1,009,745 |
| | 1,026,039 |
|
| | | | | | | | |
OPERATING INCOME | | 78,950 |
| | 107,964 |
| | 165,579 |
| | 207,272 |
|
| | | | | | | | |
OTHER INCOME | | | | | | | | |
Allowance for equity funds used during construction | | 1,849 |
| | 1,472 |
| | 4,762 |
| | 6,174 |
|
Interest and investment income | | 244 |
| | 221 |
| | 656 |
| | 689 |
|
Miscellaneous - net | | 1,298 |
| | (256 | ) | | 485 |
| | (726 | ) |
TOTAL | | 3,391 |
| | 1,437 |
| | 5,903 |
| | 6,137 |
|
| | | | | | | | |
INTEREST EXPENSE | | | | | | | | |
Interest expense | | 21,714 |
| | 22,416 |
| | 64,949 |
| | 65,993 |
|
Allowance for borrowed funds used during construction | | (1,134 | ) | | (954 | ) | | (2,896 | ) | | (4,008 | ) |
TOTAL | | 20,580 |
| | 21,462 |
| | 62,053 |
| | 61,985 |
|
| | | | | | | | |
INCOME BEFORE INCOME TAXES | | 61,761 |
| | 87,939 |
| | 109,429 |
| | 151,424 |
|
| | | | | | | | |
Income taxes | | 22,173 |
| | 31,806 |
| | 37,886 |
| | 56,671 |
|
| | | | | | | | |
NET INCOME | |
| $39,588 |
| |
| $56,133 |
| |
| $71,543 |
| |
| $94,753 |
|
| | | | | | | | |
See Notes to Financial Statements. | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
ENTERGY TEXAS, INC. AND SUBSIDIARIES |
CONSOLIDATED INCOME STATEMENTS |
For the Three and Six Months Ended June 30, 2023 and 2022 |
(Unaudited) |
| | | | |
| | Three Months Ended | | Six Months Ended |
| | 2023 | | 2022 | | 2023 | | 2022 |
| | (In Thousands) | | (In Thousands) |
OPERATING REVENUES | | | | | | | | |
Electric | | $464,430 | | | $564,591 | | | $971,936 | | | $1,037,073 | |
| | | | | | | | |
OPERATING EXPENSES | | | | | | | | |
Operation and Maintenance: | | | | | | | | |
Fuel, fuel-related expenses, and gas purchased for resale | | 63,526 | | | 60,855 | | | 231,056 | | | 134,775 | |
| | | | | | | | |
Purchased power | | 112,883 | | | 195,016 | | | 220,641 | | | 356,106 | |
Other operation and maintenance | | 63,071 | | | 72,589 | | | 127,501 | | | 147,566 | |
| | | | | | | | |
Taxes other than income taxes | | 28,717 | | | 23,482 | | | 56,713 | | | 43,931 | |
Depreciation and amortization | | 66,009 | | | 57,248 | | | 125,400 | | | 113,309 | |
Other regulatory charges (credits) - net | | 1,526 | | | 22,399 | | | 12,450 | | | 35,845 | |
TOTAL | | 335,732 | | | 431,589 | | | 773,761 | | | 831,532 | |
| | | | | | | | |
OPERATING INCOME | | 128,698 | | | 133,002 | | | 198,175 | | | 205,541 | |
| | | | | | | | |
OTHER INCOME | | | | | | | | |
Allowance for equity funds used during construction | | 6,760 | | | 3,163 | | | 11,849 | | | 5,759 | |
Interest and investment income | | 846 | | | 347 | | | 2,263 | | | 535 | |
Miscellaneous - net | | (1,941) | | | (409) | | | (1,502) | | | (102) | |
TOTAL | | 5,665 | | | 3,101 | | | 12,610 | | | 6,192 | |
| | | | | | | | |
INTEREST EXPENSE | | | | | | | | |
Interest expense | | 26,847 | | | 23,101 | | | 53,809 | | | 44,013 | |
Allowance for borrowed funds used during construction | | (2,517) | | | (1,067) | | | (4,413) | | | (1,932) | |
TOTAL | | 24,330 | | | 22,034 | | | 49,396 | | | 42,081 | |
| | | | | | | | |
INCOME BEFORE INCOME TAXES | | 110,033 | | | 114,069 | | | 161,389 | | | 169,652 | |
| | | | | | | | |
Income taxes | | 21,576 | | | 16,584 | | | 31,259 | | | 21,764 | |
| | | | | | | | |
NET INCOME | | 88,457 | | | 97,485 | | | 130,130 | | | 147,888 | |
| | | | | | | | |
Preferred dividend requirements | | 518 | | | 518 | | | 1,036 | | | 1,036 | |
| | | | | | | | |
EARNINGS APPLICABLE TO COMMON STOCK | | $87,939 | | | $96,967 | | | $129,094 | | | $146,852 | |
| | | | | | | | |
See Notes to Financial Statements. | | | | | | | | |
|
| | | | | | | | |
ENTERGY TEXAS, INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
For the Nine Months Ended September 30, 2017 and 2016 |
(Unaudited) |
| | 2017 | | 2016 |
| | (In Thousands) |
OPERATING ACTIVITIES | | | | |
Net income | |
| $71,543 |
| |
| $94,753 |
|
Adjustments to reconcile net income to net cash flow provided by operating activities: | | | | |
Depreciation and amortization | | 87,272 |
| | 79,526 |
|
Deferred income taxes, investment tax credits, and non-current taxes accrued | | 36,252 |
| | (7,605 | ) |
Changes in assets and liabilities: | | | | |
Receivables | | (30,030 | ) | | (40,678 | ) |
Fuel inventory | | (7,371 | ) | | 268 |
|
Accounts payable | | 24,711 |
| | (74 | ) |
Prepaid taxes and taxes accrued | | 1,122 |
| | 55,121 |
|
Interest accrued | | (7,207 | ) | | (9,453 | ) |
Deferred fuel costs | | (3,134 | ) | | (6,472 | ) |
Other working capital accounts | | (8,455 | ) | | (9,786 | ) |
Provisions for estimated losses | | (1,460 | ) | | (3,318 | ) |
Other regulatory assets | | 59,549 |
| | 69,324 |
|
Pension and other postretirement liabilities | | (22,978 | ) | | (21,092 | ) |
Other assets and liabilities | | (6,860 | ) | | (3,816 | ) |
Net cash flow provided by operating activities | | 192,954 |
| | 196,698 |
|
| | | | |
INVESTING ACTIVITIES | | | | |
Construction expenditures | | (243,226 | ) | | (264,394 | ) |
Allowance for equity funds used during construction | | 4,879 |
| | 6,266 |
|
Insurance proceeds received for property damages | | 2,431 |
| | — |
|
Change in money pool receivable - net | | 681 |
| | — |
|
Changes in securitization account | | 6,653 |
| | 6,762 |
|
Net cash flow used in investing activities | | (228,582 | ) | | (251,366 | ) |
| | | | |
FINANCING ACTIVITIES | | | | |
Proceeds from the issuance of long-term debt | | — |
| | 123,502 |
|
Retirement of long-term debt | | (58,076 | ) | | (55,764 | ) |
Changes in money pool payable - net | | 89,312 |
| | (9,669 | ) |
Other | | (287 | ) | | (4,240 | ) |
Net cash flow provided by financing activities | | 30,949 |
| | 53,829 |
|
| | | | |
Net decrease in cash and cash equivalents | | (4,679 | ) | | (839 | ) |
Cash and cash equivalents at beginning of period | | 6,181 |
| | 2,182 |
|
Cash and cash equivalents at end of period | |
| $1,502 |
| |
| $1,343 |
|
| | | | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | |
Cash paid (received) during the period for: | | | | |
Interest - net of amount capitalized | |
| $70,237 |
| |
| $73,570 |
|
Income taxes | |
| ($1,446 | ) | |
| $3,443 |
|
| | | | |
See Notes to Financial Statements. | | | | |
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|
| | | | | | | | |
ENTERGY TEXAS, INC. AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
ASSETS |
September 30, 2017 and December 31, 2016 |
(Unaudited) |
| | 2017 | | 2016 |
| | (In Thousands) |
CURRENT ASSETS | | | | |
Cash and cash equivalents: | | | | |
Cash | |
| $1,472 |
| |
| $1,216 |
|
Temporary cash investments | | 30 |
| | 4,965 |
|
Total cash and cash equivalents | | 1,502 |
| | 6,181 |
|
Securitization recovery trust account | | 30,798 |
| | 37,451 |
|
Accounts receivable: | | | | |
Customer | | 86,860 |
| | 71,803 |
|
Allowance for doubtful accounts | | (552 | ) | | (828 | ) |
Associated companies | | 41,002 |
| | 39,447 |
|
Other | | 12,982 |
| | 14,756 |
|
Accrued unbilled revenues | | 53,962 |
| | 39,727 |
|
Total accounts receivable | | 194,254 |
| | 164,905 |
|
Fuel inventory - at average cost | | 44,548 |
| | 37,177 |
|
Materials and supplies - at average cost | | 40,294 |
| | 36,631 |
|
Prepayments and other | | 24,194 |
| | 18,599 |
|
TOTAL | | 335,590 |
| | 300,944 |
|
| | | | |
OTHER PROPERTY AND INVESTMENTS | | | | |
Investments in affiliates - at equity | | 538 |
| | 600 |
|
Non-utility property - at cost (less accumulated depreciation) | | 376 |
| | 376 |
|
Other | | 19,126 |
| | 18,801 |
|
TOTAL | | 20,040 |
| | 19,777 |
|
| | | | |
UTILITY PLANT | | | | |
Electric | | 4,431,291 |
| | 4,274,069 |
|
Construction work in progress | | 153,679 |
| | 111,227 |
|
TOTAL UTILITY PLANT | | 4,584,970 |
| | 4,385,296 |
|
Less - accumulated depreciation and amortization | | 1,566,743 |
| | 1,526,057 |
|
UTILITY PLANT - NET | | 3,018,227 |
| | 2,859,239 |
|
| | | | |
DEFERRED DEBITS AND OTHER ASSETS | | | | |
Regulatory assets: | | | | |
Regulatory asset for income taxes - net | | 104,915 |
| | 105,816 |
|
Other regulatory assets (includes securitization property of $330,669 as of September 30, 2017 and $384,609 as of December 31, 2016) | | 681,508 |
| | 740,156 |
|
Other | | 8,303 |
| | 7,149 |
|
TOTAL | | 794,726 |
| | 853,121 |
|
| | | | |
TOTAL ASSETS | |
| $4,168,583 |
| |
| $4,033,081 |
|
| | | | |
See Notes to Financial Statements. | | |
| | |
|
| | | | | | | | | | | | | | |
ENTERGY TEXAS, INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
For the Six Months Ended June 30, 2023 and 2022 |
(Unaudited) |
| | 2023 | | 2022 |
| | (In Thousands) |
OPERATING ACTIVITIES | | | | |
Net income | | $130,130 | | | $147,888 | |
Adjustments to reconcile net income to net cash flow provided by operating activities: | | | | |
Depreciation and amortization | | 125,400 | | | 113,309 | |
Deferred income taxes, investment tax credits, and non-current taxes accrued | | 23,480 | | | 24,421 | |
Changes in assets and liabilities: | | | | |
Receivables | | 12,534 | | | (55,237) | |
Fuel inventory | | (18,082) | | | 16,888 | |
Accounts payable | | (5,725) | | | 79,801 | |
Taxes accrued | | (45,549) | | | (7,158) | |
Interest accrued | | (604) | | | 1,923 | |
Deferred fuel costs | | 98,042 | | | (141,192) | |
Other working capital accounts | | 3,129 | | | 2,388 | |
Provisions for estimated losses | | 455 | | | (10) | |
Other regulatory assets | | (19,688) | | | (143,294) | |
Other regulatory liabilities | | (9,929) | | | (14,444) | |
Effect of securitization on regulatory asset | | — | | | 153,383 | |
Pension and other postretirement liabilities | | (4,191) | | | (9,475) | |
Other assets and liabilities | | 18,864 | | | 2,536 | |
Net cash flow provided by operating activities | | 308,266 | | | 171,727 | |
| | | | |
INVESTING ACTIVITIES | | | | |
Construction expenditures | | (448,550) | | | (304,702) | |
Allowance for equity funds used during construction | | 11,849 | | | 5,759 | |
Proceeds from sale of assets | | 11,000 | | | — | |
| | | | |
Litigation proceeds from settlement agreement | | — | | | 4,134 | |
Changes in money pool receivable - net | | 98,569 | | | (1,643) | |
Changes in securitization account | | 7,248 | | | 79 | |
Decrease (increase) in other investments | | 86 | | | (30,000) | |
| | | | |
Net cash flow used in investing activities | | (319,798) | | | (326,373) | |
| | | | |
FINANCING ACTIVITIES | | | | |
Proceeds from the issuance of long-term debt | | — | | | 286,842 | |
Retirement of long-term debt | | (8,856) | | | (29,064) | |
| | | | |
| | | | |
Change in money pool payable - net | | — | | | (79,594) | |
| | | | |
| | | | |
Preferred stock dividends paid | | (1,036) | | | (1,024) | |
Other | | 20,749 | | | 33 | |
Net cash flow provided by financing activities | | 10,857 | | | 177,193 | |
| | | | |
Net increase (decrease) in cash and cash equivalents | | (675) | | | 22,547 | |
Cash and cash equivalents at beginning of period | | 3,497 | | | 28 | |
Cash and cash equivalents at end of period | | $2,822 | | | $22,575 | |
| | | | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | |
Cash paid during the period for: | | | | |
Interest - net of amount capitalized | | $53,019 | | | $40,816 | |
Income taxes | | $30,500 | | | $1,085 | |
| | | | |
See Notes to Financial Statements. | | | | |
|
| | | | | | | | |
ENTERGY TEXAS, INC. AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
LIABILITIES AND EQUITY |
September 30, 2017 and December 31, 2016 |
(Unaudited) |
| | 2017 | | 2016 |
| | (In Thousands) |
CURRENT LIABILITIES | | | | |
Accounts payable: | | | | |
Associated companies | |
| $142,695 |
| |
| $47,867 |
|
Other | | 106,117 |
| | 77,342 |
|
Customer deposits | | 44,141 |
| | 44,419 |
|
Taxes accrued | | 16,473 |
| | 15,351 |
|
Interest accrued | | 18,770 |
| | 25,977 |
|
Deferred fuel costs | | 51,409 |
| | 54,543 |
|
Other | | 10,445 |
| | 9,388 |
|
TOTAL | | 390,050 |
| | 274,887 |
|
| | | | |
NON-CURRENT LIABILITIES | | | | |
Accumulated deferred income taxes and taxes accrued | | 1,061,320 |
| | 1,027,647 |
|
Accumulated deferred investment tax credits | | 12,221 |
| | 12,934 |
|
Other regulatory liabilities | | 7,002 |
| | 8,502 |
|
Asset retirement cost liabilities | | 6,742 |
| | 6,470 |
|
Accumulated provisions | | 6,124 |
| | 7,584 |
|
Pension and other postretirement liabilities | | 44,359 |
| | 67,313 |
|
Long-term debt (includes securitization bonds of $371,422 as of September 30, 2017 and $429,043 as of December 31, 2016) | | 1,451,643 |
| | 1,508,407 |
|
Other | | 48,585 |
| | 50,343 |
|
TOTAL | | 2,637,996 |
| | 2,689,200 |
|
| | | | |
Commitments and Contingencies | | | | |
| | | | |
COMMON EQUITY | | | | |
Common stock, no par value, authorized 200,000,000 shares; issued and outstanding 46,525,000 shares in 2017 and 2016 | | 49,452 |
| | 49,452 |
|
Paid-in capital | | 481,994 |
| | 481,994 |
|
Retained earnings | | 609,091 |
| | 537,548 |
|
TOTAL | | 1,140,537 |
| | 1,068,994 |
|
| | | | |
TOTAL LIABILITIES AND EQUITY | |
| $4,168,583 |
| |
| $4,033,081 |
|
| | | | |
See Notes to Financial Statements. | | | | |
| | | | | | | | | | | | | | |
ENTERGY TEXAS, INC. AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
ASSETS |
June 30, 2023 and December 31, 2022 |
(Unaudited) |
| | 2023 | | 2022 |
| | (In Thousands) |
CURRENT ASSETS | | | | |
Cash and cash equivalents: | | | | |
Cash | | $26 | | | $500 | |
Temporary cash investments | | 2,796 | | | 2,997 | |
Total cash and cash equivalents | | 2,822 | | | 3,497 | |
Securitization recovery trust account | | 3,631 | | | 10,879 | |
Accounts receivable: | | | | |
Customer | | 81,011 | | | 115,955 | |
Allowance for doubtful accounts | | (1,708) | | | (2,352) | |
Associated companies | | 7,884 | | | 115,549 | |
Other | | 25,733 | | | 21,587 | |
Accrued unbilled revenues | | 95,924 | | | 69,208 | |
Total accounts receivable | | 208,844 | | | 319,947 | |
Deferred fuel costs | | 160,073 | | | 258,115 | |
Fuel inventory - at average cost | | 44,832 | | | 26,750 | |
Materials and supplies - at average cost | | 94,414 | | | 93,031 | |
| | | | |
Prepayments and other | | 13,764 | | | 20,568 | |
TOTAL | | 528,380 | | | 732,787 | |
| | | | |
OTHER PROPERTY AND INVESTMENTS | | | | |
Investments in affiliates - at equity | | 237 | | | 250 | |
Non-utility property - at cost (less accumulated depreciation) | | 376 | | | 376 | |
Other | | 19,196 | | | 18,975 | |
TOTAL | | 19,809 | | | 19,601 | |
| | | | |
UTILITY PLANT | | | | |
Electric | | 7,626,619 | | | 7,409,461 | |
Construction work in progress | | 613,969 | | | 339,139 | |
TOTAL UTILITY PLANT | | 8,240,588 | | | 7,748,600 | |
Less - accumulated depreciation and amortization | | 2,257,215 | | | 2,135,400 | |
UTILITY PLANT - NET | | 5,983,373 | | | 5,613,200 | |
| | | | |
DEFERRED DEBITS AND OTHER ASSETS | | | | |
Regulatory assets: | | | | |
| | | | |
Other regulatory assets (includes securitization property of $260,786 as of June 30, 2023 and $269,523 as of December 31, 2022) | | 598,370 | | | 578,682 | |
| | | | |
Other | | 96,391 | | | 99,694 | |
TOTAL | | 694,761 | | | 678,376 | |
| | | | |
TOTAL ASSETS | | $7,226,323 | | | $7,043,964 | |
| | | | |
See Notes to Financial Statements. | | | | |
|
| | | | | | | | | | | | | | | |
ENTERGY TEXAS, INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON EQUITY |
For the Nine Months Ended September 30, 2017 and 2016 |
(Unaudited) |
| | | |
| Common Equity | | |
| Common Stock | | Paid-in Capital | | Retained Earnings | | Total |
| (In Thousands) |
| | | | | | | |
Balance at December 31, 2015 |
| $49,452 |
| |
| $481,994 |
| |
| $430,010 |
| |
| $961,456 |
|
| | | | | | | |
Net income | — |
| | — |
| | 94,753 |
| | 94,753 |
|
| | | | | | | |
Balance at September 30, 2016 |
| $49,452 |
| |
| $481,994 |
| |
| $524,763 |
| |
| $1,056,209 |
|
| | | | | | | |
| | | | | | | |
Balance at December 31, 2016 |
| $49,452 |
| |
| $481,994 |
| |
| $537,548 |
| |
| $1,068,994 |
|
| | | | | | | |
Net income | — |
| | — |
| | 71,543 |
| | 71,543 |
|
| | | | | | | |
Balance at September 30, 2017 |
| $49,452 |
| |
| $481,994 |
| |
| $609,091 |
| |
| $1,140,537 |
|
| | | | | | | |
See Notes to Financial Statements. | | | | | | | |
| | | | | | | | | | | | | | |
ENTERGY TEXAS, INC. AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
LIABILITIES AND EQUITY |
June 30, 2023 and December 31, 2022 |
(Unaudited) |
| | 2023 | | 2022 |
| | (In Thousands) |
CURRENT LIABILITIES | | | | |
| | | | |
Accounts payable: | | | | |
Associated companies | | $57,241 | | | $70,321 | |
Other | | 245,062 | | | 201,982 | |
Customer deposits | | 39,666 | | | 38,764 | |
Taxes accrued | | 47,484 | | | 93,033 | |
Interest accrued | | 23,324 | | | 23,928 | |
| | | | |
| | | | |
| | | | |
| | | | |
Other | | 14,068 | | | 16,963 | |
TOTAL | | 426,845 | | | 444,991 | |
| | | | |
NON-CURRENT LIABILITIES | | | | |
Accumulated deferred income taxes and taxes accrued | | 774,147 | | | 744,227 | |
Accumulated deferred investment tax credits | | 8,337 | | | 8,711 | |
Regulatory liability for income taxes - net | | 124,742 | | | 132,647 | |
Other regulatory liabilities | | 43,223 | | | 45,247 | |
Asset retirement cost liabilities | | 11,428 | | | 11,121 | |
Accumulated provisions | | 8,048 | | | 7,593 | |
| | | | |
Long-term debt (includes securitization bonds of $266,389 as of June 30, 2023 and $275,064 as of December 31, 2022) | | 2,888,075 | | | 2,895,913 | |
Other | | 132,923 | | | 74,053 | |
TOTAL | | 3,990,923 | | | 3,919,512 | |
| | | | |
Commitments and Contingencies | | | | |
| | | | |
EQUITY | | | | |
Common stock, no par value, authorized 200,000,000 shares; issued and outstanding 46,525,000 shares in 2023 and 2022 | | 49,452 | | | 49,452 | |
Paid-in capital | | 1,050,125 | | | 1,050,125 | |
Retained earnings | | 1,670,228 | | | 1,541,134 | |
Total common shareholder's equity | | 2,769,805 | | | 2,640,711 | |
Preferred stock without sinking fund | | 38,750 | | | 38,750 | |
TOTAL | | 2,808,555 | | | 2,679,461 | |
| | | | |
TOTAL LIABILITIES AND EQUITY | | $7,226,323 | | | $7,043,964 | |
| | | | |
See Notes to Financial Statements. | | | | |
|
| | | | | | | | | | | | | | | |
ENTERGY TEXAS, INC. AND SUBSIDIARIES |
SELECTED OPERATING RESULTS |
For the Three and Nine Months Ended September 30, 2017 and 2016 |
(Unaudited) |
| | | | | | |
| | Three Months Ended | | Increase/ | | |
Description | | 2017 | | 2016 | | (Decrease) | | % |
| | (Dollars In Millions) | | |
Electric Operating Revenues: | | | | | | | | |
Residential | |
| $202 |
| |
| $196 |
| |
| $6 |
| | 3 |
|
Commercial | | 101 |
| | 91 |
| | 10 |
| | 11 |
|
Industrial | | 97 |
| | 75 |
| | 22 |
| | 29 |
|
Governmental | | 6 |
| | 6 |
| | — |
| | — |
|
Total retail | | 406 |
| | 368 |
| | 38 |
| | 10 |
|
Sales for resale: | | | | | | | | |
Associated companies | | 18 |
| | 52 |
| | (34 | ) | | (65 | ) |
Non-associated companies | | 4 |
| | 13 |
| | (9 | ) | | (69 | ) |
Other | | 5 |
| | 9 |
| | (4 | ) | | (44 | ) |
Total | |
| $433 |
| |
| $442 |
| |
| ($9 | ) | | (2 | ) |
| | | | | | | | |
Billed Electric Energy Sales (GWh): | | | | | | | | |
Residential | | 1,839 |
| | 1,989 |
| | (150 | ) | | (8 | ) |
Commercial | | 1,279 |
| | 1,336 |
| | (57 | ) | | (4 | ) |
Industrial | | 2,018 |
| | 1,948 |
| | 70 |
| | 4 |
|
Governmental | | 73 |
| | 75 |
| | (2 | ) | | (3 | ) |
Total retail | | 5,209 |
| | 5,348 |
| | (139 | ) | | (3 | ) |
Sales for resale: | | | | | | | | |
Associated companies | | 386 |
| | 1,187 |
| | (801 | ) | | (67 | ) |
Non-associated companies | | 238 |
| | 354 |
| | (116 | ) | | (33 | ) |
Total | | 5,833 |
| | 6,889 |
| | (1,056 | ) | | (15 | ) |
| | | | | | | | |
| | | | | | | | |
| | Nine Months Ended | | Increase/ | | |
Description | | 2017 | | 2016 | | (Decrease) | | % |
| | (Dollars In Millions) | | |
Electric Operating Revenues: | | | | | | | | |
Residential | |
| $482 |
| |
| $461 |
| |
| $21 |
| | 5 |
|
Commercial | | 282 |
| | 260 |
| | 22 |
| | 8 |
|
Industrial | | 292 |
| | 263 |
| | 29 |
| | 11 |
|
Governmental | | 18 |
| | 18 |
| | — |
| | — |
|
Total retail | | 1,074 |
| | 1,002 |
| | 72 |
| | 7 |
|
Sales for resale: | | | | | | | | |
Associated companies | | 47 |
| | 169 |
| | (122 | ) | | (72 | ) |
Non-associated companies | | 18 |
| | 31 |
| | (13 | ) | | (42 | ) |
Other | | 36 |
| | 31 |
| | 5 |
| | 16 |
|
Total | |
| $1,175 |
| |
| $1,233 |
| |
| ($58 | ) | | (5 | ) |
| | | | | | | | |
Billed Electric Energy Sales (GWh): | | | | | | | | |
Residential | | 4,326 |
| | 4,473 |
| | (147 | ) | | (3 | ) |
Commercial | | 3,387 |
| | 3,423 |
| | (36 | ) | | (1 | ) |
Industrial | | 5,781 |
| | 5,693 |
| | 88 |
| | 2 |
|
Governmental | | 205 |
| | 213 |
| | (8 | ) | | (4 | ) |
Total retail | | 13,699 |
| | 13,802 |
| | (103 | ) | | (1 | ) |
Sales for resale: | | | | | | | | |
Associated companies | | 1,149 |
| | 4,292 |
| | (3,143 | ) | | (73 | ) |
Non-associated companies | | 586 |
| | 848 |
| | (262 | ) | | (31 | ) |
Total | | 15,434 |
| | 18,942 |
| | (3,508 | ) | | (19 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
ENTERGY TEXAS, INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY |
For the Six Months Ended June 30, 2023 and 2022 |
(Unaudited) |
| | | | | |
| | | 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 | — | | | — | | | — | | | 50,403 | | | 50,403 | |
| | | | | | | | | |
Preferred stock dividends | — | | | — | | | — | | | (518) | | | (518) | |
Balance at March 31, 2022 | 38,750 | | | 49,452 | | | 1,050,125 | | | 1,394,764 | | | 2,533,091 | |
| | | | | | | | | |
Net income | — | | | — | | | — | | | 97,485 | | | 97,485 | |
| | | | | | | | | |
Preferred stock dividends | — | | | — | | | — | | | (518) | | | (518) | |
| | | | | | | | | |
Balance at June 30, 2022 | $38,750 | | | $49,452 | | | $1,050,125 | | | $1,491,731 | | | $2,630,058 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Balance at December 31, 2022 | $38,750 | | | $49,452 | | | $1,050,125 | | | $1,541,134 | | | $2,679,461 | |
| | | | | | | | | |
Net income | — | | | — | | | — | | | 41,673 | | | 41,673 | |
| | | | | | | | | |
| | | | | | | | | |
Preferred stock dividends | — | | | — | | | — | | | (518) | | | (518) | |
Balance at March 31, 2023 | 38,750 | | | 49,452 | | | 1,050,125 | | | 1,582,289 | | | 2,720,616 | |
| | | | | | | | | |
Net income | — | | | — | | | — | | | 88,457 | | | 88,457 | |
| | | | | | | | | |
Preferred stock dividends | — | | | — | | | — | | | (518) | | | (518) | |
| | | | | | | | | |
Balance at June 30, 2023 | $38,750 | | | $49,452 | | | $1,050,125 | | | $1,670,228 | | | $2,808,555 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
See Notes to Financial Statements. | | | | | | | | | |
SYSTEM ENERGY RESOURCES, INC.
MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS
Results of Operations
System Energy’s principal asset currently consists of an ownership interest and a leasehold interest in Grand Gulf. The capacity and energy from its 90% interest is sold under the Unit Power Sales Agreement to its only four customers, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. System Energy’s operating revenues are derived from the allocation of the capacity, energy, and related costs associated with its 90% interest in Grand Gulf pursuant to the Unit Power Sales Agreement. Payments under the Unit Power Sales Agreement are System Energy’s only source of operating revenues.
Third Quarter 2017 Compared to Third Quarter 2016
Net income changed insignificantly, decreasing by $1.8 million, for the third quarter 2017 compared to the third quarter 2016.
Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016
Net income decreased $13.1 million primarily due to provisions against revenue being recorded As discussed in 2017 in connection with the complaint against System Energy’s return on equity, lower other regulatory credits, and a higher effective income tax rate in 2017. See “Federal Regulation - ComplaintComplaints Against System Energy” below for further discussion of the complaint against System Energy. System Energy records a regulatory debit or credit for the difference between asset retirement obligation-related expenses and trust earnings plus asset retirement obligation-related costs collected in revenue. The decrease in regulatory credits is primarily caused by decreases in depreciation and accretion expenses.
Liquidity and Capital Resources
Cash Flow
Cash flows for the nine months ended September 30, 2017 and 2016 were as follows:
|
| | | | | | | |
| 2017 | | 2016 |
| (In Thousands) |
Cash and cash equivalents at beginning of period |
| $245,863 |
| |
| $230,661 |
|
| | | |
Cash flow provided by (used in): | | | |
Operating activities | 279,485 |
| | 234,759 |
|
Investing activities | (259,598 | ) | | (193,271 | ) |
Financing activities | (120,783 | ) | | (80,987 | ) |
Net decrease in cash and cash equivalents | (100,896 | ) | | (39,499 | ) |
| | | |
Cash and cash equivalents at end of period |
| $144,967 |
| |
| $191,162 |
|
Operating Activities
Net cash flow provided by operating activities increased $44.7 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 primarily due to a decrease in spending of $36.1 million on nuclear refueling outages in 2017 as compared to the same period in 2016 and the timing of collection of receivables,
System Energy Resources, Inc.
Management's Financial Discussion and Analysis
partially offset by proceeds of $28.4 million received in August 2016 from the DOE resulting from litigation regarding spent nuclear fuel storage costs that were previously expensed. See Note 82 to the financial statements in the Form 10-K, System Energy and the Unit Power Sales Agreement are currently 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 a prudence complaint 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. The claims in these proceedings include claims for refunds and claims for rate adjustments; the aggregate amount of refunds claimed in these proceedings substantially exceeds the net book value of System Energy. In the event of an adverse decision in one or more of these proceedings requiring the payment of substantial additional refunds, System Energy would be required to seek financing to pay such refunds which may not be available on terms acceptable to System Energy, or may not be available at all, when required.
Results of Operations
Net Income
Second Quarter 2023 Compared to Second Quarter 2022
System Energy had net income of $25.8 million in the second quarter 2023 compared to a discussionnet loss of $380.1 million in the second quarter 2022 primarily due to a regulatory charge of $551 million ($413 million net-of-tax) recorded in the second quarter 2022 to reflect the effects of the DOE litigation.
Investing Activities
Net cash flow used in investing activities increased $66.3 million forpartial settlement agreement and offer of settlement related to pending proceedings before the nine months ended September 30, 2017 comparedFERC. The increase was partially offset by the disallowance of the recovery of sale-leaseback lease renewal costs from Entergy Arkansas, Entergy Louisiana, and Entergy New Orleans per the December 2022 FERC order related to the nine months ended September 30, 2016 primarily due to:
money pool activity;
proceedsGrand Gulf sale-leaseback renewal complaint and the lower authorized rate of $15.8 million received in August 2016 fromreturn on equity and capital structure limitations on monthly bills issued to Entergy Mississippi per the DOE resulting from litigation regarding spent nuclear fuel storage costs that were previously capitalized.June 2022 settlement agreement with the MPSC. See Note 82 to the financial statements in the Form 10-K for discussion of the DOE litigation;partial settlement agreement. See Note 2 to the financial statements herein and in the Form 10-K for discussion of the Grand Gulf sale-leaseback renewal complaint.
$9.1
Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022
System Energy had net income of $53.3 million for the six months ended June 30, 2023 compared to a net loss of $348.7 million for the six months ended June 30, 2022 primarily due to a regulatory charge of $551 million ($413 million net-of-tax) recorded in funds held on deposit for interest payments due October 1, 2017.
the second quarter 2022 to reflect the effects of the partial settlement agreement and offer of settlement related to pending proceedings before the FERC. The increase was partially offset by:by the disallowance of the recovery of sale-leaseback lease renewal costs from Entergy Arkansas, Entergy Louisiana, and Entergy New Orleans per the December 2022 FERC order related to the Grand Gulf sale-leaseback renewal complaint and the lower authorized rate of return on equity and capital structure limitations on monthly bills issued to Entergy Mississippi per the June 2022 settlement agreement with the MPSC. See Note 2 to the financial statements in the Form 10-K for discussion of the partial settlement agreement. See Note 2 to the financial statements herein and in the Form 10-K for discussion of the Grand Gulf sale-leaseback renewal complaint.
System Energy Resources, Inc.
Management's Financial Discussion and Analysis
Income Taxes
The effective income tax rates were 22.8% for the second quarter 2023 and 23.2% for the six months ended June 30, 2023. The differences in the effective income tax rates for the second quarter 2023 and the six months ended June 30, 2023 versus the federal statutory rate of 21% were primarily due to the accrual for state income taxes, partially offset by certain book and tax differences related to utility plant items.
The effective income tax rates were 25.2% for the second quarter 2022 and 25.3% for the six months ended June 30, 2022. The differences in the effective income tax rates for the second quarter 2022 and the six months ended June 30, 2022 versus the federal statutory rate of 21% were primarily due to the accrual for state income taxes.
Income Tax Legislation
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Income Tax Legislation” in the Form 10-K for a discussion 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 herein for updates to the discussion of income tax legislation and regulation.
Liquidity and Capital Resources
Cash Flow
Cash flows for the six months ended June 30, 2023 and 2022 were as follows:
| | | | | | | | | | | |
| 2023 | | 2022 |
| (In Thousands) |
Cash and cash equivalents at beginning of period | $2,940 | | | $89,201 | |
| | | |
Net cash provided by (used in): | | | |
Operating activities | 60,571 | | | 82,645 | |
Investing activities | 11,262 | | | (94,001) | |
Financing activities | (26,518) | | | 56,880 | |
Net increase in cash and cash equivalents | 45,315 | | | 45,524 | |
| | | |
Cash and cash equivalents at end of period | $48,255 | | | $134,725 | |
Operating Activities
Net cash flow provided by operating activities decreased $22.1 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 primarily due to:
•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 herein and in the Form 10-K for further discussion of these refunds and the related proceedings; and
•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 herein and in the Form 10-K for discussion of the Unit Power Sales Agreement complaint.
System Energy Resources, Inc.
Management's Financial Discussion and Analysis
The decrease was partially offset by a decrease in spending of $33.8 million on nuclear refueling outages in 2023 as compared to the same period in 2022 and the timing of collections of receivables.
Investing Activities
System Energy’s investing activities provided $11.3 million of cash for the six months ended June 30, 2023 compared to using $94 million of cash for the six months ended June 30, 2022 primarily due to the following activity:
•a decrease of $52.1 million as a result of fluctuations in nuclear fuel activity because of variations from year to year in the timing and pricing of fuel reload requirements, in the Utility business, material and services deliveries, and the timing of cash payments during the nuclear fuel cycle; and
•a decrease of $15.9$49.8 million in nuclear construction expenditures primarily as a result of adue to higher scope of work performedspending in 2016 on2022 for Grand Gulf outage projects and lower spendingupgrades;
•money pool activity; and
•a decrease of $12.2 million in 2017 on compliance with NRC post-Fukushima requirements.decommissioning trust fund investment activity.
IncreasesDecreases in System Energy’s receivable from the money pool are a usesource of cash flow and System Energy’s receivable from the money pool increased by $202.7decreased $80.1 million for the ninesix months ended SeptemberJune 30, 20172023 compared to decreasing by $8.4$60.3 million for the ninesix months ended SeptemberJune 30, 2016.2022. The money pool is an inter-companyintercompany borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings.
Financing Activities
Net cash flow used inSystem Energy’s financing activities increased $39.8used $26.5 million of cash for the ninesix months ended SeptemberJune 30, 20172023 compared to providing $56.9 million of cash for the ninesix months ended SeptemberJune 30, 20162022 primarily due to:to the following activity:
•the repayment, at maturity, of $250 million of 4.10% Series mortgage bonds in April 2023;
•the issuance of a decrease$50 million term loan in May 2022, which was repaid, prior to maturity, in March 2023;
•net repayments of $34.8 million in 2023 compared to net long-term borrowings of $65.2$57.7 million in 2022 on the nuclear fuel company variable interest entity’s credit facility in 2017 as compared to facilities;
•the same period in 2016; and
the payment in February 2017,repayment, at maturity, of $50$50.3 million of 2.5% Series governmental bonds in April 2022; and
•the System Energy nuclear fuel company variable interest entity’s 4.02% Series H notes.
The increase was partially offset by:
a decrease in common stock dividends and distributionsissuance of $53.4 million in 2017 compared to 2016 in order to maintain the targeted capital structure; and
the partial repayment caused by System Energy in May 2016 of $22$325 million of 5.875% pollution control revenue6.00% Series mortgage bonds due 2022 issued on behalf of System Energy.in March 2023.
See Note 4 to the financial statements herein and Note 5 to the financial statements in the Form 10-K for more details on long-term debt.
System Energy Resources, Inc.
Management's Financial Discussion and Analysis
Capital Structure
System Energy’s capitalizationdebt to capital ratio is balanced between equity and debt, as shown in the following table. The decrease in the debt to capital ratio is primarily due to net income in 2023 and the net retirement of long-term debt in 2023.
| | | | | | | | | | | |
| June 30, 2023 | | December 31, 2022 |
Debt to capital | 42.9 | % | | 45.0 | % |
Effect of subtracting cash | (1.6 | %) | | (0.1 | %) |
Net debt to net capital (non-GAAP) | 41.3 | % | | 44.9 | % |
|
| | | | | |
| September 30, 2017 | | December 31, 2016 |
Debt to capital | 45.0 | % | | 45.5 | % |
Effect of subtracting cash | (7.0 | %) | | (12.0 | %) |
Net debt to net capital | 38.0 | % | | 33.5 | % |
Net debt consists of debt less cash and cash equivalents. Debt consists of short-term borrowings and long-term debt, including the currently maturing portion. Capital consists of debt 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
System Energy Resources, Inc.
Management's Financial Discussion and Analysis
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.
Uses and Sources of Capital
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources” in the Form 10-K for a discussion of System Energy’s uses and sources of capital. Following are updates to the information provided in the Form 10-K.
System Energy is developing its capital investment plan for 2018 through 2020 and currently anticipates making $515 million in capital investments during that period. The estimate includes amounts associated with specific investments and initiatives such as investments in Grand Gulf.
System Energy’s receivables from the money pool were as follows:
| | | | | | | | | | | | | | | | | | | | |
June 30, 2023 | | December 31, 2022 | | June 30, 2022 | | December 31, 2021 |
(In Thousands) |
$14,880 | | $94,981 | | $15,411 | | $75,745 |
|
| | | | | | |
September 30, 2017 | | December 31, 2016 | | September 30, 2016 | | December 31, 2015 |
(In Thousands) |
$236,467 | | $33,809 | | $31,511 | | $39,926 |
See Note 4 to the financial statements in the Form 10-K 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 May 2019.June 2025. As of SeptemberJune 30, 2017, $31.8 million in letters of credit to support a like amount of commercial paper issued and $502023, $37.8 million in loans were outstanding under the System Energy nuclear fuel company variable interest entity credit facility. See Note 4 to the financial statements herein for additional discussion of the variable interest entity credit facility.
Federal Regulation
See the “Rate, Cost-recovery, and Other Regulation - Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis in the Form 10-K and Note 2 to the financial statements herein and in the Form 10-K for a discussion of federal regulation.
Complaints Against System Energy
See Note 2 to the financial statements in the Form 10-K for information regarding pending complaints against System Energy. The following are updates to that discussion.
Return on Equity and Capital Structure Complaints
As discussed in the Form 10-K, in March 2021 the FERC ALJ issued an initial decision in the proceeding initiated by the LPSC, the MPSC, the APSC, and the City Council against System Energy regarding the return on equity component of the Unit Power Sales Agreement. With regard to System Energy’s authorized return on equity, the ALJ determined that the existing return on equity of 10.94% is 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 is excessive and that the just and reasonable equity ratio is 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
System Energy Resources, Inc.
Management's Financial Discussion and Analysis
Complaint Against System Energy
In January 2017 the APSCdifference between the actual equity ratio and MPSC filedthe 48.15% equity ratio. If the ALJ’s initial decision is upheld, the estimated refund for this proceeding is approximately $39 million, which includes interest through June 30, 2023, and the estimated resulting annual rate reduction would be approximately $28 million. As a complaintresult of the 2022 settlement agreement with the MPSC, both the estimated refund and rate reduction exclude Entergy Mississippi's portion. See “System Energy Settlement with the MPSC” in the Form 10-K for discussion of the settlement. The estimated refund will continue to accrue interest until a final FERC againstdecision is issued.
The ALJ initial decision is an interim step in the FERC litigation process, and an ALJ’s determinations made in an initial decision are not controlling on the FERC. In April 2021, System Energy. The complaint seeks a reductionEnergy filed its brief on exceptions, in which it challenged the initial decision’s findings on both the return on equity componentand 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. Refunds, if any, that might be required will only become due after the FERC issues its order reviewing the initial decision.
Grand Gulf Sale-leaseback Renewal Complaint and Uncertain Tax Position Rate Base Issue
As discussed in the Form 10-K, in May 2018 the LPSC filed a complaint against System Energy and Entergy Services related to System Energy’s renewal of a sale-leaseback transaction originally entered into in December 1988 for an 11.5% undivided interest in Grand Gulf Unit 1. The APSC, the MPSC, and the City Council subsequently intervened in the proceeding. A hearing was held before a FERC ALJ in November 2019. In April 2020 the ALJ issued the initial decision, and 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 disallows 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 are 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.
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 are 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” in the Form 10-K 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 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
System Energy Resources, Inc.
Management's Financial Discussion and Analysis
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 have been deemed denied by operation of law. The deemed denial of the rehearing request initiates the sixty-day period in which aggrieved parties may petition for federal appellate court review of the underlying FERC orders; however, the FERC may issue a substantive order on rehearing as long as it continues to have jurisdiction over the case. 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” in the Form 10-K 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.
LPSC Additional Complaints
As discussed in the Form 10-K, 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 following are updates to that discussion.
Unit Power Sales Agreement Complaint
As discussed in the Form 10-K, 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 raises 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 pursuantare unjust and unreasonable and a corresponding request for refunds for the 15-month refund period and changes to whichthe Unit Power Sales Agreement prospectively. 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.
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. System Energy sellsfiled answering testimony in January 2022. In March 2022 the FERC trial staff filed direct and answering testimony recommending refunds and prospective modifications to the Unit Power Sales Agreement.
In April 2022, System Energy filed cross-answering testimony in response to the FERC trial staff’s recommendations. 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. Also in June 2022, System Energy filed revised and supplemental cross-answering testimony to respond to the FERC trial staff’s testimony and to oppose its Grand Gulf capacityrevised recommendation.
In May 2022 the LPSC, the APSC, and energythe City Council filed rebuttal testimony and asserted new claims. In June 2022 a new procedural schedule was adopted, providing for additional rounds of testimony and for the hearing to begin in September 2022. The hearing concluded in December 2022. Also in December 2022, a motion to extend the briefing schedule and the May 2023 deadline for the initial decision was granted.
System Energy Resources, Inc.
Management's Financial Discussion and Analysis
In November 2022, System Energy filed a partial settlement agreement with the APSC, the City Council, and the LPSC that resolves 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 provides that System Energy will 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, 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 current return on equityas the Utility operating companies other than Entergy Mississippi purchasing under the Unit Power Sales Agreement. The settlement further provides that if the APSC, the City Council, or the LPSC agrees to the global settlement System Energy entered into with the MPSC (see “System Energy Settlement with the MPSC” in the Form 10-K for discussion of the settlement), and such global settlement includes a black-box refund amount, then the black-box refund for this settlement agreement shall not be incremental or in addition to the global black-box refund amount. The settlement agreement addresses 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 is 10.94%.bills. Based on this finding, the initial decision recommended refunds; System Energy estimates that those refunds for Entergy Arkansas, Entergy Louisiana, and Entergy New Orleans would total approximately $115 million plus $142 million of interest through June 30, 2023. The complaint allegesinitial decision also finds that the return on equityUnit Power Sales Agreement should be modified such that a cash working capital allowance of negative $36.4 million is unjust and unreasonable because current capital market and other considerations indicate that it is excessive. The complaint requestsapplied prospectively. If the FERC ultimately orders these modifications to institute proceedingscash working capital be implemented, the estimated annual revenue requirement impact is expected to investigatebe immaterial. On the return on equity and establish a lower return on equity, and also requests thatother non-settled issues for which the complainants sought refunds or changes to the Unit Power Sales Agreement, the initial decision ruled against the complainants.
The initial decision is an interim step in the FERC establish January 23, 2017, as a refund effective date. The complaint includes returnlitigation process, and an ALJ’s determination made in an initial decision is not controlling on equity analysis that purports to establish that the range of reasonable return on equity forFERC. System Energy is between 8.37%disagrees with the ALJ’s findings concerning the accumulated deferred income taxes issues and 8.67%.cash working capital. In July 2023, System Energy answeredfiled a brief on exceptions to the complaintinitial decision’s accumulated deferred income taxes findings. Refunds, if any, that might be required will become due only after the FERC issues its order reviewing the initial decision.
Grand Gulf Prudence Complaint
As discussed in February 2017 and disputes that a return on equitythe Form 10-K, in March 2021, the second of 8.37% to 8.67% is just and reasonable. Thethe additional complaints was filed at the FERC by the LPSC, the APSC, and the City Council intervenedagainst System Energy, Entergy Services, Entergy Operations, and Entergy Corporation. In November 2022 the FERC issued an order setting the complaint for settlement and hearing procedures. 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. The procedural schedule for the hearing has not yet been established.
Based on analysis of the pending litigation, including the May 2023 initial decision in the proceeding expressing support for the complaint. System Energy is recording a provision against revenue for the potential outcome of this proceeding. In September 2017 the FERC established a refund effective date of January 23, 2017, consolidated the return on equity complaint proceeding with the proceeding related to System Energy’s Unit Power Sales Agreement amendments,complaint proceeding, management determined that System Energy’s regulatory liability related to complaints against System Energy as of June 30, 2023 is adequate.
System Energy Formula Rate Annual Protocols Formal Challenge Concerning 2021 Calendar Year Bills
In March 2023, pursuant to the protocols procedures discussed below,in Note 2 to the financial statements in the Form 10-K, the LPSC, the APSC, and directed the partiesCity Council filed with the FERC a formal challenge to engageSystem Energy’s
System Energy Resources, Inc.
Management's Financial Discussion and Analysis
implementation of the formula rate during calendar year 2021. The formal challenge alleges: (1) that it was imprudent for System Energy to accept the IRS’s partial acceptance of a previously uncertain tax position; (2) that System Energy used incorrect inputs for retained earnings that are used to determine the capital structure; (3) that the equity ratio charged in settlement proceedings beforerates was excessive; and (4) that all issues in the ongoing Unit Power Sales Agreement complaint proceeding should also be reflected in calendar year 2021 bills. The first, third, and fourth allegations are identical to issues that were raised in the formal challenge to the calendar year 2020 bills. The formal challenge to the calendar year 2021 bills states that the impact of the first allegation is “tens of millions of dollars,” but it does not provide an ALJ. Ifestimate of the parties failfinancial impact of the remaining allegations.
In May 2023, System Energy filed an answer to come to an agreement during settlement proceedings,the formal challenge in which it requested that the FERC deny the formal challenge as a prehearing conference will be held to establish a procedural schedule for hearing proceedings.matter of law, or else hold the proceeding in abeyance pending the resolution of related dockets.
Unit Power Sales Agreement
In August 2017,As discussed in Note 2 to the financial statements in the Form 10-K, in December 2021, System Energy submitted to the FERC proposed amendments to 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. The filing proposes limited amendments to the Unit Power Sales Agreement to adopt (1) updated rates for use in calculating Grand Gulf plant depreciation and amortization expenses and (2) updated nuclear decommissioning cost annual revenue requirements, both of which are recovered through the Unit Power Sales Agreement rate formula.expenses. The proposed amendments would result in lowerhigher charges to the Utility operating companies that buy capacity and energy from System Energy under the Unit Power Sales Agreement. The proposed changes are based on updated depreciation and nuclear decommissioning studies that take into account the renewal of Grand Gulf’s operating license for a term through November 1, 2044. System Energy requested that the FERC accept the amendments effective October 1, 2017.
In September 2017February 2022 the FERC accepted System Energy’sEntergy’s proposed Unit Power Sales Agreement amendments, subject to further proceedings to consider the justness and reasonablenessincreased depreciation rates with an effective date of the amendments. Because the amendments propose a rate decrease, the FERC also initiated an investigation under Section 206 of the Federal Power Act to determine if the rate decrease should be lower than proposed. The FERC accepted the proposed amendments effective OctoberMarch 1, 2017,2022, subject to refund pending the outcome of the further settlement and/or hearing proceedings, and established a refund effective dateprocedures. In June 2023 System Energy filed with the FERC an unopposed offer of October 11, 2017settlement that it had negotiated with respectintervenors to the rate decrease. The FERC also consolidated the Unit Power Sales Agreement amendment proceeding with the proceeding related to the complaint filedproceeding. If it is approved by the APSC and MPSC, discussed above, and directedFERC, the parties to engage in settlement proceedings before an ALJ. Ifwill fully resolve the parties fail to come to an agreement during settlement proceedings, a prehearing conference will be held to establish a procedural schedule for hearing proceedings.proceeding.
Nuclear Matters
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS –Nuclear Matters” in the Form 10-K for a discussion of nuclear matters.
System Energy Resources, Inc.
Management's Financial Discussion and Analysis
Environmental Risks
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS –Environmental Risks” in the Form 10-K for a discussion of environmental risks.
Critical Accounting Estimates
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS -Critical Accounting Estimates” in the Form 10-K for a discussion of the estimates and judgments necessary in System Energy’s accounting for nuclear decommissioning costs, utility regulatory accounting, impairment of long-lived assets, and trust fund investments, taxation and uncertain tax positions, qualified pension and other postretirement benefits, and other contingencies.
New Accounting Pronouncements
See “New Accounting Pronouncements” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and AnalysisNote 1 to the financial statements in the Form 10-K for further discussion.
a discussion of new accounting pronouncements.
|
| | | | | | | | | | | | | | | | |
SYSTEM ENERGY RESOURCES, INC. |
INCOME STATEMENTS |
For the Three and Nine Months Ended September 30, 2017 and 2016 |
(Unaudited) |
| | | | |
| | Three Months Ended | | Nine Months Ended |
| | 2017 | | 2016 | | 2017 | | 2016 |
| | (In Thousands) | | (In Thousands) |
OPERATING REVENUES | | | | | | | | |
Electric | |
| $156,106 |
| |
| $114,039 |
| |
| $475,849 |
| |
| $403,056 |
|
| | | | | | | | |
OPERATING EXPENSES | | | | | | | | |
Operation and Maintenance: | | | | | | | | |
Fuel, fuel-related expenses, and gas purchased for resale | | 16,170 |
| | (7,393 | ) | | 53,164 |
| | 26,429 |
|
Nuclear refueling outage expenses | | 4,435 |
| | 4,958 |
| | 13,595 |
| | 14,448 |
|
Other operation and maintenance | | 51,392 |
| | 32,867 |
| | 154,103 |
| | 100,793 |
|
Decommissioning | | 8,290 |
| | 12,802 |
| | 34,974 |
| | 37,782 |
|
Taxes other than income taxes | | 6,679 |
| | 6,256 |
| | 19,767 |
| | 18,894 |
|
Depreciation and amortization | | 34,524 |
| | 30,811 |
| | 105,152 |
| | 100,902 |
|
Other regulatory credits - net | | (2,843 | ) | | (10,148 | ) | | (24,626 | ) | | (32,564 | ) |
TOTAL | | 118,647 |
| | 70,153 |
| | 356,129 |
| | 266,684 |
|
| | | | | | | | |
OPERATING INCOME | | 37,459 |
| | 43,886 |
| | 119,720 |
| | 136,372 |
|
| | | | | | | | |
OTHER INCOME | | | | | | | | |
Allowance for equity funds used during construction | | 1,736 |
| | 1,758 |
| | 4,148 |
| | 6,089 |
|
Interest and investment income | | 6,624 |
| | 4,233 |
| | 15,021 |
| | 12,631 |
|
Miscellaneous - net | | (130 | ) | | (109 | ) | | (361 | ) | | (365 | ) |
TOTAL | | 8,230 |
| | 5,882 |
| | 18,808 |
| | 18,355 |
|
| | | | | | | | |
INTEREST EXPENSE | | | | | | | | |
Interest expense | | 9,169 |
| | 9,186 |
| | 27,469 |
| | 28,119 |
|
Allowance for borrowed funds used during construction | | (425 | ) | | (440 | ) | | (1,014 | ) | | (1,536 | ) |
TOTAL | | 8,744 |
| | 8,746 |
| | 26,455 |
| | 26,583 |
|
| | | | | | | | |
INCOME BEFORE INCOME TAXES | | 36,945 |
| | 41,022 |
| | 112,073 |
| | 128,144 |
|
| | | | | | | | |
Income taxes | | 16,362 |
| | 18,652 |
| | 51,793 |
| | 54,726 |
|
| | | | | | | | |
NET INCOME | |
| $20,583 |
| |
| $22,370 |
| |
| $60,280 |
| |
| $73,418 |
|
| | | | | | | | |
See Notes to Financial Statements. | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
SYSTEM ENERGY RESOURCES, INC. |
STATEMENTS OF OPERATIONS |
For the Three and Six Months Ended June 30, 2023 and 2022 |
(Unaudited) |
| | | | |
| | Three Months Ended | | Six Months Ended |
| | 2023 | | 2022 | | 2023 | | 2022 |
| | (In Thousands) | | (In Thousands) |
OPERATING REVENUES | | | | | | | | |
Electric | | $138,384 | | | $163,872 | | | $309,956 | | | $305,248 | |
| | | | | | | | |
OPERATING EXPENSES | | | | | | | | |
Operation and Maintenance: | | | | | | | | |
Fuel, fuel-related expenses, and gas purchased for resale | | 18,783 | | | 11,610 | | | 37,630 | | | 19,533 | |
Nuclear refueling outage expenses | | 6,692 | | | 5,320 | | | 13,311 | | | 11,247 | |
Other operation and maintenance | | 46,986 | | | 54,685 | | | 97,186 | | | 98,589 | |
Decommissioning | | 10,391 | | | 10,016 | | | 20,678 | | | 19,933 | |
Taxes other than income taxes | | 7,728 | | | 7,150 | | | 15,010 | | | 15,001 | |
Depreciation and amortization | | 35,303 | | | 37,777 | | | 72,440 | | | 67,700 | |
Other regulatory charges (credits) - net | | (32,415) | | | 527,515 | | | (38,874) | | | 518,991 | |
TOTAL | | 93,468 | | | 654,073 | | | 217,381 | | | 750,994 | |
| | | | | | | | |
OPERATING INCOME (LOSS) | | 44,916 | | | (490,201) | | | 92,575 | | | (445,746) | |
| | | | | | | | |
OTHER INCOME (DEDUCTIONS) | | | | | | | | |
Allowance for equity funds used during construction | | 1,605 | | | 2,581 | | | 3,423 | | | 4,628 | |
Interest and investment income (loss) | | 1,638 | | | (8,959) | | | 7,402 | | | (3,727) | |
Miscellaneous - net | | (1,613) | | | (2,741) | | | (10,691) | | | (4,380) | |
TOTAL | | 1,630 | | | (9,119) | | | 134 | | | (3,479) | |
| | | | | | | | |
INTEREST EXPENSE | | | | | | | | |
Interest expense | | 13,635 | | | 9,112 | | | 24,126 | | | 18,593 | |
Allowance for borrowed funds used during construction | | (436) | | | (409) | | | (791) | | | (736) | |
TOTAL | | 13,199 | | | 8,703 | | | 23,335 | | | 17,857 | |
| | | | | | | | |
INCOME (LOSS) BEFORE INCOME TAXES | | 33,347 | | | (508,023) | | | 69,374 | | | (467,082) | |
| | | | | | | | |
Income taxes | | 7,588 | | | (127,875) | | | 16,070 | | | (118,366) | |
| | | | | | | | |
NET INCOME (LOSS) | | $25,759 | | | ($380,148) | | | $53,304 | | | ($348,716) | |
| | | | | | | | |
See Notes to Financial Statements. | | | | | | | | |
(pagePage left blank intentionally)
|
| | | | | | | | |
SYSTEM ENERGY RESOURCES, INC. |
STATEMENTS OF CASH FLOWS |
For the Nine Months Ended September 30, 2017 and 2016 |
(Unaudited) |
| | 2017 | | 2016 |
| | (In Thousands) |
OPERATING ACTIVITIES | | | | |
Net income | |
| $60,280 |
| |
| $73,418 |
|
Adjustments to reconcile net income to net cash flow provided by operating activities: | | | | |
Depreciation, amortization, and decommissioning, including nuclear fuel amortization | | 184,625 |
| | 176,571 |
|
Deferred income taxes, investment tax credits, and non-current taxes accrued | | 44,017 |
| | 73,829 |
|
Changes in assets and liabilities: | | | | |
Receivables | | 21,147 |
| | 9,084 |
|
Accounts payable | | 2,344 |
| | (2,217 | ) |
Prepaid taxes and taxes accrued | | 2,956 |
| | (30,063 | ) |
Interest accrued | | 401 |
| | 406 |
|
Other working capital accounts | | 7,605 |
| | (22,051 | ) |
Other regulatory assets | | 1,196 |
| | (12,392 | ) |
Pension and other postretirement liabilities | | (14,665 | ) | | (15,789 | ) |
Other assets and liabilities | | (30,421 | ) | | (16,037 | ) |
Net cash flow provided by operating activities | | 279,485 |
| | 234,759 |
|
| | | | |
INVESTING ACTIVITIES | | | | |
Construction expenditures | | (60,041 | ) | | (71,471 | ) |
Allowance for equity funds used during construction | | 4,148 |
| | 6,089 |
|
Nuclear fuel purchases | | (24,239 | ) | | (137,248 | ) |
Proceeds from the sale of nuclear fuel | | 60,188 |
| | 11,467 |
|
Changes in other investments - net | | (9,061 | ) | | — |
|
Proceeds from nuclear decommissioning trust fund sales | | 308,134 |
| | 392,926 |
|
Investment in nuclear decommissioning trust funds | | (336,069 | ) | | (419,255 | ) |
Changes in money pool receivable - net | | (202,658 | ) | | 8,415 |
|
Litigation proceeds for reimbursement of spent nuclear fuel storage costs
| | — |
| | 15,806 |
|
Net cash flow used in investing activities | | (259,598 | ) | | (193,271 | ) |
| | | | |
FINANCING ACTIVITIES | | | | |
Retirement of long-term debt | | (50,003 | ) | | (22,002 | ) |
Changes in credit borrowings - net | | 14,858 |
| | 80,041 |
|
Common stock dividends and distributions | | (85,610 | ) | | (139,000 | ) |
Other | | (28 | ) | | (26 | ) |
Net cash flow used in financing activities | | (120,783 | ) | | (80,987 | ) |
| | | | |
Net decrease in cash and cash equivalents | | (100,896 | ) | | (39,499 | ) |
Cash and cash equivalents at beginning of period | | 245,863 |
| | 230,661 |
|
Cash and cash equivalents at end of period | |
| $144,967 |
| |
| $191,162 |
|
| | | | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | |
Cash paid during the period for: | | | | |
Interest - net of amount capitalized | |
| $26,251 |
| |
| $27,087 |
|
Income taxes | |
| $— |
| |
| $3,402 |
|
| | | | |
See Notes to Financial Statements. | | | | |
| | | | | | | | | | | | | | |
SYSTEM ENERGY RESOURCES, INC. |
STATEMENTS OF CASH FLOWS |
For the Six Months Ended June 30, 2023 and 2022 |
(Unaudited) |
| | 2023 | | 2022 |
| | (In Thousands) |
OPERATING ACTIVITIES | | | | |
Net income (loss) | | $53,304 | | | ($348,716) | |
Adjustments to reconcile net income (loss) to net cash flow provided by operating activities: | | | | |
Depreciation, amortization, and decommissioning, including nuclear fuel amortization | | 125,741 | | | 104,296 | |
Deferred income taxes, investment tax credits, and non-current taxes accrued | | 17,865 | | | (124,202) | |
Changes in assets and liabilities: | | | | |
Receivables | | 13,558 | | | (14,753) | |
Accounts payable | | (26,332) | | | (27,368) | |
Prepaid taxes and taxes accrued | | (10,704) | | | (2,664) | |
Interest accrued | | 3,035 | | | (247) | |
Other working capital accounts | | 5,569 | | | (41,234) | |
Other regulatory assets | | (16,683) | | | (22,768) | |
Other regulatory liabilities | | 27,611 | | | 338,280 | |
Pension and other postretirement liabilities | | (4,758) | | | (7,494) | |
Other assets and liabilities | | (127,635) | | | 229,515 | |
Net cash flow provided by operating activities | | 60,571 | | | 82,645 | |
| | | | |
INVESTING ACTIVITIES | | | | |
Construction expenditures | | (54,140) | | | (100,953) | |
Allowance for equity funds used during construction | | 3,423 | | | 4,628 | |
Nuclear fuel purchases | | (31,822) | | | (77,704) | |
Proceeds from sale of nuclear fuel | | 25,091 | | | 18,845 | |
Increase in other investments | | (4) | | | — | |
Proceeds from nuclear decommissioning trust fund sales | | 151,463 | | | 177,584 | |
Investment in nuclear decommissioning trust funds | | (162,850) | | | (176,735) | |
Changes in money pool receivable - net | | 80,101 | | | 60,334 | |
| | | | |
Net cash flow provided by (used in) investing activities | | 11,262 | | | (94,001) | |
| | | | |
FINANCING ACTIVITIES | | | | |
Proceeds from the issuance of long-term debt | | 585,898 | | | 556,696 | |
Retirement of long-term debt | | (612,416) | | | (499,816) | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Net cash flow provided by (used in) financing activities | | (26,518) | | | 56,880 | |
| | | | |
Net increase in cash and cash equivalents | | 45,315 | | | 45,524 | |
Cash and cash equivalents at beginning of period | | 2,940 | | | 89,201 | |
Cash and cash equivalents at end of period | | $48,255 | | | $134,725 | |
| | | | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | |
Cash paid during the period for: | | | | |
Interest - net of amount capitalized | | $20,289 | | | $19,454 | |
| | | | |
| | | | |
See Notes to Financial Statements. | | | | |
|
| | | | | | | | |
SYSTEM ENERGY RESOURCES, INC. |
BALANCE SHEETS |
ASSETS |
September 30, 2017 and December 31, 2016 |
(Unaudited) |
| | 2017 | | 2016 |
| | (In Thousands) |
CURRENT ASSETS | | | | |
Cash and cash equivalents: | | | | |
Cash | |
| $47 |
| |
| $786 |
|
Temporary cash investments | | 144,920 |
| | 245,077 |
|
Total cash and cash equivalents | | 144,967 |
| | 245,863 |
|
Accounts receivable: | | | | |
Associated companies | | 284,724 |
| | 104,390 |
|
Other | | 4,814 |
| | 3,637 |
|
Total accounts receivable | | 289,538 |
| | 108,027 |
|
Materials and supplies - at average cost | | 86,719 |
| | 82,469 |
|
Deferred nuclear refueling outage costs | | 11,713 |
| | 24,729 |
|
Prepaid taxes | | 12,926 |
| | 15,882 |
|
Prepayments and other | | 14,450 |
| | 4,229 |
|
TOTAL | | 560,313 |
| | 481,199 |
|
| | | | |
OTHER PROPERTY AND INVESTMENTS | | | | |
Decommissioning trust funds | | 870,610 |
| | 780,496 |
|
TOTAL | | 870,610 |
| | 780,496 |
|
| | | | |
UTILITY PLANT | | | | |
Electric | | 4,308,864 |
| | 4,331,668 |
|
Property under capital lease | | 585,084 |
| | 585,084 |
|
Construction work in progress | | 80,343 |
| | 43,888 |
|
Nuclear fuel | | 188,956 |
| | 259,635 |
|
TOTAL UTILITY PLANT | | 5,163,247 |
| | 5,220,275 |
|
Less - accumulated depreciation and amortization | | 3,155,691 |
| | 3,063,249 |
|
UTILITY PLANT - NET | | 2,007,556 |
| | 2,157,026 |
|
| | | | |
DEFERRED DEBITS AND OTHER ASSETS | | | | |
Regulatory assets: | | | | |
Regulatory asset for income taxes - net | | 86,515 |
| | 93,127 |
|
Other regulatory assets | | 416,628 |
| | 411,212 |
|
Other | | 4,421 |
| | 4,652 |
|
TOTAL | | 507,564 |
| | 508,991 |
|
| | | | |
TOTAL ASSETS | |
| $3,946,043 |
| |
| $3,927,712 |
|
| | | | |
See Notes to Financial Statements. | | | | |
| | | | | | | | | | | | | | |
SYSTEM ENERGY RESOURCES, INC. |
BALANCE SHEETS |
ASSETS |
June 30, 2023 and December 31, 2022 |
(Unaudited) |
| | 2023 | | 2022 |
| | (In Thousands) |
CURRENT ASSETS | | | | |
Cash and cash equivalents: | | | | |
Cash | | $2,015 | | | $78 | |
Temporary cash investments | | 46,240 | | | 2,862 | |
Total cash and cash equivalents | | 48,255 | | | 2,940 | |
Accounts receivable: | | | | |
Associated companies | | 65,892 | | | 158,601 | |
Other | | 5,195 | | | 6,145 | |
Total accounts receivable | | 71,087 | | | 164,746 | |
| | | | |
Materials and supplies - at average cost | | 147,318 | | | 135,346 | |
Deferred nuclear refueling outage costs | | 19,681 | | | 33,377 | |
Prepaid taxes | | 3,107 | | | — | |
Prepayments and other | | 12,426 | | | 9,097 | |
TOTAL | | 301,874 | | | 345,506 | |
| | | | |
OTHER PROPERTY AND INVESTMENTS | | | | |
Decommissioning trust funds | | 1,260,251 | | | 1,142,914 | |
TOTAL | | 1,260,251 | | | 1,142,914 | |
| | | | |
UTILITY PLANT | | | | |
Electric | | 5,461,317 | | | 5,425,449 | |
| | | | |
Construction work in progress | | 99,337 | | | 102,987 | |
Nuclear fuel | | 146,230 | | | 193,004 | |
TOTAL UTILITY PLANT | | 5,706,884 | | | 5,721,440 | |
Less - accumulated depreciation and amortization | | 3,439,474 | | | 3,412,257 | |
UTILITY PLANT - NET | | 2,267,410 | | | 2,309,183 | |
| | | | |
DEFERRED DEBITS AND OTHER ASSETS | | | | |
Regulatory assets: | | | | |
| | | | |
Other regulatory assets | | 431,804 | | | 415,121 | |
| | | | |
Other | | 898 | | | 1,422 | |
TOTAL | | 432,702 | | | 416,543 | |
| | | | |
TOTAL ASSETS | | $4,262,237 | | | $4,214,146 | |
| | | | |
See Notes to Financial Statements. | | | | |
| | SYSTEM ENERGY RESOURCES, INC. | SYSTEM ENERGY RESOURCES, INC. | SYSTEM ENERGY RESOURCES, INC. |
BALANCE SHEETS | BALANCE SHEETS | BALANCE SHEETS |
LIABILITIES AND EQUITY | LIABILITIES AND EQUITY | LIABILITIES AND EQUITY |
September 30, 2017 and December 31, 2016 | |
June 30, 2023 and December 31, 2022 | | June 30, 2023 and December 31, 2022 |
(Unaudited) | (Unaudited) | (Unaudited) |
| | 2017 | | 2016 | | 2023 | | 2022 |
| | (In Thousands) | | (In Thousands) |
CURRENT LIABILITIES | | | | | CURRENT LIABILITIES | |
Currently maturing long-term debt | |
| $4 |
| |
| $50,003 |
| Currently maturing long-term debt | | $46 | | | $300,037 | |
Short-term borrowings | | 31,751 |
| | 66,893 |
| |
| Accounts payable: | | | | | Accounts payable: | |
Associated companies | | 10,325 |
| | 5,843 |
| Associated companies | | 11,431 | | | 21,701 | |
Other | | 44,958 |
| | 50,558 |
| Other | | 30,897 | | | 58,178 | |
Taxes accrued | | Taxes accrued | | — | | | 7,597 | |
| Interest accrued | | 14,450 |
| | 14,049 |
| Interest accrued | | 14,626 | | | 11,591 | |
| Sale-leaseback/depreciation regulatory liability | | Sale-leaseback/depreciation regulatory liability | | — | | | 103,497 | |
Other | | 2,958 |
| | 2,957 |
| Other | | 4,065 | | | 4,071 | |
TOTAL | | 104,446 |
| | 190,303 |
| TOTAL | | 61,065 | | | 506,672 | |
| | | | | | | | |
NON-CURRENT LIABILITIES | | | | | NON-CURRENT LIABILITIES | |
Accumulated deferred income taxes and taxes accrued | | 1,147,913 |
| | 1,112,865 |
| Accumulated deferred income taxes and taxes accrued | | 395,069 | | | 376,070 | |
Accumulated deferred investment tax credits | | 39,726 |
| | 41,663 |
| Accumulated deferred investment tax credits | | 44,004 | | | 44,692 | |
Regulatory liability for income taxes - net | | Regulatory liability for income taxes - net | | 109,366 | | | 110,840 | |
Other regulatory liabilities | | 424,381 |
| | 370,862 |
| Other regulatory liabilities | | 797,606 | | | 665,024 | |
Decommissioning | | 853,291 |
| | 854,202 |
| Decommissioning | | 1,063,139 | | | 1,042,461 | |
Pension and other postretirement liabilities | | 103,185 |
| | 117,850 |
| Pension and other postretirement liabilities | | 35,992 | | | 40,750 | |
Long-term debt | | 551,387 |
| | 501,129 |
| Long-term debt | | 752,923 | | | 477,868 | |
Other | | 8,221 |
| | 15 |
| Other | | 2 | | | 2 | |
TOTAL | | 3,128,104 |
| | 2,998,586 |
| TOTAL | | 3,198,101 | | | 2,757,707 | |
| | | | | | | | |
Commitments and Contingencies | | | | | Commitments and Contingencies | |
| | | | | |
COMMON EQUITY | | | | | COMMON EQUITY | |
Common stock, no par value, authorized 1,000,000 shares; issued and outstanding 789,350 shares in 2017 and 2016 | | 679,350 |
| | 679,350 |
| |
Retained earnings | | 34,143 |
| | 59,473 |
| |
Common stock, no par value, authorized 1,000,000 shares; issued and outstanding 789,350 shares in 2023 and 2022 | | Common stock, no par value, authorized 1,000,000 shares; issued and outstanding 789,350 shares in 2023 and 2022 | | 1,086,850 | | | 1,086,850 | |
Accumulated deficit | | Accumulated deficit | | (83,779) | | | (137,083) | |
TOTAL | | 713,493 |
| | 738,823 |
| TOTAL | | 1,003,071 | | | 949,767 | |
| | | | | | | | |
TOTAL LIABILITIES AND EQUITY | |
| $3,946,043 |
| |
| $3,927,712 |
| TOTAL LIABILITIES AND EQUITY | | $4,262,237 | | | $4,214,146 | |
| | | | | | | | |
See Notes to Financial Statements. | | | | | See Notes to Financial Statements. | |
|
| | | | | | | | | | | |
SYSTEM ENERGY RESOURCES, INC. |
STATEMENTS OF CHANGES IN COMMON EQUITY |
For the Nine Months Ended September 30, 2017 and 2016 |
(Unaudited) |
| | | |
| Common Equity | | |
| Common Stock | | Retained Earnings | | Total |
| (In Thousands) |
| | | | | |
Balance at December 31, 2015 |
| $719,350 |
| |
| $61,729 |
| |
| $781,079 |
|
| | | | | |
Net income | — |
| | 73,418 |
| | 73,418 |
|
Common stock dividends and distributions | (40,000 | ) | | (99,000 | ) | | (139,000 | ) |
| | | | | |
Balance at September 30, 2016 |
| $679,350 |
| |
| $36,147 |
| |
| $715,497 |
|
| | | | | |
| | | | | |
Balance at December 31, 2016 |
| $679,350 |
| |
| $59,473 |
| |
| $738,823 |
|
| | | | | |
Net income | — |
| | 60,280 |
| | 60,280 |
|
Common stock dividends | — |
| | (85,610 | ) | | (85,610 | ) |
| | | | | |
Balance at September 30, 2017 |
| $679,350 |
| |
| $34,143 |
| |
| $713,493 |
|
| | | | | |
See Notes to Financial Statements. | | | | | |
| | | | | | | | | | | | | | | | | |
SYSTEM ENERGY RESOURCES, INC. |
STATEMENTS OF CHANGES IN COMMON EQUITY |
For the Six Months Ended June 30, 2023 and 2022 |
(Unaudited) |
| | | |
| Common Equity | | |
| Common Stock | | Retained Earnings (Accumulated Deficit) | | Total |
| (In Thousands) |
| | | | | |
Balance at December 31, 2021 | $951,850 | | | $139,510 | | | $1,091,360 | |
| | | | | |
Net income | — | | | 31,432 | | | 31,432 | |
| | | | | |
Balance at March 31, 2022 | 951,850 | | | 170,942 | | | 1,122,792 | |
| | | | | |
Net loss | — | | | (380,148) | | | (380,148) | |
| | | | | |
Balance at June 30, 2022 | $951,850 | | | ($209,206) | | | $742,644 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Balance at December 31, 2022 | $1,086,850 | | | ($137,083) | | | $949,767 | |
| | | | | |
Net income | — | | | 27,545 | | | 27,545 | |
| | | | | |
Balance at March 31, 2023 | 1,086,850 | | | (109,538) | | | 977,312 | |
| | | | | |
Net income | — | | | 25,759 | | | 25,759 | |
| | | | | |
Balance at June 30, 2023 | $1,086,850 | | | ($83,779) | | | $1,003,071 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
See Notes to Financial Statements. | | | | | |
ENTERGY CORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
See “PART I, Item 1,Litigation” in the Form 10-K for a discussion of legal, administrative, and other regulatory proceedings affecting Entergy. Also see NoteNotes 1 and Note 2 to the financial statements herein and “Item 5, Other Information,Environmental Regulation” below for updates regarding environmental proceedings and regulation.
Item 1A. Risk Factors
There have been no material changes to the risk factors discussed in “PART"Part I, Item 1A,Risk Factors”1A. RISK FACTORS" in the Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities (a)
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
Period | | Total Number of Shares Purchased
| | Average Price Paid per Share
| | Total Number of Shares Purchased
as Part of a
Publicly
Announced Plan
| | Maximum $ Dollar Amount of Shares that May
Yet be Purchased
Under a Plan (b)
|
| | | | | | | | |
7/4/01/2017-7/31/20172023-4/30/2023 | | — |
| | $— | $— |
| — | — |
| $350,052,918 |
| $350,052,918 |
|
8/5/01/2017-8/2023-5/31/20172023 | | — |
| | $— | $— |
| — | — |
| $350,052,918 |
| $350,052,918 |
|
9/6/01/2017-9/2023-6/30/20172023 | | — |
| | $— | $— |
| — | — |
| $350,052,918 |
| $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 2017,2023, Entergy withheld 1,05471,722 shares of its common stock at $70.58$108.71 per share, 122,14827,533 shares of its common stock at $70.61$107.69 per share, and 31,24312,265 shares of its common stock at $71.89$107.59 per share, 551 shares of its common stock at $103.72 per share, 232 shares of its common stock at $106.07 per share, and 100 shares of its common stock at $105.79 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.
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(a) | See Note 12 to the financial statements in the Form 10-K for additional discussion of the stock-based compensation plans. |
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(b) | Maximum amount of shares that may yet be repurchased relates only to the $500 million 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. |
(a)See Note 12 to the financial statements in the Form 10-K for additional discussion of the stock-based compensation plans.
(b)Maximum dollar 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.
Item 5. Other Information
Rule 10b5-1 Trading Agreements
During the three months ended June 30, 2023, no director or officer of Entergy or any of the Registrant Subsidiaries adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” as each term is defined in Item 408(a) of Regulation S-K.
Regulation of the Nuclear Power Industry
Following are updatesis an update to the “Regulation of the Nuclear Power Industry” section of Part I, Item 1 of the Form 10-K.
Nuclear Waste Policy Act of 1982
Nuclear Plant Decommissioning
See the discussion in Part I, Item 1 in the Form 10-K for information regarding decommissioning funding for the nuclear plants. Following are updates to that discussion.
In March 20172023 filings with the NRC were made for certain Entergy subsidiaries’ nuclear plants reporting on decommissioning funding.funding for all of Entergy’s subsidiaries’ nuclear plants. Those reports showed that decommissioning funding for each of thosethe nuclear plants met the NRC’s financial assurance requirements.
NRC Reactor Oversight Process
In March 2017,September 2022 the NRC placed Waterford 3 in Column 2 based on an error associated with a radiation monitor calibration. Entergy soldcorrected the FitzPatrick plant to Exelon, and as part of the transaction, the FitzPatrick decommissioning trust fund, alongissue with the decommissioning obligationradiation monitor in February 2022 and also corrected a subsequent radiation monitor calibration issue. In May 2023 the NRC completed a supplemental inspection of Waterford 3 in accordance with its inspection procedures for that plant,nuclear plants in Column 2 and Waterford 3 was transferredreturned to Exelon. The FitzPatrick spent fuel disposal contract was assignedColumn 1.
In July 2023 the NRC placed River Bend in Column 2, effective April 2023, based on failure to Exelon as partinspect wiring associated with the high pressure core spray system. River Bend will remain in Column 2 pending successful completion of the transaction.a supplemental inspection.
Environmental Regulation
Following are updates to the “Environmental Regulation” section of Part I, Item 1 of the Form 10-K.
National Ambient Air Quality Standards
See the Form 10-K for discussion of the National Ambient Air Quality Standards (NAAQS) set by the EPA in accordance with the Clean Air ActAct. Following are updates to that discussion.
Hazardous Air Pollutants
As discussed in the Form 10-K, the EPA released the final Mercury and Subsequent Amendments
Regional Haze
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 June 2005April 2023 the EPA issued a regulatory proposal to revise portions of the MATS rule, including a proposed reduction to the emission limit for filterable particulate matter. If finalized, the proposed lower filterable particulate matter emission limitation could require additional capital investment and/or additional other operation and maintenance expenditures at Entergy’s coal-fired generating units. Entergy is closely monitoring this rulemaking, in part through its various trade associations.
Good Neighbor Plan/Cross-State Air Pollution Rule
In March 2023 the EPA released 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 (BART) to continue operating certain of Entergy’s fossil generation units. The rule leaves certain CAVR determinations to the states.
In Arkansas, the Arkansas Department of Environmental Quality prepared a state implementation plan (SIP) for Arkansas facilities to implement its obligations under the CAVR. In April 2012 the EPA finalized a decision addressing the Arkansas Regional Haze SIP, in which it disapproved a large portion of the Arkansas Regional Haze SIP, including the emission limits for NOx and SO2 at White Bluff. By Court order, the EPA had to issue a final federal implementation planFederal Implementation Plan (FIP) for Arkansas Regional Haze by no later than August 31, 2016. In April 2015 the EPA published a proposed FIP for Arkansas, taking comment on requiring installation of scrubbers and low NOx burners to continue operating both units at the White Bluff plant and both units at the Independence plant and NOx controls to continue operating the Lake Catherine plant. Entergy filed comments by the deadline in August 2015. Among other comments, including opposition to the EPA’s proposed controls on the Independence units, Entergy proposed to meet more stringent SO2 and NOx limits at both White Bluff and Independence within three years of the effective date of the final FIP and to cease the use of coal at the White Bluff units at a later date.
In September 2016 the EPA published the final Arkansas Regional Haze FIP. In most respects, the EPA finalized its original proposal but shortened the time for compliance for installation of the NOx controls. The FIP requires an emission limitation consistent with SO2 scrubbers at both White Bluff and Independence by October 2021 and NOx controls by April 2018. The EPA declined to adopt Entergy’s proposals related to ceasing coal use as an alternative to SO2 scrubbers for White Bluff SO2 BART. For some or all of the FIP, Entergy anticipates that Arkansas will submit a SIP to replace the FIP. In November 2016, Entergy and other interested parties, such, known as the State of Arkansas, filed
petitions for administrative reconsideration and stay at the EPA as well as petitions for judicial reviewGood Neighbor Plan, to the U.S. Court of Appealsaddress interstate transport for the Eighth Circuit. In February 2017, Entergy,2015 ozone NAAQS which will increase the State of Arkansas, and other parties requested the Court to judicially stay the FIP. In March 2017 the EPA granted in part the petitions for reconsideration and stated its intent to stay the FIP compliance deadlines by at least 90 days. Subsequently, the EPA granted a 90 day stay of the FIP effective dates and the EPA now has proposed approval of (i) an extension of these NOx limit deadlines to January 2020 and (ii) a state implementation for NOx controls that allows compliance with the provisionsstringency of the Cross-State Air Pollution Rule to satisfy(CSAPR) program in all four of the NOstates where the Utility operating companies operate. The FIP will significantly reduce ozone season nitrogen oxides (NOx regional haze provisions) emission allowance budgets and allocations for White Bluff, Independence,electric generating units. Entergy is currently assessing its compliance options for the FIP. This may include the installation of post-combustion NOx emissions controls on certain coal or large legacy gas units that will operate beyond 2026 and Lake Catherine. Arkansas published aare not currently equipped with such controls. Since the release of the proposed replacement state planrule in October 2017. This plan is under review, and comments are due toApril 2022, the stateprice for Group 3 ozone season NOx emission allowances has fluctuated significantly, peaking at over $45,000 per allowance in January 2018. The Eighth Circuit granted the government’s motion to hold the appeal litigation in abeyancelate August 2022, and has directedrecently ranged between $8,000 to $10,000 per allowance. Prior to issuance of the parties to file status reports in December 2017.
In Louisiana, Entergy is working with the Louisiana Department of Environmental Quality (LDEQ) and the EPA to revise the Louisiana SIP for regional haze, which was disapproved in part in 2012. The LDEQ submitted a revised SIPFIP, in February 2017. In May 2017 the EPA proposed to approve a majority of the revisions. In September 20172023 the EPA issued a proposed SIP approvalrelated State Implementation Plan (SIP) disapprovals for the Nelson plant, requiring an emission limitation consistent with the use of low-sulfur coal, with a compliance date three years from the effective date of the final EPA approval. The EPA’s final approval decision is expected in the fourth quarter 2017. Entergy continues to monitor the submission and to file comments in the process as appropriate.
New and Existing Source Performance Standards for Greenhouse Gas Emissions
As a part of a climate plan announced in June 2013, the EPA was directed to (i) reissue proposed carbon pollution standards for new power plants by September 20, 2013, with finalization of the rules to occur in a timely manner; (ii) issue proposed carbon pollution standards, regulations, or guidelines, as appropriate, for modified, reconstructed, and existing power plants no later than June 1, 2014; (iii) finalize those rules by no later than June 1, 2015; and (iv) include in the guidelines addressing existing power plants a requirement thatmany states, submit to the EPA the implementation plans required under Section 111(d) of the Clean Air Act and its implementing regulations by no later than June 30, 2016. In January 2014 the EPA issued the proposed New Source Performance Standards rule for new sources. In June 2014 the EPA issued proposed standards for existing power plants. Entergy has been actively engaged in the rulemaking process, having submitted comments to the EPA in December 2014. The EPA issued the final rules for both new and existing sources in August 2015, and they were published in the Federal Register in October 2015. The existing source rule, also called the Clean Power Plan, requires states to develop plans for compliance with the EPA’s emission standards. In February 2016 the U.S. Supreme Court issued a stay halting the effectiveness of the rule until the rule is reviewed by the D.C. Circuit and by the U.S. Supreme Court, if further review is granted. In March 2017 the current administration issued an executive order entitled “Promoting Energy Independence and Economic Growth” instructing the EPA to review and then to suspend, revise, or rescind the Clean Power Plan, if appropriate. The EPA subsequently asked the D.C. Circuit to hold the challenges to the Clean Power Plan and the greenhouse gas new source performance standards in abeyance and signed a notice of withdrawal of the proposed federal plan, model trading rules, and the Clean Energy Incentive Program. The court placed the litigation in abeyance in April 2017. The EPA Administrator also sent a letter to the affected governors explaining that states are not currently required to meet Clean Power Plan deadlines, some of which have passed. In October 2017 the EPA announced a proposed rule that would repeal the Clean Power Plan on the grounds that it exceeds the EPA’s statutory authority under the Clean Air Act. The EPA also asked the D.C. Circuit to continue to hold the litigation over the Clean Power Plan in abeyance “pending the conclusion of rulemaking” and stated to the court that the agency intends to issue “in the near future” an advance notice of proposed rulemaking seeking comments on replacing the Clean Power Plan. Also in October 2017, the EPA submitted its draft advance notice of proposed rulemaking to the Office of Management and Budget for review, which typically takes 60-90 days.
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 (NPDES) permit program 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 regulates the dredge and fill of waters of the United States, including jurisdictional wetlands.
NPDES Permits and Section 401 Water Quality Certifications
NPDES permits are subject to renewal every five years. Consequently, Entergy is currently in various stages of the data evaluation and discharge permitting process for its power plants.
For thirteen years, Entergy participated in an administrative permitting process with the New York State Department of Environmental Conservation (NYSDEC) for renewal of the Indian Point 2 and Indian Point 3 discharge permit. That proceeding recently was settled, along with other ongoing proceedings. In May 2017 a plaintiff filed two parallel state court appeals challenging New York State’s actions in signing and implementing the Indian Point settlement with Entergy on the basis that the State failed to perform sufficient environmental analysis of its actions. All signatories to the settlement agreement, including the Entergy affiliates that hold NRC licenses for Indian Point, were named. For a discussionfour states in which the Utility operating companies operate, and these SIP disapprovals are the subject of the recent Indian Point settlement, see “Entergy Wholesale Commodities Authorization to Operate Its Nuclear Power Plants” in Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis.
316(b) Cooling Water Intake Structures
The EPA finalized regulations in July 2004 governing the intake of water at large existing power plants employing cooling water intake structures. The rule sought to reduce perceived impacts on aquatic resources by requiring covered facilities to implement technology or other measures to meet EPA-targeted reductions in water use and corresponding perceived aquatic impacts. Entergy, other industry members and industry groups, environmental groups, and a coalition of northeastern and mid-Atlantic states challenged various aspects of the rule. After litigation, in May 2014, the EPA issued a new final 316(b) rule, followed by publication in the Federal Register in August 2014, with the final rule effective in October 2014. Entergy is developing a compliance plan for each affected facility in accordance with the requirements of the final rule.
Entergy filedmany legal challenges, including a petition for review filed by Entergy Louisiana challenging the disapproval of Louisiana’s SIP. Stays of the final rule as a co-petitioner withSIP disapprovals have been granted in all four states in which the Utility Water Act Group.operating companies operate, and the Good Neighbor Plan will not go into effect while the stays are in place. Decisions on the merits regarding the SIP disapprovals are not expected until 2024. The U.S. Court of Appeals for the Second Circuit heard oral argument in September 2017. No decisionfinal FIP also is expected before the first quarter 2018.subject to numerous legal challenges.
Federal Jurisdiction of Waters of the United StatesGreenhouse Gas Emissions
In September 2013May 2023 the EPA proposed several rules regulating greenhouse gas emissions from new and existing (coal and gas-fired) power plants. If finalized, the U.S. Army Corpsproposed requirements for existing “large and frequently used” gas turbine generating units could require significant investments in carbon dioxide (CO2) emission reduction technologies at certain of Engineers announced the intention to proposeEntergy’s existing gas turbine units with a rule to clarify federal Clean Water Act jurisdiction over waterscapacity of the United States. The announcement was madegreater than 300 MW per combustion turbine and which operate at an annual capacity factor of greater than 50 percent. Comments are due in conjunction with the EPA’s release of a draft scientific report on the “connectivity” of waters that the agency said would inform the rulemaking. This report was finalized in January 2015. The final rule was published in the Federal Register in June 2015. The rule could significantly increase the number and types of waters included in the EPA’s and the U.S. Army Corps of Engineers’ jurisdiction, which in turn could pose additional permitting and pollutant management burdens on Entergy’s operations. The final rule has been challenged in federal court by several parties, including most states. In August 2015 the District Court for North Dakota issued a preliminary injunction staying the new rule in 13 states. In October 2015 the U.S. Court of Appeals for the Sixth Circuit issued a nationwide stay of the rule.2023. Entergy will continue to monitoris closely monitoring this rulemaking, and ensure compliance with existing permitting processes. In response to the stay, the EPA and the U.S. Army Corps of Engineers resumed nationwide use of the agencies’ regulations as they existed prior to August 27, 2015. In February 2017 the current administration issued an executive order instructing the EPA and the U.S. Army Corps of Engineers to review the Waters of the United States rule and to revise or rescind, as appropriate. In June 2017 the EPA and the U.S. Army Corps of Engineers released a proposed rule that rescinds the June 2015 rule and recodifies the definition of “waters of the U.S.” that was in effect prior to the 2015 rule. The administration is expected to propose a definition of “waters of the U.S.” at a later date.part through its various trade associations.
Coal Combustion Residuals
SeeAs discussed in the Form 10-K, for discussion ofin April 2015 the EPA published the final coal combustion residuals rule (CCR rule) and the Water Infrastructure Improvements for the Nation Act (WIIN Act).(CCR) rule. In September 2017May 2023 the EPA agreedreleased a proposed 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 reconsider certain provisionsas CCR management units (i.e., non-containerized CCR located at a regulated CCR facility). Entergy does not have any legacy impoundments; however, the proposed definition of CCR management units appears to regulate on-site areas where CCR was beneficially used. This is contrary to the current CCR rule which exempts beneficial uses that meet certain criteria. Comments on the proposed rule were due in light of the WIIN Act. The EPA has not yet initiated a new round of rulemakingJuly 2023 and has not extended the existing mid-October 2017 groundwater monitoring deadline. Entergy met the existing monitoring deadline, is monitoring state agency actions, and will participatethe rulemaking, in the regulatory development process.part through its trade associations.
Other Environmental Matters
Entergy Louisiana and Entergy Texas
Several class action and other lawsuits have been filed in state and federal courts seeking relief from Entergy Gulf States, Inc. and others for damages caused by the disposal of hazardous waste and for asbestos-related disease allegedly resulting from exposure on Entergy Gulf States, Inc.’s premises.
Entergy Louisiana, as successor in interest to Entergy Gulf States Louisiana, currently is involved in the second phase of the remedial investigation of the Lake Charles Service Center site, located in Lake Charles, Louisiana. A manufactured gas plant (MGP) is believed to have operated at this site from approximately 1916 to 1931. Coal tar, a by-product of the distillation process employed at MGPs, apparently was routed to a portion of the property for disposal. The same area also has been used as a landfill. In 1999, Entergy Gulf States, Inc. signed a second administrative consent order with the EPA to perform a removal action at the site. In 2002 approximately 7,400 tons of contaminated soil and debris were excavated and disposed of from an area within the service center. In 2003 a cap was constructed over the remedial area to prevent the migration of contamination to the surface. In August 2005 an administrative order was issued by the EPA requiring that a 10-year groundwater study be conducted at this site. The groundwater monitoring study commenced in January 2006 and is continuing. The EPA released the second Five Year Review in 2015. The EPA indicated that the current remediation technique was insufficient and that Entergy would need to utilize other remediation technologies on the site. In July 2015, Entergy submitted a Focused Feasibility Study to the EPA outlining the potential remedies and suggesting installation of a waterloo barrier. The estimated cost for this remedy is approximately $2 million. Entergy is awaiting comments and direction from the EPA on the Focused Feasibility Study and potential remedy selection. In early 2017 the EPA indicated that the new remedial method, a waterloo barrier, may not be necessary and requested revisions to the Focused Feasibility Study. The EPA plans to provide comments on the revised 2017 Focused Feasibility Study in the next Five Year Review in 2020. Entergy is continuing discussions with the EPA regarding the ongoing actions at the site.
Earnings Ratios (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
The Registrant Subsidiaries have calculated ratios of earnings to fixed charges and ratios of earnings to combined fixed charges and preferred dividends/distributions pursuant to Item 503 of Regulation S-K of the SEC as follows:
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| | | | | | | | | | | | | | | | | |
| | Ratios of Earnings to Fixed Charges |
| | Twelve Months Ended | | Nine Months Ended |
| | December 31, | | September 30, |
| | 2012 | | 2013 | | 2014 | | 2015 | | 2016 | | 2017 |
Entergy Arkansas | | 3.79 |
| | 3.62 |
| | 3.08 |
| | 2.04 |
| | 3.32 |
| | 3.70 |
Entergy Louisiana | | 2.61 |
| | 3.30 |
| | 3.44 |
| | 3.36 |
| | 3.57 |
| | 3.86 |
Entergy Mississippi | | 2.79 |
| | 3.19 |
| | 3.23 |
| | 3.59 |
| | 3.96 |
| | 4.82 |
Entergy New Orleans | | 2.91 |
| | 1.85 |
| | 3.55 |
| | 4.90 |
| | 4.61 |
| | 5.17 |
Entergy Texas | | 1.76 |
| | 1.94 |
| | 2.39 |
| | 2.22 |
| | 2.92 |
| | 2.66 |
System Energy | | 5.12 |
| | 5.66 |
| | 4.04 |
| | 4.53 |
| | 5.39 |
| | 4.99 |
|
| | | | | | | | | | | | | | | | | |
| | Ratios of Earnings to Combined Fixed Charges and Preferred Dividends/Distributions |
| | Twelve Months Ended | | Nine Months Ended |
| | December 31, | | September 30, |
| | 2012 | | 2013 | | 2014 | | 2015 | | 2016 | | 2017 |
Entergy Arkansas | | 3.36 |
| | 3.25 |
| | 2.76 |
| | 1.85 |
| | 3.09 |
| | 3.62 |
Entergy Louisiana | | 2.47 |
| | 3.14 |
| | 3.28 |
| | 3.24 |
| | 3.57 |
| | 3.86 |
Entergy Mississippi | | 2.59 |
| | 2.97 |
| | 3.00 |
| | 3.34 |
| | 3.71 |
| | 4.68 |
Entergy New Orleans | | 2.63 |
| | 1.70 |
| | 3.26 |
| | 4.50 |
| | 4.30 |
| | 4.83 |
The Registrant Subsidiaries accrue interest expense related to unrecognized tax benefits in income tax expense and do not include it in fixed charges.
Item 6. Exhibits
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| 3(a) - | |
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| *3(b) - | |
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| 4(a) - | Extension Agreement,Forty-first Supplemental Indenture, dated as of August 7, 2017,May 1, 2023, to AmendedMortgage and Restated Credit AgreementDeed of Trust of Entergy Mississippi, dated as of August 14, 2015,February 1, 1988 (4.73 to Form 8-K filed May 12, 2023 in 1-31508). |
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| 4(b) - | First Amendment to Credit Agreement, dated as amended,of May 31, 2023, by and among Entergy Corporation, New Orleans, as the Borrower the banks and other financial institutions, the Lenders party thereto, and Bank of America, N.A., as Lenders, Citibank,Administrative Agent (4(a) to Form 8-K filed June 1, 2023 in 1-35747). |
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| *4(c) - | |
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| *4(b) - | Amendment, dated as of October 17, 2017, to Amended and Restated Credit Agreement dated as of August 14, 2015, as amended, among Entergy Corporation, as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto. |
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| *4(c) - | Agreement, dated as of October 17, 2017, pursuant to Amended and Restated Credit Agreement dated as of August 14, 2015, as amended, among Entergy Corporation, as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto. |
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| *4(d) - | Extension Agreement, dated as of August 7, 2017, to Amended and Restated Credit Agreement dated as of August 14, 2015, as amended, among Entergy Arkansas, Inc., as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto. |
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| *4(e) - | First Amendment dated as of October 17, 2017, to Amended and Restated Credit Agreement dated as of August 14, 2015, as amended, among Entergy Arkansas, Inc., as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto. |
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| *4(f) - | Agreement, dated as of October 17, 2017, pursuant to Amended and Restated Credit Agreement dated as of August 14, 2015, as amended, among Entergy Arkansas, Inc., as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto. |
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| *4(g) - | Extension Agreement, dated as of August 7, 2017, to Amended and Restated Credit Agreement dated as of August 14, 2015, as amended, among Entergy Louisiana, LLC, as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto. |
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| *4(h) - | Amendment, dated as of October 17, 2017, to Amended and Restated Credit Agreement dated as of August 14, 2015, as amended, among Entergy Louisiana, LLC, as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto. |
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| *4(i) - | Agreement, dated as of October 17, 2017, pursuant to Amended and Restated Credit Agreement dated as of August 14, 2015, as amended, among Entergy Louisiana, LLC, as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto. |
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| *4(j) - | Amendment, dated as of September 26, 2017, to Amended and Restated Credit Agreement, dated as of June 30, 2016, as amended,29, 2023, by and among Entergy New Orleans,Corporation, as the Borrower, the banksLender parties thereto, and other financial institutions party thereto as Lenders, and Bank of America,Citibank, N.A., as Administrative Agent. |
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| *4(k) - | Extension Agreement, dated as of August 7, 2017, to Amended and Restated Credit Agreement dated as of August 14, 2015, as amended, among Entergy Texas, Inc., as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto. |
| | |
| *4(l) - | Amendment, dated as of October 17, 2017, to Amended and Restated Credit Agreement dated as of August 14, 2015, as amended, among Entergy Texas, Inc., as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto. |
| | |
| *4(m) - | Amendment, dated as of October 17, 2017, pursuant to Amended and Restated Credit Agreement dated as of August 14, 2015, as amended, among Entergy Texas, Inc., as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto. |
|
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| *12(a)4(e) - | Second Extension to Credit Agreement, dated as of June 29, 2023, by and among Entergy Arkansas’s Computation of Ratios of Earnings to Fixed ChargesCorporation, as Borrower, the Lender parties thereto, each LC Issuing Bank, and of Earnings to Combined Fixed Charges and Preferred Dividends,Citibank, N.A., as defined.Administrative Agent. |
| | |
| *12(b)4(f) - | Second Extension to Credit Agreement, dated as of June 29, 2023, by and among Entergy Louisiana’s Computation of Ratios of Earnings to Fixed ChargesArkansas, as Borrower, the Lender parties thereto, each LC Issuing Bank, and of Earnings to Combined Fixed Charges and Preferred Distributions,Citibank, N.A., as defined.Administrative Agent. |
| | |
| *12(c)4(g) - | Second Extension to Credit Agreement, dated as of June 29, 2023, by and among Entergy Mississippi’s Computation of Ratios of Earnings to Fixed ChargesLouisiana, as Borrower, the Lender parties thereto, each LC Issuing Bank, and of Earnings to Combined Fixed Charges and Preferred Dividends,Citibank, N.A., as defined.Administrative Agent. |
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| *12(d)4(h) - | |
| | |
| *12(e)4(i) - | Second Extension to Credit Agreement, dated as of June 29, 2023, by and among Entergy Texas’s Computation of Ratios of Earnings to Fixed Charges,Texas, as defined.Borrower, the Lender parties thereto, each LC Issuing Bank, and Citibank, N.A., as Administrative Agent. |
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| *12(f)+10(a) - | |
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| *31(a) - | |
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| *31(b) - | |
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| *31(c) - | |
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| *31(d) - | |
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| *31(e) - | |
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| *31(f) - | |
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| *31(g) - | |
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| *31(h) - | |
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| *31(i) - | |
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| *31(j) - | |
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| *31(k) - | |
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| *31(l) - | |
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| *31(m) - | |
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| *31(n) - | |
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| **32(a) - | |
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| **32(b) - | |
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| **32(c) - | |
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| **32(d) - | |
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| **32(e) - | |
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| **32(f) - | |
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| **32(g) - | |
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| **32(h) - | |
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| **32(i) - | |
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| **32(j) - | |
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| **32(k) - | |
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| **32(l) - | |
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| **32(m) - | |
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| **32(n) - | |
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| *101 INS - | Inline XBRL Instance Document.Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
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| *101 SCH - | Inline XBRL Taxonomy Extension Schema Document. |
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| *101 PRE - | Inline XBRL Taxonomy Presentation Linkbase Document. |
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| *101 LAB - | Inline XBRL Taxonomy Label Linkbase Document. |
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| *101 CAL - | Inline XBRL Taxonomy Calculation Linkbase Document. |
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| *101 DEF - | Inline XBRL Definition Linkbase Document. |
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| *104 - | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibits 101). |
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Pursuant to Item 601(b)(4)(iii) of Regulation S-K, Entergy Corporation agrees to furnish to the Commission upon request any instrument with respect to long-term debt that is not registered or listed herein as an Exhibit because the total amount of securities authorized under such agreement does not exceed ten percent of the total assets of Entergy Corporation and its subsidiaries on a consolidated basis.
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* | Filed herewith. |
** | Furnished, not filed, herewith. |
+ | Management contracts or compensatory plans or arrangements |
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* | Filed herewith. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature for each undersigned company shall be deemed to relate only to matters having reference to such company or its subsidiaries.
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ENTERGY CORPORATION ENTERGY ARKANSAS, LLC ENTERGY LOUISIANA, LLC ENTERGY MISSISSIPPI, LLC ENTERGY NEW ORLEANS, LLC ENTERGY TEXAS, INC. SYSTEM ENERGY RESOURCES, INC. |
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ENTERGY CORPORATION
ENTERGY ARKANSAS, INC.
ENTERGY LOUISIANA, LLC
ENTERGY MISSISSIPPI, INC.
ENTERGY NEW ORLEANS, INC.
ENTERGY TEXAS, INC.
SYSTEM ENERGY RESOURCES, INC. /s/ Reginald T. Jackson |
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/s/ Alyson M. Mount |
Alyson M. Mount Reginald T. Jackson Senior Vice President and Chief Accounting Officer
(For each Registrant and for each as
Principal Accounting Officer) |
Date: NovemberAugust 3, 20172023