~~Weighted average remaining lease terms:~~

~~Operating leases~~

~~5.10~~

~~Financing leases~~

~~6.79~~

~~Weighted average discount rate:~~

~~Operating leases~~

~~3.91~~

~~Financing leases~~

~~4.67~~

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

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~~The following information contains the weighted average remaining lease term in years~~(b)Other electric revenues consist primarily of transmission and ~~the weighted average discount rate for the operating~~ancillary services provided to participants of an ISO-administered market and ~~financing leases of the Registrant Subsidiaries at September 30, 2019:~~

Entergy Arkansas Entergy Louisiana Entergy Mississippi Entergy New Orleans Entergy Texas

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

unbilled revenue.

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

Year Operating Leases Financing Leases
(In Thousands)

Remainder for 2019
$16,088

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

$64,734

(c)

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~~Notes to Financial Statements~~

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

~~Operating Leases~~

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

Remainder of 2019
$3,168

$2,863

$1,968

$332

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

$34,258

$18,391

$3,893

$13,116

~~Financing Leases~~

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

Remainder of 2019
$713

$1,135

$429

$204

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

$16,785

$6,994

$2,912

$5,473

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

~~In accordance with ASU 2018-11, below is the lease disclosure from Note 10 to the financial statements in the Form 10-K.~~

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~~Notes to Financial Statements~~

~~General~~

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

Year

Operating
Leases

Capital
Leases
(In Thousands)
2019
$94,043

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

$21,997

Total rental expenses for all leases (excluding power purchase agreement operating leases, nuclear fuel leases, and the Grand Gulf and Waterford 3 sale and leaseback transactions) amounted to $47.8 million in 2018, $53.1 million in 2017, and $44.4 million in 2016.

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

~~Operating Leases~~

Year

Entergy
Arkansas

Entergy
Louisiana

Entergy
Mississippi

Entergy
New Orleans

Entergy
Texas
(In Thousands)
2019
$20,421

$25,970

$9,344

$2,493

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

$117,016

$38,331

$11,423

$20,305

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~~Notes to Financial Statements~~

~~Rental Expenses~~

Year

Entergy
Arkansas

Entergy
Louisiana

Entergy
Mississippi

Entergy
New Orleans

Entergy
Texas

System
Energy
(In Millions)
2018
$6.2

$20.2

$4.6

$2.5

$3.1

$1.9
2017
$7.5

$23.0

$5.6

$2.5

$3.4

$2.2
2016
$8.0

$17.8

$4.0

$0.9

$2.8

$1.6

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

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

~~Power Purchase Agreements~~

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

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

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

$105,824


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

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

~~Sales and Leaseback Transactions~~

~~Waterford 3 Lease Obligation~~

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

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~~Notes to Financial Statements~~

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

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

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

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

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

~~Grand Gulf Lease Obligations~~

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

System Energy is required to report the sale-leaseback as a financing transaction in its financial statements. For financial reporting purposes, System Energy expenses the interest portion of the lease obligation and the plant depreciation. However, operatingOther revenues include the ~~recovery~~settlement of financial hedges, occasional sales of inventory, alternative revenue programs, provisions for revenue subject to refund, and late fees.

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 ~~lease payments because the transactions are accounted for as~~essential nature of utility services, Entergy has historically experienced a sale and leaseback for ratemaking purposes. Consistent with a recommendation contained in a FERC audit report, System Energy initially recorded as a net regulatory asset the difference between the recoverylow rate of ~~the lease payments and the amounts expensed for interest and depreciation and continues~~default on its accounts receivables. Due to record this difference as a regulatory asset or liability on an ongoing basis, resulting in a 0 net balance for the regulatory asset at the end of the lease term. The amount was a net regulatory liability of $55.6 million as of December 31, 2018 and 2017.

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~~Notes to Financial Statements~~

As of December 31, 2018, System Energy, in connection with the Grand Gulf sale and leaseback transactions, had future minimum lease payments that are recorded as long-term debt, as follows, which reflects the effect of the ~~December 2013 renewal:~~COVID-19 pandemic on customer receivables, however, Entergy recorded an increase in its allowance for doubtful accounts, as shown below:

Amount
(In Thousands)

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


	Entergy	Entergy Arkansas	Entergy Louisiana	Entergy Mississippi	Entergy New Orleans	Entergy Texas
	(In Millions)
Balance as of December 31, 2019	$7.4	$1.2	$1.9	$0.6	$3.2	$0.5
Provisions	38.4	6.3	14.1	7.0	5.5	5.5
Write-offs	(8.6)	(1.8)	(3.5)	(1.2)	(1.0)	(1.1)
Recoveries	6.0	1.6	2.0	0.8	0.7	0.9
Balance as of June 30, 2020	$43.2	$7.3	$14.5	$7.2	$8.4	$5.8

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

~~Vermont Yankee~~

~~As discussed in Note 14~~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. Although the rate of customer write-offs has historically experienced minimal variation, management monitors the current condition of individual customer accounts to the financial statements in the Form 10-K, in January 2019, Entergy transferred 100% of the membership interests in Entergy Nuclear Vermont Yankee, LLC, the owner of the Vermont Yankee plant, to a subsidiary of NorthStar.

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

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

~~Pilgrim~~

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

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~~Notes to Financial Statements~~

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

timely manner.

________________

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

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

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

Part I, Item 4. Controls and Procedures

Disclosure Controls and Procedures

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

Changes in Internal Controls over Financial Reporting

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

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ENTERGY ARKANSAS, LLC AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

The COVID-19 Pandemic

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

Results of Operations

Net Income

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

Net income increased ~~$20.8~~$9.9 million primarily due to ~~higher retail electric price and higher volume/weather, partially offset by higher depreciation and amortization expenses and~~ lower ~~other income.~~

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

~~Net income decreased $8.6 million primarily due to higher depreciation and amortization expenses, higher interest expense, lower volume/weather, and higher~~ other operation and maintenance expenses, partially offset by lower volume/weather.

Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

Net income increased $15.3 million primarily due to lower other operation and maintenance expenses and a formula rate plan regulatory provision recorded in the first quarter 2019 to reflect the historical year netting adjustment, partially offset by lower volume/weather and higher ~~retail electric price.~~depreciation and amortization expenses.

Operating Revenues

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

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

2019:



		Amount
		(In Millions)
~~2018~~2019 operating revenues		$542.9	~~$568.4~~
Fuel, rider, and other revenues that do not significantly affect net income		~~(30.8~~(64.8)	)
Volume/weather		(14.2)
Retail electric price		1.0
Return of unprotected excess accumulated deferred income taxes to customers		~~111.4~~26.9
~~Retail electric price~~		~~22.9~~
~~Volume/weather~~	~~15.6~~
~~2019~~2020 operating revenues	$491.8	~~$687.5~~

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

The volume/weather variance is primarily due to a decrease of 316 GWh, or 7%, in billed electricity usage, including decreased commercial and small industrial usage as a result of the COVID-19 pandemic, and the effect of less favorable weather on residential sales, partially offset by an increase in residential usage as a result of the COVID-19 pandemic. Entergy Arkansas continues to expect declines in sales volume during 2020 due to the

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COVID-19 pandemic, especially in the commercial and industrial customer classes. See “The COVID-19 Pandemic” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the COVID-19 pandemic.

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

The return of unprotected excess accumulated deferred income taxes to customers resulted from the return of unprotected excess accumulated deferred income taxes through a tax adjustment rider beginning in April 2018. In ~~third~~second quarter ~~2019, $41.4~~2020, $1.4 million was ~~returned to~~collected from customers as compared to ~~$152.8~~$25.5 million returned to customers in ~~third~~second quarter ~~2018.~~2019. There is no effect on net income as the reduction in operating revenues in each period was offset by a reduction in income tax expense. See Note 2 to the financial statements in the Form 10-K for further discussion of regulatory activity regarding the Tax Cuts and Jobs Act.

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~~Management's Financial Discussion and Analysis~~

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

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

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

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

2019:



		Amount
		(In Millions)
~~2018~~2019 operating revenues		$1,088.7	~~$1,614.0~~
Fuel, rider, and other revenues that do not significantly affect net income		~~(29.8~~(132.8)	)
Volume/weather		(33.3)
Retail electric price		5.7
Return of unprotected excess accumulated deferred income taxes to customers		~~161.7~~45.4
~~Retail electric price~~		~~50.6~~
~~Volume/weather~~	~~(20.2~~	)
~~2019~~2020 operating revenues	$973.7	~~$1,776.3~~

The volume/weather variance is primarily due to a decrease of 525 GWh, or 5%, in billed electricity usage, including decreased commercial and small industrial usage as a result of the COVID-19 pandemic, and the effect of less favorable weather on residential sales, partially offset by an increase in residential usage as a result of the COVID-19 pandemic. Entergy Arkansas continues to expect declines in sales volume during 2020 due to the COVID-19 pandemic, especially in the commercial and industrial customer classes. See “The COVID-19 Pandemic” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the COVID-19 pandemic.

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six months ended ~~September~~June 30, ~~2018.~~2019. There is no effect on net income as the reduction in operating revenues in each period was offset by a reduction in income tax expense. See Note 2 to the financial statements in the Form 10-K for further discussion of regulatory activity regarding the Tax Cuts and Jobs Act.

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

Second Quarter 2020 Compared to ~~an increase in formula rate plan rates effective with the first billing cycle of January~~Second Quarter 2019 ~~as approved by the APSC. See Note 2 to the financial statements in the Form 10-K for further discussion of the formula rate plan filing.~~

~~The volume/weather variance is~~Other operation and maintenance expenses decreased primarily due to a decrease of ~~719 GWh, or 4%,~~$12.2 million in ~~billed electricity usage,~~non-nuclear generation expenses primarily due to lower long-term service agreement expenses and a lower scope of work performed during plant outages in 2020 as compared to the same period in 2019, including a delay in planned outages in 2020 as a result of the ~~effect of less favorable weather on residential and commercial sales~~COVID-19 pandemic, and a decrease of $8.4 million in ~~industrial usage. The decrease in industrial usage is~~nuclear generation expenses primarily due to ~~a decrease in small industrial sales.~~lower nuclear labor costs, including contract labor.

~~Other Income Statement Variances~~

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

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

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

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~~Entergy Arkansas, LLC and Subsidiaries~~

~~Management's Financial Discussion and Analysis~~

~~Interest expense increased primarily due~~the 2018 historical year netting adjustment reflected in the 2019 formula rate plan filing. See Note 2 to the ~~issuance~~financial statements in the Form 10-K for discussion of ~~$350 million of 4.20% Series mortgage bonds in March 2019.~~the 2019 formula rate plan filing.

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

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

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


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

~~an increase~~•a decrease of ~~$5.7~~$17.2 million in ~~information technology costs primarily due to higher costs related to improved infrastructure, enhanced security, and upgrades and maintenance;~~

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

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

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

~~The increase was offset by~~ •a decrease of ~~$12~~$11.1 million in nuclear generation expenses primarily due to a lower ~~scope~~nuclear labor costs, including contract labor; and

•higher nuclear insurance refunds of ~~work performed in 2019 as compared to the same period in 2018 and a decrease of $5.9 million in energy efficiency costs due to the timing of recovery from customers.~~$7.6 million.

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

Other regulatory credits for the six months ended June 30, 2020 included $22.2 million in amortization of the 2018 historical year netting adjustment reflected in the 2019 formula rate plan filing. Other regulatory credits for the six months ended June 30, 2019 included an additional provision of $11.5 million to reflect the current estimate of the historical year netting adjustment that was to be included in the 2019 formula rate plan filing. See Note 2 to the financial statements in the Form 10-K for discussion of the 2019 formula rate plan filing.

Income Taxes

The effective income ~~decreased~~tax rate was 24.5% for the second quarter 2020. The difference in the effective income tax rate for the second quarter 2020 versus the federal statutory rate of 21% was primarily due to ~~changes~~state income taxes, partially offset by certain book and tax differences related to utility plant items.

The effective income tax rate was 10.9% for the six months ended June 30, 2020. The difference in ~~decommissioning trust fund investment activity.~~

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

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Tax Cuts and Jobs Act. See Note 10 to the ~~issuance~~financial statements herein for discussion of ~~$250 million of 4.00% Series mortgage bonds in May 2018.~~the income tax deductions for stock-based compensation.

~~Income Taxes~~

The effective income tax rates were ~~4.5%~~(31.9%) for the ~~third~~second quarter 2019 and ~~(13.1%~~(63.9%) for the ~~nine~~six months ended ~~September~~June 30, 2019. The differences in the effective income tax rates for the ~~third~~second quarter 2019 and the ~~nine~~six months ended ~~September~~June 30, 2019 versus the federal statutory rate of 21% were primarily due to the amortization of excess accumulated deferred income taxes and certain book and tax differences related to utility plant items, partially offset by state income taxes. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act.

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

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

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

Income Tax Legislation

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

Liquidity and Capital Resources

Cash Flow

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


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

Cash flow provided by (used in):
Operating activities	287,031	353,554
Investing activities	(400,864)	(321,030)
Financing activities	112,887	(700)
Net increase (decrease) in cash and cash equivalents	(946)	31,824

Cash and cash equivalents at end of period	$2,573	$31,943

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

$6,216

Cash flow provided by (used in):

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

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

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Operating Activities

Net cash flow provided by operating activities ~~increased $214~~decreased $66.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 primarily due to:

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

•an increase of $22.7 million in spending on nuclear refueling outages in 2020;

•the timing of payments to vendors;

•the timing of collection of receivables from customers, in part due to the COVID-19 pandemic; and

•an increase of $8.2 million in pension contributions in 2020. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K and Note 6 to the financial statements herein for a discussion of qualified pension and other postretirement benefits funding.

The decrease was partially offset by:

•$25 million in proceeds received from the DOE in 2020 resulting from litigation regarding spent nuclear fuel storage costs that were previously expensed. See Note 8 to the financial statements in the Form 10-K for discussion of the spent nuclear fuel litigation; and

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

~~a decrease of $33.9 million in spending on nuclear refueling outages in 2019;~~


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

~~the timing of recovery of fuel and purchased power costs.~~

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Investing Activities

Net cash flow used in investing activities ~~decreased $67.7~~increased $79.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 primarily due to:

~~a decrease~~•an increase of ~~$43.3~~$65.7 million in storm spending;

•an increase of $55.8 million as a result of fluctuations in nuclear fuel activity because of variations from year to year in the timing and pricing of fuel reload requirements in the Utility business, material and service deliveries, and the timing of cash payments during the nuclear fuel cycle; and

~~a decrease~~•an increase of ~~$42.6~~$38.2 million in nuclear construction expenditures primarily as a result of work performed in ~~2018~~2020 on various ANO ~~1 and~~ 2 outage ~~projects;~~projects.

a decrease of $17.8 million in fossil-fueled generation construction expenditures due to a decrease in spending on various fossil-fueled generation projects in 2019 as compared to the same period in 2018;

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

~~a decrease of $11.7 million in information technology capital expenditures primarily due to lower spending in 2019 on critical infrastructure protection.~~

The ~~decrease~~increase was partially offset by ~~an increase of $39.3~~$55 million in ~~distribution construction expenditures primarily due~~proceeds received from the DOE in 2020 resulting from litigation regarding spent nuclear fuel storage costs that were previously capitalized and money pool activity. See Note 8 to ~~investment~~the financial statements in the ~~reliability and infrastructure of Entergy Arkansas’s distribution system, including increased spending on advanced metering infrastructure, and an increase of $13.3 million in storm spending.~~

~~Financing Activities~~

~~Net cash flow provided by financing activities decreased $420.3 million~~Form 10-K for ~~the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018 primarily due to:~~

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

~~the issuance of $250 million of 4.00% Series mortgage bonds in May 2018;~~

~~a common equity distribution of $115 million in 2019 in order to maintain the targeted capital structure;~~

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

~~money pool activity.~~

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

~~Decreases~~Increases in Entergy Arkansas’s ~~payable to~~receivable from the money pool are a use of cash flow, and Entergy Arkansas’s ~~payable to~~receivable from the money pool ~~decreased~~increased by ~~$182.7~~$25.2 million ~~in 2019 compared to decreasing by $166.1 million in 2018.~~for the six months ended June 30, 2019. The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings.

Financing Activities

Entergy Arkansas’s financing activities provided $112.9 million of cash for the six months ended June 30, 2020 compared to using $0.7 million of cash for the six months ended June 30, 2019 primarily due to the following activity:

•money pool activity;

•a common equity distribution of $115 million in 2019 in order to maintain Entergy Arkansas’s capital structure;

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•the issuance of $100 million of 4.00% Series mortgage bonds in March 2020;

•the issuance of $350 million of 4.20% Series mortgage bonds in March 2019; and

•net long-term borrowings of $8.6 million in 2020 compared to net repayments of long-term borrowings of $39 million in 2019 on the Entergy Arkansas nuclear fuel company variable interest entity credit facility.

Increases in Entergy Arkansas’s payable to the money pool are a source of cash flow, and Entergy Arkansas’s payable to the money pool increased by $4.2 million for the six months ended June 30, 2020 compared to decreasing by $182.7 million for the six months ended June 30, 2019.

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

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Capital Structure

Entergy Arkansas’s debt to capital ratio is shown in the following ~~table. The increase in~~table:


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

(a)Calculation excludes the ~~debt~~securitization bonds, which are non-recourse to ~~capital ratio is primarily due to the issuance of $350 million of mortgage bonds in March 2019.~~Entergy Arkansas.

September 30,
2019

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


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

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

Uses and Sources of Capital

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

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

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Entergy Arkansas, ~~is developing its capital investment plan for 2020 through 2022~~LLC and currently anticipates making $2.5 billion in capital investments during that period. The preliminary estimate includes specific investments such as transmission projects to enhance reliability, reduce congestion,Subsidiaries

Management's Financial Discussion and enable economic growth; distribution spending to enhance reliability and improve service to customers, including advanced meters and related investments; resource planning, including potential generation projects; system improvements; investments in ANO 1 and 2; software and security; and other investments. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital.Analysis

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


June 30, 2020	December 31, 2019	June 30, 2019	December 31, 2018
(In Thousands)
($25,865)	($21,634)	$25,166	($182,738)

September 30,
2019

December 31,
2018

September 30,
2018

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

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

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Entergy Arkansas has a credit facility in the amount of $150 million scheduled to expire in September 2024. Entergy Arkansas also has a ~~$20~~$25 million credit facility scheduled to expire in April ~~2020.~~2021. The $150 million credit facility includes fronting commitments for the issuance of letters of credit against $5 million of the borrowing capacity of the facility. As of ~~September~~June 30, ~~2019,~~2020, no cash borrowings and no letters of credit were outstanding under the credit facilities. In addition, Entergy Arkansas is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO. As of ~~September~~June 30, ~~2019,~~2020, a $1$4.5 million letter of credit was outstanding under Entergy Arkansas’s uncommitted letter of credit facility. See Note 4 to the financial statements herein for additional discussion of the credit facilities.

The Entergy Arkansas nuclear fuel company variable interest entity has a credit facility in the amount of $80 million scheduled to expire in September 2021. As of ~~September~~June 30, ~~2019, $30.3~~2020, $23.7 million in loans were outstanding under the credit facility for the Entergy Arkansas nuclear fuel company variable interest entity. See Note 4 to the financial statements herein for additional discussion of the nuclear fuel company variable interest entity credit facility.

Searcy Solar Facility

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

State and Local Rate Regulation and Fuel-Cost Recovery

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

Retail Rates

~~2019~~2020 Formula Rate Plan Filing

In July ~~2019,~~2020, Entergy Arkansas filed with the APSC its ~~2019~~2020 formula rate plan filing to set its formula rate for the ~~2020~~2021 calendar year. The filing contained an evaluation of Entergy Arkansas’s earnings for the projected year ~~2020~~2021 and a netting adjustment for the historical year ~~2018.~~2019. Entergy Arkansas’s earned rate of return on common equity is 7.84% for the 2021 projected year and 9.07% for the 2019 historical year. The total revenue change is based upon a deficiency of approximately $80.7 million for the 2021 projected year and approximately $23.9 million for the 2019 historical year netting adjustment. The total proposed formula rate plan rider revenue change ~~designed~~for 2021 is $104.6 million to produce a target rate of return ~~on common equity~~ of 9.75% ~~is $15.3 million, which is based upon a deficiency of approximately $61.9 million~~ for the ~~2020~~ projected year ~~netted with a credit of approximately $46.6 million in the 2018 historical year netting adjustment. During 2018, Entergy Arkansas experienced higher-than expected sales volume,~~ and ~~actual costs were lower than forecasted. These changes, coupled with a reduced income tax rate resulting from the Tax Cuts and Jobs Act, resulted in the credit for~~ the historical ~~year netting adjustment. In the fourth quarter 2018, Entergy Arkansas recorded a provision of $35.1 million that reflected the estimate~~year. By operation of the ~~historical year netting adjustment that was expected to be included in the 2019 filing. In 2019,~~formula rate plan, Entergy ~~Arkansas recorded additional provisions totaling $11.5 million to reflect the updated estimate~~Arkansas’s recovery of the ~~historical year netting adjustment included in the 2019 filing. In October 2019 other parties in the proceeding filed their errors and objections requesting certain adjustments~~revenue requirement is subject to a four percent annual revenue constraint. Because Entergy Arkansas’s revenue requirement in this filing which, if granted, would reduce or eliminate Entergy Arkansas’s proposed revenue change. Entergy Arkansas filed its response addressing the requested adjustments in October 2019. In its response, Entergy Arkansas accepted certain of the adjustments recommended by the General Staff of the APSC that would reduceexceeds the

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~~proposed~~constraint, the resulting increase is limited to $74.3 million. Also with this filing, Entergy Arkansas is requesting an extension of the formula rate plan rider ~~revenue change to $14 million. Entergy Arkansas disputed the remaining adjustments proposed~~for a second five-year term. A decision by the ~~parties. In October 2019, Entergy Arkansas filed a unanimous settlement agreement with the other parties in the proceeding seeking~~ APSC ~~approval of a revised total formula rate plan rider revenue change of $10.1 million. The proposed new formula rates would go into effect in January~~is requested by mid-December 2020. In its July 2019 formula rate plan filing, Entergy Arkansas proposed to recover an $11.2 million regulatory asset, amortized over five years, associated with specific costs related to the potential construction of scrubbers at the White Bluff plant. While Entergy Arkansas does not concede that the regulatory asset does not have merit, for purposes of reaching a settlement amount on the total formula rate plan rider change Entergy Arkansas agreed not to include the amounts associated with the White Bluff scrubber regulatory asset in the 2019 formula rate plan filing or future filings. Entergy Arkansas will record a write off of the $11.2 million White Bluff scrubber regulatory asset.

~~Production Cost Allocation Rider~~

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

Energy Cost Recovery Rider

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

Opportunity Sales Proceeding

As discussed in the Form 10-K, ~~in December 2018, Entergy made a compliance filing in response~~the FERC’s opportunity sales orders have been appealed to the ~~FERC’s October 2018 order~~D.C. Circuit by Entergy, the LPSC, and the APSC. In February 2020 all of the appeals were consolidated and in April 2020 the D.C. Circuit established a briefing schedule. Briefing will occur through September 2020.

Also as discussed in the ~~opportunity sales proceeding. The compliance filing provided a final calculation of Entergy Arkansas’s payments to the other Utility operating companies, including interest. No protests were filed~~Form 10-K, in ~~response to the December 2018 compliance filing. The December 2018 compliance filing is pending FERC action.~~

In February 2019 the LPSC filed a new complaint relating to two issues that were raised in the opportunity sales proceeding, but that, in its October 2018 order, the FERC held were outside the scope of the proceeding. In March 2019, Entergy Services filed an answer and motion to dismiss the new complaint.

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

In July 2020 the APSC issued a decision concluding that the APSC ~~approve~~was not preempted by the ~~rider~~federal filed rate doctrine from considering the merits of Entergy Arkansas’s request, denying that the application is barred under the collateral estoppel aspect of res judicata, and finding that the application is not in the public interest. The order also directs Entergy Arkansas to ~~take effect~~refund to its retail customers within 30 days ~~or, if suspended by the APSC as allowed by commission rule, approve the rider to take effect in the first billing cycle~~ of the ~~first month occurring~~

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~~Table~~order the FERC-determined over-collection of ~~Contents~~

$13.7 million, plus interest, associated with a recalculated bandwidth remedy. In addition to these primary findings, the order also denied the Attorney General’s request for Entergy Arkansas ~~LLC and Subsidiaries~~

~~Management's Financial Discussion and Analysis~~

~~30 days after issuance~~to prepare a compliance filing detailing all of the APSC’s order approving the rider. In June 2019 the APSC suspended Entergy Arkansas’s tariff and granted Entergy Arkansas’s motion asking the APSC to establish the proceeding as the single designated proceeding in which interested parties may assert claims related to the appropriate retail ~~rate treatment of the FERC’s October 2018 order and related FERC orders in~~impacts from the opportunity sales ~~proceeding.~~and denied a request by the Arkansas Electric Energy Consumers to recalculate all costs using the revised responsibility ratio. Entergy Arkansas filed a motion for temporary stay of the 30-day requirement to allow Entergy Arkansas a reasonable opportunity to seek rehearing of the APSC order, but in July 2020 the APSC denied Entergy Arkansas’s request for a stay and directed Entergy Arkansas to refund to its retail ratepayers the component of the total FERC-determined opportunity sales payment that was associated with increased bandwidth remedy payments of $13.7 million, plus interest, by July 31, 2020. The APSC recognized Entergy Arkansas’s administrative limitations on processing the full refund by that date and stated that the refund shall be issued over the August 2020 billing cycle. While the APSC has denied Entergy Arkansas’s stay request, Entergy Arkansas believes its actions were prudent and, therefore, the costs are recoverable. In July 2020, Entergy Arkansas requested rehearing of the APSC order.

Net Metering Legislation

AnAs 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 would allow 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 has initiated proceedings for this purpose. ~~Because~~The APSC issued an order in June 2020, and in July 2020 several parties, including Entergy Arkansas, filed for rehearing on multiple grounds.

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COVID-19 Orders

In April 2020, in light of the ~~size~~COVID-19 pandemic, the APSC issued an order requiring utilities, to the extent they had not already done so, to suspend service disconnections during the remaining pendency of the Arkansas Governor’s emergency declaration or until the APSC rescinds the directive. The order also authorizes utilities to establish a regulatory asset to record costs resulting from the suspension of service disconnections, directs that in future proceedings the APSC will consider whether the request for recovery of these regulatory assets is reasonable and ~~number~~necessary, and requires utilities to track and report the costs and any savings directly attributable to suspension of disconnects. In May 2020 the APSC approved Entergy Arkansas expanding delayed payment arrangements to assist customers ~~eligible under this new law, there~~during the pandemic. Entergy Arkansas is still evaluating the recovery provided for by the order and, therefore, did not record as of June 30, 2020 a ~~risk of loss of load and~~regulatory asset for costs associated with the ~~shifting of significant costs from eligible entities to other customers.~~COVID-19 pandemic.

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, impairment of long-lived assets and trust fund investments, taxation and uncertain tax positions, qualified pension and other postretirement benefits, and other contingencies. The following is an update to that discussion.

InOther Postretirement Benefits

As described in Note 6 to the ~~first quarter 2019,~~financial statements herein, in March 2020, Entergy announced changes to its other postretirement benefits. As a result, Entergy Arkansas ~~recorded a revision to its estimated decommissioning cost liabilities for ANO 1~~now expects 2020 other postretirement health care and ~~ANO 2 as a result~~life insurance benefit income, including amounts capitalized, of a revised decommissioning cost study. The revised estimates resulted in a $126.2 million increase in its decommissioning cost liabilities, along with corresponding increases in the related asset retirement cost assets that will be depreciated over the remaining lives of the units.$10.1 million.

New Accounting Pronouncements

See “New Accounting Pronouncements” section of Note 1 to the financial statements in the Form 10-K for a discussion of new accounting pronouncements.

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

Three Months Ended Nine Months Ended
2019 2018 2019 2018
(In Thousands) (In Thousands)
OPERATING REVENUES
Electric
$687,526

$568,399

$1,776,267

$1,614,028

OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale 109,779
164,438
370,534
379,240
Purchased power 61,074
58,213
156,417
195,024
Nuclear refueling outage expenses 17,381
19,062
51,823
61,623
Other operation and maintenance 188,299
188,882
542,765
536,032
Decommissioning 17,422
15,226
50,351
44,971
Taxes other than income taxes 31,783
27,972
87,327
80,322
Depreciation and amortization 78,594
73,579
231,502
218,261
Other regulatory charges (credits) - net 1,018
(13,758 ) (8,873 ) (29,378 )
TOTAL 505,350
533,614
1,481,846
1,486,095

OPERATING INCOME 182,176
34,785
294,421
127,933

OTHER INCOME
Allowance for equity funds used during construction 3,977
3,735
10,777
12,214
Interest and investment income 8,788
12,060
19,193
21,352
Miscellaneous - net (4,286 ) (3,063 ) (12,704 ) (10,815 )
TOTAL 8,479
12,732
17,266
22,751

INTEREST EXPENSE
Interest expense 35,454
31,632
104,664
92,315
Allowance for borrowed funds used during construction (1,641 ) (1,739 ) (4,384 ) (5,737 )
TOTAL 33,813
29,893
100,280
86,578

INCOME BEFORE INCOME TAXES 156,842
17,624
211,407
64,106

Income taxes 7,126
(111,266 ) (27,729 ) (183,595 )

NET INCOME 149,716
128,890
239,136
247,701

Preferred dividend requirements —
357
—
1,071

EARNINGS APPLICABLE TO COMMON EQUITY
$149,716

$128,533

$239,136

$246,630

See Notes to Financial Statements.

Table of Contents


ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
For the Three and Six Months Ended June 30, 2020 and 2019
(Unaudited)

	Three Months Ended			Six Months Ended
	2020	2019	2020	2019
	(In Thousands)			(In Thousands)
OPERATING REVENUES
Electric	$491,767	$542,929	$973,679	$1,088,741

OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale	52,692	108,596	140,103	260,755
Purchased power	42,171	48,285	88,212	95,343
Nuclear refueling outage expenses	13,552	17,194	29,799	34,442
Other operation and maintenance	164,770	188,006	316,627	354,466
Decommissioning	18,206	17,168	36,147	32,929
Taxes other than income taxes	27,172	27,181	58,232	55,544
Depreciation and amortization	84,538	77,061	168,059	152,908
Other regulatory credits - net	(19,283)	(10,336)	(39,284)	(9,891)
TOTAL	383,818	473,155	797,895	976,496

OPERATING INCOME	107,949	69,774	175,784	112,245

OTHER INCOME
Allowance for equity funds used during construction	3,878	3,372	6,795	6,800
Interest and investment income	8,246	4,222	16,184	10,405
Miscellaneous - net	(6,133)	(4,728)	(12,569)	(8,418)
TOTAL	5,991	2,866	10,410	8,787

INTEREST EXPENSE
Interest expense	35,969	35,827	71,592	69,210
Allowance for borrowed funds used during construction	(1,703)	(1,329)	(2,984)	(2,743)
TOTAL	34,266	34,498	68,608	66,467

INCOME BEFORE INCOME TAXES	79,674	38,142	117,586	54,565

Income taxes	19,504	(12,157)	12,821	(34,855)

NET INCOME	$60,170	$50,299	$104,765	$89,420





See Notes to Financial Statements.

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110

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ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2020 and 2019
(Unaudited)
	2020	2019
	(In Thousands)
OPERATING ACTIVITIES
Net income	$104,765	$89,420
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation, amortization, and decommissioning, including nuclear fuel amortization	243,126	231,968
Deferred income taxes, investment tax credits, and non-current taxes accrued	24,970	45,680
Changes in assets and liabilities:
Receivables	(10,360)	4,920
Fuel inventory	(12,704)	(4,707)
Accounts payable	(34,009)	(14,280)
Taxes accrued	(409)	(19,961)
Interest accrued	119	4,155
Deferred fuel costs	16,322	56,182
Other working capital accounts	(23,858)	23,275
Provisions for estimated losses	998	11,619
Other regulatory assets	(26,191)	(57,516)
Other regulatory liabilities	(50,637)	70,958

Pension and other postretirement liabilities	(419)	(12,487)
Other assets and liabilities	55,318	(75,672)
Net cash flow provided by operating activities	287,031	353,554

INVESTING ACTIVITIES
Construction expenditures	(406,940)	(309,696)
Allowance for equity funds used during construction	6,795	6,964
Payment for purchase of assets	(5,988)	—
Nuclear fuel purchases	(57,781)	(6,691)
Proceeds from sale of nuclear fuel	18,107	22,834
Proceeds from nuclear decommissioning trust fund sales	183,474	83,407
Investment in nuclear decommissioning trust funds	(194,776)	(93,516)
Change in money pool receivable - net	—	(25,166)
Changes in securitization account	1,244	834

Litigation proceeds for reimbursement of spent nuclear fuel storage costs	55,001	—


Net cash flow used in investing activities	(400,864)	(321,030)

FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	335,902	659,913

Retirement of long-term debt	(226,366)	(361,823)



Changes in money pool payable - net	4,231	(182,738)

Common equity distributions paid	—	(115,000)

Other	(880)	(1,052)
Net cash flow provided by (used in) financing activities	112,887	(700)

Net increase (decrease) in cash and cash equivalents	(946)	31,824
Cash and cash equivalents at beginning of period	3,519	119
Cash and cash equivalents at end of period	$2,573	$31,943

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized	$69,276	$62,486


See Notes to Financial Statements.

111

ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2019 and 2018
(Unaudited)
2019 2018
(In Thousands)
OPERATING ACTIVITIES
Net income
$239,136

$247,701
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation, amortization, and decommissioning, including nuclear fuel amortization 351,390
335,939
Deferred income taxes, investment tax credits, and non-current taxes accrued 85,246
28,463
Changes in assets and liabilities:
Receivables (70,395 ) (33,422 )
Fuel inventory (5,350 ) 7,523
Accounts payable (24,766 ) (20,904 )
Taxes accrued (18,608 ) 30,686
Interest accrued 20,206
13,558
Deferred fuel costs 52,468
24,463
Other working capital accounts 44,803
(8,827 )
Provisions for estimated losses 8,841
10,013
Other regulatory assets (55,749 ) 22,574
Other regulatory liabilities 32,537
(218,518 )
Pension and other postretirement liabilities (26,136 ) (64,461 )
Other assets and liabilities (57,011 ) (12,203 )
Net cash flow provided by operating activities 576,612
362,585

INVESTING ACTIVITIES
Construction expenditures (488,487 ) (517,882 )
Allowance for equity funds used during construction 11,016
12,572
Nuclear fuel purchases (26,732 ) (79,142 )
Proceeds from sale of nuclear fuel 22,834
31,897
Proceeds from nuclear decommissioning trust fund sales 199,031
259,331
Investment in nuclear decommissioning trust funds (214,205 ) (269,913 )
Change in money pool receivable - net (6,896 ) (13,421 )
Changes in securitization account (3,238 ) (4,821 )
Insurance proceeds —
7,043
Change in other investments 1
(1 )
Net cash flow used in investing activities (506,676 ) (574,337 )

FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt 781,510
658,427
Retirement of long-term debt (473,827 ) (372,447 )
Capital contribution from parent —
350,000
Changes in short-term borrowings - net —
(49,974 )
Changes in money pool payable - net (182,738 ) (166,137 )
Distributions/dividends paid:
Common equity (115,000 ) —
Preferred stock —
(1,071 )
Other (2,931 ) 8,520
Net cash flow provided by financing activities 7,014
427,318

Net increase in cash and cash equivalents 76,950
215,566
Cash and cash equivalents at beginning of period 119
6,216
Cash and cash equivalents at end of period
$77,069

$221,782

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized
$80,644

$74,966

See Notes to Financial Statements.

Table of Contents


ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, 2020 and December 31, 2019
(Unaudited)
	2020	2019
	(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash	$2,563	$3,519
Temporary cash investments	10	—
Total cash and cash equivalents	2,573	3,519
Securitization recovery trust account	2,792	4,036
Accounts receivable:
Customer	136,852	117,679
Allowance for doubtful accounts	(7,340)	(1,169)
Associated companies	37,835	29,178
Other	34,069	117,653
Accrued unbilled revenues	125,773	108,489
Total accounts receivable	327,189	371,830


Fuel inventory - at average cost	46,449	33,745
Materials and supplies - at average cost	226,429	211,320
Deferred nuclear refueling outage costs	57,241	48,875


Prepayments and other	18,656	14,096
TOTAL	681,329	687,421

OTHER PROPERTY AND INVESTMENTS
Decommissioning trust funds	1,109,840	1,101,283

Other	343	345
TOTAL	1,110,183	1,101,628

UTILITY PLANT
Electric	12,520,703	12,293,483

Construction work in progress	296,333	197,775
Nuclear fuel	167,409	195,547
TOTAL UTILITY PLANT	12,984,445	12,686,805
Less - accumulated depreciation and amortization	5,137,471	5,019,826
UTILITY PLANT - NET	7,846,974	7,666,979

DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:

Other regulatory assets (includes securitization property of $— as of June 30, 2020 and $1,706 as of December 31, 2019)	1,693,041	1,666,850
Deferred fuel costs	67,955	67,690
Other	17,447	15,065
TOTAL	1,778,443	1,749,605

TOTAL ASSETS	$11,416,929	$11,205,633

See Notes to Financial Statements.

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ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, 2019 and December 31, 2018
(Unaudited)
2019 2018
(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash
$410

$118
Temporary cash investments 76,659
1
Total cash and cash equivalents 77,069
119
Securitization recovery trust account 7,904
4,666
Accounts receivable:
Customer 160,955
94,348
Allowance for doubtful accounts (1,423 ) (1,264 )
Associated companies 45,499
48,184
Other 48,569
64,393
Accrued unbilled revenues 137,444
108,092
Total accounts receivable 391,044
313,753
Deferred fuel costs —
19,235
Fuel inventory - at average cost 28,498
23,148
Materials and supplies - at average cost 207,541
196,314
Deferred nuclear refueling outage costs 33,581
78,966
Prepayments and other 17,447
14,553
TOTAL 763,084
650,754

OTHER PROPERTY AND INVESTMENTS
Decommissioning trust funds 1,045,826
912,049
Other 5,476
5,480
TOTAL 1,051,302
917,529

UTILITY PLANT
Electric 12,041,822
11,611,041
Construction work in progress 299,195
243,731
Nuclear fuel 186,731
220,602
TOTAL UTILITY PLANT 12,527,748
12,075,374
Less - accumulated depreciation and amortization 4,985,276
4,864,818
UTILITY PLANT - NET 7,542,472
7,210,556

DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Other regulatory assets (includes securitization property of $4,596 as of September 30, 2019 and $14,329 as of December 31, 2018) 1,590,726
1,534,977
Deferred fuel costs 67,591
67,294
Other 21,441
20,486
TOTAL 1,679,758
1,622,757

TOTAL ASSETS
$11,036,616

$10,401,596

See Notes to Financial Statements.


ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
June 30, 2020 and December 31, 2019
(Unaudited)
	2020	2019
	(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt	$395,000	$—

Accounts payable:
Associated companies	77,265	111,785
Other	189,134	202,201
Customer deposits	101,675	101,411
Taxes accrued	81,422	81,831

Interest accrued	22,907	22,788
Deferred fuel costs	70,308	53,721
Current portion of unprotected excess accumulated deferred income taxes	—	9,296
Other	42,901	38,760
TOTAL	980,612	621,793

NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued	1,221,140	1,183,126
Accumulated deferred investment tax credits	31,101	31,701
Regulatory liability for income taxes - net	466,850	478,174
Other regulatory liabilities	529,538	559,555
Decommissioning	1,276,988	1,242,616
Accumulated provisions	64,878	63,880
Pension and other postretirement liabilities	318,642	319,075
Long-term debt (includes securitization bonds of $— as of June 30, 2020 and $6,772 as of December 31, 2019)	3,233,588	3,517,208
Other	62,890	62,568
TOTAL	7,205,615	7,457,903





EQUITY
Member's equity	3,230,702	3,125,937
TOTAL	3,230,702	3,125,937

TOTAL LIABILITIES AND EQUITY	$11,416,929	$11,205,633

See Notes to Financial Statements.

113

ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
September 30, 2019 and December 31, 2018
(Unaudited)
2019 2018
(In Thousands)
CURRENT LIABILITIES
Accounts payable:
Associated companies
$55,971

$251,768
Other 195,783
187,387
Customer deposits 101,349
99,053
Taxes accrued 38,281
56,889
Interest accrued 39,099
18,893
Deferred fuel costs 33,530
—
Current portion of unprotected excess accumulated deferred income taxes 33,692
99,316
Other 48,516
23,943
TOTAL 546,221
737,249

NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued 1,172,542
1,085,545
Accumulated deferred investment tax credits 32,002
32,903
Regulatory liability for income taxes - net 480,573
505,748
Other regulatory liabilities 526,004
402,668
Decommissioning 1,224,936
1,048,428
Accumulated provisions 57,820
48,979
Pension and other postretirement liabilities 287,086
313,295
Long-term debt (includes securitization bonds of $14,016 as of September 30, 2019 and $20,898 as of December 31, 2018) 3,538,384
3,225,759
Other 63,809
17,919
TOTAL 7,383,156
6,681,244

Commitments and Contingencies

EQUITY
Member's equity 3,107,239
2,983,103
TOTAL 3,107,239
2,983,103

TOTAL LIABILITIES AND EQUITY
$11,036,616

$10,401,596

See Notes to Financial Statements.

Table of Contents

ENTERGY ARKANSAS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN MEMBER'S EQUITY

For the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019

(Unaudited)

Member's Equity

(In Thousands)

~~Balance at December 31, 2017~~

~~$2,376,754~~

~~Net income~~

~~36,255~~

~~Preferred stock dividends~~

~~(357~~

)

~~Balance at March 31, 2018~~

~~2,412,652~~

~~Net income~~

~~82,556~~

~~Capital contribution from parent~~

~~350,000~~

~~Preferred stock dividends~~

~~(357~~

)

~~Balance at June 30, 2018~~

~~2,844,851~~

~~Net income~~

~~128,890~~

~~Preferred stock dividends~~

~~(357~~

)

~~Balance at September 30, 2018~~

~~$2,973,384~~

Balance at December 31, 2018

$2,983,103

~~$2,983,103~~

Net income

39,121

Balance at March 31, 2019

3,022,224

Net income

50,299

Common equity distributions

~~(115,000~~(115,000)

)

Balance at June 30, 2019

$2,957,523

~~Net income~~

~~149,716~~

Balance at ~~September 30,~~December 31, 2019

$3,125,937

~~$3,107,239~~

Net income

44,595

Balance at March 31, 2020

3,170,532

Net income

60,170

Balance at June 30, 2020

$3,230,702

See Notes to Financial Statements.

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ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
SELECTED OPERATING RESULTS
For the Three and Six Months Ended June 30, 2020 and 2019
(Unaudited)

	Three Months Ended			Increase/
	2020	2019	(Decrease)	%
	(Dollars In Millions)
Electric Operating Revenues:
Residential	$171	$158	$13	8
Commercial	106	125	(19)	(15)
Industrial	106	119	(13)	(11)
Governmental	4	5	(1)	(20)
Total billed retail	387	407	(20)	(5)
Sales for resale:
Associated companies	27	30	(3)	(10)
Non-associated companies	11	45	(34)	(76)
Other	67	61	6	10
Total	$492	$543	($51)	(9)

Billed Electric Energy Sales (GWh):
Residential	1,497	1,546	(49)	(3)
Commercial	1,176	1,346	(170)	(13)
Industrial	1,738	1,830	(92)	(5)
Governmental	52	57	(5)	(9)
Total retail	4,463	4,779	(316)	(7)
Sales for resale:
Associated companies	308	509	(201)	(39)
Non-associated companies	831	2,037	(1,206)	(59)
Total	5,602	7,325	(1,723)	(24)


	Six Months Ended			Increase/
	2020	2019	(Decrease)	%
	(Dollars In Millions)
Electric Operating Revenues:
Residential	$391	$368	$23	6
Commercial	217	250	(33)	(13)
Industrial	207	240	(33)	(14)
Governmental	8	10	(2)	(20)
Total billed retail	823	868	(45)	(5)
Sales for resale:
Associated companies	52	59	(7)	(12)
Non-associated companies	27	95	(68)	(72)
Other	72	67	5	7
Total	$974	$1,089	($115)	(11)

Billed Electric Energy Sales (GWh):
Residential	3,572	3,751	(179)	(5)
Commercial	2,460	2,672	(212)	(8)
Industrial	3,549	3,675	(126)	(3)
Governmental	106	114	(8)	(7)
Total retail	9,687	10,212	(525)	(5)
Sales for resale:
Associated companies	711	1,106	(395)	(36)
Non-associated companies	1,977	4,556	(2,579)	(57)
Total	12,375	15,874	(3,499)	(22)

115

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

Three Months Ended Increase/

2019 2018 (Decrease) %

(Dollars In Millions)
Electric Operating Revenues:
Residential
$254

$250

$4
2
Commercial 163
120
43
36
Industrial 156
126
30
24
Governmental 6
4
2
50
Total billed retail 579
500
79
16
Sales for resale:
Associated companies 30
23
7
30
Non-associated companies 29
37
(8 ) (22 )
Other 50
8
42
525
Total
$688

$568

$120
21

Billed Electric Energy Sales (GWh):
Residential 2,393
2,482
(89 ) (4 )
Commercial 1,761
1,816
(55 ) (3 )
Industrial 2,125
2,283
(158 ) (7 )
Governmental 67
67
—
—
Total retail 6,346
6,648
(302 ) (5 )
Sales for resale:
Associated companies 588
483
105
22
Non-associated companies 1,515
1,818
(303 ) (17 )
Total 8,449
8,949
(500 ) (6 )

Nine Months Ended Increase/

2019 2018 (Decrease) %
(Dollars In Millions)
Electric Operating Revenues:
Residential
$621

$645

($24 ) (4 )
Commercial 413
334
79
24
Industrial 396
335
61
18
Governmental 16
13
3
23
Total billed retail 1,446
1,327
119
9
Sales for resale:
Associated companies 89
80
9
11
Non-associated companies 124
100
24
24
Other 117
107
10
9
Total
$1,776

$1,614

$162
10

Billed Electric Energy Sales (GWh):
Residential 6,144
6,455
(311 ) (5 )
Commercial 4,433
4,577
(144 ) (3 )
Industrial 5,800
6,064
(264 ) (4 )
Governmental 181
181
—
—
Total retail 16,558
17,277
(719 ) (4 )
Sales for resale:
Associated companies 1,694
1,206
488
40
Non-associated companies 6,071
4,706
1,365
29
Total 24,323
23,189
1,134
5

Table of Contents

ENTERGY LOUISIANA, LLC AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

The COVID-19 Pandemic

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

Results of Operations

Net Income

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

Net income ~~increased $37~~decreased $12.6 million primarily due to lower volume/weather and higher interest expense, partially offset by higher retail electric price and lower other operation and maintenance expenses.

Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

Net income increased $49.1 million primarily due to the $58 million reduction in income tax expense resulting from an IRS settlement in the first quarter 2020 related to the uncertain tax position regarding the Hurricane Isaac Louisiana Act 55 financing, which also resulted in a $29 million ($21 million net-of-tax) regulatory charge to reflect Entergy Louisiana’s agreement to share the savings with customers. Also contributing to the increase was higher ~~volume/weather.~~ retail electric price and lower other operation and maintenance expenses.The increase was partially offset by ~~higher depreciation and amortization expenses, higher other operation and maintenance expenses, and higher interest expense.~~

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

~~Net income increased $51.7 million primarily due to higher retail electric price. The increase was partially offset by a higher effective income tax rate,~~ lower volume/weather, higher ~~depreciation~~interest expense, and ~~amortization expenses, and higher interest expense.~~lower other income. See Note 10 to the financial statements herein for further discussion of the tax settlement.

Operating Revenues

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

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

2019:



	Amount
	(In Millions)
~~2018~~2019 operating revenues	$1,106.3	~~$1,206.6~~
Fuel, rider, and other revenues that do not significantly affect net income	~~(77.3~~(104.5)	)
~~Retail electric price~~Volume/weather	~~52.0~~(30.8)
Return of unprotected excess accumulated deferred income taxes to customers	~~37.6~~(1.3)
~~Volume/weather~~Retail electric price	~~12.8~~42.0
~~2019~~2020 operating revenues	$1,011.7	~~$1,231.7~~

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.

116

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Entergy Louisiana, LLC and Subsidiaries

Management's Financial Discussion and Analysis

The ~~retail electric price~~volume/weather variance is primarily due to a decrease in usage during the unbilled sales period, decreased commercial usage as a result of the COVID-19 pandemic, and the effect of less favorable weather on residential sales, partially offset by an increase in ~~formula rate plan revenues effective September 2018 and an interim increase~~residential usage as a result of the COVID-19 pandemic. Entergy Louisiana continues to expect declines in ~~formula rate plan revenues effective June 2019~~sales volume during 2020 due to the ~~inclusion of the first-year revenue requirement for St. Charles Power Station, each as approved by the LPSC. See Note 2 to the financial statements herein and~~COVID-19 pandemic, especially in the ~~Form 10-K~~commercial and industrial customer classes. See “The COVID-19 Pandemic” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for ~~further~~ discussion of the ~~formula rate plan proceedings.~~COVID-19 pandemic.

~~126~~

~~Table of Contents~~

~~Entergy Louisiana, LLC and Subsidiaries~~

~~Management's Financial Discussion and Analysis~~

In ~~third~~second quarter ~~2019, $17.2~~2020, $7.8 million was returned to customers as compared to ~~$54.8~~$6.5 million in ~~third~~second quarter ~~2018.~~2019. There is no effect on net income as the reduction in operating revenues was offset by a reduction in income tax expense. See Note 2 to the financial statements in the Form 10-K for further discussion of regulatory activity regarding the Tax Cuts and Jobs Act.

The ~~volume/weather~~retail electric price variance is primarily due to an interim increase in ~~usage during~~formula rate plan revenues effective June 2019 due to the ~~unbilled sales period.~~inclusion of the first-year revenue requirement for the J. Wayne Leonard Power Station (formerly St. Charles Power Station) and an interim increase in formula rate plan revenues effective April 2020 due to the inclusion of the first-year revenue requirement for the Lake Charles Power Station, each as approved by the LPSC. See Note 2 to the financial statements herein and in the Form 10-K for further discussion of the formula rate plan proceedings.

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

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

2019:



	Amount
	(In Millions)
~~2018~~2019 operating revenues	$2,065.6	~~$3,308.7~~
Fuel, rider, and other revenues that do not significantly affect net income	~~(159.2~~(172.0)	)
~~Retail electric price~~Volume/weather	~~106.5~~(26.7)
Return of unprotected excess accumulated deferred income taxes to customers	~~55.5~~(2.0)
~~Volume/weather~~Retail electric price	~~(14.2~~77.4	)
~~2019~~2020 operating revenues	$1,942.3	~~$3,297.3~~

The ~~retail electric price~~volume/weather variance is primarily due to decreased commercial usage as a result of the COVID-19 pandemic, the effect of less favorable weather on residential sales, and a decrease in usage during the unbilled sales period, partially offset by an increase in ~~formula rate plan revenues effective September 2018 and an interim increase~~residential usage as a result of the COVID-19 pandemic. Entergy Louisiana continues to expect declines in ~~formula rate plan revenues effective June 2019~~sales volume during 2020 due to the ~~inclusion of the first-year revenue requirement for the St. Charles Power Station, each as approved by the LPSC. See Note 2 to the financial statements herein and~~COVID-19 pandemic, especially in the ~~Form 10-K~~commercial and industrial customer classes. See “The COVID-19 Pandemic” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for ~~further~~ discussion of the ~~formula rate plan proceedings.~~COVID-19 pandemic.

The return of unprotected excess accumulated deferred income taxes to customers resulted from the return of unprotected excess accumulated deferred income taxes through changes in the formula rate plan effective May 2018. In the ~~nine~~six months ended ~~September~~June 30, ~~2019, $30.8~~2020, $15.6 million was returned to customers as compared to ~~$86.3~~ $13.6

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Management's Financial Discussion and Analysis

million in the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. There is no effect on net income as the reduction in operating revenues was offset by a reduction in income tax expense. See Note 2 to the financial statements in the Form 10-K for further discussion of regulatory activity regarding the Tax Cuts and Jobs Act.

The ~~volume/weather~~retail electric price variance is primarily due to ~~a decrease of 623 GWh, or 3%, in billed electricity usage for residential and commercial customers, including the effect of less favorable weather. The decrease was partially offset by~~ an interim increase in ~~industrial usage primarily~~formula rate plan revenues effective June 2019 due to the inclusion of the first-year revenue requirement for the J. Wayne Leonard Power Station (formerly St. Charles Power Station) and an interim increase in ~~demand from expansion projects, primarily~~formula rate plan revenues effective April 2020 due to the inclusion of the first-year revenue requirement for the Lake Charles Power Station, each as approved by the LPSC. See Note 2 to the financial statements herein and in the ~~chemicals industry.~~Form 10-K for further discussion of the formula rate plan proceedings.

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Other Income Statement Variances

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

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

~~an increase~~•the effects of ~~$5.6 million~~recording in ~~loss provisions;~~

~~an increase of $4.3 million~~second quarter 2020 final judgments to resolve claims in ~~spending on customer initiatives to explore new technologies and services and continuous customer improvement; and~~

~~an increase of $3.6 million in information technology costs primarily due to higher costs~~the Waterford 3 damages case against the DOE related to ~~improved infrastructure, enhanced security, and upgrades and maintenance.~~

spent nuclear fuel storage costs. The ~~increase was partially offset by a decrease~~damages awarded include the reimbursement of ~~$3.9~~approximately $7.7 million ~~in nuclear generation expenses primarily due to proceeds~~ of ~~$5.2 million received in September 2019 from the DOE resulting from litigation regarding~~ spent nuclear fuel storage costs ~~that were~~ previously ~~expensed.~~recorded as other operation and maintenance expense. See Note 1 to the financial statements herein for a discussion of the spent nuclear fuel ~~litigation.~~litigation;

•a decrease of $6.1 million in energy efficiency costs due to the timing of recovery from customers;

~~Taxes other than income increased~~•a decrease of $5.3 million in non-nuclear generation expenses primarily due to ~~an increase~~a lower scope of work performed during plant outages in ~~ad valorem taxes~~2020 as compared to the same period in 2019, partially offset by increases resulting from ~~higher assessments.~~the J. Wayne Leonard Power Station (formerly St. Charles Power Station) and the Lake Charles Power Station being placed in service;

•a decrease of $4.4 million primarily due to contract costs in 2019 related to initiatives to explore new customer products and services; and

•a decrease of $3.5 million in nuclear generation expenses primarily due to a lower scope of work performed in 2020 as compared to the same period in 2019.

Depreciation and amortization expenses increased primarily due to additions to plant in service, including the ~~St.~~Lake Charles Power Station, which was placed ~~into~~in service in March 2020 and the J. Wayne Leonard Power Station (formerly St. Charles Power Station), which was placed in service in May 2019.

Other ~~regulatory charges (credits) include regulatory charges~~income decreased primarily due to a decrease in the allowance for equity funds used during construction due to higher construction work in progress in 2019, including the J. Wayne Leonard Power Station (formerly St. Charles Power Station) project and the Lake Charles Power Station project.

Interest expense increased primarily due to the issuances of ~~$18.3~~$300 million ~~recorded~~of 4.20% Series mortgage bonds and $350 million of 2.90% Series mortgage bonds, each in ~~third quarter 2018~~March 2020.

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Six Months Ended June 30, 2020 Compared to ~~reflect~~ Six Months Ended June 30, 2019

Other operation and maintenance expenses decreased primarily due to:

•a decrease of $9.4 million in nuclear generation expenses primarily due to a lower scope of work performed in 2020 as compared to the same period in 2019;

•a decrease of $9.2 million in non-nuclear generation expenses primarily due to a lower scope of work performed during plant outages in 2020 as compared to the same period in 2019, partially offset by increases resulting from the J. Wayne Leonard Power Station (formerly St. Charles Power Station) and the Lake Charles Power Station being placed in service;

•the effects of ~~a provision~~recording in second quarter 2020 final judgments to resolve claims in the ~~settlement reached~~Waterford 3 damages case against the DOE related to spent nuclear fuel storage costs. The damages awarded include the reimbursement of approximately $7.7 million of spent nuclear fuel storage costs previously recorded as other operation and maintenance expense. See Note 1 to the financial statements herein for discussion of the spent nuclear fuel litigation;

•higher nuclear insurance refunds of $5.7 million; and

•a decrease of $4.7 million primarily due to contract costs in 2019 related to initiatives to explore new customer products and services.

The decrease was partially offset by an increase of $5.5 million in compensation and benefits costs primarily due to an increase in net periodic pension and other postretirement benefits costs as a result of a decrease in the ~~formula~~discount rate ~~plan extension proceeding~~used to ~~return~~value the benefit liabilities and an increase in employee health benefits ofcosts. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the ~~lower federal income tax rate in 2018~~Form 10-K, Note 6 to ~~customers. See~~the financial statements herein, and Note 211 to the financial statements in the Form 10-K for further discussion of pension and other postretirement benefit costs.

Depreciation and amortization expenses increased primarily due to additions to plant in service, including the J. Wayne Leonard Power Station (formerly St. Charles Power Station), which was placed in service in May 2019 and the Lake Charles Power Station, which was placed in service in March 2020.

Other income decreased primarily due to a decrease in the allowance for equity funds used during construction due to higher construction work in progress in 2019, including the J. Wayne Leonard Power Station (formerly St. Charles Power Station) project and the Lake Charles Power Station project.

Other regulatory credits include regulatory charges of $29 million recorded in first quarter 2020 due to a settlement with the IRS related to the uncertain tax position regarding Hurricane Isaac Louisiana Act 55 financing because the savings will be shared with customers. See Note 10 to the financial statements herein for further discussion of the ~~formula rate plan extension proceeding.~~settlement and savings obligation.

Interest expense increased primarily due to the issuance of $525 million of 4.20% Series mortgage bonds in March ~~2019.~~

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

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

~~an increase~~the issuances of ~~$10.4 million in spending on customer initiatives to explore new technologies and services and continuous customer improvement;~~

~~an increase of $8.3 million in information technology costs primarily due to higher costs related to improved infrastructure, enhanced security, and upgrades and maintenance; and~~


•	~~an increase of $3.5 million~~ ~~in distribution operations and asset management costs primarily due to higher advanced metering customer education costs and higher contract costs for meter reading services.~~

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~~Management's Financial Discussion and Analysis~~

~~The increase was substantially offset by:~~


•	~~a decrease of $7.2 million in nuclear generation expenses primarily due to proceeds of $5.2 million received in September 2019 from the DOE litigation regarding spent nuclear fuel storage costs that were previously expensed and~~ ~~a lower scope of work performed during plant outages in 2019 as compared to the same period in 2018;~~

~~a decrease of $6 million in transmission expenses primarily due to a lower scope of work in 2019 as compared to the same period in 2018;~~

~~a decrease of $4 million in vegetation maintenance costs; and~~

~~a decrease of $3.6 million in energy efficiency costs due to the timing of recovery from customers.~~

~~See Note 1 to the financial statements herein for a discussion of the spent nuclear fuel litigation~~

~~Depreciation and amortization expenses increased primarily due to additions to plant in service, including the St. Charles Power Station, which was placed in service in May 2019.~~

Other regulatory charges (credits) include regulatory charges of $73.3 million recorded in 2018 to reflect the effects of a provision in the settlement reached in the formula rate plan extension proceeding to return the benefits of the lower federal income tax rate in 2018 to customers. See Note 2 to the financial statements in the Form 10-K for discussion of the formula rate plan extension proceeding.

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

~~Interest expense increased primarily due to the issuance of $525~~$300 million of 4.20% Series mortgage bonds and $350 million of 2.90% Series mortgage bonds, each in March ~~2019.~~2020.

Income Taxes

The effective income tax ~~rates were 17.7%~~rate was 17.4% for the ~~third~~second quarter ~~2019 and 16.3% for the nine months ended September 30, 2019.~~2020. The ~~differences~~difference in the effective income tax ~~rates~~rate for the ~~third~~second quarter ~~2019 and the nine months ended September 30, 2019~~2020 versus the federal statutory rate of 21% ~~were~~was primarily due to ~~the amortization of excess accumulated deferred income taxes,~~ book and tax differences related to the non-taxable income distributions earned on preferred membership interests, the amortization of excess accumulated deferred income taxes, and certain book and tax differences related to utility plant items, partially offset by state income taxes.See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act.

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Management's Financial Discussion and Analysis

The effective income tax rate was (4.1%) for the six months ended June 30, 2020. The difference in the effective income tax rate for the six months ended June 30, 2020 versus the federal statutory rate of 21% was primarily due to the settlement with the IRS on the treatment of funds received in conjunction with the Act 55 financing of Hurricane Isaac storm costs, permanent differences related to income tax deductions for stock-based compensation, book and tax differences related to the non-taxable income distributions earned on preferred membership interests, book and tax differences related to the allowance for equity funds used during construction, the amortization of excess accumulated deferred income taxes, and certain book and tax differences related to utility plant items, partially offset by state income taxes. See Note 10 to the financial statements herein for discussion of the IRS settlement. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act. See Note 10 to the financial statements herein for discussion of the income tax deductions for stock-based compensation.

The effective income tax rates were 17.3% for the second quarter 2019 and 15% for the six months ended June 30, 2019. The differences in the effective income tax rates for the second quarter 2019 and the six months ended June 30, 2019 versus the federal statutory rate of 21% were primarily due to book and tax differences related to the non-taxable income distributions earned on preferred membership interests, the amortization of excess accumulated deferred income taxes, and book and tax differences related to the allowance for equity funds used during construction, partially offset by state income taxes. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act.

The effective income tax rate was 1.3% for the third quarter 2018. The difference in the effective income tax rate for the third quarter 2018 versus the federal statutory rate of 21% was primarily due to the amortization of excess accumulated deferred income taxes and book and tax differences related to the non-taxable income distributions earned on preferred membership interests, partially offset by state income taxes. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act.

The effective income tax rate was (6.3%) for the nine months ended September 30, 2018. The difference in the effective income tax rate for the nine months ended September 30, 2018 versus the federal statutory rate of 21% was primarily due to the amortization of excess accumulated deferred income taxes, an IRS audit settlement for the 2012-2013 tax returns, and book and tax differences related to the non-taxable income distributions earned on preferred membership interests, partially offset by state income taxes. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act. See Note 3 to the financial statements in the Form 10-K for a discussion of the IRS audit settlement.

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~~Entergy Louisiana, LLC and Subsidiaries~~

~~Management's Financial Discussion and Analysis~~

Income Tax Legislation

Liquidity and Capital Resources

Cash Flow

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


	2020	2019
	(In Thousands)
Cash and cash equivalents at beginning of period	$2,006	$43,364

Cash flow provided by (used in):
Operating activities	726,789	473,220
Investing activities	(732,085)	(920,658)
Financing activities	467,025	448,813
Net increase in cash and cash equivalents	461,729	1,375

Cash and cash equivalents at end of period	$463,735	$44,739

120

2019 2018
(In Thousands)
Cash and cash equivalents at beginning of period
$43,364

$35,907

Cash flow provided by (used in):
    Operating activities 962,443
943,300
    Investing activities (1,260,023 ) (1,283,844 )
    Financing activities 382,261
518,222
Net increase in cash and cash equivalents 84,681
177,678

Cash and cash equivalents at end of period
$128,045

$213,585

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Entergy Louisiana, LLC and Subsidiaries

Management's Financial Discussion and Analysis

Operating Activities

Net cash flow provided by operating activities increased ~~$19.1~~$253.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 primarily due to:

•

~~a decrease of $40.1~~

•the timing of payments to vendors;

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

•a decrease of $63 million in spending on nuclear refueling outages;

•$28.1 million in ~~pension contributions in 2019 as compared to 2018. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS -~~ ~~Critical Accounting Estimates” in the Form 10-K and Note 6 to the financial statements herein for a discussion of qualified pension and other postretirement benefits funding;~~

proceeds ~~of $16.6 million~~ received ~~in September 2019~~ from the DOE in 2020 resulting from litigation regarding spent nuclear fuel storage costs that were previously expensed. See Note 1 to the financial statements herein for a discussion of the spent nuclear fuel litigation; and

•income tax refunds of $20.7 million in 2020. Entergy Louisiana had income tax receipts in 2020 as a ~~decrease in the return~~result of ~~unprotected excess accumulated deferred~~a refund of an overpayment on a prior year state income taxes to customers. See Note 2 to the financial statements in the Form 10-K and Note 10 to the financial statements herein for a discussion of the effects and the regulatory activity regarding the Tax Cuts and Jobs Act.tax return.

The increase was partially offset ~~by:~~

by the timing of collection of receivables from customers, in part due to the COVID-19 pandemic, and an increase of ~~$68.4~~$11.7 million in ~~spending on nuclear refueling outages;~~interest payments.

~~the timing of payments to vendors; and~~

~~an increase of $18.7 million in storm spending in 2019.~~

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~~Management's Financial Discussion and Analysis~~

Investing Activities

Net cash flow used in investing activities decreased ~~$23.8~~$188.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 primarily due to:

•a decrease of ~~$214.4~~$118.6 million in ~~fossil-fueled generation~~construction expenditures due to higher spending in 2019 on the Lake Charles Power Station and J. Wayne Leonard Power Station (formerly St. Charles Power Station) projects;

•a decrease of $107.1 million in nuclear construction expenditures primarily due to ~~lower~~decreased spending on ~~the St. Charles Power Station and Lake Charles Power Station~~various projects in ~~2019;~~2020;

~~money pool activity;~~

•a decrease of ~~$11.6 million in information technology capital expenditures primarily due to lower spending in 2019 on critical infrastructure protection; and~~

~~several individually insignificant items.~~

~~The decrease was partially offset by:~~

~~an increase of $73.3~~$74 million as a result of fluctuations in nuclear fuel activity because of variations from year to year in the timing and pricing of fuel reload requirements in the Utility business, material and service deliveries, and the timing of cash payments during the nuclear fuel cycle; and

•an increase of ~~$55.4~~$42.6 million in ~~nuclear construction expenditures primarily due to increased spending on various projects in 2019;~~net receipts from storm reserve escrow accounts.

The decrease was partially offset by:

•money pool activity;

•an increase of ~~$47.5~~$26.4 million in distribution construction expenditures primarily due to investment in the reliability and infrastructure of Entergy Louisiana’s distribution system, including increased spending on advanced metering infrastructure; and

•an increase of ~~$38.9 million in transmission expenditures primarily due to a higher scope of work performed in 2019 as compared to the same period in 2018; and~~

~~an increase of $38.6~~$24.9 million in storm spending in ~~2019.~~2020.

~~Decreases~~Increases in Entergy Louisiana’s receivable from the money pool are a ~~source~~use of cash flow, and Entergy Louisiana’s receivable from the money pool ~~decreased~~increased by ~~$35.5~~$87.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to ~~increasing~~decreasing by ~~$2.4~~$9.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings.

Financing Activities

Net cash flow provided by financing activities ~~decreased $136~~increased $18.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 primarily due ~~to:~~

to the ~~issuance~~issuances of ~~$750~~$350 million of ~~4.00%~~2.90% Series mortgage bonds ~~in March 2018. A portion of the proceeds was used to repay $375 million of 6.0% Series mortgage bonds in May 2018;~~

~~the issuance of $600~~and $300 million of 4.20% Series mortgage bonds, each in ~~August 2018. A portion~~March 2020, and a decrease of ~~the proceeds was used to repay $300 million of 6.5% Series mortgage bonds in September 2018; and~~

~~an increase of $99~~$85.5 million in common equity distributions in ~~2019~~2020 primarily due to ~~maintain~~ upcoming capital expenditures.

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Entergy ~~Louisiana’s targeted capital structure.~~Louisiana, LLC and Subsidiaries

Management's Financial Discussion and Analysis

The ~~decrease~~increase was ~~partially~~substantially offset by:

•the issuance of $525 million of 4.20% Series mortgage bonds in March 2019;

•money pool activity; and

•net repayments of long-term borrowings of $59.9 million in 2020 compared to net long-term borrowings of ~~$29.2~~$46.1 million in 2019 on the nuclear fuel company variable interest entities’ credit ~~facilities~~facilities.

Decreases in ~~2019 compared~~Entergy Louisiana’s payable to ~~net repayments~~the money pool are a use of ~~long-term borrowings of $37~~cash flow, and Entergy Louisiana’s payable to the money pool decreased by $82.8 million onfor the ~~nuclear fuel company variable interest entities’ credit facilities in 2018; and~~six months ended June 30, 2020.

~~net repayments of short-term borrowings of $43.5 million in 2018 on the nuclear fuel company variable interest entities’ credit facilities.~~

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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.

Capital Structure

Entergy Louisiana’s debt to capital ratio is shown in the following table.


	June 30, 2020		December 31, 2019
Debt to capital	53.9	%	53.4	%
Effect of excluding securitization bonds	(0.1	%)	(0.1	%)
Debt to capital, excluding securitization bonds (a)	53.8	%	53.3	%
Effect of subtracting cash	(1.5	%)	(0.1	%)
Net debt to net capital, excluding securitization bonds (a)	52.3	%	53.2	%

September 30,
2019

December 31,
2018
Debt to capital 53.8 % 53.6 %
Effect of excluding securitization bonds (0.1 %) (0.3 %)
Debt to capital, excluding securitization bonds (a) 53.7 % 53.3 %
Effect of subtracting cash (0.5 %) (0.1 %)
Net debt to net capital, excluding securitization bonds (a) 53.2 % 53.2 %


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

(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, ~~financing~~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 bonds in analyzing its financial condition and believes they provide useful information to its investors and creditors in evaluating Entergy Louisiana’s financial condition because the securitization bonds are non-recourse to Entergy Louisiana, as more fully described in Note 5 to the financial statements in the Form 10-K. 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 has experienced negative changes during 2020 to its customer payment patterns and its operating cash flow activity due to the COVID-19 pandemic, and expects them to continue throughout 2020. See “The COVID-19 Pandemic” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the COVID-19 pandemic. Despite the effects of the pandemic on financial markets Entergy Louisiana issued $650 million of long-term mortgage bonds in March 2020. Additional discussion of Entergy Louisiana’s liquidity and capital resources follows.

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Entergy Louisiana, ~~is developing its capital investment plan for 2020 through 2022~~LLC and ~~currently anticipates making $4.4 billion in capital investments during that period. The preliminary estimate includes specific investments such as the Washington Parish Energy Center~~Subsidiaries

Management's Financial Discussion and Lake Charles Power Station; transmission projects to enhance reliability, reduce congestion, and enable economic growth; distribution spending to maintain reliability and improve service to customers, including advanced meters and related investments; resource planning, including potential generation projects; system improvements; investments in River Bend and Waterford 3; software and security; and other investments. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital.Analysis

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


June 30, 2020	December 31, 2019	June 30, 2019	December 31, 2018
(In Thousands)
$87,635	($82,826)	$37,212	$46,843

September 30,
2019
December 31, 2018
September 30,
2018

December 31,
2017
(In Thousands)
$11,358 $46,843 $13,617 $11,173

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 September 2024. The credit facility includes fronting commitments for the issuance of letters of credit against $15 million of the

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borrowing capacity of the facility. As of ~~September~~June 30, ~~2019,~~2020, there were no cash borrowings and no letters of credit outstanding under the credit facility. In addition, Entergy Louisiana is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO.As of ~~September~~June 30, ~~2019, a $11.7~~2020, $15.5 million ~~letter~~in letters of credit ~~was~~were 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, each in the amount of $105 million and scheduled to expire in September 2021. As of ~~September~~June 30, ~~2019, $84.3~~2020, $44.1 million in loans were outstanding under the credit facility for the Entergy Louisiana River Bend nuclear fuel company variable interest entity. As of ~~September~~June 30, ~~2019, $65.5~~2020, $16.2 million in loans were outstanding under the credit facility for the Entergy Louisiana Waterford nuclear fuel company variable interest entity. See Note 4 to the financial statements herein for additional discussion of the nuclear fuel company variable interest entity credit facilities.

~~St.~~Entergy Louisiana has $257 million in its storm reserve escrow account at June 30, 2020.

Lake Charles Power Station

As discussed in the Form 10-K, the LPSC issued an order in ~~December 2016~~July 2017 approving certification that the public necessity and convenience would be served by the construction of the ~~St.~~Lake Charles Power Station. ~~Commercial~~The plant commenced commercial operation ~~commenced~~ in ~~May 2019.~~March 2020.

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 - Electric

2017 Formula Rate Plan Filing

~~Commercial operation at St. Charles Power Station commenced~~As discussed in ~~May 2019. In~~the Form 10-K, in May 2019, Entergy Louisiana filed an update to its 2017 formula rate plan evaluation report to include the estimated first-year revenue requirement of $109.5 million associated with the J. Wayne Leonard Power Station (formerly St. Charles Power Station). The resulting interim adjustment to rates became effective with the first billing cycle of June 2019. In June 2020, Entergy Louisiana submitted information to the LPSC to review the prudence of Entergy Louisiana’s management of the project. No procedural schedule has been established.

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2018 Formula Rate Plan Filing

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

~~2018~~2019 Formula Rate Plan Filing

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

~~Entergy Louisiana also included in its filing a presentation of an initial proposal to combine the~~ legacy Entergy Louisiana capacity cost true-ups and higher annualized legacy Entergy Gulf States Louisiana ~~residential rates, which combination, if approved, would be accomplished on a revenue-neutral basis intended not~~revenues due to ~~affect the rates~~higher billing determinants, offset by reductions in MISO cost recovery mechanism and tax reform adjustment mechanism revenue requirements.

Request for Extension and Modification of ~~other customer classes.~~Formula Rate Plan

In May 2020, Entergy Louisiana ~~contemplates that any combination of residential rates resulting from this request would be implemented~~filed with the ~~results of the 2019 test year formula rate plan filing.~~

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~~Entergy Louisiana, LLC and Subsidiaries~~

~~Management's Financial Discussion and Analysis~~

~~Several parties intervened in the proceeding, and the~~ LPSC ~~staff filed~~ its ~~report of objections/reservations in accordance with the applicable provisions of the~~application for authority to extend its formula rate plan. In its ~~report,~~application, Entergy Louisiana seeks to maintain a 9.8% return on equity, with a bandwidth of 60 basis points above and below the ~~LPSC staff re-urged reservations~~midpoint, with ~~respect~~a first-year midpoint reset. Entergy Louisiana also seeks to the outstanding issues from the 2017 test year formula rate plan filing and disputed the inclusion of certain affiliate costs for test years 2017 and 2018. The LPSC staff objected to Entergy Louisiana’s proposal to combine residential rates but proposed the setting of a status conference to establish a procedural schedule to more fully address the issue. The LPSC staff also reservedmaintain its right to object to the treatment of the sale of Willow Glen reflected in the evaluation report and to the August 2019 compliance update, which was made primarily to update the capital additions reflected in the formula rate plan’sexisting additional capacity mechanism, tax reform adjustment mechanism, transmission recovery mechanism, ~~based on limited time~~and the MISO cost recovery mechanism. Entergy Louisiana also seeks to ~~review it. Additionally, since~~add a distribution cost recovery mechanism which operates in substantially the ~~completion~~same manner as the transmission recovery mechanism and requests a deferral of certain ~~transmission projects, the LPSC staff has issued supplemental data requests addressing the prudence~~expenses incurred for outside of ~~Entergy Louisiana’s expenditures in connection with those projects. Entergy Louisiana is in the process of responding to those requests.~~right-of-way vegetation programs.

~~Investigation of Costs Billed by Entergy Services~~

In November 2018 the LPSC issued a notice of proceeding initiating an investigation into costs incurred by Entergy Services that are included in the retail rates of Entergy Louisiana. As noted in the notice of proceeding, the LPSC observed an increase in capital construction-related costs that have been incurred by Entergy Services. Discovery is ongoing and has included efforts to seek highly detailed information on a broad range of matters unrelated to the scope of the audit.

Retail Rates - Gas

~~2018~~2017 Rate Stabilization Plan Filing

As discussed in the Form 10-K, in January ~~2019,~~2018 Entergy Louisiana filed with the LPSC its gas rate stabilization plan for the test year ended September 30, ~~2018. Entergy Louisiana made a compliance~~2017. As-filed rates from the supplemental filing ~~in April 2019 and rates~~ were implemented, ~~during~~subject to refund, with customers receiving a cost reduction of approximately $0.7 million effective with bills rendered on and after the first billing cycle of May ~~2019, subject to refund~~2018, as well as a $0.2 million reduction in the gas infrastructure rider effective with bills rendered on and ~~final LPSC review.~~

~~Gas Rate Stabilization Plan Extension Request~~

after the first billing cycle of July 2018. In ~~August~~October 2019 ~~Entergy Louisiana submitted an application to~~ the LPSC ~~seeking extension~~staff issued its report finding that Entergy Louisiana’s filing complied with the terms of the ~~gas~~ rate stabilization plan but recommending an additional refund of $0.7 million related to the Tax Act. In June 2020, the LPSC approved a joint report acknowledging Entergy Louisiana’s prior refunds and offsets for ~~the 2019-2021 test years. The LPSC has established~~flood recovery costs, and required a ~~procedural schedule to address this request with a hearing scheduled in May 2020.~~further refund of $0.8 million, inclusive of carrying costs.

Fuel and purchased power recovery

In ~~July 2014~~March 2020 the LPSC ~~authorized its~~ staff ~~to initiate~~provided notice of an audit of Entergy Louisiana’s fuel adjustment clause filings. The audit includes a review of the reasonableness of charges flowed bythrough Entergy ~~Louisiana through its~~Louisiana’s fuel adjustment clause for the period from ~~2010~~2016 through 2013. In January 2019 the LPSC staff issued its audit report recommending that Entergy Louisiana refund approximately $7.3 million, plus interest, to customers based upon the imputation of a claim of vendor fault in servicing its nuclear plant. Entergy Louisiana recorded a provision in the first quarter 2019 for the potential outcome of the audit. In August 2019, Entergy Louisiana filed direct testimony challenging the basis for the LPSC staff’s recommended disallowance and providing an alternative calculation of replacement power costs should it be determined that a disallowance is appropriate. Entergy Louisiana’s calculation would require a refund to customers of approximately $4.2 million, plus interest, as compared to the LPSC staff’s recommendation of $7.3 million, plus interest. Responsive testimony was filed by the LPSC staff and intervenors in September 2019; all parties either agreed with or did2019. Discovery has not ~~oppose Entergy Louisiana’s alternative calculation of replacement power costs. In September 2019 the procedural schedule was suspended to facilitate settlement negotiations.~~yet commenced.

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Management's Financial Discussion and Analysis

~~Net Metering Rulemaking~~

COVID-19 Orders

In ~~September 2019~~April 2020 the LPSC issued an order ~~modifying its rules regarding net metering installations. Among other things,~~authorizing utilities to record as a regulatory asset expenses incurred from the ~~rule provides for 2-channel billing for net metering~~suspension of disconnections and collection of late fees imposed by LPSC orders associated with ~~excess energy put to~~ the ~~grid being compensated at the utility’s avoided cost. However, the rule does provide that net meter installations in place as of December 31, 2019 will be~~COVID-19 pandemic. In addition, utilities may seek future recovery, subject to ~~1:1 net metering~~LPSC review and approval, of losses and expenses incurred due to compliance with ~~excess energy put~~the LPSC’s COVID-19 orders. The suspension of late fees and disconnects for non-pay was extended until the first billing cycle after July 16, 2020. Utilities seeking to recover the ~~grid being compensated at~~regulatory asset must formally petition the ~~full retail rate~~LPSC to do so, identifying the direct and indirect costs for ~~a period of 15 years (through December 31, 2034), after~~ which ~~those installations will be~~recovery is sought. Any such request is subject to ~~2-channel billing. The rule also eliminates~~LPSC review and approval. As of June 30, 2020, Entergy Louisiana recorded a regulatory asset of $10.7 million for costs associated with the ~~existing limit on the cumulative number of net meter installations.~~ 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.

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 Louisiana’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. The following is an update to that discussion.

InOther Postretirement Benefits

As described in Note 6 to the ~~second quarter 2019,~~financial statements herein, in March 2020, Entergy announced changes to its other postretirement benefits. As a result, Entergy Louisiana ~~recorded a revision to its estimated decommissioning~~now expects 2020 other postretirement health care and life insurance benefit cost, ~~liability for Waterford 3 as a result~~including amounts capitalized, of a revised decommissioning cost study. The revised estimate resulted in a $147.5 million increase in its decommissioning cost liability, along with a corresponding increase in the related asset retirement cost asset that will be depreciated over the remaining useful life of the unit.$5.6 million.

New Accounting Pronouncements

See “New Accounting Pronouncements” section of Note 1 to the financial statements in the Form 10-K for a discussion of new accounting pronouncements.

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ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
For the Three and Six Months Ended June 30, 2020 and 2019
(Unaudited)
	Three Months Ended			Six Months Ended



	2020	2019	2020	2019
	(In Thousands)			(In Thousands)
OPERATING REVENUES
Electric	$1,001,601	$1,094,259	$1,914,142	$2,030,952
Natural gas	10,051	12,058	28,157	34,695
TOTAL	1,011,652	1,106,317	1,942,299	2,065,647

OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale	161,610	220,472	306,102	367,821
Purchased power	153,786	223,014	314,529	480,320
Nuclear refueling outage expenses	13,654	13,391	27,284	26,199
Other operation and maintenance	226,216	250,835	448,874	476,723
Decommissioning	16,203	14,059	32,204	27,938
Taxes other than income taxes	48,718	46,658	98,795	96,340
Depreciation and amortization	154,255	130,246	299,390	256,380
Other regulatory credits - net	(19,202)	(33,878)	(8,070)	(61,538)
TOTAL	755,240	864,797	1,519,108	1,670,183

OPERATING INCOME	256,412	241,520	423,191	395,464

OTHER INCOME
Allowance for equity funds used during construction	6,055	20,671	20,942	44,585
Interest and investment income	93,807	49,498	74,138	121,484
Miscellaneous - net	(66,811)	(22,306)	(17,210)	(64,650)
TOTAL	33,051	47,863	77,870	101,419

INTEREST EXPENSE
Interest expense	86,296	77,631	165,813	152,334
Allowance for borrowed funds used during construction	(3,202)	(9,737)	(10,334)	(21,104)
TOTAL	83,094	67,894	155,479	131,230

INCOME BEFORE INCOME TAXES	206,369	221,489	345,582	365,653

Income taxes	35,910	38,405	(14,273)	54,936

NET INCOME	$170,459	$183,084	$359,855	$310,717

See Notes to Financial Statements.

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

Three Months Ended Nine Months Ended
2019 2018 2019 2018
(In Thousands) (In Thousands)
OPERATING REVENUES
Electric
$1,221,874

$1,196,278

$3,252,826

$3,263,073
Natural gas 9,803
10,334
44,498
45,671
TOTAL 1,231,677
1,206,612
3,297,324
3,308,744

OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale 259,419
318,987
627,240
700,296
Purchased power 197,830
218,063
678,150
736,449
Nuclear refueling outage expenses 14,026
12,969
40,225
38,739
Other operation and maintenance 249,773
239,230
726,496
724,604
Decommissioning 15,606
13,654
43,544
39,906
Taxes other than income taxes 49,602
44,594
145,942
143,021
Depreciation and amortization 137,891
124,030
394,271
366,950
Other regulatory charges (credits) - net (29,224 ) (1,433 ) (90,762 ) 30,781
TOTAL 894,923
970,094
2,565,106
2,780,746

OPERATING INCOME 336,754
236,518
732,218
527,998

OTHER INCOME
Allowance for equity funds used during construction 14,609
20,423
59,194
57,292
Interest and investment income 45,237
53,009
166,721
143,137
Miscellaneous - net (15,067 ) (25,782 ) (79,717 ) (56,217 )
TOTAL 44,779
47,650
146,198
144,212

INTEREST EXPENSE
Interest expense 78,350
73,084
230,684
216,762
Allowance for borrowed funds used during construction (7,041 ) (10,168 ) (28,145 ) (28,382 )
TOTAL 71,309
62,916
202,539
188,380

INCOME BEFORE INCOME TAXES 310,224
221,252
675,877
483,830

Income taxes 54,964
2,944
109,900
(30,430 )

NET INCOME
$255,260

$218,308

$565,977

$514,260

See Notes to Financial Statements.

Table of Contents


ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Three and Six Months Ended June 30, 2020 and 2019
(Unaudited)
	Three Months Ended			Six Months Ended


	2020	2019	2020	2019
	(In Thousands)			(In Thousands)

Net Income	$170,459	$183,084	$359,855	$310,717
Other comprehensive income (loss)
Pension and other postretirement liabilities (net of tax expense (benefit) of ($334), ($342), $3,006, and ($684))	(945)	(969)	8,522	(1,938)
Other comprehensive income (loss)	(945)	(969)	8,522	(1,938)
Comprehensive Income	$169,514	$182,115	$368,377	$308,779

See Notes to Financial Statements.

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

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

Net Income
$255,260

$218,308

$565,977

$514,260
Other comprehensive loss
Pension and other postretirement liabilities (net of tax benefit of $342, $177, $1,026, and $530) (969 ) (500 ) (2,907 ) (1,502 )
Other comprehensive loss (969 ) (500 ) (2,907 ) (1,502 )
Comprehensive Income
$254,291

$217,808

$563,070

$512,758

See Notes to Financial Statements.

(Page left blank intentionally)

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ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2020 and 2019
(Unaudited)

	2020	2019
	(In Thousands)
OPERATING ACTIVITIES
Net income	$359,855	$310,717
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation, amortization, and decommissioning, including nuclear fuel amortization	392,286	316,343
Deferred income taxes, investment tax credits, and non-current taxes accrued	(1,353)	99,015
Changes in working capital:
Receivables	(38,175)	(75,330)
Fuel inventory	(2,233)	(1,651)
Accounts payable	(37,576)	(25,686)
Prepaid taxes and taxes accrued	91,662	46,654
Interest accrued	3,689	1,918
Deferred fuel costs	(763)	(40,096)
Other working capital accounts	(13,069)	(64,715)
Changes in provisions for estimated losses	(38,621)	1,612
Changes in other regulatory assets	48,536	(88,911)
Changes in other regulatory liabilities	(42,203)	26,565
Changes in pension and other postretirement liabilities	(34,280)	(7,513)
Other	39,034	(25,702)
Net cash flow provided by operating activities	726,789	473,220

INVESTING ACTIVITIES
Construction expenditures	(690,049)	(900,264)
Allowance for equity funds used during construction	20,942	44,585
Payment for purchase of assets	(14,511)	—
Nuclear fuel purchases	(24,086)	(63,026)
Proceeds from the sale of nuclear fuel	35,041	—
Receipts from storm reserve escrow account	40,589	—

Payments to storm reserve escrow account	(1,398)	(3,382)

Changes to securitization account	755	406
Proceeds from nuclear decommissioning trust fund sales	223,736	195,433
Investment in nuclear decommissioning trust funds	(240,559)	(211,083)
Changes in money pool receivable - net	(87,635)	9,633

Insurance proceeds	—	7,040
Litigation proceeds for reimbursement of spent nuclear fuel storage costs	5,090	—



Net cash flow used in investing activities	(732,085)	(920,658)

FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	1,401,887	1,883,990
Retirement of long-term debt	(826,456)	(1,332,807)



Change in money pool payable - net	(82,826)	—

Common equity distributions paid	(16,500)	(102,000)

Other	(9,080)	(370)
Net cash flow provided by financing activities	467,025	448,813

Net increase in cash and cash equivalents	461,729	1,375
Cash and cash equivalents at beginning of period	2,006	43,364
Cash and cash equivalents at end of period	$463,735	$44,739

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized	$157,926	$146,256
Income taxes	($20,684)	$—

See Notes to Financial Statements.

129

ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2019 and 2018
(Unaudited)

2019 2018
(In Thousands)
OPERATING ACTIVITIES
Net income
$565,977

$514,260
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation, amortization, and decommissioning, including nuclear fuel amortization 498,397
490,638
Deferred income taxes, investment tax credits, and non-current taxes accrued 174,825
167,603
Changes in working capital:
Receivables (72,018 ) (61,281 )
Fuel inventory (1,752 ) 6,120
Accounts payable (40,131 ) (20,481 )
Prepaid taxes and taxes accrued 78,910
(22,893 )
Interest accrued 5,102
2,382
Deferred fuel costs (11,459 ) (25,781 )
Other working capital accounts (62,332 ) (5,086 )
Changes in provisions for estimated losses 9,748
7,800
Changes in other regulatory assets (103,635 ) 49,245
Changes in other regulatory liabilities (26,115 ) (29,943 )
Changes in pension and other postretirement liabilities (15,761 ) (59,305 )
Other (37,313 ) (69,978 )
Net cash flow provided by operating activities 962,443
943,300

INVESTING ACTIVITIES
Construction expenditures (1,277,108 ) (1,322,633 )
Allowance for equity funds used during construction 59,194
57,292
Nuclear fuel purchases (63,157 ) (32,362 )
Proceeds from the sale of nuclear fuel 11,608
54,088
Payments to storm reserve escrow account (5,013 ) (3,297 )
Changes to securitization account (6,467 ) (8,056 )
Proceeds from nuclear decommissioning trust fund sales 307,164
943,306
Investment in nuclear decommissioning trust funds (331,138 ) (973,218 )
Changes in money pool receivable - net 35,485
(2,444 )
Insurance proceeds 7,040
3,480
Other 2,369
—
Net cash flow used in investing activities (1,260,023 ) (1,283,844 )

FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt 2,332,003
1,950,482
Retirement of long-term debt (1,798,014 ) (1,338,227 )
Changes in short-term borrowings - net —
(43,540 )
Distributions paid:
Common equity (155,000 ) (56,000 )
Other 3,272
5,507
Net cash flow provided by financing activities 382,261
518,222

Net increase in cash and cash equivalents 84,681
177,678
Cash and cash equivalents at beginning of period 43,364
35,907
Cash and cash equivalents at end of period
$128,045

$213,585

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized
$219,323

$208,028
Income taxes
$—

($2,973 )

See Notes to Financial Statements.

Table of Contents


ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, 2020 and December 31, 2019
(Unaudited)

	2020	2019
	(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash	$296	$488
Temporary cash investments	463,439	1,518
Total cash and cash equivalents	463,735	2,006

Accounts receivable:
Customer	238,585	194,869
Allowance for doubtful accounts	(14,516)	(1,902)
Associated companies	151,992	77,212
Other	47,547	42,179
Accrued unbilled revenues	183,761	169,201
Total accounts receivable	607,369	481,559


Fuel inventory	43,846	41,613
Materials and supplies - at average cost	378,623	354,020
Deferred nuclear refueling outage costs	32,382	56,743
Prepaid taxes	—	7,959


Prepayments and other	54,725	37,837
TOTAL	1,580,680	981,737

OTHER PROPERTY AND INVESTMENTS
Investment in affiliate preferred membership interests	1,390,587	1,390,587
Decommissioning trust funds	1,565,006	1,563,812
Storm reserve escrow account	256,684	295,875
Non-utility property - at cost (less accumulated depreciation)	317,337	312,896

Other	13,134	13,476
TOTAL	3,542,748	3,576,646

UTILITY PLANT
Electric	23,763,970	22,620,365

Natural gas	241,943	235,678

Construction work in progress	670,116	1,383,603
Nuclear fuel	200,277	267,779
TOTAL UTILITY PLANT	24,876,306	24,507,425
Less - accumulated depreciation and amortization	9,183,284	9,118,524
UTILITY PLANT - NET	15,693,022	15,388,901

DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:

Other regulatory assets (includes securitization property of $17,413 as of June 30, 2020 and $27,596 as of December 31, 2019)	1,266,675	1,315,211
Deferred fuel costs	168,122	168,122
Other	30,258	33,491
TOTAL	1,465,055	1,516,824

TOTAL ASSETS	$22,281,505	$21,464,108

See Notes to Financial Statements.

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ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, 2019 and December 31, 2018
(Unaudited)

2019 2018
(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash
$224

$252
Temporary cash investments 127,821
43,112
Total cash and cash equivalents 128,045
43,364
Accounts receivable:
Customer 258,090
199,903
Allowance for doubtful accounts (2,154 ) (1,813 )
Associated companies 81,906
123,363
Other 46,282
60,879
Accrued unbilled revenues 194,753
167,052
Total accounts receivable 578,877
549,384
Fuel inventory 36,170
34,418
Materials and supplies - at average cost 344,207
324,627
Deferred nuclear refueling outage costs 70,456
24,406
Prepayments and other 47,519
38,715
TOTAL 1,205,274
1,014,914

OTHER PROPERTY AND INVESTMENTS
Investment in affiliate preferred membership interests 1,390,587
1,390,587
Decommissioning trust funds 1,485,569
1,284,996
Storm reserve escrow account 294,538
289,525
Non-utility property - at cost (less accumulated depreciation) 308,095
286,555
Other 13,923
14,927
TOTAL 3,492,712
3,266,590

UTILITY PLANT
Electric 22,283,456
20,532,312
Natural gas 230,416
211,421
Construction work in progress 1,325,784
1,864,582
Nuclear fuel 291,404
298,022
TOTAL UTILITY PLANT 24,131,060
22,906,337
Less - accumulated depreciation and amortization 9,018,154
8,837,596
UTILITY PLANT - NET 15,112,906
14,068,741

DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Other regulatory assets (includes securitization property of $32,939 as of September 30, 2019 and $49,753 as of December 31, 2018) 1,208,712
1,105,077
Deferred fuel costs 168,122
168,122
Other 27,297
28,371
TOTAL 1,404,131
1,301,570

TOTAL ASSETS
$21,215,023

$19,651,815

See Notes to Financial Statements.


ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
June 30, 2020 and December 31, 2019
(Unaudited)

	2020	2019
	(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt	$560,002	$320,002

Accounts payable:
Associated companies	78,264	187,615
Other	493,796	357,206
Customer deposits	152,593	153,097
Taxes accrued	83,703	—

Interest accrued	91,433	87,744
Deferred fuel costs	54,882	55,645




Current portion of unprotected excess accumulated deferred income taxes	31,138	31,138
Other	69,084	64,668
TOTAL	1,614,895	1,257,115

NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued	2,484,034	2,464,513
Accumulated deferred investment tax credits	109,723	112,128
Regulatory liability for income taxes - net	478,327	500,083

Other regulatory liabilities	773,693	794,140
Decommissioning	1,534,849	1,497,349
Accumulated provisions	281,798	320,419
Pension and other postretirement liabilities	644,364	677,619
Long-term debt (includes securitization bonds of $22,610 as of June 30, 2020 and $33,220 as of December 31, 2019)	7,319,739	6,983,667

Other	291,111	459,957
TOTAL	13,917,638	13,809,875

Commitments and Contingencies

EQUITY

Member's equity	6,735,888	6,392,556
Accumulated other comprehensive loss	13,084	4,562
TOTAL	6,748,972	6,397,118

TOTAL LIABILITIES AND EQUITY	$22,281,505	$21,464,108

See Notes to Financial Statements.

131

ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
September 30, 2019 and December 31, 2018
(Unaudited)

2019 2018
(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt
$70,002

$2
Accounts payable:
Associated companies 86,781
102,749
Other 338,724
390,367
Customer deposits 152,627
155,314
Taxes accrued 109,778
30,868
Interest accrued 88,552
83,450
Deferred fuel costs 19,952
31,411
Current portion of unprotected excess accumulated deferred income taxes 33,231
31,457
Other 71,608
49,202
TOTAL 971,255
874,820

NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued 2,414,508
2,226,721
Accumulated deferred investment tax credits 113,346
116,999
Regulatory liability for income taxes - net 523,697
581,001
Other regulatory liabilities 778,199
748,784
Decommissioning 1,478,951
1,280,272
Accumulated provisions 320,503
310,755
Pension and other postretirement liabilities 627,155
643,171
Long-term debt (includes securitization bonds of $45,386 as of September 30, 2019 and $55,682 as of December 31, 2018) 7,274,158
6,805,766
Other 402,296
160,608
TOTAL 13,932,813
12,874,077

Commitments and Contingencies

EQUITY
Member's equity 6,320,015
5,909,071
Accumulated other comprehensive loss (9,060 ) (6,153 )
TOTAL 6,310,955
5,902,918

TOTAL LIABILITIES AND EQUITY
$21,215,023

$19,651,815

See Notes to Financial Statements.

Table of Contents


ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the Six Months Ended June 30, 2020 and 2019
(Unaudited)

	Common Equity
	Member’s Equity	Accumulated Other Comprehensive Loss	Total
	(In Thousands)

Balance at December 31, 2018	$5,909,071	($6,153)	$5,902,918

Net income	127,633	—	127,633
Other comprehensive loss	—	(969)	(969)



Distributions declared on common equity	(49,000)	—	(49,000)


Other	(11)	—	(11)
Balance at March 31, 2019	5,987,693	(7,122)	5,980,571

Net income	183,084	—	183,084
Other comprehensive loss	—	(969)	(969)



Distributions declared on common equity	(53,000)	—	(53,000)


Other	(14)	—	(14)
Balance at June 30, 2019	$6,117,763	($8,091)	$6,109,672












Balance at December 31, 2019	$6,392,556	$4,562	$6,397,118

Net income	189,396	—	189,396
Other comprehensive income	—	9,467	9,467


Distributions declared on common equity	(11,500)	—	(11,500)


Other	(10)	—	(10)
Balance at March 31, 2020	6,570,442	14,029	6,584,471

Net income	170,459	—	170,459
Other comprehensive loss	—	(945)	(945)



Distributions declared on common equity	(5,000)	—	(5,000)


Other	(13)	—	(13)
Balance at June 30, 2020	$6,735,888	$13,084	$6,748,972












See Notes to Financial Statements.

132

ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the Nine Months Ended September 30, 2019 and 2018
(Unaudited)

Common Equity
Member’s
Equity
Accumulated
Other
Comprehensive
Loss
Total
(In Thousands)

Balance at December 31, 2017
$5,355,204

($46,400 )
$5,308,804

Net income 111,593
—
111,593
Other comprehensive loss —
(501 ) (501 )
Reclassification pursuant to ASU 2018-02 6,262
(10,049 ) (3,787 )
Other 24
—
24
Balance at March 31, 2018 5,473,083
(56,950 ) 5,416,133

Net income 184,358
—
184,358
Other comprehensive loss —
(501 ) (501 )
Common equity distributions (56,000 ) —
(56,000 )
Other (10 ) —
(10 )
Balance at June 30, 2018 5,601,431
(57,451 ) 5,543,980

Net income 218,308
—
218,308
Other comprehensive loss —
(500 ) (500 )
Other (10 ) —
(10 )
Balance at September 30, 2018
$5,819,729

($57,951 )
$5,761,778

Balance at December 31, 2018
$5,909,071

($6,153 )
$5,902,918

Net income 127,633
—
127,633
Other comprehensive loss —
(969 ) (969 )
Common equity distributions (49,000 ) —
(49,000 )
Other (11 ) —
(11 )
Balance at March 31, 2019 5,987,693
(7,122 ) 5,980,571

Net income 183,084
—
183,084
Other comprehensive loss —
(969 ) (969 )
Common equity distributions (53,000 ) —
(53,000 )
Other (14 ) —
(14 )
Balance at June 30, 2019 6,117,763
(8,091 ) 6,109,672

Net income 255,260
—
255,260
Other comprehensive loss —
(969 ) (969 )
Common equity distributions (53,000 ) —
(53,000 )
Other (8 ) —
(8 )
Balance at September 30, 2019
$6,320,015

($9,060 )
$6,310,955

See Notes to Financial Statements.

Table of Contents


ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
SELECTED OPERATING RESULTS
For the Three and Six Months Ended June 30, 2020 and 2019
(Unaudited)

	Three Months Ended			Increase/
	2020	2019	(Decrease)	%
	(Dollars In Millions)
Electric Operating Revenues:
Residential	$301	$290	$11	4
Commercial	209	232	(23)	(10)
Industrial	335	385	(50)	(13)
Governmental	17	18	(1)	(6)
Total billed retail	862	925	(63)	(7)
Sales for resale:
Associated companies	70	67	3	4
Non-associated companies	13	16	(3)	(19)
Other	57	86	(29)	(34)
Total	$1,002	$1,094	($92)	(8)

Billed Electric Energy Sales (GWh):
Residential	3,239	3,121	118	4
Commercial	2,455	2,720	(265)	(10)
Industrial	7,427	7,493	(66)	(1)
Governmental	189	205	(16)	(8)
Total retail	13,310	13,539	(229)	(2)
Sales for resale:
Associated companies	1,407	854	553	65
Non-associated companies	544	402	142	35
Total	15,261	14,795	466	3


	Six Months Ended			Increase/
	2020	2019	(Decrease)	%
	(Dollars In Millions)
Electric Operating Revenues:
Residential	$561	$554	$7	1
Commercial	411	439	(28)	(6)
Industrial	657	732	(75)	(10)
Governmental	34	35	(1)	(3)
Total billed retail	1,663	1,760	(97)	(6)
Sales for resale:
Associated companies	136	135	1	1
Non-associated companies	25	32	(7)	(22)
Other	90	104	(14)	(13)
Total	$1,914	$2,031	($117)	(6)

Billed Electric Energy Sales (GWh):
Residential	6,214	6,201	13	—
Commercial	4,914	5,239	(325)	(6)
Industrial	14,877	14,836	41	—
Governmental	388	408	(20)	(5)
Total retail	26,393	26,684	(291)	(1)
Sales for resale:
Associated companies	2,748	1,934	814	42
Non-associated companies	1,001	907	94	10
Total	30,142	29,525	617	2

133

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

Three Months Ended Increase/
2019 2018 (Decrease) %
(Dollars In Millions)
Electric Operating Revenues:
Residential
$426

$409

$17
4
Commercial 277
273
4
1
Industrial 376
394
(18 ) (5 )
Governmental 19
17
2
12
Total billed retail 1,098
1,093
5
—
Sales for resale:
Associated companies 66
58
8
14
Non-associated companies 16
14
2
14
Other 42
31
11
35
Total
$1,222

$1,196

$26
2

Billed Electric Energy Sales (GWh):
Residential 4,614
4,658
(44 ) (1 )
Commercial 3,325
3,382
(57 ) (2 )
Industrial 7,741
7,619
122
2
Governmental 215
216
(1 ) —
Total retail 15,895
15,875
20
—
Sales for resale:
Associated companies 1,494
1,545
(51 ) (3 )
Non-associated companies 526
369
157
43
Total 17,915
17,789
126
1

Nine Months Ended Increase/
2019 2018 (Decrease) %
(Dollars In Millions)
Electric Operating Revenues:
Residential
$980

$972

$8
1
Commercial 716
720
(4 ) (1 )
Industrial 1,108
1,115
(7 ) (1 )
Governmental 54
51
3
6
Total billed retail 2,858
2,858
—
—
Sales for resale:
Associated companies 201
229
(28 ) (12 )
Non-associated companies 48
44
4
9
Other 146
132
14
11
Total
$3,253

$3,263

($10 ) —

Billed Electric Energy Sales (GWh):
Residential 10,815
11,221
(406 ) (4 )
Commercial 8,564
8,781
(217 ) (2 )
Industrial 22,577
22,160
417
2
Governmental 623
613
10
2
Total retail 42,579
42,775
(196 ) —
Sales for resale:
Associated companies 3,428
4,099
(671 ) (16 )
Non-associated companies 1,433
1,237
196
16
Total 47,440
48,111
(671 ) (1 )

Table of Contents

ENTERGY MISSISSIPPI, LLC

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

The COVID-19 Pandemic

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

Results of Operations

Net Income

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

Net income increased ~~$5.5~~$12.2 million primarily due to higher retail electric price, ~~and higher volume/weather,~~ partially offset by ~~a higher effective income tax rate and~~ higher depreciation and amortization expenses.

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

Net income ~~decreased $13.5~~increased $19.4 million primarily due to higher ~~depreciation and amortization expenses, lower volume/weather, higher interest expense, and higher taxes other than income taxes,~~retail electric price, partially offset by higher ~~retail electric price.~~depreciation and amortization expenses.

Operating Revenues

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

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

2019:



		Amount
		(In Millions)
~~2018~~2019 operating revenues		$302.7	~~$367.7~~
Fuel, rider, and other revenues that do not significantly affect net income		~~(9.8~~(23.6)	)
~~Return of unprotected excess accumulated deferred income taxes to customers~~Volume/weather		~~25.8~~(2.1)
Retail electric price		~~7.7~~21.0
~~Volume/weather~~		~~7.3~~
~~2019~~2020 operating revenues	$298.0	~~$398.7~~

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 ~~return~~volume/weather variance is primarily due to decreased commercial usage as a result of ~~unprotected excess accumulated deferred income taxes~~the COVID-19 pandemic and the effect of less favorable weather on residential sales. The decrease was partially offset by increased usage during the unbilled sales period and an increase in residential usage as a result of the COVID-19 pandemic. Entergy Mississippi continues to ~~customers is~~expect declines in sales volume during 2020 due to the ~~return~~COVID-19 pandemic, especially in the commercial and industrial customer classes. See “The COVID-19 Pandemic” section of unprotected excess accumulated deferred income taxes through customer bill credits over a three-month period from July 2018 through September 2018 per an agreement approved by the MPSC in June 2018 resulting from the stipulation related to the effectsEntergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the Tax Cuts and Jobs Act. There was no effect on net income as the reduction in operating revenues was offset by a reduction in income tax expense. See Note 2 to the financial statements in the Form 10-K for further discussion of regulatory activity regarding the Tax Cuts and Jobs Act.

COVID-19 pandemic.

~~144~~

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Table of Contents

Entergy Mississippi, LLC

Management's Financial Discussion and Analysis

The retail electric price variance is primarily due to ~~an increase~~increases in formula rate plan rates effective with the first billing ~~cycle~~cycles of July 2019 and April 2020 and an interim capacity rate adjustment to the formula rate plan to recover non-fuel related costs of acquiring and operating the Choctaw Generating Station, each as approved by the MPSC. See Note 2 to the financial statements herein and in the Form 10-K for further discussion of the formula rate plan ~~filing.~~filings.

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

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

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

2019:



	Amount
	(In Millions)
~~2018~~2019 operating revenues	$585.0	~~$1,037.2~~
Fuel, rider, and other revenues that do not significantly affect net income	~~(80.7~~(29.5)	)
~~Volume/weather~~	~~(8.1~~		)
Retail electric price	~~9.5~~40.4
~~Return of unprotected excess accumulated deferred income taxes to customers~~Volume/weather	~~25.8~~(4.0)
~~2019~~2020 operating revenues	$591.9	~~$983.7~~

The volume/weather variance is primarily due to a decrease of 524 GWh, or 5%, in billed electricity usage, including the effect of less favorable weather on residential sales and a decrease in industrial usage. The decrease in industrial usage is primarily due to decreased small industrial sales.

The retail electric price variance is primarily due ~~to an increase~~to:

•increases in formula rate plan rates effective with the first billing ~~cycle~~cycles of July 2019 and April 2020 and an interim capacity rate adjustment to the formula rate plan to recover non-fuel related costs of acquiring and operating the Choctaw Generating Station, each as approved by the ~~MPSC.~~ MPSC; and

•higher storm damage rider revenues. Entergy Mississippi resumed billing the storm damage rider effective with the July 2019 billing cycle.

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

The return of unprotected excess accumulated deferred income taxes to customers is due to the return of unprotected excess accumulated deferred income taxes through customer bill credits over a three-month period from July 2018 through September 2018 per an agreement approved by the MPSC in June 2018 resulting from the stipulation related to the effects of the Tax Cuts and Jobs Act. There was no effect on net income as the reduction in operating revenues was offset by a reduction in income tax expense.filings. See Note 2 to the financial statements in the Form 10-K for further discussion of ~~regulatory activity regarding~~ the ~~Tax Cuts~~storm damage rider.

The volume/weather variance is primarily due to decreased commercial usage as a result of the COVID-19 pandemic and ~~Jobs Act.~~the effect of less favorable weather on residential sales. The decrease was partially offset by increased usage during the unbilled sales period and an increase in residential usage as a result of the COVID-19 pandemic. Entergy Mississippi continues to expect declines in sales volume during 2020 due to the COVID-19 pandemic, especially in the commercial and industrial customer classes. See “The COVID-19 Pandemic” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the COVID-19 pandemic.

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Entergy Mississippi, LLC

Management's Financial Discussion and Analysis

Other Income Statement Variances

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

Other operation and maintenance expenses decreased primarily due to a ~~$5.8~~decrease of $6.4 million ~~loss~~ in ~~2018 on the sale~~non-nuclear generation expenses primarily due to a lower scope of ~~fuel oil inventory per an agreement approved by the MPSC~~work done during plant outages in ~~June 2018 resulting from the stipulation related~~2020 as compared to ~~the effects~~2019, including a delay in planned outages in 2020 as a result of the ~~Tax Act. There is no effect on net income as the loss on the sale of fuel oil inventory is offset by a reduction in income tax expense.~~COVID-19 pandemic. The decrease ~~in other operation and maintenance expenses~~ was ~~significantly~~partially offset by an increase of $4$4.3 million in storm damage provisions. See Note 2 to the financial statements ~~herein and~~ in the Form 10-K for a discussion of storm cost recovery.

~~145~~

~~Table~~Depreciation and amortization expenses increased primarily as a result of ~~Contents~~additions to plant in service and higher depreciation rates effective July 2019, as approved by the MPSC.

~~Entergy Mississippi, LLC~~

~~Management's Financial Discussion~~Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

Other operation and ~~Analysis~~

maintenance expenses increased primarily due to an increase of $8.8 million in storm damage provisions, partially offset by a decrease of $8.2 million in non-nuclear generation expenses primarily due to a lower scope of work done during plant outages in 2020 as compared to the same period in 2019, including a delay in planned outages as a result of the COVID-19 pandemic. See Note 2 to the financial statements in the Form 10-K for a discussion of storm cost recovery.

Depreciation and amortization expenses increased primarily as a result of higher depreciation rates effective July 2019, as approved by the MPSC, and additions to plant in service.

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

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


•	~~an increase of $4 million~~ ~~in spending on customer initiatives to explore new technologies and services and continuous customer improvement;~~

~~an increase of $3.7 million in fossil-fueled generation expenses primarily due to an overall higher scope of work performed during plant outages;~~

~~an increase of $3.1 million in information technology costs primarily due to higher costs related to improved infrastructure, enhanced security, and upgrades and maintenance;~~


•	~~an increase of $1.5 million in~~ ~~loss provisions; and~~

~~an increase of $1.3 million in distribution operations and asset management costs due to higher advanced metering customer education costs and higher contract costs for meter reading services.~~

~~The increase was partially offset by:~~

a $5.8 million loss in 2018 on the sale of fuel oil inventory per an agreement approved by the MPSC in June 2018 resulting from the stipulation related to the effects of the Tax Act. There is no effect on net income as the loss on the sale of fuel oil inventory is offset by a reduction in income tax expense; and

~~a decrease of $5.8 million in storm damage provisions. See Note 2 to the financial statements herein and in the Form 10-K for a discussion of storm cost recovery.~~

Taxes other than income taxes increased primarily due to an increase in ad valorem taxes, partially offset by lower local franchise taxes. Ad valorem taxes increased primarily due to higher millage rates due to a rate increase effective October 2018. Local franchise taxes decreased primarily due to lower residential and commercial revenues in 2019 compared to 2018.

~~Depreciation and amortization expenses increased primarily as a result of higher depreciation rates, as approved by the MPSC, and additions to plant in service.~~

Other regulatory charges include a regulatory charge recorded in second quarter 2018 to reflect the return of unprotected excess accumulated deferred income taxes per an agreement approved by the MPSC in June 2018 that resulted in a reduction in net utility plant of $127.2 million. There is no effect on net income as the regulatory charge was offset by a reduction in income tax expense. See Note 2 to the financial statements in the Form 10-K for further discussion of regulatory activity related to the Tax Cuts and Jobs Act.

Interest expense increased primarily due to the issuance of $55 million of 4.52% Series mortgage bonds in December 2018 and $300 million of 3.85% Series mortgage bonds in June 2019, partially offset by the repayment, at maturity, of $150 million of 6.64% Series mortgage bonds in July 2019.

Income Taxes

The effective income tax ~~rates were 22.8%~~rate was 22.6% for the ~~third~~second quarter ~~2019 and 21.6% for the nine months ended September 30, 2019.~~2020. The ~~differences~~difference in the effective income tax ~~rates~~rate for the ~~third~~second quarter ~~2019 and the nine months ended September 30, 2019~~2020 versus the federal statutory rate of 21% ~~were~~was primarily due to state income taxes, partially offset by certain book and tax differences related to utility plant items.

~~146~~

~~Table of Contents~~

~~Entergy Mississippi, LLC~~

~~Management's Financial Discussion and Analysis~~

The effective income tax rate was ~~(46.7%)~~17.8% for the ~~third quarter 2018.~~six months ended June 30, 2020. The difference in the effective income tax rate for the ~~third quarter 2018~~six months ended June 30, 2020 versus the federal statutory rate of 21% was primarily due to ~~the amortization of excess accumulated deferred~~certain book and tax differences related to utility plant items and permanent differences related to income tax deductions for stock-based compensation, partially offset by state income taxes. See Note 10 to the financial statements herein ~~and Notes 2 and 3 to the financial statements in the Form 10-K~~ for a discussion of the ~~effects and regulatory activity regarding the Tax Cuts and Jobs Act.~~income tax deductions for stock-based compensation.

The effective income tax rate was ~~1,039.9%~~20.8% for the ~~nine~~second quarter 2019 and 19.9% for the six months ended ~~September~~June 30, ~~2018.~~2019. The ~~difference~~differences in the effective income tax ~~rate~~rates for the ~~nine~~second quarter 2019 and the six months ended ~~September~~June 30, ~~2018~~2019 versus the federal statutory rate of 21% ~~was~~were primarily due to ~~the amortization of excess accumulated deferred income taxes, state income taxes,~~book and tax differences related to utility plant items and book and tax differences related to the allowance for equity funds ~~used~~ during construction. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act.construction, partially offset by state income taxes.

Income Tax Legislation

~~Liquidity and Capital Resources~~

~~Cash Flow~~

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

136

2019 2018
(In Thousands)
Cash and cash equivalents at beginning of period
$36,954

$6,096

Cash flow provided by (used in):
Operating activities 203,439
218,024
Investing activities (276,307 ) (268,165 )
Financing activities 134,850
44,090
Net increase (decrease) in cash and cash equivalents 61,982
(6,051 )

Cash and cash equivalents at end of period
$98,936

$45

~~Operating Activities~~

~~Net cash flow provided by operating activities decreased $14.6 million for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018 primarily due to:~~

~~$26.2 million in proceeds from the sale of fuel oil inventory in 2018;~~

~~the timing of collection of storm damage rider revenues. See Note 2 to the financial statements herein and in the Form 10-K for further discussion of the storm damage rider; and~~

~~an increase of $6.2 million in storm spending in 2019.~~

~~147~~

Table of Contents

Entergy Mississippi, LLC

Management's Financial Discussion and Analysis

Liquidity and Capital Resources

Cash Flow

Cash flows for the six months ended June 30, 2020 and 2019 were as follows:


	2020	2019
	(In Thousands)
Cash and cash equivalents at beginning of period	$51,601	$36,954

Cash flow provided by (used in):
Operating activities	112,422	70,969
Investing activities	(261,597)	(271,691)
Financing activities	167,758	288,216
Net increase in cash and cash equivalents	18,583	87,494

Cash and cash equivalents at end of period	$70,184	$124,448

Operating Activities

Net cash flow provided by operating activities increased $41.5 million for the six months ended June 30, 2020 compared to the six months ended June 30, 2019 primarily due to the timing of payments to vendors. The ~~decrease~~increase was partially offset ~~by:~~

~~the return of unprotected excess accumulated deferred income taxes to customers in 2018;~~

by the timing of recovery of fuel and purchased power ~~costs;~~costs and the timing of collections of receivables from customers, in part due to the COVID-19 pandemic.


•	~~a decrease of $7 million in pension contributions in 2019 as compared to 2018. See “~~ ~~MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS -~~ ~~Critical Accounting Estimates” in the Form 10-K and Note 6 to the financial statements herein for a discussion of qualified pension and other postretirement benefits funding.~~

Investing Activities

Net cash flow used in investing activities ~~increased $8.1~~decreased $10.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018 primarily due to:~~

~~an increase of $20.3 million~~2019 primarily due to ~~investment in the infrastructure of Entergy Mississippi’s distribution system, including increased spending on advanced metering infrastructure;~~

~~an increase of $15.1~~money pool activity, substantially offset by $38.6 million in storm spending in ~~2019;~~2020 and

~~an increase of $12.9~~ $24.6 million in ~~transmission construction expenditures primarily due to a higher scope of work performed~~plant upgrades for the Choctaw Generating Station in ~~2019 as compared to the same period in 2018.~~March 2020.

~~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 by ~~$32.5~~$31.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to ~~decreasing~~increasing by ~~$1.6~~$65.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings.

Financing Activities

Net cash flow provided by financing activities ~~increased $90.8~~decreased $120.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 primarily due to the issuance of $300 million of 3.85% Series mortgage bonds in June ~~2019. The increase was~~2019, partially offset by the ~~repayment, at maturity,~~issuance of ~~$150~~$170 million of ~~6.64%~~3.5% Series mortgage bonds in ~~July 2019 and money pool activity.~~May 2020. 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.

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 $33.8 million for the nine months ended September 30, 2018.

Capital Structure

Entergy Mississippi’s debt to capital ratio is shown in the following table. The increase in the debt to capital ratio for Entergy Mississippi is primarily due to the issuance of $170 million of mortgage bonds in May 2020.

137

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Entergy Mississippi, LLC

Management's Financial Discussion and Analysis


	September 30, 2019		December 31, 2018			June 30, 2020		December 31, 2019
Debt to capital	51.5	%	50.6	%	Debt to capital	52.7	%	51.2	%
Effect of subtracting cash	(1.7	%)	(0.7	%)	Effect of subtracting cash	(1.0	%)	(0.8	%)
Net debt to net capital	49.8	%	49.9	%	Net debt to net capital	51.7	%	50.4	%

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~~Management's Financial Discussion and Analysis~~

its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Mississippi’s financial condition. 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.

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~~has experienced negative changes during 2020 to its ~~capital investment plan~~customer payment patterns and its operating cash flow activity due to the COVID-19 pandemic, and expects them to continue throughout 2020. See “The COVID-19 Pandemic” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for ~~2020 through 2022 and currently anticipates making $1.5 billion in capital investments during that period. The preliminary estimate includes specific investments such as~~discussion of the Sunflower Solar Facility; transmission projects to enhance reliability, reduce congestion, and enable economic growth; distribution spending to enhance reliability and improve service to customers, including advanced meters and related investments; resource planning, including potential generation projects; system improvements; software and security; and other investments. Estimated capital expenditures are subject to periodic review and modification and may vary based onCOVID-19 pandemic. Despite the ~~ongoing~~ effects of ~~regulatory constraints~~the pandemic on financial markets Entergy Mississippi renewed its short-term credit facilities in April 2020 and ~~requirements, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes~~issued $170 million of long-term mortgage bonds in ~~project plans,~~May 2020. Additional discussion of Entergy Mississippi’s liquidity and ~~the ability to access capital.~~capital resources follows.

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


June 30, 2020	December 31, 2019	June 30, 2019	December 31, 2018
(In Thousands)
$13,311	$44,693	$106,760	$41,380

September 30,
2019
December 31, 2018
September 30,
2018
December 31, 2017
(In Thousands)
$8,899 $41,380 ($33,816) $1,633

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

Entergy Mississippi has three separate credit facilities in the aggregate amount of $82.5 million scheduled to expire in ~~May 2020.~~April 2021. No borrowings were outstanding under the credit facilities as of ~~September~~June 30, ~~2019.~~2020. 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 ~~September~~June 30, ~~2019, $8.1~~2020, $2.5 million of MISO letters of credit and $7.1 million of non-MISO letters of credit were outstanding under ~~Entergy Mississippi’s uncommitted letter of credit~~this facility. See Note 4 to the financial statements herein for additional discussion of the credit facilities.

~~In October 2019,~~ Entergy Mississippi ~~received a capital contribution of $130~~has $33 million in ~~anticipation of Entergy Mississippi’s purchase of the Choctaw Generating Station.~~

~~Choctaw Generating Station~~

its storm reserve escrow account at June 30, 2020.

In August 2018, Entergy Mississippi announced that it signed an asset purchase agreement to acquire from a subsidiary of GenOn Energy Inc. the Choctaw Generating Station, an 810 MW natural gas fired combined-cycle turbine plant located near French Camp, Mississippi. The purchase price is expected to be approximately $314 million. Entergy Mississippi also expects to invest in various plant upgrades at the facility after closing and expects the total cost of the acquisition to be approximately $401 million. The purchase was contingent upon, among other things, obtaining necessary approvals, including full cost recovery, from applicable federal and state regulatory and permitting agencies. These included regulatory approvals from the MPSC and the FERC. Clearance under the Hart-Scott-Rodino Antitrust Improvements Act has occurred. In September 2019 the FERC approved the acquisition. In October 2018, Entergy Mississippi filed an application with the MPSC seeking approval of the acquisition and cost recovery. In a separate

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System Energy ~~is developing its capital investment plan for 2020 through 2022~~Resources, Inc.

Management's Financial Discussion and currently anticipates making $435 million in capital investments during that period. The preliminary estimate includes amounts associated with specific investments and initiatives such as investments in Grand Gulf.Analysis

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


June 30, 2020	December 31, 2019	June 30, 2019	December 31, 2018
(In Thousands)
($15,774)	$59,298	$71,534	$107,122

September 30,
2019

December 31,
2018

September 30,
2018

December 31,
2017
(In Thousands)
$14,775 $107,122 $16,365 $111,667

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 September 2021. As of ~~September~~June 30, ~~2019, $53.6~~2020, $80.1 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.

~~Capital Funds Agreement~~

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

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.

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Complaints Against System Energy

Return on Equity and Capital Structure Complaints

~~See~~As discussed in the Form 10-K, ~~for~~in November 2019, in a ~~discussion of the return on equity complaints filed by the APSC and the MPSC and by the LPSC against~~proceeding that did not involve System ~~Energy. The LPSC’s complaint also includes a challenge to System Energy’s capital structure. In August 2018~~Energy, the FERC issued an order ~~dismissing~~addressing the ~~LPSC’s request to investigate System Energy’s capital structure and setting~~methodology for ~~hearing~~determining the return on equity ~~complaint, with a refund effective date of April 2018. The portion of~~applicable to transmission owners in MISO. Thereafter, the ~~LPSC’s complaint dealing with return on equity was subsequently consolidated with~~participants in the System Energy proceeding agreed to amend the procedural schedule to allow the participants to file supplemental testimony addressing the order in the MISO transmission owner proceeding (Opinion No. 569).

In February 2020 the LPSC, the MPSC and APSC, and MPSC complaint for hearing. The parties are required to address an order (issued in a separate proceeding involving New England transmission owners) that proposed modifying the FERC’s standard methodology for determining return on equity. In September 2018, System Energy filed a request for rehearing and the LPSC filed a request for rehearing or reconsideration of the FERC’s August 2018 order. The LPSC’s request referenced an amended complaint that it filed on the same day raising the same capital structure claim the FERC ~~had earlier dismissed. The FERC initiated a new proceeding for the amended capital structure complaint,~~trial staff filed supplemental testimony addressing Opinion No. 569 and System Energy submitted a response in October 2018. In January 2019 the FERC set the amended capital structure complaint for settlement and hearing proceedings. Settlement procedures in the capital structure proceeding commenced in February 2019. As noted below, in June 2019 settlement discussions were terminated and the amended capital structure complaint was consolidated with the ongoing return on equity proceeding.

~~In January 2019 the LPSC and the APSC and MPSC filed direct testimony in~~how it would affect the return on equity ~~proceeding.~~evaluation for the two complaint periods concerning System Energy. For the first refund period, ~~January 23, 2017 through April 23, 2018,~~based on their respective interpretations and applications of the Opinion No. 569 methodology, the LPSC argues for an authorized return on equity for System Energy of ~~7.81%~~8.44%; the MPSC and ~~the~~ APSC ~~and MPSC~~ argue for an authorized return on equity of 8.41%; and the FERC trial staff argues for ~~System Energy~~an authorized return on equity of ~~8.24%~~9.22%. For the second refund period ~~April 27, 2018 through July 27, 2019,~~ and ~~for application~~ on a prospective basis, based on their respective interpretations and applications of the Opinion No. 569 methodology, the LPSC argues for an authorized return on equity for System Energy of ~~7.97%~~7.89%; the MPSC and ~~the~~ APSC ~~and MPSC~~ argue for an authorized return on equity for System Energy of 8.41%. In March 2019, System Energy submitted answering testimony in the return on equity proceeding. For the first refund period, System Energy’s testimony argues for a return on equity of 10.10% (median) or 10.70% (midpoint). For the second refund period, System Energy’s testimony shows that the calculated returns on equity for the first period fall within the range of presumptively just and reasonable returns on equity, and thus the second complaint should be dismissed (and the first period return on equity used going forward). If the FERC nonetheless were to set a new return on equity for the second period (and going forward), System Energy argues the return on equity should be either 10.32% (median) or 10.69% (midpoint).

In May 2019 the FERC trial staff filed its direct and answering testimony in the return on equity proceeding. For the first refund period, the FERC trial staff calculates an authorized return on equity for System Energy of 9.89% based on the application of FERC’s proposed methodology. The FERC trial staff’s direct and answering testimony noted that an authorized return on equity of ~~9.89%~~8.01% may be appropriate; and the FERC trial staff argues for an authorized return on equity of 8.66%.

In April 2020, System Energy filed supplemental answering testimony addressing Opinion No. 569. System Energy argues that the Opinion No. 569 methodology is conceptually and analytically defective for purposes of establishing just and reasonable authorized return on equity determinations and proposes an alternative approach. As its primary recommendation, System Energy continues to support the return on equity determinations in its March 2019 testimony for the first refund period ~~was within~~and its June 2019 testimony for the ~~range of presumptively~~second refund period. Under the Opinion No. 569 methodology, System Energy calculates a “presumptively just and reasonable ~~returns~~range” for the authorized return on equity for the first refund period of 8.57% to 9.52%, and for the second refund period ~~as calculated using a study period ending January 31, 2019~~of 8.28% to 9.11%. System Energy argues that these ranges are not just and reasonable results. Under its proposed alternative methodology, System Energy calculates an authorized return on equity of 10.26% for the ~~second~~first refund ~~period.~~

~~In June 2019, System Entergy filed testimony responding to~~period, which also falls within the ~~testimony filed by the FERC trial staff. Among other things, System Energy’s testimony rebutted arguments raised by the FERC trial staff~~presumptively just and ~~provided updated calculations~~reasonable range calculated for the second refund period based on the study period ending May 31, 2019. For that refund period, System Energy’s testimony shows that strict application of the return on equity methodology proposed by the FERC trial staff indicates that the second complaint would not be dismissed, and the new return on equity would be set at 9.65% (median) or 9.74% (midpoint). System Energy’s testimony argues that these results are insufficient in light of benchmarks such as state returns on equity and treasury bond yields, and instead proposes that the calculated returns on equity for the second period should be either 9.91% (median) or 10.3% (midpoint). System Energy’s testimony also argues that, under application of its proposed modified methodology, the 10.10% return on equity calculated for the first refund period would fall within the range of presumptively just and reasonable returns on equity for the second refund period. System Energy is recording a provision against revenue for the potential outcome of this proceeding.prospectively.

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~~Also in June 2019,~~In May 2020 the ~~FERC’s Chief ALJ~~FERC issued an order ~~terminating settlement discussions~~on rehearing of Opinion No. 569 (Opinion No. 569-A).In June 2020 the procedural schedule was further revised in order to allow parties to the ~~amended complaint addressing~~ System ~~Energy’s capital structure. The ALJ consolidated~~Energy proceeding to address the ~~amended complaint with~~Opinion No. 569-A methodology.Pursuant to the ~~ongoing return on equity proceeding~~revised schedule, in June 2020, the LPSC, the MPSC and ~~set new procedural deadlines for the consolidated hearing, such that the hearing will commence in January 2020~~APSC, and the ~~initial decision will be due in June 2020.~~

~~In August 2019 the LPSC~~FERC trial staff filed supplemental testimony addressing Opinion No. 569-A and ~~the APSC and MPSC filed rebuttal testimony in~~how it would affect the return on equity ~~proceeding~~evaluation for the two complaint periods concerning System Energy.For the first refund period, based on their respective interpretations and ~~direct and answering testimony relating to System Energy’s capital structure. The~~applications of the Opinion No. 569-A methodology, the LPSC ~~reargues~~argues for an authorized return on equity for System Energy of ~~7.81%~~7.97%; the MPSC and APSC argue for an authorized return on equity of 9.24%; and the ~~first~~FERC trial staff argues for an authorized return on equity of 9.49%.For the second refund period and ~~7.97% for~~on a prospective basis, based on their respective interpretations and applications of the ~~second refund period. The APSC and MPSC argue~~Opinion No. 569-A methodology, the LPSC argues for an authorized return on equity for System Energy of ~~8.26%~~7.78%; the MPSC and APSC argue that an authorized return on equity of 9.15% may be appropriate if the second complaint is not dismissed; and the FERC trial staff argues for an authorized return on equity of 9.09% if the second complaint is not dismissed.

Pursuant to the revised procedural schedule, in July 2020, System Energy filed supplemental testimony addressing Opinion No. 569-A. System Energy argues that strict application of the Opinion No. 569-A methodology produces results inconsistent with investor requirements and does not provide a sound basis on which to evaluate System Energy’s authorized return on equity. As its primary recommendation, System Energy argues for the use of a methodology that incorporates four separate financial models, including the constant growth form of the discounted cash flow model and the empirical capital asset pricing model. Based on application of its recommended methodology, System Energy argues for an authorized return on equity of 10.12% for the first refund period, which also falls within the presumptively just and ~~8.32%~~reasonable range calculated for the second refund ~~period. With respect to capital structure,~~period and prospectively. Under the ~~LPSC proposes that the FERC establish a hypothetical capital structure for SERI for ratemaking purposes. Specifically, the LPSC proposes that~~Opinion No. 569-A methodology, System Energy’s common equity ratio be set to Entergy Corporation’s equity ratio of 37% equity and 63% debt. In the alternative, the LPSC argues that the equity ratio should be no higher than 49%, the composite equity ratio of System Energy and the other Entergy operating companies who purchase under the Unit Power Sales Agreement. The APSC and MPSC recommended that 35.98% be set as the common equity ratio for System Energy. As an alternative, the APSC and MPSC proposed that System Energy’s common equity be set based on the median equity ratio of the proxy group for setting the return on equity. The median equity ratio of the proxy group proposed by the APSC and MPSC is 46.75%.

~~In September 2019 the FERC trial staff filed its rebuttal testimony in the return on equity proceeding. For the first refund period, the FERC trial staff~~ calculates an authorized return on equity of 9.44% for ~~System Energy of 9.40% based on~~ the ~~application of~~first refund period, which also falls within the ~~FERC’s proposed methodology~~presumptively just and ~~an updated proxy group. For~~reasonable range calculated for the second refund period ~~based on~~and prospectively.

Under the ~~study period ending May 31, 2019, the FERC trial staff~~revised procedural schedule, System Energy’s supplemental testimony addressing Opinion No. 569-A is due in July 2020; rebuttal testimony ~~argues for a~~addressing return on equity ~~of 9.63%. In~~issues is due in August 2020; the hearing will commence in September 2019 the FERC trial staff also filed direct and answering testimony relating to System Energy’s capital structure. The FERC trial staff argues that the average capital structure of the proxy group used to develop System Energy’s return on equity should be used to establish the capital structure. Using this approach, the FERC trial staff calculates the average capital structure for its proposed proxy group of 46.74% common equity, and 53.26% debt.

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

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

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

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

In June 2019 System Energy filed answering testimony ~~in the sale-leaseback complaint proceeding~~ arguing that the FERC should reject all claims for refunds. Among other things, System Energy argued that claims for refunds of the costs of lease renewal payments and capital additions should be rejected because those costs were recovered consistent with the Unit Power Sales Agreement formula rate, System Energy was not over or double recovering any costs, and customers will save ~~approximately $850 million~~costs over the initial and renewal terms of the leases. System Energy

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argued that claims for refunds associated with liabilities arising from uncertain tax positions should be rejected because the liabilities do not provide cost-free capital, the repayment timing of the liabilities is uncertain, and the outcome of the underlying tax positions is uncertain. System Energy’s testimony also challenged the refund calculations supplied by the other parties.

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In August 2019 the FERC trial staff filed direct and answering testimony seeking refunds for rate base reductions for the liabilities associated with uncertain tax ~~positions (claimed to be up to approximately $602 million plus interest).~~positions. The FERC trial staff also argued that System Energy recovered $32 million more than it should have in depreciation expense for capital ~~additions than it should have.~~additions. In September 2019, System Energy filed cross-answering testimony disputing the FERC trial staff’s arguments for refunds, stating that the FERC trial staff’s position regarding depreciation rates for capital additions is not unreasonable, ~~and~~but explaining that any change in depreciation expense is only one element of a Unit Power Sales Agreement ~~rebilling~~re-billing calculation. Adjustments to depreciation expense in any ~~rebilling~~re-billing under the Unit Power Sales Agreement formula rate will also involve changes to accumulated depreciation, accumulated deferred income taxes, and other formula elements as needed. In October 2019 the LPSC filed rebuttal testimony increasing the amount of refunds sought for the liabilities associated with uncertain tax positions. The LPSC ~~now~~ seeks approximately $512 million, plus ~~interest. At the same time, the~~interest, which is approximately $179 million through June 30, 2020. The FERC trial staff also filed rebuttal testimony ~~conceding that~~in which it ~~was no longer seeking up to $602 million related to~~seeks refunds of a similar amount as the LPSC for the liabilities associated with uncertain tax ~~positions; instead, it is seeking approximately $511 million plus interest.~~positions. The LPSC testimony also argued that adjustments to depreciation rates should affect rate base on a prospective basis only.

A hearing was held before a FERC ALJ in November 2019. In April 2020 the ALJ issued the initial decision. Among other things, the ALJ determined that refunds were due on three main issues. First, with regard to the lease renewal payments, the ALJ determined that System Energy is recovering an unjust acquisition premium through the lease renewal payments, and that System Energy’s recovery from customers through rates should be limited to the cost of service based on the remaining net book value of the leased assets, which is approximately $70 million. The ALJ found that the remedy for this issue should be the refund of lease payments (approximately $17.2 million per year since July 2015) with interest determined at the FERC quarterly interest rate, which would be offset by the addition of the net book value of the leased assets in the cost of service. The ALJ did not calculate a value for the refund expected as a result of this remedy. In addition, System Energy would no longer recover the lease payments in rates prospectively. Second, with regard to the liabilities associated with uncertain tax positions, the ALJ determined that the liabilities are accumulated deferred income taxes and System Energy’s rate base should have been reduced for those liabilities. If the ALJ’s initial decision is upheld, the estimated refund for this issue through June 30, 2020, is approximately $409 million, plus interest, which is approximately $101 million through June 30, 2020. The ALJ also found that System Energy should include liabilities associated with uncertain tax positions as a rate base reduction going forward. Third, with regard to the depreciation expense adjustments, the ALJ found that System Energy should correct for the error in re-billings retroactively and prospectively, but that System Energy should not be permitted to recover interest on any retroactive return on enhanced rate base resulting from such corrections. If the initial decision is affirmed on this issue, System Energy estimates refunds of approximately $19 million, which includes interest through June 30, 2020.

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. The ALJ in the initial decision acknowledges that these are issues of first impression before the FERC.In June 2020, System Energy, the LPSC, and the FERC trial staff filed briefs on exceptions, challenging several of the initial decision’s findings.System Energy’s brief on exceptions challenged the initial decision’s limitations on recovery of the lease renewal payments, its proposed rate base refund for the liabilities associated with uncertain tax positions, and its proposal to asymmetrically treat interest on bill corrections for depreciation expense adjustments.The LPSC’s and the FERC trial staff’s briefs on exceptions each challenged the initial decision’s allowance for recovery of the cost of service associated with the lease renewal based on the remaining net book value of the leased assets, its calculation of the remaining net book value of the leased assets, and the amount of the initial decision’s proposed rate base refund for the liabilities associated with uncertain tax positions.The LPSC’s brief on exceptions also challenged the initial decision’s proposal that depreciation expense adjustments include retroactive adjustments to rate base and its finding that section 203 of the Federal Power Act did not apply to the lease renewal.The FERC trial staff’s brief on exceptions also challenged the initial decision’s finding that the FERC need not institute a formal investigation into System Energy’s tariff.Briefs opposing exceptions are scheduled for September 2020.The FERC will then review the case and issue an order on the proceeding, and the FERC may accept, reject, or modify the ALJ’s initial decision in

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whole or in part.Refunds, if any, that might be required will only become due after the FERC issues its order reviewing the initial decision.

LPSC Authorization of Additional Complaints

In May 2020 the LPSC authorized its staff to file additional complaints at FERC related to the rates charged by System Energy for Grand Gulf energy and capacity supplied to Entergy Louisiana under the Unit Power Sales Agreement. The LPSC directive notes that the initial decision issued by the presiding ALJ in the Grand Gulf sale-leaseback complaint proceeding did not address for procedural reasons certain rate issues raised by the LPSC and declined to order further investigation of rates charged by System Energy. The LPSC directive authorizes its staff to file complaints at FERC “necessary to address these rate issues, to request a full investigation into the rates charged by System Energy for Grand Gulf power, and to seek rate refund, rate reduction, and such other remedies as may be necessary and appropriate to protect Louisiana ratepayers.” The LPSC directive further stated that the LPSC has seen “information suggesting that the Grand Gulf plant has been significantly underperforming compared to other nuclear plants in the United States, has had several extended and unexplained outages, and has been plagued with serious safety concerns.” The LPSC expressed concern that the costs paid by Entergy Louisiana's retail customers may have been detrimentally impacted, and authorized “the filing of a FERC complaint to address these performance issues and to seek appropriate refund, rate reduction, and other remedies as may be appropriate.” The complaints have not been filed as of this date, and the LPSC directive did not set a date for the filing of the complaints.

Nuclear Matters

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

Environmental Risks

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

Critical Accounting Estimates

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K for a discussion of the estimates and judgments necessary in System Energy’s accounting for nuclear decommissioning costs, 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. The following is an update to that discussion.



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

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


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


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


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


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

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

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

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

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

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

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

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



Common Stock Outstanding		Outstanding at ~~October~~July 31, ~~2019~~2020
Entergy Corporation	($0.01 par value)	~~199,102,083~~200,211,323


		Page Number

Forward-looking Information		iii
Definitions		vi

Part I. Financial Information

		~~Page Number~~

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

~~Part I. Financial Information~~

Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis		1
Consolidated Income Statements		2221
Consolidated Statements of Comprehensive Income		23
Consolidated Statements of Cash Flows		24
Consolidated Balance Sheets		26
Consolidated Statements of Changes in Equity		28
Selected Operating Results		30
Notes to Financial Statements
Note 1. Commitments and Contingencies		31
Note 2. Rate and Regulatory Matters		32
Note 3. Equity		4243
Note 4. Revolving Credit Facilities, Lines of Credit, Short-term Borrowings, and Long-term Debt		5049
Note 5. Stock-based Compensation		54
Note 6. Retirement and Other Postretirement Benefits		56
Note 7. Business Segment Information		6362
Note 8. Risk Management and Fair Values		65
Note 9. Decommissioning Trust Funds		8685
Note 10. Income Taxes		9392
Note 11. Property, Plant, and Equipment		9593
Note 12. Variable Interest Entities		9594
Note 13. Revenue ~~Recognition~~		9694
~~Note 14. Asset Retirement Obligations~~		99
~~Note 15. Leases~~	~~100~~
~~Note 16. Dispositions~~	~~108~~
Item 3. Quantitative and Qualitative Disclosures About Market Risk	~~109~~99
Item 4. Controls and Procedures		~~109~~99
Entergy Arkansas, LLC and Subsidiaries
Management’s Financial Discussion and Analysis		~~110~~100
Consolidated Income Statements		~~119~~109
Consolidated Statements of Cash Flows		~~121~~111
Consolidated Balance Sheets		~~122~~112
Consolidated Statements of Changes in Member’s Equity		~~124~~114
Selected Operating Results		~~125~~115
Entergy Louisiana, LLC and Subsidiaries
Management’s Financial Discussion and Analysis		~~126~~116
Consolidated Income Statements		~~136~~126


		Page Number

		~~Page Number~~

Consolidated Statements of Comprehensive Income	~~137~~127
Consolidated Statements of Cash Flows		~~139~~129
Consolidated Balance Sheets		~~140~~130
Consolidated Statements of Changes in Equity		~~142~~132
Selected Operating Results		~~143~~133
Entergy Mississippi, LLC
Management’s Financial Discussion and Analysis		~~144~~134
Income Statements		~~153~~142
Statements of Cash Flows		~~155~~143
Balance Sheets		~~156~~144
Statements of Changes in Member’s Equity		~~158~~146
Selected Operating Results		~~159~~147
Entergy New Orleans, LLC and Subsidiaries
Management’s Financial Discussion and Analysis		~~160~~148
Consolidated Income Statements		~~168~~157
Consolidated Statements of Cash Flows		~~169~~159
Consolidated Balance Sheets		~~170~~160
Consolidated Statements of Changes in Member’s Equity		~~172~~162
Selected Operating Results		~~173~~163
Entergy Texas, Inc. and Subsidiaries
Management’s Financial Discussion and Analysis		~~174~~164
Consolidated Income Statements		~~182~~172
Consolidated Statements of Cash Flows		~~183~~173
Consolidated Balance Sheets		~~184~~174
Consolidated Statements of Changes in Equity		~~186~~176
Selected Operating Results		~~187~~177
System Energy Resources, Inc.
Management’s Financial Discussion and Analysis		~~188~~178
Income Statements		~~194~~185
Statements of Cash Flows		~~195~~187
Balance Sheets		~~196~~188
Statements of Changes in Common Equity		~~198~~190

Part II. Other Information

Item 1. Legal Proceedings		~~199~~191
Item 1A. Risk Factors		~~199~~191
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		~~199~~192
Item 5. Other Information		~~200~~192
Item 6. Exhibits		~~201~~194
Signature		~~204~~196



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



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

			For the transition period from ____________ to ____________



Abbreviation or Acronym		Term

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



Abbreviation or Acronym		Term

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


Abbreviation or Acronym			Term

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



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

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


	Utility	Entergy Wholesale Commodities	Parent & Other (a)	Entergy
	(In Thousands)
2019 Net Income (Loss) Attributable to Entergy Corporation	$331,190	($25,929)	($68,837)	$236,424

Operating revenues	(163,376)	(90,074)	29	(253,421)
Fuel, fuel-related expenses, and gas purchased for resale	(117,633)	(8,697)	12	(126,318)
Purchased power	(128,599)	(5,289)	(12)	(133,900)
Other regulatory charges (credits)	1,285	—	—	1,285
Other operation and maintenance	(61,489)	(47,410)	3,290	(105,609)
Asset write-offs, impairments, and related charges	—	(9,644)	—	(9,644)
Taxes other than income taxes	1,216	(5,866)	(112)	(4,762)
Depreciation and amortization	52,920	(12,652)	5	40,273

Other income (deductions)	(4,018)	129,959	6,115	132,056
Interest expense	20,764	(2,160)	1,751	20,355
Other expenses	(2,568)	(12,714)	—	(15,282)
Income taxes	52,560	33,757	1,340	87,657
Preferred dividend requirements of subsidiaries	471	—	—	471

2020 Net Income (Loss) Attributable to Entergy Corporation	$344,869	$84,631	($68,967)	$360,533


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


	2020	2019
Owned capacity (MW) (a)	2,246	3,274
GWh billed	4,958	7,258

Entergy Wholesale Commodities Nuclear Fleet
Capacity factor	96%	92%
GWh billed	4,580	6,703
Average energy price ($/MWh)	$35.48	$32.17
Average capacity price ($/kW-month)	$2.33	$5.24
Refueling outage days:

Indian Point 3	—	8



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

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


Capacity	Borrowings	Letters of Credit	Capacity Available
(In Millions)
$3,500	$160	$6	$3,334


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


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


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


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


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



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

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

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


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


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


~~(d)~~	Assumes the planned shutdown of Indian Point 2 on April 30, 2020, planned shutdown of Indian Point 3 on April 30, 2021, and planned shutdown of Palisades on May 31, 2022. For a discussion regarding the planned shutdown of the Indian Point 2, Indian Point 3, and Palisades plants, see “~~Entergy Wholesale Commodities Exit from the Merchant Power Business” above.~~


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


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


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


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



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

	Three Months Ended						Nine Months Ended
	2019			2018			2019			2018
	(In Thousands, Except Share Data)
OPERATING REVENUES
Electric		$2,812,934			$2,697,887			$7,279,683			$7,276,374
Natural gas	27,269			26,352			112,916			112,990
Competitive businesses	300,372			380,080			1,023,768			1,107,606
TOTAL	3,140,575			3,104,319			8,416,367			8,496,970

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

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

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

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

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

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

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

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

NET INCOME ATTRIBUTABLE TO ENTERGY CORPORATION		$365,240			$536,379			$856,201			$914,560

Earnings per average common share:
Basic		$1.84			$2.96			$4.42			$5.06
Diluted		$1.82			$2.92			$4.38			$5.01

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

See Notes to Financial Statements.



ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2019 and 2018
(Unaudited)
	2019			2018
	(In Thousands)
OPERATING ACTIVITIES
Consolidated net income		$868,639			$924,877
Adjustments to reconcile consolidated net income to net cash flow provided by operating activities:
Depreciation, amortization, and decommissioning, including nuclear fuel amortization	1,634,677			1,517,344
Deferred income taxes, investment tax credits, and non-current taxes accrued	373,723			82,641
Asset write-offs, impairments, and related charges	225,175			210,263
Changes in working capital:
Receivables	(231,005		)	(153,703		)
Fuel inventory	(14,399		)	49,728
Accounts payable	(175,246		)	79,949
Taxes accrued	(2,420		)	43,510
Interest accrued	(2,314		)	(9,398		)
Deferred fuel costs	90,319			(25,284		)
Other working capital accounts	(19,232		)	(86,063		)
Changes in provisions for estimated losses	14,114			28,599
Changes in other regulatory assets	(92,861		)	207,135
Changes in other regulatory liabilities	(19,115		)	(413,684		)
Changes in pensions and other postretirement liabilities	(132,044		)	(345,526		)
Other	(400,064		)	(250,884		)
Net cash flow provided by operating activities	2,117,947			1,859,504

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

See Notes to Financial Statements.



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

				Common Shareholders’ Equity
	Subsidiaries’ Preferred Stock			Common Stock		Treasury Stock			Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total
	(In Thousands)
Balance at December 31, 2017		$—			$2,548		($5,397,637	)		$5,433,433			$7,977,702			($23,531	)		$7,992,515
Implementation of accounting standards	—			—		—			—			576,257			(632,617		)	(56,360		)
Balance at January 1, 2018	—			2,548		(5,397,637		)	5,433,433			8,553,959			(656,148		)	7,936,155

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

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

Consolidated net income	3,439			—		—			—			536,379			—			539,818
Other comprehensive loss	—			—		—			—			—			(18,484		)	(18,484		)
Common stock issuances related to stock plans	—			—		21,108			12,292			—			—			33,400
Common stock dividends declared	—			—		—			—			(161,044		)	—			(161,044		)
Preferred dividend requirements of subsidiaries	(3,439		)	—		—			—			—			—			(3,439		)
Balance at September 30, 2018		$—			$2,548		($5,353,017	)		$5,441,696			$8,953,611			($632,126	)		$8,412,712

See Notes to Financial Statements.


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

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

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

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


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








See Notes to Financial Statements.

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


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

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

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

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









See Notes to Financial Statements.

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



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


		(In Millions)
Entergy Arkansas		~~Payments (Receipts)~~($2.8)
Entergy Louisiana		~~(In Millions)~~$2.3
Entergy ~~Arkansas~~Mississippi		$20.2
~~Entergy Louisiana~~		$6
~~Entergy Mississippi~~	~~($4)~~
Entergy New Orleans	($1)0.1)
Entergy Texas		~~($3)~~$0.4

Borrowings

Letters
of Credit

Capacity
Available

(In Millions)