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

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

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

Following are income statement variances for Utility, Entergy Wholesale Commodities, Parent & Other, and Entergy comparing the second quarter 20202021 to the second quarter 20192020 showing how much the line item increased or (decreased) in comparison to the prior period:

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

The return of unprotected excess accumulated deferred income taxes to customers resulted from activity at the Utility operating companies in response to the enactment of the Tax Cuts and Jobs Act. The return of unprotected excess accumulated deferred income taxes began in the second quarter 2018. In the six months ended June 30, 2020, $402021, $54 million was returned to customers through reductions in operating revenues as compared to $121$40 million in the six months ended June 30, 2019.2020. There is no effect on net income as the reductions in operating revenues were offset by reductions in income tax expense. See Note 2 to the financial statements herein and in the Form 10-K for further discussion of regulatory activity regarding the Tax Cuts and Jobs Act.     

Operating revenues for Entergy Wholesale Commodities decreased from $723 million for the six months ended June 30, 2019 to $532 million for the six months ended June 30, 2020 to $397 million for the six months ended June 30, 2021 primarily due to the shutdown of Pilgrim in May 2019, the shutdown of Indian Point 2 in April 2020 and lower realized wholesale energy and capacity prices. The decrease was partially offset by higher volumethe shutdown of Indian Point 3 in the remaining Entergy Wholesale Commodities nuclear fleet resulting from fewer outage days in the six months ended June 30, 2020 compared to the six months ended June 30, 2019.April 2021.

Other operation and maintenance expense. See Note 1expenses increased from $1,155 million for the six months ended June 30, 2020 to $1,294 million for the financial statements herein for discussion of the spent nuclear fuel litigation.six months ended June 30, 2021 primarily due to:

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), the Lake Charles Power Station and the Choctaw Generating Station,Montgomery County Power Station.

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 2020, including the Lake Charles Power Station project and the Montgomery County Power Station project, partially offset by the MPSC.changes in decommissioning trust fund activity.

Interest expense increased primarily due to:

Other income decreasedincreased primarily due to lowerhigher gains on decommissioning trust fund investments, partially offset by the absence of earnings from nuclear decommissioning trust funds that were transferred in the six months ended June 30, 2020 compared tosale of the six months ended June 30, 2019.Indian Point Energy Center in May 2021. See Notes 8 and 9 to the financial statements herein for a discussion of decommissioning trust fund investments. See Note 14 to the financial statements herein for further discussion of the sale of the Indian Point Energy Center.

Other expenses decreased primarily due to the absence of decommissioning expense from Indian Point 2 and Indian Point 3, after the Pilgrim plant, after it was soldsale of the Indian Point Energy Center in August 2019.May 2021. See Note 14 to the financial statements herein for further discussion of the sale of the Indian Point Energy Center.

The effective income tax rate was 12.3% for the six months ended June 30, 2021. The difference in the effective income tax rate for the six months ended June 30, 2021 versus the federal statutory rate of 21% was primarily due to the amortization of excess accumulated deferred income taxes, a reduction of a valuation allowance, certain book and tax differences related to utility plant items, 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 furthera discussion of the saleeffects and regulatory activity regarding the Tax Cuts and Jobs Act. See Note 10 to the financial statements herein for discussion of the Pilgrim plant.

The effective income tax rate was 3.5% 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, 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 103 to the financial statements hereinin the Form 10-K for discussion of the IRS settlement and the income tax deductions for stock-based compensation. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act.

Indian Point 2 permanently ceased operations on April 30, 2020 and Indian Point 3 permanently ceased operations on April 30, 2021. The transaction closed in May 2021. The sale will includeincluded the transfer of the licenses, spent fuel, decommissioning liabilities, and nuclear decommissioning trusts for the three units. SubjectThe transaction resulted in a charge of $340 million ($268 million net-of-tax) in the second quarter of 2021. See Note 14 to the conditions discussed in the Form 10-K, the transaction is targeted to close in May 2021, following the defueling of Indian Point 3. As considerationfinancial statements for the transfer to Holtec of its interest in Indian Point, Entergy will receive nominal cash consideration. The termsdiscussion of the transaction do not require a minimum levelclosing of funding in the nuclear decommissioning trusts as a condition to closing. The Indian Point transaction is expected to result in a loss based on the difference between Entergy’s adjusted net investment in the subsidiaries at closing and the sale price net of any agreed adjustments. As of June 30, 2020, Entergy’s adjusted net investment in the Indian Point units was $175 million. The primary variables in the ultimate loss that Entergy will incur are the values of the nuclear decommissioning trusts and the asset retirement obligations at closing, the financial results from plant operations until the closing, and the level of any unrealized deferred tax balances at closing. Indian Point 2 ceased operations on April 30, 2020.transaction.

As discussed in the Form 10-K, in July 2018, Entergy entered into a purchase and sale agreement to sell 100% of the equity interests in Entergy Nuclear Palisades, LLC, the owner ofsubsidiary that owns Palisades and the Big Rock Point Site, for $1,000 (subject to adjustment for net liabilities and other amounts). to a Holtec subsidiary. The sale of Entergy Nuclear Palisades will include the transfer of the nuclear decommissioning trust and obligation for spent fuel management and plant decommissioning.

In December 2020, Entergy and Holtec submitted a license transfer application to the NRC requesting approval to transfer the Palisades and Big Rock Point licenses from Entergy to Holtec. The NRC has indicated that it expects to complete its review of the application by January 2022. In February 20202021 several parties filed with the parties signedNRC petitions to intervene and requests for hearing challenging the license transfer application. In March 2021, Entergy and Holtec filed answers opposing the petitions to intervene and hearing requests, and the petitioners filed replies. In March 2021 an amendmentadditional party also filed a petition to intervene and request for hearing. Entergy and Holtec filed an answer to the purchase and sale agreement to remove the closing condition that the nuclear decommissioning trust fund must have a specified amount and Entergy agreed to contribute $20 million to the nuclear decommissioning trust fund at closing, among other amendments. March 2021 petition in April 2021.

Subject to the conditions discussed in the Form 10-K, the transaction is expected to close by the end of 2022. As of June 30, 2020,2021, Entergy’s adjusted net investment in Palisades was $55$5 million. The primary variables in the ultimate loss or gain that Entergy will incur on the transaction are the values of the nuclear decommissioning trust and the asset retirement obligations at closing, the financial results from plant operations until the closing, and the level of any unrealized deferred tax balances at closing.

Entergy expects to incur employee retention and severance expenses associated with management’s strategy to exit the Entergy Wholesale Commodities merchant power business of approximately $70$10 million in 2020,2021, of which $38$7 million has been incurred as of June 30, 2020,2021, and a total of approximately $60$5 million from 2021 throughin 2022. In addition, Entergy Wholesale Commodities incurred impairment charges primarily related to nuclear fuel spending, nuclear refueling outage spending, and expenditures for capital assets of $7$2 million for the three months ended June 30, 20202021 and $12$5 million for the six months ended June 30, 2020.2021. These costs were charged to expense as incurred as a result of the impaired value of certain of the Entergy Wholesale Commodities nuclear plants’ long-lived assets due to the significantly reduced remaining estimated operating lives associated with management’s strategy to exit the Entergy Wholesale Commodities merchant power business. Entergy expects to continue to incur costs associated with nuclear fuel-related spending and expenditures for capital assets and, except for Palisades, expects to continue to charge these costs to expense as incurred because Entergy expects the value of the plants to continue to be impaired.

Entergy’s debt to capital ratio is shown in the following table. The increase in the debt to capital ratio for Entergy as of June 30, 20202021 is primarily due to the net issuance of debt in 2020.2021.

Entergy Corporation has in place a credit facility that has a borrowing capacity of $3.5 billion and expires in September 2024.June 2026.  The facility includes fronting commitments for the issuance of letters of credit against $20 million of the total borrowing capacity of the credit facility.  The commitment fee is currently 0.225% of the undrawn commitment amount.  Commitment fees and interest rates on loans under the credit facility can fluctuate depending on the senior unsecured debt ratings of Entergy Corporation.  The weighted average interest rate for the six months ended June 30, 20202021 was 2.62%1.61% on the drawn portion of the facility. Following is a summary of the borrowings outstanding and capacity available under the facility as of June 30, 2020:2021:

Entergy Corporation has a commercial paper program with a Board-approved program limit of up to $2 billion. As of June 30, 2020,2021, Entergy Corporation had approximately $1,946$866 million of commercial paper outstanding. The weighted-average interest rate for the six months ended June 30, 20202021 was 2.01%0.32%.

As discussed in the Form 10-K, in June 2019, a state court judge in New Orleans affirmedApril 2020 the City Council’s approvalAPSC issued an order approving Entergy Arkansas’s acquisition of the New Orleans Power Station and dismissedSearcy Solar facility as being in the petitionpublic interest. In May 2021, Entergy Arkansas filed with the APSC an application seeking to amend its certificate for judicial review of that decision that had been filed in April 2018. The petitioners have filed an appeal of that ruling. Also in June 2019, with regardthe Searcy Solar facility to allow for the lawsuit challenging the City Council’s decision on the basisuse of a violation of the open meetings law, the same state court judge in New Orleans ruled that there was a violation of the open meetings law at the February 2018 meeting of the City Council’s Utility Committee at which that Committee considered the New Orleans Powertax equity

Declarations of dividends on Entergy’s common stock are made at the discretion of the Board.  Among other things, the Board evaluates the level of Entergy’s common stock dividends based upon earnings per share from the Utility operating segment and the Parent and Other portion of the business, financial strength, and future investment opportunities.  At its July 20202021 meeting, the Board declared a dividend of $0.93$0.95 per share, which is the same quarterly dividend per share that Entergy has paid since the third quarter 2019.2020.

As shown in Entergy’s Consolidated Statements of Cash Flows, cash flows for the six months ended June 30, 20202021 and 20192020 were as follows:

Net cash flow provided by operating activities increased $395decreased $701 million for the six months ended June 30, 20202021 compared to the six months ended June 30, 20192020 primarily due to:to the following activity:

Net cash flow used in investing activities increased $173$628 million for the six months ended June 30, 20202021 compared to the six months ended June 30, 20192020 primarily due to:

Net cash flow provided by financing activities increased $133decreased $252 million for the six months ended June 30, 20202021 compared to the six months ended June 30, 20192020 primarily due to:

For details of Entergy’s commercial paper program and long-term debt, see Note 4 to the financial statements herein and Note 5 to the financial statements in the Form 10-K.

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

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