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Cover and table of contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
| (Mark One) | |||||
| ☑ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Fiscal Year Ended December 31, 2024
OR
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
| For the transition period from ____________ to ____________ |
| Commission File Number | Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number, and IRS Employer Identification No. | Commission File Number | Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number, and IRS Employer Identification No. | |||||||||||
| 1-11299 | ENTERGY CORPORATION | 1-35747 | ENTERGY NEW ORLEANS, LLC | |||||||||||
| (a Delaware corporation) 639 Loyola Avenue New Orleans, Louisiana 70113 Telephone (504) 576-4000 | (a Texas limited liability company) 1600 Perdido Street New Orleans, Louisiana 70112 Telephone (504) 670-3702 | |||||||||||||
| 72-1229752 | 82-2212934 | |||||||||||||
| 1-10764 | ENTERGY ARKANSAS, LLC | 1-34360 | ENTERGY TEXAS, INC. | |||||||||||
| (a Texas limited liability company) 425 West Capitol Avenue Little Rock, Arkansas 72201 Telephone (501) 377-4000 | (a Texas corporation) 2107 Research Forest Drive The Woodlands, Texas 77380 Telephone (409) 981-2000 | |||||||||||||
| 83-1918668 | 61-1435798 | |||||||||||||
| 1-32718 | ENTERGY LOUISIANA, LLC | 1-09067 | SYSTEM ENERGY RESOURCES, INC. | |||||||||||
| (a Texas limited liability company) 4809 Jefferson Highway Jefferson, Louisiana 70121 Telephone (504) 576-4000 | (an Arkansas corporation) 1340 Echelon Parkway Jackson, Mississippi 39213 Telephone (601) 368-5000 | |||||||||||||
| 47-4469646 | 72-0752777 | |||||||||||||
| 1-31508 | ENTERGY MISSISSIPPI, LLC | |||||||||||||
| (a Texas limited liability company) 308 East Pearl Street Jackson, Mississippi 39201 Telephone (601) 368-5000 | ||||||||||||||
| 83-1950019 | ||||||||||||||
Securities registered pursuant to Section 12(b) of the Act:
| Registrant | Title of Class | Trading Symbol | Name of Each Exchange on Which Registered | ||||||||
| Entergy Corporation | Common Stock, $0.01 Par Value | ETR | New York Stock Exchange | ||||||||
| Common Stock, $0.01 Par Value | ETR | NYSE Chicago, Inc. | |||||||||
| Entergy Arkansas, LLC | Mortgage Bonds, 4.875% Series due September 2066 | EAI | New York Stock Exchange | ||||||||
| Entergy Louisiana, LLC | Mortgage Bonds, 4.875% Series due September 2066 | ELC | New York Stock Exchange | ||||||||
| Entergy Mississippi, LLC | Mortgage Bonds, 4.90% Series due October 2066 | EMP | New York Stock Exchange | ||||||||
| Entergy New Orleans, LLC | Mortgage Bonds, 5.0% Series due December 2052 | ENJ | New York Stock Exchange | ||||||||
| Mortgage Bonds, 5.50% Series due April 2066 | ENO | New York Stock Exchange | |||||||||
| Entergy Texas, Inc. | 5.375% Series A Preferred Stock, Cumulative, No Par Value (Liquidation Value $25 Per Share) | ETI/PR | New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act:
| Registrant | Title of Class | ||||
| Entergy Texas, Inc. | Common Stock, no par value |
Indicate by check mark if the registrants are well-known seasoned issuers, as defined in Rule 405 of the Securities Act.
| Yes | No | ||||||||||
| Entergy Corporation | ü | ||||||||||
| Entergy Arkansas, LLC | ü | ||||||||||
| Entergy Louisiana, LLC | ü | ||||||||||
| Entergy Mississippi, LLC | ü | ||||||||||
| Entergy New Orleans, LLC | ü | ||||||||||
| Entergy Texas, Inc. | ü | ||||||||||
| System Energy Resources, Inc. | ü |
Indicate by check mark if the registrants are not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
| Yes | No | ||||||||||
| Entergy Corporation | ü | ||||||||||
| Entergy Arkansas, LLC | ü | ||||||||||
| Entergy Louisiana, LLC | ü | ||||||||||
| Entergy Mississippi, LLC | ü | ||||||||||
| Entergy New Orleans, LLC | ü | ||||||||||
| Entergy Texas, Inc. | ü | ||||||||||
| System Energy Resources, Inc. | ü |
Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit such files). Yes þ No o
Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | Accelerated filer | Non-accelerated filer | Smaller reporting company | Emerging growth company | |||||||||||||||||||||||||
| Entergy Corporation | ü | ||||||||||||||||||||||||||||
| Entergy Arkansas, LLC | ü | ||||||||||||||||||||||||||||
| Entergy Louisiana, LLC | ü | ||||||||||||||||||||||||||||
| Entergy Mississippi, LLC | ü | ||||||||||||||||||||||||||||
| Entergy New Orleans, LLC | ü | ||||||||||||||||||||||||||||
| Entergy Texas, Inc. | ü | ||||||||||||||||||||||||||||
| System Energy Resources, Inc. | ü |
If an emerging growth company, indicate by check mark if the registrants have elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
| Entergy Corporation | ü | ||||||||||
| Entergy Arkansas, LLC | |||||||||||
| Entergy Louisiana, LLC | |||||||||||
| Entergy Mississippi, LLC | |||||||||||
| Entergy New Orleans, LLC | |||||||||||
| Entergy Texas, Inc. | |||||||||||
| System Energy Resources, Inc. |
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrants included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrants’ executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Act).
Yes ☐ No þ
The aggregate market value of Entergy Corporation Common Stock, $0.01 Par Value, held by non-affiliates at June 30, 2024 was $22.9 billion. Entergy Corporation is the sole holder of the common stock of Entergy Texas, Inc. and System Energy Resources, Inc. Entergy Corporation is the direct and indirect holder of the common membership interests of Entergy Utility Holding Company, LLC, which is the sole holder of the common membership interests of Entergy Arkansas, LLC, Entergy Louisiana, LLC, Entergy Mississippi, LLC, and Entergy New Orleans, LLC.
| Common Stock Outstanding | Outstanding at January 31, 2025 | |||||||
| Entergy Corporation | ($0.01 par value) | 430,412,580 |
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement of Entergy Corporation to be filed in connection with its Annual Meeting of Stockholders, to be held May 2, 2025, are incorporated by reference into Part III hereof.
System Energy Resources, Inc. meets the requirements set forth in General Instruction I(1) of Form 10-K and is therefore filing this Form 10-K with reduced disclosure as allowed in General Instruction I(2). System Energy Resources, Inc. is reducing its disclosure by not including Part III, Items 10 through 13 in its Form 10-K.
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TABLE OF CONTENTS
i
ii
This combined Form 10-K is separately filed by Entergy Corporation and its six Registrant Subsidiaries: Entergy Arkansas, LLC, Entergy Louisiana, LLC, Entergy Mississippi, LLC, Entergy New Orleans, LLC, Entergy Texas, Inc., and System Energy Resources, Inc. Information contained herein relating to any individual company is filed by such company on its own behalf. Each company makes representations only as to itself and makes no other representations whatsoever as to any other company.
The report should be read in its entirety as it pertains to each respective reporting company. No one section of the report deals with all aspects of the subject matter. Separate Item 7 and 8 sections are provided for each reporting company, except for the Notes to the financial statements. The Notes to the financial statements for all of the reporting companies are combined. All Items other than 7 and 8 are combined for the reporting companies.
iii
FORWARD-LOOKING INFORMATION
In this combined report and from time to time, Entergy Corporation and the Registrant Subsidiaries each makes statements as a registrant concerning its expectations, beliefs, plans, objectives, goals, projections, strategies, and future events or performance. Such statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “will,” “could,” “project,” “believe,” “anticipate,” “intend,” “goal,” “commitment,” “expect,” “estimate,” “continue,” “potential,” “plan,” “predict,” “forecast,” and other similar words or expressions are intended to identify forward-looking statements but are not the only means to identify these statements. Although each of these registrants believes that these forward-looking statements and the underlying assumptions are reasonable, it cannot provide assurance that they will prove correct. Any forward-looking statement is based on information current as of the date of this combined report and speaks only as of the date on which such statement is made. Except to the extent required by the federal securities laws, each registrant undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
Forward-looking statements involve a number of risks and uncertainties. There are factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including (a) those factors discussed or incorporated by reference in Item 1A. Risk Factors in this report, (b) those factors discussed or incorporated by reference in Management’s Financial Discussion and Analysis in this report, and (c) the following factors (in addition to others described elsewhere in this combined report and in subsequent filings with the SEC):
-
resolution of pending and future rate cases and related litigation, formula rate proceedings and related negotiations, including various performance-based rate discussions, Entergy’s utility supply plan, and recovery of fuel and purchased power costs, as well as delays in cost recovery resulting from these proceedings;
-
regulatory and operating challenges and uncertainties and economic risks associated with the Utility operating companies’ participation in MISO, including the benefits of continued MISO participation, the effect of current or projected MISO market rules, market design and market and system conditions in the MISO markets, the allocation of MISO system transmission upgrade costs, delays in developing or interconnecting new generation or other resources or other adverse effects arising from the volume of requests in the MISO transmission interconnection queue, which delays or other adverse effects may be exacerbated by significant current and expected load growth, the MISO-wide base rate of return on equity allowed or any MISO-related charges and credits required by the FERC, and the effect of planning decisions that MISO makes with respect to future transmission investments by the Utility operating companies;
-
changes in utility regulation, including, with respect to retail and wholesale competition, the ability to recover net utility assets and other potential stranded costs, including those capital investments associated with unrealized customer growth expectations, and the application of more stringent return on equity criteria, transmission reliability requirements, or market power criteria by the FERC or the U.S. Department of Justice;
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changes in the regulation or regulatory oversight of Entergy’s owned or operated nuclear generating facilities, nuclear materials and fuel, and the effects of new or existing safety or environmental concerns regarding nuclear power plants and fuel;
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resolution of pending or future applications, as well as regulatory proceedings and litigation, relating to generation, transmission, or other facilities (including license modifications or other authorizations for nuclear generating facilities) and the effect of public and political opposition on these applications, regulatory proceedings, and litigation, including without limitation opposition to the employment of technologies to capture, transport, and store carbon dioxide from gas plants, land use opposition to new solar facilities and transmission lines, and land use and other environmental opposition to wind turbines;
-
the performance of and deliverability of power from Entergy’s generation resources, including the capacity factors at Entergy’s nuclear generating facilities;
iv
FORWARD-LOOKING INFORMATION (Continued)
-
increases in costs and capital expenditures that could result from changing regulatory requirements, changing governmental policies, priorities, programs and actions, including as a result of tariffs and other measures, changing economic conditions, and emerging operating and industry issues, such as growth in demand from large data centers, and the risks related to recovery of these costs and capital expenditures from Entergy’s customers (especially in an increasing cost environment);
-
the commitment of substantial human and capital resources required for the safe and reliable operation and maintenance of Entergy’s utility system, including its nuclear generating facilities;
-
Entergy’s ability to develop and execute on a point of view regarding future prices of electricity, natural gas, and other energy-related commodities;
-
the prices and availability of fuel and power Entergy must purchase for its Utility customers, particularly given the recent and ongoing significant growth in liquified natural gas exports and the associated significantly increased demand for natural gas and resulting fluctuation in natural gas prices, increasing challenges with respect to natural gas transportation arrangements, and Entergy’s ability to meet credit support requirements for fuel and power supply contracts;
-
volatility and changes in markets for electricity, natural gas, uranium, emissions allowances, and other energy-related commodities, including as a result of trade-related governmental actions, such as tariffs and other measures, and the effect of those changes on Entergy and its customers;
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changes in environmental laws and regulations, agency positions, or associated litigation, including requirements for reduced emissions of sulfur dioxide, nitrogen oxide, greenhouse gases, mercury, particulate matter and other regulated air emissions, heat and other regulated discharges to water, waste management and disposal, remediation of contaminated sites, wetlands protection and permitting, and reporting, and changes in costs of compliance with environmental laws and regulations, as well as changes to governmental policies incentivizing the development or utilization of alternative sources of generation;
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changes in laws and regulations, agency positions, or associated litigation related to protected species and associated critical habitat designations;
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the effects of changes in federal, state, or local laws and regulations, and other governmental actions or policies, including changes in monetary, fiscal, tax, environmental, trade/tariff, domestic purchase requirements, or energy policies and related laws, regulations, and other governmental actions, including as a result of prolonged litigation over proposed legislation or regulatory actions;
-
the effects of full or partial shutdowns of the federal government or delays in obtaining government or regulatory actions or decisions;
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uncertainty regarding the establishment of interim or permanent sites for spent nuclear fuel and nuclear waste storage and disposal and the level of spent fuel and nuclear waste disposal fees charged by the U.S. government or other providers related to such sites;
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variations in weather and the occurrence of hurricanes and other storms and disasters, including uncertainties associated with efforts to remediate the effects of hurricanes, ice storms, wildfires, or other weather events and the recovery of costs associated with restoration, including the ability to access funded storm reserves, federal and local cost recovery mechanisms, securitization, and insurance, as well as any related unplanned outages;
-
effects of climate change, including the potential for increases in the frequency or severity of extreme weather events, such as hurricanes, heat waves, drought or wildfires, and rising sea levels or coastal land and wetland loss, and Entergy’s ability to effectively prepare for such effects and events, including through accelerated resilience plans and projects, and any challenges in execution thereof and/or in obtaining any necessary regulatory approvals for appropriate scope and timing of such plans and projects now and in the future;
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the risk that as a result of Entergy’s membership in Nuclear Electric Insurance Limited (NEIL), an incident at a NEIL member-insured nuclear generation facility could lead to a significant retrospective assessment;
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the risk that an incident at a nuclear generation facility participating in a secondary financial protection system could lead to a significant retrospective insurance premium;
v
FORWARD-LOOKING INFORMATION (Continued)
-
changes in the quality and availability of water supplies and the related regulation of water use and diversion;
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Entergy’s ability to manage and execute on its capital projects, including any capital projects to serve the growing demand for electricity driven in part by the development of large data centers, and to complete such capital projects timely and within budget, to obtain the anticipated performance or other benefits of such capital projects, and to manage its capital and operation and maintenance costs;
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the effects of supply chain disruptions, including those driven by geopolitical developments or trade-related governmental actions, including tariffs and other measures, on Entergy’s ability to complete its capital projects in a timely and cost-effective manner;
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Entergy’s ability to purchase and sell assets at attractive prices and on other attractive terms;
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the economic climate, and particularly economic conditions in the Utility service area and events and circumstances that could influence economic conditions in those areas, including power prices and inflation, and the risk that anticipated load growth may not materialize;
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changes to or the repeal of federal income tax laws, regulations, and interpretive guidance and policies, including the Inflation Reduction Act of 2022 and the continuing impact of the Tax Cuts and Jobs Act of 2017, and any related intended or unintended consequences on financial results and future cash flows;
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the effects of Entergy’s strategies to reduce tax payments;
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the effect of interest rate volatility and other changes in the financial markets and regulatory requirements for the issuance of securities, particularly as they affect access to and cost of capital and Entergy’s ability to refinance existing securities and fund investments and acquisitions;
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actions of rating agencies, including changes in the ratings of debt and preferred stock, changes in general corporate ratings, and changes in the rating agencies’ ratings criteria;
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changes in inflation and interest rates and the impacts of inflation or a recession on our customers;
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the effects of government investigations, proceedings, or audits;
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changes in technology, including (i) Entergy’s ability to effectively assess, implement, and manage new or emerging technologies, including its ability to maintain and protect personally identifiable information while doing so; (ii) the emergence of artificial intelligence (including machine learning), which may present increased electricity demand, as well as ethical, security, legal, operational, or regulatory challenges; (iii) advances in artificial intelligence (including machine learning) technologies that could reduce the expected electricity demand for these technologies and data centers; (iv) the impact of changes relating to new, developing, or alternative sources of generation such as distributed energy and energy storage, renewable energy, energy efficiency, demand side management, and other measures that reduce load and government policies impacting development or utilization of the foregoing; and (v) competition from other companies offering products and services to Entergy’s customers based on new or emerging technologies or alternative sources of generation;
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Entergy’s ability to effectively formulate and implement plans to increase its carbon-free energy capacity and to reduce its carbon emission rate and aggregate carbon emissions, including its commitment to achieve net-zero carbon emissions by 2050 and the related increasing investment in renewable power generation sources and carbon capture and storage, the potential impact on its business and financial condition of attempting to achieve such objectives, and Entergy’s ability to achieve its climate goals and commitments due to expected load growth;
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the effects, including increased security costs, of threatened or actual terrorism, cyber attacks or data security breaches, physical attacks on or other interference with facilities or infrastructure, natural or man-made electromagnetic pulses that affect transmission or generation infrastructure, accidents, and war or a catastrophic event such as a nuclear accident or a natural gas pipeline explosion;
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impacts of perceived or actual cybersecurity or data security threats or events on Entergy and its subsidiaries, its vendors, suppliers or other third parties interconnected through the grid, which could, among other things, result in disruptions to its operations, including but not limited to, the loss of operational control, temporary or extended outages, or loss of data, including but not limited to, sensitive customer, employee, financial or operations data;
vi
FORWARD-LOOKING INFORMATION (Concluded)
-
the effects of a catastrophe, pandemic (or other health-related event), or a global or geopolitical event such as the military activities between Russia and Ukraine, or Israel and Hamas, including resultant economic and societal disruptions; fuel procurement disruptions; volatility in the capital markets (and any related increased cost of capital or any inability to access the capital markets or draw on available bank credit facilities); reduced demand for electricity, particularly from commercial and industrial customers; increased or unrecoverable costs; supply chain, vendor, and contractor disruptions, including as a result of trade-related sanctions; delays in completion of capital or other construction projects, maintenance, and other operations activities, including prolonged or delayed outages; impacts to Entergy’s workforce availability, health, or safety; increased cybersecurity risks as a result of many employees telecommuting and/or working partially remotely; increased late or uncollectible customer payments; regulatory delays; executive orders affecting, or increased regulation of, Entergy’s business; changes in credit ratings or outlooks as a result of any of the foregoing; or other adverse impacts on Entergy’s ability to execute on its business strategies and initiatives or, more generally, on Entergy’s results of operations, financial condition, and liquidity;
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Entergy’s ability to attract and retain talented management, directors, and employees with specialized skills, institutional knowledge, capacity, and abilities, including the ability to effectively execute on Entergy’s growth strategy;
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Entergy’s ability to attract, retain, and manage an appropriately qualified and sufficiently staffed workforce;
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changes in accounting standards and corporate governance best practices;
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declines in the market prices of marketable securities and changes in interest rates and resulting pension and retiree welfare plan funding requirements and the effects on benefits costs for Entergy’s defined benefit pension and other postretirement benefits plans;
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future wage and employee benefits costs, including changes in discount rates and returns on benefit plan assets;
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changes in decommissioning trust fund values or earnings or in the timing of, requirements for, or cost to decommission Entergy’s nuclear plant sites and the implementation of decommissioning of such sites following shutdown;
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the effectiveness of Entergy’s risk management policies and procedures and the ability and willingness of its counterparties, including lending, hedging, credit support, and major customer counterparties, to satisfy their financial and performance commitments;
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reductions in the demand for electricity to power hyperscale data centers and the potential for stranded assets;
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concentration of business with a small number of customers in an industry based on emerging technologies, including artificial intelligence and machine learning; and
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Entergy and its subsidiaries’ ability to successfully execute on their business strategies, including their ability to complete strategic transactions that they may undertake, and their ability to meet the rapidly growing demand for electricity, including from hyperscale data center and other large customers, and to manage the impacts of growth in demand for electricity on customers and Entergy’s business.
vii
DEFINITIONS
Certain abbreviations or acronyms used in the text and notes are defined below:
| Abbreviation or Acronym | Term | ||||
| AFUDC | Allowance for Funds Used During Construction | ||||
| ALJ | Administrative Law Judge | ||||
| ANO 1 and 2 | Units 1 and 2 of Arkansas Nuclear One (nuclear), owned by Entergy Arkansas | ||||
| APSC | Arkansas Public Service Commission | ||||
| ASU | Accounting Standards Update issued by the FASB | ||||
| Board | Board of Directors of Entergy Corporation | ||||
| Cajun | Cajun Electric Power Cooperative, Inc. | ||||
| capacity factor | Actual plant output divided by maximum potential plant output for the period | ||||
| City Council | Council of the City of New Orleans, Louisiana | ||||
| COVID-19 | The novel coronavirus disease declared a pandemic by the World Health Organization and the Centers for Disease Control and Prevention in March 2020 | ||||
| D.C. Circuit | U.S. Court of Appeals for the District of Columbia Circuit | ||||
| DOE | United States Department of Energy | ||||
| Entergy | Entergy Corporation and its direct and indirect subsidiaries | ||||
| Entergy Corporation | Entergy Corporation, a Delaware corporation | ||||
| Entergy Gulf States, Inc. | Predecessor company for financial reporting purposes to Entergy Gulf States Louisiana that included the assets and business operations of both Entergy Gulf States Louisiana and Entergy Texas | ||||
| Entergy Gulf States Louisiana | Entergy Gulf States Louisiana, L.L.C., a Louisiana limited liability company formally created as part of the jurisdictional separation of Entergy Gulf States, Inc. and the successor company to Entergy Gulf States, Inc. for financial reporting purposes. The term is also used to refer to the Louisiana jurisdictional business of Entergy Gulf States, Inc., as the context requires. Effective October 1, 2015, the business of Entergy Gulf States Louisiana was combined with Entergy Louisiana. | ||||
| Entergy Louisiana | Entergy Louisiana, LLC, a Texas limited liability company formally created as part of the combination of Entergy Gulf States Louisiana and the company formerly known as Entergy Louisiana, LLC (Old Entergy Louisiana) into a single public utility company and the successor to Old Entergy Louisiana for financial reporting purposes | ||||
| Entergy Texas | Entergy Texas, Inc., a Texas corporation formally created as part of the jurisdictional separation of Entergy Gulf States, Inc. The term is also used to refer to the Texas jurisdictional business of Entergy Gulf States, Inc., as the context requires. | ||||
| Entergy Wholesale Commodities | Prior to January 1, 2023, one of Entergy’s reportable business segments consisting of non-utility business activities primarily comprised of the ownership, operation, and decommissioning of nuclear power plants, the ownership of interests in non-nuclear power plants, and the sale of the electric power produced by its operating power plants to wholesale customers | ||||
| EPA | United States Environmental Protection Agency | ||||
| ERCOT | Electric Reliability Council of Texas | ||||
| FASB | Financial Accounting Standards Board | ||||
| FERC | Federal Energy Regulatory Commission | ||||
| FitzPatrick | James A. FitzPatrick Nuclear Power Plant (nuclear), previously owned as part of Entergy’s non-utility business, which was sold in March 2017 | ||||
| GAAP | Generally Accepted Accounting Principles | ||||
| Grand Gulf | Unit No. 1 of Grand Gulf Nuclear Station (nuclear), 90% owned or leased by System Energy |
viii
DEFINITIONS (Continued)
| Abbreviation or Acronym | Term | ||||
| GWh | Gigawatt-hour(s), which equals one million kilowatt-hours | ||||
| HLBV | Hypothetical liquidation at book value | ||||
| Independence | Independence Steam Electric Station (coal), owned 16% by Entergy Arkansas, 25% by Entergy Mississippi, and 7% by Entergy Power, LLC | ||||
| Indian Point 2 | Unit 2 of Indian Point Energy Center (nuclear), previously owned as part of Entergy’s non-utility business, which ceased power production in April 2020 and was sold in May 2021 | ||||
| Indian Point 3 | Unit 3 of Indian Point Energy Center (nuclear), previously owned as part of Entergy’s non-utility business, which ceased power production in April 2021 and was sold in May 2021 | ||||
| IRS | Internal Revenue Service | ||||
| ISO | Independent System Operator | ||||
| kV | Kilovolt | ||||
| kW | Kilowatt, which equals one thousand watts | ||||
| kWh | Kilowatt-hour(s) | ||||
| LDEQ | Louisiana Department of Environmental Quality | ||||
| LPSC | Louisiana Public Service Commission | ||||
| LURC | Louisiana Utilities Restoration Corporation | ||||
| Mcf | 1,000 cubic feet of gas | ||||
| MISO | Midcontinent Independent System Operator, Inc., a regional transmission organization | ||||
| MMBtu | One million British Thermal Units | ||||
| MPSC | Mississippi Public Service Commission | ||||
| MW | Megawatt(s), which equals one thousand kilowatts | ||||
| MWh | Megawatt-hour(s) | ||||
| Nelson Unit 6 | Unit No. 6 (coal) of the Nelson Steam Electric Generating Station, 70% of which is co-owned by Entergy Louisiana (57.5%) and Entergy Texas (42.5%) and 10.9% of which is owned by EAM Nelson Holding, LLC | ||||
| Net debt to net capital ratio | Gross debt less cash and cash equivalents divided by total capitalization less cash and cash equivalents, which is a non-GAAP measure | ||||
| NRC | Nuclear Regulatory Commission | ||||
| Palisades | Palisades Nuclear Plant (nuclear), previously owned as part of Entergy’s non-utility business, which ceased power production in May 2022 and was sold in June 2022 | ||||
| Parent & Other | The portions of Entergy not included in the Utility segment, primarily consisting of the activities of the parent company, Entergy Corporation, and other business activity, including Entergy’s non-utility operations business which owns interests in non-nuclear power plants that sell the electric power produced by those plants to wholesale customers and also provides decommissioning services to nuclear power plants owned by non-affiliated entities in the United States | ||||
| Pilgrim | Pilgrim Nuclear Power Station (nuclear), previously owned as part of Entergy’s non-utility business, which ceased power production in May 2019 and was sold in August 2019 | ||||
| PPA | Purchased power agreement or power purchase agreement | ||||
| PRP | Potentially responsible party (a person or entity that may be responsible for remediation of environmental contamination) | ||||
| PUCT | Public Utility Commission of Texas |
ix
DEFINITIONS (Concluded)
| Abbreviation or Acronym | Term | ||||
| Registrant Subsidiaries | Entergy Arkansas, LLC, Entergy Louisiana, LLC, Entergy Mississippi, LLC, Entergy New Orleans, LLC, Entergy Texas, Inc., and System Energy Resources, Inc. | ||||
| River Bend | River Bend Station (nuclear), owned by Entergy Louisiana | ||||
| RTO | Regional transmission organization | ||||
| SEC | Securities and Exchange Commission | ||||
| System Agreement | Agreement, effective January 1, 1983, as modified, among the Utility operating companies relating to the sharing of generating capacity and other power resources. The agreement terminated effective August 2016. | ||||
| System Energy | System Energy Resources, Inc. | ||||
| Unit Power Sales Agreement | Agreement, dated as of June 10, 1982, as amended and approved by the FERC, among Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, relating to the sale of capacity and energy from System Energy’s share of Grand Gulf | ||||
| Utility | Entergy’s reportable segment that generates, transmits, distributes, and sells electric power, with a small amount of natural gas distribution in portions of Louisiana | ||||
| Utility operating companies | Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas | ||||
| Vermont Yankee | Vermont Yankee Nuclear Power Station (nuclear), previously owned as part of Entergy’s non-utility business, which ceased power production in December 2014 and was disposed of in January 2019 | ||||
| Waterford 3 | Unit No. 3 (nuclear) of the Waterford Steam Electric Station, owned by Entergy Louisiana | ||||
| weather-adjusted usage | Electric usage excluding the effects of deviations from normal weather | ||||
| White Bluff | White Bluff Steam Electric Generating Station, 57% owned by Entergy Arkansas |
x
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS
Entergy operates primarily through a single reportable segment, Utility. The Utility segment includes the generation, transmission, distribution, and sale of electric power in portions of Arkansas, Mississippi, Texas, and Louisiana, including the City of New Orleans; and operation of a small natural gas distribution business in portions of Louisiana. See the “Held for Sale - Natural Gas Distribution Businesses” section in Note 14 to the financial statements for discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses. Entergy completed its multi-year strategy to exit the merchant nuclear power business in 2022. See Note 13 to the financial statements for discussion of and financial information regarding Entergy’s business segments.
Results of Operations
2024 Compared to 2023
Following are income statement variances for Utility, Parent & Other, and Entergy comparing 2024 to 2023 showing how much the line item increased or (decreased) in comparison to the prior period.
| Utility | Parent & Other (a) | Entergy | |||||||||||||||
| (In Thousands) | |||||||||||||||||
| 2023 Net Income (Loss) Attributable to Entergy Corporation | $2,507,127 | ($150,591) | $2,356,536 | ||||||||||||||
| Operating revenues | (217,142) | (50,617) | (267,759) | ||||||||||||||
| Fuel, fuel-related expenses, and gas purchased for resale | (541,322) | (3,384) | (544,706) | ||||||||||||||
| Purchased power | (97,538) | (31,262) | (128,800) | ||||||||||||||
| Other regulatory charges (credits) - net | 132,336 | — | 132,336 | ||||||||||||||
| Other operation and maintenance | 13,108 | (13,084) | 24 | ||||||||||||||
| Asset write-offs, impairments, and related charges (credits) | 51,813 | 12,642 | 64,455 | ||||||||||||||
| Taxes other than income taxes | (2,107) | (519) | (2,626) | ||||||||||||||
| Depreciation and amortization | 168,117 | 48 | 168,165 | ||||||||||||||
| Other income (deductions) | 244,652 | (362,917) | (118,265) | ||||||||||||||
| Interest expense | 83,012 | 61,402 | 144,414 | ||||||||||||||
| Other expenses | 10,182 | 96 | 10,278 | ||||||||||||||
| Income taxes | 890,512 | 181,050 | 1,071,562 | ||||||||||||||
| Preferred dividend requirements of subsidiaries and noncontrolling interests | (180) | — | (180) | ||||||||||||||
| 2024 Net Income (Loss) Attributable to Entergy Corporation | $1,826,704 | ($771,114) | $1,055,590 |
(a)Parent & Other includes eliminations, which are primarily intersegment activity.
Results of operations for 2024 include: (1) a $320 million ($253 million net-of-tax) settlement charge, reflected in Parent & Other above, recognized as a result of a group annuity contract purchased in 2024 to settle certain pension liabilities; (2) expenses of $151 million ($112 million net-of-tax), recorded at Utility in second quarter 2024, primarily consisting of regulatory charges to reflect the effects of an agreement in principle between Entergy Louisiana and the LPSC staff and the intervenors in July 2024 to renew Entergy Louisiana’s formula rate
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
plan and resolve a number of other retail dockets and matters, including all formula rate plan test years prior to 2023; (3) a $132 million ($97 million net-of-tax) charge, recorded at Utility, to reflect the write-off of a previously recorded regulatory asset as a result of an adverse decision in the Entergy Arkansas opportunity sales proceeding in March 2024; and (4) a $78 million ($57 million net-of-tax) regulatory charge, recorded at Utility in first quarter 2024, primarily to reflect a settlement in principle between Entergy New Orleans and the City Council in April 2024 for additional sharing with customers of income tax benefits from the resolution of the 2016-2018 IRS audit. See Note 11 to the financial statements for discussion of the group annuity contract and settlement charge. See Note 2 to the financial statements for discussion of the Entergy Louisiana agreement in principle and the subsequently filed global stipulated settlement agreement. See Note 2 to the financial statements for discussion of the Entergy Arkansas opportunity sales proceeding. See Note 3 to the financial statements for discussion of the Entergy New Orleans April 2024 settlement in principle and discussion of the resolution of the 2016-2018 IRS audit.
Results of operations for 2023 include: (1) a $568 million reduction, recorded at Utility, and a $275 million reduction, recorded at Parent & Other, in income tax expense as a result of the resolution of the 2016-2018 IRS audit, partially offset by $98 million ($72 million net-of-tax) of regulatory charges, recorded at Utility, to reflect credits expected to be provided to customers by Entergy Louisiana and Entergy New Orleans as a result of the resolution of the 2016-2018 IRS audit; (2) the reversal of a $106 million regulatory liability, primarily associated with the Hurricane Isaac securitization, recognized in 2017 as a result of the Tax Cuts and Jobs Act, recorded at Utility, as part of the settlement of Entergy Louisiana’s test year 2017 formula rate plan filing; (3) a $129 million reduction in income tax expense as a result of Entergy Louisiana’s storm cost securitization in March 2023, partially offset by a $103 million ($76 million net-of-tax) regulatory charge, recorded at Utility, to reflect Entergy Louisiana’s obligation to provide credits to its customers as described in an LPSC ancillary order issued as part of the securitization regulatory proceeding; and (4) write-offs of $78 million ($59 million net-of-tax), recorded at Utility, as a result of Entergy Arkansas’s approved motion to forgo recovery of identified costs resulting from the 2013 ANO stator incident. See Note 3 to the financial statements for discussion of the resolution of the 2016-2018 IRS audit and discussion of the Tax Cuts and Jobs Act. See Note 2 to the financial statements for further discussion of the Entergy Louisiana formula rate plan global settlement. See Notes 2 and 3 to the financial statements for further discussion of the Entergy Louisiana March 2023 storm cost securitization. See Note 8 to the financial statements for further discussion of the ANO stator incident and the approved motion to forgo recovery.
Operating Revenues
Utility
Following is an analysis of the change in operating revenues comparing 2024 to 2023:
| Amount | |||||
| (In Millions) | |||||
| 2023 operating revenues | $12,023 | ||||
| Fuel, rider, and other revenues that do not significantly affect net income | (393) | ||||
| Retail one-time bill credit | (92) | ||||
| Storm restoration carrying costs | (36) | ||||
| Volume/weather | 87 | ||||
| Retail electric price | 217 | ||||
| 2024 operating revenues | $11,806 |
The Utility operating companies’ results include revenues from rate mechanisms designed to recover fuel, purchased power, and other costs such that the revenues and expenses associated with these items generally offset
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
and do not affect net income. “Fuel, rider, and other revenues that do not significantly affect net income” includes the revenue variance associated with these items.
The retail one-time bill credit represents the disbursement of settlement proceeds in the form of a one-time bill credit provided to Entergy Arkansas’s retail customers during the August 2024 billing cycle through the Grand Gulf credit rider as a result of the System Energy settlement with the APSC. There is no effect on net income because Entergy previously recorded a regulatory liability at the time of the global black box settlement reached between System Energy and the MPSC in June 2022. See Note 2 to the financial statements for discussion of the System Energy settlements with the APSC and the MPSC and discussion of Entergy Arkansas’s Grand Gulf credit rider.
Storm restoration carrying costs, representing the equity component of storm restoration carrying costs, includes $31 million recognized by Entergy Louisiana as part of its March 2023 storm cost securitization and $5 million recognized by Entergy New Orleans as part of the City Council’s approval of the Entergy New Orleans storm cost certification report in December 2023. See Note 2 to the financial statements for discussion of the storm cost securitizations.
The volume/weather variance is primarily due to an increase in weather-adjusted residential and commercial usage, partially offset by the effect of less favorable weather on residential and commercial sales. The increase in weather-adjusted residential usage is the result of higher fixed charges, partially offset by lower volumetric rates, applied to lower usage. Adding to this was an increase in industrial usage primarily due to an increase in demand from large industrial customers, primarily in the petroleum refining and chlor-alkali industries and from new customers in the technology industry.
The retail electric price variance is primarily due to:
-
an increase in Entergy Arkansas’s formula rate plan rates effective January 2024;
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increases in Entergy Louisiana’s formula rate plan revenues, including increases in the distribution and transmission recovery mechanisms, effective September 2023 and September 2024;
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increases in Entergy Mississippi’s formula rate plan rates effective April 2024 and July 2024, including the implementation of the interim facilities rate adjustment effective over six months beginning in July 2024;
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increases in Entergy New Orleans’s formula rate plan rates effective September 2023 and September 2024; and
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an increase in Entergy Texas’s base rates effective June 2023 and the implementation of the distribution cost recovery factor rider effective with the first billing cycle in October 2024, partially offset by the implementation of the generation cost recovery relate-back rider for the Hardin County Peaking Facility effective over three months beginning in May 2023.
See Note 2 to the financial statements for further discussion of the regulatory proceedings discussed above.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Total electric energy sales for Utility for the years ended December 31, 2024 and 2023 are as follows:
| 2024 | 2023 | % Change | |||||||||||||||
| (GWh) | |||||||||||||||||
| Residential | 36,039 | 36,372 | (1) | ||||||||||||||
| Commercial | 28,251 | 28,221 | — | ||||||||||||||
| Industrial | 57,081 | 52,807 | 8 | ||||||||||||||
| Governmental | 2,480 | 2,458 | 1 | ||||||||||||||
| Total retail | 123,851 | 119,858 | 3 | ||||||||||||||
| Sales for resale | 14,010 | 15,189 | (8) | ||||||||||||||
| Total | 137,861 | 135,047 | 2 |
See Note 19 to the financial statements for additional discussion of operating revenues.
Other Income Statement Items
Utility
Other operation and maintenance expenses increased from $2,838 million for 2023 to $2,851 million for 2024 primarily due to:
-
an increase of $38 million in compensation and benefits costs primarily due to higher healthcare claims activity, including lower prescription drug rebates in 2024 as compared to 2023, and higher incentive-based accruals in 2024 as compared to 2023;
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an increase of $19 million in energy efficiency expenses primarily due to the timing of recovery from customers;
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an increase of $15 million in transmission costs allocated by MISO. See Note 2 to the financial statements for discussion of the recovery of these costs;
-
the effects of recording a final judgment in first quarter 2023 to resolve claims in the ANO damages case against the DOE related to spent nuclear fuel storage costs. The damages awarded included the reimbursement of approximately $10 million of spent nuclear fuel storage costs previously recorded as other operation and maintenance expenses. See Note 8 to the financial statements for discussion of the spent nuclear fuel litigation;
-
an increase of $10 million in loss provisions;
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an increase of $8 million in storm damage provisions;
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an increase of $7 million in bad debt expense; and
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a gain of $7 million on the partial sale of a service center at Entergy Texas in April 2023 as part of an eminent domain proceeding.
The increase was partially offset by:
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a decrease of $54 million in power delivery expenses primarily due to lower vegetation maintenance costs;
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a decrease of $15 million in nuclear generation expenses primarily due to a lower scope of work performed in 2024 as compared to 2023 and lower nuclear labor costs;
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a decrease of $12 million in non-nuclear generation expenses primarily due to a lower scope of work, including during plant outages, performed in 2024 as compared to 2023;
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a decrease of $10 million in information technology costs primarily due to enhancements made in 2023 to certain information technology systems; and
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a decrease of $9 million in customer service center support costs primarily due to lower contract costs.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Asset write-offs, impairments, and related charges (credits) includes:
-
a $132 million charge to reflect the write-off, at Entergy Arkansas, of a previously recorded regulatory asset as a result of an adverse decision in the Entergy Arkansas opportunity sales proceeding in March 2024. See Note 2 to the financial statements for discussion of the Entergy Arkansas opportunity sales proceeding; and
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the effects of Entergy Arkansas forgoing recovery of identified costs resulting from the 2013 ANO stator incident. In third quarter 2023, Entergy Arkansas recorded write-offs of its regulatory asset for deferred fuel of $68.9 million and the undepreciated balance of $9.5 million in capital costs related to the ANO stator incident. See Note 8 to the financial statements for further discussion of the ANO stator incident and the approved motion to forgo recovery.
Depreciation and amortization expenses increased primarily due to:
-
additions to plant in service;
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a reduction in depreciation expense of $41 million, recorded in third quarter 2023 at System Energy, representing the cumulative difference in depreciation expense resulting from the depreciation rates used from March 2022 through June 2023 and the depreciation rates included in the depreciation amendment proceeding settlement filing approved by the FERC in August 2023;
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the recognition of $28 million in depreciation expense in 2024 at Entergy Texas for the 2022 base rate case relate back period, effective over six months beginning January 2024. The recognition of depreciation expense for the relate back period was effective over the same period as collections from the relate back surcharge rider and results in no effect on net income. See Note 2 to the financial statements for discussion of the 2022 base rate case at Entergy Texas; and
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an increase in nuclear depreciation rates at Entergy Louisiana effective September 2024 in accordance with the global stipulated settlement agreement approved by the LPSC in August 2024. See Note 2 to the financial statements for discussion of the global stipulated settlement agreement.
The increase was partially offset by a decrease in depreciation rates at System Energy effective June 2023. See Note 2 to the financial statements for discussion of the Unit Power Sales Agreement depreciation amendment proceeding.
Other regulatory charges (credits) - net includes:
-
the reversal in third quarter 2024 of a $92 million regulatory liability recognized for Entergy Arkansas’s obligation to return to customers the refund from the System Energy settlement with the APSC. The reversal of the regulatory liability offsets a reduction in gross revenues from the retail one-time bill credits provided to customers in the August 2024 billing cycle through the Grand Gulf credit rider. See Note 2 to the financial statements for discussion of the System Energy settlement with the APSC and discussion of Entergy Arkansas’s Grand Gulf credit rider;
-
a regulatory credit of $16 million, recorded by Entergy Arkansas in fourth quarter 2024, to reflect the amount of the 2023 historical year netting adjustment included in the 2024 formula rate plan filing that it expects to collect from its customers during the 2025 rate effective period. See Note 2 to the financial statements for discussion of the Entergy Arkansas 2024 formula rate plan filing;
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a regulatory charge of $103 million, recorded by Entergy Louisiana in first quarter 2023, to reflect its obligation to provide credits to its customers as described in an LPSC ancillary order issued in the Hurricane Ida securitization regulatory proceeding. See Note 2 to the financial statements for discussion of the Entergy Louisiana March 2023 storm cost securitization;
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a regulatory charge of $38 million, recorded by Entergy Louisiana in fourth quarter 2023, to reflect credits expected to be provided to customers as a result of the resolution of the 2016-2018 IRS audit. See Note 3 to the financial statements for discussion of the resolution of the 2016-2018 IRS audit;
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regulatory charges of $150 million, recorded by Entergy Louisiana in second quarter 2024, to reflect the effects of an agreement in principle between Entergy Louisiana and the LPSC staff and the intervenors in
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
July 2024 to renew Entergy Louisiana’s formula rate plan and resolve a number of other retail dockets and matters, including all formula rate plan test years prior to 2023. See Note 2 to the financial statements for discussion of the Entergy Louisiana agreement in principle and the subsequently filed global stipulated settlement agreement;
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a regulatory charge of $60 million, recorded by Entergy New Orleans in fourth quarter 2023, to reflect credits expected to be provided to customers as a result of the resolution of the 2016-2018 IRS audit. See Note 3 to the financial statements for discussion of the resolution of the 2016-2018 IRS audit;
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a regulatory charge of $78 million, recorded by Entergy New Orleans in first quarter 2024, primarily to reflect a settlement in principle between Entergy New Orleans and the City Council in April 2024 for additional sharing with customers of income tax benefits from the resolution of the 2016-2018 IRS audit. See Note 3 to the financial statements for discussion of the April 2024 settlement in principle and discussion of the resolution of the 2016-2018 IRS audit; and
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the reversal in third quarter 2023 of $22 million of regulatory liabilities to reflect the recognition of certain receipts by Entergy Texas under affiliated PPAs that have been resolved. See Note 2 to the financial statements for discussion of Entergy Texas’s 2022 base rate case.
In addition, Entergy records a regulatory charge or credit for the difference between asset retirement obligation-related expenses and nuclear decommissioning trust earnings plus asset retirement obligation-related costs collected in revenue.
Other income increased primarily due to:
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changes in decommissioning trust fund activity, including portfolio rebalancing of decommissioning trust funds in 2024;
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a decrease of $56 million in non-service pension costs primarily as a result of pension settlement charges recorded in 2023 and a reduction in 2024 in the amortization of deferred pension losses as a result of an amendment to a qualified pension plan spinning-off predominantly inactive participants into a new qualified plan, extending the amortization period for deferred losses. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” below and Note 11 to the financial statements for further discussion of pension and other postretirement benefits costs;
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an increase in the allowance for equity funds used during construction due to higher construction work in progress in 2024, including the Orange County Advanced Power Station project at Entergy Texas;
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a $15 million charge, recorded by Entergy Louisiana in first quarter 2023, for the LURC’s 1% beneficial interest in the storm trust II established as part of the March 2023 storm cost securitization; and
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an increase of $14 million in intercompany dividend income from affiliated preferred membership interests related to storm cost securitizations. The intercompany dividend income on the affiliate preferred membership interests is eliminated for consolidation purposes and has no effect on net income since the investment is in another Entergy subsidiary.
See Note 2 to the financial statements for discussion of the Entergy Louisiana storm cost securitizations.
Interest expense increased primarily due to:
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the issuance by Entergy Arkansas of $300 million of 5.30% Series mortgage bonds in August 2023;
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the issuances by Entergy Arkansas of $400 million of 5.75% Series mortgage bonds and $400 million of 5.45% Series mortgage bonds, each in May 2024;
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the issuances by Entergy Louisiana of $500 million of 5.35% Series mortgage bonds and $700 million of 5.70% Series mortgage bonds, each in March 2024;
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the issuance by Entergy Louisiana of $700 million of 5.15% Series mortgage bonds in August 2024;
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the issuance by Entergy Mississippi of $300 million of 5.85% Series mortgage bonds in May 2024;
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the issuance by Entergy Texas of $350 million of 5.80% Series mortgage bonds in August 2023; and
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the issuance by Entergy Texas of $350 million of 5.55% Series mortgage bonds in August 2024.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
The increase was partially offset by:
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the repayment by Entergy Arkansas of $375 million of 3.70% Series mortgage bonds in June 2024;
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the repayment by Entergy Louisiana of $325 million of 4.05% Series mortgage bonds in August 2023;
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the repayment by Entergy Louisiana of $300 million of 5.59% Series mortgage bonds in December 2023; and
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the repayment by Entergy Louisiana of $400 million of 5.40% Series mortgage bonds in April 2024.
See Note 5 to the financial statements for a discussion of long-term debt.
Parent and Other
Asset write-offs, impairments, and related charges (credits) includes:
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the effects of recording a favorable final judgment of $20 million in fourth quarter 2024 to resolve claims in the Northstar Vermont Yankee, LLC (previously Entergy Nuclear Vermont Yankee) final round Vermont Yankee damages case against the DOE;
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the effects of recording a favorable final judgment of $7 million in fourth quarter 2024 to resolve claims in the Holtec Palisades, LLC (previously Entergy Nuclear Palisades) final round Palisades damages case against the DOE; and
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the effects of recording a favorable final judgment of $40 million in third quarter 2023 to resolve claims in the Indian Point 2 fourth round and Indian Point 3 third round combined damages case against the DOE.
See Note 8 to the financial statements for discussion of the spent nuclear fuel litigation.
Other income (deductions) decreased primarily due to:
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a $320 million ($253 million net-of-tax) non-cash settlement charge recognized as a result of a group annuity contract purchased in 2024 to settle certain pension liabilities. See Note 11 to the financial statements for discussion of the group annuity contract and settlement charge;
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lower non-service pension income. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” below and Note 11 to the financial statements for further discussion of pension and other postretirement benefits costs; and
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an increase of $14 million in the amount of the elimination for consolidation purposes of intercompany dividend income from affiliated preferred membership interest, as discussed above.
Interest expense increased primarily due to the issuance of $1.2 billion of junior subordinated debentures in May 2024 and higher commercial paper balances. See Note 4 to the financial statements for discussion of Entergy’s commercial paper program.
Income Taxes
The effective income tax rates were 26.4% for 2024 and (41.3%) for 2023. See Note 3 to the financial statements for a reconciliation of the federal statutory rate of 21% to the effective income tax rates and for additional discussion regarding income taxes.
2023 Compared to 2022
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Results of Operations” in Item 7 of Entergy’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of results of operations for 2023 compared to 2022.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Income Tax Legislation and Regulation
The Inflation Reduction Act of 2022 (IRA), signed into law on August 16, 2022, significantly expanded federal tax incentives for clean energy production, including the extension of production tax credits to solar projects and certain qualified nuclear power facilities. Additionally, the IRA enacted a 1% excise tax on the buyback of public company stock and a new corporate alternative minimum tax (CAMT). Effective for tax years beginning after December 31, 2022, the CAMT imposes a 15% tax on the Adjusted Financial Statement Income (AFSI) on each corporation in a group of corporations that averages greater than $1 billion in AFSI over a three-year period. Taxpayers subject to the CAMT regime must pay the greater of 15% of AFSI or their regular federal tax liability. In September 2024 the IRS issued proposed regulations regarding the application of the CAMT. Entergy and the Registrant Subsidiaries are closely monitoring any potential impact associated with the expansion of federal tax incentives, the 1% excise tax, and CAMT. Based on current IRS guidance and internal forecasts, Entergy and the Registrant Subsidiaries may be subject to the CAMT beginning in the next two to four years. The U.S. Treasury is expected to issue further guidance that will clarify how the tax credit provisions and CAMT provisions will be interpreted and applied. This guidance will determine the amount of tax credits and incremental cash tax payments Entergy expects in the future as a result of the legislation. Prior to receiving this guidance, Entergy cannot adequately assess the expected future effects on its results of operations, financial position, and cash flows.
In March and April of 2024 the IRS issued final regulations related to applicable tax credit transferability and direct pay provisions of the IRA. In June 2024 the IRS issued final regulations related to the prevailing wage and apprenticeship requirements under the IRA. In December 2024 the IRS issued final regulations related to technology neutral production tax credits and investment tax credits. Entergy and the Registrant Subsidiaries are closely monitoring any potential effects associated with such federal tax incentives to assess the expected future effects on their results of operations, cash flows, and financial condition. Entergy Arkansas has accrued approximately $5 million of solar production tax credits associated with the Walnut Bend Solar facility, the Driver Solar facility, and the West Memphis Solar facility in 2024. As the value of such credits is expected to be provided to customers, a regulatory liability has been recorded for all credits recognized in 2024.
In April 2023 the IRS issued Revenue Procedure 2023-15, which provides a safe harbor method of accounting that taxpayers may use to determine whether expenses to repair, maintain, replace, or improve natural gas transmission and distribution property must be capitalized and provides procedures for taxpayers to obtain automatic consent to change their method of accounting. Entergy adopted this new method of income tax accounting beginning with the 2023 federal income tax return utilizing the safe harbor method in accordance with Revenue Procedure 2023-15. The additional temporary deductions taken using the new method resulted in the recognition of deferred tax liabilities of $14.2 million for Entergy, $7.6 million for Entergy Louisiana, and $6.6 million for Entergy New Orleans.
Entergy Arkansas, Entergy Louisiana, and System Energy have the potential to generate zero-emission nuclear power production tax credits for electricity generated by their respective nuclear power facilities. Based on guidance provided by the U.S. Treasury and the IRS, the nuclear production tax credits will be calculated by multiplying the kWh of qualifying electricity by $0.003, with the value of the credits decreasing ratably, or phasing out, once the annual gross receipts from the sale of nuclear power exceed a certain threshold. If certain prevailing wage requirements are satisfied, the calculation of the credit, as described in the preceding sentence, is multiplied by a factor of five. Additional guidance is needed from the U.S. Treasury and/or the IRS to determine how the value of these credits will be calculated for power generated from nuclear facilities of rate-regulated utilities. Due to the uncertainty of value, if any, of credits Entergy Arkansas, Entergy Louisiana, or System Energy may receive, such credits have not been recognized for the nuclear power produced in 2024. Depending on the specifics of the expected additional guidance from the U.S. Treasury and/or the IRS, Entergy Arkansas, Entergy Louisiana, or System Energy may not recognize any production tax credits for their nuclear facilities, or they could recognize a significant amount each year, beginning for 2024. If the IRS does not issue any technical guidance before the due date of Entergy’s 2024 tax return, Entergy Arkansas, Entergy Louisiana, and System Energy will be required to
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
reassess the determination of the availability of such credits based on any other additional information or regulatory requests. If credits are recognized in future periods, the value of such credits is expected to be provided to customers. As such, recognition of nuclear production tax credits is not expected to have a material effect on the results of operations of Entergy, Entergy Arkansas, Entergy Louisiana, or System Energy.
Entergy is not able to predict the effects of any change to or repeal of the above tax legislation, including any federal tax incentives or tax credits, on its or the Registrant Subsidiaries’ results of operations, financial position, and cash flows.
Louisiana Tax Reform
In November 2024, during the Louisiana Third Special Legislative Session of 2024, the Louisiana legislature enacted comprehensive tax reform measures, including the reduction of the corporate state income tax rate to a flat 5.5% from the current highest marginal rate of 7.5%, effective January 1, 2025. Additional enacted measures include the repeal of the Louisiana corporate franchise tax effective January 1, 2026, and an increase in the state sales tax rate to 5%, effective January 1, 2025, until January 1, 2030, when the rate decreases to 4.75%. Additionally, certain digital products and services, such as remotely accessed software and information services, will be subject to sales tax effective January 1, 2025. These products and services will also be taxable at the local level. See Note 3 to the financial statements for further discussion on the 2024 Louisiana tax reform.
Entergy Wholesale Commodities Exit from the Merchant Power Business
Entergy completed its multi-year strategy to exit the merchant nuclear power business in 2022. See Note 13 to the financial statements for discussion of the exit from the merchant nuclear power business.
Shutdown and Sale of Palisades
In July 2018, Entergy entered into a purchase and sale agreement with Holtec International to sell to a Holtec subsidiary 100% of the equity interests in the subsidiary that owns Palisades and the Big Rock Point Site, with a subsequent amendment to the purchase and sale agreement in February 2020. In December 2020, Entergy and Holtec submitted a license transfer application to the NRC requesting approval to transfer the Palisades and Big Rock Point licenses from Entergy to Holtec. In February 2021 several parties filed with the NRC petitions to intervene and requests for hearing challenging the license transfer application. In March 2021, Entergy and Holtec filed answers opposing the petitions to intervene and hearing requests, and the petitioners filed replies. In March 2021 an additional party also filed a petition to intervene and request for hearing. Entergy and Holtec filed an answer to the March 2021 petition in April 2021. The NRC issued an order approving the application in December 2021, subject to the NRC’s authority to condition, revise, or rescind the approval order based on the resolution of four pending requests for hearing. These petitions and requests for hearing remained pending with the NRC at the time of the closing of the Palisades transaction in June 2022. In July 2022 the NRC issued an order granting the Michigan Attorney General’s petition hearing request. The hearing was held in February 2023. A decision from the NRC is pending. See Note 14 to the financial statements for discussion of the sale of the Palisades plant.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Liquidity and Capital Resources
This section discusses Entergy’s capital structure, capital spending plans and other uses of capital, sources of capital, and the cash flow activity presented in the cash flow statement.
Capital Structure
Entergy’s debt to capital ratio is shown in the following table. The increase in the debt to capital ratio is primarily due to the net issuance of long-term debt in 2024.
| December 31, 2024 | December 31, 2023 | ||||||||||
| Debt to capital | 65.3% | 63.8% | |||||||||
| Effect of excluding securitization bonds | (0.2%) | (0.3%) | |||||||||
| Debt to capital, excluding securitization bonds (non-GAAP) (a) | 65.1% | 63.5% | |||||||||
| Effect of subtracting cash | (0.7%) | (0.1%) | |||||||||
| Net debt to net capital, excluding securitization bonds (non-GAAP) (a) | 64.4% | 63.4% |
(a)Calculation excludes the New Orleans and Texas securitization bonds, which are non-recourse to Entergy New Orleans and Entergy Texas, respectively.
As of December 31, 2024, 21.1% of the debt outstanding is at the parent company, Entergy Corporation, and 78.9% is at the Utility. Net debt consists of debt less cash and cash equivalents. Debt consists of notes payable and commercial paper, finance lease obligations, and long-term debt, including the currently maturing portion. Capital consists of debt, equity, and subsidiaries’ preferred stock without sinking fund. Net capital consists of capital less cash and cash equivalents. The debt to capital ratio excluding securitization bonds and net debt to net capital ratio excluding securitization bonds are non-GAAP measures. Entergy uses the debt to capital ratios excluding securitization bonds in analyzing its financial condition and believes they provide useful information to its investors and creditors in evaluating Entergy’s financial condition because the securitization bonds are non-recourse to Entergy, as more fully described in Note 5 to the financial statements. Entergy also uses the net debt to net capital ratio excluding securitization bonds in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy’s financial condition because net debt indicates Entergy’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.
The Utility operating companies and System Energy seek to optimize their capital structures in accordance with regulatory requirements and to control their cost of capital while also maintaining equity capitalization at a level consistent with investment-grade debt ratings. To the extent that their operating cash flows are in excess of planned investments, cash may be used to reduce outstanding debt or may be paid as a dividend to their parent, to the extent funds are legally available to do so, or both, in appropriate amounts to maintain the capital structure. To the extent that their operating cash flows are insufficient to support planned investments, the Utility operating companies and System Energy may issue incremental debt or reduce dividends, or both, to maintain their capital structures. In addition, Entergy may make equity contributions to the Utility operating companies and System Energy to maintain their capital structures in certain circumstances such as financing of large transactions or payments that would materially alter the capital structure if financed entirely with debt and reduced dividends.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Long-term debt, including the currently maturing portion, makes up most of Entergy’s total debt outstanding. Following are Entergy’s long-term debt principal maturities and estimated interest payments as of December 31, 2024. To estimate future interest payments for variable rate debt, Entergy used the rate as of December 31, 2024. The amounts below include payments on System Energy’s Grand Gulf sale-leaseback transaction, which are included in long-term debt on the balance sheet.
| Long-term debt maturities and estimated interest payments | 2025 | 2026 | 2027 | 2028-2029 | after 2029 | |||||||||||||||||||||||||||
| (In Millions) | ||||||||||||||||||||||||||||||||
| Utility | $1,535 | $2,540 | $1,927 | $3,490 | $29,370 | |||||||||||||||||||||||||||
| Parent & Other | 917 | 855 | 90 | 810 | 5,669 | |||||||||||||||||||||||||||
| Total | $2,452 | $3,395 | $2,017 | $4,300 | $35,039 |
See Note 5 to the financial statements for further details of long-term debt.
Entergy Corporation has in place a credit facility that has a borrowing capacity of $3 billion and expires in June 2029. The facility includes fronting commitments for the issuance of letters of credit against $20 million of the total borrowing capacity of the credit facility. The commitment fee is currently 0.225% of the undrawn commitment amount. Commitment fees and interest rates on loans under the credit facility can fluctuate depending on the senior unsecured debt ratings of Entergy Corporation. The estimated interest rate for the year ended December 31, 2024 that would have been applied to outstanding borrowings under the facility was 5.96%. The following is a summary of the amounts outstanding and capacity available under the credit facility as of December 31, 2024:
| Capacity | Borrowings | Letters of Credit | Capacity Available | |||||||||||||||||
| (In Millions) | ||||||||||||||||||||
| $3,000 | $— | $3 | $2,997 |
Entergy Corporation’s credit facility includes a covenant requiring Entergy to maintain a consolidated debt ratio, as defined, of 65% or less of its total capitalization. The calculation of this debt ratio under Entergy Corporation’s credit facility is different than the calculation of the debt to capital ratio above. Entergy is currently in compliance with the covenant and expects to remain in compliance with this covenant. If Entergy fails to meet this ratio, or if Entergy Corporation or one of the Registrant Subsidiaries (except Entergy New Orleans and System Energy) defaults on other indebtedness or is in bankruptcy or insolvency proceedings, an acceleration of the Entergy Corporation credit facility’s maturity date may occur.
Entergy Corporation has a commercial paper program with a Board-approved program limit of $2 billion. As of December 31, 2024, Entergy Corporation had $927.3 million of commercial paper outstanding. The weighted-average interest rate for the year ended December 31, 2024 was 5.52%.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas each had credit facilities available as of December 31, 2024 as follows:
| Company | Expiration Date | Amount of Facility | Interest Rate (a) | Amount Drawn as of December 31, 2024 | Letters of Credit Outstanding as of December 31, 2024 | |||||||||||||||||||||||||||
| Entergy Arkansas | April 2026 | $25 million (b) | 6.31% | — | — | |||||||||||||||||||||||||||
| Entergy Arkansas | June 2029 | $300 million (c) | 5.58% | — | — | |||||||||||||||||||||||||||
| Entergy Louisiana | June 2029 | $400 million (c) | 5.71% | — | — | |||||||||||||||||||||||||||
| Entergy Mississippi | June 2029 | $300 million (c) | 5.58% | — | — | |||||||||||||||||||||||||||
| Entergy New Orleans | June 2027 | $25 million (c) | 6.08% | — | — | |||||||||||||||||||||||||||
| Entergy Texas | June 2029 | $300 million (c) | 5.71% | — | $1.1 million |
(a)The interest rate is the estimated interest rate as of December 31, 2024 that would have been applied to outstanding borrowings under the facility.
(b)Borrowings under this Entergy Arkansas credit facility may be secured by a security interest in its accounts receivable at Entergy Arkansas’s option.
(c)The credit facility includes fronting commitments for the issuance of letters of credit against a portion of the borrowing capacity of the facility as follows: $5 million for Entergy Arkansas; $15 million for Entergy Louisiana; $5 million for Entergy Mississippi; $10 million for Entergy New Orleans; and $25 million for Entergy Texas.
Each of the credit facilities requires the Registrant Subsidiary borrower to maintain a debt ratio, as defined, of 65% or less of its total capitalization. Each Registrant Subsidiary is in compliance with this covenant.
In addition, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas each has an uncommitted standby letter of credit facility as a means to post collateral to support their obligations to MISO and for other purposes. The following is a summary of the uncommitted standby letter of credit facilities as of December 31, 2024:
| Company | Amount of Uncommitted Facility | Letter of Credit Fee | Letters of Credit Issued as of December 31, 2024 (a) (b) | |||||||||||||||||
| Entergy Arkansas | $25 million | 0.78% | $18.1 million | |||||||||||||||||
| Entergy Louisiana | $125 million | 0.78% | $46.2 million | |||||||||||||||||
| Entergy Mississippi | $65 million | 0.78% | $33.1 million | |||||||||||||||||
| Entergy New Orleans | $1 million | 1.625% | $0.5 million | |||||||||||||||||
| Entergy Texas | $150 million | 1.250% | $93.4 million |
(a)As of December 31, 2024, letters of credit posted with MISO covered financial transmission rights exposure of $0.5 million for Entergy Arkansas, $0.1 million for Entergy Louisiana, $0.8 million for Entergy Mississippi, $0.1 million for Entergy New Orleans, and $0.3 million for Entergy Texas. See Note 15 to the financial statements for discussion of financial transmission rights.
(b)As of December 31, 2024, the letters of credit issued for Entergy Mississippi include $31.8 million in MISO letters of credit and $1.3 million in non-MISO letters of credit outstanding under this facility.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Finance lease obligations are a minimal part of Entergy’s overall capital structure. Following are Entergy’s payment obligations under those leases.
| 2025 | 2026 | 2027 | 2028-2029 | after 2029 | |||||||||||||||||||||||||
| (In Millions) | |||||||||||||||||||||||||||||
| Finance lease payments | $24 | $22 | $20 | $30 | $55 |
Finance leases are discussed in Note 10 to the financial statements.
Operating Lease Obligations and Guarantees of Unconsolidated Obligations
Entergy has a minimal amount of operating lease obligations and guarantees in support of unconsolidated obligations. Entergy’s guarantees in support of unconsolidated obligations are not likely to have a material effect on Entergy’s financial condition, results of operations, or cash flows. Following are Entergy’s payment obligations as of December 31, 2024 on non-cancelable operating leases with a term over one year:
| 2025 | 2026 | 2027 | 2028-2029 | after 2029 | |||||||||||||||||||||||||
| (In Millions) | |||||||||||||||||||||||||||||
| Operating lease payments | $77 | $69 | $58 | $65 | $48 |
Operating leases are discussed in Note 10 to the financial statements.
Other Obligations
Entergy currently expects to contribute approximately $240 million to its qualified pension plans and approximately $42.8 million to its other postretirement plans in 2025, although the 2025 required pension contributions will be known with more certainty when the January 1, 2025 valuations are completed, which is expected by April 1, 2025. See “Critical Accounting Estimates - Qualified Pension and Other Postretirement Benefits” below and Note 11 to the financial statements for a discussion of qualified pension and other postretirement benefits funding.
Entergy has $248 million of unrecognized tax benefits net of unused tax attributes plus interest for which the timing of payments beyond 12 months cannot be reasonably estimated due to uncertainties in the timing of effective settlement of tax positions. See Note 3 to the financial statements for additional information regarding unrecognized tax benefits.
In addition, the Registrant Subsidiaries enter into fuel and purchased power agreements that contain minimum purchase obligations. The Registrant Subsidiaries each have rate mechanisms in place to recover fuel, purchased power, and associated costs incurred under these purchase obligations.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Capital Expenditure Plans and Other Uses of Capital
Following are the amounts of Entergy’s planned construction and other capital investments for 2025 through 2027.
| Planned construction and capital investments | 2025 | 2026 | 2027 | |||||||||||||||||
| (In Millions) | ||||||||||||||||||||
| Generation | $4,105 | $4,850 | $4,190 | |||||||||||||||||
| Transmission | 1,550 | 2,120 | 2,335 | |||||||||||||||||
| Distribution | 2,345 | 2,335 | 1,835 | |||||||||||||||||
| Utility Support | 395 | 340 | 445 | |||||||||||||||||
| Total | $8,395 | $9,645 | $8,805 |
Planned construction and capital investments refer to amounts Entergy plans to spend on routine capital projects that are necessary to support reliability of its service, equipment, or systems and to support normal customer growth. In addition to routine capital projects, they also refer to amounts Entergy plans to spend on non-routine capital investments for which Entergy is either contractually obligated, has Board approval, or otherwise expects to make to satisfy regulatory or legal requirements. Amounts include the following types of construction and capital investments:
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investments in generation projects to modernize, decarbonize, expand, and diversify Entergy’s portfolio, as well as to support customer growth, including St. Jacques Facility, Bayou Power Station, Delta Blues Advanced Power Station, Delta Solar, Penton Solar, Orange County Advanced Power Station, Lone Star Power Station, Segno Solar, Votaw Solar, and potential construction of additional generation;
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investments in the Utility nuclear fleet;
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transmission spending to improve reliability and resilience while also supporting renewables expansion and customer growth; and
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distribution and Utility support spending to improve reliability, resilience, and customer experience through projects focused on asset renewals and enhancements and grid stability.
For the next several years, the Utility’s owned and contracted generating capacity is projected to be adequate to meet MISO reserve requirements; however, MISO has implemented changes to its resource adequacy construct that generally move from an annual to a seasonal design and that changes the way that resources are assigned capacity credit. MISO has also recently obtained FERC approval to implement additional changes that further affect the assignment of capacity credit to resources. As a result of these changes, there may be seasonal variations in the capacity credit afforded to the Utility operating companies’ resources by MISO, and some resource types generally may be assigned less capacity credit than they have historically. MISO continues to pursue market design changes related to its resource adequacy construct. The FERC recently approved a reliability-based demand curve that may have the effect of increasing the clearing prices in the MISO planning resource auction and increasing the planning reserve margin requirement for the Utility operating companies. MISO is also pursuing changes to the market rules governing load modifying resources, which could affect the accreditation of these resources and, as a result, the capacity positions of the Utility operating companies. These market design changes may have an effect on both the Utility operating companies’ liquidity and the capital investment needed for long-term resources. Entergy is monitoring the evolution and application of these rules, which may require the Utility operating companies to procure additional capacity credits from the MISO market and in the longer-term may impact the incremental additional supply resources needed. The Utility’s supply plan initiative will continue to seek to transform its generation portfolio with new generation resources. Opportunities resulting from the supply plan initiative, including new projects or the exploration of alternative financing sources, could result in increases or decreases in the capital expenditure estimates given above. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of business restructuring, regulatory constraints and requirements, governmental actions, including trade-related governmental actions, such as tariffs and other
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
measures, environmental regulations, business opportunities, market volatility, economic trends, changes in project plans, and the ability to access capital, including any changes to governmental programs, such as loans, grants, guarantees, and other subsidies. Entergy is not able to predict the effect of potential changes in regulation and law, changes to governmental programs, such as loans, grants, guarantees, and other subsidies, and trade-related governmental actions, such as tariffs and other measures, on its current and planned capital projects.
Renewables
2021 Solar Certification and the Geaux Green Option
In November 2021, Entergy Louisiana filed an application with the LPSC seeking certification of and approval for the addition of four new solar photovoltaic resources with a combined nameplate capacity of 475 megawatts (the 2021 Solar Portfolio) and the implementation of a new green tariff, the Geaux Green Option (Rider GGO). The 2021 Solar Portfolio consists of four resources that are expected to provide $242 million in net benefits to Entergy Louisiana’s customers. These resources, all of which would be constructed in Louisiana, include (i) the Vacherie Facility, a 150 megawatt resource in St. James Parish; (ii) the Sunlight Road Facility, a 50 megawatt resource in Washington Parish; (iii) the St. Jacques Facility, a 150 megawatt resource in St. James Parish; and (iv) the Elizabeth Facility, a 125 megawatt resource in Allen Parish. The St. Jacques Facility would be acquired through a build-own-transfer agreement; the remaining resources involve power purchase agreements. The Sunlight Road Facility and the Elizabeth Facility each achieved commercial operation in 2024, and the Vacherie Facility and the St. Jacques Facility originally had estimated in service dates in 2025, but are now expected to be no sooner than 2027. The filing proposed to recover the costs of the power purchase agreements through the fuel adjustment clause and the formula rate plan and the acquisition costs through the formula rate plan.
The proposed Rider GGO is a voluntary rate schedule that will enhance Entergy Louisiana’s ability to help customers meet their sustainability goals by allowing customers to align some or all of their electricity requirements with renewable energy from the resources. Because subscription fees from Rider GGO participants are expected to help offset the cost of the resources, the design of Rider GGO also preserves the benefits of the 2021 Solar Portfolio for non-participants by providing them with the reliability and capacity benefits of locally-sited solar generation at a discounted price.
In March 2022 direct testimony from Walmart, the Louisiana Energy Users Group (LEUG), and the LPSC staff was filed. Each party recommended that the LPSC approve the resources proposed in Entergy Louisiana’s application, and the LPSC staff witness indicated that the process through which Entergy Louisiana solicited or obtained the proposals for the resources complied with applicable LPSC orders. The LPSC staff and LEUG’s witnesses made recommendations to modify the proposed Rider GGO and Entergy Louisiana’s proposed rate relief. In April 2022 the LPSC staff and LEUG filed cross-answering testimony concerning each other’s proposed modifications to Rider GGO and the proposed rate recovery. Entergy Louisiana filed rebuttal testimony in June 2022. In August 2022 the parties reached a settlement certifying the 2021 Solar Portfolio and approving implementation of Rider GGO. In September 2022 the LPSC approved the settlement. Following the LPSC approval, the St. James Parish council issued a moratorium on new land use permits for solar facilities until the later of March 2023 or the completion of an environmental and economic impact study. In November 2023, St. James Parish lifted the moratorium and adopted an ordinance modifying the parish’s land use plan to establish solar as an approved land use and defining corresponding solar regulations. In March 2024 the project developer submitted a solar energy facility farm permit application to the St. James Parish planning commission to request approval for the Vacherie and St. Jacques Facilities. In June 2024 the St. James Parish council denied the application and following this denial, the project developer and one of the project’s ground lessors filed separate lawsuits seeking to overturn the council’s decision. Entergy Louisiana is currently monitoring the status of the aforementioned lawsuits and also considering alternate paths forward.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Alternative RFP and Certification
In 2023, Entergy Louisiana made a filing to seek approval from the LPSC for an alternative to the requests for proposals (RFP) process that would enable the acquisition of up to 3 GW of solar resources on a faster timeline than the current RFP and certification process allows. The initial phase of the filing established the need for the acquisition of additional resources and the need for an alternative to the RFP process. The second phase of the filing contained the details of the proposal for the alternative competitive procurement process and the information necessary to support certification. In addition to the acquisition of up to 3 GW of solar resources, the filing also sought approval of a new renewable energy credits-based tariff, the Geaux ZERO rider. In June 2024 the LPSC issued an order approving the application. In August 2024, Entergy Louisiana issued the first RFP pursuant to this order in solicitation of solar resources that meet the requirements of the LPSC’s order. For the first RFP, the initial selection of proposals has been completed, and negotiations are in progress.
Delta Solar
In December 2024 the Bolivar County Board of Supervisors approved Entergy Mississippi’s plans to construct, own, and operate the Delta Solar facility, an 80 MW solar facility to be located in Bolivar County, Mississippi. The Delta Solar facility will cost an estimated $157.2 million, inclusive of estimated transmission interconnection costs. Construction of the Delta Solar facility qualifies for pre-certification under the State legislation providing for the pre-certification of construction of certain types of facilities that directly or indirectly provide electric service to customers who own certain data processing center projects as specified in the legislation. The Delta Solar facility is expected to be in service by the end of 2027.
Penton Solar
Entergy Mississippi plans to construct, own, and operate the Penton Solar facility, a 190 MW solar facility. The Penton Solar facility will cost an estimated $327.2 million, inclusive of estimated transmission interconnection and upgrade costs. Construction of the Penton Solar facility qualifies for pre-certification under the State legislation providing for the pre-certification of construction of certain types of facilities that directly or indirectly provide electric service to customers who own certain data processing center projects as specified in the legislation. The Penton Solar facility is expected to be in service by early 2028.
Segno Solar and Votaw Solar
In July 2024, Entergy Texas filed an application seeking PUCT approval to amend Entergy Texas’s certificate of convenience and necessity to construct, own, and operate the Segno Solar facility, a 170 MW solar facility to be located in Polk County, Texas, and the Votaw Solar facility, a 141 MW solar facility to be located in Hardin County, Texas. The Segno Solar facility will cost an estimated $351.6 million, and the Votaw Solar facility will cost an estimated $303.8 million, in each case inclusive of estimated transmission interconnection and upgrade costs. In September 2024 the PUCT referred the proceeding to the State Office of Administrative Hearings. In December 2024 the ALJs with the State Office of Administrative Hearings adopted a revised agreed procedural schedule, with a hearing on the merits to be held in March 2025. In January 2025 certain intervenors and the PUCT staff filed testimony opposing Entergy Texas’s application. The opposing testimony argues that the proposed generation additions will have a net cost to customers, and it also challenges the design and effectiveness of the voluntary renewable energy tariff. In addition, the opposing testimony recommends that the PUCT impose conditions on any approval of Entergy Texas’s application. The conditions that certain intervenors and the PUCT staff propose include guarantees related to customer net benefits, resource production, independent investigation of any material cost overruns, and the addition of a mandatory sleeving tariff. Entergy Texas plans to file rebuttal testimony in February 2025. A PUCT decision is expected in third quarter 2025. Subject to receipt of required regulatory approval and other conditions, the Segno Solar facility is expected to be in service by early 2027, and the Votaw Solar facility is expected to be in service by mid-2028.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Other Generation
Lake Catherine Unit 5
In November 2024, Entergy Arkansas filed an application with the APSC seeking a certificate of environmental compatibility and public need for the construction and operation of Lake Catherine Unit 5, a 446 MW hydrogen-capable simple-cycle natural gas combustion turbine facility to be located at the existing Lake Catherine facility site in Hot Spring County, Arkansas. In December 2024 other parties, including the APSC general staff, filed testimony opposing the resource, although the APSC general staff recognized the capacity need for the resource. Entergy Arkansas filed testimony in January 2025 further supporting its application, and in February 2025 the opposing parties filed responsive rebuttal testimony continuing to dispute the estimated costs and to dispute that Entergy Arkansas performed a market solicitation sufficient to demonstrate that this resource is the most reasonable option for customers. Also in February 2025, Entergy Arkansas filed surrebuttal testimony responding to the opposing parties’ testimony. A hearing, if necessary, is scheduled for early March 2025, with an APSC decision requested by the end of March 2025. Subject to receipt of required regulatory approval and other conditions, the facility is expected to be in service by the end of 2028.
Bayou Power Station
In March 2024, Entergy Louisiana filed an application with the LPSC seeking certification that the public convenience and necessity would be served by the construction of the Bayou Power Station, a 112 MW aggregated capacity floating natural gas power station with black-start capability in Leeville, Louisiana and an associated microgrid that would serve nearby areas, including Port Fourchon, Golden Meadow, Leeville, and Grand Isle. In its application, Entergy Louisiana noted that the estimated cost of the Bayou Power Station was $411 million, including estimated costs of transmission interconnection and other related costs. In October 2024, Entergy Louisiana filed a motion to suspend the procedural schedule in this proceeding in order to evaluate certain recent developments related to the project including potential changes to the estimated cost of the project. Entergy Louisiana will determine next steps for the project after fully evaluating these developments. Subject to timely approval by the LPSC and receipt of other permits and approvals, commercial operation is expected to occur by the end of 2028.
Entergy Louisiana Additional Generation and Transmission Resources
In October 2024, Entergy Louisiana filed an application with the LPSC seeking approval of a variety of generation and transmission resources proposed in connection with establishing service to a new data center to be developed by a subsidiary of Meta Platforms, Inc. in north Louisiana, for which an electric service agreement has been executed. The filing requests LPSC certification of three new combined cycle combustion turbine generation resources totaling 2,262 MW, each of which will be enabled for future carbon capture and storage, a new 500 kV transmission line, and 500 kV substation upgrades. The application also requests approval to implement a corporate sustainability rider applicable to the new customer. The corporate sustainability rider contemplates the new customer contributing to the costs of the planned future addition of 1,500 MW of new solar and energy storage resources, agreements involving carbon capture and storage at Entergy Louisiana’s existing Lake Charles Power Station, and potential future wind and nuclear resources. The combined cost of the first two new combined cycle combustion turbine generation resources is estimated to be approximately $2,387 million, and these units are expected to achieve commercial operation in 2028. The third new generation resource is currently expected to have an estimated cost similar to the first two new generation resources and is expected to achieve commercial operation in 2029. The cost of the new 500 kV transmission line is estimated to be $546 million. Entergy Louisiana anticipates funding the incremental cost to serve the customer through direct financial contributions from the customer and the revenues it expects to earn under the electric service agreement. The electric service agreement also contains provisions for termination payments that will help ensure that there is no harm to Entergy Louisiana and its customers in the event of early termination. A directive was issued at the LPSC’s November 2024 meeting for the matter to be decided by October 2025. Consistent with this directive, a procedural schedule was adopted
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
setting the matter for hearing in July 2025. In February 2025 intervenors filed a motion asking the LPSC to deny Entergy Louisiana’s requested exemption from the LPSC’s order addressing competitive solicitation procedures and further asking the LPSC to dismiss the application.
In February 2025, Entergy Louisiana filed supplemental testimony with the LPSC stating that the third combined cycle combustion turbine resource presented in the October 2024 application would be sited at Entergy Louisiana’s Waterford site in Killona, Louisiana, alongside existing Entergy Louisiana generation resources. The testimony also notes that Entergy Louisiana is negotiating with the customer to increase the load associated with the customer’s project in north Louisiana and that the additional load can be served without additional generation capacity beyond what was presented in the October 2024 application, but that additional transmission facilities, which will be funded directly by the customer, are needed to serve this additional load.
Entergy Louisiana Transmission Projects
In March 2024, Entergy Louisiana filed an application seeking an exemption determination, or alternatively, a certificate of public convenience and necessity, for a transmission project that includes a new 500 kV/230 kV Commodore substation and an approximately 60-mile 230 kV line connecting the new Commodore substation to the Waterford substation. The project, which was approved by MISO in the 2023 MISO Transmission Expansion Plan, also includes certain common elements with, and right-of-way acquisition for, a future transmission project in the same area consisting of 500 kV elements. The estimated cost of the project is $498.8 million. In February 2025, Entergy Louisiana and the LPSC staff jointly filed, for consideration by the LPSC, an uncontested stipulated settlement agreement resolving all issues in the proceeding. In the motion requesting approval of the uncontested stipulated settlement agreement, the parties requested a settlement hearing in March 2025.
In December 2024, Entergy Louisiana filed an application seeking a certificate of public convenience and necessity for a 500 kV transmission project that includes the construction of a new 84-mile Commodore to Churchill 500 kV transmission line, the expansion of the Waterford 500 kV substation, the construction of a new Churchill 500 kV substation and improvements to the Churchill 230 kV substation, and the conversion of the existing 230 kV Waterford to Churchill transmission line to 500 kV, forming a 500 kV loop into the Downstream of Gypsy load pocket. The project, which was approved by MISO in the 2023 MISO Transmission Expansion Plan, shares common elements with a future transmission project in the same area consisting of 230 kV elements. The estimated cost of the project is $954.7 million.
Entergy Mississippi Additional Generation and Transmission Resources
In January 2024, Amazon Web Services announced its plan to invest in two data centers located in Madison County, Mississippi. In March 2024, Entergy Mississippi executed a large customer supply and service agreement to serve the two data centers. Entergy Mississippi will need generation and transmission resources to reliably serve all Entergy Mississippi customers, including the data centers. The large customer supply and service agreement also contains provisions which cover Entergy Mississippi’s incremental investment costs in the event of early termination. In May 2024 the MPSC approved Entergy Mississippi’s revisions to its formula rate plan to comply with state legislation passed in January 2024 allowing Entergy Mississippi to make interim rate adjustments, including the collection of a return on construction-work-in-process on a cash basis, to recover the non-fuel related annual ownership cost of certain facilities that directly or indirectly provide service to customers who own certain data processing center projects as specified in the legislation. Entergy Mississippi anticipates recovering the incremental cost to serve the customer through the revenues it expects to collect under the large customer supply and service agreement.
In February 2025, Entergy Mississippi entered into a new large customer supply and service agreement with a customer. The planned capital investment estimates for 2025-2027, shown above, include amounts related to the generation and transmission resources needed to reliably serve all Entergy Mississippi customers.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Delta Blues Advanced Power Station
In September 2024, Entergy Mississippi announced plans to construct, own, and operate the Delta Blues Advanced Power Station, a 754 MW combined-cycle combustion turbine facility, to be located in Washington County, Mississippi. The facility will primarily be powered by natural gas, and it will also be enabled for future carbon capture and storage and for hydrogen co-firing optionality. The Delta Blues Advanced Power Station will cost an estimated $1.2 billion. State legislation passed in January 2024 provides for the pre-certification of construction for certain types of facilities that directly or indirectly provide electric service to customers who own certain data processing center projects as specified in the legislation. Construction of the Delta Blues Advanced Power Station qualifies under this legislation for pre-certification. As enabled by this legislation, Entergy Mississippi began recovery of certain costs of construction of the Delta Blues Advanced Power Station through the interim facilities rate adjustments provision of its formula rate plan rider, which rates became effective in July 2024. Non-fuel revenue collected from the data center customer will be included in the formula rate plan to offset the facility’s revenue requirement. Construction is in progress and the facility is expected to be in service by the end of 2028.
Orange County Advanced Power Station
In September 2021, Entergy Texas filed an application seeking PUCT approval to amend Entergy Texas’s certificate of convenience and necessity to construct, own, and operate the Orange County Advanced Power Station, a new 1,215 MW combined-cycle combustion turbine facility to be located in Bridge City, Texas at an initially-estimated expected total cost of $1.2 billion inclusive of the estimated costs of the generation facilities, transmission upgrades, contingency, an allowance for funds used during construction, and necessary regulatory expenses, among others. The project includes combustion turbine technology with dual fuel capability, able to co-fire up to 30% hydrogen by volume upon commercial operation and upgradable to support 100% hydrogen operations in the future. In December 2021 the PUCT referred the proceeding to the State Office of Administrative Hearings. In March 2022 certain intervenors filed testimony opposing the hydrogen co-firing component of the proposed project and others filed testimony opposing the project outright. Also in March 2022 the PUCT staff filed testimony opposing the hydrogen co-firing component of the proposed project, but otherwise taking no specific position on the merits of the project. The PUCT staff also proposed that the PUCT establish a maximum amount that Entergy Texas may recover in rates attributable to the project. In April 2022, Entergy Texas filed rebuttal testimony addressing and rebutting these various arguments. The hearing on the merits was held in June 2022, and post-hearing briefs were submitted in July 2022. In September 2022 the ALJs with the State Office of Administrative Hearings issued a proposal for decision recommending the PUCT approve Entergy Texas’s application for certification of Orange County Advanced Power Station subject to certain conditions, including a cap on cost recovery at $1.37 billion, the exclusion of investment associated with co-firing hydrogen, weatherization requirements, and customer receipt of any contractual benefits associated with the facility’s guaranteed heat rate. In October 2022 the parties in the proceeding filed exceptions and replies to exceptions to the proposal for decision. Also in October 2022, Entergy Texas filed with the PUCT information regarding a new fixed pricing option for an estimated project cost of approximately $1.55 billion associated with Entergy Texas’s issuance of limited notice to proceed by mid-November 2022. In November 2022 the PUCT issued a final order approving the requested amendment to Entergy Texas’s certificate of convenience and necessity to construct, own, and operate the Orange County Advanced Power Station without the investment associated with hydrogen co-firing capability, without a cap on cost recovery, and subject to certain conditions, including weatherization requirements and customer receipt of any contractual benefits associated with the facility’s guaranteed heat rate.
In December 2022, Texas Industrial Energy Consumers and Sierra Club filed motions for rehearing of the PUCT’s final order alleging the PUCT erred in granting the certification of the Orange County Advanced Power Station, in not imposing a cost cap, in including certain findings related to the reasonableness of Entergy Texas’s request for proposals from which the Orange County Advanced Power Station was selected, and in other regards. Also in December 2022, Entergy Texas filed a response to the motions for rehearing refuting the points raised therein. In January 2023 the PUCT issued letters noting that it voted to consider Texas Industrial Energy
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Consumers’ motion for rehearing at its upcoming January 2023 open meeting and voted not to consider Sierra Club’s motion for rehearing at an open meeting. At the January 2023 open meeting, the PUCT voted to grant Texas Industrial Energy Consumers’ motion for rehearing for the limited purpose of issuing an order on rehearing that excludes three findings related to Entergy Texas’s request for proposals. The order on rehearing does not change the PUCT’s certification of the Orange County Advanced Power Station or the conditions placed thereon in the PUCT’s November 2022 final order. Construction is in progress, and subject to receipt of required permits, the facility is expected to be in service by mid-2026.
Legend Power Station and Lone Star Power Station
In June 2024, Entergy Texas filed an application seeking PUCT approval to amend Entergy Texas’s certificate of convenience and necessity to construct, own, and operate the Legend Power Station, a 754 MW combined-cycle combustion turbine facility, which will be enabled for future carbon capture and storage and for hydrogen co-firing optionality, to be located in Jefferson County, Texas, and the Lone Star Power Station, a 453 MW simple-cycle combustion turbine facility, which will be enabled with hydrogen co-firing optionality, to be located in Liberty County, Texas. In its application, Entergy Texas noted that the Legend Power Station was expected to cost an estimated $1.46 billion and the Lone Star Power Station was expected to cost an estimated $735.3 million, in each case inclusive of the estimated costs of the generation facilities, interconnection costs, transmission network upgrades, and an allowance for funds used during construction. As described in the application, Entergy Texas is considering alternative financing approaches for the Legend Power Station and plans to pursue the financing option that is in the best interest of its customers. In July 2024 the PUCT referred the proceeding to the State Office of Administrative Hearings and, also in July 2024, the ALJ with the State Office of Administrative Hearings adopted a procedural schedule, with a hearing on the merits scheduled to begin in October 2024. In September 2024, Entergy Texas filed, and the ALJ with the State Office of Administrative Hearings granted, a motion to extend the procedural schedule in this proceeding in order to address certain developments relating to the cost and scope of the Legend Power Station and the Lone Star Power Station. In December 2024, Entergy Texas filed supplemental testimony and exhibits addressing the cost and scope developments associated with the Legend Power Station and the Lone Star Power Station in further support of its application. The cost and scope developments include cost estimate increases of $139 million for Legend Power Station and $63.7 million for Lone Star Power Station and the consideration of an alternate site for Lone Star Power Station, which would reduce the estimated cost increase of the Lone Star Power Station to $36.2 million. Also in December 2024, the ALJ with the State Office of Administrative Hearings adopted a procedural schedule with a hearing on the merits to be held in April 2025. A PUCT decision is expected in July 2025. Subject to receipt of required regulatory approval and other conditions, both facilities are expected to be in service by mid-2028.
Resilience and Grid Hardening
Entergy Louisiana
In December 2022, Entergy Louisiana filed an application with the LPSC seeking a public interest finding regarding Phase I of Entergy Louisiana’s Future Ready resilience plan and approval of a rider mechanism to recover the program’s costs. Phase I in the December 2022 application reflected the first five years of a ten-year resilience plan and included investment of approximately $5 billion, including hardening investment, transmission dead-end structures, enhanced vegetation management, and telecommunications improvement. In April 2024 the LPSC approved a framework which includes an initial five-year resilience plan providing for an investment of approximately $1.9 billion with cost recovery via a forward-looking rider with semi-annual true-ups. The plan is subject to specified reporting requirements and includes a performance review of the hardened assets. The LPSC order approving the framework does not include any restrictions on Entergy Louisiana’s ability to file applications for approval of additional investments in resilience.
The LPSC had previously opened a formal rulemaking proceeding in December 2021 to investigate efforts to improve resilience of electric utility infrastructure. In April 2023 the LPSC staff issued a draft rule in the
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
rulemaking proceeding related to a requirement to file a grid resilience plan. The procedural schedule entered in the rulemaking proceeding contemplated adoption of a final rule in October 2023, but this did not occur, and a new date has not been set. The LPSC also has pending rulemakings addressing issues related to pole viability and grid maintenance practices. In December 2023, in those rulemakings, the LPSC staff issued a report and recommendation proposing to impose significant new reporting and compliance obligations related to jurisdictional utilities’ distribution and transmission operations, including new obligations related to grid hardening plans, pole inspections, pole replacement, vegetation management, storm restoration plans, new reliability metrics, software for handling customer complaints and complaint resolution, required use of drone technology, and new penalties and incentives for reliability performance and for compliance with the new obligations. In February 2024, Entergy Louisiana and other parties filed comments on the LPSC staff’s report.
Entergy New Orleans
In October 2021 the City Council passed a resolution and order establishing a docket and procedural schedule with respect to system resiliency and storm hardening. In July 2022, Entergy New Orleans filed with the City Council a response identifying a preliminary plan for storm hardening and resiliency projects, including microgrids, to be implemented over ten years at an approximate cost of $1.5 billion. In February 2023 the City Council approved a revised procedural schedule requiring Entergy New Orleans to make a filing in April 2023 containing a narrowed list of proposed hardening projects. In April 2023, Entergy New Orleans filed the required application and supporting testimony seeking City Council approval of the first phase (five years and $559 million) of a ten-year infrastructure hardening plan totaling approximately $1 billion. Entergy New Orleans also sought, among other relief, City Council approval of a resilience and storm hardening cost recovery rider to recover from customers the costs of the infrastructure hardening plan. In February 2024 the City Council approved a resolution authorizing Entergy New Orleans to implement a resilience project to be partially funded by $55 million of matching funding through the DOE’s Grid Resilience and Innovation Partnerships program. The resolution also required Entergy New Orleans to submit, no later than July 2024, a revised resilience plan consisting of projects over a three-year period. In March 2024, Entergy New Orleans filed with the City Council for approval the requested three-year resilience plan, which includes $168 million in hardening projects. The three-year resilience plan was to be in addition to the previously authorized resilience project to be partially funded by the DOE’s Grid Resilience and Innovation Partnerships program. In October 2024 the City Council approved a resolution authorizing a two-year resilience plan totaling $100 million and approved the requested resilience and storm hardening cost recovery rider. In December 2024, Entergy New Orleans notified the City Council of the subset of hardening projects from the revised three-year resilience plan to be included in the two-year resilience plan. Entergy New Orleans implemented the approved resilience and storm hardening cost recovery rider effective with the first billing cycle of January 2025.
Entergy Texas
In June 2024, Entergy Texas filed an application with the PUCT requesting approval of Phase I of its Texas Future Ready Resiliency Plan, a cost-effective set of measures to begin accelerating the resiliency of Entergy Texas’s transmission and distribution system. Phase I is comprised of projects totaling approximately $335.1 million, including approximately $137 million of projects to be funded by Entergy Texas and approximately $198 million of projects contingent upon Entergy Texas’s receipt of grant funds in that amount from the Texas Energy Fund. The projects in Phase I include distribution and transmission hardening and modernization projects and targeted vegetation management projects to mitigate the risk of wildfire. These projects are expected to be implemented within approximately three years of PUCT approval. In October 2024, Entergy Texas filed an unopposed settlement that would resolve all issues in the proceeding and the PUCT staff filed testimony in support of the unopposed settlement. In January 2025 the PUCT unanimously approved Phase I of Entergy Texas’s Texas Future Ready Resiliency Plan, including the approximately $137 million of projects to be funded by Entergy Texas and application of performance metrics consistent with the unopposed settlement. The PUCT clarified that, while not part of Entergy Texas’s Phase I plan, Entergy Texas is permitted to pursue the remaining $198 million of identified projects and Texas Energy Fund grant funding for those projects. In February 2025 the PUCT issued an
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order adopting a new rule establishing the procedures for application to the grant fund and Entergy Texas intends to pursue an application.
Dividends and Stock Repurchases
Declarations of dividends on Entergy Corporation common stock are made at the discretion of the Board. Among other things, the Board evaluates the level of Entergy Corporation common stock dividends based upon earnings per share from the Utility segment and the Parent and Other portion of the business, financial strength, and future investment opportunities. In January 2025, the Board declared a dividend of $0.60 per share. Entergy paid $982 million in 2024, $918 million in 2023, and $842 million in 2022 in cash dividends on its common stock.
In accordance with Entergy’s stock-based compensation plans, Entergy periodically grants stock options, restricted stock, performance units, and restricted stock units to key employees, which may be exercised to obtain shares of Entergy Corporation common stock. According to the plans, these shares can be newly issued shares, treasury stock, or shares purchased on the open market. Entergy’s management has been authorized by the Board to repurchase on the open market shares up to an amount sufficient to fund the exercise of grants under the plans.
In addition to the authority to fund grant exercises, the Board has authorized share repurchase programs to enable opportunistic purchases in response to market conditions. In October 2010 the Board granted authority for a $500 million share repurchase program. As of December 31, 2024, $350 million of authority remains under the $500 million share repurchase program. The amount of repurchases may vary as a result of material changes in business results or capital spending or new investment opportunities, or if limitations in the credit markets continue for a prolonged period.
Sources of Capital
Entergy’s sources to meet its capital requirements and to fund potential investments include:
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internally generated funds;
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cash on hand ($860 million as of December 31, 2024);
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storm reserve escrow accounts;
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debt and equity issuances in the capital markets, including debt issuances to refund or retire currently outstanding or maturing indebtedness;
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bank financing under new or existing facilities or commercial paper; and
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sales of assets.
Circumstances such as weather patterns, fuel and purchased power price fluctuations, and unanticipated expenses, including unscheduled plant outages and storms, could affect the timing and level of internally generated funds in the future. In addition to the financings necessary to meet capital requirements and contractual obligations, the Registrant Subsidiaries expect to continue, when economically feasible, to retire higher-cost debt and replace it with lower-cost debt if market conditions permit.
Provisions within the organizational documents relating to preferred stock or membership interests of certain of Entergy Corporation’s subsidiaries could restrict the payment of cash dividends or other distributions on their common and preferred equity. All debt and preferred equity issuances by the Registrant Subsidiaries require prior regulatory approval and their debt issuances are also subject to requirements set forth in bond indentures and other agreements. Entergy believes that the Registrant Subsidiaries have sufficient capacity under these tests to meet foreseeable capital needs for the next twelve months and beyond.
The FERC has jurisdiction over securities issuances by the Utility operating companies and System Energy. The City Council has concurrent jurisdiction over Entergy New Orleans’s securities issuances with maturities longer than one year. The APSC has concurrent jurisdiction over Entergy Arkansas’s issuances of securities secured by
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Management’s Financial Discussion and Analysis
Arkansas property, including first mortgage bond issuances. No regulatory approvals are necessary for Entergy Corporation to issue securities. The current FERC-authorized short-term borrowing limits and long-term financing authorization for Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy are effective through January 2027. Entergy Arkansas has obtained first mortgage bond/secured financing authorization from the APSC that extends through December 2025. Entergy New Orleans also has obtained long-term financing authorization from the City Council that extends through December 2025. Entergy Arkansas, Entergy Louisiana, and System Energy each has obtained long-term financing authorization from the FERC that extends through January 2027 for issuances by the nuclear fuel company variable interest entities. In addition to borrowings from commercial banks, the Registrant Subsidiaries may also borrow from the Entergy system money pool and from other internal short-term borrowing arrangements. The money pool is an intercompany cash management program that makes possible intercompany borrowing and lending arrangements, and the money pool and the other internal borrowing arrangements are designed to reduce Entergy’s subsidiaries’ dependence on external short-term borrowings. Borrowings from internal and external short-term borrowings combined may not exceed the FERC-authorized limits. See Notes 4 and 5 to the financial statements for further discussion of Entergy’s borrowing limits, authorizations, and amounts outstanding.
Equity Issuances and Equity Distribution Program
In January 2021, Entergy Corporation entered into an equity distribution sales agreement with several counterparties establishing an at the market equity distribution program, pursuant to which Entergy Corporation may offer and sell from time to time shares of its common stock. The sales agreement provides that, in addition to the issuance and sale of shares of Entergy Corporation common stock, Entergy Corporation may enter into forward sale agreements for the sale of its common stock. The aggregate number of shares of common stock sold under this sales agreement and under any forward sale agreement may not exceed an aggregate gross sales price of $3 billion. Through 2022, 2023, and 2024, Entergy Corporation utilized the equity distribution program either to sell or to enter into forward sale agreements with respect to shares of common stock with an aggregate gross sales price of approximately $2.6 billion, of which approximately $2.4 billion of aggregate gross sales price was the subject of forward sale agreements, subject to adjustment pursuant to the forward sale agreements. Entergy Corporation settled the forward sales agreements for cash proceeds of $853 million in November 2022, $48 million in November 2023, and $83 million in December 2023. There were no settlements of forward sale agreements for the year ended December 31, 2024. Entergy Corporation currently expects to issue approximately $4.7 billion of equity through 2028, which it may issue under its at the market equity distribution program or otherwise, with approximately $1.4 billion already contracted under forward sale agreements as of December 31, 2024. See Note 7 to the financial statements for discussion of the forward sales agreements and common stock issuances and sales under the equity distribution program.
Hurricane Francine
In September 2024, Hurricane Francine caused damage to the areas served by Entergy Louisiana and Entergy New Orleans. The storm resulted in widespread power outages, primarily due to damage to distribution infrastructure as a result of strong winds and heavy rain, and the loss of sales during the power outages. See Note 2 to the financial statements for discussion of Entergy Louisiana’s December 2024 storm cost recovery filing related to Hurricane Francine.
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Management’s Financial Discussion and Analysis
Cash Flow Activity
As shown in Entergy’s Consolidated Statements of Cash Flows, cash flows for the years ended December 31, 2024, 2023, and 2022 were as follows:
| 2024 | 2023 | 2022 | |||||||||||||||
| (In Millions) | |||||||||||||||||
| Cash and cash equivalents at beginning of period | $133 | $224 | $443 | ||||||||||||||
| Net cash provided by (used in): | |||||||||||||||||
| Operating activities | 4,488 | 4,294 | 2,585 | ||||||||||||||
| Investing activities | (5,849) | (4,629) | (5,710) | ||||||||||||||
| Financing activities | 2,088 | 244 | 2,906 | ||||||||||||||
| Net increase (decrease) in cash and cash equivalents | 727 | (91) | (219) | ||||||||||||||
| Cash and cash equivalents at end of period | $860 | $133 | $224 |
2024 Compared to 2023
Operating Activities
Net cash flow provided by operating activities increased $194 million in 2024 primarily due to lower fuel and purchased power costs and the receipt of a $152 million advance payment in 2024 from a customer related to a generation agreement. The increase was partially offset by:
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an increase of $127 million in interest paid;
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lower collections from Utility customers, including the effect of higher deferred fuel collections in 2023; and
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one-time bill credits of $92 million in 2024 to Entergy Arkansas’s retail customers through the Grand Gulf credit rider as a result of the System Energy settlement with the APSC. See Note 2 to the financial statements for discussion of the System Energy settlement agreement with the APSC and Entergy Arkansas’s Grand Gulf credit rider.
Investing Activities
Net cash flow used in investing activities increased $1,220 million in 2024 primarily due to:
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the initial and substantial completion payments totaling approximately $393 million in 2024 for the purchase of the Driver Solar facility by Entergy Arkansas;
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an increase of $291 million in non-nuclear generation construction expenditures primarily due to higher spending by Entergy Louisiana on new generation resources in north Louisiana, by Entergy Mississippi on the Delta Blues Advanced Power Station project, and by Entergy Texas on the Legend Power Station project;
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the initial and substantial completion payments totaling approximately $240 million in 2024 for the purchase of the West Memphis Solar facility by Entergy Arkansas;
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the initial and substantial completion payments totaling approximately $186 million in 2024 for the purchase of the Walnut Bend Solar facility by Entergy Arkansas;
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an increase of $183 million in transmission construction expenditures primarily due to higher capital expenditures as a result of increased development in the Utility service area and increased spending on various transmission projects in 2024, partially offset by lower capital expenditures for storm restoration in
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Management’s Financial Discussion and Analysis
- The decrease in storm restoration expenditures is primarily due to Hurricane Ida restoration efforts in 2023;
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net payments to storm reserve escrow accounts of $17 million in 2024 as compared to net receipts from storm reserve escrow accounts of $79 million in 2023;
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an increase of $89 million in distribution construction expenditures primarily due to increased investment in the resilience of the Utility distribution system, partially offset by lower capital expenditures for storm restoration in 2024; and
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an increase of $38 million in nuclear fuel purchases due to variations from year to year in the timing and pricing of fuel reload requirements, materials and services deliveries, and the timing of cash payments during the nuclear fuel cycle.
The increase was partially offset by:
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a decrease of $111 million in nuclear construction expenditures primarily due to decreased spending on various nuclear projects in 2024;
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an increase of $59 million in proceeds received in 2024 as compared to 2023 from the DOE resulting from litigation regarding spent nuclear fuel storage costs. See Note 8 to the financial statements for discussion of the spent nuclear fuel storage litigation;
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the substantial completion and final payments totaling approximately $35 million in 2023 for the purchase of the Sunflower Solar facility by the Entergy Mississippi tax equity partnership;
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a decrease of $28 million in facilities construction expenditures primarily due to decreased spending on various facilities projects in 2024 and the construction at Entergy Mississippi of a new transmission office in 2023; and
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a decrease of $25 million in information technology capital expenditures primarily due to decreased spending on various technology projects in 2024.
See Note 14 to the financial statements for discussion of the Driver Solar facility, the West Memphis Solar facility, the Walnut Bend Solar facility, and the Sunflower Solar facility purchases.
Financing Activities
Net cash flow provided by financing activities increased $1,844 million in 2024 primarily due to:
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long-term debt activity providing approximately $2,845 million of cash in 2024 compared to using approximately $862 million of cash in 2023;
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an increase of $192 million in advance payments from customers for construction related to transmission, distribution, and generator interconnection agreements; and
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an increase of $127 million in proceeds received from the exercise of stock options in 2024 as compared to 2023.
The increase was partially offset by:
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proceeds from securitization of $1.5 billion received by the storm trust II at Entergy Louisiana in 2023;
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net repayments of $211 million of commercial paper in 2024 as compared to net issuances of $311 million of commercial paper in 2023;
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$131 million in net proceeds from the issuance of common stock under the at the market equity distribution program in 2023. There were no issuances of common stock under the at the market equity distribution program in 2024; and
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an increase of $63 million in common stock dividends paid in 2024 as a result of an increase in the dividend paid per share in 2024 as compared to 2023.
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Management’s Financial Discussion and Analysis
See Note 5 to the financial statements for details of long-term debt. See Note 2 to the financial statements for a discussion of the Entergy Louisiana March 2023 storm cost securitization. See Note 4 to the financial statements for details of Entergy’s commercial paper program. See Note 7 to the financial statements for discussion of the equity distribution program.
2023 Compared to 2022
See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Cash Flow Activity” in Item 7 of Entergy’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of operating, investing, and financing cash flow activities for 2023 compared to 2022.
Rate, Cost-recovery, and Other Regulation
State and Local Rate Regulation and Fuel-Cost Recovery
The rates that the Utility operating companies charge for their services significantly influence Entergy’s financial position, results of operations, and liquidity. These companies are regulated, and the rates charged to their customers are determined in regulatory proceedings. Governmental agencies, including the APSC, the LPSC, the MPSC, the City Council, and the PUCT, are primarily responsible for approval of the rates charged to customers. Following is a summary of the Utility operating companies’ authorized returns on common equity:
| Company | Authorized Return on Common Equity | |||||||
| Entergy Arkansas | 9.15% - 10.15% | |||||||
| Entergy Louisiana | 9.3% - 10.1% Electric; 9.3% - 10.3% Gas | |||||||
| Entergy Mississippi | 9.91% - 11.92% | |||||||
| Entergy New Orleans | 8.85% - 9.85% | |||||||
| Entergy Texas | 9.57% |
Rate regulation and related regulatory proceedings and fuel and purchased power cost recovery proceedings for the Utility operating companies are discussed in Note 2 to the financial statements.
Federal Regulation
The FERC regulates wholesale sales of electricity rates and interstate transmission of electricity, including rates for System Energy’s sales of capacity and energy from Grand Gulf to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans pursuant to the Unit Power Sales Agreement. The current return on equity under the Unit Power Sales Agreement is 9.65%. See Note 2 and Note 8 to the financial statements for discussion of Entergy Louisiana’s divestiture from the Unit Power Sales Agreement.
Market and Credit Risk Sensitive Instruments
Market risk is the risk of changes in the value of commodity and financial instruments, or in future net income or cash flows, in response to changing market conditions. Entergy holds commodity and financial instruments that are exposed to the following significant market risks:
- The commodity price risk associated with the sale of electricity by Entergy’s non-utility operations business.
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Management’s Financial Discussion and Analysis
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The interest rate and equity price risk associated with Entergy’s investments in qualified pension and other postretirement benefits trust funds. See Note 11 to the financial statements for details regarding Entergy’s qualified pension and other postretirement benefits trust funds.
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The interest rate and equity price risk associated with Entergy’s investments in nuclear plant decommissioning trust funds. See Note 16 to the financial statements for details regarding Entergy’s decommissioning trust funds.
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The interest rate risk associated with changes in interest rates as a result of Entergy’s outstanding indebtedness. Entergy manages its interest rate exposure by monitoring current interest rates and its debt outstanding in relation to total capitalization. See Notes 4 and 5 to the financial statements for the details of Entergy’s debt outstanding.
The Utility has limited exposure to the effects of market risk because it operates primarily under cost-based rate regulation. To the extent approved by their retail regulators, the Utility operating companies use commodity and financial instruments to hedge the exposure to price volatility inherent in their purchased power, fuel, and gas purchased for resale costs that are recovered from customers.
Entergy’s commodity and financial instruments are also exposed to credit risk. Credit risk is the risk of loss from nonperformance by suppliers, customers, or financial counterparties to a contract or agreement. Entergy is also exposed to a potential demand on liquidity due to credit support requirements within its supply or sales agreements.
Some of the agreements to sell the power produced by Entergy’s non-utility operations business contain provisions that require an Entergy subsidiary to provide credit support to secure its obligations under such agreement. The primary form of credit support used to satisfy these requirements is an Entergy Corporation guarantee. Cash and letters of credit are also acceptable forms of credit support. At December 31, 2024, based on power prices at that time, Entergy had liquidity exposure of $5 million under the guarantees in place supporting its non-utility operations business transactions and $3 million of posted cash collateral.
In addition, each of the Utility operating companies has uncommitted standby letter of credit facilities as a means to post collateral to support its obligations to MISO and for other purposes. See Note 4 to the financial statements for discussion of these letter of credit facilities.
Nuclear Matters
Entergy’s Utility business includes the ownership and operation of nuclear generating plants and is, therefore, subject to the risks related to such ownership and operation. These include risks related to: the use, storage, and handling and disposal of high-level and low-level radioactive materials; the substantial financial requirements, both for capital investments and operational needs, including the financial requirements to address emerging issues related to equipment reliability, to position Entergy’s nuclear fleet to meet its operational goals; the performance and capacity factors of these nuclear plants; regulatory requirements and potential future regulatory changes, including changes affecting the regulations governing nuclear plant ownership, operations, license amendments, and decommissioning; the availability of interim or permanent sites for the disposal of spent nuclear fuel and nuclear waste, including the fees charged for such disposal; the sufficiency of nuclear decommissioning trust fund assets and earnings to complete decommissioning of each site when required; and limitations on the amounts of insurance recoveries for losses in connection with nuclear plant operations and catastrophic events such as a nuclear accident.
NRC Reactor Oversight Process
The NRC’s Reactor Oversight Process is a program to collect information about plant performance, assess the information for its safety significance, and provide for appropriate licensee and NRC response. The NRC evaluates plant performance by analyzing two distinct inputs: inspection findings resulting from the NRC’s
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inspection program and performance indicators reported by the licensee. The evaluations result in the placement of each plant in one of the NRC’s Reactor Oversight Process Action Matrix columns: “licensee response column,” or Column 1, “regulatory response column,” or Column 2, “degraded cornerstone column,” or Column 3, “multiple/repetitive degraded cornerstone column,” or Column 4, and “unacceptable performance,” or Column 5. Plants in Column 1 are subject to normal NRC inspection activities. Plants in Column 2, Column 3, or Column 4 are subject to progressively increasing levels of inspection by the NRC with, in general, progressively increasing levels of associated costs. Continued plant operation is not permitted for plants in Column 5. All of the nuclear generating plants owned and operated by Entergy’s Utility business are currently in Column 1.
Critical Accounting Estimates
The preparation of Entergy’s financial statements in conformity with GAAP requires management to apply appropriate accounting policies and to make estimates and judgments that can have a significant effect on reported financial position, results of operations, and cash flows. Management has identified the following accounting estimates as critical because they are based on assumptions and measurements that involve a high degree of uncertainty, and the potential for future changes in these assumptions and measurements could produce estimates that would have a material effect on the presentation of Entergy’s financial position, results of operations, or cash flows.
Nuclear Decommissioning Costs
Certain of the Utility operating companies and System Energy own nuclear generation facilities. Regulations require these Entergy subsidiaries to decommission the nuclear power plants after each facility is taken out of service, and cash is deposited in trust funds during the facilities’ operating lives in order to provide for this obligation. Entergy conducts periodic decommissioning cost studies to estimate the costs that will be incurred to decommission the facilities. The following key assumptions have a significant effect on these estimates.
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Timing - In projecting decommissioning costs, two assumptions must be made to estimate the timing of plant decommissioning. First, the date of the plant’s retirement must be estimated for those plants that do not have an announced shutdown date. The estimate may include assumptions regarding the possibility that the plant may have an operating life shorter than the operating license expiration. Second, an assumption must be made regarding whether all decommissioning activity will proceed immediately upon plant retirement, or whether the plant will be placed in SAFSTOR status. SAFSTOR is decommissioning a facility by placing it in a safe, stable condition that is maintained until it is subsequently decontaminated and dismantled to levels that permit license termination, normally within 60 years from permanent cessation of operations. A change of assumption regarding either the period of continued operation, the use of a SAFSTOR period, or whether Entergy will continue to hold the plant or the plant is held for sale can change the present value of the asset retirement obligation.
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Cost Escalation Factors - Entergy’s current decommissioning cost studies include an assumption that decommissioning costs will escalate over present cost levels by factors ranging from approximately 2% to 3% annually. A 50-basis point change in this assumption could change the estimated present value of the decommissioning liabilities by approximately 8% to 15%. The timing assumption influences the significance of the effect of a change in the estimated inflation or cost escalation rate because the effect increases with the length of time assumed before decommissioning activity ends.
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Spent Fuel Disposal - Federal law requires the DOE to provide for the permanent storage of spent nuclear fuel, and legislation has been passed by Congress to develop a repository at Yucca Mountain, Nevada. The DOE has not yet begun accepting spent nuclear fuel and is in non-compliance with federal law. The DOE continues to delay meeting its obligation and Entergy’s nuclear plant owners are continuing to pursue damage claims against the DOE for its failure to provide timely spent fuel storage. Until a federal site is available, however, nuclear plant operators must provide for interim spent fuel storage on the nuclear plant site, which can require the construction and maintenance of dry cask storage sites or other facilities. The costs of developing and maintaining these facilities during the decommissioning period can have a
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Management’s Financial Discussion and Analysis
significant effect (as much as an average of 20% to 30% of total estimated decommissioning costs). Entergy’s decommissioning studies include cost estimates for spent fuel storage. These estimates could change in the future, however, based on the expected timing of when the DOE begins to fulfill its obligation to receive and store spent nuclear fuel. See Note 8 to the financial statements for further discussion of Entergy’s spent nuclear fuel litigation.
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Technology and Regulation - Over the past several years, more practical experience with the actual decommissioning of nuclear facilities has been gained and that experience has been incorporated into Entergy’s current decommissioning cost estimates. Given the long duration of decommissioning projects, additional experience, including technological advancements in decommissioning, could be gained and affect current cost estimates. In addition, if regulations regarding nuclear decommissioning were to change, this could affect cost estimates.
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Interest Rates - The estimated decommissioning costs that are the basis for the recorded decommissioning liability are discounted to present value using a credit-adjusted risk-free rate. When the decommissioning liability is revised, increases in cash flows are discounted using the current credit-adjusted risk-free rate. Decreases in estimated cash flows are discounted using the credit-adjusted risk-free rate used previously in estimating the decommissioning liability that is being revised. Therefore, to the extent that a revised cost study results in an increase in estimated cash flows, a change in interest rates from the time of the previous cost estimate will affect the calculation of the present value of the revised decommissioning liability.
Revisions of estimated decommissioning costs that decrease the liability also result in a decrease in the asset retirement cost asset. Revisions of estimated decommissioning costs that increase the liability result in an increase in the asset retirement cost asset, which is then depreciated over the asset’s remaining economic life. See Note 9 to the financial statements for further discussion of asset retirement obligations.
Utility Regulatory Accounting
Entergy’s Utility operating companies and System Energy are subject to retail regulation by their respective state and local regulators and to wholesale regulation by the FERC. Because these regulatory agencies set the rates the Utility operating companies and System Energy are allowed to charge customers based on allowable costs, including a reasonable return on equity, the Utility operating companies and System Energy apply accounting standards that require the financial statements to reflect the effects of rate regulation, including the recording of regulatory assets and liabilities. Regulatory assets represent incurred costs that have been deferred because they are probable of future recovery from customers through regulated rates. Regulatory liabilities represent (1) revenue or gains that have been deferred because it is probable such amounts will be credited to customers through future regulated rates or (2) billings in advance of expenditures for approved regulatory programs. See Note 2 to the financial statements for a discussion of rate and regulatory matters, including details of Entergy’s and the Registrant Subsidiaries’ regulatory assets and regulatory liabilities.
For each regulatory jurisdiction in which they conduct business, the Utility operating companies and System Energy assess whether the regulatory assets and regulatory liabilities continue to meet the criteria for probable future recovery or settlement at each balance sheet date and when regulatory events occur. This assessment includes consideration of recent rate orders, historical regulatory treatment for similar costs, and factors such as changes in applicable regulatory and political environments. If the assessments made by the Utility operating companies and System Energy are ultimately different than actual regulatory outcomes, it could materially affect the results of operations, financial position, and cash flows of Entergy or the Registrant Subsidiaries.
Taxation and Uncertain Tax Positions
Management exercises significant judgment in evaluating the potential tax effects of Entergy’s operations, transactions, and other events. Entergy accounts for uncertain income tax positions using a recognition model under a two-step approach with a more likely-than-not recognition threshold and a measurement approach based on the
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Management evaluates each tax position based on the technical merits and facts and circumstances of the position, assuming the position will be examined by a taxing authority having full knowledge of all relevant information. Significant judgment is required to determine whether available information supports the assertion that the recognition threshold has been met. Additionally, measurement of unrecognized tax benefits to be recorded in the consolidated financial statements is based on the probability of different potential outcomes. Income tax expense and tax positions recorded could be significantly affected by events such as additional transactions contemplated or consummated by Entergy as well as audits by taxing authorities of the tax positions taken in transactions. Management believes that the financial statement tax balances are accounted for and adjusted appropriately each quarter, as necessary, in accordance with applicable authoritative guidance; however, the ultimate outcome of tax matters could result in favorable or unfavorable effects on the consolidated financial statements.
Certain Entergy subsidiaries have elected to apply the mark-to-market method of accounting for income tax return purposes to wholesale power purchase agreements as appropriate under the Internal Revenue Code and U.S. Treasury Regulations. The mark-to-market tax gain or loss computed each year is based on an estimated fair market valuation which includes analyses of market prices and conditions. Entergy’s and the Registrant Subsidiaries’ mark-to-market tax position could be affected by the outcome of federal and state income tax audits should taxing authorities challenge such valuations.
Entergy’s income taxes, including unrecognized tax benefits, open audits, and other significant tax matters, are discussed in Note 3 to the financial statements. See “Income Tax Legislation and Regulation” above for discussion of income tax legislation and regulation.
Qualified Pension and Other Postretirement Benefits
Entergy sponsors qualified, defined benefit pension plans, including cash balance plans and final average pay plans. Generally, plan participation is determined based on the employee’s most recent date of hire and collective bargaining agreement, where applicable. Additionally, Entergy currently provides other postretirement health care and life insurance benefits for full-time employees whose most recent date of hire or rehire is before July 1, 2014, and who reach retirement age and meet certain eligibility requirements while still working for Entergy.
Entergy’s reported costs of providing these benefits, as described in Note 11 to the financial statements, are affected by numerous factors including the provisions of the plans, changing employee demographics, and various actuarial calculations, assumptions, and accounting mechanisms. Because of the complexity of these calculations, the long-term nature of these obligations, and the importance of the assumptions utilized, Entergy’s estimate of these costs is a critical accounting estimate for Entergy and the Registrant Subsidiaries.
Assumptions
Key actuarial assumptions utilized in determining qualified pension and postretirement health care and life insurance costs include discount rates, projected healthcare cost rates, expected long-term rate of return on plan assets, rate of increase in future compensation levels, retirement rates, expected timing and form of payments, and mortality rates.
Annually, Entergy reviews and, when necessary, adjusts the assumptions for the qualified pension and other postretirement plans. Every three-to-five years, a formal actuarial assumption experience study that compares assumptions to the actual experience of the qualified pension and postretirement health care and life insurance plans is conducted. The interest rate environment over the past few years and volatility in the financial equity markets have affected Entergy’s funding and reported costs for these benefits.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Discount rates
In selecting an assumed discount rate to calculate benefit obligations, Entergy uses a yield curve based on high-quality corporate debt with cash flows matching the expected plan benefit payments. In estimating the service cost and interest cost components of net periodic benefit cost, Entergy discounts the expected cash flows by the applicable spot rates.
Projected health care cost trend rates
Entergy’s health care cost trend is affected by both medical cost inflation and, with respect to capped costs under the plan, the effects of general inflation. Entergy reviews actual recent cost trends and projected future trends in establishing its health care cost trend rates.
Expected long-term rate of return on plan assets
In determining its expected long-term rate of return on plan assets used in the calculation of benefit plan costs, Entergy reviews past performance, current and expected future asset allocations, and capital market assumptions of its investment consultant and some of its investment managers. Entergy conducts periodic asset/liability studies in order to set its target asset allocations.
In 2023, Entergy implemented a new asset allocation strategy for its pension assets, based on the funded status of each plan within the trust. The new strategy no longer focuses on targeting an overall asset allocation for the trust, but rather a target asset allocation for each plan within the trust that adjusts dynamically based on the funded status. The ultimate asset allocation for each plan is expected to be attained when the plan is 110% funded. The 2024 weighted-average target pension asset allocation is 35% equity and 65% fixed income securities, of which 61% is long duration fixed income.
In 2017, Entergy implemented a new asset allocation strategy for its non-taxable and taxable other postretirement assets, based on the funded status of each sub-account within each trust. The new strategy no longer focuses on targeting an overall asset allocation for each trust, but rather a target asset allocation for each sub-account within each trust that adjusts dynamically based on the funded status. This strategy was reaffirmed based upon an asset/liability study in 2024. The 2024 weighted-average target postretirement asset allocation is 24% equity and 76% fixed income securities.
See Note 11 to the financial statements for discussion of the current asset allocations for Entergy’s pension and other postretirement assets.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Costs and Sensitivities
The estimated 2025 and actual 2024 qualified pension and other postretirement costs and related underlying assumptions and sensitivities are shown below:
| Costs | Estimated 2025 | 2024 | ||||||||||||
| (In Millions) | ||||||||||||||
| Qualified pension cost | $85.3 | $391.5 (a) | ||||||||||||
| Other postretirement income | ($29.4) | ($24.3) | ||||||||||||
| Assumptions | 2025 | 2024 | ||||||||||||
| Discount rates | ||||||||||||||
| Qualified pension | ||||||||||||||
| Service cost | 5.75% | 5.08% | ||||||||||||
| Interest cost | 5.46% | 4.97% | ||||||||||||
| Other postretirement | ||||||||||||||
| Service cost | 5.50% | 4.82% | ||||||||||||
| Interest cost | 5.36% | 4.91% | ||||||||||||
| Expected long-term rates of return | ||||||||||||||
| Qualified pension assets | 6.00% - 7.00% Blended 6.75% | 6.75% | ||||||||||||
| Other postretirement - non-taxable assets | 6.00% - 7.00% | 6.50% - 7.25% | ||||||||||||
| Other postretirement - taxable assets - after tax rate | 4.75% | 5.25% | ||||||||||||
| Weighted-average rate of increase in future compensation | 3.98% - 4.45% | 3.98% - 4.40% | ||||||||||||
| Assumed health care cost trend rates | ||||||||||||||
| Pre-65 retirees | 8.15% | 6.95% | ||||||||||||
| Post-65 retirees | 10.13% | 7.88% | ||||||||||||
| Ultimate health care cost trend rate | 4.75% | 4.75% | ||||||||||||
| Year ultimate health care cost trend rate is reached and beyond | ||||||||||||||
| Pre-65 retirees | 2035 | 2032 | ||||||||||||
| Post-65 retirees | 2035 | 2032 |
(a) In 2024, qualified pension cost included settlement costs of $328 million.
Actual asset returns have an effect on Entergy’s qualified pension and other postretirement costs. In 2024, Entergy’s actual annual return on qualified pension assets was approximately 6.7% and on other postretirement assets was approximately 7%, as compared to the 2024 expected long-term rates of return discussed above.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
The following chart reflects the sensitivity of qualified pension cost and qualified pension projected benefit obligation to changes in certain actuarial assumptions (dollars in millions):
| Actuarial Assumption | Change in Assumption | Impact on 2025 Qualified Pension Cost | Impact on 2024 Qualified Pension Projected Benefit Obligation | |||||||||||||||||
| Increase/(Decrease) | ||||||||||||||||||||
| Discount rate | (0.25%) | $4 | $104 | |||||||||||||||||
| Rate of return on plan assets | (0.25%) | $11 | $— | |||||||||||||||||
| Rate of increase in compensation | 0.25% | $4 | $23 |
The following chart reflects the sensitivity of postretirement benefits cost and accumulated postretirement benefit obligation to changes in certain actuarial assumptions (dollars in millions):
| Actuarial Assumption | Change in Assumption | Impact on 2025 Postretirement Benefits Cost | Impact on 2024 Accumulated Postretirement Benefit Obligation | |||||||||||||||||
| Increase/(Decrease) | ||||||||||||||||||||
| Discount rate | (0.25%) | $1 | $18 | |||||||||||||||||
| Health care cost trend | 0.25% | $2 | $11 |
Each fluctuation above assumes that the other components of the calculation are held constant.
Accounting Mechanisms
In accordance with pension accounting standards, Entergy utilizes a number of accounting mechanisms that reduce the volatility of reported pension costs. Differences between actuarial assumptions and actual plan results are deferred and are amortized into expense only when the accumulated differences exceed 10% of the greater of the projected benefit obligation or the market-related value of plan assets. If necessary, the excess is amortized over the average remaining service period of active employees. If almost all of the plan participants are inactive, as is the case for certain qualified pension plans, the excess is amortized over the remaining life expectancy of plan participants. Additionally, accounting standards allow for the deferral of prior service costs/credits arising from plan amendments that attribute an increase or decrease in benefits to employee service in prior periods. Prior service costs/credits are then amortized into expense over the average future working life of active employees. Certain decisions, including workforce reductions, plan amendments, and plant shutdowns, may significantly reduce the expense amortization period and result in immediate recognition of certain previously-deferred costs and gains/losses in the form of curtailment gains or losses. Similarly, payments made to settle benefit obligations, including lump sum benefit payments, can also result in accelerated recognition in the form of settlement losses or gains. Several Entergy subsidiaries received regulatory approval to defer the expense portion of settlement charges and amortize into expense over time. See Note 11 to the financial statements for further discussion.
Entergy calculates the expected return on pension and other postretirement benefits plan assets by multiplying the long-term expected rate of return on assets by the market-related value (MRV) of plan assets. Entergy determines the MRV of its pension plan assets, except for the long duration fixed income assets, by calculating a value that uses a 20-quarter phase-in of the difference between actual and expected returns. For the long duration fixed income assets in the pension trust and for its other postretirement benefits plan assets, Entergy uses fair value as the MRV.
Accounting standards require an employer to recognize in its balance sheet the funded status of its benefit plans. See Note 11 to the financial statements for further discussion of Entergy’s funded status.
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
Employer Contributions
Entergy contributed $270 million to its qualified pension plans in 2024. Entergy estimates pension contributions will be approximately $240 million in 2025 although the 2025 required pension contributions will be known with more certainty when the January 1, 2025, valuations are completed, which is expected by April 1, 2025.
Minimum required funding calculations as determined under Pension Protection Act guidance, as amended by the American Rescue Plan Act of 2021, are performed annually as of January 1 of each year and are based on measurements of the assets and funding liabilities as measured at that date. Any excess of the funding liability over the calculated fair market value of assets results in a funding shortfall that must be funded over a fifteen-year rolling period. The Pension Protection Act also imposes certain plan limitations if the funded percentage, which is based on calculated fair market values of assets divided by funding liabilities, does not meet certain thresholds. For funding purposes, asset gains and losses are smoothed into the calculated fair market value of assets. The funding liability is based upon a weighted-average 24-month corporate bond rate published by the U.S. Treasury which is generally subject to a corridor of the 25-year average of prior segment rates. Periodic changes in asset returns and interest rates can affect funding shortfalls and future cash contributions.
Entergy contributed $45.4 million to its other postretirement plans in 2024 and plans to contribute $42.8 million in 2025.
Other Contingencies
As a company with multi-state utility operations, Entergy is subject to a number of federal and state laws and regulations and other factors and conditions in the areas in which it operates, which potentially subjects it to environmental, litigation, and other risks. Entergy periodically evaluates its exposure for such risks and records a provision for those matters which are considered probable and estimable in accordance with GAAP.
Environmental
Entergy must comply with environmental laws and regulations applicable to air emissions, water discharges, solid waste (including coal combustion residuals), hazardous waste, toxic substances, protected species, and other environmental matters. Under these various laws and regulations, Entergy could incur substantial costs to comply or address any impacts to the environment. Entergy conducts studies to determine the extent of any required remediation and has recorded liabilities based upon its evaluation of the likelihood of loss and expected dollar amount for each issue. Additional sites or issues could be identified which require environmental remediation or corrective action for which Entergy could be liable. The amounts of environmental liabilities recorded can be significantly affected by the following external events or conditions.
-
Changes to existing federal, state, or local regulation or related policies by governmental authorities having jurisdiction over air quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental matters.
-
The identification of additional impacts, sites, issues, or the filing of other complaints in which Entergy may be asserted to be a potentially responsible party.
-
The resolution or progression of existing matters through the court system or resolution by the EPA or relevant state or local authority.
Litigation
Entergy is regularly named as a defendant in a number of lawsuits involving employment, customers, and injuries and damages issues, among other matters. Entergy periodically reviews the cases in which it has been named as defendant and assesses the likelihood of loss in each case as probable, reasonably possible, or remote and records liabilities for cases that have a probable likelihood of loss and the loss can be estimated. Given the
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
environment in which Entergy operates, and the unpredictable nature of many of the cases in which Entergy is named as a defendant, the ultimate outcome of the litigation to which Entergy is exposed has the potential to materially affect the results of operations, financial position, and cash flows of Entergy or the Registrant Subsidiaries.
New Accounting Pronouncements
See Note 1 to the financial statements for discussion of new accounting pronouncements.
ENTERGY CORPORATION AND SUBSIDIARIES
REPORT OF MANAGEMENT
Management of Entergy Corporation and its subsidiaries has prepared and is responsible for the financial statements and related financial information included in this document. To meet this responsibility, management establishes and maintains a system of internal controls over financial reporting designed to provide reasonable assurance regarding the preparation and fair presentation of financial statements in accordance with generally accepted accounting principles. This system includes communication through written policies and procedures, an employee Code of Entegrity, and an organizational structure that provides for appropriate division of responsibility and training of personnel. This system is also tested by a comprehensive internal audit program.
Entergy management assesses the design and effectiveness of Entergy’s internal control over financial reporting on an annual basis. In making this assessment, management uses the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework. The 2013 COSO Framework was utilized for management’s assessment. Management acknowledges, however, that all internal control systems, no matter how well designed, have inherent limitations and can provide only reasonable assurance with respect to financial statement preparation and presentation.
Entergy Corporation’s independent registered public accounting firm, Deloitte & Touche LLP, has issued an attestation report on the effectiveness of Entergy Corporation’s internal control over financial reporting as of December 31, 2024.
In addition, the Audit Committee of the Board of Directors, composed solely of independent Directors, meets with the independent auditors, internal auditors, management, and internal accountants periodically to discuss internal controls, and auditing and financial reporting matters. The Audit Committee appoints the independent auditors annually, seeks shareholder ratification of the appointment, and reviews with the independent auditors the scope and results of the audit effort. The Audit Committee also meets periodically with the independent auditors and the chief internal auditor without management present, providing free access to the Audit Committee.
Based on management’s assessment of internal controls using the 2013 COSO criteria, management believes that Entergy and each of the Registrant Subsidiaries maintained effective internal control over financial reporting as of December 31, 2024. Management further believes that this assessment, combined with the policies and procedures noted above, provides reasonable assurance that Entergy’s and each of the Registrant Subsidiaries’ financial statements are fairly and accurately presented in accordance with generally accepted accounting principles.
| ANDREW S. MARSH Chair of the Board and Chief Executive Officer of Entergy Corporation | KIMBERLY A. FONTAN Executive Vice President and Chief Financial Officer of Entergy Corporation, Entergy Arkansas, LLC, Entergy Louisiana, LLC, Entergy Mississippi, LLC, Entergy New Orleans, LLC, Entergy Texas, Inc., and System Energy Resources, Inc. Chair of the Board and President of System Energy Resources, Inc. | ||||
| LAURA R. LANDREAUX Chair of the Board, President, and Chief Executive Officer of Entergy Arkansas, LLC | PHILLIP R. MAY, JR. Chairman of the Board, President, and Chief Executive Officer of Entergy Louisiana, LLC | ||||
| HALEY R. FISACKERLY Chairman of the Board, President, and Chief Executive Officer of Entergy Mississippi, LLC | DEANNA D. RODRIGUEZ Chair of the Board, President, and Chief Executive Officer of Entergy New Orleans, LLC | ||||
| ELIECER VIAMONTES Chairman of the Board, President, and Chief Executive Officer of Entergy Texas, Inc. |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and Board of Directors of
Entergy Corporation and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Entergy Corporation and Subsidiaries (the “Corporation”) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, cash flows, and changes in equity for each of the three years in the period ended December 31, 2024, and the related notes (collectively, referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Corporation as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Corporation’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 18, 2025, expressed an unqualified opinion on the Corporation’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on the Corporation’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Corporation in accordance with the US federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Rate and Regulatory Matters — Entergy Corporation and Subsidiaries — Refer to Note 2 to the financial statements
Critical Audit Matter Description
The Corporation is subject to rate regulation by their respective state or local utility regulatory agencies and wholesale regulation by the Federal Energy Regulatory Commission (collectively, the “Commissions”). Management has determined it meets the requirements under accounting principles generally accepted in the United States of America to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation. Accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures.
The Corporation’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Because the Commissions set the rates, the Corporation is allowed to charge customers based on allowable costs, including a
reasonable return on equity, and the Corporation applies accounting standards that require the financial statements to reflect the effects of rate regulation, including the recording of regulatory assets and liabilities. The Corporation assesses whether the regulatory assets and regulatory liabilities continue to meet the criteria for probable future recovery or settlement at each balance sheet date and when regulatory events occur. This assessment includes consideration of recent rate orders, historical regulatory treatment for similar costs, and factors such as changes in applicable regulatory and political environments. While the Corporation has indicated it expects to recover costs from customers through regulated rates, there is a risk that the Commissions will not approve: (1) full recovery of the costs of providing utility service or (2) full recovery of amounts invested in the utility business and a reasonable return on that investment.
We identified the impact of rate regulation as a critical audit matter due to the judgments made by management to support its assertions about impacted account balances and disclosures and the high degree of subjectivity involved in assessing the impact of future regulatory orders on the financial statements. Management judgments include assessing the (1) likelihood of recovery in future rates of incurred costs and the (2) likelihood of refunds to customers. Auditing management’s judgments regarding the outcome of future decisions by the Commissions, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities involved specialized knowledge of accounting for rate regulation and the rate-setting process due to its inherent complexities and auditor judgment to evaluate management estimates and the subjectivity of audit evidence.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the uncertainty of future decisions by the Commissions, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities included the following, among others:
-
We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of regulatory assets; and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We also tested the effectiveness of management’s controls over the initial recognition of amounts as regulatory assets or liabilities and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates.
-
We evaluated the Corporation’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.
-
We read relevant regulatory orders issued by the Commissions for the Corporation to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared to management’s recorded regulatory asset and liability balances for completeness.
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For regulatory matters in process, we inspected the Corporation’s and intervenors’ filings with the Commissions, initial Administrative Law Judge decisions and orders issued, and settlement offers and agreements with the Commissions for any evidence that might contradict management’s assertions.
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We obtained an analysis from management and support from the Corporation’s internal and external legal counsel, as appropriate, regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities not yet addressed in a regulatory order, to assess management’s assertion that amounts are probable of recovery or refund or a future reduction in rates.
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We obtained representation from management regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities to assess management’s assertion that amounts are probable of recovery, refund, or a future reduction in rates.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 18, 2025
We have served as the Corporation’s auditor since 2001.
| ENTERGY CORPORATION AND SUBSIDIARIES | ||||||||||||||||||||
| CONSOLIDATED INCOME STATEMENTS | ||||||||||||||||||||
| For the Years Ended December 31, | ||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In Thousands, Except Share Data) | ||||||||||||||||||||
| OPERATING REVENUES | ||||||||||||||||||||
| Electric | $11,627,732 | $11,842,454 | $13,186,845 | |||||||||||||||||
| Natural gas | 178,070 | 180,490 | 233,920 | |||||||||||||||||
| Other | 73,851 | 124,468 | 343,472 | |||||||||||||||||
| TOTAL | 11,879,653 | 12,147,412 | 13,764,237 | |||||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||||||
| Operation and Maintenance: | ||||||||||||||||||||
| Fuel, fuel-related expenses, and gas purchased for resale | 2,256,874 | 2,801,580 | 3,732,851 | |||||||||||||||||
| Purchased power | 839,236 | 968,036 | 1,561,544 | |||||||||||||||||
| Nuclear refueling outage expenses | 147,019 | 150,147 | 156,032 | |||||||||||||||||
| Other operation and maintenance | 2,898,237 | 2,898,213 | 3,038,459 | |||||||||||||||||
| Asset write-offs, impairments, and related charges (credits) | 107,134 | 42,679 | (163,464) | |||||||||||||||||
| Decommissioning | 220,080 | 206,674 | 224,076 | |||||||||||||||||
| Taxes other than income taxes | 752,948 | 755,574 | 733,538 | |||||||||||||||||
| Depreciation and amortization | 2,013,168 | 1,845,003 | 1,761,023 | |||||||||||||||||
| Other regulatory charges (credits) - net | (6,133) | (138,469) | 669,403 | |||||||||||||||||
| TOTAL | 9,228,563 | 9,529,437 | 11,713,462 | |||||||||||||||||
| OPERATING INCOME | 2,651,090 | 2,617,975 | 2,050,775 | |||||||||||||||||
| OTHER INCOME (DEDUCTIONS) | ||||||||||||||||||||
| Allowance for equity funds used during construction | 133,046 | 98,493 | 72,832 | |||||||||||||||||
| Interest and investment income (loss) | 298,865 | 162,726 | (75,581) | |||||||||||||||||
| Miscellaneous - net | (489,970) | (201,013) | (77,629) | |||||||||||||||||
| TOTAL | (58,059) | 60,206 | (80,378) | |||||||||||||||||
| INTEREST EXPENSE | ||||||||||||||||||||
| Interest expense | 1,203,588 | 1,046,164 | 940,060 | |||||||||||||||||
| Allowance for borrowed funds used during construction | (52,768) | (39,758) | (27,823) | |||||||||||||||||
| TOTAL | 1,150,820 | 1,006,406 | 912,237 | |||||||||||||||||
| INCOME BEFORE INCOME TAXES | 1,442,211 | 1,671,775 | 1,058,160 | |||||||||||||||||
| Income taxes | 381,027 | (690,535) | (38,978) | |||||||||||||||||
| CONSOLIDATED NET INCOME | 1,061,184 | 2,362,310 | 1,097,138 | |||||||||||||||||
| Preferred dividend requirements of subsidiaries and noncontrolling interests | 5,594 | 5,774 | (6,028) | |||||||||||||||||
| NET INCOME ATTRIBUTABLE TO ENTERGY CORPORATION | $1,055,590 | $2,356,536 | $1,103,166 | |||||||||||||||||
| Earnings per average common share: | ||||||||||||||||||||
| Basic | $2.47 | $5.57 | $2.70 | |||||||||||||||||
| Diluted | $2.45 | $5.55 | $2.68 | |||||||||||||||||
| Basic average number of common shares outstanding | 427,713,121 | 423,139,862 | 408,900,708 | |||||||||||||||||
| Diluted average number of common shares outstanding | 431,581,696 | 424,752,990 | 411,095,156 | |||||||||||||||||
| See Notes to Financial Statements. |
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| ENTERGY CORPORATION AND SUBSIDIARIES | |||||||||||||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||||||
| For the Years Ended December 31, | |||||||||||||||||
| 2024 | 2023 | 2022 | |||||||||||||||
| (In Thousands) | |||||||||||||||||
| Net Income | $1,061,184 | $2,362,310 | $1,097,138 | ||||||||||||||
| Other comprehensive income | |||||||||||||||||
| Cash flow hedges net unrealized gain | — | — | 1,035 | ||||||||||||||
| Pension and other postretirement plan changes | |||||||||||||||||
| (net of tax expense of $54,711, $9,248, and $46,789) | 205,229 | 29,294 | 146,893 | ||||||||||||||
| Net unrealized investment loss | |||||||||||||||||
| (net of tax benefit of $—, $—, and ($2,231)) | — | — | (7,154) | ||||||||||||||
| Other comprehensive income | 205,229 | 29,294 | 140,774 | ||||||||||||||
| Comprehensive Income | 1,266,413 | 2,391,604 | 1,237,912 | ||||||||||||||
| Preferred dividend requirements of subsidiaries and noncontrolling interests | 5,594 | 5,774 | (6,028) | ||||||||||||||
| Comprehensive Income Attributable to Entergy Corporation | $1,260,819 | $2,385,830 | $1,243,940 | ||||||||||||||
| See Notes to Financial Statements. |
| ENTERGY CORPORATION AND SUBSIDIARIES | ||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||||||
| For the Years Ended December 31, | ||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||
| OPERATING ACTIVITIES | ||||||||||||||||||||
| Consolidated net income | $1,061,184 | $2,362,310 | $1,097,138 | |||||||||||||||||
| Adjustments to reconcile consolidated net income to net cash flow provided by operating activities: | ||||||||||||||||||||
| Depreciation, amortization, and decommissioning, including nuclear fuel amortization | 2,443,562 | 2,244,479 | 2,190,371 | |||||||||||||||||
| Deferred income taxes, investment tax credits, and non-current taxes accrued | 320,705 | (707,822) | (47,154) | |||||||||||||||||
| Asset write-offs, impairments, and related charges (credits) | 107,134 | 42,679 | (163,464) | |||||||||||||||||
| Pension settlement charge | 319,675 | — | — | |||||||||||||||||
| Changes in working capital: | ||||||||||||||||||||
| Receivables | 3,056 | 101,801 | (157,267) | |||||||||||||||||
| Fuel inventory | 21,898 | (45,166) | 6,943 | |||||||||||||||||
| Accounts payable | 111,839 | (135,048) | (102,013) | |||||||||||||||||
| Taxes accrued | 22,893 | 10,122 | 4,263 | |||||||||||||||||
| Interest accrued | 45,357 | 18,933 | 4,113 | |||||||||||||||||
| Deferred fuel costs | 182,578 | 759,361 | (393,746) | |||||||||||||||||
| Other working capital accounts | (19,177) | (210,038) | (157,235) | |||||||||||||||||
| Changes in provisions for estimated losses | 43,493 | (68,631) | 374,079 | |||||||||||||||||
| Changes in regulatory assets | 378,514 | 435,877 | 576,859 | |||||||||||||||||
| Changes in other regulatory liabilities | 660,559 | 463,805 | (266,559) | |||||||||||||||||
| Effect of securitization on regulatory asset | — | (491,150) | (941,035) | |||||||||||||||||
| Changes in pension and other postretirement funded status | (469,721) | (610,479) | (699,261) | |||||||||||||||||
| Other | (745,039) | 123,295 | 1,259,458 | |||||||||||||||||
| Net cash flow provided by operating activities | 4,488,510 | 4,294,328 | 2,585,490 | |||||||||||||||||
| INVESTING ACTIVITIES | ||||||||||||||||||||
| Construction/capital expenditures | (4,838,339) | (4,440,652) | (5,065,126) | |||||||||||||||||
| Allowance for equity funds used during construction | 133,046 | 98,493 | 72,832 | |||||||||||||||||
| Nuclear fuel purchases | (309,437) | (270,973) | (223,613) | |||||||||||||||||
| Payment for purchase of plant and assets | (821,934) | (35,094) | (106,193) | |||||||||||||||||
| Net proceeds (payments) from sale of assets | — | 11,000 | (1,195) | |||||||||||||||||
| Insurance proceeds received for property damages | 7,907 | 19,493 | — | |||||||||||||||||
| Litigation proceeds from settlement agreement | — | — | 9,829 | |||||||||||||||||
| Changes in securitization account | 3,308 | 5,493 | 15,514 | |||||||||||||||||
| Payments to storm reserve escrow accounts | (17,990) | (19,780) | (1,494,048) | |||||||||||||||||
| Receipts from storm reserve escrow accounts | 736 | 98,529 | 1,125,279 | |||||||||||||||||
| Decrease (increase) in other investments | 212 | (16,733) | (3,328) | |||||||||||||||||
| Litigation proceeds for reimbursement of spent nuclear fuel storage costs | 82,412 | 23,655 | 32,367 | |||||||||||||||||
| Proceeds from nuclear decommissioning trust fund sales | 2,805,145 | 1,082,722 | 1,636,686 | |||||||||||||||||
| Investment in nuclear decommissioning trust funds | (2,894,076) | (1,185,130) | (1,708,901) | |||||||||||||||||
| Net cash flow used in investing activities | (5,849,010) | (4,628,977) | (5,709,897) | |||||||||||||||||
| See Notes to Financial Statements. |
| ENTERGY CORPORATION AND SUBSIDIARIES | ||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||||||
| For the Years Ended December 31, | ||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||
| FINANCING ACTIVITIES | ||||||||||||||||||||
| Proceeds from the issuance of: | ||||||||||||||||||||
| Long-term debt | 7,898,968 | 4,273,297 | 6,019,835 | |||||||||||||||||
| Treasury stock | 136,794 | 9,823 | 32,042 | |||||||||||||||||
| Common stock | — | 130,649 | 852,555 | |||||||||||||||||
| Retirement of long-term debt | (5,054,094) | (5,135,753) | (5,995,903) | |||||||||||||||||
| Changes in commercial paper - net | (210,880) | 310,550 | (373,556) | |||||||||||||||||
| Capital contributions from noncontrolling interests | — | 25,708 | 24,702 | |||||||||||||||||
| Proceeds received by storm trusts related to securitization | — | 1,457,676 | 3,163,572 | |||||||||||||||||
| Other | 316,845 | 107,595 | 42,761 | |||||||||||||||||
| Dividends paid: | ||||||||||||||||||||
| Common stock | (981,659) | (918,193) | (841,677) | |||||||||||||||||
| Preferred stock | (18,319) | (18,319) | (18,319) | |||||||||||||||||
| Net cash flow provided by financing activities | 2,087,655 | 243,033 | 2,906,012 | |||||||||||||||||
| Net increase (decrease) in cash and cash equivalents | 727,155 | (91,616) | (218,395) | |||||||||||||||||
| Cash and cash equivalents at beginning of period | 132,548 | 224,164 | 442,559 | |||||||||||||||||
| Cash and cash equivalents at end of period | $859,703 | $132,548 | $224,164 | |||||||||||||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||||||||||||||
| Cash paid during the period for: | ||||||||||||||||||||
| Interest - net of amount capitalized | $1,114,631 | $987,252 | $901,884 | |||||||||||||||||
| Income taxes | $41,551 | $42,821 | $28,354 | |||||||||||||||||
| Noncash investing activities: | ||||||||||||||||||||
| Accrued construction expenditures | $615,490 | $487,439 | $461,748 | |||||||||||||||||
| See Notes to Financial Statements. |
| ENTERGY CORPORATION AND SUBSIDIARIES | ||||||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||||||
| ASSETS | ||||||||||||||
| December 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| (In Thousands) | ||||||||||||||
| CURRENT ASSETS | ||||||||||||||
| Cash and cash equivalents: | ||||||||||||||
| Cash | $48,424 | $71,609 | ||||||||||||
| Temporary cash investments | 811,279 | 60,939 | ||||||||||||
| Total cash and cash equivalents | 859,703 | 132,548 | ||||||||||||
| Accounts receivable: | ||||||||||||||
| Customer | 681,504 | 699,411 | ||||||||||||
| Allowance for doubtful accounts | (17,919) | (25,905) | ||||||||||||
| Other | 204,868 | 225,334 | ||||||||||||
| Accrued unbilled revenues | 521,946 | 494,615 | ||||||||||||
| Total accounts receivable | 1,390,399 | 1,393,455 | ||||||||||||
| Deferred fuel costs | — | 169,967 | ||||||||||||
| Fuel inventory - at average cost | 166,408 | 192,799 | ||||||||||||
| Materials and supplies | 1,631,056 | 1,418,969 | ||||||||||||
| Deferred nuclear refueling outage costs | 99,885 | 140,115 | ||||||||||||
| Current assets held for sale | 15,574 | — | ||||||||||||
| Prepayments and other | 233,212 | 213,016 | ||||||||||||
| TOTAL | 4,396,237 | 3,660,869 | ||||||||||||
| OTHER PROPERTY AND INVESTMENTS | ||||||||||||||
| Decommissioning trust funds | 5,562,575 | 4,863,710 | ||||||||||||
| Non-utility property - at cost (less accumulated depreciation) | 423,764 | 418,546 | ||||||||||||
| Storm reserve escrow accounts | 340,460 | 323,206 | ||||||||||||
| Other | 82,344 | 69,494 | ||||||||||||
| TOTAL | 6,409,143 | 5,674,956 | ||||||||||||
| PROPERTY, PLANT, AND EQUIPMENT | ||||||||||||||
| Electric | 70,818,667 | 66,850,474 | ||||||||||||
| Natural gas | 77,054 | 717,503 | ||||||||||||
| Construction work in progress | 3,206,308 | 2,109,703 | ||||||||||||
| Nuclear fuel | 765,661 | 707,852 | ||||||||||||
| TOTAL PROPERTY, PLANT, AND EQUIPMENT | 74,867,690 | 70,385,532 | ||||||||||||
| Less - accumulated depreciation and amortization | 27,444,740 | 26,551,203 | ||||||||||||
| PROPERTY, PLANT, AND EQUIPMENT - NET | 47,422,950 | 43,834,329 | ||||||||||||
| DEFERRED DEBITS AND OTHER ASSETS | ||||||||||||||
| Regulatory assets: | ||||||||||||||
| Other regulatory assets (includes securitization property of $234,112 as of December 31, 2024 and $250,830 as of December 31, 2023) | 5,255,509 | 5,669,404 | ||||||||||||
| Deferred fuel costs | 172,201 | 172,201 | ||||||||||||
| Goodwill | 367,625 | 374,099 | ||||||||||||
| Accumulated deferred income taxes | 18,986 | 16,367 | ||||||||||||
| Non-current assets held for sale | 462,797 | — | ||||||||||||
| Other | 284,584 | 301,171 | ||||||||||||
| TOTAL | 6,561,702 | 6,533,242 | ||||||||||||
| TOTAL ASSETS | $64,790,032 | $59,703,396 | ||||||||||||
| See Notes to Financial Statements. |
| ENTERGY CORPORATION AND SUBSIDIARIES | ||||||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||
| December 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| (In Thousands) | ||||||||||||||
| CURRENT LIABILITIES | ||||||||||||||
| Currently maturing long-term debt | $1,378,090 | $2,099,057 | ||||||||||||
| Notes payable and commercial paper | 927,291 | 1,138,171 | ||||||||||||
| Accounts payable | 1,929,162 | 1,566,745 | ||||||||||||
| Customer deposits | 462,436 | 446,146 | ||||||||||||
| Taxes accrued | 457,093 | 434,213 | ||||||||||||
| Interest accrued | 259,554 | 214,197 | ||||||||||||
| Deferred fuel costs | 237,146 | 218,927 | ||||||||||||
| Pension and other postretirement liabilities | 64,854 | 59,508 | ||||||||||||
| Other | 395,411 | 219,528 | ||||||||||||
| TOTAL | 6,111,037 | 6,396,492 | ||||||||||||
| NON-CURRENT LIABILITIES | ||||||||||||||
| Accumulated deferred income taxes and taxes accrued | 4,467,748 | 4,245,982 | ||||||||||||
| Accumulated deferred investment tax credits | 194,146 | 205,973 | ||||||||||||
| Regulatory liability for income taxes - net | 1,168,078 | 1,033,242 | ||||||||||||
| Other regulatory liabilities | 3,609,463 | 3,116,926 | ||||||||||||
| Decommissioning and asset retirement cost liabilities | 4,713,426 | 4,505,782 | ||||||||||||
| Accumulated provisions | 506,063 | 462,570 | ||||||||||||
| Pension and other postretirement liabilities | 254,704 | 648,413 | ||||||||||||
| Long-term debt (includes securitization bonds of $239,622 as of December 31, 2024 and $263,007 as of December 31, 2023) | 26,613,505 | 23,008,839 | ||||||||||||
| Customer advances for construction | 634,587 | 292,077 | ||||||||||||
| Other | 1,112,881 | 824,584 | ||||||||||||
| TOTAL | 43,274,601 | 38,344,388 | ||||||||||||
| Commitments and Contingencies | ||||||||||||||
| Subsidiaries’ preferred stock without sinking fund | 219,410 | 219,410 | ||||||||||||
| EQUITY | ||||||||||||||
| Preferred stock, no par value, authorized 1,000,000 shares in 2024 and 2023; issued shares in 2024 and 2023 - none | — | — | ||||||||||||
| Common stock, $0.01 par value, authorized 998,000,000 shares in 2024 and 2023; issued 561,950,696 shares in 2024 and 2023 | 5,620 | 5,620 | ||||||||||||
| Paid-in capital | 7,833,525 | 7,792,601 | ||||||||||||
| Retained earnings | 12,014,315 | 11,940,384 | ||||||||||||
| Accumulated other comprehensive income (loss) | 42,769 | (162,460) | ||||||||||||
| Less - treasury stock, at cost (132,370,280 shares in 2024 and 136,253,556 shares in 2023) | 4,812,321 | 4,953,498 | ||||||||||||
| Total shareholders**’** equity | 15,083,908 | 14,622,647 | ||||||||||||
| Subsidiaries’ preferred stock without sinking fund and noncontrolling interests | 101,076 | 120,459 | ||||||||||||
| TOTAL | 15,184,984 | 14,743,106 | ||||||||||||
| TOTAL LIABILITIES AND EQUITY | $64,790,032 | $59,703,396 | ||||||||||||
| See Notes to Financial Statements. |
| ENTERGY CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | |||||||||||||||||||||||||||||||||||||||||
| For the Years Ended December 31, 2024, 2023, and 2022 | |||||||||||||||||||||||||||||||||||||||||
| Shareholders’ Equity | |||||||||||||||||||||||||||||||||||||||||
| Subsidiaries’ Preferred Stock and Noncontrolling Interests | Common Stock | Treasury Stock | Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | |||||||||||||||||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2021 | $68,110 | $5,440 | ($5,039,699) | $6,763,519 | $10,240,552 | ($332,528) | $11,705,394 | ||||||||||||||||||||||||||||||||||
| Consolidated net income (loss) (a) | (6,028) | — | — | — | 1,103,166 | — | 1,097,138 | ||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | 140,774 | 140,774 | ||||||||||||||||||||||||||||||||||
| Common stock issuances and sales under the at the market equity distribution program | — | 154 | — | 861,839 | — | — | 861,993 | ||||||||||||||||||||||||||||||||||
| Common stock issuance costs | — | — | — | (9,438) | — | — | (9,438) | ||||||||||||||||||||||||||||||||||
| Common stock issuances related to stock plans | — | — | 60,705 | 14,178 | — | — | 74,883 | ||||||||||||||||||||||||||||||||||
| Common stock dividends declared | — | — | — | — | (841,677) | — | (841,677) | ||||||||||||||||||||||||||||||||||
| Beneficial interest in storm trust | 31,636 | — | — | — | — | — | 31,636 | ||||||||||||||||||||||||||||||||||
| Capital contributions from noncontrolling interests | 24,702 | — | — | — | — | — | 24,702 | ||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | (2,194) | — | — | — | — | — | (2,194) | ||||||||||||||||||||||||||||||||||
| Preferred dividend requirements of subsidiaries (a) | (18,319) | — | — | — | — | — | (18,319) | ||||||||||||||||||||||||||||||||||
| Balance at December 31, 2022 | $97,907 | $5,594 | ($4,978,994) | $7,630,098 | $10,502,041 | ($191,754) | $13,064,892 | ||||||||||||||||||||||||||||||||||
| Consolidated net income (a) | 5,774 | — | — | — | 2,356,536 | — | 2,362,310 | ||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | 29,294 | 29,294 | ||||||||||||||||||||||||||||||||||
| Common stock issuances and sales under the at the market equity distribution program | — | 26 | — | 132,391 | — | — | 132,417 | ||||||||||||||||||||||||||||||||||
| Common stock issuance costs | — | — | — | (1,768) | — | — | (1,768) | ||||||||||||||||||||||||||||||||||
| Common stock issuances related to stock plans | — | — | 25,496 | 31,880 | — | — | 57,376 | ||||||||||||||||||||||||||||||||||
| Common stock dividends declared | — | — | — | — | (918,193) | — | (918,193) | ||||||||||||||||||||||||||||||||||
| Beneficial interest in storm trust | 14,577 | — | — | — | — | — | 14,577 | ||||||||||||||||||||||||||||||||||
| Capital contributions from noncontrolling interest | 25,708 | — | — | — | — | — | 25,708 | ||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | (5,188) | — | — | — | — | — | (5,188) | ||||||||||||||||||||||||||||||||||
| Preferred dividend requirements of subsidiaries (a) | (18,319) | — | — | — | — | — | (18,319) | ||||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | $120,459 | $5,620 | ($4,953,498) | $7,792,601 | $11,940,384 | ($162,460) | $14,743,106 | ||||||||||||||||||||||||||||||||||
| Consolidated net income (a) | 5,594 | — | — | — | 1,055,590 | — | 1,061,184 | ||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | 205,229 | 205,229 | ||||||||||||||||||||||||||||||||||
| Common stock issuances related to stock plans | — | — | 141,177 | 40,924 | — | — | 182,101 | ||||||||||||||||||||||||||||||||||
| Common stock dividends declared | — | — | — | — | (981,659) | — | (981,659) | ||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | (6,658) | — | — | — | — | — | (6,658) | ||||||||||||||||||||||||||||||||||
| Preferred dividend requirements of subsidiaries (a) | (18,319) | — | — | — | — | — | (18,319) | ||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $101,076 | $5,620 | ($4,812,321) | $7,833,525 | $12,014,315 | $42,769 | $15,184,984 | ||||||||||||||||||||||||||||||||||
| See Notes to Financial Statements. | |||||||||||||||||||||||||||||||||||||||||
| (a) Consolidated net income (loss) and preferred dividend requirements of subsidiaries include $16 million for 2024, 2023, and 2022 of preferred dividends on subsidiaries’ preferred stock without sinking fund that is not presented as equity. |
ENTERGY CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
The accompanying consolidated financial statements include the accounts of Entergy Corporation and its subsidiaries. As required by GAAP in the United States of America, all intercompany transactions have been eliminated in the consolidated financial statements. Entergy’s Registrant Subsidiaries (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy) also include their separate financial statements in this Form 10-K. Historical share and share-based data presented herein, including share-based compensation, has been retroactively adjusted to reflect the two-for-one forward stock split of Entergy Corporation common stock effective December 12, 2024. See Note 7 to the financial statements for discussion of the stock split. Certain previously reported amounts in the financial statements have been reclassified to conform to current classification, with no effect on results of operations, financial positions, or cash flows. The Registrant Subsidiaries and many other Entergy subsidiaries also maintain accounts in accordance with FERC and other regulatory guidelines.
Use of Estimates in the Preparation of Financial Statements
In conformity with GAAP in the United States of America, the preparation of Entergy Corporation’s consolidated financial statements and the separate financial statements of the Registrant Subsidiaries requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities. Adjustments to the reported amounts of assets and liabilities may be necessary in the future to the extent that future estimates or actual results are different from the estimates used.
Revenues and Fuel Costs
See Note 19 to the financial statements for a discussion of Entergy’s and the Registrant Subsidiaries’ revenues and fuel costs.
Property, Plant, and Equipment
Property, plant, and equipment is stated at original cost less regulatory disallowances and impairments. Depreciation is computed on the straight-line basis at rates based on the applicable estimated service lives of the various classes of property. For the Registrant Subsidiaries, the original cost of plant retired or removed, less salvage, is charged to accumulated depreciation. Normal maintenance, repairs, and minor replacement costs are charged to operating expenses. Certain combined-cycle gas turbine generating units are maintained under long-term service agreements with third-party service providers. The costs under these agreements are split between operating expenses and capital additions based upon the nature of the work performed. Substantially all of the Registrant Subsidiaries’ plant is subject to mortgage liens.
Customers may be required to make advance payments for construction of new utility plants to reimburse the Utility operating companies for costs that are not expected to be recovered through existing retail rates. Under the regulatory framework, these payments are required to ensure the cost to serve a particular customer does not increase the utility rates charged to other utility customers. These advance payments do not reduce the retail rate charged to the customer making the payment and do not create any additional obligation for the respective Utility operating company to provide electrical service beyond the general obligation to serve all customers in its service area. Because the cost is fully reimbursed by the customer through the advance payment, the Utility operating
Entergy Corporation and Subsidiaries
Notes to Financial Statements
company does not earn a return or recover through retail rates the cost of utility plants reimbursed by these payments. These advance payments are initially recorded as a non-current liability, which is then reduced by the costs incurred to construct the associated utility plant. This results in Entergy and the Utility operating companies recording utility plant funded by customer advances at a net cost of zero, consistent with utility ratemaking treatment. As of December 31, 2024 and 2023, Entergy and the Utility operating companies have customer advances for construction as follows:
| 2024 | 2023 | ||||||||||
| (In Millions) | |||||||||||
| Entergy | $635 | $292 | |||||||||
| Entergy Arkansas | $166 | $96 | |||||||||
| Entergy Louisiana | $292 | $115 | |||||||||
| Entergy Mississippi | $113 | $33 | |||||||||
| Entergy New Orleans | $1 | $1 | |||||||||
| Entergy Texas | $63 | $47 |
Electric plant includes the portion of Grand Gulf that was sold and leased back in a prior period. For financial reporting purposes, this sale and leaseback arrangement is reported as a financing transaction.
Net property, plant, and equipment (including property under lease and associated accumulated amortization) for Entergy by functional category, as of December 31, 2024 and 2023, is shown below:
| 2024 | 2023 | |||||||||||||
| (In Millions) | ||||||||||||||
| Production | ||||||||||||||
| Nuclear | $8,024 | $7,944 | ||||||||||||
| Other | 7,809 | 7,045 | ||||||||||||
| Transmission | 10,414 | 9,927 | ||||||||||||
| Distribution | 14,321 | 12,927 | ||||||||||||
| Other | 3,286 | 3,173 | ||||||||||||
| Construction work in progress | 3,209 | 2,110 | ||||||||||||
| Nuclear fuel | 766 | 708 | ||||||||||||
| Property, plant, and equipment - net (a) | $47,829 | $43,834 |
(a)Includes $403 million of natural gas property, plant, and equipment and accumulated depreciation and $3 million of construction work in progress classified as held for sale in “Non-current assets held for sale” on Entergy’s consolidated balance sheet as of December 31, 2024. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
Depreciation rates on average depreciable property for Entergy approximated 2.9% in 2024, 2.9% in 2023, and 2.8% in 2022.
Entergy amortizes nuclear fuel using a units-of-production method. Nuclear fuel amortization is included in fuel expense in the income statements.
Non-utility property - at cost (less accumulated depreciation) for Entergy is reported net of accumulated depreciation of $231 million as of December 31, 2024 and $193 million as of December 31, 2023.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Net property, plant, and equipment (including property under lease and associated accumulated amortization) for the Registrant Subsidiaries by functional category, as of December 31, 2024 and 2023, is shown below:
| 2024 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Millions) | ||||||||||||||||||||||||||||||||||||||
| Production | ||||||||||||||||||||||||||||||||||||||
| Nuclear | $1,887 | $4,121 | $— | $— | $— | $2,016 | ||||||||||||||||||||||||||||||||
| Other | 1,721 | 3,532 | 980 | 374 | 1,154 | — | ||||||||||||||||||||||||||||||||
| Transmission | 2,267 | 4,339 | 1,567 | 155 | 2,054 | 30 | ||||||||||||||||||||||||||||||||
| Distribution | 3,615 | 4,973 | 2,418 | 761 | 2,554 | — | ||||||||||||||||||||||||||||||||
| Other | 606 | 1,175 | 385 | 384 | 318 | 44 | ||||||||||||||||||||||||||||||||
| Construction work in progress | 320 | 762 | 487 | 20 | 1,513 | 85 | ||||||||||||||||||||||||||||||||
| Nuclear fuel | 258 | 288 | — | — | — | 220 | ||||||||||||||||||||||||||||||||
| Property, plant, and equipment - net (a) | $10,674 | $19,190 | $5,837 | $1,694 | $7,593 | $2,395 |
(a)Includes $164 million of natural gas property, plant, and equipment and accumulated depreciation and $1 million of construction work in progress for Entergy Louisiana and $239 million of natural gas property, plant, and equipment and accumulated depreciation and $2 million of construction work in progress for Entergy New Orleans classified as held for sale in “Non-current assets held for sale” on their respective consolidated balance sheet as of December 31, 2024. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
| 2023 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Millions) | ||||||||||||||||||||||||||||||||||||||
| Production | ||||||||||||||||||||||||||||||||||||||
| Nuclear | $1,859 | $4,153 | $— | $— | $— | $1,932 | ||||||||||||||||||||||||||||||||
| Other | 892 | 3,583 | 958 | 386 | 1,177 | — | ||||||||||||||||||||||||||||||||
| Transmission | 2,102 | 4,283 | 1,483 | 143 | 1,882 | 32 | ||||||||||||||||||||||||||||||||
| Distribution | 3,395 | 4,371 | 2,272 | 692 | 2,197 | — | ||||||||||||||||||||||||||||||||
| Other | 571 | 1,156 | 395 | 370 | 311 | 38 | ||||||||||||||||||||||||||||||||
| Construction work in progress | 341 | 593 | 140 | 25 | 858 | 131 | ||||||||||||||||||||||||||||||||
| Nuclear fuel | 214 | 333 | — | — | — | 161 | ||||||||||||||||||||||||||||||||
| Property, plant, and equipment - net | $9,374 | $18,472 | $5,248 | $1,616 | $6,425 | $2,294 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Depreciation rates on average depreciable property for the Registrant Subsidiaries are shown below:
| Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||
| 2024 | 2.7% | 2.7% | 3.5% | 3.3% | 3.8% | 2.1% | |||||||||||||||||||||||||||||
| 2023 | 2.7% | 2.6% | 3.6% | 3.3% | 4.0% | 1.6% | |||||||||||||||||||||||||||||
| 2022 | 2.7% | 2.4% | 3.6% | 3.2% | 3.1% | 2.0% |
Non-utility property - at cost (less accumulated depreciation) for Entergy Louisiana is reported net of accumulated depreciation of $225.4 million as of December 31, 2024 and $187.2 million as of December 31, 2023. Non-utility property - at cost (less accumulated depreciation) for Entergy Mississippi is reported net of accumulated depreciation of $0.5 million as of December 31, 2024 and $0.5 million as of December 31, 2023.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Jointly-Owned Generating Stations
Certain Entergy subsidiaries jointly own electric generating facilities with affiliates or third parties. All parties are required to provide their own financing. The investments, fuel expenses, and other operation and maintenance expenses associated with these generating stations are recorded by the Entergy subsidiaries to the extent of their respective undivided ownership interests. As of December 31, 2024, the subsidiaries’ investment and accumulated depreciation in each of these generating stations were as follows:
| Generating Stations | Fuel Type | Total Megawatt Capability (a) | Ownership | Investment | Accumulated Depreciation | ||||||||||||||||||||||||||||||
| (In Millions) | |||||||||||||||||||||||||||||||||||
| Utility: | |||||||||||||||||||||||||||||||||||
| Entergy Arkansas - | |||||||||||||||||||||||||||||||||||
| Independence | Unit 1 | Coal | 820 | 31.50 | % | $152 | $109 | ||||||||||||||||||||||||||||
| Independence | Common Facilities | Coal | 15.75 | % | $42 | $32 | |||||||||||||||||||||||||||||
| White Bluff | Units 1 and 2 | Coal | 1,244 | 57.00 | % | $622 | $412 | ||||||||||||||||||||||||||||
| Ouachita (b) | Common Facilities | Gas | 66.67 | % | $174 | $160 | |||||||||||||||||||||||||||||
| Union (c) | Common Facilities | Gas | 25.00 | % | $29 | $13 | |||||||||||||||||||||||||||||
| Entergy Louisiana - | |||||||||||||||||||||||||||||||||||
| Roy S. Nelson | Unit 6 | Coal | 514 | 40.25 | % | $301 | $231 | ||||||||||||||||||||||||||||
| Roy S. Nelson | Unit 6 Common Facilities | Coal | 40.25 | % | $22 | $11 | |||||||||||||||||||||||||||||
| Big Cajun 2 | Unit 3 | Coal | 551 | 24.15 | % | $149 | $140 | ||||||||||||||||||||||||||||
| Big Cajun 2 | Unit 3 Common Facilities | Coal | 8.05 | % | $5 | $3 | |||||||||||||||||||||||||||||
| Ouachita (b) | Common Facilities | Gas | 33.33 | % | $91 | $79 | |||||||||||||||||||||||||||||
| Acadia | Common Facilities | Gas | 50.00 | % | $22 | $3 | |||||||||||||||||||||||||||||
| Union (c) | Common Facilities | Gas | 50.00 | % | $58 | $15 | |||||||||||||||||||||||||||||
| Entergy Mississippi - | |||||||||||||||||||||||||||||||||||
| Independence | Units 1 and 2 and Common Facilities | Coal | 1,662 | 25.00 | % | $304 | $195 | ||||||||||||||||||||||||||||
| Entergy New Orleans - | |||||||||||||||||||||||||||||||||||
| Union (c) | Common Facilities | Gas | 25.00 | % | $30 | $11 | |||||||||||||||||||||||||||||
| Entergy Texas - | |||||||||||||||||||||||||||||||||||
| Roy S. Nelson | Unit 6 | Coal | 514 | 29.75 | % | $212 | $160 | ||||||||||||||||||||||||||||
| Roy S. Nelson | Unit 6 Common Facilities | Coal | 29.75 | % | $8 | $4 | |||||||||||||||||||||||||||||
| Big Cajun 2 | Unit 3 | Coal | 551 | 17.85 | % | $112 | $115 | ||||||||||||||||||||||||||||
| Big Cajun 2 | Unit 3 Common Facilities | Coal | 5.95 | % | $4 | $2 | |||||||||||||||||||||||||||||
| Montgomery County | Unit 1 | Gas | 915 | 92.44 | % | $759 | $40 | ||||||||||||||||||||||||||||
| System Energy - | |||||||||||||||||||||||||||||||||||
| Grand Gulf (d) | Unit 1 | Nuclear | 1,390 | 90.00 | % | $5,674 | $3,580 | ||||||||||||||||||||||||||||
| Other: | |||||||||||||||||||||||||||||||||||
| Independence | Unit 2 | Coal | 842 | 14.37 | % | $81 | $61 | ||||||||||||||||||||||||||||
| Independence | Common Facilities | Coal | 7.18 | % | $20 | $16 | |||||||||||||||||||||||||||||
| Roy S. Nelson | Unit 6 | Coal | 514 | 10.90 | % | $121 | $76 | ||||||||||||||||||||||||||||
| Roy S. Nelson | Unit 6 Common Facilities | Coal | 10.90 | % | $3 | $2 |
(a)“Total Megawatt Capability” is the dependable summer load carrying capability as demonstrated under actual operating conditions based on the primary fuel (assuming no curtailments) that each station was designed to utilize.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
(b)Ouachita Units 1 and 2 are owned 100% by Entergy Arkansas and Ouachita Unit 3 is owned 100% by Entergy Louisiana. The investment and accumulated depreciation numbers above are only for the common facilities and not for the generating units.
(c)Union Unit 1 is owned 100% by Entergy New Orleans, Union Unit 2 is owned 100% by Entergy Arkansas, Union Units 3 and 4 are owned 100% by Entergy Louisiana. The investment and accumulated depreciation numbers above are only for the specified common facilities and not for the generating units.
(d)Includes a leasehold interest held by System Energy. System Energy’s Grand Gulf lease obligations are discussed in Note 5 to the financial statements.
Nuclear Refueling Outage Costs
Nuclear refueling outage costs are deferred during the outage and amortized over the estimated period to the next outage because these refueling outage expenses are incurred to prepare the units to operate for the next operating cycle without having to be taken off line.
Allowance for Funds Used During Construction (AFUDC)
AFUDC represents the approximate net composite interest cost of borrowed funds and a reasonable return on the equity funds used for construction by the Registrant Subsidiaries. AFUDC increases both the plant balance and earnings and is realized in cash through depreciation provisions included in the rates charged to customers.
Certain large industrial customers make advance payments to provide Entergy and the Utility operating companies the return on their investment in utility plant that they would otherwise have received by the recognition of AFUDC. When such advances are made, AFUDC is not added to the associated utility plant, which results in a lower amount of utility plant recovered through utility rates. These advance payments are initially recorded as a current liability and then amortized to income over the construction period of the related plant. As of December 31, 2024, Entergy and Entergy Louisiana have $152 million in such advances from customers recorded as current liabilities on their respective consolidated balance sheets.
Income Taxes
Entergy Corporation and the majority of its subsidiaries file a United States consolidated federal income tax return. Each tax-paying entity records income taxes as if it were a separate taxpayer and consolidating adjustments are allocated to the tax filing entities in accordance with Entergy’s intercompany income tax allocation agreements. Deferred income taxes are recorded for temporary differences between the book and tax basis of assets and liabilities, and for certain losses and credits available for carryforward.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates in the period in which the tax or rate was enacted. See the “Other Tax Matters - Tax Cuts and Jobs Act” section in Note 3 to the financial statements for discussion of the effects of the enactment of the Tax Cuts and Jobs Act in December 2017.
The benefits of investment tax credits are deferred and amortized over the average useful life of the related property, as a reduction of income tax expense, for such credits associated with rate-regulated operations in accordance with ratemaking treatment.
Accounting for the Effects of Regulation
Entergy’s Utility operating companies and System Energy are rate-regulated entities that are required to reflect the effects of rate regulation in their financial statements, including the recording of regulatory assets and liabilities, as the Utility operating companies and System Energy have rates that meet the following three criteria:
Entergy Corporation and Subsidiaries
Notes to Financial Statements
(1) are approved by a third-party regulator; (2) are designed to recover the entities’ cost of providing the regulated services or products; and (3) can reasonably be assumed will be charged to and collected from customers. These criteria may also be applied to separable portions of a utility’s business, such as the generation or transmission functions, or to specific classes of customers.
Regulatory assets represent incurred costs that have been deferred because they are probable of future recovery from customers through regulated rates. Regulatory liabilities represent (1) revenue or gains that have been deferred because it is probable such amounts will be credited to customers through future regulated rates or (2) billings in advance of expenditures for approved regulatory programs. To the extent that all or portions of the Utility operating companies or System Energy’s operations cease to be subject to rate regulation, or future recovery or settlement is no longer probable as a result of changes in regulation or other reasons, the related regulatory assets and liabilities are eliminated from the balance sheet and the impact is recognized on the income statement.
In addition, regulatory accounting requires recognition of an impairment loss if it becomes probable that part of the cost of a recently completed plant asset will be disallowed for rate-making purposes and a reasonable estimate of the amount of the disallowance can be made.
Entergy Louisiana does not apply regulatory accounting standards to the Louisiana retail deregulated portion of River Bend or to the 30% interest in River Bend formerly owned by Cajun unless specific cost recovery is provided for in tariff rates. The Louisiana retail deregulated portion of River Bend is operated under a deregulated asset plan representing a portion (approximately 15%) of River Bend plant costs, generation, revenues, and expenses established under a 1992 LPSC order. The plan allows Entergy Louisiana to sell the electricity from the deregulated assets to Louisiana retail customers at 4.6 cents per kWh or off-system at higher prices, with certain provisions for sharing incremental revenue above 4.6 cents per kWh between customers and shareholders.
Regulatory Asset or Liability for Income Taxes
Accounting standards for income taxes provide that a regulatory asset or liability be recorded if it is probable that the currently determinable future increase or decrease in regulatory income tax expense will be recovered from or credited to customers through future rates. There are two main sources of Entergy’s regulatory asset or liability for income taxes. There is a regulatory asset related to the ratemaking treatment of the tax effects of book depreciation for the equity component of AFUDC that has been capitalized to property, plant, and equipment but for which there is no corresponding tax basis. Equity-AFUDC is a component of property, plant, and equipment that is included in rate base when the plant is placed in service. There is a regulatory liability related to the adjustment of Entergy’s net deferred income taxes that was required by the enactment in December 2017 of a change in the federal corporate income tax rate, which is discussed in Note 2 and 3 to the financial statements.
Cash and Cash Equivalents
Entergy considers all unrestricted highly liquid debt instruments with an original maturity of three months or less at date of purchase to be cash equivalents.
Securitization Recovery Trust Accounts
The funds that Entergy New Orleans and Entergy Texas hold in their securitization recovery trust accounts are not classified as cash and cash equivalents or restricted cash and cash equivalents because of their nature, uses, and restrictions. These funds are classified as part of other current assets and other investments, depending on the timeframe within which the Registrant Subsidiary expects to use the funds.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Allowance for Doubtful Accounts
The allowance for doubtful accounts reflects Entergy’s best estimate of expected losses on its accounts receivable balances. The allowance is calculated as the historical rate of customer write-offs multiplied by the current accounts receivable balance, taking into account the length of time the receivable balances have been outstanding. Although the rate of customer write-offs has historically experienced minimal variation, management monitors the current condition of individual customer accounts to manage collections and ensure bad debt expense is recorded in a timely manner. The Utility operating companies’ customer accounts receivable are written off consistent with approved regulatory requirements. See Note 19 to the financial statements for further details on the allowance for doubtful accounts.
Materials and Supplies
Materials and supplies consist of tangible goods, equipment, and other materials that Entergy holds for use or consumption in the normal course of business, whether for capital projects or operation and maintenance activities, or that are required to be kept for regulatory reasons or service reliability. Materials and supplies are valued at a weighted average unit cost when expensed or capitalized, as appropriate, when used or installed. Materials and supplies are valued at the lower of weighted average cost or net realizable value, net of provisions for excess and obsolete materials and supplies.
Investments
Entergy records decommissioning trust funds on the balance sheet at their fair value. Because of the ability of the Registrant Subsidiaries to recover decommissioning costs in rates and in accordance with the regulatory treatment for decommissioning trust funds, for unrealized gains/(losses) on investment securities, the Registrant Subsidiaries record an offsetting amount in other regulatory liabilities/assets. For the 30% interest in River Bend formerly owned by Cajun, Entergy Louisiana records an offsetting amount in other long-term liabilities on the consolidated balance sheets of Entergy and Entergy Louisiana for the unrealized trust earnings not currently expected to be needed to decommission the plant. Decommissioning trust funds for the nuclear plants previously owned by Entergy’s non-utility operations, all of which have been sold as of June 2022, did not meet the criteria for regulatory accounting treatment. Accordingly, unrealized gains/(losses) recorded on the equity securities in the trust funds for these plants were recognized in earnings with no offsetting regulatory liability/asset amount. Unrealized gains/(losses) recorded on the available-for-sale debt securities in the trust funds were recognized in the accumulated other comprehensive income component of shareholders’ equity. Entergy’s trusts are managed by third parties who operate in accordance with agreements that define investment guidelines and place restrictions on the purchases and sales of investments. See Note 16 to the financial statements for details on the decommissioning trust funds.
Partnerships with Disproportionate Allocation of Earnings and Losses in Relation to an Investor’s Ownership Interest
Entergy Arkansas and Entergy Mississippi, as managing members, each control a tax equity partnership with a third party tax equity investor and consolidate the partnerships for financial reporting purposes. For each respective partnership, the limited liability company agreement with the tax equity investor stipulates a disproportionate allocation of tax attributes, earnings, and cash flows between the Registrant Subsidiary and the tax equity investor with the tax equity investor being allocated a significant portion of the tax attributes, earnings, and cash flows until it receives its target return, at which point the earnings and cash flows will primarily be allocated to the Registrant Subsidiary. Each Registrant Subsidiary has the option to purchase, at a future date specified in their respective partnership agreement, the tax equity investor’s interests at the then-current fair market value, plus an amount that results in the tax equity investor reaching its target return, if needed.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Because of this disproportionate allocation, each Registrant Subsidiary accounts for its earnings in the partnership using the HLBV method of accounting. Under the HLBV method, the amounts of income and loss attributable to both the Registrant Subsidiary and the tax equity investor reflect changes in the amount each would hypothetically receive at the balance sheet date under the respective liquidation provisions of the limited liability company agreement, assuming the net assets of the partnership were liquidated at book value, after consideration of contributions and distributions, between the Registrant Subsidiary and the tax equity investor. Once the tax equity investor reaches its target return in the hypothetical liquidation, the remaining proceeds are primarily allocated to the Registrant Subsidiary. This allocation may result in fluctuations of income on a periodic basis that differ significantly from what would otherwise be recognized if the earnings were allocated under the relative ownership percentages between the Registrant Subsidiary and the tax equity investor. Entergy Arkansas and Entergy Mississippi have determined these differences are primarily due to timing, and both the APSC and the MPSC have approved that, for purposes of ratemaking, each Registrant Subsidiary reflect its interest in its respective partnership using its relative ownership percentage and disregard the effects of the HLBV method of accounting. Because of this, each Registrant Subsidiary has recorded a regulatory liability for the difference between the earnings allocated to it under the HLBV method of accounting and the earnings that would have been allocated to it under its respective ownership percentage in the partnership.
Derivative Financial Instruments and Commodity Derivatives
The accounting standards for derivative instruments and hedging activities require that all derivatives be recognized at fair value on the balance sheet, either as assets or liabilities, unless they meet various exceptions including the normal purchase/normal sale criteria. The changes in the fair value of recognized derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and the type of hedge transaction. Due to regulatory treatment, an offsetting regulatory asset or liability is recorded for changes in fair value of recognized derivatives for the Registrant Subsidiaries.
Contracts for commodities that will be physically delivered in quantities expected to be used or sold in the ordinary course of business, including certain purchases and sales of power and fuel, meet the normal purchase, normal sales criteria and are not recognized on the balance sheet. Revenues and expenses from these contracts are reported on a gross basis in the appropriate revenue and expense categories as the commodities are received or delivered.
Entergy has determined that contracts to purchase uranium do not meet the definition of a derivative under the accounting standards for derivative instruments because they do not provide for net settlement and the uranium markets are not sufficiently liquid to conclude that forward contracts are readily convertible to cash. If the uranium markets do become sufficiently liquid in the future and Entergy begins to account for uranium purchase contracts as derivative instruments, the fair value of these contracts would be accounted for consistent with Entergy’s other derivative instruments. See Note 15 to the financial statements for further details on Entergy’s derivative instruments and hedging activities.
Fair Values
The estimated fair values of Entergy’s financial instruments and derivatives are determined using historical prices, bid prices, market quotes, and financial modeling. Considerable judgment is required in developing the estimates of fair value. Therefore, estimates are not necessarily indicative of the amounts that Entergy could realize in a current market exchange. Gains or losses realized on financial instruments are reflected in future rates and therefore do not affect net income. Entergy considers the carrying amounts of most financial instruments classified as current assets and liabilities to be a reasonable estimate of their fair value because of the short maturity of these instruments. See Note 15 to the financial statements for further discussion of fair value.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Impairment of Long-lived Assets
Entergy periodically reviews long-lived assets whenever events or changes in circumstances indicate that recoverability of these assets is uncertain. Generally, the determination of recoverability is based on the undiscounted net cash flows expected to result from such operations and assets. Projected net cash flows depend on the expected operating life of the assets, the future operating costs associated with the assets, the efficiency and availability of the assets and generating units, and the future market and price for energy and capacity over the remaining life of the assets.
Assets Held for Sale
A long-lived asset or component of an entity meets the criteria to be classified as held for sale, generally, when management with requisite approvals commits to a plan to sell and it is probable that the sale will be completed within one year. When held for sale criteria is met, the assets and liabilities of the disposal group are separately presented as assets and liabilities held for sale on the balance sheet. Any long-lived assets of the disposal group are measured at the lower of their carrying value or their estimated fair value less costs to sell. If the disposal group meets the definition of a business, then a portion of any goodwill with that reporting unit is allocated to the disposal group based on the relative fair value of the components representing a business that will be retained and disposed.
As described in Note 14 to the financial statements, the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses met the criteria to be to classified as held for sale as of December 31, 2024.
Reacquired Debt
The premiums and costs associated with reacquired debt of Entergy’s Utility operating companies and System Energy (except that portion allocable to the deregulated operations of Entergy Louisiana) are included in regulatory assets and are being amortized over the life of the related new issuances, or over the life of the original debt issuance if the debt is not refinanced, in accordance with ratemaking treatment.
Taxes Imposed on Revenue-Producing Transactions
Governmental authorities assess taxes that are both imposed on and concurrent with a specific revenue-producing transaction between a seller and a customer, including, but not limited to, sales, use, value added, and some excise taxes. Entergy presents these taxes on a net basis, excluding them from revenues, unless required to report them differently by a regulatory authority.
New Accounting Pronouncements
The accounting standard-setting process is ongoing, and the FASB is currently working on several projects that have not yet resulted in final pronouncements. Final pronouncements that result from these projects could have a material effect on Entergy’s future results of operations, financial positions, or cash flows.
In December 2023 the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in the ASU require enhanced income tax disclosures, primarily related to consistent categorization and disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. The ASU also removes certain disclosures that are no longer considered cost beneficial or relevant. ASU 2023-09 is effective for Entergy for fiscal years beginning after December 15, 2024. Entergy does not expect ASU 2023-09 to materially affect its results of operations, financial positions, or cash flows.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
In March 2024 the SEC issued final rules that require registrants to provide certain climate-related disclosures in annual reports and registration statements in order to enhance and standardize climate-related disclosures for investors. The final rules require a registrant to disclose, among other things: material climate-related risks; activities to mitigate or adapt to such risks; information about the registrant’s board of directors’ oversight of climate-related risks and management’s role in managing material climate-related risks; and information on any climate-related targets or goals that are material to the registrant’s business, results of operations, or financial condition. In addition, the final rules require disclosure of Scope 1 and/or Scope 2 greenhouse gas emissions on a phased-in basis by certain larger registrants when those emissions are material; the filing of an attestation report covering the required disclosure of such registrant’s Scope 1 and/or Scope 2 emissions, also on a phased-in basis; and disclosure of the financial statement effects of severe weather events and other natural conditions. The final rules provide that the phase-in compliance period is effective for Entergy beginning with its annual report for the fiscal year ending December 31, 2025. In April 2024 the SEC stayed the final rules, pending judicial review of consolidated challenges to the rules by the Court of Appeals for the Eighth Circuit. In February 2025 the Acting SEC Chairman directed the SEC staff to request that the court not schedule the case for argument to provide time for the SEC to deliberate and determine the appropriate next steps in these cases. Entergy is evaluating the effect the final rules will have on its disclosures and will continue to monitor developments related to the SEC’s stay of the rules and the litigation challenging such rules.
In November 2024 the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40).” The ASU is intended to improve disclosures around income statement expenses by requiring disaggregated information within the footnotes to the financial statements about specific expense categories in commonly presented income statement expense captions. ASU 2024-03 is effective for Entergy for fiscal years beginning after December 15, 2026. Entergy does not expect ASU 2024-03 to materially affect its results of operations, financial positions, or cash flows.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
NOTE 2. RATE AND REGULATORY MATTERS (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Regulatory Assets and Regulatory Liabilities
Regulatory assets represent incurred costs that have been deferred because they are probable of future recovery from customers through regulated rates. Regulatory liabilities represent (1) revenue or gains that have been deferred because it is probable such amounts will be credited to customers through future regulated rates or (2) billings in advance of expenditures for approved regulatory programs. In addition to the regulatory assets and liabilities that are specifically disclosed on the face of the balance sheets, the tables below provide detail of “Other regulatory assets” and “Other regulatory liabilities” that are included on Entergy’s and the Registrant Subsidiaries’ balance sheets as of December 31, 2024 and 2023 (as noted in footnotes to the tables, a portion of these regulatory assets and regulatory liabilities is classified as held for sale in the balance sheets as of December 31, 2024):
Other Regulatory Assets
Entergy
| 2024 | 2023 | ||||||||||
| (In Millions) | |||||||||||
| Pension & postretirement costs (Note 11 - Qualified Pension Plans, Other Postretirement Benefits, and Non-Qualified Pension Plans) (a) | $1,387.6 | $1,655.5 | |||||||||
| Asset retirement obligation - recovery dependent upon timing of decommissioning of nuclear units or shutdown of non-nuclear power plants and solar facilities (Note 9) (a) | 1,358.7 | 1,285.0 | |||||||||
| Removal costs (Note 9) | 1,107.6 | 1,010.7 | |||||||||
| Storm damage costs, including hurricane costs - recovered through securitization and retail rates (Note 2 - Storm Cost Recovery Filings with Retail Regulators and Note 5 - Securitization Bonds) | 547.3 | 536.9 | |||||||||
| Qualified pension settlement cost deferral - recovered through June 2047 (Note 11 - Qualified Pension Settlement Cost) | 227.1 | 250.9 | |||||||||
| Retail rate deferrals - recovered through formula rates or rate riders as rates are redetermined by retail regulators | 195.1 | 248.6 | |||||||||
| Retired electric and gas meters - recovered through retail rates as determined by retail regulators (Note 2 - Retail Rate Proceedings) | 135.7 | 153.8 | |||||||||
| Deferred COVID-19 costs - recovered through retail rates as determined by retail regulators (Note 2 - Retail Rate Proceedings) | 104.0 | 118.0 | |||||||||
| Unamortized loss on reacquired debt - recovered over term of debt | 57.9 | 63.1 | |||||||||
| Advanced metering system surcharge for residential customers - recovered through December 2029 | 39.7 | 20.2 | |||||||||
| Formula rate plan historical year rate adjustment (Note 2 - Retail Rate Proceedings**)** (b) | 15.5 | — | |||||||||
| Pension & postretirement benefits expense deferral - recovered through retail rates (Note 2 - Retail Rate Proceedings and Note 11 - Entergy Texas Reserve) | 15.0 | 32.7 | |||||||||
| Rate case depreciation relate back deferral - recovered over a six-month period beginning January 2024 (Note 2 - Retail Rate Proceedings) | — | 27.6 | |||||||||
| Opportunity sales - (Note 2 - Entergy Arkansas Opportunity Sales Proceeding) (b) | — | 131.8 | |||||||||
| Other | 99.7 | 134.6 | |||||||||
| Entergy Total (c) | $5,290.9 | $5,669.4 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy Arkansas
| 2024 | 2023 | ||||||||||
| (In Millions) | |||||||||||
| Asset retirement obligation - recovery dependent upon timing of decommissioning of nuclear units or shutdown of non-nuclear power plants and solar facilities (Note 9) (a) | $693.0 | $639.1 | |||||||||
| Pension & postretirement costs (Note 11 - Qualified Pension Plans, Other Postretirement Benefits, and Non-Qualified Pension Plans) (a) | 433.3 | 536.6 | |||||||||
| Removal costs (Note 9) | 337.9 | 319.7 | |||||||||
| Qualified pension settlement cost deferral - recovered through June 2047 (Note 11 - Qualified Pension Settlement Cost) | 75.8 | 84.1 | |||||||||
| Deferred COVID-19 costs - recovered over a 10-year period through December 2033 | 35.1 | 39.0 | |||||||||
| Retired electric meters - recovered over a 15-year period through March 2034 | 32.8 | 36.3 | |||||||||
| Storm damage costs - recovered through retail rates | 29.8 | 33.1 | |||||||||
| Unamortized loss on reacquired debt - recovered over term of debt | 18.6 | 19.9 | |||||||||
| Formula rate plan historical year rate adjustment (Note 2 - Retail Rate Proceedings) (b) | 15.5 | — | |||||||||
| Retail rate deferrals - recovered through rate riders as rates are redetermined annually (b) | 13.6 | 24.9 | |||||||||
| ANO Fukushima and Flood Barrier costs - recovered through retail rates through February 2026 (b) | 2.1 | 3.8 | |||||||||
| Opportunity sales - (Note 2 - Entergy Arkansas Opportunity Sales Proceeding) (b) | — | 131.8 | |||||||||
| Other | 12.6 | 17.1 | |||||||||
| Entergy Arkansas Total | $1,700.1 | $1,885.4 |
Entergy Louisiana
| 2024 | 2023 | ||||||||||
| (In Millions) | |||||||||||
| Asset retirement obligation - recovery dependent upon timing of decommissioning of nuclear units or shutdown of non-nuclear power plants (Note 9) (a) | $421.5 | $408.7 | |||||||||
| Pension & postretirement costs (Note 11 - Qualified Pension Plans and Non-Qualified Pension Plans) (a) | 367.7 | 412.0 | |||||||||
| Removal costs (Note 9) | 323.2 | 262.3 | |||||||||
| Storm damage costs, including hurricane costs - recovered through securitization and retail rates (Note 2 - Storm Cost Recovery Filings with Retail Regulators) | 226.6 | 202.6 | |||||||||
| Qualified pension settlement cost deferral - recovered through June 2047 (Note 11 - Qualified Pension Settlement Cost) | 111.4 | 123.0 | |||||||||
| Retired electric and gas meters - recovered over a 22-year period through July 2041 | 78.5 | 83.2 | |||||||||
| Deferred COVID-19 costs - recovery period to be determined (Note 2 - Retail Rate Proceedings) (a) | 47.8 | 47.8 | |||||||||
| Unamortized loss on reacquired debt - recovered over term of debt | 21.7 | 23.4 | |||||||||
| Other | 48.5 | 85.9 | |||||||||
| Entergy Louisiana Total (c) | $1,646.9 | $1,648.9 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy Mississippi
| 2024 | 2023 | ||||||||||
| (In Millions) | |||||||||||
| Removal costs (Note 9) | $184.8 | $188.0 | |||||||||
| Retail rate deferrals - recovered through formula rates or rate riders as rates are redetermined annually | 162.5 | 192.8 | |||||||||
| Pension & postretirement costs (Note 11 - Qualified Pension Plans, Other Postretirement Benefits, and Non-Qualified Pension Plans) (a) | 112.1 | 127.6 | |||||||||
| Qualified pension settlement cost deferral - recovered through June 2047 (Note 11 - Qualified Pension Settlement Cost) | 29.1 | 32.0 | |||||||||
| Asset retirement obligation - recovery dependent upon timing of shutdown of non-nuclear power plants and solar facility (Note 9) (a) | 9.4 | 6.8 | |||||||||
| Unamortized loss on reacquired debt - recovered over term of debt | 9.1 | 10.0 | |||||||||
| Attorney General litigation costs - recovered over a six-year period through March 2026 (b) | 6.0 | 10.9 | |||||||||
| Other | 12.8 | 11.0 | |||||||||
| Entergy Mississippi Total | $525.8 | $579.1 |
Entergy New Orleans
| 2024 | 2023 | ||||||||||
| (In Millions) | |||||||||||
| Removal costs (Note 9) | $62.5 | $61.1 | |||||||||
| Pension & postretirement costs (Note 11 - Qualified Pension Plans, Other Postretirement Benefits, and Non-Qualified Pension Plans) (a) | 22.9 | 41.4 | |||||||||
| Retired electric and gas meters - recovered over a 12-year period through July 2031 (b) | 13.5 | 15.5 | |||||||||
| Gas cross-boring costs - recovered through formula rates as rates are redetermined by retail regulators | 11.9 | 10.9 | |||||||||
| Qualified pension settlement cost deferral - recovered through June 2047 (Note 11 - Qualified Pension Settlement Cost) | 10.8 | 11.8 | |||||||||
| Deferred COVID-19 costs - recovered over a five-year period through August 2028 (b) | 10.2 | 13.0 | |||||||||
| Storm damage costs, including hurricane costs - recovered through securitization and retail rates (Note 2 - Storm Cost Recovery Filings with Retail Regulators and Note 5 - Entergy New Orleans Securitization Bonds - Hurricane Isaac) | 4.0 | 3.9 | |||||||||
| Unamortized loss on reacquired debt - recovered over term of debt | 0.5 | 0.8 | |||||||||
| Other | 20.7 | 24.0 | |||||||||
| Entergy New Orleans Total (c) | $157.0 | $182.4 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy Texas
| 2024 | 2023 | ||||||||||
| (In Millions) | |||||||||||
| Storm damage costs, including hurricane costs - recovered through securitization and retail rates (Note 2 - Storm Cost Recovery Filings with Retail Regulators and Note 5 - Entergy Texas Securitization Bonds - Hurricane Laura, Hurricane Delta, and Winter Storm Uri) | $286.5 | $297.3 | |||||||||
| Removal costs (Note 9) | 102.3 | 77.5 | |||||||||
| Pension & postretirement costs (Note 11 - Qualified Pension Plans, Other Postretirement Benefits, and Non-Qualified Pension Plans) (a) | 62.9 | 85.6 | |||||||||
| Advanced metering system surcharge for residential customers - recovered through December 2029 | 39.7 | 20.2 | |||||||||
| Pension & postretirement benefits expense deferral - recovered through retail rates (Note 2 - Retail Rate Proceedings and Note 11 - Entergy Texas Reserve) | 15.0 | 32.7 | |||||||||
| Retired electric meters - recovered through retail rates (Note 2 - Retail Rate Proceedings) | 10.9 | 18.8 | |||||||||
| Neches and Sabine costs - recovered over a 10-year period through September 2028 | 9.2 | 11.6 | |||||||||
| Unamortized loss on reacquired debt - recovered over term of debt | 7.6 | 8.3 | |||||||||
| Rate case depreciation relate back deferral - recovered over a six-month period beginning January 2024 (Note 2 - Retail Rate Proceedings) | — | 27.6 | |||||||||
| Other | 15.6 | 17.0 | |||||||||
| Entergy Texas Total | $549.7 | $596.6 |
System Energy
| 2024 | 2023 | ||||||||||
| (In Millions) | |||||||||||
| Asset retirement obligation - recovery dependent upon timing of decommissioning of nuclear unit (Note 9) (b) | $224.8 | $222.0 | |||||||||
| Pension & postretirement costs (Note 11 - Qualified Pension Plans and Other Postretirement Benefits) (a) | 104.4 | 121.6 | |||||||||
| Removal costs - recovered through depreciation rates (Note 9) | 96.9 | 102.1 | |||||||||
| Unamortized loss on reacquired debt - recovered over term of debt | 0.4 | 0.7 | |||||||||
| System Energy Total | $426.5 | $446.4 |
(a)Does not earn a return on investment, but is offset by related liabilities.
(b)Does not earn a return on investment.
(c)Includes $35.4 million at Entergy, $8.9 million at Entergy Louisiana, and $23.7 million at Entergy New Orleans as of December 31, 2024 of regulatory assets related to the respective natural gas distribution businesses classified as held for sale and included within “Non-current assets held for sale” on the respective consolidated balance sheets. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Other Regulatory Liabilities
Entergy
| 2024 | 2023 | ||||||||||
| (In Millions) | |||||||||||
| Unrealized gains on nuclear decommissioning trust funds (Note 16) (a) | $2,262.5 | $1,826.2 | |||||||||
| Securitization financing savings obligation (Note 3) | 371.3 | 405.2 | |||||||||
| Retail rate rider over-recovery - refunded through formula rate or rate riders as rates are redetermined by retail regulators | 164.9 | 142.7 | |||||||||
| Credits from resolution of the 2016-2018 IRS audit (Note 3) | 163.3 | 98.0 | |||||||||
| Customer rate credits from global stipulated settlement with the LPSC - returned to customers September 2024 through August 2026 (Note 2) | 121.7 | — | |||||||||
| Refund from System Energy settlement with the LPSC - to be returned to customers January 2025 through August 2027 (Note 2) | 75.8 | — | |||||||||
| Deferred tax equity partnership earnings (Note 1) | 69.9 | 57.9 | |||||||||
| Vidalia purchased power agreement (Note 8) | 67.4 | 82.5 | |||||||||
| Refund from System Energy settlement with the City Council - returned to customers over a 25-year period beginning September 2024 (Note 2) | 64.7 | — | |||||||||
| Shorter-term financing interest earnings (Note 2 - Retail Rate Proceedings) (a) | 48.9 | 36.8 | |||||||||
| Entergy Arkansas’s accumulated accelerated Grand Gulf amortization - will be returned to customers when approved by the APSC and the FERC | 44.4 | 44.4 | |||||||||
| Asset retirement obligation - return to customers dependent upon timing of decommissioning (Note 9) (a) | 40.9 | 44.3 | |||||||||
| Refund from System Energy settlement with the City Council - return to customers to be determined (Note 2) | 32.0 | — | |||||||||
| Refund from System Energy settlement with the APSC - refunded through a rate rider as rates are re-determined periodically (Note 2) | 8.2 | 93.0 | |||||||||
| Complaints against System Energy - potential future refunds (Note 2) | — | 177.9 | |||||||||
| Other | 75.2 | 108.0 | |||||||||
| Entergy Total (b) | $3,611.1 | $3,116.9 |
Entergy Arkansas
| 2024 | 2023 | ||||||||||
| (In Millions) | |||||||||||
| Unrealized gains on nuclear decommissioning trust funds (Note 16) (a) | $761.3 | $621.6 | |||||||||
| Deferred tax equity partnership earnings (Note 1) | 32.4 | 27.4 | |||||||||
| Retail rate rider over-recovery - refunded through rate riders as rates are redetermined annually | 27.9 | 10.6 | |||||||||
| Refund from System Energy settlement with the APSC - refunded through a rate rider as rates are re-determined periodically (Note 2) | 8.2 | 93.0 | |||||||||
| Internal restructuring guaranteed customer credits - returned to customers over a six-year period through December 2024 | — | 6.6 | |||||||||
| Other | 1.4 | — | |||||||||
| Entergy Arkansas Total | $831.2 | $759.2 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy Louisiana
| 2024 | 2023 | ||||||||||
| (In Millions) | |||||||||||
| Unrealized gains on nuclear decommissioning trust funds (Note 16) (a) | $798.4 | $644.0 | |||||||||
| Securitization financing savings obligation (Note 3) | 371.3 | 405.2 | |||||||||
| Customer rate credits from global stipulated settlement with the LPSC - returned to customers September 2024 through August 2026 (Note 2) | 121.7 | — | |||||||||
| Retail rate rider over-recovery - refunded through rate riders as rates are redetermined annually | 96.3 | 86.4 | |||||||||
| Refund from System Energy settlement with the LPSC - to be returned to customers January 2025 through August 2027 (Note 2) | 75.8 | — | |||||||||
| Vidalia purchased power agreement (Note 8) | 67.4 | 82.5 | |||||||||
| Shorter-term financing interest earnings (Note 2 - Retail Rate Proceedings) (a) | 48.9 | 36.8 | |||||||||
| Asset retirement obligation - return to customers dependent upon timing of decommissioning (Note 9) (a) | 40.9 | 44.3 | |||||||||
| Hurricane Ida insurance proceeds - returned to customers August 2024 to July 2025 | 26.0 | 32.3 | |||||||||
| Credits from resolution of the 2016-2018 IRS audit - returned to customers September 2024 through August 2025 (Note 3) | 25.3 | 38.0 | |||||||||
| Sale-leaseback and depreciation refunds - returned to customers September 2023 through August 2024 | — | 14.1 | |||||||||
| Other | 21.7 | 24.1 | |||||||||
| Entergy Louisiana Total (b) | $1,693.7 | $1,407.7 |
Entergy Mississippi
| 2024 | 2023 | ||||||||||
| (In Millions) | |||||||||||
| Deferred tax equity partnership earnings (Note 1) | $37.5 | $30.5 | |||||||||
| Retail rate rider over-recovery - refunded through formula rate or rate riders as rates are redetermined annually | 12.2 | 2.4 | |||||||||
| Other postretirement benefits (Note 11 - Entergy Mississippi Other Postretirement Benefits) | 7.4 | — | |||||||||
| Other | 2.4 | 0.8 | |||||||||
| Entergy Mississippi Total | $59.5 | $33.7 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy New Orleans
| 2024 | 2023 | ||||||||||
| (In Millions) | |||||||||||
| Credits from resolution of the 2016-2018 IRS audit - to be returned to customers over a 25-year period beginning January 2025 (Note 3) | $138.0 | $60.0 | |||||||||
| Refund from System Energy settlement with the City Council - returned to customers over a 25-year period beginning September 2024 (Note 2) | 64.7 | — | |||||||||
| Refund from System Energy settlement with the City Council - return to customers to be determined (Note 2) | 32.0 | — | |||||||||
| Retail rate rider over-recovery - refunded through rate riders as rates are redetermined annually | 16.3 | 20.1 | |||||||||
| Sale-leaseback and depreciation refunds - returned to customers over a 10-year period beginning September 2023 (Note 2**)** | 5.2 | 9.8 | |||||||||
| Other | 4.5 | 0.5 | |||||||||
| Entergy New Orleans Total (b) | $260.7 | $90.4 |
Entergy Texas
| 2024 | 2023 | ||||||||||
| (In Millions) | |||||||||||
| Retail rate rider over-recovery - return to customers to be determined | $12.2 | $23.8 | |||||||||
| Retail refunds - return to customers to be determined | 6.2 | 6.2 | |||||||||
| Rate case settlement relate back - amortized over a six-month period beginning January 2024 (Note 2 - Retail Rate Proceedings) | — | 10.3 | |||||||||
| Other | 0.3 | 2.7 | |||||||||
| Entergy Texas Total | $18.7 | $43.0 |
System Energy
| 2024 | 2023 | ||||||||||
| (In Millions) | |||||||||||
| Unrealized gains on nuclear decommissioning trust funds (Note 16) (a) | $702.8 | $560.6 | |||||||||
| Entergy Arkansas’s accumulated accelerated Grand Gulf amortization - will be returned to customers when approved by the APSC and the FERC | 44.4 | 44.4 | |||||||||
| Complaints against System Energy - potential future refunds (Note 2) | — | 177.9 | |||||||||
| System Energy Total | $747.2 | $782.9 |
(a)Offset by related asset.
(b)Includes $1.6 million at Entergy, $1.2 million at Entergy Louisiana, and $0.4 million at Entergy New Orleans as of December 31, 2024 of regulatory liabilities related to the respective natural gas distribution businesses classified as held for sale and included within other non-current liabilities on the respective consolidated balance sheets. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Regulatory activity regarding the Tax Cuts and Jobs Act
See the “Other Tax Matters - Tax Cuts and Jobs Act” section in Note 3 to the financial statements for discussion of the effects of the December 2017 enactment of the Tax Cuts and Jobs Act (Tax Act), including its effects on Entergy’s and the Registrant Subsidiaries’ regulatory asset/liability for income taxes.
Entergy Louisiana
In an electric formula rate plan settlement approved by the LPSC in April 2018, the parties agreed that Entergy Louisiana would return to customers one-half of its eligible unprotected excess deferred income taxes from May 2018 through December 2018 and return to customers the other half from January 2019 through August 2022. In addition, the settlement provided that in order to flow back to customers certain other tax benefits created by the Tax Act, Entergy Louisiana established a regulatory liability effective January 1, 2018 in the amount of $9.1 million per month to reflect these tax benefits already included in retail rates until new base rates under the formula rate plan were established in September 2018, and this regulatory liability was returned to customers over the September 2018 through August 2019 formula rate plan rate-effective period. The LPSC staff and intervenors in the settlement reserved the right to obtain data from Entergy Louisiana to confirm the determination of excess accumulated deferred income taxes resulting from the Tax Act and the analysis thereof as part of the formula rate plan review proceeding for the 2017 test year filing. As discussed below in “Retail Rate Proceedings - Filings with the LPSC (Entergy Louisiana) - Retail Rates - Electric - Formula Rate Plan Global Settlement”, a global settlement resolving the outstanding issues related to the 2017 formula rate plan filing was reached in October 2023 and approved by the LPSC in November 2023.
System Energy
In a filing made with the FERC in March 2018, System Energy proposed revisions to the Unit Power Sales Agreement to reflect the effects of the Tax Act. In the filing System Energy proposed to return identified quantities of unprotected excess accumulated deferred income taxes to its customers by the end of 2018. In May 2018 the FERC accepted System Energy’s proposed tax revisions with an effective date of June 1, 2018, subject to refund and the outcome of settlement and hearing procedures. Settlement discussions were terminated in April 2019, and a hearing was held in March 2020. In December 2022 the FERC issued an order requiring System Energy to compute the amount of excess accumulated deferred income taxes associated with a previously uncertain decommissioning tax position with consideration for the resolution of the tax position by the IRS. In February 2023, System Energy submitted its compliance filing. This matter was ultimately settled as a result of System Energy’s settlements with the MPSC, the APSC, the City Council, and the LPSC. See “Complaints Against System Energy” below for further discussion of the System Energy settlements with the MPSC, the APSC, the City Council, and the LPSC.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Fuel and purchased power cost recovery
The Utility operating companies are allowed to recover fuel and purchased power costs through fuel mechanisms included in electric and gas rates that are recorded as fuel cost recovery revenues. The difference between revenues collected and the current fuel and purchased power costs is generally recorded as “Deferred fuel costs” on the Utility operating companies’ financial statements. The table below shows the amount of deferred fuel costs as of December 31, 2024 and 2023 that each Utility operating company expects to recover (or return to customers) through fuel mechanisms, subject to subsequent regulatory review.
| 2024 | 2023 | ||||||||||
| (In Millions) | |||||||||||
| Entergy Arkansas | ($45.2) | ($88.3) | |||||||||
| Entergy Louisiana (a) (b) | $163.4 | $192.9 | |||||||||
| Entergy Mississippi | ($126.3) | ($130.6) | |||||||||
| Entergy New Orleans (a) (b) | $8.0 | $10.2 | |||||||||
| Entergy Texas | ($59.3) | $139.0 |
(a)Includes $168.1 million in both years for Entergy Louisiana and $4.1 million in both years for Entergy New Orleans of fuel, purchased power, and capacity costs, which do not currently earn a return on investment and whose recovery periods are indeterminate but are expected to be recovered over a period greater than twelve months.
(b)Includes $0.7 million at Entergy Louisiana and $4.9 million at Entergy New Orleans as of December 31, 2024 of deferred fuel assets related to the respective natural gas distribution businesses classified as held for sale and included within “Current assets held for sale” on the respective consolidated balance sheets. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
Entergy Arkansas
Energy Cost Recovery Rider
Entergy Arkansas’s retail rates include an energy cost recovery rider to recover fuel and purchased energy costs in monthly customer bills. The rider utilizes the prior calendar-year energy costs and projected energy sales for the twelve-month period commencing on April 1 of each year to develop an energy cost rate, which is redetermined annually and includes a true-up adjustment reflecting the over- or under-recovery, including carrying charges, of the energy costs for the prior calendar year. The energy cost recovery rider tariff also allows an interim rate request depending upon the level of over- or under-recovery of fuel and purchased energy costs.
In January 2014, Entergy Arkansas filed a motion with the APSC relating to its upcoming energy cost rate redetermination filing that was made in March 2014. In that motion, Entergy Arkansas requested that the APSC authorize Entergy Arkansas to exclude from the redetermination of its 2014 energy cost rate $65.9 million of incremental fuel and replacement energy costs incurred in 2013 as a result of the ANO stator incident. Entergy Arkansas requested that the APSC authorize Entergy Arkansas to retain that amount in its deferred fuel balance, with recovery to be reviewed in a later period after more information was available regarding various claims associated with the ANO stator incident. In February 2014 the APSC approved Entergy Arkansas’s request to retain that amount in its deferred fuel balance. In July 2017, Entergy Arkansas filed for a change in rates pursuant to its formula rate plan rider. In that proceeding, the APSC approved a settlement agreement agreed upon by the parties, including a provision that requires Entergy Arkansas to initiate a regulatory proceeding for the purpose of recovering funds currently withheld from rates and related to the stator incident, including the $65.9 million of deferred fuel and purchased energy costs and costs related to the incremental oversight previously noted, subject to certain timelines and conditions set forth in the settlement agreement. In October 2023, Entergy Arkansas made a
Entergy Corporation and Subsidiaries
Notes to Financial Statements
commitment to the APSC to make a filing to forgo its opportunity to seek recovery of the incremental fuel and purchased energy expense, among other identified costs, resulting from the ANO stator incident. As a result, in third quarter 2023, Entergy Arkansas recorded a write-off of its regulatory asset for deferred fuel of $68.9 million, which includes interest, related to the ANO stator incident. Consistent with its October 2023 commitment, Entergy Arkansas filed a motion to forgo recovery in November 2023, and the motion was approved by the APSC in December 2023. See the “ANO Damage, Outage, and NRC Reviews” section in Note 8 to the financial statements for further discussion of the ANO stator incident and the approved motion to forgo recovery.
In March 2017, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which reflected an increase in the rate from $0.01164 per kWh to $0.01547 per kWh. The APSC staff filed testimony in March 2017 recommending that the redetermined rate be implemented with the first billing cycle of April 2017 under the normal operation of the tariff. Accordingly, the redetermined rate went into effect on March 31, 2017 pursuant to the tariff. In July 2017 the Arkansas Attorney General requested additional information to support certain of the costs included in Entergy Arkansas’s 2017 energy cost rate redetermination.
In March 2018, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which reflected an increase in the rate from $0.01547 per kWh to $0.01882 per kWh. The Arkansas Attorney General filed a response to Entergy Arkansas’s annual redetermination filing requesting that the APSC suspend the proposed tariff to investigate the amount of the redetermination or, alternatively, to allow recovery subject to refund. Among the reasons the Attorney General cited for suspension were questions pertaining to how Entergy Arkansas forecasted sales and potential implications of the Tax Cuts and Jobs Act. Entergy Arkansas replied to the Attorney General’s filing and stated that, to the extent there are questions pertaining to its load forecasting or the operation of the energy cost recovery rider, those issues exceed the scope of the instant rate redetermination. Entergy Arkansas also stated that potential effects of the Tax Cuts and Jobs Act are appropriately considered in the APSC’s separate proceeding regarding potential implications of the tax law. The APSC general staff filed a reply to the Attorney General’s filing and agreed that Entergy Arkansas’s filing complied with the terms of the energy cost recovery rider. The redetermined rate became effective with the first billing cycle of April 2018. Subsequently in April 2018 the APSC issued an order declining to suspend Entergy Arkansas’s energy cost recovery rider rate and declining to require further investigation at that time of the issues suggested by the Attorney General in the proceeding. Following a period of discovery, the Attorney General filed a supplemental response in October 2018 raising new issues with Entergy Arkansas’s March 2018 rate redetermination and asserting that $45.7 million of the increase should be collected subject to refund pending further investigation. Entergy Arkansas filed to dismiss the Attorney General’s supplemental response, the APSC general staff filed a motion to strike the Attorney General’s filing, and the Attorney General filed a supplemental response disputing Entergy Arkansas and the APSC staff’s filing. Applicable APSC rules and processes authorize its general staff to initiate periodic audits of Entergy Arkansas’s energy cost recovery rider. In late-2018 the APSC general staff notified Entergy Arkansas it initiated an audit of the 2017 fuel costs. The time in which the audit will be complete is uncertain at this time.
In March 2022, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which reflected an increase in the rate from $0.00959 per kWh to $0.01785 per kWh. The primary reason for the rate increase was a large under-recovered balance as a result of higher natural gas prices in 2021, particularly in the fourth quarter 2021. At the request of the APSC general staff, Entergy Arkansas deferred its request for recovery of $32 million from the under-recovery related to the February 2021 winter storms until the 2023 energy cost rate redetermination, unless a request for an interim adjustment to the energy cost recovery rider is necessary. This resulted in a redetermined rate of $0.016390 per kWh, which became effective with the first billing cycle in April 2022 through the normal operation of the tariff. In February 2023 the APSC issued orders initiating proceedings with the utilities under its jurisdiction to address the prudence of costs incurred and appropriate cost allocation of the February 2021 winter storms. With respect to any prudence review of Entergy Arkansas fuel costs, as part of the APSC’s draft report issued in its February 2021 winter storms investigation docket, the APSC included findings that the load shedding plans of the investor-owned utilities and some cooperatives were appropriate and comprehensive, and, further, that Entergy Arkansas’s emergency plan was
Entergy Corporation and Subsidiaries
Notes to Financial Statements
comprehensive and had a multilayered approach supported by a system-wide response plan, which is considered an industry standard. In September 2023 the APSC issued an order in Entergy Arkansas's company-specific proceeding and found that Entergy Arkansas’s practices during the winter storms were prudent.
In March 2023, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which reflected an increase in the rate from $0.01639 per kWh to $0.01883 per kWh. The primary reason for the rate increase is a large under-recovered balance as a result of higher natural gas prices in 2022 and a $32 million deferral related to the February 2021 winter storms consistent with the APSC general staff’s request in 2022. The under-recovered balance included in the filing was partially offset by the proceeds of the $41.7 million refund that System Energy made to Entergy Arkansas in January 2023 related to the sale-leaseback renewal costs and depreciation litigation as calculated in System Energy’s January 2023 compliance report filed with the FERC. See “Complaints Against System Energy - Grand Gulf Sale-leaseback Renewal Complaint and Uncertain Tax Position Rate Base Issue” below for discussion of the compliance report filed by System Energy with the FERC in January 2023. The redetermined rate of $0.01883 per kWh became effective with the first billing cycle in April 2023 through the normal operation of the tariff.
In March 2024, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which reflected a decrease in the rate from $0.01883 per kWh to $0.00882 per kWh. Due to a change in law in the State of Arkansas, the annual redetermination included $9 million, recorded as a credit to fuel expense in first quarter 2024, for recovery attributed to net metering costs in 2023. The primary reason for the rate decrease is a large over-recovered balance as a result of lower natural gas prices in 2023. To mitigate the effect of projected increases in natural gas prices in 2024, Entergy Arkansas adjusted the over-recovered balance included in the March 2024 annual redetermination filing by $43.7 million. This adjustment is expected to reduce the rate change that will be reflected in the 2025 energy cost rate redetermination. The redetermined rate of $0.00882 per kWh became effective with the first billing cycle in April 2024 through the normal operation of the tariff.
Entergy Louisiana
Entergy Louisiana recovers electric fuel and purchased power costs for the billing month based upon the level of such costs incurred two months prior to the billing month. Entergy Louisiana’s purchased gas adjustments include estimates for the billing month adjusted by a surcharge or credit that arises from an annual reconciliation of fuel costs incurred with fuel cost revenues billed to customers, including carrying charges.
To mitigate high electric bills, primarily driven by high summer usage and elevated gas prices, Entergy Louisiana deferred approximately $225 million of fuel expense incurred in April, May, June, July, August, and September 2022 (as reflected on June, July, August, September, October, and November 2022 bills). These deferrals were included in the over/under calculation of the fuel adjustment clause, which is intended to recover the full amount of the costs included on a rolling twelve-month basis.
In March 2020 the LPSC staff provided notice of an audit of Entergy Louisiana’s fuel adjustment clause filings. The audit includes a review of the reasonableness of charges flowed through Entergy Louisiana’s fuel adjustment clause for the period from 2016 through 2019. The LPSC staff issued its audit report in September 2021, and although certain internal record keeping recommendations were made, the LPSC staff did not recommend any disallowances. The next step is for the LPSC to review the report, but there is not a deadline for the review.
In January 2023 the LPSC staff provided notice of an audit of Entergy Louisiana’s purchased gas adjustment clause filings. The audit includes a review of the reasonableness of charges flowed through Entergy Louisiana’s purchased gas adjustment clause for the period from 2021 through 2022. Discovery is ongoing, and no audit report has been filed.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
In January 2023 the LPSC staff provided notice of an audit of Entergy Louisiana’s fuel adjustment clause filings. The audit includes a review of the reasonableness of charges flowed through Entergy Louisiana’s fuel adjustment clause for the period from 2020 through 2022. Discovery is ongoing, and no audit report has been filed.
Entergy Mississippi
Entergy Mississippi’s rate schedules include an energy cost recovery rider and a power management rider, both of which are adjusted annually to reflect accumulated over- or under-recoveries. Entergy Mississippi recovers fuel and purchased energy costs through its energy cost recovery rider and recovers costs associated with natural gas hedging and capacity payments through its power management rider. Entergy Mississippi’s fuel cost recoveries are subject to annual audits conducted pursuant to the authority of the MPSC.
In November 2021, Entergy Mississippi filed its annual redetermination of the annual factor to be applied under the energy cost recovery rider. The calculation of the annual factor included an under-recovery of approximately $80.6 million as of September 30, 2021. In December 2021, at the request of the MPSC, Entergy Mississippi submitted a proposal to mitigate the impact of rising fuel costs on customer bills during 2022. Entergy Mississippi proposed that the deferred fuel balance as of December 31, 2021, which was $121.9 million, be amortized over three years and that the MPSC authorize Entergy Mississippi to apply its weighted-average cost of capital as the carrying cost for the unamortized fuel balance. In January 2022 the MPSC approved the amortization of $100 million of the deferred fuel balance over two years and authorized Entergy Mississippi to apply its weighted-average cost of capital as the carrying cost for the unamortized fuel balance. The MPSC approved the proposed energy cost factor effective for February 2022 bills.
See **“**Complaints Against System Energy - System Energy Settlement with the MPSC” below for discussion of the settlement agreement filed with the FERC in June 2022. The settlement, which was approved by the FERC in November 2022, provided for a refund of $235 million from System Energy to Entergy Mississippi. In July 2022 the MPSC directed the disbursement of settlement proceeds, ordering Entergy Mississippi to provide a one-time $80 bill credit to each of its approximately 460,000 retail customers to be effective during the September 2022 billing cycle and to apply the remaining proceeds to Entergy Mississippi’s under-recovered deferred fuel balance. In accordance with the MPSC’s directive, Entergy Mississippi provided approximately $36.7 million in customer bill credits as a result of the settlement. In November 2022, Entergy Mississippi applied the remaining settlement proceeds in the amount of approximately $198.3 million to Entergy Mississippi’s under-recovered deferred fuel balance.
Entergy Mississippi had a deferred fuel balance of approximately $291.7 million under the energy cost recovery rider as of July 31, 2022, along with an over-recovery balance of $51.1 million under the power management rider. Without further action, Entergy Mississippi anticipated a year-end deferred fuel balance of approximately $200 million after application of a portion of the System Energy settlement proceeds, as discussed above. In September 2022, Entergy Mississippi filed for interim adjustments under both the energy cost recovery rider and the power management rider. Entergy Mississippi proposed five monthly incremental adjustments to the net energy cost factor designed to collect the under-recovered fuel balance as of July 31, 2022 and to reflect the recovery of a higher natural gas price. Entergy Mississippi also proposed five monthly incremental adjustments to the power management adjustment factor designed to flow through to customers the over-recovered power management rider balance as of July 31, 2022. In October 2022 the MPSC approved modified interim adjustments to Entergy Mississippi’s energy cost recovery rider and power management rider. The MPSC approved dividing the energy cost recovery rider interim adjustment into two components that would allow Entergy Mississippi to (1) recover a natural gas fuel rate that is better aligned with current prices; and (2) recover the estimated under-recovered deferred fuel balance as of September 30, 2022 over a period of 20 months. The MPSC approved six monthly incremental adjustments to the net energy cost factor designed to reflect the recovery of a higher natural gas price. The MPSC also approved six monthly incremental adjustments to the power management adjustment factor designed to flow through to customers the over-recovered power management rider balance. In accordance
Entergy Corporation and Subsidiaries
Notes to Financial Statements
with the order of the MPSC, Entergy Mississippi did not file an annual redetermination of the energy cost recovery rider or the power management rider in November 2022.
In June 2023 the MPSC approved the joint stipulation agreement between Entergy Mississippi and the Mississippi Public Utilities Staff for Entergy Mississippi’s 2023 formula rate plan filing. The stipulation directed Entergy Mississippi to make a compliance filing to revise its power management cost adjustment factor, to revise its grid modernization cost adjustment factor, and to include a revision to reduce the net energy cost factor to a level necessary to reflect an average natural gas price of $4.50 per MMBtu. The MPSC approved the compliance filing in June 2023, effective for July 2023 bills. See “Retail Rate Proceedings - Filings with the MPSC (Entergy Mississippi) - Retail Rates - 2023 Formula Rate Plan Filing” below for further discussion of the 2023 formula rate plan filing and the joint stipulation agreement.
In November 2023 Entergy Mississippi filed its annual redeterminations of the energy cost factor and the power management cost adjustment factor. The calculation of the annual factor for the energy cost recovery rider included a projected over-recovery balance of approximately $142 million at the end of January 2024. The calculation of the annual factor for the power management rider included a projected under-recovery of $47 million at the end of January 2024. In January 2024 the MPSC approved the proposed energy cost factor and the proposed power management cost factor effective for February 2024 bills.
In June 2024 the MPSC approved the joint stipulation agreement between Entergy Mississippi and the Mississippi Public Utilities Staff for Entergy Mississippi’s 2024 formula rate plan filing. The 2024 formula rate plan filing included the conclusion of the modified interim adjustments to Entergy Mississippi’s energy cost recovery rider and power management rider, which were approved in October 2022 and allowed Entergy Mississippi to recover certain under-collected fuel balances, effective for July 2024 bills. The stipulation provided for Entergy Mississippi to reduce its net energy cost factor. See “Retail Rate Proceedings - Filings with the MPSC (Entergy Mississippi) - Retail Rates - 2024 Formula Rate Plan Filing” below for further discussion of the 2024 formula rate plan filing and the joint stipulation agreement.
In November 2024, Entergy Mississippi filed its annual redeterminations of the energy cost factor and the power management cost adjustment factor. The calculation of the annual factor for the energy cost recovery rider included a projected over-recovery balance of approximately $144.6 million as of September 2024. The calculation of the annual factor for the power management rider included a projected under-recovery of $60.1 million as of September 2024. In January 2025 the MPSC approved a revised energy cost factor, effective for February 2025 bills, that did not reflect the fuel savings associated with Entergy Mississippi’s incremental increase in its share of capacity and energy in connection with Entergy Mississippi’s assumption of Entergy Louisiana’s entitlements to Grand Gulf capacity and energy, which was subject to the MPSC’s review at such time. In February 2025 the MPSC approved Entergy Mississippi’s notice of intent for Entergy Mississippi’s assumption of Entergy Louisiana’s entitlements to Grand Gulf capacity and energy, with associated fuel savings to be reflected in Entergy Mississippi’s energy cost recovery rider, effective for March 2025 bills. Additionally, in February 2025 the MPSC approved the proposed power management cost adjustment factor, effective for March 2025 bills.
Entergy New Orleans
Entergy New Orleans’s electric rate schedules include a fuel adjustment tariff designed to reflect no more than targeted fuel and purchased power costs, adjusted by a surcharge or credit for deferred fuel expense arising from the monthly reconciliation of actual fuel and purchased power costs incurred with fuel cost revenues billed to customers, including carrying charges.
Entergy New Orleans’s gas rate schedules include a purchased gas adjustment to reflect estimated gas costs for the billing month, adjusted by a surcharge or credit similar to that included in the electric fuel adjustment clause, including carrying charges.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy Texas
Entergy Texas’s rate schedules include a fixed fuel factor to recover fuel and purchased power costs, including interest, not recovered in base rates. Historically, semi-annual revisions of the fixed fuel factor have been made in March and September based on the market price of natural gas and changes in fuel mix. The amounts collected under Entergy Texas’s fixed fuel factor and any interim surcharge or refund are subject to fuel reconciliation proceedings before the PUCT. In 2023 the Texas legislature modified the Texas Utilities Code to provide that material over- and under-recovered fuel balances are to be refunded or surcharged through interim fuel adjustments and that fuel reconciliations must be filed at least once every two years. Entergy Texas expects the PUCT to undertake a rulemaking to effectuate the new legislation in 2025.
In May 2022, Entergy Texas filed an application with the PUCT to implement an interim fuel surcharge to collect the cumulative under-recovery of approximately $51.7 million, including interest, of fuel and purchased power costs incurred from May 1, 2020 through December 31, 2021. The under-recovery balance was primarily attributable to the impacts of Winter Storm Uri, including historically high natural gas prices, partially offset by settlements received by Entergy Texas from MISO related to Hurricane Laura. Entergy Texas proposed that the interim fuel surcharge be assessed over a period of six months beginning with the first billing cycle after the PUCT issues a final order, but no later than the first billing cycle of September 2022. Also in May 2022, the PUCT referred the proceeding to the State Office of Administrative Hearings. In July 2022, Entergy Texas filed on behalf of the parties an unopposed settlement resolving all issues in the proceeding. In addition, Entergy Texas filed on behalf of the parties a motion to admit evidence, to approve interim rates as requested in the initial application, and to remand the proceeding to the PUCT to consider the unopposed settlement. In August 2022 the ALJ with the State Office of Administrative Hearings issued an order granting Entergy Texas’s motion, approving interim rates effective with the first billing cycle of September 2022, and remanding the case to the PUCT for final approval. The interim fuel surcharge was approved by the PUCT in January 2023.
In September 2022, Entergy Texas filed an application with the PUCT to reconcile its fuel and purchased power costs for the period from April 2019 through March 2022. During the reconciliation period, Entergy Texas incurred approximately $1.7 billion in eligible fuel and purchased power expenses, net of certain revenues credited to such expenses and other adjustments. As of the end of the reconciliation period, Entergy Texas’s cumulative under-recovery balance was approximately $103.1 million, including interest, which Entergy Texas requested authority to carry over as the beginning balance for the subsequent reconciliation period beginning April 2022, pending future surcharges or refunds as approved by the PUCT. In November 2022 the PUCT referred the proceeding to the State Office of Administrative Hearings. In July 2023, Entergy Texas filed an unopposed settlement, supporting testimony, and an agreed motion to admit evidence and remand the proceeding to the PUCT. Pursuant to the unopposed settlement, Entergy Texas would receive no disallowance of fuel costs incurred over the three-year reconciliation period and retain $9.3 million in margins from off-system sales made during the reconciliation period, resulting in a cumulative under-recovery balance of approximately $99.7 million, including interest, as of the end of the reconciliation period. In July 2023 the ALJ with the State Office of Administrative Hearings granted the motion to admit evidence and remanded the proceeding to the PUCT for consideration of the unopposed settlement. The PUCT approved the settlement in September 2023.
In September 2024, Entergy Texas filed an application with the PUCT to reconcile its fuel and purchased power costs for the period from April 2022 through March 2024. During the reconciliation period, Entergy Texas incurred approximately $1.6 billion in eligible fuel and purchased power expenses to generate and purchase electricity to serve its customers, net of certain revenues credited to such expenses and other adjustments. Entergy Texas’s cumulative under-recovery balance for the reconciliation period was approximately $30 million, including interest, which Entergy Texas requested authority to carry over as part of the cumulative fuel balance for the subsequent reconciliation period beginning April 2024. In November 2024 the PUCT referred the proceeding to the State Office of Administrative Hearings. In December 2024 the ALJs with the State Office of Administrative Hearings adopted a procedural schedule, with a hearing on the merits scheduled for May 2025. A PUCT decision is expected in third quarter 2025.
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Notes to Financial Statements
In December 2024, Entergy Texas filed an application with the PUCT to implement an interim fuel refund of $45.5 million, including interest. Entergy Texas proposed that the interim fuel refund be implemented over a three-month period beginning with the first billing cycle in February 2025 for residential and other small customers and through a one-time credit, or surcharge depending on historical usage for the respective customer, for certain transmission voltage level and seasonal agricultural customers in February 2025. Also in December 2024 the PUCT referred the proceeding to the State Office of Administrative Hearings. In January 2025 the ALJ with the State Office of Administrative Hearings issued an order approving the interim fuel refund consistent with Entergy Texas’s application and, because no hearing was requested in the proceeding, dismissing the case from the State Office of Administrative Hearings and the PUCT.
Retail Rate Proceedings
Filings with the APSC (Entergy Arkansas)
Retail Rates
2022 Formula Rate Plan Filing
In July 2022, Entergy Arkansas filed with the APSC its 2022 formula rate plan filing to set its formula rate for the 2023 calendar year. The filing contained an evaluation of Entergy Arkansas’s earnings for the projected year 2023 and a netting adjustment for the historical year 2021. The filing showed that Entergy Arkansas’s earned rate of return on common equity for the 2023 projected year was 7.40% resulting in a revenue deficiency of $104.8 million. The earned rate of return on common equity for the 2021 historical year was 8.38% resulting in a $15.2 million netting adjustment. The total proposed revenue change for the 2023 projected year and 2021 historical year netting adjustment was $119.9 million. By operation of the formula rate plan, Entergy Arkansas’s recovery of the revenue requirement is subject to a four percent annual revenue constraint. Because Entergy Arkansas’s revenue requirement in this filing exceeded the constraint, the resulting increase was limited to $79.3 million. In October 2022 other parties filed their testimony recommending various adjustments to Entergy Arkansas’s overall proposed revenue deficiency, and Entergy Arkansas filed a response including an update to actual revenues through August 2022, which raised the constraint to $79.8 million. In November 2022, Entergy Arkansas filed with the APSC a settlement agreement reached with other parties resolving all issues in the proceeding. As a result of the settlement agreement, the total revenue change was $102.8 million, including a $87.7 million increase for the 2023 projected year and a $15.2 million netting adjustment. Because Entergy Arkansas’s revenue requirement exceeded the constraint, the resulting increase was limited to $79.8 million. In December 2022 the APSC approved the settlement agreement as being in the public interest and approved Entergy Arkansas’s compliance tariff effective with the first billing cycle of January 2023.
2023 Formula Rate Plan Filing
In July 2023, Entergy Arkansas filed with the APSC its 2023 formula rate plan filing to set its formula rate for the 2024 calendar year. The filing contained an evaluation of Entergy Arkansas’s earnings for the projected year 2024 and a netting adjustment for the historical year 2022. The filing showed that Entergy Arkansas’s earned rate of return on common equity for the 2024 projected year was 8.11% resulting in a revenue deficiency of $80.5 million. The earned rate of return on common equity for the 2022 historical year was 7.29% resulting in a $49.8 million netting adjustment. The total proposed revenue change for the 2024 projected year and 2022 historical year netting adjustment was $130.3 million. By operation of the formula rate plan, Entergy Arkansas’s recovery of the revenue requirement is subject to a four percent annual revenue constraint. Because Entergy Arkansas’s revenue requirement in this filing exceeded the constraint, the resulting increase was limited to $88.6 million. The APSC general staff and intervenors filed their errors and objections in October 2023, proposing certain adjustments, including the APSC general staff’s update to annual filing year revenues which lowers the constraint to $87.7 million. Entergy Arkansas filed its rebuttal in October 2023. In October 2023, Entergy
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Arkansas filed with the APSC a settlement agreement reached with other parties resolving all issues in the proceeding, none of which affected Entergy Arkansas’s requested recovery up to the constraint of $87.7 million. The settlement agreement provided for amortization of the approximately $39 million regulatory asset for costs associated with the COVID-19 pandemic over a 10-year period as well as recovery of $34.9 million related to the resolution of the 2016 and 2017 IRS audits from previous tax positions that are no longer uncertain, partially offset by $24.7 million in excess accumulated deferred income taxes from reductions in state income tax rates, each before consideration of their respective tax gross-up. See Note 3 to the financial statements for further discussion of the resolution of the 2016-2018 IRS audit and the State of Arkansas corporate income tax rate changes. In December 2023 the APSC approved the settlement agreement as being in the public interest and approved Entergy Arkansas’s compliance tariff effective with the first billing cycle of January 2024.
2024 Formula Rate Plan Filing
In July 2024, Entergy Arkansas filed with the APSC its 2024 formula rate plan filing to set its formula rate for the 2025 calendar year. The filing contained an evaluation of Entergy Arkansas’s earnings for the 2025 projected year and a netting adjustment for the 2023 historical year. The filing showed that Entergy Arkansas’s earned rate of return on common equity for the 2025 projected year was 8.43% resulting in a revenue deficiency of $69.5 million. The earned rate of return on common equity for the 2023 historical year was 7.48% resulting in a $33.1 million netting adjustment. The total proposed revenue change for the 2025 projected year and 2023 historical year netting adjustment is $102.6 million. By operation of the formula rate plan, Entergy Arkansas’s recovery of the revenue requirement is subject to a four percent annual revenue constraint. Because Entergy Arkansas’s revenue requirement in this filing exceeded the constraint, the resulting increase was limited to $82.6 million. The APSC general staff and intervenors filed their errors and objections in October 2024, proposing certain adjustments, including the APSC general staff’s update to annual filing year revenues that increases the constraint to $83.5 million. Entergy Arkansas filed its rebuttal in October 2024, and later in October 2024 the parties submitted a joint issues list and stipulations setting forth the disputed issues and the noncontested issues. In December 2024 the APSC approved the parties’ stipulations without modification, approved Entergy Arkansas’s adjustment with respect to storm costs, directed Entergy Arkansas to adjust its projected year distribution reliability capital closings, and deferred the recoverability of Entergy Arkansas’s opportunity sales legal fees until the next general rate case. Also in December 2024 the APSC approved Entergy Arkansas’s compliance tariff effective with the first billing cycle of January 2025. As a result of the proceeding, the total revenue change was $82.7 million, including a $63.7 million increase for the 2025 projected year and a $31.4 million netting adjustment for the 2023 historical year. In fourth quarter 2024, Entergy Arkansas recorded a regulatory asset of $15.5 million to reflect the amount of the 2023 historical year netting adjustment that it expects to collect from its customers during the 2025 rate effective period. Pursuant to the terms of the parties’ stipulations, Entergy Arkansas made a filing with the APSC in January 2025 to refund customers $30.1 million in excess accumulated deferred income taxes resulting from the reduction in the State of Arkansas’s income tax rate from 4.8% to 4.3% in 2024. Entergy Arkansas will make this refund over a 24-month period effective with the first billing cycle of February 2025.
Grand Gulf Credit Rider
In June 2024, Entergy Arkansas filed with the APSC a tariff to provide retail customers a credit resulting from the terms of the settlement agreement between Entergy Arkansas, System Energy, additional named Entergy parties, and the APSC pertaining to System Energy’s billings for wholesale sales of energy and capacity from the Grand Gulf nuclear plant. See “Complaints Against System Energy - System Energy Settlement with the APSC” below for discussion of the settlement. In July 2024 the APSC approved the tariff, under which Entergy Arkansas will refund to retail customers a total of $100.6 million. To date, Entergy Arkansas has refunded $92.3 million of the total through one-time bill credits during the August 2024 billing cycle and is finalizing plans for the refund of the remaining regulatory liability balance.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Filings with the LPSC (Entergy Louisiana)
Retail Rates - Electric
2020 Formula Rate Plan Filing
In June 2021, Entergy Louisiana filed its formula rate plan evaluation report for its 2020 calendar year operations. The 2020 test year evaluation report produced an earned return on common equity of 8.45%, with a base formula rate plan revenue increase of $63 million. Certain reductions in formula rate plan revenue driven by lower sales volumes, reductions in capacity cost and net MISO cost, and higher credits resulting from the Tax Cuts and Jobs Act offset the base formula rate plan revenue increase, leading to a net increase in formula rate plan revenue of $50.7 million. The report also included multiple new adjustments to account for, among other things, the calculation of distribution recovery mechanism revenues. The effects of the changes to total formula rate plan revenue were different for each legacy company, primarily due to differences in the legacy companies’ capacity cost changes, including the effect of true-ups. Legacy Entergy Louisiana formula rate plan revenues increased by $27 million and legacy Entergy Gulf States Louisiana formula rate plan revenues increased by $23.7 million. Subject to LPSC review, the resulting changes became effective for bills rendered during the first billing cycle of September 2021, subject to refund. Discovery commenced in the proceeding. In August 2021, Entergy Louisiana submitted an update to its evaluation report to account for various changes. Relative to the June 2021 filing, the total formula rate plan revenue increased by $14.2 million to an updated total of $64.9 million. Legacy Entergy Louisiana formula rate plan revenues increased by $32.8 million and legacy Entergy Gulf States Louisiana formula rate plan revenues increased by $32.1 million. The results of the 2020 test year evaluation report bandwidth calculation were unchanged as there was no change in the earned return on common equity of 8.45%. In September 2021 the LPSC staff filed a letter with a general statement of objections/reservations because it had not completed its review and indicated it would update the letter once its review was complete.
In November 2023 the LPSC approved a global settlement which resolved all outstanding issues related to the 2017, 2018, and 2019 formula rate plan filings and resolved certain issues with respect to the 2020 and 2021 formula rate plan filings. See “Formula Rate Plan Global Settlement” below for further discussion of the settlement. In September 2024 the LPSC issued an order approving a settlement that resolved, with prejudice, all other issues identified by the staff in the matter and closed the docket. See “2023 Entergy Louisiana Rate Case and Formula Rate Plan Extension Request” below for further discussion.
2021 Formula Rate Plan Filing
In May 2022, Entergy Louisiana filed its formula rate plan evaluation report for its 2021 calendar year operations. The 2021 test year evaluation report produced an earned return on common equity of 8.33%, with a base formula rate plan revenue increase of $65.3 million. Other increases in formula rate plan revenue driven by reductions in Tax Cut and Jobs Act credits and additions to transmission and distribution plant in service reflected through the transmission recovery mechanism and distribution recovery mechanism are partly offset by an increase in net MISO revenues, leading to a net increase in formula rate plan revenue of $152.9 million. The effects of the changes to total formula rate plan revenue are different for each legacy company, primarily due to differences in the legacy companies’ capacity cost changes, including the effect of true-ups. Legacy Entergy Louisiana formula rate plan revenues increased by $86 million and legacy Entergy Gulf States Louisiana formula rate plan revenues increased by $66.9 million. In August 2022 the LPSC staff filed a list of objections/reservations, including outstanding issues from the test years 2017-2020 formula rate plan filings, utilizing the extraordinary cost mechanism to address one-time changes such as state tax rate changes, and failing to include an adjustment for revenues not received as a result of Hurricane Ida. Subject to LPSC review, the resulting changes to formula rate plan revenues became effective for bills rendered during the first billing cycle of September 2022, subject to refund.
In November 2023 the LPSC approved a global settlement which resolved all outstanding issues related to the 2017, 2018, and 2019 formula rate plan filings and resolved certain issues with respect to the 2020 and 2021
Entergy Corporation and Subsidiaries
Notes to Financial Statements
formula rate plan filings. See “Formula Rate Plan Global Settlement” below for further discussion of the settlement. In September 2024 the LPSC issued an order approving a settlement that resolved, with prejudice, all other issues identified by the staff in the matter and closed the docket. See “2023 Entergy Louisiana Rate Case and Formula Rate Plan Extension Request” below for further discussion.
2022 Formula Rate Plan Filing
In May 2023, Entergy Louisiana filed its formula rate plan evaluation report for its 2022 calendar year operations. The 2022 test year evaluation report produced an earned return on common equity of 8.33%, requiring an approximately $70.7 million increase to base rider revenue. Due to a cap for the 2021 and 2022 test years, however, base rider formula rate plan revenues were only increased by approximately $4.9 million, resulting in a revenue deficiency of approximately $65.9 million and providing for prospective return on common equity opportunity of approximately 8.38%. Other changes in formula rate plan revenue driven by increases in capacity costs, primarily legacy capacity costs, additions eligible for recovery through the transmission recovery mechanism and distribution recovery mechanism, and higher sales during the test period were offset by reductions in net MISO costs as well as credits for FERC-ordered refunds. Also included in the 2022 test year distribution recovery mechanism revenue requirement was a $6 million credit relating to the distribution recovery mechanism performance accountability standards and requirements. In total, the net increase in formula rate plan revenues, including base formula rate plan revenues inside the formula rate plan bandwidth and subject to the cap, as well as other formula rate plan revenues outside of the bandwidth, was $85.2 million. In August 2023 the LPSC staff filed a list of objections/reservations, including outstanding issues from the test years 2017-2021 formula rate plan filings, the calculation of certain refunds from System Energy, and certain calculations relating to the tax reform adjustment mechanism. Subject to LPSC review, the resulting net increase in formula rate plan revenues of $85.2 million became effective for bills rendered during the first billing cycle of September 2023, subject to refund. In September 2024 the LPSC issued an order approving a settlement that resolved, with prejudice, all other issues identified by the staff in the matter and closed the docket. See “2023 Entergy Louisiana Rate Case and Formula Rate Plan Extension Request” below for further discussion.
2023 Entergy Louisiana Rate Case and Formula Rate Plan Extension Request
In August 2023, Entergy Louisiana filed an application for approval of a regulatory blueprint necessary for it to strengthen the electric grid for the State of Louisiana, which contained a dual-path request to update rates through either: (1) extension of Entergy Louisiana’s current formula rate plan (with certain modifications) for three years (the Rate Mitigation Proposal), which is Entergy Louisiana’s recommended path; or (2) implementation of rates resulting from a cost-of-service study (the Rate Case path). The application complied with Entergy Louisiana’s previous formula rate plan extension order requiring that for Entergy Louisiana to obtain another extension of its formula rate plan that included a rate reset, Entergy Louisiana would need to submit a full cost-of-service rate case. Entergy Louisiana’s filing supported the need to extend Entergy Louisiana’s formula rate plan with credit supportive mechanisms needed to facilitate investment in the distribution, transmission, and generation functions.
In July 2024, Entergy Louisiana reached an agreement in principle with the LPSC staff and the intervenors in the proceeding and filed with the LPSC a joint motion to suspend the procedural schedule to allow for all parties to finalize a stipulated settlement agreement.
In August 2024, Entergy Louisiana and the LPSC staff jointly filed a global stipulated settlement agreement for consideration by the LPSC with key terms as follows:
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continuation of the formula rate plan for 2024-2026 (test years 2023-2025);
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a base formula rate plan revenue increase of $120 million for test year 2023, effective for rates beginning September 2024;
Entergy Corporation and Subsidiaries
Notes to Financial Statements
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a $140 million cumulative cap on base formula rate plan revenue increases, if needed, for test years 2024 and 2025, excluding outside the bandwidth items;
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$184 million of customer rate credits to be given over two years, including increasing customer sharing of income tax benefits resulting from the 2016-2018 IRS audit, to resolve any remaining disputed issues stemming from formula rate plan test years prior to test year 2023, including but not limited to the investigation into Entergy Services costs billed to Entergy Louisiana. As discussed in Note 3 to the financial statements, a $38 million regulatory liability was recorded in 2023 in connection with the 2016-2018 IRS audit;
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$75.5 million of customer rate credits, as provided for in the System Energy global settlement, to be credited over three years subject to and conditioned upon FERC approval of the System Energy global settlement, which was approved in November 2024. See “Complaints Against System Energy – System Energy Settlement with the LPSC” below for further details of the System Energy global settlement;
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$5.8 million of customer rate credits provided for in the Entergy Louisiana formula rate plan global settlement agreement approved by the LPSC in November 2023 credited over one year. See “Formula Rate Plan Global Settlement” below for further discussion of the settlement;
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an increase in the allowed midpoint return on common equity from 9.5% to 9.7%, with a bandwidth of 40 basis points above and below the midpoint, for the extended term of the formula rate plan, except that for test year 2023 in which the authorized return on common equity shall have no bearing on the change in base formula rate plan revenue described above and, for test year 2024, any earnings above the authorized return on common equity shall be returned to customers through a credit;
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an increase in nuclear depreciation rates by $15 million in each of the 2023, 2024, and 2025 test years outside of the formula rate plan bandwidth calculation; and
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for the transmission recovery mechanism and the distribution recovery mechanism, no change to the existing floors, but the caps for both would be $350 million for test year 2023, $375 million for test year 2024, and $400 million for test year 2025. Transmission projects filed with the LPSC will be exempt from the transmission recovery mechanism cap.
The global stipulated settlement agreement was unanimously approved by the LPSC in August 2024 and an order was issued by the LPSC in September 2024 reflecting the approval of the settlement.
Based on the July 2024 agreement in principle, in second quarter 2024 Entergy Louisiana recorded expenses of $151 million ($112 million net-of-tax) primarily consisting of regulatory charges to reflect the effects of the agreement in principle.
Formula Rate Plan Global Settlement
In October 2023 the LPSC staff and Entergy Louisiana reached a global settlement which resolved all outstanding issues related to the 2017, 2018, and 2019 formula rate plan filings and resolved certain issues with respect to the 2020 and 2021 formula rate plan filings. The settlement was approved by the LPSC in November 2023. The settlement resulted in a one-time cost of service credit to customers of $5.8 million, allowed Entergy Louisiana to retain approximately $6.2 million of securitization over-collection as recovery of a regulatory asset associated with late fees related to the 2016 Baton Rouge flood, and resulted in Entergy Louisiana recording the reversal of a $105.6 million regulatory liability, primarily associated with the Hurricane Isaac securitization, recognized in 2017 as a result of the Tax Cuts and Jobs Act. See Note 3 to the financial statements for further discussion of the reversal of the regulatory liability.
2023 Formula Rate Plan Filing
In August 2024, pursuant to the global stipulated settlement agreement, Entergy Louisiana filed its formula rate plan evaluation report for its 2023 calendar year operations. Consistent with the global stipulated settlement agreement, the filing reflected a 9.7% allowed return on common equity with a bandwidth of 40 basis points above and below the midpoint. For the 2023 test year, however, the bandwidth provisions of the formula rate plan were
Entergy Corporation and Subsidiaries
Notes to Financial Statements
temporarily suspended and, pursuant to the terms of the global stipulated settlement agreement, Entergy Louisiana implemented the September 2024 formula rate plan rate adjustments effective with the first billing cycle of September 2024. Those adjustments included a $120 million increase in base rider formula rate plan revenue and a $101.8 million one-time incremental net decrease consistent with the terms of the global stipulated settlement. The formula rate plan rate adjustments reflected in the evaluation report also include a redetermination of the transmission recovery mechanism, the distribution recovery mechanism, the additional capacity mechanism, the tax adjustment mechanism, the MISO cost recovery mechanism, and other one-time adjustments. In January 2025, Entergy Louisiana and the LPSC filed a joint report indicating that no disputed issues remained in the proceeding and requesting that the LPSC issue an order accepting Entergy Louisiana’s evaluation report and, ultimately, resolving this matter. Entergy Louisiana expects a decision on the joint report in first quarter 2025.
Investigation of Costs Billed by Entergy Services
In November 2018 the LPSC issued a notice of proceeding initiating an investigation into costs incurred by Entergy Services that are included in the retail rates of Entergy Louisiana. As stated in the notice of proceeding, the LPSC observed an increase in capital construction-related costs incurred by Entergy Services. Discovery was issued and included efforts to seek highly detailed information on a broad range of matters unrelated to the scope of the audit. In September 2024 the LPSC issued an order approving a settlement that resolved, with prejudice, all other issues identified by the staff in the matter and closed the docket. See “2023 Entergy Louisiana Rate Case and Formula Rate Plan Extension Request” above for further discussion.
COVID-19 Orders
In April 2020 the LPSC issued an order authorizing utilities to record as a regulatory asset expenses incurred from the suspension of disconnections and collection of late fees imposed by LPSC orders associated with the COVID-19 pandemic. In April 2023, Entergy Louisiana filed an application proposing to utilize approximately $1.6 billion in certain low interest debt to generate earnings to apply toward the reduction of the COVID-19 regulatory asset, as well as to conduct additional outside right-of-way vegetation management activities and fund the minor storm reserve account. In that filing, Entergy Louisiana proposed to delay repayment of certain shorter-term first mortgage bonds that were issued to finance storm restoration costs until the costs could be securitized, and to invest the funds that otherwise would be used to repay those bonds in the money pool to take advantage of the spread between prevailing interest rates on investments in the money pool and the interest rates on the bonds. The LPSC approved Entergy Louisiana’s requested relief in June 2023. In November 2024, Entergy Louisiana submitted a filing to the LPSC requesting that the LPSC review Entergy Louisiana’s computation of the COVID-19 regulatory asset as well as Entergy Louisiana’s proposal to offset the regulatory asset against the interest earned on the short-term debt funds, resulting in no increased costs to customers. At the time of the filing, Entergy Louisiana had a regulatory asset of $47.8 million for costs associated with the COVID-19 pandemic. As of December 31, 2024, Entergy Louisiana had a regulatory liability of $48.9 million for the deferred earnings related to the approximately $1.6 billion in low interest debt, which had been fully repaid by August 2024. In granting Entergy Louisiana’s requested relief in June 2023, the LPSC ordered that any amount of earnings exceeding the amount of the COVID-19 regulatory asset be transferred to Entergy Louisiana’s storm reserve escrow account.
Additional Generation and Transmission Resources
In October 2024, Entergy Louisiana filed an application with the LPSC seeking approval of a variety of generation and transmission resources proposed in connection with establishing service to a new data center to be developed by a subsidiary of Meta Platforms, Inc. in north Louisiana, for which an electric service agreement has been executed. The filing requests LPSC certification of three new combined cycle combustion turbine generation resources totaling 2,262 MW, each of which will be enabled for future carbon capture and storage, a new 500 kV transmission line, and 500 kV substation upgrades. The application also requests approval to implement a corporate sustainability rider applicable to the new customer. The corporate sustainability rider contemplates the new customer contributing to the costs of the planned future addition of 1,500 MW of new solar and energy storage
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Notes to Financial Statements
resources, agreements involving carbon capture and storage at Entergy Louisiana’s existing Lake Charles Power Station, and potential future wind and nuclear resources. The combined cost of the first two new combined cycle combustion turbine generation resources is estimated to be approximately $2,387 million, and these units are expected to achieve commercial operation in 2028. The third new generation resource is currently expected to have an estimated cost similar to the first two new generation resources and is expected to achieve commercial operation in 2029. The cost of the new 500 kV transmission line is estimated to be $546 million. Entergy Louisiana anticipates funding the incremental cost to serve the customer through direct financial contributions from the customer and the revenues it expects to earn under the electric service agreement. The electric service agreement also contains provisions for termination payments that will help ensure that there is no harm to Entergy Louisiana and its customers in the event of early termination. A directive was issued at the LPSC’s November 2024 meeting for the matter to be decided by October 2025. Consistent with this directive, a procedural schedule was adopted setting the matter for hearing in July 2025. In February 2025 intervenors filed a motion asking the LPSC to deny Entergy Louisiana’s requested exemption from the LPSC’s order addressing competitive solicitation procedures and further asking the LPSC to dismiss the application.
In February 2025, Entergy Louisiana filed supplemental testimony with the LPSC stating that the third combined cycle combustion turbine resource presented in the October 2024 application would be sited at Entergy Louisiana’s Waterford site in Killona, Louisiana, alongside existing Entergy Louisiana generation resources. The testimony also notes that Entergy Louisiana is negotiating with the customer to increase the load associated with the customer’s project in north Louisiana and that the additional load can be served without additional generation capacity beyond what was presented in the October 2024 application, but that additional transmission facilities, which will be funded directly by the customer, are needed to serve this additional load.
Filings with the MPSC (Entergy Mississippi)
Retail Rates
2022 Formula Rate Plan Filing
In March 2022, Entergy Mississippi submitted its formula rate plan 2022 test year filing and 2021 look-back filing showing Entergy Mississippi’s earned return for the historical 2021 calendar year to be below the formula rate plan bandwidth and projected earned return for the 2022 calendar year to be below the formula rate plan bandwidth. The 2022 test year filing showed a $69 million rate increase was necessary to reset Entergy Mississippi’s earned return on common equity to the specified point of adjustment of 6.70% return on rate base, within the formula rate plan bandwidth. The change in formula rate plan revenues, however, was capped at 4% of retail revenues, which equated to a revenue change of $48.6 million. The 2021 look-back filing compared actual 2021 results to the approved benchmark return on rate base and reflected the need for a $34.5 million interim increase in formula rate plan revenues. In fourth quarter 2021, Entergy Mississippi recorded a regulatory asset of $19 million to reflect the then-current estimate in connection with the look-back feature of the formula rate plan. In accordance with the provisions of the formula rate plan, Entergy Mississippi implemented a $24.3 million interim rate increase, reflecting a cap equal to 2% of 2021 retail revenues, effective in April 2022. With the implementation of the interim formula rate plan rates, Entergy Mississippi began recovery of the bad debt expense deferral resulting from the COVID-19 pandemic over a three-year period.
In June 2022, Entergy Mississippi and the Mississippi Public Utilities Staff entered into a joint stipulation that confirmed the 2022 test year filing that resulted in a total rate increase of $48.6 million. Pursuant to the joint stipulation, Entergy Mississippi’s 2021 look-back filing reflected an earned return on rate base of 5.99% in calendar year 2021, which was below the look-back bandwidth, resulting in a $34.3 million increase in the formula rate plan revenues on an interim basis through June 2023. In July 2022 the MPSC approved the joint stipulation with rates effective in August 2022. In July 2022, Entergy Mississippi recorded regulatory credits of $22.6 million to reflect the effects of the joint stipulation.
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Notes to Financial Statements
In July 2022 the MPSC directed Entergy Mississippi to flow $14.1 million of the power management rider over-recovery balance to customers beginning in August 2022 through December 2022 to mitigate the bill impact of the increase in formula rate plan revenues.
2023 Formula Rate Plan Filing
In March 2023, Entergy Mississippi submitted its formula rate plan 2023 test year filing and 2022 look-back filing showing Entergy Mississippi’s earned return on rate base for the historical 2022 calendar year to be below the formula rate plan bandwidth and projected earned return for the 2023 calendar year to be below the formula rate plan bandwidth. The 2023 test year filing showed a $39.8 million rate increase was necessary to reset Entergy Mississippi’s earned return on rate base to the specified point of adjustment of 6.67%, within the formula rate plan bandwidth. The 2022 look-back filing compared actual 2022 results to the approved benchmark return on rate base and reflected the need for a $19.8 million temporary increase in formula rate plan revenues, including the refund of a $1.3 million over-recovery resulting from the demand-side management costs true-up for 2022. In fourth quarter 2022, Entergy Mississippi recorded a regulatory asset of $18.2 million in connection with the look-back feature of the formula rate plan to reflect that the 2022 estimated earned return was below the formula rate plan bandwidth. In accordance with the provisions of the formula rate plan, Entergy Mississippi implemented a $27.9 million interim rate increase, reflecting a cap equal to 2% of 2022 retail revenues, effective in April 2023.
In May 2023, Entergy Mississippi and the Mississippi Public Utilities Staff entered into a joint stipulation that confirmed a 2023 test year filing resulting in a total revenue increase of $26.5 million for 2023. Pursuant to the joint stipulation, Entergy Mississippi’s 2022 look-back filing reflected an earned return on rate base of 6.10% in calendar year 2022, which was below the look-back bandwidth, resulting in a $19.0 million increase in the formula rate plan revenues on an interim basis through June 2024. Entergy Mississippi recorded a regulatory credit of $0.8 million in June 2023 to reflect the increase in the look-back regulatory asset. In addition, certain long-term service agreement and conductor handling costs were authorized for realignment from the formula rate plan to the annual power management and grid modernization riders effective January 2023, resulting in regulatory credits recorded in June 2023 of $4.1 million and $4.3 million, respectively. Also, the amortization of Entergy Mississippi’s COVID-19 bad debt expense deferral was suspended for calendar year 2023, but resumed in July 2024. In June 2023 the MPSC approved the joint stipulation with rates effective in July 2023.
2024 Formula Rate Plan Filing
In March 2024, Entergy Mississippi submitted its formula rate plan 2024 test year filing and 2023 look-back filing showing Entergy Mississippi’s earned return on rate base for the historical 2023 calendar year to be within the formula rate plan bandwidth and projected earned return for the 2024 calendar year to be below the formula rate plan bandwidth. The 2024 test year filing showed a $63.4 million rate increase was necessary to reset Entergy Mississippi’s earned return on rate base to the specified point of adjustment of 7.10%, within the formula rate plan bandwidth. The 2023 look-back filing compared actual 2023 results to the approved benchmark return on rate base and reflected no change in formula rate plan revenues. In accordance with the provisions of the formula rate plan, Entergy Mississippi implemented a $32.6 million interim rate increase, reflecting a cap equal to 2% of 2023 retail revenues, effective April 2024.
In December 2014 the MPSC ordered Entergy Mississippi to file an updated depreciation study at least once every four years. Pursuant to this order and Entergy Mississippi’s filing cycle, Entergy Mississippi would have filed an updated depreciation report with its formula rate plan filing in 2023. However, in July 2022 the MPSC directed Entergy Mississippi to file its next depreciation study in connection with its 2024 formula rate plan filing notwithstanding the MPSC’s prior order. Accordingly, Entergy Mississippi filed a depreciation study in February 2024. The study showed a need for an increase in annual depreciation expense of $55.2 million. The calculated increase in annual depreciation expense was excluded from Entergy Mississippi’s 2024 formula rate plan revenue increase request because the MPSC had not yet approved the proposed depreciation rates.
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Notes to Financial Statements
In June 2024, Entergy Mississippi and the Mississippi Public Utilities Staff entered into a joint stipulation that confirmed the 2024 test year filing, with the exception of immaterial adjustments to certain operation and maintenance expenses. After performance adjustments, the formula rate plan reflected an earned return on rate base of 6.08% for calendar year 2024, which resulted in a total revenue increase of $64.6 million for 2024. The joint stipulation also recommended approval of a revised customer charge of $31.82 per month for residential customers and $53.10 per month for general service customers. Pursuant to the stipulation, Entergy Mississippi’s 2023 look-back filing reflected an earned return on rate base of 6.81%, resulting in an increase of $0.3 million in the formula rate plan revenues for 2023. Finally, the stipulation recommended approval of Entergy Mississippi’s proposed depreciation rates with those rates to be implemented upon request and approval at a later date. In June 2024 the MPSC approved the joint stipulation with rates effective in July 2024. The approval also included a reduction to the energy cost factor, resulting in a net bill decrease for a typical residential customer using 1,000 kWh per month. Also in June 2024, Entergy Mississippi recorded regulatory credits of $7.3 million to reflect the difference between interim rates placed in effect in April 2024 and the rates reflected in the joint stipulation.
In May 2024, Entergy Mississippi received approval from the MPSC for formula rate plan revisions that were necessary for Entergy Mississippi to comply with state legislation passed in January 2024. The legislation allows Entergy Mississippi to make interim rate adjustments to recover the non-fuel related annual ownership cost of certain facilities that directly or indirectly provide service to customers who own certain data processing center projects as specified in the legislation. Entergy Mississippi filed the first of its annual interim facilities rate adjustment reports in May 2024 to recover approximately $8.7 million of these costs over a six-month period with rates effective beginning in July 2024. Entergy Mississippi filed its second annual interim facilities rate adjustment report in December 2024 to recover approximately $46.7 million of these costs over a 12-month period with rates effective beginning in January 2025.
Grand Gulf Capacity Filing
In September 2024, Entergy Mississippi filed a notice of intent with the MPSC to implement revisions to its unit power cost recovery rider that would allow Entergy Mississippi to recover the first year of costs associated with the transfer of Entergy Louisiana’s entitlements to Grand Gulf capacity and energy, which consists of Energy Louisiana’s interest in and purchases of Grand Gulf capacity and energy under the revised rider schedule, effective by January 1, 2025. This notice filing related to the divestiture of Entergy Louisiana’s 14% share of Grand Gulf capacity and energy under the Unit Power Sales Agreement and 2.43% share of capacity and energy from Entergy Arkansas under the MSS-4 replacement tariff. This divestiture is being effectuated initially through Entergy Mississippi’s purchases from Entergy Louisiana pursuant to a PPA governed by the MSS-4 replacement tariff, a tariff governing the sales of energy and capacity among the Utility operating companies as described in the System Energy global settlement with the LPSC and Entergy Louisiana. The MSS-4 replacement PPA to effectuate this divestiture was approved by the FERC in November 2024. In February 2025 the MPSC approved Entergy Mississippi’s notice of intent, finding that it was just and reasonable for Entergy Mississippi to obtain Entergy Louisiana’s entitlements to Grand Gulf capacity and energy and that Entergy Mississippi should be allowed to recover the costs associated with the transfer of such entitlements to Grand Gulf capacity and energy, as described above. The MPSC approved the MSS-4 replacement PPA, effective as of January 1, 2025. See “Complaints Against System Energy – System Energy Settlement with the LPSC” below for further details of the System Energy global settlement with the LPSC and Note 8 to the financial statements for discussion of the Unit Power Sales Agreement.
Additional Generation and Transmission Resources
In January 2024, Amazon Web Services announced its plan to invest in two data centers located in Madison County, Mississippi. In March 2024, Entergy Mississippi executed a large customer supply and service agreement to serve the two data centers. Entergy Mississippi will need generation and transmission resources to reliably serve all Entergy Mississippi customers, including the data centers. The large customer supply and service agreement also contains provisions which cover Entergy Mississippi’s incremental investment costs in the event of early
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Notes to Financial Statements
termination. In May 2024 the MPSC approved Entergy Mississippi’s revisions to its formula rate plan to comply with state legislation passed in January 2024 allowing Entergy Mississippi to make interim rate adjustments, including the collection of a return on construction-work-in-process on a cash basis, to recover the non-fuel related annual ownership cost of certain facilities that directly or indirectly provide service to customers who own certain data processing center projects as specified in the legislation. Entergy Mississippi anticipates recovering the incremental cost to serve the customer through the revenues it expects to collect under the large customer supply and service agreement.
In February 2025, Entergy Mississippi entered into a new large customer supply and service agreement with a customer.
Filings with the City Council (Entergy New Orleans)
Retail Rates
2022 Formula Rate Plan Filing
In April 2022, Entergy New Orleans submitted to the City Council its formula rate plan 2021 test year filing. The 2021 test year evaluation report, subsequently updated in a July 2022 filing, produced an earned return on equity of 6.88% compared to the authorized return on equity of 9.35%. Entergy New Orleans sought approval of a $42.1 million rate increase based on the formula set by the City Council in the 2018 rate case. The formula resulted in an increase in authorized electric revenues of $34.1 million and an increase in authorized gas revenues of $3.3 million. Entergy New Orleans also sought to commence collecting $4.7 million in electric revenues that were previously approved by the City Council for collection through the formula rate plan. In July 2022 the City Council’s advisors issued a report seeking a reduction to Entergy New Orleans’s proposed increase of approximately $17.1 million in total for electric and gas revenues. Effective with the first billing cycle of September 2022, Entergy New Orleans implemented rates reflecting an amount agreed upon by Entergy New Orleans and the City Council including adjustments filed in the City Council’s advisors’ report, per the approved process for formula rate plan implementation. The total formula rate plan increase implemented was $24.7 million, which includes an increase of $18.2 million in electric revenues, $4.7 million in previously approved electric revenues, and an increase of $1.8 million in gas revenues. Additionally, credits of $13.9 million funded by certain regulatory liabilities currently held by Entergy New Orleans for customers were issued over an eight-month period beginning September 2022.
2023 Formula Rate Plan Filing
In April 2023, Entergy New Orleans submitted to the City Council its formula rate plan 2022 test year filing. The 2022 test year evaluation report produced an electric earned return on equity of 7.34% and a gas earned return on equity of 3.52% compared to the authorized return on equity for each of 9.35%. Entergy New Orleans sought approval of a $25.6 million rate increase based on the formula set by the City Council in the 2018 rate case. The formula would result in an increase in authorized electric revenues of $17.4 million and an increase in authorized gas revenues of $8.2 million. Entergy New Orleans also sought to commence collecting $3.4 million in electric revenues that were previously approved by the City Council for collection through the formula rate plan. In July 2023, Entergy New Orleans filed a report to decrease its requested formula rate plan revenues by approximately $0.5 million to account for minor errors discovered after the filing. The City Council advisors issued a report seeking a reduction in the requested formula rate plan revenues of approximately $8.3 million, combined for electric and gas, due to alleged errors. The City Council advisors proposed additional rate mitigation in the amount of $12 million through offsets to the formula rate plan rate increase by certain regulatory liabilities. In September 2023 the City Council approved an agreement to settle the 2023 formula rate plan filing. Effective with the first billing cycle of September 2023, Entergy New Orleans implemented rates reflecting an amount agreed upon by Entergy New Orleans and the City Council, per the approved process for formula rate plan implementation. The agreement provides for a total increase in electric revenues of $10.5 million and a total increase in gas revenues of
Entergy Corporation and Subsidiaries
Notes to Financial Statements
$6.9 million. The agreement also provides for a minor storm accrual of $0.5 million per year and the distribution of $8.9 million of currently held customer credits to implement the City Council advisors’ mitigation recommendations.
Request for Extension and Modification of Formula Rate Plan
In September 2023, Entergy New Orleans filed a motion seeking City Council approval of a three-year extension of Entergy New Orleans’s electric and gas formula rate plans. In October 2023 the City Council granted Entergy New Orleans’s request for an extension, subject to minor modifications which included a 55% equity ratio for rate setting purposes.
2024 Formula Rate Plan Filing
In April 2024, Entergy New Orleans submitted to the City Council its formula rate plan 2023 test year filing. Without the requested rate change in 2024, the 2023 test year evaluation report produced an electric earned return on equity of 8.66% and a gas earned return on equity of 5.87% compared to the authorized return on equity for each of 9.35%. Entergy New Orleans sought approval of a $12.6 million rate increase based on the formula set by the City Council in the 2018 rate case and approved again by the City Council in 2023. The formula would result in an increase in authorized electric revenues of $7.0 million and an increase in authorized gas revenues of $5.6 million. Following City Council review, the City Council’s advisors issued a report in July 2024 seeking a reduction in Entergy New Orleans’s requested formula rate plan revenues in an aggregate amount of approximately $1.6 million for electric and gas together due to alleged errors. Effective with the first billing cycle of September 2024, Entergy New Orleans implemented rates reflecting an amount agreed upon by Entergy New Orleans and the City Council, per the approved process for formula rate plan implementation. The total formula rate plan increase implemented was $11.2 million, which includes an increase of $5.8 million in electric revenues and an increase of $5.4 million in gas revenues.
Filings with the PUCT and Texas Cities (Entergy Texas)
Retail Rates
2022 Base Rate Case
In July 2022, Entergy Texas filed a base rate case with the PUCT seeking a net increase in base rates of approximately $131.4 million. The base rate case was based on a 12-month test year ending December 31, 2021. Key drivers of the requested increase were changes in depreciation rates as the result of a depreciation study and an increase in the return on equity. In addition, Entergy Texas included capital additions placed into service for the period of January 1, 2018 through December 31, 2021, including those additions reflected in the then-effective distribution and transmission cost recovery factor riders and the generation cost recovery rider, all of which were reset to zero in June 2023 as a result of this proceeding. In July 2022 the PUCT referred the proceeding to the State Office of Administrative Hearings. In October 2022 intervenors filed direct testimony challenging and supporting various aspects of Entergy Texas’s rate case application. The key issues addressed included the appropriate return on equity, generation plant deactivations, depreciation rates, and proposed tariffs related to electric vehicles. In November 2022 the PUCT staff filed direct testimony addressing a similar set of issues and recommending a reduction of $50.7 million to Entergy Texas’s overall cost of service associated with the requested net increase in base rates of approximately $131.4 million. Entergy Texas filed rebuttal testimony in November 2022.
In May 2023, Entergy Texas filed on behalf of the parties an unopposed settlement resolving all issues in the proceeding, except for issues related to electric vehicle charging infrastructure which were eventually severed to a separate proceeding and resolved in October 2024, and Entergy Texas filed an agreed motion for interim rates, subject to refund or surcharge to the extent that the interim rates differ from the final approved rates. The unopposed settlement reflected a net base rate increase to be effective and relate back to December 2022 of
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Notes to Financial Statements
$54 million, exclusive of, and incremental to, the costs being realigned from the distribution and transmission cost recovery factor riders and the generation cost recovery rider and $4.8 million of rate case expenses to be recovered through a rider over a period of 36 months. The net base rate increase of $54 million includes updated depreciation rates and a total annual revenue requirement of $14.5 million for the accrual of a self-insured storm reserve and the recovery of the regulatory assets for the pension and postretirement benefits expense deferral, costs associated with the COVID-19 pandemic, and retired non-advanced metering system electric meters. In May 2023 the ALJ with the State Office of Administrative Hearings granted the motion for interim rates, which became effective in June 2023. Additionally, the ALJ remanded the proceeding to the PUCT to consider the settlement. In August 2023 the PUCT issued an order approving the unopposed settlement. Concurrently, Entergy Texas recorded the reversal of $21.9 million of regulatory liabilities to reflect the recognition of certain receipts by Entergy Texas under affiliated PPAs that have been resolved.
Following the PUCT’s approval of the unopposed settlement in August 2023, Entergy Texas recorded a regulatory liability of $10.3 million, which reflected the net effects of higher depreciation and amortizations for the relate back period, partially offset by the relate back of base rate revenues that would have been collected had the approved rates been in effect for the period from December 2022 through June 2023, the date the new base rates were implemented on an interim basis. In October 2023, Entergy Texas filed a relate back surcharge rider to collect over six months beginning in January 2024 an additional approximately $24.6 million, which was the revenue requirement associated with the relate back of rates from December 2022 through June 2023, including carrying costs, as authorized by the PUCT’s August 2023 order. In November 2023, Entergy Texas filed an amended relate back surcharge rider to collect approximately $24.1 million based on a revised carrying cost rate. The amended relate back surcharge rider was approved by the PUCT in December 2023. The higher depreciation and amortizations for the relate back period were also recognized over the six months beginning in January 2024, resulting in no effect on net income from the collection of the relate back surcharge rider.
Distribution Cost Recovery Factor (DCRF) Rider
In June 2024, Entergy Texas filed with the PUCT a request to set a new DCRF rider. The new rider was designed to collect from Entergy Texas’s retail customers approximately $40.3 million annually based on its capital invested in distribution between January 1, 2022 and March 31, 2024. In September 2024 the PUCT approved the DCRF rider, consistent with Entergy Texas’s as-filed request, and rates became effective with the first billing cycle in October 2024.
In September 2024, Entergy Texas filed with the PUCT a request to amend its DCRF rider. The amended rider was designed to collect from Entergy Texas’s retail customers approximately $48.9 million annually, or $8.6 million in incremental annual revenues beyond Entergy Texas’s then-effective DCRF rider based on its capital invested in distribution between April 1, 2024 and June 30, 2024. In December 2024, Entergy Texas filed an errata to revise its DCRF application for minor corrections, which decreased the requested annual revenue requirement to $48.5 million. The amended request represented an incremental increase of $8.2 million in annual revenues beyond Entergy Texas’s then-effective DCRF rider. Also in December 2024 the PUCT approved the DCRF rider, consistent with Entergy Texas’s filed errata, and rates became effective on December 20, 2024.
Transmission Cost Recovery Factor (TCRF) Rider
In December 2018, Entergy Texas filed with the PUCT a request to set a new TCRF rider. The new TCRF rider was designed to collect approximately $2.7 million annually from Entergy Texas’s retail customers based on its capital invested in transmission between January 1, 2018 and September 30, 2018. In April 2019 parties filed testimony proposing a load growth adjustment, which would fully offset Entergy Texas’s proposed TCRF revenue requirement. In July 2019 the PUCT granted Entergy Texas’s application as filed to begin recovery of the requested $2.7 million annual revenue requirement, rejecting opposing parties’ proposed adjustment; however, the PUCT found that the question of prudence of the actual investment costs should be determined in Entergy Texas’s next rate case similar to the procedure used for the costs recovered through the DCRF rider. In October 2019 the PUCT
Entergy Corporation and Subsidiaries
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issued an order on a motion for rehearing, clarifying and affirming its prior order granting Entergy Texas’s application as filed. Also in October 2019 a second motion for rehearing was filed, and Entergy Texas filed a response in opposition to the motion. The second motion for rehearing was overruled by operation of law. In December 2019, Texas Industrial Energy Consumers filed an appeal to the PUCT order in district court alleging that the PUCT erred in declining to apply a load growth adjustment.
In October 2021, Entergy Texas filed with the PUCT a request to amend its TCRF rider. The amended rider was designed to collect from Entergy Texas’s retail customers approximately $66.1 million annually, or $15.1 million in incremental annual revenues beyond Entergy Texas’s then-effective TCRF rider based on its capital invested in transmission between September 1, 2020 and July 31, 2021 and changes in approved transmission charges. In January 2022 the PUCT referred the proceeding to the State Office of Administrative Hearings. In February 2022 the parties filed an unopposed settlement recommending that Entergy Texas be allowed to collect its full requested TCRF revenue requirement with interim rates effective March 2022. In February 2022 the ALJ granted the motion for interim rates, admitted evidence, and remanded the case to the PUCT for consideration of a final order at a future open meeting. In June 2022 the PUCT issued an order approving the settlement.
In October 2024, Entergy Texas filed with the PUCT a request to amend its TCRF rider, which was previously reset to zero in June 2023 as a result of the 2022 base rate case. The proposed rider is designed to collect from Entergy Texas’s retail customers approximately $9.7 million annually based on its capital invested in transmission between January 1, 2022 and June 30, 2024 and changes in other transmission charges. In December 2024 the PUCT staff filed a recommendation that the PUCT approve Entergy Texas’s as-filed application. In February 2025 the PUCT staff issued a proposed order that, if approved by the PUCT, would approve Entergy Texas’s TCRF rider as filed.
Generation Cost Recovery Rider
In October 2020, Entergy Texas filed an application to establish a generation cost recovery rider to begin recovering a return of and on its generation capital investment in the Montgomery County Power Station. Entergy Texas filed an unopposed settlement agreement in December 2020, and the PUCT approved the generation cost recovery rider settlement rates on an interim basis in January 2021. In March 2021, Entergy Texas filed to update its generation cost recovery rider, and an unopposed settlement agreement filed by Entergy Texas on behalf of the parties in October 2021 was approved by the PUCT in January 2022. In February 2022, Entergy Texas filed a relate-back rider to collect over five months an additional approximately $5 million, which was the difference between the interim revenue requirement approved in January 2021 and the revenue requirement approved in January 2022 reflecting Entergy Texas’s full generation capital investment and ownership in Montgomery County Power Station on January 1, 2021, plus carrying costs from January 2021 through January 2022 when the updated revenue requirement took effect. The PUCT approved the relate-back rider consistent with Entergy Texas’s as-filed request, and rates became effective over a five-month period, in August 2022.
In December 2020, Entergy Texas also filed an application to amend its generation cost recovery rider to reflect its acquisition of the Hardin County Peaking Facility, which closed in June 2021. Because Hardin was to be acquired in the future, the initial generation cost recovery rider rates proposed in the application represented no change from the generation cost recovery rider rates established in Entergy Texas’s previous generation cost recovery rider proceeding. In July 2021 the PUCT issued an order approving the application. In August 2021, Entergy Texas filed an update application to recover its actual investment in the acquisition of the Hardin County Peaking Facility, and in January 2022, Entergy Texas filed an update to its application to align the requested revenue requirement with the terms of the generation cost recovery rider settlement approved by the PUCT in January 2022. In April 2022, Entergy Texas filed on behalf of the parties a unanimous settlement agreement that would adjust its generation cost recovery rider to recover an annual revenue requirement of approximately $92.8 million, which was $4.5 million in incremental annual revenue above the revenue requirement approved in January 2022 described above and related to Entergy Texas’s investment in the Montgomery County Power Station. The PUCT approved the settlement agreement and rates became effective in August 2022. In September 2022,
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Entergy Texas filed a relate-back rider designed to collect over three months an additional approximately $5.7 million, which is the revenue requirement, plus carrying costs, associated with Entergy Texas’s acquisition of Hardin County Peaking Facility from June 2021 through August 2022 when the updated revenue requirement took effect. In April 2023 the PUCT approved Entergy Texas’s as-filed request with rates effective over three months beginning in May 2023.
Entergy Arkansas Opportunity Sales Proceeding
In June 2009 the LPSC filed a complaint requesting that the FERC determine that certain of Entergy Arkansas’s sales of electric energy to third parties: (a) violated the provisions of the System Agreement that allocated the energy generated by Entergy System resources; (b) imprudently denied the Entergy System and its ultimate consumers the benefits of low-cost Entergy System generating capacity; and (c) violated the provision of the System Agreement that prohibited sales to third parties by individual companies absent an offer of a right-of-first-refusal to other Utility operating companies. The LPSC’s complaint challenged sales made beginning in 2002 and requested refunds. In July 2009 the Utility operating companies filed a response to the complaint arguing among other things that the System Agreement contemplates that the Utility operating companies may make sales to third parties for their own account, subject to the requirement that those sales be included in the load (or load shape) for the applicable Utility operating company. The FERC subsequently ordered a hearing in the proceeding.
After a hearing, the ALJ issued an initial decision in December 2010. The ALJ found that the System Agreement allowed for Entergy Arkansas to make the sales to third parties but concluded that the sales should be accounted for in the same manner as joint account sales. The ALJ concluded that “shareholders” should make refunds of the damages to the Utility operating companies, along with interest. Entergy disagreed with several aspects of the ALJ’s initial decision and in January 2011 filed with the FERC exceptions to the decision.
The FERC issued a decision in June 2012 and held that, while the System Agreement is ambiguous, it does provide authority for individual Utility operating companies to make opportunity sales for their own account and Entergy Arkansas made and priced these sales in good faith. The FERC found, however, that the System Agreement does not provide authority for an individual Utility operating company to allocate the energy associated with such opportunity sales as part of its load but provides a different allocation authority. The FERC further found that the after-the-fact accounting methodology used to allocate the energy used to supply the sales was inconsistent with the System Agreement. The FERC in its decision established further hearing procedures to quantify the effect of repricing the opportunity sales in accordance with the FERC’s June 2012 decision. The hearing was held in May 2013 and the ALJ issued an initial decision in August 2013. The LPSC, the APSC, the City Council, and FERC staff filed briefs on exceptions and/or briefs opposing exceptions. Entergy filed a brief on exceptions requesting that the FERC reverse the initial decision and a brief opposing certain exceptions taken by the LPSC and FERC staff.
In April 2016 the FERC issued orders addressing requests for rehearing filed in July 2012 and the ALJ’s August 2013 initial decision. The first order denied Entergy’s request for rehearing and affirmed the FERC’s earlier rulings that Entergy’s original methodology for allocating energy costs to the opportunity sales was incorrect and, as a result, Entergy Arkansas must make payments to the other Utility operating companies to put them in the same position that they would have been in absent the incorrect allocation. The FERC clarified that interest should be included with the payments. The second order affirmed in part, and reversed in part, the rulings in the ALJ’s August 2013 initial decision regarding the methodology that should be used to calculate the payments Entergy Arkansas is to make to the other Utility operating companies. The FERC affirmed the ALJ’s ruling that a full re-run of intra-system bills should be performed but required that methodology be modified so that the sales have the same priority for purposes of energy allocation as joint account sales. The FERC reversed the ALJ’s decision that any payments by Entergy Arkansas should be reduced by 20%. The FERC also reversed the ALJ’s decision that adjustments to other System Agreement service schedules and excess bandwidth payments should not be taken into account when calculating the payments to be made by Entergy Arkansas. The FERC held that such adjustments and excess bandwidth payments should be taken into account but ordered further proceedings before an ALJ to address
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whether a cap on any reduction due to bandwidth payments was necessary and to implement the other adjustments to the calculation methodology.
In May 2016, Entergy Services filed a request for rehearing of the FERC’s April 2016 order arguing that payments made by Entergy Arkansas should be reduced as a result of the timing of the LPSC’s approval of certain contracts. Entergy Services also filed a request for clarification and/or rehearing of the FERC’s April 2016 order addressing the ALJ’s August 2013 initial decision. The APSC and the LPSC also filed requests for rehearing of the FERC’s April 2016 order. In September 2017 the FERC issued an order denying the request for rehearing on the issue of whether any payments by Entergy Arkansas to the other Utility operating companies should be reduced due to the timing of the LPSC’s approval of Entergy Arkansas’s wholesale baseload contract with Entergy Louisiana. In November 2017 the FERC issued an order denying all of the remaining requests for rehearing of the April 2016 order. In November 2017, Entergy Services filed a petition for review in the D.C. Circuit of the FERC’s orders in the first two phases of the opportunity sales case. In December 2017 the D.C. Circuit granted Entergy Services’ request to hold the appeal in abeyance pending final resolution of the related proceeding before the FERC. In January 2018 the APSC and the LPSC filed separate petitions for review in the D.C. Circuit, and the D.C. Circuit consolidated the appeals with Entergy Services’ appeal.
The hearing required by the FERC’s April 2016 order was held in May 2017. In July 2017 the ALJ issued an initial decision addressing whether a cap on any reduction due to bandwidth payments was necessary and whether to implement the other adjustments to the calculation methodology. In August 2017 the Utility operating companies, the LPSC, the APSC, and FERC staff filed individual briefs on exceptions challenging various aspects of the initial decision. In September 2017 the Utility operating companies, the LPSC, the APSC, the MPSC, the City Council, and FERC staff filed separate briefs opposing exceptions taken by various parties.
Based on testimony previously submitted in the case and its assessment of the April 2016 FERC orders, in the first quarter 2016, Entergy Arkansas recorded a liability of $87 million, which included interest, for its estimated increased costs and payment to the other Utility operating companies, and a deferred fuel regulatory asset of $75 million. Following its assessment of the course of the proceedings, including the FERC’s denial of rehearing in November 2017 described above, in the fourth quarter 2017, Entergy Arkansas recorded an additional liability of $35 million and a regulatory asset of $31 million.
In October 2018 the FERC issued an order addressing the ALJ’s July 2017 initial decision. The FERC reversed the ALJ’s decision to cap the reduction in Entergy Arkansas’s payment to account for the increased bandwidth payments that Entergy Arkansas made to the other operating companies. The FERC also reversed the ALJ’s decision that Grand Gulf sales from January through September 2000 should be included in the calculation of Entergy Arkansas’s payment. The FERC affirmed on other grounds the ALJ’s rejection of the LPSC’s claim that certain joint account sales should be accounted for as part of the calculation of Entergy Arkansas’s payment. In November 2018 the LPSC requested rehearing of the FERC’s October 2018 decision. In December 2019 the FERC denied the LPSC’s request for rehearing. In January 2020 the LPSC appealed the December 2019 decision to the D.C. Circuit.
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In December 2018, Entergy made a compliance filing in response to the FERC’s October 2018 order. The compliance filing provided a final calculation of Entergy Arkansas’s payments to the other Utility operating companies, including interest. No protests were filed in response to the December 2018 compliance filing. Refunds and interest in the following amounts were paid by Entergy Arkansas to the other operating companies in December 2018:
| Total refunds including interest | |||||||||||
| Payment/(Receipt) | |||||||||||
| (In Millions) | |||||||||||
| Principal | Interest | Total | |||||||||
| Entergy Arkansas | $68 | $67 | $135 | ||||||||
| Entergy Louisiana | ($30) | ($29) | ($59) | ||||||||
| Entergy Mississippi | ($18) | ($18) | ($36) | ||||||||
| Entergy New Orleans | ($3) | ($4) | ($7) | ||||||||
| Entergy Texas | ($17) | ($16) | ($33) |
Entergy Arkansas previously recognized a regulatory asset with a balance of $116 million as of December 31, 2018 for a portion of the payments due as a result of this proceeding.
As described above, the FERC’s opportunity sales orders were appealed to the D.C. Circuit. In February 2020 all of the appeals were consolidated and in April 2020 the D.C. Circuit established a briefing schedule. Briefing was completed in September 2020 and oral argument was heard in December 2020. In July 2021 the D.C. Circuit issued a decision denying all of the petitions for review filed in response to the FERC’s opportunity sales orders.
In February 2019 the LPSC filed a new complaint relating to two issues that were raised in the opportunity sales proceeding, but that, in its October 2018 order, the FERC held were outside the scope of the proceeding. In March 2019, Entergy Services filed an answer and motion to dismiss the new complaint. In November 2019 the FERC issued an order denying the LPSC’s complaint. The order concluded that the settlement agreement approved by the FERC in December 2015 terminating the System Agreement barred the LPSC’s new complaint. In December 2019 the LPSC requested rehearing of the FERC’s November 2019 order, and in July 2020 the FERC issued an order dismissing the LPSC’s request for rehearing. In September 2020 the LPSC appealed to the D.C. Circuit the FERC’s orders dismissing the new opportunity sales complaint. In November 2020 the D.C. Circuit issued an order establishing that briefing will occur in January 2021 through April 2021. Oral argument was held in September 2021. In December 2021 the D.C. Circuit denied the LPSC’s Petition for Review of the new opportunity sales complaint. The opportunity sales cases are complete at FERC and at the D.C. Circuit and no additional refund amounts are owed by Entergy Arkansas.
In May 2019, Entergy Arkansas filed an application and supporting testimony with the APSC requesting approval of a special rider tariff to recover the costs of these payments from its retail customers over a 24-month period. The application requested that the APSC approve the rider to take effect within 30 days or, if suspended by the APSC as allowed by commission rule, approve the rider to take effect in the first billing cycle of the first month occurring 30 days after issuance of the APSC’s order approving the rider. In June 2019 the APSC suspended Entergy Arkansas’s tariff and granted Entergy Arkansas’s motion asking the APSC to establish the proceeding as the single designated proceeding in which interested parties may assert claims related to the appropriate retail rate treatment of the FERC’s October 2018 order and related FERC orders in the opportunity sales proceeding. In January 2020 the APSC adopted a procedural schedule with a hearing in April 2020. In January 2020 the Attorney General and Arkansas Electric Energy Consumers, Inc. filed a joint motion seeking to dismiss Entergy Arkansas’s application alleging that the APSC, in a prior proceeding, ruled on the issues addressed in the application and determined that Entergy Arkansas’s requested relief violates the filed rate doctrine and the prohibition against retroactive ratemaking. Entergy Arkansas responded to the joint motion in February 2020 rebutting these
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arguments, including demonstrating that the claims in this proceeding differ substantially from those the APSC addressed previously and that the payment resulting from a FERC tariff violation for which Entergy Arkansas seeks retail cost recovery in this proceeding differs materially from the refunds resulting from a FERC tariff amendment that the APSC previously rejected on filed rate doctrine and the retroactive ratemaking grounds. In addition, in January 2020 the Attorney General and Arkansas Electric Energy Consumers, Inc. filed testimony opposing the recovery by Entergy Arkansas of the opportunity sales payment but also claiming that certain components of the payment should be segregated and refunded to customers. In March 2020, Entergy Arkansas filed rebuttal testimony.
In July 2020 the APSC issued a decision finding that Entergy Arkansas’s application is not in the public interest. The order also directed Entergy Arkansas to refund to its retail customers within 30 days of the order the FERC-determined over-collection of $13.7 million, plus interest, associated with a recalculated bandwidth remedy. In addition to these primary findings, the order also denied the Attorney General’s request for Entergy Arkansas to prepare a compliance filing detailing all of the retail impacts from the opportunity sales and denied a request by the Arkansas Electric Energy Consumers to recalculate all costs using the revised responsibility ratio. Entergy Arkansas filed a motion for temporary stay of the 30-day requirement to allow Entergy Arkansas a reasonable opportunity to seek rehearing of the APSC order, but in July 2020 the APSC denied Entergy Arkansas’s request for a stay and directed Entergy Arkansas to refund to its retail customers the component of the total FERC-determined opportunity sales payment that was associated with increased bandwidth remedy payments of $13.7 million, plus interest. The refunds were issued in the August 2020 billing cycle. While the APSC denied Entergy Arkansas’s stay request, Entergy Arkansas believes its actions were prudent and, therefore, the costs, including the $13.7 million, plus interest, are recoverable. In July 2020, Entergy Arkansas requested rehearing of the APSC order, which rehearing was denied by the APSC in August 2020. In September 2020, Entergy Arkansas filed a complaint in the U.S. District Court for the Eastern District of Arkansas challenging the APSC’s order denying Entergy Arkansas’s request to recover the costs of these payments. In October 2020 the APSC filed a motion to dismiss Entergy Arkansas’s complaint, to which Entergy Arkansas responded. Also in December 2020, Entergy Arkansas and the APSC held a pre-trial conference, and filed a report with the court in January 2021. The court held a hearing in February 2021 regarding issues addressed in the pre-trial conference report, and in June 2021 the court stayed all discovery until it rules on pending motions, after which the court will issue an amended schedule if necessary. In March 2022 the court denied the APSC’s motion to dismiss, and, in April 2022, issued a scheduling order including a trial date in February 2023. In June 2022, Entergy Arkansas filed a motion asserting that it is entitled to summary judgment because Entergy Arkansas’s position that the APSC’s order is pre-empted by the filed rate doctrine and violates the Dormant Commerce Clause is premised on facts that are not subject to genuine dispute. In July 2022, Arkansas Electric Energy Consumers, Inc., an industrial customer association, filed a motion to intervene and to hold Entergy Arkansas’s motion for summary judgment in abeyance pending a ruling on the motion to intervene. Entergy Arkansas filed a consolidated opposition to both motions. In August 2022 the APSC filed a motion for summary judgment arguing that there is no genuine issue as to any material fact and the APSC is entitled to judgment as a matter of law. In September 2022, Entergy Arkansas filed an opposition to the motion. In October 2022 the APSC filed a motion asking the court to hold further proceedings in abeyance pending a decision on the motions for summary judgment filed by Entergy Arkansas and the APSC. Also in October 2022, Entergy Arkansas filed an opposition to the motion, and the APSC filed a reply in support of its motion for summary judgment. In January 2023 the judge assigned to the case, on her own motion, identified facts that may present a conflict and recused herself; a new judge was assigned to the case, but he also recused due to a conflict. The case again was reassigned to a new judge. In January 2023 the court denied all pending motions (including those described above) except for a motion by the APSC to exclude certain testimony and further ruled that the matter would proceed to trial. In January 2023, Arkansas Electric Energy Consumers, Inc. filed a notice of appeal of the court’s order denying its motion to intervene to the United States Court of Appeals for the Eighth Circuit and a motion with the district court to stay the proceedings pending the appeal, which was denied. In February 2023, Arkansas Electric Energy Consumers, Inc. filed a motion with the United States Court of Appeals for the Eighth Circuit to stay the proceedings pending the appeal, which also was denied. The trial was held in February 2023. Following the trial, Entergy Arkansas filed a motion with the United States Court of Appeals for the Eighth Circuit to expedite the appeal filed by Arkansas Electric Energy Consumers, Inc. The United States Court of Appeals for
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the Eighth Circuit granted Entergy Arkansas’s request, and oral arguments were held in June 2023. In August 2023 the United States Court of Appeals for the Eighth Circuit affirmed the order of the court denying Arkansas Electric Energy Consumers, Inc.’s motion to intervene.
In March 2024 the U.S. District Court for the Eastern District of Arkansas issued a judgment in favor of the APSC and against Entergy Arkansas. In March 2024 Entergy Arkansas filed a notice of appeal and a motion to expedite oral arguments with the United States Court of Appeals for the Eighth Circuit and the court granted the motion to expedite. Briefing to the United States Court of Appeals for the Eighth Circuit concluded in July 2024 and oral arguments concluded in September 2024. As a result of the adverse decision by the U.S. District Court for the Eastern District of Arkansas, Entergy Arkansas concluded that it could no longer support the recognition of its $131.8 million regulatory asset reflecting the previously-expected recovery of a portion of the costs at issue in the opportunity sales proceeding and recorded a $131.8 million ($99.1 million net-of-tax) charge to earnings in first quarter 2024. In December 2024 the United States Court of Appeals for the Eighth Circuit affirmed the decision of the U.S. District Court for the Eastern District of Arkansas, and Entergy Arkansas filed a petition for rehearing en banc. In January 2025 the United States Court of Appeals for the Eighth Circuit denied Entergy Arkansas’s petition. Entergy Arkansas is evaluating a petition for certiorari with the United States Supreme Court.
MSS-4 Replacement Tariff – Net Operating Loss Carryforward Proceeding
In January 2021, pursuant to section 205 of the Federal Power Act, Entergy Services filed an amendment to the MSS-4 replacement tariff, a tariff governing the sales of energy and capacity among the Utility operating companies, in order to provide for the inclusion of specified accumulated deferred income taxes, including net operating loss carryforward accumulated deferred income taxes (NOLC ADIT), in the rate for sales of energy among the Utility operating companies on a prospective basis. In March 2021, the FERC accepted the filing, subject to refund and hearing procedures.
In October 2021 the LPSC filed a complaint with the FERC alleging that Entergy Services improperly excluded NOLC ADIT from MSS-4 replacement tariff rates in the period before March 20, 2021. The LPSC argued that sales from Entergy Louisiana to Entergy Texas and Entergy New Orleans were charged at rates lower than they otherwise should have been, and it accordingly seeks surcharges for the period prior to March 20, 2021. The FERC set the complaint for hearing procedures and subsequently the hearing for this complaint proceeding was consolidated with the hearing procedures for Entergy Services’ January 2021 NOLC ADIT filing.
Testimony was filed by parties in 2023, and the hearing before a FERC ALJ was concluded in February 2024. In June 2024, the FERC ALJ issued an initial decision addressing three major issues: (1) whether Entergy Services’ proposed prospective inclusion and allocation of NOLC ADIT in MSS-4 replacement tariff rates using a modified with-and-without methodology is just and reasonable; (2) whether Entergy Services correctly calculated excess and deficient accumulated deferred income taxes in accordance with the terms of a prior settlement; and (3) whether NOLC ADIT should have been included in MSS-4 replacement tariff rates prior to the effective date of the January 2021 MSS-4 replacement tariff filing.
With respect to issues (1) and (2), the presiding ALJ concluded that Entergy Services’ proposed methodology for allocating and including NOLC ADIT in MSS-4 replacement tariff rates was just and reasonable and that Entergy Services correctly performed the excess and deficient accumulated deferred income taxes calculations. With respect to issue (3), however, the presiding ALJ agreed with the LPSC that NOLC ADIT should have been included in MSS-4 replacement tariff rates since September 1, 2016, and as a result, the presiding ALJ ordered that Entergy Louisiana and Entergy Arkansas recalculate bills for the period of September 1, 2016 through November 11, 2023 with surcharges expected to be due to those operating companies from the purchasing operating companies, Entergy New Orleans, Entergy Texas, and Entergy Louisiana (for some Entergy Arkansas sales). The presiding ALJ also ordered Entergy Services to pay the interest owed to Entergy Louisiana on these surcharges.
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The surcharge methodology that the presiding ALJ recommended in connection with issue (3) was not supported by any participant in the hearing. As part of their exceptions to the initial decision, all parties to the proceeding opposed the use of the ALJ’s methodology, except for the FERC trial staff, which took no position. During the hearing, the LPSC and the FERC trial staff advocated that the alleged tariff violation should be remedied by the application of Entergy Services’ January 2021 proposed methodology. All other parties, including the PUCT, the City Council, and Entergy Services, opposed any surcharges for the period prior to the March 20, 2021 effective date of the January 2021 filing.
Entergy Services disputes the presiding ALJ's rulings on issue (3) and filed exceptions to these rulings in July 2024. The ALJ's initial decision is not binding on the FERC and is an interim step in the hearing process. No refunds will be owed in connection with this proceeding unless and until the FERC requires them in a final order.
Complaints Against System Energy
System Energy’s operating revenues are derived from the allocation of the capacity, energy, and related costs associated with its 90% ownership/leasehold interest in Grand Gulf. System Energy sells its Grand Gulf capacity and energy to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans pursuant to the Unit Power Sales Agreement. System Energy and the Unit Power Sales Agreement have been the subject of several litigation proceedings at the FERC, including challenges with respect to System Energy’s authorized return on equity and capital structure, renewal of its sale-leaseback arrangement, treatment of uncertain tax positions, a broader investigation of rates under the Unit Power Sales Agreement, and two prudence complaints, one challenging the extended power uprate completed at Grand Gulf in 2012 and the operation and management of Grand Gulf, particularly in the 2016-2020 time period, and the second challenging the operation and management of Grand Gulf in the 2021-2022 time period. Settlements that resolve all significant aspects of these complaints have been reached with the MPSC, the APSC, the City Council, and the LPSC, and these settlements have been approved by the FERC. Following are discussions of the proceedings.
Return on Equity and Capital Structure Complaints
In January 2017 the APSC and the MPSC filed a complaint with the FERC against System Energy. The complaint sought a reduction in the return on equity component of the Unit Power Sales Agreement pursuant to which System Energy sells its Grand Gulf capacity and energy to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. Entergy Arkansas also sells some of its Grand Gulf capacity and energy to Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans under separate agreements. The return on equity under the Unit Power Sales Agreement at the time of the complaint was 10.94%, which was established in a rate proceeding that became final in July 2001.
The APSC and the MPSC complaint alleged that the return on equity was unjust and unreasonable because capital market and other considerations indicated that it was excessive. The complaint requested proceedings to investigate the return on equity and establish a lower return on equity, and also requested that the FERC establish January 23, 2017 as a refund effective date. The complaint included a return on equity analysis that purported to establish that the range of reasonable return on equity for System Energy was between 8.37% and 8.67%. System Energy answered the complaint in February 2017 and disputed that a return on equity of 8.37% to 8.67% was just and reasonable. The LPSC and the City Council intervened in the proceeding expressing support for the complaint. In September 2017 the FERC established a refund effective date of January 23, 2017 and directed the parties to engage in settlement proceedings before an ALJ. The parties were unable to settle the return on equity issue and a FERC hearing judge was assigned in July 2018. The 15-month refund period in connection with the APSC/MPSC complaint expired on April 23, 2018.
In April 2018 the LPSC filed a complaint with the FERC against System Energy seeking an additional 15-month refund period. The LPSC complaint requested similar relief from the FERC with respect to System Energy’s
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return on equity and also requested the FERC to investigate System Energy’s capital structure. The APSC, the MPSC, and the City Council intervened in the proceeding, filed an answer expressing support for the complaint, and asked the FERC to consolidate this proceeding with the proceeding initiated by the complaint of the APSC and the MPSC in January 2017. System Energy answered the LPSC complaint in May 2018 and also filed a motion to dismiss the complaint. In August 2018 the FERC issued an order dismissing the LPSC’s request to investigate System Energy’s capital structure and setting for hearing the return on equity complaint, with a refund effective date of April 27, 2018. The 15-month refund period in connection with the LPSC return on equity complaint expired on July 26, 2019.
The portion of the LPSC’s complaint dealing with return on equity was subsequently consolidated with the APSC and the MPSC complaint for hearing. The parties also addressed an order (issued in a separate FERC proceeding involving New England transmission owners) that proposed modifying the FERC’s standard methodology for determining return on equity. In September 2018 the LPSC filed an amended complaint raising the same capital structure claim the FERC had earlier dismissed. The FERC initiated a new proceeding for the amended capital structure complaint, and System Energy answered the complaint in October 2018. In January 2019 the FERC set the amended complaint for settlement and hearing proceedings. Settlement proceedings in the capital structure proceeding commenced in February 2019, but were terminated in June 2019, and the amended capital structure complaint was consolidated with the ongoing return on equity proceeding. The 15-month refund period in connection with the capital structure complaint was from September 24, 2018 to December 23, 2019.
Several rounds of testimony were filed by the parties in these proceedings between January 2019 and August 2020. Some of these rounds of testimony were precipitated by developments in an unrelated proceeding in which the FERC issued orders addressing the methodology for determining the return on equity applicable to transmission owners in MISO (Opinion Nos. 569 and 569-A). The final positions of the parties, after the submission of all pre-filed testimony, were as follows. With regard to the return on equity complaints for the first refund period, based on their respective interpretations and applications of the Opinion No. 569-A methodology, the LPSC argued for an authorized return on equity for System Energy of 7.97%; the MPSC and the APSC argued for an authorized return on equity of 9.24%; and the FERC trial staff argued for an authorized return on equity of 9.49%. For the second refund period and on a prospective basis, based on their respective interpretations and applications of the Opinion No. 569-A methodology, the LPSC argued for an authorized return on equity for System Energy of 7.78%; the MPSC and the APSC argued that an authorized return on equity of 9.15% may be appropriate if the second complaint was not dismissed; and the FERC trial staff argued for an authorized return on equity of 9.09% if the second complaint was not dismissed. The LPSC also continued to support as its primary recommendation, based on an alternative analysis to the Opinion No. 569-A methodology, an authorized return on equity for System Energy as low as 7.56% for the first complaint refund period and as low as 7.18% for the second complaint refund period and prospectively. The MPSC and the APSC also continued to support as their primary recommendation, based on an alternative analysis to the Opinion No. 569-A methodology, an authorized return on equity for System Energy as low as 8.26% for the first complaint refund period and as low as 8.32% for the second complaint refund period and prospectively. System Energy argued that strict application of the Opinion No. 569-A methodology produces results inconsistent with investor requirements and does not provide a sound basis on which to evaluate System Energy’s authorized return on equity. Therefore, as its primary recommendation, System Energy argued for the use of a methodology that incorporates four separate financial models and, based on application of this recommended methodology, an authorized return on equity of 10.12% for the first refund period, which also fell within the presumptively just and reasonable range calculated for the second refund period and prospectively. Under the Opinion No. 569-A methodology, System Energy calculated an authorized return on equity of 9.44% for the first refund period, which also fell within the presumptively just and reasonable range calculated for the second refund period and prospectively.
With regard to the capital structure, the LPSC’s primary recommendation was that the FERC establish a hypothetical capital structure for System Energy for ratemaking purposes, according to which System Energy’s common equity ratio would be set to Entergy Corporation’s equity ratio of 37% equity and 63% debt. The APSC and the MPSC recommended that 35.98% be set as the common equity ratio for System Energy. The FERC trial
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staff argued that the average capital structure of the proxy group used to develop System Energy’s return on equity should be used to establish the capital structure. Using this approach, the FERC trial staff calculated the average capital structure for its proposed proxy group of 46.74% common equity and 53.26% debt. System Energy disputed all of these recommendations and argued that the use of its actual capital structure was just and reasonable.
After conducting a hearing, in March 2021 the FERC ALJ issued an initial decision. With regard to System Energy’s authorized return on equity, the ALJ determined that the existing return on equity of 10.94% was no longer just and reasonable, and that the replacement authorized return on equity, based on application of the Opinion No. 569-A methodology, should be 9.32%. The ALJ further determined that System Energy should pay refunds for a fifteen-month refund period (January 2017-April 2018) based on the difference between the current return on equity and the replacement authorized return on equity. The ALJ determined that the April 2018 complaint concerning the authorized return on equity should be dismissed, and that no refunds for a second fifteen-month refund period should be due. With regard to System Energy’s capital structure, the ALJ determined that System Energy’s actual equity ratio was excessive and that the just and reasonable equity ratio was 48.15% equity, based on the average equity ratio of the proxy group used to evaluate the return on equity for the second complaint. The ALJ further determined that System Energy should pay refunds for a fifteen-month refund period (September 2018-December 2019) based on the difference between the actual equity ratio and the 48.15% equity ratio.
In April 2021, System Energy filed its brief on exceptions, in which it challenged the initial decision’s findings on both the return on equity and capital structure issues. Also in April 2021 the LPSC, the APSC, the MPSC, the City Council, and the FERC trial staff filed briefs on exceptions. Reply briefs opposing exceptions were filed in May 2021 by System Energy, the FERC trial staff, the LPSC, the APSC, the MPSC, and the City Council.
As discussed below in “System Energy Settlement with the MPSC,” “System Energy Settlement with the APSC,” “System Energy Settlement with the City Council,” and “System Energy Settlement with the LPSC,” the MPSC, the APSC, the City Council, and the LPSC have settled their claims related to these proceedings. As part of the settlements with their respective retail regulators, effective July 2022 for Entergy Mississippi, November 2023 for Entergy Arkansas, June 2024 for Entergy New Orleans, and September 2024 for Entergy Louisiana, bills issued under the Unit Power Sales Agreement reflect a return on equity of 9.65% and a capital structure not to exceed 52% equity.
In August 2022 the D.C. Circuit issued an order addressing appeals of FERC’s Opinion No. 569 and 569-A, which established the methodology applied in the ALJ’s initial decision in the proceeding against System Energy discussed above. The appellate order addressed the methodology for determining the return on equity applicable to transmission owners in MISO. The D.C. Circuit found the FERC’s use of the Risk Premium model as part of the methodology to be arbitrary and capricious, and remanded the case back to the FERC. In October 2024, after System Energy had reached settlements with each of the retail regulators involved in the return on equity and capital structure proceeding discussed above, the FERC issued a remand order in the MISO transmission owners’ return on equity case, concluding that the record supported the methodology that it originally directed in Opinion No. 569 utilizing an equal weighting of the two-step discounted cash flow model and capital asset pricing model. As a result, it determined that the just and reasonable return on equity for the MISO transmission owners is 9.98%. In light of the System Energy settlements detailed below, the FERC’s changes to its return on equity methodology in the decision on the MISO transmission owners’ return on equity will not have any immediate effect on System Energy’s return on equity because System Energy’s return on equity has been set at 9.65% through the global settlement through the end of June 2026.
Grand Gulf Sale-leaseback Renewal Complaint and Uncertain Tax Position Rate Base Issue
In May 2018 the LPSC filed a complaint against System Energy and Entergy Services related to System Energy’s renewal of a sale-leaseback transaction originally entered into in December 1988 for an 11.5% undivided interest in Grand Gulf Unit 1. The complaint alleged that System Energy violated the filed rate and the FERC’s ratemaking and accounting requirements when it included in Unit Power Sales Agreement billings the cost of
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capital additions associated with the sale-leaseback interest, and that System Energy was double-recovering costs by including both the lease payments and the capital additions in Unit Power Sales Agreement billings. The complaint also claimed that System Energy was imprudent in entering into the sale-leaseback renewal because the Utility operating companies that purchase Grand Gulf’s output from System Energy could have obtained cheaper capacity and energy in the MISO markets. The complaint further alleged that System Energy violated various other reporting and accounting requirements and should have sought prior FERC approval of the lease renewal. The complaint sought various forms of relief from the FERC, including refunds for capital addition costs for all years in which they were recorded in allegedly non-formula accounts or, alternatively, the disallowance of the return on equity for the capital additions in those years plus interest; a disallowance and refund of the lease costs of the sale-leaseback renewal on grounds of imprudence; an investigation into System Energy’s treatment of a DOE litigation payment; and the imposition of certain forward-looking procedural protections, including audit rights for retail regulators of the Unit Power Sales Agreement formula rates. The APSC, the MPSC, and the City Council intervened in the proceeding.
In June 2018, System Energy and Entergy Services filed a motion to dismiss and an answer to the LPSC complaint denying that System Energy’s treatment of the sale-leaseback renewal and capital additions violated the terms of the filed rate or any other FERC ratemaking, accounting, or legal requirements or otherwise constituted double recovery. The response also argued that the complaint was inconsistent with a FERC-approved settlement to which the LPSC is a party and that explicitly authorized System Energy to recover its lease payments. Finally, the response argued that both the capital additions and the sale-leaseback renewal were prudent investments and the LPSC complaint failed to justify any disallowance or refunds. The response also offered to submit formula rate protocols for the Unit Power Sales Agreement similar to the procedures used for reviewing transmission rates under the MISO tariff. In September 2018 the FERC issued an order setting the complaint for hearing and settlement proceedings and establishing a refund effective date of May 18, 2018.
In February 2019 the presiding ALJ ruled that the hearing ordered by the FERC includes the issue of whether specific subcategories of accumulated deferred income tax should be included in, or excluded from, System Energy’s formula rate. Testimony was filed by the LPSC, the MPSC, the APSC, the City Council, the FERC trial staff, and System Energy between March 2019 and October 2019. The final positions of the parties, after all pre-filed testimony was submitted, were as follows. The LPSC sought refunds that included the renewal lease payments (approximately $17.2 million per year since July 2015), rate base reductions for accumulated deferred income tax associated with uncertain tax positions (with a corresponding refund of approximately $512 million), and the cost of capital additions associated with the sale-leaseback interest, as well as interest on those amounts. The LPSC also argued that adjustments to depreciation rates should require retroactive depreciation expense refunds but only prospective rate base adjustments. The APSC, the MPSC, and the City Council generally agreed with the LPSC’s positions. The FERC trial staff argued for refunds for rate base reductions for liabilities associated with uncertain tax positions, and also argued that System Energy recovered $32 million more than it should have in depreciation expense for capital additions. System Energy filed testimony asking the FERC to reject all of the LPSC’s claims for refunds and opposing the FERC trial staff’s position regarding the uncertain tax position issue. System Energy also argued that the FERC trial staff’s position regarding depreciation rates for capital additions was not unreasonable, but any change in depreciation expense is only one element of a Unit Power Sales Agreement re-billing calculation. Adjustments to depreciation expense in any re-billing under the Unit Power Sales Agreement formula rate would also involve changes to accumulated depreciation, accumulated deferred income taxes, and other formula elements as needed.
After holding a hearing in November 2019, in April 2020 the FERC ALJ issued the initial decision. Among other things, the ALJ determined that refunds were due on three main issues. First, with regard to the lease renewal payments, the ALJ determined that System Energy was recovering an unjust acquisition premium through the lease renewal payments, and that System Energy’s recovery from customers through rates should be limited to the cost of service based on the remaining net book value of the leased assets, which was approximately $70 million. The ALJ found that the remedy for this issue should be the refund of lease payments (approximately $17.2 million per year since July 2015) with interest determined at the FERC quarterly interest rate, which would be offset by the addition
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of the net book value of the leased assets in the cost of service. The ALJ did not calculate a value for the refund expected as a result of this remedy. In addition, System Energy would no longer recover the lease payments in rates prospectively. Second, with regard to the liabilities associated with uncertain tax positions, the ALJ determined that the liabilities are accumulated deferred income taxes and that System Energy’s rate base should have been reduced for those liabilities. The ALJ also found that System Energy should include liabilities associated with uncertain tax positions as a rate base reduction going forward. Third, with regard to the depreciation expense adjustments, the ALJ found that System Energy should correct for the error in re-billings retroactively and prospectively, but that System Energy should not be permitted to recover interest on any retroactive return on enhanced rate base resulting from such corrections.
In June 2020, System Energy, the LPSC, and the FERC trial staff filed briefs on exceptions, challenging several of the initial decision’s findings. System Energy’s brief on exceptions challenged the initial decision’s limitations on recovery of the lease renewal payments, its proposed rate base refund for the liabilities associated with uncertain tax positions, and its proposal to asymmetrically treat interest on bill corrections for depreciation expense adjustments. The LPSC’s and the FERC trial staff’s briefs on exceptions each challenged the initial decision’s allowance for recovery of the cost of service associated with the lease renewal based on the remaining net book value of the leased assets, its calculation of the remaining net book value of the leased assets, and the amount of the initial decision’s proposed rate base refund for the liabilities associated with uncertain tax positions. The LPSC’s brief on exceptions also challenged the initial decision’s proposal that depreciation expense adjustments include retroactive adjustments to rate base and its finding that section 203 of the Federal Power Act did not apply to the lease renewal. The FERC trial staff’s brief on exceptions also challenged the initial decision’s finding that the FERC need not institute a formal investigation into System Energy’s tariff. In October 2020, System Energy, the LPSC, the MPSC, the APSC, and the City Council filed briefs opposing exceptions. System Energy opposed the exceptions filed by the LPSC and the FERC trial staff. The LPSC, the MPSC, the APSC, the City Council, and the FERC trial staff opposed the exceptions filed by System Energy. Also in October 2020 the MPSC, the APSC, and the City Council filed briefs adopting the exceptions of the LPSC and the FERC trial staff.
In addition, in September 2020, the IRS issued a Notice of Proposed Adjustment (NOPA) and Entergy executed it. The NOPA memorialized the IRS’s decision to adjust the 2015 consolidated federal income tax return of Entergy Corporation and certain of its subsidiaries, including System Energy, with regard to the uncertain decommissioning tax position. Pursuant to the audit resolution documented in the NOPA, the IRS allowed System Energy’s inclusion of $102 million of future nuclear decommissioning costs in System Energy’s cost of goods sold for the 2015 tax year, roughly 10% of the requested deduction, but disallowed the balance of the position. In September 2020, System Energy filed a motion to lodge the NOPA into the record in the FERC proceeding. In October 2020 the LPSC, the APSC, the MPSC, the City Council, and the FERC trial staff filed oppositions to System Energy’s motion. As a result of the NOPA issued by the IRS in September 2020, System Energy filed, in October 2020, a new Federal Power Act section 205 filing at FERC to establish an ongoing rate base credit for the accumulated deferred income taxes resulting from the decommissioning uncertain tax position. On a prospective basis beginning with the October 2020 bill, System Energy proposed to include the accumulated deferred income taxes arising from the successful portion of the decommissioning uncertain tax position as a credit to rate base under the Unit Power Sales Agreement. In November 2020 the LPSC, the APSC, the MPSC, and the City Council filed a protest to the filing, and System Energy responded.
In November 2020 the IRS issued a Revenue Agent’s Report (RAR) for the 2014/2015 tax year and in December 2020 Entergy executed it. The RAR contained the same adjustment to the uncertain nuclear decommissioning tax position as that which the IRS had announced in the NOPA. In December 2020, System Energy filed a motion to lodge the RAR into the record in the FERC proceeding addressing the uncertain tax position rate base issue. In January 2021 the LPSC, the APSC, the MPSC, and the City Council filed a protest to the motion.
As a result of the RAR, in December 2020, System Energy filed amendments to its new Federal Power Act section 205 filings to establish an ongoing rate base credit for the accumulated deferred income taxes resulting from
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the decommissioning uncertain tax position and to credit excess accumulated deferred income taxes arising from the successful portion of the decommissioning uncertain tax position. The amendments both proposed the inclusion of the RAR as support for the filings. In December 2020 the LPSC, the APSC, and the City Council filed protests to the amendments. In February 2021 the FERC issued an order accepting System Energy’s Federal Power Act section 205 filings subject to refund, setting them for hearing, and holding the hearing in abeyance.
In December 2020, System Energy filed a new Federal Power Act section 205 filing to provide a one-time, historical credit of $25.2 million for the accumulated deferred income taxes that would have been created by the decommissioning uncertain tax position if the IRS’s decision had been known in 2016. In January 2021 the LPSC, APSC, MPSC, and City Council filed a protest to the filing. In February 2021 the FERC issued an order accepting System Energy’s Federal Power Act section 205 filing subject to refund, setting it for hearing, and holding the hearing in abeyance. System Energy provided the one-time credit during the first quarter 2021.
In December 2022 the FERC issued an order on the ALJ’s initial decision, which affirmed it in part and modified it in part. The FERC’s order directed System Energy to calculate refunds on three issues, and to provide a compliance report detailing the calculations. The FERC’s order also disallowed the future recovery of sale-leaseback renewal costs, which is estimated at approximately $11.5 million annually for purchases from Entergy Arkansas, Entergy Louisiana, and Entergy New Orleans through July 2036. The three refund issues were rental expenses related to the renewal of the sale-leaseback arrangements; refunds, if any, for the revenue requirement impact of including accumulated deferred income taxes resulting from the decommissioning uncertain tax positions from 2004 through the present; and refunds for the net effect of correcting the depreciation inputs for capital additions attributable to the portion of plant subject to the sale-leaseback.
As a result of the FERC order’s directives regarding the recovery of the sale-leaseback transaction, in December 2022 System Energy reduced the Grand Gulf sale-leaseback regulatory liability by $56 million, reduced the related accumulated deferred income tax asset by $94 million, and reduced the Grand Gulf sale-leaseback accumulated deferred income tax regulatory liability by $25 million, resulting in an increase in income tax expense of $13 million. In addition, the FERC determined that System Energy recognized excess depreciation expense related to property subject to the sale-leaseback. As a result, in December 2022, System Energy recorded a reduction in depreciation expense and the related accumulated depreciation of $33 million.
In January 2023, System Energy filed its compliance report with the FERC. With respect to the sale-leaseback renewal costs, System Energy calculated a refund of $89.8 million, which represented all of the sale-leaseback renewal rental costs that System Energy recovered in rates, with interest. With respect to the decommissioning uncertain tax position issue, System Energy calculated that no additional refunds were owed because it had already provided a one-time historical credit (for the period January 2016 through September 2020) of $25.2 million based on the accumulated deferred income taxes that resulted from the IRS’s partial acceptance of the decommissioning tax position, and because it has been providing an ongoing rate base credit for the accumulated deferred income taxes that resulted from the IRS’s partial acceptance of the decommissioning tax position since October 2020. With respect to the depreciation refund, System Energy calculated a refund of $13.7 million, which is the net total of a refund to customers for excess depreciation expense previously collected, plus interest, offset by the additional return on rate base that System Energy previously did not collect, without interest. See “System Energy Settlement with the MPSC” below for discussion of the regulatory charge and corresponding regulatory liability recorded in June 2022 related to these proceedings. In January 2023, System Energy paid the refunds of $103.5 million, which included refunds of $41.7 million to Entergy Arkansas, $27.8 million to Entergy Louisiana, and $34 million to Entergy New Orleans.
In February 2023 the LPSC, the APSC, and the City Council filed protests to System Energy’s January 2023 compliance report, in which they challenged System Energy’s calculation of the refunds associated with the decommissioning tax position but did not protest the other components of the compliance report. Each of them argued that System Energy should have paid additional refunds for the decommissioning tax position issue, and the City Council estimated the total additional refunds owed to customers of Entergy Louisiana, Entergy New Orleans,
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and Entergy Arkansas for that issue as $493 million, including interest (and without factoring in the $25.2 million refund that System Energy already paid in 2021).
In January 2023, System Energy filed a request for rehearing of the FERC’s determinations in the December 2022 order on sale-leaseback refund issues and future lease cost disallowances, the FERC’s prospective policy on uncertain tax positions, and the proper accounting of System Energy’s accumulated deferred income taxes adjustment for the Tax Cuts and Jobs Act of 2017; and a motion for confirmation of its interpretation of the December 2022 order’s remedy concerning the decommissioning tax position. In January 2023 the retail regulators filed a motion for confirmation of their interpretation of the refund requirement in the December 2022 FERC order and a provisional request for rehearing. In February 2023 the FERC issued a notice that the rehearing requests were denied by operation of law. In March 2023, System Energy filed in the United States Court of Appeals for the Fifth Circuit a petition for review of the December 2022 order. In March 2023, System Energy also filed an unopposed motion to stay the proceeding in the Fifth Circuit pending the FERC’s disposition of the pending motions, and the court granted the motion to stay.
In February 2023, System Energy submitted a tariff compliance filing with the FERC to clarify that, consistent with the releases provided in the MPSC settlement, Entergy Mississippi will continue to be charged for its allocation of the sale-leaseback renewal costs under the Unit Power Sales Agreement. See “System Energy Settlement with the MPSC” below for discussion of the settlement. In March 2023 the MPSC filed a protest to System Energy’s tariff compliance filing. The MPSC argues that the settlement did not specifically address post-settlement sale-leaseback renewal costs and that the sale-leaseback renewal costs may not be recovered under the Unit Power Sales Agreement. Entergy Mississippi’s allocated sale-leaseback renewal costs are estimated at $5.7 million annually for the remaining term of the sale-leaseback renewal.
In August 2023 the FERC issued an order addressing arguments raised on rehearing and partially setting aside the prior order (rehearing order). The rehearing order addressed rehearing requests that were filed in January 2023 separately by System Energy and the LPSC, the APSC, and the City Council.
In the rehearing order, the FERC directed System Energy to recalculate refunds for two issues: (1) refunds of rental expenses related to the renewal of the sale-leaseback arrangements and (2) refunds for the net effect of correcting the depreciation inputs for capital additions associated with the sale-leaseback. With regard to the sale-leaseback renewal rental expenses, the rehearing order allowed System Energy to recover an implied return of and on the depreciated cost of the portion of the plant subject to the sale-leaseback as of the expiration of the initial lease term. With regard to the depreciation input issue, the rehearing order allowed System Energy to offset refunds so that System Energy may collect interest on the rate base recalculations that were part of the overall depreciation rate recalculations. The rehearing order further directed System Energy to submit within 60 days of the date of the rehearing order an additional compliance filing to revise the total refunds for these two issues. As discussed above, System Energy’s January 2023 compliance filing calculated $103.5 million in total refunds, and the refunds were paid in January 2023. In October 2023, System Energy filed its compliance report with the FERC as directed in the August 2023 rehearing order. The October 2023 compliance report reflected recalculated refunds totaling $35.7 million for the two issues resulting in $67.8 million in refunds that could be recouped by System Energy. As discussed below in “System Energy Settlement with the APSC,” System Energy reached a settlement in principle with the APSC to resolve several pending cases under the FERC’s jurisdiction, including this one, pursuant to which it agreed not to recoup the $27.3 million calculated for Entergy Arkansas in the compliance filing. As a result of the FERC’s rulings on the sale-leaseback and depreciation input issues in the August 2023 rehearing order, in third quarter 2023, System Energy recorded a regulatory asset and corresponding regulatory credit of $40 million to reflect the portion of the January 2023 refunds to be recouped from Entergy Louisiana and Entergy New Orleans. Consistent with the compliance filing, in October 2023, Entergy Louisiana and Entergy New Orleans paid recoupment amounts of $18.2 million and $22.3 million, respectively, to System Energy.
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On the third refund issue identified in the rehearing requests, concerning the decommissioning uncertain tax positions, the rehearing order denied all rehearing requests, re-affirmed the remedy contained in the December 2022 order, and did not direct System Energy to recalculate refunds or to submit an additional compliance filing.
In September 2023, System Energy filed a protective appeal of the rehearing order with the United States Court of Appeals for the Fifth Circuit. The appeal was consolidated with System Energy’s prior appeal of the December 2022 order.
In September 2023 the LPSC filed with the FERC a request for rehearing and clarification of the rehearing order. The LPSC requested that the FERC reverse its determination in the rehearing order that System Energy may collect an implied return of and on the depreciated cost of the portion of the plant subject to the sale-leaseback, as of the expiration of the initial lease term, as well as its determination in the rehearing order that System Energy may offset the refunds for the depreciation rate input issue and collect interest on the rate base recalculations that were part of the overall depreciation rate recalculations. In addition, the LPSC requested that the FERC either confirm the LPSC’s interpretation of the refund associated with the decommissioning uncertain tax positions or explain why it is not doing so. In October 2023 the FERC issued a notice that the rehearing request was deemed denied by operation of law. In November 2023 the FERC issued a further notice stating that it would not issue any further order addressing the rehearing request. Also in November 2023 the LPSC filed with the United States Court of Appeals for the Fifth Circuit a petition for review of the FERC’s August 2023 rehearing order and denials of the September 2023 rehearing request.
In December 2023 the United States Court of Appeals for the Fifth Circuit lifted the abeyance on the consolidated System Energy appeals and it also consolidated the LPSC’s appeal with the System Energy appeals. Briefing of the appeals occurred between March 2024 and July 2024. In September 2024 the parties filed a joint motion to continue and stay oral argument, previously scheduled for October 2024, pending the FERC’s decision whether to approve the settlement between System Energy and the LPSC, and the United States Court of Appeals for the Fifth Circuit granted the motion. In November 2024, after the FERC issued the order approving the settlement between System Energy and the LPSC, System Energy, the LPSC, the APSC, and the FERC filed a joint stipulation to dismiss the pending appeals, which the United States Court of Appeals for the Fifth Circuit granted.
As discussed below in “System Energy Settlement with the MPSC,” “System Energy Settlement with the APSC,” “System Energy Settlement with the City Council,” and “System Energy Settlement with the LPSC,” the MPSC, the APSC, the City Council, and the LPSC have settled their claims related to this proceeding.
LPSC Additional Complaints
In May 2020 the LPSC authorized its staff to file additional complaints at the FERC related to the rates charged by System Energy for Grand Gulf energy and capacity supplied to Entergy Louisiana under the Unit Power Sales Agreement. The LPSC directive noted that the initial decision issued by the presiding ALJ in the Grand Gulf sale-leaseback complaint proceeding did not address, for procedural reasons, certain rate issues raised by the LPSC and declined to order further investigation of rates charged by System Energy.
Unit Power Sales Agreement Complaint
The first of the additional complaints was filed by the LPSC, the APSC, the MPSC, and the City Council in September 2020. The first complaint raised two sets of rate allegations: violations of the filed rate and a corresponding request for refunds for prior periods; and elements of the Unit Power Sales Agreement are unjust and unreasonable and a corresponding request for refunds for the 15-month refund period and changes to the Unit Power Sales Agreement prospectively. Several of the filed rate allegations overlapped with the previous complaints. The filed rate allegations not previously raised were that System Energy: failed to provide a rate base credit to customers for the “time value” of sale-leaseback lease payments collected from customers in advance of the time those payments were due to the owner-lessors; improperly included certain sale-leaseback transaction costs in rate base as
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prepayments; improperly included nuclear refueling outage costs in rate base; wrongly included categories of accumulated deferred income taxes as increases to rate base; charged customers based on a higher equity ratio than would be appropriate due to excessive retained earnings; and did not correctly reflect money pool investments and imprudently invested cash into the money pool. The elements of the Unit Power Sales Agreement that the complaint alleged were unjust and unreasonable include: the current cash working capital allowance of zero, uncapped recovery of incentive and executive compensation, lack of an equity re-opener, and recovery of lobbying and private airplane travel expenses. The complaint also requested a rate investigation into the Unit Power Sales Agreement and System Energy’s billing practices pursuant to section 206 of the Federal Power Act, including any issue relevant to the Unit Power Sales Agreement and its inputs. System Energy filed its answer opposing the complaint in November 2020. In its answer, System Energy argued that all of the claims raised in the complaint should be dismissed and agreed that bill adjustment with respect to two discrete issues were justified. System Energy argued that dismissal was warranted because all claims fell into one or more of the following categories: the claims had been raised and were being litigated in another proceeding; the claims did not present a prima facie case and did not satisfy the threshold burden to establish a complaint proceeding; the claims were premised on a theory or request relief that is incompatible with federal law or FERC policy; the claims request relief that is inconsistent with the filed rate; the claims were barred or waived by the legal doctrine of laches; and/or the claims had been fully addressed and do not warrant further litigation. In December 2020, System Energy filed a bill adjustment report indicating that $3.4 million had been credited to customers in connection with the two discrete issues concerning the inclusion of certain accumulated deferred income taxes balances in rates.
In May 2021 the FERC issued an order addressing the complaint, establishing a refund effective date of September 21, 2020, establishing hearing procedures, and holding those procedures in abeyance pending the FERC’s review of the initial decision in the Grand Gulf sale-leaseback renewal complaint discussed above. System Energy agreed that the hearing should be held in abeyance but sought rehearing of FERC’s decision as related to matters set for hearing that were beyond the scope of FERC’s jurisdiction or authority. The complainants sought rehearing of FERC’s decision to hold the hearing in abeyance and filed a motion to proceed, which motion System Energy opposed. In June 2021, System Energy’s request for rehearing was denied by operation of law, and System Energy filed an appeal of FERC’s orders in the Court of Appeals for the Fifth Circuit. In November 2021 the Fifth Circuit dismissed the appeal as premature.
In August 2021 the FERC issued an order addressing System Energy’s and the complainants’ rehearing requests. The FERC dismissed part of the complaint seeking an equity re-opener, maintained the abeyance for issues related to the proceeding addressing the sale-leaseback renewal and uncertain tax positions, lifted the abeyance for issues unrelated to that proceeding, and clarified the scope of the hearing.
In November 2021 the LPSC, the APSC, and the City Council filed direct testimony and requested the FERC to order refunds for prior periods and prospective amendments to the Unit Power Sales Agreement. The LPSC’s refund claims included, among other things, allegations that: (1) System Energy should not have included certain sale-leaseback transaction costs in prepayments; (2) System Energy should have credited rate base to reflect the time value of money associated with the advance collection of lease payments; (3) System Energy incorrectly included refueling outage costs that were recorded in account 174 in rate base; and (4) System Energy should have excluded several accumulated deferred income tax balances in account 190 from rate base. The LPSC also sought a retroactive adjustment to retained earnings and capital structure in conjunction with the implementation of its proposed refunds. In addition, the LPSC sought amendments to the Unit Power Sales Agreement going forward to address below-the-line costs, incentive compensation, the working capital allowance, litigation expenses, and the 2019 termination of the capital funds agreement. The APSC argued that: (1) System Energy should have included borrowings from the Entergy system money pool in its determination of short-term debt in its cost of capital; and (2) System Energy should credit customers with System Energy’s allocation of earnings on money pool investments. The City Council alleged that System Energy has maintained excess cash on hand in the money pool and that retention of excess cash was imprudent. Based on this allegation, the City Council’s witness recommended a refund of approximately $98.8 million for the period 2004-September 2021 or other alternative relief. The City Council
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further recommended that the FERC impose a hypothetical equity ratio such as 48.15% equity to capital on a prospective basis.
In January 2022, System Energy filed answering testimony arguing that the FERC should not order refunds for prior periods or any prospective amendments to the Unit Power Sales Agreement. In response to the LPSC’s refund claims, System Energy argued, among other things, that: (1) the inclusion of sale-leaseback transaction costs in prepayments was correct; (2) that the filed rate doctrine bars the request for a retroactive credit to rate base for the time value of money associated with the advance collection of lease payments; (3) that an accounting misclassification for deferred refueling outage costs had been corrected, caused no harm to customers, and requires no refunds; and (4) that its accounting and ratemaking treatment of specified accumulated deferred income tax balances in account 190 had been correct. System Energy further responded that no retroactive adjustment to retained earnings or capital structure should be ordered because there was no general policy requiring such a remedy, and there was no showing that the retained earnings element of the capital structure was incorrectly implemented. Further, System Energy presented evidence that all of the costs that were being challenged were long known to the retail regulators and were approved by them for inclusion in retail rates, and the attempt to retroactively challenge these costs, some of which had been included in rates for decades, was unjust and unreasonable. In response to the LPSC’s proposed going-forward adjustments, System Energy presented evidence to show that none of the proposed adjustments were needed. On the issue of below-the-line expenses, during discovery procedures System Energy identified a historical allocation error in certain months and agreed to provide a bill credit to customers to correct the error. In response to the APSC’s claims, System Energy argued that the Unit Power Sales Agreement did not include System Energy’s borrowings from the Entergy system money pool or earnings on deposits to the Entergy system money pool in the determination of the cost of capital; and accordingly, no refunds were appropriate on those issues. In response to the City Council’s claims, System Energy argued that it has reasonably managed its cash and that the City Council’s theory of cash management was defective because it failed to adequately consider the relevant cash needs of System Energy and it made faulty presumptions about the operation of the Entergy system money pool. System Energy further pointed out that the issue of its capital structure was already subject to pending FERC litigation.
In March 2022 the FERC trial staff filed direct and answering testimony in response to the LPSC, the APSC, and the City Council’s direct testimony. In its testimony, the FERC trial staff recommended refunds for two primary reasons: (1) it concluded that System Energy should have excluded specified accumulated deferred income tax balances in account 190 associated with rate refunds; and (2) it concluded that System Energy should have excluded specified accumulated deferred income tax balances in account 190 associated with a deemed contract satisfaction and reissuance that occurred in 2005. The FERC trial staff recommended refunds of $84.1 million, exclusive of any tax gross-up or FERC interest. In addition, the FERC trial staff recommended the following prospective modifications to the Unit Power Sales Agreement: (1) inclusion of a rate base credit to recognize the time value of money associated with the advance collection of lease payments; (2) exclusion of executive incentive compensation costs for members of the Office of the Chief Executive and long-term performance unit costs where awards are based solely or primarily on financial metrics; and (3) exclusion of unvested, accrued amounts for stock options, performance units, and restricted stock awards. With respect to issues that ultimately concerned the reasonableness of System Energy’s rate of return, the FERC trial staff stated that it was unnecessary to consider such issues in the proceeding, in light of the pending case concerning System Energy’s return on equity and capital structure. On all other material issues raised by the LPSC, the APSC, and the City Council, the FERC trial staff recommended either no refunds or no modification to the Unit Power Sales Agreement.
In April 2022, System Energy filed cross-answering testimony in response to the FERC trial staff’s recommendations of refunds for the accumulated deferred income taxes issues and proposed modifications to the Unit Power Sales Agreement for the executive incentive compensation issues. In June 2022 the FERC trial staff submitted revised answering testimony, in which it recommended additional refunds associated with the accumulated deferred income tax balances in account 190 associated with a deemed contract satisfaction and reissuance that occurred in 2005. Based on the testimony revisions, the FERC trial staff’s recommended refunds total $106.6 million, exclusive of any tax gross-up or FERC awarded interest. Also in June 2022, System Energy
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filed revised and supplemental cross-answering testimony to respond to the FERC trial staff’s testimony and oppose its revised recommendation.
In May 2022 the LPSC, the APSC, and the City Council filed rebuttal testimony. The LPSC’s testimony asserted new claims, including that: (1) certain of the sale-leaseback transaction costs may have been imprudently incurred; (2) accumulated deferred income taxes associated with sale-leaseback transaction costs should have been included in rate base; (3) accumulated deferred income taxes associated with federal investment tax credits should have been excluded from rate base; (4) monthly net operating loss accumulated deferred income taxes should have been excluded from rate base; and (5) several categories of proposed rate changes, including executive incentive compensation, air travel, industry dues, and legal costs, also warranted historical refunds. The LPSC’s rebuttal testimony argued that refunds for the alleged tariff violations and other claims must be calculated by rerunning the Unit Power Sales Agreement formula rate; however, it included estimates of refunds associated with some, but not all, of its claims, totaling $286 million without interest. The City Council’s rebuttal testimony also proposed a new, alternate theory and claim for relief regarding System Energy’s participation in the Entergy system money pool, under which it calculates estimated refunds of approximately $51.7 million. The APSC’s rebuttal testimony agreed with the LPSC’s direct testimony that retained earnings should be adjusted in a comprehensive refund calculation. The testimony quantified the estimated impacts of three issues: (1) a $1.5 million reduction in the revenue requirement under the Unit Power Sales Agreement if System Energy’s borrowings from the money pool were included in short-term debt; (2) a $1.9 million reduction in the revenue requirement if System Energy’s allocated share of money pool earnings were credited through the Unit Power Sales Agreement; and (3) a $1.9 million reduction in the revenue requirement for every $50 million of refunds ordered in a given year, without interest. In total, excluding the settled issues noted below, the claims sought more than $700 million in refunds and interest, based on charges to all Unit Power Sales Agreement purchasers including Entergy Mississippi. The hearing before a FERC ALJ occurred between September and December 2022.
In November 2022, System Energy filed a partial settlement agreement with the APSC, the City Council, and the LPSC that resolved the following issues raised in the Unit Power Sales Agreement complaint: advance collection of lease payments, aircraft costs, executive incentive compensation, money pool borrowings, advertising expenses, deferred nuclear refueling outage costs, industry association dues, and termination of the capital funds agreement. The settlement provided that System Energy would provide a black box refund of $18 million (inclusive of interest), plus additional refund amounts with interest to be calculated for certain issues to be distributed to Entergy Arkansas, Entergy Louisiana, and Entergy New Orleans as the Utility operating companies other than Entergy Mississippi purchasing under the Unit Power Sales Agreement. The settlement further provided that if the APSC, the City Council, or the LPSC agreed to the global settlement System Energy entered into with the MPSC (discussed below), and such global settlement included a black box refund amount, then the black box refund for this settlement agreement would not be incremental or in addition to the global black box refund amount. The settlement agreement addressed other matters as well, including adjustments to rate base beginning in October 2022, exclusion of certain other costs, and inclusion of money pool borrowings, if any, in short-term debt within the cost of capital calculation used in the Unit Power Sales Agreement. In April 2023 the FERC approved the settlement agreement. The refund provided for in the settlement agreement was included in the May 2023 service month bills under the Unit Power Sales Agreement.
In May 2023 the presiding ALJ issued an initial decision finding that System Energy should have excluded multiple identified categories of accumulated deferred income taxes from rate base when calculating Unit Power Sales Agreement bills. The initial decision also found that the Unit Power Sales Agreement should be modified such that a cash working capital allowance of negative $36.4 million is applied prospectively. On the other non-settled issues for which the complainants sought refunds or changes to the Unit Power Sales Agreement, the initial decision ruled against the complainants.
System Energy disagreed with the ALJ’s findings concerning the accumulated deferred income taxes issues and cash working capital. In July 2023, System Energy filed a brief on exceptions to the initial decision’s accumulated deferred income taxes findings. Also in July 2023, the APSC, the LPSC, the City Council, and the
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FERC trial staff filed separate briefs on exceptions. In August 2023 all parties filed separate briefs opposing exceptions.
As discussed below in “System Energy Settlement with the MPSC,” “System Energy Settlement with the APSC,” and “System Energy Settlement with the City Council,” and “System Energy Settlement with the LPSC,” the MPSC, the APSC, and the City Council, and the LPSC have settled their claims related to this proceeding.
Grand Gulf Prudence Complaints
The second of the additional complaints was filed at the FERC in March 2021 by the LPSC, the APSC, and the City Council against System Energy, Entergy Services, Entergy Operations, and Entergy Corporation. The second complaint contained two primary allegations. First, it alleged that, based on the plant’s capacity factor and alleged safety performance, System Energy and the other respondents imprudently operated Grand Gulf during the period 2016-2020, and it sought refunds of at least $360 million in alleged replacement energy costs, in addition to other costs, including those that could only be identified upon further investigation. Second, it alleged that the performance and/or management of the 2012 extended power uprate of Grand Gulf was imprudent, and it sought refunds of all costs of the 2012 uprate that were determined to result from imprudent planning or management of the project. In addition to the requested refunds, the complaint asked that the FERC modify the Unit Power Sales Agreement to provide for full cost recovery only if certain performance indicators were met and to require pre-authorization of capital improvement projects in excess of $125 million before related costs could be passed through to customers in rates. In April 2021, System Energy and the other respondents filed their motion to dismiss and answer to the complaint. System Energy requested that the FERC dismiss the claims within the complaint. With respect to the claim concerning operations, System Energy argued that the complaint did not meet its legal burden because, among other reasons, it failed to allege any specific imprudent conduct. With respect to the claim concerning the uprate, System Energy argued that the complaint failed because, among other reasons, the complainants’ own conduct prevented them from raising a serious doubt as to the prudence of the uprate. System Energy also requested that the FERC dismiss other elements of the complaint, including the proposed modifications to the Unit Power Sales Agreement, because they were not warranted. In February 2023 the FERC issued an order denying rehearing and thereby affirming its order setting the complaint for settlement and hearing procedures. In July 2023 the FERC chief ALJ terminated settlement procedures and appointed a presiding ALJ to oversee hearing procedures. In September 2023 a procedural schedule for hearing procedures was established. Also in September 2023 the LPSC authorized its staff to file an additional complaint concerning the prudence of System Energy’s operation and management of Grand Gulf in the year 2022. In October 2023 the LPSC, the APSC, and the City Council filed what they styled as an amended and supplemental complaint with the FERC against System Energy, Entergy Services, and Entergy Operations. In November 2023, System Energy answered the amended and supplemental complaint. Pursuant to the procedural schedule, the complainants’ testimony in the original complaint proceeding was filed in December 2023. System Energy’s answering testimony was filed in May 2024, and the FERC trial staff’s direct and answering testimony was filed in June 2024.
As discussed below in “System Energy Settlement with the APSC,” “System Energy Settlement with the City Council,” and “System Energy Settlement with the LPSC,” the APSC, the City Council, and the LPSC have settled all of their claims related to this proceeding.
System Energy Settlement with the MPSC
In June 2022, System Energy, Entergy Mississippi, and additional named Entergy parties involved in thirteen docketed proceedings before the FERC filed with the FERC a partial settlement agreement and offer of settlement. The settlement memorialized the Entergy parties’ agreement with the MPSC to globally resolve all actual and potential claims between the Entergy parties and the MPSC associated with those FERC proceedings and with System Energy’s past implementation of the Unit Power Sales Agreement. The Unit Power Sales Agreement is a FERC-jurisdictional formula rate tariff for sales of energy and capacity from System Energy’s owned and
Entergy Corporation and Subsidiaries
Notes to Financial Statements
leased share of Grand Gulf to Entergy Mississippi, Entergy Arkansas, Entergy Louisiana, and Entergy New Orleans. Entergy Mississippi purchases the greatest single amount, nearly 40% of System Energy’s share of Grand Gulf, after its additional purchases from affiliates are considered.
The settlement provided for a black box refund of $235 million from System Energy to Entergy Mississippi. In addition, beginning with the July 2022 service month, the settlement provided for Entergy Mississippi’s bills from System Energy to be adjusted to reflect: an authorized rate of return on equity of 9.65%, a capital structure not to exceed 52% equity, a rate base reduction for the advance collection of sale-leaseback rental costs, and the exclusion of certain long-term incentive plan performance unit costs from rates. The settlement was approved by the MPSC in June 2022 and the FERC in November 2022.
System Energy had previously recorded a provision and associated liability of $37 million for elements of the applicable litigation. In June 2022, System Energy recorded a regulatory charge of $551 million ($413 million net-of-tax), increasing the regulatory liability to $588 million, which consisted of $235 million for the settlement with the MPSC and $353 million for potential future refunds to Entergy Arkansas, Entergy Louisiana, and Entergy New Orleans. System Energy paid the black box refund of $235 million to Entergy Mississippi in November 2022.
System Energy Settlement with the APSC
In October 2023, System Energy, Entergy Arkansas, and additional named Entergy parties involved in multiple docketed proceedings pending before the FERC reached a settlement in principle with the APSC to globally resolve all of their actual and potential claims in those dockets and with System Energy’s past implementation of the Unit Power Sales Agreement. The settlement also covered the amended and supplemental complaint, discussed above in “Grand Gulf Prudence Complaint**,**” filed at the FERC in October 2023. System Energy, Entergy Arkansas, additional Entergy parties, and the APSC filed the settlement agreement and supporting materials with the FERC in November 2023.
The terms of the settlement with the APSC aligned with the $588 million global black box settlement reached between System Energy and the MPSC in June 2022 and provided for Entergy Arkansas to receive a black box refund of $142 million from System Energy, inclusive of $49.5 million already received by Entergy Arkansas from System Energy. In addition, beginning with the November 2023 service month, the settlement provided for Entergy Arkansas’s bills from System Energy to be adjusted to reflect an authorized rate of return on equity of 9.65% and a capital structure not to exceed 52% equity. In March 2024 the FERC approved the settlement, and System Energy paid the remaining black box refund of $93 million to Entergy Arkansas in 2024.
System Energy Settlement with the City Council
In April 2024, System Energy, Entergy New Orleans, and additional named Entergy parties involved in multiple docketed proceedings pending before the FERC reached a settlement in principle with the City Council to globally resolve all of their actual and potential claims in those dockets and with System Energy’s past implementation of the Unit Power Sales Agreement. The settlement also covered the amended and supplemental complaint, discussed in “Grand Gulf Prudence Complaints” above, filed by the LPSC, the APSC, and the City Council at the FERC in October 2023. In May 2024, System Energy, Entergy New Orleans, additional named Entergy parties, and the City Council filed the settlement agreement and supporting materials with the FERC.
The terms of the settlement with the City Council aligned with the $588 million global black box settlement amount reflected in the prior settlements reached between System Energy and the MPSC in June 2022 and between System Energy and the APSC in November 2023. The settlement provided for Entergy New Orleans to receive a black box refund of $116 million from System Energy, inclusive of approximately $18 million already received by Entergy New Orleans from System Energy. In addition, beginning with the June 2024 service month, the settlement provided for Entergy New Orleans’s bills from System Energy to be adjusted to reflect an authorized rate of return on equity of 9.65% and a capital structure not to exceed 52% equity. In August 2024 the FERC approved the
Entergy Corporation and Subsidiaries
Notes to Financial Statements
settlement, and System Energy paid the remaining black box refund of $98 million to Entergy New Orleans in October 2024.
System Energy Settlement with the LPSC
In July 2024, System Energy and the LPSC staff reached a settlement in principle to globally resolve all of the LPSC’s actual and potential claims in multiple docketed proceedings pending before the FERC (including all docketed proceedings resolved by the MPSC, the APSC, and the City Council settlements) and with System Energy’s past implementation of the Unit Power Sales Agreement. The settlement also covered the amended and supplemental complaint, discussed above in “Grand Gulf Prudence Complaints,” filed by the LPSC, the APSC, and the City Council at the FERC in October 2023. In August 2024 the LPSC approved the settlement. In September 2024 the settling parties filed the settlement for approval by the FERC.
The terms of the settlement with the LPSC staff aligned with the $588 million global black box settlement amount reflected in the prior settlements reached between System Energy and the MPSC in June 2022, between System Energy and the APSC in November 2023, and between System Energy and the City Council in April 2024. The settlement in principle provided for Entergy Louisiana to receive a black box refund of $95 million from System Energy, inclusive of approximately $15 million already received by Entergy Louisiana from System Energy. In addition, beginning with the September 2024 service month, the settlement provided for Entergy Louisiana’s bills from System Energy to be adjusted to reflect an authorized rate of return on equity of 9.65% and a capital structure not to exceed 52% equity. In November 2024 the FERC approved the settlement, and System Energy paid the remaining black box refund of $80 million to Entergy Louisiana in December 2024.
The settlement also included an agreement that, subject to the receipt of necessary regulatory approvals, Entergy Louisiana will divest to Entergy Mississippi all of its interest in Grand Gulf capacity and energy under the Unit Power Sales Agreement and its purchases from Entergy Arkansas under the MSS-4 replacement tariff. In October 2024 Entergy Louisiana and Entergy Mississippi filed with the FERC a PPA under which Entergy Mississippi would purchase Entergy Louisiana’s purchases of Grand Gulf capacity and energy. The PPA is governed by the MSS-4 replacement tariff, a tariff governing the sales of energy and capacity among the Utility operating companies. The requisite approvals for the PPA were issued by the FERC in November 2024 and the MPSC in February 2025. The divestiture is effective as of January 1, 2025.
System Energy Regulatory Liability for Pending Complaints
Prior to June 2022, System Energy recorded a provision and associated liability of $37 million for elements of the complaints against System Energy. In June 2022, as discussed in “System Energy Settlement with the MPSC” above, System Energy recorded a regulatory charge of $551 million ($413 million net-of-tax), increasing System Energy’s regulatory liability to $588 million, which consisted of $235 million for the settlement with the MPSC and $353 million for potential future refunds to Entergy Arkansas, Entergy New Orleans, and Entergy Louisiana. System Energy paid the black box refund of $235 million to Entergy Mississippi in November 2022. As discussed above in “Grand Gulf Sale-leaseback Renewal Complaint and Uncertain Tax Position Rate Base Issue,” in January 2023 System Energy paid refunds of $103.5 million as a result of the FERC’s order in December 2022 in that proceeding and recouped $40.5 million of the $103.5 million from Entergy Louisiana and Entergy New Orleans in October 2023. In addition, as discussed above in “Unit Power Sales Agreement Complaint,” a black box refund of $18 million was made by System Energy in 2023 in connection with a partial settlement in that proceeding. Based on analysis of the then-pending complaints against System Energy and potential future settlement negotiations with the LPSC and the City Council, in third quarter 2023, System Energy recorded a regulatory charge of $40 million to increase System Energy’s regulatory liability related to complaints against System Energy. In December 2023 the $93 million black box refund to Entergy Arkansas was reclassified from the regulatory liability to accounts payable - associated companies on System Energy’s balance sheet. System Energy paid the remaining black box refunds of $93 million to Entergy Arkansas, $98 million to Entergy New Orleans, and $80 million to Entergy Louisiana in 2024.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Unit Power Sales Agreement
System Energy Formula Rate Annual Protocols Formal Challenge Concerning 2020 Calendar Year Bills
System Energy’s Unit Power Sales Agreement includes formula rate protocols that provide for the disclosure of cost inputs, an opportunity for informal discovery procedures, and a challenge process. In February 2022, pursuant to the protocols procedures, the LPSC, the APSC, the MPSC, the City Council, and the Mississippi Public Utilities Staff filed with the FERC a formal challenge to System Energy’s implementation of the formula rate during calendar year 2020. This formal challenge was ultimately settled as a result of System Energy’s global settlements with the MPSC, the APSC, the City Council, and the LPSC. See “Complaints Against System Energy” above for further discussion of the System Energy settlements with the MPSC, the APSC, the City Council, and the LPSC.
System Energy Formula Rate Annual Protocols Formal Challenge Concerning 2021 Calendar Year Bills
In March 2023, pursuant to the protocols procedures discussed above, the LPSC, the APSC, and the City Council filed with the FERC a formal challenge to System Energy’s implementation of the formula rate during calendar year 2021. This formal challenge was ultimately settled as a result of System Energy’s global settlements with the MPSC, the APSC, the City Council, and the LPSC. See “Complaints Against System Energy” above for further discussion of the System Energy settlements with the MPSC, the APSC, the City Council, and the LPSC.
System Energy Formula Rate Annual Protocols Formal Challenge Concerning 2022 Calendar Year Bills
In February 2024, pursuant to the protocols procedures, the LPSC and the City Council filed with the FERC a formal challenge to System Energy’s implementation of the formula rate during calendar year 2022. This formal challenge was ultimately settled as a result of System Energy’s global settlements with the MPSC, the APSC, the City Council, and the LPSC. See “Complaints Against System Energy” above for further discussion of the System Energy settlements with the MPSC, the APSC, the City Council, and the LPSC.
Depreciation Amendment Proceeding
In December 2021, System Energy submitted to the FERC proposed amendments to the Unit Power Sales Agreement to adopt updated rates for use in calculating Grand Gulf plant depreciation and amortization expenses. The proposed amendments would result in higher charges to the Utility operating companies that buy capacity and energy from System Energy under the Unit Power Sales Agreement. In February 2022 the FERC accepted System Energy’s proposed increased depreciation rates with an effective date of March 1, 2022, subject to refund pending the outcome of the settlement and/or hearing procedures. In June 2023 System Energy filed with the FERC an unopposed offer of settlement that it had negotiated with intervenors to the proceeding. In August 2023 the FERC approved the settlement, which resolves the proceeding. In third quarter 2023, System Energy recorded a reduction in depreciation expense of $41 million representing the cumulative difference in depreciation expense resulting from the depreciation rates used from March 2022 through June 2023 and the depreciation rates included in the settlement filing approved by the FERC. In October 2023, System Energy filed a refund report with the FERC. The refund provided for in the refund report was included in the September 2023 service month bills under the Unit Power Sales Agreement. No comments or protests to the refund report were filed.
Pension Costs Amendment Proceeding
In October 2021, System Energy submitted to the FERC proposed amendments to the Unit Power Sales Agreement to include in rate base the prepaid and accrued pension costs associated with System Energy’s qualified pension plans. Based on data ending in 2020, the increased annual revenue requirement associated with the filing is approximately $8.9 million. In March 2022 the FERC accepted System Energy’s proposed amendments with an
Entergy Corporation and Subsidiaries
Notes to Financial Statements
effective date of December 1, 2021, subject to refund pending the outcome of the settlement and/or hearing procedures. In August 2023 the FERC chief ALJ terminated settlement procedures and designated a presiding ALJ to oversee hearing procedures. Testimony was filed by the parties from October 2023 through April 2024, and the hearing concluded in June 2024.
In September 2024 the presiding ALJ issued an initial decision recommending that the FERC approve inclusion of a line item in rate base for prepaid and accrued pension costs; however, the presiding ALJ did not agree with System Energy’s proposed methodology to calculate the value of the prepaid and accrued pension cost input. Instead, the presiding ALJ recommended limiting System Energy’s recovery to the prepaid and accrued pension costs that were incurred beginning in 2015 and later.
System Energy disputes the presiding ALJ's determination concerning the methodology used to calculate the prepaid and accrued pension input, and System Energy filed exceptions to these rulings in October 2024. In October 2024, the LPSC, the APSC, and the FERC trial staff filed separate briefs on exceptions; these parties generally argue that the presiding ALJ should have rejected System Energy’s filing entirely, rather than limit System Energy’s recovery of the prepaid and accrued pension costs. Later in October 2024, System Energy, the LPSC, the APSC, and the FERC trial staff filed separate briefs opposing exceptions.
If the ALJ’s determination is affirmed by the FERC, System Energy estimates refunds, including interest through December 31, 2024, of approximately $16 million to $21 million would be owed. The ALJ's initial decision is not binding on the FERC and is an interim step in the hearing process. No refunds will be owed in connection with this proceeding and no changes to System Energy’s pension cost recovery methodology will be implemented unless and until the FERC requires them in a final order. This proceeding is not covered by the global settlements described above.
Storm Cost Recovery Filings with Retail Regulators
Entergy Louisiana
Hurricane Francine
In September 2024, Hurricane Francine caused damage to the areas served by Entergy Louisiana and Entergy New Orleans. The storm resulted in widespread power outages, primarily due to damage to distribution infrastructure as a result of strong winds and heavy rain, and the loss of sales during the power outages.
In December 2024, and subsequently amended in an errata filed in February 2025, Entergy Louisiana submitted an application to the LPSC seeking a determination that approximately $183.6 million in storm restoration costs associated with Hurricane Francine were reasonable and necessary and, therefore, eligible for recovery from customers, as well as approval to recover approximately $3.6 million in certain carrying costs from customers. The $183.6 million includes approximately $152.8 million in distribution capital costs and approximately $29.8 million in non-capital costs; the balance consists of transmission and generation capital costs. Entergy Louisiana proposes in its application to recover its distribution-related capital costs of $152.8 million through the distribution recovery mechanism of its formula rate plan. Entergy Louisiana has further requested the LPSC to authorize recovery of these distribution-related capital expenses through an interim rate adjustment, subject to true-up and refund, that would begin with the first billing cycle of March 2025. Entergy Louisiana also requested to recover, from its storm reserve escrow account, $33.5 million, which consists of non-capital costs and certain carrying costs. Entergy Louisiana has also proposed to recover the transmission and generation capital costs through separate ratemaking proceedings. In February 2025, Entergy Louisiana withdrew the $33.5 million from its storm reserve escrow account. The period for intervention has expired, and a status conference for the purpose of establishing a procedural schedule has been set for March 2025.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Hurricane Laura, Hurricane Delta, Hurricane Zeta, Winter Storm Uri, and Hurricane Ida
In August 2020 and October 2020, Hurricane Laura, Hurricane Delta, and Hurricane Zeta caused significant damage to portions of Entergy Louisiana’s service area. The storms resulted in widespread outages, significant damage to distribution and transmission infrastructure, and the loss of sales during the outages. Additionally, as a result of Hurricane Laura’s extensive damage to the grid infrastructure serving the impacted area, large portions of the underlying transmission system required nearly a complete rebuild.
In October 2020, Entergy Louisiana filed an application at the LPSC seeking approval of certain ratemaking adjustments in connection with the issuance of shorter-term mortgage bonds to provide interim financing for restoration costs associated with Hurricane Laura, Hurricane Delta, and Hurricane Zeta. Subsequently, Entergy Louisiana and the LPSC staff filed a joint motion seeking approval to exclude from the derivation of Entergy Louisiana’s capital structure and cost rate of debt for ratemaking purposes, including the allowance for funds used during construction, shorter-term debt up to $1.1 billion issued by Entergy Louisiana to fund costs associated with Hurricane Laura, Hurricane Delta, and Hurricane Zeta costs on an interim basis. In November 2020 the LPSC issued an order approving the joint motion, and Entergy Louisiana issued $1.1 billion of 0.62% Series mortgage bonds due November 2023. Also in November 2020, Entergy Louisiana withdrew $257 million from its funded storm reserves.
In February 2021 two winter storms (collectively, Winter Storm Uri) brought freezing rain and ice to Louisiana. Ice accumulation sagged or downed trees, limbs, and power lines, causing damage to Entergy Louisiana’s transmission and distribution systems. The additional weight of ice caused trees and limbs to fall into power lines and other electric equipment. When the ice melted, it affected vegetation and electrical equipment, causing additional outages. Entergy Louisiana recovered the incremental fuel costs associated with Winter Storm Uri over a five-month period from April 2021 through August 2021.
In April 2021, Entergy Louisiana filed an application with the LPSC relating to Hurricane Laura, Hurricane Delta, Hurricane Zeta, and Winter Storm Uri restoration costs and in July 2021, Entergy Louisiana made a supplemental filing updating the total restoration costs. Total restoration costs for the repair and/or replacement of Entergy Louisiana’s electric facilities damaged by these storms were estimated to be approximately $2.06 billion, including approximately $1.68 billion in capital costs and approximately $380 million in non-capital costs. Including carrying costs through January 2022, Entergy Louisiana sought an LPSC determination that $2.11 billion was prudently incurred and, therefore, was eligible for recovery from customers. Additionally, Entergy Louisiana requested that the LPSC determine that re-establishment of a storm escrow account to the previously authorized amount of $290 million was appropriate. In July 2021, Entergy Louisiana supplemented the application with a request regarding the financing and recovery of the recoverable storm restoration costs. Specifically, Entergy Louisiana requested approval to securitize its restoration costs pursuant to Louisiana Act 55 financing, as supplemented by Act 293 of the Louisiana Legislature’s Regular Session of 2021.
In August 2021, Hurricane Ida caused extensive damage to Entergy Louisiana’s distribution and, to a lesser extent, transmission systems resulting in widespread power outages. In September 2021, Entergy Louisiana filed an application at the LPSC seeking approval of certain ratemaking adjustments in connection with the issuance of approximately $1 billion of shorter-term mortgage bonds to provide interim financing for restoration costs associated with Hurricane Ida, which bonds were issued in October 2021. Also in September 2021, Entergy Louisiana sought approval for the creation and funding of a $1 billion restricted escrow account for Hurricane Ida related restoration costs, subject to a subsequent prudence review.
After filing of testimony by the LPSC staff and intervenors, which generally supported or did not oppose Entergy Louisiana’s requests in regard to Hurricane Laura, Hurricane Delta, Hurricane Zeta, Winter Storm Uri, and Hurricane Ida, the parties negotiated and executed an uncontested stipulated settlement which was filed with the LPSC in February 2022. The settlement agreement contained the following key terms: $2.1 billion of restoration costs from Hurricane Laura, Hurricane Delta, Hurricane Zeta, and Winter Storm Uri were prudently incurred and
Entergy Corporation and Subsidiaries
Notes to Financial Statements
eligible for recovery; carrying costs of $51 million were recoverable; a $290 million cash storm reserve should be re-established; a $1 billion reserve should be established to partially pay for Hurricane Ida restoration costs; and Entergy Louisiana was authorized to finance $3.186 billion utilizing the securitization process authorized by Act 55, as supplemented by Act 293. The LPSC issued an order approving the settlement in March 2022. As a result of the financing order, Entergy Louisiana reclassified $1.942 billion from utility plant to other regulatory assets.
In May 2022 the securitization financing closed, resulting in the issuance of $3.194 billion principal amount of bonds by Louisiana Local Government Environmental Facilities and Community Development Authority (LCDA), a political subdivision of the State of Louisiana. The securitization was authorized pursuant to the Louisiana Utilities Restoration Corporation Act, Part VIII of Chapter 9 of Title 45 of the Louisiana Revised Statutes, as supplemented by Act 293 of the Louisiana legislature approved in 2021. The LCDA loaned the proceeds to the LURC. Pursuant to Act 293, the LURC contributed the net bond proceeds to a State legislatively authorized and LURC-sponsored trust, Restoration Law Trust I (the storm trust I).
Pursuant to Act 293, the net proceeds of the bonds were used by the storm trust I to purchase 31,635,718.7221 Class A preferred, non-voting membership interest units (the preferred membership interests) issued by Entergy Finance Company. Entergy Finance Company is required to make annual distributions (dividends) commencing on December 15, 2022 on the preferred membership interests issued to the storm trust I. These annual dividends received by the storm trust I will be distributed to Entergy Louisiana and the LURC, as beneficiaries of the storm trust I. Specifically, 1% of the annual dividends received by the storm trust I will be distributed to the LURC, for the benefit of customers, and 99% will be distributed to Entergy Louisiana, net of storm trust expenses. The preferred membership interests have a stated annual cumulative cash dividend rate of 7% and a liquidation price of $100 per unit. The terms of the preferred membership interests include certain financial covenants to which Entergy Finance Company is subject. Semi-annual redemptions of the preferred membership interests, subject to certain conditions, are expected to occur over the next 15 years.
Entergy and Entergy Louisiana do not report the bonds issued by the LCDA on their balance sheets because the bonds are the obligation of the LCDA. The bonds are secured by system restoration property, which is the right granted by law to the LURC to collect a system restoration charge from customers. The system restoration charge is adjusted at least semi-annually to ensure that it is sufficient to service the bonds. Entergy Louisiana collects the system restoration charge on behalf of the LURC and remits the collections to the bond indenture trustee. Entergy Louisiana began collecting the system restoration charge effective with the first billing cycle of June 2022 and the system restoration charge is expected to remain in place for up to 15 years. Entergy and Entergy Louisiana do not report the collections as revenue because Entergy Louisiana is merely acting as a billing and collection agent for the LCDA and the LURC. In the remote possibility that the system restoration charge, as well as any funds in the excess subaccount and funds in the debt service reserve account, are insufficient to service the bonds resulting in a payment default, the storm trust I is required to liquidate Entergy Finance Company preferred membership interests in an amount equal to what would be required to cure the default. The estimated value of this indirect guarantee is immaterial.
From the proceeds from the issuance of the preferred membership interests, Entergy Finance Company distributed $1.4 billion to its parent, Entergy Holdings Company, LLC, a company wholly-owned and consolidated by Entergy. Subsequently, Entergy Holdings Company liquidated, distributing the $1.4 billion it received from Entergy Finance Company to Entergy Louisiana as holder of 6,843,780.24 units of Class A, 4,126,940.15 units of Class B, and 2,935,152.69 units of Class C preferred membership interests. Entergy Louisiana had acquired these preferred membership interests with proceeds from previous securitizations of storm restoration costs. Entergy Finance Company loaned the remaining $1.7 billion from the preferred membership interests proceeds to Entergy which used the cash to redeem $650 million of 4.00% Series senior notes due July 2022 and indirectly contributed $1 billion to Entergy Louisiana as a capital contribution.
Entergy Louisiana used the $1 billion capital contribution to fund its Hurricane Ida escrow account and subsequently withdrew the $1 billion from the escrow account. With a portion of the $1 billion withdrawn from the
Entergy Corporation and Subsidiaries
Notes to Financial Statements
escrow account and the $1.4 billion from the Entergy Holdings Company liquidation, Entergy Louisiana deposited $290 million in a restricted escrow account as a storm damage reserve for future storms, used $1.2 billion to repay its unsecured term loan due June 2023, and used $435 million to redeem a portion of its 0.62% Series mortgage bonds due November 2023.
As discussed in Note 3 to the financial statements, the securitization resulted in recognition of a reduction of income tax expense of approximately $290 million by Entergy Louisiana. Entergy’s recognition of reduced income tax expense was partially offset by other tax charges resulting in a net reduction of income tax expense of $283 million. In recognition of obligations described in an LPSC ancillary order issued as part of the securitization regulatory proceeding, Entergy Louisiana recorded a $224 million ($165 million net-of-tax) regulatory charge and a corresponding regulatory liability to reflect its obligation to provide credits to its customers.
As discussed in Note 6 and Note 17 to the financial statements, Entergy Louisiana consolidates the storm trust I as a variable interest entity and the LURC’s 1% beneficial interest is presented as noncontrolling interest in the financial statements. In second quarter 2022, Entergy Louisiana recorded a charge of $31.6 million in other income to reflect the LURC’s beneficial interest in the storm trust I.
In April 2022, Entergy Louisiana filed an application with the LPSC relating to Hurricane Ida restoration costs. Total restoration costs for the repair and/or replacement of Entergy Louisiana’s electric facilities damaged by Hurricane Ida were estimated to be approximately $2.54 billion, including approximately $1.96 billion in capital costs and approximately $586 million in non-capital costs. Including carrying costs of $57 million through December 2022, Entergy Louisiana was seeking an LPSC determination that $2.60 billion was prudently incurred and, therefore, eligible for recovery from customers. As part of this filing, Entergy Louisiana also was seeking an LPSC determination that an additional $32 million in costs associated with the restoration of Entergy Louisiana’s electric facilities damaged by Hurricane Laura, Hurricane Delta, and Hurricane Zeta as well as Winter Storm Uri was prudently incurred. This amount was exclusive of the requested $3 million in carrying costs through December 2022. In total, Entergy Louisiana was requesting an LPSC determination that $2.64 billion was prudently incurred and, therefore, eligible for recovery from customers. As discussed above, in March 2022 the LPSC approved financing of a $1 billion storm escrow account from which funds were withdrawn to finance costs associated with Hurricane Ida restoration. In June 2022, Entergy Louisiana supplemented the application with a request regarding the financing and recovery of the recoverable storm restoration costs. Specifically, Entergy Louisiana requested approval to securitize its restoration costs pursuant to Louisiana Act 55 financing, as supplemented by Act 293 of the Louisiana Legislature’s Regular Session of 2021. In October 2022 the LPSC staff recommended a finding that the requested storm restoration costs of $2.64 billion, including associated carrying costs of $59.1 million, were prudently incurred and eligible for recovery from customers. The LPSC staff further recommended approval of Entergy Louisiana’s plans to securitize these costs, net of the $1 billion in funds withdrawn from the storm escrow account described above. The parties negotiated and executed an uncontested stipulated settlement which was filed with the LPSC in December 2022. The settlement agreement contains the following key terms: $2.57 billion of restoration costs from Hurricane Ida, Hurricane Laura, Hurricane Delta, Hurricane Zeta, and Winter Storm Uri were prudently incurred and eligible for recovery; carrying costs of $59.2 million were recoverable; and Entergy Louisiana was authorized to finance $1.657 billion utilizing the securitization process authorized by Act 55, as supplemented by Act 293. A procedural motion to consider the uncontested settlement at the December 2022 LPSC meeting did not pass and the settlement was not voted on. In January 2023 an ALJ with the LPSC conducted a settlement hearing to receive the uncontested settlement and supporting testimony into evidence and issued a report of proceedings, which allows the LPSC to consider the uncontested settlement without the procedural motion that did not pass in December. In January 2023 the LPSC approved the stipulated settlement subject to certain modifications. These modifications include the recognition of accumulated deferred income tax benefits related to damaged assets and system restoration costs as a reduction of the amount authorized to be financed utilizing the securitization process authorized by Act 55, as supplemented by Act 293, from $1.657 billion to $1.491 billion. These modifications did not affect the LPSC’s conclusion that all system restoration costs sought by Entergy Louisiana were reasonable and prudent. In February 2023 the Louisiana Bond Commission voted to authorize the LCDA to issue the bonds authorized in the LPSC’s financing order.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
In March 2023 the Hurricane Ida securitization financing closed, resulting in the issuance of approximately $1.491 billion principal amount of bonds by the LCDA and a remaining regulatory asset of $180 million to be recovered through the exclusion of the accumulated deferred income taxes related to damaged assets and system restoration costs from the determination of future rates. The securitization was authorized pursuant to the Louisiana Utilities Restoration Corporation Act, Part VIII of Chapter 9 of Title 45 of the Louisiana Revised Statutes, as supplemented by Act 293 of the Louisiana Legislature’s Regular Session of 2021. The LCDA loaned the proceeds to the LURC. Pursuant to Act 293, the LURC contributed the net bond proceeds to a State legislatively authorized and LURC-sponsored trust, Restoration Law Trust II (the storm trust II).
Pursuant to Act 293, the net proceeds of the bonds were used by the storm trust II to purchase 14,576,757.48 Class B preferred, non-voting membership interest units (the preferred membership interests) issued by Entergy Finance Company. Entergy Finance Company is required to make annual distributions (dividends) commencing on December 15, 2023 on the preferred membership interests issued to the storm trust II. These annual dividends received by the storm trust II will be distributed to Entergy Louisiana and the LURC, as beneficiaries of the storm trust II. Specifically, 1% of the annual dividends received by the storm trust II will be distributed to the LURC for the benefit of customers, and 99% will be distributed to Entergy Louisiana, net of storm trust expenses. The preferred membership interests have a stated annual cumulative cash dividend rate of 7.5% and a liquidation price of $100 per unit. The terms of the preferred membership interests include certain financial covenants to which Entergy Finance Company is subject. Semi-annual redemptions of the preferred membership interests, subject to certain conditions, are expected to occur over the next 15 years.
Entergy and Entergy Louisiana do not report the bonds issued by the LCDA on their balance sheets because the bonds are the obligation of the LCDA. The bonds are secured by system restoration property, which is the right granted by law to the LURC to collect a system restoration charge from customers. The system restoration charge is adjusted at least semi-annually to ensure that it is sufficient to service the bonds. Entergy Louisiana collects the system restoration charge on behalf of the LURC and remits the collections to the bond indenture trustee. Entergy Louisiana began collecting the system restoration charge effective with the first billing cycle of April 2023 and the system restoration charge is expected to remain in place for up to 15 years. Entergy and Entergy Louisiana do not report the collections as revenue because Entergy Louisiana is merely acting as a billing and collection agent for the LCDA and the LURC. In the remote possibility that the system restoration charge, as well as any funds in the excess subaccount and funds in the debt service reserve account, are insufficient to service the bonds resulting in a payment default, the storm trust II is required to liquidate Entergy Finance Company preferred membership interests in an amount equal to what would be required to cure the default. The estimated value of this indirect guarantee is immaterial.
From the proceeds from the issuance of the preferred membership interests, Entergy Finance Company loaned approximately $1.5 billion to Entergy, which was indirectly contributed to Entergy Louisiana as a capital contribution.
As discussed in Note 3 to the financial statements, the securitization resulted in recognition of a net reduction of income tax expense of approximately $133 million, after taking into account a provision for uncertain tax positions, by Entergy Louisiana. Entergy’s recognition of reduced income tax expense was offset by other tax charges resulting in a net reduction of income tax expense of $129 million, after taking into account a provision for uncertain tax positions. In recognition of its obligations described in an LPSC ancillary order issued as part of the securitization regulatory proceeding, Entergy Louisiana recorded in first quarter 2023 a $103 million ($76 million net-of-tax) regulatory charge and a corresponding regulatory liability to reflect its obligation to provide credits to its customers.
As discussed in Note 6 and Note 17 to the financial statements, Entergy Louisiana consolidates the storm trust II as a variable interest entity and the LURC’s 1% beneficial interest is presented as noncontrolling interest in
Entergy Corporation and Subsidiaries
Notes to Financial Statements
the financial statements. In first quarter 2023, Entergy Louisiana recorded a charge of $14.6 million in other income to reflect the LURC’s beneficial interest in the storm trust II.
Hurricane Isaac
In August 2012, Hurricane Isaac caused extensive damage to Entergy Louisiana’s service area. In June 2014 the LPSC authorized Entergy Louisiana to utilize Louisiana Act 55 financing for Hurricane Isaac system restoration costs. Entergy Louisiana committed to pass on to customers a minimum of $30.8 million of customer benefits through annual customer credits of approximately $6.2 million for five years. Approvals for the Act 55 financings were obtained from the LURC and the Louisiana State Bond Commission.
In August 2014 the LCDA issued $314.85 million in bonds under Louisiana Act 55. From the $309 million of bond proceeds loaned by the LCDA to the LURC, the LURC deposited $16 million in a restricted escrow account as a storm damage reserve for Entergy Louisiana and transferred $293 million directly to Entergy Louisiana. Entergy Louisiana used the $293 million received from the LURC to acquire 2,935,152.69 Class C preferred, non-voting, membership interest units of Entergy Holdings Company that carry a 7.5% annual distribution rate. Distributions were payable quarterly commencing on September 15, 2014, and the membership interests had a liquidation price of $100 per unit. The preferred membership interests were callable at the option of Entergy Holdings Company after ten years under the terms of the LLC agreement. The terms of the membership interests included certain financial covenants to which Entergy Holdings Company was subject, including the requirement to maintain a net worth of at least $1.75 billion. As discussed above in “Hurricane Laura, Hurricane Delta, Hurricane Zeta, Winter Storm Uri, and Hurricane Ida”, in May 2022, Entergy Holdings Company liquidated and distributed cash to Entergy Louisiana as holder of the 2,935,152.69 units of Class C preferred membership interests.
Entergy and Entergy Louisiana do not report the bonds issued by the LCDA on their balance sheets because the bonds are the obligation of the LCDA and there is no recourse against Entergy or Entergy Louisiana in the event of a bond default. To service the bonds, Entergy Louisiana collects a system restoration charge on behalf of the LURC and remits the collections to the bond indenture trustee. Entergy and Entergy Louisiana do not report the collections as revenue because Entergy Louisiana is merely acting as the billing and collection agent for the state.
Hurricane Gustav and Hurricane Ike
In September 2008, Hurricane Gustav and Hurricane Ike caused catastrophic damage to Entergy Louisiana’s service territory. In December 2009, Entergy Louisiana entered into a stipulation agreement with the LPSC staff regarding its storm costs. In March and April 2010, Entergy Louisiana and other parties to the proceeding filed with the LPSC an uncontested stipulated settlement that included Entergy Louisiana’s proposal to utilize Act 55 financing, which included a commitment to pass on to customers a minimum of $43.3 million of customer benefits through a prospective annual rate reduction of $8.7 million for five years. In April 2010 the LPSC approved the settlement and subsequently issued financing orders and a ratemaking order intended to facilitate the implementation of the Act 55 financings. In June 2010 the Louisiana State Bond Commission approved the Act 55 financing. The settlement agreement allowed for an adjustment to the credits if there was a change in the applicable federal or state income tax rate. As a result of the enactment of the Tax Cuts and Jobs Act, in December 2017, and the lowering of the federal corporate income tax rate from 35% to 21%, the Louisiana Act 55 financing savings obligation regulatory liability related to Hurricane Gustav and Hurricane Ike was reduced by $2.7 million, with a corresponding increase to Other regulatory credits on the income statement. The effects of the Tax Cuts and Jobs Act are discussed further in Note 3 to the financial statements.
In July 2010 the LCDA issued two series of bonds totaling $713.0 million under Act 55. From the $702.7 million of bond proceeds loaned by the LCDA to the LURC, the LURC deposited $290 million in a restricted escrow account as a storm damage reserve for Entergy Louisiana and transferred $412.7 million directly to Entergy Louisiana. From the bond proceeds received by Entergy Louisiana from the LURC, Entergy Louisiana
Entergy Corporation and Subsidiaries
Notes to Financial Statements
used $412.7 million to acquire 4,126,940.15 Class B preferred, non-voting, membership interest units of Entergy Holdings Company that carry a 9% annual distribution rate. Distributions were payable quarterly commencing on September 15, 2010, and the membership interests had a liquidation price of $100 per unit. The preferred membership interests were callable at the option of Entergy Holdings Company after ten years under the terms of the LLC agreement. The terms of the membership interests included certain financial covenants to which Entergy Holdings Company was subject, including the requirement to maintain a net worth of at least $1 billion. As discussed above in “Hurricane Laura, Hurricane Delta, Hurricane Zeta, Winter Storm Uri, and Hurricane Ida”, in May 2022, Entergy Holdings Company liquidated and distributed cash to Entergy Louisiana as holder of the 4,126,940.15 units of Class B preferred membership interests.
The bonds were repaid in 2022. Entergy and Entergy Louisiana did not report the bonds issued by the LCDA on their balance sheets because the bonds were the obligation of the LCDA, and there was no recourse against Entergy or Entergy Louisiana in the event of a bond default. To service the bonds, Entergy Louisiana collected a system restoration charge on behalf of the LURC and remitted the collections to the bond indenture trustee. Entergy and Entergy Louisiana do not report the collections as revenue because Entergy Louisiana is merely acting as the billing and collection agent for the state.
Hurricane Katrina and Hurricane Rita
In August and September 2005, Hurricanes Katrina and Rita caused catastrophic damage to Entergy Louisiana’s service territory. In March 2008, Entergy Louisiana and the LURC filed at the LPSC an application requesting that the LPSC grant a financing order authorizing the financing of Entergy Louisiana storm costs, storm reserves, and issuance costs pursuant to Louisiana Act 55. Entergy Louisiana also filed an application requesting LPSC approval for ancillary issues including the mechanism to flow charges and savings to customers via a storm cost offset rider. In April 2008 the Louisiana Public Facilities Authority (LPFA), which is the issuer of the bonds pursuant to the Act 55 financing, approved requests for the Act 55 financing. Also in April 2008, Entergy Louisiana and the LPSC staff filed with the LPSC an uncontested stipulated settlement that included Entergy Louisiana’s proposal under the Act 55 financing, which included a commitment to pass on to customers a minimum of $40 million of customer benefits through a prospective annual rate reduction of $8 million for five years. The LPSC subsequently approved the settlement and issued two financing orders and one ratemaking order intended to facilitate implementation of the Act 55 financing. In May 2008 the Louisiana State Bond Commission granted final approval of the Act 55 financing. The settlement agreement allowed for an adjustment to the credits if there was a change in the applicable federal or state income tax rate. As a result of the enactment of the Tax Cuts and Jobs Act, in December 2017, and the lowering of the federal corporate income tax rate from 35% to 21%, the Louisiana Act 55 financing savings obligation regulatory liability related to Hurricanes Katrina and Rita was reduced by $22.3 million, with a corresponding increase to Other regulatory credits on the income statement. The effects of the Tax Cuts and Jobs Act are discussed further in Note 3 to the financial statements.
In July 2008 the LPFA issued $687.7 million in bonds under the aforementioned Act 55. From the $679 million of bond proceeds loaned by the LPFA to the LURC, the LURC deposited $152 million in a restricted escrow account as a storm damage reserve for Entergy Louisiana and transferred $527 million directly to Entergy Louisiana. From the bond proceeds received by Entergy Louisiana from the LURC, Entergy Louisiana invested $545 million, including $17.8 million that was withdrawn from the restricted escrow account as approved by the April 16, 2008 LPSC orders, in exchange for 5,449,861.85 Class A preferred, non-voting, membership interest units of Entergy Holdings Company that carry a 10% annual distribution rate. In August 2008 the LPFA issued $278.4 million in bonds under the aforementioned Act 55. From the $274.7 million of bond proceeds loaned by the LPFA to the LURC, the LURC deposited $87 million in a restricted escrow account as a storm damage reserve for Entergy Louisiana and transferred $187.7 million directly to Entergy Louisiana. From the bond proceeds received by Entergy Louisiana from the LURC, Entergy Louisiana invested $189.4 million, including $1.7 million that was withdrawn from the restricted escrow account as approved by the April 16, 2008 LPSC orders, in exchange for 1,893,918.39 Class A preferred, non-voting, membership interest units of Entergy Holdings Company that carry a 10% annual distribution rate. Distributions were payable quarterly commencing on September 15, 2008 and had a
Entergy Corporation and Subsidiaries
Notes to Financial Statements
liquidation price of $100 per unit. The preferred membership interests were callable at the option of Entergy Holdings Company after ten years under the terms of the LLC agreement. The terms of the membership interests included certain financial covenants to which Entergy Holdings Company was subject, including the requirement to maintain a net worth of at least $1 billion. In February 2012, Entergy Louisiana sold 500,000 of its Class A preferred membership units in Entergy Holdings Company to a third party. Those preferred membership units were subsequently repurchased by Entergy Holdings Company in March 2019. As discussed above in “Hurricane Laura, Hurricane Delta, Hurricane Zeta, Winter Storm Uri, and Hurricane Ida”, in May 2022, Entergy Holdings Company liquidated and distributed cash to Entergy Louisiana as holder of the remaining 6,843,780.24 units of Class A preferred membership interests.
The bonds were repaid in 2018. Entergy and Entergy Louisiana did not report the bonds issued by the LPFA on their balance sheets because the bonds were the obligation of the LPFA, and there was no recourse against Entergy or Entergy Louisiana in the event of a bond default. To service the bonds, Entergy Louisiana collected a system restoration charge on behalf of the LURC and remitted the collections to the bond indenture trustee. Entergy and Entergy Louisiana did not report the collections as revenue because Entergy Louisiana was merely acting as the billing and collection agent for the state.
Entergy Mississippi
Prior to June 2024, Entergy Mississippi had approval from the MPSC to collect a storm damage provision of $1.75 million per month. If Entergy Mississippi’s accumulated storm damage provision balance exceeded $15 million, the collection of the storm damage provision ceased until such time that the accumulated storm damage provision became less than $10 million. Entergy Mississippi’s storm damage provision balance had been less than $10 million since May 2019, and Entergy Mississippi had been billing the monthly storm damage provision since July 2019.
In December 2023, Entergy Mississippi filed a Notice of Storm Escrow Disbursement and Request for Interim Relief notifying the MPSC that Entergy Mississippi had requested disbursement of approximately $34.5 million of storm escrow funds from its restricted storm escrow account. The filing also requested authorization from the MPSC, on a temporary basis, that the $34.5 million of storm escrow funds be credited to Entergy Mississippi’s storm damage provision, pending the MPSC’s review of Entergy Mississippi’s storm-related costs, and that Entergy Mississippi continue to bill its monthly storm damage provision without suspension in the event the storm damage provision balance exceeded $15 million, in anticipation of a subsequent filing by Entergy Mississippi in this proceeding. The storm damage provision exceeded $15 million upon receipt of the storm escrow funds. Because the MPSC had not entered an order on Entergy Mississippi’s filing on the requested relief to continue billing this provision, Entergy Mississippi suspended billing the monthly storm damage provision effective with February 2024 bills.
In March 2024, Entergy Mississippi made a combined dual filing which included a notice of intent to make routine change in rates and schedules and a motion for determination relating to the above-described notice of storm escrow disbursement. The notice of intent proposed a new storm damage mitigation and restoration rider to supersede both the then-current storm damage rate schedule and the vegetation management rider schedule, in which the collection of both expenses would be combined. The proposal requested that the MPSC authorize Entergy Mississippi to collect approximately $5.2 million per month for vegetation management and a storm damage provision. Furthermore, if Entergy Mississippi’s accumulated vegetation management and storm damage provision balance were to exceed $70 million, collection under the storm damage mitigation and restoration rider would cease until such time that the accumulated vegetation management and storm damage provision would become less than $60 million.
The Mississippi Public Utilities Staff reviewed the storm-related costs submitted by Entergy Mississippi and found them prudent. In June 2024 the MPSC considered and unanimously granted the relief sought by Entergy Mississippi, including authorization to credit any remaining funds in the storm escrow account to Entergy
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Mississippi’s storm damage provision and to close the storm escrow account and approving the new storm damage mitigation and restoration rider. Entergy Mississippi’s storm escrow account was liquidated in July 2024, and the new combined storm damage mitigation and restoration rider became effective with the July 2024 billing cycle. Additionally, Entergy Mississippi made a compliance filing to cease billing under the existing vegetation management rider schedule as of the same billing cycle.
Entergy New Orleans
Hurricane Ida
In August 2021, Hurricane Ida caused significant damage to Entergy New Orleans’s service area, including Entergy’s electrical grid. The storm resulted in widespread power outages, including the loss of 100% of Entergy New Orleans’s load and damage to distribution and transmission infrastructure, including the loss of connectivity to the eastern interconnection. In September 2021, Entergy New Orleans withdrew $39 million from its funded storm reserves. In June 2022, Entergy New Orleans filed an application with the City Council requesting approval and certification that storm restoration costs associated with Hurricane Ida of approximately $170 million, which included $11 million in estimated costs, were reasonable, necessary, and prudently incurred to enable Entergy New Orleans to restore electric service to its customers and to repair Entergy New Orleans’s electric utility infrastructure. In addition, estimated carrying costs through December 2022 related to Hurricane Ida restoration costs were $9 million. Also, Entergy New Orleans requested approval that the $39 million withdrawal from its funded storm reserve in September 2021 and $7 million in excess storm reserve escrow withdrawals related to Hurricane Zeta in October 2020 and prior miscellaneous storms were properly applied to Hurricane Ida storm restoration costs, the application of which reduced the amount to be recovered from Entergy New Orleans customers by $46 million.
Additionally, in February 2022, Entergy New Orleans and the LURC filed with the City Council a securitization application requesting that the City Council review Entergy New Orleans’s storm reserve and increase the storm reserve funding level to $150 million, to be funded through securitization. In August 2022 the City Council’s advisors recommended that the City Council authorize a single securitization bond issuance to fund Entergy New Orleans’s storm recovery reserves to an amount sufficient to: (1) allow recovery of all of Entergy New Orleans’s unrecovered storm recovery costs following Hurricane Ida, subject to City Council review and certification; (2) provide initial funding of storm recovery reserves for future storms to a level of $75 million; and (3) fund the storm recovery bonds’ upfront financing costs. In September 2022, Entergy New Orleans and the City Council’s advisors entered into an agreement in principle, which was approved by the City Council along with a financing order in October 2022, which authorized Entergy New Orleans and the LURC to proceed with a single securitization bond issuance of approximately $206 million (subject to further adjustment and review pursuant to the Final Issuance Advice Letter process set forth in the financing order), with $125 million of that total to be used for interim recovery, subject to City Council review and certification, to be allocated to unrecovered Hurricane Ida storm recovery costs; $75 million of that total to provide for a storm recovery reserve for future storms; and the remainder to fund the recovery of the storm recovery bonds’ upfront financing costs.
In December 2022, Entergy New Orleans and the LURC filed with the City Council the Final Issuance Advice Letter for a securitization bond issuance in the amount of $209.3 million, the final structuring, terms, and pricing of which were approved by the City Council in accordance with the financing order. Also in December 2022 the LCDA issued $209.3 million in bonds pursuant to the Louisiana Electric Utility Storm Recovery Securitization Act, Part V-B of Chapter 9 of Title 45 of the Louisiana Revised Statutes, as supplemented by Act 293 of the Louisiana Regular Session of 2021. The LCDA loaned $201.8 million of bond proceeds, net of certain debt service and issuance costs, to the LURC. The LURC used the proceeds to purchase from Entergy New Orleans the storm recovery property, which is the right to collect storm recovery charges sufficient to pay the storm recovery bonds and associated financing costs, and Entergy New Orleans deposited $200 million in a restricted storm reserve escrow account as a storm damage reserve for Entergy New Orleans and received directly $1.8 million in estimated upfront financing costs. Subsequently, Entergy New Orleans withdrew $125 million from the newly securitized
Entergy Corporation and Subsidiaries
Notes to Financial Statements
storm reserve to cover Hurricane Ida storm recovery costs, subject to a final determination from the City Council regarding the prudency of the storm recovery costs.
Entergy and Entergy New Orleans do not report the bonds issued by the LCDA on their balance sheets because the bonds are the obligation of the LCDA, and there is no recourse against Entergy or Entergy New Orleans in the event of a bond default. To service the bonds, Entergy New Orleans collects a storm recovery charge on behalf of the LURC and remits the collections to the bond indenture trustee. Entergy and Entergy New Orleans do not report the collections as revenue because Entergy New Orleans is merely acting as the billing and collection agent for the LURC.
In August 2023 the City Council advisors issued a report recommending that the City Council find that Entergy New Orleans prudently incurred approximately $164.1 million in storm restoration costs and $7.5 million in carrying charges and that such costs have already been properly recovered by Entergy New Orleans through withdrawals from the storm reserve escrow account. The City Council advisors also recommended that the City Council find that approximately $1.2 million in storm restoration costs had already been recovered through Entergy New Orleans’s base rates and that approximately $0.9 million in unused credits be applied against future storm costs. In August 2023 the City Council hearing officer certified the evidentiary record. In December 2023 the City Council approved a resolution adopting the advisors’ report and recommendations.
Entergy Texas
Hurricane Laura, Hurricane Delta, and Winter Storm Uri
In August 2020 and October 2020, Hurricane Laura and Hurricane Delta caused extensive damage to Entergy Texas’s service area. In February 2021, Winter Storm Uri also caused damage to Entergy Texas’s service area. The storms resulted in widespread power outages, significant damage primarily to distribution and transmission infrastructure, and the loss of sales during the power outages. In April 2021, Entergy Texas filed an application with the PUCT requesting a determination that approximately $250 million of system restoration costs associated with Hurricane Laura, Hurricane Delta, and Winter Storm Uri, including approximately $200 million in capital costs and approximately $50 million in non-capital costs, were reasonable and necessary to enable Entergy Texas to restore electric service to its customers and Entergy Texas’s electric utility infrastructure. The filing also included the projected balance of approximately $13 million of a regulatory asset containing previously approved system restoration costs related to Hurricane Harvey. In September 2021 the parties filed an unopposed settlement agreement, pursuant to which Entergy Texas removed from the amount to be securitized approximately $4.3 million that will instead be charged to its storm reserve, $5 million related to no particular issue, of which Entergy Texas would be permitted to seek recovery in a future proceeding, and approximately $300 thousand related to attestation costs. In December 2021 the PUCT issued an order approving the unopposed settlement and determining system restoration costs of $243 million related to Hurricane Laura, Hurricane Delta, and Winter Storm Uri and the $13 million projected remaining balance of the Hurricane Harvey system restoration costs were eligible for securitization. The order also determines that Entergy Texas can recover carrying costs on the system restoration costs related to Hurricane Laura, Hurricane Delta, and Winter Storm Uri.
In July 2021, Entergy Texas filed with the PUCT an application for a financing order to approve the securitization of the system restoration costs that are the subject of the April 2021 application. In November 2021 the parties filed an unopposed settlement agreement supporting the issuance of a financing order consistent with Entergy Texas’s application and with minor adjustments to certain upfront and ongoing costs to be incurred to facilitate the issuance and serving of system restoration bonds. In January 2022 the PUCT issued a financing order consistent with the unopposed settlement. As a result of the financing order, Entergy Texas reclassified $153 million from utility plant to other regulatory assets.
In April 2022, Entergy Texas Restoration Funding II, LLC, a company wholly-owned and consolidated by Entergy Texas, issued $290.85 million of senior secured system restoration bonds (securitization bonds). With the
Entergy Corporation and Subsidiaries
Notes to Financial Statements
proceeds, Entergy Texas Restoration Funding II purchased from Entergy Texas the transition property, which is the right to recover from customers through a system restoration charge amounts sufficient to service the securitization bonds. Entergy Texas began cost recovery through the system restoration charge effective with the first billing cycle of May 2022 and the system restoration charge is expected to remain in place up to 15 years. See Note 5 to the financial statements for a discussion of the April 2022 issuance of the securitization bonds.
NOTE 3. INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Income taxes for Entergy for 2024, 2023, and 2022 consist of the following:
| 2024 | 2023 | 2022 | |||||||||||||||
| (In Thousands) | |||||||||||||||||
| Current: | |||||||||||||||||
| Federal | $66,708 | $60,639 | $32,387 | ||||||||||||||
| State | 44,956 | 23,014 | (3,091) | ||||||||||||||
| Total | 111,664 | 83,653 | 29,296 | ||||||||||||||
| Deferred and non-current - net | 281,190 | (768,941) | (67,520) | ||||||||||||||
| Investment tax credits - net | (11,827) | (5,247) | (754) | ||||||||||||||
| Income taxes | $381,027 | ($690,535) | ($38,978) |
Income taxes for the Registrant Subsidiaries for 2024, 2023, and 2022 consist of the following:
| 2024 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Current: | ||||||||||||||||||||||||||||||||||||||
| Federal | ($10,558) | ($79,519) | $38,680 | ($8,022) | $8,281 | ($5,527) | ||||||||||||||||||||||||||||||||
| State | (2,275) | 1,709 | 2,407 | 5,331 | 5,468 | (396) | ||||||||||||||||||||||||||||||||
| Total | (12,833) | (77,810) | 41,087 | (2,691) | 13,749 | (5,923) | ||||||||||||||||||||||||||||||||
| Deferred and non-current - net | 88,637 | 307,835 | 39,608 | 6,381 | 52,702 | 39,409 | ||||||||||||||||||||||||||||||||
| Investment tax credits - net | (1,230) | (4,616) | (380) | (848) | (767) | (3,983) | ||||||||||||||||||||||||||||||||
| Income taxes | $74,574 | $225,409 | $80,315 | $2,842 | $65,684 | $29,503 |
| 2023 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Current: | ||||||||||||||||||||||||||||||||||||||
| Federal | $33,100 | ($142,253) | $20,328 | ($99,343) | $2,851 | $337 | ||||||||||||||||||||||||||||||||
| State | (4,201) | (6,397) | 4,142 | (5,854) | 3,719 | (1,570) | ||||||||||||||||||||||||||||||||
| Total | 28,899 | (148,650) | 24,470 | (105,197) | 6,570 | (1,233) | ||||||||||||||||||||||||||||||||
| Deferred and non-current - net | (126,878) | (52,451) | 30,690 | (84,744) | 57,066 | 31,005 | ||||||||||||||||||||||||||||||||
| Investment tax credits - net | (1,231) | (4,680) | (796) | (32) | (764) | 2,260 | ||||||||||||||||||||||||||||||||
| Income taxes | ($99,210) | ($205,781) | $54,364 | ($189,973) | $62,872 | $32,032 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| 2022 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Current: | ||||||||||||||||||||||||||||||||||||||
| Federal | $8,015 | ($79,079) | $9,242 | $1,074 | $37,471 | ($11,720) | ||||||||||||||||||||||||||||||||
| State | (1,066) | (1,773) | (6,486) | 6,221 | 2,260 | 581 | ||||||||||||||||||||||||||||||||
| Total | 6,949 | (80,852) | 2,756 | 7,295 | 39,731 | (11,139) | ||||||||||||||||||||||||||||||||
| Deferred and non-current - net | 74,802 | (77,223) | 48,443 | 16,814 | 11,520 | (83,369) | ||||||||||||||||||||||||||||||||
| Investment tax credits - net | (855) | (4,778) | 3,665 | 168 | (630) | 1,680 | ||||||||||||||||||||||||||||||||
| Income taxes | $80,896 | ($162,853) | $54,864 | $24,277 | $50,621 | ($92,828) |
Total income taxes for Entergy differ from the amounts computed by applying the statutory income tax rate to income before income taxes. The reasons for the differences for the years 2024, 2023, and 2022 are:
| 2024 | 2023 | 2022 | |||||||||||||||
| (In Thousands) | |||||||||||||||||
| Net income attributable to Entergy Corporation | $1,055,590 | $2,356,536 | $1,103,166 | ||||||||||||||
| Preferred dividend requirements of subsidiaries and noncontrolling interests | 5,594 | 5,774 | (6,028) | ||||||||||||||
| Consolidated net income | 1,061,184 | 2,362,310 | 1,097,138 | ||||||||||||||
| Income taxes | 381,027 | (690,535) | (38,978) | ||||||||||||||
| Income before income taxes | $1,442,211 | $1,671,775 | $1,058,160 | ||||||||||||||
| Income taxes computed at statutory rate (21%) | $302,864 | $351,073 | $222,214 | ||||||||||||||
| Increases (reductions) in tax resulting from: | |||||||||||||||||
| State income taxes net of federal income tax effect | 81,377 | 70,144 | 61,368 | ||||||||||||||
| Regulatory differences - utility plant items | (30,288) | (27,901) | (32,143) | ||||||||||||||
| Equity component of AFUDC | (27,343) | (20,172) | (14,156) | ||||||||||||||
| Amortization of investment tax credits | (8,808) | (7,978) | (7,740) | ||||||||||||||
| Flow-through / permanent differences | 33 | (1,374) | 1,011 | ||||||||||||||
| Amortization of deficient/(excess) ADIT (a) | 19,169 | 9,102 | (34,899) | ||||||||||||||
| IRS audit resolution (b) | — | (842,769) | — | ||||||||||||||
| Reversal of regulatory liability (c) | — | (105,649) | — | ||||||||||||||
| Entergy Louisiana securitization (d) | — | (129,034) | (282,620) | ||||||||||||||
| System Energy sale-leaseback order (e) | — | — | 12,662 | ||||||||||||||
| State audit resolution (f) | (9,057) | — | — | ||||||||||||||
| State rate change (g) | 28,636 | — | — | ||||||||||||||
| Provision for uncertain tax positions | 21,487 | 18,884 | 34,423 | ||||||||||||||
| Valuation allowance | (780) | (8,697) | (2,754) | ||||||||||||||
| Other - net | 3,737 | 3,836 | 3,656 | ||||||||||||||
| Total income taxes as reported | $381,027 | ($690,535) | ($38,978) | ||||||||||||||
| Effective Income Tax Rate | 26.4 | % | (41.3 | %) | (3.7 | %) |
(a)See “Other Tax Matters - Tax Cuts and Jobs Act” below for discussion of the amortization of excess accumulated deferred income taxes (ADIT) in 2024, 2023, and 2022 and the tax legislation enactment in 2017.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
(b)See “Income Tax Audits - 2016-2018 IRS Audit” below for discussion of the resolution of the 2016-2018 IRS audit in 2023.
(c)See Note 2 to the financial statements for discussion of Entergy Louisiana’s reversal of a regulatory liability, primarily associated with the Hurricane Isaac securitization, recognized in 2017 as a result of the Tax Cuts and Jobs Act.
(d)See **“**Other Tax Matters – Act 293 Securitizations” below for discussion of the Entergy Louisiana May 2022 and March 2023 storm cost securitizations.
(e)See Note 2 to the financial statements for discussion of the December 2022 FERC order related to the Grand Gulf sale-leaseback renewal complaint.
(f)See “Income Tax Audits - State Income Tax Audits” below for discussion of the resolution of the 2014-2018 Arkansas Department of Finance and Administration examination in 2024.
(g)See “Other Tax Matters - Arkansas and Louisiana Corporate Income Tax Rate Changes” below for details.
Total income taxes for the Registrant Subsidiaries differ from the amounts computed by applying the statutory income tax rate to income before taxes. The reasons for the differences for the years 2024, 2023, and 2022 are:
| 2024 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Net income | $319,466 | $890,771 | $245,407 | $15,847 | $293,622 | $103,500 | ||||||||||||||||||||||||||||||||
| Income taxes | 74,574 | 225,409 | 80,315 | 2,842 | 65,684 | 29,503 | ||||||||||||||||||||||||||||||||
| Income before income taxes | $394,040 | $1,116,180 | $325,722 | $18,689 | $359,306 | $133,003 | ||||||||||||||||||||||||||||||||
| Income taxes computed at statutory rate (21%) | $82,748 | $234,398 | $68,402 | $3,925 | $75,454 | $27,931 | ||||||||||||||||||||||||||||||||
| Increases (reductions) in tax resulting from: | ||||||||||||||||||||||||||||||||||||||
| State income taxes net of federal income tax effect | 13,940 | 50,760 | 13,210 | 1,248 | 5,164 | 4,936 | ||||||||||||||||||||||||||||||||
| Regulatory differences - utility plant items | (9,885) | (9,988) | (3,572) | (830) | (4,537) | (1,475) | ||||||||||||||||||||||||||||||||
| Equity component of AFUDC | (6,032) | (7,513) | (1,910) | (445) | (10,045) | (1,398) | ||||||||||||||||||||||||||||||||
| Amortization of investment tax credits | (1,201) | (4,563) | (267) | (839) | (748) | (1,155) | ||||||||||||||||||||||||||||||||
| Flow-through / permanent differences | 214 | (3,244) | 2,987 | (338) | (760) | (538) | ||||||||||||||||||||||||||||||||
| Amortization of excess ADIT (a) | 10,193 | 9,305 | — | (332) | 2 | — | ||||||||||||||||||||||||||||||||
| State audit resolution (f) | (18,276) | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| State rate change (g) | — | 16,307 | — | 242 | — | — | ||||||||||||||||||||||||||||||||
| Non-taxable dividend income | — | (64,982) | — | — | — | — | ||||||||||||||||||||||||||||||||
| Provision for uncertain tax positions | 1,800 | 3,400 | 1,100 | 777 | 1,000 | |||||||||||||||||||||||||||||||||
| Other - net | 1,073 | 1,529 | 365 | 211 | 377 | 202 | ||||||||||||||||||||||||||||||||
| Total income taxes as reported | $74,574 | $225,409 | $80,315 | $2,842 | $65,684 | $29,503 | ||||||||||||||||||||||||||||||||
| Effective Income Tax Rate | 18.9% | 20.2% | 24.7% | 15.2% | 18.3% | 22.2% |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| 2023 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Net income | $396,850 | $1,273,370 | $181,969 | $228,938 | $291,273 | $108,772 | ||||||||||||||||||||||||||||||||
| Income taxes | (99,210) | (205,781) | 54,364 | (189,973) | 62,872 | 32,032 | ||||||||||||||||||||||||||||||||
| Income before income taxes | $297,640 | $1,067,589 | $236,333 | $38,965 | $354,145 | $140,804 | ||||||||||||||||||||||||||||||||
| Income taxes computed at statutory rate (21%) | $62,504 | $224,194 | $49,630 | $8,183 | $74,370 | $29,569 | ||||||||||||||||||||||||||||||||
| Increases (reductions) in tax resulting from: | ||||||||||||||||||||||||||||||||||||||
| State income taxes net of federal income tax effect | 13,291 | 51,899 | 11,133 | 1,907 | 2,574 | 5,798 | ||||||||||||||||||||||||||||||||
| Regulatory differences - utility plant items | (8,812) | (5,535) | (5,290) | (1,353) | (6,394) | (517) | ||||||||||||||||||||||||||||||||
| Equity component of AFUDC | (4,093) | (6,754) | (1,796) | (309) | (5,920) | (1,301) | ||||||||||||||||||||||||||||||||
| Amortization of investment tax credits | (1,201) | (4,625) | (223) | (25) | (748) | (1,155) | ||||||||||||||||||||||||||||||||
| Flow-through / permanent differences | 1,105 | 126 | 3,534 | (1,913) | 1,493 | (191) | ||||||||||||||||||||||||||||||||
| Amortization of excess ADIT (a) | (6,095) | 14,032 | — | 1,147 | 17 | — | ||||||||||||||||||||||||||||||||
| IRS audit resolution (b) | (159,588) | (179,111) | (3,291) | (198,424) | (3,112) | (1,575) | ||||||||||||||||||||||||||||||||
| Reversal of regulatory liability (c) | — | (105,649) | — | — | — | — | ||||||||||||||||||||||||||||||||
| Entergy Louisiana securitization (d) | — | (133,443) | — | — | — | — | ||||||||||||||||||||||||||||||||
| Non-taxable dividend income | — | (62,116) | — | — | — | — | ||||||||||||||||||||||||||||||||
| Provision for uncertain tax positions | 2,600 | (400) | 300 | 600 | 211 | 1,200 | ||||||||||||||||||||||||||||||||
| Other - net | 1,079 | 1,601 | 367 | 214 | 381 | 204 | ||||||||||||||||||||||||||||||||
| Total income taxes as reported | ($99,210) | ($205,781) | $54,364 | ($189,973) | $62,872 | $32,032 | ||||||||||||||||||||||||||||||||
| Effective Income Tax Rate | (33.3%) | (19.3%) | 23.0% | (487.5%) | 17.8% | 22.7% |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| 2022 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Net income | $292,887 | $855,870 | $176,267 | $64,101 | $303,327 | ($276,593) | ||||||||||||||||||||||||||||||||
| Income taxes | 80,896 | (162,853) | 54,864 | 24,277 | 50,621 | (92,828) | ||||||||||||||||||||||||||||||||
| Income before income taxes | $373,783 | $693,017 | $231,131 | $88,378 | $353,948 | ($369,421) | ||||||||||||||||||||||||||||||||
| Income taxes computed at statutory rate (21%) | $78,494 | $145,534 | $48,538 | $18,559 | $74,329 | ($77,578) | ||||||||||||||||||||||||||||||||
| Increases (reductions) in tax resulting from: | ||||||||||||||||||||||||||||||||||||||
| State income taxes net of federal income tax effect | 17,981 | 44,244 | 9,659 | 6,733 | 2,175 | (16,727) | ||||||||||||||||||||||||||||||||
| Regulatory differences - utility plant items | (12,466) | (6,347) | (7,726) | (1,908) | (3,010) | (686) | ||||||||||||||||||||||||||||||||
| Equity component of AFUDC | (3,437) | (5,513) | (1,286) | (174) | (2,841) | (905) | ||||||||||||||||||||||||||||||||
| Amortization of investment tax credits | (1,201) | (4,720) | (223) | 175 | (614) | (1,155) | ||||||||||||||||||||||||||||||||
| Flow-through / permanent differences | 106 | 3,467 | 4,837 | 230 | 765 | (641) | ||||||||||||||||||||||||||||||||
| Amortization of excess ADIT (a) | — | (13,164) | — | (752) | (20,983) | — | ||||||||||||||||||||||||||||||||
| Entergy Louisiana securitization (d) | — | (289,609) | — | — | — | — | ||||||||||||||||||||||||||||||||
| System Energy sale-leaseback order (e) | — | — | — | — | — | 12,662 | ||||||||||||||||||||||||||||||||
| Non-taxable dividend income | — | (38,735) | — | — | — | — | ||||||||||||||||||||||||||||||||
| Provision for uncertain tax positions | 1,600 | 400 | 700 | 1,200 | 420 | (8,000) | ||||||||||||||||||||||||||||||||
| Valuation allowance | (1,258) | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Other - net | 1,077 | 1,590 | 365 | 214 | 380 | 202 | ||||||||||||||||||||||||||||||||
| Total income taxes as reported | $80,896 | ($162,853) | $54,864 | $24,277 | $50,621 | ($92,828) | ||||||||||||||||||||||||||||||||
| Effective Income Tax Rate | 21.6% | (23.5%) | 23.7% | 27.5% | 14.3% | 25.1% |
(a)See “Other Tax Matters - Tax Cuts and Jobs Act” below for discussion of the amortization of excess ADIT in 2024, 2023, 2022 and the tax legislation enactment in 2017.
(b)See “Income Tax Audits - 2016-2018 IRS Audit” below for discussion of the resolution of the 2016-2018 IRS audit in 2023.
(c)See Note 2 to the financial statements for discussion of Entergy Louisiana’s reversal of a regulatory liability, primarily associated with the Hurricane Isaac securitization, recognized in 2017 as a result of the Tax Cuts and Jobs Act.
(d)See “Other Tax Matters - Act 293 Securitizations” below for discussion of the Entergy Louisiana May 2022 and March 2023 storm cost securitizations.
(e)See Note 2 to the financial statements for discussion of the December 2022 FERC order related to the Grand Gulf sale-leaseback renewal complaint.
(f)See “Income Tax Audits - State Income Tax Audits” below for discussion of the resolution of the 2014-2018 Arkansas Department of Finance and Administration examination in 2024.
(g)See “Other Tax Matters - Arkansas and Louisiana Corporate Income Tax Rate Changes” below for details.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Significant components of accumulated deferred income taxes and taxes accrued for Entergy Corporation and Subsidiaries as of December 31, 2024 and 2023 are as follows:
| 2024 | 2023 | ||||||||||
| (In Thousands) | |||||||||||
| Deferred tax liabilities: | |||||||||||
| Plant basis differences - net | ($6,451,189) | ($6,192,156) | |||||||||
| Regulatory assets | (1,003,045) | (989,405) | |||||||||
| Nuclear decommissioning trusts/receivables | (563,423) | (467,267) | |||||||||
| Pension, net regulatory asset | (303,007) | (363,829) | |||||||||
| Combined unitary state taxes | (3,600) | (8,783) | |||||||||
| Power purchase agreements | (89,614) | (75,612) | |||||||||
| Accumulated storm damage provision | — | (2,474) | |||||||||
| Deferred fuel | (23,305) | (69,436) | |||||||||
| Other | (206,648) | (251,107) | |||||||||
| Total | (8,643,831) | (8,420,069) | |||||||||
| Deferred tax assets: | |||||||||||
| Regulatory liabilities | 1,394,937 | 1,247,530 | |||||||||
| Nuclear and other decommissioning liabilities | 164,685 | 147,011 | |||||||||
| Pension and other post-employment benefits | 22,646 | 116,222 | |||||||||
| Compensation | 79,580 | 81,226 | |||||||||
| Accumulated deferred investment tax credit | 52,709 | 55,928 | |||||||||
| Provision for allowances and contingencies | 141,769 | 149,479 | |||||||||
| Unbilled/deferred revenues | (9,960) | 2,418 | |||||||||
| Net operating loss carryforwards | 2,672,993 | 2,857,908 | |||||||||
| Capital losses and miscellaneous tax credits | 111,325 | 107,009 | |||||||||
| Valuation allowance | (338,508) | (372,119) | |||||||||
| Other | 212,563 | 220,055 | |||||||||
| Total | 4,504,739 | 4,612,667 | |||||||||
| Non-current accrued taxes (including unrecognized tax benefits) | (309,669) | (422,213) | |||||||||
| Accumulated deferred income taxes and taxes accrued | ($4,448,761) | ($4,229,615) |
Entergy’s estimated tax attributes carryovers and their expiration dates as of December 31, 2024 are as follows:
| Carryover Description | Carryover Amount | Year(s) of expiration | ||||||||||||
| Federal net operating losses before 1/1/2018 | $4.4 billion | 2025-2037 | ||||||||||||
| Federal net operating losses - 1/1/2018 forward | $13.9 billion | N/A | ||||||||||||
| State net operating losses | $4.3 billion | 2028-2042 | ||||||||||||
| State net operating losses with no expiration | $8.8 billion | N/A | ||||||||||||
| Other federal and state carryforwards | $134.5 million | 2025-2028 | ||||||||||||
| Miscellaneous federal and state credits | $138.8 million | 2025-2044 |
As a result of the accounting for uncertain tax positions, the amount of the deferred tax assets reflected in the financial statements is less than the amount of the tax effect of the federal and state net operating loss carryovers, tax credit carryovers, and other tax attributes generated and reflected on income tax returns. Entergy evaluates the available positive and negative evidence to estimate whether sufficient future taxable income of the appropriate character will be generated to realize the benefits of existing deferred tax assets. When the evaluation
Entergy Corporation and Subsidiaries
Notes to Financial Statements
indicates that Entergy will not be able to realize the existing benefits, a valuation allowance is recorded to reduce deferred tax assets to the realizable amount.
Because it is more likely than not that the benefits from certain state net operating losses and other deferred tax assets will not be utilized, valuation allowances totaling $339 million as of December 31, 2024 and $372 million as of December 31, 2023 have been provided on the deferred tax assets related to federal and state jurisdictions in which Entergy does not currently expect to be able to utilize certain separate company tax return attributes, preventing realization of such deferred tax assets. Certain accelerated tax deductions which generated taxable losses in various taxing jurisdictions, and which have a limited term carryover period, have resulted in the impairment of the realizability of such carryovers and are reflected in the valuation allowance disclosed above.
Significant components of accumulated deferred income taxes and taxes accrued for the Registrant Subsidiaries as of December 31, 2024 and 2023 are as follows:
| 2024 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Deferred tax liabilities: | ||||||||||||||||||||||||||||||||||||||
| Plant basis differences - net | ($1,530,196) | ($2,729,299) | ($849,623) | ($272,182) | ($727,242) | ($466,361) | ||||||||||||||||||||||||||||||||
| Regulatory assets | (219,773) | (497,177) | (37,374) | (72,389) | (100,959) | (75,606) | ||||||||||||||||||||||||||||||||
| Nuclear decommissioning trusts/receivables | (185,725) | (202,364) | — | — | — | (175,341) | ||||||||||||||||||||||||||||||||
| Pension, net regulatory asset | (101,887) | (84,732) | (26,064) | (9,687) | (16,569) | — | ||||||||||||||||||||||||||||||||
| Power purchase agreements | 11,993 | (97,846) | 1,140 | (12,385) | (5,148) | — | ||||||||||||||||||||||||||||||||
| Deferred fuel | — | (4,785) | (17,234) | (1,247) | — | (78) | ||||||||||||||||||||||||||||||||
| Other | (24,430) | (106,590) | (5,231) | (5,133) | (4,512) | (13,572) | ||||||||||||||||||||||||||||||||
| Total | (2,050,018) | (3,722,793) | (934,386) | (373,023) | (854,430) | (730,958) | ||||||||||||||||||||||||||||||||
| Deferred tax assets: | ||||||||||||||||||||||||||||||||||||||
| Regulatory liabilities | 310,621 | 678,086 | 53,046 | 89,385 | 37,325 | 229,065 | ||||||||||||||||||||||||||||||||
| Nuclear and other decommissioning liabilities | 127,933 | 18,649 | — | (407) | 97 | 17,956 | ||||||||||||||||||||||||||||||||
| Pension and other post-employment benefits | (29,923) | 39,379 | (8,989) | (19,443) | (23,403) | (24,642) | ||||||||||||||||||||||||||||||||
| Compensation | 4,851 | 7,119 | 3,277 | 1,394 | 2,596 | 515 | ||||||||||||||||||||||||||||||||
| Accumulated deferred investment tax credit | 6,360 | 26,549 | 3,355 | 4,205 | 1,515 | 10,724 | ||||||||||||||||||||||||||||||||
| Provision for allowances and contingencies | 31,686 | 59,448 | 11,361 | 23,998 | 4,358 | 225 | ||||||||||||||||||||||||||||||||
| Unbilled/deferred revenues | 3,546 | (24,017) | 1,274 | 715 | 7,925 | — | ||||||||||||||||||||||||||||||||
| Net operating loss carryforwards | 126,255 | 336,128 | 305 | 30,740 | 50 | 69,611 | ||||||||||||||||||||||||||||||||
| Capital losses and miscellaneous tax credits | 14,489 | 17,029 | 8,206 | 16,220 | 1,273 | 10,788 | ||||||||||||||||||||||||||||||||
| Other | 11,608 | 54,207 | 1,096 | 1,692 | 1,189 | — | ||||||||||||||||||||||||||||||||
| Total | 607,426 | 1,212,577 | 72,931 | 148,499 | 32,925 | 314,242 | ||||||||||||||||||||||||||||||||
| Non-current accrued taxes (including unrecognized tax benefits) | (46,577) | 32,262 | (8,661) | 22,983 | (47,344) | (35,114) | ||||||||||||||||||||||||||||||||
| Accumulated deferred income taxes and taxes accrued | ($1,489,169) | ($2,477,954) | ($870,116) | ($201,541) | ($868,849) | ($451,830) |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| 2023 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Deferred tax liabilities: | ||||||||||||||||||||||||||||||||||||||
| Plant basis differences - net | ($1,421,272) | ($2,639,079) | ($810,120) | ($272,187) | ($671,072) | ($450,559) | ||||||||||||||||||||||||||||||||
| Regulatory assets | (241,427) | (500,395) | (41,519) | (23,618) | (104,562) | (76,522) | ||||||||||||||||||||||||||||||||
| Nuclear decommissioning trusts/receivables | (154,106) | (173,402) | — | — | — | (139,858) | ||||||||||||||||||||||||||||||||
| Pension, net regulatory asset | (96,853) | (82,305) | (24,342) | (9,216) | (17,522) | (18,895) | ||||||||||||||||||||||||||||||||
| Power purchase agreements | 15,993 | (112,292) | 1,140 | (12,516) | (4,551) | — | ||||||||||||||||||||||||||||||||
| Accumulated storm damage provision | — | — | — | — | (1,387) | — | ||||||||||||||||||||||||||||||||
| Deferred fuel | — | (17,065) | (21,137) | (1,563) | (29,194) | (37) | ||||||||||||||||||||||||||||||||
| Other | (21,187) | (126,952) | (6,844) | (4,270) | (3,301) | (9,051) | ||||||||||||||||||||||||||||||||
| Total | (1,918,852) | (3,651,490) | (902,822) | (323,370) | (831,589) | (694,922) | ||||||||||||||||||||||||||||||||
| Deferred tax assets: | ||||||||||||||||||||||||||||||||||||||
| Regulatory liabilities | 296,278 | 575,459 | 54,586 | 42,921 | 41,137 | 240,310 | ||||||||||||||||||||||||||||||||
| Nuclear and other decommissioning liabilities | 118,301 | 9,055 | — | — | 97 | 19,259 | ||||||||||||||||||||||||||||||||
| Pension and other post-employment benefits | (28,868) | 46,837 | (10,064) | (19,354) | (21,977) | (2,641) | ||||||||||||||||||||||||||||||||
| Compensation | 4,054 | 6,078 | 3,649 | 1,268 | 2,181 | 406 | ||||||||||||||||||||||||||||||||
| Accumulated deferred investment tax credit | 6,761 | 27,902 | 3,446 | 4,431 | 1,672 | 11,717 | ||||||||||||||||||||||||||||||||
| Provision for allowances and contingencies | 23,956 | 70,297 | 10,072 | 25,846 | 8,659 | 225 | ||||||||||||||||||||||||||||||||
| Unbilled/deferred revenues | 5,962 | (20,375) | 6,194 | 1,045 | 8,365 | — | ||||||||||||||||||||||||||||||||
| Net operating loss carryforwards | 94,321 | 459,553 | 8,375 | 26,227 | 61 | 35,089 | ||||||||||||||||||||||||||||||||
| Capital losses and miscellaneous tax credits | 7,137 | 13,073 | 7,613 | 15,684 | 1,655 | 13,211 | ||||||||||||||||||||||||||||||||
| Other | 17,072 | 52,438 | 1,556 | (235) | 1,740 | — | ||||||||||||||||||||||||||||||||
| Total | 544,974 | 1,240,317 | 85,427 | 97,833 | 43,590 | 317,576 | ||||||||||||||||||||||||||||||||
| Non-current accrued taxes (including unrecognized tax benefits) | (63,175) | 19,731 | (4,349) | 29,922 | (26,906) | (28,398) | ||||||||||||||||||||||||||||||||
| Accumulated deferred income taxes and taxes accrued | ($1,437,053) | ($2,391,442) | ($821,744) | ($195,615) | ($814,905) | ($405,744) |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The Registrant Subsidiaries’ estimated tax attributes carryovers and their expiration dates as of December 31, 2024 are as follows:
| Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | |||||||||||||||||||||||||||||||||
| Federal net operating losses before 1/1/2018 | $— million | $812.8 million | $— million | $82.6 million | $— million | $— million | ||||||||||||||||||||||||||||||||
| Year(s) of expiration | N/A | 2035-2037 | N/A | 2037 | N/A | N/A | ||||||||||||||||||||||||||||||||
| Federal net operating losses - 1/1/2018 forward | $576 million | $2.6 billion | $— million | $26.4 million | $1.5 billion | $264.7 million | ||||||||||||||||||||||||||||||||
| Year(s) of expiration | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||
| State net operating losses | $597.4 million | $5.8 billion | $7.1 million | $336.6 million | $1 million | $370.1 million | ||||||||||||||||||||||||||||||||
| Year(s) of expiration | 2028-2032 | N/A | 2039-2042 | N/A | 2028 | 2040-2044 | ||||||||||||||||||||||||||||||||
| Misc. federal credits | $12.9 million | $21 million | $4.9 million | $16.7 million | $0.8 million | $5.7 million | ||||||||||||||||||||||||||||||||
| Year(s) of expiration | 2038-2044 | 2035-2044 | 2038-2044 | 2037-2044 | 2039-2044 | 2029-2044 | ||||||||||||||||||||||||||||||||
| State credits | $— million | $1.1 million | $8.3 million | $— million | $1.3 million | $17 million | ||||||||||||||||||||||||||||||||
| Year(s) of expiration | N/A | N/A | 2025-2028 | N/A | 2027-2033 | 2025-2028 |
Unrecognized tax benefits
Accounting standards establish a “more-likely-than-not” recognition threshold that must be met before a tax benefit can be recognized in the financial statements. If a tax deduction is taken on a tax return but does not meet the more-likely-than-not recognition threshold, an increase in income tax liability, above what is payable on the tax return, is required to be recorded. A reconciliation of Entergy’s beginning and ending amount of unrecognized tax benefits is as follows:
| 2024 | 2023 | 2022 | |||||||||||||||
| (In Thousands) | |||||||||||||||||
| Gross balance at January 1 | $2,439,910 | $6,393,599 | $5,759,968 | ||||||||||||||
| Additions based on tax positions related to the current year | 12,731 | 332,884 | 792,134 | ||||||||||||||
| Additions for tax positions of prior years | 21,149 | 194,894 | 37,259 | ||||||||||||||
| Reductions for tax positions of prior years (a) | (85,715) | (1,300,381) | (195,762) | ||||||||||||||
| Settlements (a) | (33,208) | (3,181,086) | — | ||||||||||||||
| Gross balance at December 31 | 2,354,867 | 2,439,910 | 6,393,599 | ||||||||||||||
| Offsets to gross unrecognized tax benefits: | |||||||||||||||||
| Loss and tax credit carryovers | (2,079,778) | (2,160,484) | (5,566,212) | ||||||||||||||
| Cash paid to taxing authorities | (27,000) | — | (82,000) | ||||||||||||||
| Unrecognized tax benefits net of unused tax attributes and payments (b) | $248,089 | $279,426 | $745,387 |
(a)Amounts in 2023 are primarily related to the resolution of the 2016-2018 IRS audit as discussed in “Income Tax Audits - 2016-2018 IRS Audit” below. Amounts in 2024 are primarily related to the resolution of 2014-2018 Arkansas tax examination as discussed in “Income Tax Audits - State Income Tax Audits” below.
(b)Potential tax liability above what is payable on tax returns.
The balances of unrecognized tax benefits include $1,900 million, $1,899 million, and $3,254 million as of December 31, 2024, 2023, and 2022, respectively, which, if recognized, would lower the effective income tax
Entergy Corporation and Subsidiaries
Notes to Financial Statements
rates. Because of the effect of deferred tax accounting, the remaining balances of unrecognized tax benefits of $455 million, $541 million, and $3,140 million as of December 31, 2024, 2023, and 2022, respectively, if disallowed, would not affect the annual effective income tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.
Entergy accrues interest expense, if any, related to unrecognized tax benefits in income tax expense. Entergy’s December 31, 2024, 2023, and 2022 accrued balance for the possible payment of interest is approximately $32 million, $39 million, and $50 million, respectively. Interest (net-of-tax) of ($7) million, ($11) million, and $8 million was recorded in 2024, 2023, and 2022, respectively.
A reconciliation of the Registrant Subsidiaries’ beginning and ending amount of unrecognized tax benefits for 2024, 2023, and 2022 is as follows:
| 2024 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Gross balance at January 1, 2024 | $69,197 | $864,043 | $5,653 | $19,331 | $415,205 | $14,301 | ||||||||||||||||||||||||||||||||
| Additions based on tax positions related to the current year (a) | 2,732 | 1,921 | 237 | 163 | 378 | 833 | ||||||||||||||||||||||||||||||||
| Additions for tax positions of prior years | 25,784 | 10,357 | 536 | 153 | 560 | 1,281 | ||||||||||||||||||||||||||||||||
| Reductions for tax positions of prior years | (52,300) | (9,205) | (437) | (139) | (31,810) | — | ||||||||||||||||||||||||||||||||
| Gross balance at December 31, 2024 | 45,413 | 867,116 | 5,989 | 19,508 | 384,333 | 16,415 | ||||||||||||||||||||||||||||||||
| Offsets to gross unrecognized tax benefits: | ||||||||||||||||||||||||||||||||||||||
| Loss and tax credit carryovers | (30,333) | (753,101) | (4,997) | (11,639) | (314,446) | (16,415) | ||||||||||||||||||||||||||||||||
| Unrecognized tax benefits net of unused tax attributes | $15,080 | $114,015 | $992 | $7,869 | $69,887 | $— |
| 2023 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Gross balance at January 1, 2023 | $1,452,819 | $1,350,836 | $547,548 | $638,726 | $389,366 | $23,702 | ||||||||||||||||||||||||||||||||
| Additions based on tax positions related to the current year (a) | 2,249 | 332,320 | 209 | 78 | 196 | 752 | ||||||||||||||||||||||||||||||||
| Additions for tax positions of prior years | — | — | — | — | 94,793 | — | ||||||||||||||||||||||||||||||||
| Reductions for tax positions of prior years (b) | (148,558) | (458,072) | (16,853) | (191,336) | (67,156) | (9,532) | ||||||||||||||||||||||||||||||||
| Settlements (b) | (1,237,313) | (361,041) | (525,251) | (428,137) | (1,994) | (621) | ||||||||||||||||||||||||||||||||
| Gross balance at December 31, 2023 | 69,197 | 864,043 | 5,653 | 19,331 | 415,205 | 14,301 | ||||||||||||||||||||||||||||||||
| Offsets to gross unrecognized tax benefits: | ||||||||||||||||||||||||||||||||||||||
| Loss and tax credit carryovers | (34,683) | (735,612) | (3,778) | (11,721) | (381,561) | (14,301) | ||||||||||||||||||||||||||||||||
| Unrecognized tax benefits net of unused tax attributes | $34,514 | $128,431 | $1,875 | $7,610 | $33,644 | $— |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| 2022 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Gross balance at January 1, 2022 | $1,408,494 | $604,628 | $549,569 | $639,497 | $552,295 | $23,356 | ||||||||||||||||||||||||||||||||
| Additions based on tax positions related to the current year (a) | 40,502 | 750,320 | 185 | 72 | 173 | 690 | ||||||||||||||||||||||||||||||||
| Additions for tax positions of prior years | 6,233 | 10,262 | 1,122 | 393 | 801 | 761 | ||||||||||||||||||||||||||||||||
| Reductions for tax positions of prior years | (2,410) | (14,374) | (3,328) | (1,236) | (163,903) | (1,105) | ||||||||||||||||||||||||||||||||
| Gross balance at December 31, 2022 | 1,452,819 | 1,350,836 | 547,548 | 638,726 | 389,366 | 23,702 | ||||||||||||||||||||||||||||||||
| Offsets to gross unrecognized tax benefits: | ||||||||||||||||||||||||||||||||||||||
| Loss and tax credit carryovers | (1,277,414) | (1,328,916) | (504,940) | (455,928) | (377,054) | (23,702) | ||||||||||||||||||||||||||||||||
| Unrecognized tax benefits net of unused tax attributes | $175,405 | $21,920 | $42,608 | $182,798 | $12,312 | $— |
(a)The primary additions for Entergy Louisiana in 2022 and 2023 are related to the Entergy Louisiana securitizations as discussed in “Other Tax Matters - Act 293 Securitizations” below.
(b)Amounts in 2023 are primarily related to the resolution of the 2016-2018 IRS audit as discussed in “Income Tax Audits - 2016-2018 IRS Audit” below.
The Registrant Subsidiaries’ balances of unrecognized tax benefits included amounts which, if recognized, would have reduced income tax expense as follows:
| December 31, | |||||||||||||||||
| 2024 | 2023 | 2022 | |||||||||||||||
| (In Millions) | |||||||||||||||||
| Entergy Arkansas | $32.6 | $57.2 | $377.9 | ||||||||||||||
| Entergy Louisiana | $868.2 | $862.5 | $720.8 | ||||||||||||||
| Entergy Mississippi | $1.3 | $1.0 | $151.2 | ||||||||||||||
| Entergy New Orleans | $18.3 | $18.2 | $310.7 | ||||||||||||||
| Entergy Texas | $50.3 | $2.9 | $3.3 | ||||||||||||||
| System Energy | $4.0 | $3.1 | $2.5 |
Accrued balances for the possible payment of interest related to unrecognized tax benefits for the Registrant Subsidiaries are as follows:
| December 31, | |||||||||||||||||
| 2024 | 2023 | 2022 | |||||||||||||||
| (In Millions) | |||||||||||||||||
| Entergy Arkansas | $8.4 | $7.8 | $4.3 | ||||||||||||||
| Entergy Louisiana | $5.1 | $1.5 | $4.1 | ||||||||||||||
| Entergy Mississippi | $3.2 | $2.1 | $3.1 | ||||||||||||||
| Entergy New Orleans | $0.6 | $0.6 | $6.4 | ||||||||||||||
| Entergy Texas | $0.5 | $— | $1.1 | ||||||||||||||
| System Energy | $2.9 | $1.9 | $1.9 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The Registrant Subsidiaries record interest and penalties related to unrecognized tax benefits in income tax expense. No penalties were recorded in 2024, 2023, and 2022. Interest (net-of-tax) was recorded as follows:
| 2024 | 2023 | 2022 | |||||||||||||||
| (In Millions) | |||||||||||||||||
| Entergy Arkansas | $0.6 | $3.5 | $1.6 | ||||||||||||||
| Entergy Louisiana | $3.6 | ($2.6) | $0.4 | ||||||||||||||
| Entergy Mississippi | $1.1 | ($1.0) | $0.7 | ||||||||||||||
| Entergy New Orleans | $— | ($5.8) | $1.2 | ||||||||||||||
| Entergy Texas | $0.5 | ($1.1) | $— | ||||||||||||||
| System Energy | $1.0 | $— | ($10.2) |
Income Tax Audits
Entergy and its subsidiaries file U.S. federal and various state income tax returns. IRS examinations are complete for years before 2019. All state taxing authorities’ examinations are complete for years before 2016. Entergy regularly defends its positions and works with the IRS to resolve audits. The resolution of audit issues could result in significant changes to the amounts of unrecognized tax benefits in the next twelve months.
2016-2018 IRS Audit
The IRS completed its examination of the 2016 through 2018 tax years and issued a Revenue Agent Report (RAR) for each federal filer under audit in November 2023. Entergy agreed to all adjustments contained in the RARs. Entergy and the Registrant Subsidiaries recorded all the material effects resulting from the RARs in the fourth quarter of 2023.
Utility Restructurings
In 2017, Entergy New Orleans undertook an internal restructuring, and in 2018, Entergy Arkansas and Entergy Mississippi also participated in internal restructurings under which these three Utility operating companies joined Entergy Louisiana as wholly-owned subsidiaries of Entergy Utility Holding Company, LLC. The change in ownership required Entergy to recognize Entergy Arkansas’s nuclear decommissioning liabilities for income tax purposes, which resulted in recognition of a gain for income tax purposes and a corresponding increase in the tax basis of assets, in accordance with the Internal Revenue Code and Treasury Regulations. Entergy determined that there was uncertainty regarding the treatment of certain aspects of the restructurings and recorded provisions for uncertain tax positions which are now considered to be effectively settled in accordance with accounting standards. The reversal of such provisions for uncertain tax positions results in a reduction of income tax expense of $156 million for Entergy Arkansas, $1 million for Entergy Mississippi, and $6 million for Entergy New Orleans.
The IRS also required Entergy New Orleans to reverse a tax gain associated with the 2017 restructuring that had been previously recognized, allowing Entergy New Orleans to reduce its tax expense by $39 million.
After the restructuring, Entergy Arkansas adopted a new method of accounting for income tax purposes in which its nuclear decommissioning costs are treated as production costs of electricity includable in cost of goods sold, which resulted in a $1.8 billion reduction in taxable income on its 2018 tax return that was treated as an unrecognized tax benefit. In conjunction with the audit, Entergy agreed with the IRS adjustments concerning the nuclear decommissioning tax position allowing Entergy Arkansas to include $102 million of its decommissioning liability in cost of goods sold.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Mark-to-Market Method of Accounting
In 2016, Entergy Louisiana elected mark-to-market income tax treatment for various wholesale electric power purchase and sale agreements, including Entergy Louisiana’s contract to purchase electricity from the Vidalia hydroelectric facility and from System Energy under the Unit Power Sales Agreement as well as other intercompany power purchase agreements. The election resulted in a $2 billion deductible temporary difference. The IRS allowed the mark-to-market tax method of accounting associated with the Vidalia contract and various other third-party and intercompany wholesale electric power purchase and sale agreements. The IRS disallowed the net deductions associated with the Unit Power Sales Agreement, which did not have an effect on net tax expense. The net allowance resulted in a reversal of a provision for uncertain tax positions of $132 million and a corresponding reduction of income tax expense.
In 2017, Entergy New Orleans also elected mark-to-market income tax treatment for the Unit Power Sales Agreement and various intercompany wholesale electric contracts which resulted in a $1 billion deductible temporary difference. The IRS allowed the mark-to-market tax method of accounting associated with various intercompany and third-party wholesale electric contracts. The IRS disallowed the net deductions associated with the Unit Power Sales Agreement, which did not have an effect on net tax expense. The net allowance resulted in a reversal of a provision for uncertain tax positions of $139 million and a corresponding reduction of income tax expense.
In 2018, Entergy Arkansas and Entergy Mississippi each accrued approximately $2 billion in deductible temporary differences related to mark-to-market tax accounting for the Unit Power Sales Agreement and various wholesale electric contracts. The IRS allowed the mark-to-market tax method of accounting associated with various intercompany and third-party wholesale electric contracts. The IRS disallowed the net deductions associated with the Unit Power Sales Agreement, which did not have an effect on net tax expense. The effective settlement of the mark-to-market tax position for Entergy Arkansas resulted in the accrual of an increase to tax expense of $40 million, which was offset by approximately $5 million of miscellaneous excess ADIT recognized as a result of the 2016-2018 IRS audit resolution. The net increase to tax expense is deferred as a regulatory asset, as discussed within the “Regulatory and Other Matters” section below.
Restructuring of Entergy’s Non-Utility Operations Business
During the 2016 to 2018 audit period, the ownership of certain of Entergy’s non-utility operations business nuclear power plants (previously reported as part of Entergy Wholesale Commodities) was restructured. Such restructuring transactions required Entergy to recognize the plants’ nuclear decommissioning liabilities for income tax purposes. The accrual of the nuclear decommissioning liabilities also required Entergy to recognize a gain for income tax purposes, a significant portion of which resulted in an increase in the tax basis of the assets. Because certain aspects of the restructuring transactions involved uncertainty, Entergy recorded a provision for uncertain tax positions. The IRS did not propose adjustments to the tax treatment of the restructuring transactions resulting in a net decrease to income tax expense of $288 million from the reversal of the provision for uncertain tax positions in fourth quarter 2023.
Reduction of Net Operating Loss Carryovers
The IRS audit reduced Entergy’s net operating loss carryover by $8 billion. A portion of Entergy’s audit adjustments were not offset by losses which resulted in a tax liability of $79 million, which was fully offset by prior deposits made by Entergy. Entergy received an assessment of interest in excess of prior deposits of $13 million in December 2023, and such interest was paid in January 2024.
Net operating loss carryovers were reduced by $4 billion for Entergy Arkansas, $1 billion for Entergy Louisiana, $2 billion for Entergy Mississippi, $1 billion for Entergy New Orleans, and $40 million for System
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Energy. The IRS audit adjustments were also factored into the settle-up required under Entergy’s intercompany income tax allocation agreement, and such amounts were settled in the fourth quarter of 2023.
Regulatory and Other Matters
In accordance with prior regulatory agreements associated with the Entergy Louisiana and Entergy Gulf States Louisiana business combination and Entergy New Orleans restructuring and general rate-making principles, Entergy Louisiana and Entergy New Orleans, respectively, recorded a regulatory liability and an associated regulatory charge of $38 million and $60 million ($28 million and $44 million net-of-tax), in December 2023.
Additionally, in December 2023, a regulatory asset for income tax associated with deficient ADIT of $35 million, $2 million, and $3 million, was recorded for Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi, respectively. See Note 2 to the financial statements for discussion of Entergy Arkansas’s regulatory activity related to the Tax Cuts and Jobs Act and discussion of the settlement of Entergy Arkansas’s 2023 formula rate plan.
As noted above, Entergy accrues interest expense related to unrecognized tax benefits in income tax expense. As a result of the IRS audit resolution, Entergy reversed approximately $24 million of interest related to the allowance of previously unrecognized tax benefits in December 2023.
Reversal of net deferred credits associated with the accounting for income taxes upon the resolution of the IRS audit resulted in a reduction/(increase) in income tax expense in December 2023 of $9 million, $42 million, ($2) million, $2 million, $2 million, and $1 million for Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy, respectively.
In April 2024, Entergy New Orleans and the City Council entered into a settlement in principle whereby Entergy New Orleans agreed to share with customers $138 million of income tax benefits from the resolution of the 2016–2018 IRS audit. Based on this settlement in principle, in first quarter 2024 Entergy New Orleans increased the associated regulatory liability from $60 million to $138 million and recorded a corresponding $78 million regulatory charge ($57 million net-of-tax). The settlement in principle requires that the regulatory liability be amortized over 25 years beginning January 2025 with the unamortized balance included in rate base and the amortization treated as a reduction to Entergy New Orleans’s retail revenue requirement. In May 2024 the City Council approved the settlement.
In September 2024 the LPSC unanimously approved a jointly filed global stipulated settlement agreement between Entergy Louisiana and the LPSC staff whereby Entergy Louisiana agreed to $184 million of customer rate credits to be given over two years, including customer sharing of income tax benefits resulting from the 2016-2018 IRS audit. See Note 2 to the financial statements for further discussion of Entergy Louisiana agreement in principle and the subsequently filed global stipulated settlement agreement.
Included in the effect of the IRS audit on the results of operations was the measurement of deferred tax assets and liabilities influenced by the 2017 enactment of the Tax Cuts and Jobs Act income tax rate change discussed below. With the conclusion of the audit, there are no remaining federal unrecognized tax benefits affected by the rate differential which could impact income tax expense and the regulatory liability for income taxes in future periods.
State Income Tax Audits
As a result of income tax audit adjustments proposed by the Arkansas Department of Finance and Administration, an Entergy subsidiary in the non-utility operations business recorded a provision in third quarter 2022 for uncertain tax positions of approximately $21 million, which includes interest expense. In the third quarter 2024, Entergy and the Arkansas Department of Finance and Administration resolved the terms of the Arkansas
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Department of Finance and Administration’s outstanding tax assessments related to the examination of the 2014 through 2018 tax years. The agreement resulted in a payment of tax of approximately $8 million by Entergy. As a result of the income tax audit adjustments and the reversal of a provision for uncertain tax positions, including amounts previously recorded in the third quarter 2022, Entergy Arkansas recorded a net reduction in income tax expense of approximately $18 million, which was offset by approximately $9 million of income tax expense recorded by other Entergy subsidiaries, resulting in a net reduction in income tax expense for Entergy of $9 million.
Other Tax Matters
Tax Cuts and Jobs Act (TCJA)
The most significant effect of the TCJA for Entergy and the Registrant Subsidiaries was the change in the federal corporate income tax rate from 35% to 21%, effective January 1, 2018. Entergy had regulatory liability balances of $1.2 billion and $1.0 billion as of December 31, 2024 and December 31, 2023, respectively. These liabilities were primarily associated with the re-measurement of deferred tax assets and liabilities due to the income tax rate change, subsequent amortization of excess ADIT, and payments to customers since the enactment of the TCJA. In addition to the protected and unprotected excess ADIT amounts, the net regulatory liability for income taxes includes other regulatory assets and liabilities for income taxes mainly related to AFUDC, as described in Note 1 to the financial statements.
Entergy’s regulatory liability for income taxes includes a gross-up at the applicable tax rate to account for the effect of excess ADIT on the ratemaking formula. The regulatory liability for income taxes reflects (1) the reduction of the net deferred tax liability resulting in excess ADIT, and (2) the tax gross-up of excess ADIT. The Registrant Subsidiaries’ December 31, 2024 and December 31, 2023 balance sheets reflect net regulatory liabilities for income taxes as follows:
| 2024 | 2023 | ||||||||||
| (In Millions) | |||||||||||
| Entergy Arkansas | $418 | $392 | |||||||||
| Entergy Louisiana | $355 | $194 | |||||||||
| Entergy Mississippi | $181 | $189 | |||||||||
| Entergy New Orleans | $15 | $36 | |||||||||
| Entergy Texas | $94 | $115 | |||||||||
| System Energy | $105 | $107 |
Excess ADIT is generally classified into two categories: (1) the portion that is subject to the normalization requirements of the TCJA, referred to as “protected”, and (2) the portion that is not subject to such normalization provisions, referred to as “unprotected”. See Note 2 to the financial statements for discussion of Entergy Louisiana’s $106 million reversal of a regulatory liability, primarily associated with the Hurricane Isaac securitization, recognized in 2017 as a result of the TCJA, recorded in fourth quarter 2023.
The majority of the remaining unamortized Excess ADIT as of December 31, 2024 is classified as protected. The TCJA mandates the normalization method of accounting for income taxes for excess ADIT associated with public utility property. The TCJA specifies the use of the average rate assumption method (ARAM) to determine of the timing of the return of excess ADIT associated with such property. Under ARAM, the excess ADIT is reduced over the remaining life of the asset. Remaining asset lives vary for each Registrant Subsidiary, but the average life of public utility property is typically 30 years or longer. Entergy will amortize the protected portion of the excess ADIT in compliance with the normalization requirements.
During the second quarter 2018, the Registrant Subsidiaries began returning unprotected excess accumulated deferred income taxes, associated with the effects of the TCJA, to their customers through rate riders
Entergy Corporation and Subsidiaries
Notes to Financial Statements
and other mechanisms approved by their respective regulatory authorities. Return of the unprotected excess accumulated deferred income taxes results in a reduction in the regulatory liability for income taxes and a corresponding reduction in income tax expense. This manner of regulatory accounting affects the effective tax rate for the period as compared to the statutory tax rate. The return of unprotected excess accumulated deferred income taxes was substantially completed by Entergy and the Registrant Subsidiaries during 2022.
Inflation Reduction Act of 2022
The Inflation Reduction Act of 2022, signed into law on August 16, 2022, significantly expanded federal tax incentives for clean energy production, including the extension of production tax credits to solar projects and certain qualified nuclear power facilities. Additionally, the Inflation Reduction Act of 2022 enacted a 1% excise tax on the buyback of public company stock and a new corporate alternative minimum tax. Entergy Arkansas has accrued approximately $5 million of solar production tax credits associated with the Walnut Bend Solar facility, the Driver Solar facility, and the West Memphis Solar facility in 2024. As the value of such credits is expected to be provided to customers, a regulatory liability has been recorded for all credits recognized in 2024.
Entergy Arkansas, Entergy Louisiana, and System Energy have the potential to generate zero-emission nuclear power production tax credits for electricity generated by their respective nuclear power facilities. Based on guidance provided by the U.S. Treasury and the IRS, the nuclear production tax credits will be calculated by multiplying the kWh of qualifying electricity by $0.003, with the value of the credits decreasing ratably, or phasing out, once the annual gross receipts from the sale of nuclear power exceed a certain threshold. If certain prevailing wage requirements are satisfied, the calculation of the credit, as described in the preceding sentence, is multiplied by a factor of five. Additional guidance is needed from the U.S. Treasury and/or the IRS to determine how the value of these credits will be calculated for power generated from nuclear facilities of rate-regulated utilities. Due to the uncertainty of value, if any, of credits Entergy Arkansas, Entergy Louisiana, or System Energy may receive, such credits have not been recognized for the nuclear power produced in 2024. Depending on the specifics of the expected additional guidance from the U.S. Treasury and/or the IRS, Entergy Arkansas, Entergy Louisiana, or System Energy may not recognize any production tax credits for their nuclear facilities, or they could recognize a significant amount each year, beginning for 2024. If the IRS does not issue any technical guidance before the due date of Entergy’s 2024 tax return, Entergy Arkansas, Entergy Louisiana, and System Energy will be required to reassess the determination of the availability of such credits based on any other additional information or regulatory requests. If credits are recognized in future periods, the value of such credits is expected to be provided to customers. As such, recognition of nuclear production tax credits is not expected to have a material effect on the results of operations of Entergy, Entergy Arkansas, Entergy Louisiana, or System Energy.
Tax Accounting Methods
Certain Entergy subsidiaries have elected to apply the mark-to-market method of accounting for income tax return purposes to wholesale power purchase agreements as appropriate under the Internal Revenue Code and U.S. Treasury Regulations. The mark-to-market tax gain or loss computed each year is based on an estimated fair market valuation which includes analyses of market prices and conditions.
In 2020, Entergy Texas elected mark-to-market income tax treatment for wholesale electric power purchase and sale agreements which resulted in a $2.5 billion deductible temporary difference.
Arkansas and Louisiana Corporate Income Tax Rate Changes
Since 2019, the State of Arkansas has enacted corporate income tax law changes that have phased in rate reductions from the former rate of 6.5% to the currently enacted rate of 4.3%. As a result of the rate reductions, Entergy Arkansas has recorded regulatory liabilities for income taxes of approximately $29 million, $26 million, and $15 million in 2024, 2023, and 2022, respectively, and a total of $32 million for years prior to 2022. The
Entergy Corporation and Subsidiaries
Notes to Financial Statements
regulatory liabilities include a tax gross-up related to the treatment of income taxes in the retail and wholesale ratemaking formulas and have been or are scheduled to be included in future rate mechanisms.
In November 2024, during the Louisiana Third Special Legislative Session of 2024, the Louisiana legislature enacted comprehensive tax reform measures that impact corporate income taxes through a reduction in rates to a flat 5.5% (from the current highest marginal rate of 7.5%), effective January 1, 2025. Accordingly, deferred tax assets and liabilities were adjusted, with associated regulatory assets and liabilities for income taxes, to reflect the new applicable state rate. As a result of the rate reduction, Entergy Louisiana and Entergy New Orleans recorded regulatory liabilities for income taxes of approximately $179 million and $9 million, respectively. The regulatory liabilities include a tax gross-up related to the treatment of income taxes in the retail and wholesale ratemaking formulas and are expected to be included in future rate mechanisms. In fourth quarter 2024, as a result of the net reduction in certain deferred tax assets and liabilities, Entergy Louisiana and Entergy New Orleans recorded an increase of income tax expense of approximately $16.3 million and $0.2 million, respectively, with an additional $12.1 million increase of income tax expense recorded by other Entergy subsidiaries.
Act 293 Securitizations
As described in Note 2 to the financial statements, Entergy Louisiana has implemented two separate securitization transactions authorized under Act 293 of the Louisiana Legislature’s Regular Session of 2021. The first transaction occurred in May of 2022 and the second occurred in March of 2023. Act 293 provides that the LURC contribute the net bond proceeds to a LURC-sponsored trust. Over the 15-year term of the Act 293 bonds, the respective storm trusts will make distributions to Entergy Louisiana, a beneficiary of the storm trusts, that will not be taxable to Entergy Louisiana. Additionally, Entergy Louisiana will not include the receipt of the system restoration charges in taxable income because the right to receive the system restoration charges has been granted directly to the LURC, and Entergy Louisiana only acts as an agent to collect those charges on behalf of the LURC.
Accordingly, the securitizations provided for a tax accounting permanent difference resulting in net reductions of income tax expense for Entergy Louisiana of approximately $133 million in March 2023 and $290 million in May 2022, both after taking into account a provision for uncertain tax positions. Entergy’s recognition of reduced income tax expense was offset by other tax changes resulting in a net reduction of income tax expense for Entergy of approximately $129 million in March 2023 and $283 million in May 2022, both after taking into account a provision for uncertain tax positions.
In recognition of its obligations described in LPSC ancillary orders issued as part of the securitization regulatory proceedings, Entergy Louisiana recorded regulatory liabilities of $103 million ($76 million net-of-tax) in first quarter 2023 and $224 million ($165 million net-of-tax) in second quarter 2022 to reflect its obligation to provide credits to its customers. See Note 2 to the financial statements for further discussion of the Entergy Louisiana March 2023 and May 2022 storm cost securitizations.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
NOTE 4. REVOLVING CREDIT FACILITIES, LINES OF CREDIT, AND SHORT-TERM BORROWINGS (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Entergy Corporation has in place a credit facility that has a borrowing capacity of $3 billion and expires in June 2029. The facility includes fronting commitments for the issuance of letters of credit against $20 million of the total borrowing capacity of the credit facility. The commitment fee is currently 0.225% of the undrawn commitment amount. Commitment fees and interest rates on loans under the credit facility can fluctuate depending on the senior unsecured debt ratings of Entergy Corporation. The estimated interest rate for the year ended December 31, 2024 that would have been applied to outstanding borrowings under the facility was 5.96%. The following is a summary of the amounts outstanding and capacity available under the credit facility as of December 31, 2024:
| Capacity | Borrowings | Letters of Credit | Capacity Available | |||||||||||||||||
| (In Millions) | ||||||||||||||||||||
| $3,000 | $— | $3 | $2,997 |
Entergy Corporation’s credit facility includes a covenant requiring Entergy to maintain a consolidated debt ratio, as defined, of 65% or less of its total capitalization. Entergy is in compliance with this covenant. If Entergy fails to meet this ratio, or if Entergy Corporation or one of the Registrant Subsidiaries (except Entergy New Orleans and System Energy) defaults on other indebtedness or is in bankruptcy or insolvency proceedings, an acceleration of the Entergy Corporation credit facility’s maturity date may occur.
Entergy Corporation has a commercial paper program with a Board-approved program limit of $2 billion. As of December 31, 2024, Entergy Corporation had $927.3 million of commercial paper outstanding. The weighted-average interest rate for the year ended December 31, 2024 was 5.52%.
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas each had credit facilities available as of December 31, 2024 as follows:
| Company | Expiration Date | Amount of Facility | Interest Rate (a) | Amount Drawn as of December 31, 2024 | Letters of Credit Outstanding as of December 31, 2024 | |||||||||||||||||||||||||||
| Entergy Arkansas | April 2026 | $25 million (b) | 6.31% | — | — | |||||||||||||||||||||||||||
| Entergy Arkansas | June 2029 | $300 million (c) | 5.58% | — | — | |||||||||||||||||||||||||||
| Entergy Louisiana | June 2029 | $400 million (c) | 5.71% | — | — | |||||||||||||||||||||||||||
| Entergy Mississippi | June 2029 | $300 million (c) | 5.58% | — | — | |||||||||||||||||||||||||||
| Entergy New Orleans | June 2027 | $25 million (c) | 6.08% | — | — | |||||||||||||||||||||||||||
| Entergy Texas | June 2029 | $300 million (c) | 5.71% | — | $1.1 million |
(a)The interest rate is the estimated interest rate as of December 31, 2024 that would have been applied to outstanding borrowings under the facility.
(b)Borrowings under this Entergy Arkansas credit facility may be secured by a security interest in its accounts receivable at Entergy Arkansas’s option.
(c)The credit facility includes fronting commitments for the issuance of letters of credit against a portion of the borrowing capacity of the facility as follows: $5 million for Entergy Arkansas; $15 million for Entergy Louisiana; $5 million for Entergy Mississippi; $10 million for Entergy New Orleans; and $25 million for Entergy Texas.
The commitment fees on the credit facilities range from 0.075% to 0.375% of the undrawn commitment amount for Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy Texas, and of the entire facility amount for
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy New Orleans. Each of the credit facilities requires the Registrant Subsidiary borrower to maintain a debt ratio, as defined, of 65% or less of its total capitalization. Each Registrant Subsidiary is in compliance with this covenant.
In addition, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas each has an uncommitted standby letter of credit facility as a means to post collateral to support its obligations to MISO and for other purposes. The following is a summary of the uncommitted standby letter of credit facilities as of December 31, 2024:
| Company | Amount of Uncommitted Facility | Letter of Credit Fee | Letters of Credit Issued as of December 31, 2024 (a) (b) | |||||||||||||||||
| Entergy Arkansas | $25 million | 0.78% | $18.1 million | |||||||||||||||||
| Entergy Louisiana | $125 million | 0.78% | $46.2 million | |||||||||||||||||
| Entergy Mississippi | $65 million | 0.78% | $33.1 million | |||||||||||||||||
| Entergy New Orleans | $1 million | 1.625% | $0.5 million | |||||||||||||||||
| Entergy Texas | $150 million | 1.250% | $93.4 million |
(a)As of December 31, 2024, letters of credit posted with MISO covered financial transmission rights exposure of $0.5 million for Entergy Arkansas, $0.1 million for Entergy Louisiana, $0.8 million for Entergy Mississippi, $0.1 million for Entergy New Orleans, and $0.3 million for Entergy Texas. See Note 15 to the financial statements for discussion of financial transmission rights.
(b)As of December 31, 2024, the letters of credit issued for Entergy Mississippi include $31.8 million in MISO letters of credit and $1.3 million in non-MISO letters of credit outstanding under this facility.
The short-term borrowings of the Registrant Subsidiaries are limited to amounts authorized by the FERC. Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy have FERC-authorized short-term borrowing limits effective through January 2027. In addition to borrowings from commercial banks, these companies may also borrow from the Entergy system money pool and from other internal short-term borrowing arrangements. The money pool is an intercompany cash management program that makes possible intercompany borrowing and lending arrangements, and the money pool and the other internal borrowing arrangements are designed to reduce the Registrant Subsidiaries’ dependence on external short-term borrowings. Borrowings from internal and external short-term borrowings combined may not exceed the FERC-authorized limits. The following are the FERC-authorized limits for short-term borrowings and the outstanding short-term borrowings as of December 31, 2024 (aggregating both internal and external short-term borrowings) for the Registrant Subsidiaries:
| Authorized | Borrowings | ||||||||||
| (In Millions) | |||||||||||
| Entergy Arkansas | $250 | $15 | |||||||||
| Entergy Louisiana | $450 | $— | |||||||||
| Entergy Mississippi | $200 | $— | |||||||||
| Entergy New Orleans | $150 | $— | |||||||||
| Entergy Texas | $200 | $— | |||||||||
| System Energy | $200 | $— |
Vermont Yankee Credit Facility (Entergy Corporation)
In January 2019, Entergy Nuclear Vermont Yankee was transferred to NorthStar and its credit facility was assumed by Entergy Assets Management Operations, LLC (formerly Vermont Yankee Asset Retirement, LLC), Entergy Nuclear Vermont Yankee’s parent company that remains an Entergy subsidiary after the transfer. In
Entergy Corporation and Subsidiaries
Notes to Financial Statements
December 2024, Entergy repaid the total $139 million of cash borrowings outstanding under the facility, and the facility was subsequently terminated.
Variable Interest Entities (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, and System Energy)
See Note 17 to the financial statements for a discussion of the consolidation of the nuclear fuel company variable interest entities (VIEs). To finance the acquisition and ownership of nuclear fuel, the nuclear fuel company VIEs have credit facilities and three of the four VIEs also issue commercial paper, details of which follow as of December 31, 2024:
| Company | Expiration Date | Amount of Facility | Weighted-Average Interest Rate on Borrowings (a) | Amount Outstanding as of December 31, 2024 | ||||||||||||||||||||||
| (Dollars in Millions) | ||||||||||||||||||||||||||
| Entergy Arkansas VIE | June 2027 | $80 | 6.28% | $22.5 | ||||||||||||||||||||||
| Entergy Louisiana River Bend VIE | June 2027 | $105 | 6.33% | $18.7 | ||||||||||||||||||||||
| Entergy Louisiana Waterford VIE | June 2027 | $105 | 6.32% | $18.9 | ||||||||||||||||||||||
| System Energy VIE | June 2027 | $120 | 6.27% | $72.7 |
(a)Includes letter of credit fees and bank fronting fees on commercial paper issuances by the nuclear fuel company VIEs for Entergy Arkansas, Entergy Louisiana, and System Energy. The nuclear fuel company VIE for Entergy Louisiana River Bend does not issue commercial paper, but borrows directly on its bank credit facility.
The commitment fees on the credit facilities are 0.100% of the undrawn commitment amount for the Entergy Arkansas, Entergy Louisiana, and System Energy VIEs. Each credit facility requires the respective lessee of nuclear fuel (Entergy Arkansas, Entergy Louisiana, or Entergy Corporation as guarantor for System Energy) to maintain a consolidated debt ratio, as defined, of 70% or less of its total capitalization. Each lessee is in compliance with this covenant.
The nuclear fuel company VIEs had notes payable that were included in debt on the respective balance sheets as of December 31, 2024 as follows:
| Company | Description | Amount | ||||||||||||
| Entergy Arkansas VIE | 1.84% Series N due July 2026 | $90 million | ||||||||||||
| Entergy Arkansas VIE | 5.54% Series O due May 2029 | $70 million | ||||||||||||
| Entergy Louisiana River Bend VIE | 2.51% Series V due June 2027 | $70 million | ||||||||||||
| Entergy Louisiana Waterford VIE | 5.94% Series J due September 2026 | $70 million | ||||||||||||
| System Energy VIE | 2.05% Series K due September 2027 | $90 million |
In accordance with regulatory treatment, interest on the nuclear fuel company VIEs’ credit facilities, commercial paper, and long-term notes payable is reported in fuel expense.
As of December 31, 2024, Entergy Arkansas, Entergy Louisiana, and System Energy each has obtained financing authorization from the FERC that extends through January 2027 for issuances by its nuclear fuel company VIEs.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
NOTE 5. LONG - TERM DEBT (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Long-term debt for Entergy as of December 31, 2024 and 2023 consisted of:
| Type of Debt and Maturity | Weighted-Average Interest Rate December 31, 2024 | Interest Rate Ranges at December 31, | Outstanding at December 31, | |||||||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||
| Mortgage Bonds | ||||||||||||||||||||||||||||||||
| 2024-2028 | 3.54% | 1.50% - 6.00% | 0.95% - 6.00% | $4,268,000 | $6,143,000 | |||||||||||||||||||||||||||
| 2029-2033 | 3.62% | 1.60% - 6.41% | 1.60% - 5.30% | 4,250,000 | 4,150,000 | |||||||||||||||||||||||||||
| 2034-2044 | 4.66% | 3.10% - 6.54% | 3.10% - 5.00% | 3,457,000 | 1,507,000 | |||||||||||||||||||||||||||
| 2045-2066 | 4.48% | 2.65% - 5.85% | 2.65% - 5.80% | 9,685,000 | 7,935,000 | |||||||||||||||||||||||||||
| Governmental Bonds (a) | ||||||||||||||||||||||||||||||||
| 2024-2044 | 2.43% | 2.0% - 2.5% | 2.0% - 2.5% | 282,375 | 282,375 | |||||||||||||||||||||||||||
| Securitization Bonds | ||||||||||||||||||||||||||||||||
| 2024-2036 | 3.64% | 3.051% - 3.697% | 2.67% - 3.697% | 242,424 | 267,003 | |||||||||||||||||||||||||||
| Variable Interest Entities Notes Payable (Note 4) | ||||||||||||||||||||||||||||||||
| 2024-2029 | 3.67% | 1.84% - 5.94% | 1.84% - 5.94% | 390,000 | 320,000 | |||||||||||||||||||||||||||
| Entergy Corporation Senior Notes | ||||||||||||||||||||||||||||||||
| due September 2025 | n/a | 0.9% | 0.9% | 800,000 | 800,000 | |||||||||||||||||||||||||||
| due September 2026 | n/a | 2.95% | 2.95% | 750,000 | 750,000 | |||||||||||||||||||||||||||
| due June 2028 | n/a | 1.9% | 1.9% | 650,000 | 650,000 | |||||||||||||||||||||||||||
| due June 2030 | n/a | 2.80% | 2.80% | 600,000 | 600,000 | |||||||||||||||||||||||||||
| due June 2031 | n/a | 2.40% | 2.40% | 650,000 | 650,000 | |||||||||||||||||||||||||||
| due June 2050 | n/a | 3.75% | 3.75% | 600,000 | 600,000 | |||||||||||||||||||||||||||
| Entergy Corporation Junior Subordinated Debentures due December 2054 (b) | n/a | 7.125% | — | 1,200,000 | — | |||||||||||||||||||||||||||
| Entergy New Orleans Unsecured Term Loan due June 2024 | n/a | — | 6.25% | — | 85,000 | |||||||||||||||||||||||||||
| Vermont Yankee Credit Facility (Note 4) | n/a | — | 6.61% | — | 139,000 | |||||||||||||||||||||||||||
| Entergy Arkansas VIE Credit Facility (Note 4) | n/a | 6.28% | 6.10% | 22,500 | 70,200 | |||||||||||||||||||||||||||
| Entergy Louisiana River Bend VIE Credit Facility (Note 4) | n/a | 6.33% | 6.17% | 18,700 | 46,600 | |||||||||||||||||||||||||||
| Entergy Louisiana Waterford VIE Credit Facility (Note 4) | n/a | 6.32% | 6.07% | 18,900 | 29,500 | |||||||||||||||||||||||||||
| System Energy VIE Credit Facility (Note 4) | n/a | 6.27% | 5.91% | 72,700 | 21,500 | |||||||||||||||||||||||||||
| Long-term DOE Obligation (c) | — | — | — | 216,016 | 205,151 | |||||||||||||||||||||||||||
| Grand Gulf Sale-Leaseback Obligation | n/a | — | — | 34,203 | 34,260 | |||||||||||||||||||||||||||
| Unamortized Premium and Discount - Net | (17,575) | (11,638) | ||||||||||||||||||||||||||||||
| Unamortized Debt Issuance Costs | (204,010) | (171,475) | ||||||||||||||||||||||||||||||
| Other | 5,362 | 5,420 | ||||||||||||||||||||||||||||||
| Total Long-Term Debt | 27,991,595 | 25,107,896 | ||||||||||||||||||||||||||||||
| Less Amount Due Within One Year | 1,378,090 | 2,099,057 | ||||||||||||||||||||||||||||||
| Long-Term Debt Excluding Amount Due Within One Year | $26,613,505 | $23,008,839 | ||||||||||||||||||||||||||||||
| Fair Value of Long-Term Debt | $25,181,802 | $22,489,174 |
(a)Consists of pollution control revenue bonds and environmental revenue bonds, some of which are secured by collateral mortgage bonds.
(b)Entergy Corporation will pay interest at an annual rate of 7.125% through November 2029. Commencing on December 1, 2029, the annual rate will equal the five-year treasury rate as of the most recent reset interest determination date plus 2.67%, which interest resets will occur on each five-year anniversary of December 1 after December 1, 2029.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
(c)Pursuant to the Nuclear Waste Policy Act of 1982, Entergy’s nuclear owner/licensee subsidiaries have contracts with the DOE for spent nuclear fuel disposal service. The contracts include a one-time fee for generation prior to April 7, 1983. Entergy Arkansas is the only Entergy company that generated electric power with nuclear fuel prior to that date and includes the one-time fee, plus accrued interest, in long-term debt.
The annual long-term debt maturities (excluding lease obligations and long-term DOE obligations) for debt outstanding as of December 31, 2024, for the next five years are as follows:
| Amount | |||||
| (In Thousands) | |||||
| 2025 | $1,379,140 | ||||
| 2026 | $2,375,720 | ||||
| 2027 | $1,043,520 | ||||
| 2028 | $2,177,293 | ||||
| 2029 | $405,720 |
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy have obtained long-term financing authorizations from the FERC that extend through January 2027. Entergy New Orleans has obtained long-term financing authorization from the City Council that extends through December 2025. Entergy Arkansas has also obtained first mortgage bond/secured financing authorization from the APSC that extends through December 2025.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Long-term debt for the Registrant Subsidiaries as of December 31, 2024 and 2023 consisted of:
| 2024 | 2023 | |||||||||||||
| (In Thousands) | ||||||||||||||
| Entergy Arkansas | ||||||||||||||
| Mortgage Bonds: | ||||||||||||||
| 3.70% Series due June 2024 | $— | $375,000 | ||||||||||||
| 3.5% Series due April 2026 | 600,000 | 600,000 | ||||||||||||
| 4.00% Series due June 2028 | 350,000 | 350,000 | ||||||||||||
| 5.15% Series due January 2033 | 425,000 | 425,000 | ||||||||||||
| 5.30% Series due September 2033 | 300,000 | 300,000 | ||||||||||||
| 5.45% Series due June 2034 | 400,000 | — | ||||||||||||
| 4.95% Series due December 2044 | 250,000 | 250,000 | ||||||||||||
| 4.20% Series due April 2049 | 550,000 | 550,000 | ||||||||||||
| 2.65% Series due June 2051 | 675,000 | 675,000 | ||||||||||||
| 3.35% Series due June 2052 | 400,000 | 400,000 | ||||||||||||
| 5.75% Series due June 2054 | 400,000 | — | ||||||||||||
| 4.875% Series due September 2066 | 410,000 | 410,000 | ||||||||||||
| Total mortgage bonds | 4,760,000 | 4,335,000 | ||||||||||||
| Variable Interest Entity Notes Payable and Credit Facility (Note 4): | ||||||||||||||
| 1.84% Series N due July 2026 | 90,000 | 90,000 | ||||||||||||
| 5.54% Series O due May 2029 | 70,000 | — | ||||||||||||
| Credit Facility due June 2027, weighted-average rate 6.28% | 22,500 | 70,200 | ||||||||||||
| Total variable interest entity notes payable and credit facility | 182,500 | 160,200 | ||||||||||||
| Other: | ||||||||||||||
| Long-term DOE Obligation (b) | 216,016 | 205,151 | ||||||||||||
| Unamortized Premium and Discount – Net | 3,620 | 7,508 | ||||||||||||
| Unamortized Debt Issuance Costs | (41,552) | (36,711) | ||||||||||||
| Other | 1,910 | 1,932 | ||||||||||||
| Total Long-Term Debt | 5,122,494 | 4,673,080 | ||||||||||||
| Less Amount Due Within One Year | — | 375,000 | ||||||||||||
| Long-Term Debt Excluding Amount Due Within One Year | $5,122,494 | $4,298,080 | ||||||||||||
| Fair Value of Long-Term Debt | $4,546,643 | $4,166,941 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| 2024 | 2023 | |||||||||||||
| (In Thousands) | ||||||||||||||
| Entergy Louisiana | ||||||||||||||
| Mortgage Bonds: | ||||||||||||||
| 0.95% Series due October 2024 | $— | $1,000,000 | ||||||||||||
| 5.40% Series due November 2024 | — | 400,000 | ||||||||||||
| 3.78% Series due April 2025 | 110,000 | 110,000 | ||||||||||||
| 3.78% Series due April 2025 | 190,000 | 190,000 | ||||||||||||
| 4.44% Series due January 2026 | 250,000 | 250,000 | ||||||||||||
| 2.40% Series due October 2026 | 400,000 | 400,000 | ||||||||||||
| 3.12% Series due September 2027 | 450,000 | 450,000 | ||||||||||||
| 3.25% Series due April 2028 | 425,000 | 425,000 | ||||||||||||
| 1.60% Series due December 2030 | 300,000 | 300,000 | ||||||||||||
| 3.05% Series due June 2031 | 325,000 | 325,000 | ||||||||||||
| 2.35% Series due June 2032 | 500,000 | 500,000 | ||||||||||||
| 4.00% Series due March 2033 | 750,000 | 750,000 | ||||||||||||
| 5.35% Series due March 2034 | 500,000 | — | ||||||||||||
| 5.15% Series due September 2034 | 700,000 | — | ||||||||||||
| 3.10% Series due June 2041 | 500,000 | 500,000 | ||||||||||||
| 5% Series due July 2044 | 170,000 | 170,000 | ||||||||||||
| 4.95% Series due January 2045 | 450,000 | 450,000 | ||||||||||||
| 4.20% Series due September 2048 | 900,000 | 900,000 | ||||||||||||
| 4.20% Series due April 2050 | 525,000 | 525,000 | ||||||||||||
| 2.90% Series due March 2051 | 650,000 | 650,000 | ||||||||||||
| 4.75% Series due September 2052 | 500,000 | 500,000 | ||||||||||||
| 5.70% Series due March 2054 | 700,000 | — | ||||||||||||
| 4.875% Series due September 2066 | 270,000 | 270,000 | ||||||||||||
| Total mortgage bonds | 9,565,000 | 9,065,000 | ||||||||||||
| Governmental Bonds (a): | ||||||||||||||
| 2.00% Series due June 2030, Louisiana Local Government Environmental Facilities and Community Development Authority (c) | 16,200 | 16,200 | ||||||||||||
| 2.50% Series due April 2036, Louisiana Local Government Environmental Facilities and Community Development Authority (c) | 182,480 | 182,480 | ||||||||||||
| Total governmental bonds | 198,680 | 198,680 | ||||||||||||
| Variable Interest Entity Notes Payable and Credit Facilities (Note 4): | ||||||||||||||
| 5.94% Series J due September 2026 | 70,000 | 70,000 | ||||||||||||
| 2.51% Series V due June 2027 | 70,000 | 70,000 | ||||||||||||
| Credit Facility due June 2027, weighted-average rate 6.33% | 18,700 | 46,600 | ||||||||||||
| Credit Facility due June 2027, weighted-average rate 6.32% | 18,900 | 29,500 | ||||||||||||
| Total variable interest entity notes payable and credit facilities | 177,600 | 216,100 | ||||||||||||
| Other: | ||||||||||||||
| Unamortized Premium and Discount - Net | (9,820) | (6,478) | ||||||||||||
| Unamortized Debt Issuance Costs | (68,459) | (56,101) | ||||||||||||
| Other | 3,452 | 3,488 | ||||||||||||
| Total Long-Term Debt | 9,866,453 | 9,420,689 | ||||||||||||
| Less Amount Due Within One Year | 300,000 | 1,400,000 | ||||||||||||
| Long-Term Debt Excluding Amount Due Within One Year | $9,566,453 | $8,020,689 | ||||||||||||
| Fair Value of Long-Term Debt | $8,751,266 | $8,414,512 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| 2024 | 2023 | |||||||||||||
| (In Thousands) | ||||||||||||||
| Entergy Mississippi | ||||||||||||||
| Mortgage Bonds: | ||||||||||||||
| 3.75% Series due July 2024 | $— | $100,000 | ||||||||||||
| 3.25% Series due December 2027 | 150,000 | 150,000 | ||||||||||||
| 2.85% Series due June 2028 | 375,000 | 375,000 | ||||||||||||
| 5.0% Series due September 2033 | 300,000 | 300,000 | ||||||||||||
| 2.55% Series due December 2033 | 200,000 | 200,000 | ||||||||||||
| 4.52% Series due December 2038 | 55,000 | 55,000 | ||||||||||||
| 3.85% Series due June 2049 | 435,000 | 435,000 | ||||||||||||
| 3.50% Series due June 2051 | 370,000 | 370,000 | ||||||||||||
| 5.85% Series due June 2054 | 300,000 | — | ||||||||||||
| 4.90% Series due October 2066 | 260,000 | 260,000 | ||||||||||||
| Total mortgage bonds | 2,445,000 | 2,245,000 | ||||||||||||
| Other: | ||||||||||||||
| Unamortized Premium and Discount – Net | 5,283 | 5,546 | ||||||||||||
| Unamortized Debt Issuance Costs | (23,210) | (21,036) | ||||||||||||
| Total Long-Term Debt | 2,427,073 | 2,229,510 | ||||||||||||
| Less Amount Due Within One Year | — | 100,000 | ||||||||||||
| Long-Term Debt Excluding Amount Due Within One Year | $2,427,073 | $2,129,510 | ||||||||||||
| Fair Value of Long-Term Debt | $2,116,246 | $1,969,334 |
| 2024 | 2023 | |||||||||||||
| (In Thousands) | ||||||||||||||
| Entergy New Orleans | ||||||||||||||
| Mortgage Bonds: | ||||||||||||||
| 3.00% Series due March 2025 | $78,000 | $78,000 | ||||||||||||
| 4% Series due June 2026 | 85,000 | 85,000 | ||||||||||||
| 6.25% Series due June 2029 | 35,000 | — | ||||||||||||
| 6.41% Series due June 2031 | 65,000 | — | ||||||||||||
| 4.19% Series due November 2031 | 90,000 | 90,000 | ||||||||||||
| 4.51% Series due September 2033 | 60,000 | 60,000 | ||||||||||||
| 6.54% Series due June 2034 | 50,000 | — | ||||||||||||
| 4.51% Series due November 2036 | 70,000 | 70,000 | ||||||||||||
| 3.75% Series due March 2040 | 62,000 | 62,000 | ||||||||||||
| 5.0% Series due December 2052 | 30,000 | 30,000 | ||||||||||||
| 5.50% Series due April 2066 | 110,000 | 110,000 | ||||||||||||
| Total mortgage bonds | 735,000 | 585,000 | ||||||||||||
| Securitization Bonds: | ||||||||||||||
| 2.67% Series Senior Secured due June 2027 | — | 6,245 | ||||||||||||
| Total securitization bonds | — | 6,245 | ||||||||||||
| Other: | ||||||||||||||
| 6.25% Unsecured Term Loan due June 2024 | — | 85,000 | ||||||||||||
| Payable to associated company due November 2035 | 7,004 | 8,279 | ||||||||||||
| Unamortized Premium and Discount – Net | — | (6) | ||||||||||||
| Unamortized Debt Issuance Costs | (6,537) | (7,068) | ||||||||||||
| Total Long-Term Debt | 735,467 | 677,450 | ||||||||||||
| Less Amount Due Within One Year | 79,140 | 86,275 | ||||||||||||
| Long-Term Debt Excluding Amount Due Within One Year | $656,327 | $591,175 | ||||||||||||
| Fair Value of Long-Term Debt | $697,466 | $602,716 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| 2024 | 2023 | |||||||||||||
| (In Thousands) | ||||||||||||||
| Entergy Texas | ||||||||||||||
| Mortgage Bonds: | ||||||||||||||
| 1.50% Series due September 2026 | $130,000 | $130,000 | ||||||||||||
| 3.45% Series due December 2027 | 150,000 | 150,000 | ||||||||||||
| 4.0% Series due March 2029 | 300,000 | 300,000 | ||||||||||||
| 1.75% Series due March 2031 | 600,000 | 600,000 | ||||||||||||
| 4.50% Series due March 2039 | 400,000 | 400,000 | ||||||||||||
| 5.15% Series due June 2045 | 250,000 | 250,000 | ||||||||||||
| 3.55% Series due September 2049 | 475,000 | 475,000 | ||||||||||||
| 5.00% Series due September 2052 | 325,000 | 325,000 | ||||||||||||
| 5.80% Series due September 2053 | 350,000 | 350,000 | ||||||||||||
| 5.55% Series due September 2054 | 350,000 | — | ||||||||||||
| Total mortgage bonds | 3,330,000 | 2,980,000 | ||||||||||||
| Securitization Bonds: | ||||||||||||||
| 3.051% Series Senior Secured, Series A Tranche A-1 due December 2028 | 51,574 | 69,908 | ||||||||||||
| 3.697% Series Senior Secured, Series A Tranche A-2 due December 2036 | 190,850 | 190,850 | ||||||||||||
| Total securitization bonds | 242,424 | 260,758 | ||||||||||||
| Other: | ||||||||||||||
| Unamortized Premium and Discount - Net | 7,624 | 10,199 | ||||||||||||
| Unamortized Debt Issuance Costs | (27,605) | (25,865) | ||||||||||||
| Total Long-Term Debt | 3,552,443 | 3,225,092 | ||||||||||||
| Less Amount Due Within One Year | — | — | ||||||||||||
| Long-Term Debt Excluding Amount Due Within One Year | $3,552,443 | $3,225,092 | ||||||||||||
| Fair Value of Long-Term Debt | $3,176,230 | $2,936,130 |
| 2024 | 2023 | |||||||||||||
| (In Thousands) | ||||||||||||||
| System Energy | ||||||||||||||
| Mortgage Bonds: | ||||||||||||||
| 2.14% Series due December 2025 | $200,000 | $200,000 | ||||||||||||
| 6.00% Series due April 2028 | 325,000 | 325,000 | ||||||||||||
| 5.30% Series due December 2034 | 300,000 | — | ||||||||||||
| Total mortgage bonds | 825,000 | 525,000 | ||||||||||||
| Governmental Bonds (a): | ||||||||||||||
| 2.375% Series due June 2044, Mississippi Business Finance Corp. (c) | 83,695 | 83,695 | ||||||||||||
| Total governmental bonds | 83,695 | 83,695 | ||||||||||||
| Variable Interest Entity Notes Payable and Credit Facility (Note 4): | ||||||||||||||
| 2.05% Series K due September 2027 | 90,000 | 90,000 | ||||||||||||
| Credit Facility due June 2027, weighted-average rate 6.27% | 72,700 | 21,500 | ||||||||||||
| Total variable interest entity notes payable and credit facility | 162,700 | 111,500 | ||||||||||||
| Other: | ||||||||||||||
| Grand Gulf Sale-Leaseback Obligation | 34,203 | 34,260 | ||||||||||||
| Unamortized Premium and Discount – Net | (8,698) | (10,451) | ||||||||||||
| Unamortized Debt Issuance Costs | (7,164) | (5,545) | ||||||||||||
| Total Long-Term Debt | 1,089,736 | 738,459 | ||||||||||||
| Less Amount Due Within One Year | 200,090 | 57 | ||||||||||||
| Long-Term Debt Excluding Amount Due Within One Year | $889,646 | $738,402 | ||||||||||||
| Fair Value of Long-Term Debt | $1,063,946 | $696,168 |
(a)Consists of pollution control revenue bonds.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
(b)Pursuant to the Nuclear Waste Policy Act of 1982, Entergy’s nuclear owner/licensee subsidiaries have contracts with the DOE for spent nuclear fuel disposal service. The contracts include a one-time fee for generation prior to April 7, 1983. Entergy Arkansas is the only Entergy company that generated electric power with nuclear fuel prior to that date and includes the one-time fee, plus accrued interest, in long-term debt.
(c)The debt is secured by a series of collateral mortgage bonds.
The annual long-term debt maturities (excluding lease obligations and long-term DOE obligations) for debt outstanding as of December 31, 2024, for the next five years are as follows:
| Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||||||||||||||
| 2025 | $— | $300,000 | $— | $79,140 | $— | $200,000 | |||||||||||||||||||||||||||||
| 2026 | $690,000 | $720,000 | $— | $85,720 | $130,000 | $— | |||||||||||||||||||||||||||||
| 2027 | $22,500 | $557,600 | $150,000 | $720 | $150,000 | $162,700 | |||||||||||||||||||||||||||||
| 2028 | $350,000 | $425,000 | $375,000 | $719 | $51,574 | $325,000 | |||||||||||||||||||||||||||||
| 2029 | $70,000 | $— | $— | $35,720 | $300,000 | $— |
Entergy Louisiana Debt Issuance
In January 2025, Entergy Louisiana issued $750 million of 5.80% Series mortgage bonds due March 2055. Entergy Louisiana expects to use the proceeds, together with other funds, to repay on or prior to maturity its $190 million of 3.78% Series mortgage bonds due April 2025, to repay on or prior to maturity its $110 million of 3.78% Series mortgage bonds due April 2025, for capital expenditures, and for general corporate purposes.
Securitization Bonds
Entergy New Orleans Securitization Bonds - Hurricane Isaac
In May 2015 the City Council issued a financing order authorizing the issuance of securitization bonds to recover Entergy New Orleans’s Hurricane Isaac storm restoration costs of $31.8 million, including carrying costs, the costs of funding and replenishing the storm recovery reserve in the amount of $63.9 million, and approximately $3 million of up-front financing costs associated with the securitization. In July 2015, Entergy New Orleans Storm Recovery Funding I, L.L.C., a company wholly owned and consolidated by Entergy New Orleans, issued $98.7 million of storm cost recovery bonds. The bonds have a coupon of 2.67%. Although the principal amount was not due until June 2027, Entergy New Orleans Storm Recovery Funding made a principal payment on the bonds in the amount of $6.2 million in 2024, after which the bonds were fully repaid.
Entergy Texas Securitization Bonds - Hurricane Ike and Hurricane Gustav
In September 2009 the PUCT authorized the issuance of securitization bonds to recover $566.4 million of Entergy Texas’s Hurricane Ike and Hurricane Gustav restoration costs, plus carrying costs and transaction costs, offset by insurance proceeds. In November 2009, Entergy Texas Restoration Funding, LLC (Entergy Texas Restoration Funding), a company wholly-owned and consolidated by Entergy Texas, issued $545.9 million of senior secured transition bonds (securitization bonds). Although the principal amount was not due until November 2023, Entergy Texas Restoration Funding made principal payments on the bonds in the amount of $54.3 million in 2022, after which the bonds were fully repaid.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy Texas Securitization Bonds - Hurricane Laura, Hurricane Delta, and Winter Storm Uri
In January 2022 the PUCT authorized the issuance of securitization bonds to recover $242.9 million of Entergy Texas’s Hurricane Laura, Hurricane Delta, and Winter Storm Uri restoration costs, plus carrying costs, plus approximately $13.3 million relating to a system restoration regulatory asset related to Hurricane Harvey, plus up-front qualified costs. In April 2022, Entergy Texas Restoration Funding II, LLC, a company wholly-owned and consolidated by Entergy Texas, issued $290.85 million of senior secured system restoration bonds (securitization bonds), as follows:
| Amount | |||||
| (In Thousands) | |||||
| Senior Secured System Restoration Bonds: | |||||
| Tranche A-1 (3.051%) due December 2028 | $100,000 | ||||
| Tranche A-2 (3.697%) due December 2036 | 190,850 | ||||
| Total senior secured system restoration bonds | $290,850 |
Although the principal amount of each tranche is not due until the dates given above, Entergy Texas Restoration Funding II expects to make principal payments on the securitization bonds over the next three years in the amounts of $18.8 million for 2025, $19.4 million for 2026, and $13.4 million for 2027 for Tranche A-1, after which Tranche A-1 will be fully repaid. Entergy Texas Restoration Funding II expects to begin principal payments for Tranche A-2 in 2027 with payments of $6.6 million in 2027, $20.5 million in 2028, and $21.2 million in 2029.
With the proceeds, Entergy Texas Restoration Funding II purchased from Entergy Texas the transition property, which is the right to recover from customers through a system restoration charge amounts sufficient to service the securitization bonds. Entergy Texas expects to use the proceeds to reduce its outstanding debt. The creditors of Entergy Texas do not have recourse to the assets or revenues of Entergy Texas Restoration Funding II, including the transition property, and the creditors of Entergy Texas Restoration Funding II do not have recourse to the assets or revenues of Entergy Texas. Entergy Texas has no payment obligations to Entergy Texas Restoration Funding II except to remit system restoration charge collections.
Grand Gulf Sale-Leaseback Transactions
In 1988, in two separate but substantially identical transactions, System Energy sold and leased back undivided ownership interests in Grand Gulf for the aggregate sum of $500 million. The initial term of the leases expired in July 2015. System Energy renewed the leases in December 2013 for fair market value with renewal terms expiring in July 2036. At the end of the new lease renewal terms, System Energy has the option to repurchase the leased interests in Grand Gulf or renew the leases at fair market value. In the event that System Energy does not renew or purchase the interests, System Energy would surrender such interests and their associated entitlement of Grand Gulf’s capacity and energy.
System Energy is required to report the sale-leaseback as a financing transaction in its financial statements. As such, it has recognized debt for the lease obligation and retained the portion of the plant subject to the sale-leaseback on its balance sheet. For financial reporting purposes, System Energy has recognized interest expense on the debt balance and depreciation on the applicable plant balance. The lease payments are recognized as principal and interest payments on the debt balance.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
As of December 31, 2024, System Energy, in connection with the Grand Gulf sale and leaseback transactions, had future minimum lease payments that are recorded as long-term debt, as follows, which reflects the effect of the December 2013 renewal:
| Amount | |||||
| (In Thousands) | |||||
| 2025 | $17,188 | ||||
| 2026 | 17,188 | ||||
| 2027 | 17,188 | ||||
| 2028 | 17,188 | ||||
| 2029 | 17,188 | ||||
| Years thereafter | 120,312 | ||||
| Total | 206,252 | ||||
| Less: Amount representing interest | 172,049 | ||||
| Present value of net minimum lease payments | $34,203 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
NOTE 6. PREFERRED EQUITY AND NONCONTROLLING INTERESTS (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy Texas)
The number of shares and units authorized and outstanding and dollar value of preferred stock, preferred membership interests, and noncontrolling interests for Entergy Corporation subsidiaries as of December 31, 2024 and 2023 are presented below.
| Shares/Units Authorized | Shares/Units Outstanding | |||||||||||||||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| (Dollars in Thousands) | ||||||||||||||||||||||||||||||||||||||
| Preferred stock or preferred membership interests without sinking fund presented between liabilities and equity: | ||||||||||||||||||||||||||||||||||||||
| Entergy Utility Holding Company, LLC, 7.5% Series (a) | 110,000 | 110,000 | 110,000 | 110,000 | $107,425 | $107,425 | ||||||||||||||||||||||||||||||||
| Entergy Utility Holding Company, LLC, 6.25% Series (b) | 15,000 | 15,000 | 15,000 | 15,000 | 14,366 | 14,366 | ||||||||||||||||||||||||||||||||
| Entergy Utility Holding Company, LLC, 6.75% Series (c) | 75,000 | 75,000 | 75,000 | 75,000 | 73,370 | 73,370 | ||||||||||||||||||||||||||||||||
| Entergy Finance Holding, Inc. 8.75% (d) | 250,000 | 250,000 | 250,000 | 250,000 | 24,249 | 24,249 | ||||||||||||||||||||||||||||||||
| Total preferred stock or preferred membership interests without sinking fund presented between liabilities and equity | 450,000 | 450,000 | 450,000 | 450,000 | 219,410 | 219,410 | ||||||||||||||||||||||||||||||||
| Preferred stock without sinking fund and noncontrolling interests presented as equity: | ||||||||||||||||||||||||||||||||||||||
| Entergy Texas, 5.375% Series | 1,400,000 | 1,400,000 | 1,400,000 | 1,400,000 | 35,000 | 35,000 | ||||||||||||||||||||||||||||||||
| Entergy Texas, 5.10% Series (e) | 150,000 | 150,000 | — | — | — | — | ||||||||||||||||||||||||||||||||
| Entergy Arkansas Noncontrolling Interest | — | — | — | — | 15,168 | 21,599 | ||||||||||||||||||||||||||||||||
| Entergy Louisiana Noncontrolling Interests | — | — | — | — | 42,706 | 45,107 | ||||||||||||||||||||||||||||||||
| Entergy Mississippi Noncontrolling Interest | — | — | — | — | 8,202 | 18,753 | ||||||||||||||||||||||||||||||||
| Total preferred stock without sinking fund and noncontrolling interests presented as equity | 1,550,000 | 1,550,000 | 1,400,000 | 1,400,000 | 101,076 | 120,459 | ||||||||||||||||||||||||||||||||
| Total subsidiaries’ preferred stock or preferred membership interests without sinking fund and noncontrolling interests | 2,000,000 | 2,000,000 | 1,850,000 | 1,850,000 | $320,486 | $339,869 |
(a)In October 2015, Entergy Utility Holding Company, LLC issued 110,000 units of $1,000 liquidation value 7.5% Series A Preferred Membership Interests, all of which are outstanding as of December 31, 2024. The distributions are cumulative and payable quarterly. These units are redeemable on or after January 1, 2036, at Entergy Utility Holding Company, LLC’s option, at the fixed redemption price of $1,000 per unit. Dollar amount outstanding is net of $2,575 thousand of preferred stock issuance costs.
(b)In November 2017, Entergy Utility Holding Company, LLC issued 15,000 units of $1,000 liquidation value 6.25% Series B Preferred Membership Interests, all of which are outstanding as of December 31, 2024. The distributions are cumulative and payable quarterly. These units are redeemable on or after February 28, 2038, at Entergy Utility Holding Company, LLC’s option, at the fixed redemption price of $1,000 per unit. Dollar amount outstanding is net of $634 thousand of preferred stock issuance costs.
(c)In November 2018, Entergy Utility Holding Company, LLC issued 75,000 units of $1,000 liquidation value 6.75% Series C Preferred Membership Interests, all of which are outstanding as of December 31, 2024. The distributions are cumulative and payable quarterly. These units are redeemable on or after February 28,
Entergy Corporation and Subsidiaries
Notes to Financial Statements
2039, at Entergy Utility Holding Company, LLC’s option, at the fixed redemption price of $1,000 per unit. Dollar amount outstanding is net of $1,630 thousand of preferred stock issuance costs.
(d)In December 2013, Entergy Finance Holding, Inc. issued 250,000 shares of $100 par value 8.75% Series Preferred Stock, all of which are outstanding as of December 31, 2024. The dividends are cumulative and payable quarterly. The preferred stock is redeemable on or after December 16, 2023, at Entergy Finance Holding, Inc.’s option, at the fixed redemption price of $100 per share. Dollar amount outstanding is net of $751 thousand of preferred stock issuance costs.
(e)Currently, all shares are held by Entergy Corporation.
The number of shares authorized and outstanding and dollar value of preferred stock for Entergy Texas as of December 31, 2024 and 2023 are presented below.
| Shares Authorized and Outstanding | Call Price per Share as of December 31, | |||||||||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | 2024 | ||||||||||||||||||||||||||||
| Entergy Texas Preferred Stock | (Dollars in Thousands) | |||||||||||||||||||||||||||||||
| Without sinking fund: | ||||||||||||||||||||||||||||||||
| Cumulative, $25 par value: | ||||||||||||||||||||||||||||||||
| 5.375% Series (a) | 1,400,000 | 1,400,000 | $35,000 | $35,000 | $— | |||||||||||||||||||||||||||
| 5.10% Series (b) | 150,000 | 150,000 | 3,750 | 3,750 | $25.50 | |||||||||||||||||||||||||||
| Total without sinking fund | 1,550,000 | 1,550,000 | $38,750 | $38,750 |
(a)In September 2019, Entergy Texas issued $35 million of 5.375% Series A Preferred Stock, a total of 1,400,000 shares with a liquidation value of $25 per share, all of which are outstanding as of December 31, 2024. The dividends are cumulative and payable quarterly. The preferred stock is redeemable on or after October 15, 2024 at Entergy Texas’s option, at a fixed redemption price of $25 per share.
(b)In November 2021, Entergy Texas issued $3.75 million of 5.10% Series B Preferred Stock, a total of 150,000 shares with a liquidation value of $25 per share, all of which are outstanding and held by Entergy Corporation as of December 31, 2024. The dividends are cumulative and payable quarterly. The preferred stock is redeemable at Entergy Texas’s option at a fixed redemption price of $25.50 per share prior to November 1, 2026 and at a fixed redemption price of $25 per share on or after November 1, 2026.
Dividends and distributions paid on all of Entergy Corporation’s subsidiaries’ preferred stock and membership interests series may be eligible for the dividends received deduction.
The dollar value of noncontrolling interest for Entergy Arkansas as of December 31, 2024 and 2023 is presented below.
| 2024 | 2023 | ||||||||||
| (In Thousands) | |||||||||||
| Entergy Arkansas Noncontrolling Interest | |||||||||||
| AR Searcy Partnership, LLC (a) | $15,168 | $21,599 | |||||||||
| Total Noncontrolling Interest | $15,168 | $21,599 |
(a)AR Searcy Partnership, LLC is a tax equity partnership between Entergy Arkansas and a tax equity investor which was formed to acquire and own the Searcy Solar facility. Entergy Arkansas, as the managing member, consolidates AR Searcy Partnership, LLC and the tax equity investor’s interest is presented as noncontrolling interest in the consolidated financial statements for Entergy Arkansas and Entergy. Entergy Arkansas uses the HLBV method of accounting for income or loss allocation to the tax equity investor’s
Entergy Corporation and Subsidiaries
Notes to Financial Statements
noncontrolling interest. See Note 1 to the financial statements for further discussion on the presentation of the tax equity investor’s noncontrolling interest and the HLBV method of accounting.
The dollar value of noncontrolling interests for Entergy Louisiana as of December 31, 2024 and 2023 are presented below.
| 2024 | 2023 | ||||||||||
| (In Thousands) | |||||||||||
| Entergy Louisiana Noncontrolling Interests | |||||||||||
| Restoration Law Trust I (a) | $28,826 | $30,488 | |||||||||
| Restoration Law Trust II (b) | 13,880 | 14,619 | |||||||||
| Total Noncontrolling Interests | $42,706 | $45,107 |
(a)Restoration Law Trust I (the storm trust I) was established in 2022 as part of the Act 293 securitization of Entergy Louisiana’s Hurricane Laura, Hurricane Delta, Hurricane Zeta, and Winter Storm Uri restoration costs, as well as to establish a storm reserve to fund a portion of Hurricane Ida storm restoration costs. The storm trust I holds preferred membership interests issued by Entergy Finance Company, and Entergy Finance Company is required to make annual distributions (dividends) on the preferred membership interests. These annual dividends paid on the Entergy Finance Company preferred membership interests are distributed 1% to the LURC and 99% to Entergy Louisiana. Entergy Louisiana, as the primary beneficiary, consolidates the storm trust I and the LURC’s 1% beneficial interest is presented as noncontrolling interest in the consolidated financial statements for Entergy Louisiana and Entergy. See Note 2 to the financial statements for a discussion of the Entergy Louisiana May 2022 storm cost securitization.
(b)Restoration Law Trust II (the storm trust II) was established in 2023 as part of the Act 293 securitization of Entergy Louisiana’s remaining Hurricane Ida storm restoration costs. The storm trust II holds preferred membership interests issued by Entergy Finance Company, and Entergy Finance Company is required to make annual distributions (dividends) on the preferred membership interests. These annual dividends paid on the Entergy Finance Company preferred membership interests are distributed 1% to the LURC and 99% to Entergy Louisiana. Entergy Louisiana, as the primary beneficiary, consolidates the storm trust II and the LURC’s 1% beneficial interest is presented as noncontrolling interest in the consolidated financial statements for Entergy Louisiana and Entergy. See Note 2 to the financial statements for a discussion of the Entergy Louisiana March 2023 storm cost securitization.
The dollar value of noncontrolling interest for Entergy Mississippi as of December 31, 2024 and 2023 is presented below.
| 2024 | 2023 | ||||||||||
| (In Thousands) | |||||||||||
| Entergy Mississippi Noncontrolling Interest | |||||||||||
| MS Sunflower Partnership, LLC (a) | $8,202 | $18,753 | |||||||||
| Total Noncontrolling Interest | $8,202 | $18,753 |
(a)MS Sunflower Partnership, LLC is a tax equity partnership between Entergy Mississippi and a tax equity investor which was formed to acquire and own the Sunflower Solar facility. Entergy Mississippi, as the managing member, consolidates MS Sunflower Partnership, LLC and the tax equity investor’s interest is presented as noncontrolling interest in the consolidated financial statements for Entergy Mississippi and Entergy. Entergy Mississippi uses the HLBV method of accounting for income or loss allocation to the tax equity investor’s noncontrolling interest. See Note 1 to the financial statements for further discussion on the presentation of the tax equity investor’s noncontrolling interest and the HLBV method of accounting.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Presentation of Preferred Stock without Sinking Fund
Accounting standards regarding noncontrolling interests and the classification and measurement of redeemable securities require the classification of preferred securities between liabilities and shareholders’ equity on the balance sheet if the holders of those securities have protective rights that allow them to gain control of the board of directors in certain circumstances. These rights would have the effect of giving the holders the ability to potentially redeem their securities, even if the likelihood of occurrence of these circumstances is considered remote. The outstanding preferred stock of Entergy Texas has protective rights with respect to unpaid dividends but provides for the election of board members that would not constitute a majority of the board, and the preferred stock of Entergy Texas is therefore classified as a component of equity.
The outstanding preferred securities of Entergy Utility Holding Company, LLC (a Utility subsidiary) and Entergy Finance Holding, Inc. (an Entergy subsidiary in the non-utility operations business), in each case, whose preferred holders have protective rights, are presented between liabilities and equity on Entergy’s consolidated balance sheets. The preferred dividends or distributions paid by all subsidiaries are reflected for all periods presented outside of consolidated net income.
NOTE 7. COMMON EQUITY (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Common Stock
On October 30, 2024, Entergy’s board of directors approved a two-for-one forward stock split of Entergy Corporation common stock (the stock split). On December 12, 2024, Entergy effected the stock split and a proportionate increase in the number of authorized shares of its common stock. Shares began trading on a split-adjusted basis at market open on December 13, 2024. Entergy’s authorized common stock increased from 499 million to 998 million shares. The shares of common stock retain a par value of $0.01 per share. Accordingly, an amount equal to the par value of the increased shares resulting from the stock split was reclassified from capital in excess of par value to common stock. Historical share and share-based data presented herein has been retroactively adjusted to reflect the stock split.
The following table presents Entergy’s basic and diluted earnings per share calculations included on the consolidated income statements:
| For the Years Ended December 31, | |||||||||||||||||||||||||||||||||||
| 2024 | 2023 | 2022 | |||||||||||||||||||||||||||||||||
| (Dollars In Thousands, Except Per Share Data; Shares in Millions) | |||||||||||||||||||||||||||||||||||
| $/share | $/share | $/share | |||||||||||||||||||||||||||||||||
| Consolidated net income | $1,061,184 | $2,362,310 | $1,097,138 | ||||||||||||||||||||||||||||||||
| Less: Preferred dividend requirements of subsidiaries and noncontrolling interests | 5,594 | 5,774 | (6,028) | ||||||||||||||||||||||||||||||||
| Net income attributable to Entergy Corporation | $1,055,590 | $2,356,536 | $1,103,166 | ||||||||||||||||||||||||||||||||
| Basic shares and earnings per average common share | 427.7 | $2.47 | 423.1 | $5.57 | 408.9 | $2.70 | |||||||||||||||||||||||||||||
| Average dilutive effect of: | |||||||||||||||||||||||||||||||||||
| Stock options | 0.6 | — | 0.6 | (0.01) | 1.0 | (0.01) | |||||||||||||||||||||||||||||
| Other equity plans | 1.3 | (0.01) | 1.1 | (0.01) | 1.0 | (0.01) | |||||||||||||||||||||||||||||
| Equity forwards | 2.0 | (0.01) | — | — | 0.2 | — | |||||||||||||||||||||||||||||
| Diluted shares and earnings per average common share | 431.6 | $2.45 | 424.8 | $5.55 | 411.1 | $2.68 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Earnings per share dilution resulting from stock options outstanding and other equity plans is determined under the treasury stock method. The calculation of diluted earnings per share excluded 1,857,250 stock options outstanding in 2024, 2,359,923 stock options outstanding in 2023, and 1,862,906 stock options outstanding in 2022 because their effect would have been antidilutive. Until settlement of the forward sale agreements discussed below in “Equity Distribution Program”, earnings per share dilution resulting from the agreements, if any, is determined under the treasury stock method. Share dilution occurs when the average market price of Entergy Corporation’s common stock is higher than the average forward sales price. The calculation of diluted earnings per share excluded 2,373,682 shares in 2024 and 3,525,418 shares in 2023 under forward sale agreements outstanding because their effect would have been antidilutive. There were no forward sale agreements outstanding as of December 31, 2022.
Common stock and treasury stock shares activity for Entergy for 2024, 2023, and 2022 is as follows:
| 2024 | 2023 | 2022 | |||||||||||||||||||||||||||||||||
| Common Shares Issued | Treasury Shares | Common Shares Issued | Treasury Shares | Common Shares Issued | Treasury Shares | ||||||||||||||||||||||||||||||
| Beginning Balance, January 1 | 561,950,696 | 136,253,556 | 559,307,858 | 136,954,858 | 543,931,020 | 138,624,652 | |||||||||||||||||||||||||||||
| Issuances: | |||||||||||||||||||||||||||||||||||
| Equity Distribution Program | — | — | 2,642,838 | — | 15,376,838 | — | |||||||||||||||||||||||||||||
| Employee Stock-Based Compensation Plans | — | (3,855,200) | — | (673,242) | — | (1,636,732) | |||||||||||||||||||||||||||||
| Directors’ Plan | — | (28,076) | — | (28,060) | — | (33,062) | |||||||||||||||||||||||||||||
| Ending Balance, December 31 | 561,950,696 | 132,370,280 | 561,950,696 | 136,253,556 | 559,307,858 | 136,954,858 |
Entergy Corporation reissues treasury shares to meet the requirements of the Stock Plan for Outside Directors (Directors’ Plan), the three equity plans of Entergy Corporation and Subsidiaries, and certain other stock benefit plans. The Directors’ Plan awards to non-employee directors a portion of their compensation in the form of a fixed dollar value of shares of Entergy Corporation common stock.
In October 2010 the Board granted authority for a $500 million share repurchase program. As of December 31, 2024, $350 million of authority remains under the $500 million share repurchase program.
Dividends declared per common share were $2.30 in 2024, $2.17 in 2023, and $2.05 in 2022.
Equity Distribution Program
In January 2021, Entergy Corporation entered into an equity distribution sales agreement with several counterparties establishing an at the market equity distribution program, pursuant to which Entergy Corporation may offer and sell from time to time shares of its common stock. The sales agreement provides that, in addition to the issuance and sale of shares of Entergy Corporation common stock, Entergy Corporation may enter into forward sale agreements for the sale of its common stock. In May 2024, Entergy Corporation entered into an amendment to the equity distribution sales agreement for its at the market equity distribution program wherein it increased by an additional $1 billion the aggregate gross sales price authorized under the at the market equity distribution program and added additional agents, forward purchasers, and forward sellers. The aggregate number of shares of common stock sold under this sales agreement and under any forward sale agreement may not exceed an aggregate gross sales price of $3 billion. As of December 31, 2024, an aggregate gross sales price of approximately $2.6 billion has been sold under the at the market equity distribution program.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
During the years ended December 31, 2024, 2023, and 2022, there were no shares of common stock issued under the at the market equity distribution program.
There were no settlements of forward sale agreements for the year ended December 31, 2024. During the years ended December 31, 2023 and 2022, Entergy Corporation physically settled its obligations under the following forward sale agreements:
| Effective Date of Forward Sale Agreements | Shares of Common Stock Issued | Gross Sales Price | Forward Sellers Fees | Forward Sale Price per Share | Cash Proceeds at Settlement | ||||||||||||||||||||||||||||||
| (Dollars In Thousands, Except Per Share Data) | |||||||||||||||||||||||||||||||||||
| Forward sale agreements settled in November 2022: | |||||||||||||||||||||||||||||||||||
| June 2021 | 833,706 | $45,000 | $450 | ||||||||||||||||||||||||||||||||
| August 2021 | 3,385,110 | $190,074 | $1,901 | ||||||||||||||||||||||||||||||||
| September 2021 | 501,486 | $25,419 | $254 | ||||||||||||||||||||||||||||||||
| March 2022 | 3,076,020 | $167,997 | $1,680 | ||||||||||||||||||||||||||||||||
| June 2022 | 4,248,172 | $250,899 | $2,509 | ||||||||||||||||||||||||||||||||
| September 2022 | 3,332,344 | $194,231 | $1,942 | ||||||||||||||||||||||||||||||||
| Total | 15,376,838 | $56.25 | $853,257 | ||||||||||||||||||||||||||||||||
| Forward sale agreements settled in November 2023: | |||||||||||||||||||||||||||||||||||
| June 2023 | 205,990 | $10,524 | $105 | ||||||||||||||||||||||||||||||||
| June 2023 | 730,614 | $37,375 | $374 | ||||||||||||||||||||||||||||||||
| Total | 936,604 | $50.69 | $47,786 | ||||||||||||||||||||||||||||||||
| Forward sale agreements settled in December 2023: | |||||||||||||||||||||||||||||||||||
| November 2023 | 1,706,234 | $84,000 | $840 | ||||||||||||||||||||||||||||||||
| Total | 1,706,234 | $48.74 | $83,312 |
Entergy Corporation incurred an aggregate amount of approximately $0.7 million of general issuance costs associated with the November 2022 settlement and approximately $0.4 million of general issuance costs associated with the November 2023 and December 2023 settlements. Entergy Corporation used the net proceeds for general corporate purposes, which included repayment of commercial paper, outstanding loans under Entergy Corporation’s revolving credit facility, and other debt.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The following forward sale agreements entered into by Entergy Corporation remain outstanding as of December 31, 2024:
| Effective Date | Shares of Common Stock per Forward Sale Agreements | Maturity Date | Forward Sale Price per Share (a) | Gross Sales Price | Forward Sellers Fees | |||||||||||||||||||||||||||
| (Dollars In Thousands, Except Per Share Data) | ||||||||||||||||||||||||||||||||
| December 2023 | 5,506,492 | May 2025 | $50.56 | $280,459 | $2,805 | |||||||||||||||||||||||||||
| March 2024 | 569,844 | May 2025 | $50.91 | $29,318 | $293 | |||||||||||||||||||||||||||
| March 2024 | 2,320,830 | May 2025 | $50.73 | $119,153 | $1,192 | |||||||||||||||||||||||||||
| May 2024 | 2,556,832 | July 2025 | $55.38 | $142,387 | $1,424 | |||||||||||||||||||||||||||
| May 2024 | 2,466,470 | July 2025 | $54.05 | $134,396 | $1,344 | |||||||||||||||||||||||||||
| June 2024 | 2,140,006 | July 2025 | $52.94 | $114,540 | $1,145 | |||||||||||||||||||||||||||
| August 2024 | 2,225,832 | October 2025 | $57.67 | $130,393 | $1,304 | |||||||||||||||||||||||||||
| August 2024 | 3,466,772 | October 2025 | $58.84 | $205,454 | $2,055 | |||||||||||||||||||||||||||
| September 2024 | 3,069,070 | October 2025 | $60.14 | $186,266 | $1,863 | |||||||||||||||||||||||||||
| September 2024 | 888,756 | October 2025 | $64.22 | $57,702 | $577 |
(a)Forward prices were updated with the counterparties as of December 13, 2024 in response to the stock split which was deemed an adjustment event.
No amounts are recorded on Entergy’s balance sheet with respect to the equity offerings until settlements of the equity forward sale agreements occur.
The forward sale agreements require Entergy Corporation to, at its election prior to the maturity date, either (i) physically settle the transactions by issuing the total shares of common stock per the respective forward sale agreement to the forward counterparties in exchange for net proceeds at the then-applicable forward sale price specified by the respective agreement (initial forward sale price) or (ii) net settle the transactions in whole or in part through the delivery or receipt of cash or shares. Each forward sale price is subject to adjustment on a daily basis based on a floating interest rate factor and will decrease by other fixed amounts specified in the respective agreement. In connection with the forward sale agreements, the forward seller, or its affiliates, borrowed from third parties and sold shares of Entergy Corporation’s common stock (gross sales price). In connection with the sale of these shares, Entergy Corporation paid the forward seller fees and these fees have not been deducted from the gross sales prices. Entergy Corporation did not receive any proceeds from such sales of borrowed shares.
Retained Earnings and Dividends
Entergy Corporation received dividend payments and distributions from subsidiaries totaling $484 million in 2024, $189 million in 2023, and $301 million in 2022.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Comprehensive Income
Accumulated other comprehensive income (loss) is included in the equity section of the balance sheets of Entergy and Entergy Louisiana. The following table presents changes in accumulated other comprehensive income (loss) for Entergy for the years ended December 31, 2024 and 2023:
| Pension and Other Postretirement Plan Changes | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| (In Thousands) | ||||||||||||||
| Beginning balance, January 1, | ($162,460) | ($191,754) | ||||||||||||
| Other comprehensive income (loss) before reclassifications | (31,676) | 36,404 | ||||||||||||
| Amounts reclassified from accumulated other comprehensive income (loss) | 236,905 | (7,110) | ||||||||||||
| Net other comprehensive income for the period | 205,229 | 29,294 | ||||||||||||
| Ending balance, December 31, | $42,769 | ($162,460) |
The following table presents changes in accumulated other comprehensive income for Entergy Louisiana for the years ended December 31, 2024 and 2023:
| Pension and Other Postretirement Plan Changes | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| (In Thousands) | ||||||||||||||
| Beginning balance, January 1, | $54,798 | $55,370 | ||||||||||||
| Other comprehensive income before reclassifications | 6,953 | 5,603 | ||||||||||||
| Amounts reclassified from accumulated other comprehensive income | (8,093) | (6,175) | ||||||||||||
| Net other comprehensive loss for the period | (1,140) | (572) | ||||||||||||
| Ending balance, December 31, | $53,658 | $54,798 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Total reclassifications out of accumulated other comprehensive income (loss) (AOCI) for Entergy for the years ended December 31, 2024 and 2023 are as follows:
| Amounts reclassified from AOCI | Income Statement Location | |||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||
| Pension and other postretirement plan changes | ||||||||||||||||||||
| Amortization of prior service credit | $13,896 | $13,586 | (a) | |||||||||||||||||
| Amortization of net gain | 7,327 | 6,590 | (a) | |||||||||||||||||
| Settlement loss | (319,978) | (10,848) | (a) | |||||||||||||||||
| Total amortization and settlement loss | (298,755) | 9,328 | ||||||||||||||||||
| Income taxes | 61,850 | (2,218) | Income taxes | |||||||||||||||||
| Total amortization and settlement loss (net of tax) | ($236,905) | $7,110 | ||||||||||||||||||
| Total reclassifications for the period (net of tax) | ($236,905) | $7,110 |
(a)These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension and other postretirement cost. See Note 11 to the financial statements for additional details.
Total reclassifications out of accumulated other comprehensive income (AOCI) for Entergy Louisiana for the years ended December 31, 2024 and 2023 are as follows:
| Amounts reclassified from AOCI | Income Statement Location | |||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||
| Pension and other postretirement plan changes | ||||||||||||||||||||
| Amortization of prior service credit | $4,544 | $3,804 | (a) | |||||||||||||||||
| Amortization of net gain | 6,533 | 6,263 | (a) | |||||||||||||||||
| Settlement loss | (2) | (1,617) | (a) | |||||||||||||||||
| Total amortization and settlement loss | 11,075 | 8,450 | ||||||||||||||||||
| Income taxes | (2,982) | (2,275) | Income taxes | |||||||||||||||||
| Total amortization and settlement loss (net of tax) | 8,093 | 6,175 | ||||||||||||||||||
| Total reclassifications for the period (net of tax) | $8,093 | $6,175 |
(a)These accumulated other comprehensive income components are included in the computation of net periodic pension and other postretirement cost. See Note 11 to the financial statements for additional details.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
NOTE 8. COMMITMENTS AND CONTINGENCIES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Entergy and the Registrant Subsidiaries are involved in a number of legal, regulatory, and tax proceedings before various courts, regulatory authorities, and governmental agencies in the ordinary course of business. While management is unable to predict with certainty the outcome of such proceedings, management does not believe that the ultimate resolution of these matters will have a material adverse effect on Entergy’s results of operations, cash flows, or financial condition. Entergy discusses regulatory proceedings in Note 2 to the financial statements and discusses tax proceedings in Note 3 to the financial statements.
Vidalia Purchased Power Agreement
Entergy Louisiana has an agreement extending through the year 2031 to purchase energy generated by a hydroelectric facility known as the Vidalia project. Entergy Louisiana made payments under the contract of approximately $116.8 million in 2024, $100.4 million in 2023, and $117.2 million in 2022. If the maximum percentage (94%) of the energy is made available to Entergy Louisiana, current production projections would require estimated payments of approximately $121.7 million in 2025 and a total of $730.3 million for the years 2026 through 2031. Entergy Louisiana currently recovers the costs of the purchased energy through its fuel adjustment clause.
In an LPSC-approved settlement related to tax benefits from the tax treatment of the Vidalia contract, Entergy Louisiana agreed to credit rates by $11 million each year for up to 10 years, beginning in October 2002. In October 2011 the LPSC approved a settlement under which Entergy Louisiana agreed to provide credits to customers by crediting billings an additional $20.235 million per year for 15 years beginning January 2012. Entergy Louisiana recorded a regulatory charge and a corresponding regulatory liability to reflect this obligation. The settlement agreement allowed for an adjustment to the credits if, among other things, there was a change in the applicable federal or state income tax rate. As a result of the enactment of the Tax Cuts and Jobs Act, in December 2017, and the lowering of the federal corporate income tax rate from 35% to 21%, the Vidalia purchased power regulatory liability was reduced by $30.5 million, with a corresponding increase to Other regulatory credits on the income statement. See Note 3 to the financial statements for discussion of the effects of the Tax Cuts and Jobs Act and discussion of the resolution of the 2016-2018 IRS audit, which included the tax treatment of the Vidalia contract.
ANO Damage, Outage, and NRC Reviews
In March 2013, during a scheduled refueling outage at ANO 1, a contractor-owned and operated heavy-lifting apparatus collapsed while moving the generator stator out of the turbine building. The collapse resulted in the death of an ironworker and injuries to several other contract workers, caused ANO 2 to shut down, and damaged the ANO turbine building. The total cost of assessment, restoration of off-site power, site restoration, debris removal, and replacement of damaged property and equipment was approximately $95 million. Entergy Arkansas pursued its options for recovering damages that resulted from the stator drop, including its insurance coverage and legal action. Entergy Arkansas collected $50 million in 2014 from Nuclear Electric Insurance Limited (NEIL), a mutual insurance company that provides property damage coverage to the members’ nuclear generating plants. Entergy Arkansas also collected a total of $21 million in 2018 as a result of stator-related settlements.
In addition, Entergy Arkansas incurred replacement power costs for ANO 2 power during its outage and incurred incremental replacement power costs for ANO 1 power because the outage extended beyond the originally-planned duration of the refueling outage. In February 2014 the APSC authorized Entergy Arkansas to retain $65.9 million in its deferred fuel balance with recovery to be reviewed in a later period after more information regarding various claims associated with the ANO stator incident was available.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
In March 2015, after several NRC inspections and regulatory conferences, arising from the stator incident, the NRC placed ANO into the “multiple/repetitive degraded cornerstone column,” or Column 4, of the NRC’s Reactor Oversight Process Action Matrix. Entergy Arkansas incurred incremental costs of approximately $53 million in 2015 to prepare for the NRC inspections that began in early 2016 in order to address the issues required to move ANO back to “licensee response” or Column 1 of the NRC’s Reactor Oversight Process Action Matrix. Excluding remediation and response costs that resulted from the additional NRC inspection activities, Entergy Arkansas incurred approximately $44 million in 2016 and $7 million in 2017 in support of NRC inspection activities and to implement Entergy Arkansas’s performance improvement initiatives developed in 2015. In June 2018 the NRC moved ANO 1 and 2 into the “licensee response column,” or Column 1, of the NRC’s Reactor Oversight Process Action Matrix.
In October 2023, Entergy Arkansas made a commitment to the APSC to make a filing to forgo its opportunity to seek recovery of the identified costs resulting from the ANO stator incident, specifically all incremental fuel and purchased energy expense, capital and incremental non-fuel operations and maintenance costs, and costs of any judgment that may be rendered against Entergy Arkansas in civil litigation that is not covered by insurance. As a result, in third quarter 2023, Entergy Arkansas recorded write-offs of its regulatory asset for deferred fuel of $68.9 million, which includes interest, and the undepreciated balance of $9.5 million in capital costs related to the ANO stator incident. Consistent with its October 2023 commitment, Entergy Arkansas filed a motion to forgo recovery in November 2023, and the motion was approved by the APSC in December 2023.
Spent Nuclear Fuel Litigation
Under the Nuclear Waste Policy Act of 1982, the DOE is required, for a specified fee, to construct storage facilities for, and to dispose of, all spent nuclear fuel and other high-level radioactive waste generated by domestic nuclear power reactors. Entergy’s nuclear owner/licensee subsidiaries have been charged fees for the estimated future disposal costs of spent nuclear fuel in accordance with the Nuclear Waste Policy Act of 1982. The affected Entergy companies entered into contracts with the DOE, whereby the DOE is to furnish disposal services at a cost of one mill per net kWh generated and sold after April 7, 1983, plus a one-time fee for generation prior to that date. Entergy considers all costs incurred for the disposal of spent nuclear fuel, except accrued interest, to be proper components of nuclear fuel expense. Provisions to recover such costs have been or will be made in applications to regulatory authorities for the Utility plants. Following the defunding of the Yucca Mountain spent fuel repository program, the National Association of Regulatory Utility Commissioners and others sued the government seeking cessation of collection of the one mill per net kWh generated and sold after April 7, 1983 fee. In November 2013 the D.C. Circuit ordered the DOE to submit a proposal to Congress to reset the fee to zero until the DOE complies with the Nuclear Waste Policy Act or Congress enacts an alternative waste disposal plan. In January 2014 the DOE submitted the proposal to Congress under protest, and also filed a petition for rehearing with the D.C. Circuit. The petition for rehearing was denied. The zero spent fuel fee went into effect prospectively in May 2014.
Because the DOE has not begun accepting spent fuel, it is in non-compliance with the Nuclear Waste Policy Act of 1982 and is in partial breach of its spent fuel disposal contracts. As a result of the DOE’s failure to begin disposal of spent nuclear fuel in 1998 pursuant to the Nuclear Waste Policy Act of 1982 and the spent fuel disposal contracts, Entergy’s nuclear owner/licensee subsidiaries have incurred and will continue to incur damages. Beginning in November 2003 these subsidiaries have pursued litigation to recover the damages caused by the DOE’s delay in performance. Following are details of final judgments recorded by Entergy in 2022, 2023, and 2024 related to Entergy’s nuclear owner/licensee subsidiaries’ litigation with the DOE.
In October 2021 the U.S. Court of Federal Claims issued a final judgment in the amount of $83 million in favor of Entergy Nuclear Indian Point 2, LLC and Entergy Nuclear Indian Point 3, LLC against the DOE in the Indian Point 2 third round and Indian Point 3 second round combined damages case. Entergy received payment from the U.S. Treasury in January 2022. The effect in 2021 of recording the judgment was a reduction to asset write-offs, impairments, and related charges (credits). The damages awarded included $32 million related to costs
Entergy Corporation and Subsidiaries
Notes to Financial Statements
previously recorded as plant, $47 million related to costs previously recorded as other operation and maintenance expenses, and $4 million related to costs previously recorded as taxes other than income taxes.
In March 2023 the DOE submitted an offer of judgment to resolve claims in the fourth round ANO damages case. The $41 million offer was accepted by Entergy Arkansas, and the U.S. Court of Federal Claims issued a judgment in that amount in favor of Entergy Arkansas and against the DOE. Entergy Arkansas received payment from the U.S. Treasury in April 2023. The effects of recording the judgment were reductions to plant, nuclear fuel expense, other operation and maintenance expenses, materials and supplies, and taxes other than income taxes. The ANO damages awarded included $18 million related to costs previously recorded as plant, $10 million related to costs previously recorded as other operation and maintenance expenses, $8 million related to costs previously recorded as nuclear fuel expense, $3 million related to costs previously recorded as materials and supplies, and $2 million related to costs previously recorded as taxes other than income taxes.
In July 2023 the DOE submitted an offer of judgment to resolve claims in the Indian Point 2 fourth round and Indian Point 3 third round combined damages case. The $59 million offer was accepted by Entergy and Holtec International, as the current owner. The U.S. Court of Federal Claims issued a final judgment in that amount in favor of Holtec Indian Point 2, LLC and Holtec Indian Point 3, LLC (previously Entergy Nuclear Indian Point 2, LLC and Entergy Nuclear Indian Point 3, LLC) and against the DOE. Holtec received payment from the U.S. Treasury in July 2023. Consistent with certain terms agreed upon in connection with the sale of Indian Point Energy Center in May 2021, Holtec transferred $40 million to Entergy for its pro-rata share of the litigation proceeds in August 2023. The remainder of the judgment was retained by Holtec. The effect of recording Entergy’s pro-rata share of the judgment was a reduction to asset write-offs, impairments, and related charges (credits). Entergy’s pro-rata share of the damages awarded included $18 million related to costs previously recorded as spending on the asset retirement obligation, $15 million related to costs previously recorded as other operation and maintenance expenses, $6 million related to costs previously recorded as plant, and $1 million related to costs previously recorded as taxes other than income taxes.
In August 2024 the U.S. Court of Federal Claims issued a final judgment in the amount of $177 million in favor of Northstar Vermont Yankee, LLC (previously Entergy Nuclear Vermont Yankee) and against the DOE in the final round Vermont Yankee damages case. Northstar, as the current owner, received payment from the U.S. Treasury in November 2024 and subsequently transferred $127 million of the litigation proceeds to Entergy per the terms of the agreement for the disposition of Vermont Yankee, which included $107 million for independent spent fuel storage installation expansion, and related to a long-term note receivable issued to Entergy at the time of the disposition of Vermont Yankee, and $20 million for costs related to independent spent fuel storage installation operations, both as required by the disposition documents. Northstar retained $10 million of the litigation proceeds, and the remaining $40 million of the total litigation proceeds was placed by Northstar into an escrow account and is expected to be transferred to Entergy upon the satisfaction of certain agreed upon conditions. The effect of recording Entergy’s share of the judgment was a reduction of $82 million in principle and $25 million in accrued interest on the long-term note receivable and a reduction to asset write-offs, impairments, and related charges (credits) of $20 million related to costs previously recorded as spending on the asset retirement obligation.
In October 2024 the U.S. Court of Federal Claims issued a final judgment in the amount of $7 million in favor of Holtec Palisades, LLC (previously Entergy Nuclear Palisades) and against the DOE in the final round Palisades damages case. Payment to Holtec, as the current owner, from the U.S. Treasury is expected in first quarter 2025, at which time Holtec is expected to transfer the $7 million judgment to Entergy. The effect of recording the judgment was a reduction to asset write-offs, impairments, and related charges (credits).
Management cannot predict the timing or amount of any potential recoveries on other claims filed by Entergy subsidiaries and cannot predict the timing of any eventual receipt from the DOE of the U.S. Court of Federal Claims damage awards.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Nuclear Insurance
Third Party Liability Insurance
The Price-Anderson Act requires that reactor licensees purchase insurance and participate in a secondary insurance pool that provides insurance coverage for the public in the event of a nuclear power plant accident. The costs of this insurance are borne by the nuclear power industry. Congress amended and renewed the Price-Anderson Act in 2024 for a term through 2065. The Price-Anderson Act requires nuclear power plants to show evidence of financial protection in the event of a nuclear accident. This protection must consist of two layers of coverage:
1.The primary level is insurance underwritten by American Nuclear Insurers (ANI) and provides public liability insurance coverage of $500 million for each operating reactor. If this amount is not sufficient to cover claims arising from an accident, the second level, Secondary Financial Protection, applies.
2.Secondary Financial Protection: Currently, 95 nuclear reactors participate in the Secondary Financial Protection program, which provides approximately $15.8 billion in secondary layer insurance coverage to compensate the public in the event of a nuclear power reactor accident. The Price-Anderson Act provides that all potential liability for a nuclear accident is limited to the amounts of insurance coverage available under the primary and secondary layers.
Within the Secondary Financial Protection program, each nuclear reactor has a contingent obligation to pay a retrospective premium, equal to its proportionate share of the loss in excess of the primary level, regardless of proximity to the incident or fault, up to a maximum of approximately $165.9 million per reactor per incident (Entergy’s maximum total contingent obligation per incident is $829.6 million). This retrospective premium is assessable at approximately $24.7 million per year per incident per nuclear power reactor.
3.Total insurance coverage available is approximately $16.3 billion, among the primary ANI coverage and the Secondary Financial Protection program, to respond to a nuclear power plant accident that causes third-party damages (e.g., off-site property and environmental damage, off-site bodily injury, and on-site third-party bodily injury (i.e., contractors)). These coverages also respond to an accident caused by terrorism.
Entergy Arkansas and Entergy Louisiana each have two licensed reactors. System Energy has one licensed reactor (10% of Grand Gulf is owned by a non-affiliated company (Cooperative Energy) that would share on a pro-rata basis in any retrospective premium assessment to System Energy under the Price-Anderson Act).
Property Insurance
Entergy’s nuclear owner/licensee subsidiaries are members of NEIL, a mutual insurance company that provides property damage coverage, including decontamination and reactor stabilization, to the members’ nuclear generating plants. The property damage insurance limits procured by Entergy for its nuclear plants are in compliance with the financial protection requirements of the NRC. These coverage limits, deductibles, and weekly indemnity periods are subject to change based on results of NEIL loss control inspections.
The nuclear plants’ (ANO 1 and 2, Grand Gulf, River Bend, and Waterford 3) property damage insurance limits are $1.06 billion per occurrence at each plant. The property deductible is $20 million per site at the nuclear plants, except for earth movement, flood, and windstorm. Property damage from earth movement is excluded from the first $500 million in coverage for all nuclear plants. Property damage from flood is excluded from the first $500 million in coverage at ANO 1 and 2 and Grand Gulf. Property damage from flood for Waterford 3 and River Bend includes a deductible of $10 million plus an additional 10% of the amount of the loss in excess of $10 million, up to a maximum deductible of $50 million. Property damage from a windstorm for all of the nuclear plants
Entergy Corporation and Subsidiaries
Notes to Financial Statements
includes a deductible of $10 million plus an additional 10% of the amount of the loss in excess of $10 million, up to a total maximum deductible of $50 million.
In addition, Waterford 3 and Entergy’s portion of Grand Gulf are also covered under NEIL’s Accidental Outage Coverage program. Accidental outage coverage provides indemnification for the actual cost incurred in the event of an unplanned outage resulting from property damage covered under the NEIL Primary Property Insurance policy, subject to a deductible period. The indemnification is based on market power prices at the time of the loss, actual costs incurred during the outage, and the respective limits of each nuclear plant. After the deductible period has passed, weekly indemnities for an unplanned nuclear or non-nuclear outage, covered under NEIL’s Accidental Outage Coverage program, would be paid according to the amounts listed below:
-
100% of the weekly indemnity for each week for the initial payment period of 52 weeks for nuclear and non-nuclear loss; then
-
80% of the weekly indemnity for each week for the final payment period of 110 weeks for nuclear loss only; or
-
60% of the weekly indemnity for each week for the final payment period of 52 weeks for non-nuclear loss only.
Under the property damage and accidental outage insurance programs, all NEIL insured plants could be subject to assessments should losses exceed the accumulated funds available from NEIL. The assessments are subject to change based on results of NEIL underwriting. The current maximum amounts of such possible assessments per occurrence are as follows:
| Assessments | |||||
| (In Millions) | |||||
| Entergy Arkansas | $20.0 | ||||
| Entergy Louisiana | $37.6 | ||||
| Entergy Mississippi | $0.1 | ||||
| Entergy New Orleans | $0.1 | ||||
| Entergy Texas | N/A | ||||
| System Energy | $14.4 |
NRC regulations provide that the proceeds of this insurance must be used, first, to render the reactor safe and stable, and second, to complete decontamination operations. Only after proceeds are dedicated for such use and regulatory approval is secured would any remaining proceeds be made available for the benefit of plant owners or their creditors.
In the event that one or more acts of terrorism causes property damage from a nuclear event under one or more or all nuclear insurance policies issued by NEIL (including, but not limited to, those described above) within 12 months from the date the first property damage occurs, the maximum recovery under all such nuclear insurance policies shall be an aggregate not exceeding $3.24 billion plus the additional amounts recovered for such losses from reinsurance, indemnity, and any other sources applicable to such losses.
Non-Nuclear Property Insurance
Entergy’s non-nuclear property insurance program provides coverage on a system-wide basis for Entergy’s non-nuclear assets. The insurance program provides coverage for property damage up to $400 million per occurrence in excess of a $20 million self-insured retention except for property damage caused by the following: earthquake shock, flood, and named windstorm, including associated storm surge. For earthquake shock and flood, the insurance program provides coverage up to $400 million on an annual aggregate basis in excess of a $40 million self-insured retention. For named windstorm and associated storm surge, the insurance program provides coverage
Entergy Corporation and Subsidiaries
Notes to Financial Statements
up to $125 million on an annual aggregate basis in excess of a $40 million self-insured retention. The coverage provided by the insurance program for the Entergy New Orleans gas distribution system is limited to $50 million per occurrence and is subject to the same annual aggregate limits and retentions listed above for earthquake shock, flood, and named windstorm, including associated storm surge.
Covered property generally includes power plants, substations, facilities, inventories, and gas distribution-related properties. Excluded property generally includes transmission and distribution lines, poles, and towers. For substations valued at $5 million or less, coverage for named windstorm and associated storm surge is excluded. This coverage is in place for Entergy Corporation, the Registrant Subsidiaries, and certain other Entergy subsidiaries. Entergy also purchases $400 million in terrorism insurance coverage for its conventional property.
Employment and Labor-related Proceedings
The Registrant Subsidiaries and other Entergy subsidiaries and related entities are responding to various lawsuits in both state and federal courts and to other labor-related proceedings filed by current and former employees, recognized bargaining representatives, and certain third parties. Generally, the amount of damages being sought is not specified in these proceedings. These actions may include, but are not limited to, allegations of wrongful employment actions; wage disputes and other claims under the Fair Labor Standards Act or its state counterparts; claims of race, gender, age, and disability discrimination; disputes arising under collective bargaining agreements; unfair labor practice proceedings and other administrative proceedings before the National Labor Relations Board or concerning the National Labor Relations Act; claims of retaliation; claims of harassment and hostile work environment; and claims for or regarding benefits under various Entergy Corporation-sponsored employee benefit plans. Entergy and the Registrant Subsidiaries and related entities are responding to these lawsuits and proceedings and deny liability to the claimants. Management believes that loss exposure has been and will continue to be handled so that the ultimate resolution of these matters will not be material, in the aggregate, to the financial position, results of operation, or cash flows of Entergy or the Registrant Subsidiaries.
Asbestos Litigation (Entergy Arkansas, Entergy Louisiana, Entergy New Orleans, and Entergy Texas)
Numerous lawsuits have been filed in state courts against primarily Entergy Louisiana and Entergy Texas by individuals alleging exposure to asbestos while working at Entergy facilities between 1955 and 1980. Entergy is being sued as a premises owner. Many other defendants are named in these lawsuits as well. Currently, there are approximately 185 lawsuits involving approximately 330 claimants. Management believes that adequate provisions have been established to cover any exposure. Additionally, negotiations continue with insurers to recover reimbursements. Management believes that loss exposure has been and will continue to be handled so that the ultimate resolution of these matters will not be material, in the aggregate, to the financial position, results of operation, or cash flows of the Utility operating companies.
Grand Gulf-Related Agreements
Unit Power Sales Agreement (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)
System Energy sells all of its share of capacity and energy from Grand Gulf to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans in accordance with specified percentages (Entergy Arkansas - 36%, Entergy Louisiana - 14%, Entergy Mississippi - 33%, and Entergy New Orleans - 17%) as ordered by the FERC under the Unit Power Sales Agreement. Charges under this agreement are paid in consideration for the purchasing companies’ respective entitlement to receive capacity and energy and are payable irrespective of the quantity of energy delivered. Grand Gulf’s operating license currently extends through 2044. Monthly obligations are based on actual capacity and energy costs. The average monthly payments for 2024 under the agreement were approximately $16.8 million for Entergy Arkansas, $7.0 million for Entergy Louisiana, $16.4 million for Entergy
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Mississippi, and $8.4 million for Entergy New Orleans. See Note 2 to the financial statements for discussion of proceedings regarding the Unit Power Sales Agreement.
In August 2024 the LPSC approved a settlement with Entergy Louisiana to globally resolve all of the LPSC’s actual and potential claims in multiple docketed proceedings pending before the FERC and with System Energy’s past implementation of the Unit Power Sales Agreement. The settlement was approved by the FERC in November 2024. The terms of the settlement included an agreement that Entergy Louisiana would divest to Entergy Mississippi its 14% share of capacity and energy from Grand Gulf under the Unit Power Sales Agreement and its 2.43% share of capacity and energy from Entergy Arkansas under the MSS-4 replacement tariff. This divestiture is being effectuated initially through Entergy Mississippi’s purchases from Entergy Louisiana pursuant to a PPA governed by the MSS-4 replacement tariff. As discussed in Note 2 to the financial statements, in September 2024, Entergy Mississippi filed a notice of intent with the MPSC that related to and sought approval of the divestiture. The MSS-4 replacement PPA to effectuate this divestiture was approved by the FERC in November 2024. The MPSC approved the MSS-4 replacement PPA, effective as of January 1, 2025. Under the divestiture, Entergy Mississippi also assumes any and all of Entergy Louisiana’s rights and obligations under the Availability Agreement and will hold Entergy Louisiana harmless with respect thereto, as of January 1, 2025. See Note 2 to the financial statements for discussion of the System Energy settlement with the LPSC.
Availability Agreement (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans are individually obligated to make payments or subordinated advances to System Energy in accordance with stated percentages (Entergy Arkansas - 17.1%, Entergy Louisiana - 26.9%, Entergy Mississippi - 31.3%, and Entergy New Orleans - 24.7%) in amounts that, when added to amounts received under the Unit Power Sales Agreement or otherwise, are adequate to cover all of System Energy’s operating expenses as defined, including expenses incurred in connection with a permanent shutdown of Grand Gulf. System Energy has assigned its rights to payments and advances to certain creditors as security for certain of its debt obligations. Since commercial operation of Grand Gulf began, payments under the Unit Power Sales Agreement to System Energy have exceeded the amounts payable under the Availability Agreement and, therefore, no payments under the Availability Agreement have ever been required. However, if Entergy Arkansas or Entergy Mississippi fails to make its Unit Power Sales Agreement payments, and System Energy is unable to obtain funds from other sources, Entergy Louisiana and Entergy New Orleans could become subject to claims or demands by System Energy or certain of its creditors for payments or advances under the Availability Agreement (or the assignments thereof) equal to the difference between their required Unit Power Sales Agreement payments and their required Availability Agreement payments because their allocated shares under the Availability Agreement exceed their allocated shares under the Unit Power Sales Agreement. Under the Entergy Louisiana divestiture described in “Unit Power Sales Agreement” above, Entergy Mississippi assumed any and all of Entergy Louisiana’s rights and obligations under the Availability Agreement and will hold Entergy Louisiana harmless with respect thereto, effective as of January 1, 2025.
Reallocation Agreement (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)
System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans entered into the Reallocation Agreement relating to the sale of capacity and energy from Grand Gulf and the related costs, in which Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans agreed to assume all of Entergy Arkansas’s responsibilities and obligations with respect to Grand Gulf under the Availability Agreement. The FERC’s decision allocating a portion of Grand Gulf capacity and energy to Entergy Arkansas supersedes the Reallocation Agreement as it relates to Grand Gulf. Effective December 2024, the parties terminated the Reallocation Agreement.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
NOTE 9. ASSET RETIREMENT OBLIGATIONS (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Accounting standards require companies to record liabilities for all legal obligations associated with the retirement of long-lived assets that result from the normal operation of the assets. For Entergy, substantially all of its asset retirement obligations consist of its liability for decommissioning its nuclear power plants. The remainder of removal costs included in the decommissioning and asset retirement costs line item on the balance sheets is associated with non-nuclear power plants.
These liabilities are recorded at their fair values (which are the present values of the estimated future cash outflows) in the period in which they are incurred, with an accompanying addition to the recorded cost of the long-lived asset. The asset retirement obligation is accreted each year through a charge to expense, to reflect the time value of money for this present value obligation. The accretion will continue through the completion of the asset retirement activity. The amounts added to the carrying amounts of the long-lived assets will be depreciated over the useful lives of the assets. The application of accounting standards related to asset retirement obligations is earnings neutral to the rate-regulated business of the Registrant Subsidiaries.
In accordance with ratemaking treatment and as required by regulatory accounting standards, the depreciation provisions for the Registrant Subsidiaries include a component for removal costs that are not asset retirement obligations under accounting standards. In accordance with regulatory accounting principles, the Registrant Subsidiaries have recorded regulatory assets in the following amounts to reflect their estimates of the difference between estimated incurred removal costs and estimated removal costs expected to be recovered in rates:
| December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| (In Millions) | |||||||||||
| Entergy Arkansas | $337.9 | $319.7 | |||||||||
| Entergy Louisiana | $323.2 | $262.3 | |||||||||
| Entergy Mississippi | $184.8 | $188.0 | |||||||||
| Entergy New Orleans | $62.5 | $61.1 | |||||||||
| Entergy Texas | $102.3 | $77.5 | |||||||||
| System Energy | $96.9 | $102.1 |
As of December 31, 2024, the regulatory asset for removal costs for the Utility operating companies includes amounts related to storm restoration costs. See Note 2 to the financial statements for further discussion of storm restoration costs and requested recovery.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The cumulative decommissioning and retirement cost liabilities and expenses recorded in 2024 and 2023 for Entergy and the Registrant Subsidiaries were as follows:
| Entergy | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | |||||||||||||||||||||||||||||||||||
| (In Millions) | |||||||||||||||||||||||||||||||||||||||||
| Liabilities as of December 31, 2022 | $4,271.5 | $1,472.7 | $1,736.8 | $7.8 | $— | $11.1 | $1,042.5 | ||||||||||||||||||||||||||||||||||
| Accretion | 219.4 | 87.4 | 88.6 | 0.4 | 0.5 | 0.6 | 41.7 | ||||||||||||||||||||||||||||||||||
| Change in cash flow estimate | 14.9 | — | 10.8 | — | 4.1 | — | — | ||||||||||||||||||||||||||||||||||
| Liabilities as of December 31, 2023 | 4,505.8 | 1,560.1 | 1,836.2 | 8.2 | 4.6 | 11.7 | 1,084.2 | ||||||||||||||||||||||||||||||||||
| Liabilities incurred (a) | 41.1 | 17.7 | 19.4 | 4.0 | — | — | — | ||||||||||||||||||||||||||||||||||
| Accretion | 233.8 | 93.6 | 94.4 | 1.1 | 0.3 | 0.8 | 43.5 | ||||||||||||||||||||||||||||||||||
| Change in cash flow estimate | (67.3) | 20.2 | (107.1) | 11.8 | — | 5.2 | — | ||||||||||||||||||||||||||||||||||
| Liabilities as of December 31, 2024 | $4,713.4 | $1,691.6 | $1,842.9 | $25.1 | $4.9 | $17.7 | $1,127.7 |
(a)See “Other” below for additional discussion regarding the asset retirement obligations established at Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi.
Nuclear Plant Decommissioning
Entergy periodically reviews and updates estimated decommissioning costs. The actual decommissioning costs may vary from the estimates because of the timing of plant decommissioning, regulatory requirements, changes in technology, and increased costs of labor, materials, and equipment.
In first quarter 2024, Entergy Arkansas recorded a revision to its estimated decommissioning cost liabilities for ANO 1 and 2 as a result of a revised decommissioning cost study. The revised estimates resulted in a $14.4 million decrease in its decommissioning cost liabilities, along with corresponding decreases in the related asset retirement cost assets that will be depreciated over the remaining useful lives of the units.
In fourth quarter 2024, Entergy Louisiana recorded a revision to its estimated decommissioning cost liability for Waterford 3 as a result of a revised decommissioning cost study. The revised estimate resulted in a $121.5 million decrease in its decommissioning cost liability, along with a corresponding decrease in the related asset retirement cost asset that will be depreciated over the remaining useful life of the unit.
In third quarter 2023, Entergy Louisiana recorded a revision to its estimated decommissioning cost liability for River Bend as a result of a revised decommissioning cost study. The revised estimate resulted in a $10.8 million increase in its decommissioning cost liability, along with a corresponding increase in the related asset retirement cost asset that will be depreciated over the remaining useful life of the unit.
NRC Filings Regarding Trust Funding Levels
Plant owners are required to provide the NRC with a biennial report (annually for units that have shut down or will shut down within five years), based on values as of December 31, addressing the owners’ ability to meet the NRC minimum funding levels. Depending on the value of the trust funds, plant owners may be required to take steps, such as providing financial guarantees through letters of credit or parent company guarantees or making additional contributions to the trusts, to ensure that the trusts are adequately funded and that NRC minimum funding requirements are met.
As nuclear plants individually approach and begin decommissioning, filings will be submitted to the NRC for planned shutdown activities. These filings with the NRC also determine whether financial assurance may be required in addition to the nuclear decommissioning trust fund.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Coal Combustion Residuals
In April 2015 the EPA published the final coal combustion residuals (CCR) rule regulating CCRs destined for disposal in landfills or surface impoundments as non-hazardous wastes regulated under Resource Conservation and Recovery Act Subtitle D. The final regulations create new compliance requirements including modified storage, new notification and reporting practices, product disposal considerations, and CCR unit closure criteria, but excluded CCRs that are beneficially reused in certain processes. Entergy believes that on-site disposal options will be available at its facilities, to the extent needed.
In second quarter 2024, revisions were recorded to the estimated decommissioning cost liabilities for White Bluff and Independence as a result of the EPA rule that was finalized in May 2024 establishing management standards for legacy CCR surface impoundments (i.e., inactive surface impoundments at inactive power plants) and establishing a new class of units referred to as CCR management units (CCRMUs) (i.e., non-containerized CCR located at a regulated CCR facility). Entergy does not have any legacy impoundments; however, the definition of CCR management units includes on-site areas where CCR was beneficially used. This is contrary to the previous CCR rule which exempted beneficial uses that met certain criteria. Under this expanded rule, all facilities must identify and delineate any CCRMU greater than one ton and submit a facility evaluation report by February 2026. Any potential requirements for corrective action or operational changes under the various CCR rules continue to be assessed. Given the complexity and recency of the EPA guidance, Entergy is still evaluating the level of work that will ultimately be required to comply with the rule. Based on initial estimates of multiple possible remediation scenarios, Entergy Arkansas and Entergy Mississippi recorded increases of $31.2 million and $9.1 million, respectively, in their decommissioning cost liabilities, along with corresponding increases in the related asset retirement cost assets that will be depreciated over the remaining useful lives of the units. Entergy will continue to update the asset retirement obligation as the requirements of the revised CCR rule are clarified.
Other
In 2024, Entergy Mississippi recorded an asset retirement obligation to reflect decommissioning costs related to an obligation under the Sunflower Solar facility’s land lease agreements to remove the electrical system and return the land to its normal condition. This estimate resulted in the establishment of a $4.0 million decommissioning cost liability, along with the establishment of a related asset retirement cost asset that will be depreciated over the remaining initial lease term. See Note 14 to the financial statements for discussion of Entergy Mississippi’s purchase of the Sunflower Solar facility.
In 2024, Entergy Arkansas recorded asset retirement obligations to reflect decommissioning costs related to obligations to remove the electrical systems and return the land to its normal condition under the respective land lease agreements for the Walnut Bend Solar facility and the Driver Solar facility. These estimates resulted in the establishment of a decommissioning cost liability of $4.5 million for the Walnut Bend Solar facility and of $13.2 million for the Driver Solar facility, along with the establishment of related asset retirement cost assets that will be depreciated over the remaining initial lease terms, respectively. See Note 14 to the financial statements for discussion of Entergy Arkansas’s purchase of the Walnut Bend Solar facility and the Driver Solar facility.
Prior to August 2024, Entergy Louisiana was a partner in the Nelson Industrial Steam Company (NISCO) partnership which owned two petroleum coke generating units. In April 2023 these generating units suspended operations in the MISO market, and the parties to the NISCO partnership began working to wind up the NISCO partnership, which would ultimately result in ownership of the generating units transferring to Entergy Louisiana. In November 2023 the FERC issued an order providing Section 203 of the Federal Power Act approval for any subsequent transfer of the facilities to Entergy Louisiana. In August 2024, Entergy Louisiana and its partners in the NISCO partnership entered into an agreement related to the wind up of the partnership, which resulted in the receipt of $21.3 million in cash by Entergy Louisiana and the transfer of ownership of the non-operating facilities to
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy Louisiana. As a result of the agreement and resulting transfer of ownership, Entergy Louisiana also recognized an asset retirement obligation of $19.4 million associated with the ash landfill area in 2024.
NOTE 10. LEASES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
As of December 31, 2024 and 2023, Entergy and the Registrant Subsidiaries held operating and finance leases for fleet vehicles used in operations, real estate, and aircraft. Excluded are power purchase agreements not meeting the definition of a lease, nuclear fuel leases, and the Grand Gulf sale-leaseback which were determined not to be leases under the accounting standards.
Leases have remaining terms of one year to 56 years. Real estate leases generally include at least one five-year renewal option; however, renewal is not typically considered reasonably certain unless Entergy or a Registrant Subsidiary makes significant leasehold improvements or other modifications that would hinder its ability to easily move. In certain of the lease agreements for fleet vehicles used in operations, Entergy and the Registrant Subsidiaries provide residual value guarantees to the lessor. Due to the nature of the agreements and Entergy’s continuing relationship with the lessor, however, Entergy and the Registrant Subsidiaries expect to renegotiate or refinance the leases prior to conclusion of the lease. As such, Entergy and the Registrant Subsidiaries do not believe it is probable that they will be required to pay anything pertaining to the residual value guarantee, and the lease liabilities and right-of-use assets are measured accordingly.
Entergy incurred the following total lease costs for the years ended December 31, 2024 and 2023:
| 2024 | 2023 | |||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||
| Operating lease cost | $76,494 | $68,136 | ||||||||||||||||||
| Finance lease cost: | ||||||||||||||||||||
| Amortization of right-of-use assets | $18,063 | $15,193 | ||||||||||||||||||
| Interest on lease liabilities | $4,664 | $3,639 |
Of the lease costs disclosed above, Entergy had $3.1 million and $5.0 million in short-term leases costs for the years ended December 31, 2024 and 2023, respectively.
The Registrant Subsidiaries incurred the following lease costs for the year ended December 31, 2024:
| Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | |||||||||||||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||||||||||||||
| Operating lease cost | $19,382 | $19,770 | $9,482 | $2,234 | $7,977 | ||||||||||||||||||||||||||||||
| Finance lease cost: | |||||||||||||||||||||||||||||||||||
| Amortization of right-of-use assets | $4,675 | $5,755 | $2,604 | $1,240 | $2,104 | ||||||||||||||||||||||||||||||
| Interest on lease liabilities | $990 | $1,068 | $1,116 | $264 | $399 |
Of the lease costs disclosed above, Entergy Arkansas had $1.1 million, Entergy Louisiana had $1.1 million, Entergy Mississippi had $0.5 million, Entergy New Orleans had $0.1 million, and Entergy Texas had $0.3 million in short-term lease costs for the year ended December 31, 2024.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The Registrant Subsidiaries incurred the following lease costs for the year ended December 31, 2023:
| Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | |||||||||||||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||||||||||||||
| Operating lease cost | $17,065 | $16,906 | $7,837 | $1,912 | $7,290 | ||||||||||||||||||||||||||||||
| Finance lease cost: | |||||||||||||||||||||||||||||||||||
| Amortization of right-of-use assets | $3,633 | $4,835 | $2,227 | $1,025 | $1,786 | ||||||||||||||||||||||||||||||
| Interest on lease liabilities | $545 | $729 | $973 | $150 | $284 |
Of the lease costs disclosed above, Entergy Arkansas had $1.7 million, Entergy Louisiana had $1.6 million, Entergy Mississippi had $1.1 million, Entergy New Orleans had $0.1 million, and Entergy Texas had $0.4 million in short-term lease costs for the year ended December 31, 2023.
The lease costs for the years ended December 31, 2024 and 2023 disclosed above materially approximate the cash flows used by the Registrant Subsidiaries for leases with all costs included within operating activities on the respective Statements of Cash Flows, except for the finance lease costs which are included in financing activities.
Entergy has elected to account for short-term leases in accordance with policy options provided by accounting guidance; therefore, there are no related lease liabilities or right-of-use assets for the costs recognized above by Entergy or by its Registrant Subsidiaries in the table below.
Included within Property, Plant, and Equipment on Entergy’s consolidated balance sheets at December 31, 2024 and 2023 are $277 million and $207 million related to operating leases, respectively, and $110 million and $84 million related to finance leases, respectively. These lease amounts include $1 million related to operating leases and $4 million related to finance leases classified as held for sale in “Non-current assets held for sale” on Entergy’s consolidated balance sheet as of December 31, 2024. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
Included within Utility Plant on the Registrant Subsidiaries’ respective balance sheets at December 31, 2024 and 2023 are the following amounts:
| Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | |||||||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||||||||
| 2024 (a) | |||||||||||||||||||||||||||||
| Operating leases | $64,960 | $65,909 | $32,399 | $7,971 | $27,524 | ||||||||||||||||||||||||
| Finance leases | $36,105 | $26,159 | $22,641 | $6,451 | $10,822 | ||||||||||||||||||||||||
| 2023 | |||||||||||||||||||||||||||||
| Operating leases | $61,718 | $54,047 | $25,470 | $6,119 | $21,321 | ||||||||||||||||||||||||
| Finance leases | $17,622 | $21,438 | $22,661 | $4,779 | $8,714 |
(a)Includes $0.4 million of operating leases and $1.4 million of finance leases for Entergy Louisiana and $0.4 million of operating leases and $3.0 million of finance leases for Entergy New Orleans classified as held for sale in “Non-current assets held for sale” on their respective consolidated balance sheet as of December 31, 2024. See Note 14 to the financial statements for further discussion of the planned sale of the
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
The following lease-related liabilities are recorded within the respective Other lines on Entergy’s consolidated balance sheets at December 31, 2024 and 2023:
| 2024 | 2023 | |||||||||||||
| (In Thousands) | ||||||||||||||
| Current liabilities (a): | ||||||||||||||
| Operating leases | $65,907 | $60,789 | ||||||||||||
| Finance leases | $18,253 | $16,671 | ||||||||||||
| Non-current liabilities (b): | ||||||||||||||
| Operating leases | $211,290 | $146,627 | ||||||||||||
| Finance leases | $96,536 | $72,215 |
(a)Includes $0.3 million of operating leases and $1 million of finance leases classified as held for sale and included within other current liabilities on Entergy’s consolidated balance sheet as of December 31, 2024. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
(b)Includes $1 million of operating leases and $3 million of finance leases classified as held for sale and included within other non-current liabilities on Entergy’s consolidated balance sheet as of December 31, 2024. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
The following lease-related liabilities are recorded within the respective Other lines on the Registrant Subsidiaries’ respective balance sheets at December 31, 2024:
| Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | |||||||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||||||||
| Current liabilities (a): | |||||||||||||||||||||||||||||
| Operating leases | $17,159 | $17,016 | $8,116 | $1,885 | $7,387 | ||||||||||||||||||||||||
| Finance leases | $3,734 | $5,620 | $3,228 | $1,218 | $2,185 | ||||||||||||||||||||||||
| Non-current liabilities (b): | |||||||||||||||||||||||||||||
| Operating leases | $47,799 | $48,896 | $24,294 | $5,995 | $20,142 | ||||||||||||||||||||||||
| Finance leases | $32,584 | $20,539 | $20,271 | $5,233 | $8,637 |
(a)Includes $0.2 million operating leases and $0.4 million of finance leases for Entergy Louisiana and $0.1 million of operating leases and $0.7 million of finance leases for Entergy New Orleans classified as held for sale and included within other current liabilities on their respective consolidated balance sheet as of December 31, 2024. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
(b)Includes $0.2 million of operating leases and $1.0 million of finance leases for Entergy Louisiana and $0.3 million of operating leases and $2.3 million of finance leases for Entergy New Orleans classified as held for sale and included within other non-current liabilities on their respective consolidated balance sheet as of December 31, 2024. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The following lease-related liabilities are recorded within the respective Other lines on the Registrant Subsidiaries’ respective balance sheets at December 31, 2023:
| Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | |||||||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||||||||
| Current liabilities: | |||||||||||||||||||||||||||||
| Operating leases | $15,514 | $14,771 | $6,754 | $1,681 | $6,023 | ||||||||||||||||||||||||
| Finance leases | $3,743 | $4,870 | $3,059 | $991 | $1,865 | ||||||||||||||||||||||||
| Non-current liabilities: | |||||||||||||||||||||||||||||
| Operating leases | $46,211 | $39,282 | $18,722 | $4,377 | $15,304 | ||||||||||||||||||||||||
| Finance leases | $13,879 | $16,568 | $19,602 | $3,788 | $6,849 |
The following information contains the weighted-average remaining lease term in years and the weighted-average discount rate for the operating and finance leases of Entergy at December 31, 2024 and 2023:
| 2024 | 2023 | |||||||||||||
| Weighted-average remaining lease terms: | ||||||||||||||
| Operating leases | 5.54 | 4.46 | ||||||||||||
| Finance leases | 9.81 | 8.61 | ||||||||||||
| Weighted-average discount rate: | ||||||||||||||
| Operating leases | 4.34 | % | 4.10 | % | ||||||||||
| Finance leases | 4.75 | % | 4.64 | % |
The following information contains the weighted-average remaining lease term in years and the weighted-average discount rate for the operating and finance leases of the Registrant Subsidiaries at December 31, 2024:
| Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | |||||||||||||||||||||||||
| Weighted-average remaining lease terms: | |||||||||||||||||||||||||||||
| Operating leases | 4.39 | 4.64 | 5.25 | 6.08 | 4.59 | ||||||||||||||||||||||||
| Finance leases | 11.32 | 5.60 | 17.58 | 5.91 | 5.74 | ||||||||||||||||||||||||
| Weighted-average discount rate: | |||||||||||||||||||||||||||||
| Operating leases | 4.38 | % | 4.38 | % | 4.52 | % | 4.40 | % | 4.55 | % | |||||||||||||||||||
| Finance leases | 4.38 | % | 4.28 | % | 5.18 | % | 4.19 | % | 4.19 | % |
The following information contains the weighted-average remaining lease term in years and the weighted-average discount rate for the operating and finance leases of the Registrant Subsidiaries at December 31, 2023:
| Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | |||||||||||||||||||||||||
| Weighted-average remaining lease terms: | |||||||||||||||||||||||||||||
| Operating leases | 4.62 | 4.60 | 5.34 | 6.38 | 4.44 | ||||||||||||||||||||||||
| Finance leases | 5.57 | 5.40 | 17.82 | 5.73 | 5.49 | ||||||||||||||||||||||||
| Weighted-average discount rate: | |||||||||||||||||||||||||||||
| Operating leases | 4.04 | % | 4.01 | % | 4.08 | % | 4.02 | % | 4.43 | % | |||||||||||||||||||
| Finance leases | 3.77 | % | 3.85 | % | 5.08 | % | 3.69 | % | 3.76 | % |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Maturity of the lease liabilities for Entergy as of December 31, 2024 are as follows:
| Operating Leases | Finance Leases | |||||||||||||
| (In Thousands) | ||||||||||||||
| 2025 | $77,097 | $23,860 | ||||||||||||
| 2026 | 68,793 | 22,129 | ||||||||||||
| 2027 | 58,349 | 19,676 | ||||||||||||
| 2028 | 40,111 | 16,993 | ||||||||||||
| 2029 | 24,807 | 13,008 | ||||||||||||
| Years thereafter | 48,439 | 55,018 | ||||||||||||
| Minimum lease payments | 317,596 | 150,684 | ||||||||||||
| Less: amount representing interest | 40,399 | 35,895 | ||||||||||||
| Present value of net minimum lease payments | $277,197 | $114,789 |
Maturity of the lease liabilities for the Registrant Subsidiaries as of December 31, 2024 are as follows:
Operating Leases
| Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | ||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||
| 2025 | $19,625 | $20,093 | $9,764 | $2,194 | $8,679 | |||||||||||||||||||||||||||
| 2026 | 17,923 | 17,733 | 8,540 | 1,859 | 7,577 | |||||||||||||||||||||||||||
| 2027 | 15,301 | 15,425 | 7,744 | 1,539 | 5,903 | |||||||||||||||||||||||||||
| 2028 | 9,588 | 11,561 | 5,952 | 1,265 | 4,546 | |||||||||||||||||||||||||||
| 2029 | 4,915 | 6,328 | 3,212 | 862 | 2,891 | |||||||||||||||||||||||||||
| Years thereafter | 4,543 | 4,473 | 3,126 | 1,395 | 1,908 | |||||||||||||||||||||||||||
| Minimum lease payments | 71,895 | 75,613 | 38,338 | 9,114 | 31,504 | |||||||||||||||||||||||||||
| Less: amount representing interest | 6,937 | 9,701 | 5,928 | 1,234 | 3,975 | |||||||||||||||||||||||||||
| Present value of net minimum lease payments | $64,958 | $65,912 | $32,410 | $7,880 | $27,529 |
Finance Leases
| Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | ||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||
| 2025 | $6,455 | $6,723 | $3,640 | $1,469 | $2,628 | |||||||||||||||||||||||||||
| 2026 | 6,084 | 5,974 | 3,331 | 1,399 | 2,421 | |||||||||||||||||||||||||||
| 2027 | 5,444 | 5,084 | 2,877 | 1,263 | 2,096 | |||||||||||||||||||||||||||
| 2028 | 4,606 | 4,183 | 2,444 | 1,057 | 1,808 | |||||||||||||||||||||||||||
| 2029 | 3,793 | 3,303 | 2,001 | 864 | 1,356 | |||||||||||||||||||||||||||
| Years thereafter | 23,226 | 4,516 | 24,082 | 1,252 | 1,936 | |||||||||||||||||||||||||||
| Minimum lease payments | 49,608 | 29,783 | 38,375 | 7,304 | 12,245 | |||||||||||||||||||||||||||
| Less: amount representing interest | 13,290 | 3,624 | 14,876 | 853 | 1,423 | |||||||||||||||||||||||||||
| Present value of net minimum lease payments | $36,318 | $26,159 | $23,499 | $6,451 | $10,822 |
In allocating consideration in lease contracts to the lease and non-lease components, Entergy and the Registrant Subsidiaries have made the accounting policy election to combine lease and non-lease components
Entergy Corporation and Subsidiaries
Notes to Financial Statements
related to fleet vehicles used in operations and to allocate the contract consideration to both lease and non-lease components for real estate leases.
NOTE 11. RETIREMENT, OTHER POSTRETIREMENT BENEFITS, AND DEFINED CONTRIBUTION PLANS (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Qualified Pension Plans
Entergy has defined benefit qualified pension plans, including the Entergy Corporation Retirement Plan for Non-Bargaining Employees (Non-Bargaining Plan I), the Entergy Corporation Retirement Plan for Bargaining Employees (Bargaining Plan I), the Entergy Corporation Retirement Plan II for Non-Bargaining Employees (Non-Bargaining Plan II), the Entergy Corporation Retirement Plan II for Bargaining Employees (Bargaining Plan II), the Entergy Corporation Retirement Plan III (Plan III), the Entergy Corporation Retirement Plan IV for Bargaining Employees, Entergy Corporation Retirement Plan VI for Non-Bargaining Employees (Non-Bargaining Plan VI), and the Entergy Corporation Cash Balance Plan for Bargaining Employees (Bargaining Cash Balance Plan). The Entergy Corporation Cash Balance Plan for Non-Bargaining Employees (Non-Bargaining Cash Balance Plan) was merged with and into Non-Bargaining Plan I effective January 1, 2022. Effective January 1, 2024, Non-Bargaining Plan I was amended to spin-off predominately inactive participants into a new qualified pension plan, Non-Bargaining Plan VI. Effective January 1, 2025, Bargaining Plan I was amended to spin-off predominately inactive participants into a new qualified pension plan, Entergy Corporation Plan VI for Bargaining Employees (Bargaining Plan VI). The Bargaining Cash Balance Plan was merged with and into Bargaining Plan I also effective January 1, 2025.
The Registrant Subsidiaries participate in these plans: Non-Bargaining Plan I, Bargaining Plan I, Plan III, Non-Bargaining Plan VI, and Bargaining Cash Balance Plan.
Non-bargaining and bargaining employees whose most recent date of hire was prior to June 30, 2014 (or such later date provided for in their applicable collective bargaining agreement) participate in a noncontributory final average pay formula that provides pension benefits based on the employee’s credited service and compensation during employment. Non-bargaining and bargaining employees whose most recent date of hire is after June 30, 2014 and before January 1, 2021 (or such later date provided for in their applicable collective bargaining agreement) do not participate in a final average pay formula, but instead participate in a cash balance formula. Effective January 1, 2021, the Non-Bargaining Cash Balance Plan and Bargaining Cash Balance Plan were amended to close participation in each plan to those employees whose most recent hire date is after December 31, 2020 (or such later date provided for in their applicable collective bargaining agreement). Employees hired after this date instead may be eligible to participate in and receive a discretionary employer contribution under an Entergy sponsored tax-qualified defined contribution plan that includes a 401(k) feature.
The assets of the defined benefit qualified pension plans are held in a master trust established by Entergy. Each pension plan has an undivided beneficial interest in each of the investment accounts in the master trust that is maintained by a trustee. Use of the master trust permits the commingling of the trust assets of the pension plans of Entergy Corporation and its Registrant Subsidiaries for investment and administrative purposes. Although assets in the master trust are commingled, the trustee maintains supporting records for the purpose of allocating the trust level equity in net earnings (loss) and the administrative expenses of the investment accounts in the trust to the various participating pension plans in the trust. The fair value of the trust’s assets is determined by the trustee and certain investment managers. The trustee calculates a daily earnings factor, including realized and unrealized gains or losses, collected and accrued income, and administrative expenses, and allocates earnings to each plan in the master trust on a pro rata basis.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Within each pension plan, the record of each Registrant Subsidiary’s beneficial interest in the plan assets is maintained by the plan’s actuary and is updated quarterly. Assets for each Registrant Subsidiary are increased for investment net income and contributions and are decreased for benefit payments. A plan’s investment net income/loss (i.e., interest and dividends, realized and unrealized gains and losses and expenses) is allocated to the Registrant Subsidiaries participating in that plan based on the value of assets for each Registrant Subsidiary at the beginning of the quarter adjusted for contributions and benefit payments made during the quarter.
Entergy Corporation and its subsidiaries fund pension plans in an amount not less than the minimum required contribution under the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code of 1986, as amended. The assets of the plans include common and preferred stocks, fixed-income securities, interest in a money market fund, and insurance contracts. The Registrant Subsidiaries’ pension costs are recovered from customers as a component of cost of service in each of their respective jurisdictions.
Components of Qualified Net Pension Cost and Other Amounts Recognized as a Regulatory Asset and/or Accumulated Other Comprehensive Income (AOCI)
Entergy Corporation and its subsidiaries’ total 2024, 2023, and 2022 qualified pension costs and amounts recognized as a regulatory asset and/or other comprehensive income, including amounts capitalized, included the following components:
| 2024 | 2023 | 2022 | |||||||||||||||
| (In Thousands) | |||||||||||||||||
| Net periodic pension cost: | |||||||||||||||||
| Service cost - benefits earned during the period | $93,468 | $101,182 | $138,085 | ||||||||||||||
| Interest cost on projected benefit obligation | 249,757 | 298,281 | 235,805 | ||||||||||||||
| Expected return on assets | (338,619) | (388,030) | (402,504) | ||||||||||||||
| Recognized net loss | 58,590 | 81,919 | 188,683 | ||||||||||||||
| Settlement charges | 328,277 | 160,387 | 230,389 | ||||||||||||||
| Net pension cost | $391,473 | $253,739 | $390,458 | ||||||||||||||
| Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax) | |||||||||||||||||
| Arising this period: | |||||||||||||||||
| Net (gain) loss | ($101,445) | ($213,636) | $6,113 | ||||||||||||||
| Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year: | |||||||||||||||||
| Amortization of net loss | (58,590) | (81,919) | (188,683) | ||||||||||||||
| Settlement charges | (328,277) | (160,387) | (230,389) | ||||||||||||||
| Total | ($488,312) | ($455,942) | ($412,959) | ||||||||||||||
| Total recognized as net periodic pension cost, regulatory asset, and/or AOCI (before tax) | ($96,839) | ($202,203) | ($22,501) |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The Registrant Subsidiaries’ total 2024, 2023, and 2022 qualified pension costs and amounts recognized as a regulatory asset and/or other comprehensive income, including amounts capitalized, for their current and former employees included the following components:
| 2024 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Net periodic pension cost: | ||||||||||||||||||||||||||||||||||||||
| Service cost - benefits earned during the period | $16,398 | $22,204 | $5,135 | $1,760 | $3,846 | $5,525 | ||||||||||||||||||||||||||||||||
| Interest cost on projected benefit obligation | 52,870 | 55,843 | 14,084 | 6,276 | 11,324 | 13,525 | ||||||||||||||||||||||||||||||||
| Expected return on assets | (72,620) | (77,786) | (20,451) | (8,814) | (16,308) | (18,485) | ||||||||||||||||||||||||||||||||
| Recognized net loss | 22,983 | 10,407 | 4,562 | 1,881 | 1,574 | 4,638 | ||||||||||||||||||||||||||||||||
| Settlement charges | — | — | — | — | — | 615 | ||||||||||||||||||||||||||||||||
| Net pension cost | $19,631 | $10,668 | $3,330 | $1,103 | $436 | $5,818 | ||||||||||||||||||||||||||||||||
| Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax) | ||||||||||||||||||||||||||||||||||||||
| Arising this period: | ||||||||||||||||||||||||||||||||||||||
| Net gain | ($49,352) | ($55,010) | ($10,857) | ($8,990) | ($6,190) | ($9,812) | ||||||||||||||||||||||||||||||||
| Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year: | ||||||||||||||||||||||||||||||||||||||
| Amortization of net loss | (22,983) | (10,407) | (4,562) | (1,881) | (1,574) | (4,638) | ||||||||||||||||||||||||||||||||
| Settlement charges | — | — | — | — | — | (615) | ||||||||||||||||||||||||||||||||
| Total | ($72,335) | ($65,417) | ($15,419) | ($10,871) | ($7,764) | ($15,065) | ||||||||||||||||||||||||||||||||
| Total recognized as net periodic pension cost, regulatory asset, and/or AOCI (before tax) | ($52,704) | ($54,749) | ($12,089) | ($9,768) | ($7,328) | ($9,247) |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| 2023 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Net periodic pension cost: | ||||||||||||||||||||||||||||||||||||||
| Service cost - benefits earned during the period | $18,461 | $24,716 | $5,775 | $1,955 | $4,328 | $5,749 | ||||||||||||||||||||||||||||||||
| Interest cost on projected benefit obligation | 56,026 | 60,346 | 15,402 | 6,747 | 12,726 | 13,852 | ||||||||||||||||||||||||||||||||
| Expected return on assets | (70,574) | (75,757) | (19,423) | (8,798) | (16,641) | (17,585) | ||||||||||||||||||||||||||||||||
| Recognized net loss | 19,400 | 19,797 | 5,719 | 1,694 | 4,075 | 4,236 | ||||||||||||||||||||||||||||||||
| Settlement charges | 26,137 | 40,437 | 12,242 | 2,080 | 11,230 | 6,375 | ||||||||||||||||||||||||||||||||
| Net pension cost | $49,450 | $69,539 | $19,715 | $3,678 | $15,718 | $12,627 | ||||||||||||||||||||||||||||||||
| Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax) | ||||||||||||||||||||||||||||||||||||||
| Arising this period: | ||||||||||||||||||||||||||||||||||||||
| Net gain | ($30,674) | ($71,016) | ($20,220) | ($3,183) | ($16,759) | ($3,268) | ||||||||||||||||||||||||||||||||
| Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year: | ||||||||||||||||||||||||||||||||||||||
| Amortization of net loss | (19,400) | (19,797) | (5,719) | (1,694) | (4,075) | (4,236) | ||||||||||||||||||||||||||||||||
| Settlement charges | (26,137) | (40,437) | (12,242) | (2,080) | (11,230) | (6,375) | ||||||||||||||||||||||||||||||||
| Total | ($76,211) | ($131,250) | ($38,181) | ($6,957) | ($32,064) | ($13,879) | ||||||||||||||||||||||||||||||||
| Total recognized as net periodic pension cost, regulatory asset, and/or AOCI (before tax) | ($26,761) | ($61,711) | ($18,466) | ($3,279) | ($16,346) | ($1,252) |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| 2022 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Net periodic pension cost: | ||||||||||||||||||||||||||||||||||||||
| Service cost - benefits earned during the period | $25,210 | $33,520 | $8,043 | $2,745 | $5,999 | $7,746 | ||||||||||||||||||||||||||||||||
| Interest cost on projected benefit obligation | 45,378 | 49,330 | 12,979 | 5,491 | 10,729 | 11,286 | ||||||||||||||||||||||||||||||||
| Expected return on assets | (75,820) | (82,478) | (20,168) | (9,920) | (18,317) | (18,173) | ||||||||||||||||||||||||||||||||
| Recognized net loss | 43,597 | 41,711 | 12,594 | 4,787 | 9,013 | 10,938 | ||||||||||||||||||||||||||||||||
| Settlement charges | 36,409 | 58,550 | 15,786 | 6,676 | 22,411 | 9,905 | ||||||||||||||||||||||||||||||||
| Net pension cost | $74,774 | $100,633 | $29,234 | $9,779 | $29,835 | $21,702 | ||||||||||||||||||||||||||||||||
| Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax) | ||||||||||||||||||||||||||||||||||||||
| Arising this period: | ||||||||||||||||||||||||||||||||||||||
| Net (gain) loss | $28,365 | ($15,604) | ($4,743) | $525 | $13,363 | ($7,063) | ||||||||||||||||||||||||||||||||
| Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year: | ||||||||||||||||||||||||||||||||||||||
| Amortization of net loss | (43,597) | (41,711) | (12,594) | (4,787) | (9,013) | (10,938) | ||||||||||||||||||||||||||||||||
| Settlement charges | (36,409) | (58,550) | (15,786) | (6,676) | (22,411) | (9,905) | ||||||||||||||||||||||||||||||||
| Total | ($51,641) | ($115,865) | ($33,123) | ($10,938) | ($18,061) | ($27,906) | ||||||||||||||||||||||||||||||||
| Total recognized as net periodic pension cost, regulatory asset, and/or AOCI (before tax) | $23,133 | ($15,232) | ($3,889) | ($1,159) | $11,774 | ($6,204) |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Qualified Pension Obligations, Plan Assets, Funded Status, and Amounts Recognized in the Balance Sheet
Qualified pension obligations, plan assets, funded status, and amounts recognized in the Consolidated Balance Sheets for Entergy Corporation and its Subsidiaries as of December 31, 2024 and 2023 are as follows:
| 2024 | 2023 | ||||||||||
| (In Thousands) | |||||||||||
| Change in Projected Benefit Obligation (PBO) | |||||||||||
| Balance at January 1 | $5,915,404 | $6,166,106 | |||||||||
| Service cost | 93,468 | 101,182 | |||||||||
| Interest cost | 249,757 | 298,281 | |||||||||
| Actuarial (gain) loss | (156,248) | 123,237 | |||||||||
| Benefits paid (including settlement lump sum benefit payments of ($1,205,195) in 2024 and ($410,110) in 2023) | (1,581,690) | (773,402) | |||||||||
| Balance at December 31 | $4,520,691 | $5,915,404 | |||||||||
| Change in Plan Assets | |||||||||||
| Fair value of assets at January 1 | $5,460,601 | $5,242,098 | |||||||||
| Actual return on plan assets | 283,816 | 724,903 | |||||||||
| Employer contributions | 270,005 | 267,002 | |||||||||
| Benefits paid (including settlement lump sum benefit payments of ($1,205,195) in 2024 and ($410,110) in 2023) | (1,581,690) | (773,402) | |||||||||
| Fair value of assets at December 31 | $4,432,732 | $5,460,601 | |||||||||
| Funded status | ($87,959) | ($454,803) | |||||||||
| Amount recognized in the balance sheet (funded status) | |||||||||||
| Non-current assets | $70,671 | $— | |||||||||
| Non-current liabilities (a) | (158,630) | (454,803) | |||||||||
| Total funded status | ($87,959) | ($454,803) | |||||||||
| Amount recognized as a regulatory asset | |||||||||||
| Net loss (b) | $1,217,402 | $1,447,978 | |||||||||
| Amount recognized as AOCI (before tax) | |||||||||||
| Net loss | $89,531 | $347,268 |
(a)Includes ($4.0) million at Entergy as of December 31, 2024 of non-current liabilities related to the natural gas distribution businesses classified as held for sale and included in other non-current liabilities on the consolidated balance sheet. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
(b)Includes $13.9 million at Entergy as of December 31, 2024 of regulatory assets related to the natural gas distribution businesses classified as held for sale and included in “Non-current assets held for sale” on the consolidated balance sheet. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Qualified pension obligations, plan assets, funded status, and amounts recognized in the Balance Sheets for the Registrant Subsidiaries as of December 31, 2024 and 2023 are as follows:
| 2024 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Change in Projected Benefit Obligation (PBO) | ||||||||||||||||||||||||||||||||||||||
| Balance at January 1 | $1,117,585 | $1,173,283 | $295,942 | $133,950 | $239,984 | $286,558 | ||||||||||||||||||||||||||||||||
| Service cost | 16,398 | 22,204 | 5,135 | 1,760 | 3,846 | 5,525 | ||||||||||||||||||||||||||||||||
| Interest cost | 52,870 | 55,843 | 14,084 | 6,276 | 11,324 | 13,525 | ||||||||||||||||||||||||||||||||
| Actuarial gain | (48,020) | (46,895) | (10,071) | (6,098) | (6,102) | (8,908) | ||||||||||||||||||||||||||||||||
| Benefits paid (a) | (77,770) | (81,411) | (22,019) | (8,755) | (19,110) | (21,583) | ||||||||||||||||||||||||||||||||
| Balance at December 31 | $1,061,063 | $1,123,024 | $283,071 | $127,133 | $229,942 | $275,117 | ||||||||||||||||||||||||||||||||
| Change in Plan Assets | ||||||||||||||||||||||||||||||||||||||
| Fair value of assets at January 1 | $991,894 | $1,058,711 | $280,260 | $117,923 | $222,496 | $255,443 | ||||||||||||||||||||||||||||||||
| Actual return on plan assets | 73,952 | 85,900 | 21,237 | 11,706 | 16,395 | 19,389 | ||||||||||||||||||||||||||||||||
| Employer contributions | 55,112 | 48,401 | 14,980 | 4,931 | 8,272 | 16,650 | ||||||||||||||||||||||||||||||||
| Benefits paid (a) | (77,770) | (81,411) | (22,019) | (8,755) | (19,110) | (21,583) | ||||||||||||||||||||||||||||||||
| Fair value of assets at December 31 | $1,043,188 | $1,111,601 | $294,458 | $125,805 | $228,053 | $269,899 | ||||||||||||||||||||||||||||||||
| Funded status | ($17,875) | ($11,423) | $11,387 | ($1,328) | ($1,889) | ($5,218) | ||||||||||||||||||||||||||||||||
| Amounts recognized in the balance sheet (funded status) | ||||||||||||||||||||||||||||||||||||||
| Non-current assets | $29,521 | $10,010 | $19,666 | $3,299 | $6,064 | $3,135 | ||||||||||||||||||||||||||||||||
| Non-current liabilities (b) | (47,396) | (21,433) | (8,279) | (4,627) | (7,953) | (8,353) | ||||||||||||||||||||||||||||||||
| Total funded status | ($17,875) | ($11,423) | $11,387 | ($1,328) | ($1,889) | ($5,218) | ||||||||||||||||||||||||||||||||
| Amounts recognized as regulatory asset | ||||||||||||||||||||||||||||||||||||||
| Net loss (c) | $412,777 | $256,316 | $86,790 | $34,039 | $55,902 | $96,932 | ||||||||||||||||||||||||||||||||
| Amounts recognized as AOCI (before tax) | ||||||||||||||||||||||||||||||||||||||
| Net loss | $— | $10,680 | $— | $— | $— | $— |
(a)Including settlement lump sum benefit payments of ($2.1) million at System Energy.
(b)Includes ($2.0) million at Entergy Louisiana and ($1.2) million at Entergy New Orleans as of December 31, 2024 of non-current liabilities related to the respective natural gas distribution businesses classified as held for sale and included in other non-current liabilities on the respective consolidated balance sheets. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
(c)Includes $4.5 million at Entergy Louisiana and $6.7 million at Entergy New Orleans as of December 31, 2024 of regulatory assets related to the respective natural gas distribution businesses classified as held for sale and included in “Non-current assets held for sale” on the respective consolidated balance sheets. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| 2023 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Change in Projected Benefit Obligation (PBO) | ||||||||||||||||||||||||||||||||||||||
| Balance at January 1 | $1,168,098 | $1,256,422 | $320,994 | $140,436 | $265,565 | $288,302 | ||||||||||||||||||||||||||||||||
| Service cost | 18,461 | 24,716 | 5,775 | 1,955 | 4,328 | 5,749 | ||||||||||||||||||||||||||||||||
| Interest cost | 56,026 | 60,346 | 15,402 | 6,747 | 12,726 | 13,852 | ||||||||||||||||||||||||||||||||
| Actuarial (gain) loss | 39,643 | 1,925 | (328) | 4,590 | (1,416) | 14,522 | ||||||||||||||||||||||||||||||||
| Benefits paid (a) | (164,643) | (170,126) | (45,901) | (19,778) | (41,219) | (35,867) | ||||||||||||||||||||||||||||||||
| Balance at December 31 | $1,117,585 | $1,173,283 | $295,942 | $133,950 | $239,984 | $286,558 | ||||||||||||||||||||||||||||||||
| Change in Plan Assets | ||||||||||||||||||||||||||||||||||||||
| Fair value of assets at January 1 | $961,178 | $1,035,574 | $265,736 | $119,710 | $226,417 | $240,392 | ||||||||||||||||||||||||||||||||
| Actual return on plan assets | 140,891 | 148,698 | 39,315 | 16,571 | 31,984 | 35,375 | ||||||||||||||||||||||||||||||||
| Employer contributions | 54,468 | 44,565 | 21,110 | 1,420 | 5,314 | 15,543 | ||||||||||||||||||||||||||||||||
| Benefits paid (a) | (164,643) | (170,126) | (45,901) | (19,778) | (41,219) | (35,867) | ||||||||||||||||||||||||||||||||
| Fair value of assets at December 31 | $991,894 | $1,058,711 | $280,260 | $117,923 | $222,496 | $255,443 | ||||||||||||||||||||||||||||||||
| Funded status | ($125,691) | ($114,572) | ($15,682) | ($16,027) | ($17,488) | ($31,115) | ||||||||||||||||||||||||||||||||
| Amounts recognized in the balance sheet (funded status) | ||||||||||||||||||||||||||||||||||||||
| Non-current liabilities | ($125,691) | ($114,572) | ($15,682) | ($16,027) | ($17,488) | ($31,115) | ||||||||||||||||||||||||||||||||
| Amounts recognized as regulatory asset | ||||||||||||||||||||||||||||||||||||||
| Net loss | $485,113 | $319,116 | $102,208 | $44,911 | $63,665 | $111,996 | ||||||||||||||||||||||||||||||||
| Amounts recognized as AOCI (before tax) | ||||||||||||||||||||||||||||||||||||||
| Net loss | $— | $13,296 | $— | $— | $— | $— |
(a)Including settlement lump sum benefit payments of ($68.7) million at Entergy Arkansas, ($103.1) million at Entergy Louisiana, ($31.4) million at Entergy Mississippi, ($5.3) million at Entergy New Orleans, ($29.4) million at Entergy Texas, and ($16.7) million at System Energy.
The qualified pension plans incurred net actuarial gains during 2024 primarily due to liability gains due to a rise in bond yields that resulted in increases to the discount rates used to develop the benefit obligations; partially offset by asset losses resulting from an actual return on assets lower than the expected return on assets in some plans. The qualified pension plans incurred net actuarial gains during 2023 primarily due to asset gains resulting from an actual return on assets much higher than the expected return on assets, offset by liability losses due to a decline in bond yields that resulted in decreases to the discount rates used to develop the benefit obligations.
The accumulated benefit obligation for Entergy’s qualified pension plans was $4.1 billion and $5.6 billion at December 31, 2024 and 2023, respectively.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Information for Entergy’s qualified pension plans with an accumulated benefit obligation in excess of plan assets as of December 31, 2024 and 2023 was as follows:
| 2024 | 2023 | ||||||||||
| (In Thousands) | |||||||||||
| Accumulated benefit obligation | $912,174 | $2,508,990 | |||||||||
| Fair value of plan assets | $864,795 | $2,300,937 |
Information for Entergy’s qualified pension plans with a projected benefit obligation in excess of plan assets as of December 31, 2024 and 2023 was as follows:
| 2024 | 2023 | ||||||||||
| (In Thousands) | |||||||||||
| Projected benefit obligation | $2,701,323 | $4,385,472 | |||||||||
| Fair value of plan assets | $2,542,693 | $3,898,434 |
The qualified pension accumulated benefit obligation for each of the Registrant Subsidiaries for their current and former employees as of December 31, 2024 and 2023 was as follows:
| 2024 | 2023 | ||||||||||
| (In Thousands) | |||||||||||
| Entergy Arkansas | $980,559 | $1,048,901 | |||||||||
| Entergy Louisiana | $1,024,433 | $1,085,318 | |||||||||
| Entergy Mississippi | $257,759 | $273,338 | |||||||||
| Entergy New Orleans | $118,620 | $125,878 | |||||||||
| Entergy Texas | $212,935 | $225,379 | |||||||||
| System Energy | $252,397 | $267,432 |
Information for each of the Registrant Subsidiaries qualified pension plans with an accumulated benefit obligation in excess of plan assets as of December 31, 2024 and 2023 was as follows:
| 2024 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy Texas | System Energy | |||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||
| Accumulated benefit obligation | $304,518 | $123,735 | $105,285 | $58,082 | $44,286 | |||||||||||||||||||||||||||
| Fair value of plan assets | $297,161 | $115,446 | $103,380 | $55,953 | $40,146 |
| 2023 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Accumulated benefit obligation | $612,788 | $658,373 | $202,182 | $125,878 | $70,680 | $127,606 | ||||||||||||||||||||||||||||||||
| Fair value of plan assets | $554,362 | $607,471 | $196,500 | $117,922 | $61,495 | $109,266 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Information for each of the Registrant Subsidiaries qualified pension plans with a projected benefit obligation in excess of plan assets as of December 31, 2024 and 2023 was as follows:
| 2024 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Projected benefit obligation | $1,009,496 | $580,451 | $111,659 | $108,354 | $128,652 | $247,186 | ||||||||||||||||||||||||||||||||
| Fair value of plan assets | $962,101 | $559,017 | $103,380 | $103,727 | $120,700 | $238,833 |
| 2023 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Projected benefit obligation | $1,117,586 | $1,173,284 | $213,098 | $133,949 | $146,511 | $286,558 | ||||||||||||||||||||||||||||||||
| Fair value of plan assets | $991,894 | $1,058,711 | $196,500 | $117,922 | $128,991 | $255,443 |
Other Postretirement Benefits
Entergy also currently offers retiree medical, dental, vision, and life insurance benefits (other postretirement benefits) for eligible retired employees. Employees who commenced employment before July 1, 2014 and who satisfy certain eligibility requirements (including retiring from Entergy after a certain age and/or years of service with Entergy and immediately commencing their Entergy pension benefit), may become eligible for other postretirement benefits.
In March 2020, Entergy announced changes to its other postretirement benefits. Effective January 1, 2021, certain retired, former non-bargaining employees age 65 and older who are eligible for Entergy-sponsored retiree welfare benefits, and their eligible spouses who are age 65 and older (collectively, Medicare-eligible participants), are eligible to participate in an Entergy-sponsored retiree health plan, and are no longer eligible for retiree coverage under the Entergy Corporation Companies’ Benefits Plus Medical, Dental and Vision Plans. Under the Entergy-sponsored retiree health plan, Medicare-eligible participants are eligible to participate in a health reimbursement arrangement which they may use towards the purchase of various types of qualified insurance offered through a Medicare exchange provider and for other qualified medical expenses. The changes affecting active bargaining unit employees were negotiated with the unions prior to implementation, where necessary, and to the extent required by law.
Effective January 1, 1993, Entergy adopted an accounting standard requiring a change from a cash method to an accrual method of accounting for postretirement benefits other than pensions. Entergy Arkansas, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy have received regulatory approval to recover accrued other postretirement benefits costs through rates. The LPSC ordered Entergy Louisiana to continue the use of the pay-as-you-go method for ratemaking purposes for postretirement benefits other than pensions. However, the LPSC retains the flexibility to examine individual companies’ accounting for other postretirement benefits to determine if special exceptions to this order are warranted. Pursuant to regulatory directives, Entergy Arkansas, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy contribute the other postretirement benefits costs collected in rates into external trusts. System Energy is funding, on behalf of Entergy Operations, other postretirement benefits associated with employees who work or worked at Grand Gulf.
Trust assets contributed by participating Registrant Subsidiaries are in master trusts, established by Entergy Corporation and maintained by a trustee. Each plan has an undivided beneficial interest in each of the investment accounts in its respective master trust that is maintained by a trustee. Each participating Registrant Subsidiary holds a beneficial interest in the plans’ investment accounts. The assets in the master trusts are commingled for investment and administrative purposes. Although assets are commingled, supporting records are maintained for
Entergy Corporation and Subsidiaries
Notes to Financial Statements
the purpose of allocating the beneficial interest in net earnings/(losses) and the administrative expenses of the investment accounts to the various participating plans and participating Registrant Subsidiaries. Beneficial interest in an investment account’s net income/(loss) is comprised of interest and dividends, realized and unrealized gains and losses, and expenses. Beneficial interest from these investments is allocated to the plans and participating Registrant Subsidiary based on their portion of net assets in the pooled accounts.
Components of Net Other Postretirement Benefits Cost and Other Amounts Recognized as a Regulatory Asset and/or AOCI
Entergy Corporation’s and its subsidiaries’ total 2024, 2023, and 2022 other postretirement benefits income, including amounts capitalized and amounts recognized as a regulatory asset and/or other comprehensive income, included the following components:
| 2024 | 2023 | 2022 | |||||||||||||||
| (In Thousands) | |||||||||||||||||
| Other postretirement costs: | |||||||||||||||||
| Service cost - benefits earned during the period | $12,503 | $14,654 | $24,734 | ||||||||||||||
| Interest cost on accumulated postretirement benefits obligation (APBO) | 39,408 | 42,272 | 27,306 | ||||||||||||||
| Expected return on assets | (42,277) | (36,732) | (43,420) | ||||||||||||||
| Amortization of prior service credit | (22,880) | (22,558) | (25,550) | ||||||||||||||
| Recognized net (gain) loss | (11,045) | (11,446) | 4,333 | ||||||||||||||
| Net other postretirement benefits income | ($24,291) | ($13,810) | ($12,597) | ||||||||||||||
| Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax) | |||||||||||||||||
| Arising this period: | |||||||||||||||||
| Prior service credit for the period | $— | ($4,434) | ($858) | ||||||||||||||
| Net gain | (73,123) | (44,441) | (131,524) | ||||||||||||||
| Amounts reclassified from regulatory asset and/or AOCI to net periodic benefit cost in the current year: | |||||||||||||||||
| Amortization of prior service credit | 22,880 | 22,558 | 25,550 | ||||||||||||||
| Amortization of net gain (loss) | 11,045 | 11,446 | (4,333) | ||||||||||||||
| Total | ($39,198) | ($14,871) | ($111,165) | ||||||||||||||
| Total recognized as net periodic other postretirement benefits income, regulatory asset, and/or AOCI (before tax) | ($63,489) | ($28,681) | ($123,762) |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Total 2024, 2023, and 2022 other postretirement benefits (income) costs of the Registrant Subsidiaries, including amounts capitalized and deferred, for their current and former employees included the following components:
| 2024 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Other postretirement costs: | ||||||||||||||||||||||||||||||||||||||
| Service cost - benefits earned during the period | $2,569 | $2,800 | $736 | $205 | $670 | $699 | ||||||||||||||||||||||||||||||||
| Interest cost on APBO | 7,331 | 7,995 | 1,945 | 1,012 | 2,411 | 1,593 | ||||||||||||||||||||||||||||||||
| Expected return on assets | (17,535) | — | (5,486) | (5,915) | (10,156) | (2,912) | ||||||||||||||||||||||||||||||||
| Amortization of prior service cost (credit) | 2,097 | (4,544) | (955) | (916) | (4,371) | (293) | ||||||||||||||||||||||||||||||||
| Recognized net (gain) loss | — | (6,952) | 61 | 74 | 591 | — | ||||||||||||||||||||||||||||||||
| Net other postretirement benefits income | ($5,538) | ($701) | ($3,699) | ($5,540) | ($10,855) | ($913) | ||||||||||||||||||||||||||||||||
| Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax) | ||||||||||||||||||||||||||||||||||||||
| Arising this period: | ||||||||||||||||||||||||||||||||||||||
| Net gain | ($20,074) | ($7,273) | ($3,915) | ($2,217) | ($4,683) | ($3,476) | ||||||||||||||||||||||||||||||||
| Amounts reclassified from regulatory asset and/or AOCI to net periodic benefit cost in the current year: | ||||||||||||||||||||||||||||||||||||||
| Amortization of prior service credit (cost) | (2,097) | 4,544 | 955 | 916 | 4,371 | 293 | ||||||||||||||||||||||||||||||||
| Amortization of net gain (loss) | — | 6,952 | (61) | (74) | (591) | — | ||||||||||||||||||||||||||||||||
| Total | ($22,171) | $4,223 | ($3,021) | ($1,375) | ($903) | ($3,183) | ||||||||||||||||||||||||||||||||
| Total recognized as net periodic other postretirement benefits income, regulatory asset, and/or AOCI (before tax) | ($27,709) | $3,522 | ($6,720) | ($6,915) | ($11,758) | ($4,096) |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| 2023 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Other postretirement costs: | ||||||||||||||||||||||||||||||||||||||
| Service cost - benefits earned during the period | $2,965 | $3,379 | $878 | $235 | $809 | $754 | ||||||||||||||||||||||||||||||||
| Interest cost on APBO | 8,002 | 8,931 | 2,170 | 1,160 | 2,597 | 1,726 | ||||||||||||||||||||||||||||||||
| Expected return on assets | (15,113) | — | (4,716) | (5,263) | (8,776) | (2,535) | ||||||||||||||||||||||||||||||||
| Amortization of prior service cost (credit) | 2,096 | (3,804) | (955) | (916) | (4,371) | (293) | ||||||||||||||||||||||||||||||||
| Recognized net (gain) loss | 171 | (7,057) | 85 | 466 | 914 | — | ||||||||||||||||||||||||||||||||
| Net other postretirement benefits (income) cost | ($1,879) | $1,449 | ($2,538) | ($4,318) | ($8,827) | ($348) | ||||||||||||||||||||||||||||||||
| Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax) | ||||||||||||||||||||||||||||||||||||||
| Arising this period: | ||||||||||||||||||||||||||||||||||||||
| Prior service credit for the period | $— | ($4,434) | $— | $— | $— | $— | ||||||||||||||||||||||||||||||||
| Net gain | (23,033) | (458) | (6,883) | (7,606) | (8,790) | (3,942) | ||||||||||||||||||||||||||||||||
| Amounts reclassified from regulatory asset and/or AOCI to net periodic benefit cost in the current year: | ||||||||||||||||||||||||||||||||||||||
| Amortization of prior service credit (cost) | (2,096) | 3,804 | 955 | 916 | 4,371 | 293 | ||||||||||||||||||||||||||||||||
| Amortization of net gain (loss) | (171) | 7,057 | (85) | (466) | (914) | — | ||||||||||||||||||||||||||||||||
| Total | ($25,300) | $5,969 | ($6,013) | ($7,156) | ($5,333) | ($3,649) | ||||||||||||||||||||||||||||||||
| Total recognized as net periodic other postretirement (income) cost, regulatory asset, and/or AOCI (before tax) | ($27,179) | $7,418 | ($8,551) | ($11,474) | ($14,160) | ($3,997) |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| 2022 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Other postretirement costs: | ||||||||||||||||||||||||||||||||||||||
| Service cost - benefits earned during the period | $4,457 | $5,633 | $1,354 | $397 | $1,322 | $1,239 | ||||||||||||||||||||||||||||||||
| Interest cost on APBO | 5,050 | 5,770 | 1,401 | 694 | 1,596 | 1,116 | ||||||||||||||||||||||||||||||||
| Expected return on assets | (17,930) | — | (5,575) | (5,997) | (10,273) | (3,162) | ||||||||||||||||||||||||||||||||
| Amortization of prior service cost (credit) | 1,885 | (4,630) | (1,772) | (916) | (4,371) | (319) | ||||||||||||||||||||||||||||||||
| Recognized net (gain) loss | 873 | (744) | 222 | (898) | 648 | 121 | ||||||||||||||||||||||||||||||||
| Net other postretirement benefits (income) cost | ($5,665) | $6,029 | ($4,370) | ($6,720) | ($11,078) | ($1,005) | ||||||||||||||||||||||||||||||||
| Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax) | ||||||||||||||||||||||||||||||||||||||
| Arising this period: | ||||||||||||||||||||||||||||||||||||||
| Prior service cost (credit) for the period | $273 | $323 | ($1,300) | $— | $— | $141 | ||||||||||||||||||||||||||||||||
| Net (gain) loss | 12,894 | (65,501) | 6,629 | 17,334 | 22,323 | 1,208 | ||||||||||||||||||||||||||||||||
| Amounts reclassified from regulatory asset and/or AOCI to net periodic benefit cost in the current year: | ||||||||||||||||||||||||||||||||||||||
| Amortization of prior service credit (cost) | (1,885) | 4,630 | 1,772 | 916 | 4,371 | 319 | ||||||||||||||||||||||||||||||||
| Amortization of net gain (loss) | (873) | 744 | (222) | 898 | (648) | (121) | ||||||||||||||||||||||||||||||||
| Total | $10,409 | ($59,804) | $6,879 | $19,148 | $26,046 | $1,547 | ||||||||||||||||||||||||||||||||
| Total recognized as net periodic other postretirement (income) cost, regulatory asset, and/or AOCI (before tax) | $4,744 | ($53,775) | $2,509 | $12,428 | $14,968 | $542 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Other Postretirement Benefits Obligations, Plan Assets, Funded Status, and Amounts Not Yet Recognized and Recognized in the Balance Sheet
Other postretirement benefits obligations, plan assets, funded status, and amounts not yet recognized and recognized in the Consolidated Balance Sheets of Entergy Corporation and its Subsidiaries as of December 31, 2024 and 2023 are as follows:
| 2024 | 2023 | ||||||||||
| (In Thousands) | |||||||||||
| Change in APBO | |||||||||||
| Balance at January 1 | $837,644 | $865,854 | |||||||||
| Service cost | 12,503 | 14,654 | |||||||||
| Interest cost | 39,408 | 42,272 | |||||||||
| Plan amendments | — | (4,434) | |||||||||
| Plan participant contributions | 21,473 | 18,669 | |||||||||
| Actuarial gain | (66,320) | (4,303) | |||||||||
| Benefits paid | (90,492) | (95,348) | |||||||||
| Medicare Part D subsidy received | 466 | 280 | |||||||||
| Balance at December 31 | $754,682 | $837,644 | |||||||||
| Change in Plan Assets | |||||||||||
| Fair value of assets at January 1 | $673,141 | $623,824 | |||||||||
| Actual return on plan assets | 49,080 | 76,870 | |||||||||
| Employer contributions | 45,400 | 49,126 | |||||||||
| Plan participant contributions | 21,473 | 18,669 | |||||||||
| Benefits paid | (90,492) | (95,348) | |||||||||
| Fair value of assets at December 31 | $698,602 | $673,141 | |||||||||
| Funded status | ($56,080) | ($164,503) | |||||||||
| Amounts recognized in the balance sheet | |||||||||||
| Current liabilities | ($42,530) | ($45,706) | |||||||||
| Non-current liabilities (a) | (13,550) | (118,797) | |||||||||
| Total funded status | ($56,080) | ($164,503) | |||||||||
| Amounts recognized as a regulatory asset (b) | |||||||||||
| Prior service credit | ($12,729) | ($21,465) | |||||||||
| Net gain | (78,520) | (33,617) | |||||||||
| ($91,249) | ($55,082) | ||||||||||
| Amounts recognized as AOCI (before tax) | |||||||||||
| Prior service credit | ($20,755) | ($34,899) | |||||||||
| Net gain | (133,253) | (116,078) | |||||||||
| ($154,008) | ($150,977) |
(a)Includes $14.7 million at Entergy as of December 31, 2024 of non-current assets related to the natural gas distribution businesses classified as held for sale and included in “Non-current assets held for sale” on the consolidated balance sheet. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
(b)Includes ($1.9) million at Entergy as of December 31, 2024 of regulatory assets related to the natural gas distribution businesses classified as held for sale and included in “Non-current assets held for sale” on the consolidated balance sheet. See Note 14 to the financial statements for further discussion of the planned
Entergy Corporation and Subsidiaries
Notes to Financial Statements
sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
Other postretirement benefits obligations, plan assets, funded status, and amounts not yet recognized and recognized in the Balance Sheets of the Registrant Subsidiaries as of December 31, 2024 and 2023 are as follows:
| 2024 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Change in APBO | ||||||||||||||||||||||||||||||||||||||
| Balance at January 1 | $155,987 | $170,139 | $41,344 | $21,685 | $51,617 | $33,778 | ||||||||||||||||||||||||||||||||
| Service cost | 2,569 | 2,800 | 736 | 205 | 670 | 699 | ||||||||||||||||||||||||||||||||
| Interest cost | 7,331 | 7,995 | 1,945 | 1,012 | 2,411 | 1,593 | ||||||||||||||||||||||||||||||||
| Plan participant contributions | 4,200 | 5,867 | 696 | 519 | 681 | 1,297 | ||||||||||||||||||||||||||||||||
| Actuarial gain | (17,007) | (7,273) | (3,008) | (1,063) | (3,763) | (2,897) | ||||||||||||||||||||||||||||||||
| Benefits paid | (14,917) | (22,774) | (3,584) | (2,658) | (6,021) | (3,934) | ||||||||||||||||||||||||||||||||
| Medicare Part D subsidy received | 49 | 77 | 14 | 1 | 14 | 17 | ||||||||||||||||||||||||||||||||
| Balance at December 31 | $138,212 | $156,831 | $38,143 | $19,701 | $45,609 | $30,553 | ||||||||||||||||||||||||||||||||
| Change in Plan Assets | ||||||||||||||||||||||||||||||||||||||
| Fair value of assets at January 1 | $274,814 | $— | $85,662 | $100,536 | $161,318 | $45,402 | ||||||||||||||||||||||||||||||||
| Actual return on plan assets | 20,602 | — | 6,393 | 7,069 | 11,076 | 3,491 | ||||||||||||||||||||||||||||||||
| Employer contributions | (604) | 16,907 | (23) | 134 | 690 | 741 | ||||||||||||||||||||||||||||||||
| Plan participant contributions | 4,200 | 5,867 | 696 | 519 | 681 | 1,297 | ||||||||||||||||||||||||||||||||
| Benefits paid | (14,917) | (22,774) | (3,584) | (2,658) | (6,021) | (3,934) | ||||||||||||||||||||||||||||||||
| Fair value of assets at December 31 | $284,095 | $— | $89,144 | $105,600 | $167,744 | $46,997 | ||||||||||||||||||||||||||||||||
| Funded status | $145,883 | ($156,831) | $51,001 | $85,899 | $122,135 | $16,444 | ||||||||||||||||||||||||||||||||
| Amounts recognized in the balance sheet | ||||||||||||||||||||||||||||||||||||||
| Non-current assets (a) | $145,883 | $— | $51,001 | $85,899 | $122,135 | $16,444 | ||||||||||||||||||||||||||||||||
| Current liabilities | — | (14,377) | — | — | — | — | ||||||||||||||||||||||||||||||||
| Non-current liabilities (b) | — | (142,454) | — | — | — | — | ||||||||||||||||||||||||||||||||
| Total funded status | $145,883 | ($156,831) | $51,001 | $85,899 | $122,135 | $16,444 | ||||||||||||||||||||||||||||||||
| Amounts recognized in regulatory asset (c) | ||||||||||||||||||||||||||||||||||||||
| Prior service cost (credit) | $2,886 | $— | ($1,727) | ($1,066) | ($7,419) | ($203) | ||||||||||||||||||||||||||||||||
| Net loss (gain) | (38,054) | — | (8,791) | (8,134) | 9,268 | (3,364) | ||||||||||||||||||||||||||||||||
| ($35,168) | $— | ($10,518) | ($9,200) | $1,849 | ($3,567) | |||||||||||||||||||||||||||||||||
| Amounts recognized in AOCI (before tax) | ||||||||||||||||||||||||||||||||||||||
| Prior service credit | $— | ($8,101) | $— | $— | $— | $— | ||||||||||||||||||||||||||||||||
| Net gain | — | (76,030) | — | — | — | — | ||||||||||||||||||||||||||||||||
| $— | ($84,131) | $— | $— | $— | $— |
(a)Includes $19.5 million of non-current assets at Entergy New Orleans as of December 31, 2024 related to the natural gas distribution business classified as held for sale and included in “Non-current assets held for sale” on the consolidated balance sheet. See Note 14 to the financial statements for further discussion of the
Entergy Corporation and Subsidiaries
Notes to Financial Statements
planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
(b)Includes ($2.5) million of non-current liabilities at Entergy Louisiana as of December 31, 2024 related to the natural gas distribution business classified as held for sale and included in other non-current liabilities on the consolidated balance sheet. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
(c)Includes ($1.9) million at Entergy New Orleans as of December 31, 2024 of regulatory assets related to the natural gas distribution business classified as held for sale and included in “Non-current assets held for sale” on the consolidated balance sheet. See Note 14 to the financial statements for further discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses and the classification as held for sale.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| 2023 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Change in APBO | ||||||||||||||||||||||||||||||||||||||
| Balance at January 1 | $164,018 | $183,126 | $44,365 | $23,971 | $53,482 | $35,274 | ||||||||||||||||||||||||||||||||
| Service cost | 2,965 | 3,379 | 878 | 235 | 809 | 754 | ||||||||||||||||||||||||||||||||
| Interest cost | 8,002 | 8,931 | 2,170 | 1,160 | 2,597 | 1,726 | ||||||||||||||||||||||||||||||||
| Plan amendments | — | (4,434) | — | — | — | — | ||||||||||||||||||||||||||||||||
| Plan participant contributions | 3,131 | 4,317 | 1,386 | 374 | 680 | 994 | ||||||||||||||||||||||||||||||||
| Actuarial (gain) loss | (6,403) | (458) | (1,650) | (1,676) | 337 | (1,075) | ||||||||||||||||||||||||||||||||
| Benefits paid | (15,759) | (24,768) | (5,815) | (2,384) | (6,299) | (3,908) | ||||||||||||||||||||||||||||||||
| Medicare Part D subsidy received | 33 | 46 | 10 | 5 | 11 | 13 | ||||||||||||||||||||||||||||||||
| Balance at December 31 | $155,987 | $170,139 | $41,344 | $21,685 | $51,617 | $33,778 | ||||||||||||||||||||||||||||||||
| Change in Plan Assets | ||||||||||||||||||||||||||||||||||||||
| Fair value of assets at January 1 | $255,117 | $— | $79,496 | $91,140 | $148,799 | $42,434 | ||||||||||||||||||||||||||||||||
| Actual return on plan assets | 31,743 | — | 9,949 | 11,193 | 17,903 | 5,402 | ||||||||||||||||||||||||||||||||
| Employer contributions | 582 | 20,451 | 646 | 213 | 235 | 480 | ||||||||||||||||||||||||||||||||
| Plan participant contributions | 3,131 | 4,317 | 1,386 | 374 | 680 | 994 | ||||||||||||||||||||||||||||||||
| Benefits paid | (15,759) | (24,768) | (5,815) | (2,384) | (6,299) | (3,908) | ||||||||||||||||||||||||||||||||
| Fair value of assets at December 31 | $274,814 | $— | $85,662 | $100,536 | $161,318 | $45,402 | ||||||||||||||||||||||||||||||||
| Funded status | $118,827 | ($170,139) | $44,318 | $78,851 | $109,701 | $11,624 | ||||||||||||||||||||||||||||||||
| Amounts recognized in the balance sheet | ||||||||||||||||||||||||||||||||||||||
| Current liabilities | $— | ($15,049) | $— | $— | $— | $— | ||||||||||||||||||||||||||||||||
| Non-current liabilities | 118,827 | (155,090) | 44,318 | 78,851 | 109,701 | 11,624 | ||||||||||||||||||||||||||||||||
| Total funded status | $118,827 | ($170,139) | $44,318 | $78,851 | $109,701 | $11,624 | ||||||||||||||||||||||||||||||||
| Amounts recognized in regulatory asset | ||||||||||||||||||||||||||||||||||||||
| Prior service cost (credit) | $4,983 | $— | ($2,682) | ($1,982) | ($11,790) | ($496) | ||||||||||||||||||||||||||||||||
| Net loss (gain) | (17,980) | — | (4,815) | (5,843) | 14,542 | 112 | ||||||||||||||||||||||||||||||||
| ($12,997) | $— | ($7,497) | ($7,825) | $2,752 | ($384) | |||||||||||||||||||||||||||||||||
| Amounts recognized in AOCI (before tax) | ||||||||||||||||||||||||||||||||||||||
| Prior service credit | $— | ($12,645) | $— | $— | $— | $— | ||||||||||||||||||||||||||||||||
| Net gain | — | (75,709) | — | — | — | — | ||||||||||||||||||||||||||||||||
| $— | ($88,354) | $— | $— | $— | $— |
The other postretirement plans incurred net actuarial gains during 2024 primarily due to liability gains due to a rise in bond yields that resulted in increases to the discount rates used to develop the benefit obligations and an actual return on assets higher than the expected return on assets. The other postretirement plans incurred net actuarial gains during 2023 primarily due to updated demographic assumptions and census data coupled with an actual return on assets much higher than the expected return on assets, partially offset by liability losses due to a decline in bond yields that resulted in decreases to the discount rates used to develop the benefit obligations.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Non-Qualified Pension Plans
Entergy also sponsors non-qualified, non-contributory defined benefit pension plans that provide benefits to certain key employees. Entergy recognized net periodic pension cost related to these plans of $12.2 million in 2024, $43.8 million in 2023, and $30.9 million in 2022. In 2024, 2023, and 2022, Entergy recognized $1.5 million, $27.9 million, and $12.2 million, respectively, in settlement charges related to the payment of lump sum benefits out of the plan that is included in the non-qualified pension plan cost above.
The projected benefit obligation was $94.1 million as of December 31, 2024 of which $22.3 million was a current liability and $71.8 million was a non-current liability. The projected benefit obligation was $88.6 million as of December 31, 2023 of which $13.8 million was a current liability and $74.8 million was a non-current liability. The accumulated benefit obligation was $81.2 million and $77.9 million as of December 31, 2024 and 2023, respectively. The unamortized prior service cost and net loss are recognized in regulatory assets ($29.8 million at December 31, 2024 and $29.7 million at December 31, 2023) and accumulated other comprehensive income before taxes ($4.7 million at December 31, 2024 and $3.9 million at December 31, 2023).
A Rabbi Trust was established for the benefit of certain participants in Entergy’s non-qualified, non-contributory defined benefit pension plans. The Rabbi Trust assets were invested in money-market funds which were recorded at fair value with all gains and losses recognized immediately in income. All of the investments were classified as Level 1 investments for purposes of Fair Value Measurements. At December 31, 2022, the fair value of the assets held in the Rabbi Trust was $35 million. In August 2023 the Rabbi Trust assets were used to pay benefits due under the non-qualified pension plans.
The following Registrant Subsidiaries participate in Entergy’s non-qualified, non-contributory defined benefit pension plans that provide benefits to certain key employees. The net periodic pension cost for their current and former employees for the non-qualified plans for 2024, 2023, and 2022, was as follows:
| Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | |||||||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||||||||
| 2024 | $269 | $256 | $326 | $122 | $248 | ||||||||||||||||||||||||
| 2023 | $637 | $99 | $808 | $132 | $253 | ||||||||||||||||||||||||
| 2022 | $282 | $102 | $321 | $114 | $1,320 |
Included in the 2024 net periodic pension cost above are settlement charges of $55 thousand for Entergy Louisiana related to the lump sum benefits paid out of the plan. Included in the 2023 net periodic pension cost above are settlement charges of $379 thousand and $453 thousand for Entergy Arkansas and Entergy Mississippi, respectively, related to the lump sum benefits paid out of the plan. Included in the 2022 net periodic pension cost above are settlement charges of $1 thousand, $2 thousand, and $1 million for Entergy Louisiana, Entergy Mississippi, and Entergy Texas, respectively, related to the lump sum benefits paid out of the plan.
The projected benefit obligation for their current and former employees for the non-qualified plans as of December 31, 2024 and 2023 was as follows:
| Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | |||||||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||||||||
| 2024 | $1,721 | $1,405 | $3,566 | $1,143 | $2,734 | ||||||||||||||||||||||||
| 2023 | $2,313 | $2,574 | $3,369 | $1,034 | $3,762 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The accumulated benefit obligation for their current and former employees for the non-qualified plans as of December 31, 2024 and 2023 was as follows:
| Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | |||||||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||||||||
| 2024 | $1,468 | $1,197 | $3,322 | $939 | $2,710 | ||||||||||||||||||||||||
| 2023 | $1,935 | $2,494 | $3,187 | $814 | $3,701 |
The following amounts were recorded on the balance sheet as of December 31, 2024 and 2023:
| 2024 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | |||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||
| Current liabilities | ($524) | ($190) | ($419) | ($104) | ($386) | |||||||||||||||||||||||||||
| Non-current liabilities | (1,197) | (1,215) | (3,147) | (1,039) | (2,348) | |||||||||||||||||||||||||||
| Total funded status | ($1,721) | ($1,405) | ($3,566) | ($1,143) | ($2,734) | |||||||||||||||||||||||||||
| Regulatory asset (liability) | $119 | $493 | $1,292 | $9 | ($3,429) | |||||||||||||||||||||||||||
| Accumulated other comprehensive income (before taxes) | $— | $21 | $— | $— | $— |
| 2023 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | |||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||
| Current liabilities | ($276) | ($308) | ($474) | ($106) | ($448) | |||||||||||||||||||||||||||
| Non-current liabilities | (2,037) | (2,266) | (2,895) | (928) | (3,314) | |||||||||||||||||||||||||||
| Total funded status | ($2,313) | ($2,574) | ($3,369) | ($1,034) | ($3,762) | |||||||||||||||||||||||||||
| Regulatory asset (liability) | $857 | $1,604 | $1,303 | $5 | ($2,526) | |||||||||||||||||||||||||||
| Accumulated other comprehensive income (before taxes) | $— | $67 | $— | $— | $— |
The non-qualified pension plans incurred an actuarial loss during 2024 primarily as a result of liability losses due to differences in recent retirement and lump sum experience relative to actuarial assumptions, as well as salary increases in excess of expectations. The non-qualified pension plans incurred a small actuarial loss during 2023 primarily as a result of liability losses due to differences in recent retirement and lump sum experience relative to actuarial assumptions.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Reclassification out of Accumulated Other Comprehensive Income (Loss)
Entergy and Entergy Louisiana reclassified the following costs out of accumulated other comprehensive income (loss) (before taxes and including amounts capitalized) as of December 31, 2024:
| Qualified Pension Costs | Other Postretirement Costs | Non-Qualified Pension Costs | Total | ||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||
| Entergy | |||||||||||||||||||||||
| Amortization of prior service credit (cost) | $— | $14,055 | ($159) | $13,896 | |||||||||||||||||||
| Amortization of gain (loss) | (2,820) | 10,459 | (312) | 7,327 | |||||||||||||||||||
| Settlement loss | (319,920) | — | (58) | (319,978) | |||||||||||||||||||
| ($322,740) | $24,514 | ($529) | ($298,755) | ||||||||||||||||||||
| Entergy Louisiana | |||||||||||||||||||||||
| Amortization of prior service credit | $— | $4,544 | $— | $4,544 | |||||||||||||||||||
| Amortization of gain (loss) | (416) | 6,952 | (3) | 6,533 | |||||||||||||||||||
| Settlement loss | — | — | (2) | (2) | |||||||||||||||||||
| ($416) | $11,496 | ($5) | $11,075 |
Entergy and Entergy Louisiana reclassified the following costs out of accumulated other comprehensive income (loss) (before taxes and including amounts capitalized) as of December 31, 2023:
| Qualified Pension Costs | Other Postretirement Costs | Non-Qualified Pension Costs | Total | ||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||
| Entergy | |||||||||||||||||||||||
| Amortization of prior service credit (cost) | $— | $14,038 | ($452) | $13,586 | |||||||||||||||||||
| Amortization of gain (loss) | (4,407) | 11,590 | (593) | 6,590 | |||||||||||||||||||
| Settlement loss | (7,844) | — | (3,004) | (10,848) | |||||||||||||||||||
| ($12,251) | $25,628 | ($4,049) | $9,328 | ||||||||||||||||||||
| Entergy Louisiana | |||||||||||||||||||||||
| Amortization of prior service credit | $— | $3,804 | $— | $3,804 | |||||||||||||||||||
| Amortization of gain (loss) | (792) | 7,057 | (2) | 6,263 | |||||||||||||||||||
| Settlement loss | (1,617) | — | — | (1,617) | |||||||||||||||||||
| ($2,409) | $10,861 | ($2) | $8,450 |
Accounting for Pension and Other Postretirement Benefits
Accounting standards require an employer to recognize in its balance sheet the funded status of its benefit plans. This is measured as the difference between plan assets at fair value and the benefit obligation. Entergy uses a December 31 measurement date for its pension and other postretirement plans. Employers are to record previously unrecognized gains and losses, prior service costs, and any remaining transition asset or obligation (that resulted from adopting prior pension and other postretirement benefits accounting standards) as comprehensive income and/or as a regulatory asset reflective of the recovery mechanism for pension and other postretirement benefits costs in the Registrant Subsidiaries’ respective regulatory jurisdictions. For the portion of Entergy Louisiana that is not regulated, the unrecognized prior service cost, gains and losses, and transition asset/obligation for its pension and other postretirement benefits obligations are recorded as other comprehensive income. Entergy Louisiana recovers other postretirement benefits costs on a pay-as-you-go basis and records the unrecognized prior
Entergy Corporation and Subsidiaries
Notes to Financial Statements
service cost, gains and losses, and transition obligation for its other postretirement benefits obligation as other comprehensive income. Accounting standards also require that changes in the funded status be recorded as other comprehensive income and/or a regulatory asset in the period in which the changes occur.
With regard to pension and other postretirement costs, Entergy calculates the expected return on pension and other postretirement benefits plan assets by multiplying the long-term expected rate of return on assets by the market-related value (MRV) of plan assets. Entergy determines the MRV of its pension plan assets, except for the long duration fixed income assets, by calculating a value that uses a 20-quarter phase-in of the difference between actual and expected returns. For the long duration fixed income assets in the pension trust and for its other postretirement benefits plan assets Entergy uses fair value as the MRV.
In accordance with accounting standards, the other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations and are presented by Entergy in miscellaneous - net in other income.
Qualified Pension Settlement Costs
In May 2024, Entergy Corporation entered into a commitment agreement by and between Entergy Corporation, Newport Trust Company, LLC, as independent fiduciary of Entergy Corporation Retirement Plan II for Non-Bargaining Employees, Entergy Corporation Retirement Plan II for Bargaining Employees, Entergy Corporation Retirement Plan III, and Entergy Corporation Retirement Plan IV for Bargaining Employees (the Pension Plans), and the Metropolitan Life Insurance Company (MetLife), under which the Pension Plans purchased a nonparticipating single premium group annuity contract from MetLife to settle approximately $1.2 billion of benefit liabilities of the Pension Plans.
The group annuity contract primarily covers a population that includes approximately 3,400 non-utility business retirees, joint annuitants, beneficiaries, and alternate payees who commenced benefit payments from the Pension Plans on or before March 1, 2024 (Transferred Participants). MetLife irrevocably guarantees and assumes the sole obligation to make future monthly pension benefit payments to the Transferred Participants as provided under its group annuity contract, with direct payments that began September 1, 2024. The aggregate amount of each Transferred Participant’s payment under the group annuity contract will be equal to the amount of each individual’s payment under the Pension Plans.
The purchase of the group annuity contract was funded directly by assets of the Pension Plans. The transferred pension liability required no additional funding prior to transfer, as the liability was fully funded. As a result of the transaction, Entergy recognized a one-time non-cash pension settlement charge of $328 million in 2024, of which $8 million was recorded at Utility, as described below, and $320 million was recorded at Parent & Other. The $320 million settlement charge at Parent & Other is reflected in Miscellaneous - net in Other income (deductions) on the consolidated income statements.
Year-to-date lump sum benefit payments from Non-Bargaining Plan I, Bargaining Plan I, Non-Bargaining Plan II, and Bargaining Plan II exceeded the sum of the Plans’ service and interest cost, resulting in settlement costs during 2023 and 2022. Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy participate in one or both of Non-Bargaining Plan I and Bargaining Plan I and incurred settlement costs. In accordance with accounting standards, settlement accounting requires immediate recognition of the portion of previously unrecognized losses associated with the settled portion of the plan’s pension liability. Similar to other pension costs, the settlement costs were included with employee labor costs and charged to expense and capital in the same manner that labor costs were charged. Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans each received regulatory approval to defer the expense portion of settlement costs, with future amortization of the deferred settlement expense over the period in which the expense otherwise would be recorded had the immediate recognition not occurred.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy Mississippi Other Postretirement Benefits
Pursuant to an order from the MPSC, Entergy Mississippi was directed to cease including other postretirement benefit credits in other operation and maintenance expense or allocating to capital expenditures for ratemaking purposes effective January 1, 2024. The credits are being deferred as a regulatory liability. In addition, beginning in July 2024, Entergy Mississippi is recovering the December 31, 2023 other postretirement benefit asset in rate base over five years and accruing a regulatory liability. At December 31, 2024, the balance in these regulatory liability accounts was approximately $7.4 million.
Entergy New Orleans Other Postretirement Benefits
Pursuant to an order from the City Council, Entergy New Orleans received approval to exclude other postretirement benefit expense credits from the formula rate plan evaluation filing. To comply with the order, Entergy New Orleans began recording the other postretirement benefit expense credits to a regulatory liability account in September 2024. At December 31, 2024, the balance in this regulatory liability account was approximately $1 million.
Entergy Texas Reserve
In September 2020, Entergy Texas elected to establish a reserve, in accordance with PUCT regulations, to track the surplus or deficit in the annual amount of actuarially determined pension and other postretirement benefits chargeable to Entergy Texas’s expense. The reserve amounts recorded are evaluated in each rate case filed by Entergy Texas and an amortization period is determined at that time. At December 31, 2024, the balance in this reserve was approximately $15 million.
Qualified Pension and Other Postretirement Plans’ Assets
The Plan Administrator’s trust asset investment strategy is to invest the assets in a manner whereby long-term earnings on the assets (plus cash contributions) provide adequate funding for retiree benefit payments. The mix of assets is based on an optimization study that identifies asset allocation targets in order to achieve the maximum return for an acceptable level of risk, while minimizing the expected contributions and pension and postretirement expense.
In the optimization studies, the Plan Administrator formulates assumptions about characteristics, such as expected asset class investment returns, volatility (risk), and correlation coefficients among the various asset classes. The future market assumptions used in the optimization study are determined by examining historical market characteristics of the various asset classes and making adjustments to reflect future conditions expected to prevail over the study period.
The target asset allocation for pension adjusts dynamically based on the funded status of each plan within the trust. The current targets are shown below. The expectation is that the allocation to fixed income securities will increase as the pension plans’ funded status increases. The following ranges were established to produce an acceptable, economically efficient plan to manage around the targets.
For postretirement assets the target and range asset allocations (as shown below) reflect recommendations made in the latest optimization study. The target asset allocations for postretirement assets adjust dynamically based on the funded status of each sub-account within each trust. The current weighted-average targets shown below represent the aggregate of all targets for all sub-accounts within all trusts.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy’s qualified pension and postretirement weighted-average asset allocations by asset category at December 31, 2024 and 2023 and the target asset allocation and ranges for 2024 are as follows:
| Pension Asset Allocation | Target | Range | Actual 2024 | Actual 2023 | ||||||||||||||||||||||||||||
| Domestic Equity Securities | 22% | 18% | to | 26% | 23% | 33% | ||||||||||||||||||||||||||
| International Equity Securities | 13% | 10% | to | 16% | 13% | 18% | ||||||||||||||||||||||||||
| Intermediate Fixed Income Securities | 4% | 3% | to | 5% | 5% | 9% | ||||||||||||||||||||||||||
| Long Duration Fixed Income Securities | 61% | 57% | to | 65% | 59% | 40% | ||||||||||||||||||||||||||
| Other | —% | —% | to | 10% | —% | —% |
| Postretirement Asset Allocation | Non-Taxable and Taxable | |||||||||||||||||||||||||||||||
| Target | Range | Actual 2024 | Actual 2023 | |||||||||||||||||||||||||||||
| Domestic Equity Securities | 14% | 9% | to | 19% | 16% | 28% | ||||||||||||||||||||||||||
| International Equity Securities | 10% | 5% | to | 15% | 9% | 17% | ||||||||||||||||||||||||||
| Fixed Income Securities | 76% | 71% | to | 81% | 75% | 55% | ||||||||||||||||||||||||||
| Other | —% | —% | to | 5% | —% | —% |
In determining its expected long-term rate of return on plan assets used in the calculation of benefit plan costs, Entergy reviews past performance, current and expected future asset allocations, and capital market assumptions of its investment consultant and some investment managers.
The expected long-term rate of return for the qualified pension plans’ assets is based primarily on the geometric average of the historical annual performance of a representative portfolio weighted by the target asset allocation defined in the table above, along with other indications of expected return on assets. The time period reflected is a long-dated period spanning several decades.
The expected long-term rate of return for the non-taxable postretirement trust assets is determined using the same methodology described above for pension assets, but the aggregate asset allocation specific to the non-taxable postretirement assets is used.
For the taxable postretirement trust assets, the investment allocation includes tax-exempt fixed income securities. This asset allocation, in combination with the same methodology employed to determine the expected return for other postretirement assets (as described above), and with a modification to reflect applicable taxes, is used to produce the expected long-term rate of return for taxable postretirement trust assets.
Concentrations of Credit Risk
Entergy’s investment guidelines mandate the avoidance of risk concentrations. Types of concentrations specified to be avoided include, but are not limited to, investment concentrations in a single entity, type of industry, foreign country, geographic area, and individual security issuance. As of December 31, 2024, all investment managers and assets were materially in compliance with the approved investment guidelines, therefore there were no significant concentrations (defined as greater than 10 percent of plan assets) of credit risk in Entergy’s pension and other postretirement benefits plan assets.
Fair Value Measurements
Accounting standards provide the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The three levels of the fair value hierarchy are described below:
-
Level 1 - Level 1 inputs are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access at the measurement date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
-
Level 2 - Level 2 inputs are inputs other than quoted prices included in Level 1 that are, either directly or indirectly, observable for the asset or liability at the measurement date. Assets are valued based on prices derived by an independent party that uses inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. Prices are reviewed and can be challenged with the independent parties and/or overridden if it is believed such would be more reflective of fair value. Level 2 inputs include the following:
- quoted prices for similar assets or liabilities in active markets;
- quoted prices for identical assets or liabilities in inactive markets;
- inputs other than quoted prices that are observable for the asset or liability; or
- inputs that are derived principally from or corroborated by observable market data by correlation or other means.
If an asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.
- Level 3 - Level 3 refers to securities valued based on significant unobservable inputs.
Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following tables set forth by level within the fair value hierarchy, measured at fair value on a recurring basis at December 31, 2024, and December 31, 2023, a summary of the investments held in the master trusts for Entergy’s qualified pension and other postretirement plans in which the Registrant Subsidiaries participate.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Qualified Defined Benefit Pension Plan Trusts
| 2024 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||
| Equity securities: | ||||||||||||||||||||||||||
| Corporate stocks: | ||||||||||||||||||||||||||
| Preferred | $932 | (b) | $— | $— | $932 | |||||||||||||||||||||
| Common | 403,146 | (b) | — | — | 403,146 | |||||||||||||||||||||
| Common collective trusts (c) | 1,206,983 | |||||||||||||||||||||||||
| Fixed income securities: | ||||||||||||||||||||||||||
| U.S. Government securities | — | 1,145,994 | (a) | — | 1,145,994 | |||||||||||||||||||||
| Corporate debt instruments | — | 307,666 | (a) | — | 307,666 | |||||||||||||||||||||
| Registered investment companies (e) | 30,293 | (d) | 2,735 | (d) | — | 1,512,994 | ||||||||||||||||||||
| Other | — | 44,691 | (f) | — | 44,691 | |||||||||||||||||||||
| Other: | ||||||||||||||||||||||||||
| Insurance company general account (unallocated contracts) | — | 5,918 | (g) | — | 5,918 | |||||||||||||||||||||
| Total investments | $434,371 | $1,507,004 | $— | $4,628,324 | ||||||||||||||||||||||
| Cash | 2,026 | |||||||||||||||||||||||||
| Other pending transactions | (133,550) | |||||||||||||||||||||||||
| Less: Other postretirement assets included in total investments | (64,068) | |||||||||||||||||||||||||
| Total fair value of qualified pension assets | $4,432,732 |
| 2023 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||
| Equity securities: | ||||||||||||||||||||||||||
| Corporate stocks: | ||||||||||||||||||||||||||
| Preferred | $10,827 | (b) | $— | $— | $10,827 | |||||||||||||||||||||
| Common | 715,452 | (b) | — | — | 715,452 | |||||||||||||||||||||
| Common collective trusts (c) | 2,066,247 | |||||||||||||||||||||||||
| Fixed income securities: | ||||||||||||||||||||||||||
| U.S. Government securities | — | 1,085,231 | (a) | — | 1,085,231 | |||||||||||||||||||||
| Corporate debt instruments | — | 924,904 | (a) | — | 924,904 | |||||||||||||||||||||
| Registered investment companies (e) | 34,364 | (d) | 2,718 | (d) | — | 657,691 | ||||||||||||||||||||
| Other | 774 | 78,883 | (f) | — | 79,657 | |||||||||||||||||||||
| Other: | ||||||||||||||||||||||||||
| Insurance company general account (unallocated contracts) | — | 5,899 | (g) | — | 5,899 | |||||||||||||||||||||
| Total investments | $761,417 | $2,097,635 | $— | $5,545,908 | ||||||||||||||||||||||
| Cash | 1,488 | |||||||||||||||||||||||||
| Other pending transactions | (22,404) | |||||||||||||||||||||||||
| Less: Other postretirement assets included in total investments | (64,391) | |||||||||||||||||||||||||
| Total fair value of qualified pension assets | $5,460,601 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Other Postretirement Trusts
| 2024 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||
| Equity securities: | ||||||||||||||||||||||||||
| Common collective trust (c) | $161,726 | |||||||||||||||||||||||||
| Fixed income securities: | ||||||||||||||||||||||||||
| U.S. Government securities | $107,547 | (b) | $112,780 | (a) | $— | 220,327 | ||||||||||||||||||||
| Corporate debt instruments | — | 166,208 | (a) | — | 166,208 | |||||||||||||||||||||
| Registered investment companies | 2,295 | (d) | — | — | 2,295 | |||||||||||||||||||||
| Other | — | 80,561 | (f) | — | 80,561 | |||||||||||||||||||||
| Total investments | $109,842 | $359,549 | $— | $631,117 | ||||||||||||||||||||||
| Other pending transactions | 3,417 | |||||||||||||||||||||||||
| Plus: Other postretirement assets included in the investments of the qualified pension trust | 64,068 | |||||||||||||||||||||||||
| Total fair value of other postretirement assets | $698,602 |
| 2023 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||
| Equity securities: | ||||||||||||||||||||||||||
| Common collective trust (c) | $276,560 | |||||||||||||||||||||||||
| Fixed income securities: | ||||||||||||||||||||||||||
| U.S. Government securities | $80,219 | (b) | $84,521 | (a) | $— | 164,740 | ||||||||||||||||||||
| Corporate debt instruments | — | 106,523 | (a) | — | 106,523 | |||||||||||||||||||||
| Registered investment companies | 548 | (d) | — | — | 548 | |||||||||||||||||||||
| Other | — | 57,511 | (f) | — | 57,511 | |||||||||||||||||||||
| Total investments | $80,767 | $248,555 | $— | $605,882 | ||||||||||||||||||||||
| Other pending transactions | 2,868 | |||||||||||||||||||||||||
| Plus: Other postretirement assets included in the investments of the qualified pension trust | 64,391 | |||||||||||||||||||||||||
| Total fair value of other postretirement assets | $673,141 |
(a)Certain fixed income debt securities (corporate, government, and securitized) are stated at fair value as determined by broker quotes.
(b)Common stocks, preferred stocks, and certain fixed income debt securities (government) are stated at fair value determined by quoted market prices.
(c)The common collective trusts hold investments in accordance with stated objectives. The investment strategy of the trusts is to capture the growth potential of equity markets by replicating the performance of a specified index. The issuer of these funds allows daily trading at the net asset value and trades settle at a later date, with no other trading restrictions. Net asset value per share of common collective trusts estimate fair value. Common collective trusts are not publicly quoted and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table, but are included in the total.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
(d)Registered investment companies are money market mutual funds with a stable net asset value of one dollar per share. Registered investment companies may hold investments in domestic and international bond markets or domestic equities valued at the daily closing price as reported by the fund. These funds are required to publish their daily net asset value and to transact at that price. The money market mutual funds held by the trusts are deemed to be actively traded. Certain registered investment companies are recorded at contract value, which approximates fair value.
(e)Certain of these registered investment companies are not publicly quoted and are valued by the fund administrators using net asset value as a practical expedient. The issuer of these funds allows daily trading at the net asset value and trades settle at a later date, with no other trading restrictions. Accordingly, these funds are not assigned a level in the fair value table, but are included in the total.
(f)The other remaining assets are U.S. municipal and foreign government bonds stated at fair value as determined by broker quotes.
(g)The unallocated insurance contract investments are recorded at contract value, which approximates fair value. The contract value represents contributions made under the contract, plus interest, less funds used to pay benefits and contract expenses, and less distributions to the master trust.
Estimated Future Benefit Payments
Based upon the assumptions used to measure Entergy’s qualified pension and other postretirement benefits obligations at December 31, 2024, and including pension and other postretirement benefits attributable to estimated future employee service, Entergy expects that benefits to be paid over the next ten years for Entergy Corporation and its subsidiaries will be as follows:
| Estimated Future Benefits Payments | |||||||||||||||||
| Qualified Pension | Non-Qualified Pension | Other Postretirement | |||||||||||||||
| (In Thousands) | |||||||||||||||||
| Year(s) | |||||||||||||||||
| 2025 | $396,881 | $22,324 | $68,754 | ||||||||||||||
| 2026 | $373,969 | $7,975 | $65,668 | ||||||||||||||
| 2027 | $374,332 | $14,666 | $63,067 | ||||||||||||||
| 2028 | $374,818 | $8,905 | $60,746 | ||||||||||||||
| 2029 | $372,728 | $7,532 | $58,225 | ||||||||||||||
| 2030 - 2034 | $1,852,026 | $36,035 | $279,644 |
Based upon the same assumptions, Entergy expects that benefits to be paid over the next ten years for the Registrant Subsidiaries for their current and former employees will be as follows:
| Estimated Future Qualified Pension Benefits Payments | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Year(s) | ||||||||||||||||||||||||||||||||||||||
| 2025 | $92,997 | $99,646 | $26,600 | $10,879 | $22,865 | $24,910 | ||||||||||||||||||||||||||||||||
| 2026 | $91,164 | $94,614 | $25,540 | $11,107 | $22,419 | $22,420 | ||||||||||||||||||||||||||||||||
| 2027 | $91,175 | $93,456 | $25,272 | $10,658 | $21,251 | $23,235 | ||||||||||||||||||||||||||||||||
| 2028 | $89,535 | $95,546 | $24,923 | $10,775 | $20,135 | $22,540 | ||||||||||||||||||||||||||||||||
| 2029 | $88,244 | $93,857 | $25,038 | $10,242 | $20,474 | $22,790 | ||||||||||||||||||||||||||||||||
| 2030 - 2034 | $437,940 | $458,211 | $118,197 | $50,337 | $93,989 | $112,086 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| Estimated Future Non-Qualified Pension Benefits Payments | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | |||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||
| Year(s) | ||||||||||||||||||||||||||||||||
| 2025 | $524 | $190 | $419 | $104 | $386 | |||||||||||||||||||||||||||
| 2026 | $103 | $173 | $309 | $84 | $360 | |||||||||||||||||||||||||||
| 2027 | $94 | $159 | $764 | $263 | $335 | |||||||||||||||||||||||||||
| 2028 | $175 | $146 | $578 | $210 | $310 | |||||||||||||||||||||||||||
| 2029 | $143 | $141 | $436 | $167 | $284 | |||||||||||||||||||||||||||
| 2030 - 2034 | $634 | $552 | $1,582 | $609 | $1,081 |
| Estimated Future Other Postretirement Benefits Payments | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||||||||
| Year(s) | ||||||||||||||||||||||||||||||||||||||
| 2025 | $12,198 | $14,377 | $3,329 | $2,082 | $4,542 | $2,645 | ||||||||||||||||||||||||||||||||
| 2026 | $11,754 | $13,757 | $3,218 | $1,941 | $4,168 | $2,434 | ||||||||||||||||||||||||||||||||
| 2027 | $11,280 | $13,172 | $3,109 | $1,789 | $3,989 | $2,339 | ||||||||||||||||||||||||||||||||
| 2028 | $11,012 | $12,531 | $3,110 | $1,655 | $3,787 | $2,288 | ||||||||||||||||||||||||||||||||
| 2029 | $10,896 | $12,089 | $3,014 | $1,575 | $3,627 | $2,278 | ||||||||||||||||||||||||||||||||
| 2030 - 2034 | $53,047 | $57,646 | $14,486 | $7,164 | $17,113 | $11,340 |
Contributions
Entergy currently expects to contribute approximately $240 million to its qualified pension plans and approximately $42.8 million to its other postretirement plans in 2025. The Registrant Subsidiaries currently expect to contribute the following approximate amounts to their qualified pension and other postretirement plans for their current and former employees in 2025:
| Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||||||||||||||
| Pension Contributions | $35,544 | $41,253 | $8,064 | $5,016 | $7,725 | $15,668 | |||||||||||||||||||||||||||||
| Other Postretirement Contributions | $529 | $14,377 | $178 | $205 | $156 | $34 |
The 2025 required pension contributions will be known with more certainty when the January 1, 2025 valuations are completed, which is expected by April 1, 2025.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Actuarial Assumptions
The significant actuarial assumptions used in determining the pension PBO and the other postretirement benefits APBO as of December 31, 2024 and 2023 were as follows:
| 2024 | 2023 | ||||||||||
| Weighted-average discount rate: | |||||||||||
| Qualified pension | 5.67% - 5.89% Blended 5.75% | 5.02% - 5.10% Blended 5.06% | |||||||||
| Other postretirement | 5.66% | 5.01% | |||||||||
| Non-qualified pension | 5.23% | 4.68% | |||||||||
| Weighted-average rate of increase in future compensation levels | 3.98% - 4.45% | 3.98% - 4.40% | |||||||||
| Interest crediting rate | 4.80% | 4.00% | |||||||||
| Assumed health care trend rate: | |||||||||||
| Pre-65 | 8.15% | 6.95% | |||||||||
| Post-65 | 10.13% | 7.88% | |||||||||
| Ultimate health care cost trend rate | 4.75% | 4.75% | |||||||||
| Year ultimate health care cost trend rate is reached and beyond: | |||||||||||
| Pre-65 | 2035 | 2032 | |||||||||
| Post-65 | 2035 | 2032 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The significant actuarial assumptions used in determining the net periodic pension and other postretirement benefits costs for 2024, 2023, and 2022 were as follows:
| 2024 | 2023 | 2022 | |||||||||||||||
| Weighted-average discount rate: | |||||||||||||||||
| Qualified pension: | |||||||||||||||||
| Service cost | 5.08% | 5.26% | 3.07% | ||||||||||||||
| Interest cost | 4.97% | 5.16% | 2.49% | ||||||||||||||
| Other postretirement: | |||||||||||||||||
| Service cost | 4.82% | 5.00% | 3.20% | ||||||||||||||
| Interest cost | 4.91% | 5.09% | 2.31% | ||||||||||||||
| Non-qualified pension: | |||||||||||||||||
| Service cost | 5.01% | 5.31% | 4.94% | ||||||||||||||
| Interest cost | 4.86% | 5.30% | 5.03% | ||||||||||||||
| Weighted-average rate of increase in future compensation levels | 3.98% - 4.40% | 3.98% - 4.40% | 3.98% - 4.40% | ||||||||||||||
| Expected long-term rate of return on plan assets: | |||||||||||||||||
| Pension assets | 6.00% - 7.25% Blended 6.75% | 7.00% | 6.75% | ||||||||||||||
| Other postretirement non-taxable assets | 6.50% - 7.25% | 6.00% - 7.00% | 5.75% - 6.75% | ||||||||||||||
| Other postretirement taxable assets | 5.25% | 5.25% | 4.75% | ||||||||||||||
| Assumed health care trend rate: | |||||||||||||||||
| Pre-65 | 6.95% | 6.65% | 5.65% | ||||||||||||||
| Post-65 | 7.88% | 7.50% | 5.90% | ||||||||||||||
| Ultimate health care cost trend rate | 4.75% | 4.75% | 4.75% | ||||||||||||||
| Year ultimate health care cost trend rate is reached and beyond: | |||||||||||||||||
| Pre-65 | 2032 | 2032 | 2032 | ||||||||||||||
| Post-65 | 2032 | 2032 | 2032 |
With respect to the mortality assumptions, Entergy used the Pri-2012 Employee and Healthy Annuitant Table, projected generationally using Scale MP-2021 with Aon’s Endemic Adjustment, in determining its December 31, 2024 and 2023 pension plans’ PBOs and the Pri.H 2012 (headcount weighted) Employee and Healthy Annuitant Table, projected generationally using Scale MP-2021 with Aon’s Endemic Adjustment, in determining its December 31, 2024 and 2023 other postretirement benefits APBO.
Defined Contribution Plans
Entergy sponsors the Savings Plan of Entergy Corporation and Subsidiaries (System Savings Plan). The System Savings Plan is a defined contribution plan covering eligible employees of Entergy and certain of its subsidiaries. The participating Entergy subsidiary makes matching contributions to the System Savings Plan for all eligible participating employees in an amount equal to either 70% or 100% of the participants’ basic contributions, up to 6% of their eligible earnings per pay period. The matching contribution is allocated to investments as directed by the employee.
Entergy also sponsors the Savings Plan of Entergy Corporation and Subsidiaries VI (Savings Plan VI) (established in April 2007) and the Savings Plan of Entergy Corporation and Subsidiaries VII (Savings Plan VII) (established in April 2007) to which matching contributions are also made. The plans are defined contribution plans that cover eligible employees, as defined by each plan, of Entergy and certain of its subsidiaries. Effective
Entergy Corporation and Subsidiaries
Notes to Financial Statements
December 31, 2023, employees participating in Savings Plan VI and Savings Plan VII were transferred into the System Savings Plan when Savings Plan VI and Savings Plan VII merged into the System Savings Plan.
Entergy also sponsors the Savings Plan of Entergy Corporation and Subsidiaries VIII (established January 2021) and the Savings Plan of Entergy Corporation and Subsidiaries IX (established January 2021) to which company contributions are made. The participating Entergy subsidiary makes matching contributions to these defined contribution plans for all eligible participating employees in an amount equal to 100% of the participants’ basic contributions, up to 5% of their eligible earnings per pay period. Eligible participants may also receive a discretionary annual company contribution up to 4% of the participant’s eligible earnings (subject to vesting).
Entergy’s subsidiaries’ contributions to defined contribution plans collectively were $72.3 million in 2024, $65.1 million in 2023, and $62.1 million in 2022. The majority of the contributions were to the System Savings Plan.
The Registrant Subsidiaries’ 2024, 2023, and 2022 contributions to defined contribution plans for their employees were as follows:
| Year | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | |||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||
| 2024 | $6,822 | $8,784 | $4,048 | $1,584 | $3,907 | |||||||||||||||||||||||||||
| 2023 | $5,866 | $7,757 | $3,534 | $1,383 | $3,380 | |||||||||||||||||||||||||||
| 2022 | $5,124 | $7,138 | $3,194 | $1,223 | $2,938 |
NOTE 12. STOCK-BASED COMPENSATION (Entergy Corporation)
Entergy grants stock options, restricted stock, performance units, and restricted stock units to key employees of the Entergy subsidiaries under its equity plans which are shareholder-approved stock-based compensation plans. The cost of the stock-based compensation is charged to income over the vesting period. Awards under Entergy’s plans generally vest over three years. Entergy accounts for forfeitures of stock-based compensation when they occur. Entergy recognizes all income tax effects related to share-based payments through the income statement. Historical share and share-based data presented herein for share-based compensation has been retroactively adjusted to reflect the two-for-one forward stock split of Entergy Corporation common stock effective December 12, 2024. See Note 7 to the financial statements for discussion of the stock split.
Effective May 3, 2019, Entergy’s shareholders approved the 2019 Omnibus Incentive Plan (2019 Plan). The maximum number of common shares that can be issued from the 2019 Plan for stock-based awards is 24,400,000 all of which are available for incentive stock option grants. The 2019 Plan applies to awards granted on or after May 3, 2019 and awards expire ten years from the date of grant. As of December 31, 2024, there were 13,966,025 authorized shares remaining for stock-based awards.
Stock Options
Stock options are granted at exercise prices that equal the closing market price of Entergy Corporation common stock on the date of grant. Generally, stock options granted will become exercisable in equal amounts on each of the first three anniversaries of the date of grant. Unless they are forfeited previously under the terms of the grant, options expire 10 years after the date of the grant if they are not exercised.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The following table includes financial information for stock options for each of the years presented:
| 2024 | 2023 | 2022 | |||||||||||||||
| (In Millions) | |||||||||||||||||
| Compensation expense included in Entergy’s consolidated net income | $4.0 | $4.1 | $4.2 | ||||||||||||||
| Tax benefit recognized in Entergy’s consolidated net income | $1.0 | $1.1 | $1.1 | ||||||||||||||
| Compensation cost capitalized as part of fixed assets and materials and supplies | $1.9 | $1.9 | $1.7 |
Entergy determines the fair value of the stock option grants by considering factors such as lack of marketability, stock retention requirements, and regulatory restrictions on exercisability in accordance with accounting standards. The stock option weighted-average assumptions used in determining the fair values are as follows:
| 2024 | 2023 | 2022 | |||||||||||||||
| Stock price volatility | 25.24% | 24.89% | 24.27% | ||||||||||||||
| Expected term in years | 6.88 | 6.89 | 6.92 | ||||||||||||||
| Risk-free interest rate | 4.03% | 3.51% | 1.77% | ||||||||||||||
| Dividend yield | 4.30% | 4.00% | 4.00% | ||||||||||||||
| Dividend payment per share | $2.30 | $2.17 | $2.05 |
Stock price volatility is calculated based upon the daily public stock price volatility of Entergy Corporation common stock over a period equal to the expected term of the award. The expected term of the options is based upon historical option exercises and the weighted-average life of options when exercised and the estimated weighted-average life of all vested but unexercised options. In 2008, Entergy implemented stock ownership guidelines for its senior executive officers. These guidelines require an executive officer to own shares of Entergy Corporation common stock equal to a specified multiple of his or her salary. Until an executive officer achieves this ownership position the executive officer is required to retain 75% of the net-of-tax net profit upon exercise of the option to be held in Entergy Corporation common stock. The reduction in fair value of the stock options due to this restriction is based upon an estimate of the call option value of the reinvested gain discounted to present value over the applicable reinvestment period.
A summary of stock option activity for the year ended December 31, 2024 and changes during the year are presented below:
| Number of Options | Weighted- Average Exercise Price | Aggregate Intrinsic Value | Weighted- Average Contractual Life | ||||||||||||||||||||
| (Dollars In Thousands, Except Per Share Data) | |||||||||||||||||||||||
| Options outstanding as of January 1, 2024 | 5,797,416 | $48.83 | |||||||||||||||||||||
| Options granted | 704,398 | $49.54 | |||||||||||||||||||||
| Options exercised | (3,114,546) | $43.83 | |||||||||||||||||||||
| Options forfeited/expired | (160,812) | $57.69 | |||||||||||||||||||||
| Options outstanding as of December 31, 2024 | 3,226,456 | $53.38 | $72,410 | 6.62 | |||||||||||||||||||
| Options exercisable as of December 31, 2024 | 1,935,970 | $54.38 | $41,515 | 5.44 | |||||||||||||||||||
| Weighted-average grant-date fair value of options granted during 2024 | $9.31 |
The weighted-average grant-date fair value of options granted during the year was $10.04 for 2023 and $8.13 for 2022. The total intrinsic value of stock options exercised was $56 million during 2024, $2 million during 2023, and $20 million during 2022. The intrinsic value, which has no effect on net income, of the outstanding stock options
Entergy Corporation and Subsidiaries
Notes to Financial Statements
exercised is calculated by the positive difference between the weighted-average exercise price of the stock options granted and Entergy Corporation’s common stock price as of December 31, 2024. Entergy recognizes compensation cost over the vesting period of the options based on their grant-date fair value. The total fair value of options that vested was approximately $6 million during 2024, $6 million during 2023, and $5 million during 2022. Cash received from option exercises was $136 million for the year ended December 31, 2024. The tax benefits realized from options exercised was $13.9 million for the year ended December 31, 2024.
The following table summarizes information about stock options outstanding as of December 31, 2024:
| Options Outstanding | Options Exercisable | ||||||||||||||||||||||||||||||||||
| Range of Exercise Price | As of December 31, 2024 | Weighted-Average Remaining Contractual Life-Yrs. | Weighted-Average Exercise Price | Number Exercisable as of December 31, 2024 | Weighted-Average Exercise Price | ||||||||||||||||||||||||||||||
| $31.00 | - | $39.99 | 248,134 | 2.66 | $37.48 | 248,134 | $37.48 | ||||||||||||||||||||||||||||
| $40.00 | - | $49.99 | 1,145,520 | 7.49 | $48.28 | 467,062 | $46.46 | ||||||||||||||||||||||||||||
| $50.00 | - | $59.99 | 1,158,822 | 7.51 | $54.55 | 546,794 | $54.65 | ||||||||||||||||||||||||||||
| $60.00 | - | $65.86 | 673,980 | 5.08 | $65.86 | 673,980 | $65.86 | ||||||||||||||||||||||||||||
| $63.17 | - | $131.72 | 3,226,456 | 6.62 | $53.38 | 1,935,970 | $54.38 |
Stock-based compensation cost related to non-vested stock options outstanding as of December 31, 2024 not yet recognized is approximately $6 million and is expected to be recognized over a weighted-average period of 1.7 years.
Restricted Stock Awards
Entergy grants restricted stock awards earned under its stock benefit plans in the form of stock units. One-third of the restricted stock awards and accrued dividends will vest upon each anniversary of the grant date and are expensed ratably over the three-year vesting period. Shares of restricted stock have the same dividend and voting rights as other common stock and are considered issued and outstanding shares of Entergy upon vesting. Restricted stock awards are valued at the closing price of Entergy Corporation’s common stock on the grant date.
The following table includes information about the restricted stock awards outstanding as of December 31, 2024:
| Shares | Weighted-Average Grant Date Fair Value Per Share | ||||||||||
| Outstanding shares at January 1, 2024 | 1,253,547 | $53.64 | |||||||||
| Granted | 874,190 | $49.68 | |||||||||
| Vested | (605,320) | $52.60 | |||||||||
| Forfeited | (75,166) | $52.47 | |||||||||
| Outstanding shares at December 31, 2024 | 1,447,251 | $51.74 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The following table includes financial information for restricted stock for each of the years presented:
| 2024 | 2023 | 2022 | |||||||||||||||
| (In Millions) | |||||||||||||||||
| Compensation expense included in Entergy’s consolidated net income | $24.4 | $22.2 | $23.2 | ||||||||||||||
| Tax benefit recognized in Entergy’s consolidated net income | $6.2 | $5.7 | $5.9 | ||||||||||||||
| Compensation cost capitalized as part of fixed assets and materials and supplies | $11.3 | $9.7 | $9.2 |
The total fair value of the restricted stock awards granted was $43 million, $41 million, and $39 million for the years ended December 31, 2024, 2023, and 2022, respectively.
The total fair value of the restricted stock awards vested was $32 million, $33 million, and $34 million for the years ended December 31, 2024, 2023, and 2022, respectively.
Long-Term Performance Unit Program
Entergy grants long-term incentive awards earned under its stock benefit plans in the form of performance units, which represents the value of, and are settled with, one share of Entergy Corporation common stock at the end of the three-year performance period, plus dividends accrued during the performance period on the number of performance units earned. The Long-Term Performance Unit Program specifies a minimum, target, and maximum achievement level, the achievement of which will determine the number of performance units that may be earned. Entergy measures performance by assessing Entergy’s total shareholder return relative to the total shareholder return of the companies in the Philadelphia Utility Index. To emphasize the importance of environmental stewardship, specifically of carbon-free generation and resilience, an environmental achievement measure was selected as one of the performance measures for the 2024-2026 performance period. For the 2024-2026 performance period, performance will be measured based eighty percent on relative total shareholder return and twenty percent on the environmental achievement measure. The total shareholder return portion is valued based on various factors, primarily market conditions; and the environmental achievement measure portion is valued based on the closing price of Entergy Corporation’s common stock on the grant date. Performance units have the same dividend and voting rights as other common stock, are considered issued and outstanding shares of Entergy upon vesting, and are expensed ratably over the three-year vesting period, and compensation cost for the portion of the award based on the selected credit measure will be adjusted based on the number of units that ultimately vest.
The following table includes information about the long-term performance units outstanding at the target level as of December 31, 2024:
| Shares | Weighted-Average Grant Date Fair Value Per Share | ||||||||||
| Outstanding shares at January 1, 2024 | 962,002 | $60.56 | |||||||||
| Granted | 404,760 | $59.03 | |||||||||
| Vested | (432,804) | $53.88 | |||||||||
| Forfeited | (47,356) | $63.99 | |||||||||
| Outstanding shares at December 31, 2024 | 886,602 | $62.94 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The following table includes financial information for the long-term performance units for each of the years presented:
| 2024 | 2023 | 2022 | |||||||||||||||
| (In Millions) | |||||||||||||||||
| Compensation expense included in Entergy’s consolidated net income | $12.0 | $11.1 | $16.0 | ||||||||||||||
| Tax benefit recognized in Entergy’s consolidated net income | $3.1 | $2.8 | $4.1 | ||||||||||||||
| Compensation cost capitalized as part of fixed assets and materials and supplies | $5.7 | $5.2 | $6.7 |
The total fair value of the long-term performance units granted was $24 million, $20 million, and $35 million for the years ended December 31, 2024, 2023, and 2022, respectively.
In January 2024, Entergy issued 432,804 shares of Entergy Corporation common stock at a share price of $49.43 for awards earned and dividends accrued under the 2021-2023 Long-Term Performance Unit Program. In January 2023, Entergy issued 76,300 shares of Entergy Corporation common stock at a share price of $53.80 for awards earned and dividends accrued under the 2020-2022 Long-Term Performance Unit Program. In January 2022, Entergy issued 448,668 shares of Entergy Corporation common stock at a share price of $55.18 for awards earned and dividends accrued under the 2019-2021 Long-Term Performance Unit Program.
Restricted Stock Unit Awards
Entergy grants restricted stock unit awards earned under its stock benefit plans in the form of stock units that are subject to time-based restrictions. The restricted stock units may be settled in shares of Entergy Corporation common stock or the cash value of shares of Entergy Corporation common stock at the time of vesting. The costs of restricted stock unit awards are charged to income over the restricted period, which varies from grant to grant. The average vesting period for restricted stock unit awards granted is 39 months. As of December 31, 2024, there were 230,058 unvested restricted stock units that are expected to vest over an average period of 44 months.
The following table includes information about the restricted stock unit awards outstanding as of December 31, 2024:
| Shares | Weighted-Average Grant Date Fair Value Per Share | ||||||||||
| Outstanding shares at January 1, 2024 | 279,000 | $52.55 | |||||||||
| Granted | 55,174 | $66.26 | |||||||||
| Vested | (87,192) | $51.70 | |||||||||
| Forfeited | (16,924) | $44.90 | |||||||||
| Outstanding shares at December 31, 2024 | 230,058 | $56.73 |
The following table includes financial information for restricted stock unit awards for each of the years presented:
| 2024 | 2023 | 2022 | |||||||||||||||
| (In Millions) | |||||||||||||||||
| Compensation expense included in Entergy’s consolidated net income | $2.5 | $2.8 | $2.0 | ||||||||||||||
| Tax benefit recognized in Entergy’s consolidated net income | $0.6 | $0.7 | $0.5 | ||||||||||||||
| Compensation cost capitalized as part of fixed assets and materials and supplies | $1.2 | $1.2 | $0.8 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The total fair value of the restricted stock unit awards granted was $4 million, $2 million, and $8 million for the years ended December 31, 2024, 2023, and 2022, respectively.
The total fair value of the restricted stock unit awards vested was $5 million, $1 million, and $3 million for the years ended December 31, 2024, 2023, and 2022, respectively.
NOTE 13. BUSINESS SEGMENT INFORMATION (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Entergy has a single reportable segment, Utility, which includes the generation, transmission, distribution, and sale of electric power in portions of Arkansas, Mississippi, Texas, and Louisiana, including the City of New Orleans; and operation of a small natural gas distribution business in portions of Louisiana. Revenue for the Utility segment is primarily derived from retail electric sales. The accounting policies of the Utility segment are the same as those described in Note 1 to the financial statements. The Utility segment reflects management’s primary basis of organization with a predominant focus on its utility operations in the Gulf South. Entergy’s chief operating decision maker is its chief executive officer. The chief operating decision maker uses Utility net income in the annual planning process and to monitor budget versus actual results on a monthly basis in assessing financial performance and in determining how to allocate resources. Parent & Other includes the parent company, Entergy Corporation, and other business activity, including Entergy’s non-utility operations business, which is an operating segment that does not meet the quantitative thresholds for determining reportable segments. Entergy’s non-utility operations business owns interests in non-nuclear power plants that sell the electric power produced by those plants to wholesale customers and also provides decommissioning services to nuclear power plants owned by non-affiliated entities in the United States.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The following table includes operating revenues and significant expense categories regularly provided to the chief operating decision maker for the Utility segment, a reconciliation of Utility operating revenues to Entergy’s consolidated operating revenues, and a reconciliation of Utility net income to consolidated net income and net income attributable to Entergy Corporation for each of the years presented:
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||
| Utility operating revenues | $11,805,802 | $12,022,944 | $13,420,804 | |||||||||||||||||
| Reconciliation of revenues: | ||||||||||||||||||||
| Other revenues (a) | 73,914 | 124,509 | 343,461 | |||||||||||||||||
| Elimination of intersegment revenues | (63) | (41) | (28) | |||||||||||||||||
| Consolidated operating revenues | 11,879,653 | 12,147,412 | 13,764,237 | |||||||||||||||||
| Less Utility expenses and other items: | ||||||||||||||||||||
| Fuel, fuel-related expenses, and gas purchased for resale | 2,214,471 | 2,755,793 | 3,634,394 | |||||||||||||||||
| Purchased power | 806,646 | 904,184 | 1,478,121 | |||||||||||||||||
| Other operation and maintenance expenses | 2,851,165 | 2,838,057 | 2,899,759 | |||||||||||||||||
| Other regulatory charges (credits) - net | (6,133) | (138,469) | 669,403 | |||||||||||||||||
| Other Utility items (b) | 4,109,352 | 3,152,475 | 3,340,547 | |||||||||||||||||
| Utility net income | 1,830,301 | 2,510,904 | 1,398,580 | |||||||||||||||||
| Reconciliation of net income: | ||||||||||||||||||||
| Non-cash pension settlement charge (c) | (319,675) | — | — | |||||||||||||||||
| IRS audit resolution (d) | — | 275,403 | — | |||||||||||||||||
| Gain on sale of Palisades (e) | — | — | 165,626 | |||||||||||||||||
| Income taxes on reconciling items noted above | 66,515 | — | (36,102) | |||||||||||||||||
| Other loss | (203,097) | (125,018) | (244,949) | |||||||||||||||||
| Elimination of intersegment loss | (312,860) | (298,979) | (186,017) | |||||||||||||||||
| Consolidated net income | 1,061,184 | 2,362,310 | 1,097,138 | |||||||||||||||||
| Preferred dividend requirements of subsidiaries and noncontrolling interests (f) | 5,594 | 5,774 | (6,028) | |||||||||||||||||
| Net income attributable to Entergy Corporation | $1,055,590 | $2,356,536 | $1,103,166 |
(a)See Note 19 to the financial statements for discussion of other revenues.
(b)Other Utility items includes nuclear refueling outage expenses, asset write-offs, decommissioning expenses, taxes other than income taxes, depreciation and amortization expenses, other income, interest expense, and income tax expense.
(c)See Note 11 to the financial statements for discussion of the one-time non-cash pension settlement charge of $328 million, of which $8 million was recorded at Utility and $320 million was recorded at Parent & Other, resulting from a group annuity contract purchased in 2024 to settle certain pension liabilities.
(d)See Note 3 to the financial statements for discussion of the resolution of the 2016-2018 IRS audit, which included a $568 million reduction, recorded at Utility, and a $275 million reduction, recorded at Parent & Other, in income tax expense in 2023.
(e)See Note 14 to the financial statements for discussion of the $166 million gain, recorded at Parent & Other, resulting from the sale of the Palisades plant in June 2022.
(f)Preferred dividend requirements of subsidiaries and noncontrolling interests is substantially derived from the Utility segment. See Note 6 to the financial statements for discussion of preferred stock and noncontrolling interests.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The following tables present segment financial information for Entergy’s single reportable segment, Utility, and a reconciliation to the corresponding consolidated amounts for Entergy Corporation.
| 2024 | Utility | Parent & Other | Eliminations | Consolidated | ||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||
| Asset write-offs, impairments, and related charges (credits) | $131,775 | ($24,641) | $— | $107,134 | ||||||||||||||||||||||
| Depreciation, amortization, and decommissioning | $2,226,681 | $6,567 | $— | $2,233,248 | ||||||||||||||||||||||
| Interest and investment income | $592,257 | $21,621 | ($315,013) | $298,865 | ||||||||||||||||||||||
| Interest expense | $899,655 | $253,317 | ($2,152) | $1,150,820 | ||||||||||||||||||||||
| Income taxes | $515,665 | ($134,638) | $— | $381,027 | ||||||||||||||||||||||
| Total assets | $68,951,564 | $721,459 | ($4,882,991) | $64,790,032 | ||||||||||||||||||||||
| Total expenditures for additions to long-lived assets | $5,967,739 | $1,971 | $— | $5,969,710 |
| 2023 | Utility | Parent & Other | Eliminations | Consolidated | ||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||
| Asset write-offs, impairments, and related charges (credits) | $79,962 | ($37,283) | $— | $42,679 | ||||||||||||||||||||||
| Depreciation, amortization, and decommissioning | $2,045,254 | $6,423 | $— | $2,051,677 | ||||||||||||||||||||||
| Interest and investment income | $443,751 | $18,660 | ($299,685) | $162,726 | ||||||||||||||||||||||
| Interest expense | $816,643 | $190,468 | ($705) | $1,006,406 | ||||||||||||||||||||||
| Income taxes | ($374,847) | ($315,688) | $— | ($690,535) | ||||||||||||||||||||||
| Total assets | $63,887,038 | $836,598 | ($5,020,240) | $59,703,396 | ||||||||||||||||||||||
| Total expenditures for additions to long-lived assets | $4,745,918 | $801 | $— | $4,746,719 |
| 2022 | Utility | Parent & Other | Eliminations | Consolidated | ||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||
| Depreciation, amortization, and decommissioning | $1,941,653 | $43,446 | $— | $1,985,099 | ||||||||||||||||||||||
| Interest and investment income (loss) | $145,968 | ($35,293) | ($186,256) | ($75,581) | ||||||||||||||||||||||
| Interest expense | $750,175 | $162,300 | ($238) | $912,237 | ||||||||||||||||||||||
| Income taxes | ($34,263) | ($4,715) | $— | ($38,978) | ||||||||||||||||||||||
| Total assets | $61,399,243 | $884,442 | ($3,688,494) | $58,595,191 | ||||||||||||||||||||||
| Total expenditures for additions to long-lived assets | $5,382,243 | $13,884 | $— | $5,396,127 |
Eliminations are primarily intersegment activity. All of Entergy’s goodwill is related to the Utility segment.
Registrant Subsidiaries
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas each has one operating and reportable segment, an integrated utility business which includes the generation, transmission, and distribution of electric power; and operation of a small natural gas distribution business at each of Entergy Louisiana and Entergy New Orleans. Revenue for each integrated utility business is primarily derived from retail electric sales. System Energy has one operating and reportable segment, which is an electricity generation business. System Energy’s only source of revenue is the sale of electric power and capacity generated from its 90% interest in the Grand Gulf nuclear plant to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Orleans. Each of the Registrant Subsidiaries’ operations are managed on an integrated basis by that company because of the substantial effect of cost-based rates and regulatory oversight on the business process, cost structures, and operating results. The chief operating decision maker for the Registrant Subsidiaries is the respective president and chief executive officer for the Utility operating companies and the president for System Energy. Each chief operating decision maker assesses financial performance on an entity-wide basis and decides how to allocate resources based on net income that also is reported on the income statement for each of the Registrant Subsidiaries as net income. Net income is used in the annual planning process and to monitor budget versus actual results on a monthly basis and each Registrant Subsidiary’s earned return on common equity in assessing financial performance. Each chief operating decision maker is only provided with the consolidated financial results for the respective Registrant Subsidiary. All segment financial information for the Registrant Subsidiaries is as reported on the respective financial statements for each of the Registrant Subsidiaries.
Geographic Areas
Entergy and the Registrant Subsidiaries derive substantially all revenue from inside of the United States and all long-lived assets are located within the United States.
Major Customers
Neither Entergy nor the Registrant Subsidiaries have an individual customer representing more than 10% of its respective revenues for the years ended December 31, 2024, 2023, and 2022.
Exit from the Merchant Power Business
Entergy completed its multi-year strategy to exit the merchant nuclear power business in 2022. The Fitzpatrick plant was sold to Exelon in March 2017. The Vermont Yankee plant was transferred to NorthStar in January 2019. The Pilgrim plant was sold to Holtec International in August 2019. The Indian Point 2 and Indian Point 3 plants were sold to Holtec International in May 2021. The Palisades plant was sold to Holtec International in June 2022. The decisions to shut down these plants and the related transactions resulted in asset impairments; employee retention and severance expenses and other benefits-related costs; and contracted economic development contributions.
As of December 31, 2021, Entergy had a restructuring cost accrual of $37 million relating to employee retention and severance expenses and other benefits-related costs related to its exit from the merchant power business. During the year ended December 31, 2022, Entergy accrued an additional $3 million in restructuring costs and made severance and retention payments of $40 million, after which the restructuring cost accrual was zero. The employee retention and severance expenses and other benefits-related costs are included in "Other operation and maintenance" in Entergy’s consolidated income statements.
NOTE 14. ACQUISITIONS, HELD FOR SALE, AND DISPOSITIONS (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans)
Acquisitions
Walnut Bend Solar
In June 2020, Entergy Arkansas signed a build-own-transfer agreement for the purchase of an approximately 100 MW to-be-constructed solar photovoltaic energy facility, Walnut Bend Solar facility, to be sited on approximately 1,000 acres in Lee County, Arkansas. Acquisition of the Walnut Bend Solar facility was initially approved by the APSC in July 2021. The agreement was amended by the parties in February 2023, and the revised agreement was approved by the APSC in July 2023. In February 2024, Entergy Arkansas made an initial payment
Entergy Corporation and Subsidiaries
Notes to Financial Statements
of approximately $170 million to acquire the facility. Substantial completion was achieved and commercial operation commenced in September 2024, at which time Entergy Arkansas made a substantial completion payment of approximately $16 million for acquisition of the facility.
West Memphis Solar
In September 2020, Entergy Arkansas signed a build-own-transfer agreement for the purchase of an approximately 180 MW to-be-constructed solar photovoltaic energy facility, West Memphis Solar facility, to be sited on approximately 1,500 acres in Crittenden County, Arkansas. Acquisition of the West Memphis Solar facility was initially approved by the APSC in October 2021. In March 2022 the counterparty to the build-own-transfer agreement notified Entergy Arkansas that it was seeking changes to certain terms of the agreement, including both cost and schedule. Entergy Arkansas filed a supplemental application with the APSC in January 2023 for a change in the transmission route and updates to the cost and schedule, which was approved by the APSC in March 2023. In August 2024, Entergy Arkansas made an initial payment of approximately $48 million to acquire the facility. Substantial completion was achieved in November 2024, at which time Entergy Arkansas made a substantial completion payment of approximately $192 million for acquisition of the facility. Commercial operation commenced in December 2024.
Driver Solar
In August 2022, Entergy Arkansas signed a build-own-transfer agreement for the purchase of an approximately 250 MW to-be-constructed solar photovoltaic energy facility, Driver Solar facility, to be sited near Osceola, Arkansas. Acquisition of the Driver Solar facility was approved by the APSC in August 2022. In August 2024, Entergy Arkansas made an initial payment of approximately $308 million to acquire the facility. Substantial completion was achieved in November 2024, at which time Entergy Arkansas made a substantial completion payment of approximately $85 million for acquisition of the facility. Commercial operation commenced in December 2024.
Sunflower Solar
In November 2018, Entergy Mississippi entered into an agreement for the purchase of an approximately 100 MW solar photovoltaic facility to be sited on approximately 1,000 acres in Sunflower County, Mississippi. The project, Sunflower Solar facility, was being built by Sunflower County Solar Project, LLC, an indirect subsidiary of Recurrent Energy, LLC. In December 2018, Entergy Mississippi filed a joint petition with Sunflower County Solar Project with the MPSC for Sunflower County Solar Project to construct and for Entergy Mississippi to acquire and thereafter own, operate, improve, and maintain the solar facility. In March 2020, Entergy Mississippi filed supplemental testimony addressing questions and observations raised in August 2019 by consultants retained by the Mississippi Public Utilities Staff and proposing an alternative structure for the transaction that would reduce its cost. In April 2020 the MPSC issued an order approving certification of the Sunflower Solar facility, subject to certain conditions, including: (i) that Entergy Mississippi pursue a tax equity partnership structure through which the partnership would acquire and own the facility under the build-own-transfer agreement and (ii) that if Entergy Mississippi does not consummate the partnership structure under the terms of the order, there will be a cap of $136 million on the level of recoverable costs. In April 2022, Entergy Mississippi confirmed mechanical completion of the Sunflower Solar facility. Pursuant to the MPSC’s April 2020 order, MS Sunflower Partnership, LLC was formed for the tax equity partnership with Entergy Mississippi as its managing member. In May 2022 both Entergy Mississippi and the tax equity investor made capital contributions to the tax equity partnership that were then used to make an initial payment of $105 million for acquisition of the facility. Substantial completion of the Sunflower Solar facility was accepted by Entergy Mississippi in September 2022. Commercial operation at the Sunflower Solar facility commenced in September 2022. In April 2023 both Entergy Mississippi and the tax equity investor made additional capital contributions to the tax equity partnership that were then used to make the substantial completion payment of $30 million for acquisition of the facility. The final payment of $5 million for
Entergy Corporation and Subsidiaries
Notes to Financial Statements
acquisition of the facility was made in October 2023. See Note 1 to the financial statements for further discussion of the HLBV method of accounting used to account for the investment in MS Sunflower Partnership, LLC.
Held for Sale
Natural Gas Distribution Businesses
On October 28, 2023, Entergy New Orleans and Entergy Louisiana each entered into separate purchase and sale agreements with respect to the sale of their respective regulated natural gas local distribution company businesses to two separate affiliates of Bernhard Capital Partners Management LP. Under the purchase and sale agreements, Entergy New Orleans has agreed to sell its regulated natural gas local distribution company business serving customers in the Parish of Orleans, Louisiana, and Entergy Louisiana has agreed to sell its regulated natural gas local distribution company business serving customers in the Parish of East Baton Rouge, Louisiana. The Entergy Louisiana and Entergy New Orleans natural gas distribution businesses are reflected in Entergy’s Utility reportable segment and in the respective single reportable segment for each of Entergy Louisiana and Entergy New Orleans.
The base purchase price to be paid by the buyer of the Entergy New Orleans gas business is $285.5 million, and the base purchase price to be paid by the buyer of the Entergy Louisiana gas business is $198 million, in each case subject to certain adjustments at the closing of the transactions. Each purchase and sale agreement contains customary representations, warranties, and covenants related to the applicable business and the respective transactions. Entergy New Orleans and Entergy Louisiana have each agreed to operate the respective gas businesses in the ordinary course of business and subject to certain operating covenants during the period between the date of the purchase and sale agreements and the completion of the transactions.
The transactions will proceed in two phases: (1) an “Initial Phase” prior to regulatory approvals in connection with both transactions; and (2) a “Second Phase” following regulatory approvals in connection with both transactions to the extent that certain conditions are satisfied or, where permissible, waived for both transactions.
Required regulatory approvals include the approval of the City Council for the sale of the Entergy New Orleans gas business and the approval of the LPSC and the Metropolitan Council for the City of Baton Rouge and Parish of East Baton Rouge for the sale of the Entergy Louisiana gas business. Additionally, while approval of the transactions is generally not required from the FERC, the parties sought and obtained a waiver of the FERC’s capacity release rules, as applicable.
In December 2023, Entergy New Orleans and Entergy Louisiana and the respective buyers filed their joint applications with the City Council and the LPSC, respectively, seeking approval for the proposed transactions. The applications requested a decision by June 2024.
In February 2024 the City Council adopted a procedural schedule, and in September 2024 the hearing officer certified the record of the proceeding. In December 2024 the City Council found the proposed transaction in the public interest and approved it, subject to certain conditions. The key conditions include:
-
Entergy New Orleans will not seek recovery of certain assets allocated to its gas business that will not transfer to the buyer through the sale. These assets had a net book value as of December 31, 2024 of approximately $19 million.
-
Entergy New Orleans will be limited to recovering $19 million of transaction and cooperation costs associated with the sale of the gas business.
-
Entergy New Orleans will share with customers 50% of the net proceeds from the transaction. Net proceeds from the transaction will be determined by the sales price, less the sum of: (1) the net book value of the assets sold and liabilities assumed by the buyer, (2) the net book value of the assets of the gas business that will not be included in the sale and for which Entergy New Orleans will not seek to recover from customers,
Entergy Corporation and Subsidiaries
Notes to Financial Statements
and (3) the transaction and cooperation costs associated with the sale, limited to $19 million. Entergy New Orleans will recognize a regulatory liability for such sharing with customers, and will amortize it into customer rates ratably over three years.
In July 2024 the LPSC staff issued a report recommending LPSC approval of the application of Delta Capital Gas Company, LLC (a Bernhard Capital Partners Management LP affiliate, formerly Delta States Utilities LA, LLC) and Entergy Louisiana and the transaction described therein as being in the public interest and proposing certain conditions. In August 2024 the LPSC issued an order accepting the LPSC staff’s report and recommendation.
The purchase and sale agreements may be terminated by any party if the Second Phase does not start within 15 months of October 28, 2023, or within 18 months if the only remaining conditions to starting the Second Phase are obtaining the regulatory approvals. The consummation of each of the transactions is subject to satisfaction of certain customary closing conditions, including the receipt of the regulatory approvals, clearance under the Hart-Scott Rodino Act, and the concurrent closing of the other transaction. Clearance under the Hart-Scott Rodino Act was obtained in 2024. Under the purchase and sale agreements, the closing of the transactions is not required to occur earlier than the later of six months following the initiation of the Second Phase and July 28, 2025, and the purchase and sale agreements may be terminated by either party in the event the closing has not occurred prior to October 28, 2025. Neither transaction is subject to a financing condition for the applicable buyer.
The purchase and sale agreements are subject to customary termination provisions. If the purchase and sale agreements are terminated in certain circumstances, each seller may be liable to the applicable buyer for a portion of the buyer’s transition costs incurred in connection with transitioning the applicable business. Entergy New Orleans’s and Entergy Louisiana’s aggregate liability for such transaction costs shall not exceed $7.5 million if termination occurs during the Initial Phase or $12.5 million if termination occurs during the Second Phase, with responsibility allocated between the sellers pro rata based on the relative purchase price. If the purchase and sale agreements are terminated in certain circumstances, each buyer may be liable to the corresponding seller for a reverse termination fee, equal to 7% of the applicable base purchase price if termination occurs during the Initial Phase, or 10% of the applicable base purchase price if the termination occurs in the Second Phase.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
As of December 31, 2024, the Entergy Louisiana and Entergy New Orleans natural gas distribution businesses met the criteria to be classified as held for sale. Neither Entergy Louisiana nor Entergy New Orleans recognized write downs of the natural gas distribution business assets as a result of their classification as held for sale as of December 31, 2024, as neither sale is expected to result in a loss. The assets and liabilities of the Entergy Louisiana and Entergy New Orleans natural gas distribution businesses classified as held for sale on Entergy’s, Entergy Louisiana’s, and Entergy New Orleans’s consolidated balance sheets as of December 31, 2024 included the following amounts:
| Entergy | Entergy Louisiana | Entergy New Orleans | ||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||
| Deferred fuel | $5,608 | $727 | $4,881 | |||||||||||||||||
| Fuel inventory - at average cost | 4,493 | 702 | 3,791 | |||||||||||||||||
| Materials and supplies | 5,451 | 1,045 | 4,406 | |||||||||||||||||
| Prepayments and other | 22 | — | 22 | |||||||||||||||||
| Total current assets held for sale | $15,574 | $2,474 | $13,100 | |||||||||||||||||
| Property, plant, and equipment - natural gas | $679,502 | $303,193 | $376,309 | |||||||||||||||||
| Construction work in progress | 2,959 | 1,085 | 1,874 | |||||||||||||||||
| Less - accumulated depreciation and amortization | (276,388) | (139,556) | (136,832) | |||||||||||||||||
| Other regulatory assets | 35,381 | 8,947 | 23,682 | |||||||||||||||||
| Goodwill (a) | 6,474 | — | — | |||||||||||||||||
| Pension and other postretirement assets | 14,663 | — | 19,499 | |||||||||||||||||
| Other | 206 | — | 206 | |||||||||||||||||
| Total non-current assets held for sale | $462,797 | $173,669 | $284,738 | |||||||||||||||||
| Accounts payable | $702 | $702 | $— | |||||||||||||||||
| Customer deposits | 6,214 | 1,984 | 4,230 | |||||||||||||||||
| Taxes accrued | 13 | 13 | — | |||||||||||||||||
| Other | 1,401 | 589 | 812 | |||||||||||||||||
| Total current liabilities held for sale (b) | $8,330 | $3,288 | $5,042 | |||||||||||||||||
| Regulatory liability for income taxes - net | $31,575 | $4,981 | $26,594 | |||||||||||||||||
| Other regulatory liabilities | 1,611 | 1,214 | 397 | |||||||||||||||||
| Pension and other postretirement liabilities | 3,976 | 4,525 | 1,197 | |||||||||||||||||
| Other | 3,844 | 1,194 | 2,650 | |||||||||||||||||
| Total non-current liabilities held for sale (c) | $41,006 | $11,914 | $30,838 |
(a) Goodwill is allocated to the natural gas distribution business based on its relative fair value compared to the retained portion of the reporting unit.
(b) Included within other current liabilities on the respective consolidated balance sheets.
(c) Included within other non-current liabilities on the respective consolidated balance sheets.
Entergy Louisiana and Entergy New Orleans will continue to recognize depreciation on the natural gas distribution businesses assets since they will continue to receive revenues through utility customer rates until the closing of the transaction, and because the final purchase price for the natural gas distribution businesses will be adjusted by an amount equal to that depreciation, among other adjustments.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The pre-tax income for the Entergy Louisiana and Entergy New Orleans natural gas distribution businesses, excluding interest and corporate allocations, included in Entergy’s, Entergy Louisiana’s, and Entergy New Orleans’s consolidated income statements for the years ended December 31, 2024, 2023, and 2022 is as follows:
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||
| Entergy | ||||||||||||||||||||
| Income before income taxes | $48,223 | $38,162 | $39,076 | |||||||||||||||||
| Entergy Louisiana | ||||||||||||||||||||
| Income before income taxes | $20,965 | $17,375 | $15,080 | |||||||||||||||||
| Entergy New Orleans | ||||||||||||||||||||
| Income before income taxes | $27,258 | $20,787 | $23,996 |
Dispositions
Palisades
In July 2018, Entergy entered into a purchase and sale agreement with Holtec International to sell to a Holtec subsidiary 100% of the equity interests in the subsidiary that owns Palisades and the Big Rock Point Site. In December 2020, Entergy and Holtec submitted a license transfer application to the NRC requesting approval to transfer the Palisades and Big Rock Point licenses from Entergy to Holtec. The NRC issued an order approving the application in December 2021. Palisades was shut down in May 2022 and defueled in June 2022. The Palisades transaction closed in June 2022 for a purchase price of $1,000 (subject to adjustment for net liabilities and other amounts). The sale included the transfer of the Palisades nuclear decommissioning trust and the asset retirement obligation for spent fuel management and plant decommissioning. The transaction resulted in a gain of $166 million ($130 million net-of-tax) in the second quarter 2022. The disposition-date fair value of the nuclear decommissioning trust fund was approximately $552 million, and the disposition-date fair value of the asset retirement obligation was approximately $708 million. The transaction also included property, plant, and equipment with a net book value of zero and materials and supplies.
NOTE 15. RISK MANAGEMENT AND FAIR VALUES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Market Risk
In the normal course of business, Entergy is exposed to a number of market risks. Market risk is the potential loss that Entergy may incur as a result of changes in the market or fair value of a particular commodity or instrument. All financial and commodity-related instruments, including derivatives, are subject to market risk including commodity price risk, equity price, and interest rate risk. Entergy uses derivatives primarily to mitigate commodity price risk associated with the price of fuel.
The Utility has limited exposure to the effects of market risk because it operates primarily under cost-based rate regulation. To the extent approved by their retail regulators, the Utility operating companies use commodity and financial instruments to hedge the exposure to price volatility inherent in their purchased power, fuel, and gas purchased for resale costs, that are recovered from customers.
Derivatives
Entergy designates a significant portion of its derivative instruments as normal purchase/normal sale transactions due to their physical settlement provisions, including power purchase and sales agreements, fuel
Entergy Corporation and Subsidiaries
Notes to Financial Statements
purchase agreements, and capacity contracts. Certain derivative instruments do not qualify for designation as normal purchase/normal sale transactions due to their financial settlement provisions. See further discussion below regarding the accounting for these derivative instruments.
Entergy manages fuel price volatility for its Louisiana jurisdictions (Entergy Louisiana and Entergy New Orleans) and Entergy Mississippi through the purchase of natural gas swaps and options that financially settle against either the average Henry Hub Gas Daily prices or the NYMEX Henry Hub. These swaps and options are marked-to-market through fuel expense with offsetting regulatory assets or liabilities. All benefits or costs of the program are recorded in fuel costs. The notional volumes of these swaps are based on a portion of projected annual exposure to gas price volatility for electric generation at Entergy Louisiana and Entergy Mississippi and projected winter purchases for gas distribution at Entergy New Orleans. The maximum length of time over which Entergy has executed natural gas swaps and options as of December 31, 2024 is 10 months for Entergy Mississippi. The total volume of natural gas swaps and options outstanding as of December 31, 2024 is 9,603,850 MMBtu for Entergy and Entergy Mississippi. As of December 31, 2024, Entergy Louisiana and Entergy New Orleans had no outstanding natural gas swaps or options. Credit support for these natural gas swaps and options is covered by master agreements that do not require Entergy to provide collateral based on mark-to-market value, but do carry adequate assurance language that may lead to requests for collateral.
During the second quarter 2024, Entergy participated in the annual financial transmission rights auction process for the MISO planning year of June 1, 2024 through May 31, 2025. Financial transmission rights are derivative instruments that represent economic hedges of future congestion charges that will be incurred in serving Entergy’s customer load. They are not designated as hedging instruments. Entergy initially records financial transmission rights at their estimated fair value and subsequently adjusts the carrying value to their estimated fair value at the end of each accounting period prior to settlement. Unrealized gains or losses on financial transmission rights held by the non-utility operations are included in operating revenues. The Utility operating companies recognize regulatory liabilities or assets for unrealized gains or losses on financial transmission rights. The total volume of financial transmission rights outstanding as of December 31, 2024 is 59,318 GWh for Entergy, including 13,991 GWh for Entergy Arkansas, 24,896 GWh for Entergy Louisiana, 9,297 GWh for Entergy Mississippi, 2,460 GWh for Entergy New Orleans, and 8,579 GWh for Entergy Texas. Credit support for financial transmission rights held by the Utility operating companies is covered by cash and/or letters of credit issued by each Utility operating company as required by MISO. Credit support for financial transmission rights held by Entergy’s non-utility operations business is covered by cash. No cash or letters of credit were required to be posted for financial transmission rights exposure for the non-utility operations business as of December 31, 2024 and 2023. Letters of credit posted with MISO covered the financial transmission rights exposure for Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas as of December 31, 2024 and for Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy Texas as of December 31, 2023.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The fair values of Entergy’s derivative instruments not designated as hedging instruments on the consolidated balance sheets as of December 31, 2024 and 2023 are shown in the table below. Certain investments, including those not designated as hedging instruments, are subject to master netting agreements and are presented in the balance sheet on a net basis in accordance with accounting guidance for derivatives and hedging.
| Instrument | Balance Sheet Location | Gross Fair Value (a) | Offsetting Position (b) | Net Fair Value (c) (d) | ||||||||||||||||||||||
| (In Millions) | ||||||||||||||||||||||||||
| 2024 | ||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Natural gas swaps and options | Prepayments and other | $2 | $— | $2 | ||||||||||||||||||||||
| Financial transmission rights | Prepayments and other | $21 | ($1) | $20 | ||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||
| Financial transmission rights | Other current liabilities | ($—) | $1 | $1 | ||||||||||||||||||||||
| 2023 | ||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Financial transmission rights | Prepayments and other | $21 | $— | $21 | ||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||
| Natural gas swaps and options | Other current liabilities | $11 | $— | $11 | ||||||||||||||||||||||
(a)Represents the gross amounts of recognized assets/liabilities
(b)Represents the netting of fair value balances with the same counterparty
(c)Represents the net amounts of assets/liabilities presented on the Entergy Corporation and Subsidiaries’ Consolidated Balance Sheets
(d)Excludes letters of credit posted with MISO to cover financial transmission rights exposure in the amount of $2 million as of December 31, 2024 and December 31, 2023
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The effects of Entergy’s derivative instruments not designated as hedging instruments on the consolidated income statements for the years ended December 31, 2024, 2023, and 2022 are as follows:
| Instrument | Income Statement location | Amount of gain (loss) recorded in the income statement | ||||||||||||
| (In Millions) | ||||||||||||||
| 2024 | ||||||||||||||
| Natural gas swaps and options | Fuel, fuel-related expenses, and gas purchased for resale | (a) | ($8) | |||||||||||
| Financial transmission rights | Purchased power expense | (b) | $164 | |||||||||||
| 2023 | ||||||||||||||
| Natural gas swaps and options | Fuel, fuel-related expenses, and gas purchased for resale | (a) | ($54) | |||||||||||
| Financial transmission rights | Purchased power expense | (b) | $124 | |||||||||||
| 2022 | ||||||||||||||
| Natural gas swaps and options | Fuel, fuel-related expenses, and gas purchased for resale | (a) | $74 | |||||||||||
| Financial transmission rights | Purchased power expense | (b) | $176 |
(a)Due to regulatory treatment, the natural gas swaps and options are marked-to-market through fuel, fuel-related expenses, and gas purchased for resale and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as fuel expenses when the swaps and options are settled are recovered or refunded through fuel cost recovery mechanisms.
(b)Due to regulatory treatment, the changes in the estimated fair value of financial transmission rights for the Utility operating companies are recorded through purchased power expense and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as purchased power expense when the financial transmission rights for the Utility operating companies are settled are recovered or refunded through fuel cost recovery mechanisms.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The fair values of derivative instruments not designated as hedging instruments on the Registrant Subsidiaries’ balance sheets as of December 31, 2024 and 2023 are shown in the tables below. Certain investments, including those not designated as hedging instruments, are subject to master netting agreements and are presented in the balance sheet on a net basis in accordance with accounting guidance for derivatives and hedging.
| Instrument | Balance Sheet Location | Gross Fair Value (a) | Offsetting Position (b) | Net Fair Value (c) (d) | Registrant | |||||||||||||||||||||||||||
| (In Millions) | ||||||||||||||||||||||||||||||||
| 2024 | ||||||||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||
| Natural gas swaps | Prepayments and other | $1.6 | $— | $1.6 | Entergy Mississippi | |||||||||||||||||||||||||||
| Financial transmission rights | Prepayments and other | $8.6 | ($0.1) | $8.5 | Entergy Arkansas | |||||||||||||||||||||||||||
| Financial transmission rights | Prepayments and other | $8.7 | ($0.1) | $8.6 | Entergy Louisiana | |||||||||||||||||||||||||||
| Financial transmission rights | Prepayments and other | $1.3 | $— | $1.3 | Entergy New Orleans | |||||||||||||||||||||||||||
| Financial transmission rights | Prepayments and other | $2.0 | ($0.1) | $1.9 | Entergy Texas | |||||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||
| Financial transmission rights | Other current liabilities | ($0.4) | $0.9 | $0.5 | Entergy Mississippi | |||||||||||||||||||||||||||
| 2023 | ||||||||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||
| Financial transmission rights | Prepayments and other | $6.0 | $— | $6.0 | Entergy Arkansas | |||||||||||||||||||||||||||
| Financial transmission rights | Prepayments and other | $9.8 | $— | $9.8 | Entergy Louisiana | |||||||||||||||||||||||||||
| Financial transmission rights | Prepayments and other | $1.4 | $— | $1.4 | Entergy Mississippi | |||||||||||||||||||||||||||
| Financial transmission rights | Prepayments and other | $1.1 | $— | $1.1 | Entergy New Orleans | |||||||||||||||||||||||||||
| Financial transmission rights | Prepayments and other | $2.7 | ($0.3) | $2.4 | Entergy Texas | |||||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||
| Natural gas swaps and options | Other current liabilities | $0.4 | $— | $0.4 | Entergy Louisiana | |||||||||||||||||||||||||||
| Natural gas swaps | Other current liabilities | $10.1 | $— | $10.1 | Entergy Mississippi | |||||||||||||||||||||||||||
| Natural gas swaps | Other current liabilities | $0.6 | $— | $0.6 | Entergy New Orleans |
(a)Represents the gross amounts of recognized assets/liabilities
(b)Represents the netting of fair value balances with the same counterparty
(c)Represents the net amounts of assets/liabilities presented on the Registrant Subsidiaries’ balance sheets
(d)Excludes letters of credit posted with MISO to cover financial transmission rights exposure in the amount of $0.5 million for Entergy Arkansas, $0.1 million for Entergy Louisiana, $0.8 million for Entergy Mississippi, $0.1 million for Entergy New Orleans, and $0.3 million for Entergy Texas as of December 31, 2024 and in the amount of $1.2 million for Entergy Arkansas, $0.5 million for Entergy Louisiana, $0.3 million for Entergy Mississippi, and $0.1 million for Entergy Texas as of December 31, 2023
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The effects of derivative instruments not designated as hedging instruments on the Registrant Subsidiaries’ income statements for the years ended December 31, 2024, 2023, and 2022 are as follows:
| Instrument | Income Statement Location | Amount of gain (loss) recorded in the income statement | Registrant | |||||||||||||||||
| (In Millions) | ||||||||||||||||||||
| 2024 | ||||||||||||||||||||
| Natural gas swaps | Fuel, fuel-related expenses, and gas purchased for resale | (a) | $7.0 | Entergy Mississippi | ||||||||||||||||
| Natural gas swaps | Fuel, fuel-related expenses, and gas purchased for resale | (a) | $0.5 | Entergy New Orleans | ||||||||||||||||
| Financial transmission rights | Purchased power expense | (b) | $59.8 | Entergy Arkansas | ||||||||||||||||
| Financial transmission rights | Purchased power expense | (b) | $71.7 | Entergy Louisiana | ||||||||||||||||
| Financial transmission rights | Purchased power expense | (b) | $7.5 | Entergy Mississippi | ||||||||||||||||
| Financial transmission rights | Purchased power expense | (b) | $6.9 | Entergy New Orleans | ||||||||||||||||
| Financial transmission rights | Purchased power expense | (b) | $17.8 | Entergy Texas | ||||||||||||||||
| 2023 | ||||||||||||||||||||
| Natural gas swaps and options | Fuel, fuel-related expenses, and gas purchased for resale | (a) | ($8.4) | Entergy Louisiana | ||||||||||||||||
| Natural gas swaps | Fuel, fuel-related expenses, and gas purchased for resale | (a) | ($42.9) | Entergy Mississippi | ||||||||||||||||
| Natural gas swaps | Fuel, fuel-related expenses, and gas purchased for resale | (a) | ($3.0) | Entergy New Orleans | ||||||||||||||||
| Financial transmission rights | Purchased power expense | (b) | $25.8 | Entergy Arkansas | ||||||||||||||||
| Financial transmission rights | Purchased power expense | (b) | $60.4 | Entergy Louisiana | ||||||||||||||||
| Financial transmission rights | Purchased power expense | (b) | $13.7 | Entergy Mississippi | ||||||||||||||||
| Financial transmission rights | Purchased power expense | (b) | $6.4 | Entergy New Orleans | ||||||||||||||||
| Financial transmission rights | Purchased power expense | (b) | $17.3 | Entergy Texas | ||||||||||||||||
| 2022 | ||||||||||||||||||||
| Natural gas swaps and options | Fuel, fuel-related expenses, and gas purchased for resale | (a) | $21.4 | Entergy Louisiana | ||||||||||||||||
| Natural gas swaps | Fuel, fuel-related expenses, and gas purchased for resale | (a) | $53.6 | Entergy Mississippi | ||||||||||||||||
| Natural gas swaps | Fuel, fuel-related expenses, and gas purchased for resale | (a) | ($1.2) | Entergy New Orleans | ||||||||||||||||
| Financial transmission rights | Purchased power expense | (b) | $106.5 | Entergy Arkansas | ||||||||||||||||
| Financial transmission rights | Purchased power expense | (b) | $48.5 | Entergy Louisiana | ||||||||||||||||
| Financial transmission rights | Purchased power expense | (b) | $10.4 | Entergy Mississippi | ||||||||||||||||
| Financial transmission rights | Purchased power expense | (b) | $3.7 | Entergy New Orleans | ||||||||||||||||
| Financial transmission rights | Purchased power expense | (b) | $6.3 | Entergy Texas |
(a)Due to regulatory treatment, the natural gas swaps and options are marked-to-market through fuel, fuel-related expenses, and gas purchased for resale and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as fuel expenses when the swaps and options are settled are recovered or refunded through fuel cost recovery mechanisms.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
(b)Due to regulatory treatment, the changes in the estimated fair value of financial transmission rights for the Utility operating companies are recorded through purchased power expense and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as purchased power expense when the financial transmission rights for the Utility operating companies are settled are recovered or refunded through fuel cost recovery mechanisms.
Fair Values
The estimated fair values of Entergy’s financial instruments and derivatives are determined using historical prices, bid prices, market quotes, and financial modeling. Considerable judgment is required in developing the estimates of fair value. Therefore, estimates are not necessarily indicative of the amounts that Entergy could realize in a current market exchange. Gains or losses realized on financial instruments are reflected in future rates and therefore do not affect net income. Entergy considers the carrying amounts of most financial instruments classified as current assets and liabilities to be a reasonable estimate of their fair value because of the short maturity of these instruments.
Accounting standards define fair value as an exit price, or the price that would be received to sell an asset or the amount that would be paid to transfer a liability in an orderly transaction between knowledgeable market participants at the date of measurement. Entergy and the Registrant Subsidiaries use assumptions or market input data that market participants would use in pricing assets or liabilities at fair value. The inputs can be readily observable, corroborated by market data, or generally unobservable. Entergy and the Registrant Subsidiaries endeavor to use the best available information to determine fair value.
Accounting standards establish a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy establishes the highest priority for unadjusted market quotes in an active market for the identical asset or liability and the lowest priority for unobservable inputs.
The three levels of the fair value hierarchy are:
-
Level 1 - Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of individually owned common stocks, cash equivalents (temporary cash investments, securitization recovery trust account, and escrow accounts), debt instruments, and gas swaps traded on exchanges with active markets. Cash equivalents includes all unrestricted highly liquid debt instruments with an original or remaining maturity of three months or less at the date of purchase.
-
Level 2 - Level 2 inputs are inputs other than quoted prices included in Level 1 that are, either directly or indirectly, observable for the asset or liability at the measurement date. Assets are valued based on prices derived by independent third parties that use inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. Prices are reviewed and can be challenged with the independent parties and/or overridden by Entergy if it is believed such would be more reflective of fair value. Level 2 inputs include the following:
–quoted prices for similar assets or liabilities in active markets;
–quoted prices for identical assets or liabilities in inactive markets;
–inputs other than quoted prices that are observable for the asset or liability; or
–inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Level 2 consists primarily of individually-owned debt instruments and gas swaps and options valued using observable inputs.
- Level 3 - Level 3 inputs are pricing inputs that are generally less observable or unobservable from objective sources. These inputs are used with internally developed methodologies to produce management’s best estimate of fair value for the asset or liability. Level 3 consists primarily of financial transmission rights.
The values of financial transmission rights are based on unobservable inputs, including estimates of congestion costs in MISO between applicable generation and load pricing nodes based on the 50th percentile of historical prices. They are classified as Level 3 assets and liabilities. The valuations of these assets and liabilities are performed by the Office of Corporate Risk Oversight. The values are calculated internally and verified against the data published by MISO. Entergy’s Accounting group reviews these valuations for reasonableness, with the assistance of others within the organization with knowledge of the various inputs and assumptions used in the valuation. The Office of Corporate Risk Oversight reports to the Vice President and Treasurer. The Accounting group reports to the Chief Accounting Officer.
The following tables set forth, by level within the fair value hierarchy, Entergy’s assets and liabilities that are accounted for at fair value on a recurring basis as of December 31, 2024 and December 31, 2023. The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect placement within the fair value hierarchy levels.
| 2024 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| (In Millions) | ||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Temporary cash investments | $811 | $— | $— | $811 | ||||||||||||||||||||||
| Decommissioning trust funds (a): | ||||||||||||||||||||||||||
| Equity securities | 30 | — | — | 30 | ||||||||||||||||||||||
| Debt securities | 848 | 1,199 | — | 2,047 | ||||||||||||||||||||||
| Common trusts (b) | 3,486 | |||||||||||||||||||||||||
| Securitization recovery trust account | 4 | — | — | 4 | ||||||||||||||||||||||
| Storm reserve escrow accounts | 340 | — | — | 340 | ||||||||||||||||||||||
| Natural gas swaps and options | 2 | — | — | 2 | ||||||||||||||||||||||
| Financial transmission rights | — | — | 20 | 20 | ||||||||||||||||||||||
| $2,035 | $1,199 | $20 | $6,740 | |||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||
| Financial transmission rights | $— | $— | $1 | $1 | ||||||||||||||||||||||
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| 2023 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| (In Millions) | ||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Temporary cash investments | $61 | $— | $— | $61 | ||||||||||||||||||||||
| Decommissioning trust funds (a): | ||||||||||||||||||||||||||
| Equity securities | 24 | — | — | 24 | ||||||||||||||||||||||
| Debt securities | 611 | 1,159 | — | 1,770 | ||||||||||||||||||||||
| Common trusts (b) | 3,070 | |||||||||||||||||||||||||
| Securitization recovery trust account | 8 | — | — | 8 | ||||||||||||||||||||||
| Storm reserve escrow accounts | 323 | — | — | 323 | ||||||||||||||||||||||
| Financial transmission rights | — | — | 21 | 21 | ||||||||||||||||||||||
| $1,027 | $1,159 | $21 | $5,277 | |||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||
| Natural gas swaps and options | $11 | $— | $— | $11 | ||||||||||||||||||||||
(a)The decommissioning trust funds hold equity and fixed income securities. Equity securities are invested to approximate the returns of major market indices. Fixed income securities are held in various governmental and corporate securities. See Note 16 to the financial statements for additional information on the investment portfolios.
(b)Common trust funds are not publicly quoted and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table. The fund administrator of these investments allows daily trading at the net asset value and trades settle at a later date.
The following table sets forth a reconciliation of changes in the net assets for the fair value of financial transmission rights classified as Level 3 in the fair value hierarchy for the years ended December 31, 2024, 2023, and 2022:
| 2024 | 2023 | 2022 | |||||||||||||||
| (In Millions) | |||||||||||||||||
| Balance as of January 1, | $21 | $19 | $4 | ||||||||||||||
| Issuances of financial transmission rights | 53 | 42 | 16 | ||||||||||||||
| Gains included as a regulatory liability/asset | 110 | 84 | 175 | ||||||||||||||
| Settlements | (164) | (124) | (176) | ||||||||||||||
| Balance as of December 31, | $20 | $21 | $19 |
The fair values of the Level 3 financial transmission rights are based on unobservable inputs calculated internally and verified against historical pricing data published by MISO.
The following table sets forth an analysis of each of the types of unobservable inputs impacting the fair value of items classified as Level 3 within the fair value hierarchy, and the sensitivity to changes to those inputs:
| Significant Unobservable Input | Transaction Type | Position | Change to Input | Effect on Fair Value | ||||||||||||||||||||||
| Unit contingent discount | Electricity swaps | Sell | Increase (Decrease) | Decrease (Increase) | ||||||||||||||||||||||
The following tables set forth, by level within the fair value hierarchy, the Registrant Subsidiaries’ assets and liabilities that are accounted for at fair value on a recurring basis as of December 31, 2024 and December 31,
Entergy Corporation and Subsidiaries
Notes to Financial Statements
- The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect placement within the fair value hierarchy levels.
Entergy Arkansas
| 2024 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| (In Millions) | ||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Temporary cash investments | $3.4 | $— | $— | $3.4 | ||||||||||||||||||||||
| Decommissioning trust funds (a): | ||||||||||||||||||||||||||
| Equity securities | 12.9 | — | — | 12.9 | ||||||||||||||||||||||
| Debt securities | 259.9 | 319.1 | — | 579.0 | ||||||||||||||||||||||
| Common trusts (b) | 1,012.5 | |||||||||||||||||||||||||
| Financial transmission rights | — | — | 8.5 | 8.5 | ||||||||||||||||||||||
| $276.2 | $319.1 | $8.5 | $1,616.3 |
| 2023 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| (In Millions) | ||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Temporary cash investments | $3.1 | $— | $— | $3.1 | ||||||||||||||||||||||
| Decommissioning trust funds (a): | ||||||||||||||||||||||||||
| Equity securities | 6.4 | — | — | 6.4 | ||||||||||||||||||||||
| Debt securities | 129.9 | 367.0 | — | 496.9 | ||||||||||||||||||||||
| Common trusts (b) | 910.7 | |||||||||||||||||||||||||
| Financial transmission rights | — | — | 6.0 | 6.0 | ||||||||||||||||||||||
| $139.4 | $367.0 | $6.0 | $1,423.1 |
Entergy Louisiana
| 2024 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| (In Millions) | ||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Temporary cash investments | $326.8 | $— | $— | $326.8 | ||||||||||||||||||||||
| Decommissioning trust funds (a): | ||||||||||||||||||||||||||
| Equity securities | 14.5 | — | — | 14.5 | ||||||||||||||||||||||
| Debt securities | 326.0 | 582.1 | — | 908.1 | ||||||||||||||||||||||
| Common trusts (b) | 1,506.5 | |||||||||||||||||||||||||
| Storm reserve escrow account | 256.7 | — | — | 256.7 | ||||||||||||||||||||||
| Financial transmission rights | — | — | 8.6 | 8.6 | ||||||||||||||||||||||
| $924.0 | $582.1 | $8.6 | $3,021.2 | |||||||||||||||||||||||
Entergy Corporation and Subsidiaries
Notes to Financial Statements
| 2023 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| (In Millions) | ||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Temporary cash investments | $0.5 | $— | $— | $0.5 | ||||||||||||||||||||||
| Decommissioning trust funds (a): | ||||||||||||||||||||||||||
| Equity securities | 14.6 | — | — | 14.6 | ||||||||||||||||||||||
| Debt securities | 271.7 | 516.4 | — | 788.1 | ||||||||||||||||||||||
| Common trusts (b) | 1,304.7 | |||||||||||||||||||||||||
| Storm reserve escrow account | 243.8 | — | — | 243.8 | ||||||||||||||||||||||
| Financial transmission rights | — | — | 9.8 | 9.8 | ||||||||||||||||||||||
| $530.6 | $516.4 | $9.8 | $2,361.5 | |||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||
| Natural gas swaps and options | $0.4 | $— | $— | $0.4 | ||||||||||||||||||||||
Entergy Mississippi
| 2024 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| (In Millions) | ||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Temporary cash investments | $155.5 | $— | $— | $155.5 | ||||||||||||||||||||||
| Natural gas swaps | 1.6 | — | — | 1.6 | ||||||||||||||||||||||
| $157.1 | $— | $— | $157.1 | |||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||
| Financial transmission rights | $— | $— | $0.5 | $0.5 | ||||||||||||||||||||||
| 2023 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| (In Millions) | ||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Temporary cash investments | $6.6 | $— | $— | $6.6 | ||||||||||||||||||||||
| Storm reserve escrow account | 0.7 | — | — | 0.7 | ||||||||||||||||||||||
| Financial transmission rights | — | — | 1.4 | 1.4 | ||||||||||||||||||||||
| $7.3 | $— | $1.4 | $8.7 | |||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||
| Natural gas swaps | $10.1 | $— | $— | $10.1 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy New Orleans
| 2024 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| (In Millions) | ||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Temporary cash investments | $31.4 | $— | $— | $31.4 | ||||||||||||||||||||||
| Securitization recovery trust account | 1.6 | — | — | 1.6 | ||||||||||||||||||||||
| Storm reserve escrow account | 83.7 | — | — | 83.7 | ||||||||||||||||||||||
| Financial transmission rights | — | — | 1.3 | 1.3 | ||||||||||||||||||||||
| $116.7 | $— | $1.3 | $118.0 | |||||||||||||||||||||||
| 2023 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| (In Millions) | ||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Securitization recovery trust account | $2.4 | $— | $— | $2.4 | ||||||||||||||||||||||
| Storm reserve escrow account | 78.7 | — | — | 78.7 | ||||||||||||||||||||||
| Financial transmission rights | — | — | 1.1 | 1.1 | ||||||||||||||||||||||
| $81.1 | $— | $1.1 | $82.2 | |||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||
| Natural gas swaps | $0.6 | $— | $— | $0.6 |
Entergy Texas
| 2024 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| (In Millions) | ||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Temporary cash investments | $184.7 | $— | $— | $184.7 | ||||||||||||||||||||||
| Securitization recovery trust account | 2.7 | — | — | 2.7 | ||||||||||||||||||||||
| Financial transmission rights | — | — | 1.9 | 1.9 | ||||||||||||||||||||||
| $187.4 | $— | $1.9 | $189.3 | |||||||||||||||||||||||
| 2023 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| (In Millions) | ||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Temporary cash investments | $20.5 | $— | $— | $20.5 | ||||||||||||||||||||||
| Securitization recovery trust account | 5.2 | — | — | 5.2 | ||||||||||||||||||||||
| Financial transmission rights | — | — | 2.4 | 2.4 | ||||||||||||||||||||||
| $25.7 | $— | $2.4 | $28.1 | |||||||||||||||||||||||
Entergy Corporation and Subsidiaries
Notes to Financial Statements
System Energy
| 2024 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| (In Millions) | ||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Temporary cash investments | $28.5 | $— | $— | $28.5 | ||||||||||||||||||||||
| Decommissioning trust funds (a): | ||||||||||||||||||||||||||
| Equity securities | 2.4 | — | — | 2.4 | ||||||||||||||||||||||
| Debt securities | 262.4 | 297.4 | — | 559.8 | ||||||||||||||||||||||
| Common trusts (b) | 966.9 | |||||||||||||||||||||||||
| $293.3 | $297.4 | $— | $1,557.6 |
| 2023 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| (In Millions) | ||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Decommissioning trust funds (a): | ||||||||||||||||||||||||||
| Equity securities | $2.7 | $— | $— | $2.7 | ||||||||||||||||||||||
| Debt securities | 209.5 | 275.7 | — | 485.2 | ||||||||||||||||||||||
| Common trusts (b) | 854.4 | |||||||||||||||||||||||||
| $212.2 | $275.7 | $— | $1,342.3 |
(a)The decommissioning trust funds hold equity and fixed income securities. Equity securities are invested to approximate the returns of major market indices. Fixed income securities are held in various governmental and corporate securities. See Note 16 to the financial statements for additional information on the investment portfolios.
(b)Common trust funds are not publicly quoted and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table. The fund administrator of these investments allows daily trading at the net asset value and trades settle at a later date.
The following table sets forth a reconciliation of changes in the net assets (liabilities) for the fair value of financial transmission rights classified as Level 3 in the fair value hierarchy for the year ended December 31, 2024.
| Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | |||||||||||||||||||||||||
| (In Millions) | |||||||||||||||||||||||||||||
| Balance as of January 1, 2024 | $6.0 | $9.8 | $1.4 | $1.1 | $2.4 | ||||||||||||||||||||||||
| Issuances of financial transmission rights | 17.6 | 21.6 | 3.9 | 2.8 | 7.3 | ||||||||||||||||||||||||
| Gains included as a regulatory liability/asset | 44.7 | 48.9 | 1.7 | 4.3 | 10.0 | ||||||||||||||||||||||||
| Settlements | (59.8) | (71.7) | (7.5) | (6.9) | (17.8) | ||||||||||||||||||||||||
| Balance as of December 31, 2024 | $8.5 | $8.6 | ($0.5) | $1.3 | $1.9 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The following table sets forth a reconciliation of changes in the net assets for the fair value of financial transmission rights classified as Level 3 in the fair value hierarchy for the year ended December 31, 2023.
| Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | |||||||||||||||||||||||||
| (In Millions) | |||||||||||||||||||||||||||||
| Balance as of January 1, 2023 | $10.3 | $7.3 | $0.6 | $0.8 | $0.1 | ||||||||||||||||||||||||
| Issuances of financial transmission rights | 20.6 | 18.1 | 1.3 | 1.4 | 0.2 | ||||||||||||||||||||||||
| Gains included as a regulatory liability/asset | 0.9 | 44.8 | 13.2 | 5.3 | 19.4 | ||||||||||||||||||||||||
| Settlements | (25.8) | (60.4) | (13.7) | (6.4) | (17.3) | ||||||||||||||||||||||||
| Balance as of December 31, 2023 | $6.0 | $9.8 | $1.4 | $1.1 | $2.4 |
NOTE 16. DECOMMISSIONING TRUST FUNDS (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, and System Energy)
The NRC requires certain of the Utility operating companies and System Energy to maintain nuclear decommissioning trusts to fund the costs of decommissioning ANO 1 and 2, River Bend, Waterford 3, and Grand Gulf. Entergy’s nuclear decommissioning trust funds invest in equity securities, fixed-rate debt securities, and cash and cash equivalents.
Entergy records decommissioning trust funds on the balance sheet at their fair value. Because of the ability of the Registrant Subsidiaries to recover decommissioning costs in rates and in accordance with the regulatory treatment for decommissioning trust funds, for unrealized gains/(losses) on investment securities, the Registrant Subsidiaries record an offsetting amount in other regulatory liabilities/assets. For the 30% interest in River Bend formerly owned by Cajun, Entergy Louisiana records an offsetting amount in other long-term liabilities on the consolidated balance sheets of Entergy and Entergy Louisiana for the unrealized trust earnings not currently expected to be needed to decommission the plant. Decommissioning trust funds for the nuclear plants previously owned by Entergy’s non-utility operations, all of which have been sold as of June 2022, did not meet the criteria for regulatory accounting treatment. Accordingly, unrealized gains/(losses) recorded on the equity securities in the trust funds for these plants were recognized in earnings with no offsetting regulatory liability/asset amount. Unrealized gains/(losses) recorded on the available-for-sale debt securities in the trust funds were recognized in the accumulated other comprehensive income component of shareholders’ equity. Generally, Entergy records gains and losses on its debt and equity securities using the specific identification method to determine the cost basis of its securities.
As discussed in Note 14 to the financial statements, in June 2022, Entergy completed the sale of Palisades to Holtec. As part of the transaction, Entergy transferred the Palisades decommissioning trust fund to Holtec. The disposition-date fair value of the decommissioning trust fund was approximately $552 million.
The unrealized gains/(losses) recognized during the year ended December 31, 2024 on equity securities still held as of December 31, 2024 were $616 million. The equity securities are generally held in funds that are designed to approximate or somewhat exceed the return of the Standard & Poor’s 500 Index. A relatively small percentage of the equity securities are held in funds that are designed to approximate or somewhat exceed the return of the Wilshire 4500 Index. The debt securities are generally held in individual government and credit issuances.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The available-for-sale debt securities held as of December 31, 2024 and 2023 are summarized as follows:
| 2024 | 2023 | |||||||||||||
| (In Millions) | ||||||||||||||
| Fair value | $2,047 | $1,770 | ||||||||||||
| Unrealized gains | $7 | $19 | ||||||||||||
| Unrealized losses | $80 | $134 |
As of December 31, 2024 and 2023, there were no deferred taxes on unrealized gains/(losses). The amortized cost of available-for-sale debt securities was $2,121 million as of December 31, 2024 and $1,885 million as of December 31, 2023. As of December 31, 2024, available-for-sale debt securities had an average coupon rate of approximately 4.04%, an average duration of approximately 6.35 years, and an average maturity of approximately 11.05 years.
The fair value and gross unrealized losses of available-for-sale debt securities, summarized by length of time that the securities had been in a continuous loss position, were as follows as of December 31, 2024 and 2023:
| December 31, 2024 | December 31, 2023 | ||||||||||||||||||||||
| Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||||
| (In Millions) | |||||||||||||||||||||||
| Less than 12 months | $1,102 | $24 | $134 | $6 | |||||||||||||||||||
| More than 12 months | 510 | 56 | 999 | 128 | |||||||||||||||||||
| Total | $1,612 | $80 | $1,133 | $134 |
The fair value of available-for-sale debt securities, summarized by contractual maturities, as of December 31, 2024 and 2023 are as follows:
| 2024 | 2023 | ||||||||||
| (In Millions) | |||||||||||
| Less than 1 year | $36 | $82 | |||||||||
| 1 year - 5 years | 574 | 517 | |||||||||
| 5 years - 10 years | 629 | 504 | |||||||||
| 10 years - 15 years | 166 | 121 | |||||||||
| 15 years - 20 years | 218 | 179 | |||||||||
| 20 years+ | 424 | 367 | |||||||||
| Total | $2,047 | $1,770 |
The following table summarizes proceeds from the dispositions of available-for-sale debt securities and the related gains and losses from the sales for the years ended December 31, 2024, 2023, and 2022:
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In Millions) | ||||||||||||||||||||
| Proceeds from disposition of securities | $1,258 | $661 | $889 | |||||||||||||||||
| Realized gains | $5 | $1 | $2 | |||||||||||||||||
| Realized losses | $89 | $37 | $46 |
During the years ended December 31, 2024 and 2023, gross gains and gross losses related to available-for-sale debt securities were reclassified out of other regulatory liabilities/assets into earnings. During the year ended
Entergy Corporation and Subsidiaries
Notes to Financial Statements
December 31, 2022, gross gains and gross losses related to available-for-sale debt securities were reclassified out of other comprehensive income or other regulatory liabilities/assets into earnings.
Entergy Arkansas
Entergy Arkansas holds equity securities and available-for-sale debt securities in nuclear decommissioning trust accounts. The available-for-sale debt securities held as of December 31, 2024 and 2023 are summarized as follows:
| 2024 | 2023 | |||||||||||||
| (In Millions) | ||||||||||||||
| Fair value | $579.0 | $496.9 | ||||||||||||
| Unrealized gains | $1.2 | $2.4 | ||||||||||||
| Unrealized losses | $25.8 | $53.6 |
The amortized cost of available-for-sale debt securities was $603.5 million as of December 31, 2024 and $548.1 million as of December 31, 2023. As of December 31, 2024, the available-for-sale debt securities had an average coupon rate of approximately 3.72%, an average duration of approximately 6.31 years, and an average maturity of approximately 8.66 years.
The unrealized gains/(losses) recognized during the year ended December 31, 2024 on equity securities still held as of December 31, 2024 were $177 million. The equity securities are generally held in funds that are designed to approximate or somewhat exceed the return of the Standard & Poor’s 500 Index. A relatively small percentage of the equity securities are held in funds that are designed to approximate or somewhat exceed the return of the Wilshire 4500 Index. The debt securities are generally held in individual government and credit issuances.
The fair value and gross unrealized losses of available-for-sale debt securities, summarized by length of time that the securities had been in a continuous loss position, were as follows as of December 31, 2024 and 2023:
| December 31, 2024 | December 31, 2023 | ||||||||||||||||||||||
| Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||||
| (In Millions) | |||||||||||||||||||||||
| Less than 12 months | $282.8 | $8.2 | $22.5 | $0.4 | |||||||||||||||||||
| More than 12 months | 195.0 | 17.6 | 403.4 | 53.2 | |||||||||||||||||||
| Total | $477.8 | $25.8 | $425.9 | $53.6 |
The fair value of available-for-sale debt securities, summarized by contractual maturities, as of December 31, 2024 and 2023 are as follows:
| 2024 | 2023 | ||||||||||
| (In Millions) | |||||||||||
| Less than 1 year | $31.7 | $45.3 | |||||||||
| 1 year - 5 years | 142.5 | 132.2 | |||||||||
| 5 years - 10 years | 231.0 | 205.7 | |||||||||
| 10 years - 15 years | 62.2 | 39.9 | |||||||||
| 15 years - 20 years | 62.8 | 49.6 | |||||||||
| 20 years+ | 48.8 | 24.2 | |||||||||
| Total | $579.0 | $496.9 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The following table summarizes proceeds from the dispositions of available-for-sale debt securities and the related gains and losses from the sales for the years ended December 31, 2024, 2023, and 2022:
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In Millions) | ||||||||||||||||||||
| Proceeds from disposition of securities | $210.6 | $28.5 | $42.1 | |||||||||||||||||
| Realized gains | $0.1 | $0.1 | $0.1 | |||||||||||||||||
| Realized losses | $35.8 | $2.0 | $2.6 |
During the years ended December 31, 2024, 2023, and 2022, gross gains and gross losses related to available-for-sale debt securities were reclassified out of other regulatory liabilities/assets into earnings.
Entergy Louisiana
Entergy Louisiana holds equity securities and available-for-sale debt securities in nuclear decommissioning trust accounts. The available-for-sale debt securities held as of December 31, 2024 and 2023 are summarized as follows:
| 2024 | 2023 | |||||||||||||
| (In Millions) | ||||||||||||||
| Fair value | $908.1 | $788.1 | ||||||||||||
| Unrealized gains | $3.6 | $11.7 | ||||||||||||
| Unrealized losses | $26.9 | $37.4 |
The amortized cost of available-for-sale debt securities was $931.5 million as of December 31, 2024 and $813.9 million as of December 31, 2023. As of December 31, 2024, the available-for-sale debt securities had an average coupon rate of approximately 4.32%, an average duration of approximately 6.50 years, and an average maturity of approximately 12.97 years.
The unrealized gains/(losses) recognized during the year ended December 31, 2024 on equity securities still held as of December 31, 2024 were $277.8 million. The equity securities are generally held in funds that are designed to approximate or somewhat exceed the return of the Standard & Poor’s 500 Index. A relatively small percentage of the equity securities are held in funds that are designed to approximate or somewhat exceed the return of the Wilshire 4500 Index. The debt securities are generally held in individual government and credit issuances.
The fair value and gross unrealized losses of available-for-sale debt securities, summarized by length of time that the securities had been in a continuous loss position, were as follows as of December 31, 2024 and 2023:
| December 31, 2024 | December 31, 2023 | ||||||||||||||||||||||
| Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||||
| (In Millions) | |||||||||||||||||||||||
| Less than 12 months | $543.8 | $8.8 | $69.8 | $0.9 | |||||||||||||||||||
| More than 12 months | 178.4 | 18.1 | 356.1 | 36.5 | |||||||||||||||||||
| Total | $722.2 | $26.9 | $425.9 | $37.4 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The fair value of available-for-sale debt securities, summarized by contractual maturities, as of December 31, 2024 and 2023 are as follows:
| 2024 | 2023 | ||||||||||
| (In Millions) | |||||||||||
| Less than 1 year | $4.4 | $31.4 | |||||||||
| 1 year - 5 years | 188.2 | 181.6 | |||||||||
| 5 years - 10 years | 259.4 | 170.0 | |||||||||
| 10 years - 15 years | 80.9 | 70.2 | |||||||||
| 15 years - 20 years | 106.1 | 90.2 | |||||||||
| 20 years+ | 269.1 | 244.7 | |||||||||
| Total | $908.1 | $788.1 |
The following table summarizes proceeds from the dispositions of available-for-sale debt securities and the related gains and losses from the sales for the years ended December 31, 2024, 2023, and 2022:
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In Millions) | ||||||||||||||||||||
| Proceeds from disposition of securities | $547.8 | $318.6 | $362.2 | |||||||||||||||||
| Realized gains | $1.3 | $0.5 | $1.3 | |||||||||||||||||
| Realized losses | $25.8 | $20.9 | $23.0 |
During the years ended December 31, 2024, 2023, and 2022, gross gains and gross losses related to available-for-sale debt securities were reclassified out of other regulatory liabilities/assets into earnings.
System Energy
System Energy holds equity securities and available-for-sale debt securities in nuclear decommissioning trust accounts. The available-for-sale debt securities held as of December 31, 2024 and 2023 are summarized as follows:
| 2024 | 2023 | |||||||||||||
| (In Millions) | ||||||||||||||
| Fair value | $559.8 | $485.2 | ||||||||||||
| Unrealized gains | $1.9 | $4.5 | ||||||||||||
| Unrealized losses | $27.6 | $42.5 |
The amortized cost of available-for-sale debt securities was $585.5 million as of December 31, 2024 and $523.2 million as of December 31, 2023. As of December 31, 2024, the available-for-sale debt securities had an average coupon rate of approximately 3.94%, an average duration of approximately 6.13 years, and an average maturity of approximately 10.44 years.
The unrealized gains/(losses) recognized during the year ended December 31, 2024 on equity securities still held as of December 31, 2024 were $161.1 million. The equity securities are generally held in funds that are designed to approximate or somewhat exceed the return of the Standard & Poor’s 500 Index. A relatively small percentage of the equity securities are held in funds that are designed to approximate or somewhat exceed the return of the Wilshire 4500 Index. The debt securities are generally held in individual government and credit issuances.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The fair value and gross unrealized losses of available-for-sale debt securities, summarized by length of time that the securities had been in a continuous loss position, were as follows as of December 31, 2024 and 2023:
| December 31, 2024 | December 31, 2023 | ||||||||||||||||||||||
| Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||||
| (In Millions) | |||||||||||||||||||||||
| Less than 12 months | $275.6 | $6.8 | $42.1 | $4.5 | |||||||||||||||||||
| More than 12 months | 136.8 | 20.8 | 239.1 | 38.0 | |||||||||||||||||||
| Total | $412.4 | $27.6 | $281.2 | $42.5 |
The fair value of available-for-sale debt securities, summarized by contractual maturities, as of December 31, 2024 and 2023 are as follows:
| 2024 | 2023 | ||||||||||
| (In Millions) | |||||||||||
| Less than 1 year | $0.2 | $5.3 | |||||||||
| 1 year - 5 years | 243.7 | 203.4 | |||||||||
| 5 years - 10 years | 138.9 | 128.6 | |||||||||
| 10 years - 15 years | 22.7 | 10.7 | |||||||||
| 15 years - 20 years | 49.4 | 38.8 | |||||||||
| 20 years+ | 104.9 | 98.4 | |||||||||
| Total | $559.8 | $485.2 |
The following table summarizes proceeds from the dispositions of available-for-sale debt securities and the related gains and losses from the sales for the years ended December 31, 2024, 2023, and 2022:
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In Millions) | ||||||||||||||||||||
| Proceeds from disposition of securities | $500.1 | $314.3 | $209.4 | |||||||||||||||||
| Realized gains | $3.1 | $0.6 | $0.2 | |||||||||||||||||
| Realized losses | $28.0 | $14.2 | $10.7 |
During the years ended December 31, 2024, 2023, and 2022, gross gains and gross losses related to available-for-sale debt securities were reclassified out of other regulatory liabilities/assets into earnings.
NOTE 17. VARIABLE INTEREST ENTITIES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Under applicable authoritative accounting guidance, a variable interest entity (VIE) is an entity that conducts a business or holds property that possesses any of the following characteristics: an insufficient amount of equity at risk to finance its activities, equity owners who do not have the power to direct the significant activities of the entity (or have voting rights that are disproportionate to their ownership interest), or where equity holders do not receive expected losses or returns. An entity may have an interest in a VIE through ownership or other contractual rights or obligations, and is required to consolidate a VIE if it is the VIE’s primary beneficiary. The primary beneficiary of a VIE is the entity that has the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance and has the obligation to absorb losses or has the right to residual returns that would potentially be significant to the entity.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Entergy Arkansas, Entergy Louisiana, and System Energy consolidate the respective companies from which they lease nuclear fuel, usually in a sale and leaseback transaction. This is because Entergy directs the nuclear fuel companies with respect to nuclear fuel purchases, assists the nuclear fuel companies in obtaining financing, and, if financing cannot be arranged, the lessee (Entergy Arkansas, Entergy Louisiana, or System Energy) is required to pay advance rent (Entergy Arkansas VIE, Entergy Louisiana Waterford VIE, and System Energy VIE) or special payments (Entergy Louisiana River Bend VIE) to allow the nuclear fuel company (the VIE) to meet its obligations. During the term of the arrangements, none of the Entergy operating companies have been required to provide financial support apart from their scheduled lease payments. See Note 4 to the financial statements for details of the nuclear fuel companies’ credit facilities and commercial paper borrowings and long-term debt that are reported by Entergy, Entergy Arkansas, Entergy Louisiana, and System Energy. These amounts also represent Entergy’s and the respective Registrant Subsidiary’s maximum exposure to losses associated with their respective interests in the nuclear fuel companies.
Entergy Texas Restoration Funding, LLC and Entergy Texas Restoration Funding II, LLC, companies wholly-owned and consolidated by Entergy Texas, are VIEs and Entergy Texas is the primary beneficiary. In November 2009, Entergy Texas Restoration Funding issued senior secured transition bonds (securitization bonds) to finance Entergy Texas’s Hurricane Ike and Hurricane Gustav restoration costs. Although the principal amount was not due until November 2023, Entergy Texas Restoration Funding made principal payments on the bonds in 2022, after which the bonds were fully repaid. In April 2022, Entergy Texas Restoration Funding II issued senior secured system restoration bonds (securitization bonds) to finance Entergy Texas’s Hurricane Laura, Hurricane Delta, and Winter Storm Uri restoration costs. With the proceeds, the VIEs purchased from Entergy Texas the transition property, which is the right to recover from customers through a system restoration charge amounts sufficient to service the securitization bonds. The transition property is reflected as a regulatory asset on the consolidated Entergy Texas balance sheet. The creditors of Entergy Texas do not have recourse to the assets or revenues of the VIEs, including the transition property, and the creditors of the VIEs do not have recourse to the assets or revenues of Entergy Texas. Entergy Texas has no payment obligations to the VIEs except to remit system restoration charge collections. See Note 5 to the financial statements for additional details regarding the securitization bonds.
Entergy New Orleans Storm Recovery Funding I, L.L.C., a company wholly-owned and consolidated by Entergy New Orleans, is a VIE and Entergy New Orleans is the primary beneficiary. In July 2015, Entergy New Orleans Storm Recovery Funding issued storm cost recovery bonds to recover Entergy New Orleans’s Hurricane Isaac storm restoration costs, including carrying costs, the costs of funding and replenishing the storm recovery reserve, and up-front financing costs associated with the securitization. With the proceeds, Entergy New Orleans Storm Recovery Funding purchased from Entergy New Orleans the storm recovery property, which is the right to recover from customers through a storm recovery charge amounts sufficient to service the securitization bonds. Although the principal amount was not due until June 2027, Entergy New Orleans Storm Recovery Funding made a principal payment on the bonds in 2024, after which the bonds were fully repaid. See Note 5 to the financial statements for additional details regarding the securitization bonds.
Restoration Law Trust I (the storm trust I), a trust consolidated by Entergy Louisiana, is a VIE and Entergy Louisiana is the primary beneficiary. The storm trust I was established as part of the May 2022 Act 293 securitization of Entergy Louisiana’s Hurricane Laura, Hurricane Delta, Hurricane Zeta, and Winter Storm Uri restoration costs, as well as to establish a storm reserve to fund a portion of Hurricane Ida storm restoration costs. Entergy Louisiana is the primary beneficiary of the storm trust I because it was created to facilitate the financing of Entergy Louisiana’s storm restoration costs and Entergy Louisiana is entitled to receive a majority of the proceeds received by the storm trust I. As of December 31, 2024 and 2023, the primary asset held by the storm trust I was $2.9 billion and $3.0 billion, respectively, of outstanding Entergy Finance Company preferred membership interests, which is reflected as an investment in affiliate preferred membership interests on the consolidated balance sheets of Entergy Louisiana. The storm trust I’s investment in affiliate preferred membership interests was purchased with the net bond proceeds of the securitization bonds issued by the LCDA. After the securitization bonds were issued, the LCDA loaned the net bond proceeds to the LURC, and pursuant to Act 293, the LURC contributed the net bond proceeds to the storm trust I. The holders of the securitization bonds do not have recourse to the assets or revenues
Entergy Corporation and Subsidiaries
Notes to Financial Statements
of the trust or to any Entergy affiliate and the bonds are not reflected in the consolidated balance sheets of Entergy or Entergy Louisiana. The LURC’s 1% beneficial interest in the storm trust I is recorded as noncontrolling interest on the consolidated balance sheets of Entergy and Entergy Louisiana, with balances of $28.8 million and $30.5 million as of December 31, 2024 and 2023, respectively. See Note 2 to the financial statements for additional discussion of the securitization bonds and the preferred membership interests.
Restoration Law Trust II (the storm trust II), a trust consolidated by Entergy Louisiana, is a VIE and Entergy Louisiana is the primary beneficiary. The storm trust II was established as part of the March 2023 Act 293 securitization of Entergy Louisiana’s Hurricane Ida restoration costs, less Hurricane Ida amounts previously financed in May 2022 in a prior securitization transaction. Entergy Louisiana is the primary beneficiary of the storm trust II because it was created to facilitate the financing of Entergy Louisiana’s storm restoration costs and Entergy Louisiana is entitled to receive a majority of the proceeds received by the storm trust II. As of December 31, 2024 and 2023, the primary asset held by the storm trust II was $1.4 billion and $1.5 billion, respectively, of outstanding Entergy Finance Company preferred membership interests, which is reflected as an investment in affiliate preferred membership interests on the consolidated balance sheets of Entergy Louisiana. The storm trust II’s investment in affiliate preferred membership interests was purchased with the net bond proceeds of the securitization bonds issued by the LCDA. After the securitization bonds were issued, the LCDA loaned the net bond proceeds to the LURC, and pursuant to Act 293, the LURC contributed the net bond proceeds to the storm trust II. The holders of the securitization bonds do not have recourse to the assets or revenues of the storm trust II or to any Entergy affiliate and the bonds are not reflected in the consolidated balance sheets of Entergy or Entergy Louisiana. The LURC’s 1% beneficial interest in the storm trust II is recorded as noncontrolling interest on the consolidated balance sheets of Entergy and Entergy Louisiana, with balances of $13.9 million and $14.6 million as of December 31, 2024 and 2023, respectively. See Note 2 to the financial statements for additional discussion of the securitization bonds and the preferred membership interests.
System Energy is considered to hold a variable interest in the lessor from which it leases an undivided interest in the Grand Gulf nuclear plant. System Energy is the lessee under this arrangement, which is described in more detail in Note 5 to the financial statements. System Energy made payments under this arrangement, including interest, of $17.2 million in 2024, 2023, and 2022. The lessor is a bank acting in the capacity of owner trustee for the benefit of equity investors in the transaction pursuant to trust agreement entered solely for the purpose of facilitating the lease transaction. It is possible that System Energy may be considered as the primary beneficiary of the lessor, but it is unable to apply the authoritative accounting guidance with respect to this VIE because the lessor is not required to, and could not, provide the necessary financial information to consolidate the lessor. Because System Energy accounts for this leasing arrangement as a capital financing, however, System Energy believes that consolidating the lessor would not materially affect the financial statements. In the event of default under a lease, remedies available to the lessor include payment by the lessee of the fair value of the undivided interest in the plant, payment of the present value of the basic rent payments, or payment of a predetermined casualty value. System Energy believes, however, that the obligations recorded on the balance sheet materially represent its potential exposure to loss.
AR Searcy Partnership, LLC, is a tax equity partnership that qualifies as a VIE, which Entergy Arkansas is required to consolidate as it is the primary beneficiary. AR Searcy Partnership, LLC, was formed to acquire and own the Searcy Solar facility. The entity is a VIE because the holders of the membership interests, as a group, lack the characteristics of a controlling financial interest, including substantive kick out rights. Entergy Arkansas is the primary beneficiary of the partnership because, as the managing member, it has the right to direct the operations and receive a majority of the operating income of the partnership. See Note 1 to the financial statements for discussion of the presentation of the third party tax equity partner’s noncontrolling interest and the HLBV method of accounting used to account for Entergy Arkansas’s investment in AR Searcy Partnership, LLC. As of December 31, 2024, AR Searcy Partnership, LLC recorded assets equal to $129.7 million, primarily consisting of property, plant, and equipment, and the carrying value of Entergy Arkansas’s ownership interest in the partnership was approximately $113.2 million. As of December 31, 2023, AR Searcy Partnership, LLC recorded assets equal to $134 million, primarily consisting of property, plant, and equipment, and the carrying value of Entergy Arkansas’s
Entergy Corporation and Subsidiaries
Notes to Financial Statements
ownership interest in the partnership was approximately $111.2 million. The tax equity investor’s ownership interest is recorded as noncontrolling interest.
MS Sunflower Partnership, LLC, is a tax equity partnership that qualifies as a VIE, which Entergy Mississippi is required to consolidate as it is the primary beneficiary. See Note 14 to the financial statements for additional discussion on the establishment of MS Sunflower Partnership, LLC and the acquisition of the Sunflower Solar facility. The entity is a VIE because the holders of the membership interests, as a group, lack the characteristics of a controlling financial interest, including substantive kick out rights. Entergy Mississippi is the primary beneficiary of the partnership because, as the managing member, it has the right to direct the operations and receive a majority of the operating income of the partnership. See Note 1 to the financial statements for discussion of the presentation of the third party tax equity partner’s noncontrolling interest and the HLBV method of accounting used to account for Entergy Mississippi’s investment in MS Sunflower Partnership, LLC. As of December 31, 2024, MS Sunflower Partnership, LLC recorded assets equal to $157.8 million, primarily consisting of property, plant, and equipment, and the carrying value of Entergy Mississippi’s ownership interest in the partnership was approximately $132.7 million. As of December 31, 2023, MS Sunflower Partnership, LLC recorded assets equal to $163.2 million, primarily consisting of property, plant, and equipment, and the carrying value of Entergy Mississippi’s ownership interest in the partnership was approximately $128.4 million. The tax equity investor’s ownership interest is recorded as noncontrolling interest.
Entergy has also reviewed various lease arrangements, power purchase agreements, including agreements for renewable power, and other agreements that represent variable interests in other legal entities which have been determined to be VIEs. In these cases, Entergy has determined that it is not the primary beneficiary of the related VIE because it does not have the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance, or it does not have the obligation to absorb losses or the right to residual returns that would potentially be significant to the entity, or both.
NOTE 18. TRANSACTIONS WITH AFFILIATES (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Each Registrant Subsidiary purchases electricity from or sells electricity to the other Registrant Subsidiaries, or both, under rate schedules filed with the FERC. The Registrant Subsidiaries receive management, technical, advisory, operating, and administrative services from Entergy Services; and receive management, technical, and operating services from Entergy Operations. These transactions are on an “at cost” basis.
As described in Note 19 to the financial statements, all of System Energy’s operating revenues consist of billings to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans.
As described in Note 4 to the financial statements, the Registrant Subsidiaries participate in the Entergy system money pool and earn interest income from the money pool. As described in Note 2 to the financial statements, Entergy Louisiana received preferred membership interest distributions from Entergy Holdings Company through May 2022, at which point Entergy Holdings Company was dissolved. As a result of storm securitizations at Entergy Louisiana in 2022 and 2023, the Entergy Louisiana storm trust I purchased preferred membership interests issued by Entergy Finance Company in May 2022 and the Entergy Louisiana storm trust II purchased preferred membership interests issued by Entergy Finance Company in March 2023. The Entergy Louisiana storm trust I and storm trust II receive annual dividends on their respective preferred membership interests.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The tables below contain the various affiliate transactions of the Utility operating companies, System Energy, and other Entergy affiliates.
Intercompany Revenues
| Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||
| (In Millions) | |||||||||||||||||||||||||||||||||||
| 2024 | $111.8 | $312.8 | $1.0 | $— | $— | $583.3 | |||||||||||||||||||||||||||||
| 2023 | $125.2 | $317.6 | $1.0 | $— | $0.7 | $588.4 | |||||||||||||||||||||||||||||
| 2022 | $127.5 | $354.0 | $1.0 | $— | $18.9 | $658.8 |
Intercompany Operating Expenses
| Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||
| (In Millions) | |||||||||||||||||||||||||||||||||||
| 2024 | $540.6 | $649.3 | $339.6 | $293.9 | $319.4 | $166.6 | |||||||||||||||||||||||||||||
| 2023 | $585.8 | $719.8 | $345.2 | $302.5 | $316.8 | $179.0 | |||||||||||||||||||||||||||||
| 2022 | $617.4 | $770.2 | $356.1 | $341.7 | $321.4 | $215.0 |
Intercompany Interest and Investment Income
| Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | ||||||||||||||||||||||||||||||
| (In Millions) | |||||||||||||||||||||||||||||||||||
| 2024 | $2.2 | $315.4 | $0.4 | $0.2 | $2.7 | $0.8 | |||||||||||||||||||||||||||||
| 2023 | $0.7 | $303.2 | $0.2 | $1.0 | $1.8 | $0.6 | |||||||||||||||||||||||||||||
| 2022 | $0.1 | $186.1 | $0.1 | $0.1 | $0.3 | $0.3 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
NOTE 19. REVENUE (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Revenues from electric service and the sale of natural gas are recognized when services are transferred to the customer in an amount equal to what Entergy has the right to bill the customer because this amount represents the value of services provided to customers. Entergy’s total revenues for the years ended December 31, 2024, 2023, and 2022 were as follows:
| 2024 | 2023 | 2022 | |||||||||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||||||||
| Utility: | |||||||||||||||||||||||||||||
| Residential | $4,509,553 | $4,552,804 | $4,640,039 | ||||||||||||||||||||||||||
| Commercial | 2,952,398 | 2,997,888 | 3,087,675 | ||||||||||||||||||||||||||
| Industrial | 3,197,835 | 3,170,090 | 3,716,058 | ||||||||||||||||||||||||||
| Governmental | 268,222 | 270,640 | 286,605 | ||||||||||||||||||||||||||
| Total billed retail | 10,928,008 | 10,991,422 | 11,730,377 | ||||||||||||||||||||||||||
| Sales for resale (a) | 278,700 | 366,348 | 858,743 | ||||||||||||||||||||||||||
| Other electric revenues (b) | 360,949 | 352,056 | 481,256 | ||||||||||||||||||||||||||
| Revenues from contracts with customers | 11,567,657 | 11,709,826 | 13,070,376 | ||||||||||||||||||||||||||
| Other Utility revenues (c) | 60,075 | 132,628 | 116,469 | ||||||||||||||||||||||||||
| Electric revenues | 11,627,732 | 11,842,454 | 13,186,845 | ||||||||||||||||||||||||||
| Natural gas revenues | 178,070 | 180,490 | 233,920 | ||||||||||||||||||||||||||
| Other revenues (d) | 73,851 | 124,468 | 343,472 | ||||||||||||||||||||||||||
| Total operating revenues | $11,879,653 | $12,147,412 | $13,764,237 |
The Utility operating companies’ total revenues for the year ended December 31, 2024 were as follows:
| 2024 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | |||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||
| Residential | $999,641 | $1,554,400 | $724,601 | $308,757 | $922,154 | |||||||||||||||||||||||||||
| Commercial | 571,574 | 1,100,309 | 577,484 | 229,648 | 473,383 | |||||||||||||||||||||||||||
| Industrial | 632,144 | 1,781,615 | 195,194 | 29,821 | 559,061 | |||||||||||||||||||||||||||
| Governmental | 18,622 | 85,537 | 56,420 | 79,060 | 28,583 | |||||||||||||||||||||||||||
| Total billed retail | 2,221,981 | 4,521,861 | 1,553,699 | 647,286 | 1,983,181 | |||||||||||||||||||||||||||
| Sales for resale (a) | 169,409 | 335,375 | 128,781 | 48,042 | 17,174 | |||||||||||||||||||||||||||
| Other electric revenues (b) | 53,492 | 187,097 | 72,237 | 6,782 | 46,710 | |||||||||||||||||||||||||||
| Revenues from contracts with customers | 2,444,882 | 5,044,333 | 1,754,717 | 702,110 | 2,047,065 | |||||||||||||||||||||||||||
| Other revenues (c) | 15,299 | 23,825 | 9,876 | 6,244 | 3,085 | |||||||||||||||||||||||||||
| Electric revenues | 2,460,181 | 5,068,158 | 1,764,593 | 708,354 | 2,050,150 | |||||||||||||||||||||||||||
| Natural gas revenues | — | 75,860 | — | 102,210 | — | |||||||||||||||||||||||||||
| Total operating revenues | $2,460,181 | $5,144,018 | $1,764,593 | $810,564 | $2,050,150 |
Entergy Corporation and Subsidiaries
Notes to Financial Statements
The Utility operating companies’ total revenues for the year ended December 31, 2023 were as follows:
| 2023 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | |||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||
| Residential | $996,760 | $1,576,129 | $748,428 | $317,188 | $914,299 | |||||||||||||||||||||||||||
| Commercial | 584,304 | 1,104,509 | 604,343 | 235,193 | 469,539 | |||||||||||||||||||||||||||
| Industrial | 635,472 | 1,720,298 | 217,916 | 31,831 | 564,573 | |||||||||||||||||||||||||||
| Governmental | 20,409 | 83,736 | 60,477 | 77,152 | 28,866 | |||||||||||||||||||||||||||
| Total billed retail | 2,236,945 | 4,484,672 | 1,631,164 | 661,364 | 1,977,277 | |||||||||||||||||||||||||||
| Sales for resale (a) | 269,648 | 357,900 | 104,058 | 63,360 | 10,497 | |||||||||||||||||||||||||||
| Other electric revenues (b) | 121,425 | 151,252 | 49,752 | (992) | 35,988 | |||||||||||||||||||||||||||
| Revenues from contracts with customers | 2,628,018 | 4,993,824 | 1,784,974 | 723,732 | 2,023,762 | |||||||||||||||||||||||||||
| Other revenues (c) | 18,378 | 79,415 | 17,559 | 14,242 | 4,824 | |||||||||||||||||||||||||||
| Electric revenues | 2,646,396 | 5,073,239 | 1,802,533 | 737,974 | 2,028,586 | |||||||||||||||||||||||||||
| Natural gas revenues | — | 74,531 | — | 105,959 | — | |||||||||||||||||||||||||||
| Total operating revenues | $2,646,396 | $5,147,770 | $1,802,533 | $843,933 | $2,028,586 |
The Utility operating companies’ total revenues for the year ended December 31, 2022 were as follows:
| 2022 | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | |||||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||
| Residential | $946,719 | $1,775,552 | $651,455 | $335,471 | $930,842 | |||||||||||||||||||||||||||
| Commercial | 530,512 | 1,274,665 | 508,996 | 256,963 | 516,539 | |||||||||||||||||||||||||||
| Industrial | 559,147 | 2,275,978 | 182,270 | 36,970 | 661,693 | |||||||||||||||||||||||||||
| Governmental | 20,186 | 94,910 | 52,861 | 87,514 | 31,134 | |||||||||||||||||||||||||||
| Total billed retail | 2,056,564 | 5,421,105 | 1,395,582 | 716,918 | 2,140,208 | |||||||||||||||||||||||||||
| Sales for resale (a) | 443,685 | 555,640 | 167,867 | 120,851 | 66,782 | |||||||||||||||||||||||||||
| Other electric revenues (b) | 159,178 | 204,878 | 51,554 | 13,637 | 57,379 | |||||||||||||||||||||||||||
| Revenues from contracts with customers | 2,659,427 | 6,181,623 | 1,615,003 | 851,406 | 2,264,369 | |||||||||||||||||||||||||||
| Other revenues (c) | 13,767 | 65,310 | 9,231 | 3,842 | 24,536 | |||||||||||||||||||||||||||
| Electric revenues | 2,673,194 | 6,246,933 | 1,624,234 | 855,248 | 2,288,905 | |||||||||||||||||||||||||||
| Natural gas revenues | — | 91,835 | — | 142,085 | — | |||||||||||||||||||||||||||
| Total operating revenues | $2,673,194 | $6,338,768 | $1,624,234 | $997,333 | $2,288,905 |
(a)Sales for resale includes day-ahead sales of energy in a market administered by an ISO. These sales represent financially binding commitments for the sale of physical energy the next day. These sales are adjusted to actual power generated and delivered in the real time market. Given the short duration of these transactions, Entergy does not consider them to be derivatives subject to fair value adjustments and includes them as part of customer revenues.
(b)Other electric revenues consist primarily of transmission and ancillary services provided to participants of an ISO-administered market, unbilled revenue, and certain customer credits as directed by regulators.
(c)Other Utility revenues include the equity component of carrying costs related to securitization, occasional sales of inventory, alternative revenue programs, provisions for revenue subject to refund, and late fees.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
(d)Other revenues include the sale of electric power and capacity to wholesale customers, day-ahead sales of energy in a market administered by an ISO, operation and management services fees, and amortization of a below-market power purchase agreement.
Electric Revenues
Entergy’s primary source of revenue is from retail electric sales sold under tariff rates approved by regulators in its various jurisdictions. Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas generate, transmit, and distribute electric power primarily to retail customers in Arkansas, Louisiana, Mississippi, and Texas. Entergy’s Utility operating companies provide power to customers on demand throughout the month, measured by a meter located at the customer’s property. Approved rates vary by customer class due to differing requirements of the customers and market factors involved in fulfilling those requirements. Entergy issues monthly bills to customers at rates approved by regulators for power and related services provided during the previous billing cycle.
To the extent that deliveries have occurred, but a bill has not been issued, Entergy’s Utility operating companies record an estimate for energy delivered since the latest billings. The Utility operating companies calculate the estimate based upon several factors including actual metered customer usage, billings through the last billing cycle in a month, actual generation in the month, historical line loss factors, and market prices of power in the respective jurisdiction. The inputs are revised as needed to approximate actual usage and cost. Each month, estimated unbilled amounts are recorded as unbilled revenue and accounts receivable, and the prior month’s estimate is reversed. Price and volume differences resulting from factors such as weather affect the calculation of unbilled revenues from one period to the other.
Entergy may record revenue based on rates that are subject to refund. Such revenues are reduced by estimated refund amounts when Entergy believes refunds are probable based on the status of rate proceedings as of the date financial statements are prepared. Because these refunds will be made through a reduction in future rates, and not as a reduction in bills previously issued, they are presented as other revenues in the table above.
System Energy’s only source of revenue is the sale of electric power and capacity generated from its 90% interest in the Grand Gulf nuclear plant to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. System Energy issues monthly bills to its affiliated customers equal to its actual operating costs plus a return on common equity approved by the FERC. Effective January 1, 2025, Entergy Louisiana has divested all of its 14% share of capacity and energy from Grand Gulf and all of the capacity and energy from Grand Gulf that it purchases from Entergy Arkansas (approximately 2.43%) to Entergy Mississippi. This divestiture is being effectuated initially under a designated PPA between Entergy Louisiana and Entergy Mississippi, which was accepted by the FERC in November 2024. The MPSC approved the MSS-4 replacement PPA, effective as of January 1, 2025. See Note 8 to the financial statements for further discussion of System Energy and the Unit Power Sales Agreement.
Entergy’s Utility operating companies also sell excess power not needed for their own customers, primarily through transactions with MISO, a regional transmission organization that maintains functional control over the combined transmission systems of its members and manages one of the largest energy markets in the U.S. In the MISO market, Entergy offers its generation and bids its load into the market. MISO settles these offers and bids based on locational marginal prices. These represent pricing for energy at a given location based on a market clearing price that takes into account physical limitations on the transmission system, generation, and demand throughout the MISO region. MISO evaluates each market participant’s energy offers and demand bids to economically and reliably dispatch the entire MISO system. Entergy nets purchases and sales within the MISO market and reports in operating revenues when in a net selling position and in operating expenses when in a net purchasing position.
Entergy Corporation and Subsidiaries
Notes to Financial Statements
Natural Gas
Entergy Louisiana and Entergy New Orleans also distribute natural gas to retail customers in and around Baton Rouge, Louisiana, and New Orleans, Louisiana, respectively. Gas transferred to customers is measured by a meter at the customer’s property. Entergy issues monthly invoices to customers at rates approved by regulators for the volume of gas transferred to date. See “Held for Sale - Natural Gas Distribution Businesses” in Note 14 to the financial statements for discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses.
Other Revenues
Entergy’s revenues from its non-utility operations include the sale of electric power and capacity to wholesale customers, day-ahead sales of energy in a market administered by an ISO, operation and management services fees, and amortization of a below-market PPA.
Practical Expedients and Exceptions
Entergy has elected not to disclose the value of unsatisfied performance obligations for contracts with an original expected term of one year or less, or for revenue recognized in an amount equal to what Entergy has the right to bill the customer for services performed.
Most of Entergy’s contracts, except in a few cases where there are defined minimums or stated terms, are on demand. This results in customer bills that vary each month based on an approved tariff and usage. Entergy imposes monthly or annual minimum requirements on some customers primarily as credit and cost recovery guarantees and not as pricing for unsatisfied performance obligations. These minimums typically expire after the initial term or when specified costs have been recovered. The minimum amounts are part of each month’s bill and recognized as revenue accordingly. Some Entergy subsidiaries in the non-utility operations business have services contracts that have fixed components and terms longer than one year. The total fixed consideration related to these unsatisfied performance obligations, however, is not material to Entergy revenues.
Recovery of Fuel Costs
Entergy’s Utility operating companies’ rate schedules include either fuel adjustment clauses or fixed fuel factors, which allow either current recovery in billings to customers or deferral of fuel costs until the costs are billed to customers. Where the fuel component of revenues is based on a pre-determined fuel cost (fixed fuel factor), the fuel factor remains in effect until changed as part of a general rate case, fuel reconciliation, or fixed fuel factor filing. System Energy’s operating revenues are intended to recover from Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans operating expenses and capital costs attributable to Grand Gulf. The capital costs are based on System Energy’s common equity funds allocable to its net investment in Grand Gulf, plus System Energy’s effective interest cost for its debt allocable to its investment in Grand Gulf.
Taxes Imposed on Revenue-Producing Transactions
Governmental authorities assess taxes that are both imposed on and concurrent with a specific revenue-producing transaction between a seller and a customer, including, but not limited to, sales, use, value added, and some excise taxes. Entergy presents these taxes on a net basis, excluding them from revenues.
Allowance for Doubtful Accounts
The allowance for doubtful accounts reflects Entergy’s best estimate of expected losses on its accounts receivable balances. Due to the essential nature of utility services, Entergy has historically experienced a low rate
Entergy Corporation and Subsidiaries
Notes to Financial Statements
of default on its accounts receivables. The following table sets forth a reconciliation of changes in the allowance for doubtful accounts for the years ended December 31, 2024 and 2023.
| Entergy | Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | ||||||||||||||||||||||||||||||
| (In Millions) | |||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2022 | $30.9 | $6.5 | $7.6 | $2.5 | $11.9 | $2.4 | |||||||||||||||||||||||||||||
| Provisions | 38.7 | 9.4 | 13.9 | 7.3 | 3.4 | 4.7 | |||||||||||||||||||||||||||||
| Write-offs | (83.1) | (20.6) | (31.3) | (10.4) | (10.7) | (10.1) | |||||||||||||||||||||||||||||
| Recoveries | 39.4 | 11.9 | 15.9 | 3.9 | 3.2 | 4.5 | |||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | $25.9 | $7.2 | $6.1 | $3.3 | $7.8 | $1.5 | |||||||||||||||||||||||||||||
| Provisions | 32.0 | 7.0 | 10.0 | 4.8 | 4.6 | 5.6 | |||||||||||||||||||||||||||||
| Write-offs | (71.2) | (17.5) | (23.3) | (11.5) | (10.4) | (8.5) | |||||||||||||||||||||||||||||
| Recoveries | 31.2 | 8.0 | 10.2 | 5.6 | 4.7 | 2.7 | |||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | $17.9 | $4.7 | $3.0 | $2.2 | $6.7 | $1.3 |
The allowance is calculated as the historical rate of customer write-offs multiplied by the current accounts receivable balance, taking into account the length of time the receivable balances have been outstanding. The rate of customer write-offs has historically experienced minimal variation, although general economic conditions can affect the rate of customer write-offs. Management monitors the current condition of individual customer accounts to manage collections and ensure bad debt expense is recorded in a timely manner.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
Item 1. Business
RISK FACTORS SUMMARY
Entergy’s business is subject to numerous risks and uncertainties that could affect its ability to successfully implement its business strategy and affect its financial results. Carefully consider all of the information in this report and, in particular, the following principal risks and all of the other specific factors described in Part I, Item 1A of this report, “Risk Factors,” before deciding whether to invest in Entergy or the Registrant Subsidiaries.
Utility Regulatory Risks
-
The terms and conditions of service, including electric and gas rates, of the Registrant Subsidiaries are determined through regulatory approval proceedings that can be lengthy and subject to appeal, potentially resulting in lengthy litigation, and uncertainty as to ultimate results.
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Entergy’s business could experience adverse effects related to changes to state or federal legislation or regulation, including increased tariffs, as well as changes to governmental policies and programs, including tax credits, loans, grants, guarantees, and other subsidies, or experience risks associated with participation in the MISO markets and allocation of transmission upgrade costs.
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The Utility operating companies recover fuel, purchased power, and associated costs through rate mechanisms that are subject to risks of delay or disallowance in regulatory proceedings.
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A delay or failure in recovering amounts for storm restoration costs incurred as a result of severe weather could have material effects on Entergy and its Utility operating companies affected by severe weather.
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Weather, economic conditions, technological developments, and other factors may have a material impact on electricity and gas usage and otherwise materially affect the Utility operating companies’ results of operations.
Nuclear Operating, Shutdown, and Regulatory Risks
- The results of operations, financial condition, and liquidity of Entergy Arkansas, Entergy Louisiana, and System Energy could be materially affected by the following:
◦inability to consistently operate their nuclear power plants at high capacity factors;
◦refueling outages that last materially longer than anticipated or unplanned outages;
◦risks related to the purchase of uranium fuel (and its conversion, enrichment, and fabrication);
◦the risk that the NRC will change or modify its regulations, suspend or revoke their licenses, or increase oversight of their nuclear plants;
◦risks and costs related to operating and maintaining their nuclear power plants;
◦the costs associated with the storage of the spent nuclear fuel, as well as the costs of and their ability to fully decommission their nuclear power plants;
◦the potential requirement to pay substantial retrospective premiums and/or assessments imposed under the Price-Anderson Act and/or by Nuclear Electric Insurance Limited (NEIL) in the event of a nuclear incident, and losses not covered by insurance;
◦the risk that the decommissioning trust fund assets may not be adequate to meet decommissioning obligations if market performance and other changes decrease the value of assets in the decommissioning trusts and/or actual decommissioning costs are higher than estimated; and
◦new or existing safety concerns regarding operating nuclear power plants and nuclear fuel.
Business Risks
- Entergy and the Registrant Subsidiaries depend on access to the capital markets and, at times, may face potential liquidity constraints. Disruptions in the capital and credit markets or a downgrade in Entergy’s or its Registrant Subsidiaries’ credit ratings could, among other things, adversely affect their ability to meet liquidity needs, or to access capital to operate and grow their businesses, and the cost of capital.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
-
The reputation of Entergy or its Registrant Subsidiaries may be materially adversely affected by negative publicity or the inability to meet their stated goals or commitments, among other potential causes.
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Changes in tax legislation and taxation as well as the inherent difficulty in quantifying potential tax effects of business decisions could negatively impact Entergy’s and the Registrant Subsidiaries’ results of operations, financial condition, and liquidity.
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Entergy and its subsidiaries’ ability to successfully execute on their business strategies, including their ability to execute on their growth strategies and to complete strategic transactions, is subject to significant risks, and, as a result, they may be unable to achieve some or all of the anticipated results of such strategies.
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The success of certain Utility operating companies’ investments in new generation and transmission assets to support large-scale data centers depends on a limited number of customers, the continued demand for electricity to power data centers and the successful completion of the associated generation and transmission projects. Any reduction in the demand for electricity to power data centers or delays or unexpected costs associated with such projects may harm the growth prospects, future operating results and financial condition of Entergy and these Utility operating companies.
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Entergy may not be able to attract, retain, and manage an appropriately staffed and qualified workforce, which could negatively affect Entergy or its subsidiaries’ results of operations.
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Entergy and its subsidiaries, including the Utility operating companies and System Energy, may incur substantial costs (i) to fulfill their obligations related to environmental and other matters or (ii) related to reliability standards.
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Entergy could be negatively affected by the effects of climate change, including physical risks, such as increased frequency and intensity of hurricanes, availability of water, droughts, and other severe weather and wildfires, and transition risks, such as environmental and regulatory obligations intended to combat the effects of climate change, including by compelling greenhouse gas emission reductions or reporting, or increasing clean or renewable energy requirements, or placing a price on greenhouse gas emissions.
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Market performance, interest rate changes, and other changes may decrease the value of employee benefit plan assets, which then could require additional funding of such benefit plans and result in increased benefit plan costs.
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The litigation environment in the states in which the Registrant Subsidiaries operate poses a significant risk to those businesses.
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Terrorist attacks and sabotage, physical attacks, cyber attacks, system failures, data breaches or other disruptions of Entergy’s and its subsidiaries’ or their suppliers’ physical infrastructure or technology systems may adversely affect Entergy’s business and results of operations.
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Entergy and the Registrant Subsidiaries are subject to risks associated with their ability to obtain adequate insurance at acceptable costs.
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Significant increases in commodity prices, other materials and supplies, and operation and maintenance expenses may adversely affect Entergy’s results of operations, financial condition, and liquidity.
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The effect of higher purchased gas cost charges to customers taking gas service may adversely affect Entergy New Orleans’s results of operations and liquidity.
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System Energy owns and, through an affiliate, operates a single nuclear generating facility, and it is dependent on sales to affiliated companies for all of its revenues. Certain contractual arrangements relating to System Energy, the affiliated companies, and these revenues are the subject of ongoing and potential future litigation and regulatory proceedings.
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As a holding company, Entergy Corporation depends on cash distributions from its subsidiaries to meet its debt service and other financial obligations and to pay dividends on its common stock, and has provided, and may continue to provide, capital contributions or debt financing to its subsidiaries, which would reduce the funds available to meet its other financial obligations.
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The hazardous activities associated with power generation and delivery could adversely impact our results of operations and financial condition.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
ENTERGY’S BUSINESS
Entergy is an integrated energy company engaged primarily in electric power production and retail distribution operations. Entergy owns and operates power plants with approximately 25,000 MW of electric generating capacity. Entergy delivers electricity to approximately 3 million Utility customers in Arkansas, Louisiana, Mississippi, and Texas. Entergy had annual revenues of $11.9 billion in 2024 and had approximately 12,000 employees as of December 31, 2024.
Entergy operates primarily through a single reportable segment, Utility. The Utility segment includes the generation, transmission, distribution, and sale of electric power in portions of Arkansas, Mississippi, Texas, and Louisiana, including the City of New Orleans; and operation of a small natural gas distribution business in portions of Louisiana. See “Held for Sale - Natural Gas Distribution Businesses” in Note 14 to the financial statements for discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses. Entergy completed its multi-year strategy to exit the merchant nuclear power business in 2022. See Note 13 to the financial statements for discussion of and financial information regarding Entergy’s business segments.
Strategy
Entergy’s strategy is to operate and grow its utility business through a customer-centric approach designed to understand and meet customer needs, creating value for all of its key stakeholders, including customers, communities, employees, and owners. As part of its strategy, Entergy invests significant capital to support customer growth and its customers’ growing demands for greater reliability, resilience, and clean energy, while remaining focused on affordability. Entergy manages risks by ensuring its Utility investments are customer-driven, the result of robust analysis, supported by broad stakeholder outreach and progressive regulatory constructs, and executed with disciplined project management. Further, Entergy continues to integrate key sustainability elements, including social responsibility and good governance, into every decision it makes.
Utility
The Utility segment includes five retail electric utility subsidiaries: Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas. These companies generate, transmit, distribute, and sell electric power to retail and wholesale customers in Arkansas, Louisiana, Mississippi, and Texas. Entergy Louisiana and Entergy New Orleans also provide natural gas utility services to customers in and around Baton Rouge, Louisiana, and New Orleans, Louisiana, respectively. See “Held for Sale - Natural Gas Distribution Businesses” in Note 14 to the financial statements for discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses. Also included in the Utility is System Energy, a wholly-owned subsidiary of Entergy Corporation that owns or leases 90 percent of Grand Gulf. System Energy sells its power and capacity from Grand Gulf at wholesale to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. Effective January 1, 2025, Entergy Louisiana divested all of its 14% share of capacity and energy from Grand Gulf and all of the capacity and energy from Grand Gulf that it purchases from Entergy Arkansas (approximately 2.43%) to Entergy Mississippi. This divestiture is being effectuated initially under a designated PPA between Entergy Louisiana and Entergy Mississippi, effective as of January 1, 2025. The five retail utility subsidiaries are each regulated by the FERC and by state utility commissions, or, in the case of Entergy New Orleans, the City Council. System Energy is regulated by the FERC because all of its transactions are at wholesale. The Utility has a diverse power generation portfolio, including increasingly carbon-free energy sources, which is consistent with Entergy’s strong support for the environment.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
Customers
As of December 31, 2024, the Utility operating companies provided retail electric and gas service to customers in Arkansas, Louisiana, Mississippi, and Texas, as follows:
| Electric Customers | Gas Customers | ||||||||||||||||||||||||||||
| Area Served | (In Thousands) | (%) | (In Thousands) | (%) | |||||||||||||||||||||||||
| Entergy Arkansas | Portions of Arkansas | 735 | 24 | ||||||||||||||||||||||||||
| Entergy Louisiana | Portions of Louisiana | 1,110 | 37 | 96 | 47 | ||||||||||||||||||||||||
| Entergy Mississippi | Portions of Mississippi | 459 | 15 | ||||||||||||||||||||||||||
| Entergy New Orleans | City of New Orleans | 209 | 7 | 108 | 53 | ||||||||||||||||||||||||
| Entergy Texas | Portions of Texas | 524 | 17 | ||||||||||||||||||||||||||
| Total | 3,037 | 100 | 204 | 100 |
Electric and Natural Gas Energy Sales
Electric Energy Sales
The total electric energy sales of the Utility operating companies are subject to seasonal fluctuations, with the peak sales period normally occurring during the third quarter of each year. On August 6, 2024, Entergy reached a 2024 peak demand of 22,697 MWh, compared to the 2023 peak of 23,319 MWh recorded on August 23, 2023. Selected electric energy sales data for 2024 is shown in the table below:
| Entergy Arkansas | Entergy Louisiana | Entergy Mississippi | Entergy New Orleans | Entergy Texas | System Energy | Entergy (a) | |||||||||||||||||||||||||||||||||||
| (GWh) | |||||||||||||||||||||||||||||||||||||||||
| Sales to retail customers | 23,605 | 60,703 | 12,744 | 5,597 | 21,202 | — | 123,851 | ||||||||||||||||||||||||||||||||||
| Sales for resale: | |||||||||||||||||||||||||||||||||||||||||
| Affiliates | 2,039 | 5,808 | — | — | — | 9,586 | — | ||||||||||||||||||||||||||||||||||
| Others | 4,058 | 1,574 | 5,568 | 2,123 | 687 | — | 14,010 | ||||||||||||||||||||||||||||||||||
| Total | 29,702 | 68,085 | 18,312 | 7,720 | 21,889 | 9,586 | 137,861 | ||||||||||||||||||||||||||||||||||
| Average use per residential customer (kWh) | 12,549 | 14,602 | 14,167 | 12,457 | 14,276 | — | 13,844 |
(a)Includes the effect of intercompany eliminations.
The following table illustrates the Utility operating companies’ 2024 combined electric sales volume as a percentage of total electric sales volume, and 2024 combined electric revenues as a percentage of total 2024 electric revenue, each by customer class.
| Customer Class | % of Sales Volume | % of Revenue | ||||||||||||
| Residential | 26.1 | 38.8 | ||||||||||||
| Commercial | 20.5 | 25.4 | ||||||||||||
| Industrial (a) | 41.4 | 27.5 | ||||||||||||
| Governmental | 1.8 | 2.3 | ||||||||||||
| Wholesale/Other | 10.2 | 6.0 |
(a)Major industrial customers are primarily in the petroleum refining and chemical industries.
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
Natural Gas Energy Sales
Entergy New Orleans and Entergy Louisiana provide both electric power and natural gas to retail customers. Entergy New Orleans and Entergy Louisiana sold 8,872,535 Mcf and 6,816,140 Mcf, respectively, of natural gas to retail customers in 2024. In 2024, 99% of Entergy Louisiana’s operating revenue was derived from the electric utility business and only 1% from the natural gas distribution business. For Entergy New Orleans, 87% of operating revenue was derived from the electric utility business and 13% from the natural gas distribution business in 2024.
Following is data concerning Entergy New Orleans’s 2024 retail operating revenue sources:
| Customer Class | % of Electric Operating Revenue | % of Natural Gas Operating Revenue | ||||||||||||
| Residential | 48 | 56 | ||||||||||||
| Commercial | 35 | 26 | ||||||||||||
| Industrial | 5 | 5 | ||||||||||||
| Governmental/Municipal | 12 | 13 |
Retail Rate Regulation
General (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, System Energy)
Each Utility operating company regularly participates in retail rate proceedings. The status of material retail rate proceedings is described in Note 2 to the financial statements. Certain aspects of the Utility operating companies and System Energy’s retail rate mechanisms are discussed below.
| Rate base (in billions) | Current authorized return on common equity | Weighted-average cost of capital (after-tax) | Equity ratio | Regulatory construct | ||||||||||||||||||||||||||||
| Entergy Arkansas | $11.3 (a) | 9.15% - 10.15% | 5.58% | 37.9% (b) | - forward test year formula rate plan - riders: fuel and purchased power, MISO, capacity, Grand Gulf, energy efficiency | |||||||||||||||||||||||||||
| Entergy Louisiana (electric) | $16.4 (c) | 9.3% - 10.1% | 6.81% | 50.81% | - formula rate plan through 2023 test year - riders: fuel, capacity, MISO, transmission, distribution, resilience plan | |||||||||||||||||||||||||||
| Entergy Louisiana (gas) | $0.16 (d) | 9.3% - 10.3% | 7.08% | 54.35% | - gas rate stabilization plan - rider: gas infrastructure | |||||||||||||||||||||||||||
| Entergy Mississippi | $4.5 (e) | 9.91% - 11.92% | 7.52% | 49.67% | - formula rate plan with forward-looking features - riders: fuel, Grand Gulf, MISO, unit power cost, storm damage mitigation and restoration, ad valorem tax adjustment, grid modernization, restructuring credit, power management |
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
| Rate base (in billions) | Current authorized return on common equity | Weighted-average cost of capital (after-tax) | Equity ratio | Regulatory construct | ||||||||||||||||||||||||||||
| Entergy New Orleans (electric) | $1.3 (f) | 8.85% - 9.85% | 7.28% | 55% (g) | - formula rate plan with forward-looking features - riders: fuel and purchased power, MISO, energy efficiency, environmental, capacity costs | |||||||||||||||||||||||||||
| Entergy New Orleans (gas) | $0.2 (f) | 8.85% - 9.85% | 7.28% | 55% (g) | - formula rate plan with forward-looking features - rider: purchased gas | |||||||||||||||||||||||||||
| Entergy Texas | $4.4 (h) | 9.57% | 6.61% | 51.2% | - historical test year rate case and interim rate base riders (distribution, transmission, and generation cost recovery riders) - riders: fuel, capacity, cost recovery riders (distribution, transmission, and generation), rate case expenses, and advanced metering infrastructure surcharge, among others | |||||||||||||||||||||||||||
| System Energy | $1.83 (i) | 9.65% | 7.41% | 52.0% | - monthly cost of service |
(a)Based on 2025 test year.
(b)Based on $2.0 billion in accumulated deferred income taxes at a 0% cost rate included in the weighted-average cost of capital calculation.
(c)Based on December 31, 2023 test year and excludes approximately $100 million of transmission plant investment included in the transmission recovery mechanism and approximately $300 million of distribution plant investment included in the distribution recovery mechanism, as well as approximately $400 million of net accumulated deferred tax liability items included in the tax adjustment mechanism.
(d)Based on September 30, 2023 test year.
(e)Based on 2024 forward test year.
(f)Based on December 31, 2023 test year and known and measurables through December 31, 2024.
(g)In October 2023 the City Council approved a three-year extension of Entergy New Orleans’s formula rate plan, modified to reflect a 55% equity ratio for rate setting purposes.
(h)Based on December 31, 2021 test year and excludes $0.5 billion in cost recovery riders.
(i)Based on calculation as of December 31, 2024 for Entergy Arkansas, Entergy Louisiana, and Entergy New Orleans. Effective July 2022, Entergy Mississippi’s bills from System Energy reflect a rate base reduction for the advance collection of sale-leaseback rental costs, resulting in a calculation of $1.82 billion as of December 31, 2024. See Note 2 to the financial statements for discussion of the System Energy settlement agreements.
Entergy Arkansas
Formula Rate Plan
Between base rate cases, Entergy Arkansas is able to adjust base rates annually, subject to certain caps, through formula rate plans that utilize a forward test year. Entergy Arkansas is subject to a maximum rate change of 4% of the filing year total retail revenue. In addition, Entergy Arkansas is subject to a true-up of projection to actuals netted with future projection. In response to Entergy Arkansas’s application for a general change in rates in
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
2015, the APSC approved the formula rate plan tariff proposed by Entergy Arkansas including its use of a projected year test period and an initial five-year term. The initial five-year term expired in 2021. As granted by Arkansas law, Entergy Arkansas obtained APSC approval of the extension of the formula rate plan tariff for an additional five-year term, through 2026. As part of the settlement of the 2023 formula rate plan proceeding, Entergy Arkansas agreed to file its next base rate case no later than February 2026. As part of Entergy Arkansas’s base rate case in 2026, Entergy Arkansas may include a request for continued regulation under a formula rate review mechanism.
Fuel and Purchased Power Cost Recovery
Entergy Arkansas’s rate schedules include an energy cost recovery rider to recover fuel and purchased power costs in monthly bills. The rider utilizes prior calendar year energy costs and projected energy sales for the twelve-month period commencing on April 1 of each year to develop an energy cost rate, which is redetermined annually and includes a true-up adjustment reflecting the over-recovery or under-recovery, including carrying charges, of the energy cost for the prior calendar year. The energy cost recovery rider tariff also allows an interim rate request depending upon the level of over- or under-recovery of fuel and purchased energy costs. In December 2007 the APSC issued an order stating that Entergy Arkansas’s energy cost recovery rider will remain in effect, and any future termination of the rider would be subject to eighteen months advance notice by the APSC, which would occur following notice and hearing.
Production Cost Allocation Rider
Entergy Arkansas has in place an APSC-approved production cost allocation rider for recovery from customers of the retail portion of the costs allocated to Entergy Arkansas as a result of System Agreement proceedings.
Other
In June 2022 the APSC approved Entergy Arkansas’s compliance tariff filing for a proposed green tariff designed to help participating customers meet their renewable and sustainability goals and to enhance economic development efforts in Arkansas. The APSC has approved offerings of 280 MW of solar capacity to be made available under this tariff.
In June 2023 the APSC approved Entergy Arkansas’s Go ZERO tariff, which provides participating industrial and commercial customers the opportunity to choose from a number of clean energy options to help them achieve their sustainability goals. The APSC has approved offerings of 240 MW to be made available under this tariff.
Entergy Louisiana
Formula Rate Plan
Entergy Louisiana historically sets electric base rates annually through a formula rate plan using a historic test year. The form of the formula rate plan, on a combined basis, was approved in connection with the business combination of Entergy Louisiana and Entergy Gulf States Louisiana and largely followed the formula rate plans that were approved by the LPSC in connection with the full electric base rate cases filed by those companies in February 2013. In 2021 the LPSC approved a settlement extending the formula rate plan for test years 2020, 2021, and 2022. Certain modifications were made in that extension, including a decrease to the allowed return on equity, narrowing of the earnings “dead band” around the mid-point allowed return on equity, elimination of sharing above and below the earnings “dead band,” and the addition of a distribution cost recovery mechanism. The formula rate plan continues to include exceptions from the rate cap and sharing requirements for certain large capital investment projects, including acquisition or construction of generating facilities and purchase power agreements approved by the LPSC, certain transmission investments, and certain distribution investments, among other items. In August
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
2024 the LPSC approved a settlement further extending the formula rate plan for test years 2023, 2024, and 2025. Certain modifications were made in that extension, including expansion of the tax adjustment mechanism (formerly the tax reform adjustment mechanism), a more streamlined and defined process for resolving formula rate plan test years, a narrowed “earnings” dead band, removal of certain legacy provisions that pre-dated the business combination, and the addition of a dedicated cost recovery mechanism for renewable resources.
Fuel and Purchased Power Cost Recovery
Entergy Louisiana’s rate schedules include a fuel adjustment clause designed to recover the cost of fuel and purchased power costs. The fuel adjustment clause contains a surcharge or credit for deferred fuel expense and related carrying charges arising from the monthly reconciliation of actual fuel costs incurred with fuel cost revenues billed to customers, including carrying charges. See Note 2 to the financial statements for a discussion of proceedings related to audits of Entergy Louisiana’s fuel adjustment clause filings.
To help stabilize electricity costs, Entergy Louisiana received approval from the LPSC to hedge its exposure to natural gas price volatility through the use of financial instruments. Entergy Louisiana historically hedged approximately one-third of the projected exposure to natural gas price changes for the gas used to serve its native electric load for all months of the year. The hedge quantity was reviewed on an annual basis. In November 2018, Entergy Louisiana received approval from the LPSC to suspend these seasonal hedging programs and implement financial hedges with terms up to five years for a portion of its natural gas exposure. In May 2024, following the conclusion of its five-year hedging program, Entergy Louisiana filed an application with the LPSC for a permanent hedging program. The permanent gas hedging program would also utilize financial hedges for a portion of Entergy Louisiana’s non-industrial natural gas exposure. In February 2025, Entergy Louisiana filed a motion to suspend the procedural schedule, with a status conference requested for May 2025.
Entergy Louisiana’s gas rates include a purchased gas adjustment clause based on estimated gas costs for the billing month adjusted by a surcharge or credit that arises from an annual reconciliation of fuel costs incurred with fuel cost revenues billed to customers, including carrying charges.
Retail Rates - Gas
In accordance with the settlement of Entergy Gulf States Louisiana’s gas rate stabilization plan for the test year ended September 30, 2012, in August 2014, Entergy Gulf States Louisiana submitted for consideration a proposal for implementation of an infrastructure rider to recover expenditures associated with strategic plant investment and relocation projects mandated by local governments. After review by the LPSC staff and inclusion of certain customer safeguards required by the LPSC staff, in December 2014, Entergy Gulf States Louisiana and the LPSC staff submitted a joint settlement for implementation of an accelerated gas pipe replacement program providing for the replacement of approximately 100 miles of pipe over the next ten years, as well as relocation of certain existing pipe resulting from local government-related infrastructure projects, and for a rider to recover the investment associated with these projects. The rider allows for recovery of approximately $65 million over ten years. The rider recovery will be adjusted on a quarterly basis to include actual investment incurred for the prior quarter and is subject to the following conditions, among others: a ten-year term; application of any earnings in excess of the upper end of the earnings band as an offset to the revenue requirement of the infrastructure rider; adherence to a specified spending plan, within plus or minus 20% annually; annual filings comparing actual versus planned rider spending with actual spending and explanation of variances exceeding 10%; and an annual true-up. The joint settlement was approved by the LPSC in January 2015. Implementation of the infrastructure rider commenced with bills rendered on and after the first billing cycle of April 2015. In April 2022, Entergy Louisiana submitted for consideration a proposal to extend the infrastructure rider to address replacement of an additional 187 miles of pipe. In December 2022, Entergy Louisiana and the LPSC staff submitted an uncontested settlement that extends the rider for an additional ten years beginning after the end of the current term of the rider in 2025. The extension is subject to the same customer safeguards and conditions as the original term of the rider. The extension
Part I Item 1
Entergy Corporation, Utility operating companies, and System Energy
allows for recovery of approximately $95 million over ten years. In February 2023 the uncontested settlement was approved by the LPSC.
Storm Cost Recovery
See Note 2 to the financial statements for a discussion of Entergy Louisiana’s filings to recover storm-related costs.
LPSC Customer-Centered Options Rulemaking
In December 2019, an LPSC commissioner issued an unopposed directive to the LPSC staff to research customer-centered options for all customer classes, as well as other regulatory environments and recommend a plan for how to ensure customers are the focus. Since 2020, the LPSC staff has issued several requests for information on proposed scope and information related to retail open access, and interested parties filed responses to the requests.
In June 2024 the LPSC staff issued its Final Phase 1 Report setting forth a recommendation on sleeved PPAs, including many features similar to utility green tariffs previously approved by the LPSC, and adopting numerous limits and safeguards that had been proposed in comments by LPSC-jurisdictional utilities. The Final Phase 1 Report also addressed various new reporting requirements for all LPSC-jurisdictional utilities, including reliability metrics, customer counts, customers receiving federal Low-Income Home Energy Assistance Program aid, utility authorized and earned returns on equity, and other items. The report also recommended that the LPSC adopt requirements that, with each rate filing, a utility report certain information regarding bill impacts and similar matters. In June 2024 the LPSC voted unanimously to approve the LPSC staff’s Final Phase 1 Report and proposal, and an order was issued in August 2024.
In December 2024 the LPSC staff issued its Phase 2 Report, addressing enhanced combined heat and power options, energy displacement sleeved PPAs, and other matters. The LPSC staff also issued various data requests to be answered by all jurisdictional utilities. The LPSC staff has indicated that the Phase 3 Report, which will address partial or full retail open access and other issues that were deferred from the Phase 2 Report, is expected to be completed by the third quarter 2025. In January 2025, Entergy Louisiana filed a motion asking the LPSC to provide renewed guidance as to whether the inquiry in this proceeding into the remaining issues in the Phase 3 Report is appropriate and consistent with the LPSC’s current policy objectives, or whether the docket has achieved its purpose and may be closed. The LPSC is expected to consider the motion at its March 2025 meeting.
Other
In March 2016 the LPSC opened two dockets to examine, on a generic basis, issues that it identified in connection with its review of Cleco Corporation’s acquisition by third party investors. The first docket is captioned “In re: Investigation of double leveraging issues for all LPSC-jurisdictional utilities,” and the second is captioned “In re: Investigation of tax structure issues for all LPSC-jurisdictional utilities.” In April 2016 the LPSC clarified that the concerns giving rise to the two dockets arose as a result of its review of the structure of the Cleco-Macquarie transaction and that the specific intent of the directives is to seek more information regarding intra-corporate debt financing of a utility’s capital structure as well as the use of investment tax credits to mitigate the tax obligation at the parent level of a consolidated entity. No schedule has been set for either docket, and limited discovery has occurred.
In September 2019 the LPSC issued an order modifying its rule regarding net metering installations. Among other things, the rule provides for 2-channel billing for net metering with excess energy put to the grid being compensated at the utility’s avoided cost. However, the rule does provide that net meter installations in place as of December 31, 2019 will be subject to 1:1 net metering with excess energy put to the grid being compensated at the
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full retail rate for a period of 15 years (through December 31, 2034), after which those installations will be subject to 2-channel billing. The rule also eliminates the existing limit on the cumulative number of net meter installations.
Entergy Mississippi
Formula Rate Plan
Since the conclusion in 2015 of Entergy Mississippi’s most recent base rate case, Entergy Mississippi has set electric base rates annually through a formula rate plan. Between base rate cases, Entergy Mississippi is able to adjust base rates annually, subject to certain caps, through formula rate plans that utilize forward-looking features. In addition, Entergy Mississippi is subject to an annual “look-back” evaluation. Entergy Mississippi is allowed a maximum rate increase of 4% of each test year’s retail revenue. Any increase above 4% requires a base rate case. If Entergy Mississippi’s formula rate plan were terminated without replacement, it would revert to the more traditional rate case environment or seek approval of a new formula rate plan.
In August 2012 the MPSC opened inquiries to review whether the then-current formulaic methodology used to calculate the return on common equity in both Entergy Mississippi’s formula rate plan and Mississippi Power Company’s annual formula rate plan was still appropriate or could be improved to better serve the public interest. The intent of this inquiry and review was for informational purposes only; the evaluation of any recommendations for changes to the existing methodology would take place in a general rate case or in the existing formula rate plan proceeding. In March 2013 the Mississippi Public Utilities Staff filed its consultant’s report which noted the return on common equity estimation methods used by Entergy Mississippi and Mississippi Power Company are commonly used throughout the electric utility industry. The report suggested ways in which the methods used by Entergy Mississippi and Mississippi Power Company might be improved, but did not recommend specific changes in the return on common equity formulas or calculations at that time. In June 2014 the MPSC expanded the scope of the August 2012 inquiry to study the merits of adopting a uniform formula rate plan that could be applied, where possible in whole or in part, to both Entergy Mississippi and Mississippi Power Company in order to achieve greater consistency in the plans. The MPSC directed the Mississippi Public Utilities Staff to investigate and review Entergy Mississippi’s formula rate plan rider schedule and Mississippi Power Company’s Performance Evaluation Plan by considering the merits and deficiencies and possibilities for improvement of each and then to propose a uniform formula rate plan that, where possible, could be applicable to both companies. No procedural schedule has been set. In October 2014 the Mississippi Public Utilities Staff conducted a public technical conference to discuss performance benchmarking and its potential application to the electric utilities’ formula rate plans. The docket remains open.
In December 2019 the MPSC approved Entergy Mississippi’s proposed revisions to its formula rate plan to provide for a mechanism in the formula rate plan, the interim capacity rate adjustment mechanism, to recover the non-fuel related costs of additional owned capacity acquired by Entergy Mississippi as well as to allow similar cost recovery treatment for other capacity acquisitions that are approved by the MPSC. The MPSC must approve recovery through the interim capacity rate adjustment for each new resource. In addition, the MPSC approved revisions to the formula rate plan which allows Entergy Mississippi to begin billing rate adjustments effective April 1 of the filing year on a temporary basis subject to refund or credit to customers, subject to final MPSC order. The MPSC also authorized Entergy Mississippi to remove vegetation management costs from the formula rate plan and recover these costs through the establishment of a vegetation management rider, which was superseded in June 2024 with the approval of the storm damage mitigation and restoration rider. See Note 2 to the financial statements for a discussion of proceedings regarding recovery of Entergy Mississippi’s storm-related costs.
In November 2020 the MPSC approved Entergy Mississippi’s revisions to its formula rate plan providing for the realignment of energy efficiency costs to its formula rate plan, the deferral of energy efficiency expenditures into a regulatory asset, and the elimination of its energy efficiency cost recovery rider effective with the January 2022 billing cycle.
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In June 2023 the MPSC approved Entergy Mississippi’s revisions to its formula rate plan to realign the recovery of certain long-term service agreement and conductor handling costs to the annual power management and grid modernization riders effective January 2023.
In May 2024 the MPSC approved Entergy Mississippi’s revisions to its formula rate plan to comply with state legislation passed in January 2024 allowing Entergy Mississippi to make interim rate adjustments to recover the non-fuel related annual ownership cost of certain facilities that directly or indirectly provide service to customers who own certain data processing center projects as specified in the legislation.
Fuel and Purchased Power Cost Recovery
Entergy Mississippi’s rate schedules include energy cost recovery riders to recover fuel and purchased power costs. The energy cost rate for each calendar year is redetermined annually and includes a true-up adjustment reflecting the over-recovery or under-recovery of the energy costs as of the 12-month period ended September 30. Entergy Mississippi’s fuel cost recoveries are subject to annual audits conducted pursuant to the authority of the MPSC. The energy cost recovery riders allow interim rate adjustments depending on the level of over- or under-recovery of fuel and purchased energy costs.
To help stabilize electricity costs, Entergy Mississippi received approval from the MPSC to hedge its exposure to natural gas price volatility through the use of financial instruments. Entergy Mississippi hedges approximately one-third of the projected exposure to natural gas price changes for the gas used to serve its native electric load for all months of the year. The hedge quantity is reviewed on an annual basis.
Storm Cost Recovery
See Note 2 to the financial statements for a discussion of proceedings regarding recovery of Entergy Mississippi’s storm-related costs.
Other
In October 2022 the MPSC adopted the Distributed Generation Rule. The Distributed Generation Rule maintains the 3% net metering participation cap. The Distributed Generation Rule grandfathers a 2.5 cents per kWh distributed generation benefits adder for 25 years and expands eligibility for the 2 cents per kWh low-income benefits adder to households up to 225% of the federal poverty level and grandfathers that adder for 25 years. The Distributed Generation Rule also directs utilities to make rate filings implementing up-front incentives for distributed generating systems and demand response battery systems, and to establish a public K-12 solar for schools program. In August 2023 the MPSC approved Entergy Mississippi’s proposed solar for schools rate schedule under the Distributed Generation Rule.
In December 2022 the MPSC approved Entergy Mississippi’s RenewABLE Community Option (Schedule RCO), an offering for qualifying non-residential customers to subscribe to renewable resource capacity to satisfy their environmental, sustainability, and governance goals. Registration for the Schedule RCO launched in May 2023.
Entergy New Orleans
Formula Rate Plan
As part of its determination of rates in the base rate case filed by Entergy New Orleans in 2018, in November 2019, the City Council issued a resolution resolving the rate case, with rates to become effective retroactive to August 2019. The resolution allows Entergy New Orleans to implement a three-year formula rate plan, beginning with the 2019 test year as adjusted for forward-looking known and measurable changes, with the
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filing for the first test year to be made in 2020. In October 2020 the City Council approved an agreement in principle filed by Entergy New Orleans that results in Entergy New Orleans forgoing its 2020 formula rate plan filing and shifting the three-year formula rate plan to filings in 2021, 2022, and 2023. In September 2023, Entergy New Orleans filed a motion seeking City Council approval of a three-year extension of Entergy New Orleans’s electric and gas formula rate plans, for filings in 2024, 2025, and 2026. In October 2023 the City Council granted Entergy New Orleans’s request for an extension, subject to minor modifications.
Fuel and Purchased Power Cost Recovery
Entergy New Orleans’s electric rate schedules include a fuel adjustment tariff designed to reflect no more than targeted fuel and purchased power costs, adjusted by a surcharge or credit for deferred fuel expense arising from the monthly reconciliation of actual fuel and purchased power costs incurred with fuel cost revenues billed to customers, including carrying charges.
Entergy New Orleans’s gas rate schedules include a purchased gas adjustment to reflect estimated gas costs for the billing month, adjusted by a surcharge or credit similar to that included in the electric fuel adjustment clause, including carrying charges.
To help stabilize gas costs, Entergy New Orleans seeks approval annually from the City Council to continue implementation of its natural gas hedging program consistent with the City Council’s stated policy objectives. The program uses financial instruments to hedge exposure to volatility in the wholesale price of natural gas purchased to serve Entergy New Orleans gas customers. Entergy New Orleans hedges up to 25% of actual gas sales made during the winter months.
Storm Cost Recovery
In January 2025, Entergy New Orleans filed an application with the City Council requesting the establishment of a standard procedural timeline for consideration of future applications by Entergy New Orleans that seek securitization financing of storm restoration costs, including replenishment of storm recovery reserves, in furtherance of the goals of promoting efficiency of restoration and helping mitigate customer exposure to carrying costs following expenditures for future storm restoration. To support this objective, Entergy New Orleans proposed a procedural schedule that would allow for the issuance of a financing order no later than four months or 120 days from the date that Entergy New Orleans files any future applications seeking securitization financing of storm restoration costs, including storm recovery reserves, with the City Council. Entergy New Orleans also requested that the City Council approve an amendment to the storm recovery reserve escrow agreement to increase flexibility in the timing of certain disbursements of escrow funds to prepare for anticipated storms.
See Note 2 to the financial statements for a discussion of Entergy New Orleans’s filings to recover storm-related costs.
Entergy Texas
Base Rates
The base rates of Entergy Texas are established largely in traditional base rate case proceedings. Between base rate proceedings, Entergy Texas has available rate riders to recover the revenue requirements associated with certain incremental costs. Entergy Texas is required to file full base rate case proceedings every four years and within eighteen months of utilizing its generation cost recovery rider for investments above $200 million.
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Fuel and Purchased Power Cost Recovery
Entergy Texas’s rate schedules include a fixed fuel factor to recover fuel and purchased power costs, including interest, that are not included in base rates. Historically, semi-annual revisions of the fixed fuel factor have been made in March and September based on the market price of natural gas and changes in fuel mix. The amounts collected under Entergy Texas’s fixed fuel factor and any interim surcharge or refund are subject to fuel reconciliation proceedings before the PUCT. In the course of this reconciliation, the PUCT determines whether eligible fuel and fuel-related expenses and revenues are necessary and reasonable and makes a prudence finding for each of the fuel-related contracts entered into during the reconciliation period. In 2023 the Texas legislature modified the Texas Utilities Code to provide that material over- and under-recovered fuel balances are to be refunded or surcharged through interim fuel adjustments and that fuel reconciliations must be filed at least once every two years. Entergy Texas expects the PUCT to undertake a rulemaking to effectuate the new legislation in 2025.
At the PUCT’s April 2013 open meeting, the PUCT Commissioners discussed their view that a purchased power capacity rider was good public policy. The PUCT issued an order in May 2013 adopting the rule allowing for a purchased power capacity rider, subject to an offsetting adjustment for load growth. The rule, as adopted, also includes a process for obtaining pre-approval by the PUCT of purchased power agreements to be recovered through a purchased power capacity rider. No Texas utility, including Entergy Texas, has exercised the option to recover capacity costs under the rider mechanism, but Entergy Texas will continue to evaluate the benefits of utilizing the rider to recover future capacity costs. In 2023, the Texas legislature modified the Texas Utilities Code to permit a utility to seek pre-approval from the PUCT for a purchased power agreement of three years or more if such approval is a precondition to the effectiveness of such agreements, regardless of whether the utility intends to recover costs associated with the purchased power agreement through a purchased power capacity rider.
Transmission, Distribution, and Generation Cost Recovery
As discussed above, Entergy Texas has available rate riders to recover the revenue requirements associated with certain incremental costs. These riders include a transmission cost recovery factor rider mechanism for the recovery of transmission-related capital investments, a distribution cost recovery factor rider mechanism for the recovery of distribution-related capital investment, and a generation cost recovery rider mechanism for the recovery of generation-related capital investments.
In June 2009 a law was enacted in Texas containing provisions that allow Entergy Texas to take advantage of a cost recovery mechanism that permits annual filings for the recovery of reasonable and necessary expenditures for transmission infrastructure improvement and changes in wholesale transmission charges. This mechanism was previously available to other non-ERCOT Texas utility companies, but not to Entergy Texas.
In September 2011 the PUCT adopted a proposed rule implementing a distribution cost recovery factor to recover capital and capital-related costs related to distribution infrastructure. The distribution cost recovery factor permitted utilities once per year to implement an increase or decrease in rates above or below amounts reflected in base rates to reflect distribution-related depreciation expense, federal income tax and other taxes, and return on investment. In 2023, the Texas Legislature modified the Texas Utilities Code to permit utilities to update their distribution cost recovery factors up to twice per year and to require the PUCT to issue an order on such update applications within 60 days, with a 15-day extension permitted for good cause.
In September 2019 the PUCT initiated a rulemaking to promulgate a generation cost recovery rider rule, implementing legislation passed in the 2019 Texas legislative session intended to allow electric utilities to recover generation investments between base rate proceedings. The PUCT approved the final rule in July 2020.
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Storm Cost Recovery
See Note 2 to the financial statements for a discussion of Entergy Texas’s filings to recover storm-related costs.
Other
In January 2022, Entergy Texas filed an application requesting approval to implement two voluntary renewable option tariffs, Rider Small Volume Renewable Option (Rider SVRO) and Rider Large Volume Renewable Option (Rider LVRO). Both tariffs are voluntary offerings that give customers the ability to match some or all of their monthly electricity usage with renewable energy credits that are purchased by Entergy Texas and retired on the customer’s behalf. Voluntary participation in either Rider SVRO or Rider LVRO and the charges assessed under the respective tariff would be in addition to the charges paid by customers under their otherwise applicable rate schedules and riders. In April 2022, Entergy Texas filed on behalf of the parties an unopposed settlement agreement supporting approval of Entergy Texas’s proposed voluntary renewable option tariffs. As part of the settlement agreement, Entergy Texas agreed to revise the cost allocation between the rate tiers of Rider SVRO and committed to collaborating with and considering the input of customers to develop an asset-backed green tariff program. The PUCT approved the settlement agreement in August 2022.
As part of its rate case application filed with the PUCT in July 2022, Entergy Texas requested approval of Schedule Green Future Option (Schedule GFO), an asset-backed green tariff that would allow Entergy Texas’s customers to voluntarily subscribe to a portion of the underlying solar facility’s capacity in exchange for energy credits. In August 2023 the PUCT approved an unopposed settlement in the proceeding that included approval of Schedule GFO.
Electric Industry Restructuring
In June 2009 a law was enacted in Texas that required Entergy Texas to cease all activities relating to Entergy Texas’s transition to competition. The law allows Entergy Texas to remain a part of the SERC Reliability Corporation (SERC) Region, although it does not prevent Entergy Texas from joining another power region. The law provides that proceedings to certify a power region that Entergy Texas belongs to as a qualified power region can be initiated by the PUCT, or on motion by another party, when the conditions supporting such a proceeding exist. Under the law, the PUCT may not approve a transition to competition plan for Entergy Texas until the expiration of four years from the PUCT’s certification of a qualified power region for Entergy Texas.
The law further amended already existing law that had required Entergy Texas to propose for PUCT approval a tariff to allow eligible customers the ability to contract for competitive generation. The amending language in the law provides, among other things, that: (1) the tariff shall not be implemented in a manner that harms the sustainability or competitiveness of manufacturers who choose not to participate in the tariff; (2) Entergy Texas shall “purchase competitive generation service, selected by the customer, and provide the generation at retail to the customer;” and (3) Entergy Texas shall provide and price transmission service and ancillary services under that tariff at a rate that is unbundled from its cost of service. The law directs that the PUCT may not issue an order on the tariff that is contrary to an applicable decision, rule, or policy statement of a federal regulatory agency having jurisdiction. The PUCT determined that unrecovered costs that may be recovered through the rider consist only of those costs necessary to implement and administer the competitive generation program and do not include lost revenues or embedded generation costs. The amount of customer load that may be included in the competitive generation service program is limited to 115 MW.
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System Energy
Cost of Service
The rates of System Energy are established by the FERC, and the costs allowed to be charged pursuant to these rates are, in turn, passed through to the participating Utility operating companies through the Unit Power Sales Agreement, which has monthly billings that reflect the current operating costs of, and investment in, Grand Gulf. Retail regulators and other parties may seek to initiate proceedings at FERC to investigate the prudence of costs included in the rates charged under the Unit Power Sales Agreement and examine, among other things, the reasonableness or prudence of the operation and maintenance practices, level of expenditures, allowed rates of return and rate base, and previously incurred capital expenditures, to the extent that claims concerning such issues have not been released by a party to one of the System Energy settlement agreements. Beginning in 2021, System Energy implemented annual billing protocols to provide retail regulators with information regarding rates billed under the Unit Power Sales Agreement. See Note 2 to the financial statements for discussion of the System Energy settlement agreements.
Franchises
Entergy Arkansas holds exclusive franchises to provide electric service in approximately 308 incorporated cities and towns in Arkansas. These franchises generally are unlimited in duration and continue unless the municipalities purchase the utility property. In Arkansas, franchises are considered to be contracts and, therefore, are governed pursuant to the terms of the franchise agreement and applicable statutes.
Entergy Louisiana holds non-exclusive franchises to provide electric service in approximately 175 incorporated municipalities and in the unincorporated areas of approximately 59 parishes of Louisiana. Entergy Louisiana holds non-exclusive franchises to provide natural gas service to customers in the City of Baton Rouge and in East Baton Rouge Parish. Municipal franchise agreement terms range from 25 to 60 years while parish franchise terms range from 25 to 99 years.
Entergy Mississippi has received from the MPSC certificates of public convenience and necessity to provide electric service to areas within 45 counties, including a number of municipalities, in western Mississippi. Under Mississippi statutory law, such certificates are exclusive. Entergy Mississippi may continue to serve in such municipalities upon payment of a statutory franchise fee, regardless of whether an original municipal franchise is still in existence.
Entergy New Orleans provides electric and gas service in the City of New Orleans pursuant to indeterminate permits set forth in city ordinances. These ordinances contain a continuing option for the City of New Orleans to purchase Entergy New Orleans’s electric and gas utility properties.
Entergy Texas holds a certificate of convenience and necessity from the PUCT to provide electric service to areas within approximately 27 counties in eastern Texas and holds non-exclusive franchises to provide electric service in approximately 70 incorporated municipalities. Entergy Texas typically obtains 25-year franchise agreements as existing agreements expire. Entergy Texas’s electric franchises expire over the period 2025-2058.
The business of System Energy is limited to wholesale power sales. It has no distribution franchises.
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Property and Other Generation Resources
Owned Generating Stations
The total capability of the generating stations owned and leased by the Utility operating companies and System Energy as of December 31, 2024 is indicated below:
| Owned and Leased Capability MW(a) | ||||||||||||||||||||||||||||||||||||||||||||
| Company | Total | CT / CCGT (b) | Legacy Gas/Oil | Nuclear (c) | Coal | Hydro (c) | Solar (c) | |||||||||||||||||||||||||||||||||||||
| Entergy Arkansas | 5,559 | 1,547 | 522 | 1,821 | 967 | 72 | 630 | |||||||||||||||||||||||||||||||||||||
| Entergy Louisiana | 10,809 | 5,629 | 2,789 | 2,052 | 339 | — | — | |||||||||||||||||||||||||||||||||||||
| Entergy Mississippi | 2,964 | 1,739 | 707 | — | 416 | — | 102 | |||||||||||||||||||||||||||||||||||||
| Entergy New Orleans | 662 | 635 | — | — | — | — | 27 | |||||||||||||||||||||||||||||||||||||
| Entergy Texas | 3,234 | 990 | 1,994 | — | 250 | — | — | |||||||||||||||||||||||||||||||||||||
| System Energy | 1,251 | — | — | 1,251 | — | — | — | |||||||||||||||||||||||||||||||||||||
| Total | 24,479 | 10,540 | 6,012 | 5,124 | 1,972 | 72 | 759 |
(a)“Owned and Leased Capability” is the dependable summer load carrying capability as demonstrated under actual operating conditions based on the primary fuel (assuming no curtailments) that each station was designed to utilize.
(b)Represents Simple Cycle Combustion Turbine units and Combined Cycle Gas Turbine units.
(c)The percentage of nuclear and renewable energy includes energy procured or produced for the benefit of certain customers through special tariffs, contracts, or renewable program subscriptions, and those customers retain the exclusive claims to all associated environmental attributes, renewable energy credits, and other relevant clean energy certifications.
Summer peak load for the Utility has averaged 21,998 MW over the previous decade.
The Utility operating companies’ load and capacity projections are reviewed periodically to assess the need and timing for additional generating capacity and interconnections. These reviews consider existing and projected demand, the availability and price of power, the location of new load, the economy, Entergy’s clean energy and other public policy goals, environmental regulations, and the age and condition of Entergy’s existing infrastructure.
The Utility operating companies’ long-term resource strategy (Portfolio Transformation Strategy) calls for the bulk of capacity needs to be met through long-term resources, whether owned or contracted. Over the past decade, the Portfolio Transformation Strategy has resulted in the addition of about 8,702 MW of new long-term resources and the deactivation of about 4,242 MW of legacy generation. As MISO market participants, the Utility operating companies also participate in MISO’s Day Ahead and Real Time Energy and Ancillary Services markets to economically dispatch generation and purchase energy to serve customers reliably and at the lowest reasonable cost.
Other Generation Resources
RFP Procurements
The Utility operating companies from time-to-time issue requests for proposals (RFP) to procure supply-side resources from sources other than the spot market to meet the unique regional needs of the Utility operating companies. The RFPs issued by the Utility operating companies have sought resources needed to meet near-term MISO reliability requirements as well as long-term requirements through a broad range of wholesale power
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products, including long-term contractual products and asset acquisitions. The RFP process has resulted in selections or acquisitions, including, among other things:
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In November 2018, Entergy Mississippi signed an agreement for the purchase of an approximately 100 MW to-be-constructed solar photovoltaic energy facility, Sunflower Solar facility, located in Sunflower County, Mississippi. Entergy Mississippi received regulatory approval from the MPSC in April 2020, and closed on the acquisition, through use of a tax equity partnership, in May 2022. The Sunflower Solar facility commenced commercial operation in September 2022;
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In March 2019, Entergy Arkansas signed an agreement for the purchase of an approximately 100 MW to-be-constructed solar photovoltaic energy facility, Searcy Solar facility, located in White County near Searcy, Arkansas. Entergy Arkansas received regulatory approval from the APSC in April 2020, and closed on the acquisition, through use of a tax equity partnership, in December 2021. The Searcy Solar facility commenced commercial operation in January 2022;
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In June 2020, Entergy Arkansas signed an agreement for the purchase of an approximately 100 MW to-be-constructed solar photovoltaic energy facility, Walnut Bend Solar facility, located in Lee County, Arkansas. In July 2021 the APSC issued an order approving the acquisition of the Walnut Bend Solar facility. In February 2024, Entergy Arkansas acquired the facility. The Walnut Bend Solar facility commenced commercial operation in September 2024;
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In September 2020, Entergy Arkansas signed an agreement for the purchase of an approximately 180 MW to-be-constructed solar photovoltaic energy facility, West Memphis Solar facility, located in Crittenden County, Arkansas. In October 2021 the APSC issued an order approving the acquisition of the West Memphis Solar facility. In August 2024, Entergy Arkansas acquired the facility. The West Memphis Solar facility commenced commercial operation in December 2024;
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In December 2020, Entergy Texas selected the 1,158 MW self-build alternative, Orange County Advanced Power Station, out of the 2020 Entergy Texas combined-cycle, gas turbine RFP. Regulatory approval was received in November 2022 and construction has commenced. The facility is expected to be in service by mid-2026;
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In November 2021, Entergy Louisiana signed an agreement for the purchase of an approximately 150 MW to-be-constructed solar photovoltaic energy facility, St. Jacques facility, to be sited in St. James Parish near Vacherie, Louisiana. In September 2022 the LPSC issued an order approving the St. Jacques facility; however, following the LPSC approval, the St. James Parish council issued a moratorium on new land use permits for solar facilities. In November 2023, St. James Parish lifted the moratorium and adopted an ordinance modifying the parish’s land use plan to establish solar as an approved land use and defining corresponding solar regulations. In June 2024 the St. James Parish council denied the project developer’s solar energy facility farm permit application and following this denial, the project developer and one of the project’s ground lessors filed separate lawsuits seeking to overturn the council’s decision. Entergy Louisiana is currently monitoring the status of the aforementioned lawsuits and also considering alternate paths forward;
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In August 2022, Entergy Arkansas signed an agreement for the purchase of an approximately 250 MW to-be-constructed solar photovoltaic energy facility, Driver Solar facility, located near Osceola, Arkansas. Also in August 2022, Entergy Arkansas received regulatory approval from the APSC for the Driver Solar facility. In August 2024, Entergy Arkansas acquired the facility. The Driver Solar facility commenced commercial operation in December 2024;
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Entergy Louisiana began construction on the 49 MW Sterlington solar project in December 2024, located in Sterlington, Louisiana. The facility is expected to achieve commercial operation in January 2026;
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Entergy Mississippi will begin construction on the Delta Solar facility, an 80 MW solar facility to be located in Bolivar County, Mississippi, in April 2026. The facility is expected to achieve commercial operation by the end of 2027; and
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Entergy Mississippi will begin construction on the Penton Solar facility, a 190 MW solar facility in December 2025. The facility is expected to achieve commercial operation by early 2028.
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The RFP process has also resulted in the selection, or confirmation of the economic merits of, long-term purchased power agreements (PPAs), including, among others:
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River Bend’s 30% life-of-unit PPA between Entergy Louisiana and Entergy New Orleans for 100 MW related to Entergy Louisiana’s unregulated portion of the River Bend nuclear station, which portion was formerly owned by Cajun;
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Entergy Arkansas’s wholesale base load capacity life-of-unit PPAs executed in 2003 totaling approximately 220 MW between Entergy Arkansas and Entergy Louisiana (110 MW) and between Entergy Arkansas and Entergy New Orleans (110 MW) related to the sale of a portion of Entergy Arkansas’s coal and nuclear base load resources (which had not been included in Entergy Arkansas’s retail rates);
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In September 2012, Entergy Gulf States Louisiana and Rain CII Carbon LLC executed a 20-year agreement for 28 MW, with the potential to purchase an additional 9 MW when available, from a petroleum coke calcining facility in Sulphur, Louisiana. The facility began commercial operation in May 2013. Entergy Louisiana, as successor in interest to Entergy Gulf States Louisiana, now holds the agreement with the facility;
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In March 2013, Entergy Gulf States Louisiana and Agrilectric Power Partners, LP executed a 20-year agreement for 8.5 MW from a refurbished rice hull-fueled electric generation facility located in Lake Charles, Louisiana. Entergy Louisiana, as successor in interest to Entergy Gulf States Louisiana, now holds the agreement with Agrilectric;
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Entergy Mississippi’s cost-based purchase, beginning in January 2013, of 90 MW from Entergy Arkansas’s share of Grand Gulf (only 60 MW of this PPA came through the RFP process). Cost recovery for the 90 MW was approved by the MPSC in January 2013;
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In April 2015, Entergy Arkansas and Stuttgart Solar, LLC executed a 20-year agreement for 81 MW from a solar photovoltaic electric generation facility located near Stuttgart, Arkansas. The APSC approved the project and deliveries pursuant to that agreement commenced in June 2018;
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In November 2016, Entergy Louisiana and LS Power executed a 10-year agreement for 485 MW from the Carville Energy Center located in St. Gabriel, Louisiana. In November 2019, LS Power sold and transferred the Carville Energy Center and facility to Argo Infrastructure Partners, which included the power purchase agreement. The PPA delivery term began in June 2022;
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In November 2016, Entergy Louisiana and Occidental Chemical Corporation executed a 10-year agreement for 500 MW from the Taft Cogeneration facility located in Hahnville, Louisiana. The transaction received regulatory approval and began in June 2018;
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In June 2017, Entergy Arkansas and Chicot Solar, LLC executed a 20-year agreement for 100 MW from a to-be-constructed solar photovoltaic electric generating facility located in Chicot County, Arkansas. The transaction received regulatory approval and the PPA began in November 2020;
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In February 2018, Entergy Louisiana and LA3 West Baton Rouge, LLC (Capital Region Solar project) executed a 20-year agreement for 50 MW from a to-be-constructed solar photovoltaic electric generating facility located in West Baton Rouge Parish, Louisiana. The transaction received regulatory approval in February 2019 and the PPA began in October 2020;
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In July 2018, Entergy New Orleans and St. James Solar, LLC executed a 20-year agreement for 20 MW from a to-be-constructed solar photovoltaic electric generating facility located in St. James Parish, Louisiana. The transaction received regulatory approval in July 2019 and the PPA began in February 2023 after the facility reached commercial operation in March 2023;
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In August 2018, Entergy Louisiana and South Alexander Development I, LLC executed a 5-year agreement for 5 MW from a solar photovoltaic electric generating facility located in Livingston Parish, Louisiana. The PPA began in December 2020 and received regulatory approval in January 2021;
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In February 2019, Entergy New Orleans and Iris Solar, LLC executed a 20-year agreement for 50 MW from a to-be-constructed solar photovoltaic electric generating facility located in Washington Parish, Louisiana. The transaction received regulatory approval in July 2019 and achieved commercial operation in November 2022;
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In August 2020, Entergy Texas and Umbriel Solar, LLC executed a 20-year agreement for 150 MW from a to-be-constructed solar photovoltaic electric generating facility located in Polk County, Texas. The facility achieved commercial operation in November 2023;
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In June 2021, Entergy Louisiana and Sunlight Road Solar, LLC executed a 20-year agreement for 50 MW from a to-be-constructed solar photovoltaic electric generating facility located in Washington Parish, Louisiana. The facility achieved commercial operation in November 2024 and the PPA delivery term began in December 2024;
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In June 2021, Entergy Louisiana and Vacherie Solar Energy Center, LLC executed a 20-year PPA for 150 MW from a to-be-constructed solar photovoltaic electric generating facility located in St. James Parish, Louisiana. In September 2022 the LPSC voted to issue an order approving the Vacherie facility; however, following the LPSC approval, the St. James Parish council issued a moratorium on new land use permits for solar facilities. In November 2023, St. James Parish lifted the moratorium and adopted an ordinance modifying the parish’s land use plan to establish solar as an approved land use and defining corresponding solar regulations. In June 2024 the St. James Parish council denied the project developer’s solar energy facility farm permit application and following this denial, the project developer and one of the project’s ground lessors filed separate lawsuits seeking to overturn the council’s decision. Entergy Louisiana is currently monitoring the status of the aforementioned lawsuits and also considering alternate paths forward;
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In December 2022, Entergy Mississippi and Hinds Solar, LLC executed a 20-year PPA for approximately 150 MW from a to-be-constructed solar photovoltaic energy facility located in Hinds County, Mississippi. In August 2023 the MPSC approved the PPA;
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In October 2022, Entergy Mississippi and Wildwood Solar, LLC executed a 20-year PPA for approximately 100 MW from a to-be-constructed solar photovoltaic energy facility located in Tallahatchie County, Mississippi. In August 2023 the MPSC approved the PPA, and the facility is expected to reach commercial operation in 2026;
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In October 2022, Entergy Mississippi and Greer Solar, LLC executed a 20-year PPA for approximately 170 MW from a to-be-constructed solar photovoltaic energy facility located in Washington County, Mississippi. In August 2023 the MPSC approved the PPA, and the facility is expected to reach commercial operation as early as December 2026;
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In October 2022, Entergy Arkansas and Flat Fork Solar, LLC executed a 20-year PPA for approximately 200 MW from a to-be-constructed solar photovoltaic energy facility located in St. Francis County, Arkansas. In September 2023 the APSC approved the PPA, and the facility is expected to reach commercial operation as early as September 2025;
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In October 2022, Entergy Arkansas and Forgeview Solar, LLC executed a 15-year PPA for approximately 200 MW from a to-be-constructed solar photovoltaic energy facility located in Mississippi County, Arkansas. In September 2023 the APSC approved the PPA, and the facility is expected to reach commercial operation as early as November 2025;
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In January 2023, Entergy Louisiana and Coastal Prairie Solar, LLC executed a 20-year PPA for approximately 175 MW from a to-be-constructed solar photovoltaic energy facility located in Iberville Parish, Louisiana. In January 2024 the LPSC approved the PPA, and the facility is expected to reach commercial operation as early as December 2027; and
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In October 2023, Entergy Louisiana and Mondu Solar, LLC executed a 20-year PPA for approximately 100 MW from a to-be-constructed solar photovoltaic energy facility located in Point Coupee Parish, Louisiana. In September 2024 the LPSC approved the PPA, and the facility is expected to reach commercial operation as early as June 2026.
In July 2021, Entergy Services, on behalf of Entergy Texas, issued an RFP for solar generation resources. Entergy Texas selected a combination of PPA and owned resources in March 2022. The PPA negotiations were terminated after failure to reach agreement on terms. In July 2024, Entergy Texas filed an application with the PUCT seeking regulatory approval for the owned resource, the 141 MW Votaw Solar facility. Subject to receipt of required regulatory approval and other conditions, the Votaw Solar facility is expected to be in service by mid-2028.
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In April 2022, Entergy Services, on behalf of Entergy Arkansas, issued an RFP for solar photovoltaic and wind resources. Entergy Arkansas selected a combination of PPA and build-own-transfer resources in February 2023. One PPA project was terminated after failure to reach agreement on terms, and negotiation of definitive agreements for the remaining resources are in progress.
In October 2022, Entergy Services, on behalf of Entergy Texas, issued an RFP for solar photovoltaic and wind resources. Entergy Texas selected a combination of PPA, build-own-transfer, and owned resources in July 2023. The PPA and build-own-transfer negotiations were terminated after failure to reach agreement on terms. In July 2024, Entergy Texas filed an application with the PUCT seeking regulatory approval for the owned resource, the 170 MW Segno Solar facility. Subject to receipt of required regulatory approval and other conditions, the Segno Solar facility is expected to be in service by early 2027.
In April 2024, Entergy Services, on behalf of Entergy Louisiana, issued an RFP for capacity and energy from existing generation resources. Entergy Louisiana selected a PPA resource in December 2024, and negotiation of a definitive agreement is in progress.
In August 2024, Entergy Services, on behalf of Entergy Louisiana, issued the 3 GW Alternative Market-based Mechanism Process Solar RFP which solicits up to 3,000 MW of solar photovoltaic resources across four procurement windows. The RFP is expected to continue through 2026 with selections expected throughout the process at the conclusion of each procurement window, as applicable.
In November 2024, Entergy Services, on behalf of Entergy Louisiana, issued a Combined Cycle Combustion Turbine capacity and energy resources RFP which solicits up to 2,000 MW of generation. The RFP is expected to continue through 2025 with selections expected in third quarter 2025.
Other Procurements From Third Parties
The Utility operating companies have also made resource acquisitions outside of the RFP process and have also entered various limited- and long-term contracts in recent years as a result of bilateral negotiations, including among others:
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In March 2016, Entergy Arkansas (Power Block 2), Entergy Louisiana (Power Blocks 3 and 4), and Entergy New Orleans (Power Block 1) completed their respective acquisitions of the 1,980 MW (summer rating), natural gas-fired, combined-cycle gas turbine Union Power Station power blocks, each rated at 495 MW (summer rating). The facility is located near El Dorado, Arkansas and has been in operation since July 2003;
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In October 2019, Entergy Mississippi acquired the Choctaw Generating Station, an 810 MW combined-cycle, natural gas-fired power plant. The facility is located in Choctaw County and has been in operation since July 2003;
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In November 2020, Entergy Louisiana acquired the Washington Parish Energy Center, a 361 MW natural gas-fired peaking power plant. The facility is located approximately 60 miles north of New Orleans on a site Entergy Louisiana purchased from Calpine in 2019. Calpine began construction on the plant in early 2019 and Entergy Louisiana purchased the plant upon completion in November 2020;
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In June 2021, Entergy Texas acquired the Hardin County Peaking Facility, an existing 147 MW simple-cycle gas-fired peaking power plant in Kountze, Texas, previously owned by East Texas Electric Cooperative. The facility has been in operation since January 2010;
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In November 2021, Entergy Louisiana and Elizabeth Solar, LLC executed a 20-year PPA for approximately 125 MW from a to-be-constructed solar photovoltaic energy facility located in Allen Parish, Louisiana. In September 2022 the LPSC voted to approve this project and in September 2023, Entergy Louisiana reported to the LPSC that it had entered into amended agreements related to the Elizabeth Solar facility. The facility achieved commercial operation in December 2024;
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In February 2024, Entergy Louisiana and Magnolia Power executed a 10-year Capacity Credit Purchase Agreement (CCPA) for 290 MW of MISO Zone 9, Zonal Resource Credits (ZRC) associated with the Magnolia Power Generating Station. In December 2024 the LPSC approved the CCPA, with the delivery term set to commence on the first day of the 2025-2026 MISO planning year; and
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In May 2024, Entergy Mississippi and Cooperative Energy executed a one-year ZRC Purchase and Sale Agreement for a minimum of 300 MW of MISO Zone 10, ZRCs during the 2025-2026 MISO planning year. This agreement was followed by a similar agreement between the parties in November 2024 for a minimum of 350 MW of MISO Zone 10, ZRCs to be transferred over the 2026-2027, 2027-2028, and 2028-2029 planning years.
Power Through Programs
In February 2019, Entergy Mississippi proposed a new technologies pilot to the MPSC, which was approved in December 2019. The pilot, previously referred to as the Power Through program, further modernized the energy grid and met customers’ evolving expectations by offering utility-owned, natural gas-fired backup generators to customers. Following conclusion of the three-year pilot, in October 2023, Entergy Mississippi proposed full-scale implementation of commercial scale, natural gas-fired resilient distributed generation, to be installed in front of the meter at commercial and industrial customer premises. The full-scale offering was approved by the MPSC in December 2023 along with an associated rate schedule, the Resiliency as a Service Rider Schedule. Entergy Mississippi can dispatch the units at times of peak demand, which can mitigate the typically higher energy and capacity costs borne by all customers during times of peak energy usage.
In December 2020, Entergy Texas filed an application with the PUCT to amend its certificate of convenience and necessity to own and operate up to 75 MW of natural gas-fired distributed generation to be installed at commercial and industrial customer premises. Under this proposal, Entergy Texas would own and operate a fleet of generators ranging from 100 kW to 10 MW that would supply a portion of Entergy Texas’s long-term resource needs and enhance the resiliency of Entergy Texas’s electric grid. This fleet of generators would also be available to customers during outages to supply backup electric service as part of a program known as “Power Through.” In its 2021 session, the Texas legislature modified the Texas Utilities Code to exempt generators under 10 megawatts from the requirement to obtain a certificate of convenience and necessity. In addition, the PUCT announced an intent to conduct a broad rulemaking related to distributed generation and recommended that utilities with pending applications addressing distributed generation withdraw them. Accordingly, Entergy Texas withdrew its application for a certificate of convenience and necessity and associated tariff from the PUCT without prejudice to refiling. Entergy Texas continues to deploy certain customer-sited distributed generators under an existing PUCT-approved tariff. In August 2022, Entergy Texas filed an application for PUCT approval of voluntary Rate Schedule Utility Owned Distributed Generation through which it would charge host customers for back-up service from customer-sited Power Through generators. Based on the exemption enacted by the Texas legislature in 2021, Entergy Texas’s application was not required to, and did not, seek an amendment to its certificate of convenience and necessity in order to continue deploying Power Through generators. In October 2022 two intervenors filed requests for a hearing on Entergy Texas’s application. In October 2022 the PUCT staff filed a request that the proceeding be referred to the State Office of Administrative Hearings. In January 2023 the PUCT announced an intent to develop certain broadly applicable reliability metrics against which to measure distributed generation resources and directed Entergy Texas to withdraw its application. However, the PUCT did allow Entergy Texas to continue its pilot program for Power Through generators. Entergy Texas withdrew its application. In its 2023 session, the Texas legislature modified the Texas Utilities Code to confirm Entergy Texas’s ability to provide back-up generation service using customer-sited utility-owned distributed generation and directing the PUCT to approve rates for such service upon application by Entergy Texas. In February 2024, Entergy Texas resubmitted its application for PUCT approval of voluntary Rate Schedule Utility Owned Distributed Generation. Texas cities, the Office of Public Utility Counsel, Texas Industrial Energy Consumers, and Wal-Mart, Inc. have intervened as parties. In July 2024 the proceeding was referred to the State Office of Administrative Hearings and a procedural schedule was established. In November 2024, Entergy Texas filed an unopposed settlement agreement consistent with its as-filed request and a motion to admit evidence and remand the proceeding to the PUCT. Also in
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November 2024, the ALJ with the State Office of Administrative Hearings granted the motion and remanded the proceeding to the PUCT. In December 2024 the PUCT’s Office of Policy and Docket Management filed a proposed order for the PUCT’s consideration that would adopt the unopposed settlement. A PUCT decision is expected in the first quarter of 2025.
In August 2021, Entergy Arkansas filed with the APSC an application seeking authority for a “Power Through” offering to deploy natural gas-fired distributed generation. The application was supported by a number of letters of interest from Entergy Arkansas customers. In May 2023 the APSC issued an order approving the Power Through offering with some modifications. In December 2023 the APSC approved a streamlined approval process for the individual Power Through generators. In July 2024, Entergy Arkansas filed tariff revisions to comply with the APSC’s order. In November 2024 the APSC approved Entergy Arkansas’s compliance tariff.
In July 2021, Entergy Louisiana filed with the LPSC an application for authority to deploy natural gas-fired distributed generation. The application was supported by a number of letters of interest from Entergy Louisiana customers. In June 2022 the parties reached an uncontested settlement which, among other things, recommended approval of 120 MW of natural gas fired distributed generation and an additional 30 MW of solar and battery distributed generation, for a total distributed generation program of 150 MW. Pursuant to the terms of the settlement agreement, Entergy Louisiana may seek to expand the distributed generation program following the earlier of two years after issuance of an order approving the settlement or the installation of 60 MW of distributed generation pursuant to this program. The settlement was approved by the LPSC in November 2022.
Provision of Service to Large-Scale Data Center Customers
Subject to pending regulatory approvals, certain Utility operating companies are planning to make significant infrastructure investments in new solar projects, natural gas power plants, and other transmission and generation assets to power new large-scale data centers. These infrastructure investments are being made primarily in connection with electric service agreements with a small number of new customers to provide power for new data centers being constructed to support artificial intelligence and other technology capabilities.
In January 2024, Amazon Web Services announced its plan to invest in two data centers located in Madison County, Mississippi. In March 2024, Entergy Mississippi executed a large customer supply and service agreement to serve the two data centers. In February 2025, Entergy Mississippi entered into a new large customer supply and service agreement with a customer. See the “Liquidity and Capital Resources – Uses of Capital – Additional Generation and Transmission Resources” section of Management’s Financial Discussion and Analysis for Entergy Mississippi for additional discussion of the agreements and the investments proposed in connection with service to these facilities.
In October 2024, Entergy Louisiana filed an application with the LPSC requesting approval of certain generation and transmission assets proposed in connection with service to a new large-scale data center being developed by a subsidiary of Meta Platforms, Inc. in north Louisiana. See the “Liquidity and Capital Resources – Uses of Capital – Additional Generation and Transmission Resources” section of Management’s Financial Discussion and Analysis for Entergy Louisiana for additional discussion of this filing and the investments proposed in connection with new service to this data center facility.
In addition, some of the Utility operating companies are engaged in discussions with other prospective customers concerning potential service to other data center projects. Because of the significant demand and energy needs associated with these facilities, which generally require power at levels near their maximum level of demand for sustained periods throughout the day and throughout the year, extending service to these facilities often requires investment in incremental generation and transmission facilities, with a resulting risk of stranded costs if expected demand does not materialize, although this risk can potentially be mitigated through appropriate commercial terms subject to negotiations with the customer. Often it is therefore necessary and appropriate for the Utility operating companies, in the electric service agreements negotiated with these customers, to include terms that provide for the
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prospective customer to contribute significant funds toward the cost of these incremental investments and that include other terms and safeguards to balance reasonably the interests of existing customers with the interests of the prospective customer. Such safeguards take many forms but may include minimum payment obligations, lengthy contract durations, customer advances for construction, and credit and collateral requirements, among other terms. Extending service to large data center customers also may carry significant potential benefits to the Utility operating companies’ existing customer base as well as significant economic development benefits for the states and communities in which the new data centers are sited. These benefits include the potential for substantial contributions to the Utility operating companies’ fixed costs, which may have the effect of reducing electricity rates for all customers, as well as creating new jobs, tax revenues to local governments, indirect economic benefits, and similar benefits. Investments in significant new generation and transmission assets, such as those necessary to serve proposed large-scale data center customers, are often subject to the requirement of receiving applicable regulatory approvals from the APSC, the LPSC, the MPSC, the City Council, or the PUCT, depending on applicable regulatory rules and laws and the circumstances of the proposed investments.
Large-scale data center customers often have sustainability goals and commitments that require the sourcing of power for these facilities from renewable or emissions-free resources, such as solar, wind, or nuclear resources, or installation of carbon capture or other technologies to reduce emissions. Many of these data center customers are willing to contribute a significant portion of the cost of these facilities in order to access these sustainable or emissions-free resources, which arrangements have the potential to lower the costs of such resources as reflected in the rates of the Utility operating companies to the benefit of their other customers. This interest of prospective large-scale data center customers in sustainable and clean generating resources coincides with the Entergy’s own sustainability commitments and informs the Utility operating companies’ strategies and resource planning solutions to serve these prospective customers’ needs. There can be no assurance that prospective large-scale data center customers will continue to prioritize sustainability or clean generating resources, which may affect the Utility operating companies’ strategies in the future.
Interconnections
The Utility operating companies’ generating units are interconnected to the electric system which operates at various voltages up to 500 kV. These generating units consist of steam-turbine generators fueled by natural gas, coal, and pressurized and boiling water nuclear reactors; combustion-turbine generators, combined-cycle combustion turbine generators and reciprocating internal combustion engine generators that are fueled by natural gas; and inverter-based resources interconnecting both solar photovoltaic systems and energy storage devices that participate in the MISO wholesale electric market. Additionally, some of the Utility operating companies also offer customer services and products that include load-modifying and demand response resources that are interconnected to both the distribution and transmission systems and that also participate in the wholesale market. Entergy’s Utility operating companies are MISO market participants and the companies’ transmission systems are interconnected with those of many neighboring utilities. MISO is an essential link in the safe, cost-effective delivery of electric power across all or parts of 15 U.S. states and the Canadian province of Manitoba. In addition, the Utility operating companies are members of the SERC Reliability Corporation (SERC), the Regional Entity with delegated authority from the North American Electric Reliability Corporation (NERC) for the purpose of proposing and enforcing Bulk Electric System reliability standards within 16 central and southeastern states.
Gas Property
As of December 31, 2024, Entergy New Orleans distributed and transported natural gas for distribution within New Orleans, Louisiana, through approximately 2,600 miles of gas pipeline. As of December 31, 2024, the gas properties of Entergy Louisiana, which are located in and around Baton Rouge, Louisiana, were not material to Entergy Louisiana’s financial position. See “Held for Sale - Natural Gas Distribution Businesses” in Note 14 to the financial statements for discussion of the planned sale of the Entergy New Orleans and Entergy Louisiana natural gas distribution businesses.
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Title
The Utility operating companies’ generating stations are generally located on properties owned in fee simple. Most of the substations and transmission and distribution lines are constructed on private property or public rights-of-way pursuant to easements, servitudes, or appropriate franchises. Some substation properties are owned in fee simple. The Utility operating companies generally have the right of eminent domain, whereby they may perfect title to, or secure easements or servitudes on, private property for their utility operations.
Substantially all of the physical properties and assets owned by Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy are subject to the liens of mortgages securing bonds issued by those companies. The Lewis Creek generating station of Entergy Texas was acquired by merger with a subsidiary of Entergy Texas and is currently not subject to the lien of the Entergy Texas indenture.
Fuel Supply
The average fuel cost per kWh for the Utility operating companies and System Energy for the years 2022-2024 were:
| Year | Natural Gas | Nuclear | Coal | Renewables (a) | Purchased Power | MISO Purchases (b) | ||||||||||||||||||||||||||||||||
| 2024 | (Cents Per kWh) | |||||||||||||||||||||||||||||||||||||
| Entergy Arkansas | 2.02 | 0.57 | 3.04 | 1.67 | 10.21 | 0.37 | ||||||||||||||||||||||||||||||||
| Entergy Louisiana | 2.30 | 0.73 | 3.34 | 11.48 | 3.70 | 2.32 | ||||||||||||||||||||||||||||||||
| Entergy Mississippi | 1.86 | — | 2.60 | 0.11 | 2.36 | 2.89 | ||||||||||||||||||||||||||||||||
| Entergy New Orleans (c) | 2.26 | — | — | 3.60 | — | 2.75 | ||||||||||||||||||||||||||||||||
| Entergy Texas | 2.04 | — | 3.33 | 3.53 | 6.80 | 2.80 | ||||||||||||||||||||||||||||||||
| System Energy | — | 0.65 | — | — | — | — | ||||||||||||||||||||||||||||||||
| Utility | 2.14 | 0.65 | 3.00 | 5.85 | 3.73 | 2.38 | ||||||||||||||||||||||||||||||||
| 2023 | ||||||||||||||||||||||||||||||||||||||
| Entergy Arkansas | 1.98 | 0.50 | 3.09 | 1.98 | 11.57 | 0.77 | ||||||||||||||||||||||||||||||||
| Entergy Louisiana | 2.34 | 0.60 | 3.22 | 10.38 | 3.76 | 2.50 | ||||||||||||||||||||||||||||||||
| Entergy Mississippi | 2.21 | — | 2.82 | 0.03 | 5.86 | 1.84 | ||||||||||||||||||||||||||||||||
| Entergy New Orleans (c) | 2.05 | — | — | 3.24 | — | 2.33 | ||||||||||||||||||||||||||||||||
| Entergy Texas | 2.29 | — | 3.17 | 2.25 | 5.64 | 3.18 | ||||||||||||||||||||||||||||||||
| System Energy | — | 0.68 | — | — | — | — | ||||||||||||||||||||||||||||||||
| Utility | 2.25 | 0.58 | 3.06 | 6.14 | 4.03 | 2.61 | ||||||||||||||||||||||||||||||||
| 2022 | ||||||||||||||||||||||||||||||||||||||
| Entergy Arkansas | 4.98 | 0.52 | 2.93 | 2.11 | 10.90 | (2.65) | ||||||||||||||||||||||||||||||||
| Entergy Louisiana | 5.50 | 0.57 | 2.84 | 10.70 | 6.95 | 6.45 | ||||||||||||||||||||||||||||||||
| Entergy Mississippi | 4.38 | — | 2.85 | 0.04 | 6.53 | 6.68 | ||||||||||||||||||||||||||||||||
| Entergy New Orleans (c) | 5.10 | — | — | (5.16) | — | 7.21 | ||||||||||||||||||||||||||||||||
| Entergy Texas | 5.77 | — | 2.83 | 6.26 | 5.61 | 6.68 | ||||||||||||||||||||||||||||||||
| System Energy | — | 0.65 | — | — | — | — | ||||||||||||||||||||||||||||||||
| Utility | 5.27 | 0.57 | 2.89 | 7.00 | 6.54 | 5.95 |
(a)Includes average fuel costs from both owned and purchased power resources.
Next: Item 1. Entergy Corporation, Utility operating companies, and System Energy