Item 4. Controls and Procedures

Disclosure Controls and Procedures

As of March 31, 2022, evaluations were performed under the supervision and with the participation of Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy (individually “Registrant” and collectively the “Registrants”) management, including their respective Principal Executive Officers (PEO) and Principal Financial Officers (PFO). The evaluations assessed the effectiveness of the Registrants’ disclosure controls and procedures. Based on the evaluations, each PEO and PFO has concluded that, as to the Registrant or Registrants for which they serve as PEO or PFO, the Registrant’s or Registrants’ disclosure controls and procedures are effective to ensure that information required to be disclosed by each Registrant in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms; and that the Registrant’s or Registrants’ disclosure controls and procedures are also effective in reasonably assuring that such information is accumulated and communicated to the Registrant’s or Registrants’ management, including their respective PEOs and PFOs, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls over Financial Reporting

Under the supervision and with the participation of each Registrants’ management, including its respective PEO and PFO, each Registrant evaluated changes in internal control over financial reporting that occurred during the quarter ended March 31, 2022 and found no change that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

ENTERGY ARKANSAS, LLC AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

Results of Operations

Net Income

Net income decreased $27.5 million primarily due to the reversal in 2021 of the remaining regulatory liability for the formula rate plan 2019 historical year netting adjustment and higher depreciation and amortization expenses, partially offset by higher retail electric price.

Operating Revenues

Following is an analysis of the change in operating revenues comparing the first quarter 2022 to the first quarter 2021:

			Amount
			(In Millions)
2021 operating revenues			$583.4
Fuel, rider, and other revenues that do not significantly affect net income			(55.4)
Volume/weather			(3.1)
Return of unprotected excess accumulated deferred income taxes to customers			8.0
Retail electric price			26.1
2022 operating revenues			$559.0

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

The volume/weather variance is primarily due to the effect of less favorable weather on residential sales, partially offset by increases in commercial and industrial usage. The increase in commercial usage was primarily due to an increase in customers and the effect of the COVID-19 pandemic on businesses in first quarter 2021. The increase in industrial usage was primarily due to an increase in demand from existing customers, primarily in the wood products and petroleum refining industries.

The return of unprotected excess accumulated deferred income taxes to customers resulted from the return of unprotected excess accumulated deferred income taxes through a tax adjustment rider beginning in April 2018. In the first quarter 2021, $8 million was returned to customers. There is no effect on net income as the reduction in operating revenues was offset by a reduction in income tax expense. See Note 2 to the financial statements in the Form 10-K for further discussion of regulatory activity regarding the Tax Cuts and Jobs Act.

The retail electric price variance is primarily due to increases in formula rate plan rates effective May 2021 and January 2022. See Note 2 to the financial statements in the Form 10-K for further discussion of the 2020 formula rate plan filing and the 2021 formula rate plan filing.

Entergy Arkansas, LLC and Subsidiaries

Management's Financial Discussion and Analysis

Total electric energy sales for Entergy Arkansas for the three months ended March 31, 2022 and 2021 are as follows:

			2022						2021						% Change
			(GWh)
Residential			2,092						2,185						(4)
Commercial			1,307						1,262						4
Industrial			1,972						1,947						1
Governmental			55						54						2
Total retail			5,426						5,448						—
Sales for resale:
Associated companies			486						597						(19)
Non-associated companies			1,391						2,030						(31)
Total			7,303						8,075						(10)

See Note 13 to the financial statements herein for additional discussion of Entergy Arkansas’s operating revenues.

Other Income Statement Variances

Depreciation and amortization expenses increased primarily due to additions to plant in service, including the Searcy Solar facility, which was placed in service in December 2021.

Other regulatory charges (credits) - net includes the reversal in 2021 of the remaining $38.8 million regulatory liability for the 2019 historical year netting adjustment as part of its 2020 formula rate plan proceeding. See Note 2 to the financial statements in the Form 10-K for discussion of the 2020 formula rate plan filing. In addition, Entergy Arkansas records a regulatory charge or credit for the difference between asset retirement obligation-related expenses and nuclear decommissioning trust earnings plus asset retirement obligation related costs collected in revenue.

Other income decreased primarily due to changes in decommissioning trust fund activity, including portfolio rebalancing of the ANO 1 and ANO 2 decommissioning trust funds in the first quarter 2021.

Noncontrolling interest reflects the earnings or losses attributable to the noncontrolling interest partner of the tax equity partnership for the Searcy Solar facility under HLBV accounting. Entergy Arkansas has recorded a regulatory charge of $1.5 million in first quarter 2022 to defer the difference between the losses allocated to the tax equity partner under the HLBV method of accounting and the earnings/loss that would have been allocated to the tax equity partner under its respective ownership percentage in the partnership. See Note 1 to the financial statements in the Form 10-K for discussion of the HLBV method of accounting.

Income Taxes

The effective income tax rate was 22.6% for the first quarter 2022. The difference in the effective income tax rate for the first quarter 2022 versus the federal statutory rate of 21% was primarily due to state income taxes, partially offset by certain book and tax differences related to utility plant items.

The effective income tax rate was 17.3% for the first quarter 2021. The difference in the effective income tax rate for the first quarter 2021 versus the federal statutory rate of 21% was primarily due to the amortization of excess accumulated deferred income taxes and certain book and tax differences related to utility plant items, partially offset by state income taxes. See Note 10 to the financial statements herein and Notes 2 and 3 to the

Entergy Arkansas, LLC and Subsidiaries

Management's Financial Discussion and Analysis

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

Liquidity and Capital Resources

Cash Flow

Cash flows for the three months ended March 31, 2022 and 2021 were as follows:

			2022						2021
			(In Thousands)
Cash and cash equivalents at beginning of period			$12,915						$192,128
Net cash provided by (used in):
Operating activities			247,426						91,573
Investing activities			(214,477)						(162,611)
Financing activities			64,167						2,690
Net increase (decrease) in cash and cash equivalents			97,116						(68,348)
Cash and cash equivalents at end of period			$110,031						$123,780

Operating Activities

Net cash flow provided by operating activities increased $155.9 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to:

• higher collections from customers;

• decreased fuel costs, including costs related to Winter Storm Uri in 2021. See Note 2 to the financial statements in the 10-K for a discussion of fuel and purchased power cost recovery;

• a decrease of $9.7 million in storm spending in 2022 primarily due to increased spending on Winter Storm Uri restoration efforts in 2021; and

• a decrease of $6.3 million in pension contributions in 2022. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K and Note 6 to the financial statements herein for a discussion of qualified pension and other postretirement benefits funding.

Investing Activities

Net cash flow used in investing activities increased $51.9 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to:

• money pool activity;

• an increase of $14 million in distribution construction expenditures primarily due to higher capital expenditures for storm restoration, partially offset by lower spending on advanced metering infrastructure in 2022; and

• an increase of $10.2 million in nuclear construction expenditures primarily due to increased spending on various nuclear projects in 2022.

The increase was partially offset by a decrease of $11.5 million as a result of fluctuations in nuclear fuel activity primarily due to variations from year to year in the timing and pricing of fuel reload requirements, materials and services deliveries, and the timing of cash payments during the nuclear fuel cycle.

Entergy Arkansas, LLC and Subsidiaries

Management's Financial Discussion and Analysis

Increases in Entergy Arkansas’s receivable from the money pool are a use of cash flow, and Entergy Arkansas’s receivable from the money pool increased by $60 million for the three months ended March 31, 2022 compared to increasing by $12.5 million for the three months ended March 31, 2021. The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings.

Financing Activities

Net cash flow provided by financing activities increased $61.5 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to:

• the repayment, at maturity, of $350 million of 3.75% Series mortgage bonds due February 2021;

• the issuance of $200 million of 4.20% Series mortgage bonds in March 2022; and

• the repayment, at maturity, of $45 million of 2.375% Series governmental bonds due January 2021.

The increase was partially offset by the issuance of $400 million of 3.35% Series mortgage bonds in March 2021 and money pool activity.

Decreases in Entergy Arkansas’s payable to the money pool are a use of cash flow, and Entergy Arkansas’s payable to the money pool decreased by $139.9 million for the three months ended March 31, 2022.

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

Capital Structure

Entergy Arkansas’s debt to capital ratio is shown in the following table. The increase in the debt to capital ratio is primarily due to the issuance of long-term debt in 2022.

			March 31, 2022						December 31, 2021
Debt to capital			53.4		%				52.6		%
Effect of subtracting cash			(0.6		%)				—		%
Net debt to net capital			52.8		%				52.6		%

Net debt consists of debt less cash and cash equivalents. Debt consists of short-term borrowings, finance lease obligations, and long-term debt, including the currently maturing portion. Capital consists of debt and equity. Net capital consists of capital less cash and cash equivalents. Entergy Arkansas uses the debt to capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Arkansas’s financial condition. Entergy Arkansas also uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Arkansas’s financial condition because net debt indicates Entergy Arkansas’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.

Uses and Sources of Capital

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

Entergy Arkansas, LLC and Subsidiaries

Management's Financial Discussion and Analysis

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

March 31, 2022						December 31, 2021						March 31, 2021						December 31, 2020
(In Thousands)
$59,981						($139,904)						$15,610						$3,110

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

Entergy Arkansas has a credit facility in the amount of $150 million scheduled to expire in June 2026. Entergy Arkansas also has a $25 million credit facility scheduled to expire in July 2022. The $150 million credit facility includes fronting commitments for the issuance of letters of credit against $5 million of the borrowing capacity of the facility. As of March 31, 2022, there were no cash borrowings and no letters of credit outstanding under the credit facilities. In addition, Entergy Arkansas is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO. As of March 31, 2022, $7.5 million in letters of credit were outstanding under Entergy Arkansas’s uncommitted letter of credit facility. See Note 4 to the financial statements herein for further discussion of the credit facilities.

The Entergy Arkansas nuclear fuel company variable interest entity has a credit facility in the amount of $80 million scheduled to expire in June 2024. As of March 31, 2022, there were no loans outstanding under the credit facility for the Entergy Arkansas nuclear fuel company variable interest entity. See Note 4 to the financial statements herein for further discussion of the nuclear fuel company variable interest entity credit facility.

See the table and discussion in the Form 10-K under “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Uses of Capital,” that sets forth the amounts of planned construction and other capital investments for 2022 through 2024. While Entergy Arkansas is still assessing the effect on its planned solar projects, a recently commenced investigation by the U.S. Department of Commerce into potential circumvention of duties and tariffs may result in increased duties or tariffs on imported solar panels and has created supply chain disruptions which will affect the ultimate timing and could increase the cost of completion of these projects.

West Memphis Solar Facility

As discussed in the Form 10-K, in October 2021 the APSC directed Entergy Arkansas to file a report within 180 days detailing its efforts to obtain a tax equity partnership. In April 2022, Entergy Arkansas filed its tax equity partnership status report and will file subsequent reports until a tax equity partnership is obtained or a tax equity partnership is no longer sought. Entergy Arkansas views the progress of the outreach to potential tax equity investors and the current status of the discussions as consistent with its expectations for the timeline for achieving a tax equity partnership. Closing had been expected to occur in 2023. The counter-party has notified Entergy Arkansas that it is seeking changes to certain terms of the build-own-transfer agreement, including both cost and schedule. Negotiations are ongoing, but at this time the project is not expected to achieve commercial operation in 2023.

Driver Solar Facility

In April 2022, Entergy Arkansas filed a petition with the APSC seeking a finding that the purchase of the 250 MW Driver Solar Facility is in the public interest. The acquisition of Driver Solar will be contingent upon receiving all necessary regulatory and Board approvals. Entergy Arkansas requested a decision by the APSC by June 2022 and requested cost recovery through the formula rate plan rider. The APSC established a procedural schedule with a hearing scheduled in June 2022. The facility is expected to be in service by the end of 2024.

Entergy Arkansas, LLC and Subsidiaries

Management's Financial Discussion and Analysis

State and Local Rate Regulation and Fuel-Cost Recovery

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

Energy Cost Recovery Rider

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 from $0.00959 per kWh to $0.01785 per kWh. The primary reason for the rate increase is a large under-recovery 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 2021 February 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.

Opportunity Sales Proceeding

As discussed in the Form 10-K, 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 the opportunity sales payments made to the other Utility operating companies. In October 2020 the APSC filed a motion to dismiss Entergy Arkansas’s complaint. 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.

COVID-19 Orders

See the Form 10-K for discussion of APSC orders issued in light of the COVID-19 pandemic. As of March 31, 2022, Entergy Arkansas had a regulatory asset of $34.4 million for costs associated with the COVID-19 pandemic.

Federal Regulation

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – Federal Regulation” in the Form 10-K for a discussion of federal regulation.

Nuclear Matters

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

Environmental Risks

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

Critical Accounting Estimates

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy Arkansas’s accounting for nuclear decommissioning costs, utility regulatory accounting, impairment of long-lived assets, taxation and uncertain tax positions, qualified pension and other postretirement benefits, and other contingencies.

Entergy Arkansas, LLC and Subsidiaries

Management's Financial Discussion and Analysis

New Accounting Pronouncements

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

ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
For the Three Months Ended March 31, 2022 and 2021
(Unaudited)
																		2022						2021
												(In Thousands)
OPERATING REVENUES
Electric																		$558,956						$583,386
OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale																		86,225						126,181
Purchased power																		57,471						70,221
Nuclear refueling outage expenses																		14,070						12,647
Other operation and maintenance																		157,257						154,908
Decommissioning																		20,129						19,000
Taxes other than income taxes																		33,202						29,743
Depreciation and amortization																		95,610						88,279
Other regulatory charges (credits) - net																		(20,542)						(37,467)
TOTAL																		443,422						463,512
OPERATING INCOME																		115,534						119,874
OTHER INCOME
Allowance for equity funds used during construction																		3,055						2,993
Interest and investment income																		6,320						27,887
Miscellaneous - net																		(5,392)						(5,791)
TOTAL																		3,983						25,089
INTEREST EXPENSE
Interest expense																		36,047						33,786
Allowance for borrowed funds used during construction																		(1,214)						(1,290)
TOTAL																		34,833						32,496
INCOME BEFORE INCOME TAXES																		84,684						112,467
Income taxes																		19,117						19,430
NET INCOME																		65,567						93,037
Net loss attributable to noncontrolling interest																		(1,387)						—
EARNINGS APPLICABLE TO MEMBER'S EQUITY																		$66,954						$93,037
See Notes to Financial Statements.

(Page left blank intentionally)

ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2022 and 2021
(Unaudited)
						2022						2021
						(In Thousands)
OPERATING ACTIVITIES
Net income						$65,567						$93,037
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation, amortization, and decommissioning, including nuclear fuel amortization						133,634						126,630
Deferred income taxes, investment tax credits, and non-current taxes accrued						11,776						42,885
Changes in assets and liabilities:
Receivables						23,583						(56,256)
Fuel inventory						7,199						17,930
Accounts payable						(33,409)						(21,622)
Taxes accrued						27,209						8,365
Interest accrued						32,233						18,837
Deferred fuel costs						(16,954)						(55,704)
Other working capital accounts						3,794						(8,025)
Provisions for estimated losses						(309)						(12,383)
Other regulatory assets						(7,198)						42,388
Other regulatory liabilities						(91,068)						(38,604)
Pension and other postretirement liabilities						(19,852)						(25,116)
Other assets and liabilities						111,221						(40,789)
Net cash flow provided by operating activities						247,426						91,573
INVESTING ACTIVITIES
Construction expenditures						(162,108)						(146,334)
Allowance for equity funds used during construction						3,055						2,993
Nuclear fuel purchases						(27,258)						(17,621)
Proceeds from sale of nuclear fuel						37,157						16,059
Proceeds from nuclear decommissioning trust fund sales						64,608						143,575
Investment in nuclear decommissioning trust funds						(69,950)						(148,783)
Changes in money pool receivable - net						(59,981)						(12,500)
Net cash flow used in investing activities						(214,477)						(162,611)
FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt						212,060						604,760
Retirement of long-term debt						(7,506)						(613,706)
Change in money pool payable - net						(139,904)						—
Other						(483)						11,636
Net cash flow provided by financing activities						64,167						2,690
Net increase (decrease) in cash and cash equivalents						97,116						(68,348)
Cash and cash equivalents at beginning of period						12,915						192,128
Cash and cash equivalents at end of period						$110,031						$123,780
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized						$3,227						$14,359
See Notes to Financial Statements.

ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, 2022 and December 31, 2021
(Unaudited)
						2022						2021
						(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash						$2,852						$8,155
Temporary cash investments						107,179						4,760
Total cash and cash equivalents						110,031						12,915
Accounts receivable:
Customer						136,178						154,412
Allowance for doubtful accounts						(6,513)						(13,072)
Associated companies						91,621						29,587
Other						43,337						51,064
Accrued unbilled revenues						95,429						101,663
Total accounts receivable						360,052						323,654
Deferred fuel costs						125,767						108,862
Fuel inventory - at average cost						43,693						50,892
Materials and supplies - at average cost						262,292						247,980
Deferred nuclear refueling outage costs						51,655						65,318
Prepayments and other						14,614						14,863
TOTAL						968,104						824,484
OTHER PROPERTY AND INVESTMENTS
Decommissioning trust funds						1,360,604						1,438,416
Other						791						947
TOTAL						1,361,395						1,439,363
UTILITY PLANT
Electric						13,637,936						13,578,297
Construction work in progress						306,933						241,127
Nuclear fuel						132,841						182,055
TOTAL UTILITY PLANT						14,077,710						14,001,479
Less - accumulated depreciation and amortization						5,539,188						5,472,296
UTILITY PLANT - NET						8,538,522						8,529,183
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Other regulatory assets						1,696,876						1,689,678
Deferred fuel costs						68,800						68,751
Other						22,042						13,660
TOTAL						1,787,718						1,772,089
TOTAL ASSETS						$12,655,739						$12,565,119
See Notes to Financial Statements.

ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
March 31, 2022 and December 31, 2021
(Unaudited)
						2022						2021
						(In Thousands)
CURRENT LIABILITIES
Accounts payable:
Associated companies						$46,527						$217,310
Other						187,777						190,476
Customer deposits						95,178						92,511
Taxes accrued						116,799						89,590
Interest accrued						49,341						17,108
Other						40,881						38,901
TOTAL						536,503						645,896
NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued						1,436,824						1,416,201
Accumulated deferred investment tax credits						28,998						29,299
Regulatory liability for income taxes - net						427,203						431,655
Other regulatory liabilities						656,698						743,314
Decommissioning						1,410,540						1,390,410
Accumulated provisions						76,775						77,084
Pension and other postretirement liabilities						165,903						185,789
Long-term debt						4,163,602						3,958,862
Other						111,271						110,754
TOTAL						8,477,814						8,343,368
Commitments and Contingencies
EQUITY
Member's equity						3,609,699						3,542,745
Noncontrolling interest						31,723						33,110
TOTAL						3,641,422						3,575,855
TOTAL LIABILITIES AND EQUITY						$12,655,739						$12,565,119
See Notes to Financial Statements.

ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN MEMBER'S EQUITY
For the Three Months Ended March 31, 2022 and 2021
(Unaudited)
			Noncontrolling Interest						Member's Equity						Total
			(In Thousands)
Balance at December 31, 2020			$—						$3,276,169						$3,276,169
Net income			—						93,037						93,037
Balance at March 31, 2021			$—						$3,369,206						$3,369,206
Balance at December 31, 2021			$33,110						$3,542,745						$3,575,855
Net income (loss)			(1,387)						66,954						65,567
Balance at March 31, 2022			$31,723						$3,609,699						$3,641,422
See Notes to Financial Statements.

ENTERGY LOUISIANA, LLC AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

Results of Operations

Net Income

Net income decreased $15.8 million primarily due to higher other operation and maintenance expenses, higher interest expense, higher taxes other than income taxes, higher depreciation and amortization expenses, and lower volume/weather. The decrease was partially offset by higher retail electric price.

Operating Revenues

Following is an analysis of the change in operating revenues comparing the first quarter 2022 to the first quarter 2021:

			Amount
			(In Millions)
2021 operating revenues			$1,107.6
Fuel, rider, and other revenues that do not significantly affect net income			153.5
Retail electric price			17.2
Volume/weather			(12.3)
2022 operating revenues			$1,266.0

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

The retail electric price variance is primarily due to an increase in formula rate plan revenues, including increases in the transmission and distribution recovery mechanisms, effective September 2021. See Note 2 to the financial statements in the Form 10-K for further discussion of the formula rate plan proceedings.

The volume/weather variance is primarily due to the effect of less favorable weather on residential sales and a decrease in weather-adjusted residential usage, including the effect of the COVID-19 pandemic on first quarter 2021, partially offset by increases in industrial and commercial usage. The increase in industrial usage was primarily due to increased demand from expansion projects, primarily in the chemicals, petroleum refining, and transportation industries, increased demand from existing customers, primarily in the chemicals and pulp and paper industries as a result of prior year temporary plant shutdowns and operational issues, and an increase in demand from cogeneration customers. The increase in commercial usage was primarily due to the effect of the COVID-19 pandemic on businesses in first quarter 2021. The increased usage from these industrial and commercial customers has a relatively smaller effect on operating revenues because a larger portion of the revenues from those customers comes from fixed charges.

Entergy Louisiana, LLC and Subsidiaries

Management's Financial Discussion and Analysis

Total electric energy sales for Entergy Louisiana for the three months ended March 31, 2022 and 2021 are as follows:

			2022						2021						% Change
			(GWh)
Residential			3,069						3,197						(4)
Commercial			2,421						2,395						1
Industrial			7,606						7,208						6
Governmental			191						196						(3)
Total retail			13,287						12,996						2
Sales for resale:
Associated companies			1,341						959						40
Non-associated companies			853						386						121
Total			15,481						14,341						8

See Note 13 to the financial statements herein for additional discussion of Entergy Louisiana’s operating revenues.

Other Income Statement Variances

Other operation and maintenance expenses increased primarily due to:

• an increase of $7.3 million in distribution operations expenses primarily due to higher reliability costs, higher safety and training costs, and higher vegetation maintenance costs, partially offset by a decrease in meter reading expenses as a result of the deployment of advanced metering systems;

• an increase of $2.6 million in nuclear generation expenses primarily due to a higher scope of work performed in 2022 as compared to prior year, partially offset by lower spending in 2022 on sanitation and social distancing protocols as a result of the COVID-19 pandemic;

• an increase of $2.3 million in transmission expenses, including an increase in vegetation maintenance costs; and

• an increase of $2.3 million in customer service center support costs primarily due to higher contract costs.

The increase was partially offset by higher nuclear insurance refunds of $2.6 million and a decrease of $2.6 million in non-nuclear generation expenses primarily due to a lower scope of work performed in 2022 as compared to the same period in 2021.

Taxes other than income taxes increased primarily due to increases in ad valorem taxes resulting from higher assessments and increases in franchise taxes.

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

Other income decreased primarily due to changes in decommissioning trust fund activity, including portfolio rebalancing of the Waterford 3 and River Bend decommissioning trust funds in the first quarter of 2021.

Interest expense increased primarily due to:

• the issuances of $500 million of 2.35% Series mortgage bonds and $500 million of 3.10% Series mortgage bonds, each in March 2021;

• the $1.2 billion unsecured term loan proceeds received in January 2022; and

• the issuance of $1 billion of 0.95% Series mortgage bonds in October 2021.

Entergy Louisiana, LLC and Subsidiaries

Management's Financial Discussion and Analysis

The increase was partially offset by the repayment of $200 million of 4.8% Series mortgage bonds in May 2021.

Income Taxes

The effective income tax rates were 16.9% for the first quarter 2022 and 18.5% for the first quarter 2021. The differences in the effective income tax rates for the first quarter 2022 and the first quarter 2021 versus the federal statutory rate of 21% were primarily due to book and tax differences related to the non-taxable income distributions earned on preferred membership interests, certain book and tax differences related to utility plant items, and the amortization of excess accumulated deferred income taxes, partially offset by state income taxes. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act.

Liquidity and Capital Resources

Cash Flow

Cash flows for the three months ended March 31, 2022 and 2021 were as follows:

			2022						2021
			(In Thousands)
Cash and cash equivalents at beginning of period			$18,573						$728,020
Net cash provided by (used in):
Operating activities			183,126						(54,598)
Investing activities			(1,032,121)						(1,098,466)
Financing activities			987,069						1,026,860
Net increase (decrease) in cash and cash equivalents			138,074						(126,204)
Cash and cash equivalents at end of period			$156,647						$601,816

Operating Activities

Entergy Louisiana’s operating activities provided $183.1 million of cash for the three months ended March 31, 2022 compared to using $54.6 million of cash for the three months ended March 31, 2021 primarily due to the following activity:

• higher collections from customers;

• timing of recovery of fuel and purchased power costs;

• a decrease of $20 million in spending on nuclear refueling outages; and

• a decrease of $18.9 million in pension contributions in 2022. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K and Note 6 to the financial statements herein for a discussion of qualified pension and other postretirement benefits funding.

The above activity was partially offset by an increase of approximately $139 million in storm spending in 2022, primarily due to Hurricane Ida restoration efforts. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Hurricane Ida” in the Form 10-K for discussion of storm restoration efforts.

Entergy Louisiana, LLC and Subsidiaries

Management's Financial Discussion and Analysis

Investing Activities

Net cash flow used in investing activities decreased $66.3 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to:

• a decrease of $60.9 million in transmission construction expenditures primarily due to higher capital expenditures for storm restoration in 2021;

• a decrease of $24.9 million in nuclear decommissioning trust fund activity as a result of a lump sum contribution in 2021 for amounts collected over a 17-month period. See Note 2 in the Form 10-K for a discussion of nuclear decommissioning expense recovery; and

• a decrease of $23.2 million as a result of fluctuations in nuclear fuel activity, primarily due to variations from year to year in the timing and pricing of fuel reload requirements, materials and services deliveries, and the timing of cash payments during the nuclear fuel cycle.

The decrease was partially offset by:

• an increase of $35.1 million in distribution construction expenditures primarily due to higher capital expenditures for storm restoration in 2022, partially offset by lower spending in 2022 on advanced metering infrastructure;

• an increase of $11.1 million in information technology capital expenditures primarily due to increased spending on various technology projects in 2022; and

• an increase of $9 million in nuclear construction expenditures primarily due to higher capital expenditures for storm restoration in 2022.

Financing Activities

Net cash flow provided by financing activities decreased $39.8 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to:

• the issuance of $500 million of 2.35% Series mortgage bonds and $500 million of 3.10% Series mortgage bonds, each in March 2021;

• net repayments of long-term borrowings of $30.6 million in 2022 compared to net long-term borrowings of $85.5 million in 2021 on the nuclear fuel company variable interest entities’ credit facilities; and

• $125 million in common equity distributions in 2022 to return to Entergy Corporation the $125 million capital contribution received in December 2021 to assist in paying for costs associated with Hurricane Ida.

The decrease was partially offset by the $1.2 billion of proceeds received from an unsecured term loan in January 2022 and the repayment of Entergy Louisiana Waterford VIE’s $40 million of 3.92% Series H secured notes in February 2021.

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

Entergy Louisiana, LLC and Subsidiaries

Management's Financial Discussion and Analysis

Capital Structure

Entergy Louisiana’s debt to capital ratio is shown in the following table. The increase in the debt to capital ratio for Entergy Louisiana is primarily due to the $1.2 billion unsecured term loan proceeds received in January 2022.

			March 31, 2022						December 31, 2021
Debt to capital			59.5		%				57.2		%
Effect of subtracting cash			(0.3		%)				0.0		%
Net debt to net capital			59.2		%				57.2		%

Net debt consists of debt less cash and cash equivalents. Debt consists of short-term borrowings, finance lease obligations, and long-term debt, including the currently maturing portion. Capital consists of debt and common equity. Net capital consists of capital less cash and cash equivalents. Entergy Louisiana uses the debt to capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Louisiana’s financial condition. Entergy Louisiana also uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Louisiana’s financial condition because net debt indicates Entergy Louisiana’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.

Uses and Sources of Capital

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

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

March 31, 2022						December 31, 2021						March 31, 2021						December 31, 2020
(In Thousands)
$81,160						$14,539						$75,772						$13,426

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

Entergy Louisiana has a credit facility in the amount of $350 million scheduled to expire in June 2026. The credit facility includes fronting commitments for the issuance of letters of credit against $15 million of the borrowing capacity of the facility. As of March 31, 2022, there were no cash borrowings and no letters of credit outstanding under the credit facility. In addition, Entergy Louisiana is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO. As of March 31, 2022, $11 million in letters of credit were outstanding under Entergy Louisiana’s uncommitted letter of credit facility. See Note 4 to the financial statements herein for additional discussion of the credit facilities.

The Entergy Louisiana nuclear fuel company variable interest entities have two separate credit facilities, each in the amount of $105 million and scheduled to expire in June 2024. As of March 31, 2022, $30.8 million in loans were outstanding under the credit facility for the Entergy Louisiana River Bend nuclear fuel company variable interest entity. As of March 31, 2022, $82.1 million in loans were outstanding under the credit facility for the Entergy Louisiana Waterford nuclear fuel company variable interest entity. See Note 4 to the financial statements herein for additional discussion of the nuclear fuel company variable interest entity credit facilities.

See the table and discussion in the Form 10-K under “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Uses of Capital,” that sets forth the amounts of planned

Entergy Louisiana, LLC and Subsidiaries

Management's Financial Discussion and Analysis

construction and other capital investments for 2022 through 2024. While Entergy Louisiana is still assessing the effect on its planned solar projects, a recently commenced investigation by the U.S. Department of Commerce into potential circumvention of duties and tariffs may result in increased duties or tariffs on imported solar panels and has created supply chain disruptions which will affect the ultimate timing and could increase the cost of completion of these projects.

2021 Solar Certification and the Geaux Green Option

As discussed in the Form 10-K, 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 LPSC has established a procedural schedule that is expected to result in an LPSC decision by the end of 2022. 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 complies with applicable LPSC orders. LPSC staff and LEUG’s witnesses made recommendations to modify the proposed Rider GGO and Entergy Louisiana’s proposed rate relief. In April 2022, LPSC staff and LEUG filed cross-answering testimony concerning the other party’s proposed modifications to Rider GGO and the proposed rate recovery. Discovery concerning these parties’ testimonies is ongoing.

Hurricane Laura, Hurricane Delta, Hurricane Zeta, Winter Storm Uri, and Hurricane Ida

As discussed in the Form 10-K, in August 2020 and October 2020, Hurricane Laura, Hurricane Delta, and Hurricane Zeta caused significant damage to portions of Entergy Louisiana’s service area. The storms resulted in widespread outages, significant damage to distribution and transmission infrastructure, and the loss of sales during the outages. Additionally, as a result of Hurricane Laura’s extensive damage to the grid infrastructure serving the impacted area, large portions of the underlying transmission system required nearly a complete rebuild. In February 2021 two winter storms (collectively, Winter Storm Uri) brought freezing rain and ice to Louisiana. Ice accumulation sagged or downed trees, limbs and power lines, causing damage to Entergy Louisiana’s transmission and distribution systems. The additional weight of ice caused trees and limbs to fall into power lines and other electric equipment. When the ice melted, it affected vegetation and electrical equipment, causing additional outages.

In 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 was seeking an LPSC determination that $2.11 billion was prudently incurred and, therefore, was eligible for recovery from customers. Additionally, Entergy Louisiana was requesting 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.

Entergy Louisiana, LLC and Subsidiaries

Management's Financial Discussion and Analysis

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 restoration costs, subject to a subsequent prudence review.

After filing of testimony by 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 were 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, in first quarter 2022, Entergy Louisiana reclassified $1.339 billion from utility plant to other regulatory assets. The securitization process is expected to be completed in second quarter 2022.

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 currently are 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 through December 2022, Entergy Louisiana is seeking an LPSC determination that $2.60 billion was prudently incurred and, therefore, is eligible for recovery from customers. As part of this filing, Entergy Louisiana also is seeking an LPSC determination that an additional $32 million in restoration 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 is exclusive of the requested $3 million in carrying costs through December 2022. In total, Entergy Louisiana is requesting an LPSC determination that $2.64 billion was prudently incurred and, therefore, is eligible for recovery from customers. As discussed above, in March 2022 the LPSC approved financing of a $1 billion storm escrow that can be withdrawn to finance costs associated with Hurricane Ida restoration. Entergy Louisiana expects to supplement the April 2022 application with a request that the LPSC authorize Entergy Louisiana to finance the remaining storm restoration costs included in the April 2022 application, currently expected to be through the securitization process authorized by Louisiana Act 55, as supplemented by Act 293 of the Louisiana Legislature’s Regular Session of 2021.

State and Local Rate Regulation and Fuel-Cost Recovery

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

COVID-19 Orders

As discussed in the Form 10-K, in April 2020 the LPSC issued an order authorizing utilities to record as a regulatory asset expenses incurred from the suspension of disconnections and collection of late fees imposed by LPSC orders associated with the COVID-19 pandemic. In addition, utilities may seek future recovery, subject to LPSC review and approval, of losses and expenses incurred due to compliance with the LPSC’s COVID-19 orders. Utilities seeking to recover the regulatory asset must formally petition the LPSC to do so, identifying the direct and indirect costs for which recovery is sought. Any such request is subject to LPSC review and approval. As of

Entergy Louisiana, LLC and Subsidiaries

Management's Financial Discussion and Analysis

March 31, 2022, Entergy Louisiana had a regulatory asset of $47.8 million for costs associated with the COVID-19 pandemic.

Industrial and Commercial Customers

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – Industrial and Commercial Customers” in the Form 10-K for a discussion of industrial and commercial customers.

Federal Regulation

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – Federal Regulation” in the Form 10-K for a discussion of federal regulation.

Nuclear Matters

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

Environmental Risks

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

Critical Accounting Estimates

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy Louisiana’s accounting for nuclear decommissioning costs, utility regulatory accounting, impairment of long-lived assets, taxation and uncertain tax positions, qualified pension and other postretirement benefits, and other contingencies.

New Accounting Pronouncements

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

ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
For the Three Months Ended March 31, 2022 and 2021
(Unaudited)
						2022						2021
						(In Thousands)
OPERATING REVENUES
Electric						$1,237,237						$1,079,663
Natural gas						28,735						27,981
TOTAL						1,265,972						1,107,644
OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale						362,074						145,234
Purchased power						176,197						209,961
Nuclear refueling outage expenses						11,947						13,282
Other operation and maintenance						254,001						237,483
Decommissioning						17,688						16,823
Taxes other than income taxes						61,615						52,484
Depreciation and amortization						169,083						160,813
Other regulatory charges (credits) - net						(20,897)						31,097
TOTAL						1,031,708						867,177
OPERATING INCOME						234,264						240,467
OTHER INCOME
Allowance for equity funds used during construction						6,726						6,101
Interest and investment income						15,900						72,515
Miscellaneous - net						15,517						(34,638)
TOTAL						38,143						43,978
INTEREST EXPENSE
Interest expense						93,784						82,806
Allowance for borrowed funds used during construction						(3,026)						(2,759)
TOTAL						90,758						80,047
INCOME BEFORE INCOME TAXES						181,649						204,398
Income taxes						30,789						37,772
NET INCOME						$150,860						$166,626
See Notes to Financial Statements.

ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Three Months Ended March 31, 2022 and 2021
(Unaudited)
			2022						2021
			(In Thousands)
Net Income			$150,860						$166,626
Other comprehensive loss
Pension and other postretirement liabilities (net of tax benefit of $226 and $144)			(613)						(407)
Other comprehensive loss			(613)						(407)
Comprehensive Income			$150,247						$166,219
See Notes to Financial Statements.

ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2022 and 2021
(Unaudited)
						2022						2021
						(In Thousands)
OPERATING ACTIVITIES
Net income						$150,860						$166,626
Adjustments to reconcile net income to net cash flow provided by (used in) operating activities:
Depreciation, amortization, and decommissioning, including nuclear fuel amortization						213,022						198,868
Deferred income taxes, investment tax credits, and non-current taxes accrued						95,785						67,823
Changes in working capital:
Receivables						71,237						(13,080)
Fuel inventory						(46)						1,194
Accounts payable						(262,042)						(126,070)
Taxes accrued						(42,950)						20,619
Interest accrued						(857)						(9,163)
Deferred fuel costs						498						(203,815)
Other working capital accounts						(24,241)						(25,628)
Changes in provisions for estimated losses						2,694						(258)
Changes in other regulatory assets						(1,336,616)						(70,784)
Changes in other regulatory liabilities						(67,164)						22,503
Storm restoration costs approved for securitization recognized as regulatory asset						1,338,559						—
Changes in pension and other postretirement liabilities						(11,608)						(30,745)
Other						55,995						(52,688)
Net cash flow provided by (used in) operating activities						183,126						(54,598)
INVESTING ACTIVITIES
Construction expenditures						(935,692)						(945,831)
Allowance for equity funds used during construction						6,726						6,101
Nuclear fuel purchases						(55,913)						(52,435)
Proceeds from the sale of nuclear fuel						26,681						—
Changes to securitization account						—						(6,050)
Proceeds from nuclear decommissioning trust fund sales						155,269						291,275
Investment in nuclear decommissioning trust funds						(168,283)						(329,180)
Changes in money pool receivable - net						(66,621)						(62,346)
Litigation proceeds from settlement agreement						5,695						—
Other						17						—
Net cash flow used in investing activities						(1,032,121)						(1,098,466)
FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt						1,506,637						1,399,245
Retirement of long-term debt						(401,411)						(368,707)
Distributions paid:
Common equity						(125,000)						—
Other						6,843						(3,678)
Net cash flow provided by financing activities						987,069						1,026,860
Net increase (decrease) in cash and cash equivalents						138,074						(126,204)
Cash and cash equivalents at beginning of period						18,573						728,020
Cash and cash equivalents at end of period						$156,647						$601,816
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized						$91,441						$89,432
See Notes to Financial Statements.

ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, 2022 and December 31, 2021
(Unaudited)
						2022						2021
						(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash						$15,933						$195
Temporary cash investments						140,714						18,378
Total cash and cash equivalents						156,647						18,573
Accounts receivable:
Customer						256,931						355,265
Allowance for doubtful accounts						(11,092)						(29,231)
Associated companies						159,787						96,539
Other						49,735						36,674
Accrued unbilled revenues						174,038						174,768
Total accounts receivable						629,399						634,015
Deferred fuel costs						44,876						45,374
Fuel inventory						43,004						42,958
Materials and supplies - at average cost						490,752						485,325
Deferred nuclear refueling outage costs						33,947						39,582
Prepayments and other						58,384						44,187
TOTAL						1,457,009						1,310,014
OTHER PROPERTY AND INVESTMENTS
Investment in affiliate preferred membership interests						1,390,587						1,390,587
Decommissioning trust funds						2,005,369						2,114,523
Non-utility property - at cost (less accumulated depreciation)						338,365						337,247
Other						13,812						13,744
TOTAL						3,748,133						3,856,101
UTILITY PLANT
Electric						27,252,039						28,055,038
Natural gas						288,820						285,006
Construction work in progress						721,536						847,924
Nuclear fuel						200,163						209,418
TOTAL UTILITY PLANT						28,462,558						29,397,386
Less - accumulated depreciation and amortization						9,940,422						9,860,252
UTILITY PLANT - NET						18,522,136						19,537,134
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Other regulatory assets						4,113,282						2,776,666
Deferred fuel costs						168,122						168,122
Other						39,358						27,801
TOTAL						4,320,762						2,972,589
TOTAL ASSETS						$28,048,040						$27,675,838
See Notes to Financial Statements.

ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
March 31, 2022 and December 31, 2021
(Unaudited)
						2022						2021
						(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt						$200,000						$200,000
Accounts payable:
Associated companies						81,781						183,172
Other						872,120						1,481,902
Customer deposits						153,109						150,697
Taxes accrued						21,298						64,248
Interest accrued						92,195						93,052
Current portion of unprotected excess accumulated deferred income taxes						15,182						24,291
Other						56,709						68,995
TOTAL						1,492,394						2,266,357
NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued						2,523,361						2,433,854
Accumulated deferred investment tax credits						101,408						102,588
Regulatory liability for income taxes - net						307,779						313,693
Other regulatory liabilities						990,456						1,042,597
Decommissioning						1,673,809						1,653,198
Accumulated provisions						27,185						24,490
Pension and other postretirement liabilities						516,628						528,213
Long-term debt						11,822,131						10,714,346
Other						387,083						415,930
TOTAL						18,349,840						17,228,909
Commitments and Contingencies
EQUITY
Member's equity						8,198,141						8,172,294
Accumulated other comprehensive income						7,665						8,278
TOTAL						8,205,806						8,180,572
TOTAL LIABILITIES AND EQUITY						$28,048,040						$27,675,838
See Notes to Financial Statements.

ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the Three Months Ended March 31, 2022 and 2021
(Unaudited)
			Common Equity
			Member’s Equity						Accumulated Other Comprehensive Income						Total
			(In Thousands)
Balance at December 31, 2020			$7,453,361						$4,327						$7,457,688
Net income			166,626						—						166,626
Other comprehensive loss			—						(407)						(407)
Other			(16)						—						(16)
Balance at March 31, 2021			$7,619,971						$3,920						$7,623,891
Balance at December 31, 2021			$8,172,294						$8,278						$8,180,572
Net income			150,860						—						150,860
Other comprehensive loss			—						(613)						(613)
Distributions declared on common equity			(125,000)						—						(125,000)
Other			(13)						—						(13)
Balance at March 31, 2022			$8,198,141						$7,665						$8,205,806
See Notes to Financial Statements.

ENTERGY MISSISSIPPI, LLC

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

Results of Operations

Net Income

Net income increased $4.4 million primarily due to higher retail electric price, partially offset by higher depreciation and amortization expenses and higher interest expenses.

Operating Revenues

Following is an analysis of the change in operating revenues comparing the first quarter 2022 to the first quarter 2021:

			Amount
			(In Millions)
2021 operating revenues			$336.6
Fuel, rider, and other revenues that do not significantly affect net income			(2.2)
Retail electric price			16.4
Volume/weather			(1.8)
2022 operating revenues			$349.0

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

The retail electric price variance is primarily due to increases in formula rate plan rates effective April 2021 and July 2021. See Note 2 to the financial statements in the Form 10-K for further discussion of the formula rate plan filings.

The volume/weather variance is primarily due to a decrease in weather-adjusted residential usage, including the effect of the COVID-19 pandemic on first quarter 2021, partially offset by the effect of more favorable weather on residential and commercial sales.

Entergy Mississippi, LLC

Management's Financial Discussion and Analysis

Total electric energy sales for Entergy Mississippi for the three months ended March 31, 2022 and 2021 are as follows:

			2022						2021						% Change
			(GWh)
Residential			1,295						1,349						(4)
Commercial			1,021						1,004						2
Industrial			561						527						6
Governmental			96						95						1
Total retail			2,973						2,975						—
Sales for resale:
Non-associated companies			535						1,452						(63)
Total			3,508						4,427						(21)

See Note 13 to the financial statements herein for additional discussion of Entergy Mississippi’s operating revenues.

Other Income Statement Variances

Taxes other than income taxes increased primarily due to increases in ad valorem taxes resulting from higher assessments and millage rate increases.

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

Interest expense increased primarily due to the issuance of $200 million of 3.50% Series mortgage bonds in March 2021 and the issuance of $200 million of 2.55% Series mortgage bonds in November 2021.

Income Taxes

The effective income tax rates were 20.2% for the first quarter 2022 and 22.2% for the first quarter 2021. The differences in the effective income tax rates for the first quarter 2022 and the first quarter 2021 versus the federal statutory rate of 21% were primarily due to certain book and tax differences related to utility plant items, partially offset by state income taxes.

Entergy Mississippi, LLC

Management's Financial Discussion and Analysis

Liquidity and Capital Resources

Cash Flow

Cash flows for the three months ended March 31, 2022 and 2021 were as follows:

			2022						2021
			(In Thousands)
Cash and cash equivalents at beginning of period			$47,627						$18
Net cash provided by (used in):
Operating activities			(4,340)						54,311
Investing activities			(61,154)						(162,802)
Financing activities			17,895						185,189
Net increase (decrease) in cash and cash equivalents			(47,599)						76,698
Cash and cash equivalents at end of period			$28						$76,716

Operating Activities

Entergy Mississippi’s operating activities used $4.3 million of cash for the three months ended March 31, 2022 compared to providing $54.3 million of cash for the three months ended March 31, 2021 primarily due to the following activity:

• timing of payments to vendors;

• income tax refunds of $8 million received in 2021 in accordance with an intercompany income tax allocation agreement;

• higher collections from customers; and

• a decrease of $7.2 million in storm spending in 2022 primarily due to spending on Winter Storm Uri restoration efforts in 2021.

Investing Activities

Net cash flow used in investing activities decreased $101.6 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to:

• a decrease of $51.3 million in distribution construction expenditures primarily due to a higher scope of work performed in 2021 as compared to 2022; and

• money pool activity.

Decreases in Entergy Mississippi’s receivable from the money pool are a source of cash flow, and Entergy Mississippi’s receivable from the money pool decreased by $40.5 million for the three months ended March 31, 2022 compared to increasing $9.7 million for the three months ended March 31, 2021. The money pool is an inter-company borrowing arrangement designed to reduce the Utility’s subsidiaries’ need for external short-term borrowings.

Financing Activities

Net cash flow provided by financing activities decreased $167.3 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to the issuance of $200 million of 3.50% Series mortgage bonds in March 2021, partially offset by money pool activity.

Entergy Mississippi, LLC

Management's Financial Discussion and Analysis

Increases in Entergy Mississippi’s payable to the money pool are a source of cash flow and Entergy Mississippi’s payable to the money pool increased by $22.4 million for the three months ended March 31, 2022 compared to decreasing by $16.5 million for the three months ended March 31, 2021.

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

Capital Structure

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

			March 31, 2022						December 31, 2021
Debt to capital			53.9		%				54.3		%
Effect of subtracting cash			—		%				(0.5		%)
Net debt to net capital			53.9		%				53.8		%

Net debt consists of debt less cash and cash equivalents. Debt consists of short-term borrowings, finance lease obligations, and long-term debt, including the currently maturing portion. Capital consists of debt and equity. Net capital consists of capital less cash and cash equivalents. Entergy Mississippi uses the debt to capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Mississippi’s financial condition. Entergy Mississippi also uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Mississippi’s financial condition because net debt indicates Entergy Mississippi’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.

Uses and Sources of Capital

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

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

March 31, 2022						December 31, 2021						March 31, 2021						December 31, 2020
(In Thousands)
($22,386)						$40,456						$9,683						($16,516)

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

As of March 31, 2022, Entergy Mississippi had three separate credit facilities in the aggregate amount of $82.5 million scheduled to expire in April 2022. No borrowings were outstanding under the credit facilities as of March 31, 2022. In April 2022, Entergy Mississippi renewed the three separate existing credit facilities and increased the aggregate amount available under the facilities to $95 million, and extended the expiration date of each credit facility to April 2023. Also in April 2022, Entergy Mississippi entered into a credit facility in the amount of $150 million with an expiration date of July 2024. In addition, Entergy Mississippi is a party to an uncommitted letter of credit facility primarily as a means to post collateral to support its obligations to MISO. As of March 31, 2022, $2.3 million in MISO letters of credit and $1 million in non-MISO letters of credit were outstanding under this facility. See Note 4 to the financial statements herein for additional discussion of the credit facilities.

Entergy Mississippi, LLC

Management's Financial Discussion and Analysis

Entergy Mississippi had $33.2 million in its storm reserve escrow account at March 31, 2022.

Sunflower Solar Facility

As discussed in the Form 10-K, in November 2018, Entergy Mississippi announced that it signed an agreement for the purchase of an approximately 100 MW solar photovoltaic facility that will be sited on approximately 1,000 acres in Sunflower County, Mississippi. The estimated total investment, including the base purchase price and other related costs, for Entergy Mississippi to acquire the Sunflower Solar Facility is approximately $153.2 million. Entergy Mississippi will purchase the facility upon mechanical completion and after the other purchase contingencies have been met. In April 2020 the MPSC issued an order approving certification of the Sunflower Solar Facility and its recovery through Entergy Mississippi’s interim capacity rate adjustment mechanism, subject to certain conditions including: (i) that Entergy Mississippi pursue a 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. The initial closing is targeted to occur in May 2022. In conjunction with closing, Entergy Mississippi is executing a partnership structure through which the partnership will acquire and own the Sunflower Solar Facility. Final payment of the purchase price will be made upon substantial completion of the facility, which is currently expected in third quarter 2022.

State and Local Rate Regulation and Fuel-Cost Recovery

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

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 shows a $69 million rate increase is 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, is capped at 4% of retail revenues, which equates to a revenue change of $48.6 million. The 2021 look-back filing compares actual 2021 results to the approved benchmark return on rate base and reflects 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, subject to refund, pending a final MPSC order. A final order is expected in the second quarter 2022, with the resulting final rates, including amounts above the 2% cap of 2021 retail revenues, effective July 2022.

COVID-19 Orders

As discussed in the Form 10-K, in April 2020 the MPSC issued an order authorizing utilities to defer incremental costs and expenses associated with COVID-19 compliance and to seek future recovery through rates of the prudently incurred incremental costs and expenses. As of March 31, 2022, Entergy Mississippi had a regulatory asset of $14.1 million for costs associated with the COVID-19 pandemic.

Entergy Mississippi, LLC

Management's Financial Discussion and Analysis

Federal Regulation

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – Federal Regulation” in the Form 10-K for a discussion of federal regulation.

Nuclear Matters

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

Environmental Risks

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

Critical Accounting Estimates

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy Mississippi’s accounting for utility regulatory accounting, impairment of long-lived assets, taxation and uncertain tax positions, qualified pension and other postretirement benefits, and other contingencies.

New Accounting Pronouncements

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

ENTERGY MISSISSIPPI, LLC
INCOME STATEMENTS
For the Three Months Ended March 31, 2022 and 2021
(Unaudited)
																		2022						2021
												(In Thousands)
OPERATING REVENUES
Electric																		$349,029						$336,619
OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale																		67,277						60,197
Purchased power																		61,212						68,591
Other operation and maintenance																		65,811						67,831
Taxes other than income taxes																		32,730						25,899
Depreciation and amortization																		60,084						55,036
Other regulatory charges (credits) - net																		3,907						8,129
TOTAL																		291,021						285,683
OPERATING INCOME																		58,008						50,936
OTHER DEDUCTIONS
Allowance for equity funds used during construction																		1,078						1,668
Interest and investment income																		64						42
Miscellaneous - net																		(1,153)						(2,313)
TOTAL																		(11)						(603)
INTEREST EXPENSE
Interest expense																		20,434						17,613
Allowance for borrowed funds used during construction																		(465)						(677)
TOTAL																		19,969						16,936
INCOME BEFORE INCOME TAXES																		38,028						33,397
Income taxes																		7,673						7,425
NET INCOME																		$30,355						$25,972
See Notes to Financial Statements.

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ENTERGY MISSISSIPPI, LLC
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2022 and 2021
(Unaudited)
						2022						2021
						(In Thousands)
OPERATING ACTIVITIES
Net income						$30,355						$25,972
Adjustments to reconcile net income to net cash flow provided by (used in) operating activities:
Depreciation and amortization						60,084						55,036
Deferred income taxes, investment tax credits, and non-current taxes accrued						3,979						22,593
Changes in assets and liabilities:
Receivables						(6,379)						4,557
Fuel inventory						23						1,736
Accounts payable						989						26,391
Taxes accrued						(63,785)						(75,886)
Interest accrued						10,613						4,238
Deferred fuel costs						(24,076)						(25,722)
Other working capital accounts						(46,494)						(3,425)
Provisions for estimated losses						(179)						(7,689)
Other regulatory assets						16,301						11,015
Other regulatory liabilities						21,689						19,147
Pension and other postretirement liabilities						(3,906)						(5,668)
Other assets and liabilities						(3,554)						2,016
Net cash flow provided by (used in) operating activities						(4,340)						54,311
INVESTING ACTIVITIES
Construction expenditures						(102,686)						(154,788)
Allowance for equity funds used during construction						1,078						1,668
Changes in money pool receivable - net						40,456						(9,683)
Other						(2)						1
Net cash flow used in investing activities						(61,154)						(162,802)
FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt						—						200,573
Changes in money pool payable - net						22,386						(16,516)
Other						(4,491)						1,132
Net cash flow provided by financing activities						17,895						185,189
Net increase (decrease) in cash and cash equivalents						(47,599)						76,698
Cash and cash equivalents at beginning of period						47,627						18
Cash and cash equivalents at end of period						$28						$76,716
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized						$9,160						$12,757
Income taxes						$—						($8,045)
See Notes to Financial Statements.

ENTERGY MISSISSIPPI, LLC
BALANCE SHEETS
ASSETS
March 31, 2022 and December 31, 2021
(Unaudited)
						2022						2021
						(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash						$26						$29
Temporary cash investments						2						47,598
Total cash and cash equivalents						28						47,627
Accounts receivable:
Customer						86,389						84,048
Allowance for doubtful accounts						(3,396)						(7,209)
Associated companies						5,008						42,994
Other						17,994						14,609
Accrued unbilled revenues						50,404						56,034
Total accounts receivable						156,399						190,476
Deferred fuel costs						145,954						121,878
Fuel inventory - at average cost						10,288						10,311
Materials and supplies - at average cost						75,509						69,639
Prepayments and other						40,847						6,394
TOTAL						429,025						446,325
OTHER PROPERTY AND INVESTMENTS
Non-utility property - at cost (less accumulated depreciation)						4,523						4,527
Escrow accounts						48,888						48,886
TOTAL						53,411						53,413
UTILITY PLANT
Electric						6,650,580						6,613,109
Construction work in progress						120,538						95,452
TOTAL UTILITY PLANT						6,771,118						6,708,561
Less - accumulated depreciation and amortization						2,159,949						2,127,590
UTILITY PLANT - NET						4,611,169						4,580,971
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Other regulatory assets						446,131						462,432
Other						18,880						14,248
TOTAL						465,011						476,680
TOTAL ASSETS						$5,558,616						$5,557,389
See Notes to Financial Statements.

ENTERGY MISSISSIPPI, LLC
BALANCE SHEETS
LIABILITIES AND EQUITY
March 31, 2022 and December 31, 2021
(Unaudited)
						2022						2021
						(In Thousands)
CURRENT LIABILITIES
Accounts payable:
Associated companies						$62,229						$42,929
Other						104,367						113,000
Customer deposits						87,307						86,167
Taxes accrued						42,488						106,273
Interest accrued						27,896						17,283
Other						29,735						36,731
TOTAL						354,022						402,383
NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued						724,154						720,097
Accumulated deferred investment tax credits						10,857						10,913
Regulatory liability for income taxes - net						209,758						212,445
Other regulatory liabilities						73,689						49,313
Asset retirement cost liabilities						10,458						10,315
Accumulated provisions						37,849						38,028
Pension and other postretirement liabilities						55,101						59,065
Long-term debt						2,180,197						2,179,989
Other						32,608						35,273
TOTAL						3,334,671						3,315,438
Commitments and Contingencies
EQUITY
Member's equity						1,869,923						1,839,568
TOTAL						1,869,923						1,839,568
TOTAL LIABILITIES AND EQUITY						$5,558,616						$5,557,389
See Notes to Financial Statements.

ENTERGY MISSISSIPPI, LLC
STATEMENTS OF CHANGES IN MEMBER'S EQUITY
For the Three Months Ended March 31, 2022 and 2021
(Unaudited)
						Member's Equity
						(In Thousands)
Balance at December 31, 2020						$1,672,734
Net income						25,972
Balance at March 31, 2021						$1,698,706
Balance at December 31, 2021						$1,839,568
Net income						30,355
Balance at March 31, 2022						$1,869,923
See Notes to Financial Statements.

ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

Results of Operations

Net Income

Net income increased $13.4 million primarily due to higher retail electric price and lower other operation and maintenance expenses.

Operating Revenues

Following is an analysis of the change in operating revenues comparing first quarter 2022 to first quarter 2021:

			Amount
			(In Millions)
2021 operating revenues			$169.3
Fuel, rider, and other revenues that do not significantly affect net income			15.9
Retail electric price			10.3
Volume/weather			2.8
2022 operating revenues			$198.3

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

The retail electric price variance is primarily due to a rate increase effective November 2021 in accordance with the terms of the 2021 formula rate plan filing. See Note 2 to the financial statements in the Form 10-K for further discussion of the formula rate plan filing.

The volume/weather variance is primarily due to an increase in commercial usage. The increase in commercial usage was primarily due to the effect of the COVID-19 pandemic on businesses in first quarter 2021.

Entergy New Orleans, LLC and Subsidiaries

Management's Financial Discussion and Analysis

Total electric energy sales for Entergy New Orleans for the three months ended March 31, 2022 and 2021 are as follows:

			2022						2021						% Change
			(GWh)
Residential			538						538						—
Commercial			465						446						4
Industrial			94						94						—
Governmental			178						172						3
Total retail			1,275						1,250						2
Sales for resale:
Non-associated companies			716						89						704
Total			1,991						1,339						49

See Note 13 to the financial statements herein for additional discussion of Entergy New Orleans’s operating revenues.

Other Income Statement Variances

Other operation and maintenance expenses decreased primarily due to a decrease of $2.4 million in non-nuclear generation expenses primarily due to the timing of the scope of work performed during plant outages in 2022 as compared to the same period in 2021 and a decrease of $2 million in energy efficiency expenses due to the timing of recovery from customers.

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

Interest expense increased primarily due to the issuance of $90 million of 4.19% Series mortgage bonds and the issuance of $70 million of 4.51% Series mortgage bonds, each in November 2021.

Income Taxes

The effective income tax rate was 17.8% for first quarter 2022. The difference in the effective income tax rate for first quarter 2022 versus the federal statutory rate of 21% was primarily due to the amortization of excess accumulated deferred income taxes and certain book and tax differences related to utility plant items, partially offset by state income taxes. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects of and regulatory activity regarding the Tax Cuts and Jobs Act.

The effective income tax rate was 33.9% for first quarter 2021. The difference in the effective income tax rate for first quarter 2021 versus the federal statutory rate of 21% was primarily due to the provision for uncertain tax positions and state income taxes, partially offset by certain book and tax differences related to utility plant items.

Entergy New Orleans, LLC and Subsidiaries

Management's Financial Discussion and Analysis

Liquidity and Capital Resources

Cash Flow

Cash flows for the three months ended March 31, 2022 and 2021 were as follows:

			2022						2021
			(In Thousands)
Cash and cash equivalents at beginning of period			$42,862						$26
Net cash provided by (used in):
Operating activities			41,811						(14,114)
Investing activities			(53,401)						14,875
Financing activities			(107)						14,825
Net increase (decrease) in cash and cash equivalents			(11,697)						15,586
Cash and cash equivalents at end of period			$31,165						$15,612

Operating Activities

Entergy New Orleans’s operating activities provided $41.8 million of cash for the three months ended March 31, 2022 compared to using $14.1 million of cash for the three months ended March 31, 2021 primarily due to the following activity:

• higher collections from customers;

• the timing of payments to vendors;

• an increase of $9.3 million in storm spending in 2022, primarily due to Hurricane Ida restoration efforts. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Hurricane Ida” in the Form 10-K for discussion of hurricane restoration efforts; and

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

Investing Activities

Entergy New Orleans’s investing activities used $53.4 million of cash for the three months ended March 31, 2022 compared to providing $14.9 million of cash for the three months ended March 31, 2021 primarily due to the following activity:

• an increase of $50.2 million in distribution construction expenditures primarily due to higher capital expenditures for storm restoration in 2022. The increase in storm restoration spending is primarily due to Hurricane Ida restoration efforts. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Hurricane Ida” in the Form 10-K for discussion of hurricane restoration efforts;

• $44.2 million in receipts from storm reserve escrow accounts in 2021; and

• money pool activity.

Decreases in Entergy New Orleans’s receivable from the money pool are a source of cash flow, and Entergy New Orleans’s receivable from the money pool decreased $18.3 million for the three months ended March 31, 2022. The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings.

Entergy New Orleans, LLC and Subsidiaries

Management's Financial Discussion and Analysis

Financing Activities

Entergy New Orleans’s financing activities used $0.1 million of cash for the three months ended March 31, 2022 compared to providing $14.8 million of cash for the three months ended March 31, 2021 primarily due to money pool activity.

Increases in Entergy New Orleans’s payable to the money pool are a source of cash flow, and Entergy New Orleans’s payable to the money pool increased $15 million for the three months ended March 31, 2021.

Capital Structure

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

			March 31, 2022						December 31, 2021
Debt to capital			54.8		%				55.4		%
Effect of excluding securitization bonds			(1.0		%)				(1.0		%)
Debt to capital, excluding securitization bonds (a)			53.8		%				54.4		%
Effect of subtracting cash			(1.0		%)				(1.4		%)
Net debt to net capital, excluding securitization bonds (a)			52.8		%				53.0		%

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

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

Uses and Sources of Capital

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

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

March 31, 2022						December 31, 2021						March 31, 2021						December 31, 2020
(In Thousands)
$18,122						$36,410						($25,229)						($10,190)

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

Entergy New Orleans, LLC and Subsidiaries

Management's Financial Discussion and Analysis

Entergy New Orleans has a credit facility in the amount of $25 million scheduled to expire in June 2024. The credit facility includes fronting commitments for the issuance of letters of credit against $10 million of the borrowing capacity of the facility. As of March 31, 2022, no cash borrowings and no letters of credit were outstanding under the facility. In addition, Entergy New Orleans is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO. As of March 31, 2022, a $1 million letter of credit was outstanding under Entergy New Orleans’s uncommitted letter of credit facility. See Note 4 to the financial statements herein for additional discussion of the credit facilities.

In February 2022, Entergy New Orleans 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. A City Council decision is expected in third quarter 2022.

Hurricane Ida

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Hurricane Ida” in the Form 10-K for a discussion of Hurricane Ida, which caused significant damage to Entergy New Orleans’s service area, including Entergy’s electrical grid. Entergy New Orleans expects to initiate its storm cost recovery proceeding in late second quarter 2022.

State and Local Rate Regulation

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

Retail Rates

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 produced an earned return on equity of 6.88% compared to the authorized return on equity of 9.35%. Entergy New Orleans seeks approval of a $40.2 million rate increase based on the formula set by the City Council in the 2018 rate case. The formula results in an increase in authorized electric revenues of $32.3 million and an increase in authorized gas revenues of $3.2 million. Entergy New Orleans also seeks to commence collecting $4.7 million in electric revenues that were previously approved by the City Council for collection through the formula rate plan. The filing is subject to review by the City Council and other parties over a 75-day review period, followed by a 25-day period to resolve any disputes among the parties. Resulting rates will be effective with the first billing cycle of September 2022 pursuant to the formula rate plan tariff. For any disputed rate adjustments, however, the City Council would set a procedural schedule that would extend the process for City Council approval of disputed rate adjustments.

COVID-19 Orders

As discussed in the Form 10-K, in May 2020 the City Council issued an accounting order authorizing Entergy New Orleans to establish a regulatory asset for incremental COVID-19-related expenses. As of March 31, 2022, Entergy New Orleans had a regulatory asset of $14.5 million for costs associated with the COVID-19 pandemic.

Entergy New Orleans, LLC and Subsidiaries

Management's Financial Discussion and Analysis

Reliability Investigation

As discussed in the Form 10-K, in April 2018 the City Council adopted a resolution directing Entergy New Orleans to demonstrate that it has been prudent in the management and maintenance of the reliability of its distribution system. The City Council also approved a resolution that opened a prudence investigation into whether Entergy New Orleans was imprudent for not acting sooner to address outages in New Orleans and whether fines should be imposed. In January 2019, Entergy New Orleans filed testimony in response to the prudence investigation and asserting that it had been prudent in managing system reliability. In April 2019 the City Council advisors filed comments and testimony asserting that Entergy New Orleans did not act prudently in maintaining and improving its distribution system reliability in recent years and recommending that a financial penalty in the range of $1.5 million to $2 million should be assessed. Entergy New Orleans disagreed with the recommendation and submitted rebuttal testimony and rebuttal comments in June 2019. In November 2019 the City Council passed a resolution that penalized Entergy New Orleans $1 million for alleged imprudence in the maintenance of its distribution system. In December 2019, Entergy New Orleans filed suit in Louisiana state court seeking judicial review of the City Council’s resolution. In March 2022 the Civil District Court approved a scheduling order with briefing through May 2022 and oral argument in June 2022.

System Resiliency and Storm Hardening

As discussed in the Form 10-K, in October 2021 the City Council passed a resolution and order establishing a docket and procedural schedule with respect to system resiliency and storm hardening. The docket will identify a plan for storm hardening and resiliency projects with other stakeholders. In March 2022 the City Council granted Entergy New Orleans’s request for an extension of time to file a response until July 2022.

Federal Regulation

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – Federal Regulation” in the Form 10-K for a discussion of federal regulation.

Nuclear Matters

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

Environmental Risks

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

Critical Accounting Estimates

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy New Orleans’s accounting for utility regulatory accounting, impairment of long-lived assets, taxation and uncertain tax positions, qualified pension and other postretirement benefits, and other contingencies.

New Accounting Pronouncements

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

ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
For the Three Months Ended March 31, 2022 and 2021
(Unaudited)
																		2022						2021
												(In Thousands)
OPERATING REVENUES
Electric																		$154,646						$139,148
Natural gas																		43,626						30,187
TOTAL																		198,272						169,335
OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale																		43,397						19,012
Purchased power																		56,470						68,670
Other operation and maintenance																		33,652						38,178
Taxes other than income taxes																		13,989						12,556
Depreciation and amortization																		19,815						18,161
Other regulatory charges (credits) - net																		4,185						3,130
TOTAL																		171,508						159,707
OPERATING INCOME																		26,764						9,628
OTHER INCOME (DEDUCTIONS)
Allowance for equity funds used during construction																		369						258
Interest and investment income																		24						9
Miscellaneous - net																		(271)						(302)
TOTAL																		122						(35)
INTEREST EXPENSE
Interest expense																		8,694						7,029
Allowance for borrowed funds used during construction																		(199)						(116)
TOTAL																		8,495						6,913
INCOME BEFORE INCOME TAXES																		18,391						2,680
Income taxes																		3,265						909
NET INCOME																		$15,126						$1,771
See Notes to Financial Statements.

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ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2022 and 2021
(Unaudited)
						2022						2021
						(In Thousands)
OPERATING ACTIVITIES
Net income						$15,126						$1,771
Adjustments to reconcile net income to net cash flow provided by (used in) operating activities:
Depreciation and amortization						19,815						18,161
Deferred income taxes, investment tax credits, and non-current taxes accrued						9,558						4,572
Changes in assets and liabilities:
Receivables						39,328						(1,975)
Fuel inventory						446						2,234
Accounts payable						(14,168)						(27,777)
Taxes accrued						(2,803)						13
Interest accrued						(613)						(3,203)
Deferred fuel costs						(9,959)						(4,886)
Other working capital accounts						(10,876)						(11,103)
Provisions for estimated losses						6,224						(40,680)
Other regulatory assets						25,499						28,879
Other regulatory liabilities						(16,667)						8,728
Pension and other postretirement liabilities						(2,782)						(4,397)
Other assets and liabilities						(16,317)						15,549
Net cash flow provided by (used in) operating activities						41,811						(14,114)
INVESTING ACTIVITIES
Construction expenditures						(68,959)						(26,165)
Allowance for equity funds used during construction						369						258
Changes in money pool receivable - net						18,288						—
Receipts from storm reserve escrow account						—						44,200
Payments to storm reserve escrow account						—						(3)
Changes in securitization account						(3,099)						(3,415)
Net cash flow provided by (used in) investing activities						(53,401)						14,875
FINANCING ACTIVITIES
Changes in money pool payable - net						—						15,039
Other						(107)						(214)
Net cash flow provided by (used in) financing activities						(107)						14,825
Net increase (decrease) in cash and cash equivalents						(11,697)						15,586
Cash and cash equivalents at beginning of period						42,862						26
Cash and cash equivalents at end of period						$31,165						$15,612
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized						$8,957						$9,921
See Notes to Financial Statements.

ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, 2022 and December 31, 2021
(Unaudited)
						2022						2021
						(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash						$26						$26
Temporary cash investments						31,139						42,836
Total cash and cash equivalents						31,165						42,862
Securitization recovery trust account						5,098						1,999
Accounts receivable:
Customer						61,442						69,902
Allowance for doubtful accounts						(7,702)						(13,282)
Associated companies						21,557						74,146
Other						12,590						13,668
Accrued unbilled revenues						24,481						25,550
Total accounts receivable						112,368						169,984
Deferred fuel costs						2,352						—
Fuel inventory - at average cost						2,499						2,945
Materials and supplies - at average cost						20,610						19,216
Prepayments and other						15,621						5,428
TOTAL						189,713						242,434
OTHER PROPERTY AND INVESTMENTS
Non-utility property at cost (less accumulated depreciation)						1,016						1,016
TOTAL						1,016						1,016
UTILITY PLANT
Electric						1,964,963						1,976,202
Natural gas						377,826						373,983
Construction work in progress						23,047						22,199
TOTAL UTILITY PLANT						2,365,836						2,372,384
Less - accumulated depreciation and amortization						785,381						774,309
UTILITY PLANT - NET						1,580,455						1,598,075
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Deferred fuel costs						4,080						4,080
Other regulatory assets (includes securitization property of $22,924 as of March 31, 2022 and $25,761 as of December 31, 2021)						223,118						248,617
Other						60,565						56,101
TOTAL						287,763						308,798
TOTAL ASSETS						$2,058,947						$2,150,323
See Notes to Financial Statements.

ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
March 31, 2022 and December 31, 2021
(Unaudited)
						2022						2021
						(In Thousands)
CURRENT LIABILITIES
Payable due to associated company						$1,326						$1,326
Accounts payable:
Associated companies						41,135						45,057
Other						59,501						146,921
Customer deposits						29,470						28,539
Taxes accrued						1,582						4,385
Interest accrued						7,378						7,991
Deferred fuel costs						—						7,607
Current portion of unprotected excess accumulated deferred income taxes						—						1,906
Other						6,019						6,204
TOTAL						146,411						249,936
NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued						375,056						365,384
Accumulated deferred investment tax credits						16,297						16,306
Regulatory liability for income taxes - net						39,208						40,589
Asset retirement cost liabilities						—						4,032
Accumulated provisions						12,553						6,329
Long-term debt (includes securitization bonds of $29,721 as of March 31, 2022 and $29,661 as of December 31, 2021)						777,590						777,254
Long-term payable due to associated company						9,585						9,585
Other						28,406						42,193
TOTAL						1,258,695						1,261,672
Commitments and Contingencies
EQUITY
Member's equity						653,841						638,715
TOTAL						653,841						638,715
TOTAL LIABILITIES AND EQUITY						$2,058,947						$2,150,323
See Notes to Financial Statements.

ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN MEMBER'S EQUITY
For the Three Months Ended March 31, 2022 and 2021
(Unaudited)
			Member's Equity
			(In Thousands)
Balance at December 31, 2020			$606,917
Net income			1,771
Balance at March 31, 2021			$608,688
Balance at December 31, 2021			$638,715
Net income			15,126
Balance at March 31, 2022			$653,841
See Notes to Financial Statements.

ENTERGY TEXAS, INC. AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

Results of Operations

Net Income

Net income remained relatively unchanged, increasing $0.3 million, primarily due to higher retail electric price, partially offset by higher other operation and maintenance expenses and higher depreciation and amortization expenses.

Operating Revenues

Following is an analysis of the change in operating revenues comparing the first quarter 2022 to the first quarter 2021:

			Amount
			(In Millions)
2021 operating revenues			$480.2
Fuel, rider, and other revenues that do not significantly affect net income			(28.3)
Volume/weather			0.1
Retail electric price			20.5
2022 operating revenues			$472.5

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

The volume/weather variance is insignificant and primarily due to an increase in industrial usage, an increase in weather-adjusted commercial usage, and the effect of more favorable weather on residential and commercial sales. The increase in industrial usage was primarily due to an increase in demand from cogeneration and mid-to-small customers and an increase in demand from expansion projects, primarily in the transportation and chemicals industries. The increase in commercial usage was primarily due to an increase in customers and the effect of the COVID-19 pandemic on businesses in first quarter 2021. The increased usage from these industrial and commercial customers has a relatively smaller effect on operating revenues because a larger portion of the revenues from those customers comes from fixed charges.

The retail electric price variance is primarily due to:

• increases in the transmission cost recovery factor rider effective March 2021 and March 2022;

• an increase in the distribution cost recovery factor rider effective January 2022; and

• an increase in the generation cost recovery rider effective January 2022.

See Note 2 to the financial statements herein and in the Form 10-K for further discussion of the generation cost recovery rider and transmission and distribution cost recovery factor rider filings.

Entergy Texas, Inc. and Subsidiaries

Management's Financial Discussion and Analysis

Total electric energy sales for Entergy Texas for the three months ended March 31, 2022 and 2021 are as follows:

			2022						2021						% Change
			(GWh)
Residential			1,460						1,394						5
Commercial			1,059						1,004						5
Industrial			2,264						1,963						15
Governmental			64						62						3
Total retail			4,847						4,423						10
Sales for resale:
Associated companies			190						296						(36)
Non-associated companies			144						341						(58)
Total			5,181						5,060						2

See Note 13 to the financial statements herein for additional discussion of Entergy Texas’s operating revenues.

Other Income Statement Variances

Other operation and maintenance expenses increased primarily due to:

• an increase of $7.7 million in non-nuclear generation expenses primarily due to higher expenses associated with the Hardin County Peaking Facility, which was purchased in June 2021, and the Montgomery County Power Station and a higher scope of work performed during outages in 2022 as compared to the same period in 2021;

• an increase of $1.7 million in distribution operations expenses primarily due to higher contractor costs, higher vegetation maintenance costs, and higher safety and training costs; and

• several individually insignificant items.

The increase was partially offset by a decrease of $1.1 million in meter reading expenses as a result of the deployment of advanced metering systems.

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

Income Taxes

The effective income tax rates were 9.3% for the first quarter 2022 and 9.1% for the first quarter 2021. The differences in the effective income tax rates for the first quarter 2022 and the first quarter 2021 versus the federal statutory rate of 21% were primarily due to the amortization of excess accumulated deferred income taxes and certain book and tax differences related to utility plant items. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act.

Entergy Texas, Inc. and Subsidiaries

Management's Financial Discussion and Analysis

Liquidity and Capital Resources

Cash Flow

Cash flows for the three months ended March 31, 2022 and 2021 were as follows:

			2022						2021
			(In Thousands)
Cash and cash equivalents at beginning of period			$28						$248,596
Net cash provided by (used in):
Operating activities			82,338						(28,864)
Investing activities			(144,536)						(223,696)
Financing activities			62,196						3,989
Net decrease in cash and cash equivalents			(2)						(248,571)
Cash and cash equivalents at end of period			$26						$25

Operating Activities

Entergy Texas’s operating activities provided $82.3 million of cash for the three months ended March 31, 2022 compared to using $28.9 million of cash for the three months ended March 31, 2021 primarily due to the following activity:

• the timing of recovery of fuel and purchased power costs, including increased fuel costs in 2021 as a result of Winter Storm Uri. See Note 2 to the financial statements in the Form 10-K for a discussion of fuel and purchased power cost recovery;

• the timing of payments to vendors; and

• higher collections from customers.

Investing Activities

Net cash flow used in investing activities decreased $79.2 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to:

• a decrease of $49 million in distribution construction expenditures primarily due to lower capital expenditures for storm restoration in 2022 and lower spending on advanced metering infrastructure. The decrease in storm restoration spending is primarily due to Hurricane Laura restoration efforts in 2021;

• a decrease of $21.4 million in transmission construction expenditures primarily due to a lower scope of work on projects performed in 2022 as compared to 2021; and

• a decrease of $19.4 million in non-nuclear generation construction expenditures primarily due to a lower scope of work on projects performed in 2022 as compared to 2021.

The decrease was partially offset by cash collateral of $12 million posted in March 2022 to support Entergy Texas’s obligations to MISO.

Financing Activities

Net cash flow provided by financing activities increased $58.2 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to money pool activity.

Entergy Texas, Inc. and Subsidiaries

Management's Financial Discussion and Analysis

Increases in Entergy Texas’s payable to the money pool are a source of cash flow, and Entergy Texas’s payable to the money pool increased by $91.8 million for the three months ended March 31, 2022 compared to increasing by $30.9 million for the three months ended March 31, 2021. The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings.

Capital Structure

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

			March 31, 2022						December 31, 2021
Debt to capital			47.9		%				48.7		%
Effect of excluding the securitization bonds			(0.2		%)				(0.5		%)
Debt to capital, excluding securitization bonds (a)			47.7		%				48.2		%
Effect of subtracting cash			—		%				—		%
Net debt to net capital, excluding securitization bonds (a)			47.7		%				48.2		%

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

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

Uses and Sources of Capital

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

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

March 31, 2022						December 31, 2021						March 31, 2021						December 31, 2020
(In Thousands)
($171,393)						($79,594)						($30,858)						$4,601

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

Entergy Texas has a credit facility in the amount of $150 million scheduled to expire in June 2026. The credit facility includes fronting commitments for the issuance of letters of credit against $30 million of the borrowing capacity of the facility. As of March 31, 2022, there were no cash borrowings and $1.3 million of letters of credit outstanding under the credit facility. In addition, Entergy Texas is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO. As of March 31, 2022, $79.6 million in letters of credit were outstanding under Entergy Texas’s uncommitted letter of credit facility. See Note 4 to the financial statements herein for additional discussion of the credit facilities.

Entergy Texas, Inc. and Subsidiaries

Management's Financial Discussion and Analysis

Orange County Advanced Power Station

As discussed in the Form 10-K, 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 opposing the project outright. Also in March 2022, 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. Also in April 2022 the ALJs with the State Office of Administrative Hearings approved a continuance of the hearing on the merits from April 2022 to June 2022, providing Entergy Texas an opportunity to accelerate the determination and fixing of pricing for the Orange County Advanced Power Station prior to the hearing. A final order by the PUCT is expected in third or fourth quarter of 2022. Entergy Texas also is pursuing environmental permitting that is required prior to the commencement of construction. Subject to receipt of required regulatory approvals, permits, and other conditions, the facility is expected to be in service by May 2026.

Hurricane Laura, Hurricane Delta, and Winter Storm Uri

As discussed in the Form 10-K, 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 July 2021, Entergy Texas filed with the PUCT an application for a financing order to approve the securitization of certain system restoration costs, which were approved by the PUCT as eligible for securitization in December 2021. 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, in first quarter 2022, 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 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 4 to the financial statements herein for a discussion of the April 2022 issuance of the securitization bonds.

State and Local Rate Regulation and Fuel-Cost Recovery

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

Entergy Texas, Inc. and Subsidiaries

Management's Financial Discussion and Analysis

Distribution Cost Recovery Factor (DCRF) Rider

As discussed in the Form 10-K, in August 2021, Entergy Texas filed with the PUCT a request to amend its DCRF rider. The proposed rider is designed to collect from Entergy Texas’s retail customers approximately $40.2 million annually, or $13.9 million in incremental annual revenues beyond Entergy Texas’s currently effective DCRF rider based on its capital invested in distribution between September 1, 2020 and June 30, 2021. In September 2021 the PUCT referred the proceeding to the State Office of Administrative Hearings. A procedural schedule was established with a hearing scheduled in December 2021. In December 2021 the parties filed an unopposed settlement recommending that Entergy Texas be allowed to collect its full requested DCRF revenue requirement and resolving all issues in the proceeding, including a motion for interim rates to take effect for usage on and after January 24, 2022. Also, in December 2021, the ALJ with the State Office of Administrative Hearings issued an order granting the motion for interim rates, which went into effect in January 2022, admitting evidence, and remanding the proceeding to the PUCT to consider the settlement. In March 2022 the PUCT issued an order approving the settlement.

Generation Cost Recovery Rider

As discussed in the Form 10-K, 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 through August 31, 2020, which was approved by the PUCT on an interim basis in January 2021. In March 2021, Entergy Texas filed to update its generation cost recovery rider to include its generation capital investment in Montgomery County Power Station after August 31, 2020 and an unopposed settlement agreement filed on behalf of the parties by Entergy Texas 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 is the difference between the interim revenue requirement approved in January 2021 and the revenue requirement approved in January 2022 that reflects 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. In April 2022, Entergy Texas and PUCT staff filed a joint proposed order that supports approval of Entergy Texas’s as-filed request.

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. In September 2021 the PUCT referred the proceeding to the State Office of Administrative Hearings. A procedural schedule was established with a hearing scheduled in April 2022. 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 March 2022, Entergy Texas filed on behalf of the parties an unopposed motion, which motion was granted by the ALJ with the State Office of Administrative Hearings, to abate the procedural schedule indicating that the parties had reached an agreement in principle. 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 is $4.5 million in incremental annual revenue above the $88.3 million approved in January 2022, related to Entergy Texas’s actual investment in the acquisition of the Hardin County Peaking Facility.

COVID-19 Orders

As discussed in the Form 10-K, in March 2020 the PUCT authorized electric utilities to record as a regulatory asset expenses resulting from the effects of the COVID-19 pandemic. In future proceedings, the PUCT will consider whether each utility's request for recovery of these regulatory assets is reasonable and necessary, the

Entergy Texas, Inc. and Subsidiaries

Management's Financial Discussion and Analysis

appropriate period of recovery, and any amount of carrying costs thereon. As of March 31, 2022, Entergy Texas had a regulatory asset of $10.4 million for costs associated with the COVID-19 pandemic.

Green Pricing Option Tariffs

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 green pricing 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. This matter is awaiting placement on an open meeting agenda for PUCT consideration of the settlement.

Federal Regulation

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – Federal Regulation” in the Form 10-K for a discussion of federal regulation.

Nuclear Matters

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

Industrial and Commercial Customers

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – Industrial and Commercial Customers” in the Form 10-K for a discussion of industrial and commercial customers.

Environmental Risks

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

Critical Accounting Estimates

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K for a discussion of utility regulatory accounting, impairment of long-lived assets, taxation and uncertain tax positions, qualified pension and other postretirement benefits, and other contingencies.

New Accounting Pronouncements

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

ENTERGY TEXAS, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
For the Three Months Ended March 31, 2022 and 2021
(Unaudited)
																		2022						2021
												(In Thousands)
OPERATING REVENUES
Electric																		$472,482						$480,220
OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale																		73,920						112,396
Purchased power																		161,090						141,362
Other operation and maintenance																		74,977						62,955
Taxes other than income taxes																		20,449						21,875
Depreciation and amortization																		56,061						50,936
Other regulatory charges (credits) - net																		13,446						15,840
TOTAL																		399,943						405,364
OPERATING INCOME																		72,539						74,856
OTHER INCOME
Allowance for equity funds used during construction																		2,596						2,445
Interest and investment income																		188						224
Miscellaneous - net																		307						(423)
TOTAL																		3,091						2,246
INTEREST EXPENSE
Interest expense																		20,912						23,038
Allowance for borrowed funds used during construction																		(865)						(984)
TOTAL																		20,047						22,054
INCOME BEFORE INCOME TAXES																		55,583						55,048
Income taxes																		5,180						4,990
NET INCOME																		50,403						50,058
Preferred dividend requirements																		518						470
EARNINGS APPLICABLE TO COMMON STOCK																		$49,885						$49,588
See Notes to Financial Statements.

ENTERGY TEXAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2022 and 2021
(Unaudited)
						2022						2021
						(In Thousands)
OPERATING ACTIVITIES
Net income						$50,403						$50,058
Adjustments to reconcile net income to net cash flow provided by (used in) operating activities:
Depreciation and amortization						56,061						50,936
Deferred income taxes, investment tax credits, and non-current taxes accrued						(1,175)						(1,522)
Changes in assets and liabilities:
Receivables						(1,674)						(16,424)
Fuel inventory						8,039						3,509
Accounts payable						4,492						(42,511)
Taxes accrued						(15,188)						(5,123)
Interest accrued						(11,195)						(10,989)
Deferred fuel costs						(8,440)						(62,970)
Other working capital accounts						4,832						1,118
Provisions for estimated losses						54						(31)
Other regulatory assets						(135,079)						40,484
Other regulatory liabilities						(11,491)						(13,649)
Storm restoration costs approved for securitization recognized as regulatory asset						153,383						—
Pension and other postretirement liabilities						(4,146)						(5,434)
Other assets and liabilities						(6,538)						(16,316)
Net cash flow provided by (used in) operating activities						82,338						(28,864)
INVESTING ACTIVITIES
Construction expenditures						(155,948)						(238,903)
Allowance for equity funds used during construction						2,596						2,445
Litigation proceeds from settlement agreement						4,134						—
Change in money pool receivable - net						—						4,601
Changes in securitization account						16,631						8,161
Increase in other investments						(11,949)						—
Net cash flow used in investing activities						(144,536)						(223,696)
FINANCING ACTIVITIES
Retirement of long-term debt						(29,064)						(27,951)
Changes in money pool payable - net						91,799						30,858
Preferred stock dividends paid						(505)						(470)
Other						(34)						1,552
Net cash flow provided by financing activities						62,196						3,989
Net decrease in cash and cash equivalents						(2)						(248,571)
Cash and cash equivalents at beginning of period						28						248,596
Cash and cash equivalents at end of period						$26						$25
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized						$31,513						$33,394
Income taxes						($1,913)						($836)
See Notes to Financial Statements.

ENTERGY TEXAS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, 2022 and December 31, 2021
(Unaudited)
						2022						2021
						(In Thousands)
CURRENT ASSETS
Cash and cash equivalents						$26						$28
Securitization recovery trust account						9,998						26,629
Accounts receivable:
Customer						88,964						83,797
Allowance for doubtful accounts						(2,783)						(5,814)
Associated companies						15,868						31,720
Other						23,315						13,404
Accrued unbilled revenues						61,658						62,241
Total accounts receivable						187,022						185,348
Deferred fuel costs						56,720						48,280
Fuel inventory - at average cost						34,673						42,712
Materials and supplies - at average cost						73,415						72,884
Prepayments and other						23,902						17,515
TOTAL						385,756						393,396
OTHER PROPERTY AND INVESTMENTS
Investments in affiliates - at equity						287						300
Non-utility property - at cost (less accumulated depreciation)						376						376
Other						17,730						18,128
TOTAL						18,393						18,804
UTILITY PLANT
Electric						7,071,317						7,181,567
Construction work in progress						207,167						183,965
TOTAL UTILITY PLANT						7,278,484						7,365,532
Less - accumulated depreciation and amortization						2,053,212						2,049,750
UTILITY PLANT - NET						5,225,272						5,315,782
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Other regulatory assets (includes securitization property of $11,221 as of March 31, 2022 and $23,818 as of December 31, 2021)						556,412						421,333
Other						119,734						112,096
TOTAL						676,146						533,429
TOTAL ASSETS						$6,305,567						$6,261,411
See Notes to Financial Statements.

ENTERGY TEXAS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
March 31, 2022 and December 31, 2021
(Unaudited)
						2022						2021
						(In Thousands)
CURRENT LIABILITIES
Accounts payable:
Associated companies						$225,441						$142,929
Other						140,760						164,981
Customer deposits						37,535						37,271
Taxes accrued						33,830						49,018
Interest accrued						7,807						19,002
Current portion of unprotected excess accumulated deferred income taxes						20,059						27,188
Other						15,797						16,120
TOTAL						481,229						456,509
NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued						695,150						692,496
Accumulated deferred investment tax credits						9,172						9,325
Regulatory liability for income taxes - net						137,959						144,145
Other regulatory liabilities						38,884						37,060
Asset retirement cost liabilities						8,638						8,520
Accumulated provisions						8,296						8,242
Long-term debt (includes securitization bonds of $24,953 as of March 31, 2022 and $53,979 as of December 31, 2021)						2,325,371						2,354,148
Other						67,777						67,760
TOTAL						3,291,247						3,321,696
Commitments and Contingencies
EQUITY
Common stock, no par value, authorized 200,000,000 shares; issued and outstanding 46,525,000 shares in 2022 and 2021						49,452						49,452
Paid-in capital						1,050,125						1,050,125
Retained earnings						1,394,764						1,344,879
Total common shareholder's equity						2,494,341						2,444,456
Preferred stock without sinking fund						38,750						38,750
TOTAL						2,533,091						2,483,206
TOTAL LIABILITIES AND EQUITY						$6,305,567						$6,261,411
See Notes to Financial Statements.

ENTERGY TEXAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the Three Months Ended March 31, 2022 and 2021
(Unaudited)
									Common Equity
			Preferred Stock						Common Stock						Paid-in Capital						Retained Earnings						Total
			(In Thousands)
Balance at December 31, 2020			$35,000						$49,452						$955,162						$1,117,964						$2,157,578
Net income			—						—						—						50,058						50,058
Preferred stock dividends			—						—						—						(470)						(470)
Balance at March 31, 2021			$35,000						$49,452						$955,162						$1,167,552						$2,207,166
Balance at December 31, 2021			$38,750						$49,452						$1,050,125						$1,344,879						$2,483,206
Net income			—						—						—						50,403						50,403
Preferred stock dividends			—						—						—						(518)						(518)
Balance at March 31, 2022			$38,750						$49,452						$1,050,125						$1,394,764						$2,533,091
See Notes to Financial Statements.

SYSTEM ENERGY RESOURCES, INC.

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

System Energy’s principal asset currently consists of an ownership interest and a leasehold interest in Grand Gulf. The capacity and energy from its 90% interest is sold under the Unit Power Sales Agreement to its only four customers, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. System Energy’s operating revenues are derived from the allocation of the capacity, energy, and related costs associated with its 90% interest in Grand Gulf pursuant to the Unit Power Sales Agreement. Payments under the Unit Power Sales Agreement are System Energy’s only source of operating revenues. As discussed in “Complaints Against System Energy” below, System Energy is currently involved in proceedings at the FERC commenced by the retail regulators of its customers regarding its return on equity, its capital structure, its renewal of the sale-leaseback of 11.5% of Grand Gulf, the treatment of uncertain tax positions in rate base, the prudence of its operation of Grand Gulf, and the rates it charges under the Unit Power Sales Agreement.

Results of Operations

Net Income

Net income increased $7.6 million primarily due to the increase in operating revenues resulting from changes in rate base.

Income Taxes

The effective income tax rate was 23.2% for the first quarter 2022. The difference in the effective income tax rate for the first quarter 2022 versus the federal statutory rate of 21% was primarily due to state income taxes, partially offset by book and tax differences related to the allowance for equity funds used during construction.

The effective income tax rate was (79.5%) for the first quarter 2021. The difference in the effective income tax rate for the first quarter 2021 versus the federal statutory rate of 21% was primarily due to the amortization of excess accumulated deferred income taxes, certain book and tax differences related to utility plant items, the amortization of investment tax credits, and book and tax differences related to the allowance for equity funds used during construction, partially offset by state income taxes. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act.

System Energy Resources, Inc.

Management's Financial Discussion and Analysis

Liquidity and Capital Resources

Cash Flow

Cash flows for the three months ended March 31, 2022 and 2021 were as follows:

			2022						2021
			(In Thousands)
Cash and cash equivalents at beginning of period			$89,201						$242,469
Net cash provided by (used in):
Operating activities			40,011						(29,242)
Investing activities			(94,802)						(23,437)
Financing activities			63,845						(57,563)
Net increase (decrease) in cash and cash equivalents			9,054						(110,242)
Cash and cash equivalents at end of period			$98,255						$132,227

Operating Activities

System Energy’s operating activities provided $40 million of cash for the three months ended March 31, 2022 compared to using $29.2 million of cash for the three months ended March 31, 2021 primarily due to income tax payments of $39.1 million in 2021 and timing of payments to vendors, partially offset by an increase in spending of $12.7 million on nuclear refueling outages in 2022 as compared to the same period in 2021 and timing of collections of receivables. System Energy had income tax payments in 2021 as a result of the amended Mississippi tax returns filed based on federal adjustments related to the resolution of the 2014-2015 IRS audit, as well as a portion of the payments made in accordance with an intercompany income tax allocation agreement. See Note 3 to the financial statements in the Form 10-K for discussion of the 2014-2015 IRS audit.

Investing Activities

Net cash flow used in investing activities increased $71.4 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to:

• an increase of $71.9 million as a result of fluctuations in nuclear fuel activity because of variations from year to year in the timing and pricing of fuel reload requirements in the Utility business, material and services deliveries, and the timing of cash payments during the nuclear fuel cycle; and

• an increase of $31.3 million in nuclear construction expenditures due to increased spending on various nuclear projects in 2022.

The increase was offset by money pool activity.

Decreases in System Energy’s receivable from the money pool are a source of cash flow and System Energy’s receivable from the money pool decreased by $18.6 million for the three months ended March 31, 2022 compared to increasing by $12.7 million for the three months ended March 31, 2021. The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings.

System Energy Resources, Inc.

Management's Financial Discussion and Analysis

Financing Activities

System Energy’s financing activities provided $63.8 million of cash for the three months ended March 31, 2022 compared to using $57.6 million of cash for the three months ended March 31, 2021 primarily due to:

• the repayment in February 2021 of $100 million of 3.42% Series J notes by the System Energy nuclear fuel company variable interest entity; and

• a decrease of $21 million in common stock dividends and distributions. No common stock dividends or distributions were made in 2022 in order to maintain System Energy’s capital structure.

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

Capital Structure

System Energy’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 repayment of long-term debt in 2021.

			March 31, 2022						December 31, 2021
Debt to capital			41.8		%				40.4		%
Effect of subtracting cash			(3.2		%)				(3.0		%)
Net debt to net capital			38.6		%				37.4		%

Net debt consists of debt less cash and cash equivalents. Debt consists of short-term borrowings and long-term debt, including the currently maturing portion. Capital consists of debt and common equity. Net capital consists of capital less cash and cash equivalents. System Energy uses the debt to capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating System Energy’s financial condition. System Energy uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating System Energy’s financial condition because net debt indicates System Energy’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.

Uses and Sources of Capital

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

System Energy’s receivables from the money pool were as follows:

March 31, 2022						December 31, 2021						March 31, 2021						December 31, 2020
(In Thousands)
$57,139						$75,745						$16,682						$4,004

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

The System Energy nuclear fuel company variable interest entity has a credit facility in the amount of $120 million scheduled to expire in June 2024. As of March 31, 2022, $100 million in loans were outstanding under the

System Energy Resources, Inc.

Management's Financial Discussion and Analysis

System Energy nuclear fuel company variable interest entity credit facility. See Note 4 to the financial statements herein for additional discussion of the variable interest entity credit facility.

Federal Regulation

See the “Rate, Cost-recovery, and Other Regulation - Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis in the Form 10-K and Note 2 to the financial statements herein and in the Form 10-K for a discussion of federal regulation.

Complaints Against System Energy

Return on Equity and Capital Structure Complaints

As discussed in the Form 10-K, in March 2021 the FERC ALJ issued an initial decision in the proceeding against System Energy regarding the return on equity component of the Unit Power Sales Agreement. With regard to System Energy’s authorized return on equity, the ALJ determined that the existing return on equity of 10.94% is no longer just and reasonable, and that the replacement authorized return on equity, based on application of the Opinion No. 569-A methodology, should be 9.32%. The ALJ further determined that System Energy should pay refunds for a fifteen-month refund period (January 2017-April 2018) based on the difference between the current return on equity and the replacement authorized return on equity. The ALJ determined that the April 2018 complaint concerning the authorized return on equity should be dismissed, and that no refunds for a second fifteen-month refund period should be due. With regard to System Energy’s capital structure, the ALJ determined that System Energy’s actual equity ratio is excessive and that the just and reasonable equity ratio is 48.15% equity, based on the average equity ratio of the proxy group used to evaluate the return on equity for the second complaint. The ALJ further determined that System Energy should pay refunds for a fifteen-month refund period (September 2018-December 2019) based on the difference between the actual equity ratio and the 48.15% equity ratio. If the ALJ’s initial decision is upheld, the estimated refund for this proceeding is approximately $61 million, which includes interest through March 31, 2022, and the estimated resulting annual rate reduction would be approximately $45 million. The estimated refund will continue to accrue interest until a final FERC decision is issued. Based on the course of the proceeding to date, System Energy has recorded a provision of $38 million, including interest, as of March 31, 2022.

The ALJ initial decision is an interim step in the FERC litigation process, and an ALJ’s determinations made in an initial decision are not controlling on the FERC. In April 2021, System Energy 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, APSC, MPSC, 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, APSC, MPSC, and the City Council. Refunds, if any, that might be required will only become due after the FERC issues its order reviewing the initial decision.

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

As discussed in the Form 10-K, in May 2018 the LPSC filed a complaint against System Energy and Entergy Services related to System Energy’s renewal of a sale-leaseback transaction originally entered into in December 1988 for an 11.5% undivided interest in Grand Gulf Unit 1. A hearing was held before a FERC ALJ in November 2019. In April 2020 the ALJ issued the initial decision. Among other things, the ALJ determined that refunds were due on three main issues. First, with regard to the lease renewal payments, the ALJ determined that System Energy is recovering an unjust acquisition premium through the lease renewal payments, and that System Energy’s recovery from customers through rates should be limited to the cost of service based on the remaining net book value of the leased assets, which is approximately $70 million. The ALJ found that the remedy for this issue should be the refund of lease payments (approximately $17.2 million per year since July 2015) with interest determined at the FERC quarterly interest rate, which would be offset by the addition of the net book value of the

System Energy Resources, Inc.

Management's Financial Discussion and Analysis

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. If the ALJ’s initial decision is upheld, the estimated refund for this issue through March 31, 2022, is approximately $422 million, plus interest, which is approximately $135 million through March 31, 2022. The ALJ also found that System Energy should include liabilities associated with uncertain tax positions as a rate base reduction going forward. Third, with regard to the depreciation expense adjustments, the ALJ found that System Energy should correct for the error in re-billings retroactively and prospectively, but that System Energy should not be permitted to recover interest on any retroactive return on enhanced rate base resulting from such corrections. If the initial decision is affirmed on this issue, System Energy estimates refunds of approximately $19 million, which includes interest through March 31, 2022.

The ALJ initial decision is an interim step in the FERC litigation process, and an ALJ’s determinations made in an initial decision are not controlling on the FERC. The ALJ in the initial decision acknowledges that these are issues of first impression before the FERC. The case is pending before the FERC, which will review the case and issue an order on the proceeding, and the FERC may accept, reject, or modify the ALJ’s initial decision in whole or in part. Refunds, if any, that might be required will only become due after the FERC issues its order reviewing the initial decision.

LPSC Authorization of Additional Complaints

As discussed in the Form 10-K, in May 2020 the LPSC authorized its staff to file additional complaints at the FERC related to the rates charged by System Energy for Grand Gulf energy and capacity supplied to Entergy Louisiana under the Unit Power Sales Agreement.

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 raises two sets of rate allegations: violations of the filed rate and a corresponding request for refunds for prior periods; and elements of the Unit Power Sales Agreement 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. 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 the FERC’s decision as related to matters set for hearing that were beyond the scope of the FERC’s jurisdiction or authority. The complainants sought rehearing of the FERC’s decision to hold the hearing in abeyance and filed a motion to proceed, which motion System Energy subsequently opposed. In June 2021, System Energy’s request for rehearing was denied by operation of law, and System Energy filed an appeal of the FERC’s orders in the Court of Appeals for the Fifth Circuit. The appeal was initially stayed for a period of 90 days, but the stay expired. In November 2021 the Fifth Circuit dismissed the appeal as premature.

In November 2021 the LPSC, APSC, and 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 include, 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 is also seeking a retroactive adjustment to retained earnings and capital structure in conjunction with the implementation of

System Energy Resources, Inc.

Management's Financial Discussion and Analysis

its proposed refunds. In addition, the LPSC seeks 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 argues 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 alleges 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 recommends a refund of approximately $98.8 million for the period 2004-September 2021 or other alternative relief. The City Council further recommends 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 argues, among other things, that (1) the inclusion of sale-leaseback transaction costs in prepayments was correct; (2) 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) an accounting misclassification for deferred refueling outage costs has been corrected, caused no harm to customers, and requires no refunds; and (4) its accounting and ratemaking treatment of specified accumulated deferred income tax balances in account 190 has been correct. System Energy further responds that no retroactive adjustment to retained earnings or capital structure should be ordered because there is 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 are 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 have been included in rates for decades, is unjust and unreasonable. In response to the LPSC’s proposed going-forward adjustments, System Energy presents evidence to show that none of the proposed adjustments are 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 argues that the Unit Power Sales Agreement does 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 are appropriate on those issues. In response to the City Council’s claims, System Energy argues that it has reasonably managed its cash and that the City Council’s theory of cash management is defective because it fails to adequately consider the relevant cash needs of System Energy and it makes faulty presumptions about the operation of the Entergy System money pool. System Energy further points out that the issue of its capital structure is already subject to pending FERC litigation.

In March 2022 the FERC trial staff filed direct and answering testimony in response to the LPSC, APSC, and City Council’s direct testimony. In its testimony, the FERC trial staff recommends 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 recommends refunds of $84.1 million, exclusive of any tax gross-up or FERC interest. In addition, the FERC trial staff recommends 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 concern the reasonableness of System Energy’s rate of return, the FERC trial staff states that it is unnecessary to consider such issues in this 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, APSC, and City Council, the FERC trial staff recommends either no refunds or no modification to the Unit Power Sales Agreement.

System Energy Resources, Inc.

Management's Financial Discussion and Analysis

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. The formal challenge alleges: (1) that it was imprudent for System Energy to accept the IRS’s partial acceptance of a previously uncertain tax position; (2) that System Energy should have delayed recording the result of the IRS’s partial acceptance of the previously uncertain tax position until after internal tax allocation payments were made; (3) that the equity ratio charged in rates was excessive; (4) that sale-leaseback rental payments should have been excluded from rates; and (5) that all issues in the ongoing Unit Power Sales Agreement Complaint proceeding should also be reflected in calendar year 2020 bills. While System Energy disagrees that any refunds are owed for the 2020 calendar year bills, the formal challenge estimates that the financial impact of the first through fourth allegations is approximately $53 million; it does not provide an estimate of the financial impact of the fifth allegation.

In March 2022, System Energy filed an answer to the formal challenge in which it requested that the FERC deny the formal challenge as a matter of law, or else hold the proceeding in abeyance pending the resolution of related dockets.

Nuclear Matters

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

Environmental Risks

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

Critical Accounting Estimates

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K for a discussion of the estimates and judgments necessary in System Energy’s accounting for nuclear decommissioning costs, utility regulatory accounting, impairment of long-lived assets, taxation and uncertain tax positions, qualified pension and other postretirement benefits, and other contingencies.

New Accounting Pronouncements

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

SYSTEM ENERGY RESOURCES, INC.
INCOME STATEMENTS
For the Three Months Ended March 31, 2022 and 2021
(Unaudited)
																		2022						2021
												(In Thousands)
OPERATING REVENUES
Electric																		$141,376						$117,746
OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale																		7,923						16,859
Nuclear refueling outage expenses																		5,927						6,718
Other operation and maintenance																		43,904						41,960
Decommissioning																		9,917						9,529
Taxes other than income taxes																		7,851						6,825
Depreciation and amortization																		29,923						28,194
Other regulatory charges (credits) - net																		(8,524)						11,550
TOTAL																		96,921						121,635
OPERATING INCOME (LOSS)																		44,455						(3,889)
OTHER INCOME
Allowance for equity funds used during construction																		2,047						1,111
Interest and investment income																		5,232						27,442
Miscellaneous - net																		(1,639)						(2,024)
TOTAL																		5,640						26,529
INTEREST EXPENSE
Interest expense																		9,481						9,535
Allowance for borrowed funds used during construction																		(327)						(188)
TOTAL																		9,154						9,347
INCOME BEFORE INCOME TAXES																		40,941						13,293
Income taxes																		9,509						(10,571)
NET INCOME																		$31,432						$23,864
See Notes to Financial Statements.

SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2022 and 2021
(Unaudited)
						2022						2021
						(In Thousands)
OPERATING ACTIVITIES
Net income						$31,432						$23,864
Adjustments to reconcile net income to net cash flow provided by (used in) operating activities:
Depreciation, amortization, and decommissioning, including nuclear fuel amortization						46,566						53,433
Deferred income taxes, investment tax credits, and non-current taxes accrued						(8,690)						(10,197)
Changes in assets and liabilities:
Receivables						(3,845)						9,255
Accounts payable						(15,017)						(21,296)
Taxes accrued						5,939						(33,364)
Interest accrued						(475)						(1,088)
Other working capital accounts						(20,646)						2,347
Other regulatory assets						(2,331)						20,923
Other regulatory liabilities						(85,655)						(12,591)
Pension and other postretirement liabilities						(4,542)						(7,424)
Other assets and liabilities						97,275						(53,104)
Net cash flow provided by (used in) operating activities						40,011						(29,242)
INVESTING ACTIVITIES
Construction expenditures						(46,509)						(14,890)
Allowance for equity funds used during construction						2,047						1,111
Nuclear fuel purchases						(75,251)						(4,745)
Proceeds from the sale of nuclear fuel						11,257						12,626
Proceeds from nuclear decommissioning trust fund sales						62,717						211,481
Investment in nuclear decommissioning trust funds						(67,669)						(216,342)
Changes in money pool receivable - net						18,606						(12,678)
Net cash flow used in investing activities						(94,802)						(23,437)
FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt						225,956						189,244
Retirement of long-term debt						(162,111)						(225,807)
Common stock dividends and distributions paid						—						(21,000)
Net cash flow provided by (used in) financing activities						63,845						(57,563)
Net increase (decrease) in cash and cash equivalents						9,054						(110,242)
Cash and cash equivalents at beginning of period						89,201						242,469
Cash and cash equivalents at end of period						$98,255						$132,227
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized						$9,749						$10,720
Income taxes						$—						$39,085
See Notes to Financial Statements.

SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
ASSETS
March 31, 2022 and December 31, 2021
(Unaudited)
						2022						2021
						(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash						$72						$87
Temporary cash investments						98,183						89,114
Total cash and cash equivalents						98,255						89,201
Accounts receivable:
Associated companies						102,258						118,977
Other						8,961						7,003
Total accounts receivable						111,219						125,980
Materials and supplies - at average cost						124,639						127,093
Deferred nuclear refueling outage costs						32,250						10,123
Prepayments and other						2,843						1,870
TOTAL						369,206						354,267
OTHER PROPERTY AND INVESTMENTS
Decommissioning trust funds						1,308,172						1,385,254
TOTAL						1,308,172						1,385,254
UTILITY PLANT
Electric						5,357,646						5,362,494
Construction work in progress						149,025						97,968
Nuclear fuel						210,446						171,438
TOTAL UTILITY PLANT						5,717,117						5,631,900
Less - accumulated depreciation and amortization						3,414,249						3,396,136
UTILITY PLANT - NET						2,302,868						2,235,764
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Other regulatory assets						397,877						395,546
Other						1,728						1,793
TOTAL						399,605						397,339
TOTAL ASSETS						$4,379,851						$4,372,624
See Notes to Financial Statements.

SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
LIABILITIES AND EQUITY
March 31, 2022 and December 31, 2021
(Unaudited)
						2022						2021
						(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt						$50,335						$50,329
Accounts payable:
Associated companies						11,736						23,682
Other						70,571						62,573
Taxes accrued						38,857						32,918
Interest accrued						11,239						11,714
Other						4,101						4,101
TOTAL						186,839						185,317
NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued						373,447						382,931
Accumulated deferred investment tax credits						42,684						43,003
Regulatory liability for income taxes - net						111,511						113,165
Other regulatory liabilities						660,943						744,944
Decommissioning						1,017,520						1,007,603
Pension and other postretirement liabilities						71,562						76,104
Long-term debt						755,018						690,967
Other						37,535						37,230
TOTAL						3,070,220						3,095,947
Commitments and Contingencies
COMMON EQUITY
Common stock, no par value, authorized 1,000,000 shares; issued and outstanding 789,350 shares in 2022 and 2021						951,850						951,850
Retained earnings						170,942						139,510
TOTAL						1,122,792						1,091,360
TOTAL LIABILITIES AND EQUITY						$4,379,851						$4,372,624
See Notes to Financial Statements.

SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF CHANGES IN COMMON EQUITY
For the Three Months Ended March 31, 2022 and 2021
(Unaudited)
			Common Equity
			Common Stock						Retained Earnings						Total
			(In Thousands)
Balance at December 31, 2020			$951,850						$128,696						$1,080,546
Net income			—						23,864						23,864
Common stock dividends and distributions			—						(21,000)						(21,000)
Balance at March 31, 2021			$951,850						$131,560						$1,083,410
Balance at December 31, 2021			$951,850						$139,510						$1,091,360
Net income			—						31,432						31,432
Balance at March 31, 2022			$951,850						$170,942						$1,122,792
See Notes to Financial Statements.

ENTERGY CORPORATION AND SUBSIDIARIES

PART II. OTHER INFORMATION