Item 4. Controls and Procedures

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Item 4. Controls and Procedures

Disclosure Controls and Procedures

As of June 30, 2024, 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 (each individually a “Registrant” and collectively the “Registrants”) management, including their respective Principal Executive Officers (PEO) and Principal Financial Officers (PFO). The evaluations assessed the effectiveness of the Registrants’ disclosure controls and procedures. Based on the evaluations, each PEO and PFO has concluded that, as to the Registrant or Registrants for which they serve as PEO or PFO, the Registrant’s or Registrants’ disclosure controls and procedures are effective to ensure that information required to be disclosed by each Registrant in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms; and that the Registrant’s or Registrants’ disclosure controls and procedures are also effective in reasonably assuring that such information is accumulated and communicated to the Registrant’s or Registrants’ management, including their respective PEOs and PFOs, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

Under the supervision and with the participation of each Registrant’s management, including its respective PEO and PFO, each Registrant evaluated changes in internal control over financial reporting that occurred during the quarter ended June 30, 2024 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

Second Quarter 2024 Compared to Second Quarter 2023

Net income increased $28.4 million primarily due to higher retail electric price and higher volume/weather, partially offset by higher interest expense and higher depreciation and amortization expenses.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Net income decreased $63.3 million primarily due to a $131.8 million ($99.1 million net-of-tax) charge to reflect the write-off of a previously recorded regulatory asset as a result of an adverse decision in the opportunity sales proceeding in March 2024, higher other operation and maintenance expenses, higher interest expense, and higher depreciation and amortization expenses. The decrease was partially offset by higher retail electric price and higher volume/weather. See Note 2 to the financial statements herein and in the Form 10-K for discussion of the opportunity sales proceeding.

Operating Revenues

Second Quarter 2024 Compared to Second Quarter 2023

Following is an analysis of the change in operating revenues comparing the second quarter 2024 to the second quarter 2023:


			Amount
			(In Millions)
2023 operating revenues			$616.3
Fuel, rider, and other revenues that do not significantly affect net income			(45.9)
Volume/weather			18.6
Retail electric price			19.8

2024 operating revenues			$608.8

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

The volume/weather variance is primarily due to an increase in weather-adjusted residential usage, the effect of more favorable weather on residential sales, and an increase in industrial and commercial usage. The increase in weather-adjusted residential usage is primarily due to an increase in customers. The increase in industrial usage is primarily due to an increase in demand from large industrial customers, primarily new customers in the technology industry, and an increase in demand from small industrial customers.

The retail electric price variance is primarily due to an increase in formula rate plan rates effective January 2024. See Note 2 to the financial statements in the Form 10-K for discussion of the 2023 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 June 30, 2024 and 2023 are as follows:


	2024	2023	% Change
	(GWh)
Residential	1,855	1,767	5
Commercial	1,419	1,374	3
Industrial	2,443	2,226	10
Governmental	50	49	2
Total retail	5,767	5,416	6
Sales for resale:
Associated companies	522	512	2
Non-associated companies	982	811	21
Total	7,271	6,739	8

See Note 12 to the financial statements herein for additional discussion of Entergy Arkansas’s operating revenues.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Following is an analysis of the change in operating revenues comparing the six months ended June 30, 2024 to the six months ended June 30, 2023:


			Amount
			(In Millions)
2023 operating revenues			$1,199.1
Fuel, rider, and other revenues that do not significantly affect net income			(32.0)
Retail electric price			35.0
Volume/weather			28.7
2024 operating revenues			$1,230.8

The volume/weather variance is primarily due to the effect of more favorable weather on residential sales, an increase in weather-adjusted residential usage, and an increase in industrial usage. The increase in weather-adjusted residential usage is primarily due to an increase in customers. The increase in industrial usage is primarily due to an increase in demand from large industrial customers, primarily new customers in the technology industry, and an increase in demand from small industrial customers.

Entergy Arkansas, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Total electric energy sales for Entergy Arkansas for the six months ended June 30, 2024 and 2023 are as follows:


	2024	2023	% Change
	(GWh)
Residential	3,821	3,569	7
Commercial	2,699	2,613	3
Industrial	4,711	4,276	10
Governmental	95	95	—
Total retail	11,326	10,553	7
Sales for resale:
Associated companies	984	1,075	(8)
Non-associated companies	1,949	2,379	(18)
Total	14,259	14,007	2

See Note 12 to the financial statements herein for additional discussion of Entergy Arkansas’s operating revenues.

Other Income Statement Variances

Second Quarter 2024 Compared to Second Quarter 2023

Other operation and maintenance expenses decreased primarily due to a decrease of $3.4 million in non-nuclear generation expenses primarily due to a lower scope of work during plant outages performed in 2024 as compared to 2023 and a decrease of $2.2 million in power delivery expenses primarily due to lower vegetation maintenance costs. The decrease was partially offset by an increase of $2.9 million in contract costs related to operational performance, customer service, and organizational health initiatives.

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

Other income increased primarily due to a decrease of $3.7 million in net periodic pension and other postretirement benefits non-service costs primarily as a result of pension settlement charges recorded in second quarter 2023 and a reduction in 2024 in the amortization of deferred pension losses as a result of an amendment to a qualified pension plan spinning-off predominantly inactive participants into a new qualified plan, extending the amortization period for deferred losses. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K, Note 6 to the financial statements herein, and Note 11 to the financial statements in the Form 10-K for further discussion of pension and other postretirement benefits costs.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Fuel, fuel-related expenses, and gas purchased for resale includes a credit of $9 million, recorded in first quarter 2024, for costs related to net metering. The costs were incurred in 2023 and included within Entergy Arkansas’s annual redetermination of its energy cost recovery rider filed in March 2024 due to a change in law in the state of Arkansas. See Note 2 to the financial statements herein for discussion of the March 2024 energy cost recovery rider filing.

Entergy Arkansas, LLC and Subsidiaries

Management's Financial Discussion and Analysis

Other operation and maintenance expenses increased primarily due to:

the effects of recording a final judgment in first quarter 2023 to resolve claims in the ANO damages case against the DOE related to spent nuclear fuel storage costs. The damages awarded included the reimbursement of approximately $10.3 million of spent nuclear fuel storage costs previously recorded as other operation and maintenance expenses. See Note 8 to the financial statements in the Form 10-K for discussion of the spent nuclear fuel litigation;
an increase of $6.1 million in energy efficiency expenses primarily due to the timing of recovery from customers; and
an increase of $5.2 million in contract costs related to operational performance, customer service, and organizational health initiatives.

The increase was partially offset by a decrease of $5.5 million in non-nuclear generation expenses primarily due to a lower scope of work during plant outages performed in 2024 as compared to 2023.

Asset write-offs includes a $131.8 million ($99.1 million net-of-tax) charge to reflect the write-off of a previously recorded regulatory asset as a result of an adverse decision in the opportunity sales proceeding in March 2024. See Note 2 to the financial statements herein and in the Form 10-K for discussion of the opportunity sales proceeding.

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

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 increased primarily due to changes in decommissioning trust fund activity, including portfolio rebalancing of the decommissioning trust funds in first quarter 2024.

Interest expense increased primarily due to the issuance of $300 million of 5.30% Series mortgage bonds in August 2023 and the issuances of $400 million of 5.75% Series mortgage bonds and $400 million of 5.45% Series mortgage bonds, each in May 2024. The increase was partially offset by the repayment of $250 million of 3.05% Series mortgage bonds in June 2023.

Income Taxes

The effective income tax rate was 25.2% for the second quarter 2024. The difference in the effective income tax rate for the second quarter 2024 versus the federal statutory rate of 21% was primarily due to the accrual for state income taxes and the amortization of accumulated deferred income taxes as a result of tax rate changes, partially offset by certain book and tax differences related to utility plant items and book and tax differences related to the allowance for equity funds used during construction.

The effective income tax rate was 25.4% for the six months ended June 30, 2024. The difference in the effective income tax rate for the six months ended June 30, 2024 versus the federal statutory rate of 21% was primarily due to the amortization of accumulated deferred income taxes as a result of tax rate changes and the accrual for state income taxes, partially offset by certain book and tax differences related to utility plant items and book and tax differences related to the allowance for equity funds used during construction.

The effective income tax rate was 22.9% for the second quarter 2023. The difference in the effective income tax rate for the second quarter 2023 versus the federal statutory rate of 21% was primarily due to the accrual for state income taxes, partially offset by certain book and tax differences related to utility plant items.

Entergy Arkansas, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

The effective income tax rate was 19.4% for the six months ended June 30, 2023. The difference in the effective income tax rate for the six months ended June 30, 2023 versus the federal statutory rate of 21% was primarily due to the amortization of state accumulated deferred income taxes as a result of tax rate changes and certain book and tax differences related to utility plant items, partially offset by the accrual for state income taxes.

Income Tax Legislation and Regulation

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Income Tax Legislation and Regulation” herein and in the Form 10-K for discussion of income tax legislation and regulation.

Liquidity and Capital Resources

Cash Flow

Cash flows for the six months ended June 30, 2024 and 2023 were as follows:


	2024	2023
	(In Thousands)
Cash and cash equivalents at beginning of period	$3,632	$5,278

Net cash provided by (used in):
Operating activities	524,708	407,699
Investing activities	(721,529)	(563,854)
Financing activities	979,521	155,090
Net increase (decrease) in cash and cash equivalents	782,700	(1,065)

Cash and cash equivalents at end of period	$786,332	$4,213

Operating Activities

Net cash flow provided by operating activities increased $117 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to:

the receipt of $92 million in settlement proceeds in May 2024 as a result of the System Energy settlement with the APSC. See Note 2 to the financial statements for a discussion of the System Energy settlement agreement with the APSC;
higher collections from customers;
a decrease of $30.1 million in interest paid; and
a decrease in spending of $14.1 million on nuclear refueling outages in 2024.

The increase was partially offset by:

the timing of recovery of fuel and purchased power costs. See Note 2 to the financial statements herein and in the Form 10-K for a discussion of fuel and purchased power cost recovery;
the refund of $41.7 million received from System Energy in January 2023 related to the sale-leaseback renewal costs and depreciation litigation as calculated in System Energy’s January 2023 compliance report filed with the FERC. The refund was subsequently applied to the under-recovered deferred fuel balance. See Note 2 to the financial statements in the Form 10-K for further discussion of the refund and the related proceedings;

Entergy Arkansas, LLC and Subsidiaries

Management's Financial Discussion and Analysis

$23.2 million in proceeds received from the DOE in April 2023 resulting from litigation regarding spent nuclear fuel storage costs that were previously expensed. See Note 1 to the financial statements in the Form 10-K for discussion of the spent nuclear fuel litigation; and
the timing of payments to vendors.

Investing Activities

Net cash flow used in investing activities increased $157.7 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to:

the initial payment of approximately $169.7 million in February 2024 for the purchase of the Walnut Bend Solar facility. See Note 14 to the financial statements herein for discussion of the Walnut Bend Solar facility purchase;
money pool activity; and
$17.9 million in proceeds received from the DOE in April 2023 resulting from litigation regarding spent nuclear fuel storage costs that were previously recorded as plant. See Note 8 to the financial statements in the Form 10-K for discussion of the spent nuclear fuel litigation.

The increase was partially offset by:

a decrease of $89.5 million in distribution construction expenditures primarily due to lower capital expenditures for storm restoration in 2024;
a decrease of $31.2 million in nuclear construction expenditures primarily due to decreased spending on various nuclear projects in 2024; and
a decrease of $24.5 million as a result of fluctuations in nuclear fuel activity 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.

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 $130.6 million for the six months ended June 30, 2024. The money pool is an intercompany cash management program that makes possible intercompany borrowing and lending arrangements, and the money pool and other borrowing arrangements are designed to reduce the Registrant Subsidiaries’ dependence on external short-term borrowings.

Financing Activities

Net cash flow provided by financing activities increased $824.4 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to:

the issuances of $400 million of 5.45% Series mortgage bonds and $400 million of 5.75% Series mortgage bonds, each in May 2024;
capital contributions of approximately $695 million received from Entergy Corporation in 2024 in anticipation of upcoming expenditures, including the acquisitions of the Walnut Bend Solar facility, the Driver Solar facility, and the West Memphis Solar facility;
the repayment, at maturity, of $250 million of 3.05% Series mortgage bonds in June 2023;
$89 million in common equity distributions paid in 2023 in order to maintain Entergy Arkansas’s capital structure; and
the issuance of $70 million of 5.54% Series O notes by the Entergy Arkansas nuclear fuel company variable interest entity in March 2024.

Entergy Arkansas, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

The increase was partially offset by:

the issuance of $425 million of 5.15% Series mortgage bonds in January 2023;
the repayment, at maturity, of $375 million of 3.70% Series mortgage bonds in June 2024;
net repayments of $70.2 million in 2024 compared to net borrowings of $97.5 million in 2023 on the nuclear fuel company variable interest entity’s credit facility; 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 $145.4 million for the six months ended June 30, 2024 compared to decreasing by $28.5 million for the six months ended June 30, 2023.

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

Capital Structure

Entergy Arkansas’s debt to capital ratio is shown in the following table. The decrease in the debt to capital ratio for Entergy Arkansas is primarily due to capital contributions of $695 million received from Entergy Corporation in 2024, partially offset by the net issuance of long-term debt in 2024.


	June 30, 2024		December 31, 2023
Debt to capital	53.1	%	55.5	%
Effect of subtracting cash	(4.2	%)	—	%
Net debt to net capital (non-GAAP)	48.9	%	55.5	%

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. The net debt to net capital ratio is a non-GAAP measure. 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. The following are updates to the information provided in the Form 10-K.

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


June 30, 2024	December 31, 2023	June 30, 2023	December 31, 2022
(In Thousands)
$130,602	($145,385)	($152,327)	($180,795)

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

Entergy Arkansas, LLC and Subsidiaries

Management's Financial Discussion and Analysis

Entergy Arkansas has a credit facility in the amount of $300 million scheduled to expire in June 2029. Entergy Arkansas also has a $25 million credit facility scheduled to expire in April 2026. The $300 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 June 30, 2024, 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 June 30, 2024, $12.4 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 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 2027. As of June 30, 2024, 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 discussion of the nuclear fuel company variable interest entity credit facility.

State and Local Rate Regulation and Fuel-Cost Recovery

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

Retail Rates

2024 Formula Rate Plan Filing

In July 2024, Entergy Arkansas filed with the APSC its 2024 formula rate plan filing to set its formula rate for the 2025 calendar year. The filing contained an evaluation of Entergy Arkansas’s earnings for the 2025 projected year and a netting adjustment for the 2023 historical year. The filing showed that Entergy Arkansas’s earned rate of return on common equity for the 2025 projected year was 8.43% resulting in a revenue deficiency of $69.5 million. The earned rate of return on common equity for the 2023 historical year was 7.48% resulting in a $33.1 million netting adjustment. The total proposed revenue change for the 2025 projected year and 2023 historical year netting adjustment is $102.6 million. By operation of the formula rate plan, Entergy Arkansas’s recovery of the revenue requirement is subject to a four percent annual revenue constraint. Because Entergy Arkansas’s revenue requirement in this filing exceeded the constraint, the resulting increase was limited to $82.6 million. This filing is subject to review by the APSC, which is expected to issue its order on the filing in December 2024.

Grand Gulf Credit Rider

In June 2024, Entergy Arkansas filed with the APSC a tariff to provide retail customers a credit resulting from the terms of the settlement agreement between Entergy Arkansas, System Energy, additional named Entergy parties, and the APSC pertaining to System Energy’s billings for wholesale sales of energy and capacity from the Grand Gulf nuclear plant. See “Complaints Against System Energy - System Energy Settlement with the APSC” in Note 2 to the financial statements herein and in the Form 10-K for discussion of the settlement. In July 2024 the APSC approved the tariff, under which Entergy Arkansas will refund retail customers a total of $100.6 million with a one-time bill credit during the August 2024 billing cycle.

Energy Cost Recovery Rider

In March 2024, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which reflected a decrease in the rate from $0.01883 per kWh to $0.00882 per kWh. Due to a change in law in the State of Arkansas, the annual redetermination included $9 million, recorded as a credit to fuel expense in first quarter 2024, for recovery attributed to net metering costs in 2023. The primary reason for

Entergy Arkansas, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

the rate decrease is a large over-recovered balance as a result of lower natural gas prices in 2023. To mitigate the effect of projected increases in natural gas prices in 2024, Entergy Arkansas adjusted the over-recovered balance included in the March 2024 annual redetermination filing by $43.7 million. This adjustment is expected to reduce the rate change that will be reflected in the 2025 energy cost rate redetermination. The redetermined rate of $0.00882 per kWh became effective with the first billing cycle in April 2024 through the normal operation of the tariff.

Opportunity Sales Proceeding

See Note 2 to the financial statements in the Form 10-K for discussion of the Entergy Arkansas opportunity sales proceeding. As discussed in the Form 10-K, in September 2020, Entergy Arkansas filed a complaint in the U.S. District Court for the Eastern District of Arkansas challenging the APSC’s denial of recovery of $135 million of payments to other Utility operating companies in December 2018 relating to off-system sales of electricity from 2002-2009, as ordered by the FERC. The complaint also involved a challenge to the $13.7 million, plus interest, of related refunds ordered by the APSC and paid by Entergy Arkansas in August 2020. The trial was held in February 2023. Following the trial, Entergy Arkansas filed a motion with the United States Court of Appeals for the Eighth District to expedite the appeal filed by Arkansas Electric Energy Consumers, Inc. The United States Court of Appeals for the Eighth District granted Entergy Arkansas’s request, and oral arguments were held in June 2023. In August 2023 the United States Court of Appeals for the Eighth District affirmed the order of the court denying Arkansas Electric Energy Consumers, Inc.’s motion to intervene.

In March 2024 the U.S. District Court for the Eastern District of Arkansas issued a judgment in favor of the APSC and against Entergy Arkansas. In March 2024 Entergy Arkansas filed a notice of appeal and a motion to expedite oral arguments with the United States Court of Appeals for the Eighth District and the court granted the motion to expedite. Briefing to the United States Court of Appeals for the Eighth District concluded in July 2024. As a result of the adverse decision by the U.S. District Court for the Eastern District of Arkansas, Entergy Arkansas concluded that it could no longer support the recognition of its $131.8 million regulatory asset reflecting the previously-expected recovery of a portion of the costs at issue in the opportunity sales proceeding and recorded a $131.8 million ($99.1 million net-of-tax) charge to earnings in first quarter 2024.

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. See “Other Information - Environmental Regulation” in Part II, Item 5 herein for updates regarding environmental proceedings and regulation.

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, 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 the “New Accounting Pronouncements” section of Note 1 to the financial statements in the Form 10-K for a discussion of new accounting pronouncements and the “New Accounting Pronouncements” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis herein for updates to the discussion of new accounting pronouncements.


ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
For the Three and Six Months Ended June 30, 2024 and 2023
(Unaudited)

	Three Months Ended		Six Months Ended
	2024	2023	2024	2023
	(In Thousands)		(In Thousands)
OPERATING REVENUES
Electric	$608,798	$616,347	$1,230,843	$1,199,096

OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale	52,756	102,350	159,195	215,859
Purchased power	55,602	57,648	107,922	122,399
Nuclear refueling outage expenses	14,101	15,504	28,189	30,845
Other operation and maintenance	174,835	178,044	352,876	334,863
Asset write-offs	—	—	131,775	—
Decommissioning	22,832	21,667	45,479	43,017
Taxes other than income taxes	34,390	34,743	70,614	67,094
Depreciation and amortization	103,966	99,707	206,957	196,148
Other regulatory charges (credits) - net	(20,934)	(19,185)	27,685	(40,029)
TOTAL	437,548	490,478	1,130,692	970,196

OPERATING INCOME	171,250	125,869	100,151	228,900

OTHER INCOME
Allowance for equity funds used during construction	5,862	5,400	11,394	10,243
Interest and investment income	5,181	5,727	77,941	13,206
Miscellaneous - net	(2,799)	(6,239)	(6,380)	(8,340)
TOTAL	8,244	4,888	82,955	15,109

INTEREST EXPENSE
Interest expense	54,879	46,038	104,144	91,405
Allowance for borrowed funds used during construction	(2,864)	(2,169)	(5,563)	(4,114)
TOTAL	52,015	43,869	98,581	87,291

INCOME BEFORE INCOME TAXES	127,479	86,888	84,525	156,718

Income taxes	32,120	19,940	21,446	30,374

NET INCOME	95,359	66,948	63,079	126,344

Net loss attributable to noncontrolling interest	(825)	(1,006)	(2,643)	(2,635)

EARNINGS APPLICABLE TO MEMBER'S EQUITY	$96,184	$67,954	$65,722	$128,979

See Notes to Financial Statements.

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ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2024 and 2023
(Unaudited)
	2024	2023
	(In Thousands)
OPERATING ACTIVITIES
Net income	$63,079	$126,344
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation, amortization, and decommissioning, including nuclear fuel amortization	287,564	270,098
Deferred income taxes, investment tax credits, and non-current taxes accrued	41,130	33,572
Asset write-offs	131,775	—
Changes in assets and liabilities:
Receivables	67,067	21,444
Fuel inventory	10,890	(6,830)
Accounts payable	26,093	(43,953)
Taxes accrued	(15,496)	(4,315)
Interest accrued	4,647	10,421
Deferred fuel costs	2,317	123,264
Other working capital accounts	(13,243)	(30,581)
Provisions for estimated losses	5,725	(26,606)
Other regulatory assets	179,719	(51,960)
Other regulatory liabilities	71,529	97,349
Pension and other postretirement funded status	(27,588)	(18,948)
Other assets and liabilities	(310,500)	(91,600)
Net cash flow provided by operating activities	524,708	407,699
INVESTING ACTIVITIES
Construction expenditures	(394,973)	(524,723)
Allowance for equity funds used during construction	11,394	10,243
Payment for purchase of plant	(169,694)	—
Nuclear fuel purchases	(65,010)	(73,912)
Proceeds from sale of nuclear fuel	33,213	17,614
Proceeds from nuclear decommissioning trust fund sales	412,931	54,469
Investment in nuclear decommissioning trust funds	(418,818)	(65,584)
Change in money pool receivable - net	(130,602)	—


Litigation proceeds for reimbursement of spent nuclear fuel storage costs	—	17,933
Decrease in other investments	30	106
Net cash flow used in investing activities	(721,529)	(563,854)
FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	970,030	661,923
Retirement of long-term debt	(555,411)	(394,810)


Capital contributions from parent	695,000	—
Changes in money pool payable - net	(145,385)	(28,468)
Common equity distributions paid	—	(89,000)
Other	15,287	5,445
Net cash flow provided by financing activities	979,521	155,090

Net increase (decrease) in cash and cash equivalents	782,700	(1,065)
Cash and cash equivalents at beginning of period	3,632	5,278
Cash and cash equivalents at end of period	$786,332	$4,213

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized	$49,597	$79,716
Income taxes	$1,569	$—
Noncash investing activities:
Accrued construction expenditures	$36,355	$113,205

See Notes to Financial Statements.


ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, 2024 and December 31, 2023
(Unaudited)
	2024	2023
	(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash	$14,168	$520
Temporary cash investments	772,164	3,112
Total cash and cash equivalents	786,332	3,632
Accounts receivable:
Customer	159,732	157,520
Allowance for doubtful accounts	(4,297)	(7,182)
Associated companies	176,832	124,672
Other	70,310	89,532
Accrued unbilled revenues	142,619	117,119
Total accounts receivable	545,196	481,661

Fuel inventory - at average cost	46,605	57,495
Materials and supplies - at average cost	387,125	358,302
Deferred nuclear refueling outage costs	39,064	35,463
Prepayments and other	37,288	40,866
TOTAL	1,841,610	977,419

OTHER PROPERTY AND INVESTMENTS
Decommissioning trust funds	1,522,508	1,414,009
Other	799	801
TOTAL	1,523,307	1,414,810

UTILITY PLANT
Electric	15,166,477	14,821,814
Construction work in progress	503,003	340,601
Nuclear fuel	226,459	213,722
TOTAL UTILITY PLANT	15,895,939	15,376,137
Less - accumulated depreciation and amortization	6,144,521	6,002,203
UTILITY PLANT - NET	9,751,418	9,373,934

DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Other regulatory assets	1,705,642	1,885,361
Other	154,064	21,334
TOTAL	1,859,706	1,906,695

TOTAL ASSETS	$14,976,041	$13,672,858

See Notes to Financial Statements.


ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
June 30, 2024 and December 31, 2023
(Unaudited)
	2024	2023
	(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt	$—	$375,000
Accounts payable:
Associated companies	98,324	225,344
Other	196,722	215,502
Customer deposits	121,174	113,186
Taxes accrued	89,655	105,151
Interest accrued	40,017	35,370
Deferred fuel costs	90,599	88,282
Other	65,592	55,683
TOTAL	702,083	1,213,518

NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued	1,445,165	1,437,053
Accumulated deferred investment tax credits	26,670	27,270
Regulatory liability for income taxes - net	419,526	392,496
Other regulatory liabilities	803,680	759,181
Decommissioning	1,625,476	1,560,057
Accumulated provisions	64,684	58,959
Pension and other postretirement liabilities	103,190	8,901
Long-term debt	5,094,160	4,298,080
Other	172,939	156,673
TOTAL	9,755,490	8,698,670

Commitments and Contingencies

EQUITY
Member's equity	4,499,793	3,739,071
Noncontrolling interest	18,675	21,599
TOTAL	4,518,468	3,760,670

TOTAL LIABILITIES AND EQUITY	$14,976,041	$13,672,858

See Notes to Financial Statements.


ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the Six Months Ended June 30, 2024 and 2023
(Unaudited)

	Noncontrolling Interest	Member's Equity	Total
	(In Thousands)

Balance at December 31, 2022	$27,825	$3,753,990	$3,781,815

Net income (loss)	(1,629)	61,026	59,397
Common equity distributions	—	(80,000)	(80,000)



Distributions to noncontrolling interest	(104)	—	(104)
Balance at March 31, 2023	26,092	3,735,016	3,761,108

Net income (loss)	(1,006)	67,954	66,948
Common equity distributions	—	(9,000)	(9,000)


Distributions to noncontrolling interest	(113)	—	(113)
Balance at June 30, 2023	$24,973	$3,793,970	$3,818,943









Balance at December 31, 2023	$21,599	$3,739,071	$3,760,670

Net loss	(1,818)	(30,462)	(32,280)

Capital contribution from parent	—	275,000	275,000



Distributions to noncontrolling interest	(250)	—	(250)
Balance at March 31, 2024	19,531	3,983,609	4,003,140

Net income (loss)	(825)	96,184	95,359
Capital contribution from parent	—	420,000	420,000
Distributions to noncontrolling interest	(31)	—	(31)
Balance at June 30, 2024	$18,675	$4,499,793	$4,518,468










See Notes to Financial Statements.

ENTERGY LOUISIANA, LLC AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

Results of Operations

Net Income

Second Quarter 2024 Compared to Second Quarter 2023

Net income decreased $132.1 million primarily due to expenses of $151.5 million ($110.7 million net-of-tax), recorded in second quarter 2024, primarily consisting of regulatory charges to reflect the effects of an agreement in principle between Entergy Louisiana and the LPSC staff and the intervenors in July 2024 to renew Entergy Louisiana’s formula rate plan and resolve a number of other retail dockets and matters, including all formula rate plan test years prior to 2023. Also contributing to the decrease were higher other operation and maintenance expenses, partially offset by higher volume/weather and a lower effective income tax rate. See Note 2 to the financial statements herein for discussion of the agreement in principle and the subsequently filed global stipulated settlement agreement.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Net income decreased $193.4 million primarily due to expenses of $151.5 million ($110.7 million net-of-tax), recorded in second quarter 2024, primarily consisting of regulatory charges to reflect the effects of an agreement in principle between Entergy Louisiana and the LPSC staff and the intervenors in July 2024 to renew Entergy Louisiana’s formula rate plan and resolve a number of other retail dockets and matters, including all formula rate plan test years prior to 2023. Also contributing to the decrease are the net effects of Entergy Louisiana’s storm cost securitization in March 2023, including a $133.4 million reduction in income tax expense, partially offset by a $103.4 million ($76.4 million net-of-tax) regulatory charge to reflect Entergy Louisiana’s obligation to share the benefits of the securitization with customers, and higher other operation and maintenance expenses. The decrease was partially offset by higher other income and higher volume/weather. See Note 2 to the financial statements herein for discussion of the agreement in principle and the subsequently filed global stipulated settlement agreement. See Note 2 to the financial statements in the Form 10-K for discussion of the March 2023 storm cost securitization.

Operating Revenues

Second Quarter 2024 Compared to Second Quarter 2023

Following is an analysis of the change in operating revenues comparing the second quarter 2024 to the second quarter 2023:


			Amount
			(In Millions)
2023 operating revenues			$1,205.6
Fuel, rider, and other revenues that do not significantly affect net income			43.0
Volume/weather			18.4
Retail electric price			9.1
2024 operating revenues			$1,276.1

Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

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 volume/weather variance is primarily due to the effect of more favorable weather on residential sales and an increase in industrial usage, partially offset by a decrease in weather-adjusted residential usage. The increase in industrial usage is primarily due to an increase in demand from large industrial customers, primarily in the petroleum refining industry.

The retail electric price variance is primarily due to an increase in formula rate plan revenues, including increases in the distribution and transmission recovery mechanisms, effective September 2023. See Note 2 to the financial statements in the Form 10-K for discussion of the formula rate plan proceeding.

Total electric energy sales for Entergy Louisiana for the three months ended June 30, 2024 and 2023 are as follows:


	2024	2023	% Change
	(GWh)
Residential	3,913	3,694	6
Commercial	2,881	2,801	3
Industrial	8,414	8,014	5
Governmental	209	206	1
Total retail	15,417	14,715	5
Sales for resale:
Associated companies	1,482	678	119
Non-associated companies	395	464	(15)
Total	17,294	15,857	9

See Note 12 to the financial statements herein for additional discussion of Entergy Louisiana’s operating revenues.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Following is an analysis of the change in operating revenues comparing the six months ended June 30, 2024 to the six months ended June 30, 2023:


			Amount
			(In Millions)
2023 operating revenues			$2,550.8
Fuel, rider, and other revenues that do not significantly affect net income			(95.7)
Storm restoration carrying costs			(30.6)
Retail electric price			20.4
Volume/weather			33.7
2024 operating revenues			$2,478.6

Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Storm restoration carrying costs represent the equity component of storm restoration carrying costs recognized as part of the securitization of Hurricane Ida restoration costs in March 2023. See Note 2 to the financial statements in the Form 10-K for discussion of the March 2023 storm cost securitization.

The volume/weather variance is primarily due to the effect of more favorable weather on residential and commercial sales.

Total electric energy sales for Entergy Louisiana for the six months ended June 30, 2024 and 2023 are as follows:


	2024	2023	% Change
	(GWh)
Residential	6,728	6,378	5
Commercial	5,335	5,248	2
Industrial	16,175	15,845	2
Governmental	408	400	2
Total retail	28,646	27,871	3
Sales for resale:
Associated companies	2,740	2,355	16
Non-associated companies	777	688	13
Total	32,163	30,914	4

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

Other Income Statement Variances

Second Quarter 2024 Compared to Second Quarter 2023

Other operation and maintenance expenses increased primarily due to:

an increase of $7.8 million in nuclear generation expenses primarily due to a higher scope of work, including during plant outages, performed in 2024 as compared to 2023;
an increase of $7 million in energy efficiency expenses primarily due to the timing of recovery from customers;
an increase of $4.4 million in contract costs related to operational performance, customer service, and organizational health initiatives; and
an increase of $2.5 million in transmission costs allocated by MISO. See Note 2 to the financial statements in the Form 10-K for discussion of the recovery of these costs.

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

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

Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Other regulatory charges (credits) - net includes a regulatory charge of $150.2 million, recorded in second quarter 2024, to reflect the effects of an agreement in principle between Entergy Louisiana and the LPSC staff and the intervenors in July 2024 to renew Entergy Louisiana’s formula rate plan and resolve a number of other retail dockets and matters, including all formula rate plan test years prior to 2023. In addition, Entergy Louisiana records a regulatory charge or credit for the difference between asset retirement obligation-related expenses and nuclear decommissioning trust earnings plus asset retirement obligation-related costs collected in revenue. See Note 2 to the financial statements herein for discussion of the agreement in principle and the subsequently filed global stipulated settlement agreement.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Other operation and maintenance expenses increased primarily due to:

an increase of $8.8 million in non-nuclear generation expenses primarily due to a higher scope of work, including during plant outages, performed in 2024 as compared to 2023;
an increase of $8.1 million in nuclear generation expenses primarily due to a higher scope of work, including during plant outages, performed in 2024 as compared to 2023;
an increase of $7.6 million in contract costs related to operational performance, customer service, and organizational health initiatives;
an increase of $7 million in energy efficiency expenses primarily due to the timing of recovery from customers;
an increase of $3.9 million in compensation and benefits costs primarily due to higher healthcare claims activity in 2024; and
an increase of $3.4 million in transmission costs allocated by MISO. See Note 2 to the financial statements in the Form 10-K for discussion of the recovery of these costs.

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

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

Other regulatory charges (credits) - net includes:

a regulatory charge of $150.2 million, recorded in second quarter 2024, to reflect the effects of an agreement in principle between Entergy Louisiana and the LPSC staff and the intervenors in July 2024 to renew Entergy Louisiana’s formula rate plan and resolve a number of other retail dockets and matters, including all formula rate plan test years prior to 2023. See Note 2 to the financial statements herein for discussion of the agreement in principle and the subsequently filed global stipulated settlement agreement; and
a regulatory charge of $103.4 million, recorded in first quarter 2023, to reflect Entergy Louisiana’s obligation to provide credits to its customers as described in an LPSC ancillary order issued in the Hurricane Ida securitization regulatory proceeding. See Note 2 to the financial statements in the Form 10-K for discussion of the March 2023 storm cost securitization.

In addition, Entergy Louisiana records a regulatory charge or credit for the difference between asset retirement obligation-related expenses and nuclear decommissioning trust earnings plus asset retirement obligation-related costs collected in revenue.

Other income increased primarily due to:

changes in decommissioning trust fund activity, including portfolio rebalancing of the River Bend decommissioning trust fund in first quarter 2024;

Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

an increase of $21 million in affiliated dividend income from affiliated preferred membership interests, related to storm cost securitizations;
a $14.6 million charge, recorded in first quarter 2023, for the LURC’s 1% beneficial interest in the storm trust II established as part of the March 2023 storm cost securitization; and
a decrease of $12.8 million in net periodic pension and other postretirement benefits non-service costs primarily as a result of pension settlement charges recorded in second quarter 2023 and a reduction in 2024 in the amortization of deferred pension losses as a result of an amendment to a qualified pension plan spinning-off predominantly inactive participants into a new qualified plan, extending the amortization period for deferred losses. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K, Note 6 to the financial statements herein, and Note 11 to the financial statements in the Form 10-K for further discussion of pension and other postretirement benefits costs.

See Note 2 to the financial statements in the Form 10-K for discussion of the storm cost securitizations.

Interest expense increased primarily due to a decrease in the allowance for borrowed funds used during construction due to lower construction work in progress in 2024.

Income Taxes

The effective income tax rate was 13.7% for the second quarter 2024 and 16% for the six months ended June 30, 2024. The differences in the effective income tax rates for the second quarter 2024 and for the six months ended June 30, 2024 versus the federal statutory rate of 21% were primarily due to the book and tax differences related to the non-taxable income distributions earned on preferred membership interests and certain book and tax differences related to utility plant items, partially offset by the accrual for state income taxes and the amortization of state accumulated deferred income taxes as a result of tax rate changes.

The effective income tax rate was 20.7% for the second quarter 2023. The difference in the effective income tax rate for the second quarter 2023 versus the federal statutory rate of 21% was primarily due to book and tax differences related to the non-taxable income distributions earned on preferred membership interests, partially offset by the accrual for state income taxes and the amortization of state accumulated deferred income taxes as a result of a tax rate change.

The effective income tax rate was (9.1%) for the six months ended June 30, 2023. The difference in the effective income tax rate for the six months ended June 30, 2023 versus the federal statutory rate of 21% was primarily due to the reduction in income tax expense as a result of the March 2023 securitization of storm costs pursuant to Louisiana Act 55, as supplemented by Act 293 of the Louisiana Legislature’s Regular Session of 2021 and book and tax differences related to the non-taxable income distributions earned on preferred membership interests, partially offset by the accrual for state income taxes and the amortization of state accumulated deferred income taxes as a result of a tax rate change. See Notes 2 and 10 to the financial statements herein for a discussion of the March 2023 storm cost securitization under Act 293.

Income Tax Legislation and Regulation

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Income Tax Legislation and Regulation” herein and in the Form 10-K for discussion of income tax legislation and regulation.

Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Planned Sale of Gas Distribution Business

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Planned Sale of Gas Distribution Businesses” in the Form 10-K for discussion of the planned sale of Entergy Louisiana’s gas distribution business. The following is an update to that discussion.

In July 2024 the LPSC staff issued a report recommending LPSC approval of the application of Delta States Utilities LA, LLC (a Bernhard Capital Partners Management LP affiliate) and Entergy Louisiana and the transaction described therein as being in the public interest and proposing certain conditions. Entergy Louisiana anticipates that the LPSC will review the matter at its August Business and Executive meeting.

Liquidity and Capital Resources

Cash Flow

Cash flows for the six months ended June 30, 2024 and 2023 were as follows:


	2024	2023
	(In Thousands)
Cash and cash equivalents at beginning of period	$2,772	$56,613

Net cash provided by (used in):
Operating activities	808,398	928,060
Investing activities	(639,095)	(2,658,135)
Financing activities	13,706	2,530,488
Net increase in cash and cash equivalents	183,009	800,413

Cash and cash equivalents at end of period	$185,781	$857,026

Operating Activities

Net cash flow provided by operating activities decreased $119.7 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to:

higher fuel costs and the timing of recovery of fuel and purchased power costs. See Note 2 to the financial statements in the Form 10-K for a discussion of fuel and purchased power cost recovery;
lower collections from customers;
the timing of payments to vendors; and
the refund of $27.8 million received from System Energy in January 2023 related to the sale-leaseback renewal costs and depreciation litigation as calculated in System Energy’s January 2023 compliance report filed with the FERC. See Note 2 to the financial statements in the Form 10-K for further discussion of the refund and the related proceedings.

The decrease was partially offset by a decrease of $16.3 million in spending on nuclear refueling outages.

Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Investing Activities

Net cash flow used in investing activities decreased $2,019 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to:

an increase in investment in affiliates in 2023 due to the $1,457.7 million purchase by the storm trust II of preferred membership interests issued by an Entergy affiliate. See Note 2 to the financial statements in the Form 10-K for a discussion of the March 2023 storm cost securitization and the storm trust II’s investment in preferred membership interests;
money pool activity;
a decrease of $123.6 million in nuclear construction expenditures primarily due to decreased spending on various nuclear projects in 2024;
an increase of $67.3 million in redemptions of the preferred membership interests held by the storm trusts in 2024 as compared to 2023, as part of periodic redemptions that are expected to occur, subject to certain conditions, for the preferred membership interests that were issued in connection with the storm cost securitizations. See Note 2 to the financial statements in the Form 10-K for a discussion of the storm cost securitizations;
a decrease of $57.5 million as a result of fluctuations in nuclear fuel activity 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;
a decrease of $36.3 million in transmission construction expenditures primarily due to decreased spending on various transmission projects in 2024 and lower capital expenditures for storm restoration in 2024; and
a decrease of $25.5 million in non-nuclear generation construction expenditures primarily due to a lower scope of work on projects performed in 2024 as compared to 2023.

Increases in Entergy Louisiana’s receivable from the money pool are a use of cash flow, and Entergy Louisiana’s receivable from the money pool increased $31.4 million for the six months ended June 30, 2024 compared to increasing by $275.6 million for the six months ended June 30, 2023. The money pool is an intercompany cash management program that makes possible intercompany borrowing and lending arrangements, and the money pool and other borrowing arrangements are designed to reduce the Registrant Subsidiaries’ dependence on external short-term borrowings.

Financing Activities

Net cash flow provided by financing activities decreased $2,516.8 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to:

proceeds from securitization of $1.5 billion received by the storm trust II in 2023;
a capital contribution of approximately $1.5 billion in 2023 received indirectly from Entergy Corporation related to the March 2023 storm cost securitization;
an increase of $503.9 million in common equity distributions paid in 2024 in order to maintain Entergy Louisiana’s capital structure;
the repayment, prior to maturity, of $400 million of 5.40% Series mortgage bonds in April 2024; and
an increase in net long-term repayments of $54 million on the nuclear fuel company variable interest entities’ credit facilities.

The decrease was partially offset by:

the issuances of $500 million of 5.35% Series mortgage bonds and $700 million of 5.70% Series mortgage bonds in March 2024;
money pool activity; and
a decrease of $50 million in 2024 in net repayments on Entergy Louisiana’s revolving credit facility.

Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Decreases in Entergy Louisiana’s payable to the money pool are a use of cash flow, and Entergy Louisiana’s payable to the money pool decreased $156.2 million for the six months ended June 30, 2024 compared to decreasing by $226.1 million for the six months ended June 30, 2023.

See Note 4 to the financial statements herein and Note 5 to the financial statements in the Form 10-K for more details on long-term debt. See Note 2 to the financial statements in the Form 10-K for a discussion of the storm cost securitizations.

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 net issuance of long-term debt in 2024.


	June 30, 2024		December 31, 2023
Debt to capital	47.7	%	44.9	%


Effect of subtracting cash	(0.5	%)	0.0	%
Net debt to net capital (non-GAAP)	47.2	%	44.9	%

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 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. The net debt to net capital ratio is a non-GAAP measure. 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. The following are updates to the information provided in the Form 10-K.

Following are the current annual amounts of Entergy Louisiana’s planned construction and other capital investments.


	2024	2025	2026
	(In Millions)
Planned construction and capital investment:
Generation	$380	$825	$515
Transmission	615	955	1,230
Distribution	785	1,120	860
Utility Support	100	80	75
Total	$1,880	$2,980	$2,680

The updated capital plan for 2024-2026 reflects accelerated resilience spending. In addition to routine capital spending to maintain operations, the capital plan includes investments in generation projects to modernize, decarbonize, and diversify Entergy Louisiana’s portfolio, including Bayou Power Station; investments in River Bend and Waterford 3; distribution and Utility support spending to improve reliability, resilience, and customer

Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

experience; transmission spending to improve reliability and resilience while also supporting renewables expansion and customer growth; and other investments.

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


June 30, 2024	December 31, 2023	June 30, 2023	December 31, 2022
(In Thousands)
$31,361	($156,166)	$275,559	($226,114)

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 $400 million scheduled to expire in June 2029. 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 June 30, 2024, 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 June 30, 2024, $20.7 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 2027. As of June 30, 2024, $27.9 million in loans were outstanding under the credit facility for the Entergy Louisiana River Bend nuclear fuel company variable interest entity and $26.5 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.

Alternative RFP and Certification

As discussed in the Form 10-K, in March 2023, Entergy Louisiana made the first phase of a bifurcated filing to seek approval from the LPSC for an alternative to the requests for proposals (RFP) process that would enable the acquisition of up to 3 GW of solar resources on a faster timeline than the current RFP and certification process allows. The initial phase of the filing established the need for the acquisition of additional resources and the need for an alternative to the RFP process. The second phase of the filing, which contains the details of the proposal for the alternative competitive procurement process and the information necessary to support certification, was filed in May 2023. In addition to the acquisition of up to 3 GW of solar resources, the filing also seeks approval of a new renewable energy credits-based tariff, Rider Geaux ZERO. In May 2024 the LPSC voted to approve the application, and in June 2024 the LPSC issued an order reflecting that approval.

Resilience and Grid Hardening

As discussed in the Form 10-K, in December 2022, Entergy Louisiana filed an application with the LPSC seeking a public interest finding regarding Phase I of Entergy Louisiana’s Future Ready resilience plan and approval of a rider mechanism to recover the program’s costs. Phase I in the December 2022 application reflected the first five years of a ten-year resilience plan and included investment of approximately $5 billion, including hardening investment, transmission dead-end structures, enhanced vegetation management, and telecommunications improvement. In April 2024 the LPSC approved a framework which includes an initial five-year resilience plan providing for an investment of approximately $1.9 billion with cost recovery via a forward-looking rider with semi-annual true-ups. The plan is subject to specified reporting requirements and includes a performance review of the hardened assets. The LPSC order approving the framework does not include any restrictions on Entergy Louisiana’s ability to file applications for approval of additional investments in resilience.

Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Bayou Power Station

In March 2024, Entergy Louisiana filed an application with the LPSC seeking certification that the public convenience and necessity would be served by the construction of the Bayou Power Station, a 112 MW aggregated capacity floating natural gas power station with black-start capability in Leeville, Louisiana and an associated microgrid that would serve nearby areas, including Port Fourchon, Golden Meadow, Leeville, and Grand Isle. The current estimated cost of the Bayou Power Station is $411 million, including estimated costs of transmission interconnection and other related costs. Subject to timely approval by the LPSC and receipt of other permits and approvals, commercial operation is expected to occur by the end of 2028. A procedural schedule has been established with a hearing in December 2024.

Nelson Industrial Steam Company

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Nelson Industrial Steam Company” in the Form 10-K for information on Entergy Louisiana’s Nelson Industrial Steam Company partnership.

State and Local Rate Regulation and Fuel-Cost Recovery

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

Retail Rates

2023 Entergy Louisiana Rate Case and Formula Rate Plan Extension Request

As discussed in the Form 10-K, in August 2023, Entergy Louisiana filed an application for approval of a regulatory blueprint necessary for it to strengthen the electric grid for the State of Louisiana, which contains a dual-path request to update rates through either: (1) extension of Entergy Louisiana’s current formula rate plan (with certain modifications) for three years (the Rate Mitigation Proposal), which is Entergy Louisiana’s recommended path; or (2) implementation of rates resulting from a cost-of-service study (the Rate Case path). The application complies with Entergy Louisiana’s previous formula rate plan extension order requiring that for Entergy Louisiana to obtain another extension of its formula rate plan that included a rate reset, Entergy Louisiana would need to submit a full cost-of-service/rate case. Entergy Louisiana’s filing supports the need to extend Entergy Louisiana’s formula rate plan with credit supportive mechanisms needed to facilitate investment in the distribution, transmission, and generation functions.

A status conference was held in October 2023 at which a procedural schedule was adopted that included three technical conferences and a hearing in August 2024. In March 2024 the parties agreed to an eight-week extension of all deadlines to allow for continuation of settlement negotiations, and the ALJ issued an order with an amended procedural schedule. In July 2024 the parties agreed to extend further the procedural schedule to facilitate the continuation of settlement negotiations, with the hearing commencing in December 2024.

In July 2024, Entergy Louisiana reached an agreement in principle with the LPSC staff and the intervenors in the proceeding and filed with the LPSC a joint motion to suspend the procedural schedule to allow for all parties to finalize a stipulated settlement agreement.

Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

In August 2024, Entergy Louisiana and the LPSC staff jointly filed a global stipulated settlement agreement for consideration by the LPSC with key terms as follows:

continuation of the formula rate plan for 2024-2026 (test years 2023-2025);
a base formula rate plan revenue increase of $120 million for test year 2023, effective for rates beginning September 2024;
a $140 million cumulative cap on base formula rate plan revenue increases, if needed, for test years 2024 and 2025, excluding outside the bandwidth items;
$184 million of customer rate credits to be given over two years, including increasing customer sharing of income tax benefits resulting from the 2016-2018 IRS audit, to resolve any remaining disputed issues stemming from formula rate plan test years prior to test year 2023, including but not limited to the investigation into Entergy Services costs billed to Entergy Louisiana. As discussed in Note 3 to the financial statements in the Form 10-K, a $38 million regulatory liability was recorded in 2023 in connection with the 2016-2018 IRS audit;
$75.8 million of customer rate credits, as provided for in the System Energy global settlement, to be credited over three years subject to and conditioned upon FERC approval of the System Energy global settlement. See “Complaints Against System Energy – System Energy Settlement with the LPSC” in Note 2 to the financial statements herein for further details of the System Energy global settlement;
$5.8 million of customer rate credits provided for in the Entergy Louisiana formula rate plan global settlement agreement approved by the LPSC in November 2023 credited over one year. See Note 2 to the financial statements in the Form 10-K for the discussion of the November 2023 Entergy Louisiana formula rate plan global settlement agreement;
an increase in the allowed midpoint return on common equity from 9.5% to 9.7%, with a bandwidth of 40 basis points above and below the midpoint, for the extended term of the formula rate plan, except that for test year 2023 in which the authorized return on common equity shall have no bearing on the change in base formula rate plan revenue described above and, for test year 2024, any earnings above the authorized return on common equity shall be returned to customers through a credit;
an increase in nuclear depreciation rates by $15 million in each of the 2023, 2024, and 2025 test years outside of the formula rate plan bandwidth calculation; and
for the transmission recovery mechanism and the distribution recovery mechanism, no change to the existing floors, but the caps for both would be $350 million for test year 2023, $375 million for test year 2024, and $400 million for test year 2025. LPSC-approved transmission projects will be exempt from the transmission recovery mechanism cap.

The terms of the global stipulated settlement agreement are subject to approval by the LPSC and will not go into effect unless/until such approval is obtained. Entergy Louisiana anticipates the global stipulated settlement agreement to be considered by the LPSC at its Business and Executive meeting on August 14, 2024.

Based on the July 2024 agreement in principle, in second quarter 2024 Entergy Louisiana recorded expenses of $151 million ($111 million net-of-tax) primarily consisting of regulatory charges to reflect the effects of the agreement in principle.

Industrial and Commercial Customers

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

Federal Regulation

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

Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Nuclear Matters

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Nuclear Matters” in the Form 10-K for a discussion of nuclear matters. The following is an update to that discussion.

NRC Reactor Oversight Process

The NRC’s Reactor Oversight Process is a program to collect information about plant performance, assess the information for its safety significance, and provide for appropriate licensee and NRC response. The NRC evaluates plant performance by analyzing two distinct inputs: inspection findings resulting from the NRC’s inspection program and performance indicators reported by the licensee. The evaluations result in the placement of each plant in one of the NRC’s Reactor Oversight Process Action Matrix columns: “licensee response column,” or Column 1, “regulatory response column,” or Column 2, “degraded cornerstone column,” or Column 3, “multiple/repetitive degraded cornerstone column,” or Column 4, and “unacceptable performance,” or Column 5. Plants in Column 1 are subject to normal NRC inspection activities. Plants in Column 2, Column 3, or Column 4 are subject to progressively increasing levels of inspection by the NRC with, in general, progressively increasing levels of associated costs. Continued plant operation is not permitted for plants in Column 5. River Bend is currently in Column 1. Entergy expects the NRC to determine that Waterford 3 entered Column 2, effective second quarter 2024, based on exceeding the threshold for reactor scrams in June 2024. Waterford 3 will remain in Column 2 until a supplemental inspection is satisfactorily completed.

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, taxation and uncertain tax positions, qualified pension and other postretirement benefits, and other contingencies.

New Accounting Pronouncements


ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
For the Three and Six Months Ended June 30, 2024 and 2023
(Unaudited)

	Three Months Ended		Six Months Ended
	2024	2023	2024	2023
	(In Thousands)		(In Thousands)
OPERATING REVENUES
Electric	$1,261,444	$1,191,909	$2,434,237	$2,511,661
Natural gas	14,680	13,703	44,327	39,159
TOTAL	1,276,124	1,205,612	2,478,564	2,550,820

OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale	246,571	230,365	486,658	605,635
Purchased power	166,868	133,376	367,148	328,310
Nuclear refueling outage expenses	20,041	12,588	37,554	27,861
Other operation and maintenance	275,168	249,717	536,147	496,088
Decommissioning	20,061	18,820	39,725	37,406
Taxes other than income taxes	70,629	61,663	140,468	125,618
Depreciation and amortization	190,861	181,247	380,405	357,342
Other regulatory charges (credits) - net	120,298	(24,767)	111,944	49,229
TOTAL	1,110,497	863,009	2,100,049	2,027,489

OPERATING INCOME	165,627	342,603	378,515	523,331

OTHER INCOME
Allowance for equity funds used during construction	7,522	8,654	14,807	17,715
Interest and investment income	15,229	31,880	78,192	60,723
Interest and investment income - affiliated	80,075	81,877	160,479	137,303
Miscellaneous - net	(20,646)	(42,583)	(67,821)	(90,668)
TOTAL	82,180	79,828	185,657	125,073

INTEREST EXPENSE
Interest expense	98,536	94,931	195,731	192,102
Allowance for borrowed funds used during construction	(2,593)	(4,321)	(5,070)	(8,714)
TOTAL	95,943	90,610	190,661	183,388

INCOME BEFORE INCOME TAXES	151,864	331,821	373,511	465,016

Income taxes	20,750	68,561	59,674	(42,268)

NET INCOME	131,114	263,260	313,837	507,284

Net income attributable to noncontrolling interests	788	819	1,583	1,373

EARNINGS APPLICABLE TO MEMBER'S EQUITY	$130,326	$262,441	$312,254	$505,911

See Notes to Financial Statements.


ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Three and Six Months Ended June 30, 2024 and 2023
(Unaudited)

	Three Months Ended		Six Months Ended
	2024	2023	2024	2023
	(In Thousands)		(In Thousands)

Net Income	$131,114	$263,260	$313,837	$507,284

Other comprehensive loss
Pension and other postretirement adjustment (net of tax benefit of $745, $653, $1,491, and $943)	(2,023)	(1,773)	(4,047)	(2,559)
Other comprehensive loss	(2,023)	(1,773)	(4,047)	(2,559)

Comprehensive Income	129,091	261,487	309,790	504,725
Net income attributable to noncontrolling interests	788	819	1,583	1,373
Comprehensive Income Applicable to Member’s Equity	$128,303	$260,668	$308,207	$503,352

See Notes to Financial Statements.


ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2024 and 2023
(Unaudited)
	2024	2023
	(In Thousands)
OPERATING ACTIVITIES
Net income	$313,837	$507,284
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation, amortization, and decommissioning, including nuclear fuel amortization	453,888	423,535
Deferred income taxes, investment tax credits, and non-current taxes accrued	146,540	185
Changes in working capital:
Receivables	(161,001)	67,807
Fuel inventory	6,890	(14,907)
Accounts payable	(1,443)	(147,001)
Taxes accrued	27,677	48,015
Interest accrued	14,163	(5,396)
Deferred fuel costs	11,364	188,801
Other working capital accounts	(190,407)	(213,571)
Changes in provisions for estimated losses	9,519	3,909
Changes in other regulatory assets	(9,005)	448,144
Changes in other regulatory liabilities	286,036	217,746
Effect of securitization on regulatory asset	—	(491,150)
Changes in pension and other postretirement funded status	(22,548)	(12,364)
Other	(77,112)	(92,977)
Net cash flow provided by operating activities	808,398	928,060
INVESTING ACTIVITIES
Construction expenditures	(685,206)	(889,118)
Allowance for equity funds used during construction	14,807	17,715


Nuclear fuel purchases	(52,992)	(88,403)
Proceeds from sale of nuclear fuel	38,822	16,733
Payments to storm reserve escrow account	(6,553)	(6,602)

Purchase of preferred membership interests of affiliate	—	(1,457,676)
Redemption of preferred membership interests of affiliate	113,942	46,643

Proceeds from nuclear decommissioning trust fund sales	333,149	229,972
Investment in nuclear decommissioning trust funds	(363,736)	(258,420)
Changes in money pool receivable - net	(31,361)	(275,559)
Insurance proceeds received for property damages	—	6,184
Decrease in other investments	33	396

Net cash flow used in investing activities	(639,095)	(2,658,135)
FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	1,825,954	833,484
Retirement of long-term debt	(1,061,918)	(851,617)
Proceeds received by storm trust related to securitization	—	1,457,676
Capital contribution from parent	—	1,457,676


Changes in money pool payable - net	(156,166)	(226,114)

Common equity distributions paid	(664,100)	(160,250)

Other	69,936	19,633
Net cash flow provided by financing activities	13,706	2,530,488

Net increase in cash and cash equivalents	183,009	800,413
Cash and cash equivalents at beginning of period	2,772	56,613
Cash and cash equivalents at end of period	$185,781	$857,026

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized	$177,455	$192,861
Income taxes	$58	($6,037)
Non-cash investing activities:
Accrued construction expenditures	$81,177	$138,522

See Notes to Financial Statements.


ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, 2024 and December 31, 2023
(Unaudited)
	2024	2023
	(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash	$474	$2,255
Temporary cash investments	185,307	517
Total cash and cash equivalents	185,781	2,772
Accounts receivable:
Customer	302,489	264,776
Allowance for doubtful accounts	(3,361)	(6,156)
Associated companies	205,140	82,292
Other	68,394	74,685
Accrued unbilled revenues	237,470	202,173
Total accounts receivable	810,132	617,770
Deferred fuel costs	13,436	24,800
Fuel inventory - at average cost	50,928	57,818
Materials and supplies - at average cost	732,270	652,180
Deferred nuclear refueling outage costs	66,810	96,047

Prepayments and other	240,739	71,613
TOTAL	2,100,096	1,523,000

OTHER PROPERTY AND INVESTMENTS
Investment in affiliate preferred membership interests	4,382,304	4,496,245
Decommissioning trust funds	2,292,174	2,107,384
Non-utility property - at cost (less accumulated depreciation)	404,313	404,043
Storm reserve escrow account	250,372	243,819
Other	9,587	9,367
TOTAL	7,338,750	7,260,858

UTILITY PLANT
Electric	28,341,063	27,800,467
Natural gas	324,169	315,658
Construction work in progress	514,882	592,803
Nuclear fuel	249,813	333,472
TOTAL UTILITY PLANT	29,429,927	29,042,400
Less - accumulated depreciation and amortization	10,776,257	10,570,707
UTILITY PLANT - NET	18,653,670	18,471,693

DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:

Other regulatory assets	1,657,857	1,648,852
Deferred fuel costs	168,122	168,122
Other	52,426	36,945
TOTAL	1,878,405	1,853,919

TOTAL ASSETS	$29,970,921	$29,109,470

See Notes to Financial Statements.


ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
June 30, 2024 and December 31, 2023
(Unaudited)
	2024	2023
	(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt	$1,300,000	$1,400,000
Accounts payable:
Associated companies	132,514	283,016
Other	406,932	467,414
Customer deposits	172,428	167,905
Taxes accrued	94,140	66,463
Interest accrued	105,819	91,656

Other	107,516	87,468
TOTAL	2,319,349	2,563,922

NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued	2,525,735	2,391,442
Accumulated deferred investment tax credits	90,961	93,242
Regulatory liability for income taxes - net	194,618	193,754
Other regulatory liabilities	1,692,861	1,407,689
Decommissioning	1,896,968	1,836,240
Accumulated provisions	273,388	263,869
Pension and other postretirement liabilities	249,718	271,928
Long-term debt	8,888,393	8,020,689
Other	619,985	493,176
TOTAL	16,432,627	14,972,029

Commitments and Contingencies

EQUITY
Member’s equity	11,122,661	11,473,614
Accumulated other comprehensive income	50,751	54,798
Noncontrolling interests	45,533	45,107
TOTAL	11,218,945	11,573,519

TOTAL LIABILITIES AND EQUITY	$29,970,921	$29,109,470

See Notes to Financial Statements.


ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the Six Months Ended June 30, 2024 and 2023
(Unaudited)

	Noncontrolling Interests	Member’s Equity	Accumulated Other Comprehensive Income	Total


Balance at December 31, 2022	$31,735	$9,406,343	$55,370	$9,493,448

Net income	554	243,470	—	244,024
Other comprehensive loss	—	—	(786)	(786)
Capital contribution from parent	—	1,457,676	—	1,457,676
Common equity distributions	—	(160,250)	—	(160,250)
Beneficial interest in storm trust	14,577	—	—	14,577
Distribution to LURC	(470)	—	—	(470)
Other	—	(28)	—	(28)
Balance at March 31, 2023	46,396	10,947,211	54,584	11,048,191

Net income	819	262,441	—	263,260
Other comprehensive loss	—	—	(1,773)	(1,773)






Other	—	15	—	15
Balance at June 30, 2023	$47,215	$11,209,667	$52,811	$11,309,693












Balance at December 31, 2023	$45,107	$11,473,614	$54,798	$11,573,519

Net income	795	181,928	—	182,723
Other comprehensive loss	—	—	(2,024)	(2,024)

Non-cash contribution from parent	—	976	—	976
Common equity distributions	—	(97,500)	—	(97,500)


Distributions to LURC	(858)	—	—	(858)
Other	—	(43)	—	(43)
Balance at March 31, 2024	45,044	11,558,975	52,774	11,656,793

Net income	788	130,326	—	131,114
Other comprehensive loss	—	—	(2,023)	(2,023)



Common equity distributions	—	(566,600)	—	(566,600)


Distributions to LURC	(299)	—	—	(299)
Other	—	(40)	—	(40)
Balance at June 30, 2024	$45,533	$11,122,661	$50,751	$11,218,945












See Notes to Financial Statements.

ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

Results of Operations

Net Income

Second Quarter 2024 Compared to Second Quarter 2023

Net income increased $21.3 million primarily due to higher volume/weather and higher retail electric price.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Net income increased $27.8 million primarily due to higher retail electric price and higher volume/weather.

Operating Revenues

Second Quarter 2024 Compared to Second Quarter 2023

Following is an analysis of the change in operating revenues comparing the second quarter 2024 to the second quarter 2023:


			Amount
			(In Millions)
2023 operating revenues			$445.1
Fuel, rider, and other revenues that do not significantly affect net income			(20.0)
Retail electric price			5.0
Volume/weather			12.8
2024 operating revenues			$442.9

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 an increase in formula rate plan rates effective April 2024. See Note 2 to the financial statements herein for discussion of the formula rate plan filing.

The volume/weather variance is primarily due to the effect of more favorable weather on residential and commercial sales and an increase in weather-adjusted commercial usage.

Entergy Mississippi, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Total electric energy sales for Entergy Mississippi for the three months ended June 30, 2024 and 2023 are as follows:


	2024	2023	% Change
	(GWh)
Residential	1,397	1,323	6
Commercial	1,172	1,105	6
Industrial	596	565	5
Governmental	101	99	2
Total retail	3,266	3,092	6
Sales for resale:
Non-associated companies	970	1,209	(20)
Total	4,236	4,301	(2)

See Note 12 to the financial statements herein for additional discussion of Entergy Mississippi’s operating revenues.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Following is an analysis of the change in operating revenues comparing the six months ended June 30, 2024 to the six months ended June 30, 2023:


			Amount
			(In Millions)
2023 operating revenues			$857.6
Fuel, rider, and other revenues that do not significantly affect net income			(22.3)
Retail electric price			13.8
Volume/weather			8.7
2024 operating revenues			$857.8

The retail electric price variance is primarily due to increases in formula rate plan rates effective April 2023 and April 2024. See Note 2 to the financial statements herein and in the Form 10-K for further discussion of the formula rate plan filings.

The volume/weather variance is primarily due to the effect of more favorable weather on residential and commercial sales, partially offset by a decrease in weather-adjusted residential usage and a decrease in industrial usage. The decrease in industrial usage is primarily due to a decrease in demand from large industrial customers, primarily in the primary metals and wood products industries, and a decrease in demand from small industrial customers.

Entergy Mississippi, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Total electric energy sales for Entergy Mississippi for the six months ended June 30, 2024 and 2023 are as follows:


	2024	2023	% Change
	(GWh)
Residential	2,584	2,412	7
Commercial	2,135	2,120	1
Industrial	1,090	1,132	(4)
Governmental	188	192	(2)
Total retail	5,997	5,856	2
Sales for resale:
Non-associated companies	2,958	2,773	7
Total	8,955	8,629	4

See Note 12 to the financial statements herein for additional discussion of Entergy Mississippi’s operating revenues.

Other Income Statement Variances

Second Quarter 2024 Compared to Second Quarter 2023

Other regulatory charges (credits) - net includes regulatory credits of $7.3 million, recorded in second quarter 2024, to reflect the effects of the joint stipulation reached in the 2024 formula rate plan filing proceeding. See Note 2 to the financial statements herein for discussion of the 2024 formula rate plan filing.

Interest expense increased primarily due to the issuance of $300 million of 5.85% Series mortgage bonds in May 2024.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Other operation and maintenance expenses remained relatively unchanged, increasing $0.5 million, primarily due to:

an increase of $3.4 million in contract costs related to operational performance, customer service, and organizational health initiatives;
an increase of $2.8 million in compensation and benefits costs primarily due to higher healthcare claims activity in 2024; and
an increase of $1.4 million in energy efficiency expenses primarily due to the timing of recovery from customers.

The increase was substantially offset by a $7.1 million decrease in storm damage provisions. See Note 2 to the financial statements herein and in the Form 10-K for discussion of Entergy Mississippi’s storm damage provision.

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

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

Entergy Mississippi, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Interest expense increased primarily due to higher interest expense from carrying costs related to the deferred fuel balance and the issuance of $300 million of 5.85% Series mortgage bonds in May 2024.

Income Taxes

The effective income tax rates were 24.1% for the second quarter 2024 and 23.6% for the six months ended June 30, 2024. The differences in the effective income tax rates for the second quarter 2024 and the six months ended June 30, 2024 versus the federal statutory rate of 21% were primarily due to the accrual for state income taxes, partially offset by certain book and tax differences related to utility plant items.

The effective income tax rates were 25% for the second quarter 2023 and 24.8% for the six months ended June 30, 2023. The differences in the effective income tax rates for the second quarter 2023 and the six months ended June 30, 2023 versus the federal statutory rate of 21% were primarily due to the accrual for state income taxes, partially offset by certain book and tax differences related to utility plant items.

Income Tax Legislation and Regulation

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Income Tax Legislation and Regulation” herein and in the Form 10-K for discussion of income tax legislation and regulation.

Liquidity and Capital Resources

Cash Flow

Cash flows for the six months ended June 30, 2024 and 2023 were as follows:


	2024	2023
	(In Thousands)
Cash and cash equivalents at beginning of period	$6,630	$16,979

Net cash provided by (used in):
Operating activities	185,304	173,548
Investing activities	(314,145)	(276,717)
Financing activities	125,324	94,643
Net decrease in cash and cash equivalents	(3,517)	(8,526)

Cash and cash equivalents at end of period	$3,113	$8,453

Operating Activities

Net cash flow provided by operating activities increased $11.8 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to lower fuel costs and a decrease of $9.7 million in storm spending in 2024 as compared to 2023. The increase was partially offset by the timing of recovery of fuel and purchased power costs and the timing of payments to vendors. See Note 2 to the financial statements in the Form 10-K for a discussion of fuel and purchased power cost recovery.

Entergy Mississippi, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Investing Activities

Net cash flow used in investing activities increased $37.4 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to:

an increase of $32 million in transmission construction expenditures primarily due to increased development in Entergy Mississippi’s service area;
an increase of $27.9 million in non-nuclear generation construction expenditures primarily due to a higher scope of work on projects performed in 2024 as compared to 2023; and
money pool activity.

The increase was partially offset by the substantial completion payment of approximately $30.4 million in April 2023 for the purchase of the Sunflower Solar facility by a consolidated tax equity partnership. See Note 14 to the financial statements in the Form 10-K for discussion of the Sunflower Solar facility purchase.

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 $26.9 million for the six months ended June 30, 2023. The money pool is an intercompany cash management program that makes possible intercompany borrowing and lending arrangements, and the money pool and other borrowing arrangements are designed to reduce the Registrant Subsidiaries’ dependence on external short-term borrowings.

Financing Activities

Net cash flow provided by financing activities increased $30.7 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to:

the repayment, prior to maturity, of $250 million of 3.10% Series mortgage bonds in June 2023;
the repayment, prior to maturity, in May 2023, of $50 million of an unsecured term loan due December 2023; and
a decrease of $17.7 million in common equity distributions paid in 2024 in order to maintain Entergy Mississippi’s capital structure.

The increase was partially offset by:

money pool activity;
the repayment, prior to maturity, of $100 million of 3.75% Series mortgage bonds in June 2024; and
a capital contribution of $25.7 million received in April 2023 from the noncontrolling tax equity investor in MS Sunflower Partnership, LLC and used by the partnership for payments in the acquisition of the Sunflower Solar facility. See Note 14 to the financial statements in the Form 10-K for discussion of the Sunflower Solar facility purchase.

Decreases in Entergy Mississippi’s payable to the money pool are a use of cash flow, and Entergy Mississippi’s payable to the money pool decreased $33.4 million for the six months ended June 30, 2024 compared to increasing by $104.6 million for the six months ended June 30, 2023.

Entergy Mississippi, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Capital Structure

Entergy Mississippi’s debt to capital ratio is shown in the following table. The increase in the debt to capital ratio for Entergy Mississippi is primarily due to the net issuance of long-term debt in 2024.


	June 30, 2024		December 31, 2023
Debt to capital	51.6	%	50.5	%
Effect of subtracting cash	—	%	(0.1	%)
Net debt to net capital (non-GAAP)	51.6	%	50.4	%

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. The net debt to net capital ratio is a non-GAAP measure. Entergy Mississippi uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Mississippi’s financial condition because net debt indicates Entergy Mississippi’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.

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. The following are updates to the information provided in the Form 10-K.

Following are the current annual amounts of Entergy Mississippi’s planned construction and other capital investments.


	2024	2025	2026
	(In Millions)
Planned construction and capital investment:
Generation	$145	$735	$735
Transmission	160	170	185
Distribution	325	325	290
Utility Support	45	55	55
Total	$675	$1,285	$1,265

The updated capital plan for 2024-2026 reflects incremental capital investments for potential generation projects. In addition to routine capital spending to maintain operations, the capital plan includes investments in generation projects to modernize, decarbonize, and diversify Entergy Mississippi’s portfolio, as well as to support customer growth; distribution and Utility support spending to improve reliability, resilience, and customer experience; transmission spending to improve reliability and resilience while also supporting renewables expansion and customer growth; and other investments.

Entergy Mississippi, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

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


June 30, 2024	December 31, 2023	June 30, 2023	December 31, 2022
(In Thousands)
($40,355)	($73,769)	($104,624)	$26,879

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

Entergy Mississippi has a credit facility in the amount of $300 million scheduled to expire in June 2029. The credit facility includes fronting commitments for the issuance of letters of credit against $5 million of the borrowing capacity of the facility. As of June 30, 2024, there were no cash borrowings and no letters of credit outstanding under the credit facility. In addition, Entergy Mississippi is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO and for other purposes. As of June 30, 2024, $30.9 million in MISO letters of credit and $10.2 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.

State and Local Rate Regulation and Fuel-Cost Recovery

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

Retail Rates

2024 Formula Rate Plan Filing

In March 2024, Entergy Mississippi submitted its formula rate plan 2024 test year filing and 2023 look-back filing showing Entergy Mississippi’s earned return on rate base for the historical 2023 calendar year to be within the formula rate plan bandwidth and projected earned return for the 2024 calendar year to be below the formula rate plan bandwidth. The 2024 test year filing showed a $63.4 million rate increase was necessary to reset Entergy Mississippi’s earned return on rate base to the specified point of adjustment of 7.10%, within the formula rate plan bandwidth. The 2023 look-back filing compared actual 2023 results to the approved benchmark return on rate base and reflected no change in formula rate plan revenues. In accordance with the provisions of the formula rate plan, Entergy Mississippi implemented a $32.6 million interim rate increase, reflecting a cap equal to 2% of 2023 retail revenues, effective April 2024.

In December 2014 the MPSC ordered Entergy Mississippi to file an updated depreciation study at least once every four years. Pursuant to this order and Entergy Mississippi’s filing cycle, Entergy Mississippi would have filed an updated depreciation report with its formula rate plan filing in 2023. However, in July 2022 the MPSC directed Entergy Mississippi to file its next depreciation study in connection with its 2024 formula rate plan filing notwithstanding the MPSC’s prior order. Accordingly, Entergy Mississippi filed a depreciation study in February 2024. The study showed a need for an increase in annual depreciation expense of $55.2 million. The calculated increase in annual depreciation expense was excluded from Entergy Mississippi’s 2024 formula rate plan revenue increase request because the MPSC had not yet approved the proposed depreciation rates.

In June 2024, Entergy Mississippi and the Mississippi Public Utilities Staff entered into a joint stipulation that confirmed the 2024 test year filing, with the exception of immaterial adjustments to certain operation and maintenance expenses. After performance adjustments, the formula rate plan reflected an earned return on rate base of 6.08% for calendar year 2024, which resulted in a total revenue increase of $64.6 million for 2024. The joint stipulation also recommended approval of a revised customer charge of $31.82 per month for residential customers and $53.10 per month for general service customers. Pursuant to the stipulation, Entergy Mississippi’s 2023 look-

Entergy Mississippi, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

back filing reflected an earned return on rate base of 6.81%, resulting in an increase of $0.3 million in the formula rate plan revenues for 2023. Finally, the stipulation recommended approval of Entergy Mississippi’s proposed depreciation rates with those rates to be implemented upon request and approval at a later date. In June 2024 the MPSC approved the joint stipulation with rates effective in July 2024. The approval also included a reduction to the energy cost factor, resulting in a net bill decrease for a typical residential customer using 1,000 kWh per month. Also in June 2024, Entergy Mississippi recorded regulatory credits of $7.3 million to reflect the difference between interim rates placed in effect in April 2024 and the rates reflected in the joint stipulation.

Also, in May 2024, Entergy Mississippi received approval from the MPSC for formula rate plan revisions that were necessary for Entergy Mississippi to comply with recently passed state legislation. The legislation allows Entergy Mississippi to make interim rate adjustments to recover the non-fuel related annual ownership cost of certain facilities that directly or indirectly provide service to customers who own certain data processing center projects as specified in the legislation. Entergy Mississippi filed its interim facilities rate adjustment report in May 2024 to recover approximately $8.7 million of these costs over a six-month period with rates effective beginning in July 2024.

Fuel and purchased power cost recovery

In June 2024 the MPSC approved a joint stipulation agreement between Entergy Mississippi and the Mississippi Public Utilities Staff for Entergy Mississippi’s 2024 formula rate plan filing. The 2024 formula rate plan filing included the conclusion of the modified interim adjustments to Entergy Mississippi’s energy cost recovery rider and power management rider, which were approved in October 2022 and allowed Entergy Mississippi to recover certain under-collected fuel balances. The stipulation provided for Entergy Mississippi to reduce its net energy cost factor. See “Retail Rates - 2024 Formula Rate Plan Filing” above for further discussion of the 2024 formula rate plan filing and the joint stipulation agreement.

Storm Cost Recovery Filings with Retail Regulators

As discussed in the Form 10-K, Entergy Mississippi had approval from the MPSC to collect a storm damage provision of $1.75 million per month. If Entergy Mississippi’s accumulated storm damage provision balance exceeded $15 million, the collection of the storm damage provision ceased until such time that the accumulated storm damage provision became less than $10 million.

In December 2023, Entergy Mississippi filed a Notice of Storm Escrow Disbursement and Request for Interim Relief notifying the MPSC that Entergy Mississippi had requested disbursement of approximately $34.5 million of storm escrow funds from its restricted storm escrow account. The filing also requested authorization from the MPSC, on a temporary basis, that the $34.5 million of storm escrow funds be credited to Entergy Mississippi’s storm damage provision, pending the MPSC’s review of Entergy Mississippi’s storm-related costs, and that Entergy Mississippi continue to bill its monthly storm damage provision without suspension in the event the storm damage provision balance exceeds $15 million, in anticipation of a subsequent filing by Entergy Mississippi in this proceeding. The storm damage reserve exceeded $15 million upon receipt of the storm escrow funds. Because the MPSC had not entered an order on Entergy Mississippi’s filing on the requested relief to continue billing this provision, Entergy Mississippi suspended billing the monthly storm damage provision effective with February 2024 bills.

In March 2024, Entergy Mississippi made a combined dual filing which included a Notice of Intent to Make Routine Change in Rates and Schedules and a Motion for Determination relating to the above-described Notice of Storm Escrow Disbursement. The Notice of Intent proposed a new storm damage mitigation and restoration rider to supersede both the current storm damage rate schedule and the vegetation management rider schedule, in which the collection of both expenses would be combined. The proposal requests that the MPSC authorize Entergy Mississippi to collect a storm damage provision of $5.2 million per month. Furthermore, if Entergy Mississippi’s

Entergy Mississippi, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

accumulated storm damage provision balance exceeds $70 million, collection of the storm damage provision would cease until such time that the accumulated storm damage provision becomes less than $60 million.

The Mississippi Public Utilities Staff reviewed the storm-related costs submitted by Entergy Mississippi and found them prudent. In June 2024 the MPSC considered and unanimously granted the relief sought by Entergy Mississippi. The new combined storm damage mitigation and restoration rider became effective with the July 2024 billing cycle. Additionally, Entergy Mississippi made a compliance filing to cease billing under the existing vegetation management rider schedule as of the same billing cycle.

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. See “Other Information - Environmental Regulation” in Part II, Item 5 herein for updates regarding environmental proceedings and regulation.

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, taxation and uncertain tax positions, qualified pension and other postretirement benefits, and other contingencies.

New Accounting Pronouncements


ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
For the Three and Six Months Ended June 30, 2024 and 2023
(Unaudited)

	Three Months Ended		Six Months Ended
	2024	2023	2024	2023
	(In Thousands)		(In Thousands)
OPERATING REVENUES
Electric	$442,894	$445,130	$857,750	$857,558

OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale	63,977	140,530	181,827	301,815
Purchased power	66,847	59,140	134,502	122,954
Other operation and maintenance	67,700	68,600	138,906	138,418
Taxes other than income taxes	37,496	35,301	75,806	71,035
Depreciation and amortization	67,131	65,346	133,048	129,375
Other regulatory charges (credits) - net	9,873	(25,947)	3,382	(58,790)
TOTAL	313,024	342,970	667,471	704,807

OPERATING INCOME	129,870	102,160	190,279	152,751

OTHER INCOME
Allowance for equity funds used during construction	3,094	2,169	5,012	4,053
Interest and investment income	948	1,319	1,141	1,783
Miscellaneous - net	(1,772)	(3,438)	(3,393)	(5,521)
TOTAL	2,270	50	2,760	315

INTEREST EXPENSE
Interest expense	28,499	25,433	54,896	49,377
Allowance for borrowed funds used during construction	(1,204)	(902)	(1,951)	(1,685)
TOTAL	27,295	24,531	52,945	47,692

INCOME BEFORE INCOME TAXES	104,845	77,679	140,094	105,374

Income taxes	25,280	19,414	33,097	26,169

NET INCOME	79,565	58,265	106,997	79,205

Net loss attributable to noncontrolling interest	(1,733)	(3,623)	(4,035)	(5,764)

EARNINGS APPLICABLE TO MEMBER'S EQUITY	$81,298	$61,888	$111,032	$84,969

See Notes to Financial Statements.


ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2024 and 2023
(Unaudited)
	2024	2023
	(In Thousands)
OPERATING ACTIVITIES
Net income	$106,997	$79,205
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation and amortization	133,048	129,375
Deferred income taxes, investment tax credits, and non-current taxes accrued	24,931	26,736
Changes in assets and liabilities:
Receivables	(26,254)	(6,155)
Fuel inventory	(2,331)	(5,919)
Accounts payable	475	(32,930)
Taxes accrued	(48,627)	(45,044)
Interest accrued	(1,845)	(724)
Deferred fuel costs	41,104	149,189
Other working capital accounts	(18,367)	(25,035)
Provisions for estimated losses	(11,575)	1,731
Other regulatory assets	5,325	(39,846)
Other regulatory liabilities	(3,415)	(55,443)
Pension and other postretirement funded status	(8,968)	(8,261)
Other assets and liabilities	(5,194)	6,669
Net cash flow provided by operating activities	185,304	173,548

INVESTING ACTIVITIES
Construction expenditures	(319,053)	(276,530)
Allowance for equity funds used during construction	5,012	4,053
Change in money pool receivable - net	—	26,879
Payment for purchase of assets	—	(30,433)
Increase in other investments	(104)	(686)
Net cash flow used in investing activities	(314,145)	(276,717)

FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	396,105	396,861
Retirement of long-term debt	(200,000)	(400,000)
Capital contribution from noncontrolling interest	—	25,708
Changes in money pool payable - net	(33,414)	104,624
Common equity distributions paid	(22,300)	(40,000)
Other	(15,067)	7,450
Net cash flow provided by financing activities	125,324	94,643

Net decrease in cash and cash equivalents	(3,517)	(8,526)
Cash and cash equivalents at beginning of period	6,630	16,979
Cash and cash equivalents at end of period	$3,113	$8,453

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized	$55,538	$48,771
Income taxes	$2,356	$—
Noncash investing activities:
Accrued construction expenditures	$22,334	$66,818

See Notes to Financial Statements.


ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, 2024 and December 31, 2023
(Unaudited)
	2024	2023
	(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash	$30	$30
Temporary cash investments	3,083	6,600
Total cash and cash equivalents	3,113	6,630
Accounts receivable:
Customer	124,274	121,389
Allowance for doubtful accounts	(2,226)	(3,312)
Associated companies	7,807	4,997
Other	22,637	17,697
Accrued unbilled revenues	85,998	71,465
Total accounts receivable	238,490	212,236

Fuel inventory - at average cost	18,527	16,196
Materials and supplies - at average cost	109,283	95,526
Prepayments and other	13,108	12,740
TOTAL	382,521	343,328

OTHER PROPERTY AND INVESTMENTS
Non-utility property - at cost (less accumulated depreciation)	4,489	4,497
Storm reserve escrow account	759	656

TOTAL	5,248	5,153

UTILITY PLANT
Electric	7,617,717	7,455,145
Construction work in progress	284,846	139,635
TOTAL UTILITY PLANT	7,902,563	7,594,780
Less - accumulated depreciation and amortization	2,435,037	2,346,327
UTILITY PLANT - NET	5,467,526	5,248,453

DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Other regulatory assets	573,751	579,076
Other	77,054	51,996
TOTAL	650,805	631,072

TOTAL ASSETS	$6,506,100	$6,228,006

See Notes to Financial Statements.


ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
June 30, 2024 and December 31, 2023
(Unaudited)
	2024	2023
	(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt	$—	$100,000
Accounts payable:
Associated companies	86,688	133,571
Other	112,595	92,659
Customer deposits	94,308	92,637
Taxes accrued	66,507	115,134
Interest accrued	19,692	21,537
Deferred fuel costs	171,749	130,645
Other	22,152	26,463
TOTAL	573,691	712,646

NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued	849,315	821,744
Accumulated deferred investment tax credits	13,373	13,811
Regulatory liability for income taxes - net	183,083	188,714
Other regulatory liabilities	35,912	33,696
Asset retirement cost liabilities	30,309	8,229
Accumulated provisions	27,906	39,481

Long-term debt	2,426,614	2,129,510
Other	72,986	71,961
TOTAL	3,639,498	3,307,146

Commitments and Contingencies

EQUITY
Member's equity	2,278,193	2,189,461
Noncontrolling interest	14,718	18,753
TOTAL	2,292,911	2,208,214

TOTAL LIABILITIES AND EQUITY	$6,506,100	$6,228,006

See Notes to Financial Statements.


ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the Six Months Ended June 30, 2024 and 2023
(Unaudited)

	Noncontrolling Interest	Member's Equity	Total
		(In Thousands)

Balance at December 31, 2022	$3,347	$2,037,190	$2,040,537

Net income (loss)	(2,141)	23,081	20,940
Common equity distributions	—	(12,500)	(12,500)
Balance at March 31, 2023	1,206	2,047,771	2,048,977

Net income (loss)	(3,623)	61,888	58,265
Common equity distributions	—	(27,500)	(27,500)
Capital contribution from noncontrolling interest	25,708	—	25,708
Balance at June 30, 2023	$23,291	$2,082,159	$2,105,450






Balance at December 31, 2023	$18,753	$2,189,461	$2,208,214

Net income (loss)	(2,302)	29,734	27,432

Balance at March 31, 2024	16,451	2,219,195	2,235,646

Net income (loss)	(1,733)	81,298	79,565

Common equity distributions	—	(22,300)	(22,300)

Balance at June 30, 2024	$14,718	$2,278,193	$2,292,911





See Notes to Financial Statements.

ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

Results of Operations

Net Income

Second Quarter 2024 Compared to Second Quarter 2023

Net income increased $7.3 million primarily due to higher volume/weather and higher retail electric price, partially offset by higher other operation and maintenance expenses.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Entergy New Orleans experienced a net loss of $27.8 million for the six months ended June 30, 2024 compared to net income of $24.0 million for the six months ended June 30, 2023 primarily due to a $78.5 million ($57.4 million net-of-tax) regulatory charge, recorded in first quarter 2024, primarily to reflect a settlement in principle between Entergy New Orleans and the City Council in April 2024 for additional sharing with customers of income tax benefits from the resolution of the 2016-2018 IRS audit. Also contributing to the net loss were higher other operation and maintenance expenses. See Note 10 to the financial statements herein for discussion of the April 2024 settlement in principle and Note 3 to the financial statements in the Form 10-K for discussion of the resolution of the 2016-2018 IRS audit.

Operating Revenues

Second Quarter 2024 Compared to Second Quarter 2023

Following is an analysis of the change in operating revenues comparing the second quarter 2024 to the second quarter 2023:


			Amount
			(In Millions)
2023 operating revenues			$188.0
Fuel, rider, and other revenues that do not significantly affect net income			3.1
Volume/weather			6.9
Retail electric price			1.3
2024 operating revenues			$199.3

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

The volume/weather variance is primarily due to the effect of more favorable weather on residential sales and an increase in weather-adjusted residential usage.

The retail electric price variance is primarily due to an increase in formula rate plan rates effective September 2023 in accordance with the terms of the 2023 formula rate plan filing. See Note 2 to the financial statements in the Form 10-K for discussion of the formula rate plan filing.

Entergy New Orleans, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Total electric energy sales for Entergy New Orleans for the three months ended June 30, 2024 and 2023 are as follows:


	2024	2023	% Change
	(GWh)
Residential	614	576	7
Commercial	531	508	5
Industrial	115	97	19
Governmental	198	187	6
Total retail	1,458	1,368	7
Sales for resale:
Non-associated companies	476	551	(14)
Total	1,934	1,919	1

See Note 12 to the financial statements herein for additional discussion of Entergy New Orleans’s operating revenues.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Following is an analysis of the change in operating revenues comparing the six months ended June 30, 2024 to the six months ended June 30, 2023:


			Amount
			(In Millions)
2023 operating revenues			$396.8
Fuel, rider, and other revenues that do not significantly affect net income			(11.1)
Retail electric price			2.8
Volume/weather			3.8
2024 operating revenues			$392.3

The volume/weather variance is primarily due to the effect of more favorable weather on residential and commercial sales and an increase in weather-adjusted residential usage, partially offset by a decrease in weather-adjusted commercial usage.

Entergy New Orleans, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Total electric energy sales for Entergy New Orleans for the six months ended June 30, 2024 and 2023 are as follows:


	2024	2023	% Change
	(GWh)
Residential	1,094	1,030	6
Commercial	974	995	(2)
Industrial	200	196	2
Governmental	375	368	2
Total retail	2,643	2,589	2
Sales for resale:
Non-associated companies	981	1,594	(38)
Total	3,624	4,183	(13)

See Note 12 to the financial statements herein for additional discussion of Entergy New Orleans’s operating revenues.

Other Income Statement Variances

Second Quarter 2024 Compared to Second Quarter 2023

Other operation and maintenance expenses increased primarily due to an increase of $1.1 million in non-nuclear generation expenses primarily due to a higher scope of work during plant outages performed in 2024 as compared to 2023.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Other operation and maintenance expenses increased primarily due to:

the recognition of $1.8 million in costs related to rate mitigation credits approved in the settlement of the 2023 formula rate plan filing. See Note 2 to the financial statements in the Form 10-K for discussion of the formula rate plan filing;
an increase of $1.6 million in contract costs related to operational performance, customer service, and organizational health initiatives;
an increase of $1.4 million in energy efficiency expenses primarily due to higher energy efficiency costs;
an increase of $1.4 million in compensation and benefits costs primarily due to higher healthcare claims activity in 2024;
an increase of $1.2 million in non-nuclear generation expenses primarily due to a higher scope of work during plant outages performed in 2024 as compared to 2023; and
several individually insignificant items.

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

Other regulatory charges (credits) - net includes a regulatory charge of $78.5 million, recorded in first quarter 2024, primarily to reflect a settlement in principle between Entergy New Orleans and the City Council in April 2024 for additional sharing with customers of income tax benefits from the resolution of the 2016-2018 IRS audit. See Note 10 to the financial statements herein for discussion of the April 2024 settlement in principle and Note 3 to the financial statements in the Form 10-K for discussion of the resolution of the 2016-2018 IRS audit.

Other income decreased primarily due to lower interest earned on money pool investments.

Entergy New Orleans, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Income Taxes

The effective income tax rates were 26.2% for the second quarter 2024 and 29.8% for the six months ended June 30, 2024. The differences in the effective income tax rates for the second quarter 2024 and the six months ended June 30, 2024 versus the federal statutory rate of 21% were primarily due to the accrual for state income taxes.

The effective income tax rates were 29.4% for the second quarter 2023 and 30.5% for the six months ended June 30, 2023. The differences in the effective income tax rates for the second quarter 2023 and the six months ended June 30, 2023 versus the federal statutory rate of 21% were primarily due to the accrual for state income taxes and the amortization of state accumulated deferred income taxes as a result of tax rate changes, partially offset by certain book and tax differences related to utility plant items.

Income Tax Legislation and Regulation

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Income Tax Legislation and Regulation” herein and in the Form 10-K for discussion of income tax legislation and regulation.

Planned Sale of Gas Distribution Business

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Planned Sale of Gas Distribution Businesses” in the Form 10-K for discussion of the planned sale of Entergy New Orleans’s gas distribution business. The following is an update to that discussion.

Liquidity and Capital Resources

Cash Flow

Cash flows for the six months ended June 30, 2024 and 2023 were as follows:


	2024	2023
	(In Thousands)
Cash and cash equivalents at beginning of period	$26	$4,464

Net cash provided by (used in):
Operating activities	45,416	100,950
Investing activities	(74,449)	12,900
Financing activities	35,565	23,057
Net increase in cash and cash equivalents	6,532	136,907

Cash and cash equivalents at end of period	$6,558	$141,371

Entergy New Orleans, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Operating Activities

Net cash flow provided by operating activities decreased $55.5 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to:

the refund of $34 million received from System Energy in January 2023 related to the sale-leaseback renewal costs and depreciation litigation as calculated in System Energy’s January 2023 compliance report filed with the FERC. See Note 2 to the financial statements in the Form 10-K for further discussion of the refund and the related proceedings;
lower collections from customers; and
the timing of payments to vendors.

The decrease was partially offset by the timing of recovery of fuel and purchased power costs. See Note 2 to the financial statements in the Form 10-K for a discussion of fuel and purchased power cost recovery.

Investing Activities

Entergy New Orleans’s investing activities used $74.4 million of cash for the six months ended June 30, 2024 compared to providing $12.9 million of cash for the six months ended June 30, 2023 primarily due to the following activity:

money pool activity;
a decrease of $5.0 million in distribution construction expenditures primarily due to a lower scope of work on projects in 2024 as compared to 2023, partially offset by higher capital expenditures for storm restoration in 2024; and
a decrease of $14.0 million in transmission construction expenditures primarily due to higher spending in 2023 related to Entergy New Orleans’s construction of the New Orleans Sewerage and Water Board Sullivan substation.

Increases in Entergy New Orleans’s receivable from the money pool are a use of cash flow, and Entergy New Orleans’s receivable from the money pool increased $1.1 million for the six months ended June 30, 2024 compared to decreasing by $101.8 million for the six months ended June 30, 2023. The money pool is an intercompany cash management program that makes possible intercompany borrowing and lending arrangements, and the money pool and other borrowing arrangements are designed to reduce the Registrant Subsidiaries’ dependence on external short-term borrowings.

Financing Activities

Net cash flow provided by financing activities increased $12.5 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to the issuance in May 2024 of (1) $35 million of 6.25% Series mortgage bonds, (2) $65 million of 6.41% Series mortgage bonds, and (3) $50 million of 6.54% mortgage bonds. The increase was partially offset by:

the repayment, at maturity, of an $85 million unsecured term loan in June 2024;
money pool activity;
additional borrowings of $15 million in May 2023 on the unsecured term loan repaid in June 2024; and
a $15 million advance received in 2023 related to Entergy New Orleans’s construction of the New Orleans Sewerage and Water Board Sullivan substation.

Decreases in Entergy New Orleans’s payable to the money pool are a use of cash flow, and Entergy New Orleans’s payable to the money pool decreased by $21.7 million for the six months ended June 30, 2024.

Entergy New Orleans, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Capital Structure

Entergy New Orleans’s debt to capital ratio is shown in the following table. The increase in the debt to capital ratio for Entergy New Orleans is primarily due to net loss in 2024.


	June 30, 2024		December 31, 2023
Debt to capital	48.8	%	45.8	%
Effect of excluding securitization bonds	—	%	(0.2	%)
Debt to capital, excluding securitization bonds (non-GAAP) (a)	48.8	%	45.6	%
Effect of subtracting cash	(0.2	%)	—	%
Net debt to net capital, excluding securitization bonds (non-GAAP) (a)	48.6	%	45.6	%

(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. The debt to capital ratio excluding securitization bonds and net debt to net capital ratio excluding securitization bonds are non-GAAP measures. Entergy New Orleans uses the debt to capital ratios excluding securitization bonds in analyzing its financial condition and believes they provide useful information to its investors and creditors in evaluating Entergy New Orleans’s financial condition because the securitization bonds are non-recourse to Entergy New Orleans, as more fully described in Note 5 to the financial statements in the Form 10-K. Entergy New Orleans also uses the net debt to net capital ratio excluding securitization bonds in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy New Orleans’s financial condition because net debt indicates Entergy New Orleans’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.

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. The 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:


June 30, 2024	December 31, 2023	June 30, 2023	December 31, 2022
(In Thousands)
$1,110	($21,651)	$45,487	$147,254

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

Entergy New Orleans has a credit facility in the amount of $25 million scheduled to expire in June 2027. 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 June 30, 2024, there were no cash borrowings and no letters of credit outstanding under the credit facility. In addition, Entergy New Orleans is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO. As of June 30, 2024, a $0.5 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.

Entergy New Orleans, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Resilience and Grid Hardening

As discussed in the Form 10-K, in October 2021 the City Council passed a resolution and order establishing a docket and procedural schedule with respect to system resiliency and storm hardening. In July 2022, Entergy New Orleans filed with the City Council a response identifying a preliminary plan for storm hardening and resiliency projects, including microgrids, to be implemented over ten years at an approximate cost of $1.5 billion. In February 2023 the City Council approved a revised procedural schedule requiring Entergy New Orleans to make a filing in April 2023 containing a narrowed list of proposed hardening projects. In April 2023, Entergy New Orleans filed the required application and supporting testimony seeking City Council approval of the first phase (five years and $559 million) of a ten-year infrastructure hardening plan totaling approximately $1 billion. Entergy New Orleans also sought, among other relief, City Council approval of a rider to recover from customers the costs of the infrastructure hardening plan. In February 2024 the City Council approved a resolution authorizing Entergy New Orleans to implement a resilience project to be partially funded by $55 million of matching funding through the DOE’s Grid Resilience and Innovation Partnerships program. The resolution also required Entergy New Orleans to submit, no later than July 2024, a revised resilience plan consisting of projects over a three-year period. In March 2024, Entergy New Orleans filed with the City Council for approval the requested three-year resilience plan, which includes $168 million in hardening projects. The three-year resilience plan is in addition to the previously authorized resilience project to be partially funded by the DOE’s Grid Resilience and Innovation Partnerships program. In July 2024 the City Council held a technical conference regarding Entergy New Orleans’s three-year resilience plan.

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

2024 Formula Rate Plan Filing

In April 2024, Entergy New Orleans submitted to the City Council its formula rate plan 2023 test year filing. Without the requested rate change in 2024, the 2023 test year evaluation report produced an electric earned return on equity of 8.66% and a gas earned return on equity of 5.87% compared to the authorized return on equity for each of 9.35%. Entergy New Orleans seeks approval of a $12.6 million rate increase based on the formula set by the City Council in the 2018 rate case and approved again by the City Council in 2023. The formula would result in an increase in authorized electric revenues of $7.0 million and an increase in authorized gas revenues of $5.6 million. Following City Council review, the City Council’s advisors issued a report in July 2024 seeking a reduction in Entergy New Orleans’s requested formula rate plan revenues in an aggregate amount of approximately $1.6 million for electric and gas together due to alleged errors. The City Council’s advisors’ report began a 35-day period to resolve any disputes among the parties regarding the formula rate plan. Resulting rates will be effective with the first billing cycle of September 2024 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.

Reliability Investigation

As discussed in the Form 10-K, in August 2017 the City Council established a docket to investigate the reliability of the Entergy New Orleans distribution system and to consider implementing certain reliability standards and possible financial penalties for not meeting any such standards. 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

Entergy New Orleans, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

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 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 June 2022 the Orleans Civil District Court issued a written judgment that the penalty be set aside, reversed, and vacated. In August 2022 the Orleans Civil District Court issued written reasons for its judgment and also granted a post-judgment motion to remand for the City Council to take actions consistent with its judgment.

In April 2023 the City Council approved a resolution that established a procedural schedule to allow for the submission of additional evidence regarding the penalty imposed in 2019. In May 2023, Entergy New Orleans filed with the Orleans Civil District Court a petition for judicial review and (or alternatively) declaratory judgment of, together with a request for injunctive relief from, the City Council’s April 2023 resolution. In June 2023 the City Council filed exceptions requesting the Orleans Civil District Court dismiss the suit as premature, and a hearing date was set on the exceptions. In September 2023, Entergy New Orleans filed an unopposed motion to continue the hearing on the City Council’s exceptions without date, which was granted. In May 2024 the City Council approved a settlement in which Entergy New Orleans agreed to $500 thousand in unrecovered distribution investment and will recover all verifiable regulatory costs associated with any reliability-related investigation, as well as any costs associated with the judicial reviews. In June 2024, Entergy New Orleans filed with the Orleans Civil District Court an unopposed motion to dismiss with prejudice and an order regarding its petition for judicial review. In July 2024 the dismissal order was signed.

Renewable Portfolio Standard Rulemaking

As discussed in the Form 10-K, in May 2021 the City Council established the Renewable and Clean Portfolio Standard. In May 2023, Entergy New Orleans submitted its compliance demonstration report to the City Council for the 2022 compliance year, which describes and demonstrates Entergy New Orleans’s compliance with the Renewable and Clean Portfolio Standard in 2022 and satisfies certain informational requirements. Entergy New Orleans requested, among other things, that the City Council determine that Entergy New Orleans achieved the target under the portfolio standard for 2022 and remains within the customer protection cost cap, and that the City Council approve a proposal to recover costs associated with 2022 compliance. In April 2024 the City Council approved a resolution finding Entergy New Orleans was in compliance with the 2022 requirements and that Entergy New Orleans did not exceed the customer protection cost cap, as well as approving Entergy New Orleans’s proposal to recover costs.

Income Tax Audits

As discussed in Note 3 to the financial statements herein and in the Form 10-K, in November 2023 the IRS completed its examination of the 2016 through 2018 tax years and issued a Revenue Agent Report for each federal filer under audit. Based on prior regulatory agreements and general rate-making principles, in fourth quarter 2023 Entergy New Orleans recorded a regulatory liability and associated regulatory charge of $60 million ($44 million net-of-tax). In April 2024, Entergy New Orleans and the City Council entered into a settlement in principle whereby Entergy New Orleans agreed to share with customers $138 million of income tax benefits from the resolution of the 2016–2018 IRS audit. Based on this settlement in principle, in first quarter 2024, Entergy New Orleans increased the associated regulatory liability from $60 million to $138 million and recorded a corresponding $78 million regulatory charge ($57 million net-of-tax). The settlement in principle requires that the regulatory liability be amortized over 25 years with the unamortized balance included in rate base and the amortization treated

Entergy New Orleans, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

as a reduction to Entergy New Orleans’s retail revenue requirement. In May 2024 the City Council approved 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 a discussion of nuclear matters.

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, taxation and uncertain tax positions, qualified pension and other postretirement benefits, and other contingencies.

New Accounting Pronouncements


ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Six Months Ended June 30, 2024 and 2023
(Unaudited)

	Three Months Ended		Six Months Ended
	2024	2023	2024	2023
	(In Thousands)		(In Thousands)
OPERATING REVENUES
Electric	$178,664	$168,216	$335,605	$337,911
Natural gas	20,677	19,800	56,697	58,925
TOTAL	199,341	188,016	392,302	396,836

OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale	18,314	18,974	49,139	70,998
Purchased power	64,318	65,929	124,700	132,549
Other operation and maintenance	41,720	38,961	85,052	72,188
Taxes other than income taxes	14,187	14,480	29,609	30,904
Depreciation and amortization	21,130	20,064	42,044	39,639
Other regulatory charges (credits) - net	1,659	2,288	83,179	1,187
TOTAL	161,328	160,696	413,723	347,465

OPERATING INCOME (LOSS)	38,013	27,320	(21,421)	49,371

OTHER INCOME
Allowance for equity funds used during construction	511	280	889	730
Interest and investment income	316	2,400	457	4,451
Miscellaneous - net	381	(517)	352	(744)
TOTAL	1,208	2,163	1,698	4,437

INTEREST EXPENSE
Interest expense	10,810	10,003	20,336	19,622
Allowance for borrowed funds used during construction	(214)	(136)	(371)	(355)
TOTAL	10,596	9,867	19,965	19,267

INCOME (LOSS) BEFORE INCOME TAXES	28,625	19,616	(39,688)	34,541

Income taxes	7,492	5,759	(11,841)	10,542

NET INCOME (LOSS)	$21,133	$13,857	($27,847)	$23,999

See Notes to Financial Statements.


ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2024 and 2023
(Unaudited)
	2024	2023
	(In Thousands)
OPERATING ACTIVITIES
Net income (loss)	($27,847)	$23,999
Adjustments to reconcile net income (loss) to net cash flow provided by operating activities:
Depreciation and amortization	42,044	39,639
Deferred income taxes, investment tax credits, and non-current taxes accrued	(19,560)	10,247
Changes in assets and liabilities:
Receivables	(111,913)	23,357
Fuel inventory	544	3,868
Accounts payable	(10,311)	(24,536)
Prepaid taxes and taxes accrued	7,345	(657)
Interest accrued	(1,220)	194
Deferred fuel costs	(51)	4,315
Other working capital accounts	(8,120)	(14,016)
Provisions for estimated losses	2,473	3,550
Other regulatory assets	11,073	2,930
Other regulatory liabilities	167,529	30,722
Pension and other postretirement funded status	(3,876)	(2,454)
Other assets and liabilities	(2,694)	(208)
Net cash flow provided by operating activities	45,416	100,950

INVESTING ACTIVITIES
Construction expenditures	(72,409)	(88,480)
Allowance for equity funds used during construction	889	730
Changes in money pool receivable - net	(1,110)	101,767

Payments to storm reserve escrow account	(2,939)	(1,723)
Changes in securitization account	1,120	555
Decrease in other investments	—	51
Net cash flow provided by (used in) investing activities	(74,449)	12,900

FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	149,075	14,641
Retirement of long-term debt	(91,245)	(6,073)
Contribution from customer for construction	—	15,000
Change in money pool payable - net	(21,651)	—

Other	(614)	(511)
Net cash flow provided by financing activities	35,565	23,057

Net increase in cash and cash equivalents	6,532	136,907
Cash and cash equivalents at beginning of period	26	4,464
Cash and cash equivalents at end of period	$6,558	$141,371

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized	$20,159	$18,719
Income taxes	$2,598	$2
Noncash investing activities:
Accrued construction expenditures	$4,263	$8,496

See Notes to Financial Statements.


ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, 2024 and December 31, 2023
(Unaudited)
	2024	2023
	(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash	$26	$26
Temporary cash investments	6,532	—
Total cash and cash equivalents	6,558	26
Securitization recovery trust account	1,306	2,426
Accounts receivable:
Customer	71,412	67,258
Allowance for doubtful accounts	(5,824)	(7,770)
Associated companies	102,291	1,657
Other	6,883	5,270
Accrued unbilled revenues	35,763	31,087
Total accounts receivable	210,525	97,502
Deferred fuel costs	6,199	6,148
Fuel inventory - at average cost	2,754	3,298
Materials and supplies - at average cost	32,846	30,019
Prepaid taxes	—	1,574
Prepayments and other	19,146	11,482
TOTAL	279,334	152,475

OTHER PROPERTY AND INVESTMENTS
Non-utility property - at cost (less accumulated depreciation)	832	832
Storm reserve escrow account	81,670	78,731

TOTAL	82,502	79,563

UTILITY PLANT
Electric	2,078,423	2,046,928
Natural gas	408,508	401,846
Construction work in progress	40,512	25,424
TOTAL UTILITY PLANT	2,527,443	2,474,198
Less - accumulated depreciation and amortization	879,838	858,672
UTILITY PLANT - NET	1,647,605	1,615,526

DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:

Other regulatory assets (includes securitization property of $— as of June 30, 2024 and $506 as of December 31, 2023)	171,294	182,367
Deferred fuel costs	4,080	4,080
Other	84,269	63,964
TOTAL	259,643	250,411

TOTAL ASSETS	$2,269,084	$2,097,975

See Notes to Financial Statements.


ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
June 30, 2024 and December 31, 2023
(Unaudited)
	2024	2023
	(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt	$78,000	$85,000
Payable due to associated company	1,275	1,275
Accounts payable:
Associated companies	43,275	76,736
Other	38,150	39,813
Customer deposits	33,324	32,420
Taxes accrued	5,771	—
Interest accrued	7,314	8,534


Other	11,003	8,953
TOTAL	218,112	252,731

NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued	176,689	195,615
Accumulated deferred investment tax credits	15,672	16,457
Regulatory liability for income taxes - net	34,411	36,061
Other regulatory liabilities	259,613	90,434

Accumulated provisions	90,597	88,124

Long-term debt (includes securitization bonds of $— as of June 30, 2024 and $5,415 as of December 31, 2023)	650,197	584,171
Long-term payable due to associated company	7,004	7,004
Other	37,882	20,624
TOTAL	1,272,065	1,038,490

Commitments and Contingencies

EQUITY
Member's equity	778,907	806,754
TOTAL	778,907	806,754

TOTAL LIABILITIES AND EQUITY	$2,269,084	$2,097,975

See Notes to Financial Statements.


ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN MEMBER'S EQUITY
For the Six Months Ended June 30, 2024 and 2023
(Unaudited)

			Member's Equity
			(In Thousands)

Balance at December 31, 2022			$702,816

Net income			10,142

Balance at March 31, 2023			712,958





Net income			13,857

Balance at June 30, 2023			$726,815


Balance at December 31, 2023			$806,754

Net loss			(48,980)

Balance at March 31, 2024			757,774





Net income			21,133

Balance at June 30, 2024			$778,907

See Notes to Financial Statements.

ENTERGY TEXAS, INC. AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

Results of Operations

Net Income

Second Quarter 2024 Compared to Second Quarter 2023

Net income increased $1.8 million primarily due to higher volume/weather and higher other income, partially offset by higher other operation and maintenance expenses and higher depreciation and amortization expenses.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Net income decreased $3.2 million primarily due to higher other operation and maintenance expenses and higher depreciation and amortization expenses, partially offset by higher volume/weather, higher retail electric price, and higher other income.

Operating Revenues

Second Quarter 2024 Compared to Second Quarter 2023

Following is an analysis of the change in operating revenues comparing the second quarter 2024 to the second quarter 2023:


			Amount
			(In Millions)
2023 operating revenues			$464.4
Fuel, rider, and other revenues that do not significantly affect net income			32.5
Volume/weather			22.6
Retail electric price			(0.4)
2024 operating revenues			$519.1

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 primarily due to the effect of more favorable weather on residential and commercial sales and an increase in weather-adjusted residential and commercial usage. The increase in weather-adjusted residential usage is primarily due to an increase in customers.

The retail electric price variance is insignificant and primarily due to the implementation of the generation cost recovery relate-back rider for the Hardin County Peaking Facility effective over three months beginning in May 2023, substantially offset by an increase in base rates effective June 2023. See Note 2 to the financial statements in the Form 10-K for discussion of the generation cost recovery rider filings and the 2022 base rate case.

Entergy Texas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

Total electric energy sales for Entergy Texas for the three months ended June 30, 2024 and 2023 are as follows:


	2024	2023	% Change
	(GWh)
Residential	1,778	1,667	7
Commercial	1,234	1,181	4
Industrial	2,404	2,399	—
Governmental	68	67	1
Total retail	5,484	5,314	3
Sales for resale:
Non-associated companies	229	136	68
Total	5,713	5,450	5

See Note 12 to the financial statements herein for additional discussion of Entergy Texas’s operating revenues.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Following is an analysis of the change in operating revenues comparing the six months ended June 30, 2024 to the six months ended June 30, 2023:


			Amount
			(In Millions)
2023 operating revenues			$971.9
Fuel, rider, and other revenues that do not significantly affect net income			(40.8)
Retail electric price			9.2
Volume/weather			23.3
2024 operating revenues			$963.6

The retail electric price variance is primarily due to an increase in base rates effective June 2023, partially offset by the implementation of the generation cost recovery relate-back rider for the Hardin County Peaking Facility effective over three months beginning in May 2023. See Note 2 to the financial statements in the Form 10-K for discussion of the 2022 base rate case and the generation cost recovery rider filings.

The volume/weather variance is primarily due to the effect of more favorable weather on residential sales and an increase in weather-adjusted residential usage. The increase in weather-adjusted residential usage is primarily due to an increase in customers.

Entergy Texas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

Total electric energy sales for Entergy Texas for the six months ended June 30, 2024 and 2023 are as follows:


	2024	2023	% Change
	(GWh)
Residential	3,089	2,914	6
Commercial	2,317	2,241	3
Industrial	4,458	4,592	(3)
Governmental	131	130	1
Total retail	9,995	9,877	1
Sales for resale:
Non-associated companies	346	239	45
Total	10,341	10,116	2

See Note 12 to the financial statements herein for additional discussion of Entergy Texas’s operating revenues.

Other Income Statement Variances

Second Quarter 2024 Compared to Second Quarter 2023

Other operation and maintenance expenses increased primarily due to:

a gain of $6.9 million on the partial sale of a service center in April 2023 as part of an eminent domain proceeding;
an increase of $2.3 million in power delivery expenses primarily due to higher transmission line inspection costs and higher transmission and distribution repairs and maintenance costs, partially offset by lower vegetation maintenance costs;
an increase of $2.0 million in contract costs related to operational performance, customer service, and organizational health initiatives;
an increase of $2.0 million in storm damage provisions;
an increase of $1.8 million in compensation and benefits costs primarily due to higher healthcare claims activity in 2024; and
an increase of $1.6 million in non-nuclear generation expenses primarily due to a higher scope of work performed in 2024 as compared to 2023.

Depreciation and amortization expenses increased primarily due to:

the recognition of $13.8 million in depreciation expense in second quarter 2024 for the 2022 base rate case relate back period, effective over six months beginning January 2024. The recognition of depreciation expense for the relate back period is effective over the same period as collections from the relate back surcharge rider and results in no effect on net income;
an increase in depreciation rates effective with an increase in base rates in June 2023; and
additions to plant in service.

See Note 2 to the financial statements in the Form 10-K for discussion of the 2022 base rate case.

Entergy Texas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

Interest expense increased primarily due to the issuance of $350 million of 5.80% Series mortgage bonds in August 2023, partially offset by an increase in the allowance for borrowed funds used during construction due to higher construction work in progress in 2024, including the Orange County Advanced Power Station project.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Other operation and maintenance expenses increased primarily due to:

a gain of $6.9 million on the partial sale of a service center in April 2023 as part of an eminent domain proceeding;
an increase of $5.1 million in power delivery expenses primarily due to higher transmission and distribution repairs and maintenance costs, higher reliability costs, and higher transmission line inspection costs, partially offset by lower vegetation maintenance costs;
an increase of $4.5 million in compensation and benefits costs primarily due to higher healthcare claims activity in 2024;
an increase of $3.7 million in storm damage provisions;
an increase of $3.6 million in contract costs related to operational performance, customer service, and organizational health initiatives;
an increase of $2.8 million in non-nuclear generation expenses primarily due to a higher scope of work performed in 2024 as compared to 2023; and
several individually insignificant items.

Depreciation and amortization expenses increased primarily due to:

the recognition of $27.6 million in depreciation expense in 2024 for the 2022 base rate case relate back period, effective over six months beginning January 2024. The recognition of depreciation expense for the relate back period is effective over the same period as collections from the relate back surcharge rider and results in no effect on net income;
an increase in depreciation rates effective with an increase in base rates in June 2023; and
additions to plant in service.

See Note 2 to the financial statements in the Form 10-K for discussion of the 2022 base rate case.

Other income increased primarily due to an increase in the allowance for equity funds used during construction due to higher construction work in progress in 2024, including the Orange County Advanced Power Station project, and higher interest earned on money pool investments. The increase was partially offset by an increase of $4 million in net periodic pension and other postretirement benefit non-service costs as a result of an increase in amortizations of the previously deferred surplus and deferrals of the deficit in the annual amount of actuarially determined pension and other postretirement benefits chargeable under the Entergy Texas reserve. See Note 11 to the financial statements in the Form 10-K for further discussion of the Entergy Texas reserve.

Income Taxes

The effective income tax rates were 18.4% for the second quarter 2024 and 18.6% for the six months ended June 30, 2024. The differences in the effective income tax rates for the second quarter 2024 and the six months ended June 30, 2024 versus the federal statutory rate of 21% were primarily due to book and tax differences related to the allowance for equity funds used during construction and certain book and tax differences related to utility plant items.

Entergy Texas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

The effective income tax rates were 19.6% for the second quarter 2023 and 19.4% for the six months ended June 30, 2023. The differences in the effective income tax rates for the second quarter 2023 and the six months ended June 30, 2023 versus the federal statutory rate of 21% were primarily due to book and tax differences related to the allowance for equity funds used during construction and certain book and tax differences related to utility plant items, partially offset by the accrual for state income taxes.

Income Tax Legislation and Regulation

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Income Tax Legislation and Regulation” herein and in the Form 10-K for discussion of income tax legislation and regulation.

Liquidity and Capital Resources

Cash Flow

Cash flows for the six months ended June 30, 2024 and 2023 were as follows:


	2024	2023
	(In Thousands)
Cash and cash equivalents at beginning of period	$21,986	$3,497

Net cash provided by (used in):
Operating activities	292,420	308,266
Investing activities	(215,942)	(319,798)
Financing activities	26,442	10,857
Net increase (decrease) in cash and cash equivalents	102,920	(675)

Cash and cash equivalents at end of period	$124,906	$2,822

Operating Activities

Net cash flow provided by operating activities decreased $15.8 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to the timing of payments to vendors, lower collections from customers, and an increase of $12.5 million in interest paid. The decrease was partially offset by a decrease of $24.6 million in income taxes paid in 2024 as a result of lower estimated income tax payments in comparison to 2023 and a decrease of $9.7 million in storm spending in 2024 as compared to 2023.

Investing Activities

Net cash flow used in investing activities decreased $103.9 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to money pool activity and a decrease of $23.3 million in non-nuclear generation construction expenditures primarily due to lower spending on the Orange County Advanced Power Station project in 2024 as compared to 2023, partially offset by higher spending on the Legend Power Station and Lone Star Power Station projects in 2024. The decrease was partially offset by:

an increase of $55.2 million in transmission construction expenditures primarily due to increased spending on various transmission projects in 2024;
an increase of $50.8 million in distribution construction expenditures primarily due to higher capital expenditures as a result of increased development in Entergy Texas’s service area and higher capital expenditures for storm restoration in 2024;

Entergy Texas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

cash collateral of $12.7 million posted in 2024 to support Entergy Texas’s obligations to MISO; and
the partial sale of a service center in April 2023 for $11 million as part of an eminent domain proceeding.

Decreases in Entergy Texas’s receivable from the money pool are a source of cash flow, and Entergy Texas’s receivable from the money pool decreased $296.7 million for the six months ended June 30, 2024 compared to decreasing by $98.6 million for the six months ended June 30, 2023. The money pool is an intercompany cash management program that makes possible intercompany borrowing and lending arrangements, and the money pool and other borrowing arrangements are designed to reduce the Registrant Subsidiaries’ dependence on external short-term borrowings.

Financing Activities

Net cash flow provided by financing activities increased $15.6 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to an increase of $16.3 million in prepaid deposits related to contributions-in-aid-of-construction primarily for customer and generator interconnection agreements.

Capital Structure

Entergy Texas’s debt to capital ratio is shown in the following table. The decrease in the debt to capital ratio for Entergy Texas is primarily due to net income in 2024.


	June 30, 2024		December 31, 2023
Debt to capital	49.9	%	50.9	%
Effect of excluding securitization bonds	(2.0	%)	(2.1	%)
Debt to capital, excluding securitization bonds (non-GAAP) (a)	47.9	%	48.8	%
Effect of subtracting cash	(1.1	%)	(0.2	%)
Net debt to net capital, excluding securitization bonds (non-GAAP) (a)	46.8	%	48.6	%

(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. The debt to capital ratio excluding securitization bonds and net debt to net capital ratio excluding securitization bonds are non-GAAP measures. Entergy Texas uses the debt to capital ratios excluding securitization bonds in analyzing its financial condition and believes they provide useful information to its investors and creditors in evaluating Entergy Texas’s financial condition because the securitization bonds are non-recourse to Entergy Texas, as more fully described in Note 5 to the financial statements in the Form 10-K. Entergy Texas also uses the net debt to net capital ratio excluding securitization bonds in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Texas’s financial condition because net debt indicates Entergy Texas’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.

Entergy Texas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

Uses and Sources of Capital

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

Following are the current annual amounts of Entergy Texas’s planned construction and other capital investments.


	2024	2025	2026
	(In Millions)
Planned construction and capital investment:
Generation	$435	$800	$825
Transmission	315	320	375
Distribution	470	415	360
Utility Support	45	25	45
Total	$1,265	$1,560	$1,605

The updated capital plan for 2024-2026 reflects a change in the timing of capital investment in certain potential generation projects. In addition to routine capital spending to maintain operations, the capital plan includes investments in generation projects to modernize, decarbonize, and diversify Entergy Texas’s portfolio, including Orange County Advanced Power Station, Lone Star Power Station, Segno Solar, and Votaw Solar; distribution and Utility support spending to improve reliability, resilience, and customer experience; transmission spending to improve reliability and resilience while also supporting renewables expansion and customer growth; and other investments.

Entergy Texas’s receivables from the money pool were as follows:


June 30, 2024	December 31, 2023	June 30, 2023	December 31, 2022
(In Thousands)
$21,212	$317,882	$899	$99,468

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 $300 million scheduled to expire in June 2029. 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 June 30, 2024, there were no cash borrowings and $1.1 million in 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 June 30, 2024, $79.7 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.

Legend Power Station and Lone Star Power Station

In June 2024, Entergy Texas filed an application seeking PUCT approval to amend Entergy Texas’s certificate of convenience and necessity to construct, own, and operate the Legend Power Station, a 754 MW combined-cycle combustion turbine facility, which will be enabled with both carbon capture and storage and hydrogen co-firing optionality, to be located in Jefferson County, Texas, and the Lone Star Power Station, a 453 MW simple-cycle combustion turbine facility, which will be enabled with hydrogen co-firing optionality, to be located in Liberty County, Texas. Legend Power Station will cost an estimated $1.46 billion and Lone Star Power Station will cost an estimated $735.3 million, in each case inclusive of the estimated costs of the generation

Entergy Texas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

facilities, interconnection costs, transmission network upgrades, and an allowance for funds used during construction. As described in the application, Entergy Texas is considering alternative financing approaches for Legend Power Station and plans to pursue the financing option that is in the best interest of customers. In July 2024 the PUCT referred the proceeding to the State Office of Administrative Hearings and, also in July 2024, the ALJ with the State Office of Administrative Hearings adopted a procedural schedule, with a hearing on the merits scheduled to begin in October 2024. Subject to receipt of required regulatory approval and other conditions, both facilities are expected to be in service by mid-2028.

Segno Solar and Votaw Solar

In July 2024, Entergy Texas filed an application seeking PUCT approval to amend Entergy Texas’s certificate of convenience and necessity to construct, own, and operate the Segno Solar facility, a 170 MW solar facility to be located in Polk County, Texas, and the Votaw Solar facility, a 141 MW solar facility to be located in Hardin County, Texas. The Segno Solar facility will cost an estimated $351.6 million, and the Votaw Solar facility will cost an estimated $303.8 million, in each case inclusive of estimated transmission interconnection and upgrade costs. Subject to receipt of required regulatory approval and other conditions, the Segno Solar facility is expected to be in service by early 2027, and the Votaw Solar facility is expected to be in service by mid-2028.

Resilience and Grid Hardening

In June 2024, Entergy Texas filed an application with the PUCT requesting approval of Phase I of its Texas Future Ready Resiliency Plan, a cost-effective set of measures to begin accelerating the resiliency of Entergy Texas’s transmission and distribution system. Phase I is comprised of projects totaling approximately $335.1 million, including approximately $198 million of projects contingent upon Entergy Texas’s receipt of grant funds in that amount from the Texas Energy Fund. The projects in Phase I include distribution and transmission hardening and modernization projects and targeted vegetation management projects to mitigate the risk of wildfire. Work on these projects is expected to commence within approximately three years of PUCT approval. The PUCT referred the proceeding to the State Office of Administrative Hearings in June 2024. In July 2024, Entergy Texas filed a motion, on behalf of the parties to the proceeding, requesting the ALJ with the State Office of Administrative Hearings adopt an agreed proposed procedural schedule, with a hearing on the merits scheduled for September 2024. A PUCT decision is expected in fourth quarter 2024.

Hurricane Beryl

In July 2024, Hurricane Beryl caused extensive damage to Entergy Texas’s service area. The storm resulted in widespread power outages, as a result of extensive debris and damage to distribution and transmission infrastructure, and the loss of sales during the power outages. Total restoration costs for the repair and/or replacement of Entergy Texas’s electric facilities damaged by Hurricane Beryl are currently estimated to be in the range of $75 million to $85 million. Based on the historic treatment of such costs in Entergy Texas’s service area, management believes that recovery of restoration costs is probable. There are well established mechanisms and precedent for addressing these catastrophic events and providing for recovery of prudently incurred storm costs in accordance with applicable regulatory and legal principles. Because Entergy Texas has not gone through the regulatory process regarding these storm costs, however, there is an element of risk, and Entergy Texas is unable to predict with certainty the degree of success it may have in its recovery initiatives, the amount of restoration costs that it may ultimately recover, or the timing of such recovery.

Entergy Texas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

State and Local Rate Regulation and Fuel-Cost Recovery

Retail Rates

2022 Base Rate Case

As discussed in the Form 10-K, in August 2023 the PUCT issued an order severing issues related to electric vehicle charging infrastructure in the 2022 base rate case proceeding to a separate proceeding. In December 2023 the PUCT referred the separate proceeding to resolve the issues related to electric vehicle charging infrastructure to the State Office of Administrative Hearings. A hearing on the merits was held in April 2024. In June 2024 the ALJ with the State Office of Administrative Hearings issued a proposal for decision concluding that it is appropriate for a vertically integrated electric utility, and Entergy Texas specifically, to own vehicle-charging facilities or other transportation electrification and charging infrastructure and recommending that both of Entergy Texas’s proposed transportation electrification riders be approved. A PUCT decision is expected in third quarter 2024.

Distribution Cost Recovery Factor (DCRF) Rider

In June 2024, Entergy Texas filed with the PUCT a request to set a new DCRF rider. The proposed rider is designed to collect from Entergy Texas’s retail customers approximately $40.3 million annually based on its capital invested in distribution between January 1, 2022 and March 31, 2024. The PUCT adopted a procedural schedule in July 2024. A PUCT decision is expected in third quarter 2024.

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.

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

Critical Accounting Estimates

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy Texas’s

Entergy Texas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

accounting for utility regulatory accounting, taxation and uncertain tax positions, qualified pension and other postretirement benefits, and other contingencies.

New Accounting Pronouncements


ENTERGY TEXAS, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
For the Three and Six Months Ended June 30, 2024 and 2023
(Unaudited)

	Three Months Ended		Six Months Ended
	2024	2023	2024	2023
	(In Thousands)		(In Thousands)
OPERATING REVENUES
Electric	$519,077	$464,430	$963,568	$971,936

OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale	115,520	63,526	211,657	231,056
Purchased power	88,713	112,883	183,056	220,641
Other operation and maintenance	83,176	63,071	161,136	127,501
Taxes other than income taxes	22,979	28,717	47,546	56,713
Depreciation and amortization	90,824	66,009	180,329	125,400
Other regulatory charges (credits) - net	(12,477)	1,526	(13,452)	12,450
TOTAL	388,735	335,732	770,272	773,761

OPERATING INCOME	130,342	128,698	193,296	198,175

OTHER INCOME
Allowance for equity funds used during construction	10,834	6,760	20,082	11,849
Interest and investment income	2,791	846	6,695	2,263
Miscellaneous - net	(3,186)	(1,941)	(5,498)	(1,502)
TOTAL	10,439	5,665	21,279	12,610

INTEREST EXPENSE
Interest expense	34,483	26,847	66,449	53,809
Allowance for borrowed funds used during construction	(4,219)	(2,517)	(7,821)	(4,413)
TOTAL	30,264	24,330	58,628	49,396

INCOME BEFORE INCOME TAXES	110,517	110,033	155,947	161,389

Income taxes	20,295	21,576	28,981	31,259

NET INCOME	90,222	88,457	126,966	130,130

Preferred dividend requirements	518	518	1,036	1,036

EARNINGS APPLICABLE TO COMMON STOCK	$89,704	$87,939	$125,930	$129,094

See Notes to Financial Statements.

(Page left blank intentionally)


ENTERGY TEXAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2024 and 2023
(Unaudited)
	2024	2023
	(In Thousands)
OPERATING ACTIVITIES
Net income	$126,966	$130,130
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation and amortization	180,329	125,400
Deferred income taxes, investment tax credits, and non-current taxes accrued	21,112	23,480
Changes in assets and liabilities:
Receivables	(64,108)	12,534
Fuel inventory	1,877	(18,082)
Accounts payable	13,853	(5,725)
Taxes accrued	(21,155)	(45,549)
Interest accrued	(561)	(604)
Deferred fuel costs	80,220	98,042
Other working capital accounts	(9,386)	3,129
Provisions for estimated losses	(1,384)	455
Other regulatory assets	40,197	(19,688)
Other regulatory liabilities	(26,028)	(9,929)
Pension and other postretirement funded status	(8,190)	(4,191)
Other assets and liabilities	(41,322)	18,864
Net cash flow provided by operating activities	292,420	308,266

INVESTING ACTIVITIES
Construction expenditures	(522,890)	(448,550)
Allowance for equity funds used during construction	20,082	11,849
Proceeds from sale of assets	—	11,000
Changes in money pool receivable - net	296,670	98,569
Changes in securitization account	2,856	7,248
Decrease (increase) in other investments	(12,660)	86

Net cash flow used in investing activities	(215,942)	(319,798)

FINANCING ACTIVITIES

Retirement of long-term debt	(9,104)	(8,856)




Preferred stock dividends paid	(1,036)	(1,036)
Other	36,582	20,749
Net cash flow provided by financing activities	26,442	10,857

Net increase (decrease) in cash and cash equivalents	102,920	(675)
Cash and cash equivalents at beginning of period	21,986	3,497
Cash and cash equivalents at end of period	$124,906	$2,822

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized	$65,529	$53,019
Income taxes	$5,862	$30,500
Noncash investing activities:
Accrued construction expenditures	$343,525	$138,771

See Notes to Financial Statements.


ENTERGY TEXAS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, 2024 and December 31, 2023
(Unaudited)
	2024	2023
	(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash	$26	$1,497
Temporary cash investments	124,880	20,489
Total cash and cash equivalents	124,906	21,986
Securitization recovery trust account	2,340	5,195
Accounts receivable:
Customer	119,885	88,468
Allowance for doubtful accounts	(933)	(1,484)
Associated companies	31,932	329,941
Other	39,732	24,416
Accrued unbilled revenues	90,934	72,771
Total accounts receivable	281,550	514,112
Deferred fuel costs	58,799	139,019
Fuel inventory - at average cost	48,970	50,847
Materials and supplies - at average cost	146,412	123,020

Prepayments and other	41,518	35,232
TOTAL	704,495	889,411

OTHER PROPERTY AND INVESTMENTS
Investments in affiliates - at equity	130	214
Non-utility property - at cost (less accumulated depreciation)	376	376
Other	15,246	15,068
TOTAL	15,752	15,658

UTILITY PLANT
Electric	8,144,778	7,931,340
Construction work in progress	1,215,214	857,707
TOTAL UTILITY PLANT	9,359,992	8,789,047
Less - accumulated depreciation and amortization	2,472,681	2,363,919
UTILITY PLANT - NET	6,887,311	6,425,128

DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Other regulatory assets (includes securitization property of $243,478 as of June 30, 2024 and $250,324 as of December 31, 2023)	556,409	596,606
Other	159,392	129,769
TOTAL	715,801	726,375

TOTAL ASSETS	$8,323,359	$8,056,572

See Notes to Financial Statements.


ENTERGY TEXAS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
June 30, 2024 and December 31, 2023
(Unaudited)
	2024	2023
	(In Thousands)
CURRENT LIABILITIES

Accounts payable:
Associated companies	$56,359	$74,423
Other	238,679	195,703
Customer deposits	40,988	39,999
Taxes accrued	57,732	78,887
Interest accrued	30,724	31,285

Other	23,979	16,237
TOTAL	448,461	436,534

NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued	843,464	814,905
Accumulated deferred investment tax credits	7,589	7,963
Regulatory liability for income taxes - net	103,806	114,759
Other regulatory liabilities	27,938	43,013
Asset retirement cost liabilities	17,228	11,743
Accumulated provisions	8,096	9,480
Long-term debt (includes securitization bonds of $248,670 as of June 30, 2024 and $257,592 as of December 31, 2023)	3,216,909	3,225,092
Other	405,276	274,421
TOTAL	4,630,306	4,501,376

Commitments and Contingencies

EQUITY
Common stock, no par value, authorized 200,000,000 shares; issued and outstanding 46,525,000 shares in 2024 and 2023	49,452	49,452
Paid-in capital	1,200,125	1,200,125
Retained earnings	1,956,265	1,830,335
Total common shareholder's equity	3,205,842	3,079,912
Preferred stock without sinking fund	38,750	38,750
TOTAL	3,244,592	3,118,662

TOTAL LIABILITIES AND EQUITY	$8,323,359	$8,056,572

See Notes to Financial Statements.


ENTERGY TEXAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the Six Months Ended June 30, 2024 and 2023
(Unaudited)

		Common Equity
	Preferred Stock	Common Stock	Paid-in Capital	Retained Earnings	Total
	(In Thousands)

Balance at December 31, 2022	$38,750	$49,452	$1,050,125	$1,541,134	$2,679,461

Net income	—	—	—	41,673	41,673

Preferred stock dividends	—	—	—	(518)	(518)
Balance at March 31, 2023	38,750	49,452	1,050,125	1,582,289	2,720,616

Net income	—	—	—	88,457	88,457

Preferred stock dividends	—	—	—	(518)	(518)

Balance at June 30, 2023	$38,750	$49,452	$1,050,125	$1,670,228	$2,808,555








Balance at December 31, 2023	$38,750	$49,452	$1,200,125	$1,830,335	$3,118,662

Net income	—	—	—	36,744	36,744


Preferred stock dividends	—	—	—	(518)	(518)
Balance at March 31, 2024	38,750	49,452	1,200,125	1,866,561	3,154,888

Net income	—	—	—	90,222	90,222

Preferred stock dividends	—	—	—	(518)	(518)

Balance at June 30, 2024	$38,750	$49,452	$1,200,125	$1,956,265	$3,244,592






See Notes to Financial Statements.

SYSTEM ENERGY RESOURCES, INC.

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

System Energy’s principal asset 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 and in Note 2 to the financial statements in the Form 10-K, System Energy and the Unit Power Sales Agreement are currently the subject of several litigation proceedings at the FERC (or on appeal from the FERC to the United States Court of Appeals for the Fifth Circuit).

Results of Operations

Net Income

Second Quarter 2024 Compared to Second Quarter 2023

Net income decreased $0.9 million primarily due to the lower authorized rate of return on equity and capital structure limitations reflected in monthly bills issued to Entergy Arkansas effective with the November 2023 service month per the settlement agreement with the APSC and the lower authorized rate of return on equity and capital structure limitations reflected in monthly bills issued to Entergy New Orleans effective with the June 2024 service month per the settlement agreement with the City Council, substantially offset by an increase in operating revenues resulting from changes in rate base. See Note 2 to the financial statements herein and in the Form 10-K for discussion of the settlement with the APSC. See Note 2 to the financial statements herein for discussion of the settlement with the City Council.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Net income increased $2.7 million primarily due to an increase in operating revenues resulting from changes in rate base, partially offset by the lower authorized rate of return on equity and capital structure limitations reflected in monthly bills issued to Entergy Arkansas effective with the November 2023 service month per the settlement agreement with the APSC and the lower authorized rate of return on equity and capital structure limitations reflected in monthly bills issued to Entergy New Orleans effective with the June 2024 service month per the settlement agreement with the City Council. See Note 2 to the financial statements herein and in the Form 10-K for discussion of the settlement with the APSC. See Note 2 to the financial statements herein for discussion of the settlement with the City Council.

Income Taxes

The effective income tax rates were 23.2% for the second quarter 2024 and 21.7% for the six months ended June 30, 2024. The difference in the effective income tax rate for the second quarter 2024 versus the federal statutory rate of 21% was primarily due to the accrual for state income taxes, partially offset by book and tax differences related to the allowance for equity funds used during construction.

The effective income tax rates were 22.8% for the second quarter 2023 and 23.2% for the six months ended June 30, 2023. The differences in the effective income tax rates for the second quarter 2023 and the six months ended June 30, 2023 versus the federal statutory rate of 21% were primarily due to the accrual for state income taxes, partially offset by certain book and tax differences related to utility plant items.

System Energy Resources, Inc.

Management’s Financial Discussion and Analysis

Income Tax Legislation and Regulation

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Income Tax Legislation and Regulation” herein and in the Form 10-K for discussion of income tax legislation and regulation.

Liquidity and Capital Resources

Cash Flow

Cash flows for the six months ended June 30, 2024 and 2023 were as follows:


	2024	2023
	(In Thousands)
Cash and cash equivalents at beginning of period	$60	$2,940

Net cash provided by (used in):
Operating activities	27,420	60,571
Investing activities	(216,666)	11,262
Financing activities	220,264	(26,518)
Net increase in cash and cash equivalents	31,018	45,315

Cash and cash equivalents at end of period	$31,078	$48,255

Operating Activities

Net cash flow provided by operating activities decreased $33.2 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to:

the refund of $92 million made in May 2024 to Entergy Arkansas as a result of the settlement with the APSC. See Note 2 to the financial statements herein and in the Form 10-K for discussion of the settlement with the APSC;
an increase in spending of $20.1 million on nuclear refueling outage costs in 2024 as compared to 2023; and
the timing of collection of receivables.

The decrease was partially offset by:

aggregate refunds of $103.5 million made in January 2023 related to the sale-leaseback renewal costs and depreciation litigation as calculated in System Energy’s January 2023 compliance report filed with the FERC. See Note 2 to the financial statements in the Form 10-K for further discussion of the refunds and the related proceedings; and
refunds of $19.3 million included in May 2023 service month bills under the Unit Power Sales Agreement to reflect the effects of the partial settlement agreement approved by the FERC in April 2023. See Note 2 to the financial statements in the Form 10-K for discussion of the Unit Power Sales Agreement complaint.

System Energy Resources, Inc.

Management’s Financial Discussion and Analysis

Investing Activities

System Energy’s investing activities used $216.7 million of cash for the six months ended June 30, 2024 compared to providing $11.3 million of cash for the six months ended June 30, 2023 primarily due to the following activity:

an increase in cash used of $108.8 million as a result of fluctuations in nuclear fuel activity due to variations from year to year in the timing and pricing of fuel reload requirements, material and services deliveries, and the timing of cash payments during the nuclear fuel cycle;
money pool activity; and
an increase of $38.1 million in nuclear construction expenditures primarily due to higher spending in 2024 on Grand Gulf outage projects and upgrades.

Increases in System Energy’s receivable from the money pool are a use of cash flow and System Energy’s receivable from the money pool increased $5.2 million for the six months ended June 30, 2024 compared to decreasing by $80.1 million for the six months ended June 30, 2023. The money pool is an intercompany cash management program that makes possible intercompany borrowing and lending arrangements, and the money pool and other borrowing arrangements are designed to reduce the Registrant Subsidiaries’ dependence on external short-term borrowings.

Financing Activities

System Energy’s financing activities provided $220.3 million of cash for the six months ended June 30, 2024 compared to using $26.5 million of cash for the six months ended June 30, 2023 primarily due to the following activity:

the repayment, at maturity, of $250 million of 4.10% Series mortgage bonds in April 2023;
a capital contribution of $150 million received from Entergy Corporation in January 2024 in order to maintain System Energy’s capital structure;
net long-term borrowings of $82.6 million in 2024 compared to net repayments of $34.8 million in 2023 on the nuclear fuel company variable interest entity’s credit facility;
the repayment, prior to maturity, in March 2023 of a $50 million term loan due in November 2023;
the issuance of $325 million of 6.00% Series mortgage bonds in March 2023; and
money pool activity.

Decreases in System Energy’s payable to the money pool are a use of cash flow, and System Energy’s payable to the money pool decreased $12.2 million for the six months ended June 30, 2024.

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 decrease in the debt to capital ratio for System Energy is primarily due to the capital contribution of $150 million received from Entergy Corporation in 2024, partially offset by the net issuance of long-term debt in 2024.


	June 30, 2024		December 31, 2023
Debt to capital	42.9	%	45.4	%
Effect of subtracting cash	(0.9	%)	—	%
Net debt to net capital (non-GAAP)	42.0	%	45.4	%

System Energy Resources, Inc.

Management’s Financial Discussion and Analysis

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. The net debt to net capital ratio is a non-GAAP measure. System Energy uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating System Energy’s financial condition because net debt indicates System Energy’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.

Uses and Sources of Capital

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

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


June 30, 2024	December 31, 2023	June 30, 2023	December 31, 2022
(In Thousands)
$5,238	($12,246)	$14,880	$94,981

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 2027. As of June 30, 2024, $104.1 million in loans were outstanding under the System Energy nuclear fuel company variable interest entity credit facility. See Note 4 to the financial statements herein for additional discussion of the variable interest entity credit facility.

Federal Regulation

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

Complaints Against System Energy

See Note 2 to the financial statements in the Form 10-K for information regarding pending complaints against System Energy. System Energy and the Unit Power Sales Agreement are currently the subject of several litigation proceedings at the FERC (or on appeal from the FERC to the United States Court of Appeals for the Fifth Circuit), including challenges with respect to System Energy’s authorized return on equity and capital structure, renewal of its sale-leaseback arrangement, treatment of uncertain tax positions, a broader investigation of rates under the Unit Power Sales Agreement, and two prudence complaints, one challenging the extended power uprate completed at Grand Gulf in 2012 and the operation and management of Grand Gulf, particularly in the 2016-2020 time period, and the second challenging the operation and management of Grand Gulf in the 2021-2022 time period. Settlements that resolve all significant aspects of these complaints have been reached with the MPSC and the APSC and approved by the FERC. A settlement has been reached with the City Council and is pending FERC approval, as described in “System Energy Settlement with the City Council” below. An agreement in principle has been reached with the LPSC staff, as described in “System Energy Settlement with the LPSC” below. If the settlement with the City Council is approved by the FERC and the settlement with the LPSC staff is approved by the LPSC and

System Energy Resources, Inc.

Management’s Financial Discussion and Analysis

the FERC, it would resolve all significant aspects of these pending complaints. The following are updates to the discussion in the Form 10-K.

Return on Equity and Capital Structure Complaints

As discussed in the Form 10-K, in March 2021 the FERC ALJ issued an initial decision in the proceeding initiated by the LPSC, the MPSC, the APSC, and the City Council against System Energy regarding the return on equity component of the Unit Power Sales Agreement. With regard to System Energy’s authorized return on equity, the ALJ determined that the existing return on equity of 10.94% is no longer just and reasonable, and that the replacement authorized return on equity, based on application of the FERC’s 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 $25.3 million, which includes interest through June 30, 2024, and the estimated resulting annual rate reduction would be approximately $15 million. As a result of the settlement agreements with the MPSC and the APSC, both the estimated refund and rate reduction exclude Entergy Mississippi's and Entergy Arkansas’s portions. See “System Energy Settlement with the MPSC” in the Form 10-K and see “System Energy Settlement with the APSC” below and in the Form 10-K for discussion of the settlements. The estimated refund will continue to accrue interest until a final FERC decision is issued.

The ALJ initial decision is an interim step in the FERC litigation process, and an ALJ’s determinations made in an initial decision are not controlling on the FERC. In April 2021, System Energy filed its brief on exceptions, in which it challenged the initial decision’s findings on both the return on equity and capital structure issues. Also in April 2021 the LPSC, the APSC, the MPSC, the City Council, and the FERC trial staff filed briefs on exceptions. Reply briefs opposing exceptions were filed in May 2021 by System Energy, the FERC trial staff, the LPSC, the APSC, the MPSC, and the City Council. Refunds, if any, that might be required will only become due after the FERC issues its order reviewing the initial decision.

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

As discussed in the Form 10-K, in May 2018 the LPSC filed a complaint against System Energy and Entergy Services related to System Energy’s renewal of a sale-leaseback transaction originally entered into in December 1988 for an 11.5% undivided interest in Grand Gulf Unit 1. The APSC, the MPSC, and the City Council subsequently intervened in the proceeding. A hearing was held before a FERC ALJ in November 2019. In April 2020 the ALJ issued the initial decision, and in December 2022 the FERC issued an order on the ALJ’s initial decision, which affirmed it in part and modified it in part. The FERC’s order directed System Energy to calculate refunds on three issues, and to provide a compliance report detailing the calculations. The FERC’s order also disallows the future recovery of sale-leaseback renewal costs, which is estimated at approximately $11.5 million annually for purchases from Entergy Arkansas, Entergy Louisiana, and Entergy New Orleans through July 2036. The three refund issues are rental expenses related to the renewal of the sale-leaseback arrangements; refunds, if any, for the revenue requirement impact of including accumulated deferred income taxes resulting from the decommissioning uncertain tax positions from 2004 through the present; and refunds for the net effect of correcting the depreciation inputs for capital additions attributable to the portion of plant subject to the sale-leaseback.

In January 2023, System Energy filed its compliance report with the FERC. With respect to the sale-leaseback renewal costs, System Energy calculated a refund of $89.8 million, which represented all of the sale-

System Energy Resources, Inc.

Management’s Financial Discussion and Analysis

leaseback renewal rental costs that System Energy recovered in rates, with interest. With respect to the decommissioning uncertain tax position issue, System Energy calculated that no additional refunds are owed because it had already provided a one-time historical credit (for the period January 2016 through September 2020) of $25.2 million based on the accumulated deferred income taxes that resulted from the IRS’s partial acceptance of the decommissioning tax position, and because it has been providing an ongoing rate base credit for the accumulated deferred income taxes that resulted from the IRS’s partial acceptance of the decommissioning tax position since October 2020. With respect to the depreciation refund, System Energy calculated a refund of $13.7 million, which is the net total of a refund to customers for excess depreciation expense previously collected, plus interest, offset by the additional return on rate base that System Energy previously did not collect, without interest.

In January 2023, System Energy filed a request for rehearing of the FERC’s determinations in the December 2022 order on sale-leaseback refund issues and future lease cost disallowances, the FERC’s prospective policy on uncertain tax positions, and the proper accounting of System Energy’s accumulated deferred income taxes adjustment for the Tax Cuts and Jobs Act of 2017; and a motion for confirmation of its interpretation of the December 2022 order’s remedy concerning the decommissioning tax position. In January 2023 the retail regulators filed a motion for confirmation of their interpretation of the refund requirement in the December 2022 FERC order and a provisional request for rehearing. In February 2023 the FERC issued a notice that the rehearing requests have been deemed denied by operation of law. The deemed denial of the rehearing request initiated a sixty-day period in which aggrieved parties could petition for federal appellate court review of the underlying FERC orders; however, the FERC may issue a substantive order on rehearing as long as it continues to have jurisdiction over the case. In March 2023, System Energy filed in the United States Court of Appeals for the Fifth Circuit a petition for review of the December 2022 order. In March 2023, System Energy also filed an unopposed motion to stay the proceeding in the Fifth Circuit pending the FERC’s disposition of the pending motions, and the court granted the motion to stay.

In August 2023 the FERC issued an order addressing arguments raised on rehearing and partially setting aside the prior order (rehearing order). The rehearing order addresses rehearing requests that were filed in January 2023 separately by System Energy and the LPSC, the APSC, and the City Council.

In the rehearing order, the FERC directs System Energy to recalculate refunds for two issues: (1) refunds of rental expenses related to the renewal of the sale-leaseback arrangements and (2) refunds for the net effect of correcting the depreciation inputs for capital additions associated with the sale-leaseback. With regard to the sale-leaseback renewal rental expenses, the rehearing order allows System Energy to recover an implied return of and on the depreciated cost of the portion of the plant subject to the sale-leaseback as of the expiration of the initial lease term. With regard to the depreciation input issue, the rehearing order allows System Energy to offset refunds so that System Energy may collect interest on the rate base recalculations that were part of the overall depreciation rate recalculations. The rehearing order further directs System Energy to submit within 60 days of the date of the rehearing order an additional compliance filing to revise the total refunds for these two issues. As discussed above, System Energy’s January 2023 compliance filing calculated $103.5 million in total refunds, and the refunds were paid in January 2023. In October 2023, System Energy filed its compliance report with the FERC as directed in the August 2023 rehearing order. The October 2023 compliance report reflected recalculated refunds totaling $35.7 million for the two issues resulting in $67.8 million in refunds that could be recouped by System Energy. As discussed below in “System Energy Settlement with the APSC,” System Energy reached a settlement in principle with the APSC to resolve several pending cases under the FERC’s jurisdiction, including this one, pursuant to which it has agreed not to recoup the $27.3 million calculated for Entergy Arkansas in the compliance filing. Consistent with the compliance filing, in October 2023, Entergy Louisiana and Entergy New Orleans paid recoupment amounts of $18.2 million and $22.3 million, respectively, to System Energy.

On the third refund issue identified in the rehearing requests, concerning the decommissioning uncertain tax positions, the rehearing order denied all rehearing requests, re-affirmed the remedy contained in the December 2022 order, and did not direct System Energy to recalculate refunds or to submit an additional compliance filing. On this issue, as reflected in its January 2023 compliance filing, System Energy believes it has already paid the refunds due

System Energy Resources, Inc.

Management’s Financial Discussion and Analysis

under the remedy that the FERC outlined for the uncertain tax positions issue in its December 2022 order. In August 2023 the LPSC issued a media release in which it stated that it disagrees with System Energy’s determination that the rehearing order requires no further refunds to be made on this issue.

In September 2023, System Energy filed a protective appeal of the rehearing order with the United States Court of Appeals for the Fifth Circuit. The appeal was consolidated with System Energy’s prior appeal of the December 2022 order.

In September 2023 the LPSC filed with the FERC a request for rehearing and clarification of the rehearing order. The LPSC requests that the FERC reverse its determination in the rehearing order that System Energy may collect an implied return of and on the depreciated cost of the portion of the plant subject to the sale-leaseback, as of the expiration of the initial lease term, as well as its determination in the rehearing order that System Energy may offset the refunds for the depreciation rate input issue and collect interest on the rate base recalculations that were part of the overall depreciation rate recalculations. In addition, the LPSC requests that the FERC either confirm the LPSC’s interpretation of the refund associated with the decommissioning uncertain tax positions or explain why it is not doing so. In October 2023 the FERC issued a notice that the rehearing request has been deemed denied by operation of law. In November 2023 the FERC issued a further notice stating that it would not issue any further order addressing the rehearing request. Also in November 2023 the LPSC filed with the United States Court of Appeals for the Fifth Circuit a petition for review of the FERC’s August 2023 rehearing order and denials of the September 2023 rehearing request.

In December 2023 the United States Court of Appeals for the Fifth Circuit lifted the abeyance on the consolidated System Energy appeals, and it also consolidated the LPSC’s appeal with the System Energy appeals. In March 2024, separate petition briefs were filed by System Energy and by the LPSC. Also in March 2024, the City Council filed an intervenor brief supporting the LPSC. In June 2024 counsel for the FERC filed the respondent’s brief, arguing that the FERC’s August 2023 rehearing order concerning the sale-leaseback and depreciation rate remedy issues should be affirmed and arguing that the dispute over the uncertain tax position issue is not yet ripe. In July 2024, System Energy and the LPSC each filed separate reply briefs.

LPSC Additional Complaints

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

Unit Power Sales Agreement Complaint

As discussed in the Form 10-K, the first of the additional complaints was filed by the LPSC, the APSC, the MPSC, and the City Council in September 2020. The first complaint raises two sets of rate allegations: violations of the filed rate and a corresponding request for refunds for prior periods; and elements of the Unit Power Sales Agreement 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.

In November 2021 the LPSC, the APSC, and the City Council filed direct testimony and requested the FERC to order refunds for prior periods and prospective amendments to the Unit Power Sales Agreement. System Energy filed answering testimony in January 2022. In March 2022 the FERC trial staff filed direct and answering testimony recommending refunds and prospective modifications to the Unit Power Sales Agreement.

System Energy Resources, Inc.

Management’s Financial Discussion and Analysis

In April 2022, System Energy filed cross-answering testimony in response to the FERC trial staff’s recommendations. In June 2022 the FERC trial staff submitted revised answering testimony, in which it recommended additional refunds associated with the accumulated deferred income tax balances in account 190. Also in June 2022, System Energy filed revised and supplemental cross-answering testimony to respond to the FERC trial staff’s testimony and oppose its revised recommendation.

In May 2022 the LPSC, the APSC, and the City Council filed rebuttal testimony and asserted new claims. In June 2022 a new procedural schedule was adopted, providing for additional rounds of testimony and for the hearing to begin in September 2022. The hearing concluded in December 2022. Also in December 2022, a motion to extend the briefing schedule and the May 2023 deadline for the initial decision was granted.

In November 2022, System Energy filed a partial settlement agreement with the APSC, the City Council, and the LPSC that resolved the following issues raised in the Unit Power Sales Agreement complaint: advance collection of lease payments, aircraft costs, executive incentive compensation, money pool borrowings, advertising expenses, deferred nuclear refueling outage costs, industry association dues, and termination of the capital funds agreement. The settlement provided that System Energy would provide a black box refund of $18 million (inclusive of interest), plus additional refund amounts with interest to be calculated for certain issues to be distributed to Entergy Arkansas, Entergy Louisiana, and Entergy New Orleans as the Utility operating companies other than Entergy Mississippi purchasing under the Unit Power Sales Agreement. The settlement further provided that if the APSC, the City Council, or the LPSC agrees to the global settlement System Energy entered into with the MPSC (see “System Energy Settlement with the MPSC” in the Form 10-K for discussion of the settlement), and such global settlement includes a black box refund amount, then the black box refund for this settlement agreement shall not be incremental or in addition to the global black box refund amount. The settlement agreement addressed other matters as well, including adjustments to rate base beginning in October 2022, exclusion of certain other costs, and inclusion of money pool borrowings, if any, in short-term debt within the cost of capital calculation used in the Unit Power Sales Agreement. In April 2023 the FERC approved the settlement agreement. The refund provided for in the settlement agreement was included in the May 2023 service month bills under the Unit Power Sales Agreement.

In May 2023 the presiding ALJ issued an initial decision finding that System Energy should have excluded multiple identified categories of accumulated deferred income taxes from rate base when calculating Unit Power Sales Agreement bills. Based on this finding, the initial decision recommended refunds; System Energy estimates that those refunds for Entergy Louisiana and Entergy New Orleans would total approximately $69.9 million plus $97.8 million of interest through June 30, 2024. The initial decision also finds that the Unit Power Sales Agreement should be modified such that a cash working capital allowance of negative $36.4 million is applied prospectively. If the FERC ultimately orders these modifications to cash working capital be implemented, the estimated annual revenue requirement impact is expected to be immaterial. On the other non-settled issues for which the complainants sought refunds or changes to the Unit Power Sales Agreement, the initial decision ruled against the complainants.

The initial decision is an interim step in the FERC litigation process, and an ALJ’s determination made in an initial decision is not controlling on the FERC. System Energy disagrees with the ALJ’s findings concerning the accumulated deferred income taxes issues and cash working capital. In July 2023, System Energy filed a brief on exceptions to the initial decision’s accumulated deferred income taxes findings. Also in July 2023, the APSC, the LPSC, the City Council, and the FERC trial staff filed separate briefs on exceptions. The APSC’s brief on exceptions challenges the ALJ’s determinations on the money pool interest and retained earnings issues. The LPSC’s brief on exceptions challenges the ALJ’s determinations regarding the sale-leaseback transaction costs, legal fees, and retained earnings issues. The City Council’s brief on exceptions challenges the ALJ’s determinations on the money pool and cash management issues. The FERC trial staff’s brief on exceptions challenges the ALJ’s determinations on the cash working capital issue as well as certain of the accumulated deferred income taxes issues. In August 2023 all parties filed separate briefs opposing exceptions. System Energy filed a brief opposing the exceptions of the APSC, the LPSC, and the City Council. The APSC, the LPSC, and the City Council filed separate briefs opposing the exceptions raised by System Energy and the FERC trial staff. The FERC trial staff filed its own

System Energy Resources, Inc.

Management’s Financial Discussion and Analysis

brief opposing certain exceptions raised by System Energy, the APSC, the LPSC, and the City Council. The case is now pending a decision by the FERC. Refunds, if any, that might be required will become due only after the FERC issues its order reviewing the initial decision.

LPSC Petition for a Writ of Mandamus

In March 2024 the LPSC filed a petition for a writ of mandamus, requesting that the United States Court of Appeals for the Fifth Circuit direct the FERC to take action on (1) System Energy’s pending compliance filings (and the LPSC’s protests) in response to the FERC’s orders on the uncertain tax position rate base issue, as discussed above; and (2) the ALJ’s pending initial decision in the return on equity and capital structure proceeding, also as discussed above. System Energy filed a notice of intervention in the proceeding.

In March 2024 the United States Court of Appeals for the Fifth Circuit directed the FERC to respond to the LPSC’s petition. Also in March 2024, System Energy filed its response to the LPSC’s petition, in which it opposed the LPSC’s mandamus request on the compliance filing and took no position on the request for action on the return on equity and capital structure case. Later in March 2024, the FERC responded opposing both parts of the LPSC’s petition, and the LPSC filed an opposed motion for leave to answer and its answer to the FERC’s and System Energy’s responses. In July 2024 the Fifth Circuit held oral argument on the petition. During oral argument, the FERC’s counsel represented that the FERC intends to issue an order in the return on equity and capital structure proceeding by the end of the year. Later in July 2024 the Fifth Circuit issued an order denying the LPSC’s petition.

System Energy Settlement with the APSC

As discussed in the Form 10-K, in October 2023, System Energy, Entergy Arkansas, and additional named Entergy parties involved in multiple docketed proceedings pending before the FERC reached a settlement in principle with the APSC to globally resolve all of their actual and potential claims in those dockets and with System Energy’s past implementation of the Unit Power Sales Agreement. The settlement also covers the amended and supplemental complaint, discussed in “Grand Gulf Prudence Complaint” in the Form 10-K, filed by the LPSC, the APSC, and the City Council at the FERC in October 2023. System Energy, Entergy Arkansas, additional Entergy parties, and the APSC filed the settlement agreement and supporting materials with the FERC in November 2023. The Unit Power Sales Agreement is a FERC-jurisdictional formula rate tariff for sales of energy and capacity from System Energy’s owned and leased share of Grand Gulf to Entergy Mississippi, Entergy Arkansas, Entergy Louisiana, and Entergy New Orleans. System Energy previously settled with the MPSC with respect to these complaints before the FERC.

The terms of the settlement with the APSC align with the $588 million global black box settlement reached between System Energy and the MPSC in June 2022 and provide for Entergy Arkansas to receive a black box refund of $142 million from System Energy, inclusive of $49.5 million already received by Entergy Arkansas from System Energy. In November 2022 the FERC approved the System Energy settlement with the MPSC and stated that the settlement “appears to be fair and reasonable and in the public interest.”

In addition to the black box refund of $142 million described above, beginning with the November 2023 service month, the settlement provides for Entergy Arkansas’s bills from System Energy to be adjusted to reflect an authorized rate of return on equity of 9.65% and a capital structure not to exceed 52% equity.

In December 2023 the FERC trial staff and the LPSC filed comments. The FERC trial staff commented that it “believes that the settlement is fair, and in the public interest,” and neither it nor the LPSC oppose the settlement. In December 2023 the remaining black box refund to Entergy Arkansas was reclassified from long-term other regulatory liabilities to accounts payable - associated companies on System Energy’s balance sheet. In March 2024 the FERC approved the settlement “because it appears to be fair and reasonable and in the public interest.” System Energy paid the remaining black box refund of $92 million to Entergy Arkansas in May 2024.

System Energy Resources, Inc.

Management’s Financial Discussion and Analysis

System Energy Settlement with the City Council

In April 2024, System Energy, Entergy New Orleans, and additional named Entergy parties involved in multiple docketed proceedings pending before the FERC reached a settlement in principle with the City Council to globally resolve all of their actual and potential claims in those dockets and with System Energy’s past implementation of the Unit Power Sales Agreement. The settlement also covers the amended and supplemental complaint, discussed in “Grand Gulf Prudence Complaint” in the Form 10-K, filed by the LPSC, the APSC, and the City Council at the FERC in October 2023. In May 2024, System Energy, Entergy New Orleans, additional named Entergy parties, and the City Council filed the settlement agreement and supporting materials with the FERC. The Unit Power Sales Agreement is a FERC-jurisdictional formula rate tariff for sales of energy and capacity from System Energy’s owned and leased share of Grand Gulf to Entergy Mississippi, Entergy Arkansas, Entergy Louisiana, and Entergy New Orleans. As discussed above and in Note 2 to the financial statements in the Form 10-K, System Energy previously settled with the MPSC and the APSC with respect to these complaints before the FERC. Entergy Mississippi and Entergy Arkansas have nearly 65% of System Energy’s share of Grand Gulf’s output, after purchases from affiliates are considered. The settlements with the APSC, the MPSC, and the City Council represent almost 85% of System Energy’s share of the output of Grand Gulf.

The terms of the settlement with the City Council align with the $588 million global black box settlement amount reflected in the prior settlements reached between System Energy and the MPSC in June 2022 and between System Energy and the APSC in November 2023. The settlement provides for Entergy New Orleans to receive a black box refund of $116 million from System Energy, inclusive of approximately $18 million already received by Entergy New Orleans from System Energy. In November 2022 the FERC approved the System Energy settlement with the MPSC, and in March 2024 the FERC approved the System Energy settlement with the APSC. In both settlements, the FERC stated that the settlements “appear to be fair and reasonable and in the public interest.” In March 2024 the $98 million black box refund to Entergy New Orleans was reclassified from long-term other regulatory liabilities to accounts payable - associated companies on System Entergy’s balance sheet.

In addition to the black box refund of $116 million described above, beginning with the June 2024 service month, the settlement provides for Entergy New Orleans’s bills from System Energy to be adjusted to reflect an authorized rate of return on equity of 9.65% and a capital structure not to exceed 52% equity.

System Energy Settlement with the LPSC

In July 2024, System Energy and the LPSC staff reached a settlement in principle to globally resolve all of the LPSC’s actual and potential claims in multiple docketed proceedings pending before the FERC (including all docketed proceedings resolved by the MPSC, the APSC, and the City Council settlements) and with System Energy’s past implementation of the Unit Power Sales Agreement. The settlement also covers the amended and supplemental complaint, discussed in “Grand Gulf Prudence Complaint” in the Form 10-K, filed by the LPSC, the APSC, and the City Council at the FERC in October 2023. The settling parties intend to file the settlement for approval by the FERC following the LPSC’s approval of the settlement.

The terms of the settlement with the LPSC staff align with the $588 million global black box settlement amount reflected in the prior settlements reached between System Energy and the MPSC in June 2022, between System Energy and the APSC in November 2023, and between System Energy and the City Council in April 2024. The settlement in principle provides for Entergy Louisiana to receive a black box refund of $95 million from System Energy, inclusive of approximately $15 million already received by Entergy Louisiana from System Energy. In June 2024 the remaining $80 million black box refund to Entergy Louisiana was reclassified from long-term other regulatory liabilities to accounts payable - associated companies on System Entergy’s balance sheet.

In addition to the black box refund of $95 million described above, beginning with the September 2024 service month, the settlement provides for Entergy Louisiana’s bills from System Energy to be adjusted to reflect an authorized rate of return on equity of 9.65% and a capital structure not to exceed 52% equity.

System Energy Resources, Inc.

Management’s Financial Discussion and Analysis

System Energy Regulatory Liability for Pending Complaints

As discussed in the Form 10-K, System Energy had recorded a regulatory liability related to complaints against System Energy, which was consistent with the settlement agreements reached with the MPSC and the APSC, taking into account amounts already or expected to be refunded. System Energy’s remaining regulatory liability related to complaints against System Energy as of December 31, 2023 was $178 million. As discussed above in “System Energy Settlement with the City Council,” in first quarter 2024 the $98 million black box refund to Entergy New Orleans was reclassified from the regulatory liability to accounts payable - associated companies on System Energy’s balance sheet. As discussed above in “System Energy Settlement with the LPSC,” in second quarter 2024 the $80 million black box refund to Entergy Louisiana was reclassified from the regulatory liability to accounts payable - associated companies on System Energy’s balance sheet.

Unit Power Sales Agreement

System Energy Formula Rate Annual Protocols Formal Challenge Concerning 2022 Calendar Year Bills

In February 2024, pursuant to the protocols procedures discussed in Note 2 to the financial statements in the Form 10-K, the LPSC and the City Council filed with the FERC a formal challenge to System Energy’s implementation of the formula rate during calendar year 2022. The formal challenge alleges: (1) that the equity ratio charged in rates was excessive; and (2) that all issues in the pending Unit Power Sales Agreement complaint proceeding should also be reflected in calendar year 2022 bills. These allegations are identical to issues that were raised in the formal challenge to the calendar year 2020 and 2021 bills.

In March 2024, 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.

Pension Costs Amendment Proceeding

As discussed in the Form 10-K, in October 2021, System Energy submitted to the FERC proposed amendments to the Unit Power Sales Agreement to include in the rate base the prepaid and accrued pension costs associated with System Energy’s qualified pension plans. Based on data ending in 2020, the increased annual revenue requirement associated with the filing is approximately $8.9 million. In March 2022 the FERC accepted System Energy’s proposed amendments with an effective date of December 1, 2021, subject to refund pending the outcome of the settlement and/or hearing procedures. In August 2023 the FERC chief ALJ terminated settlement procedures and designated a presiding ALJ to oversee hearing procedures. In October 2023, System Energy filed direct testimony in support of its proposed amendments. Under the procedural schedule, testimony was filed through April 2024, and the hearing occurred from late May through early June 2024. The presiding ALJ’s initial decision is expected in September 2024.

Nuclear Matters

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

Environmental Risks

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Management’s Financial Discussion and Analysis

Critical Accounting Estimates

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

New Accounting Pronouncements


SYSTEM ENERGY RESOURCES, INC.
INCOME STATEMENTS
For the Three and Six Months Ended June 30, 2024 and 2023
(Unaudited)

	Three Months Ended		Six Months Ended
	2024	2023	2024	2023
	(In Thousands)		(In Thousands)
OPERATING REVENUES
Electric	$145,934	$138,384	$298,554	$309,956

OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale	17,120	18,783	30,237	37,630
Nuclear refueling outage expenses	4,136	6,692	10,797	13,311
Other operation and maintenance	45,746	46,986	97,169	97,186
Decommissioning	10,815	10,391	21,522	20,678
Taxes other than income taxes	6,892	7,728	14,101	15,010
Depreciation and amortization	30,443	35,303	60,121	72,440
Other regulatory charges (credits) - net	27,188	(32,415)	22,215	(38,874)
TOTAL	142,340	93,468	256,162	217,381

OPERATING INCOME	3,594	44,916	42,392	92,575

OTHER INCOME
Allowance for equity funds used during construction	1,451	1,605	3,885	3,423
Interest and investment income	38,967	1,638	46,940	7,402
Miscellaneous - net	(165)	(1,613)	72	(10,691)
TOTAL	40,253	1,630	50,897	134

INTEREST EXPENSE
Interest expense	12,072	13,635	23,243	24,126
Allowance for borrowed funds used during construction	(594)	(436)	(1,453)	(791)
TOTAL	11,478	13,199	21,790	23,335

INCOME BEFORE INCOME TAXES	32,369	33,347	71,499	69,374

Income taxes	7,521	7,588	15,533	16,070

NET INCOME	$24,848	$25,759	$55,966	$53,304

See Notes to Financial Statements.

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SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2024 and 2023
(Unaudited)
	2024	2023
	(In Thousands)
OPERATING ACTIVITIES
Net income	$55,966	$53,304
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation, amortization, and decommissioning, including nuclear fuel amortization	106,652	125,741
Deferred income taxes, investment tax credits, and non-current taxes accrued	28,258	17,865
Changes in assets and liabilities:
Receivables	(9,335)	13,558
Accounts payable	74,527	(26,332)
Prepaid taxes and taxes accrued	(19,301)	(10,704)
Interest accrued	(620)	3,035
Other working capital accounts	(27,233)	5,569
Other regulatory assets	21,178	(16,683)
Other regulatory liabilities	(115,256)	27,611
Pension and other postretirement funded status	(6,952)	(4,758)
Other assets and liabilities	(80,464)	(127,635)
Net cash flow provided by operating activities	27,420	60,571

INVESTING ACTIVITIES
Construction expenditures	(87,410)	(54,140)
Allowance for equity funds used during construction	3,885	3,423
Nuclear fuel purchases	(115,544)	(31,822)
Proceeds from sale of nuclear fuel	21	25,091
Decrease (increase) in other investments	23	(4)
Proceeds from nuclear decommissioning trust fund sales	455,082	151,463
Investment in nuclear decommissioning trust funds	(467,485)	(162,850)
Changes in money pool receivable - net	(5,238)	80,101

Net cash flow provided by (used in) investing activities	(216,666)	11,262

FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	544,736	585,898
Retirement of long-term debt	(462,226)	(612,416)
Capital contribution from parent	150,000	—

Change in money pool payable - net	(12,246)	—



Net cash flow provided by (used in) financing activities	220,264	(26,518)

Net increase in cash and cash equivalents	31,018	45,315
Cash and cash equivalents at beginning of period	60	2,940
Cash and cash equivalents at end of period	$31,078	$48,255

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized	$25,231	$20,289
Income taxes	($2,326)	$—
Noncash investing activities:
Accrued construction expenditures	$24,234	$17,741

See Notes to Financial Statements.


SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
ASSETS
June 30, 2024 and December 31, 2023
(Unaudited)
	2024	2023
	(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash	$240	$60
Temporary cash investments	30,838	—
Total cash and cash equivalents	31,078	60
Accounts receivable:
Associated companies	71,436	54,544
Other	4,542	6,861
Total accounts receivable	75,978	61,405

Materials and supplies - at average cost	164,087	155,565
Deferred nuclear refueling outage costs	28,625	8,603


Prepayments and other	8,512	3,373
TOTAL	308,280	229,006

OTHER PROPERTY AND INVESTMENTS
Decommissioning trust funds	1,450,321	1,342,317
TOTAL	1,450,321	1,342,317

UTILITY PLANT
Electric	5,597,910	5,495,728

Construction work in progress	84,886	130,866
Nuclear fuel	205,975	160,655
TOTAL UTILITY PLANT	5,888,771	5,787,249
Less - accumulated depreciation and amortization	3,525,638	3,493,299
UTILITY PLANT - NET	2,363,133	2,293,950

DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:

Other regulatory assets	425,182	446,360

Other	12,895	730
TOTAL	438,077	447,090

TOTAL ASSETS	$4,559,811	$4,312,363

See Notes to Financial Statements.


SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
LIABILITIES AND EQUITY
June 30, 2024 and December 31, 2023
(Unaudited)
	2024	2023
	(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt	$72	$57

Accounts payable:
Associated companies	187,787	118,523
Other	43,623	73,580
Taxes accrued	8,100	27,401

Interest accrued	12,334	12,954


Other	4,351	4,354
TOTAL	256,267	236,869

NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued	434,863	405,744
Accumulated deferred investment tax credits	45,278	46,960
Regulatory liability for income taxes - net	106,805	107,458
Other regulatory liabilities	668,309	782,912
Decommissioning	1,105,756	1,084,234
Pension and other postretirement liabilities	24,711	19,491
Long-term debt	822,762	738,402
Other	555	1,754
TOTAL	3,209,039	3,186,955

Commitments and Contingencies

COMMON EQUITY
Common stock, no par value, authorized 1,000,000 shares; issued and outstanding 789,350 shares in 2024 and 2023	1,066,850	916,850
Retained earnings (accumulated deficit)	27,655	(28,311)
TOTAL	1,094,505	888,539

TOTAL LIABILITIES AND EQUITY	$4,559,811	$4,312,363

See Notes to Financial Statements.


SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF CHANGES IN COMMON EQUITY
For the Six Months Ended June 30, 2024 and 2023
(Unaudited)

	Common Stock	Retained Earnings (Accumulated Deficit)	Total
	(In Thousands)

Balance at December 31, 2022	$1,086,850	($137,083)	$949,767

Net income	—	27,545	27,545

Balance at March 31, 2023	1,086,850	(109,538)	977,312

Net income	—	25,759	25,759

Balance at June 30, 2023	$1,086,850	($83,779)	$1,003,071






Balance at December 31, 2023	$916,850	($28,311)	$888,539

Net income	—	31,118	31,118
Capital contribution from parent	150,000	—	150,000

Balance at March 31, 2024	1,066,850	2,807	1,069,657

Net income	—	24,848	24,848

Balance at June 30, 2024	$1,066,850	$27,655	$1,094,505





See Notes to Financial Statements.

ENTERGY CORPORATION AND SUBSIDIARIES

PART II. OTHER INFORMATION

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