Item 4. Controls and Procedures

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Item 4. Controls and Procedures

Disclosure Controls and Procedures

As of September 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 September 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

Third Quarter 2024 Compared to Third Quarter 2023

Net income increased $86.6 million primarily due to write-offs in third quarter 2023 of $78.4 million ($58.8 million net-of-tax) recorded as a result of a commitment, made in October 2023, by Entergy Arkansas to the APSC to make a filing seeking to forgo recovery of identified costs resulting from the 2013 ANO stator incident. Also contributing to the increase were higher retail electric price, an $18.3 million reduction in income tax expense as a result of the resolution of an Arkansas state income tax audit, and higher other income, partially offset by lower volume/weather. See Note 8 to the financial statements in the Form 10-K for discussion of the ANO stator incident, Entergy Arkansas’s October 2023 commitment to the APSC, and the subsequently approved motion to forgo recovery. See Note 10 to the financial statements herein for discussion of the resolution of the Arkansas state income tax audit.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Net income increased $23.3 million primarily due to write-offs in third quarter 2023 of $78.4 million ($58.8 million net-of-tax) recorded as a result of a commitment, made in October 2023, by Entergy Arkansas to the APSC to make a filing seeking to forgo recovery of identified costs resulting from the 2013 ANO stator incident. Also contributing to the increase were higher retail electric price, higher other income, and higher volume/weather. The increase was partially offset by 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 and higher interest expense. See Note 8 to the financial statements in the Form 10-K for discussion of the ANO stator incident, Entergy Arkansas’s October 2023 commitment to the APSC, and the subsequently approved motion to forgo recovery. See Note 2 to the financial statements herein and in the Form 10-K for discussion of the opportunity sales proceeding.

Operating Revenues

Third Quarter 2024 Compared to Third Quarter 2023

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


			Amount
			(In Millions)
2023 operating revenues			$831.7
Fuel, rider, and other revenues that do not significantly affect net income			(82.7)
Retail one-time bill credit			(92.3)
Volume/weather			(16.2)
Retail electric price			21.6
2024 operating revenues			$662.1

Entergy Arkansas, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

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 retail one-time bill credit represents the disbursement of settlement proceeds in the form of a one-time bill credit provided to Entergy Arkansas’s retail customers during the August 2024 billing cycle through the Grand Gulf credit rider as a result of the System Energy settlement with the APSC. There is no effect on net income because Entergy Arkansas previously recorded a regulatory liability for the effects of the System Energy settlement with the APSC. See Note 2 to the financial statements herein and in the Form 10-K for discussion of the System Energy settlement with the APSC and see Note 2 to the financial statements herein for discussion of the Grand Gulf credit rider.

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

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


	2024	2023	% Change
	(GWh)
Residential	2,243	2,336	(4)
Commercial	1,650	1,680	(2)
Industrial	2,682	2,530	6
Governmental	54	60	(10)
Total retail	6,629	6,606	—
Sales for resale:
Associated companies	577	607	(5)
Non-associated companies	1,343	1,792	(25)
Total	8,549	9,005	(5)

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

Entergy Arkansas, LLC and Subsidiaries

Management's Financial Discussion and Analysis

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

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


			Amount
			(In Millions)
2023 operating revenues			$2,030.8
Fuel, rider, and other revenues that do not significantly affect net income			(114.6)
Retail one-time bill credit			(92.3)
Volume/weather			12.5
Retail electric price			56.6
2024 operating revenues			$1,893.0

The volume/weather variance is primarily due to the effect of an increase in residential and industrial usage. The increase in 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 nine months ended September 30, 2024 and 2023 are as follows:


	2024	2023	% Change
	(GWh)
Residential	6,018	5,905	2
Commercial	4,330	4,293	1
Industrial	7,466	6,806	10
Governmental	141	156	(10)
Total retail	17,955	17,160	5
Sales for resale:
Associated companies	1,562	1,683	(7)
Non-associated companies	3,292	4,171	(21)
Total	22,809	23,014	(1)

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

Other Income Statement Variances

Third Quarter 2024 Compared to Third Quarter 2023

Asset write-offs includes the effects of a commitment, made in October 2023, by Entergy Arkansas to the APSC to make a filing seeking to forgo recovery of identified costs resulting from the 2013 ANO stator incident. In third quarter 2023, Entergy Arkansas recorded write-offs of its regulatory asset for deferred fuel of $68.9 million and the undepreciated balance of $9.5 million in capital costs related to the ANO stator incident. See Note 8 to the financial statements in the Form 10-K for further discussion of the ANO stator incident, Entergy Arkansas’s October 2023 commitment to the APSC, and the subsequently approved motion to forgo recovery.

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

Other regulatory charges (credits) - net includes the reversal in third quarter 2024 of a $92.3 million regulatory liability recognized for the obligation to return to customers the refund from the System Energy settlement with the APSC. The reversal of the regulatory liability offsets a reduction in gross revenues from the retail one-time bill credits provided to customers in the August 2024 billing cycle through the Grand Gulf credit rider. See Note 2 to the financial statements herein and in the Form 10-K for discussion of the System Energy settlement with the APSC and see Note 2 to the financial statements herein for discussion of the Grand Gulf credit rider.

Other income increased primarily due to higher interest earned on money pool investments and a decrease of $5.5 million in non-service pension costs primarily as a result of pension settlement charges recorded in third 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.

Interest expense increased primarily due to the issuances of $400 million of 5.75% Series mortgage bonds and $400 million of 5.45% Series mortgage bonds, each in May 2024, and the issuance of $300 million of 5.30%

Entergy Arkansas, LLC and Subsidiaries

Management's Financial Discussion and Analysis

Series mortgage bonds in August 2023. The increase was partially offset by the repayment of $375 million of 3.70% Series mortgage bonds in June 2024.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 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.

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 $8.9 million in energy efficiency expenses primarily due to the timing of recovery from customers; and
an increase of $6.9 million in contract costs related to operational performance, customer service, and organizational health initiatives.

The increase was partially offset by a decrease of $4.9 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 $5.4 million in nuclear generation expenses primarily due to lower nuclear labor costs 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; and
the effects of a commitment, made in October 2023, by Entergy Arkansas to the APSC to make a filing seeking to forgo recovery of identified costs resulting from the 2013 ANO stator incident. In third quarter 2023, Entergy Arkansas recorded write-offs of its regulatory asset for deferred fuel of $68.9 million and the undepreciated balance of $9.5 million in capital costs related to the ANO stator incident. See Note 8 to the financial statements in the Form 10-K for further discussion of the ANO stator incident, Entergy Arkansas’s October 2023 commitment to the APSC, and the subsequently approved motion to forgo recovery.

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

Entergy Arkansas, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Other income increased primarily due to:

changes in decommissioning trust fund activity, including portfolio rebalancing of the decommissioning trust funds in first quarter 2024;
a decrease of $12.1 million in non-service pension costs primarily as a result of pension settlement charges recorded in 2023 and a reduction in 2024 in the amortization of deferred pension losses as a result of an amendment to a qualified pension plan spinning-off predominantly inactive participants into a new qualified plan, extending the amortization period for deferred losses. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” 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; and
higher interest earned on money pool investments.

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 $375 million of 3.70% Series mortgage bonds in June 2024 and the repayment of $250 million of 3.05% Series mortgage bonds in June 2023.

Income Taxes

The effective income tax rate was 16.2% for the third quarter 2024. The difference in the effective income tax rate for the third quarter 2024 versus the federal statutory rate of 21% was primarily due to the resolution of an Arkansas state income tax audit, partially offset by the accrual for state income taxes and the amortization of accumulated deferred income taxes as a result of tax rate changes. See Note 10 to the financial statements herein for discussion of the resolution of the Arkansas state income tax audit.

The effective income tax rate was 18.7% for the nine months ended September 30, 2024. The difference in the effective income tax rate for the nine months ended September 30, 2024 versus the federal statutory rate of 21% was primarily due to the resolution of an Arkansas state income tax audit, certain book and tax differences related to utility plant items, and book and tax differences related to the allowance for equity funds used during construction, partially offset by the accrual for state income taxes and the amortization of accumulated deferred income taxes as a result of tax rate changes. See Note 10 to the financial statements herein for discussion of the resolution of the Arkansas state income tax audit.

The effective income tax rate was 23.4% for the third quarter 2023. The difference in the effective income tax rate for the third 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.

The effective income tax rate was 21.2% for the nine months ended September 30, 2023. The difference in the effective income tax rate for the nine months ended September 30, 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 and amortization of state accumulated deferred income taxes as a result of tax rate changes.

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 Arkansas, LLC and Subsidiaries

Management's Financial Discussion and Analysis

Liquidity and Capital Resources

Cash Flow

Cash flows for the nine months ended September 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	836,755	762,386
Investing activities	(1,252,242)	(822,851)
Financing activities	1,052,038	168,586
Net increase in cash and cash equivalents	636,551	108,121

Cash and cash equivalents at end of period	$640,183	$113,399

Operating Activities

Net cash flow provided by operating activities increased $74.4 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to:

lower fuel and purchased power payments;
the timing of payments to vendors;
a decrease of $23.2 million in storm spending in 2024 as compared to 2023;
a decrease of $20.9 million in pension contributions resulting from the timing of contributions in 2024 compared to 2023. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K and Note 6 to the financial statements herein for a discussion of qualified pension and other postretirement benefits funding;
a decrease of $8 million in spending on nuclear refueling outages in 2024 as compared to 2023; and
the receipt of $92.7 million in settlement proceeds in 2024 as a result of the System Energy settlement with the APSC, which was subsequently refunded to retail customers in third quarter 2024 with one-time bill credits through the Grand Gulf credit rider. See Note 2 to the financial statements herein and in the Form 10-K for discussion of the System Energy settlement agreement with the APSC and see Note 2 to the financial statements herein for discussion of the Grand Gulf credit rider.

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;
an increase of $24.7 million in interest paid; and
$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 8 to the financial statements in the Form 10-K for discussion of the spent nuclear fuel litigation.

Entergy Arkansas, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Investing Activities

Net cash flow used in investing activities increased $429.4 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to:

the initial payment of approximately $307.7 million in August 2024 for the purchase of the Driver Solar facility;
the initial and substantial completion payments totaling approximately $185.5 million in 2024 for the purchase of the Walnut Bend Solar facility;
the initial payment of approximately $48.4 million in August 2024 for the purchase of the West Memphis Solar facility;
money pool activity;
an increase in cash used of $28 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; 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 $151.6 million in distribution construction expenditures primarily due to lower capital expenditures for storm restoration in 2024;
a decrease of $34.4 million in nuclear construction expenditures primarily due to decreased spending on various nuclear projects in 2024; and
a decrease of $16.7 million in transmission construction expenditures primarily due to decreased spending on various transmission projects in 2024.

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 $65.8 million for the nine months ended September 30, 2024 compared to increasing by $11.1 million for the nine months ended September 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.

See Note 14 to the financial statements herein for discussion of the Driver Solar facility, the Walnut Bend Solar facility, and the West Memphis Solar facility purchases.

Financing Activities

Net cash flow provided by financing activities increased $883.5 million for the nine months ended September 30, 2024 compared to the nine months ended September 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, which included 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;
$142 million in common equity distributions paid in 2023 in order to maintain Entergy Arkansas’s capital structure;

Entergy Arkansas, LLC and Subsidiaries

Management's Financial Discussion and Analysis

the issuance of $70 million of 5.54% Series O notes by the Entergy Arkansas nuclear fuel company variable interest entity in March 2024;
money pool activity; and
an increase of $33.1 million in prepaid deposits related to contributions-in-aid-of-construction primarily for customer and generator interconnection agreements.

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;
the issuance of $300 million of 5.30% Series mortgage bonds in August 2023; and
net repayments of $31.7 million in 2024 compared to net borrowings of $10.6 million in 2023 on the nuclear fuel company variable interest entity’s credit facility.

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 nine months ended September 30, 2024 compared to decreasing by $180.8 million for the nine months ended September 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.


	September 30, 2024		December 31, 2023
Debt to capital	52.3	%	55.5	%
Effect of subtracting cash	(3.3	%)	—	%
Net debt to net capital (non-GAAP)	49.0	%	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.

Entergy Arkansas, LLC 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 Arkansas’s uses and sources of capital. The following are updates to the information provided in the Form 10-K.

Entergy Arkansas is developing its capital investment plan for 2025 through 2027 and currently anticipates making $2.5 billion in capital investments during that period. In addition to routine capital spending to maintain operations, the preliminary estimate includes investments in generation projects to modernize, decarbonize, and diversify Entergy Arkansas’s portfolio; investments in ANO 1 and 2; 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 other investments. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements, government actions, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital.

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


September 30, 2024	December 31, 2023	September 30, 2023	December 31, 2022
(In Thousands)
$65,835	($145,385)	$11,104	($180,795)

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

Entergy Arkansas has a credit facility in the amount of $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 September 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 September 30, 2024, $11.9 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 additional discussion of the credit facilities.

The Entergy Arkansas nuclear fuel company variable interest entity has a credit facility in the amount of $80 million scheduled to expire in June 2027. As of September 30, 2024, there were $38.5 million in 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.

Renewables

Walnut Bend Solar

As discussed in the Form 10-K, in October 2020, Entergy Arkansas filed a petition with the APSC seeking a finding that the purchase of the 100 MW Walnut Bend Solar facility pursuant to a build-own-transfer agreement is in the public interest. Entergy Arkansas primarily requested cost recovery through the formula rate plan rider. Acquisition of the Walnut Bend Solar facility was initially approved by the APSC in July 2021. The agreement was amended by the parties in February 2023, and the revised agreement was approved by the APSC in July 2023. In February 2024, Entergy Arkansas made an initial payment of approximately $169.7 million to acquire the facility. Substantial completion was achieved and commercial operation commenced in September 2024, at which time Entergy Arkansas made a substantial completion payment of approximately $15.8 million for acquisition of the

Entergy Arkansas, LLC and Subsidiaries

Management's Financial Discussion and Analysis

facility. See Note 14 to the financial statements herein and in the Form 10-K for discussion of the purchase of the Walnut Bend Solar facility.

West Memphis Solar

As discussed in the Form 10-K, in January 2021, Entergy Arkansas filed a petition with the APSC seeking a finding that the purchase of the 180 MW West Memphis Solar facility pursuant to a build-own-transfer agreement is in the public interest. In September 2020, Entergy Arkansas signed an agreement for the purchase of the West Memphis Solar facility, to be sited on approximately 1,500 acres in Crittenden County, Arkansas. Acquisition of the West Memphis Solar facility was initially approved by the APSC in October 2021. In March 2022 the counterparty to the build-own-transfer agreement notified Entergy Arkansas that it was seeking changes to certain terms of the agreement, including both cost and schedule. Entergy Arkansas filed a supplemental application with the APSC in January 2023 for a change in the transmission route and updates to the cost and schedule, which was approved by the APSC in March 2023. In August 2024, Entergy Arkansas made an initial payment of approximately $48.4 million to acquire the facility. The project will commence commercial operation once testing is completed and the project has achieved substantial completion. Entergy Arkansas expects the project to commence commercial operation in November 2024, at which time a substantial completion payment of approximately $200 million is expected. See Note 14 to the financial statements herein for discussion of the purchase of the West Memphis Solar facility.

Driver Solar

As discussed in the Form 10-K, in April 2022, Entergy Arkansas filed a petition with the APSC seeking a finding that the purchase of the 250 MW Driver Solar facility pursuant to a build-own-transfer agreement is in the public interest and requested cost recovery through the formula rate plan rider. In August 2022 the APSC granted Entergy Arkansas’s petition and approved the acquisition of Driver Solar and cost recovery through the formula rate plan rider. In August 2024, Entergy Arkansas made an initial payment of approximately $307.7 million to acquire the facility. The project will commence commercial operation once testing is completed and the project has achieved substantial completion. Entergy Arkansas currently expects the project to commence commercial operation by the end of 2024, at which time a substantial completion payment of approximately $100 million is expected. See Note 14 to the financial statements herein for discussion of the purchase of the Driver Solar 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. The APSC general staff and intervenors filed their errors and objections in October 2024, proposing

Entergy Arkansas, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

certain adjustments, including the APSC general staff’s update to annual filing year revenues that increases the constraint to $86.8 million. Entergy Arkansas filed its rebuttal in October 2024, and later in October 2024 the parties submitted a joint issues list and stipulations setting forth the disputed issues and the noncontested issues. A hearing is scheduled for November 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 to retail customers a total of $100.6 million. To date, Entergy Arkansas has refunded $92.3 million of the total through one-time bill credits during the August 2024 billing cycle.

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 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 Circuit to expedite the appeal filed by Arkansas Electric Energy Consumers, Inc. The United States Court of Appeals for the Eighth Circuit granted Entergy Arkansas’s request, and oral arguments were held in June 2023. In August 2023 the United States Court of Appeals for the Eighth Circuit affirmed the order of the court denying Arkansas Electric Energy Consumers, Inc.’s motion to intervene.

In March 2024 the U.S. District Court for the Eastern District of Arkansas issued a judgment in favor of the APSC and against Entergy Arkansas. In March 2024 Entergy Arkansas filed a notice of appeal and a motion to expedite oral arguments with the United States Court of Appeals for the Eighth Circuit and the court granted the motion to expedite. Briefing to the United States Court of Appeals for the Eighth Circuit concluded in July 2024 and oral arguments concluded in September 2024. The appeal is pending with the United States Court of Appeals for the Eighth Circuit. 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.

Entergy Arkansas, LLC and Subsidiaries

Management's Financial Discussion and Analysis

Federal Regulation

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

Nuclear Matters

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

Environmental Risks

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

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 Nine Months Ended September 30, 2024 and 2023
(Unaudited)

	Three Months Ended		Nine Months Ended
	2024	2023	2024	2023
	(In Thousands)		(In Thousands)
OPERATING REVENUES
Electric	$662,148	$831,659	$1,892,991	$2,030,755

OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale	74,310	156,778	233,505	372,637
Purchased power	64,308	74,837	172,230	197,236
Nuclear refueling outage expenses	12,482	14,772	40,671	45,617
Other operation and maintenance	193,007	196,408	545,883	531,271
Asset write-offs	—	78,434	131,775	78,434
Decommissioning	23,366	21,989	68,845	65,006
Taxes other than income taxes	40,600	40,157	111,214	107,251
Depreciation and amortization	106,004	101,957	312,961	298,105
Other regulatory charges (credits) - net	(109,305)	(26,380)	(81,620)	(66,409)
TOTAL	404,772	658,952	1,535,464	1,629,148

OPERATING INCOME	257,376	172,707	357,527	401,607

OTHER INCOME
Allowance for equity funds used during construction	8,052	5,579	19,446	15,822
Interest and investment income	16,983	4,627	94,924	17,833
Miscellaneous - net	(7,493)	(8,030)	(13,873)	(16,370)
TOTAL	17,542	2,176	100,497	17,285

INTEREST EXPENSE
Interest expense	57,214	47,648	161,358	139,053
Allowance for borrowed funds used during construction	(3,928)	(2,241)	(9,491)	(6,355)
TOTAL	53,286	45,407	151,867	132,698

INCOME BEFORE INCOME TAXES	221,632	129,476	306,157	286,194

Income taxes	35,862	30,307	57,308	60,681

NET INCOME	185,770	99,169	248,849	225,513

Net loss attributable to noncontrolling interest	(957)	(791)	(3,600)	(3,426)

EARNINGS APPLICABLE TO MEMBER'S EQUITY	$186,727	$99,960	$252,449	$228,939

See Notes to Financial Statements.

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ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2024 and 2023
(Unaudited)
	2024	2023
	(In Thousands)
OPERATING ACTIVITIES
Net income	$248,849	$225,513
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation, amortization, and decommissioning, including nuclear fuel amortization	436,279	413,018
Deferred income taxes, investment tax credits, and non-current taxes accrued	69,609	59,931
Asset write-offs	131,775	78,434
Changes in assets and liabilities:
Receivables	76,233	(45,742)
Fuel inventory	19,675	8,001
Accounts payable	(24,338)	(71,533)
Taxes accrued	14,976	15,033
Interest accrued	33,080	35,534
Deferred fuel costs	(16,795)	165,982
Other working capital accounts	(24,630)	(12,517)
Provisions for estimated losses	9,981	(24,356)
Regulatory assets	177,319	(455)
Other regulatory liabilities	70,199	68,475
Pension and other postretirement funded status	(40,943)	(55,944)
Other assets and liabilities	(344,514)	(96,988)
Net cash flow provided by operating activities	836,755	762,386
INVESTING ACTIVITIES
Construction expenditures	(566,117)	(768,243)
Allowance for equity funds used during construction	19,446	15,822
Payment for purchase of plant	(541,618)	—
Nuclear fuel purchases	(122,065)	(93,775)
Proceeds from sale of nuclear fuel	33,213	32,880
Proceeds from nuclear decommissioning trust fund sales	482,594	87,878
Investment in nuclear decommissioning trust funds	(491,890)	(104,348)
Changes in money pool receivable - net	(65,835)	(11,104)


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	(1,252,242)	(822,851)
FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	1,088,957	991,606
Retirement of long-term debt	(635,916)	(515,615)


Capital contributions from parent	695,000	—
Changes in money pool payable - net	(145,385)	(180,795)
Common equity distributions paid	—	(142,000)
Other	49,382	15,390
Net cash flow provided by financing activities	1,052,038	168,586

Net increase in cash and cash equivalents	636,551	108,121
Cash and cash equivalents at beginning of period	3,632	5,278
Cash and cash equivalents at end of period	$640,183	$113,399

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized	$126,356	$101,616
Income taxes	$1,569	$—
Noncash investing activities:
Accrued construction expenditures	$46,231	$61,957

See Notes to Financial Statements.


ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, 2024 and December 31, 2023
(Unaudited)
	2024	2023
	(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash	$7,247	$520
Temporary cash investments	632,936	3,112
Total cash and cash equivalents	640,183	3,632
Accounts receivable:
Customer	179,557	157,520
Allowance for doubtful accounts	(5,069)	(7,182)
Associated companies	105,216	124,672
Other	67,388	89,532
Accrued unbilled revenues	124,171	117,119
Total accounts receivable	471,263	481,661

Fuel inventory - at average cost	37,820	57,495
Materials and supplies - at average cost	404,995	358,302
Deferred nuclear refueling outage costs	36,320	35,463
Prepayments and other	40,231	40,866
TOTAL	1,630,812	977,419

OTHER PROPERTY AND INVESTMENTS
Decommissioning trust funds	1,601,796	1,414,009
Other	798	801
TOTAL	1,602,594	1,414,810

UTILITY PLANT
Electric	15,540,379	14,821,814
Construction work in progress	717,530	340,601
Nuclear fuel	238,710	213,722
TOTAL UTILITY PLANT	16,496,619	15,376,137
Less - accumulated depreciation and amortization	6,225,012	6,002,203
UTILITY PLANT - NET	10,271,607	9,373,934

DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Other regulatory assets	1,708,042	1,885,361
Other	151,548	21,334
TOTAL	1,859,590	1,906,695

TOTAL ASSETS	$15,364,603	$13,672,858

See Notes to Financial Statements.


ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
September 30, 2024 and December 31, 2023
(Unaudited)
	2024	2023
	(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt	$—	$375,000
Accounts payable:
Associated companies	58,479	225,344
Other	209,175	215,502
Customer deposits	126,165	113,186
Taxes accrued	120,127	105,151
Interest accrued	68,450	35,370
Deferred fuel costs	71,487	88,282
Other	67,165	55,683
TOTAL	721,048	1,213,518

NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued	1,475,800	1,437,053
Accumulated deferred investment tax credits	26,369	27,270
Regulatory liability for income taxes - net	417,942	392,496
Other regulatory liabilities	803,934	759,181
Decommissioning	1,703,370	1,560,057
Accumulated provisions	68,940	58,959
Pension and other postretirement liabilities	91,547	8,901
Long-term debt	5,135,751	4,298,080
Other	216,113	156,673
TOTAL	9,939,766	8,698,670

Commitments and Contingencies

EQUITY
Member's equity	4,686,520	3,739,071
Noncontrolling interest	17,269	21,599
TOTAL	4,703,789	3,760,670

TOTAL LIABILITIES AND EQUITY	$15,364,603	$13,672,858

See Notes to Financial Statements.


ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the Nine Months Ended September 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

Net income (loss)	(791)	99,960	99,169
Common equity distributions	—	(53,000)	(53,000)


Distributions to noncontrolling interest	(507)	—	(507)
Balance at September 30, 2023	$23,675	$3,840,930	$3,864,605


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

Net income (loss)	(957)	186,727	185,770



Distributions to noncontrolling interest	(449)	—	(449)
Balance at September 30, 2024	$17,269	$4,686,520	$4,703,789

See Notes to Financial Statements.

ENTERGY LOUISIANA, LLC AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

Results of Operations

Net Income

Third Quarter 2024 Compared to Third Quarter 2023

Net income decreased $9.5 million primarily due to lower volume/weather, partially offset by lower other operation and maintenance expenses and higher retail electric price.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Net income decreased $203 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 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 provide credits to its customers as described in an LPSC ancillary order issued as part of the securitization regulatory proceeding, higher depreciation and amortization expenses, higher other operation and maintenance expenses, and higher interest expense. The decrease was partially offset by higher other income and higher retail electric price. 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

Third Quarter 2024 Compared to Third Quarter 2023

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


			Amount
			(In Millions)
2023 operating revenues			$1,434.9
Fuel, rider, and other revenues that do not significantly affect net income			70.3
Retail electric price			19.9
Volume/weather			(47.0)
2024 operating revenues			$1,478.1

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.

Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

The retail electric price variance is primarily due to increases in formula rate plan revenues, including increases in the distribution and transmission recovery mechanisms, effective September 2023 and September 2024. See Note 2 to the financial statements herein and in the Form 10-K for discussion of the formula rate plan proceedings.

The volume/weather variance is primarily due to the effect of less favorable weather on residential and commercial sales and a decrease in weather-adjusted residential usage, partially offset by an increase in industrial usage. The decrease in weather-adjusted residential usage is primarily due to the effects of Hurricane Francine in the third quarter 2024. The increase in industrial usage is primarily due to an increase in demand from large industrial customers, primarily in the petroleum refining and chlor-alkali industries.

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


	2024	2023	% Change
	(GWh)
Residential	4,586	5,049	(9)
Commercial	3,295	3,395	(3)
Industrial	9,201	8,016	15
Governmental	214	216	(1)
Total retail	17,296	16,676	4
Sales for resale:
Associated companies	1,582	1,584	—
Non-associated companies	531	435	22
Total	19,409	18,695	4

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

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

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


			Amount
			(In Millions)
2023 operating revenues			$3,985.7
Fuel, rider, and other revenues that do not significantly affect net income			(25.5)
Storm restoration carrying costs			(30.6)
Volume/weather			(13.3)
Retail electric price			40.4
2024 operating revenues			$3,956.7

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 less favorable weather on residential and commercial sales and a decrease in weather-adjusted residential and commercial usage, partially offset by an increase in industrial usage. The decrease in weather-adjusted residential and commercial usage is primarily due to the effects of Hurricane Francine in the third quarter 2024. The increase in industrial usage is primarily due to an increase in demand from large industrial customers, primarily in the petroleum refining industry.

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


	2024	2023	% Change
	(GWh)
Residential	11,094	11,428	(3)
Commercial	8,550	8,643	(1)
Industrial	25,669	23,862	8
Governmental	631	617	2
Total retail	45,944	44,550	3
Sales for resale:
Associated companies	4,322	3,250	33
Non-associated companies	1,307	1,123	16
Total	51,573	48,923	5

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

Other Income Statement Variances

Third Quarter 2024 Compared to Third Quarter 2023

Other operation and maintenance expenses decreased primarily due to:

a decrease of $5.5 million in power delivery expenses primarily due to the timing of vegetation maintenance costs;
a decrease of $4.6 million in energy efficiency expenses primarily due to the timing of recovery from customers;
a decrease of $4.5 million in compensation and benefits costs primarily due to lower incentive-based compensation accruals in 2024 as compared to 2023; and
a decrease of $4.2 million in nuclear generation expenses primarily due to a lower scope of work performed in 2024 as compared to 2023.

The decrease was partially offset by an increase of $3 million in contract costs related to operational performance, customer service, and organizational health initiatives and an increase of $2.5 million in loss provisions.

Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

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

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:

a decrease of $10.5 million in non-service pension costs primarily as a result of pension settlement charges recorded in third 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; and
changes in decommissioning trust fund activity, including portfolio rebalancing of the River Bend decommissioning trust fund in third quarter 2024.

Interest expense increased primarily due to the issuances of $500 million of 5.35% Series mortgage bonds and $700 million of 5.70% Series mortgage bonds, each in March 2024, and the issuance of $700 million of 5.15% Series mortgage bonds in August 2024. The increase was partially offset by:

the repayment of $325 million of 4.05% Series mortgage bonds in August 2023;
the repayment of $300 million of 5.59% Series mortgage bonds in December 2023; and
the repayment of $400 million of 5.40% Series mortgage bonds in April 2024.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Other operation and maintenance expenses increased primarily due to:

an increase of $10.5 million in contract costs related to operational performance, customer service, and organizational health initiatives;
an increase of $9 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 $5.4 million in loss provisions;
an increase of $4.2 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; and
an increase of $3.9 million in nuclear generation expenses primarily due to a higher scope of work, including during plant outages, performed in 2024 as compared to 2023.

The increase was partially offset by a decrease of $6.9 million in power delivery expenses primarily due to the timing of vegetation maintenance 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:

regulatory charges 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, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

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 funds in 2024;
a decrease of $23.2 million in non-service pension costs primarily as a result of pension settlement charges recorded in third 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;
an increase of $17.6 million in affiliated dividend income from affiliated preferred membership interests, related to storm cost securitizations; and
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.

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:

the issuances of $500 million of 5.35% Series mortgage bonds and $700 million of 5.70% Series mortgage bonds, each in March 2024;
the issuance of $700 million of 5.15% Series mortgage bonds in August 2024; and
a decrease in the allowance for borrowed funds used during construction due to lower construction work in progress in 2024.

The increase was partially offset by:

the repayment of $325 million of 4.05% Series mortgage bonds in August 2023;
the repayment of $300 million of 5.59% Series mortgage bonds in December 2023; and
the repayment of $400 million of 5.40% Series mortgage bonds in April 2024.

Income Taxes

The effective income tax rate was 22.6% for the third quarter 2024. The difference in the effective income tax rate for the third quarter 2024 versus the federal statutory rate of 21% was 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 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.

Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

The effective income tax rate was 19.6% for the nine months ended September 30, 2024. The difference in the effective income tax rate for the nine months ended September 30, 2024 versus the federal statutory rate of 21% was 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 22.4% for the third quarter 2023. The difference in the effective income tax rate for the third quarter 2023 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 non-taxable income distributions earned on preferred membership interests.

The effective income tax rate was 6.6% for the nine months ended September 30, 2023. The difference in the effective income tax rate for the nine months ended September 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.

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 are updates 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. In August 2024 the LPSC issued an order accepting the LPSC staff’s report and recommendation.

As discussed in the Form 10-K, in December 2023, Entergy New Orleans and the buyer of Entergy New Orleans’s gas distribution business filed their joint application with the City Council seeking approval for the proposed transaction. In September 2024 the hearing officer certified the record of the proceeding for City Council consideration. A decision is targeted for first quarter 2025.

Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Liquidity and Capital Resources

Cash Flow

Cash flows for the nine months ended September 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	1,320,416	1,368,788
Investing activities	(881,330)	(2,734,954)
Financing activities	(340,519)	2,102,833
Net increase in cash and cash equivalents	98,567	736,667

Cash and cash equivalents at end of period	$101,339	$793,280

Operating Activities

Net cash flow provided by operating activities decreased $48.4 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to:

the timing of payments to vendors;
lower collections from customers;
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;
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; and
an increase of $17.6 million in interest paid.

The decrease was partially offset by:

a decrease of $21.9 million in spending on nuclear refueling outages in 2024 as compared to 2023;
$21 million received in third quarter 2024 related to the wind up of the NISCO partnership. See Note 1 to the financial statements herein for a discussion of the NISCO partnership; and
a decrease of $15.2 million in pension contributions resulting from the timing of contributions in 2024 compared to 2023. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K and Note 6 to the financial statements herein for a discussion of qualified pension and other postretirement benefits funding.

Investing Activities

Net cash flow used in investing activities decreased $1,853.6 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to:

the purchase in 2023 of $1,457.7 million 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;

Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

a decrease in cash used of $108.2 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 $128.7 million in nuclear construction expenditures primarily due to decreased spending on various nuclear projects in 2024;
an increase of $70.2 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;
money pool activity;
a decrease of $19.1 million in non-nuclear generation construction expenditures primarily due to a lower scope of work on projects performed in 2024 as compared to 2023; and
a decrease of $17.9 million in information technology capital expenditures primarily due to decreased spending on various technology projects in 2024.

The decrease was partially offset by an increase of $28.1 million in distribution construction expenditures primarily due to increased investment in the resilience of the distribution system.

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 $10.5 million for the nine months ended September 30, 2024 compared to increasing by $79.1 million for the nine months ended September 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

Entergy Louisiana’s financing activities used $340.5 million of cash for the nine months ended September 30, 2024 compared to providing $2,102.8 million of cash for the nine months ended September 30, 2023 primarily due to the following activity:

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;
the repayment, prior to maturity, of $1 billion of 0.95% Series mortgage bonds in August 2024;
the repayment, prior to maturity, of $400 million of 5.40% Series mortgage bonds in April 2024;
an increase of $346.1 million in common equity distributions paid in 2024 in order to maintain Entergy Louisiana’s capital structure;
the issuance of $70 million of 5.94% Series J notes by the Entergy Louisiana Waterford variable interest entity in September 2023;
an increase in net long-term repayments of $24.7 million on the nuclear fuel company variable interest entities’ credit facilities;
a decrease of $50 million in 2024 in net repayments on Entergy Louisiana’s revolving credit facility;
money pool activity;
the repayment, at maturity, of $325 million of 4.05% Series mortgage bonds in September 2023;
the issuance of $700 million of 5.15% Series mortgage bonds in August 2024; and
the issuances of $500 million of 5.35% Series mortgage bonds and $700 million of 5.70% Series mortgage bonds in March 2024.

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 nine months ended September 30, 2024 compared to decreasing by $226.1 million for the nine months ended September 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.


	September 30, 2024		December 31, 2023
Debt to capital	46.1	%	44.9	%


Effect of subtracting cash	(0.2	%)	0.0	%
Net debt to net capital (non-GAAP)	45.9	%	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.

Entergy Louisiana is developing its capital investment plan for 2025 through 2027 and currently anticipates making $12.9 billion in capital investments during that period. In addition to routine capital spending to maintain operations, the preliminary estimate includes investments in generation projects to modernize, decarbonize, and diversify Entergy Louisiana’s portfolio, as well as to support customer growth, including Bayou Power Station and new generation resources in north Louisiana; investments in River Bend and Waterford 3; 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. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements, government actions, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital.

Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

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


September 30, 2024	December 31, 2023	September 30, 2023	December 31, 2022
(In Thousands)
$10,473	($156,166)	$79,136	($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 September 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 September 30, 2024, $19.7 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 September 30, 2024, $21.7 million in loans were outstanding under the credit facility for the Entergy Louisiana River Bend nuclear fuel company variable interest entity and $26.8 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. In August 2024, Entergy Louisiana issued the first RFP pursuant to this order in solicitation of solar resources that meet the requirements of the LPSC’s order.

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. In its application, Entergy Louisiana noted that the estimated cost of the Bayou Power Station was $411 million, including estimated costs of transmission interconnection and other related costs. In October 2024, Entergy Louisiana filed a motion to suspend the procedural schedule in this proceeding in order to evaluate certain recent developments related to the project including potential changes to the estimated cost of the project. Entergy Louisiana will determine next steps for the project after fully evaluating these developments. Subject to timely approval by the LPSC and receipt of other permits and approvals, commercial operation is expected to occur by the end of 2028.

Additional Generation and Transmission Resources

In October 2024, Entergy Louisiana filed an application with the LPSC seeking approval of a variety of generation and transmission resources proposed in connection with establishing service to a new customer facility in north Louisiana, for which an electric service agreement has been executed. The filing requests LPSC certification of three new combined cycle combustion turbine generation resources totaling 2,262 MW, each of which will be enabled for future carbon capture and storage, a new 500 kV transmission line, and 500 kV substation upgrades. The application also requests approval to implement a corporate sustainability rider applicable to the new customer. The corporate sustainability rider contemplates the new customer contributing to the costs of the future addition of 1,500 MW of new solar and energy storage resources, agreements involving carbon capture and storage at Entergy Louisiana’s existing Lake Charles Power Station, and potential future wind and nuclear resources. The combined cost of the first two new generation resources is estimated to be approximately $2,387 million, and these units are expected to achieve commercial operation in 2028. The third new generation resource is currently expected to have an estimated cost similar to the first two new generation resources and is expected to achieve commercial operation in 2029. The cost of the new 500 kV transmission line is estimated to be $546 million. Entergy Louisiana anticipates funding the incremental cost to serve the customer through direct financial contributions from the customer and the revenues it expects to earn under the electric service agreement. The application requests an LPSC decision by September 2025 in order to support the customer’s schedule for taking electric service for the new facility.

Hurricane Francine

In September 2024, Hurricane Francine caused damage to the areas served by Entergy Louisiana and Entergy New Orleans. The storm resulted in widespread power outages, primarily due to damage to distribution infrastructure as a result of strong winds and heavy rain, and the loss of sales during the power outages. Total restoration costs for the repair and/or replacement of Entergy Louisiana’s electric facilities damaged by Hurricane Francine are currently estimated to be in the range of $185 million to $205 million. Entergy Louisiana is considering all available avenues to recover storm-related costs from Hurricane Francine, including accessing funded storm reserve escrows. Storm cost recovery or financing will be subject to review by applicable regulatory authorities.

Based on the historic treatment of such costs for similar storm events in the area served by Entergy Louisiana, management believes that recovery of restoration costs is probable. There are well established mechanisms and precedent for addressing these events and providing for recovery of prudently incurred storm costs in accordance with applicable regulatory and legal principles. Because Entergy Louisiana has not gone through the regulatory process regarding these storm costs; however, there is an element of risk, and Entergy Louisiana 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 Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

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 NISCO partnership. The following is an update to that discussion.

In August 2024, Entergy Louisiana and its partners in the NISCO partnership entered into an agreement related to the wind up of the partnership, which resulted in the transfer of ownership of the non-operating facilities to Entergy Louisiana. The transaction was not material to Entergy Louisiana’s results of operations, cash flows, or financial condition.

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.

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;

Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

$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;
$75.5 million of customer rate credits, as provided for in the System Energy global settlement, to be credited over three years subject to and conditioned upon FERC approval of the System Energy global settlement. 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. Transmission projects filed with the LPSC will be exempt from the transmission recovery mechanism cap.

The global stipulated settlement agreement was unanimously approved by the LPSC in August 2024 and an order was issued by the LPSC in September 2024 reflecting the approval of the settlement.

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

2023 Formula Rate Plan Filing

In August 2024, pursuant to the global stipulated settlement agreement, Entergy Louisiana filed its formula rate plan evaluation report for its 2023 calendar year operations. Consistent with the global stipulated settlement agreement, the filing reflected a 9.7% allowed return on common equity with a bandwidth of 40 basis points above and below the midpoint. For the 2023 test year, however, the bandwidth provisions of the formula rate plan are temporarily suspended and, pursuant to the terms of the global stipulated settlement agreement, Entergy Louisiana implemented the September 2024 formula rate plan rate adjustments effective with the first billing cycle of September 2024. Those adjustments include a $120 million increase in base rider formula rate plan revenue and a $101.8 million one-time incremental net decrease consistent with the terms of the global stipulated settlement. The formula rate plan rate adjustments reflected in the evaluation report also include a redetermination of the transmission recovery mechanism, the distribution recovery mechanism, the additional capacity mechanism, the tax adjustment mechanism, the MISO cost recovery mechanism, and other one-time adjustments. Pursuant to the terms of the global stipulated settlement agreement, the review of the 2023 evaluation report shall be limited to these mechanisms and conducted under an expedited procedural schedule that provides a process for the parties to file and pursue resolution of any disputed issues by January 2025, after which any remaining disputed issues will be submitted to the ALJ for a contested proceeding and, ultimately, resolution by the LPSC.

Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Industrial and Commercial Customers

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

Federal Regulation

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

Nuclear Matters

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Nuclear Matters” in the Form 10-K for a discussion of nuclear matters. 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, and Waterford 3 is currently in Column 2.

In August 2024 the NRC placed Waterford 3 in 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 Nine Months Ended September 30, 2024 and 2023
(Unaudited)

	Three Months Ended		Nine Months Ended
	2024	2023	2024	2023
	(In Thousands)		(In Thousands)
OPERATING REVENUES
Electric	$1,464,627	$1,421,598	$3,898,864	$3,933,259
Natural gas	13,466	13,269	57,793	52,428
TOTAL	1,478,093	1,434,867	3,956,657	3,985,687

OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale	328,444	242,886	815,102	848,521
Purchased power	147,281	162,934	514,429	491,244
Nuclear refueling outage expenses	19,617	17,569	57,171	45,430
Other operation and maintenance	266,743	285,251	802,890	781,339
Decommissioning	20,340	19,138	60,065	56,544
Taxes other than income taxes	52,006	60,360	192,474	185,978
Depreciation and amortization	193,422	184,188	573,827	541,530
Other regulatory charges (credits) - net	(18,689)	(21,470)	93,255	27,759
TOTAL	1,009,164	950,856	3,109,213	2,978,345

OPERATING INCOME	468,929	484,011	847,444	1,007,342

OTHER INCOME
Allowance for equity funds used during construction	8,653	6,945	23,460	24,660
Interest and investment income (loss)	34,182	(11,482)	112,374	49,241
Interest and investment income - affiliated	77,877	80,971	238,356	218,274
Miscellaneous - net	(38,689)	(6,411)	(106,510)	(97,079)
TOTAL	82,023	70,023	267,680	195,096

INTEREST EXPENSE
Interest expense	101,842	93,857	297,573	285,959
Allowance for borrowed funds used during construction	(2,988)	(3,019)	(8,058)	(11,733)
TOTAL	98,854	90,838	289,515	274,226

INCOME BEFORE INCOME TAXES	452,098	463,196	825,609	928,212

Income taxes	102,303	103,889	161,977	61,621

NET INCOME	349,795	359,307	663,632	866,591

Net income attributable to noncontrolling interests	775	810	2,358	2,183

EARNINGS APPLICABLE TO MEMBER'S EQUITY	$349,020	$358,497	$661,274	$864,408

See Notes to Financial Statements.


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

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

Net Income	$349,795	$359,307	$663,632	$866,591

Other comprehensive loss
Pension and other postretirement adjustment (net of tax benefit of $746, $674, $2,237, and $1,617)	(2,024)	(1,829)	(6,071)	(4,388)
Other comprehensive loss	(2,024)	(1,829)	(6,071)	(4,388)

Comprehensive Income	347,771	357,478	657,561	862,203
Net income attributable to noncontrolling interests	775	810	2,358	2,183
Comprehensive Income Applicable to Member’s Equity	$346,996	$356,668	$655,203	$860,020

See Notes to Financial Statements.


ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2024 and 2023
(Unaudited)
	2024	2023
	(In Thousands)
OPERATING ACTIVITIES
Net income	$663,632	$866,591
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation, amortization, and decommissioning, including nuclear fuel amortization	694,525	650,800
Deferred income taxes, investment tax credits, and non-current taxes accrued	173,820	127,074
Changes in working capital:
Receivables	(212,759)	(54,518)
Fuel inventory	7,580	(19,194)
Accounts payable	(54,722)	(153,749)
Taxes accrued	140,193	57,979
Interest accrued	(15,338)	(9,687)
Deferred fuel costs	61,893	133,090
Other working capital accounts	(254,340)	(262,001)
Changes in provisions for estimated losses	11,205	7,249
Changes in other regulatory assets	(92,733)	390,864
Changes in other regulatory liabilities	384,975	200,267
Effect of securitization on regulatory asset	—	(491,150)
Changes in pension and other postretirement funded status	(33,849)	(43,909)
Other	(153,666)	(30,918)
Net cash flow provided by operating activities	1,320,416	1,368,788
INVESTING ACTIVITIES
Construction expenditures	(1,031,418)	(1,194,315)
Allowance for equity funds used during construction	23,460	24,660

Proceeds from sale of assets	1,495	—
Nuclear fuel purchases	(74,597)	(136,357)
Proceeds from sale of nuclear fuel	63,197	16,733
Payments to storm reserve escrow account	(9,843)	(10,463)

Purchase of preferred membership interests of affiliate	—	(1,457,676)
Redemption of preferred membership interests of affiliate	194,604	124,364

Proceeds from nuclear decommissioning trust fund sales	554,371	473,394
Investment in nuclear decommissioning trust funds	(600,068)	(516,047)
Changes in money pool receivable - net	(10,473)	(79,136)
Insurance proceeds received for property damages	7,907	19,493
Decrease in other investments	35	396

Net cash flow used in investing activities	(881,330)	(2,734,954)
FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	2,650,002	1,196,927
Retirement of long-term debt	(2,199,926)	(1,505,325)
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)	(318,000)

Other	29,671	39,993
Net cash flow provided by (used in) financing activities	(340,519)	2,102,833

Net increase in cash and cash equivalents	98,567	736,667
Cash and cash equivalents at beginning of period	2,772	56,613
Cash and cash equivalents at end of period	$101,339	$793,280

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized	$306,589	$288,987
Income taxes	$58	($6,037)
Noncash investing activities:
Accrued construction expenditures	$102,761	$111,341

See Notes to Financial Statements.


ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, 2024 and December 31, 2023
(Unaudited)
	2024	2023
	(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash	$572	$2,255
Temporary cash investments	100,767	517
Total cash and cash equivalents	101,339	2,772
Accounts receivable:
Customer	394,006	264,776
Allowance for doubtful accounts	(5,703)	(6,156)
Associated companies	171,439	82,292
Other	58,441	74,685
Accrued unbilled revenues	222,819	202,173
Total accounts receivable	841,002	617,770
Deferred fuel costs	—	24,800
Fuel inventory - at average cost	50,238	57,818
Materials and supplies - at average cost	749,198	652,180
Deferred nuclear refueling outage costs	47,307	96,047

Prepayments and other	310,196	71,613
TOTAL	2,099,280	1,523,000

OTHER PROPERTY AND INVESTMENTS
Investment in affiliate preferred membership interests	4,301,641	4,496,245
Decommissioning trust funds	2,414,795	2,107,384
Non-utility property - at cost (less accumulated depreciation)	407,752	404,043
Storm reserve escrow account	253,662	243,819
Other	9,668	9,367
TOTAL	7,387,518	7,260,858

UTILITY PLANT
Electric	28,479,977	27,800,467
Natural gas	328,174	315,658
Construction work in progress	753,066	592,803
Nuclear fuel	258,395	333,472
TOTAL UTILITY PLANT	29,819,612	29,042,400
Less - accumulated depreciation and amortization	10,913,299	10,570,707
UTILITY PLANT - NET	18,906,313	18,471,693

DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:

Other regulatory assets	1,741,585	1,648,852
Deferred fuel costs	168,122	168,122
Other	55,524	36,945
TOTAL	1,965,231	1,853,919

TOTAL ASSETS	$30,358,342	$29,109,470

See Notes to Financial Statements.


ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
September 30, 2024 and December 31, 2023
(Unaudited)
	2024	2023
	(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt	$300,000	$1,400,000
Accounts payable:
Associated companies	92,973	283,016
Other	519,527	467,414
Customer deposits	172,631	167,905
Taxes accrued	206,656	66,463
Interest accrued	76,318	91,656
Deferred fuel costs	37,093	—
Other	108,904	87,468
TOTAL	1,514,102	2,563,922

NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued	2,554,396	2,391,442
Accumulated deferred investment tax credits	89,820	93,242
Regulatory liability for income taxes - net	194,426	193,754
Other regulatory liabilities	1,791,992	1,407,689
Decommissioning	1,940,069	1,836,240
Accumulated provisions	275,074	263,869
Pension and other postretirement liabilities	238,586	271,928
Long-term debt	9,576,127	8,020,689
Other	617,887	493,176
TOTAL	17,278,377	14,972,029

Commitments and Contingencies

EQUITY
Member’s equity	11,471,670	11,473,614
Accumulated other comprehensive income	48,727	54,798
Noncontrolling interests	45,466	45,107
TOTAL	11,565,863	11,573,519

TOTAL LIABILITIES AND EQUITY	$30,358,342	$29,109,470

See Notes to Financial Statements.


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

	Noncontrolling Interests	Member’s Equity	Accumulated Other Comprehensive Income	Total
	(In Thousands)

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

Net income	810	358,497	—	359,307
Other comprehensive loss	—	—	(1,829)	(1,829)

Common equity distributions	—	(157,750)	—	(157,750)
Distribution to LURC	(811)	—	—	(811)



Other	—	(12)	—	(12)
Balance at September 30, 2023	$47,214	$11,410,402	$50,982	$11,508,598

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

Net income	775	349,020	—	349,795
Other comprehensive loss	—	—	(2,024)	(2,024)




Distributions to LURC	(842)	—	—	(842)

Other	—	(11)	—	(11)
Balance at September 30, 2024	$45,466	$11,471,670	$48,727	$11,565,863

See Notes to Financial Statements.

ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

Results of Operations

Net Income

Third Quarter 2024 Compared to Third Quarter 2023

Net income increased $5.6 million primarily due to higher retail electric price, partially offset by lower volume/weather, higher other operation and maintenance expenses, and higher taxes other than income taxes.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Net income increased $33.4 million primarily due to higher retail electric price, partially offset by higher taxes other than income taxes and higher interest expense.

Operating Revenues

Third Quarter 2024 Compared to Third Quarter 2023

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


			Amount
			(In Millions)
2023 operating revenues			$538.8
Fuel, rider, and other revenues that do not significantly affect net income			(46.7)
Volume/weather			(11.0)
Retail electric price			27.1
2024 operating revenues			$508.2

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

The retail electric price variance is primarily due to increases in formula rate plan rates effective April 2024 and July 2024, including the implementation of the interim facilities rate adjustment effective over six months beginning in July 2024. See Note 2 to the financial statements herein for discussion of the formula rate plan filings.

Entergy Mississippi, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

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


	2024	2023	% Change
	(GWh)
Residential	1,774	1,925	(8)
Commercial	1,380	1,436	(4)
Industrial	647	647	—
Governmental	113	119	(5)
Total retail	3,914	4,127	(5)
Sales for resale:
Non-associated companies	1,287	961	34
Total	5,201	5,088	2

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

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

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


			Amount
			(In Millions)
2023 operating revenues			$1,396.4
Fuel, rider, and other revenues that do not significantly affect net income			(79.3)
Volume/weather			(2.4)
Retail electric price			51.2
2024 operating revenues			$1,365.9

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

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

Entergy Mississippi, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

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


	2024	2023	% Change
	(GWh)
Residential	4,317	4,336	—
Commercial	3,554	3,556	—
Industrial	1,736	1,779	(2)
Governmental	304	311	(2)
Total retail	9,911	9,982	(1)
Sales for resale:
Non-associated companies	4,244	3,734	14
Total	14,155	13,716	3

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

Other Income Statement Variances

Third Quarter 2024 Compared to Third Quarter 2023

Other operation and maintenance expenses increased primarily due to:

an increase of $6.4 million 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 mitigation and restoration rider;
an increase of $1.3 million in contract costs related to operational performance, customer service, and organizational health initiatives; and
several individually insignificant items.

The increase was partially offset by a decrease of $3.9 million in power delivery expenses primarily due to the timing of vegetation maintenance costs.

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

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

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Other operation and maintenance expenses increased primarily due to:

an increase of $4.7 million in contract costs related to operational performance, customer service, and organizational health initiatives;
an increase of $2.3 million in compensation and benefits costs primarily due to higher healthcare claims activity in 2024;
an increase of $2.3 million in energy efficiency expenses primarily due to the timing of recovery from customers; and
several individually insignificant items.

Entergy Mississippi, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

The increase was partially offset by a decrease of $5.3 million in power delivery expenses primarily due to the timing of vegetation maintenance 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 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 and higher interest expense from carrying costs related to the deferred fuel balance, partially offset by the repayment of a $150 million unsecured term loan, of which $50 million was repaid in May 2023 and $100 million was repaid in December 2023.

Income Taxes

The effective income tax rates were 25.0% for the third quarter 2024 and 24.2% for the nine months ended September 30, 2024. The differences in the effective income tax rates for the third quarter 2024 and the nine months ended September 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 24.2% for the third quarter 2023 and 24.5% for the nine months ended September 30, 2023. The differences in the effective income tax rates for the third quarter 2023 and the nine months ended September 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 nine months ended September 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	448,253	408,904
Investing activities	(481,457)	(433,505)
Financing activities	63,707	17,938
Net increase (decrease) in cash and cash equivalents	30,503	(6,663)

Cash and cash equivalents at end of period	$37,133	$10,316

Entergy Mississippi, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Operating Activities

Net cash flow provided by operating activities increased $39.3 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to lower fuel costs and a decrease of $11.3 million in pension contributions resulting from the timing of contributions in 2024 compared to 2023. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K and Note 6 to the financial statements herein for a discussion of qualified pension and other postretirement benefits funding. The 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 timing of payments to vendors;
lower collections from customers; and
an increase of $7 million in interest paid.

Investing Activities

Net cash flow used in investing activities increased $48.0 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to:

an increase of $60.8 million in transmission construction expenditures primarily due to increased development in Entergy Mississippi’s service area;
an increase of $45.3 million in non-nuclear generation construction expenditures primarily due to higher spending on the Delta Blues Advanced Power Station project in 2024; and
money pool activity.

The increase was partially offset by:

a decrease of $33.7 million in distribution construction expenditures primarily due to lower capital expenditures for storm restoration in 2024; and
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.

Increases in Entergy Mississippi’s receivable from the money pool are a use of cash flow, and Entergy Mississippi’s receivable from the money pool increased $3.4 million for the nine months ended September 30, 2024 compared to decreasing by $26.9 million for the nine months ended September 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 $45.8 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to the repayment, prior to maturity, of $250 million of 3.10% Series mortgage bonds in June 2023 and the repayment, prior to maturity, in May 2023, of $50 million of an unsecured term loan due December 2023. The increase was partially offset by:

the repayment, prior to maturity, of $100 million of 3.75% Series mortgage bonds in June 2024;
money pool activity;
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

Entergy Mississippi, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Sunflower Solar facility. See Note 14 to the financial statements in the Form 10-K for discussion of the Sunflower Solar facility purchase; and

a decrease of $21.2 million in prepaid deposits related to contributions-in-aid-of-construction primarily for customer and generator interconnection agreements.

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 $73.8 million for the nine months ended September 30, 2024 compared to increasing by $23.9 million for the nine months ended September 30, 2023.

Capital Structure

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


	September 30, 2024		December 31, 2023
Debt to capital	50.9	%	50.5	%
Effect of subtracting cash	(0.3	%)	(0.1	%)
Net debt to net capital (non-GAAP)	50.6	%	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.

Entergy Mississippi is developing its capital investment plan for 2025 through 2027 and currently anticipates making $3.7 billion in capital investments during that period. In addition to routine capital spending to maintain operations, the preliminary estimate includes investments in generation projects to modernize, decarbonize, and diversify Entergy Mississippi’s portfolio, as well as to support customer growth, including Delta Blues Advanced Power Station and additional solar generation; 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. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements, government actions, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital.

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:


September 30, 2024	December 31, 2023	September 30, 2023	December 31, 2022
(In Thousands)
$3,400	($73,769)	($23,893)	$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 September 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 September 30, 2024, $31.8 million in MISO letters of credit and $1.3 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.

Delta Blues Advanced Power Station

In September 2024, Entergy Mississippi announced plans to construct, own, and operate the Delta Blues Advanced Power Station, a 754 MW combined-cycle combustion turbine facility, to be located in Washington County, Mississippi. The facility will primarily be powered by natural gas, and it will also be enabled with carbon capture and hydrogen co-firing optionality. The Delta Blues Advanced Power Station will cost an estimated $1.2 billion. State legislation passed in January 2024 provides for the pre-certification of construction for certain types of facilities that directly or indirectly provide electric service to customers with defined projects under the legislation. Construction of the Delta Blues Advanced Power Station qualifies under this legislation for pre-certification. As enabled by this legislation, Entergy Mississippi began recovery of certain costs of construction of the Delta Blues Advanced Power Station through the interim facilities rate adjustments provision of its formula rate plan rider, which rates became effective in July 2024. Non-fuel revenue collected from the facility’s customer will be included in the formula rate plan to offset the facility’s revenue requirement. Construction is in progress and the facility is expected to be in service by 2028.

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.

Entergy Mississippi, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

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

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

Grand Gulf Capacity Filing

In September 2024, Entergy Mississippi filed a notice of intent with the MPSC to implement revisions to its unit power cost recovery rider that would allow Entergy Mississippi to recover the first year of costs associated with the transfer of Entergy Louisiana’s interest in and purchases of Grand Gulf capacity and energy under the revised rider schedule, effective by January 1, 2025. This notice filing relates to the divestiture of Entergy Louisiana’s 14% share of Grand Gulf capacity and energy under the Unit Power Sales Agreement and 2.43% share of capacity and energy from Entergy Arkansas under the MSS-4 replacement tariff. This divestiture will be effectuated initially through Entergy Mississippi’s purchases from Entergy Louisiana pursuant to a PPA governed by the MSS-4 replacement tariff, a tariff governing the sales of energy and capacity among the Utility operating companies as described in the System Energy global settlement with the LPSC and Entergy Louisiana. 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 with the LPSC. In October 2024, Entergy Louisiana and Entergy Mississippi filed the proposed MSS-4 replacement PPA with the FERC. The parties requested that the MPSC and the FERC issue orders accepting the PPA no later than December 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

Entergy Mississippi, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

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 “Filings with the MPSC (Entergy Mississippi) - Retail Rates - 2024 Formula Rate Plan Filing” in Note 2 to the financial statements herein for 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 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, including authorization to credit any remaining funds in the storm escrow account to Entergy Mississippi’s storm damage reserve and to close the storm escrow account. Entergy Mississippi’s storm escrow account was liquidated in July 2024, and the new combined storm damage mitigation and restoration rider became effective with the July 2024 billing cycle. Additionally, Entergy Mississippi made a compliance filing to cease billing under the existing vegetation management rider schedule as of the same billing cycle.

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.

Entergy Mississippi, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

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 Nine Months Ended September 30, 2024 and 2023
(Unaudited)

	Three Months Ended		Nine Months Ended
	2024	2023	2024	2023
	(In Thousands)		(In Thousands)
OPERATING REVENUES
Electric	$508,171	$538,815	$1,365,921	$1,396,373

OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale	43,223	151,755	225,050	453,570
Purchased power	85,939	89,465	220,441	212,419
Other operation and maintenance	86,016	78,959	224,922	217,377
Taxes other than income taxes	48,461	42,374	124,267	113,409
Depreciation and amortization	68,167	66,760	201,215	196,135
Other regulatory charges (credits) - net	26,844	(25,470)	30,226	(84,260)
TOTAL	358,650	403,843	1,026,121	1,108,650

OPERATING INCOME	149,521	134,972	339,800	287,723

OTHER INCOME (DEDUCTIONS)
Allowance for equity funds used during construction	1,227	2,260	6,239	6,313
Interest and investment income	338	107	1,479	1,890
Miscellaneous - net	(5,626)	(3,828)	(9,019)	(9,349)
TOTAL	(4,061)	(1,461)	(1,301)	(1,146)

INTEREST EXPENSE
Interest expense	28,109	25,257	83,005	74,634
Allowance for borrowed funds used during construction	(468)	(911)	(2,419)	(2,596)
TOTAL	27,641	24,346	80,586	72,038

INCOME BEFORE INCOME TAXES	117,819	109,165	257,913	214,539

Income taxes	29,436	26,428	62,533	52,597

NET INCOME	88,383	82,737	195,380	161,942

Net loss attributable to noncontrolling interest	(3,584)	(1,640)	(7,619)	(7,404)

EARNINGS APPLICABLE TO MEMBER'S EQUITY	$91,967	$84,377	$202,999	$169,346

See Notes to Financial Statements.

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ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2024 and 2023
(Unaudited)
	2024	2023
	(In Thousands)
OPERATING ACTIVITIES
Net income	$195,380	$161,942
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation and amortization	201,215	196,135
Deferred income taxes, investment tax credits, and non-current taxes accrued	57,459	23,405
Changes in assets and liabilities:
Receivables	(34,116)	(52,905)
Fuel inventory	2,335	(1,746)
Accounts payable	(484)	(56,477)
Taxes accrued	(14,571)	14,269
Interest accrued	12,855	11,334
Deferred fuel costs	13,938	215,892
Other working capital accounts	(20,790)	(24,420)
Provisions for estimated losses	(4,534)	2,627
Other regulatory assets	30,049	(35,970)
Other regulatory liabilities	18,346	(52,712)
Pension and other postretirement funded status	(12,703)	(22,529)
Other assets and liabilities	3,874	30,059
Net cash flow provided by operating activities	448,253	408,904

INVESTING ACTIVITIES
Construction expenditures	(484,952)	(435,188)
Allowance for equity funds used during construction	6,239	6,313
Changes in money pool receivable - net	(3,400)	26,879
Payment for purchase of plant	—	(30,433)
Receipt from storm reserve escrow account	736	—
Increase in other investments	(80)	(1,076)
Net cash flow used in investing activities	(481,457)	(433,505)

FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	396,032	396,853
Retirement of long-term debt	(200,000)	(400,000)
Capital contribution from noncontrolling interest	—	25,708
Changes in money pool payable - net	(73,769)	23,893
Common equity distributions paid	(44,633)	(40,000)
Other	(13,923)	11,484
Net cash flow provided by financing activities	63,707	17,938

Net increase (decrease) in cash and cash equivalents	30,503	(6,663)
Cash and cash equivalents at beginning of period	6,630	16,979
Cash and cash equivalents at end of period	$37,133	$10,316

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized	$68,370	$61,352
Income taxes	$2,356	$—
Noncash investing activities:
Accrued construction expenditures	$33,632	$31,169

See Notes to Financial Statements.


ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, 2024 and December 31, 2023
(Unaudited)
	2024	2023
	(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash	$761	$30
Temporary cash investments	36,372	6,600
Total cash and cash equivalents	37,133	6,630
Accounts receivable:
Customer	137,386	121,389
Allowance for doubtful accounts	(2,714)	(3,312)
Associated companies	13,778	4,997
Other	23,613	17,697
Accrued unbilled revenues	77,690	71,465
Total accounts receivable	249,753	212,236

Fuel inventory - at average cost	13,861	16,196
Materials and supplies - at average cost	111,342	95,526
Prepayments and other	12,916	12,740
TOTAL	425,005	343,328

OTHER PROPERTY AND INVESTMENTS
Non-utility property - at cost (less accumulated depreciation)	4,486	4,497
Storm reserve escrow account	—	656

TOTAL	4,486	5,153

UTILITY PLANT
Electric	7,695,382	7,455,145
Construction work in progress	356,032	139,635
TOTAL UTILITY PLANT	8,051,414	7,594,780
Less - accumulated depreciation and amortization	2,472,037	2,346,327
UTILITY PLANT - NET	5,579,377	5,248,453

DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Other regulatory assets	549,027	579,076
Other	75,340	51,996
TOTAL	624,367	631,072

TOTAL ASSETS	$6,633,235	$6,228,006

See Notes to Financial Statements.


ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
September 30, 2024 and December 31, 2023
(Unaudited)
	2024	2023
	(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt	$—	$100,000
Accounts payable:
Associated companies	46,602	133,571
Other	122,666	92,659
Customer deposits	93,746	92,637
Taxes accrued	100,563	115,134
Interest accrued	34,392	21,537
Deferred fuel costs	144,583	130,645
Other	21,970	26,463
TOTAL	564,522	712,646

NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued	884,553	821,744
Accumulated deferred investment tax credits	13,267	13,811
Regulatory liability for income taxes - net	180,729	188,714
Other regulatory liabilities	60,027	33,696
Asset retirement cost liabilities	30,725	8,229
Accumulated provisions	34,947	39,481

Long-term debt	2,426,893	2,129,510
Other	78,611	71,961
TOTAL	3,709,752	3,307,146

Commitments and Contingencies

EQUITY
Member's equity	2,347,827	2,189,461
Noncontrolling interest	11,134	18,753
TOTAL	2,358,961	2,208,214

TOTAL LIABILITIES AND EQUITY	$6,633,235	$6,228,006

See Notes to Financial Statements.


ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the Nine Months Ended September 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

Net income (loss)	(1,640)	84,377	82,737
Balance at September 30, 2023	$21,651	$2,166,536	$2,188,187

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

Net income (loss)	(3,584)	91,967	88,383
Common equity distributions	—	(22,333)	(22,333)
Balance at September 30, 2024	$11,134	$2,347,827	$2,358,961

See Notes to Financial Statements.

ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

Results of Operations

Net Income

Third Quarter 2024 Compared to Third Quarter 2023

Net income decreased $4.4 million primarily due to lower volume/weather, partially offset by lower other operation and maintenance expenses.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Net income decreased $56.3 million 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 decrease were higher other operation and maintenance expenses. The decrease was partially offset by a lower effective income tax rate. 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

Third Quarter 2024 Compared to Third Quarter 2023

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


			Amount
			(In Millions)
2023 operating revenues			$254.3
Fuel, rider, and other revenues that do not significantly affect net income			(13.4)
Volume/weather			(9.8)
Retail electric price			1.4
2024 operating revenues			$232.5

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 less favorable weather on residential and commercial sales.

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 September 30, 2024 and 2023 are as follows:


	2024	2023	% Change
	(GWh)
Residential	778	877	(11)
Commercial	614	652	(6)
Industrial	114	129	(12)
Governmental	232	232	—
Total retail	1,738	1,890	(8)
Sales for resale:
Non-associated companies	426	600	(29)
Total	2,164	2,490	(13)

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

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

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


			Amount
			(In Millions)
2023 operating revenues			$651.2
Fuel, rider, and other revenues that do not significantly affect net income			(24.6)
Volume/weather			(6.0)
Retail electric price			4.2
2024 operating revenues			$624.8

The volume/weather variance is primarily due to a decrease in weather-adjusted commercial usage and the effect of less favorable weather on residential sales.

Entergy New Orleans, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

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


	2024	2023	% Change
	(GWh)
Residential	1,866	1,906	(2)
Commercial	1,600	1,647	(3)
Industrial	307	325	(6)
Governmental	606	600	1
Total retail	4,379	4,478	(2)
Sales for resale:
Non-associated companies	1,407	2,194	(36)
Total	5,786	6,672	(13)

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

Other Income Statement Variances

Third Quarter 2024 Compared to Third Quarter 2023

Other operation and maintenance expenses decreased primarily due to a decrease of $2.7 million in power delivery expenses primarily due to a lower scope of work performed in 2024 as compared to 2023 and the timing of vegetation maintenance costs.

Interest expense increased primarily due to the issuances of $35 million of 6.25% Series mortgage bonds, $65 million of 6.41% Series mortgage bonds, and $50 million of 6.54% Series mortgage bonds, each in May 2024, partially offset by the repayment of an $85 million unsecured term loan in June 2024.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Other operation and maintenance expenses increased primarily due to:

an increase of $2.4 million in bad debt expense;
an increase of $2.2 million in energy efficiency expenses primarily due to higher energy efficiency costs;
an increase of $2.2 million in contract costs related to operational performance, customer service, and organizational health initiatives; and
an increase of $1.4 million in costs recognized related to credits provided to customers as part of the rate mitigation plan 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.

Taxes other than income taxes decreased primarily due to a decrease in local franchise taxes as a result of lower retail revenues in 2024 as compared to 2023.

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

Entergy New Orleans, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

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, partially offset by a decrease of $2.5 million in non-service pension costs primarily as a result of pension settlement charges recorded in 2023 and a reduction in 2024 in the amortization of deferred pension losses as a result of an amendment to a qualified pension plan spinning-off predominantly inactive participants into a new qualified plan, extending the amortization period for deferred losses. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” 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.

Interest expense increased primarily due to the issuances of $35 million of 6.25% Series mortgage bonds, $65 million of 6.41% Series mortgage bonds, and $50 million of 6.54% Series mortgage bonds, each in May 2024. The increase was partially offset by the repayment of $100 million of 3.90% Series mortgage bonds in July 2023.

Income Taxes

The effective income tax rate was 27.0% for the third quarter 2024. The difference in the effective income tax rate for the third quarter 2024 versus the federal statutory rate of 21% was primarily due to the accrual for state income taxes.

The effective income tax rate was 18.7% for the nine months ended September 30, 2024. The difference in the effective income tax rate for the nine months ended September 30, 2024 versus the federal statutory rate of 21% was primarily due to certain book and tax differences related to utility plant items, the amortization of state accumulated deferred income taxes as a result of a tax rate change, the amortization of investment tax credits, and book and tax differences related to the allowance for equity funds used during construction, partially offset by the accrual for state income taxes.

The effective income tax rates were 27.3% for the third quarter 2023 and 28.5% for the nine months ended September 30, 2023. The differences in the effective income tax rates for the third quarter 2023 and the nine months ended September 30, 2023 versus the federal statutory rate of 21% were primarily due to 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.

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 are updates to that discussion.

Entergy New Orleans, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

proposed transaction. In September 2024 the hearing officer certified the record of the proceeding for City Council consideration. A decision is targeted for first quarter 2025.

Liquidity and Capital Resources

Cash Flow

Cash flows for the nine months ended September 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	123,928	185,632
Investing activities	(124,564)	1,914
Financing activities	35,123	(77,203)
Net increase in cash and cash equivalents	34,487	110,343

Cash and cash equivalents at end of period	$34,513	$114,807

Operating Activities

Net cash flow provided by operating activities decreased $61.7 million for the nine months ended September 30, 2024 compared to the nine months ended September 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 and lower collections from customers. The decrease was partially offset by lower fuel payments in 2024 as compared to 2023. See Note 2 to the financial statements in the Form 10-K for discussion of the refund and the related proceedings.

Investing Activities

Entergy New Orleans’s investing activities used $124.6 million of cash for the nine months ended September 30, 2024 compared to providing $1.9 million of cash for the nine months ended September 30, 2023 primarily due to money pool activity and a decrease of $14.7 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 $3.6 million for the nine months ended September 30, 2024 compared to decreasing by $135.4 million for the nine months ended September 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.

Entergy New Orleans, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Financing Activities

Entergy New Orleans’s financing activities provided $35.1 million of cash for the nine months ended September 30, 2024 compared to using $77.2 million of cash for the nine months ended September 30, 2023 primarily due to the following activity:

the issuances of $35 million of 6.25% Series mortgage bonds, $65 million of 6.41% Series mortgage bonds, and $50 million of 6.54% mortgage bonds, each in May 2024;
the repayment, at maturity, of $100 million of 3.90% Series mortgage bonds in July 2023;
a $15 million advance received in 2023 related to Entergy New Orleans’s construction of the New Orleans Sewerage and Water Board Sullivan substation;
money pool activity; and
the repayment, at maturity, of an $85 million unsecured term loan in June 2024 as compared to additional borrowings of $15 million on the unsecured term loan in May 2023.

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 $21.7 million for the nine months ended September 30, 2024.

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 the net issuance of long-term debt in 2024.


	September 30, 2024		December 31, 2023
Debt to capital	47.6	%	45.8	%
Effect of excluding securitization bonds	—	%	(0.2	%)
Debt to capital, excluding securitization bonds (non-GAAP) (a)	47.6	%	45.6	%
Effect of subtracting cash	(1.2	%)	—	%
Net debt to net capital, excluding securitization bonds (non-GAAP) (a)	46.4	%	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.

Entergy New Orleans, LLC 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 New Orleans’s uses and sources of capital. The following are updates to the information provided in the Form 10-K.

Entergy New Orleans is developing its capital investment plan for 2025 through 2027 and currently anticipates making $585 million in capital investments during that period. In addition to routine capital spending to maintain operations, the preliminary estimate includes distribution and Utility support spending to improve reliability, resilience, and customer experience; transmission spending to improve reliability and resilience; and other investments. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements, government actions, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital.

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


September 30, 2024	December 31, 2023	September 30, 2023	December 31, 2022
(In Thousands)
$3,601	($21,651)	$11,827	$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 September 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 September 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.

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. In October 2024 the City Council approved a resolution authorizing a two-year resilience plan

Entergy New Orleans, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

totaling $100 million. The resolution directs Entergy New Orleans to notify the City Council of the subset of hardening projects from the revised three-year resilience plan to be included in the two-year resilience plan.

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 sought approval of a $12.6 million rate increase based on the formula set by the City Council in the 2018 rate case and approved again by the City Council in 2023. The formula would result in an increase in authorized electric revenues of $7.0 million and an increase in authorized gas revenues of $5.6 million. Following City Council review, the City Council’s advisors issued a report in July 2024 seeking a reduction in Entergy New Orleans’s requested formula rate plan revenues in an aggregate amount of approximately $1.6 million for electric and gas together due to alleged errors. Effective with the first billing cycle of September 2024, Entergy New Orleans implemented rates reflecting an amount agreed upon by Entergy New Orleans and the City Council, per the approved process for formula rate plan implementation. The total formula rate plan increase implemented was $11.2 million, which includes an increase of $5.8 million in electric revenues and an increase of $5.4 million in gas revenues.

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 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

Entergy New Orleans, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

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 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

Entergy New Orleans, LLC and Subsidiaries

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 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 INCOME STATEMENTS
For the Three and Nine Months Ended September 30, 2024 and 2023
(Unaudited)

	Three Months Ended		Nine Months Ended
	2024	2023	2024	2023
	(In Thousands)		(In Thousands)
OPERATING REVENUES
Electric	$213,663	$235,280	$549,268	$573,191
Natural gas	18,852	19,036	75,549	77,961
TOTAL	232,515	254,316	624,817	651,152

OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale	19,385	28,922	68,524	99,920
Purchased power	67,947	68,115	192,647	200,664
Other operation and maintenance	42,500	45,273	127,552	117,461
Taxes other than income taxes	16,509	17,251	46,118	48,155
Depreciation and amortization	21,199	20,831	63,243	60,470
Other regulatory charges (credits) - net	1,738	4,946	84,917	6,133
TOTAL	169,278	185,338	583,001	532,803

OPERATING INCOME	63,237	68,978	41,816	118,349

OTHER INCOME (DEDUCTIONS)
Allowance for equity funds used during construction	572	332	1,461	1,062
Interest and investment income	421	1,535	878	5,986
Miscellaneous - net	(298)	(1,943)	54	(2,687)
TOTAL	695	(76)	2,393	4,361

INTEREST EXPENSE
Interest expense	10,600	9,171	30,936	28,793
Allowance for borrowed funds used during construction	(238)	(161)	(609)	(516)
TOTAL	10,362	9,010	30,327	28,277

INCOME BEFORE INCOME TAXES	53,570	59,892	13,882	94,433

Income taxes	14,438	16,347	2,597	26,889

NET INCOME	$39,132	$43,545	$11,285	$67,544

See Notes to Financial Statements.

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ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2024 and 2023
(Unaudited)
	2024	2023
	(In Thousands)
OPERATING ACTIVITIES
Net income	$11,285	$67,544
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation and amortization	63,243	60,470
Deferred income taxes, investment tax credits, and non-current taxes accrued	(890)	23,529
Changes in assets and liabilities:
Receivables	(124,000)	5,119
Fuel inventory	20	2,909
Accounts payable	(885)	(28,968)
Prepaid taxes and taxes accrued	3,470	734
Interest accrued	2,608	2,195
Deferred fuel costs	(626)	8,025
Other working capital accounts	(5,129)	14,598
Provisions for estimated losses	4,101	6,585
Other regulatory assets	10,139	8,597
Other regulatory liabilities	169,542	17,878
Pension and other postretirement funded status	(7,009)	(4,506)
Other assets and liabilities	(1,941)	923
Net cash flow provided by operating activities	123,928	185,632

INVESTING ACTIVITIES
Construction expenditures	(119,271)	(128,477)
Allowance for equity funds used during construction	1,461	1,062
Changes in money pool receivable - net	(3,601)	135,427

Payments to storm reserve escrow account	(4,014)	(2,712)
Changes in securitization account	861	(3,437)
Decrease in other investments	—	51
Net cash flow provided by (used in) investing activities	(124,564)	1,914

FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	148,943	14,630
Retirement of long-term debt	(91,245)	(106,073)
Contribution from customer for construction	—	15,000
Change in money pool payable - net	(21,651)	—

Other	(924)	(760)
Net cash flow provided by (used in) financing activities	35,123	(77,203)

Net increase in cash and cash equivalents	34,487	110,343
Cash and cash equivalents at beginning of period	26	4,464
Cash and cash equivalents at end of period	$34,513	$114,807

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized	$26,678	$25,545
Income taxes	$2,598	$1,600
Noncash investing activities:
Accrued construction expenditures	$3,422	$4,737

See Notes to Financial Statements.


ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, 2024 and December 31, 2023
(Unaudited)
	2024	2023
	(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash	$98	$26
Temporary cash investments	34,415	—
Total cash and cash equivalents	34,513	26
Securitization recovery trust account	1,565	2,426
Accounts receivable:
Customer	85,625	67,258
Allowance for doubtful accounts	(6,952)	(7,770)
Associated companies	104,612	1,657
Other	5,109	5,270
Accrued unbilled revenues	36,709	31,087
Total accounts receivable	225,103	97,502
Deferred fuel costs	6,774	6,148
Fuel inventory - at average cost	3,278	3,298
Materials and supplies - at average cost	33,639	30,019
Prepaid taxes	—	1,574
Prepayments and other	15,759	11,482
TOTAL	320,631	152,475

OTHER PROPERTY AND INVESTMENTS
Non-utility property - at cost (less accumulated depreciation)	832	832
Storm reserve escrow account	82,745	78,731

TOTAL	83,577	79,563

UTILITY PLANT
Electric	2,096,668	2,046,928
Natural gas	412,120	401,846
Construction work in progress	57,197	25,424
TOTAL UTILITY PLANT	2,565,985	2,474,198
Less - accumulated depreciation and amortization	894,610	858,672
UTILITY PLANT - NET	1,671,375	1,615,526

DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:

Other regulatory assets (includes securitization property of $— as of September 30, 2024 and $506 as of December 31, 2023)	172,228	182,367
Deferred fuel costs	4,080	4,080
Other	87,363	63,964
TOTAL	263,671	250,411

TOTAL ASSETS	$2,339,254	$2,097,975

See Notes to Financial Statements.


ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
September 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	44,847	76,736
Other	45,163	39,813
Customer deposits	33,159	32,420
Taxes accrued	1,896	—
Interest accrued	11,142	8,534


Other	11,309	8,953
TOTAL	226,791	252,731

NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued	195,942	195,615
Accumulated deferred investment tax credits	15,644	16,457
Regulatory liability for income taxes - net	33,974	36,061
Other regulatory liabilities	262,063	90,434

Accumulated provisions	92,225	88,124

Long-term debt (includes securitization bonds of $— as of September 30, 2024 and $5,415 as of December 31, 2023)	650,332	584,171
Long-term payable due to associated company	7,004	7,004
Other	37,240	20,624
TOTAL	1,294,424	1,038,490

Commitments and Contingencies

EQUITY
Member's equity	818,039	806,754
TOTAL	818,039	806,754

TOTAL LIABILITIES AND EQUITY	$2,339,254	$2,097,975

See Notes to Financial Statements.


ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN MEMBER'S EQUITY
For the Nine Months Ended September 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

Net income			43,545

Balance at September 30, 2023			$770,360

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

Net income			39,132

Balance at September 30, 2024			$818,039

See Notes to Financial Statements.

ENTERGY TEXAS, INC. AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

Results of Operations

Net Income

Third Quarter 2024 Compared to Third Quarter 2023

Net income decreased $31.8 million primarily due to lower volume/weather.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Net income decreased $34.9 million primarily due to higher depreciation and amortization expenses and higher other operation and maintenance expenses, partially offset by higher other income.

Operating Revenues

Third Quarter 2024 Compared to Third Quarter 2023

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


			Amount
			(In Millions)
2023 operating revenues			$616.6
Fuel, rider, and other revenues that do not significantly affect net income			12.7
Volume/weather			(33.7)
Retail electric price			1.4
2024 operating revenues			$597.0

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 less favorable weather on residential and commercial sales and a decrease in weather-adjusted residential usage. The decrease in weather-adjusted residential usage is primarily due to the effects of Hurricane Beryl in the third quarter 2024.

The retail electric price variance is insignificant and primarily due to the effect on unbilled revenue resulting from the implementation of the distribution cost recovery factor rider effective with the first billing cycle in October 2024. See Note 2 to the financial statements herein for discussion of the distribution cost recovery factor rider filing.

Entergy Texas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

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


	2024	2023	% Change
	(GWh)
Residential	2,138	2,474	(14)
Commercial	1,455	1,485	(2)
Industrial	2,506	2,459	2
Governmental	71	73	(3)
Total retail	6,170	6,491	(5)
Sales for resale:
Non-associated companies	141	128	10
Total	6,311	6,619	(5)

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

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

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


			Amount
			(In Millions)
2023 operating revenues			$1,588.5
Fuel, rider, and other revenues that do not significantly affect net income			(23.1)
Volume/weather			(10.4)
Retail electric price			5.6
2024 operating revenues			$1,560.6

The volume/weather variance is primarily due to the effect of less favorable weather on residential sales and a decrease in weather-adjusted residential usage. The decrease in weather-adjusted residential usage is primarily due to the effects of Hurricane Beryl in the third quarter 2024.

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.

Entergy Texas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

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


	2024	2023	% Change
	(GWh)
Residential	5,205	5,388	(3)
Commercial	3,764	3,726	1
Industrial	6,996	7,051	(1)
Governmental	201	203	(1)
Total retail	16,166	16,368	(1)
Sales for resale:
Non-associated companies	487	367	33
Total	16,653	16,735	—

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

Other Income Statement Variances

Third Quarter 2024 Compared to Third Quarter 2023

Other operation and maintenance expenses decreased primarily due to a decrease of $5.8 million in power delivery expenses primarily due to the timing of vegetation maintenance costs.

Other regulatory charges (credits) - net includes the reversal in third quarter 2023 of $21.9 million of regulatory liabilities to reflect the recognition of certain receipts by Entergy Texas under affiliated PPAs that have been resolved. See Note 2 to the financial statements in the Form 10-K for discussion of the 2022 base rate case.

Interest expense increased primarily due to the issuance of $350 million of 5.55% Series mortgage bonds in August 2024 and 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.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 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 $5.2 million in contract costs related to operational performance, customer service, and organizational health initiatives;
an increase of $3.9 million in compensation and benefits costs primarily due to higher healthcare claims activity in 2024;
an increase of $3.8 million in bad debt expense;
an increase of $3.7 million in non-nuclear generation expenses primarily due to a higher scope of work performed in 2024 as compared to 2023; and
an increase of $3.2 million in storm damage provisions.

Entergy Texas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

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;
additions to plant in service; and
an increase in depreciation rates effective with an increase in base rates in June 2023.

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 $5 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 discussion of the Entergy Texas reserve.

Interest expense increased primarily due to the issuance of $350 million of 5.80% Series mortgage bonds in August 2023 and the issuance of $350 million of 5.55% Series mortgage bonds in August 2024, 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.

Income Taxes

The effective income tax rates were 18.8% for the third quarter 2024 and 18.7% for the nine months ended September 30, 2024. The differences in the effective income tax rates for the third quarter 2024 and the nine months ended September 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.

The effective income tax rates were 20.1% for the third quarter 2023 and 19.8% for the nine months ended September 30, 2023. The differences in the effective income tax rates for the third quarter 2023 and the nine months ended September 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.

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 Texas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

Liquidity and Capital Resources

Cash Flow

Cash flows for the nine months ended September 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	550,819	498,457
Investing activities	(576,495)	(608,945)
Financing activities	357,333	357,787
Net increase in cash and cash equivalents	331,657	247,299

Cash and cash equivalents at end of period	$353,643	$250,796

Operating Activities

Net cash flow provided by operating activities increased $52.4 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to lower fuel and purchased power costs, the timing of recovery of fuel and purchased power costs, and a decrease of $23.7 million in income taxes paid in 2024 as a result of lower estimated income tax payments in comparison to 2023. The increase was partially offset by:

the timing of payments to vendors;
lower collections from customers; and
an increase of $46 million in interest paid.

See Note 2 to the financial statements herein and in the Form 10-K for a discussion of fuel and purchased power cost recovery.

Investing Activities

Net cash flow used in investing activities decreased $32.5 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to money pool activity. The decrease was partially offset by:

an increase of $100 million in transmission construction expenditures primarily due to higher capital expenditures as a result of increased development in Entergy Texas’s service area and increased spending on various transmission projects in 2024; and
an increase of $83.9 million in distribution construction expenditures primarily due to higher capital expenditures for storm restoration in 2024 and higher capital expenditures as a result of increased development in Entergy Texas’s service area. The increase in storm restoration expenditures is primarily due to Hurricane Beryl restoration efforts in 2024.

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 $280.9 million for the nine months ended September 30, 2024 compared to decreasing by $73.7 million for the nine months ended September 30, 2023. The money pool is an intercompany cash management program that makes possible intercompany borrowing and lending arrangements,

Entergy Texas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

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 $0.5 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to the issuance of $350 million of 5.80% Series mortgage bonds in August 2023 and other insignificant activity, substantially offset by the issuance of $350 million of 5.55% Series mortgage bonds in August 2024.

Capital Structure

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


	September 30, 2024		December 31, 2023
Debt to capital	51.5	%	50.9	%
Effect of excluding securitization bonds	(1.8	%)	(2.1	%)
Debt to capital, excluding securitization bonds (non-GAAP) (a)	49.7	%	48.8	%
Effect of subtracting cash	(2.8	%)	(0.2	%)
Net debt to net capital, excluding securitization bonds (non-GAAP) (a)	46.9	%	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.

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.

Entergy Texas is developing its capital investment plan for 2025 through 2027 and currently anticipates making $4.8 billion in capital investments during that period. In addition to routine capital spending to maintain operations, the preliminary estimate 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. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements, government actions, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital.

Entergy Texas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

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


September 30, 2024	December 31, 2023	September 30, 2023	December 31, 2022
(In Thousands)
$36,978	$317,882	$25,808	$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 September 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 September 30, 2024, $86.4 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. In its application, Entergy Texas noted that the Legend Power Station was expected to cost an estimated $1.46 billion and the Lone Star Power Station was expected to cost an estimated $735.3 million, in each case inclusive of the estimated costs of the generation facilities, interconnection costs, transmission network upgrades, and an allowance for funds used during construction. As described in the application, Entergy Texas is considering alternative financing approaches for the Legend Power Station and plans to pursue the financing option that is in the best interest of its customers. In July 2024 the PUCT referred the proceeding to the State Office of Administrative Hearings and, also in July 2024, the ALJ with the State Office of Administrative Hearings adopted a procedural schedule, with a hearing on the merits scheduled to begin in October 2024. In September 2024, Entergy Texas filed, and the ALJ with the State Office of Administrative Hearings granted, a motion to extend the procedural schedule in this proceeding in order to address certain developments relating to the cost and scope of the Legend Power Station and the Lone Star Power Station. As soon as the required information is developed, Entergy Texas plans to update the economic analyses in the application for both projects and to file a proposed updated procedural schedule. 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. In September 2024 the PUCT referred the proceeding to the State Office of Administrative Hearings and the ALJ with the State Office of Administrative Hearings adopted an agreed procedural schedule, with a hearing on the merits to be held in March 2025. A PUCT decision is expected in third quarter 2025. Subject to receipt of required regulatory approval and other conditions, the Segno Solar facility is expected to be in service by early 2027, and the Votaw Solar facility is expected to be in service by mid-2028.

Entergy Texas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

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. These projects are expected to be implemented 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. The ALJ with the State Office of Administrative Hearings adopted the agreed procedural schedule in August 2024. In September 2024, Entergy Texas filed, on behalf of the parties to the proceeding, and the ALJ with the State Office of Administrative Hearings granted, an unopposed motion to abate the procedural schedule, including the hearing on the merits, noting the parties had reached a settlement in principle and to allow the parties time to finalize a settlement agreement. In October 2024, Entergy Texas filed an unopposed settlement that would resolve all issues in the proceeding, supporting testimony, and a motion to admit evidence and remand the proceeding to the PUCT. Also in October 2024, the PUCT staff filed testimony in support of the unopposed settlement. 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 approximately $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. Entergy Texas expects to recover the majority of the restoration costs associated with Hurricane Beryl through its transmission and distribution cost recovery factor riders.

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

Entergy Texas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

transportation electrification riders be approved. In October 2024 the PUCT issued an order concluding that it is appropriate for Entergy Texas to own transportation electrification and charging infrastructure, including charging stations, and approving both of Entergy Texas’s proposed transportation electrification riders with a limitation that Entergy Texas’s infrastructure rider be applied only to publicly-available charging infrastructure and Entergy Texas not recover any outstanding fees from customers not taking service under the rider.

Distribution Cost Recovery Factor (DCRF) Rider

In June 2024, Entergy Texas filed with the PUCT a request to set a new DCRF rider. The new rider was designed to collect from Entergy Texas’s retail customers approximately $40.3 million annually based on its capital invested in distribution between January 1, 2022 and March 31, 2024. In September 2024, the PUCT approved the DCRF rider, consistent with Entergy Texas’s as-filed request, and rates became effective with the first billing cycle in October 2024.

In September 2024, Entergy Texas filed with the PUCT a request to amend its DCRF rider. The proposed rider is designed to collect from Entergy Texas’s retail customers approximately $48.9 million annually, or $8.6 million in incremental annual revenues beyond Entergy Texas’s currently effective DCRF rider based on its capital invested in distribution between April 1, 2024 and June 30, 2024. In October 2024 the PUCT staff filed a recommendation that the PUCT approve Entergy Texas’s as-filed application. A PUCT decision is expected in fourth quarter 2024.

Transmission Cost Recovery Factor (TCRF) Rider

In October 2024, Entergy Texas filed with the PUCT a request to set a new TCRF rider. The proposed rider is designed to collect from Entergy Texas’s retail customers approximately $9.7 million annually based on its capital invested in transmission between January 1, 2022 and June 30, 2024 and changes in other transmission charges. Entergy Texas requested that the PUCT issue a decision in fourth quarter 2024, unless a hearing on the merits is requested.

Fuel and purchased power cost recovery

In September 2024, Entergy Texas filed an application with the PUCT to reconcile its fuel and purchased power costs for the period from April 2022 through March 2024. During the reconciliation period, Entergy Texas incurred approximately $1.6 billion in eligible fuel and purchased power expenses to generate and purchase electricity to serve its customers, net of certain revenues credited to such expenses and other adjustments. Entergy Texas’s cumulative under-recovery balance for the reconciliation period was approximately $30 million, including interest, which Entergy Texas requested authority to carry over as part of the cumulative fuel balance for the subsequent reconciliation period beginning April 2024.

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.

Entergy Texas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

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 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 Nine Months Ended September 30, 2024 and 2023
(Unaudited)

	Three Months Ended		Nine Months Ended
	2024	2023	2024	2023
	(In Thousands)		(In Thousands)
OPERATING REVENUES
Electric	$596,998	$616,595	$1,560,566	$1,588,531

OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale	154,340	94,099	365,997	325,155
Purchased power	93,327	131,927	276,383	352,568
Other operation and maintenance	80,377	85,929	241,513	213,430
Taxes other than income taxes	25,181	28,372	72,727	85,085
Depreciation and amortization	78,331	76,888	258,660	202,288
Other regulatory charges (credits) - net	4,850	(5,909)	(8,602)	6,541
TOTAL	436,406	411,306	1,206,678	1,185,067

OPERATING INCOME	160,592	205,289	353,888	403,464

OTHER INCOME
Allowance for equity funds used during construction	12,976	7,244	33,058	19,093
Interest and investment income	4,269	2,741	10,964	5,004
Miscellaneous - net	(2,756)	(619)	(8,254)	(2,121)
TOTAL	14,489	9,366	35,768	21,976

INTEREST EXPENSE
Interest expense	34,393	29,524	100,842	83,333
Allowance for borrowed funds used during construction	(5,051)	(2,714)	(12,872)	(7,127)
TOTAL	29,342	26,810	87,970	76,206

INCOME BEFORE INCOME TAXES	145,739	187,845	301,686	349,234

Income taxes	27,428	37,756	56,409	69,015

NET INCOME	118,311	150,089	245,277	280,219

Preferred dividend requirements	518	518	1,554	1,554

EARNINGS APPLICABLE TO COMMON STOCK	$117,793	$149,571	$243,723	$278,665

See Notes to Financial Statements.

(Page left blank intentionally)


ENTERGY TEXAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2024 and 2023
(Unaudited)
	2024	2023
	(In Thousands)
OPERATING ACTIVITIES
Net income	$245,277	$280,219
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation and amortization	258,660	202,288
Deferred income taxes, investment tax credits, and non-current taxes accrued	46,499	57,279
Changes in assets and liabilities:
Receivables	(70,355)	(40,609)
Fuel inventory	5,606	(25,734)
Accounts payable	35,245	(9,871)
Taxes accrued	(8,492)	(29,995)
Interest accrued	(15,023)	13,612
Deferred fuel costs	149,954	97,451
Other working capital accounts	(35,684)	(23,042)
Provisions for estimated losses	(1,268)	511
Other regulatory assets	20,987	(17,997)
Other regulatory liabilities	(31,304)	(13,111)
Pension and other postretirement funded status	(12,044)	(8,961)
Other assets and liabilities	(37,239)	16,417
Net cash flow provided by operating activities	550,819	498,457

INVESTING ACTIVITIES
Construction expenditures	(888,132)	(711,382)
Allowance for equity funds used during construction	33,058	19,093
Proceeds from sale of assets	1,325	11,000
Changes in money pool receivable - net	280,904	73,660
Changes in securitization account	(4,490)	(1,402)
Decrease in other investments	840	86

Net cash flow used in investing activities	(576,495)	(608,945)

FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	343,436	344,966
Retirement of long-term debt	(9,104)	(8,856)




Preferred stock dividends paid	(1,554)	(1,554)
Other	24,555	23,231
Net cash flow provided by financing activities	357,333	357,787

Net increase in cash and cash equivalents	331,657	247,299
Cash and cash equivalents at beginning of period	21,986	3,497
Cash and cash equivalents at end of period	$353,643	$250,796

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized	$113,605	$67,605
Income taxes	$6,793	$30,500
Noncash investing activities:
Accrued construction expenditures	$196,788	$178,740

See Notes to Financial Statements.


ENTERGY TEXAS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, 2024 and December 31, 2023
(Unaudited)
	2024	2023
	(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash	$289	$1,497
Temporary cash investments	353,354	20,489
Total cash and cash equivalents	353,643	21,986
Securitization recovery trust account	9,686	5,195
Accounts receivable:
Customer	142,903	88,468
Allowance for doubtful accounts	(1,652)	(1,484)
Associated companies	50,561	329,941
Other	27,193	24,416
Accrued unbilled revenues	84,558	72,771
Total accounts receivable	303,563	514,112
Deferred fuel costs	—	139,019
Fuel inventory - at average cost	45,241	50,847
Materials and supplies - at average cost	153,989	123,020

Prepayments and other	43,938	35,232
TOTAL	910,060	889,411

OTHER PROPERTY AND INVESTMENTS
Investments in affiliates - at equity	118	214
Non-utility property - at cost (less accumulated depreciation)	376	376
Other	15,374	15,068
TOTAL	15,868	15,658

UTILITY PLANT
Electric	8,288,259	7,931,340
Construction work in progress	1,447,020	857,707
TOTAL UTILITY PLANT	9,735,279	8,789,047
Less - accumulated depreciation and amortization	2,528,368	2,363,919
UTILITY PLANT - NET	7,206,911	6,425,128

DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Other regulatory assets (includes securitization property of $238,093 as of September 30, 2024 and $250,324 as of December 31, 2023)	575,619	596,606
Other	163,334	129,769
TOTAL	738,953	726,375

TOTAL ASSETS	$8,871,792	$8,056,572

See Notes to Financial Statements.


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

Accounts payable:
Associated companies	$64,376	$74,423
Other	290,049	195,703
Customer deposits	41,069	39,999
Taxes accrued	70,395	78,887
Interest accrued	16,262	31,285
Deferred fuel costs	10,935	—
Other	20,773	16,237
TOTAL	513,859	436,534

NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued	874,261	814,905
Accumulated deferred investment tax credits	7,402	7,963
Regulatory liability for income taxes - net	98,901	114,759
Other regulatory liabilities	27,567	43,013
Asset retirement cost liabilities	17,457	11,743
Accumulated provisions	8,212	9,480
Long-term debt (includes securitization bonds of $248,761 as of September 30, 2024 and $257,592 as of December 31, 2023)	3,561,402	3,225,092
Other	400,346	274,421
TOTAL	4,995,548	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	2,074,058	1,830,335
Total common shareholder's equity	3,323,635	3,079,912
Preferred stock without sinking fund	38,750	38,750
TOTAL	3,362,385	3,118,662

TOTAL LIABILITIES AND EQUITY	$8,871,792	$8,056,572

See Notes to Financial Statements.


ENTERGY TEXAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the Nine Months Ended September 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

Net income	—	—	—	150,089	150,089


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

Balance at September 30, 2023	$38,750	$49,452	$1,050,125	$1,819,799	$2,958,126

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

Net income	—	—	—	118,311	118,311
Preferred stock dividends	—	—	—	(518)	(518)

Balance at September 30, 2024	$38,750	$49,452	$1,200,125	$2,074,058	$3,362,385

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

Third Quarter 2024 Compared to Third Quarter 2023

Net income decreased $1.6 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.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Net income increased $1 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 24% for the third quarter 2024 and 22.5% for the nine months ended September 30, 2024. The differences in the effective income tax rates for the third quarter 2024 and the nine months ended September 30, 2024 versus the federal statutory rate of 21% were 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 22.5% for the third quarter 2023 and 22.9% for the nine months ended September 30, 2023. The differences in the effective income tax rates for the third quarter 2023 and the nine months ended September 30, 2023 versus the federal statutory rate of 21% were primarily due to the accrual for

System Energy Resources, Inc.

Management’s Financial Discussion and Analysis

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.

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 nine months ended September 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	113,280	155,190
Investing activities	(241,229)	(27,165)
Financing activities	206,084	(35,172)
Net increase in cash and cash equivalents	78,135	92,853

Cash and cash equivalents at end of period	$78,195	$95,793

Operating Activities

Net cash flow provided by operating activities decreased $41.9 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to:

the refund of $92.7 million made in 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 of $21.2 million in spending 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

Net cash flow used in investing activities increased $214.1 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to:

money pool activity;
an increase in cash used of $85.8 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; and
an increase of $43.5 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 $8.1 million for the nine months ended September 30, 2024 compared to decreasing by $85.2 million for the nine months ended September 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 $206.1 million of cash for the nine months ended September 30, 2024 compared to using $35.2 million of cash for the nine months ended September 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 $68.5 million in 2024 compared to net repayments of $43.4 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 nine months ended September 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.


	September 30, 2024		December 31, 2023
Debt to capital	41.9	%	45.4	%
Effect of subtracting cash	(2.4	%)	—	%
Net debt to net capital (non-GAAP)	39.5	%	45.4	%

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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 is developing its capital investment plan for 2025 through 2027 and currently anticipates making $385 million in capital investments during that period. The preliminary estimate includes amounts associated with Grand Gulf investments and initiatives.

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


September 30, 2024	December 31, 2023	September 30, 2023	December 31, 2022
(In Thousands)
$8,119	($12,246)	$9,772	$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 September 30, 2024, $90 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, the APSC, and the City Council and approved by the FERC. A settlement has been reached with the LPSC and is pending FERC approval, as described in “System Energy Settlement with the LPSC” below. If the settlement with the

System Energy Resources, Inc.

Management’s Financial Discussion and Analysis

LPSC is approved by 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 $11.6 million, which includes interest through September 30, 2024, and the estimated resulting annual rate reduction would be approximately $6.8 million. As a result of the settlement agreements with the MPSC, the APSC, and the City Council, the estimated refund and rate reduction only includes the portion related to Entergy Louisiana, whose settlement with the LPSC is pending FERC approval. See “System Energy Settlement with the MPSC” in the Form 10-K, see “System Energy Settlement with the APSC” below and in the Form 10-K, and see “System Energy Settlement with the City Council” below 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.

In August 2022 the D.C. Circuit issued an order addressing appeals of FERC’s Opinion No. 569 and 569-A, which established the methodology applied in the ALJ’s initial decision in the proceeding against System Energy discussed above and in the Form 10-K. The appellate order addressed the methodology for determining the return on equity applicable to transmission owners in MISO. The D.C. Circuit found the FERC’s use of the risk premium model as part of the methodology to be arbitrary and capricious and remanded the case back to the FERC. In October 2024 the FERC issued a remand order in the MISO transmission owners’ case, concluding that the record supported the methodology that it originally directed in Opinion No. 569 utilizing an equal weighting of the two-step discounted cash flow model and capital asset pricing model. As a result, it determined that the just and reasonable return on equity for the MISO transmission owners is 9.98%. In light of the System Energy settlements described below, the FERC’s changes to its return on equity methodology in the decision on the MISO transmission owners’ return on equity will not have any immediate effect on System Energy’s return on equity because System Energy’s return on equity is locked-in through the end of June 2026.

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Management’s Financial Discussion and Analysis

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-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

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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 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. In September 2024 the parties filed a joint motion to continue and stay oral argument, previously scheduled for October 2024, pending the FERC’s decision whether to approve the settlement between System Energy and the LPSC, and the United States Court of Appeals for the Fifth Circuit granted the motion.

System Energy Resources, Inc.

Management’s Financial Discussion and Analysis

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.

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

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Management’s Financial Discussion and Analysis

Sales Agreement bills. Based on this finding, the initial decision recommended refunds; System Energy estimates that those refunds for Entergy Louisiana would total approximately $31.5 million plus $45.6 million of interest through September 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 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

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Management’s Financial Discussion and Analysis

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 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 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.

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 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 Energy’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.

In August 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 $98 million to Entergy New Orleans in October 2024. 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. 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.

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Management’s Financial Discussion and Analysis

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. In August 2024 the LPSC approved the settlement. In September 2024 the settling parties filed the settlement for approval by the FERC.

The terms of the settlement with the LPSC 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 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 Energy’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.

The settlement also includes an agreement that, subject to the receipt of necessary regulatory approvals, Entergy Louisiana will divest to Entergy Mississippi all of its interest in Grand Gulf capacity and energy under the Unit Power Sales Agreement and its purchases from Entergy Arkansas under the MSS-4 replacement tariff. Subject to the receipt of all required regulatory approvals, divestiture will be effective on January 1, 2025. In October 2024 Entergy Louisiana and Entergy Mississippi filed with the FERC a power purchase agreement under which Entergy Mississippi would purchase Entergy Louisiana’s purchases of Grand Gulf capacity and energy. The power purchase agreement is governed by the MSS-4 replacement tariff, a tariff governing the sales of energy and capacity among the Utility operating companies. The parties requested that the FERC issue an order accepting the power purchase agreement no later than December 2024.

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

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Management’s Financial Discussion and Analysis

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 in late May and early June 2024.

In September 2024 the presiding ALJ issued an initial decision recommending that the FERC approve inclusion of a line item for prepaid and accrued pension costs; however, the presiding ALJ did not agree with System Energy’s proposed methodology to calculate the value of the prepaid and accrued pension cost input. Instead, the presiding ALJ recommended limiting System Energy’s recovery to the prepaid and accrued pension costs that were incurred beginning in 2015 and later.

System Energy disputes the presiding ALJ's determination concerning the methodology used to calculate the prepaid and accrued pension input, and System Energy filed exceptions to these rulings in October 2024. If the ALJ’s determination is affirmed by the FERC, System Energy estimates refunds, including interest through September 30, 2024, of approximately $15 million to $19 million would be owed related to the ALJ’s findings. The ALJ's initial decision is not binding on the FERC and is an interim step in the hearing process. No refunds will be owed in connection with this proceeding and no changes to System Energy’s pension cost recovery methodology will be implemented unless and until the FERC requires them in a final order. This proceeding is not covered by the global settlements described above.

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 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.

System Energy Resources, Inc.

Management’s Financial Discussion and Analysis

New Accounting Pronouncements


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

	Three Months Ended		Nine Months Ended
	2024	2023	2024	2023
	(In Thousands)		(In Thousands)
OPERATING REVENUES
Electric	$147,339	$119,467	$445,893	$429,423

OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale	17,427	18,881	47,664	56,511
Nuclear refueling outage expenses	4,180	6,717	14,977	20,028
Other operation and maintenance	47,868	52,623	145,037	149,809
Decommissioning	10,923	10,495	32,445	31,173
Taxes other than income taxes	6,802	7,261	20,903	22,271
Depreciation and amortization	30,518	(11,597)	90,639	60,843
Other regulatory charges (credits) - net	(8,347)	(9,207)	13,868	(48,081)
TOTAL	109,371	75,173	365,533	292,554

OPERATING INCOME	37,968	44,294	80,360	136,869

OTHER INCOME
Allowance for equity funds used during construction	1,647	1,866	5,532	5,289
Interest and investment income	5,288	2,738	52,228	10,140
Miscellaneous - net	360	(1,405)	432	(12,096)
TOTAL	7,295	3,199	58,192	3,333

INTEREST EXPENSE
Interest expense	11,652	12,199	34,895	36,325
Allowance for borrowed funds used during construction	(685)	(448)	(2,138)	(1,239)
TOTAL	10,967	11,751	32,757	35,086

INCOME BEFORE INCOME TAXES	34,296	35,742	105,795	105,116

Income taxes	8,219	8,045	23,752	24,115

NET INCOME	$26,077	$27,697	$82,043	$81,001

See Notes to Financial Statements.


SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2024 and 2023
(Unaudited)
	2024	2023
	(In Thousands)
OPERATING ACTIVITIES
Net income	$82,043	$81,001
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation, amortization, and decommissioning, including nuclear fuel amortization	162,837	141,213
Deferred income taxes, investment tax credits, and non-current taxes accrued	38,301	24,887
Changes in assets and liabilities:
Receivables	7,714	49,881
Accounts payable	70,282	(16,504)
Taxes accrued	(16,404)	(5,782)
Interest accrued	827	4,571
Other working capital accounts	(21,934)	8,936
Other regulatory assets	22,117	(64,565)
Other regulatory liabilities	(45,306)	(15,981)
Pension and other postretirement funded status	(10,660)	(14,484)
Other assets and liabilities	(176,537)	(37,983)
Net cash flow provided by operating activities	113,280	155,190

INVESTING ACTIVITIES
Construction expenditures	(117,597)	(80,068)
Allowance for equity funds used during construction	5,532	5,289
Nuclear fuel purchases	(122,946)	(57,790)
Proceeds from sale of nuclear fuel	16,465	37,104
Decrease (increase) in other investments	23	(4)
Proceeds from nuclear decommissioning trust fund sales	682,377	245,386
Investment in nuclear decommissioning trust funds	(696,964)	(262,291)
Changes in money pool receivable - net	(8,119)	85,209

Net cash flow used in investing activities	(241,229)	(27,165)

FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	812,087	662,965
Retirement of long-term debt	(743,757)	(698,137)
Capital contribution from parent	150,000	—

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



Net cash flow provided by (used in) financing activities	206,084	(35,172)

Net increase in cash and cash equivalents	78,135	92,853
Cash and cash equivalents at beginning of period	60	2,940
Cash and cash equivalents at end of period	$78,195	$95,793

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized	$36,497	$30,249
Income taxes	($2,326)	$—
Noncash investing activities:
Accrued construction expenditures	$15,240	$16,732

See Notes to Financial Statements.


SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
ASSETS
September 30, 2024 and December 31, 2023
(Unaudited)
	2024	2023
	(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash	$616	$60
Temporary cash investments	77,579	—
Total cash and cash equivalents	78,195	60
Accounts receivable:
Associated companies	56,881	54,544
Other	4,929	6,861
Total accounts receivable	61,810	61,405

Materials and supplies - at average cost	165,368	155,565
Deferred nuclear refueling outage costs	23,742	8,603


Prepayments and other	6,817	3,373
TOTAL	335,932	229,006

OTHER PROPERTY AND INVESTMENTS
Decommissioning trust funds	1,525,289	1,342,317
TOTAL	1,525,289	1,342,317

UTILITY PLANT
Electric	5,613,464	5,495,728

Construction work in progress	96,380	130,866
Nuclear fuel	207,738	160,655
TOTAL UTILITY PLANT	5,917,582	5,787,249
Less - accumulated depreciation and amortization	3,553,541	3,493,299
UTILITY PLANT - NET	2,364,041	2,293,950

DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:

Other regulatory assets	424,243	446,360

Other	13,408	730
TOTAL	437,651	447,090

TOTAL ASSETS	$4,662,913	$4,312,363

See Notes to Financial Statements.


SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
LIABILITIES AND EQUITY
September 30, 2024 and December 31, 2023
(Unaudited)
	2024	2023
	(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt	$90	$57

Accounts payable:
Associated companies	188,152	118,523
Other	40,956	73,580
Taxes accrued	10,997	27,401

Interest accrued	13,781	12,954


Other	4,353	4,354
TOTAL	258,329	236,869

NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued	445,859	405,744
Accumulated deferred investment tax credits	44,908	46,960
Regulatory liability for income taxes - net	106,316	107,458
Other regulatory liabilities	738,748	782,912
Decommissioning	1,116,679	1,084,234
Pension and other postretirement liabilities	21,535	19,491
Long-term debt	809,495	738,402
Other	462	1,754
TOTAL	3,284,002	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)	53,732	(28,311)
TOTAL	1,120,582	888,539

TOTAL LIABILITIES AND EQUITY	$4,662,913	$4,312,363

See Notes to Financial Statements.


SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF CHANGES IN COMMON EQUITY
For the Nine Months Ended September 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

Net income	—	27,697	27,697

Balance at September 30, 2023	$1,086,850	($56,082)	$1,030,768


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

Net income	—	26,077	26,077

Balance at September 30, 2024	$1,066,850	$53,732	$1,120,582

See Notes to Financial Statements.

ENTERGY CORPORATION AND SUBSIDIARIES

PART II. OTHER INFORMATION

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