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ENTERGY CORPORATION

(ETR)
  Report
Delayed Nyse  -  04:00 2022-10-06 pm EDT
102.71 USD   -2.10%
10/04Entergy Arkansas Announces 250-MW Solar Facility Near Osceola
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Entergy : MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS

08/06/2021 | 10:37am EDT

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


•The Utility business segment includes the generation, transmission,
distribution, and sale of electric power in portions of Arkansas, Mississippi,
Texas, and Louisiana, including the City of New Orleans; and operation of a
small natural gas distribution business.
•The Entergy Wholesale Commodities business segment includes the ownership,
operation, and decommissioning of nuclear power plants located in the northern
United States and the sale of the electric power produced by its operating
plants to wholesale customers. Entergy Wholesale Commodities also provides
services to other nuclear power plant owners and owns interests in non-nuclear
power plants that sell the electric power produced by those plants to wholesale
customers. See "Entergy Wholesale Commodities Exit from the Merchant Power
Business" below and in the Form 10-K for discussion of the operation and planned
shutdown and sale of each of the Entergy Wholesale Commodities nuclear power
plants.

See Note 7 to the financial statements herein for financial information regarding Entergy's business segments.

The COVID-19 Pandemic

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - The COVID-19 Pandemic" in the Form 10-K for a discussion of the COVID-19 pandemic and its effects on Entergy's business.

Hurricane Laura, Hurricane Delta, and Hurricane Zeta


See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Hurricane Laura, Hurricane
Delta, and Hurricane Zeta" in the Form 10-K for a discussion of Hurricane Laura,
Hurricane Delta, and Hurricane Zeta, which caused significant damage to portions
of the Utility's service territories in Louisiana, including New Orleans, Texas,
and to a lesser extent, in Arkansas and Mississippi. See Note 2 to the financial
statements herein for discussion of storm cost filings made in 2021 by Entergy
Louisiana, Entergy New Orleans, and Entergy Texas.

Winter Storm Uri


See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - February 2021 Winter
Storms" in the Form 10-K for a discussion of the winter storms and extreme cold
temperatures experienced in the United States, including Entergy's service area,
in February 2021 (Winter Storm Uri). Fuel and purchased power costs for February
2021 for Entergy were approximately $720 million, including $145 million for
Entergy Arkansas, $285 million for Entergy Louisiana, $65 million for Entergy
Mississippi, $35 million for Entergy New Orleans, and $185 million for Entergy
Texas. This compares to fuel and purchased power costs for February 2020 for
Entergy of $245 million, including $40 million for Entergy Arkansas, $95 million
for Entergy Louisiana, $35 million for Entergy Mississippi, $25 million for
Entergy New Orleans, and $50 million for Entergy Texas. See Note 2 to the
financial statements herein for discussion of storm cost filings made in 2021 by
Entergy Louisiana and Entergy Texas. See Note 2 to the financial statements
herein and in the Form 10-K for discussion of fuel cost recovery at the Utility
operating companies.





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Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
Results of Operations

Second Quarter 2021 Compared to Second Quarter 2020


Following are income statement variances for Utility, Entergy Wholesale
Commodities, Parent & Other, and Entergy comparing the second quarter 2021 to
the second quarter 2020 showing how much the line item increased or (decreased)
in comparison to the prior period:
                                                                                 Entergy
                                                                                Wholesale                 Parent &
                                                        Utility                Commodities               Other (a)                Entergy
                                                                                         (In Thousands)
2020 Net Income (Loss) Attributable to
Entergy Corporation                                    $344,869                   $84,631                ($68,967)               $360,533

Operating revenues                                      460,324                   (51,053)                     11                 409,282
Fuel, fuel-related expenses, and gas
purchased for resale                                    284,683                       376                       -                 285,059
Purchased power                                          32,515                     7,895                       -                  40,410
Other regulatory charges (credits) - net                (29,891)                        -                       -                 (29,891)
Other operation and maintenance                         102,213                   (56,992)                   (364)                 44,857
Asset write-offs, impairments, and related                    -                   335,317                       -
charges                                                                                                                           335,317
Taxes other than income taxes                             5,654                    (8,346)                    (43)                 (2,735)
Depreciation and amortization                            28,904                   (11,040)                    (88)                 17,776

Other income (deductions)                               (45,535)                 (152,885)                  4,205                (194,215)
Interest expense                                         10,085                    (2,809)                  1,444                   8,720
Other expenses                                            1,942                   (12,350)                      -                 (10,408)
Income taxes                                             (2,350)                  (96,163)                 (9,018)               (107,531)

2021 Net Income (Loss) Attributable to
Entergy Corporation                                    $325,903                 ($275,195)               ($56,682)                ($5,974)


(a)Parent & Other includes eliminations, which are primarily intersegment activity.


Second quarter 2021 results of operations include a charge of $340 million ($268
million net-of-tax) as a result of the sale of the Indian Point Energy Center in
May 2021. See Note 14 to the financial statements herein for further discussion
of the sale of the Indian Point Energy Center.

Second quarter 2020 results of operations include gains of $225 million
(pre-tax) on Entergy Wholesale Commodities' nuclear decommissioning trust fund
investments reflecting the equity market rebound from the March 2020 decline
associated with the COVID-19 pandemic. See Notes 8 and 9 to the financial
statements herein for a discussion of decommissioning trust fund investments.

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                                            Entergy Corporation and Subsidiaries
                                  Management's Financial Discussion and Analysis
Operating Revenues

Utility

Following is an analysis of the change in operating revenues comparing the second quarter 2021 to the second quarter 2020:

                                                                                 Amount
                                                                              (In Millions)
2020 operating revenues                                                                $2,213
Fuel, rider, and other revenues that do not significantly affect net
income                                                                                    354
Retail electric price                                                                      96
Volume/weather                                                                             10
2021 operating revenues                                                                $2,673



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

The retail electric price variance is primarily due to:


•an increase in Entergy Arkansas's formula rate plan rates effective with the
first billing cycle of May 2021;
•increases in Entergy Louisiana's overall formula rate plan revenues, including
an increase in the transmission recovery mechanism effective September 2020, and
an interim increase effective December 2020 due to the inclusion of the
first-year revenue requirement for the Washington Parish Energy Center;
•an increase in Entergy Mississippi's formula rate plan rates effective, in
part, with the first billing cycle of April 2021;
•an interim increase in Entergy New Orleans's formula rate plan revenues
resulting from the recovery of New Orleans Power Station costs, effective
November 2020; and
•the implementation of the generation cost recovery rider, which includes the
first-year revenue requirement for the Montgomery County Power Station,
effective January 2021, an increase in the transmission cost recovery factor
rider effective March 2021, and an increase in the distribution cost recovery
factor rider effective March 2021, each at Entergy Texas.

See Note 2 to the financial statements herein and in the Form 10-K for further discussion of the regulatory proceedings discussed above.


The volume/weather variance is primarily due to an increase of 777 GWh, or 3%,
in billed electricity usage primarily due to an increase in commercial usage
resulting from reduced impacts from the COVID-19 pandemic on businesses as
compared to prior year and an increase in industrial usage primarily due to an
increase in demand from expansion projects, primarily in the transportation,
metals, and chemicals industries, and an increase in demand from cogeneration
customers. The increase was partially offset by a decrease in usage from
residential customers primarily due to the impact that the COVID-19 pandemic had
on prior year usage. See "The COVID-19 Pandemic" section of Entergy Corporation
and Subsidiaries Management's Financial Discussion and Analysis in the Form 10-K
for discussion of the COVID-19 pandemic.
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Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis

Billed electric energy sales for Utility for the three months ended June 30, 2021 and 2020 are as follows:

                                         2021         2020        % Change
                                               (GWh)
                    Residential          7,361        7,759          (5)
                    Commercial           6,370        6,071           5
                    Industrial          12,690       11,846           7
                    Governmental           602          570           6
                    Total retail        27,023       26,246           3
                    Sales for resale     4,716        3,111          52
                    Total               31,739       29,357           8


See Note 13 to the financial statements herein for additional discussion of operating revenues.

Entergy Wholesale Commodities


Operating revenues for Entergy Wholesale Commodities decreased from $200 million
for the second quarter 2020 to $149 million for the second quarter 2021
primarily due to the shutdown of Indian Point 3 in April 2021 and the shutdown
of Indian Point 2 in April 2020.

Following are key performance measures for Entergy Wholesale Commodities for the second quarters 2021 and 2020:

                                                             2021        2020
           Owned capacity (MW) (a)                          1,205       2,246
           GWh billed                                       2,687       4,958

           Entergy Wholesale Commodities Nuclear Fleet
           Capacity factor                                   94%         96%
           GWh billed                                       2,356       4,580
           Average energy price ($/MWh)                     $48.75      $35.48
           Average capacity price ($/kW-month)              $0.32       $2.33


The Entergy Wholesale Commodities nuclear power plants had no refueling outage days in the second quarters of 2021 and 2020.

(a)The reduction in owned capacity is due to the shutdown of the 1,041 MW Indian Point 3 plant in April 2021.


Other Income Statement Items

Utility

Other operation and maintenance expenses increased from $589 million for the
second quarter 2020 to $691 million for the second quarter 2021 primarily due
to:

•an increase of $16 million in non-nuclear generation expenses primarily due to
a higher scope of work performed during plant outages in 2021 as compared to
2020 and higher expenses associated with plants placed in service, including the
New Orleans Power Station, which began commercial operation in May
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                                  Management's Financial Discussion and Analysis
2020; the Washington Parish Energy Center, purchased in November 2020; and the
Montgomery County Power Station, which began commercial operation in January
2021;
•an increase of $15 million in nuclear generation expenses primarily due to
higher nuclear labor costs and a higher scope of work performed in 2021 as
compared to 2020;
•an increase of $14 million in compensation and benefits costs primarily due to
lower healthcare claims activity in 2020 as a result of the COVID-19 pandemic,
an increase in healthcare cost rates, and an increase in net periodic pension
and other postretirement benefits costs as a result of a decrease in the
discount rate used to value the benefit liabilities. 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 benefit
costs;
•an increase of $14 million in distribution operations expenses primarily due to
higher distribution reliability costs and higher vegetation maintenance costs;
•the effects of recording in second quarter 2020 final judgments to resolve
claims in the Waterford 3 damages case against the DOE related to spent nuclear
fuel storage costs. The damages awarded included the reimbursement of
approximately $8 million of spent nuclear fuel storage costs previously recorded
as other operation and maintenance expense. See Note 8 to the financial
statements in the Form 10-K for discussion of the spent nuclear fuel litigation;
•an increase of $7 million in information technology costs primarily due to
higher contract costs and higher costs associated with system maintenance;
•an increase of $6 million primarily due to contract costs in 2021 related to
customer solutions and sustainability initiatives; and
•several individually insignificant items.

Depreciation and amortization expenses increased primarily due to additions to plant in service, including the Montgomery County Power Station.

Other regulatory charges (credits) - net includes:


•regulatory credits of $11 million, recorded in the second quarter 2020 at
Entergy Arkansas, to reflect the amortization of the 2018 historical year
netting adjustment reflected in the 2019 formula rate plan filing. See Note 2 to
the financial statements in the Form 10-K for discussion of the 2019 formula
rate plan filing; and
•regulatory credits of $20 million, recorded in the second quarter 2021 at
Entergy Mississippi, to reflect the effects of the joint stipulation reached in
the 2021 formula rate plan filing proceeding. See Note 2 to the financial
statements herein for discussion of the 2021 formula rate plan filing.

Other income decreased primarily due to changes in decommissioning trust fund
activity and a decrease in the allowance for equity funds used during
construction due to higher construction work in progress in 2020, including the
Montgomery County Power Station project.

Interest expense increased primarily due to:


•the issuances by Entergy Louisiana of $1.1 billion of 0.62% Series mortgage
bonds, $300 million of 2.90% Series mortgage bonds, and $300 million of 1.60%
Series mortgage bonds, each in November 2020;
•the issuances by Entergy Louisiana of $500 million of 2.35% Series mortgage
bonds and $500 million of 3.10% Series mortgage bonds, each in March 2021;
•the issuance by Entergy Mississippi of $370 million of 3.50% Series mortgage
bonds in March 2021; and
•a decrease in the allowance for borrowed funds used during construction due to
higher construction work in progress in 2020, including the Montgomery County
Power Station project.

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Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis

The increase was partially offset by:


•the repayments by Entergy Louisiana of $200 million of 5.25% Series mortgage
bonds and $100 million of 4.70% Series mortgage bonds, each in December 2020;
and
•the repayment by Entergy Louisiana of $200 million of 4.8% Series mortgage
bonds in May 2021.

Entergy Wholesale Commodities

Other operation and maintenance expenses decreased from $140 million for the second quarter 2020 to $83 million for the second quarter 2021 primarily due to:


•a decrease of $35 million primarily resulting from the absence of expenses from
Indian Point 2, after it was shut down in April 2020, and Indian Point 3, after
it was shut down in April 2021; and
•a decrease of $22 million in severance and retention expenses. Severance and
retention expenses were incurred in 2021 and 2020 due to management's strategy
to exit the Entergy Wholesale Commodities merchant power business.

See "Entergy Wholesale Commodities Exit from the Merchant Power Business" below
and in the Form 10-K for a discussion of management's strategy to shut down and
sell all of the plants in Entergy Wholesale Commodities' merchant nuclear fleet.
See Note 7 to the financial statements herein for further discussion of
severance and retention expenses.

Asset write-offs, impairments, and related charges for the second quarter 2021
include a charge of $340 million ($268 million net-of-tax) as a result of the
sale of the Indian Point Energy Center in May 2021. See Note 14 to the financial
statements herein for further discussion of the sale of the Indian Point Energy
Center. See "Entergy Wholesale Commodities Exit from the Merchant Power
Business" below and in the Form 10-K for a discussion of management's strategy
to shut down and sell all of the plants in the Entergy Wholesale Commodities
merchant nuclear fleet.

Depreciation and amortization expenses decreased primarily due to the absence of
depreciation expense from Indian Point 3, after it was shut down in April 2021,
and Indian Point 2, after it was shut down in April 2020.

Other income decreased primarily due to lower gains on decommissioning trust
fund investments, including the absence of earnings from nuclear decommissioning
trust funds that were transferred in the sale of the Indian Point Energy Center
in May 2021. See Notes 8 and 9 to the financial statements herein for a
discussion of decommissioning trust fund investments. See Note 14 to the
financial statements herein for further discussion of the sale of the Indian
Point Energy Center.

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

Income Taxes


The effective income tax rate was 93% for the second quarter 2021. The
difference in the effective income tax rate for the second quarter 2021 versus
the federal statutory rate of 21% was primarily due to the amortization of
excess accumulated deferred income taxes, a reduction of a valuation allowance,
certain book and tax differences related to utility plant items, and book and
tax differences related to the allowance for equity funds used during
construction, partially offset by state income taxes. See Note 10 to the
financial statements herein and Notes 2 and 3 to the financial statements in the
Form 10-K for a discussion of the effects and regulatory activity regarding the
Tax Cuts and Jobs Act. See Note 10 to the financial statements herein for
discussion of the valuation allowance reduction.
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                                  Management's Financial Discussion and Analysis

The effective income tax rate was 19.6% for the second quarter 2020. The
difference in the effective income tax rate for the second quarter 2020 versus
the federal statutory rate of 21% was primarily due to the amortization of
excess accumulated deferred income taxes and certain book and tax differences
related to utility plant items, partially offset by state income taxes. See Note
10 to the financial statements herein and Notes 2 and 3 to the financial
statements in the Form 10-K for a discussion of the effects and regulatory
activity regarding the Tax Cuts and Jobs Act.

Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020

Following are income statement variances for Utility, Entergy Wholesale Commodities, Parent & Other, and Entergy comparing the six months ended June 30, 2021 to the six months ended June 30, 2020 showing how much the line items increased or (decreased) in comparison to the prior period:

                                                                                 Entergy
                                                                                Wholesale                 Parent &
                                                        Utility                Commodities               Other (a)                Entergy
                                                                                         (In Thousands)
2020 Net Income (Loss) Attributable to
Entergy Corporation                                    $664,685                  ($26,344)              ($159,094)               $479,247

Operating revenues                                      962,310                  (135,384)                     14                 826,940
Fuel, fuel-related expenses, and gas
purchased for resale                                    387,363                     1,470                     (10)                388,823
Purchased power                                         188,483                    15,037                      10                 203,530
Other regulatory charges (credits)                       10,066                         -                       -                  10,066
Other operation and maintenance                         138,801                   (89,042)                   (200)                 49,559
Asset write-offs, impairments, and related                    -                   333,495                       -
charges                                                                                                                           333,495
Taxes other than income taxes                             5,399                   (21,988)                    262                 (16,327)
Depreciation and amortization                            65,956                   (33,187)                   (183)                 32,586

Other income (deductions)                               (15,488)                   65,285                  10,463                  60,260
Interest expense                                         23,933                    (3,914)                 (1,570)                 18,449
Other expenses                                           (1,297)                  (10,633)                      -                 (11,930)
Income taxes                                            110,333                   (50,062)                (30,666)                 29,605

2021 Net Income (Loss) Attributable to
Entergy Corporation                                    $682,470                 ($237,619)              ($116,260)               $328,591


(a)Parent & Other includes eliminations, which are primarily intersegment activity.


Results of operations for the six months ended June 30, 2021 include a charge of
$340 million ($268 million net-of-tax) as a result of the sale of the Indian
Point Energy Center in May 2021. See Note 14 to the financial statements herein
for further discussion of the sale of the Indian Point Energy Center.

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Management's Financial Discussion and Analysis

Operating Revenues

Utility

Following is an analysis of the change in operating revenues comparing the six months ended June 30, 2021 to the six months ended June 30, 2020:

                                                                                 Amount
                                                                              (In Millions)
2020 operating revenues                                                                $4,308
Fuel, rider, and other revenues that do not significantly affect net
income                                                                                    682
Retail electric price                                                                     187
Volume/weather                                                                            107
Return of unprotected excess accumulated deferred income taxes to
customers                                                                                 (14)
2021 operating revenues                                                                $5,270



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

The retail electric price variance is primarily due to:


•an increase in Entergy Arkansas's formula rate plan rates effective with the
first billing cycle of May 2021;
•increases in Entergy Louisiana's overall formula rate plan revenues, including
an interim increase effective April 2020 due to the inclusion of the first-year
revenue requirement for the Lake Charles Power Station, an increase in the
transmission recovery mechanism effective September 2020, and an interim
increase effective December 2020 due to the inclusion of the first-year revenue
requirement for the Washington Parish Energy Center;
•increases in Entergy Mississippi's formula rate plan rates effective, in part,
with the first billing cycles of April 2020 and April 2021 and the
implementation of a vegetation management rider effective with the April 2020
billing cycle;
•an interim increase in Entergy New Orleans's formula rate plan revenues
resulting from the recovery of New Orleans Power Station costs, effective
November 2020; and
•the implementation of the generation cost recovery rider, which includes the
first-year revenue requirement for the Montgomery County Power Station,
effective January 2021, an increase in the transmission cost recovery factor
rider effective March 2021, and an increase in the distribution cost recovery
factor rider effective March 2021, each at Entergy Texas.

See Note 2 to the financial statements herein and in the Form 10-K for further discussion of the regulatory proceedings discussed above.


The volume/weather variance is primarily due to an increase of 1,767 GWh, or 3%,
in billed electricity usage, including the effect of more favorable weather on
residential sales, an increase in industrial usage, and an increase in usage
during the unbilled sales period. The increase in industrial usage is primarily
due to an increase in demand from expansion projects, primarily in the
transportation, metals, and chemicals industries, partially offset by decreased
demand from existing customers in the chemicals and petroleum refining
industries as a result of temporary plant shutdowns and operational issues.
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                                  Management's Financial Discussion and Analysis

The return of unprotected excess accumulated deferred income taxes to customers
resulted from activity at the Utility operating companies in response to the
enactment of the Tax Cuts and Jobs Act. The return of unprotected excess
accumulated deferred income taxes began in the second quarter 2018. In the six
months ended June 30, 2021, $54 million was returned to customers through
reductions in operating revenues as compared to $40 million in the six months
ended June 30, 2020. There is no effect on net income as the reductions in
operating revenues were offset by reductions in income tax expense. See Note 2
to the financial statements in the Form 10-K for further discussion of
regulatory activity regarding the Tax Cuts and Jobs Act.

Billed electric energy sales for Utility for the six months ended June 30, 2021 and 2020 are as follows:

                                         2021          2020        % Change
                                               (GWh)
                   Residential          16,961        15,885           7
                   Commercial           12,504        12,315           2
                   Industrial           24,148        23,662           2
                   Governmental          1,181         1,165           1
                   Total retail         54,794        53,027           3
                   Sales for resale      9,016         6,228          45
                   Total                63,810        59,255           8


See Note 13 to the financial statements herein for additional discussion of operating revenues.

Entergy Wholesale Commodities


Operating revenues for Entergy Wholesale Commodities decreased from $532 million
for the six months ended June 30, 2020 to $397 million for the six months ended
June 30, 2021 primarily due to the shutdown of Indian Point 2 in April 2020 and
the shutdown of Indian Point 3 in April 2021.

Following are key performance measures for Entergy Wholesale Commodities for the six months ended June 30, 2021 and 2020:

                                                             2021        2020
           Owned capacity (MW) (a)                          1,205       2,246
           GWh billed                                       7,099       11,714

           Entergy Wholesale Commodities Nuclear Fleet
           Capacity factor                                   97%         98%
           GWh billed                                       6,344       10,839
           Average energy price ($/MWh)                     $50.70      $42.37
           Average capacity price ($/kW-month)              $0.26       $1.58


The Entergy Wholesale Commodities nuclear power plants had no refueling outage days in the six months ended June 30, 2021 and 2020.

(a)The reduction in owned capacity is due to the shutdown of the 1,041 MW Indian Point 3 plant in April 2021.

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Management's Financial Discussion and Analysis

Other Income Statement Items

Utility


Other operation and maintenance expenses increased from $1,155 million for the
six months ended June 30, 2020 to $1,294 million for the six months ended June
30, 2021 primarily due to:

•an increase of $24 million in non-nuclear generation expenses primarily due to
a higher scope of work performed during plant outages in 2021 as compared to
2020 and higher expenses associated with plants placed in service, including the
Lake Charles Power Station, which began commercial operation in March 2020; the
New Orleans Power Station, which began commercial operation in May 2020; the
Washington Parish Energy Center, purchased in November 2020; and the Montgomery
County Power Station, which began commercial operation in January 2021;
•an increase of $20 million in nuclear generation expenses primarily due to
higher nuclear labor costs and a higher scope of work performed in 2021 as
compared to 2020;
•an increase of $18 million in compensation and benefits costs primarily due to
lower healthcare claims activity in 2020 as a result of the COVID-19 pandemic,
an increase in healthcare cost rates, and an increase in net periodic pension
and other postretirement benefits costs as a result of a decrease in the
discount rate used to value the benefit liabilities. 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 benefit
costs;
•an increase of $17 million in distribution operations expenses primarily due to
higher distribution reliability costs and higher vegetation maintenance costs;
•lower nuclear insurance refunds of $13 million;
•the effects of recording in second quarter 2020 final judgments to resolve
claims in the Waterford 3 damages case against the DOE related to spent nuclear
fuel storage costs. The damages awarded included the reimbursement of
approximately $8 million of spent nuclear fuel storage costs previously recorded
as other operation and maintenance expense. See Note 8 to the financial
statements in the Form 10-K for discussion of the spent nuclear fuel litigation;
•an increase of $8 million as a result of the amount of transmission costs
allocated by MISO. See Note 2 to the financial statements in the Form 10-K for
further information on the recovery of these costs;
•an increase of $7 million primarily due to contract costs in 2021 related to
customer solutions and sustainability initiatives; and
•an increase of $6 million in information technology costs due to higher
contract costs and higher costs associated with system maintenance.

Depreciation and amortization expenses increased primarily due to additions to
plant in service, including the Lake Charles Power Station and the Montgomery
County Power Station.

Other regulatory charges (credits) - net includes:


•regulatory credits of $22 million, recorded in 2020 at Entergy Arkansas, to
reflect the amortization of the 2018 historical year netting adjustment
reflected in the 2019 formula rate plan filing. See Note 2 to the financial
statements in the Form 10-K for discussion of the 2019 formula rate plan filing;
•the reversal in 2021 of the remaining $39 million regulatory liability for
Entergy Arkansas's 2019 historical year netting adjustment as part of its 2020
formula rate plan proceeding. See Note 2 to the financial statements herein and
in the Form 10-K for discussion of Entergy Arkansas's 2020 formula rate plan
filing;
•$29 million recorded in the first quarter 2020, at Entergy Louisiana, due to a
settlement with the IRS related to the uncertain tax position regarding the
Hurricane Isaac Louisiana Act 55 financing because the savings will be shared
with customers. See Note 3 to the financial statements in the Form 10-K for
further discussion of the settlement and savings obligation; and
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•regulatory credits of $20 million, recorded in the second quarter 2021 at
Entergy Mississippi, to reflect the effects of the joint stipulation reached in
the 2021 formula rate plan filing proceeding. See Note 2 to the financial
statements herein for discussion of the 2021 formula rate plan filing.

Other income decreased primarily due to a decrease in the allowance for equity
funds used during construction due to higher construction work in progress in
2020, including the Lake Charles Power Station project and the Montgomery County
Power Station project, partially offset by changes in decommissioning trust fund
activity.

Interest expense increased primarily due to:


•the issuance by Entergy Louisiana of $350 million of 2.90% Series mortgage
bonds in March 2020;
•the issuances by Entergy Louisiana of $1.1 billion of 0.62% Series mortgage
bonds, $300 million of 2.90% Series mortgage bonds, and $300 million of 1.60%
Series mortgage bonds, each in November 2020;
•the issuances by Entergy Louisiana of $500 million of 2.35% Series mortgage
bonds and $500 million of 3.10% Series mortgage bonds, each in March 2021;
•the issuance by Entergy Mississippi of $370 million of 3.50% Series mortgage
bonds in March 2021; and
•a decrease in the allowance for borrowed funds used during construction due to
higher construction work in progress in 2020, including the Lake Charles Power
Station project and the Montgomery County Power Station project.

The increase was partially offset by:


•the repayments by Entergy Louisiana of $200 million of 5.25% Series mortgage
bonds and $100 million of 4.70% Series mortgage bonds, each in December 2020;
and
•the repayment by Entergy Louisiana of $200 million of 4.8% Series mortgage
bonds in May 2021.

Entergy Wholesale Commodities

Other operation and maintenance expenses decreased from $271 million for the six
months ended June 30, 2020 to $182 million for the six months ended June 30,
2021 primarily due to:

•a decrease of $63 million resulting from the absence of expenses from Indian
Point 2, after it was shut down in April 2020, and Indian Point 3, after it was
shut down in April 2021; and
•a decrease of $28 million in severance and retention expenses. Severance and
retention expenses were incurred in 2021 and 2020 due to management's strategy
to exit the Entergy Wholesale Commodities merchant power business.

See "Entergy Wholesale Commodities Exit from the Merchant Power Business" below
and in the Form 10-K for a discussion of management's strategy to shut down and
sell all of the remaining plants in Entergy Wholesale Commodities' merchant
nuclear fleet. See Note 7 to the financial statements herein for further
discussion of severance and retention expenses.

Asset write-offs, impairments, and related charges for the six months ended June
30, 2021 include a charge of $340 million ($268 million net-of-tax) as a result
of the sale of the Indian Point Energy Center in May 2021. See Note 14 to the
financial statements herein for further discussion of the sale of the Indian
Point Energy Center. See "Entergy Wholesale Commodities Exit from the Merchant
Power Business" below and in the Form 10-K for a discussion of management's
strategy to shut down and sell all of the remaining plants in the Entergy
Wholesale Commodities merchant nuclear fleet.

Taxes other than income taxes decreased primarily due to lower payroll taxes and lower ad valorem taxes.

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Depreciation and amortization expenses decreased primarily due to:


•the absence of depreciation expense from Indian Point 2, after it was shut down
in April 2020, and from Indian Point 3, after it was shut down in April 2021;
and
•the effect of recording in 2021 a final judgment to resolve claims in the
Palisades damages case against the DOE related to spent nuclear fuel storage
costs. The damages awarded included $9 million of spent nuclear fuel storage
costs previously recorded as depreciation expense. See Note 1 to the financial
statements herein for discussion of the spent nuclear fuel litigation.

Other income increased primarily due to higher gains on decommissioning trust
fund investments, partially offset by the absence of earnings from nuclear
decommissioning trust funds that were transferred in the sale of the Indian
Point Energy Center in May 2021. See Notes 8 and 9 to the financial statements
herein for a discussion of decommissioning trust fund investments. See Note 14
to the financial statements herein for further discussion of the sale of the
Indian Point Energy Center.

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

Income Taxes


The effective income tax rate was 12.3% for the six months ended June 30, 2021.
The difference in the effective income tax rate for the six months ended June
30, 2021 versus the federal statutory rate of 21% was primarily due to the
amortization of excess accumulated deferred income taxes, a reduction of a
valuation allowance, certain book and tax differences related to utility plant
items, and book and tax differences related to the allowance for equity funds
used during construction, partially offset by state income taxes. See Note 10 to
the financial statements herein and Notes 2 and 3 to the financial statements in
the Form 10-K for a discussion of the effects and regulatory activity regarding
the Tax Cuts and Jobs Act. See Note 10 to the financial statements herein for
discussion of the valuation allowance reduction.

The effective income tax rate was 3.5% for the six months ended June 30, 2020.
The difference in the effective income tax rate for the six months ended June
30, 2020 versus the federal statutory rate of 21% was primarily due to the
settlement with the IRS on the treatment of funds received in conjunction with
the Act 55 financing of Hurricane Isaac storm costs, permanent differences
related to income tax deductions for stock-based compensation, amortization of
excess accumulated deferred income taxes, and certain book and tax differences
related to utility plant items, partially offset by state income taxes. See Note
3 to the financial statements in the Form 10-K for discussion of the IRS
settlement and the income tax deductions for stock-based compensation. See Note
10 to the financial statements herein and Notes 2 and 3 to the financial
statements in the Form 10-K for a discussion of the effects and regulatory
activity regarding the Tax Cuts and Jobs Act.

Entergy Wholesale Commodities Exit from the Merchant Power Business

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Entergy Wholesale Commodities Exit from the Merchant Power Business" in the Form 10-K for a discussion of management's strategy to shut down and sell all remaining plants in the Entergy Wholesale Commodities merchant nuclear fleet. Following are updates to that discussion.

Shutdown and Sale of Indian Point 2 and Indian Point 3


As discussed in the Form 10-K, in April 2019, Entergy entered into an agreement
to sell, directly or indirectly, 100% of the equity interests in the
subsidiaries that own Indian Point 1, Indian Point 2, and Indian Point 3 to a
Holtec subsidiary for decommissioning the plants.
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                                  Management's Financial Discussion and Analysis

In November 2019, Entergy and Holtec submitted a license transfer application to
the NRC. The NRC issued an order approving the application in November 2020,
subject to the NRC's authority to condition, revise, or rescind the approval
order based on the resolution of four pending hearing requests. In January 2021
the NRC issued an order denying all four hearing requests challenging the
license transfer application. In January 2021, New York State filed a petition
for review with the D.C. Circuit asking the court to vacate the NRC's January
2021 order denying the State's hearing request, as well as the NRC's November
2020 order approving the license transfers. In January 2021 the D.C. Circuit
issued a scheduling order, setting deadlines for initial procedural filings in
March 2021. In March 2021 additional parties also filed petitions for review
with the D.C. Circuit seeking review of the same NRC orders. In March 2021 the
court consolidated all of the appeals into the same proceeding. Pursuant to an
April 2021 settlement among Entergy, Holtec, New York State, and several other
parties, discussed below, all petitioners to the D.C. Circuit proceeding
withdrew their pending appeals, and the court terminated the consolidated
proceeding in June 2021.

In November 2019, Entergy and Holtec also submitted a petition to the New York
State Public Service Commission (NYPSC) seeking an order from the NYPSC
disclaiming jurisdiction or abstaining from review of the transaction or,
alternatively, approving the transaction. Closing was also conditioned on
obtaining from the New York State Department of Environmental Conservation an
agreement related to Holtec's decommissioning plan as being consistent with
applicable standards. In April 2021, Entergy and Holtec filed a joint settlement
proposal with the NYPSC that resolved all issues among all parties, including
financial assurance, site restoration, financial reporting, continued funding
for state and local emergency management and response activities, a memorandum
of understanding with local taxing jurisdictions, and the dismissal of the
federal appeals described in the preceding paragraph. In May 2021 the NYPSC
approved the joint settlement proposal and the transaction.

Indian Point 2 permanently ceased operations on April 30, 2020 and Indian Point
3 permanently ceased operations on April 30, 2021. The transaction closed in May
2021. The sale included the transfer of the licenses, spent fuel,
decommissioning liabilities, and nuclear decommissioning trusts for the three
units. The transaction resulted in a charge of $340 million ($268 million
net-of-tax) in the second quarter of 2021. See Note 14 to the financial
statements for discussion of the closing of the Indian Point transaction.

Planned Shutdown and Sale of Palisades


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

In December 2020, Entergy and Holtec submitted a license transfer application to
the NRC requesting approval to transfer the Palisades and Big Rock Point
licenses from Entergy to Holtec. The NRC has indicated that it expects to
complete its review of the application by January 2022. In February 2021 several
parties filed with the NRC petitions to intervene and requests for hearing
challenging the license transfer application. In March 2021, Entergy and Holtec
filed answers opposing the petitions to intervene and hearing requests, and the
petitioners filed replies. In March 2021 an additional party also filed a
petition to intervene and request for hearing. Entergy and Holtec filed an
answer to the March 2021 petition in April 2021.

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

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Management's Financial Discussion and Analysis

Costs Associated with Entergy Wholesale Commodities Strategic Transactions


Entergy expects to incur employee retention and severance expenses associated
with management's strategy to exit the Entergy Wholesale Commodities merchant
power business of approximately $10 million in 2021, of which $7 million has
been incurred as of June 30, 2021, and a total of approximately $5 million in
2022. In addition, Entergy Wholesale Commodities incurred impairment charges
primarily related to expenditures for capital assets of $2 million for the three
months ended June 30, 2021 and $5 million for the six months ended June 30,
2021. These costs were charged to expense as incurred as a result of the
impaired value of certain of the Entergy Wholesale Commodities nuclear plants'
long-lived assets due to the significantly reduced remaining estimated operating
lives associated with management's strategy to exit the Entergy Wholesale
Commodities merchant power business.

Liquidity and Capital Resources

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources" in the Form 10-K for a discussion of Entergy's capital structure, capital expenditure plans and other uses of capital, and sources of capital. Following are updates to that discussion.

Capital Structure and Resources


Entergy's debt to capital ratio is shown in the following table. The increase in
the debt to capital ratio for Entergy as of June 30, 2021 is primarily due to
the net issuance of debt in 2021.
                                                                   June 30,                     December 31,
                                                                     2021                           2020
Debt to capital                                                           69.5  %                          68.3  %
Effect of excluding securitization bonds                                  (0.1  %)                         (0.2  %)
Debt to capital, excluding securitization bonds (a)                       69.4  %                          68.1  %
Effect of subtracting cash                                                (0.5  %)                         (1.7  %)
Net debt to net capital, excluding securitization bonds (a)               68.9  %                          66.4  %



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

As of June 30, 2021, 22.3% of the debt outstanding is at the parent company,
Entergy Corporation, 77.2% is at the
Utility, and 0.5% is at Entergy Wholesale Commodities. Net debt consists of debt
less cash and cash equivalents. Debt consists of notes payable and commercial
paper, finance lease obligations, and long-term debt, including the currently
maturing portion. Capital consists of debt, common shareholders' equity, and
subsidiaries' preferred stock without sinking fund. Net capital consists of
capital less cash and cash equivalents. Entergy uses the debt to capital ratios
excluding securitization bonds in analyzing its financial condition and believes
they provide useful information to its investors and creditors in evaluating
Entergy's financial condition because the securitization bonds are non-recourse
to Entergy, as more fully described in Note 5 to the financial statements in the
Form 10-K. Entergy also uses the net debt to net capital ratio excluding
securitization bonds in analyzing its financial condition and believes it
provides useful information to its investors and creditors in evaluating
Entergy's financial condition because net debt indicates Entergy's outstanding
debt position that could not be readily satisfied by cash and cash equivalents
on hand.

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                                  Management's Financial Discussion and Analysis
Entergy Corporation has in place a credit facility that has a borrowing capacity
of $3.5 billion and expires in June 2026. The facility includes fronting
commitments for the issuance of letters of credit against $20 million of the
total borrowing capacity of the credit facility. The commitment fee is currently
0.225% of the undrawn commitment amount. Commitment fees and interest rates on
loans under the credit facility can fluctuate depending on the senior unsecured
debt ratings of Entergy Corporation. The weighted average interest rate for the
six months ended June 30, 2021 was 1.61% on the drawn portion of the facility.
Following is a summary of the borrowings outstanding and capacity available
under the facility as of June 30, 2021:
                                                       Letters       Capacity
                     Capacity        Borrowings       of Credit      Available
                                           (In Millions)
                      $3,500            $150             $6           $3,344


A covenant in Entergy Corporation's credit facility requires Entergy to maintain
a consolidated debt ratio, as defined, of 65% or less of its total
capitalization. The calculation of this debt ratio under Entergy Corporation's
credit facility is different than the calculation of the debt to
capital ratio above. One such difference is that it excludes the effects, among
other things, of certain impairments related to the Entergy Wholesale
Commodities nuclear generation assets. Entergy is currently in compliance with
the covenant and expects to remain in compliance with this covenant. If Entergy
fails to meet this ratio, or if Entergy or one of the Registrant Subsidiaries
(except Entergy New Orleans) defaults on other indebtedness or is in bankruptcy
or insolvency proceedings, an acceleration of the facility's maturity date may
occur. See Note 4 to the financial statements herein for additional discussion
of the Entergy Corporation credit facility and discussion of the Registrant
Subsidiaries' credit facilities.

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

Certain of the Utility operating companies have a total of $72 million in storm reserve escrow accounts at June 30, 2021.

Equity Distribution Program


In January 2021, Entergy entered into an equity distribution sales agreement
with several counterparties establishing an at the market equity distribution
program, pursuant to which Entergy may offer and sell from time to time shares
of its common stock. The sales agreement provides that, in addition to the
issuance and sale of shares of Entergy common stock, Entergy may enter into
forward sale agreements for the sale of its common stock. The aggregate number
of shares of common stock sold under this sales agreement and under any forward
sale agreement may not exceed an aggregate gross sales price of $1 billion. See
Note 3 to the financial statement herein for discussion of the forward sales
agreements and common stock issuances and sales under the equity distribution
program.

Capital Expenditure Plans and Other Uses of Capital


See the table and discussion in the Form 10-K under "MANAGEMENT'S FINANCIAL
DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Capital Expenditure
Plans and Other Uses of Capital," that sets forth the amounts of planned
construction and other capital investments by operating segment for 2021 through
2023. Following are updates to that discussion.

Searcy Solar Facility


As discussed in the Form 10-K, in April 2020 the APSC issued an order approving
Entergy Arkansas's acquisition of the Searcy Solar facility as being in the
public interest. In May 2021, Entergy Arkansas filed with the APSC an
application seeking to amend its certificate for the Searcy Solar facility to
allow for the use of a tax equity
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partnership. The tax equity partnership structure is expected to reduce costs
and yield incremental net benefits to customers beyond those expected under the
build-own-transfer structure alone. A decision on the tax equity partnership is
requested by September 2021. Entergy Arkansas will purchase the facility upon
mechanical completion and after the other purchase contingencies have been met.
Closing is expected to occur by the end of 2021.

Walnut Bend Solar Facility


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 is in the
public interest. Entergy Arkansas primarily requested cost recovery through the
formula rate plan rider. A procedural schedule was established with a paper
hearing held in April 2021. In July 2021 the APSC granted Entergy Arkansas's
petition and approved the acquisition of the resource and cost recovery through
the formula rate plan rider. In addition, the APSC directed Entergy Arkansas to
file a report within 180 days detailing its efforts to obtain a tax equity
partnership. Closing is expected to occur in 2022.

Liberty County Solar Facility


In September 2020, Entergy Texas filed an application seeking PUCT approval to
amend Entergy Texas's certificate of convenience and necessity to acquire the
100 MW Liberty County Solar Facility and a determination that Entergy Texas's
acquisition of the facility through a tax equity partnership is in the public
interest. In its preliminary order, the PUCT determined that, in considering
Entergy Texas's application, it would not specifically address whether Entergy
Texas's use of a tax equity partnership is in the public interest. In March 2021
intervenors and PUCT staff filed testimony, and Entergy Texas filed rebuttal
testimony in April 2021. A hearing on the merits was held in April 2021.
Post-hearing and reply briefing was completed in May 2021. In July 2021 the
presiding administrative law judges issued a proposal for decision recommending
that the PUCT deny the certification requested in the application. This proposal
for decision is subject to change based on exceptions filed by the parties. Once
it is final, it will be presented to the PUCT, which may adopt or modify it. A
decision by the PUCT is expected in September 2021. Closing, subject to receipt
of required regulatory approvals and other conditions, is expected to occur in
2023.

Dividends

Declarations of dividends on Entergy's common stock are made at the discretion
of the Board. Among other things, the Board evaluates the level of Entergy's
common stock dividends based upon earnings per share from the Utility operating
segment and the Parent and Other portion of the business, financial strength,
and future investment opportunities. At its July 2021 meeting, the Board
declared a dividend of $0.95 per share, which is the same quarterly dividend per
share that Entergy has paid since the third quarter 2020.

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