ENTERGY CORPORATION Entergy operates primarily through two business segments: Utility and
•The Utility business segment includes the generation, transmission, distribution, and sale of electric power in portions ofArkansas ,Mississippi ,Texas , andLouisiana , including theCity 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 northernUnited 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 theMerchant Power Business" below and in the Form 10-K for discussion of the operation and planned shutdown and sale of each of theEntergy Wholesale Commodities nuclear power plants, including the planned shutdown and sale of Palisades, the only remaining operating plant inEntergy Wholesale Commodities' merchant nuclear fleet.
See Note 7 to the financial statements herein for financial information regarding Entergy's business segments.
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Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
Results of Operations
First Quarter 2022 Compared to First Quarter 2021
Following are income statement variances for Utility,Entergy Wholesale Commodities , Parent & Other, and Entergy comparing the first quarter 2022 to the first quarter 2021 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) 2021 Net Income (Loss) Attributable to Entergy Corporation$356,567 $37,577 ($59,579 )$334,565 Operating revenues 131,540 (98,442) (11) 33,087 Fuel, fuel-related expenses, and gas purchased for resale 160,924 4,836 11 165,771 Purchased power (105,937) (4,160) (11) (110,108) Other regulatory charges (credits) - net (60,704) - - (60,704) Other operation and maintenance 26,207 (57,721) 3,540 (27,974) Asset write-offs, impairments, and related - (2,529) - charges (2,529) Taxes other than income taxes 20,344 3,069 33 23,446 Depreciation and amortization 29,121 (4,219) (449) 24,453 Other income (deductions) (46,264) (47,309) (1,834) (95,407) Interest expense 15,442 (3,027) 9,238 21,653 Other expenses 1,698 (39,029) - (37,331) Income taxes 15,625 (12,706) (2,364) 555 Preferred dividend requirements of subsidiaries and noncontrolling interest (1,339) - (48) (1,387) 2022 Net Income (Loss) Attributable to Entergy Corporation$340,462 $7,312 ($71,374 )$276,400
(a)Parent & Other includes eliminations, which are primarily intersegment activity.
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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 first quarter 2022 to the first quarter 2021:
Amount
(In Millions)
2021 operating revenues $2,597 Fuel, rider, and other revenues that do not significantly affect net income
30
Retail electric price 91
Return of unprotected excess accumulated deferred income taxes to
customers 24
Volume/weather (14)
2022 operating revenues $2,728
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:
•increases inEntergy Arkansas's formula rate plan rates effectiveMay 2021 andJanuary 2022 ; •an increase in Entergy Louisiana's formula rate plan revenues, including increases in the distribution and transmission recovery mechanisms, effectiveSeptember 2021 ; •increases inEntergy Mississippi's formula rate plan rates effectiveApril 2021 andJuly 2021 ; •an increase inEntergy New Orleans's formula rate plan rates effectiveNovember 2021 ; and •increases in the transmission cost recovery factor rider effectiveMarch 2021 andMarch 2022 , an increase in the distribution cost recovery factor rider effectiveJanuary 2022 , and an increase in the generation cost recovery rider effectiveJanuary 2022 , each atEntergy 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 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 second quarter 2018. In the first quarter 2022,$17 million was returned to customers through reductions in operating revenues as compared to$41 million in the first quarter 2021. 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. The volume/weather variance is primarily due to the effect of less favorable weather on residential sales and a decrease in weather-adjusted residential usage, including the effect of the COVID-19 pandemic on first quarter 2021, partially offset by increases in industrial and commercial usage. The increase in industrial usage was due to an increase in demand from cogeneration customers, an increase in demand from existing customers, primarily in the chemicals and pulp and paper industries as a result of prior year temporary plant shutdowns and operational issues, an increase in demand from expansion projects, primarily in the chemicals, transportation, and petroleum 3 -------------------------------------------------------------------------------- Table of ContentsEntergy Corporation and Subsidiaries Management's Financial Discussion and Analysis refining industries, and an increase in demand from small industrial customers. The increase in commercial usage was primarily due to an increase in customers and the effect of the COVID-19 pandemic on businesses in first quarter 2021. The increased usage from these industrial and commercial customers has a relatively smaller effect on operating revenues because a larger portion of the revenues from those customers comes from fixed charges. Total electric energy sales for Utility for the three months endedMarch 31, 2022 and 2021 are as follows: 2022 2021 % Change (GWh) Residential 8,454 8,663 (2) Commercial 6,271 6,111 3 Industrial 12,496 11,738 6 Governmental 584 581 1 Total retail 27,805 27,093 3 Sales for resale 3,641 4,299 (15) Total 31,446 31,392 -
See Note 13 to the financial statements herein for additional discussion of operating revenues.
Operating revenues forEntergy Wholesale Commodities decreased from$248 million for the first quarter 2021 to$150 million for the first quarter 2022 primarily due to the shutdown ofIndian Point 3 inApril 2021 .
Following are key performance measures for
2022 2021
Owned capacity (MW) (a) 1,205 2,246
GWh billed 2,225 4,413
Entergy Wholesale Commodities Nuclear Fleet (b)
Capacity factor 100% 99%
GWh billed 1,766 3,988
Average energy price ($/MWh) $59.21 $51.86
Average capacity price ($/kW-month) $0.15 $0.23
(a)The reduction in owned capacity is due to the shutdown of the 1,041 MW Indian
Point 3 plant in April 2021 .
(b)The Entergy Wholesale Commodities nuclear power plants had no refueling
outage days in the first quarters 2022 and 2021.
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Other Income Statement Items
Utility
Other operation and maintenance expenses increased from
•an increase of$6 million in customer service center support costs primarily due to higher contract costs; •an increase of$5 million in nuclear generation expenses primarily due to a higher scope of work performed in 2022 as compared to prior year, partially offset by lower spending in 2022 on sanitation and social distancing protocols as a result of the COVID-19 pandemic; •an increase of$4 million in transmission expenses, including higher vegetation maintenance costs; •an increase of$3 million in distribution operations expenses primarily due to higher reliability costs and higher safety and training costs, partially offset by a decrease in meter reading expenses as a result of the deployment of advanced metering systems; and •several individually insignificant items.
The increase was partially offset by higher nuclear insurance refunds of
Taxes other than income taxes increased primarily due to increases in franchise taxes and 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 the reversal in 2021 of the remaining$39 million regulatory liability forEntergy Arkansas's 2019 historical year netting adjustment as part of its 2020 formula rate plan proceeding. See Note 2 to the financial statements in the Form 10-K for discussion of the 2020 formula rate plan filing. In addition, Entergy records a regulatory charge or credit for the difference between asset retirement obligation-related expenses and nuclear decommissioning trust earnings plus asset retirement obligation related costs collected in revenue. Other income decreased primarily due to changes in decommissioning trust fund activity, including portfolio rebalancing of the decommissioning trust funds in the first quarter 2021.
Interest expense increased primarily due to:
•the issuance byEntergy Arkansas of$400 million of 3.35% Series mortgage bonds inMarch 2021 ; •the issuances by Entergy Louisiana of$500 million of 2.35% Series mortgage bonds and$500 million of 3.10% Series mortgage bonds, each inMarch 2021 ; •the issuance by Entergy Louisiana of$1 billion of 0.95% Series mortgage bonds inOctober 2021 ; •the issuance byEntergy Mississippi of$200 million of 3.50% Series mortgage bonds inMarch 2021 ; •the$1.2 billion unsecured term loan proceeds received by Entergy Louisiana inJanuary 2022 ; •the issuance byEntergy Mississippi of$200 million of 2.55% Series mortgage bonds inNovember 2021 ; and •the issuances byEntergy New Orleans of$70 million of 4.51% Series mortgage bonds and$90 million of 4.19% Series mortgage bonds, each inNovember 2021 . The increase was partially offset by the repayment byEntergy Arkansas of$350 million of 3.75% Series mortgage bonds inFebruary 2021 and the repayment by Entergy Louisiana of$200 million of 4.8% Series mortgage bonds inMay 2021 . 5 -------------------------------------------------------------------------------- Table of ContentsEntergy Corporation and Subsidiaries Management's Financial Discussion and Analysis
Other operation and maintenance expenses decreased from
•a decrease of$44 million resulting from the absence of expenses fromIndian Point 3, after it was shut down inApril 2021 ; and •a decrease of$10 million in severance and retention expenses. Severance and retention expenses were incurred in 2022 and 2021 due to management's strategy to exit theEntergy 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 plants inEntergy Wholesale Commodities' merchant nuclear fleet. See Note 7 to the financial statements herein for further discussion of severance and retention expenses. Other income decreased primarily due to the absence of earnings from the nuclear decommissioning trust funds that were transferred in the sale of the Indian Point Energy Center inMay 2021 and lower gains on Palisades decommissioning trust fund investments, partially offset by lower non-service pension costs. 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 in the Form 10-K for further discussion of the sale of the Indian Point Energy Center. See Note 6 to the financial statements herein for a discussion of pension and other postretirement benefits costs. Other expenses decreased primarily due to the absence of decommissioning expense fromIndian Point 2 andIndian Point 3, after the sale of theIndian Point Energy Center inMay 2021 . See Note 14 to the financial statements in the Form 10-K for further discussion of the sale of the Indian Point Energy Center.
Income Taxes
The effective income tax rates were 19.2% for the first quarter 2022 and 16.3% for the first quarter 2021. The differences in the effective income tax rates for the first quarter 2022 and the first quarter 2021 versus the federal statutory rate of 21% were primarily due to the amortization of excess accumulated deferred income taxes and certain book and tax differences related to utility plant items, 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.
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 plants in the
InApril 2022 , Entergy andNebraska Public Power District signed an agreement to mutually terminate the management support services contract, under which Entergy provides plant operation support services for the 800MW Cooper Nuclear Station located nearBrownville, Nebraska , effectiveJuly 31, 2022 .
Planned Shutdown and Sale of Palisades
As discussed in the Form 10-K, inJuly 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 6 --------------------------------------------------------------------------------
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to adjustment for net liabilities and other amounts) to a
Entergy intends to shut down Palisades permanently no later thanMay 31, 2022 . Subject to the conditions discussed in the Form 10-K, the sale of Palisades is expected to close in mid-2022. As ofMarch 31, 2022 , Entergy's adjusted net investment in Palisades was approximately($100) 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.
Costs Associated with Exit of the Entergy Wholesale Commodities Business
Entergy expects to incur employee retention and severance expenses associated with management's strategy to exit theEntergy Wholesale Commodities merchant power business of approximately$5 million in 2022, of which$4 million has been incurred as ofMarch 31, 2022 .
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 ofMarch 31, 2022 is primarily due to the net issuance of debt in 2022. March 31, December 31, 2022 2021 Debt to capital 70.5 % 69.5 % Effect of excluding securitization bonds (0.1 %) (0.1 %) Debt to capital, excluding securitization bonds (a) 70.4 % 69.4 % Effect of subtracting cash (0.5 %) (0.3 %) Net debt to net capital, excluding securitization bonds (a) 69.9 % 69.1 %
(a)Calculation excludes the
As ofMarch 31, 2022 , 21.5% of the debt outstanding is at the parent company,Entergy Corporation , 78% is at the Utility, and 0.5% is atEntergy 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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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
three months ended March 31, 2022 was 1.81% on the drawn portion of the
facility. As of March 31, 2022 , amounts outstanding and capacity available under
the $3.5 billion credit facility are:
Letters Capacity
Capacity Borrowings of Credit Available
(In Millions)
$3,500 $150 $3 $3,347
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. 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 Utility operating companies (except
Entergy New Orleans ) defaults on other indebtedness or is in bankruptcy or
insolvency proceedings, an acceleration of the Entergy Corporation credit
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 Utility operating companies' credit facilities.
Entergy Corporation has a commercial paper program with a Board-approved program
limit of up to $2 billion . As of March 31, 2022 , Entergy Corporation had $1.343
billion of commercial paper outstanding. The weighted-average interest rate for
the three months ended March 31, 2022 was 0.48%.
InFebruary 2022 ,Entergy New Orleans filed with theCity Council a securitization application requesting that theCity Council reviewEntergy New Orleans's storm reserve and increase the storm reserve funding level to$150 million , to be funded through securitization. ACity Council decision is expected in third quarter 2022.
Equity Issuances and Equity Distribution Program
As discussed in the Form 10-K, inJanuary 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 also 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 . ThroughMarch 31, 2022 , Entergy has utilized the equity distribution program either to sell or to enter into forward sale agreements with respect to shares of common stock with an aggregate gross sales price of approximately$630 million , of which approximately$430 million of aggregate gross sales price is the subject of forward sale agreements that have not been settled and is subject to adjustment pursuant to the forward sale agreements. In addition to settlement of existing forward sale agreements,Entergy Corporation currently expects to issue approximately$570 million of equity through 2024. See Note 3 to the financial statements herein for discussion of the forward sale agreements and common stock issuances and sales under the equity distribution program.
Hurricane Laura,
As discussed in the Form 10-K, inAugust 2020 andOctober 2020 , Hurricane Laura,Hurricane Delta , and Hurricane Zeta caused significant damage to portions of Entergy Louisiana's service area. The storms resulted in widespread outages, significant damage to distribution and transmission infrastructure, and the loss of sales during 8 --------------------------------------------------------------------------------
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the outages. Additionally, as a result of Hurricane Laura's extensive damage to
the grid infrastructure serving the impacted area, large portions of the
underlying transmission system required nearly a complete rebuild. In February
2021 two winter storms (collectively, Winter Storm Uri) brought freezing rain
and ice to Louisiana . Ice accumulation sagged or downed trees, limbs and power
lines, causing damage to Entergy Louisiana's transmission and distribution
systems. The additional weight of ice caused trees and limbs to fall into power
lines and other electric equipment. When the ice melted, it affected vegetation
and electrical equipment, causing additional outages.
In April 2021 , Entergy Louisiana filed an application with the LPSC relating to
Hurricane Laura, Hurricane Delta , Hurricane Zeta, and Winter Storm Uri
restoration costs and in July 2021 , Entergy Louisiana made a supplemental filing
updating the total restoration costs. Total restoration costs for the repair
and/or replacement of Entergy Louisiana's electric facilities damaged by these
storms were estimated to be approximately $2.06 billion , including approximately
$1.68 billion in capital costs and approximately $380 million in non-capital
costs. Including carrying costs through January 2022 , Entergy Louisiana was
seeking an LPSC determination that $2.11 billion was prudently incurred and,
therefore, was eligible for recovery from customers. Additionally, Entergy
Louisiana was requesting that the LPSC determine that re-establishment of a
storm escrow account to the previously authorized amount of $290 million was
appropriate. In July 2021 , Entergy Louisiana supplemented the application with a
request regarding the financing and recovery of the recoverable storm
restoration costs. Specifically, Entergy Louisiana requested approval to
securitize its restoration costs pursuant to Louisiana Act 55 financing, as
supplemented by Act 293 of the Louisiana Legislature's Regular Session of 2021.
In August 2021 , Hurricane Ida caused extensive damage to Entergy Louisiana's
distribution and, to a lesser extent, transmission systems resulting in
widespread power outages. In September 2021 , Entergy Louisiana filed an
application at the LPSC seeking approval of certain ratemaking adjustments in
connection with the issuance of approximately $1 billion of shorter-term
mortgage bonds to provide interim financing for restoration costs associated
with Hurricane Ida, which bonds were issued in October 2021 . Also in September
2021 , Entergy Louisiana sought approval for the creation and funding of a $1
billion restricted escrow account for Hurricane Ida restoration costs, subject
to a subsequent prudence review.
After filing of testimony by LPSC staff and intervenors, which generally
supported or did not oppose Entergy Louisiana's requests in regard to Hurricane
Laura, Hurricane Delta , Hurricane Zeta, Winter Storm Uri, and Hurricane Ida, the
parties negotiated and executed an uncontested stipulated settlement which was
filed with the LPSC in February 2022 . The settlement agreement contained the
following key terms: $2.1 billion of restoration costs from Hurricane Laura,
Hurricane Delta , Hurricane Zeta, and Winter Storm Uri were prudently incurred
and were eligible for recovery; carrying costs of $51 million were recoverable;
a $290 million cash storm reserve should be re-established; a $1 billion reserve
should be established to partially pay for Hurricane Ida restoration costs; and
Entergy Louisiana was authorized to finance $3.186 billion utilizing the
securitization process authorized by Act 55, as supplemented by Act 293. The
LPSC issued an order approving the settlement in March 2022 . As a result of the
financing order, in first quarter 2022, Entergy Louisiana reclassified $1.339
billion from utility plant to other regulatory assets. The securitization
process is expected to be completed in second quarter 2022.
In April 2022 , Entergy Louisiana filed an application with the LPSC relating to
Hurricane Ida restoration costs. Total restoration costs for the repair and/or
replacement of Entergy Louisiana's electric facilities damaged by Hurricane Ida
currently are estimated to be approximately $2.54 billion , including
approximately $1.96 billion in capital costs and approximately $586 million in
non-capital costs. Including carrying costs through December 2022 , Entergy
Louisiana is seeking an LPSC determination that $2.60 billion was prudently
incurred and, therefore, is eligible for recovery from customers. As part of
this filing, Entergy Louisiana also is seeking an LPSC determination that an
additional $32 million in restoration costs associated with the restoration of
Entergy Louisiana's electric facilities damaged by Hurricane Laura, Hurricane
Delta , and Hurricane Zeta as well as Winter Storm Uri was prudently incurred.
This amount is exclusive of the requested $3 million in carrying costs through
December 2022 . In total, Entergy Louisiana is requesting an LPSC determination
that $2.64 billion was prudently incurred and, therefore, is eligible for
recovery from customers. As discussed above, in March 2022 the LPSC
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approved financing of a $1 billion storm escrow that can be withdrawn to finance
costs associated with Hurricane Ida restoration. Entergy Louisiana expects to
supplement the April 2022 application with a request that the LPSC authorize
Entergy Louisiana to finance the remaining storm restoration costs included in
the April 2022 application, currently expected to be through the securitization
process authorized by Louisiana Act 55, as supplemented by Act 293 of the
Louisiana Legislature's Regular Session of 2021.
Hurricane Ida (
See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Hurricane Ida" in the Form 10-K for a discussion of Hurricane Ida, which caused significant damage to Entergy's service area, including Entergy's electrical grid.Entergy New Orleans expects to initiate its storm cost recovery proceeding in late second quarter 2022.
Hurricane Laura,
As discussed in the Form 10-K, inAugust 2020 andOctober 2020 , Hurricane Laura andHurricane Delta caused extensive damage toEntergy Texas's service area. InFebruary 2021 , Winter Storm Uri also caused damage toEntergy Texas's service area. The storms resulted in widespread power outages, significant damage primarily to distribution and transmission infrastructure, and the loss of sales during the power outages. InJuly 2021 ,Entergy Texas filed with the PUCT an application for a financing order to approve the securitization of certain system restoration costs, which were approved by the PUCT as eligible for securitization inDecember 2021 . InNovember 2021 the parties filed an unopposed settlement agreement supporting the issuance of a financing order consistent withEntergy Texas's application and with minor adjustments to certain upfront and ongoing costs to be incurred to facilitate the issuance and serving of system restoration bonds. InJanuary 2022 the PUCT issued a financing order consistent with the unopposed settlement. As a result of the financing order, in first quarter 2022,Entergy Texas reclassified$153 million from utility plant to other regulatory assets. InApril 2022 ,Entergy Texas Restoration Funding II, LLC , a company wholly-owned and consolidated byEntergy Texas , issued$290.85 million of senior secured system restoration bonds (securitization bonds). With the proceeds, Entergy Texas Restoration Funding II purchased fromEntergy Texas the transition property, which is the right to recover from customers through a system restoration charge amounts sufficient to service the securitization bonds.Entergy Texas began cost recovery through the system restoration charge effective with the first billing cycle ofMay 2022 and the system restoration charge is expected to remain in place up to 15 years. See Note 4 to the financial statements herein for a discussion of theApril 2022 issuance of the securitization bonds.
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 2022 through 2024. Following are updates to that discussion. While Entergy is still assessing the effect on its planned solar projects, a recently commenced investigation by theU.S. Department of Commerce into potential circumvention of duties and tariffs may result in increased duties or tariffs on imported solar panels and has created supply chain disruptions which will affect the ultimate timing and could increase the cost of completion of these projects.
West Memphis Solar Facility
As discussed in the Form 10-K, inOctober 2021 the APSC directedEntergy Arkansas to file a report within 180 days detailing its efforts to obtain a tax equity partnership. InApril 2022 ,Entergy Arkansas filed its tax equity partnership status report and will file subsequent reports until a tax equity partnership is obtained or a tax equity partnership is no longer sought.Entergy Arkansas views the progress of the outreach to potential tax equity 10 --------------------------------------------------------------------------------
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investors and the current status of the discussions as consistent with its
expectations for the timeline for achieving a tax equity partnership. Closing
had been expected to occur in 2023. The counter-party has notified Entergy
Arkansas that it is seeking changes to certain terms of the build-own-transfer
agreement, including both cost and schedule. Negotiations are ongoing, but at
this time the project is not expected to achieve commercial operation in 2023.
Driver Solar Facility
InApril 2022 ,Entergy Arkansas filed a petition with the APSC seeking a finding that the purchase of the 250 MW Driver Solar Facility is in the public interest. The acquisition of Driver Solar will be contingent upon receiving all necessary regulatory and Board approvals.Entergy Arkansas requested a decision by the APSC byJune 2022 and requested cost recovery through the formula rate plan rider. The APSC established a procedural schedule with a hearing scheduled inJune 2022 . The facility is expected to be in service by the end of 2024.
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