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 shutdown and sale of each of theEntergy Wholesale Commodities nuclear power plants. With the sale of Palisades inJune 2022 , Entergy completed its multi-year strategy to exit the merchant nuclear power business.
See Note 7 to the financial statements herein for financial information regarding Entergy's business segments.
1 -------------------------------------------------------------------------------- Table of ContentsEntergy Corporation and Subsidiaries Management's Financial Discussion and Analysis Results of Operations
Second Quarter 2022 Compared to Second Quarter 2021
Following are income statement variances for Utility,Entergy Wholesale Commodities , Parent & Other, and Entergy comparing the second quarter 2022 to the second 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$325,903 ($275,195 ) ($56,682 ) ($5,974 ) Operating revenues 632,884 (59,723) (35) 573,126 Fuel, fuel-related expenses, and gas purchased for resale 18,570 7,317 (5) 25,882 Purchased power 310,321 7,930 5 318,256 Other regulatory charges (credits) - net 816,201 - - 816,201 Other operation and maintenance 34,446 (40,848) 2,999 (3,403) Asset write-offs, impairments, and related charges (credits) - (506,158) - (506,158) Taxes other than income taxes 19,567 (3,239) 5 16,333 Depreciation and amortization 34,891 (11,172) (505) 23,214 Other income (deductions) (5,315) (59,299) (10,647) (75,261) Interest expense 10,621 (2,288) 5,152 13,485 Other expenses (596) (29,527) - (30,123) Income taxes (443,064) 96,929 4,908 (341,227) Preferred dividend requirements of subsidiaries and noncontrolling interest (224) - (48) (272) 2022 Net Income (Loss) Attributable to Entergy Corporation$152,739 $86,839 ($79,875 )$159,703
(a)Parent & Other includes eliminations, which are primarily intersegment activity.
Second quarter 2022 results of operations include: 1) a regulatory charge of$551 million ($413 million net-of-tax), recorded at Utility, as a result of System Energy's partial settlement agreement and offer of settlement related to pending proceedings before theFERC ; 2) a$283 million reduction in income tax expense as a result of the Hurricane Laura,Hurricane Delta , Hurricane Zeta, Winter Storm Uri, and Hurricane Ida securitization financing, which also resulted in a$224 million ($165 million net-of-tax) regulatory charge, recorded at Utility, to reflect Entergy Louisiana's obligation to provide credits to its customers in recognition of obligations related to an LPSC ancillary order issued as part of the securitization regulatory proceeding; and 3) a gain of$166 million ($130 million net-of-tax) as a result of the sale of the Palisades plant inJune 2022 . See Note 2 to the financial statements herein for further discussion of the System Energy partial settlement agreement and offer of settlement. See Notes 2 and 10 to the financial statements herein for further discussion of the securitization. See Note 14 to the financial statements herein for further discussion of the sale of the Palisades plant. 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 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. 2 --------------------------------------------------------------------------------
Table of ContentsEntergy 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 2022 to the second quarter 2021:
Amount (In Millions) 2021 operating revenues$2,673
Fuel, rider, and other revenues that do not significantly affect net income
376 Volume/weather 140 Storm restoration carrying costs 59 Retail electric price 58 2022 operating revenues$3,306 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 volume/weather variance is primarily due to an increase of 2,343 GWh, or 8%, in electricity usage across all customer classes, including the effect of more favorable weather on residential and commercial sales. The increase in industrial usage was due to an increase in demand from expansion projects, primarily in the chemicals, transportation, and petroleum refining industries, an increase in demand from cogeneration customers, and 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. The increase in weather-adjusted commercial usage was primarily due to the effect of the COVID-19 pandemic on businesses in second quarter 2021. Storm restoration carrying costs, representing the equity component of storm restoration carrying costs, includes$37 million at Entergy Louisiana and$22 million atEntergy Texas , recorded in second quarter 2022, recognized as part of the Entergy Louisiana storm cost securitization inMay 2022 and theEntergy Texas storm cost securitization inApril 2022 . See Note 2 to the financial statements herein for discussion of storm cost securitizations.
The retail electric price variance is primarily due to:
•an increase inEntergy Arkansas's formula rate plan rates effectiveJanuary 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 effectiveJuly 2021 andApril 2022 ; •an increase inEntergy New Orleans's formula rate plan rates effectiveNovember 2021 ; and •an increase in the transmission cost recovery factor rider effectiveMarch 2022 and an increase in the distribution cost recovery factor 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.
3 -------------------------------------------------------------------------------- Table of ContentsEntergy Corporation and Subsidiaries Management's Financial Discussion and Analysis Total electric energy sales for Utility for the three months endedJune 30, 2022 and 2021 are as follows: 2022 2021 % Change (GWh) Residential 9,493 8,487 12 Commercial 7,203 6,731 7 Industrial 13,480 12,640 7 Governmental 641 616 4 Total retail 30,817 28,474 8 Sales for resale 3,920 4,716 (17) Total 34,737 33,190 5
See Note 13 to the financial statements herein for additional discussion of operating revenues.
Operating revenues forEntergy Wholesale Commodities decreased from$149 million for the second quarter 2021 to$89 million for the second quarter 2022 primarily due to the shutdown of Palisades inMay 2022 andIndian Point 3 inApril 2021 and lower realized wholesale energy and capacity prices including the effect of the additional PPA entered into with Consumers Energy covering the period fromApril 2022 to final shutdown inMay 2022 at a lower rate than the original PPA. See Note 19 to the financial statements in the Form 10-K for further discussion of the Palisades PPA.
Following are key performance measures for
2022 2021 Owned capacity (MW) (a) 394 1,205 GWh billed 1,371 2,687 Entergy Wholesale Commodities Nuclear Fleet (b) Capacity factor 81% 94% GWh billed 975 2,356 Average energy price ($/MWh)$30.50 $48.75 Average capacity price ($/kW-month)$0.15 $0.32
(a)The reduction in owned capacity is due to the shutdown of the 811 MW
Palisades plant in
4 --------------------------------------------------------------------------------
Table of ContentsEntergy Corporation and Subsidiaries Management's Financial Discussion and Analysis Other Income Statement Items Utility Other operation and maintenance expenses increased from$691 million for the second quarter 2021 to$726 million for the second quarter 2022 primarily due to: •an increase of$10 million in power delivery 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; •an increase of$6 million in energy efficiency expenses due to the timing of recovery from customers and higher energy efficiency costs; •an increase of$5 million in customer service center support costs primarily due to higher contract costs; •an increase of$5 million in bad debt expense primarily due to the deferral in 2021 of bad debt expense resulting from the COVID-19 pandemic. See Note 2 to the financial statements herein and in the Form 10-K for further discussion of regulatory activity associated with the COVID-19 pandemic; and •an increase of$2 million in loss provisions.
Taxes other than income taxes increased primarily due to increases in ad valorem taxes resulting from higher assessments and increases in franchise taxes.
Depreciation and amortization expenses increased primarily due to additions to plant in service.
Other regulatory charges (credits) - net includes:
•a regulatory charge of$224 million , recorded by Entergy Louisiana in second quarter 2022, to reflect its obligation to provide credits to its customers in recognition of obligations related to an LPSC ancillary order issued in the Hurricane Laura,Hurricane Delta , Hurricane Zeta, Winter Storm Uri, and Hurricane Ida securitization regulatory proceeding. See Note 2 to the financial statements herein for discussion of the storm cost securitization; •a regulatory charge of$551 million , recorded by System Energy in second quarter 2022, to reflect the effects of the partial settlement agreement and offer of settlement related to pending proceedings before theFERC . See Note 2 to the financial statements herein for discussion of the partial settlement agreement and offer of settlement; and •regulatory credits of$20 million , recorded in second quarter 2021 atEntergy 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 in the Form 10-K for discussion of the 2021 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 a$32 million charge at EntergyLouisiana for the LURC's 1% beneficial interest in the storm trust established as part of the Hurricane Laura,Hurricane Delta , Hurricane Zeta, Winter Storm Uri, and Hurricane Ida securitization. This decrease was partially offset by: •an increase of$11 million in intercompany dividend income resulting from the Entergy Louisiana storm trust's investment of securitization proceeds in affiliated preferred membership interests, partially offset by the liquidation of Entergy Louisiana's investment in affiliated preferred membership interests acquired in connection with previous securitizations of storm restoration costs; •a decrease of$8 million in non-service pension costs; and 5 -------------------------------------------------------------------------------- Table of ContentsEntergy Corporation and Subsidiaries Management's Financial Discussion and Analysis
•an increase of
See Note 2 to the financial statements herein for discussion of the securitization.
Interest expense increased primarily due to:
•the issuance byEntergy Arkansas of$200 million of 4.20% Series mortgage bonds inMarch 2022 ; •the issuance by Entergy Louisiana of$1 billion of 0.95% Series mortgage bonds inOctober 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$90 million of 4.19% Series mortgage bonds and$70 million of 4.51% Series mortgage bonds, each inNovember 2021 .
Other operation and maintenance expenses decreased from$83 million for the second quarter 2021 to$42 million for the second quarter 2022 primarily due to a decrease of$44 million resulting from the absence of expenses fromIndian Point 3, after it was shut down inApril 2021 , and Palisades, after it was shut down inMay 2022 . The decrease was partially offset by an increase of$5 million in severance and retention expenses. Severance and retention expense was a$1 million credit in the second quarter 2022 as compared to a$6 million credit in the second quarter 2021, with the credits related to revisions of the estimated remaining severance and retention costs upon the sales of Palisades and 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 plants inEntergy 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 (credits) for the second quarter 2022 include a gain of$166 million ($130 million net-of-tax) as a result of the sale of the Palisades plant inJune 2022 . Asset write-offs, impairments, and related charges (credits) 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 inMay 2021 . See Note 14 to the financial statements herein for further discussion of the sale of the Palisades plant. 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 "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 theEntergy Wholesale Commodities merchant nuclear fleet. Depreciation and amortization expenses decreased primarily due to the absence of depreciation expense from Palisades, after it was shut down inMay 2022 , andIndian Point 3, after it was shut down inApril 2021 . Other income decreased primarily due to losses on Palisades decommissioning trust fund investments in the second quarter 2022 compared to the second quarter 2021 and the absence of earnings from the nuclear decommissioning trust funds that were transferred in the sale of the Indian Point Energy Center inMay 2021 , 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 herein for further discussion of the sale of the Palisades plant. 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. 6 --------------------------------------------------------------------------------
Table of ContentsEntergy Corporation and Subsidiaries Management's Financial Discussion and Analysis 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 rate was 183.8% for the second quarter 2022. The difference in the effective income tax rate for the second quarter 2022 versus the federal statutory rate of 21% was primarily due to the reduction in income tax expense as a result of the securitization of Hurricane Laura,Hurricane Delta , Hurricane Zeta, Winter Storm Uri, and Hurricane Ida storm costs pursuant to Louisiana Act 55, as supplemented by Act 293 of theLouisiana Legislature's Regular Session of 2021. The high effective income tax rate was also driven by a loss before income taxes for the second quarter 2022 primarily caused by the regulatory charge recorded by System Energy as a result of the partial settlement agreement and offer of settlement. See Notes 2 and 10 to the financial statements herein for further discussion of the Entergy Louisiana securitization. See Note 2 to the financial statements herein for discussion of the System Energy settlement agreement. 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 3 to the financial statements in the Form 10-K for discussion of the valuation allowance reduction. 7 -------------------------------------------------------------------------------- Table of ContentsEntergy Corporation and Subsidiaries Management's Financial Discussion and Analysis
Six Months Ended
Following are income statement variances for Utility,
Entergy Wholesale Parent & Utility Commodities Other (a) Entergy (In Thousands) 2021 Net Income (Loss) Attributable to Entergy Corporation$682,470 ($237,619 ) ($116,260 )$328,591 Operating revenues 764,425 (158,163) (47) 606,215 Fuel, fuel-related expenses, and gas purchased for resale 179,494 12,153 7 191,654 Purchased power 204,383 3,770 (7) 208,146 Other regulatory charges (credits) - net 755,497 - - 755,497 Other operation and maintenance 60,656 (98,570) 6,539 (31,375) Asset write-offs, impairments, and related charges (credits) - (508,686) - (508,686) Taxes other than income taxes 39,911 (170) 38 39,779 Depreciation and amortization 64,013 (15,392) (954) 47,667 Other income (deductions) (51,580) (106,607) (12,480) (170,667) Interest expense 26,062 (5,315) 14,390 35,137 Other expenses 1,101 (68,555) - (67,454) Income taxes (427,440) 84,224 2,545 (340,671) Preferred dividend requirements of subsidiaries and noncontrolling interest (1,563) 1 (96) (1,658) 2022 Net Income (Loss) Attributable to Entergy Corporation$493,201 $94,151 ($151,249 )$436,103
(a)Parent & Other includes eliminations, which are primarily intersegment activity.
Results of operations for the six months endedJune 30, 2022 include: 1) a regulatory charge of$551 million ($413 million net-of-tax), recorded at Utility, as a result of System Energy's partial settlement agreement and offer of settlement related to pending proceedings before theFERC ; 2) a$283 million reduction in income tax expense as a result of the Hurricane Laura,Hurricane Delta , Hurricane Zeta, Winter Storm Uri, and Hurricane Ida securitization financing, which also resulted in a$224 million ($165 million net-of-tax) regulatory charge, recorded at Utility, to reflect Entergy Louisiana's obligation to provide credits to its customers in recognition of obligations related to an LPSC ancillary order issued as part of the securitization regulatory proceeding; and 3) a gain of$166 million ($130 million net-of-tax) as a result of the sale of the Palisades plant inJune 2022 . See Note 2 to the financial statements herein for further discussion of the System Energy partial settlement agreement and offer of settlement. See Notes 2 and 10 to the financial statements herein for further discussion of the securitization. See Note 14 to the financial statements herein for further discussion of the sale of the Palisades plant. Results of operations for the six months endedJune 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 inMay 2021 . See Note 14 to the financial statements in the Form 10-K for further discussion of the sale of Indian Point Energy Center. 8 --------------------------------------------------------------------------------
Table of ContentsEntergy Corporation and Subsidiaries Management's Financial Discussion and Analysis Operating Revenues Utility
Following is an analysis of the change in operating revenues comparing the six
months ended
Amount (In Millions) 2021 operating revenues$5,270 Fuel, rider, and other revenues that do not significantly affect net income 409 Retail electric price 149 Volume/weather 126 Storm restoration carrying costs 59 Return of unprotected excess accumulated deferred income taxes to customers 21 2022 operating revenues$6,034 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 ,July 2021 , andApril 2022 ; •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 effective in lateJanuary 2021 , 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 volume/weather variance is primarily due to an increase of 3,055 GWh, or 5%, in electricity usage across all customer classes, including the effect of more favorable weather on residential and commercial sales. The increase in industrial usage was due to an increase in demand from cogeneration customers, an increase in demand from expansion projects, primarily in the chemicals, transportation, and petroleum refining industries, 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 an increase in demand from small industrial customers. The increase in weather-adjusted commercial usage was primarily due to an increase in customers and the effect of the COVID-19 pandemic on businesses in 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. Storm restoration carrying costs, representing the equity component of storm restoration carrying costs, includes$37 million at Entergy Louisiana and$22 million atEntergy Texas , recorded in second quarter 2022, 9 -------------------------------------------------------------------------------- Table of ContentsEntergy Corporation and Subsidiaries Management's Financial Discussion and Analysis recognized as part of the Entergy Louisiana storm cost securitization inMay 2022 and theEntergy Texas storm cost securitization inApril 2022 . See Note 2 to the financial statements herein for discussion of storm cost securitizations. 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 six months endedJune 30, 2022 ,$33 million was returned to customers through reductions in operating revenues as compared to$54 million in the six months endedJune 30, 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. Total electric energy sales for Utility for the six months endedJune 30, 2022 and 2021 are as follows: 2022 2021 % Change (GWh) Residential 17,946 17,150 5 Commercial 13,474 12,842 5 Industrial 25,976 24,378 7 Governmental 1,226 1,197 2 Total retail 58,622 55,567 5 Sales for resale 7,562 9,016 (16) Total 66,184 64,583 2
See Note 13 to the financial statements herein for additional discussion of operating revenues.
Operating revenues forEntergy Wholesale Commodities decreased from$397 million for the six months endedJune 30, 2021 to$239 million for the six months endedJune 30, 2022 primarily due to the shutdown ofIndian Point 3 inApril 2021 and Palisades inMay 2022 .
Following are key performance measures for
2022 2021 Owned capacity (MW) (a) 394 1,205 GWh billed 3,595 7,099 Entergy Wholesale Commodities Nuclear Fleet (b) Capacity factor 93% 97% GWh billed 2,741 6,344 Average energy price ($/MWh)$48.99 $50.70 Average capacity price ($/kW-month)$0.15 $0.26
(a)The reduction in owned capacity is due to the shutdown of the 811 MW
Palisades plant in
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Table of ContentsEntergy Corporation and Subsidiaries Management's Financial Discussion and Analysis Other Income Statement Items Utility Other operation and maintenance expenses increased from$1,294 million for the six months endedJune 30, 2021 to$1,354 million for the six months endedJune 30, 2022 primarily due to: •an increase of$18 million in power delivery 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; •an increase of$11 million in customer service center support costs primarily due to higher contract costs; •an increase of$6 million in nuclear generation expenses primarily due to a higher scope of work performed in 2022 as compared to prior year, partially offset by lower spending in 2022 on sanitation and social distancing protocols as a result of the COVID-19 pandemic; •an increase of$5 million in legal expenses primarily due to an increase in legal and regulatory activity increasing the use of outside legal services; •an increase of$4 million in non-nuclear generation expenses primarily due to higher expenses associated with the Hardin County Peaking Facility, which was purchased inJune 2021 ; •an increase of$4 million in energy efficiency expenses due to the timing of recovery from customers and higher energy efficiency costs; •an increase of$4 million in loss provisions; and •several individually insignificant items.
The increase was partially offset by a decrease of
Taxes other than income taxes increased primarily due to increases in ad valorem taxes resulting from higher assessments, increases in franchise taxes, and employment taxes.
Depreciation and amortization expenses increased primarily due to additions to plant in service.
Other regulatory charges (credits) - net includes:
•the reversal in first quarter 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; •a regulatory charge of$224 million , recorded by Entergy Louisiana in second quarter 2022, to reflect its obligation to provide credits to its customers in recognition of obligations related to an LPSC ancillary order issued in the Hurricane Laura,Hurricane Delta , Hurricane Zeta, Winter Storm Uri, and Hurricane Ida securitization regulatory proceeding. See Note 2 to the financial statements herein for discussion of the storm cost securitization; and •a regulatory charge of$551 million , recorded by System Energy in second quarter 2022, to reflect the effects of the partial settlement agreement and offer of settlement related to pending proceedings before theFERC . See Note 2 to the financial statements herein for discussion of the partial settlement agreement and offer of settlement. 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. 11 -------------------------------------------------------------------------------- Table of ContentsEntergy Corporation and Subsidiaries Management's Financial Discussion and Analysis
Other income decreased primarily due to:
•changes in decommissioning trust fund activity, including portfolio rebalancing of the decommissioning trust funds in 2022 and 2021; and •a$32 million charge at Entergy Louisiana for the LURC's 1% beneficial interest in the storm trust established as part of the Hurricane Laura,Hurricane Delta , Hurricane Zeta, Winter Storm Uri, and Hurricane Ida securitization.
This decrease was partially offset by:
•an increase of$11 million in intercompany dividend income resulting from the Entergy Louisiana storm trust's investment of securitization proceeds in affiliated preferred membership interests, partially offset by the liquidation of Entergy Louisiana's investment in affiliated preferred membership interests acquired in connection with previous securitizations of storm restoration costs; •an increase of$11 million due to the recognition of storm restoration carrying costs, primarily related to Hurricane Ida; and •a decrease of$8 million in non-service pension costs.
See Note 2 to the financial statements herein for discussion of the securitization.
Interest expense increased primarily due to:
•the issuance byEntergy Arkansas of$400 million of 3.35% Series mortgage bonds inMarch 2021 ; •the issuance byEntergy Arkansas of$200 million of 4.20% Series mortgage bonds inMarch 2022 ; •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$1.2 billion unsecured term loan proceeds received by Entergy Louisiana inJanuary 2022 ; •the issuance byEntergy Mississippi of$200 million of 3.50% Series mortgage bonds inMarch 2021 ; •the issuance byEntergy Mississippi of$200 million of 2.55% Series mortgage bonds inNovember 2021 ; and •the issuances byEntergy New Orleans of$90 million of 4.19% Series mortgage bonds and$70 million of 4.51% 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 .
Other operation and maintenance expenses decreased from$182 million for the six months endedJune 30, 2021 to$84 million for the six months endedJune 30, 2022 primarily due to a decrease of$87 million resulting from the absence of expenses fromIndian Point 3, after it was shut down inApril 2021 , and Palisades, after it was shut down inMay 2022 , and a decrease of$5 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. Asset write-offs, impairments, and related charges (credits) for the six months endedJune 30, 2022 include a gain of$166 million ($130 million net-of-tax) as a result of the sale of the Palisades plant inJune 2022 . Asset 12 --------------------------------------------------------------------------------
Table of ContentsEntergy Corporation and Subsidiaries Management's Financial Discussion and Analysis write-offs, impairments, and related charges (credits) for the six months endedJune 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 inMay 2021 . See Note 14 to the financial statements herein for further discussion of the sale of the Palisades plant. 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 "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 theEntergy Wholesale Commodities merchant nuclear fleet. Depreciation and amortization expenses decreased primarily due to the absence of depreciation expense fromIndian Point 3, after it was shut down inApril 2021 , and Palisades, after it was shut down inMay 2022 . The decrease was partially offset by the effect of recording in 2021 a final judgment to resolve claims in the Palisades damages case against theDOE 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 8 to the financial statements in the Form 10-K for discussion of the spent nuclear fuel litigation. 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 losses on Palisades decommissioning trust fund investments in the six months endedJune 30, 2022 compared to the six months endedJune 30, 2021 , 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 rate was (194.8%) for the six months endedJune 30, 2022 . The difference in the effective income tax rate for the six months endedJune 30, 2022 versus the federal statutory rate of 21% was primarily due to the reduction in income tax expense as a result of the securitization of Hurricane Laura,Hurricane Delta , Hurricane Zeta, Winter Storm Uri, and Hurricane Ida storm costs pursuant to Louisiana Act 55, as supplemented by Act 293 of theLouisiana Legislature's Regular Session of 2021, the amortization of excess accumulated deferred income taxes and certain book and tax differences related to utility plant items. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act. See Notes 2 and 10 to the financial statements herein for further discussion of the EntergyLouisiana securitization. The effective income tax rate was 12.3% for the six months endedJune 30, 2021 . The difference in the effective income tax rate for the six months endedJune 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 3 to the financial statements in the Form 10-K for discussion of the valuation allowance reduction.
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
13 -------------------------------------------------------------------------------- Table of ContentsEntergy Corporation and Subsidiaries Management's Financial Discussion and Analysis
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 provided plant operation support services for the 800MW Cooper Nuclear Station located nearBrownville, Nebraska , effectiveJuly 31, 2022 .
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 to adjustment for net liabilities and other amounts) to aHoltec subsidiary. Palisades was shut down inMay 2022 and defueled inJune 2022 . The transaction closed inJune 2022 . The sale included the transfer of the nuclear decommissioning trust and the asset retirement obligation for spent fuel management and plant decommissioning. The transaction resulted in a gain of$166 million ($130 million net-of-tax) in the second quarter of 2022. See Note 14 to the financial statements herein for further discussion of the sale of the Palisades plant. InDecember 2020 , Entergy andHoltec submitted a license transfer application to the NRC requesting approval to transfer the Palisades andBig Rock Point licenses from Entergy toHoltec . InFebruary 2021 several parties, including theMichigan Attorney General, filed with the NRC petitions to intervene and requests for hearing challenging the license transfer application, and these petitions and requests for hearing remained pending with the NRC at the time of the closing of the Palisades transaction. InJuly 2022 the NRC issued an order granting theMichigan Attorney General's petition hearing request.
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 decrease in the debt to capital ratio for Entergy as ofJune 30, 2022 is primarily due to the net retirement of debt in 2022. June 30, December 31, 2022 2021 Debt to capital 69.1 % 69.5 % Effect of excluding securitization bonds (0.3 %) (0.1 %) Debt to capital, excluding securitization bonds (a) 68.8 % 69.4 % Effect of subtracting cash (0.4 %) (0.3 %) Net debt to net capital, excluding securitization bonds (a) 68.4 % 69.1 %
(a)Calculation excludes the
As ofJune 30, 2022 , 20.6% of the debt outstanding is at the parent company,Entergy Corporation , 78.9% 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 14 --------------------------------------------------------------------------------
Table of Contents Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis 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.Entergy Corporation has in place a credit facility that has a borrowing capacity of$3.5 billion and expires inJune 2027 . 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 ofEntergy Corporation . The weighted average interest rate for the six months endedJune 30, 2022 was 1.96% on the drawn portion of the facility. As ofJune 30, 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 inEntergy 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 underEntergy 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 (exceptEntergy New Orleans ) defaults on other indebtedness or is in bankruptcy or insolvency proceedings, an acceleration of theEntergy Corporation credit facility's maturity date may occur. See Note 4 to the financial statements herein for additional discussion of theEntergy 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 ofJune 30, 2022 ,Entergy Corporation had$1.398 billion of commercial paper outstanding. The weighted-average interest rate for the six months endedJune 30, 2022 was 0.91%.
Entergy Louisiana had
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. Initially, the aggregate number of shares of common stock sold under this sales agreement and under any forward sale agreement could not exceed an aggregate gross sales price of$1 billion . InMay 2022 , Entergy increased by$1 billion the aggregate gross sales price authorized under the at the market equity distribution program. ThroughJune 30, 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$880 million , of which approximately$680 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 15 -------------------------------------------------------------------------------- Table of ContentsEntergy Corporation and Subsidiaries Management's Financial Discussion and Analysis agreements. In addition to settlement of existing forward sale agreements,Entergy Corporation currently expects to issue approximately$320 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 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. InFebruary 2021 two winter storms (collectively, Winter Storm Uri) brought freezing rain and ice toLouisiana . 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. InApril 2021 , Entergy Louisiana filed an application with the LPSC relating to Hurricane Laura,Hurricane Delta , Hurricane Zeta, and Winter Storm Uri restoration costs and inJuly 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 throughJanuary 2022 , Entergy Louisiana sought an LPSC determination that$2.11 billion was prudently incurred and, therefore, was eligible for recovery from customers. Additionally, Entergy Louisiana requested that the LPSC determine that re-establishment of a storm escrow account to the previously authorized amount of$290 million was appropriate. InJuly 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 theLouisiana Legislature's Regular Session of 2021. InAugust 2021 , Hurricane Ida caused extensive damage to Entergy Louisiana's distribution and, to a lesser extent, transmission systems resulting in widespread power outages. InSeptember 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 inOctober 2021 . Also inSeptember 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 inFebruary 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 inMarch 2022 . As a result of the financing order, Entergy Louisiana reclassified$1.942 billion from utility plant to other regulatory assets.
In
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Table of ContentsEntergy Corporation and Subsidiaries Management's Financial Discussion and Analysis (LCDA), a political subdivision of theState of Louisiana . The securitization was authorized pursuant to the Louisiana Utilities Restoration Corporation Act, Part VIII of Chapter 9 of Title 45 of the Louisiana Revised Statutes, as supplemented by Act 293 of theLouisiana legislature approved in 2021. The LCDA loaned the proceeds to the LURC. Pursuant to Act 293, the LURC contributed the net bond proceeds to a State legislatively authorized and LURC-sponsored trust, Restoration Law Trust I (the storm trust). Pursuant to Act 293, the net proceeds of the bonds were used by the storm trust to purchase 31,635,718.7221 Class A preferred, non-voting membership interest units (the preferred interests) issued byEntergy Finance Company, LLC , a majority-owned indirect subsidiary of Entergy.Entergy Finance Company is required to make annual distributions (dividends) commencing onDecember 15, 2022 on the preferred interests issued to the storm trust. These annual dividends received by the storm trust will be distributed to Entergy Louisiana and the LURC, as beneficiaries of the storm trust. Specifically, 1% of the annual dividends received by the storm trust will be distributed to the LURC, for the benefit of customers, and 99% will be distributed to Entergy Louisiana, net of storm trust expenses. The preferred interests have a stated annual cumulative cash dividend rate of 7% and a liquidation price of$100 per unit. The terms of the preferred interests include certain financial covenants to whichEntergy Finance Company is subject. Entergy and Entergy Louisiana do not report the bonds issued by the LCDA on their balance sheets because the bonds are the obligation of the LCDA. The bonds are secured by system restoration property, which is the right granted by law to the LURC to collect a system restoration charge from customers. The system restoration charge is adjusted at least semi-annually to ensure that it is sufficient to service the bonds. Entergy Louisiana collects the system restoration charge on behalf of the LURC and remits the collections to the bond indenture trustee. Entergy Louisiana began collecting the system restoration charge effective with the first billing cycle ofJune 2022 and the system restoration charge is expected to remain in place up to 15 years. Entergy and Entergy Louisiana do not report the collections as revenue because EntergyLouisiana is merely acting as a billing and collection agent for the LCDA and the LURC. In the remote possibility that the system restoration charge, as well as any funds in the excess subaccount and funds in the debt service reserve account, are insufficient to service the bonds resulting in a payment default, the storm trust is required to liquidateEntergy Finance Company preferred interests in an amount equal to what would be required to cure the default. The estimated value of this indirect guarantee is immaterial. From the proceeds from the issuance of the preferred membership interests,Entergy Finance Company distributed$1.4 billion to its parent,Entergy Holdings Company, LLC . Subsequently,Entergy Holdings Company liquidated, distributing the$1.4 billion it received fromEntergy Finance Company to Entergy Louisiana as holder of 6,843,780.24 units of Class A, 4,126,940.15 units of Class B, and 2,935,152.69 units of Class C preferred membership interests. Entergy Louisiana had acquired these preferred membership interests with proceeds from previous securitizations of storm restoration costs.Entergy Finance Company loaned the remaining$1.7 billion from the preferred membership interests proceeds to Entergy which used the cash to redeem$650 million of 4.00% Series senior notes dueJuly 2022 and indirectly contributed$1 billion to Entergy Louisiana as a capital contribution. Entergy Louisiana used the$1 billion capital contribution to fund its Hurricane Ida escrow account and subsequently withdrew the$1 billion from the escrow account. With a portion of the$1 billion withdrawn from the escrow account and the$1.4 billion from theEntergy Holdings Company liquidation, EntergyLouisiana deposited$290 million in a restricted escrow account as a storm damage reserve for future storms, used$1.2 billion to repay its unsecured term loan dueJune 2023 , and used$435 million to redeem a portion of its 0.62% Series mortgage bonds dueNovember 2023 . As discussed in Note 10 to the financial statements herein, the securitization resulted in recognition of a reduction of income tax expense of approximately$290 million by Entergy Louisiana. Entergy's recognition of reduced income tax expense was offset by other tax charges resulting in a net reduction of income tax expense of$283 million . In recognition of obligations related to an LPSC ancillary order issued as part of the securitization 17 -------------------------------------------------------------------------------- Table of ContentsEntergy Corporation and Subsidiaries Management's Financial Discussion and Analysis
regulatory proceeding, Entergy Louisiana recorded a
As discussed in Note 12 to the financial statements herein, Entergy Louisiana consolidates the storm trust as a variable interest entity and the LURC's 1% beneficial interest is shown as noncontrolling interest in the financial statements. In second quarter 2022, Entergy Louisiana recorded a charge of$31.6 million in other income to reflect the LURC's beneficial interest in the trust. InApril 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 of$57 million throughDecember 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 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 throughDecember 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, inMarch 2022 the LPSC approved financing of a$1 billion storm escrow account from which funds were withdrawn to finance costs associated with Hurricane Ida restoration. InJune 2022 , 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 theLouisiana Legislature's Regular Session of 2021. A procedural schedule has been established with a hearing inDecember 2022 .
Hurricane Ida (
As discussed in the Form 10-K, inAugust 2021 , Hurricane Ida caused significant damage toEntergy New Orleans's service area, including Entergy's electrical grid. The storm resulted in widespread power outages, including the loss of 100% ofEntergy New Orleans's load and damage to distribution and transmission infrastructure, including the loss of connectivity to the eastern interconnection. InSeptember 2021 ,Entergy New Orleans withdrew$39 million from its funded storm reserves. InJune 2022 ,Entergy New Orleans filed an application with theCity Council requesting approval and certification that storm restoration costs associated with Hurricane Ida of approximately$170 million were reasonable, necessary, and prudently incurred to enableEntergy New Orleans to restore electric service to its customers and to repairEntergy New Orleans's electric utility infrastructure. Carrying costs throughDecember 2022 related to Hurricane Ida restoration costs were$9 million . Additionally,Entergy New Orleans is requesting approval that the$39 million withdrawal from its funded storm reserve inSeptember 2021 and$7 million in excess storm reserve escrow withdrawals related to Hurricane Zeta and prior miscellaneous storms are properly applied to Hurricane Ida storm restoration costs, the application of which reduces the amount to be recovered fromEntergy New Orleans customers by$46 million .The City Council has not yet set a procedural schedule regarding the requested relief, thoughEntergy New Orleans requested resolution by the end of first quarter 2023.Entergy New Orleans intends to file with theCity Council an application proposing a financing method for recovery of costs deemed eligible for recovery.
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 18 --------------------------------------------------------------------------------
Table of ContentsEntergy Corporation and Subsidiaries Management's Financial Discussion and Analysis 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.
Following are the current annual amounts of Entergy's planned construction and other capital investments.
Planned construction and capital investments 2022 2023
2024 (In Millions) Utility: Generation$1,080 $1,325 $2,320 Transmission 835 805 1,025 Distribution 1,360 1,520 1,740 Utility Support 590 440 315 Total 3,865 4,090 5,400 Entergy Wholesale Commodities and Other 10 - - Total$3,875 $4,090 $5,400 The updated capital plan for 2022-2024 reflects incremental capital investments for potential generation projects, accelerated resilience spending, and increased capital project costs. The capital plan includes investments in generation projects to modernize, decarbonize, and diversify Entergy's portfolio, including Sunflower Solar, West Memphis Solar, Driver Solar,Orange County Advanced Power Station , and St. Jacques Louisiana Solar; investments in Entergy's nuclear fleet; transmission spending to drive reliability and resilience while also supporting renewables expansion; distribution and Utility support spending to improve reliability, resilience, and customer experience through projects focused on asset renewals and enhancements and grid stability. While Entergy is still assessing the effect on its planned solar projects, the 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 exacerbated previously existing supply chain disruptions, which have negatively affected the timing and cost of completion of these projects. 19 -------------------------------------------------------------------------------- Table of ContentsEntergy Corporation and Subsidiaries Management's Financial Discussion and Analysis
Walnut Bend Solar
As discussed in the Form 10-K, the APSC directedEntergy Arkansas to file a report within 180 days detailing its efforts to obtain a tax equity partnership. InJanuary 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. Closing was expected to occur in 2022. The counter-party has notifiedEntergy Arkansas that it is terminating the project, though it is willing to consider an alternative for the site.Entergy Arkansas has disputed the right of termination. Negotiations are ongoing, but at this time the project is not expected to achieve commercial operation in 2022.
West Memphis Solar
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 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 notifiedEntergy 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
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 and requested cost recovery through the formula rate plan rider. The acquisition of Driver Solar will be contingent upon receiving all necessary regulatory and Board approvals. The APSC established a procedural schedule with a hearing scheduled inJune 2022 , but the parties later agreed to waive the hearing and submit the matter to the APSC for a decision consistent with the filed record. The facility is expected to be in service by the end of 2024. Negotiations with the counter-party are expected to conclude inAugust 2022 , andEntergy Arkansas has requested an APSC decision byAugust 31, 2022 .
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