Operator:

Good morning. My name is Alex, and I will be your conference operator today. At this time, I would like to welcome everyone to Entergy's First Quarter 2024 Earnings Conference Call. [Operator Instructions].

William Abler:

Good morning, and thank you for joining us. We will begin today with comments from Entergy's Chair and CEO, Drew Marsh; and then Kimberly Fontan, our CFO, will review results. In an effort to accommodate everyone who has questions, we request that each person ask no more than 2 questions.

Regarding utility O&M, quarterly timing can vary significantly, especially when compared to a prior year where we deployed significant flex spending for the benefit of customers following a very hot summer. As we look to second quarter this year, we expect O&M to be higher than last year with the increase roughly in line with the first quarter variance. Key drivers of the timing of our spending in 2024 include the following:

In 2023, all of our flex spending increases were in the back end of the year. So we expect corresponding reductions in spending this year in that same time frame. In second quarter last year, we received significant prescription rebates covering multiple years, which we don't expect to recur at that level or in the same time frame this year.

Konstantin Lednev:

It's actually Constantine for Shar. Can we start on the updated thoughts around the CapEx plan given the data points around resiliency and additional industrial customers. You had about $900 million in plan with a bigger number now approved. Is that pushing CapEx higher in the near term? And how should we think about the moving pieces there?

Konstantin Lednev:

Okay. Perfect. And maybe can you help us reconcile some of the charges taken in the quarter and how the refunds may impact cash and financing needs in the near term? Just do you anticipate any pull forward of equity issuance? Or are there offsetting factors that we should think about?

Konstantin Lednev:

Perfect. And maybe just one last follow-up on some of your commentary around regulatory outcomes. Do you have any updated thoughts around the FRP process and rate case process in Louisiana? And is the period after the direct testimony of the make it right for the kind of more intense settlement discussions? Any kind of lessons learned that you can implement?

Operator:

Our next question comes from Jeremy Tonet from JPMorgan.

Roderick West:

This is Rod. I can touch on that and certainly Kimberly can follow. But beyond the AWS transaction in Mississippi, we're continuing to see significant interest in the data center sectors, both hyperscale as well as colocation in Arkansas, Louisiana and Mississippi. But we continue to see strong interest from the metal sector as well, specifically aluminum and steel. With projects in various stages of development, you can add in there with the RRA, developments showing up in blue ammonia in addition to the conversations around carbon capture. And that's not to exclude what we would consider to be our traditional sectors of growth in the service territory around refining and petrochemicals. We plan to give more color, of course, at Analyst Day, but I didn't want to suggest that there was one specific sector. There's a fair amount of diversity in our backlog and growth outlook.

Jeremy Tonet:

Got it. That makes sense. It's very helpful there. That kind of leads into my next question. I was just wondering for the Analyst Day, obviously, you're not going to give us all the details here, but just wondering any broad parameters of what we should expect on that day.

Roderick West:

Yes. You're right, being in a position where we can say comfortably that roughly 85% of the SERI risk has been addressed through settlement, it does lend itself to what I would think would be a compelling case to resolve the risk with the state of Louisiana. We can't speak and don't speak around the nuances of negotiations in any period. But we do believe that the fact that New Orleans is now off the table, it gives us a shot to pursue that with Louisiana near term.

Michael Lonegan:

I was wondering if you could provide a preview of your planned resiliency filing in Texas. You laid out a cadence of spending for Texas at the EEI conference. And I was just wondering if the Texas Resiliency Act since then has changed how you're thinking about it in terms of the amount and timing of planned investments?

Andrew Marsh:

And I'll add that as you probably recall, the Texas part of the resilience investment was pushed back a little bit, because we had a lot of growth upfront. And so you probably won't see as much and that's where the grant piece comes in. And also the mechanism, as we've talked about before, since we have all of this growth in our service territory, mechanism doesn't work as well from a credit perspective for us. So we're working on that. We have another legislative session coming up, but you'll see all of that reflected in our ultimate resilience filing.

Kimberly Fontan:

Yes. As far as the $411 million that is included in our capital plan from a protection, it's a technology that's been used elsewhere and certainly just not necessarily in this area along the East Coast. And certainly, it's expected to be resilient in heavy winds and storms.

Operator:

Our next question comes from Nick Campanella from Barclays.

Kimberly Fontan:

Yes. Thanks for the question, Nick. When you think about the Mississippi Data Center, it ramps up over time. So you're not going to see a lot of that in the 3-year outlook period. We can talk more about what that means over the 5 years that Drew referenced at the Analyst Day. But you're right, when you think about AGM on that sort of customer, you are also putting in infrastructure to support it. So you saw a shift in spending in the fourth quarter update, where we added incremental renewables, for example, in Mississippi, because those investments and the associated costs associated with those investments will offset some of that from a bottom line perspective and then financing costs for those type of things as well. But again, you'll see most of that effect outside the 3-year outlook period.

Nicholas Campanella:

Great. That's really helpful. Appreciate it. And then, I guess, you mentioned in your remarks and you have it on slides here, you've been above the 14% FFO-to-debt target that the agencies put you at. I'm just thinking about Moody's continuing to be a negative outlook. Do you think that there's a window to kind of address that ahead of summer? And what's your latest conversations been there?

Anthony Crowdell:

I guess just quickly, if I could get Rod busy here. Just on SERI, Rod, I know you're working with the Louisiana Public Service Commission on maybe settling there. Separately, there's the formula rate plan issue. Is there anything that prevents both of those being settled together, meaning one is a FERC issue and one may be more of a state issue?

Anthony Crowdell:

Great. And then just an easy one, I guess, Drew, on the gas sale update. I know it's a very long window for approval. Just any update or timing or procedural schedule you can provide us?

Operator:

Our next question comes from the line of Steve Fleishman from Wolfe Research.

Andrew Marsh:

Probably not. That's a new transformer. And as I know you're aware, there's a backlog for large transformers like that. And we don't have one of that size as a spare. So we do have the interim transformer ready to go, and it should be ready by summertime. That gets us back to about 90%. And so the plant should be online this summer, but we won't have full deliverability out of the plant that we get a new transformer in place. But you can run 90% just with the spare. So it's kind of most of the way. So...

Andrew Marsh:

I believe that they are expecting to put something out late this year, but the time lines have moved around a little bit for them, but I think that was the previous expectation. Just to be clear, you're talking about the long-term planning piece of it, right?

Andrew Marsh:

Yes. As you know, they've been in MISO North for a while working on stuff. And I do believe that they plan to put out some expectations later this year.

Kimberly Fontan:

That's absolutely correct, Steve. And the Cogent sales were for the quarter, but that's really a volume difference, slight EPS difference. But as we discussed, the incremental industrial sales certainly support that, helping us achieve our objectives at the end of the year.

Agnieszka Storozynski:

So two questions. First, as you see this data center load materializing in your service territory, is there any discussion about potential changes in like T&D tariffs that these big users would be paying? I'm mostly trying to see if there's any way to shield residential customers from payments for any sort of T&D upgrades that will be needed to accommodate this load.

Agnieszka Storozynski:

Good. And speaking of Mississippi, and I'm just thinking about SERI, all of these issues that are related to the Grand Gulf nuclear plant. I mean, as you are basically trying to finish all of the litigations associated with that plant, is there -- I mean, would you, for example, consider signing like a long-term contract with a data center instead of having the sort of disputes on the regulated level just to make this asset dedicated to an industrial or commercial user as opposed to having it, again, it seems to have led to a number of regulatory disputes in the past.

Operator:

Our next question comes from the line of Ryan Levine from Citi.

Roderick West:

Yes, this is Rod, again. And I think Kimberly alluded to it. The example in Mississippi, I think, serves as a blueprint for other states when you think about how we shape both the legislation from the actual state, the contractual guarantees, if you will, from AWS, and the regulatory outcomes that facilitated our ability to meet AWS' needs, I think, plays well.

Andrew Marsh:

Yes. And I'll just add that given what Rod just outlined, our regulators and our communities are excited about these potential investments. There are large investments that are going to throw off a bunch of tax holders and provide some really good jobs. There are areas in Central and Northern Mississippi, Northern Louisiana and in Arkansas, there's a lot of rural space out there that data centers can go to. And those jobs are meaningful in those areas. So they're really excited about the opportunity for those investments and the economic activity that comes along with them. That's why, as Ross said, they're competing to figure out how they can serve these potential customers.

Andrew Marsh:

Yes, that's a great question. And where we are along the coast in Texas, a lot of the resilience investments and the wildfire investments is going to be very similar and overlapping. So yes, that is going to be part of it. I'm sure that wildfire is going to be a part of the conversation or legislature coming up early next year.

Operator:

[Operator Instructions] Our next question comes from Travis Miller from Morningstar.

Kimberly Fontan:

There's both there, Travis. The transmission certainly generally is less than the generation, but some of it is timing. When you think about it, we have long-term supply plans where we may have had generation in a plan and perhaps there's some earlier execution of it in order to meet that demand. And as you know, we're in MISO. So transmission is playing through MISO as well.

Travis Miller:

Okay. And then do you anticipate, on that generation piece, doing an RFP? Or would you have first rights to any kind of new generation build?

Travis Miller:

Okay. And then general, the comments there you just made in general for any industrial customer or more for data versus other chemical producers or factories, et cetera?

Operator:

There are no further questions as of right now. I'd like to hand back the call over to Mr. Abler. Thank you.

Operator:

Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the Entergy's Fourth Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I will now turn the call over to Bill Abler, Vice President of Investor Relations for Entergy Corporation.

Drew Marsh:

Thank you, Bill, and good morning everyone. Today, we are reporting strong results for another successful year. Our 2023 adjusted earnings per share was $6.77 and the top half of our guidance range, once again delivering steady predictable results. Our strategy is rooted in creating value for our four key stakeholders, our customers, employees, communities and owners, and it starts with understanding what our customers need from us to be successful. We build our investment plan to meet those needs, including new generation, transmission and distribution investments to support customers' strong industrial growth and decarbonization goals, as well as to improve reliability and resilience, all the while prioritizing projects with affordability in mind. Our customer-centric approach has served us well and we are confident we'll continue to create meaningful value. Starting with the customer, 2023 was another strong year for growth. Last year, we signed 61 new electric service agreements. These contracts represent more than 1.3 gigawatts of generation capacity at about $250 million of annual adjusted gross margin. Our outlook anticipates most, but not all of these contracted volumes to come to fruition and our forecast probability weights each prospect. Data centers are a hot topic. And as you know, we've seen interest in our service area. A few weeks ago, Mississippi's Governor Reeves called a special session to finalize the legislative package to bring a large Amazon Web Services or AWS project to Mississippi. AWS is investing $10 billion, the largest economic development project in the state's history to build two hyperscale data center complexes that are expected to come online over a three-year period starting in 2025. The project will create at least 1,000 ongoing high-paying, high-tech jobs, as well as significant economic benefits to the state and local communities. In addition, the legislation provides the approval of Entergy Mississippi's investment in transmission and generation to serve the facility. It also permits Entergy Mississippi to recover carrying costs during construction, which lowers the total cost for customers and supports Entergy Mississippi's credit. In addition to the data centers, our growth story continues to develop and diversify. For example, two projects supporting production of electric vehicle batteries, as well as our lumber facility upgrade were announced in the fourth quarter. We also signed up new customers in the LNG and blue hydrogen spaces. The developers for these projects expect sustainable, affordable, reliable and resilient service from Entergy's utilities. The ongoing enter from potential customers informs and affirms our expectation for very strong growth. Customer affordability is a key area of focus. Some of the actions we are taking include, pursuing loans and grants to offset the cost of much needed investments. Several of our operating companies submitted Part one applications to the DOEs loan programs office, totaling $4.7 billion for a variety of projects related to the clean energy transition. Our utilities also submitted eight preliminary proposals for grid resilience and innovative partnerships or GRIP program funding. Additionally, some of our operating companies are partnering with their states to apply for funding from other federal sources. This is building off the successful efforts in 2023, including our Louisiana utilities support for the state's HERO application, which resulted in a grant for Louisiana's $500 million strategic energy initiative, and our Texas utility support for the IIJA hydrogen hub application which resulted in a $1.2 billion grant for high velocity. Operationally, Entergy's employees work every day to support our customers and deliver excellence. Everything they do starts with safety. When it comes to safety, our work is never done because we believe zero harm is possible. While focusing on safety Entergy's generation fleet had an outstanding year. Even with challenges from record-breaking heat this past summer, we achieved our best forced outage rate since 2011. Not only did we meet our customer's demands, but we also exported power to other utilities in MISO at the moments that matter. That performance has continued into 2024. Winter Storm Heather hit our service area in January and we set a new winter peak. Once again, our fleet performed very well and we maintained reserve capacity comfortably above our customer demand. Our power delivery team has also made important strides this year completing work that improves reliability and resilience serves new customers and helps attract new economic development to our region. In 2023, we improved our reliability performance with the lowest outage frequency in the last decade. Stakeholder engagement also continues to be a focus area. In 2023, we broadened our engagement efforts to expand our conversations with a wide group of stakeholders including customers, employees, elected leaders, community leaders, vendors and of course, our regulators. In each of our jurisdictions including at the federal level, we want to understand their perspective and ensure that we communicate clearly what we are trying to do, why we are doing it and how it benefits customers and communities. By effectively engaging with stakeholders, we can foster constructive regulatory and policy environments and our customers, communities, employees win while we also deliver on our commitment to provide steady predictable earnings and dividend growth for our owners. Of course, the proof is in the outcomes and we made important progress on our regulatory objectives over the last few months. Starting at the federal level in November FERC issued notice of denial of the request for rehearing on the uncertain tax position and sale leaseback case. FERC's order explicitly stated that the rehearing request would not be redressed in a future order. Both parties have filed appeals of the FERC and the court could come to a decision later this year. Turning to the retail level. We have seen progress on accelerated resilience, which is extremely important for the security of all our stakeholders and especially, our coastal customers and communities. Entergy New Orleans shared polling results with the council members to show that the community supports efforts to accelerate resilience and they're willing to pay for it. The City Council's Climate and Sustainability Committee has taken first step to move in this direction recommending approval of the $110 million project that was granted 50% matching funds through the federal GRIP program. This is a good first step and improved resilience for one district in New Orleans, but it's far from the final step. The committee has asked Entergy New Orleans to shorten Phase 1 to a three-year period rather than the five years in our initial proposal to allow the council to evaluate progress sooner before moving to the next phases of the plan. The matter is on today's City Council agenda. Our three-year resilience plan will align with the previous filing with projects optimized to fit within the shorter time frame. We expect to submit the updated plan in the next few weeks. For Entergy Louisiana the hearing was moved to early April to give staff an opportunity to ensure the plan is consistent with the latest thoughts on the forthcoming resilience rules. In the meantime, recent technical conferences have allowed parties to continue advancing the resilience conversation. Parties continued to be supportive of greater resilience and we still expect an LPSC decision on this matter in the second quarter. The PUCT finalized the Texas Resilience Act rule making which provides a framework that supports greater resilience investments and efficient recovery. We did not receive everything we wanted in the rule making particularly around credit support for utility already stretching to meet significant customer growth needs. Still, Entergy Texas intends to submit its plan later this quarter. The commission will have 180 days to act on this filing. We expect a decision in late summer of this year. In addition, Texas voters approved funding for the Texas Energy Fund. Of the $5 billion appropriated $500 million has been designated for grants to non-ERCOT utilities, municipals and co-ops. We intend to participate for the benefit of our customers communities and expect more details in the coming months. In December, Entergy New Orleans received certification of Hurricane Ida cost. The council's order determined that all restoration costs were prudent. This approval fully resolves recovery of all Ida costs. As a reminder, Entergy New Orleans received securitization funds in early 2023 in advance of the final certification. This follows a similar path where Entergy Louisiana received $1 billion of securitization funds for Ida well in advance of final cost certification. Financial resilience through fair and efficient storm costs recovery is critical for utility credit to ensure low borrowing costs for customers. Timely recovery of storm costs also avoids carrying costs and save customers money. In addition to affordability, strong credit is important for storm response and making investments to support economic growth in our communities. Our gas LDC sale process is moving along nicely, and we made initial regulatory filings to request approval for the sale. We are targeting to close the transaction around the third quarter of next year after a transition period to allow the buyer to set up all support systems. The stakeholder engagement process has been going well and the closing time line could be accelerated if regulatory reviews are completed this year. In January, the Louisiana Public Service Commission approved two renewable resources, totaling 225 megawatts. Both projects are expected to come online in 2025. And Entergy Louisiana's request to streamline the acquisition of up to 3000 megawatts of new solar resources, all testimony has been filed and we are making progress in settlement negotiations. Parties filed a request to suspend the procedural schedule while discussions continue. Entergy Louisiana is optimistic it can achieve a constructive resolution of this case that will facilitate our ability to expand renewable resources to support customer needs. And finally, the unanimous settlement of Entergy Arkansas's annual FRP filing was approved, new rates were effective in January. Turning for a moment to the communities we serve. In 2023, we created more than $135 million in economic value for our communities. That includes $25 million of direct shareholder contributions, primarily for bill payment assistance as well as facilitation for LIHEAP assistance, employee volunteers supporting tax preparation and many other activities. One current example is our employees helping our community celebrate Black History Month. We are very proud of the work of our employees and our corporate social responsibility team, as they provide critical health to strengthen the communities we serve and our efforts haven't gone unnoticed. Newsweek recently named Entergy as one of America's most responsible companies. We were also recognized as one of the nation's top 50 most community-minded corporations by the Points of Light Foundation and the highest ranked utility. And Entergy was once again included in the Dow Jones Sustainability Index North America Index. This is the 22nd consecutive year that we've been included on a selective DJSI index. These are just a few examples of the awards we've received that recognize our efforts to create value for our customers, employees and communities. Looking ahead, in 2023, we continue to lay the foundation for long-term growth and customer benefits for Entergy and our stakeholders. As I mentioned at the start, our strategy begins with helping our customers achieve their goals including the unique industrial growth opportunity in front of us. We plan to invest $20 billion over the next three years to make our fleet cleaner and to make our system more reliable and resilient. Just over half of our capital plan, $11 billion is for transmission and distribution to improve reliability and resilience and to serve customer growth. This includes projects from MISO's annual transmission planning process that were approved in December. The 2023 MTAP identified 34 new projects in our service area, including major projects in Southeast Texas and South Louisiana to support strong growth in those regions. Our transmission and distribution investment plan includes $1 billion for accelerated resilience, which can be accomplished within our current regulatory frameworks and credit requirements. Just a reminder, this is less than our recommendation but we can increase our resilience investment as we receive approvals from our regulators that include credit supportive recovery mechanisms. We are planning to invest $8 billion in generation. This includes roughly $2 billion for new owned solar as well as the remaining investment to complete the Orange County Advanced Power Station, which we expect to be in service in 2026. Of course, our customers are focused on clean energy. To that end, we are working closely with customers and vendor partners to make carbon capture and sequestration a reality. Our plan also balances customer affordability, which is a core tenet of sustainability. We are working to improve efficiencies and reduce costs allowing us to offset the impact of growth and inflation and maintain a flat O&M outlook as well as become more efficient with our capital investment dollars. And as I discussed earlier, we are pursuing federal and state grant and loan funding opportunities. Bringing new customers into our service area also spreads the cost of customer-centric investments over a larger customer base and improved local economies, which helps with affordability. And finally, other actions like managing our natural gas inventory and ensuring generator operations at moments that matter, improves reliability and helps avoid unexpected spikes in fuel and purchase power costs for our customers. 2023 was another successful year for Entergy, and given the opportunity ahead of us, we still have a lot of work to do. Our proven track record gives us the confidence that we will continue to be successful. We are keenly focused on execution across key customer, operational regulatory and financial fronts. By continuing to put customers first, we will deliver premium value for each of our key stakeholders. Before I turn it over to Kimberly, I'm excited to announce that we will host an Analyst Day on June 6 and 7. And this year, we're returning to our home city New Orleans. We will continue the conversation on the significant opportunities that we see ahead including a five-year view as we've done in the past. And now, Kimberly will review our financial results for the year as well as our outlook.

Operator:

[Operator Instructions] And your first question comes from the line of Paul Zimbardo from Bank of America. Your line is open.

Andrew Marsh:

Yes, good morning, Paul.

Kimberly Fontan:

Sure, Paul. Thanks for the question. The tax item was a resolution of the 2016 to 2018 audit. And as you noted on EPS, we adjusted those effects out of earnings. From a cash perspective, there's no real cash effect of that as the NOLs and the tax deposits had taken care of that. So no significant cash effect there.

Kimberly Fontan:

Yes. Certainly, the EEI, our plan is preliminary. We continue to adjust and modify that. As I noted, the industrial customers, we expect them to be strong in 2024. You probably saw the announcement in Mississippi around a significant customer there that provides economic opportunities in Mississippi, but we continue to refine and modify our forecast as we move from EEI into quarter end.

Paul Zimbardo:

Okay. Okay. Great. And then if I can quickly follow up on that. Is there any initial estimate or a way to think about how much infrastructure you could need to build for that large Mississippi customer?

Operator:

Okay. Great. Thanks a lot team. Our next question comes from the line of Angie Storozynski from Seaport.

Kimberly Fontan:

Yes. Angie, at EEI, we laid out a capital plan that's pretty close to what's here. It's a couple of hundred million more here. And we continue to refine our capital plan, prioritize around customers that we're aware of. We also showed at EEI additional capital that could be added. There was additional transmission, additional clean energy for -- to support customers and a couple of other areas. And so we continue to work to prioritize those. But I would think about this as this is our capital plan that we're planning for. We're continuing to prioritize it as we move into analyst day. I'd expect we'd show you five years of capital. And so that would be the view that you would get at that point.

Angie Storozynski:

Okay. Changing topics on SERI and the resolution of SERI issues in both New Orleans and Louisiana is there any time line on those? And should we actually link any resolution of SERI related issues to the Brazilian CapEx maybe as a way to pay for some of the spending.

Angie Storozynski:

Perfect. Good luck. Thank you.

Operator:

Your next question comes from the line of Travis Miller from Morningstar. Your line is open.

Drew Marsh:

Good morning.

Kimberly Fontan:

Yes, Travis what we've talked about going forward is a 6% to 7% or CAGR through the 2026 outlook period. What you're seeing as you noted in 2024 is coming off of a base year of 2023. That low will be a little lumpy as it comes in over that period, but we expect a 6% to 7% growth rate on those industrials over that outlook period.

Drew Marsh:

And as far as the recapture piece we don't have a precise number for that. It's probably 1% or 2% if not -- that's a component of it probably in that range.

Kimberly Fontan:

Yes. As Drew noted, we have a little less than $1 billion of resilience spending in our capital plan over this period. Once decisions are made in Louisiana and New Orleans around the recovery mechanism than the pace around that, then we would -- that could be additional capital. But what's in that capital plan is close to that $1 billion number.

Kimberly Fontan:

That’s correct [ph]

Kimberly Fontan:

No, I don't think so. The filing just to be clear, the filing is more than what we've included. What we've included is, what we can spend in our given mechanisms that we have. And as you probably know, we requested accelerated mechanisms in both Louisiana and New Orleans, so that we can accelerate that spending. And so, depending on those mechanisms that could provide additional opportunity for capital there.

Drew Marsh:

I don't have a precise breakdown of that. We do have quite a bit, which isn't necessarily going through RFPs. It's certainly in Arkansas and Mississippi. And so, I think there's a good chunk of that, but I don't have a precise number for you.

Drew Marsh:

Thank you.

Bill Abler:

Thank you Rob, and thanks everyone for participating this morning. Our annual report on Form 10-K is due to the SEC on February 29, and provides more details and disclosures about our financial statements. Events that occur prior to the date of our 10-K filing that provide additional evidence of conditions that existed at the date of the balance sheet would be reflected in our financial statements in accordance, with generally accepted accounting principles. Also as a reminder, we maintain a web page as part of Entergy's Investor Relations website called Regulatory and Other Information, which provides key updates of regulatory proceedings and important milestones on our strategic execution. While some of this information may be considered material information, you should not rely exclusively on this page for all relevant company information. And this concludes our call. Thank you very much.

Operator:

Good morning. My name is Joel, and I will be your conference operator today. At this time, I would like to welcome everyone to the Entergy Third Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I will now turn the call over to Bill Abler, Vice President of Investor Relations for Entergy Corporation.

Drew Marsh:

Thank you, Bill, and good morning, everyone. Today we are reporting very strong financial results for the quarter, as well as important progress with a few recent announcements, including a settlement in principle with the Arkansas Public Service Commission on SERI litigation and an agreement to sell our gas distribution business. Starting with our quarterly financial results. Our adjusted earnings per share was $3.27. We experienced record temperatures with an estimated impact of $0.64, which has given us the opportunity to flex our spending plans to invest in key areas that benefit our customers, derisk 2024 and support our goal to deliver steady predictable results. With our results to-date and our biggest quarter behind us, we are raising the bottom of the guidance range by $0.10 per share. We remain well-positioned to achieve our long-term 6% to 8% growth outlooks. Our goal to deliver steady predictable growth includes our dividend. Consistent with expectations, our Board of Directors once again raised our quarterly dividend by 6% to $1.13 per share or $4.52 annually. Turning to the business update. Our system faced extreme heat and we saw record demand through July and August. In fact, they were 13 days that surpassed previous peak demand records. Despite the challenging weather, our system met our customer’s high expectations. Our power delivery team withstood June storms as the summer turned hot and dry for most of our service territory. Our generation portfolio covered our customer demand and we operated well within our reserve margins and our nuclear fleet was online throughout the quarter with a fleet capability factor of 99%. We continue to invest in our nuclear assets with the goal to operate safely and reliably well into the future. Two of our plants are currently planned outages to complete work along these lines. Waterford 3 is an extended planned refueling outage that includes significant investments to drive plant longevity. In addition, we advanced in a planned outage to complete minor repairs to improve reliability going forward. We are also investing in power delivery to improve reliability and resiliency. These investments not only benefit existing customers but also attract new economic development through our region. Through the first three quarters of this year, we replaced approximately 21,000 distribution poles placed nearly 1,500 new transmission structures in service and completed 15 new substations. Our past investments in modern efficient generation units, our nuclear fleet and our power delivery system helped us meet this summer’s number of demands. We continue to see signs of strong customer growth that helps affordability by spreading fixed costs over a larger customer base. For example, First Solar announced plans to invest up to $1.1 billion to build the solar manufacturing facility, CF Industries is proposing a $2 billion low-carbon clean ammonia production facility and Cora is proposing an $800 million investment in two electric vehicle battery supply-chain projects. These are just a few of the projects to support our expectation for strong growth in the coming years. We have made meaningful progress on important regulatory matters which support the credit required to meet customer’s growing needs and to drive improved customer outcomes. First, System Energy reached a $142 million global settlement in principle with the Arkansas Public Service Commission to resolve all current SERI claims. Entergy Arkansas has already received some funds and the remaining amount will be refunded by SERI once FERC approves the settlement. This agreement is consistent with SERI’s settlement with Mississippi which was approved by FERC. It is also consistent with the reserve recorded last year. With this latest settlement, SERI has now resolved nearly two-thirds of its litigation risk. The SERI settlement follows FERC’s August order on rehearing for the sale leaseback renewal and uncertain tax position case. In that order, FERC agreed with System Energy’s arguments on the sale leaseback and depreciation refund calculations and denied rehearing requests on the uncertain tax positions. Accordingly, we submitted our compliance report on the sale leaseback and SERI has recouped $40 million of the amount previously paid to Entergy New Orleans and Entergy Louisiana. Shortly after 1st August order, the LPSC filed for rehearing and clarification. FERC denied the rehearing by operation of law and indicated intends to issue an additional order on this matter. We believe that the August order and settlement with Arkansas provides important clarity that will help guide constructive discussions to resolve the remaining SERI litigation matters. A fair and reasonable settlement can provide meaningful refunds to customers in the near-term and eliminate uncertainty which itself brings further benefits to customers. Turning to retail matters. Entergy New Orleans’ new formula rates were approved by the City Council and went into effect in September. This is the last rate change under E-NO’s current FRP. In addition, the Council also approved Entergy New Orleans’ request to extend its FRP for another three years. The outcome provides regulatory clarity for Entergy New Orleans and includes enhancements that will support the company’s credit and by extension, its ability to make important investments for its customers. Entergy Louisiana, likewise, has new formula rates effective in September, it’s last rate change under its current FRP. In the third quarter, Entergy Louisiana also filed its rate case and alternatively proposed to extend its FRP with some revisions to provide an opportunity to earn a fair improved return on investment that is critical to support the Louisiana growth. The proposal also includes new customer and community programs to support those in need. We prefer the proposed FRP renewal to the rate case as it better supports the strong growth that is important to Louisiana. Regardless of the past, our goal is to maintain the current cadence with new rates effective next September. In late breaking news at the LPSC yesterday afternoon, we filed an unopposed stipulated settlement to resolve outstanding 2017 to 2019 formula rate plan filings and certain issues in the 2020 and 2021 filings. This settlement, which requires LPSC review is consistent with our outlooks and it represents continued work with our stakeholders to provide clarity on our path forward. Separately, Louisiana’s docket to implement a streamlined process for certification of up to 3,000 megawatts of new solar is also progressing. Staff testimony is supportive of enhancing the process and we will work with them to incorporate the perspective. It is still relatively early in the process and we are hopeful that we will ultimately reach a constructive settlement as part of our ongoing efforts to work collaboratively with our regulators to bring clean energy solutions for our customers. In Texas, the PUCT approved our rate case settlement. New rates, as well as new depreciation and amortizations are effective retroactive to December 2022. And also just yesterday, Entergy Arkansas filed the unanimous settlement with its annual FRP. That allowance for a rate change with a 4% cap. We expect the commission to take up the matter before year-end and new rates will be effective in January. Last week, Entergy Arkansas agreed to forego cost recovery from the state or incidents in 2013. As a result, this quarter, Entergy Arkansas wrote off replacement power costs for an underappreciated plant through on its balance sheet. This has been a long-standing issue and this resolution provides clarity moving forward. Finally, regarding resilience. We continue to move forward in the processes to review our accelerated resilience proposals. In New Orleans, we are holding town hall meetings to listen to our stakeholder’s inputs and answer their questions. We are targeting a City Council decision by year-end. In Louisiana, we received input from a staff engineer, as well as staff and interveners. All parties agree that accelerated resilience would benefit customers. There are however varying opinions on how much we should pursue right now and the timing, as we work together to manage customer affordability. Our focus remains on bringing as much value to customers as we can while maintaining the credit of the business. We have significant capital needs to meet our customer’s growing demand for reliable, resilient and clean energy. To that end, we are pursuing opportunities to source that capital at lower costs. On Monday, we announced an agreement to sell our gas distribution business for $484 million. We will use the proceeds to reduce debt and support our capital needs. The sale is expected to be essentially neutral to earnings. While the gas business is a relatively small piece of our overall utility business, the more than 200 employees in that business are an important part of Entergy’s community and culture as they have been for over 100 years. We have reached agreement with Bernhard Capital Partners, a Louisiana-based group and part because they understand that these employees are critical stakeholders in the gas business. In addition, our customers will continue to receive the high level of service that they have come to expect. The transaction is contingent on regulatory approvals and we anticipate closing around the third quarter of 2025. Federal programs are another cost effective way to source capital. We are pursuing both grants and loans through various programs. For example, under the Grid Resilience and Innovation Partnerships or GRIP program, each of our operating companies submitted applications. We are pleased to report that the proposal from Entergy New Orleans was selected in the federal share of the $110 million system hardening and battery microgrid project will be $55 million. While four of our projects were not selected, they did receive encouragement letters and we are able to reapply for future funding rounds. We are also preparing to apply for federal loans through the DOE titled 17 Clean Energy Financing Program. Our application will include projects that we are already planning, including renewable generation, battery storage and transmission projects. Beyond federal financing directly for our customers, we are working with our community partners to attract other federal support for investment in our region. A good example is Louisiana’s Hero Project that unites public-private and philanthropic sectors to accelerate more affordable, reliable and clean energy to protect residents of Louisiana from climate change threats. Entergy Louisiana and Entergy New Orleans were both critical team members in helping Louisiana secure the $500 million award. Another example is Entergy Texas’ participation in the high velocity hydrogen hub, which was selected by the deal with DOE for $1.2 billion award. This funding will help jumpstart additional clean energy production transportation and end-use opportunities which in turn will create jobs and economic activity and our communities. Entergy Texas could see additional load from blue and green hydrogen customers as a result. Most of our community work is local boots on the ground, including economic developments. Our teams work alongside our state and local governments to attract new business, jobs and tax base to our service area. We are honored that Site Selection magazine has once again recognized Entergy as a top utility for economic development. We also have programs to directly help our customers in need. With the extreme heat this past quarter, we stepped up our efforts to provide resources for bill assistance, provide education on energy efficiency, a range of payment plans and encourage customers to transition to levelize billing. We also hosted our first Power Your Future Summit with education and workforce partners across our service area to create pathways to employment for individuals from underrepresented communities. These are just a few examples of the tremendous work our utility companies and employees put toward our community stakeholders every day. The EEI Financial Conference is just a couple of weeks away. The fundamentals underpinned -- underpinning our growth and value creation for each of our key stakeholders remains intact. Our long-term sales growth outlook is robust, bolstered by the IRA. Our investment plan includes incremental capital to support the growth and other customer objectives including reliability, resilience and clean energy investments. Customer affordability remains a priority and we are actively pursuing continuous improvement efforts to expand our employee skills and capabilities, and using technologies like artificial intelligence and robotic process automation to help us maintain a generally flat O&M trajectory despite the inflationary environment and our incremental investments. While our capital plan is increasing, we have a plan to manage within the current financing environment that meets our credit objectives with the same level of equity we laid out at Analyst Day. With all of that, we are on track to deliver steady, predictable earnings and dividend growth and steadily working to build the premier utility. We look forward to continuing this conversation with you at the EEI Financial Conference in a couple of weeks. Now I will turn the call over to Kimberly, who will review our financial results for the quarter.

Operator:

[Operator Instructions] Your first question comes from the line of Shar Pourreza of Guggenheim. Your line is open.

Drew Marsh:

Good morning, Shar.

Kimberly Fontan:

Sure, Shar. Thanks for the question. As you noted, we did have significant weather that enabled us to pull forward some O&M spending. Some of that is, as I noted, related to that vegetation management spending that is coming into 2023. There’s also been additional spending in the transmission and distribution space around maintenance on those assets. All of that does help derisk 2024. And then we did have this higher spending in 2023 in the third quarter and a flow a bit into the fourth quarter as we continue to maintain a unit for Drew mentioned that ran so well to support these higher volumes. So all those help contribute to that change in the O&M space and that’s help derisk future periods.

Kimberly Fontan:

Sure. The gas sale does help support the incremental capital that Drew mentioned going into our 2025 and 2026 outlooks. We also have strong sales that support that and we do not have the incremental equity in that period and supported by those two items, and we will go through more details of the financing plan for that at EEI in a couple of weeks.

Roderick West:

Well, good morning. It’s Rod. The impetus...

Roderick West:

The impetus. Good morning. The impetus for the timing of the settlement I think stemmed from the August FERC ruling that in our view lowered the risk of uncertainty around further refunds due from the uncertain tax position and sale leaseback. So it was an opportunity for us to revisit negotiations, given the clarity from an August -- mid-August decision.

Roderick West:

Yeah. From our advantage point. We view it as constructive. Obviously, we won’t talk about comment on specific timing or progress with Louisiana or New Orleans, but we are comfortable saying we remain inactive in pursuit of settlement under the -- under similar terms with the point being, obviously, as long as we are able to reach constructive settlements that’s fair and reasonable and certainly consistent with the way in which we approach that Arkansas and Mississippi. We think we have a fair shot, but obviously, we did the counterparties to align with us and that’s the work that remains.

Operator:

Our next question comes from the line of David Arcaro of Morgan Stanley. Your name -- your line is open.

Roderick West:

Good morning.

Kimberly Fontan:

Good morning.

Kimberly Fontan:

Yeah. Big picture, David. As I noted, we are seeing, we continue to see a strong pipeline around new and expansion customers and Rod can talk on that, more specifically. For the quarter, we had some outages in our existing customers that drove to what our results are our year-to-date and our pipeline continues to be strong.

David Arcaro:

Okay. Got it. Thanks for that. And so at the end of the day no change to your projections in terms of what you had been expecting industrial sales growth to look like going forward?

David Arcaro:

Okay. Okay. Thanks. And then, I was wondering, if you could just comment on your competitiveness in renewable RFP, just any progress there. Thinking ahead to the potential opportunity in Louisiana with the enhanced renewable RFP three gigawatts. Just how are you situated as that comes closer?

David Arcaro:

Okay. Perfect. Thanks for the color. I appreciate it.

Jeremy Tonet:

Hi. Good morning.

Jeremy Tonet:

Just wanted to follow up on the U.S. Gulf Coast industrial activity, if I could. Just curious, I guess, in your investor conversations or do you feel the market fully appreciates given where WTI has moved up versus relative to gas and what the spread is on a BTU basis for oil and oil byproducts versus gas and natural gas byproducts? How much of a material advantage that is for the U.S. Gulf Coast, both as a feedstock for the petchem industry, as well as power cost for industrial businesses down there, and I guess, the very long multiyear trend of growth that could underpin?

Jeremy Tonet:

Got it. Very clear. Thank you. Maybe just following up on some of your prepared remarks there with New Orleans, Louisiana resiliency filing comments. You mentioned that they are bearing options and opinions as how to -- how much resiliency to do right now. Any sense as to how much variability you could see in the outcomes of these filings, other than affordability concerns, what are the other kind of big moving pieces here that are involved in these resiliency discussions?

Jeremy Tonet:

Got it. That makes a lot of sense. Just one last one if I could. Given that you have reaffirmed your 6% to 8% EPS CAGR through 2026 in line with the Investor Day commentary. Is it reasonable to assume rate base growth will also continue at a similar 7% to 8% CAGR through 2028? How would accelerated resiliency impact this similarly would how higher renewables win rate impact this? On the other side of the coin, do you see pressures against this, such as FRP taps as far as inflation is concerned, just trying to see both sides, how you see this playing out?

Roderick West:

And I will just add that as we get to EEI, we planned some additional disclosures around that potential capital increase above what we already have.

Kimberly Fontan:

Jeremy, we pay attention to customer affordability and we certainly monitor the caps that we have to make sure that we are making investments that are staying within affordability for our customers. So that we have had constructive regulatory mechanisms in all of our jurisdictions and continue to expect to have that as we go forward.

Jeremy Tonet:

Understood. Appreciate the time. Thank you.

Paul Zimbardo:

Hi. Good morning. Thank you, team.

Paul Zimbardo:

And first of all done on the latest series settlement progress. Very nice to say. And I was hoping, I could kind of merge Dave and Jeremy’s question and kind combine. What’s the quantum of incremental capital opportunities across the renewable efforts, as well as the hardening and resiliency programs, I know there’s been a lot of numbers and timeframes, just if you could help kind of frame the opportunity set, relative to the outlook would be helpful?

Paul Zimbardo:

Okay. Great. Thanks. And eagerly anticipating EEI a bigger update. And then the other one, just on Louisiana with the rate case/the FRP extension. Is this the kind of major proceeding that you think needs to be more fully litigated or is that a settlement and opportunity there?

Paul Zimbardo:

Okay. Understood. And then to clarify quickly just setting expectations on timing, should we think about the settlement potential after the intervenor testimony? I think March 26 of next year or could we potentially see something faster than that?

Paul Zimbardo:

Okay. Great. No. Thank you. That’s very helpful. See you at EEI.

Operator:

Our next question comes from the line of Michael Lonegan of Evercore. Your line is open.

Kimberly Fontan:

Thanks, Michael. You are right. We did have to spend more to support the hot summer and the volumes and the power gen team performed really well. I don’t have the breakout specifically between that piece, as well as the pull forwards. But, certainly, we have been able to pull forward significant spending around reliability in the transmission and distribution space and in the vegetation space as well.

Drew Marsh:

Thank you.

Anthony Crowdell:

Yeah. Thank you. I think Mizuno sounds very good. Excuse me, just on, I guess, two quick ones. Approval of the gas system sale. I think your guidance like the 3Q 2025 close, it’s almost two years. Just curious on the length, what causes that long closure, any important milestones along the way, which keep an eye for it?

Drew Marsh:

Yeah. I will just add that our buyer is new to this particular business and while all the operations and everything is all going to be good to go and transfer right over. They do need to -- we are going to work with them to set up some of the back-office pieces of this and that might take a little bit longer than it normally would if it was a strategic buyer, for example.

Drew Marsh:

Well, I mean, I will tell you is, I mean, I think that, we are always looking at every potential outcome and options. So that is always part of the calculation. But at this point, we think we have made good progress with the settlement in Mississippi and then now the settlement in Arkansas, such that it derisks roughly two-thirds of the overall exposure there. So we feel like we are making good progress in that. We don’t really need to go down that particular path at this time. But that is something that we are always paying close attention to and looking at various options and so that’s something we will keep considering in the future.

Drew Marsh:

Thank you.

Nick Campanella:

Hey. Good morning. Thanks a lot for taking the time. Just one for me today, a lots been answered. But on the credit, I think, you are doing 12.4% trailing 12 month and you are obviously signaling you can get back to the 14% by year-end and within the appropriate minimum. Can you just confirm that’s more just lapping and roll-off of items and there’s nothing else required from the regulatory standpoint of approval for the point?

Nick Campanella:

Thanks.

Ryan Levine:

Hi, everybody. What jurisdictions do you see having the biggest opportunity for incremental resilience spending and does the current equity issuance plan have a built-in buffer for some of this CapEx upside highlighted already in the call?

Ryan Levine:

Appreciate it. Thank you.

Paul Patterson:

Good morning.

Paul Patterson:

Just finally with, most of my questions been answered, but with respect to the SERI leaseback litigation. Congratulations on the settlement and stuff, but if Louisiana, I guess, I am wondering is, from a fully litigated perspective when we get closure on as if this -- if there isn’t a settlement I guess with Louisiana.

Paul Patterson:

I guess, look, I guess, I mean, I am not asking you to predict that. I think if you sort of answered that. I guess what my question was, if there isn’t a settlement, how long this litigation, when would you expect the litigation…

Paul Patterson:

… to come back to fruition.

Paul Patterson:

Okay. Great. Thanks for the clarity.

Roderick West:

And just to say, full resolution on any resolution, because we have…

Operator:

Our next question comes from the line of Travis Miller of Morningstar. Your line is open. Travis, perhaps, your line is unmuted. There are no further questions at this time. Mr. Abler, I will now turn the call back over to you.

Operator:

Hello. Good morning. My name is Jeremy, and I will be your conference operator today. At this time, I would like to welcome everyone to Entergy's Second Quarter 2023 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Bill Abler, Vice President of Investor Relations for Entergy Corporation.

Drew Marsh:

Thank you, Bill, and good morning, everyone. Today, we are reporting second quarter adjusted earnings per share of $1.84. Our progress through the first half of the year keeps us firmly on track to achieve 2023 results in line with our guidance. and we remain well positioned to achieve our long-term 6% to 8% growth outlook. Creating sustainable value for our customers, employees, communities and owners is at the center of everything we do. I'll start today with our work to meet our customers' demands. We're investing in resilience and reliability and working to expand our clean energy footprint. This work helps our current customers meet their goals while also attracting new customers to Entergy's service area. To that end, our power delivery team continues to upgrade legacy assets to new, more robust wind and flooding standards through new construction projects, storm restoration and asset renewal. For example, in the second quarter, our new deployments included roughly 600 transmission structures, approximately 8,000 distribution poles, more than 200 miles of new distribution conductor and 7 new substations. In addition, these improvements will support more than 120 megawatts of growth. Safe and effective nuclear operations are also important for our stakeholders. Our nuclear units continue to provide clean, reliable baseload power to our customers in 2 of our plants, River Bend and ANO Unit 2 recently completed successful refueling outages, which included major projects to support long-term operational excellence. Overall, our nuclear plants are running very well. Outside of refueling outages, our fleet achieved a 99% capability factor for the first half of 2023. While our customers demand more reliability and clean energy from us, our unique and sizable long-term industrial sales growth opportunity continues to improve. Growing businesses support our communities, provide employment opportunities and help with affordability. The inherent advantages of our geographic footprint remain solidly intact. We continue to see evidence of these advantages through recent project announcements in our service areas. For example, ExxonMobil announced a transformative CCUS project that will capture, transport and store up to 800,000 metric tons of CO2 per year from the Nucor iron plant in Convent, Louisiana. The project is expected to start up in 2026. Paired with the recently announced acquisition of Denbury, ExxonMobil's actions clearly highlight the opportunities around CCUS in our region. Also, Shell Catalysts & Technologies announced its final investment decision on the $120 million expansion project in Port Allen, Louisiana. Facility is already the largest refining catalyst plant in the world, and the expansion will create even more manufacturing capacity. These are just a couple of the projects that have the potential to increase and extend our long-term growth rate. We are currently updating our annual industrial sales forecast, and we are accounting for recent trends. As many of you have noted, there has been some weakness in national industrial output indicators like the ISM Manufacturing Index. Despite this, we are seeing strength in our Gulf region. In the quarter, our total industrial sales declined, which had been expected due to higher cogeneration sales last year. Adjusting for Cogent, our industrial sales were up about 1%. For some highlights. Sales to small industrial customers, which are typically more exposed to broader U.S. economic factors, grew nearly 90 gigawatt hours over last year. Sales to large, new and expanding industrial customers grew nearly 100 gigawatt hours over last year. As we look forward, a few large industrial projects have adjusted their in-service dates from 2024 to 2025, which could lower our 2024 industrial growth expectation, but not to a degree that affects our outlook. Overall, our pipeline for projects continues to grow, supported by favorable commodity spreads and the IRA legislation. Early indications show demand in 2025 and beyond shaping up even stronger than our last forecast. As we typically do, we'll provide an update to our industrial growth expectations at EEI. To support this growth and to help our customers meet their sustainability needs, we are expanding our clean energy portfolio. Through 2026, we plan to add nearly 6,000 megawatts of renewable capacity. 2,400 of those megawatts are currently in construction, permitting, regulatory review or negotiations. Approximately 30% of the 2,400 megawatts will be owned by Entergy. Last quarter, I mentioned that we are continuing to work on our self-build capabilities. Our recent self-build submissions have been extremely competitive in the RFP process. However, we have been limited by a smaller development pipeline. I'm pleased to report that we are making progress on that front, and going forward, I would expect Entergy to achieve at least 50% ownership through our competitive RFPs. Moving to regulatory items. We continue to make meaningful progress on important regulatory matters which support the credit required to meet customers' growing needs and drive improved customer outcomes. Beginning with Mississippi, the Public Service Commission approved Entergy Mississippi's formula rate plan settlement, providing full recovery of substantially all costs. Meanwhile, Entergy Louisiana, Entergy New Orleans and Entergy Arkansas each filed their annual formula rate plans. New rates for Louisiana and New Orleans are expected to be effective in September and Arkansas are expected to be effective at the 1st of next year. As we've discussed, Entergy Louisiana plans to file a base rate case this month, including a request for a new 3-year formula rate plan. We like the clarity and certainty that an FRP provides, which helps us make investments to benefit our customers. However, in recent years, Entergy Louisiana's earned returns have materially lagged its allowed returns. We are making significant investments to support customer growth and demand for greater resilience in cleaner energy in Louisiana. This investment is critical for the state as well as our local communities. It is important to have an opportunity for fair and timely recovery, which allows us to maintain Entergy Louisiana's credit and cost-effectively source capital to meet customers' expectations. Turning to Texas. Entergy Texas has an unopposed settlement before the commission, and we expect a decision at tomorrow's open meeting. Interim rates were implemented in June and once the commission makes its decision, any change in revenue and depreciation expense will be retroactive to December of last year. In addition, the Texas legislative session wrapped up at the end of May and the governor signed a new bill into law that are important to Texas customers and communities as well as to Entergy. I'll highlight a few. The Texas Resiliency Act allows utilities to submit a storm resiliency plan to improve customer outcomes. We expect the commission to complete their initial rulemaking of 180 days which sets the deadline to establish a regulatory framework in mid-December. Entergy Texas will then file its resilience plan shortly after the rulemaking is complete, and the commission will have 180 days to review and act on the filing. Based on this, Entergy Texas currently expects to have clarity on its resilience plan in the middle of next year. The distribution cost recovery factor legislation allows for 2 annual filings, which provide more timely recovery of significant distribution investments that we plan to make in Texas to support customer growth and reliability. And the expedited transmission CCM will reduce the time for commission approval by half to approximately 6 months. This will enable Entergy Texas to complete projects to support customer growth and resilience sooner and with lower risk. Turning to federal matters. In May, we received an initial decision on the unit power sales agreement complaint against SIRI. The ALJ ruled against the complainants on several issues, but recommended approximately $250 million refunds, which is mostly interest primarily associated with accumulated deferred tax issues going as far back as 1996. We disagree with the ALJ's conclusions on ADIT, and we continue to believe that SIRI's positions on the law and the facts are correct and that its actions were prudent and taken for the benefit of customers. SIRI filed its briefs on exception in July, and the next step is a ruling from FERC. There is not a statutory deadline for FERC to issue an order. More broadly on SIRI, I would note that we are still awaiting FERC's response to our compliance filing related to the December 23rd quarter on the sale leaseback and uncertain tax position case. While there is not a procedural deadline, we expect to see this clarification soon, and we expect FERC to affirm that no additional refunds are due. FERC's response will provide clarity and will be an important step towards resolving the broader set of SIRI litigation. Our communities are one of our key stakeholders and actively supporting them is an important part of our strategy. The Civic 50, an initiative of Points of Light named Entergy a top 50 most community-minded company and this year's leader for the utility sector. Another example of our community commitment is our Beat the Heat campaign. In May, we launched a series of measures to help low-income and senior customers save on their utility bills during hot summer months. $4 million in contributions will support thousands of vulnerable customers through bill payment assistance, weatherization events, and distribution and energy efficiency kits. I'm also proud that Forbes Magazine has named Entergy as one of America's best employers for diversity. They recognized our commitment to fostering a diverse and inclusive workplace where employees feel valued and respected. Such confirmation is critical as we compete for talent from all corners of our community to best serve the diverse interest of our 3 million customers. Together, our employees are doing a great job of living our vision statement of We Power Life by meeting today's challenges and ensuring that we will create value for our stakeholders well into the future. As you can see, we continue to make progress on our strategy to deliver for all our key stakeholders. We are laser-focused on meeting our customers' demands through operational excellence, resilience and clean energy investments. Meanwhile, we continue to maintain our financial discipline and work closely with our stakeholders to ensure we have the financial strength to drive economic development in our communities. Successfully executing across these dimensions will keep us on track to deliver steady, predictable earnings and dividend growth and move us toward our goal to be the premier utility. I'll now turn the call over to Kimberly, who will review our financial results for the quarter.

Operator:

[Operator Instructions] Our first question comes from the line of Shar Pourreza.

Roderick West:

It's Rod. I think the best answer to your question is really the proof of concept, the decision that the LPSC has made to date. We've got the support, as you'll recall, after the election at the end of 2022, we got the support for our securitization. We got support for our Lake Charles Transmission system. We got support for our gas business rate decisions, all from the new commission. And so, I don't believe that we have a relationship issue. And in fact, we continue to work collaboratively with this new commission. We acknowledge that the addition of the newest commissioner, Davante Lewis, has created an opportunity for us to engage differently in educating a new commissioner on the historic relationships between the company and its stakeholders, not just the relationship between the commissioner and the company, but also the commissioner and the customer impacts. I know that you're reacting -- your question, react in some respects from some of the comments that have come out of individual commissioners and our reaction has been consistent. As long as we maintain our focus on ensuring positive customer outcomes, whether it's resiliency, whether it's renewables and clean energy and certainly affordability, we expect to be -- continue to be aligned with LPSC. And so we're moving forward, as Drew alluded to, with our regulatory calendars and to file our rate case and FRP as well as a strong renewables portfolio in addition to continuing to fuel the growth for the state, and we expect the commission to be supportive of the company's positions. We'll have a lot of debate along the way, but we'll continue to work constructively with them.

Constantine Lednev:

Right. And I guess just anything that you feel like you need incremental to narrow some of those are kind of earned ROE gaps?

Constantine Lednev:

Excellent. That's great color. And maybe shifting to the other kind of regulatory item, SIRI. Would the operational prudence complaint kind of reaching a point of settlement impasse in July and rehearing is still pending. Are you embedding any range of outcomes in the current financial plans just in terms of cash or financing drag? And maybe any guidance on kind of capping the potential liability in any form from the last complaint?

Drew Marsh:

And I'll add that in terms of capping the exposure, the ALJ order from May regarding the UPSA is while it had -- as I mentioned, they had a $250 million of requested refunds, it did prune off quite a bit of additional liability. And so you do see that the amount of liability continues to come in as we move forward in the process. But we're still working through all that. And certainly, that's the amount that we believe we are at right now is what we have reflected on our books.

Jeremy Tonet:

Just want to stick with Louisiana here a bit. And I think you touched on it a little bit, but want to see if you might be able to expand more. And how do you think the Louisiana resiliency process could unfold once the staff engineered report is filed this month. Any sense from the commission on how the commission would like to handle it and if this could be kind of rolled together the resiliency, the RFP, the rate case all get tied together?

Jeremy Tonet:

Got it. Got it. That makes sense. That's helpful. And sticking with Louisiana here, are stakeholder communications -- let us to hear about when those recent outages, there were some system glitches and communication to consumers was maybe not where it could be. Just wondering efforts on this side to, I guess, improve customer response and kind of address some of those local stakeholder concerns there?

Jeremy Tonet:

Got it. That's helpful there. And then just a last one, if I could. I was wondering if you might be able to unpack a little bit more FFO to debt and kind of the trajectory over the balance of the year and hitting the goals that you want to hit there. Just any incremental color would be appreciated.

Operator:

Our next question comes from the line of David Arcaro.

Drew Marsh:

Yes. Thanks, David. That's a good question. We have been working on building the capability in the development space as I mentioned. And we have been actually successful for the projects that we have been able to put forward in competing in our RFPs. So I think we're making good progress in terms of what does it take to be competitive on the solar RFP front. . The challenge we've had is we just haven't had a large pipeline of projects to support. So many of the projects that are even in the 30% that I mentioned earlier are build on transfer projects where a developer is constructing it and then moving it over to us at -- just before the completion of COD. What I'm referring to when I say we're making progress is we are finding some success in building up our portfolio. So we have somewhere in the neighborhood of about 4 gigawatts of development pipeline that we have put forward at this point. Now, I wouldn't say that's all ready to go and RFP. We're still building out some of those projects. But it's a much larger portfolio, and we are expecting to add maybe another half gigawatt to that by the end of the year. And then beyond that point, we'd expect it to continue to grow, and that should be very strong given where we have been competitively, that should be very strong in the RFPs going forward. So that's what we've been seeing, and that's what we're focused on.

David Arcaro:

Got it. That's helpful color. And then let's see -- curious similar topic, but in Texas, one of your peer utilities in the state has had challenges just getting a few renewables projects over the finish line there. I was just wondering how that's affecting your strategy in the State of Texas? How that might maybe impacting the outstanding RFPs that you've got?

Operator:

And our next question comes from the line of Paul Zimbardo.

Drew Marsh:

Yes. So it would be expected to be part of the EEI refresh, and we can give you some more details for sure. Then I would characterize the movement from '24 to '25 is the normal roll around of these large industrial projects that are billions of dollars and they're hard to get done. And so that's nothing that we haven't seen before. And so that is -- well, I wouldn't say that was expected, I would say we're not surprised. And that is -- so that part is not really new news. As we look forward beyond 2024, we are continuing to see a very robust industrial sales pipeline, lots of interest from a lot of different parties. We've -- particularly around the clean energy. I mentioned a particular CCUS project from ExxonMobil in my remarks, but there are other projects like that out there. There are projects like that related to hydrogen. So we are I think, well positioned to take advantage of all of that and we'll give you more details whenever we get to EEI.

Kimberly Fontan:

Sure, Paul. Are you referencing out of the Texas legislation, specifically. Was that your question?

Kimberly Fontan:

Yes, there were a couple of -- a number of favorable things out of the legislation. Obviously, the resilience filing gives us a path to file our resilience plan and seek recovery of that in a way that helps provide our system higher resilience standard and support our customers. The DCRF changed from an annual filing to a biannual filing, that certainly gives us an opportunity to improve the -- or decrease the lag associated within investments. But from an overall perspective, we're still -- we haven't changed our outlook with regards to that, but certainly, a better way to recover investments. And then the third item is around compensation. And that one really for us on executive compensation is around recovery in a rate case. It's not really effective to us, but it certainly is helpful from a precedential perspective.

Kimberly Fontan:

Yes. I think it's too early to do that at this point. But certainly, they are positive tailwinds from our perspective that help us when we think about our overall outlook, but nothing changes in that regard.

Bill Abler:

Thanks, Jeremy, and thanks, everyone, for participating this morning. Our quarterly report on Form 10-Q is due to the SEC on August 9 and provides more details and disclosures about our financial statements. Events that occur prior to the date of our 10-Q filing that provide additional evidence of conditions that existed at the date of the balance sheet would be reflected in our financial statements in accordance with generally accepted accounting principles. Also as a reminder, we maintain a web page as part of Entergy's Investor Relations website called Regulatory and Other Information, which provides key updates of regulatory proceedings and important milestones on our strategic execution. While some of this information may be considered material information, you should not rely exclusively on this page for all relevant company information. And this concludes our call. Thank you very much.

Operator:

Good morning. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to Entergy's First Quarter 2023 Earnings Conference Call. [Operator Instructions]. I would now like to turn the call over to Bill Abler, Vice President of Investor Relations for Entergy Corporation.

Andrew Marsh:

Thank you, Bill, and good morning, everyone. We had a very productive start to the year with meaningful progress on activities that support our near- and long-term objectives. Today, we are reporting first quarter adjusted earnings per share of $1.14. Mild weather affected these results, but we are prepared for this variability. As we have shown over the last several years, our FLEX program helped us achieve that very predictable results. We are on track for 2023 results in line with our guidance, and we remain well positioned to achieve our long-term 6% to 8% growth outlooks. Our focus on creating sustainable value for our 4 key stakeholders, customers, employees, communities and owners is the foundation of our strategy. It's at the center of everything we do. Recently, JUST Capital and CNBC named Entergy to the JUST 100 list, which highlights companies that are doing the right thing for all their stakeholders. We are honored because our inclusion on this list is an acknowledgment that we are living up to our commitments. Serving all our stakeholders starts with understanding what our customers need from us. To meet those needs, we are investing to improve reliability and resilience and significantly expand our clean energy footprint. This will not only help our current customers become more successful, but will also attract new customers. So far this year, we have installed or replaced over 400 transmission structures with new resilient designs, including critical river crossing lines. We also completed transmission interconnections for 2 new Entergy-owned renewable resources. One example of a transmission project that will improve resilience and reliability is a recently completed projects in Southwest Louisiana, where we upgraded transmission lines rated to withstand 150-mile per hour winds, replaced older poles with resilient steel structures, installed new higher-capacity power lines and added automated switching capability to improve reliability. In Southeast Louisiana and in Texas, we are building new substations and distribution power lines that will support residential and business growth in those areas and reduce stress on existing substations. In addition, we installed and replaced more than 5,000 wood distribution poles with newer, more resilient designs. Collectively, our team continues to focus on operational excellence to deliver stakeholder outcomes across all facets of our business. We also continue to be a critical local partner, supporting strong economic development, working to bring new businesses, new jobs and new tax base to the communities we serve. As you know, we expect significant industrial sales growth over the next several years. While the broader market is contemplating recession concerns, our region's growth story remains intact. Key strategic value drivers continue to be supportive. The LNG, ammonia and refining sectors are generally short on supply, and the deficit will likely not be meaningfully affected by a recession. Other sectors, such as ethylene, PVC, methanol and steel, may see some market pullback, but the Gulf Coast has the lowest cost producers. So plants in our service area should be the last to be curtailed. Meanwhile, the passage of the IRA is accelerating development in the clean energy transition space. We are seeing very strong interest in our service area, which has the potential to increase and extend our 6% long-term industrial sales growth rate as incentive rules are finalized and turned into financed projects. One example of a potential project fueled by the IRA is the St. Charles Clean Fuels project, which is exploring whether to build a $4.6 billion blue ammonia production plant in St. Rose, Louisiana. The new facility would produce up to 8,000 metric tons per day of blue ammonia and would rely on carbon capture technology to sequester more than 90% of its carbon dioxide emissions. Our underlying 6% industrial growth rate does not rely on these IRA tailwinds. And we continue to see a lot of activity in the traditional industrial segments we serve. There are some noteworthy developments in recent months, including Golden Triangle Polymers, which held its groundbreaking for a state-of-the-art polyethylene plant in Orange County, Texas. In addition, Sempra announced that the company reached its financial investment decision, and issued the final notice to proceed on Phase 1 of its Port Arthur LNG project. A big part of meeting our customer sustainability needs is growing our clean energy footprint, and we continue to make progress on that objective. On Monday, we held our official groundbreaking for the Orange County Advanced Power Station in Texas, hosting Governor Abbott, 4 of 5 PUCT Commissioners and other state and local officials. That facility will ensure that we have modern and reliable infrastructure to support existing customers and the rapidly growing customer base in our Southeast Texas region. We will utilize turbine technology and a plant layout that can support dual fuel capability with hydrogen in the future. The optionality helps ensure the plant's long-term viability and creates improved energy security and operational flexibility for our customers. We also continue to make progress on our objective to expand our renewables capacity to meet customer needs. Since our last call, Entergy Arkansas and Entergy Louisiana concluded evaluations of their 2022 renewable RFPs. Participation was robust, and we are in negotiations for approximately 2,300 megawatts. Turning to affordability. It remains a core tenet in our pursuit of greater sustainability and reliability for customers. To help manage bill effects of customer-centric investments, we continue to aggressively pursue customer sales growth, disciplined cost management and federal support to offset costs. Natural gas prices have come down significantly. And coupled with a mild winter, that's further good news for customer bills. Our latest estimates for residential bill trajectories, including updated gas have improved. For the system, we are now seeing a 3-year annual growth rate of less than 1% from 2022 through 2025. That's roughly half the level we were expecting a few months ago. In the quarter, we made regulatory -- meaningful regulatory progress against our objectives. Entergy Texas has reached settlement on all material issues with parties in its base rate case, and we expect to file the settlement with the PUCT in the next few weeks. Entergy Mississippi filed its annual formula rate plan in March. Mississippi's efficient mechanism supports continued customer-centric investments and supports our financial outlook. Interim rates became effective on April 1. Entergy Louisiana's formula rate plan will expire after this year's filing. We are evaluating options to renew the current FRP, and we're also preparing for a potential rate case filing, which would be submitted this summer. As we've laid out, Entergy Louisiana is investing significant capital to support our customers' growth and their demands for greater resilience and clean energy. This growth is critical for Louisiana and its local communities. We need to ensure that our rate constructs provide the opportunity for fair and timely recovery, which will allow us to effectively source the capital while maintaining utility credits. Either an FRP renewal or rate case path should allow enough time for rates to be effective in September 2024, which would keep us on our normal cadence. If we file a rate case, we will request a new FRP starting with the 2025 filing year. Entergy Louisiana also filed a request to streamline the procurement and approval processes for up to 3 gigawatts of solar resources. This is in addition to the nearly 2.5 gigawatts from previous or ongoing RFPs. If the new processes are approved, we can bring additional renewables to construction faster and at a lower cost and risk, materially improving our ability to meet our customers' accelerating demands for clean energy. For our accelerated resilience and grid hardening filings, Entergy Louisiana received a procedural schedule in its docket. Next up is the commission's engineering report and testimony to be filed in August. Hearings are scheduled in January of next year. However, there is the potential to receive a decision this year through a settlement with parties, and that remains a possibility with broad stakeholder alignment on the need for more resilient investments. In a separate but important docket, the LPSC Staff outlined a process and an evaluation procedure for utilities in Louisiana to follow, which creates a solid road map for Entergy Louisiana's resilience investment. Entergy New Orleans filed its updated resilience plan with the City Council. The $1 billion 10-year plan reflects significant stakeholder input. Like Louisiana, New Orleans is requesting approval for the first 5 years of the program, and we are targeting a decision from the council by year-end. In Texas, the Electric Infrastructure Resiliency Act has been proposed in both the State House and Senate. The bill, if passed, would require the commission to act within 180 days of utilities filing a resiliency plan. Certain prudently incurred costs would be recovered through a variety of mechanisms. We will continue to work with our regulators across all aspects of our business to create value for our customers and other key stakeholders. And you can find additional details on our regulatory proceedings in the appendix of our webcast presentation. In March, our service area experienced tornadoes in Arkansas and Mississippi. The damage to our system included distribution poles, wires spans, transformers and one substation. We replaced damaged equipment with newer, more resilient assets rated to our latest standards. The restoration is completed quickly and safely with 0 injuries. And for that, I am extremely grateful to our teams. In addition to restoration, we responded quickly to provide community support. Entergy shareholders committed $150,000 to the American Red Cross to provide shelter, food, water, mental health counseling and other services to the households impacted by the tornadoes. In addition, more than 150 Entergy employees came into the affected region and volunteered their time by assisting with cleanup, providing meals, organizing supply drives and staffing information booth to once again prove our employees unfaltering commitment to our customers and communities when they need it most. Before concluding, I would like to note that Entergy Mississippi is celebrating its 100th anniversary. That's a century of serving its customers and communities. To commemorate this milestone, Entergy Mississippi donated with $100,000 to Extra Table, a Mississippi-based food bank, to combat food and security in Mississippi. That's $1,000 for every year of operations. In addition, Entergy volunteers packed 2,500 meal kits. This is the first event of a multiphase program that will ultimately provide 100,000 meals. Giving back to communities through philanthropy, volunteerism and advocacy is integral to Entergy's living its vision statement of We Power Life. We've had a productive start to 2023. We are focused on successfully delivering value for our key stakeholders, and we will continue to successfully achieve the milestones that keep us on track to deliver steady, predictable earnings and dividend growth. To do this, we are working to improve operational and regulatory outcomes, support our customers' industrial growth and economic development in our region, invest in renewables, clean energy and resilient acceleration to support our customers' demand and execute with financial discipline to strengthen our balance sheet and become more competitive. I'll now turn the call over to Kimberly, who will review our financial results for the quarter.

Operator:

[Operator Instructions]. Our first question comes from the line of Shahriar Pourreza with Guggenheim Partners.

Kimberly Fontan:

Thanks, Shahriar, for that question. As it relates to our capital plan, as you know, we have $16 billion through '23 through '25, and we've provided the financing for that, which includes a little bit that's left in '24. We have talked about -- the last time we talked about '25 was at Analyst Day, where we gave a number for '25 and '26. And I would expect as we turn the corner on '24, we would be looking at that financing more specifically. As it relates to your asset optimization question, certainly, we don't have anything to know here. But as you know, we would pursue that if it met our 3 basic grading criteria around. Is it executable? Does it distract? And does it create value? But certainly, to the extent that something met that criteria, we would look at it.

Andrew Marsh:

Yes, Shahriar, this is Drew. And it has been skewed and that's not where we want to be, frankly. So we are working hard to improve our self-build capabilities and leverage our economies of scale, find more financial discipline in the packages that we're putting together in those RFP processes so that we can improve. And we do believe that, that will happen. But you're right, we haven't been hitting the mark, and that's important because it is creating some -- it's taking up some of the room in our balance sheet and limiting our operational and strategic flexibility in the long term. So we want to make sure that we get up to that number, and we're still working towards it.

Durgesh Chopra:

I had two questions, both on sort of the resiliency filings. Maybe first part of that question, can you just give us any initial stakeholder feedback that you may have gotten in Louisiana and New Orleans, the 2 filings that you've made? And second, Drew, in your prepared remarks, you mentioned about this separate docket in Louisiana. Maybe a little bit more color there. Do you have to kind of use that docket for securing the approval in Louisiana? Or just maybe any other color there?

Andrew Marsh:

This is Drew. I want to add to what Rod was saying, just to make sure you caught it at the beginning of his comment, he actually answered the second of your question at the beginning on the second docket. And that second docket does actually create an ability for us to do the math on how the benefits and the costs should work. And specifically, it allows the economics of customer outages to be part of the conversation. And so there's a few mechanisms that they create for that. But that's an important piece of that framework that the staff established.

Operator:

Your next question comes from the line of Julien Dumoulin-Smith with Bank of America.

Roderick West:

I think the short answer to both of the frames of your question is, settlement discussions will be aided by clarity from the FERC that we are awaiting with regard to the sale leaseback and the uncertain tax position ruling, as you recall from the December ruling and the procedural order out in this past February. So yes, there are ongoing conversations and settlement on all of the ancillary cases, but clarity around where the FERC sits on those 2 issues will go along the way towards setting the path for our -- our path forward on settlement. There's no -- yes, go ahead. I'm sorry.

Roderick West:

I think that's a fair assessment, just given the positions that certain of the stakeholders have taken around their reaction to the December order. Clarity from the FERC will clear the lanes for ongoing discussions. There's also a timing element where we expect the FERC to act sooner rather than later in order to maintain jurisdiction vis-à-vis the Fifth Circuit and others. So we're expecting -- we don't have a date, but we are expecting FERC to act sooner to get ahead of what might be the appeals process if left unresolved.

Kimberly Fontan:

Thanks, Julien. It's early in the year. So we certainly have good line of sight on our ability to manage that through the rest of the year. There is some additional puts and takes that we would manage through depending on what happens. Obviously, if the weather is mild during the summer, we'd have to work through that. If it comes in more normal or hotter, then there may be opportunities to flex up. For some specifics, certainly, we talked about last year that in 2022, the higher O&M was tied to higher volumes and we flex stuff, which helps us to derisk '23, and we're able to take advantage of some of that here. And then we've seen some favorability, as you probably saw in the materials around volumes in residential and commercials, and that may give us continued opportunity throughout the year if that continues to persist. The other area I would point out is interest expense, and we've been able to manage through some potential upside there as it relates to timing of debt issuances, for example.

David Arcaro:

A little bit of a follow-up on the last question. I was curious for the utility O&M targets for the year, you notched that up to $0.70 in terms of the savings. But I was curious, it was only about $0.03 kind of a help in the first quarter. Are there any underlying challenges that you've hit or inflationary pressures or anything like that, that make it more difficult to achieve the O&M savings for the year? Or is it more just kind of a timing issue versus -- on a year-over-year comparison?

David Arcaro:

Okay. Got you. That's helpful. And then I was just wondering, are there any legislative bills in Texas that might be meaningful for your business as we get closer to the end of the session in the state for next month?

Operator:

[Operator Instructions]. Our next question comes from the line of Ross Fowler with UBS.

Kimberly Fontan:

Yes, Ross, I think you're right in that there are small opinions in a number of categories beyond what you went through there. So you're right, a $0.10 in O&M. You've got the $0.5 and other and the weather volume there is about $0.05. And we saw that mix in the first quarter. And then you will see probably not specifically in the side, but just on a -- throughout the balance of the income statement, pennies here and there that balance the rest out.

Ross Fowler:

Got it. That's very clear. And then just maybe contextualize for me, you're showing 2% industrial growth in the quarter year-over-year. And Drew, you kind of went through this in some of the prepared remarks, but maybe give us a little bit more contextualization of your sort of 6% long-term aspiration versus what you're currently seeing?

Ross Fowler:

That's great. And of course, we'll be watching the potential for EPA plant rules around carbon capture. But for now, I'll jump back in the queue.

Steven Fleishman:

Just wanted to follow up on the question related to Siri, where, I think, Rod, you mentioned a timing element that FERC needs that before they lose jurisdiction. Could you give us a sense of what that time line is or limit?

Steven Fleishman:

Okay. And then, I guess, a question for Drew, just things have quieted down a lot once the securitization was approved and fuel prices have come down and the like. Could you just give a latest sense of relationships with the Louisiana Commission and do they kind of have appreciation of the volatility that was created around, stuff early in the year? And yes, any color there would be helpful.

Roderick West:

Yes. And I think, Steve, your preface was on point. The fact that gas prices have come down and we have aided in providing relief to customers, and there's been some time since the election that's given us an opportunity to reengage with commissioners around our customer-centric strategy, I think it's proven very helpful. I will note that our most recent engagement with the commission was around vote on the gas business rate case. That was a big deal. The prudency of our Lake Charles -- our Lake Charles Power Station, along with the gas rate case was all 5 0 . And it is not insignificant that the proposed rulemaking from this path with regard to resiliency. That too was the result of the intentional work in part that we have -- we've done in engaging with the commission and our other stakeholders, especially the customers. So look, in response to the noise coming out of the elections and the end of the year, we've certainly ramped up our engagement processes to make sure that our commission and staff from related stakeholders are informed. But also, I want to be explicit in saying that the -- the fact that we have a new commissioner in Louisiana for us represents a new commission. Anytime there's a new addition to the commission, it's an opportunity for us to reassess, reset and reengage. And we've been quite deliberate about doing that for the purpose of keeping alignment with the commission because we have a -- and you know this, we have a really aggressive regulatory agenda given all of the merit of customer-centric opportunities and investments we have in Louisiana and the growth in Louisiana is going to put a lot of pressure on the commission. And our engagement process is geared to help make their lives easier as we try to solve our customers' problems. But we get it, and it will be ongoing. It is not a thing where we check the box and say, oh, we have finished the work. The stakeholder engagement process is 24/7/365, Steve.

William Abler:

Thank you, Regina, and thanks to everyone for participating this morning. Our quarterly report on Form 10-Q is due to the SEC on May 10, and provides more details and disclosures about our financial statements. Events that occur prior to the date of our 10-Q filing that provide additional evidence of conditions that existed at the date of the balance sheet would be reflected in our financial statements in accordance with generally accepted accounting principles. Also as a reminder, we maintain a web page as part of Entergy's Investor Relations website called Regulatory and Other Information, which provides key updates of regulatory proceedings and important milestones on our strategic execution. While some of this information may be considered material information, you should not rely exclusively on this page for all relevant company information. And this concludes our call. Thank you very much.

Operator:

Thank you for standing by, and welcome to Entergy Corporation's Fourth Quarter 2022 Earnings Release and Teleconference. At this time, all participants are in a listen-only mode. After the speakers presentation there will be a question-and-answer session. [Operator Instructions] As a reminder, today's program is being recorded. And now, I'd like to introduce your host for today's program, Mr. Bill Abler, Vice President of Investor Relations. Please go ahead, sir.

Drew Marsh:

Thank you, Bill, and good morning, everyone. Today, we are reporting strong results for another successful year. Our 2022 adjusted earnings per share was $6.42 in the top half of our guidance range. This is the seventh year in a row that our results have come in above our guidance midpoint. Our steady predictable financial results are underpinned by our strategy to create value for our four key stakeholders, our customers, employees, communities and owners. Our strategy starts with learning from our customers what they need from us to be successful, and then we build an investment plan to meet those demands. As a result, we are investing in our power delivery system to improve reliability and resilience and significantly expanding our clean generation to support our rapidly growing industrial load and the decarbonization goals of our customers. This customer-centric approach has delivered benefits for all our key stakeholders. We are confident this approach will continue to create meaningful value well into the future. In 2022, Entergy’s 12,000 employees worked every single day to deliver operational excellence, achieve positive regulatory outcomes, build the foundation for our long-term growth strategy and drive improved affordability for our customers. Operational excellence begins with safety. In 2022, we made important strides recording the fewest injuries in our company's history, and a total recordable injury rate that ranked in the first quartile among EEI utilities. To achieve this result, we reduced total accidents, including employees and contractors by 30% and serious injuries by more than 50%. This is an improvement that we're proud of, our work isn't done because we believe zero harm is possible. We will continue our relentless focus on keeping our employees and contractors safe all day, every day. Entergy's operational excellence is consistently on display when we respond to extraordinary circumstances. We saw this recently with winter storms Elliott and Mara. Elliott presented unique challenges due to the extremely cold temperatures. In fact, we experienced some of the highest winter loads that we have seen, including new winter peaks for Entergy Arkansas and Entergy Texas. Teams from across our organization collaborated to ensure that the system capacity and operating resources were maximized. Power availability was critical, and our generation facilities performed extremely well, buoyed by contingency planning and improvements from weatherization investments made after winter storm Yuri. Not only were we able to meet the high demand of our customers, but we also exported power to nearby systems to help other utilities meet their demand. Our teams performed extremely well during both events and for that, I am very thankful. I'm especially proud that we had no injuries, ensuring that all our employees return home safely. River Bend Station, our nuclear plant near Baton Rouge began its refueling outage after 675 days of being continuously online. That's the longest run in station history. River Bend is an important -- is important to the area it serves providing safe, clean energy that our customers can count on and tremendous support for our communities. During this outage, we will be making multiple equipment improvements to ensure long-term reliability of the unit, including replacement of condenser tubes and feed water heaters. We also made important progress on our regulatory objectives. Starting with Texas, we received approval from the PUCT to build the Orange County Advanced Power Station or OCAPS. This new highly efficient CCGT will provide near-term benefits, including lower fuel costs, lower emissions and expanding regional capacity to support growth in our Texas service area. The plant will be upgradable to enable future reconfiguration for hydrogen capability, which will increase fuel diversity and provide long-duration storage in a carbon constrained environment. For Entergy Texas rate case, parties have progressed in construct the settlement discussions and reached a tentative agreement on key terms. The hearing was put on hold to allow time to finalize the agreement. We'll provide an update on the details when available. In Louisiana, we received approval to recover the balance of Hurricane IDA cost using securitization. We work collaboratively with our regulators to find a solution that met the needs of all stakeholders. The order determined that all of the costs incurred were reasonable and prudent and Entergy Louisiana will fully recover those costs, which is vital for the credit of the company. While the commission approved our storm recovery, we want to assure you that we heard your feedback about the discussion at the meeting and the uncertainty in the process. To that end, we are continuously evaluating our stakeholder outreach practices. Our ongoing goal is a best-in-class stakeholder engagement approach that achieves alignment around important customer outcomes. We believe there is agreement with our regulators around our long-term goals to deliver what our customers need to be successful. Our customers are central to all that we do, and we know we can continue to work with our regulators to improve our processes for the future. Turning to the federal level. In December, we received an order on System Energy's uncertain tax position and sale-leaseback complaint. For the uncertain tax issue, we believe that the FERC's remedy is clear. And as a result, no additional refunds are required. The remedy is important because the rulings of the IRS are now known and the credit ADIT on a hypothetical basis under facts now known to be incorrect, would be wrong. FERC's Remedy also recognizes that customers benefited from our actions by more than $100 million in value, including a $25 million refund made by SERI in 2021 consistent with the amount of ADIT allowed by the IRS, and a separate $18 million refund for excess ADIT also paid in 2021. Meanwhile, SERI took on the risk of interest and penalties with the IRS to provide that value. Absent our actions, customers would have received nothing. And throughout the period at issue, customers paid not $0.01 more in rates than they would have paid has SERI not taken the uncertain tax positions. On the sale leaseback. Sorry. SERI is active on my iPad as well. On the sale-leaseback item, we are disappointed in FERC's conclusion and we have thought rehearing of that decision. The lease renewal was a cost-efficient way to ensure customers would continue to receive access to reliable baseload clean energy from a diverse fuel source. And overall, the sale leaseback saved them over $800 million. On January 10, SERI issued $104 million in refunds required by the order. We have made our compliance refund reports detailing that calculation. FERC will need to review our compliance filing and issue a further order. There is no statutory deadline for the order, but we hope to get FERC's decision soon. As a reminder, SERI refunded Entergy Mississippi $235 million in November as part of its global settlement with the Mississippi Public Service Commission, which represents Entergy Mississippi's 40% interest in 13 different dockets at the FERC. We still believe that a global settlement with the remaining retail regulators on terms similar to the agreement with the MPSC would be in the best interest of all parties. It would resolve disruptive litigation uncertainty for SERI and our stakeholders, including our regulators, accelerate meaningful value to customers, avoid costly and unnecessary third-party litigation fees and allow all parties to move forward with fewer distractions as we work together to pursue the important priorities and outcomes that our customers demand. Moving on to our growth story. Our strategy is centered on two key aspects of our business that are critical to helping our customers meet their goals. First, expanding our clean energy footprint to support industrial sales growth and a growing customer electrification focus; and second, accelerating the resilience and hardening of our system to improve outcomes for existing customers, while giving new customers the confidence to invest in our communities. Our three year $16 billion capital plan supports this strategy, while improving reliability and our customers' experience. This capital plan also provides clear line of sight to our 6% to 8% adjusted EPS growth outlook as well as our credit goals. We are aggressively investing in cleaner energy to benefit customers and communities. Of the $16 billion, close to $6 billion represents generation investments moving us toward a cleaner future. This includes investments in renewables, OCAPS and nuclear. Today, we have just over 800 megawatts of renewables in service, but we're still in the early stages of our renewables build out. Over the next three years, we plan to increase our renewable portfolio by approximately 4,500 megawatts, more than 4 times our renewable capacity today, and that trend will accelerate beyond 2025 with plans for up to 14 to 17 gigawatts in service by the end of 2031. With this plan, we expect to achieve our 50% carbon intensity reduction goal in advance of our 2030 target as well as our new goal for 50% carbon free capacity by 2030. Our plan for accelerated resilience and hardening, known as Entergy Future Ready, is also important to reduce storm risk for our customers and other stakeholders. Last year, we laid out our $15 billion 10 year plan is expected to reduce storm outages, reduce future storm restoration costs and provide a foundation for growth for customers who are dependent on electricity more than ever. Our three year capital plan includes about $900 million for this work and more investment could be added to this plan once regulatory approvals are obtained. We filed our initial resilience plans for New Orleans last July and our plan for Louisiana late last year, and we are targeting decisions in those jurisdictions by the end of this year. For Texas, we are supporting legislation that would allow for an accelerated resilience plan. We expect to make our initial regulatory filing in the third quarter of this year after legislative efforts are completed. We are targeting a decision from the Texas Commission sometime next year. Of the $16 billion three year capital plan, $7 billion represents transmission and distribution investments in addition to our accelerated resilience program to deliver improved reliability and customer experience, through projects focused on asset renewals, enhancements and grid stability. These investments are also designed to prepare the grid for renewables expansion and new customer connections. We've already seen that focused distribution investments make a meaningful difference. Where we've implemented reliability projects, we have seen a significant reduction in the number of outages. Beyond driving important outcomes for our customers, our capital plan provides the foundation for our unique economic development and industrial sales growth story. We continue to see very robust expansion plans from existing and potential new customers, and Kimberly will discuss the key drivers. Two recent clean energy announcements of note are an OCI project for a 1.1 million metric ton blue ammonia facility near Beaumont, Texas, and a Linde project to build a blue hydrogen facility which will supply the OCI plant. The list of industrial projects that we are tracking represent an additional seven terawatt hours of growth above our outlook through 2025. For our planning, we probability adjust the outcomes because we anticipate that not all of those will achieve operations or that may show up on a slower time line. With this backdrop, we remain confident in our longer-term 6% industrial sales growth expectations, consistent with what we laid out at Analyst Day. Affordability remains a core tenant in our pursuit of greater sustainability and reliability for customers. Aggressively pursuing commercial and industrial growth is also important for affordability as it spreads customer-centric investments over a larger customer base. Beyond sales growth, we are supporting customer affordability by working to improve efficiencies and reduce costs, which will translate into benefits for customers. We have historically focused our continuous improvement largely on operating costs. But given the growing capital needs to support customer-centric projects, we have expanded our CI efforts to capital investments. To balance our customers' needs, affordability, reliability and sustainability, we must ensure that we invest capital dollars as efficiently as possible. Higher gas prices and hot weather challenged customer affordability this past summer. The good news is that natural gas prices have come down in recent months, and that will improve affordability for our customers, particularly in Entergy Louisiana and Entergy New Orleans, where their fuel clauses adjust monthly. We continue to work on behalf of our customers to pursue federal funding as a potential means to reduce costs, particularly for investments that accelerate the path towards a more resilient future. To that end, we are pleased to report all five of our operating companies received encouragement letters to proceed with full applications for the first round of DOE's grid resilience and innovation partnerships program. All of our proposals are to improve resilience in disadvantaged communities. This round of program funding is expected to conclude this summer and winning submissions will receive funding for half of their project costs. If we were successful on all five projects, the awards would total $190 million. Finally, in 2022, shareholder contributions totaled $25 million. This included $10 million in donations for bill assistance programs. We also stepped up our efforts on energy efficiency and weatherization programs to provide long-term bill relief. Our impact for our customers and communities goes well beyond charitable donations. Our employees logged more than 110,000 hours of volunteer service. We helped low-income customers access $125 million in LIHEAP funding. And through our volunteer income tax assistance program, we helped place 12,000 low-income families on a path to economic stability by helping them claim $22 million in earned income tax credits. We are very proud of the work of our employees and our corporate social responsibility team as they provide critical help to strengthen the communities we serve. 2022 was another successful year for Entergy, yet we still have a lot of work to do. We are laser-focused on successfully delivering value for our key stakeholders. That includes executing the capital plan before us and laying the groundwork for the significant long-term opportunities in renewable generation, clean electrification, and resilience acceleration. It also includes improving operational outcomes, building alignment with stakeholders, reducing unnecessary noise and distractions, and executing financially to strengthen our balance sheet and maintain credit. All of this is foundational to achieving our 6% to 8% adjusted EPS growth plan and delivering important benefits to Entergy's key stakeholders, which will ensure the sustainability of our business for decades to come. I'll now turn the call over to Kimberly who will review our financial results for the year and our outlook.

Operator:

[Operator Instructions] Our first question comes from the line of Shar Pourreza from Guggenheim. Your question, please.

Kimberly Fontan:

Sure. Thanks for that. This is Kimberly. As you pointed out, our 2023 sales are up a little bit and our O&M is up a little bit from EEI. As you know that early outlooks are preliminary estimates and we've continued to refine our guidance and our outlooks. And as we did that, we found additional tailwinds both in conservative planning principles and additional opportunities in sales. There are some modest opportunities in interest rates expense, and that enabled us to add additional O&M for customer-centric spending like vegetation, as well as call center support and things like that. I will note that we continue to sit squarely in the middle of our guidance range, and we do plan to use flex spending or flex levers that we have to continue to manage 2023 both from a weather potential effects as well as any other effects that come along.

Rod West:

So this is Rod. I'll try to unpack the procedural aspects of SERI updates, and I think I'll let Kimberly address anything as it relates to any new financial claims. But two primary matters to update around the uncertain tax position and the sale-leaseback. One is the compliance filing and the other being the -- our opposing party's request for rehearing. On the compliance filing, actually today, we're filing our response to the regulator's opposition to our filing. And there is no specific timeline that FERC has to act on that, so that's one update. The second, a week from now there is the request outstanding by the opposition of -- for rehearing on the decisions that the FERC made at the end of the year. There is a deadline there that FERC has imposed on itself of February 23rd, so it's actually a week from today. That's the request for rehearing filed by the parties there. So two updates there. We'll have to review the order to determine what if any next steps we have in that regard, but those are the two primary updates for the SERI proceedings around the uncertain tax position and sale-leaseback.

Constantine Lednev:

And just as a follow up. Does the kind of information, does this kind of set you up for a better position for any kind of settlement discussions just given the fact that some of these issues are starting to get off the table?

Drew Marsh:

And I'll just add that -- this is Drew. Whenever we were back in December, we did have conversations going whenever the FERC did decide that they were going to put an order out. It halted those conversations to see what those orders were. And so, pending that information and clarity around that as Rod said, we would hope to be able to get back to the table with them.

Drew Marsh:

Great. Thanks.

Paul Zimbardo:

Hi. Good morning. Thank you, all.

Rod West:

Hey, good morning.

Kimberly Fontan:

Paul, this is Kimberly. I may need to get back with you on the specific numbers, but in general, our pension expense is down as you noted as the funded status has increased about $500 million to about 85%. We did increase the contribution at the end of the year, but I'll have Bill follow up with the specific number on that. Our pension liability came down due to the increase in interest rates, which, of course, is reflected in the discount rate for that liability, but that was offset by lower than expected returns on the asset side of our investments. But on a net basis, we are in a better funded status position at the end of the year.

Paul Zimbardo:

Okay.

Paul Zimbardo:

Okay. Great. And then also, I noticed there was a $33 million depreciation adjustment for SERI you had in your earnings release. If you could just give some information on what that related to.

Paul Zimbardo:

Okay, great. Thank you for that. Appreciate it.

Operator:

Thank you. [Operator Instructions] And our next question comes from the line of David Arcaro from Morgan Stanley. Your question, please.

Drew Marsh:

Absolutely. Good morning.

Rod West:

Yeah, reliability is actually a part and parcel of our resilience conversation. They are very much connected. And coming out of the back end of 2022 where our customers were experiencing financial hardship because of rising commodity prices, high usage and the like, the regulators were looking for relief and any disruption to our customers was viewed as a challenge for the regulators. But it didn't stop our stakeholder engagement strategy around reinforcing the need for continued investment, customer-centric investments and reliability. And it will continue to be part of our resilience filing and it's part of the case that we've made and the case will continue to make to the Louisiana Commission. They are aligned with us on those customer-centric investments, and we expect to see improvements in reliability across the board. So they've been interested. It's been aligned with our engagement with them thus far. We expect to continue to have their support, especially around our efforts to accelerate the investments.

David Arcaro:

Got it. Thanks. That's helpful. And you alluded to it in the prepared remarks, obviously, the last securitization process was a challenging one and I was just wondering if you could elaborate? Is there a way to lower the risk around storm cost securitization processes going forward in Louisiana? Just what kind of initiatives can you pursue specifically to kind of align parties more smoothly going forward?

Rod West:

Yeah, and I think that's the point. Our customers are agnostic as to whether the investment is a reliability investment or a resiliency investment, and when there is a storm and the customers are interrupted, they are experiencing the hardships of that interruption. That's what was part of the driver for the heightened tension both in our -- from the regulators as well as our investment plans in pursuing accelerated investments in resiliency because our customers had the recency of the experience with storms. And so, Drew's point is right on point that if we can get alignment around accelerated resiliency investments, our customers will actually experience better reliability experiences as well. They are quite connected.

Drew Marsh:

Thank you.

Durgesh Chopra:

Hey, team. Thank you for giving me time. Hey, just...

Durgesh Chopra:

Good morning, Drew. Just -- just clarification. What to expect on February 2020 -- February 22nd? So is the FERC actually going to put out an order where they will kind of -- you have the compliance refund, will they affirm the compliance refund report? I'm just trying to kind of figure out what to look for there?

Durgesh Chopra:

I see. So if they basically say no to the rehearing, then I guess, does that clear way the path to you kind of going through other settlements and putting that to bed? Is that the right framework that I'm thinking about?

Durgesh Chopra:

Understood. Thank you, guys. That's all I had. All my other questions have been answered. Thanks, again.

Rod West:

Thank you.

Angie Storozynski:

Thank you. So the first on FERC and SERI. So FERC scheduled hearings and that's a last challenge that talks about the prudence of the up rates of Grand Gulf, which I mean on its own frankly, it's hard to believe that this challenge wasn't outright rejected. So I mean, is there any read through? Are you hearing anything from FERC why those hearings were even scheduled?

Angie Storozynski:

Yes.

Drew Marsh:

And, Angie, to be sure we appreciate your sentiment.

Angie Storozynski:

Okay. And then, completely -- changing topics completely here. So I mean, I was just wondering there is this discussion in the industry overall about switching from solar ITC to solar PTC. Obviously, from a regulatory utility perspective that's helpful given no issue with ITC normalization, but is there -- I mean, as you look at it, right, especially that your solar resource would be superior or above average, I mean, is this shift -- would that be actually in any way EPS accretive? I mean, I'm just thinking about the earnings recognition under the -- on the solar PTCs versus the ITC.

Drew Marsh:

And Angie, this is Drew. I would add to Kimberly's comments that we have a 50% planning assumption to the extent that this does help make us more competitive. There might be an opportunity for incremental investment over and above what we're planning, but we still have to go achieve that. So we're continuing to work to get more competitive. And this is certainly helping level the playing field for us as you said versus the ITC framework. But that's an opportunity for us that we will have to go achieve out there in the future.

Kimberly Fontan:

Yes, we're certainly working through EEI with our partners and with the other utilities on getting clarification on these nuclear PTCs. We'll obviously have to wait with the rest of the industry on what that actually comes out as, but we do believe that that's an opportunity for us and we'd be eligible for those. And it provides, as Drew said, an opportunity for customers, both to manage builds as well as an opportunity for incremental investment depending on how those come out. But we have definitely been in discussions with them through EEI.

Angie Storozynski:

Awesome. Thank you. Thank you, both.

Operator:

Thank you. One moment for our next question. And our next question comes from the line of Anthony Crowdell from Mizuho. Your question, please.

Rod West:

We can't say because FERC has -- on the issues we just alluded to, doesn't have a specific timeline. They are in control of the schedule there. The updates that I've given was the filing we were making today that -- where the FERC has no scheduled deadline. That's in regard to our compliance filing. Then, the other was a week from today, the timing that FERC imposed on itself to reply to the request for rehearing from all the other parties, but it is in FERC’s domain to decide when they make these decisions. So I could not give any expected timeframes to resolve all of these. That's another one of the reasons why we're so aggressive in engaging with the regulators to pursue a settlement to remove the uncertainty inherent in FERC's operations. No disrespect to our FERC commissioners.

Kimberly Fontan:

Sure. As you pointed out, we are targeting to be above 14% by the end of 2023 and closing out the securitization for Louisiana that was approved in January is a significant help to enable that. As far as longer term, we are targeting 15% and we're targeting that over the outlook period. So you'll see us continue to focus on strengthening our balance sheet over the outlook period to get to that target of around 15%.

Drew Marsh:

Thank you.

Constantine Lednev:

Hi. Thanks for taking my follow up. Maybe just to elaborate on the O&M targets and conditions that you're seeing, you kind of mentioned some of the costs escalating, but just trying to get a sense on what percentage of O&M is subject to some of these external factors, and how do those elevated costs play into regulatory relief just given the FRP revenue increase caps?

Constantine Lednev:

So, no kind of impact on the regulatory relief just given some of that flex that you have. I think the early outlook has like a 9% utility book ROE, any change in thinking around there?

Constantine Lednev:

Great and quick follow-up on the question around credit metrics. Just are capital market conditions changing your thoughts around the process or kind of capital allocation or dividend decisions? And kind of more broadly, how are you thinking about optimizing those financing needs, especially with CapEx ramps up in the second half of the decade?

Drew Marsh:

And it's not changing our capital mix really either at this time. We're using the internal tool for continuous improvement and trying to flex around those internal options rather than try to adjust what we're doing on an external basis at this point.

Drew Marsh:

Thanks, Constantine.

Nicholas Campanella:

Hey, everyone. Thanks for getting me in here. Just one from me today. In Louisiana, I know you're kind of on the last year of the FRP cadence and I guess you'll either file for an extension in the third quarter or a rate case. Can you just give us a sense of where you're leaning there and any additional thoughts around that? Thank you.

Nicholas Campanella:

Thanks for that. Have a great day.

Operator:

Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Bill Abler for any further remarks.

Operator:

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Operator:

Thank you for standing by. And welcome to the Third Quarter 2022 Entergy Corporation Earnings Release. At this time, all participants are in listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today’s program is being recorded. And now I’d like to introduce your host for today’s program, Mr. Bill Abler, Vice President, Investor Relations. Please go ahead, sir.

Drew Marsh:

Thank you, Bill, and good morning, everyone. Yesterday, the planned leadership succession that we announced in August took effect. While I am honored to have the opportunity to lead this great company, I am not alone. Leo remains as the Executive Chair for the next few months and we will continue to execute at a high level on our strategic path. Leo built a strong bench of talented leaders. Kimberly Fontan takes over as Chief Financial Officer, and Kimberly Cook-Nelson assumes the role of Chief Nuclear Officer. Meanwhile, Chris Bakken will serve as the Executive Vice President of Entergy Infrastructure to provide leadership and mentorship to both Pete Norgeot, who was recently promoted to Chief Operating Officer; and Kimberly Cook-Nelson as they settle into our top operational roles. While the new senior leadership -- with the new senior leadership team in place, Entergy has a bright future and we expect to deliver on the commitments that we have made to our key stakeholders. Today, we are reporting strong quarterly adjusted earnings of $2.84 per share. This is another solid quarter that keeps us on track for the year. In fact, with our biggest quarter behind us, we are narrowing our 2022 guidance by raising the bottom of the range by $0.10 per share and we are affirming our longer term outlooks for 6% to 8% annual growth through 2025. Last week, our Board of Directors raised our quarterly dividend by 6%. The annualized amount is now $4.28 per share, consistent with our target payout ratio of 60% to 65%. During the quarter, we continued to execute on many important fronts. Steady predictable growth depends on steady predictable regulatory mechanisms. Four of our operating companies have annual formula rate plans to provide timely recovery of our investments to benefit customers. Mississippi’s FRP filing was approved in July. Entergy New Orleans and Entergy Louisiana’s FRP rate changes were effective on September 1st. And we expect Entergy Arkansas’ annual review to wrap up in December. Entergy Texas filed a base rate case this year and it is proceeding on schedule with hearings planned in December. Absent the settlement, we expect a decision in the second quarter of next year. New Orleans City Council approved a $206 million securitization financing for storm cost recovery and replenishment of Entergy New Orleans storm escrow. While the prudent review of Ida cost is ongoing, moving forward with the financing will benefit customers by reducing interest rate risk. Louisiana’s review of Ida cost is also ongoing. Staff recently filed supportive testimony and recommended full cost recovery. Hearings are scheduled for December and we expect to receive securitization funds early next year. These developments are an important step in moving our credit metrics back to targeted levels. In September, we received an ALJ recommendation on our proposed Orange County Advanced Power Station or OCAPS. It was very encouraging that the presiding judges recommended approval of the project and they recognize the significant economic and reliability benefits that this facility would bring to our customer in Texas. The ALJ did not support the hydrogen capability for the plant though we continue to believe that day one hydrogen co-firing capability for OCAPS is in the best interest of our customers. I will note that the Governor of Texas has indicated his support for the plant, including its hydrogen capability. OCAPS hydrogen capability is less than 5% of the total investment, and it provides a critically important option for fuel diversity and ensures the plant’s continued value in a low carbon future. Also, an economically viable hydrogen economy is no longer decades away. The passage of the Inflation Reduction Act promises to improve hydrogen economics and further accelerate clean hydrogen production. As we have said, Entergy’s region is uniquely positioned to take advantage of this opportunity and we expect the Gulf Coast to lead the way, bringing jobs and economic benefits to our communities. The decision on Orange County ultimately lies with the commission and it is on the agenda for tomorrow’s meeting. If approved, OCAPS will be our first unit capable of burning up to 30% hydrogen on day one1 with plans to eventually be 100% hydrogen capable. The Gulf region remains a prime target for onshoring growth opportunities. As we laid out at Analyst Day, our industrial customers have many inherent advantages that make them low cost producers on the global stage. This is enhanced by recent supply chain and geopolitical conditions. Commodity spreads important to our customers remain positive and continue to support the outlooks we laid out at Analyst Day. We continue to see announcements for new projects in our service area. For example, Entergy Texas and New Fortress Energy signed an MOU for collaboration on developing renewable energy and hydrogen infrastructure. The partnership will help accelerate the green hydrogen economy in Southeast Texas. New Fortress Energy’s project will leverage industry-leading electrolysis technology from Plug Power for the production of more than 50 tons per day of green hydrogen. Entergy Texas will supply 120 megawatts of green power to serve this facility, which is expected to be one of the largest of its kind in North America. In Louisiana, Olin and Plug Power announced plans to produce green hydrogen from a 15-ton per day plant. Both of these projects are good examples of how the hydrogen economy is coming to life in our service territory. CF Industries announced a $2 billion carbon capture ammonia complex in Ascension Parish, which will create more than 400 jobs. This is another great example of customer growth tied to decarbonization. As I said, we have seen a lot of progress in the last few months. We continue to monitor the significant pipeline of opportunities for signs of impacts from broader economic uncertainty. We have not seen a noticeable pause or pull back. As we said at Analyst Day, fundamentals of our region uniquely position the Gulf Coast for substantial growth even in a challenging economy. We also continue to make progress on expanding our renewables footprint. We received approval for the 250-megawatt driver solar acquisition in Arkansas. This facility is being constructed near U.S. Steel’s expansion in Osceola and it is expected to be completed in 2024, and U.S. Steel received the facility’s clean energy attributes. This illustrates how we work collaboratively with our customers and our regulators to support growth, jobs and sustainability in our region. In September, the Louisiana Commission approved four solar projects totaling 475 megawatts. They also approved our new Geaux Green tariff, which -- that’s G-E-A-U-X, Geaux, which began taking reservations from large commercial and industrial customers yesterday. Based on inquiries to-date, we are expecting strong demand and it arrived. The 365 megawatts allocated to the tariff were fully reserved in just a few minutes, indicating strong faster demand for sustainability products. We also announced plans for two new renewable RFPs. Entergy Texas is seeking 2,000 megawatts of clean energy and Entergy Mississippi is seeking 500 megawatts. We now have eight active RFPs totaling 7,000 megawatts. We have made selections in four of those RFPs and are negotiating with counterparties. We will announce specific projects once agreements are reached. In addition to clean energy, resilience is important for our customers who depend more than ever on reliable electricity supply. Since Hurricane Ida, we have invested in new infrastructure built to higher standards that will improve the system’s resilience, including more than 22,000 distribution poles, more than 2,200 transmission structures and eight fuel stations. Execution on our resilience investment is ongoing and our base plan includes investments that will continue to upgrade our system. At Analyst Day, we laid out our $15 billion 10-year accelerated resilience plan. We expect our proposed investments to significantly reduce physical and financial storm risk, and we are engaging with stakeholders to make our case. We made our first filing in New Orleans. We plan to file in Louisiana before year end and in Texas by mid-next year. We did our homework and the accelerated resilience plan is heavily informed by our neighbors in Florida, knowing that their hardened assets performed well and Hurricane Ian along with the strong performance of our own hardened infrastructure over the past couple of years gives us confidence that we can substantially reduce our exposure to storms and provide meaningful benefits to customers. Affordability remains a top priority and we announced several initiatives last quarter to help our customers when they saw higher bills from both warmer temperatures and higher natural gas prices. As part of our recent customer affordability initiatives, we have helped more than 35,000 customers with more than $5 million in bill credits. We have held energy fairs in 48 communities to provide helpful information to our customers about how to manage their bills and benefit from energy efficiency. We have also weatherized many low income customer’s homes and installed energy efficient appliances including new heat pumps and tankless water heaters. These efforts are only a part of what we are doing to help with affordability. Many of our past actions are mitigating the impacts of high natural gas prices for our customers today. The investments we made over the last eight years in more efficient generation and renewable resources are reducing fuel costs. Based on 2022 gas prices, these modern assets are reducing fuel cost by an estimated $400 million compared to what it would have otherwise been. Our nearly decade-long participation in MISO has also produced customer savings, which totaled more than $2 billion through 2021. Support for economic development and growth in our service areas also helps with customer affordability. Not only does it spread fixed costs over a growing customer base and also provides economic growth and jobs that are critical for our communities. Another lever for affordability is continuous improvement, which is more important than ever. We are using CI to find efficiencies that will offset inflationary pressures and create headroom for new investments to help customers. We have a robust growth story at Entergy. We are seeing significant industrial growth as economic indicators for businesses in the Gulf South continue to be positive. Besides driving investments and growth for our owners, that industrial growth is important for our communities, especially in today’s economic environment. This opportunity is unique to Entergy and it will benefit each of our key stakeholders. We see our growth continuing for years to come as our customers need to help our -- help to -- need our help to achieve their decarbonization goals. It starts with growing our clean energy capacity, which will reduce our customer’s indirect emissions and continues through electrification of industrial processes to reduce their direct emissions. We are very excited about our near-term and long-term prospects, and we look forward to continuing this conversation with you at the EEI financial conference in a few weeks. Before I wrap up, I’d like to say a few words about Leo Denault. He yesterday retired from his role as our Chief Executive Officer after a long and successful career. While we won’t see him day-to-day, the impacts of his tireless dedication to our four key stakeholders remain. Under Leo’s leadership, we simplified our business to our core utilities. We turned around our nuclear operations. We redefined our customer focus. We have progressed and broadened our ESG commitments. We raised diversity, inclusion and belonging as a strategic pillar. We emerged as a national leader in corporate citizenship. Without missing a beat, we navigated through the pandemic and storms of the last couple of years. And we established a clear vision of our future opportunities. As part of his distinguished career, Leo completed 74 earnings calls over the past 19 years and he has been a steady presence for our key stakeholders. We will work with him as Executive Chairman for the next several months, as we continue to make progress on the vision and strategy that he established. As I turn the call over a word about our new Chief Financial Officer, Kimberly Fontan. Most recently, Kimberly served as our Chief Accounting Officer and she also has senior leadership experience in operations and regulatory roles. Kimberly brings a broad experience and perspective, and she’s a great addition to Entergy’s senior leadership team. Now I will turn the call over to our Chief Financial Officer, Kimberly Fontan.

Operator:

Thanks. [Operator Instructions] And our first question comes from the line of Jeremy Tonet from JPMorgan. Your question please.

Drew Marsh:

Good morning, Jeremy.

Kimberly Fontan:

Hey. Thanks for the question, Jeremy. Good question. Our current expectation is at least 50% or better from an owned perspective and that’s what’s assumed in our outlook.

Drew Marsh:

It’s consistent with where we were. Sorry, Jeremy, this is Drew. It’s consistent with where we were at Analyst Day.

Kimberly Fontan:

Sure. That’s certainly something that we are looking at. Recall that a lot of our investments on renewables are in the back half of the decade. So we certainly expect to see benefits from IRA in that period and we will talk more about that at Analyst Day. But we do think that the IRA provides upside, as well as reducing the need for tax equity partnerships on that front.

Drew Marsh:

Yeah. I think that’s a great question, Jeremy. This is Drew. I will start off and then Kimberly or Rod can add to that. But it’s -- what we laid out at Analyst Day was 6% compound annual growth through the five-year period. There’s a big chunk of that that’s coming in around 24% and that’s -- I think that’s probably the biggest step-up in our forecast. But it’s still consistent with what we laid out at that point and we see it continuing to be robust. In terms of jobs, it certainly will be helpful for jobs in our area and continue to allow our customer -- our residential and commercial customer bases to grow. It’s not as big as it was 30 years ago, honestly, because of the amount of automation and other things that are inherent in modern industrial facilities. But that also gives us the opportunity to be much more competitive on the global stage. So I think those there are trade-offs in those pieces. But that’s one of the things that makes our region very attractive. I don’t know, Rod, if you have anything to add to that?

Drew Marsh:

Okay.

Drew Marsh:

Thanks, Jeremy.

Shar Pourreza:

Hey, guys. Good morning.

Shar Pourreza:

Drew, maybe just starting off around your earnings guidance, just, I guess, looking at your O&M run rate increase and interest rate headwinds for 2023, how are you sort of thinking about the contingency and plan levers on offset, et cetera? I guess how does sort of this inflationary environment kind of change your planning parameters versus the Analyst Day expectations, especially as we are looking to bridge into next year with a sort of a $0.30 band at the top and bottom end?

Shar Pourreza:

Got it.

Shar Pourreza:

Okay. Perfect. And then just to ask, maybe just shifting to financing, I mean, obviously, your capital growth opportunities are increasing with resiliency, hardening, green tariffs, et cetera. I guess, how are you sort of thinking about more accretive ways to finance this growth in this current really challenging capital markets environment. I mean there’s been some press sort of highlighting that you could be looking to raise about $2 billion through a minority sale of your utilities combined into a holding company, excluding Texas. I guess any sort of general comments here, any sense on timing, is there a process that started? I mean you certainly won’t be the first utility that’s looking to optimize an asset in lieu of traditional financing?

Kimberly Fontan:

Yeah. Thanks, Shar. There’s no new news on this front. I know we had talked to you about the value difference between private capital and public capital markets, and to the extent that we can capitalize on that, and there’s a difference there, we would be compelled to do that. But there’s no new news on that front at this point.

Drew Marsh:

And I hand it to Kimberly very softly.

Drew Marsh:

Thank you.

David Arcaro:

Hey. Good morning. Thanks very much for taking my question.

David Arcaro:

On the AMT, I just wanted to check, how much of an impact are you expecting once we reach 2026. I think you had in one of the slides in terms of when the corporate AMT would start impacting the business. And I was wondering in the interim over the next couple of years, just given that same slide, slide 10, we are currently seeing Henry Hub forward prices kind of in the 450 range or above over the next few years. Is there an AMT impact at all in like 2024, 2025 that’s offset by the nuclear PTC level? I am wondering if you could just compare those two impacts. Thanks.

David Arcaro:

Okay. Great. Thanks. That’s helpful. And then on the upcoming Louisiana Resilience filing, I was just wondering if there’s any feedback or initial conversations from relevant stakeholders in the state around the importance, the priority of kicking off this work and what the appetite might be?

David Arcaro:

Okay. Great. Thanks so much.

Operator:

Thank you. One moment for our next question. And our next question comes from the line of Durgesh Chopra from Evercore ISI. Your question please.

Drew Marsh:

Thank you.

Durgesh Chopra:

Yes. Of course. All my other questions have been answered. I was just wondering if you could update if there’s an update to share on the SERI settlement. I know you had this settlement with Mississippi, but anything there that we should focus on as we get into the year-end or next step there?

Durgesh Chopra:

Okay. That’s helpful, guys. Thank you.

Operator:

Thank you. One moment for our next question. And our next question comes from the line of Paul Zimbardo from Bank of America. Your question please.

Drew Marsh:

Good morning, Paul.

Kimberly Fontan:

Yeah. Good question. There’s a number of both pull-forwards, as well as inflationary items. It’s hard to get to the specific number. But from an inflation perspective, we are seeing that more in -- you see it in fuel, you see it in chemical type costs and then we see it on the capital side and less so in the labor market side. But we have included an ongoing level of inflation. And then if you think about the flex side, we have long talked about flexing up when there are opportunities from whether in volume or other things that happen in the business and that’s really what you are seeing on the other side, opportunities to spend where we can support our customers and our stakeholders.

Paul Zimbardo:

Okay. Great. Understand there. And staying on the hot topic of inflation, just as you think about the next Arkansas FRP filing, do you think that this is probably another one that’s going to be at the rate change cap or do you think you can manage a little bit below that level?

Drew Marsh:

And we are a little over the cap for what’s coming for the formula plan this year. So we are above the cap already there.

Drew Marsh:

All right. Thanks, Paul.

Michael Lapides:

Hey, guys. Thank you for taking my question, and again, congrats, not just to Drew and Kimberly, but obviously, Leo. It has been a long time since coming over from Indiana. I have a couple of easy questions. One is your demand growth, especially on the C&I side has been really, really healthy, not just this year but last couple of years, and this quarter, we saw a turn in residential demand growth. You have proposed Orange County in Texas, but just curious, even though you are adding a lot of renewable in lots of the jurisdictions, what your thoughts are around in some of the other jurisdictions to any need for any more conventional generation?

Kimberly Fontan:

Yeah. That’s a good question. We do plan out over a long-term and we are looking for growth -- we watch the growth that’s occurring. Our plans include a significant amount of renewable investments as you suggested. I think we have 14 gigawatt hours to 17 gigawatt hours in our -- over the longer period in investments. We will add baseload generation, smaller units to the extent that they are needed to support reliability and ensure that we continue to meet the needs of our customers. But near-term, Orange County is the project that’s on the plan.

Michael Lapides:

Got it. And then one on related follow-up, can you -- lots of really positive things happening in Louisiana. The securitization looks like it’s going pretty smoothly. Don’t have a last step or two there. It will be interesting to watch the grid resiliency docket. Just curious, though, can you remind us what your was -- revenue request was for the formula rate plan versus what’s been authorized in the formula rate plan there? And just in general, how you are thinking about getting Louisiana closer to earning authorized rates of return?

Michael Lapides:

Either the bottom…

Michael Lapides:

Either the bottom or in some periods not at the bottom, depends how long you look?

Michael Lapides:

So if I look at your EPS guidance over the next couple of years, does this assume that Louisiana at some point in that timeframe that it kind of how far out gets closer to the midpoint of the range?

Michael Lapides:

Meaning your outlook assumes you are not at the low end of the band, you are back towards the middle or does it assume kind of what you have delivered over the last couple of years?

Drew Marsh:

And I don’t think it’s assuming…

Drew Marsh:

… any new mechanisms that suddenly pop up in the forecast. We have -- we are assuming that we have the existing mechanisms in place. But we will need to get better mechanisms in order to hit all of the financial targets that we need to hit, particularly the credit metrics that we are targeting going forward.

Drew Marsh:

Thank you, Michael.

Ross Fowler:

Good morning, Drew. Good morning, Kimberly. How are you?

Ross Fowler:

Congratulations on the official new roles, I guess, as of yesterday. Most of my questions have been asked, but just a couple for me. So going back to Rod’s comments on the Louisiana resiliency filing and lessons learned from Hurricane Ian. I guess one of the lessons learned was the system did very well. But there were parts of it, obviously, that didn’t perform as well and there’s been some discussions, I guess, in Florida around undergrounding those portions of the system that are higher risk. Has that entered sort of the conversation in Louisiana yet or can you provide some color or context around that?

Ross Fowler:

All right. That’s fantastic. Thank you. And then maybe one just on LNG expansion. We have seen some softening in LNG prices. I think that probably has more to do with weather in Europe than anything else. But I know it’s days, are you still seeing a lot of interest there, obviously, you touched on this a little bit, but what interest specifically are you seeing around maybe use of electric drives for future projects and putting renewable energy into those electric drives to the extent possible to sort of make the profile…

Ross Fowler:

… of future projects green.

Drew Marsh:

And Ross, I will just add that, that theme around the LNG with electric drives and having a cleaner product, is not unique to LNG. We are seeing that in other industrial processes where folks that, particularly if you are putting in -- they are putting in new facilities, they are trying to electrify as much as possible. Some of the existing facilities will electrify over top of it. If anybody is putting anything new, whether it’s in metals or LNG or petrochem or whatever, they are looking to see if they can electrify those industrial processes that normally, probably, would have been handled through fossil fuels. So that’s an ongoing thing that we are seeing across a broad spectrum of industrial processes.

Drew Marsh:

Great. Thanks, Ross.

Operator:

Thank you. One moment for our next question. And our final question for today comes from the line of Sophie Karp from KeyBanc. Your question please.

Drew Marsh:

Sure. Sophie, this is Drew. I will tackle that. Certainly, the settlement, Rod, referenced the settlements that we have in Mississippi and we are in conversations with others to see if we can find a global event. Prior to the work that we are doing right now up at FERC and all the different proceedings that we have, w went -- I don’t know, couple of decades without significant litigation around SERI. And I would expect that once we are through this, it will kind of go back to that natural state. We will have to see. But certainly a strategic alternative around with that is something that we consider, but we would not have an option around that until we get through the litigated settlement. And so if we are able to get through the litigation, then we could consider something like that, but that’s -- if we go back to a normal run rate, I don’t think that would be the best option for us. So we will have to wait and see how this develops, but certainly, until we get through the current conversations up at the FERC, we wouldn’t be able to go forward in any way on the strategic front.

Drew Marsh:

Thank you.

Bill Abler:

Thank you, Jonathan, and thanks to everyone for participating this morning. Our quarterly report on Form 10-Q is due to the SEC on November 9th and provides more details and disclosures about our financial statements. Events that occur prior to the date of our 10-Q filing that provide additional evidence of conditions that existed at the date of the balance sheet would be reflected in our financial statements in accordance with generally accepted accounting principles. Also, as a reminder, we maintain a webpage as part of Entergy’s Investor Relations website called Regulatory and Other Information, which provides key updates on -- of regulatory proceedings and important milestones on our strategic execution. While some of this information may be considered material information, you should not rely exclusively on this page for all relevant company information. And this concludes our call. Thank you very much.

Operator:

Thank you for standing by. And welcome to the Entergy Corporation Second Quarter 2022 Earnings Release. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today's program may be recorded. And now, I'd like to introduce your host for today's program, Bill Abler, Vice President, Investor Relations. Please go ahead, sir.

Leo Denault:

Thank you, Bill. Good morning, everyone. Today, we are reporting strong second quarter adjusted earnings of $1.78 per share. Robust economic activity and supportive fundamentals drove favorable sales trends in our commercial and industrial sectors and hot weather drove increased residential and commercial sales. We are also seeing growing residential customer counts supported by strengthening wage and employment data. Given the results to date as well as our view of the balance of the year, we are tracking towards the upper half of our 2022 guidance range and remain squarely on pace to achieve our longer-term 6% to 8% growth outlooks. While we're pleased with the strength of our business, I want to acknowledge that, due to global factors impacting natural gas prices, together with high electric usage caused by extreme heat, our customers, like many across the country are receiving electric bills that are much higher than is typical even for this time of year. This is top of mind, as we continue to achieve outcomes that build upon our proven track record of results. We executed on the important customer, regulatory, operational, and financial deliverables that continue to improve quality across our business. As we discussed at Analyst Day, the attributes of Entergy's business, align well with premium utilities. Given the bill pressures customers are facing, we continue to take strong and meaningful measures to help ease the burden of electric costs. Many of our past actions and investments are mitigating the impacts of high natural gas prices for our customers today. The investments we made over the last eight years and more efficient generation and renewable resources have lowered fuel cost by nearly $500 million annually compared to what they would otherwise have been. Going forward, investments in renewables, and highly efficient generating resources, like the Orange County Advanced Power Station, will further reduce customer exposure to natural gas prices. Our ongoing participation in MISO has provided more than $250 million per year of savings for customers and these savings increased during periods of higher fuel prices. Our top quartile O&M performance and customer centric investments have delivered meaningful value for customers. We placed extra importance in helping customers who need it the most, with programs like the Power to Care, and initiatives to get LIHEAP assistance to customers that qualify. Otherwise, we help customers manage affordability include products like level building, deferred payment plans, as well as analytics and AMI-driven usage alerts. To further address bill challenges today, we are working with our regulators on additional solutions. We've agreed to defer fuel recovery to mitigate fuel price impacts on customer's monthly bills. We are also waiving late fees for eligible customers and credit card fees for all residential customers. We've committed $10 million in shareholder donations for residential bill payment assistance programs. Additionally, given our strong industrial and commercial sales and hot weather, we are utilizing our flex program to increase spending on initiatives designed to lower customers costs and improve reliability. As I mentioned, one of the largest drivers of higher customer bills has been the increase in natural gas prices. Looking ahead, the forward NYMEX curve indicates significant gas price declines over the next 12 months to 24 months and we are seeing fundamentals that support that trajectory. While weather across the nation has driven up natural gas demand this year, causing inventories to be tight, US gas production is tracking roughly three Bcf per day ahead of last year. The US has ample natural gas resources that can be produced in shale plays at prices consistent with the long-term NYMEX curve. Over the last year, we've seen independent producer activity ramp up in Haynesville and Permian Basin shale plays. Haynesville gas rig counts have increased nearly 50%. Increased gas production is also reflected by higher oil rig counts in West Texas, where high levels of associated gas from Permian Basin shale represent significant natural gas supply additions. The old adage that nothing solves high prices like high prices is certainly true. And while we can't control commodity prices, we see relief for customers in sight. Our recent SERI settlement represents another way we have worked with our regulators to mitigate risk, while also helping reduce customers' bills. In late June, we announced a settlement with the MPSC that resolved Entergy, Mississippi's 40% economic interest in complaints against SERI. The settlement is a big step forward in resolving risks surrounding system energy and improving our overall regulatory environment. The settlement also comes at an opportune time to provide much needed bill relief to Mississippi customers. Entergy, Mississippi would use the cash payment from this settlement to provide immediate bill relief and help offset fuel impacts on customer bills. The Mississippi Public Service Commission recognized the opportunity to deliver meaningful value to customers today rather than wait for an uncertain outcome potentially years down the road. Looking beyond Mississippi, this settlement sets a marker and represents a catalyst opportunity to drive progress with the other commissions on broader SERI litigation resolution. Beyond SERI, regulatory progress was made at all of our utilities. We have submitted our annual FRP filings in Arkansas, New Orleans and Louisiana. And as planned Entergy, Texas filed a rate case reflecting the significant investments we've made across transmission distribution and generation resources to better serve our Texas customers. We also demonstrated strong operational quality in the quarter. We have a flexible diverse and reliable portfolio of generation and grid infrastructure that allowed us to reliably deliver power to customers during extreme weather. In fact, all of the states we serve recorded triple-digit temperatures during the month of June and Entergy system set a new peak load in MISO. Consistent with the accelerated resilience plan we laid out in Analyst Day, Entergy, New Orleans made its initial resilience and hardening filing. The filing included $1.5 billion of hardening projects over the next 10 years, including options for several microgrids spaced in neighborhoods throughout the city. All projects proposed create customer benefits. We will work with the City Council and other stakeholders to identify the optimal set of projects for Entergy, New Orleans and we'll make a formal filing later this year to seek approval for these projects. We are working towards similar resilience filings in Entergy, Louisiana in the fourth quarter and at Entergy, Texas next year. These filings and stakeholder engagement are important steps toward our 10-year accelerated resilience plan. Our plan will reduce risk for our customers and for Entergy both in terms of reduced outages and lower storm costs and further improve our operational and balance sheet quality. Another important accomplishment is the sale of Palisades to Holtec. This represents the last major milestone in our multiyear plan to exit the merchant nuclear power business. Turning to growth. Overall, economic activity in our region was vibrant during the second quarter. Our commercial customers continue to show strong recovery from the pandemic. We've seen positive economic indicators for our residential customers. For example, the Louisiana wages increased more than 6% in 2021, which exceeded the national average. Further, Louisiana's unemployment rate hit a 50-year low 3.8% this past June. Economic development and expansion across our region is robust. And as we've discussed, Entergy is a major facilitator of this growth. Across our system, residential customer accounts continue to grow and show energy efficiency gains. Both of these trends drive improved affordability. We had significant industrial growth this past quarter, which drives economic gains for the regions we serve and the load growth helps keep bills low for all customers. As we discussed at Analyst Day, Entergy has a robust and unique growth story, stemming from our industrial customers with an expected 6% compound annual growth rate over the next five years. Commodity spreads and geopolitical conditions combined with the inherent Gulf Coast stability and competitive advantages are driving new customers to locate in our region and our existing customers to expand their businesses. Over the next five years we have line of sight to the growth we outlined with a robust pipeline of projects. As we sit today, there are 100 identified projects in the pipeline. Roughly half of these projects have already made final investment decisions comprising almost 10.5 terawatt hours of annual load potential by 2026, further highlighting our growth opportunity. Sempra Infrastructure entered into an MOU with Entergy Texas for its Port Arthur LNG plant. Phase one of this facility includes two LNG trains with gas turbine compression, representing 270 megawatts of new load. Phase two would add two additional trains with plans for electric compression that would represent approximately 600 megawatts of new load. The Port Arthur project demonstrates the strong basis for the industrial load growth we expect over the next decade. As outlined in the MOU, Entergy Texas is developing options to accelerate the deployment of new renewable generation and to increase power supply resiliency. If Sempra's Port Arthur energy were to be supplied with 100% solar, it would represent more than 2,500 megawatts of new solar generating resources. Projects like Sempra Port Arthur highlight industrial expansion, with customers striving to grow in a carbon-neutral manner. For our broader industrial customer base to achieve their decarbonization goals, it goes well beyond mitigating emissions from business growth. They must decarbonize their existing operations. As we've previously discussed, Entergy's industrial customers have significant carbon emissions, representing 15% of the nation's industrial emissions and the majority of our customers have aggressive decarbonization goals. For utility investors interested in driving decarbonization, Entergy represents a unique rate of change investment opportunity. Over the last quarter, we continued to make decarbonization progress for Entergy and our customers. Construction of Entergy Mississippi Sunflower Solar Station was completed. This 100-megawatt facility represents the first step towards Entergy Mississippi's 1,000-megawatt EDGE program which will support economic development in the state. In May, the Arkansas Public Service Commission approved our Green Promise tariff that offers 100 megawatts of capacity from Entergy Arkansas, Searcy and Chicot Solar resources for allocation to customers who signed letters of intent. We've seen robust customer demand for green products and this program is already fully subscribed. We intend to grow this tariff to accommodate the demand. Entergy Texas continued to move the Orange County Advanced Power Station through the regulatory review and approval process. When it comes online OCAPS will have the lowest heat rate of any combined-cycle plant in our fleet and will immediately provide fuel savings, reliability and environmental benefits for our customers. This hydrogen-capable facility will provide further benefits over time, through fuel diversity and long-duration clean energy storage. At our Analyst Day, we laid out a clear plan and path to support our customers' significant growth potential over the next decade. This plan calls for greater investment in clean resources and accelerated resilience to meet our customers' demands, while we maintain our focus on affordability and drive continued quality gains across all aspects of our business, consistent with our premier utility objective. Entergy has an excellent near-term growth opportunity. When considering the broader electrification and decarbonization potential, our long-term growth opportunity is even better. We are excited about our future and proud of the progress we are making towards achieving it. I will now turn the call over to Drew to review our first quarter results as well as our financial strength and outlooks.

Operator:

Certainly. [Operator Instructions] And our first question comes from the line of Shahriar Pourreza from Guggenheim. Your question please.

Leo Denault:

Good morning.

Constantine Lednev:

I wanted to start off on the strong results for the quarter and some of the changes in assumptions for 2022 guidance. You're now in the top half, obviously, and you have a big EPS offset for the remainder of the year in the O&M flex category, but whether it keeps looking strong. And how does that potentially set, a base for growth in 2023? And maybe just curious, on the recurring elements in this slice, and how that carries into 2023 assumptions and contingency.

Leo Denault:

I think, that's fair. We're encouraged by the beginning of the year. We're using that -- those results to make sure, that we're doing the right things for our customers here and now, and certainly see a lot of reasons, why that industrial load growth should continue, not only this year but for years to come, to support our outlook.

Leo Denault:

Rod, why don't you give them the process and then Drew, you can help out on that.

Drew Marsh:

And then regarding the financials, we have in our outlook we've reflected the collective of the Mississippi settlements, on an ongoing basis. And once we do have some -- since we're ongoing discussions, with everyone we wouldn't comment on ROEs, or capital structures or anything else beyond that at this time.

Leo Denault:

Thank you.

Paul Zimbardo:

Hi, good morning and thank you.

Drew Marsh:

Good morning, Paul

Drew Marsh:

Sure. Paul, this is Drew. We do think that they are eligible based on our reading of the act. As you know, our nuclear units do compete in the MISO markets. They bid their power in every day. And so we have a busbar price – a wholesale market price and that's the revenue that comes to the company every day because it ultimately gets netted off in rates and stuff like that through the normal regulatory process. But we do participate in the wholesale power markets every day. And so that's how we believe we'd be eligible.

Rod West:

It's, Rod. I can frame up the Texas rate case filing. Between October and through the end of the year, you'll see the procedural schedule laid out and I'll direct you to Page 34 of our materials just for some context. But it's about $131 million base rate change in our case and our proposed ROE is 10.8%, reflecting a 10.5% midpoint with the 30% – I mean the 30 bps performance adder with equity ratio around 51%. And the procedural schedules laid out as is and certainly reflects the continuing benefit of our transmission, distribution and generation riders as we move to incorporate OCAPS and other assets in our capital plan.

Paul Zimbardo:

Okay. Thank you.

Paul Zimbardo:

Yes, thank you.

Jeremy Tonet:

Hi, good morning.

Jeremy Tonet:

Just want to start off with Entergy, New Orleans and the resilience filing there. Have there been any initial reactions that you could share with us or other takeaways, especially as we think about Louisiana and Texas on this front?

Jeremy Tonet:

Got it. Yes. That was kind of the next part of the question here. Just conversations in Louisiana talking about higher customer bills as you talked about in your prepared remarks there. And so do you see -- what type of role do you see this playing against conversations for CapEx at large and particularly on the resiliency front given the inflationary pressures that you talked about there?

Jeremy Tonet:

Got it. That's very helpful. And just a last one if I could here, as it relates to equity needs in 2025 and 2026. While the ATM can satisfy these needs here, just wondering how you think about asset recycling at this point, if this is on the table, or could you speak to broader considerations here?

Jeremy Tonet:

Got it. That’s helpful. I will leave there. Thanks.

Rod West:

Thank you.

Jonathan Arnold:

Hi. Good morning, guys.

Jonathan Arnold:

Can I just ask about the -- you mentioned that you've deferred $300 million of fuel I think. Is that the extent of what you're proposing to do on that particular tool or is that just what you'd recognize through second quarter this June balance sheet?

Jonathan Arnold:

To the balance sheet.

Jonathan Arnold:

So, that's sort of the current proposal across the portfolio and to the rest of the deferred fuel from in first half of the year we should see that sort of catch up a little quicker.

Jonathan Arnold:

Okay. And then could you just sort of maybe help frame for us a little bit some of the other things you're doing to try and mitigate pressure on customers maybe sort of put some quantification around that in the context of the fuel deferral number? Is that the biggest thing? I'm guessing it probably is but just curious about what are the other pieces of the strategy.

Leo Denault:

The only thing I would add to that Jonathan is certainly for Mississippi customers the SERI settlement is probably the biggest bang for the buck that we've had in terms of near-term bill relief.

Drew Marsh:

I was going to add Jon the securitization that we did we got $100 million of benefits to Louisiana customers. I mean there's a number of things that we've done that have some big dollars associated with them. We haven't really talked about our gas hedging program that's been beneficial to the customers in these high gas price environment. So there's a number of things that we've done to help mitigate customer bills.

Rod West:

Yes that is correct. We're seeking -- we're asking FERC essentially approve and ratify that settlement by November, but Mississippi is already taking steps to put that -- the benefits to customers in place. So -- but November is the time frame from a FERC perspective.

Drew Marsh:

Right now, it's assuming a grossed-up element, an inclusive everybody got the same as Mississippi, but we're not commenting beyond that about where it might end up given we have ongoing discussions.

Drew Marsh:

Yeah.

Drew Marsh:

Thank you.

David Arcaro:

Hi, good morning. Thanks so much for taking the question.

David Arcaro:

Oh, hi, good morning. I was curious on the Inflation Reduction Act. Do you have a view at this stage just how much that could improve your competitiveness on the renewables front and whether it could unlock additional opportunity to rate base renewables within the play going forward versus the proportion that you've been assuming thus far?

David Arcaro:

Great. Yeah. Thanks. That's helpful. And you had also mentioned on the cash flow side of things. It sounded like it was neutral. Is the way to think about that that you're already planning to see a cash tax bill that's at least at the level of the AMT that's been floated out there such that there wouldn't be an incremental cash flow drag as you see it?

Drew Marsh:

Yeah. And I will add that that's an ongoing basis. I referenced the first year. There is a timing element that's out there that we had to pay close attention to between the A&T starting in 2023. And the bulk of our tax credits would be from the nuclear tax credit and those would start until 2024. So there's that 2023 gap that we'll have to figure out how to work through. The good news is it should be an offset to deferred taxes. So that means our rate base should go up. But we got to work through that. We got to get the final bill work through that with retail regulators talk to rating agencies and the like.

Drew Marsh:

Correct, correct.

Drew Marsh:

Thank you.

David Paz:

Hey, good morning.

Drew Marsh:

Hi, David.

Leo Denault:

Yeah. As far as operationally David, I will get into the technical details, but we had a couple of pieces of equipment that had issues. So we had to take the plant offline to fix those issues and that's ongoing. Plants should be online pretty quickly, and ready to roll after the recent refueling outage is, where we replaced a lot of equipment and on the backs of last year's record run. Kind of while we're talking about nuclear, I will just point out, because it happened today the River Bend station now had its longest continuous run online too. So congratulations to them. As far as the mechanism Rod, I don't know, if you want to –

Drew Marsh:

And the contracts back to the operating companies are unit contingent. So they would just replace the purchase power in the market as they do every day and that would flow through the fuel costs.

Drew Marsh:

As each of the individual operating companies.

David Paz:

Got it. Okay. Make sense. Thank you.

Operator:

Thank you. And our next question comes from the line of Michael Lapides from Goldman Sachs. Your question, please.

Rod West:

Hey, Michael, it's Rod. We had a – we covered it at an Analyst Day, but the point being it depends on the timing of our agreement in say in Louisiana, how the state of Louisiana thinks about the capital plan around resiliency is going to determine whether we think we can flow through the capital cost through the existing FRP and recovery riders, or if there's going to be a need for anything else. And again, that's a function of sizing, because what we talked about on Analyst Day for our capital program was that we would go from $2 million to $4 million around accelerated resiliency where a chunk of – the larger chunk of that would be in Louisiana and we would do it through existing mechanisms. And whether we needed anything different would be dependent upon how the commission worked through with us around the pace and timing of capital spend. Texas is a little -- and so that process will begin when we make the filing that we currently planned in October. In Texas, the way that we sequenced the accelerated resilience filing in Texas, we pushed that back into 2023, given that the timing around the rate case and OCAPS shifted a bit and we want to sequence, the resiliency filing to fall in place behind both OCAPS and the rate case. And the dynamic is not radically different than the way we're thinking about it in Louisiana. Again, depending upon how the commission thinks through and certainly our customers think through the pacing of resiliency spend in Texas, then the question becomes, can we accommodate that CapEx through the existing T&D recovery riders, or if there's a need for -- as we described it, a tweak in the regulatory recovery mechanisms. And those remain -- that remains to be seen Michael, but the thinking is the same.

Michael Lapides:

Do you need -- thank you for that, Leo and Rod. Just a quick follow-up on the Louisiana side. You have a lag right now in Louisiana, right? Louisiana, I would argue, is maybe one of the harder places to earn authorized for you guys? Do you worry that if you don't get a change in rate making, meaning somehow a more forward-looking structure to the formula rate plan, that's simply using the existing construct would simply add to the lag?

Drew Marsh:

And Louisiana has some good precedence around this. I mean, Leo was talking about AMI and the AMI dockets in Louisiana, we were able to get more contemporaneous recovery. And of course on the capacity side, we have a long history of getting generation assets into rates when they get to COD. So I think there is examples of how this could work differently in Louisiana, but we certainly echo Rod's concern.

Rod West:

Thanks, Michael.

Operator:

Thank you. And our final question for today comes from the line of Paul Patterson from Glenrock. Your question please.

Rod West:

Yeah. it's the FERC that drives -- we don't get to tell FERC and I say this respectfully. We don't get to tell FERC what their procedural schedule needs to be, but we're certainly they're usually sensitive to certainly us and other stakeholders when there's an objective to particularly in this instance where we're trying to reduce the overall noise around SERI and the risk associated with it and the potential benefit for customers that tends to resonate it. So it's as soon as possible as far as we are concerned, but we're always weaving in our interest with those of our other stakeholders in first docket, which as you might imagine has more than Entergy to contemplate. So we're grateful for whatever FERC is able to do to accelerate the consideration of this customer beneficial settlement in Mississippi.

Rod West:

I think you got that right.

Rod West:

Thank you, Paul.

Operator:

Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Bill Abler for any further remarks.

Operator:

Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Disclaimer*:

This transcript is designed to be used alongside the freely available audio recording on this page. Timestamps within the transcript are designed to help you navigate the audio should the corresponding text be unclear. The machine-assisted output provided is partly edited and is designed as a guide.:

William Abler:

00:32 Good morning and thank you for joining us. We will begin today with comments from Entergy's Chairman and CEO, Leo Denault; and then Drew Marsh, our CFO will review results. In effort to accommodate everyone who ask questions, we request to each person ask no more than two question. 00:51 In today's call, management will make certain forward-looking statements. Actual results could differ materially from these forward-looking statements due to a number of factors, which are set forth in our earnings release, our slide presentation and our SEC filings. Entergy does not assume any obligation to update these forward-looking statements. 01:08 Management will also discuss non-GAAP financial information. Reconciliations to the applicable GAAP measures are included in today's press release and slide presentation, both of which can be found on the Investor Relations section of our website. 01:22 And now, I will turn the call over to Leo.

Andrew Marsh:

15:12 Thank you, Leo. Good morning, everyone. Today, we are reporting strong results for the first quarter. As you can see on Slide 3, we had adjusted earnings of $1.32 per share. The drivers are straightforward and keep us solidly on track to achieve our financial objectives for the year. We remain confident in our continued success and we are affirming our guidance and longer-term outlook. 15:37 Turning to Slide 4, you'll see the drivers for the quarter. As a result of our continued customer-centric investments, we saw higher levels of revenue as well as higher depreciation and interest expenses. Other O&M increases included higher customer service support and nuclear generation expenses. 15:56 Results for EWC are summarized on Slide 5. The drivers for that business are largely due to the shutdown sale of Indian Point last year. As Leo mentioned, we expect to complete our exit of the merchant nuclear business in the coming months. That will be a major strategic milestone. 16:19 Moving to Slide 6. Operating cash flow for the quarter was higher than last year at $538 million. Higher utility revenue, lower fuel and purchase power payments and lower pension contributions were the largest drivers. As a reminder, fuel and purchase power payments were significantly impacted by winter storm Uri in 2021. Non-capital storm spending was higher than last year, which provided a partial offset. 16:48 Turning to credit and liquidity on Slide 7. We continue to make progress on securitizations that will strengthen our balance sheet to produce significant cost savings for our customers. Our regulators recognize that financially healthy utilities benefit our customers. To that end, Entergy Texas recently completed securitization for its 2020 storms. And on the day of our last call, the LPSC approved storm recovery and financing for the 2020 storm plus $1 million down payment on Hurricane Ida. 17:22 The approval included replenishment of Louisiana storm escrow to $290 million. Louisiana securitization is expected to be off balance sheet, and we anticipate a $3.2 billion issuance in the coming weeks. Entergy Louisiana plans to file for Ida cost recovery in the coming days, as Leo mentioned, we are targeting to receive proceeds by year-end. The timing of recovery ultimately depend on procedural schedule approved by the commission. 17:53 Entergy New Orleans is seeking approval on the New Orleans City Council to issue $150 million in securitized bonds to replenish the company's storm reserve. If approved, this reserve would enhance credit and ability to respond to potential future storms. In addition, ENO plans to file for Ida cost recovery later this year. Our net liquidity at the end of the quarter was $3.5 billion, being further supported by the tax securitization proceeds received on April 1, and the $3.2 billion Louisiana securitization proceeds once they are received. 18:33 Beyond securitization and liquidity, we continue to focus on resilience, which we will discuss in detail at our Analyst Day. Part of that discussion will include how we are actively applying for federal funding to help pay for resilience investments and mitigate customer insights. 18:53 Looking at Slide 8. It's been approximately two months since our last earnings call. And that time, we have reduced our equity needs by nearly $170 million through our ATM program, with roughly $570 million remaining to be executed between now and the end of 2024. Given the small amount, our plan is to close out the remaining days with the ATM program. 18:53 The four sectors shown on Slide 9 represent nearly half of our industrial sales. And the fundamentals for our industrial customers remained robust in support of continued growth expansion. In addition, expansion of LNG export facilities is coming into spotlight again. Majority of these potential LNG expansion projects will provide and expand Entergy service territories. 19:43 Looking forward to Slide 10, we have a solid base plan with good visibility to achieve our guidance and outlook. We are also monitoring situations surrounding inflation and interest rates. We did not see a meaningful impact on our operational results, and we remain on track to achieve our annual cost estimate. As a result, we are affirming our 2022 adjusted EPS guidance range as well as our longer-term outlook. 20:13 As we move towards Analyst Day in New York, in June, we're executing on our operational, strategic and financial objectives and building on a solid foundation. In New York, we'll share our longer-term views on customer-centric investments and financial outlooks. And we look forward to seeing you there. And now the Entergy team is available to answer questions.

Shar Pourreza:

20:58 Hey, guys.

Shar Pourreza:

21:02 Leo, from your prepared remarks, just quickly on Palisades, should we assume you don't want to even remain a short-term owner until the asset is potentially sold? So viability of the asset is really a Holtec question or could there be changes to the Holtec agreement? And maybe just elaborate a little bit on some of the technical challenges like refueling and the capital that's needed to halt decommissioning and can they even be overcome?

Shar Pourreza:

23:04 Got it. And then just on credit metrics and equity would you guys potentially trending above your thresholds. Do you see any opportunities to maybe further downsize your $570 million of remaining needs? And as you're kind of getting closer to hitting your credit metrics and prepare to roll forward your capital plan, do you anticipate any improvements in credit metric thresholds especially as the business mix has improved and storm funding is moving closer to resolution? So would like, for instance, an improvement in thresholds, let's say, the 12% to 13% effectively leave you over equitized versus the current projections?

Shar Pourreza:

25:51 Got it. And then just one quick follow-up, if I may, and I appreciate that. It's just on your Analyst Day. I know -- I mean, obviously, you guys talked about resiliency and sort of the green tariffs. Just given the timing of sort of the regulatory initiatives and the technical conferences, I know you obviously highlighted how they would fit in with the Analyst Day. But should we specifically think about the Analyst Day as a roll forward of your base plan and you'll qualitatively maybe discuss these opportunities with some scenario, back testing analysis? Or could we actually see some of the spending actually rolled into the capital plan? Thanks.

Shar Pourreza:

26:41 All right. Thanks, Leo. [indiscernible] I get that past.

Operator:

26:48 Thank you. Our next question comes from the line of Nicholas Campanella from Credit Suisse. Your question please.

Leo Denault:

27:01 Good morning.

Roderick West:

27:31 Yeah. And this is Rod. Good morning. From Leo's comments, the near-term risk that we were referring to in terms of existing owned projects was roughly 280 megawatts because we we’re discrete about both -- we're explicit about both West Memphis and Walnut Bend. And so from a megawatt standpoint, they really don't represent a material amount of capacity. So we want to make sure that we put that in some context. And recall, Leo also mentioned the lion's share of our renewable capacity actually shows up on the back end of the decade. So we're calling it out because we recognize that there are some near-term constraints, but they really don't influence, how we're thinking about our build-out.

Nicholas Campanella:

28:56 Absolutely. And then just Drew's comments on inflation. If anywhere, where would you kind of call out that you're kind of seeing the most pressure to the plan? And can you just kind of talk about just the current state of power markets, how you're kind of managing customer bill impacts and the ability to just continue to extend your rate base growth here, perhaps any levers that makes your jurisdiction more unique than others, that would be helpful. Thanks.

Nicholas Campanella:

31:30 That was very detailed. Thanks for the repose. See you in New York.

Operator:

31:37 Thank you. Our next question comes from the line of Jeremy Tonet from JPMorgan. Your question please.